G.R. No.

177131
June 7, 2011
BOY SCOUTS OF THE PHILIPPINES, Petitioner, vs. COA, Respondent.
FACTS:
Questioning the jurisdiction of COA, a petition for prohibition was
filed by BSP seeking to prohibit the COA from implementing its
June 18, 2002 Decision, its February 21, 2007 Resolutio with the
subject "Defining the Commissions policy with respect to the audit
of the Boy Scouts of the Philippines." as well as all other issuances
arising therefrom, and that all of the foregoing be rendered null and
void.
The assailed COA Resolution:
stated that the BSP was created as a public corporation
under CA 111, as amended by PD 460 and RA 7278; that in
BSP v. NLRC, the SC ruled that the BSP, as constituted
under its charter, was a GCC within the meaning of Article
IX(B)(2)(1) of the Constitution"; and thus a government
instrumentality under the 1987 Administrative Code."
cited its constitutional mandate under Section 2(1), Article
IX (D)
resolved (pursuant to the same) to conduct an annual
financial audit of BSP in accordance with generally accepted
auditing standards, and express an opinion on whether the
financial statements which include the Balance Sheet, the
Income Statement and the Statement of Cash Flows
present fairly its financial position and results of operations.
Reolved that for purposes of audit supervision, BSP shall be
classified among the government corporations belonging to
the Educational, Social, Scientific, Civic and Research Sector
under the Corporate Audit Office I, to be audited, similar to
the subsidiary corporations, by employing the team audit
approach.
BSP sought reconsiderationcontending that it is not subject
to COA jurisdiction
1. We reckon that the ruling in the case of Boy Scouts of the
Philippines vs. National Labor Relations Commission, et al. (G.R. No.
80767) classifying the BSP as a government-controlled corporation
is anchored on the "substantial Government participation" in the
National Executive Board of the BSP. It is to be noted that the case
was decided when the BSP Charter is defined by Commonwealth
Act No. 111 as amended by Presidential Decree 460.
However, may we humbly refer you to Republic Act No. 7278 which
amended the BSPs charter after the cited case was decided. The
most salient of all amendments in RA No. 7278 is the alteration of
the composition of the National Executive Board of the BSP.

The said RA virtually eliminated the "substantial government

participation" in the National Executive Board by removing: (i) the
President of the Philippines and executive secretaries, with the
exception of the Secretary of Education, as members thereof; and
(ii) the appointment and confirmation power of the President of the
Philippines, as Chief Scout, over the members of the said Board.
The BSP believes that the cited case has been superseded by RA
7278. Thereby weakening the cases conclusion that the BSP is a
government-controlled corporation (sic). The 1987 Administrative
Code itself, of which the BSP vs. NLRC relied on for some terms,
defines government-owned and controlled corporations as agencies
organized as stock or non-stock corporations which the BSP, under
its present charter, is not.
Also, the Government, like in other GOCCs, does not have funds
invested in the BSP. What RA 7278 only provides is that the
Government or any of its subdivisions, branches, offices, agencies
and instrumentalities can from time to time donate and contribute
funds to the BSP.
Also the BSP respectfully believes that the BSP is not "appropriately
regarded as a government instrumentality under the 1987
Administrative Code" as stated in the COA resolution. As defined by
Section 2(10) of the said code, instrumentality refers to "any
agency of the National Government, not integrated within the
department framework, vested with special functions or jurisdiction
by law, endowed with some if not all corporate powers,
administering special funds, and enjoying operational autonomy,
usually through a charter."
The BSP is not an entity administering special funds. It is not even
included in the DECS National Budget. x x x
It may be argued also that the BSP is not an "agency" of the
Government. The 1987 Administrative Code, merely referred the
BSP as an "attached agency" of the DECS as distinguished from an
actual line agency of departments that are included in the National
Budget. The BSP believes that an "attached agency" is different
from an "agency." Agency, as defined in Section 2(4) of the
Administrative Code, is defined as any of the various units of the
Government including a department, bureau, office,
instrumentality, government-owned or controlled corporation or
local government or distinct unit therein.
Under the above definition, the BSP is neither a unit of the
Government; a department which refers to an executive
department as created by law (Section 2[7] of the Administrative
Code); nor a bureau which refers to any principal subdivision or unit
of any department (Section 2[8], Administrative Code).
Subsequently, requests for reconsideration of the COA Resolution
were also made separately by Robert P. Valdellon, Regional Scout

Director, Western Visayas Region, Iloilo City and Eugenio F. Capreso,

Council Scout Executive of Calbayog City.
In a letter dated July 3, 2000, Director Crescencio S. Sunico,
Corporate Audit Officer (CAO) I of the COA, furnished the BSP with a
copy of the Memo June 20, 2000 of Atty. Santos M. Alquizalas, the
COA General Counsel. In said Memorandum, the COA General
Counsel opined that Republic Act No. 7278 did not supersede the
Courts ruling in Boy Scouts of the Philippines v. National Labor
Relations Commission, even though said law eliminated the
substantial government participation in the selection of members of
the National Executive Board of the BSP. The Memorandum further
provides:
Analysis of the said case disclosed that the substantial gov
participation is only (1) of the (3) grounds relied upon by the Court
in the resolution of the case. Other considerations include the
character of the BSPs purposes and functions which has a public
aspect and the statutory designation of the BSP as a "public corp".
These grounds have not been deleted by RA 7278 but rather
strengthened as evidenced by the amendment made relative to
BSPs purposes stated in Sec 3 of RA 7278.
Whether BSP is "a government instrumentality" and "agency" of the
government: the SC declared that BSP is both a GOCC with an
original charter" and as an "instrumentality" of the Govt.
Administrative Code of 1987 designated the BSP as one of the
attached agencies of DECS which does not change its nature as a
GOCC with original charter subject to COA audit jurisdiction.
Section 2(1), Article IX-D of the Constitution provides that COA shall
have the power, authority, and duty to examine, audit and settle all
accounts pertaining to the revenue and receipts of, and
expenditures or uses of funds and property, owned or held in trust
by, or pertaining to, the Govt, or any of its subdivisions, agencies or
instrumentalities, including government-owned or controlled
corporations with original charters.
Based on the Memorandum of the COA General Counsel, Director
Sunicowrote:
In view of the points clarified by said Memorandum upholding COA
Resolution No. 99-011, we have to comply with the provisions of
the latter, among which is to conduct an annual financial audit of
the Boy Scouts of the Philippines.15
In a letter dated November 20, 2000 signed by Director Amorsonia
B. Escarda, CAO I, the COA informed the BSP that a preliminary
survey of its organizational structure, operations and accounting
system/records shall be conducted on November 21 to 22, 2000.16
Upon the BSPs request, the audit was deferred for thirty (30) days.
The BSP then filed a Petition for Review with Prayer for Preliminary

Injunction and/or Temporary Restraining Order before the COA. This

was denied by the COA in its questioned Decision, which held that
the BSP is under its audit jurisdiction. The BSP moved for
reconsideration but this was likewise denied under its questioned
Resolution.
This led to the filing by the BSP of this petition for prohibition with
preliminary injunction and temporary restraining order against the
COA.
The Issue
As stated earlier, the sole issue to be resolved in this case is
whether the BSP falls under the COAs audit jurisdiction.
The Parties Respective Arguments
The BSP contends that Boy Scouts of the Philippines v. National
Labor Relations Commission is inapplicable for purposes of
determining the audit jurisdiction of the COA as the issue therein
was the jurisdiction of the National Labor Relations Commission
over a case for illegal dismissal and unfair labor practice filed by
certain BSP employees.
While the BSP concedes that its functions do relate to those that
the government might otherwise completely assume on its own, it
avers that this alone was not determinative of the COAs audit
jurisdiction over it. The BSP further avers that the Court in Boy
Scouts of the Philippines v. National Labor Relations Commission
"simply stated x x x that in respect of functions, the BSP is akin to a
public corporation" but this was not synonymous to holding that the
BSP is a government corporation or entity subject to audit by the
COA.
The BSP contends that Republic Act No. 7278 introduced crucial
amendments to its charter; hence, the findings of the Court in Boy
Scouts of the Philippines v. National Labor Relations Commission
are no longer valid as the government has ceased to play a
controlling influence in it. The BSP claims that the pronouncements
of the Court therein must be taken only within the context of that
case; that the Court had categorically found that its assets were
acquired from the Boy Scouts of America and not from the
Philippine government, and that its operations are financed chiefly
from membership dues of the Boy Scouts themselves as well as
from property rentals; and that "the BSP may correctly be
characterized as non-governmental, and hence, beyond the audit
jurisdiction of the COA." It further claims that the designation by
the Court of the BSP as a government agency or instrumentality is
mere obiter dictum.
The BSP maintains that the provisions of Republic Act No. 7278
suggest that "governance of BSP has come to be overwhelmingly a
private affair or nature, with government participation restricted to
the seat of the Secretary of Education, Culture and Sports." It cites

Philippine Airlines Inc. v. Commission on Audit wherein the Court

declared that, "PAL, having ceased to be a government-owned or
controlled corporation is no longer under the audit jurisdiction of
the COA." Claiming that the amendments introduced by Republic
Act No. 7278 constituted a supervening event that changed the
BSPs corporate identity in the same way that the governments
privatization program changed PALs, the BSP makes the case that
the government no longer has control over it; thus, the COA cannot
use the Boy Scouts of the Philippines v. National Labor Relations
Commission as its basis for the exercise of its jurisdiction and the
issuance of COA Resolution No. 99-011.24 The BSP further claims
as follows:
It is not far-fetched, in fact, to concede that BSPs funds and assets
are private in character. Unlike ordinary public corporations, such
as provinces, cities, and municipalities, or government-owned and
controlled corporations, such as Land Bank of the Philippines and
the Development Bank of the Philippines, the assets and funds of
BSP are not derived from any government grant. For its operations,
BSP is not dependent in any way on any government appropriation;
as a matter of fact, it has not even been included in any
appropriations for the government. To be sure, COA has not alleged,
in its Resolution No. 99-011 or in the Memorandum of its General
Counsel, that BSP received, receives or continues to receive assets
and funds from any agency of the government. The foregoing
simply point to the private nature of the funds and assets of
petitioner BS
As stated in petitioners third argument, BSPs assets and funds
were never acquired from the government. Its operations are not in
any way financed by the government, as BSP has never been
included in any appropriations act for the government. Neither has
the government invested funds with BSP. BSP, has not been, at any
time, a user of government property or funds; nor have properties
of the government been held in trust by BSP. This is precisely the
reason why, until this time, the COA has not attempted to subject
BSP to its audit jurisdiction.
To summarize its other arguments, the BSP contends that it is not a
government-owned or controlled corporation; neither is it an
instrumentality, agency, or subdivision of the government.
In its Comment,26 the COA argues as follows:
1. The BSP is a public corporation created under Commonwealth
Act No. 111 dated October 31, 1936, and whose functions relate to
the fostering of public virtues of citizenship and patriotism and the
general improvement of the moral spirit and fiber of the youth. The
manner of creation and the purpose for which the BSP was created
indubitably prove that it is a government agency.

2. Being a government agency, the funds and property owned or

held in trust by the BSP are subject to the audit authority of
respondent Commission on Audit pursuant to Section 2 (1), Article
IX-D of the 1987 Constitution.
3. Republic Act No. 7278 did not change the character of the BSP as
a government-owned or controlled corporation and government
instrumentality.27
The COA maintains that the functions of the BSP that include,
among others, the teaching to the youth of patriotism, courage,
self-reliance, and kindred virtues, are undeniably sovereign
functions enshrined under the Constitution and discussed by the
Court in Boy Scouts of the Philippines v. National Labor Relations
Commission. The COA contends that any attempt to classify the
BSP as a private corporation would be incomprehensible since no
less than the law which created it had designated it as a public
corporation and its statutory mandate embraces performance of
sovereign functions.
The COA claims that the only reason why the BSP employees fell
within the scope of the Civil Service Commission even before the
1987 Constitution was the fact that it was a government-owned or
controlled corporation; that as an attached agency of the
Department of Education, Culture and Sports (DECS), the BSP is an
agency of the government; and that the BSP is a chartered
institution under Section 1(12) of the Revised Administrative Code
of 1987, embraced under the term government instrumentality.
The COA concludes that being a government agency, the funds and
property owned or held by the BSP are subject to the audit
authority of the COA pursuant to Section 2(1), Article IX (D) of the
1987 Constitution.
In support of its arguments, the COA cites The Veterans Federation
of the Philippines (VFP) v. Reyes,30 wherein the Court held that
among the reasons why the VFP is a public corporation is that its
charter, Republic Act No. 2640, designates it as one. Furthermore,
the COA quotes the Court as saying in that case:
In several cases, we have dealt with the issue of whether certain
specific activities can be classified as sovereign functions. These
cases, which deal with activities not immediately apparent to be
sovereign functions, upheld the public sovereign nature of
operations needed either to promote social justice or to stimulate
patriotic sentiments and love of country.
Petitioner claims that its funds are not public funds because no
budgetary appropriations or government funds have been released
to the VFP directly or indirectly from the DBM, and because VFP
funds come from membership dues and lease rentals earned from
administering government lands reserved for the VFP.

The fact that no budgetary appropriations have been released to

the VFP does not prove that it is a private corporation. The DBM
indeed did not see it fit to propose budgetary appropriations to the
VFP, having itself believed that the VFP is a private corporation. If
the DBM, however, is mistaken as to its conclusion regarding the
nature of VFP's incorporation, its previous assertions will not
prevent future budgetary appropriations to the VFP. The erroneous
application of the law by public officers does not bar a subsequent
correct application of the law.(Citations omitted.)
The COA points out that the government is not precluded by law
from extending financial support to the BSP and adding to its funds,
and that "as a government instrumentality which continues to
perform a vital function imbued with public interest and reflective
of the governments policy to stimulate patriotic sentiments and
love of country, the BSPs funds from whatever source are public
funds, and can be used solely for public purpose in pursuance of
the provisions of Republic Act No. [7278]."
The COA claims that the fact that it has not yet audited the BSPs
funds may not bar the subsequent exercise of its audit jurisdiction.
The BSP filed its Reply33 on August 29, 2007 maintaining that its
statutory designation as a "public corporation" and the public
character of its purpose and functions are not determinative of the
COAs audit jurisdiction; reiterating its stand that Boy Scouts of the
Philippines v. National Labor Relations Commission is not applicable
anymore because the aspect of government ownership and control
has been removed by Republic Act No. 7278; and concluding that
the funds and property that it either owned or held in trust are not
public funds and are not subject to the COAs audit jurisdiction.
Thereafter, considering the BSPs claim that it is a private
corporation, this Court, in a Resolution34 dated July 20, 2010,
required the parties to file, within a period of twenty (20) days from
receipt of said Resolution, their respective comments on the issue
of whether Commonwealth Act No. 111, as amended by Republic
Act No. 7278, is constitutional.
In compliance with the Courts resolution, the parties filed their
respective Comments.
In its Comment35 dated October 22, 2010, the COA argues that the
constitutionality of Commonwealth Act No. 111, as amended, is not
determinative of the resolution of the present controversy on the
COAs audit jurisdiction over petitioner, and in fact, the controversy
may be resolved on other grounds; thus, the requisites before a
judicial inquiry may be made, as set forth in Commissioner of
Internal Revenue v. Court of Tax Appeals,36 have not been fully
met.37 Moreover, the COA maintains that behind every law lies the
presumption of constitutionality.38 The COA likewise argues that
contrary to the BSPs position, repeal of a law by implication is not

favored.39 Lastly, the COA claims that there was no violation of

Section 16, Article XII of the 1987 Constitution with the creation or
declaration of the BSP as a government corporation. Citing
Philippine Society for the Prevention of Cruelty to Animals v.
Commission on Audit,40 the COA further alleges:
The true criterion, therefore, to determine whether a corporation is
public or private is found in the totality of the relation of the
corporation to the State. If the corporation is created by the State
as the latters own agency or instrumentality to help it in carrying
out its governmental functions, then that corporation is considered
public; otherwise, it is private. x x x.41
For its part, in its Comment42 filed on December 3, 2010, the BSP
submits that its charter, Commonwealth Act No. 111, as amended
by Republic Act No. 7278, is constitutional as it does not violate
Section 16, Article XII of the Constitution. The BSP alleges that
"while [it] is not a public corporation within the purview of COAs
audit jurisdiction, neither is it a private corporation created by
special law falling within the ambit of the constitutional prohibition
x x x." The BSP further alleges:
Petitioners purpose is embodied in Section 3 of C.A. No. 111, as
amended by Section 1 of R.A. No. 7278, thus:
A reading of the foregoing provision shows that petitioner was
created to advance the interest of the youth, specifically of young
boys, and to mold them into becoming good citizens. Ultimately,
the creation of petitioner redounds to the benefit, not only of those
boys, but of the public good or welfare. Hence, it can be said that
petitioners purpose and functions are more of a public rather than
a private character. Petitioner caters to all boys who wish to join the
organization without any distinction. It does not limit its
membership to a particular class of boys. Petitioners members are
trained in scoutcraft and taught patriotism, civic consciousness and
responsibility, courage, self-reliance, discipline and kindred virtues,
and moral values, preparing them to become model citizens and
outstanding leaders of the country
The BSP reiterates its stand that the public character of its purpose
and functions do not place it within the ambit of the audit
jurisdiction of the COA as it lacks the government ownership or
control that the Constitution requires before an entity may be
subject of said jurisdiction.It avers that it merely stated in its Reply
that the withdrawal of government control is akin to privatization,
but it does not necessarily mean that petitioner is a private
corporation.The BSP claims that it has a unique characteristic which
"neither classifies it as a purely public nor a purely private
corporation";that it is not a quasi-public corporation; and that it
may belong to a different class altogether.

The BSP claims that assuming arguendo that it is a private

corporation, its creation is not contrary to the purpose of Section
16, Article XII of the Constitution; and that the evil sought to be
avoided by said provision is inexistent in the enactment of the
BSPs charter,49 as, (i) it was not created for any pecuniary
purpose; (ii) those who will primarily benefit from its creation are
not its officers but its entire membership consisting of boys being
trained in scoutcraft all over the country; (iii) it caters to all boys
who wish to join the organization without any distinction; and (iv) it
does not limit its membership to a particular class or group of boys.
Thus, the enactment of its charter confers no special privilege to
particular individuals, families, or groups; nor does it bring about
the danger of granting undue favors to certain groups to the
prejudice of others or of the interest of the country, which are the
evils sought to be prevented by the constitutional provision
involved.
Finally, the BSP states that the presumption of constitutionality of a
legislative enactment prevails absent any clear showing of its
repugnancy to the Constitution.
The Ruling of the Court
After looking at the legislative history of its amended charter and
carefully studying the applicable laws and the arguments of both
parties, we find that the BSP is a public corporation and its funds
are subject to the COAs audit jurisdiction.
The BSP Charter (Commonwealth Act No. 111, approved on October
31, 1936), entitled "An Act to Create a Public Corporation to be
Known as the Boy Scouts of the Philippines, and to Define its
Powers and Purposes" created the BSP as a "public corporation" to
serve the following public interest or purpose:
Sec. 3. The purpose of this corporation shall be to promote through
organization and cooperation with other agencies, the ability of
boys to do useful things for themselves and others, to train them in
scoutcraft, and to inculcate in them patriotism, civic consciousness
and responsibility, courage, self-reliance, discipline and kindred
virtues, and moral values, using the method which are in common
use by boy scouts.
Presidential Decree No. 460, approved on May 17, 1974, amended
Commonwealth Act No. 111 and provided substantial changes in
the BSP organizational structure. Pertinent provisions are quoted
below:
Section II. Section 5 of the said Act is also amended to read as
follows:
The governing body of the said corporation shall consist of a
National Executive Board composed of (a) the President of the
Philippines or his representative; (b) the charter and life members

of the Boy Scouts of the Philippines; (c) the Chairman of the Board
of Trustees of the Philippine Scouting Foundation; (d) the Regional
Chairman of the Scout Regions of the Philippines; (e) the Secretary
of Education and Culture, the Secretary of Social Welfare, the
Secretary of National Defense, the Secretary of Labor, the
Secretary of Finance, the Secretary of Youth and Sports, and the
Secretary of Local Government and Community Development; (f)
an equal number of individuals from the private sector; (g) the
National President of the Girl Scouts of the Philippines; (h) one
Scout of Senior age from each Scout Region to represent the boy
membership; and (i) three representatives of the cultural
minorities. Except for the Regional Chairman who shall be elected
by the Regional Scout Councils during their annual meetings, and
the Scouts of their respective regions, all members of the National
Executive Board shall be either by appointment or cooption, subject
to ratification and confirmation by the Chief Scout, who shall be the
Head of State. Vacancies in the Executive Board shall be filled by a
majority vote of the remaining members, subject to ratification and
confirmation by the Chief Scout. The by-laws may prescribe the
number of members of the National Executive Board necessary to
constitute a quorum of the board, which number may be less than
a majority of the whole number of the board. The National
Executive Board shall have power to make and to amend the bylaws, and, by a two-thirds vote of the whole board at a meeting
called for this purpose, may authorize and cause to be executed
mortgages and liens upon the property of the corporation.
Subsequently, on March 24, 1992, Republic Act No. 7278 further
amended Commonwealth Act No. 111 "by strengthening the
volunteer and democratic character" of the BSP and reducing
government representation in its governing body, as follows:
Section 1. Sections 2 and 3 of Commonwealth Act. No. 111, as
amended, is hereby amended to read as follows:
"Sec. 2. The said corporation shall have th powers of perpetual
succession, to sue and be sued; to enter into contracts; to acquire,
own, lease, convey and dispose of such real and personal estate,
land grants, rights and choses in action as shall be necessary for
corporate purposes, and to accept and receive funds, real and
personal property by gift, devise, bequest or other means, to
conduct fund-raising activities; to adopt and use a seal, and the
same to alter and destroy; to have offices and conduct its business
and affairs in Metropolitan Manila and in the regions, provinces,
cities, municipalities, and barangays of the Philippines, to make and
adopt by-laws, rules and regulations not inconsistent with this Act
and the laws of the Philippines, and generally to do all such acts
and things, including the establishment of regulations for the

election of associates and successors, as may be necessary to carry

into effect the provisions of this Act and promote the purposes of
said corporation: Provided, That said corporation shall have no
power to issue certificates of stock or to declare or pay dividends,
its objectives and purposes being solely of benevolent character
and not for pecuniary profit of its members.
"Sec. 3. The purpose of this corporation shall be to promote
through organization and cooperation with other agencies, the
ability of boys to do useful things for themselves and others, to
train them in scoutcraft, and to inculcate in them patriotism, civic
consciousness and responsibility, courage, self-reliance, discipline
and kindred virtues, and moral values, using the method which are
in common use by boy scouts."
Sec. 2. Section 4 of Commonwealth Act No. 111, as amended, is
hereby repealed and in lieu thereof, Section 4 shall read as follows:
"Sec. 4. The President of the Philippines shall be the Chief Scout of
the Boy Scouts of the Philippines."
Sec. 3. Sections 5, 6, 7 and 8 of Commonwealth Act No. 111, as
amended, are hereby amended to read as follows:
"Sec. 5. The governing body of the said corporation shall consist of
a National Executive Board, the members of which shall be Filipino
citizens of good moral character. The Board shall be composed of
the following:
"(a) One (1) charter member of the Boy Scouts of the Philippines
who shall be elected by the members of the National Council at its
meeting called for this purpose;
"(b) The regional chairmen of the scout regions who shall be
elected by the representatives of all the local scout councils of the
region during its meeting called for this purpose: Provided, That a
candidate for regional chairman need not be the chairman of a local
scout council;
"(c) The Secretary of Education, Culture and Sports;
"(d) The National President of the Girl Scouts of the Philippines;
"(e) One (1) senior scout, each from Luzon, Visayas and Mindanao
areas, to be elected by the senior scout delegates of the local scout
councils to the scout youth forums in their respective areas, in its
meeting called for this purpose, to represent the boy scout
membership;
"(f) Twelve (12) regular members to be elected by the members of
the National Council in its meeting called for this purpose;
"(g) At least ten (10) but not more than fifteen (15) additional
members from the private sector who shall be elected by the
members of the National Executive Board referred to in the
immediately preceding paragraphs (a), (b), (c), (d), (e) and (f) at
the organizational meeting of the newly reconstituted National
Executive Board which shall be held immediately after the meeting

of the National Council wherein the twelve (12) regular members

and the one (1) charter member were elected.
"Sec. 8. Any donation or contribution which from time to time may
be made to the Boy Scouts of the Philippines by the Government or
any of its subdivisions, branches, offices, agencies or
instrumentalities or by a foreign government or by private, entities
and individuals shall be expended by the National Executive Board
in pursuance of this Act.
The BSP as a Public Corporation under Par. 2, Art. 2 of the Civil
Code
There are three classes of juridical persons under Article 44 of the
Civil Code and the BSP, as presently constituted under Republic Act
No. 7278, falls under the second classification. Article 44 reads:
Art. 44. The following are juridical persons:
(1) The State and its political subdivisions;
(2) Other corporations, institutions and entities for public interest or
purpose created by law; their personality begins as soon as they
have been constituted according to law;
(3) Corporations, partnerships and associations for private interest
or purpose to which the law grants a juridical personality, separate
and distinct from that of each shareholder, partner or member.
(Emphases supplied.)
The BSP, which is a corporation created for a public interest or
purpose, is subject to the law creating it under Article 45 of the Civil
Code, which provides:
Art. 45. Juridical persons mentioned in Nos. 1 and 2 of the
preceding article are governed by the laws creating or recognizing
them.
Private corporations are regulated by laws of general application on
the subject.
Partnerships and associations for private interest or purpose are
governed by the provisions of this Code concerning partnerships.
(Emphasis and underscoring supplied.)
The purpose of the BSP as stated in its amended charter shows that
it was created in order to implement a State policy declared in
Article II, Section 13 of the Constitution, which reads:
ARTICLE II - DECLARATION OF PRINCIPLES AND STATE POLICIES
Section 13. The State recognizes the vital role of the youth in
nation-building and shall promote and protect their physical, moral,
spiritual, intellectual, and social well-being. It shall inculcate in the
youth patriotism and nationalism, and encourage their involvement
in public and civic affairs.
Evidently, the BSP, which was created by a special law to serve a
public purpose in pursuit of a constitutional mandate, comes within
the class of "public corporations" defined by paragraph 2, Article 44

of the Civil Code and governed by the law which creates it,
pursuant to Article 45 of the same Code.
The BSPs Classification Under the Administrative Code of 1987
The public, rather than private, character of the BSP is recognized
by the fact that, along with the Girl Scouts of the Philippines, it is
classified as an attached agency of the DECS under Executive
Order No. 292, or the Administrative Code of 1987, which states:
TITLE VI EDUCATION, CULTURE AND SPORTS
Chapter 8 Attached Agencies
SEC. 20. Attached Agencies. The following agencies are hereby
attached to the Department:
(12) Boy Scouts of the Philippines;
(13) Girl Scouts of the Philippines.
The administrative relationship of an attached agency to the
department is defined in the Administrative Code of 1987 as
follows:
BOOK IV
THE EXECUTIVE BRANCH
Chapter 7 ADMINISTRATIVE RELATIONSHIP
SEC. 38. Definition of Administrative Relationship. Unless
otherwise expressly stated in the Code or in other laws defining the
special relationships of particular agencies, administrative
relationships shall be categorized and defined as follows:
(3) Attachment. (a) This refers to the lateral relationship between
the department or its equivalent and the attached agency or
corporation for purposes of policy and program coordination. The
coordination may be accomplished by having the department
represented in the governing board of the attached agency or
corporation, either as chairman or as a member, with or without
voting rights, if this is permitted by the charter; having the
attached corporation or agency comply with a system of periodic
reporting which shall reflect the progress of programs and projects;
and having the department or its equivalent provide general
policies through its representative in the board, which shall serve
as the framework for the internal policies of the attached
corporation or agency.
As an attached agency, the BSP enjoys operational autonomy, as
long as policy and program coordination is achieved by having at
least one representative of government in its governing board,
which in the case of the BSP is the DECS Secretary. In this sense,
the BSP is not under government control or "supervision and
control." Still this characteristic does not make the attached
chartered agency a private corporation covered by the
constitutional proscription in question.

Art. XII, Sec. 16 of the Constitution refers to "private corporations"

created by government for proprietary or economic/business
purposes
At the outset, it should be noted that the provision of Section 16 in
issue is found in Article XII of the Constitution, entitled "National
Economy and Patrimony." Section 1 of Article XII is quoted as
follows:
SECTION 1. The goals of the national economy are a more equitable
distribution of opportunities, income, and wealth; a sustained
increase in the amount of goods and services produced by the
nation for the benefit of the people; and an expanding productivity
as the key to raising the quality of life for all, especially the
underprivileged.
The State shall promote industrialization and full employment
based on sound agricultural development and agrarian reform,
through industries that make full and efficient use of human and
natural resources, and which are competitive in both domestic and
foreign markets. However, the State shall protect Filipino
enterprises against unfair foreign competition and trade practices.
In the pursuit of these goals, all sectors of the economy and all
regions of the country shall be given optimum opportunity to
develop. Private enterprises, including corporations, cooperatives,
and similar collective organizations, shall be encouraged to
broaden the base of their ownership.
The scope and coverage of Section 16, Article XII of the
Constitution can be seen from the aforementioned declaration of
state policies and goals which pertains to national economy and
patrimony and the interests of the people in economic
development.
Section 16, Article XII deals with "the formation, organization, or
regulation of private corporations,"52 which should be done
through a general law enacted by Congress, provides for an
exception, that is: if the corporation is government owned or
controlled; its creation is in the interest of the common good; and it
meets the test of economic viability. The rationale behind Article
XII, Section 16 of the 1987 Constitution was explained in Feliciano
v. Commission on Audit,53 in the following manner:
The Constitution emphatically prohibits the creation of private
corporations except by a general law applicable to all citizens. The
purpose of this constitutional provision is to ban private
corporations created by special charters, which historically gave
certain individuals, families or groups special privileges denied to
other citizens.54 (Emphasis added.)
It may be gleaned from the above discussion that Article XII,
Section 16 bans the creation of "private corporations" by special
law. The said constitutional provision should not be construed so as

to prohibit the creation of public corporations or a corporate agency

or instrumentality of the government intended to serve a public
interest or purpose, which should not be measured on the basis of
economic viability, but according to the public interest or purpose it
serves as envisioned by paragraph (2), of Article 44 of the Civil
Code and the pertinent provisions of the Administrative Code of
1987.
The BSP is a Public Corporation Not Subject to the Test of
Government Ownership or Control and Economic Viability
The BSP is a public corporation or a government agency or
instrumentality with juridical personality, which does not fall within
the constitutional prohibition in Article XII, Section 16,
notwithstanding the amendments to its charter. Not all
corporations, which are not government owned or controlled, are
ipso facto to be considered private corporations as there exists
another distinct class of corporations or chartered institutions
which are otherwise known as "public corporations." These
corporations are treated by law as agencies or instrumentalities of
the government which are not subject to the tests of ownership or
control and economic viability but to different criteria relating to
their public purposes/interests or constitutional policies and
objectives and their administrative relationship to the government
or any of its Departments or Offices.
Classification of Corporations Under Section 16, Article XII of the
Constitution on National Economy and Patrimony
The dissenting opinion of Associate Justice Antonio T. Carpio, citing
a line of cases, insists that the Constitution recognizes only two
classes of corporations: private corporations under a general law,
and government-owned or controlled corporations created by
special charters.
We strongly disagree. Section 16, Article XII should not be
construed so as to prohibit Congress from creating public
corporations. In fact, Congress has enacted numerous laws creating
public corporations or government agencies or instrumentalities
vested with corporate powers. Moreover, Section 16, Article XII,
which relates to National Economy and Patrimony, could not have
tied the hands of Congress in creating public corporations to serve
any of the constitutional policies or objectives.
In his dissent, Justice Carpio contends that this ponente introduces
"a totally different species of corporation, which is neither a private
corporation nor a government owned or controlled corporation"
and, in so doing, is missing the fact that the BSP, "which was
created as a non-stock, non-profit corporation, can only be either a
private corporation or a government owned or controlled
corporation."

Note that in Boy Scouts of the Philippines v. National Labor

Relations Commission, the BSP, under its former charter, was
regarded as both a government owned or controlled corporation
with original charter and a "public corporation." The said case
pertinently stated:
While the BSP may be seen to be a mixed type of entity, combining
aspects of both public and private entities, we believe that
considering the character of its purposes and its functions, the
statutory designation of the BSP as "a public corporation" and the
substantial participation of the Government in the selection of
members of the National Executive Board of the BSP, the BSP, as
presently constituted under its charter, is a government-controlled
corporation within the meaning of Article IX (B) (2) (1) of the
Constitution.
We are fortified in this conclusion when we note that the
Administrative Code of 1987 designates the BSP as one of the
attached agencies of the Department of Education, Culture and
Sports ("DECS"). An "agency of the Government" is defined as
referring to any of the various units of the Government including a
department, bureau, office, instrumentality, government-owned or
-controlled corporation, or local government or distinct unit therein.
"Government instrumentality" is in turn defined in the 1987
Administrative Code in the following manner:
Instrumentality - refers to any agency of the National Government,
not integrated within the department framework, vested with
special functions or jurisdiction by law, endowed with some if not
all corporate powers, administering special funds, and enjoying
operational autonomy usually through a charter. This term includes
regulatory agencies, chartered institutions and government-owned
or controlled corporations.
The same Code describes a "chartered institution" in the following
terms:
Chartered institution - refers to any agency organized or operating
under a special charter, and vested by law with functions relating
to specific constitutional policies or objectives. This term includes
the state universities and colleges, and the monetary authority of
the State.
We believe that the BSP is appropriately regarded as "a
government instrumentality" under the 1987 Administrative Code.
It thus appears that the BSP may be regarded as both a
"government controlled corporation with an original charter" and as
an "instrumentality" of the Government within the meaning of
Article IX (B) (2) (1) of the Constitution. x x x.
The existence of public or government corporate or juridical entities
or chartered institutions by legislative fiat distinct from private
corporations and government owned or controlled corporation is

best exemplified by the 1987 Administrative Code cited above,

which we quote in part:
Sec. 2. General Terms Defined. Unless the specific words of the
text, or the context as a whole, or a particular statute, shall require
a different meaning:
(10) "Instrumentality" refers to any agency of the National
Government, not integrated within the department framework,
vested with special functions or jurisdiction by law, endowed with
some if not all corporate powers, administering special funds, and
enjoying operational autonomy, usually through a charter. This
term includes regulatory agencies, chartered institutions and
government-owned or controlled corporations.
(12) "Chartered institution" refers to any agency organized or
operating under a special charter, and vested by law with functions
relating to specific constitutional policies or objectives. This term
includes the state universities and colleges and the monetary
authority of the State.
(13) "Government-owned or controlled corporation" refers to any
agency organized as a stock or non-stock corporation, vested with
functions relating to public needs whether governmental or
proprietary in nature, and owned by the Government directly or
through its instrumentalities either wholly, or, where applicable as
in the case of stock corporations, to the extent of at least fifty-one
(51) per cent of its capital stock: Provided, That government-owned
or controlled corporations may be further categorized by the
Department of the Budget, the Civil Service Commission, and the
Commission on Audit for purposes of the exercise and discharge of
their respective powers, functions and responsibilities with respect
to such corporations.
Assuming for the sake of argument that the BSP ceases to be
owned or controlled by the government because of reduction of the
number of representatives of the government in the BSP Board, it
does not follow that it also ceases to be a government
instrumentality as it still retains all the characteristics of the latter
as an attached agency of the DECS under the Administrative Code.
Vesting corporate powers to an attached agency or instrumentality
of the government is not constitutionally prohibited and is allowed
by the above-mentioned provisions of the Civil Code and the 1987
Administrative Code.
Economic Viability and Ownership and Control Tests Inapplicable to
Public Corporations
As presently constituted, the BSP still remains an instrumentality of
the national government. It is a public corporation created by law
for a public purpose, attached to the DECS pursuant to its Charter
and the Administrative Code of 1987. It is not a private corporation

which is required to be owned or controlled by the government and

be economically viable to justify its existence under a special law.
The dissent of Justice Carpio also submits that by recognizing "a
new class of public corporation(s)" created by special charter that
will not be subject to the test of economic viability, the
constitutional provision will be circumvented.
However, a review of the Record of the 1986 Constitutional
Convention reveals the intent of the framers of the highest law of
our land to distinguish between government corporations
performing governmental functions and corporations involved in
business or proprietary functions:
THE PRESIDENT. Commissioner Foz is recognized.
MR. FOZ. Madam President, I support the proposal to insert
"ECONOMIC VIABILITY" as one of the grounds for organizing
government corporations. x x x.
MR. OPLE. Madam President, the reason for this concern is really
that when the government creates a corporation, there is a sense
in which this corporation becomes exempt from the test of
economic performance. We know what happened in the past. If a
government corporation loses, then it makes its claim upon the
taxpayers money through new equity infusions from the
government and what is always invoked is the common good. x x x
Therefore, when we insert the phrase "ECONOMIC VIABILITY"
together with the "common good," this becomes a restraint on
future enthusiasts for state capitalism to excuse themselves from
the responsibility of meeting the market test so that they become
viable. x x x.
THE PRESIDENT. Commissioner Quesada is recognized.
MS. QUESADA. Madam President, may we be clarified by the
committee on what is meant by economic viability?
E PRESIDENT. Please proceed.
MR. MONSOD. Economic viability normally is determined by costbenefit ratio that takes into consideration all benefits, including
economic external as well as internal benefits. These are what they
call externalities in economics, so that these are not strictly
financial criteria. Economic viability involves what we call economic
returns or benefits of the country that are not quantifiable in
financial terms. x x x.
MS. QUESADA. So, would this particular formulation now really limit
the entry of government corporations into activities engaged in by
corporations?

MR. MONSOD. Yes, because it is also consistent with the economic

philosophy that this Commission approved that there should be
minimum government participation and intervention in the
economy.
MS. QUESDA. Sometimes this Commission would just refer to
Congress to provide the particular requirements when the
government would get into corporations. But this time around, we
specifically mentioned economic viability. x x x.
MR. VILLEGAS. Commissioner Ople will restate the reason for his
introducing that amendment.
MR. OPLE. I am obliged to repeat what I said earlier in moving for
this particular amendment jointly with Commissioner Foz. During
the past three decades, there had been a proliferation of
government corporations, very few of which have succeeded, and
many of which are now earmarked by the Presidential
Reorganization Commission for liquidation because they failed the
economic test. x
MS. QUESADA. But would not the Commissioner say that the reason
why many of the government-owned or controlled corporations
failed to come up with the economic test is due to the management
of these corporations, and not the idea itself of government
corporations? It is a problem of efficiency and effectiveness of
management of these corporations which could be remedied, not
by eliminating government corporations or the idea of getting into
state-owned corporations, but improving management which our
technocrats should be able to do, given the training and the
experience.

THE PRESIDENT. Commissioner Padilla is recognized.

MR. PADILLA. This is an inquiry to the committee. With regard to
corporations created by a special charter for government-owned or
controlled corporations, will these be in the pioneer fields or in
places where the private enterprise does not or cannot enter? Or is
this so general that these government corporations can compete
with private corporations organized under a general law?
MR. MONSOD. Madam President, x x x. There are two types of
government corporations those that are involved in performing
governmental functions, like garbage disposal, Manila waterworks,
and so on; and those government corporations that are involved in
business functions. As we said earlier, there are two criteria that
should be followed for corporations that want to go into business.
First is for government corporations to first prove that they can be
efficient in the areas of their proper functions. This is one of the
problems now because they go into all kinds of activities but are
not even efficient in their proper functions. Secondly, they should
not go into activities that the private sector can do better.
MR. PADILLA. There is no question about corporations performing
governmental functions or functions that are impressed with public
interest. But the question is with regard to matters that are
covered, perhaps not exhaustively, by private enterprise. It seems
that under this provision the only qualification is economic viability
and common good, but shall government, through governmentcontrolled corporations, compete with private enterprise?
MR. MONSOD. No, Madam President. As we said, the government
should not engage in activities that private enterprise is engaged in
and can do better. x x x.56 (Emphases supplied.)

MR. OPLE. That is part of the economic viability, Madam President.

MS. QUESADA. So, is the Commissioner saying then that the
Filipinos will benefit more if these government-controlled
corporations were given to private hands, and that there will be
more goods and services that will be affordable and within the
reach of the ordinary citizens?

Thus, the test of economic viability clearly does not apply to public
corporations dealing with governmental functions, to which
category the BSP belongs. The discussion above conveys the
constitutional intent not to apply this constitutional ban on the
creation of public corporations where the economic viability test
would be irrelevant. The said test would only apply if the
corporation is engaged in some economic activity or business
function for the government.

MR. OPLE. Yes. There is nothing here, Madam President, that will
prevent the formation of a government corporation in accordance
with a special charter given by Congress. However, we are raising
the standard a little bit so that, in the future, corporations
established by the government will meet the test of the common
good but within that framework we should also build a certain
standard of economic viability.

It is undisputed that the BSP performs functions that are impressed

with public interest. In fact, during the consideration of the Senate
Bill that eventually became Republic Act No. 7278, which amended
the BSP Charter, one of the bills sponsors, Senator Joey Lina,
described the BSP as follows:

Senator Lina. Yes, I can only think of two organizations involving the
masses of our youth, Mr. President, that should be given this kind of
a privilege the Boy Scouts of the Philippines and the Girl Scouts of
the Philippines. Outside of these two groups, I do not think there
are other groups similarly situated.
The Boy Scouts of the Philippines has a long history of providing
value formation to our young, and considering how huge the
population of the young people is, at this point in time, and also
considering the importance of having an organization such as this
that will inculcate moral uprightness among the young people, and
further considering that the development of these young people at
that tender age of seven to sixteen is vital in the development of
the country producing good citizens, I believe that we can make an
exception of the Boy Scouting movement of the Philippines from
this general prohibition against providing tax exemption and
privileges.
Furthermore, this Court cannot agree with the dissenting opinion
which equates the changes introduced by Republic Act No. 7278 to
the BSP Charter as clear manifestation of the intent of Congress "to
return the BSP to the private sector." It was not the intent of
Congress in enacting Republic Act No. 7278 to give up all interests
in this basic youth organization, which has been its partner in
forming responsible citizens for decades.
In fact, as may be seen in the deliberation of the House Bills that
eventually resulted to Republic Act No. 7278, Congress worked
closely with the BSP to rejuvenate the organization, to bring it back
to its former glory reached under its original charter,
Commonwealth Act No. 111, and to correct the perceived ills
introduced by the amendments to its Charter under Presidential
Decree No. 460. The BSP suffered from low morale and decrease in
number because the Secretaries of the different departments in
government who were too busy to attend the meetings of the BSPs
National Executive Board ("the Board") sent representatives who,
as it turned out, changed from meeting to meeting. Thus, the
Scouting Councils established in the provinces and cities were not
in touch with what was happening on the national level, but they
were left to implement what was decided by the Board.58
A portion of the legislators discussion is quoted below to clearly
show their intent:
HON. DEL MAR. x x x I need not mention to you the value and the
tremendous good that the Boy Scout Movement has done not only
for the youth in particular but for the country in general. And that is

why, if we look around, our past and present national leaders,

prominent men in the various fields of endeavor, public servants in
government offices, and civic leaders in the communities all over
the land, and not only in our country but all over the world many if
not most of them have at one time or another been beneficiaries of
the Scouting Movement. And so, it is along this line, Mr. Chairman,
that we would like to have the early approval of this measure if only
to pay back what we owe much to the Scouting Movement. Now,
going to the meat of the matter, Mr. Chairman, if I may just the
Scouting Movement was enacted into law in October 31, 1936
under Commonwealth Act No. 111. x x x [W]e were acknowledged
as the third biggest scouting organization in the world x x x. And to
our mind, Mr. Chairman, this erratic growth and this decrease in
membership [number] is because of the bad policy measures that
were enunciated with the enactment or promulgation by the
President before of Presidential Decree No. 460 which we feel is the
culprit of the ills that is flagging the Boy Scout Movement today.
And so, this is specifically what we are attacking, Mr. Chairman, the
disenfranchisement of the National Council in the election of the
national board. x x x. And so, this is what we would like to be
appraised of by the officers of the Boy [Scouts] of the Philippines
whom we are also confident, have the best interest of the Boy
Scout Movement at heart and it is in this spirit, Mr. Chairman, that
we see no impediment towards working together, the Boy Scout of
the Philippines officers working together with the House of
Representatives in coming out with a measure that will put back
the vigor and enthusiasm of the Boy Scout Movement. x x x.59
(Emphasis ours.)
The following is another excerpt from the discussion on the House
version of the bill, in the Committee on Government Enterprises:
HON. AQUINO: x x x Well, obviously, the two bills as well as the
previous laws that have created the Boy Scouts of the Philippines
did not provide for any direct government support by way of
appropriation from the national budget to support the activities of
this organization. The point here is, and at the same time they have
been subjected to a governmental intervention, which to their mind
has been inimical to the objectives and to the institution per se,
that is why they are seeking legislative fiat to restore back the
original mandate that they had under Commonwealth Act 111.
Such having been the experience in the hands of government,
meaning, there has been negative interference on their part and
inasmuch as their mandate is coming from a legislative fiat, then
shouldnt it be, this rhetorical question, shouldnt it be better for
this organization to seek a mandate from, lets say, the government

the Corporation Code of the Philippines and register with the SEC as
non-profit non-stock corporation so that government intervention
could be very very minimal. Maybe thats a rhetorical question,
they may or they may not answer, ano. I dont know what would be
the benefit of a charter or a mandate being provided for by way of
legislation versus a registration with the SEC under the Corporation
Code of the Philippines inasmuch as they dont get anything from
the government anyway insofar as direct funding. In fact, the only
thing that they got from government was intervention in their
affairs. Maybe we can solicit some commentary comments from the
resource persons. Incidentally, dont take that as an objection, Im
not objecting. Im all for the objectives of these two bills. It just
occurred to me that since you have had very bad experience in the
hands of government and you will always be open to such possible
intervention even in the future as long as you have a legislative
mandate or your mandate or your charter coming from legislative
action.
xxxx
MR. ESCUDERO: Mr. Chairman, there may be a disadvantage if the
Boy Scouts of the Philippines will be required to register with the
SEC. If we are registered with the SEC, there could be a danger of
proliferation of scout organization. Anybody can organize and then
register with the SEC. If there will be a proliferation of this, then the
organization will lose control of the entire organization. Another
disadvantage, Mr. Chairman, anybody can file a complaint in the
SEC against the Boy Scouts of the Philippines and the SEC may
suspend the operation or freeze the assets of the organization and
hamper the operation of the organization. I dont know, Mr.
Chairman, how you look at it but there could be a danger for
anybody filing a complaint against the organization in the SEC and
the SEC might suspend the registration permit of the organization
and we will not be able to operate.
HON. AQUINO: Well, that I think would be a problem that will not be
exclusive to corporations registered with the SEC because even if
you are government corporation, court action may be taken against
you in other judicial bodies because the SEC is simply another
quasi-judicial body. But, I think, the first point would be very
interesting, the first point that you raised. In effect, what you are
saying is that with the legislative mandate creating your charter, in
effect, you have been given some sort of a franchise with this
movement.
MR. ESCUDERO: Yes.

HON. AQUINO: Exclusive franchise of that movement?

MR. ESCUDERO: Yes.
HON. AQUINO: Well, proceed with other issues, Mr. Chairman.
Therefore, even though the amended BSP charter did away with
most of the governmental presence in the BSP Board, this was done
to more strongly promote the BSPs objectives, which were not
supported under Presidential Decree No. 460. The BSP objectives,
as pointed out earlier, are consistent with the public purpose of the
promotion of the well-being of the youth, the future leaders of the
country. The amendments were not done with the view of changing
the character of the BSP into a privatized corporation. The BSP
remains an agency attached to a department of the government,
the DECS, and it was not at all stripped of its public character.
The ownership and control test is likewise irrelevant for a public
corporation like the BSP. To reiterate, the relationship of the BSP, an
attached agency, to the government, through the DECS, is defined
in the Revised Administrative Code of 1987. The BSP meets the
minimum statutory requirement of an attached government agency
as the DECS Secretary sits at the BSP Board ex officio, thus
facilitating the policy and program coordination between the BSP
and the DECS.
Requisites for Declaration of Unconstitutionality Not Met in this
Case
The dissenting opinion of Justice Carpio improperly raised the issue
of unconstitutionality of certain provisions of the BSP Charter. Even
if the parties were asked to Comment on the validity of the BSP
charter by the Court, this alone does not comply with the requisites
for judicial review, which were clearly set forth in a recent case:
When questions of constitutional significance are raised, the Court
can exercise its power of judicial review only if the following
requisites are present: (1) the existence of an actual and
appropriate case; (2) the existence of personal and substantial
interest on the part of the party raising the constitutional question;
(3) recourse to judicial review is made at the earliest opportunity;
and (4) the constitutional question is the lis mota of the case.61
(Emphasis added.)
Thus, when it comes to the exercise of the power of judicial review,
the constitutional issue should be the very lis mota, or threshold
issue, of the case, and that it should be raised by either of the
parties. These requirements would be ignored under the dissents
rather overreaching view of how this case should have been

decided. True, it was the Court that asked the parties to comment,
but the Court cannot be the one to raise a constitutional issue.
Thus, the Court chooses to once more exhibit restraint in the
exercise of its power to pass upon the validity of a law.
Re: the COAs Jurisdiction
Regarding the COAs jurisdiction over the BSP, Section 8 of its
amended charter allows the BSP to receive contributions or
donations from the government. Section 8 reads:
Section 8. Any donation or contribution which from time to time
may be made to the Boy Scouts of the Philippines by the
Government or any of its subdivisions, branches, offices, agencies
or instrumentalities shall be expended by the Executive Board in
pursuance of this Act.lawph!1
The sources of funds to maintain the BSP were identified before the
House Committee on Government Enterprises while the bill was
being deliberated, and the pertinent portion of the discussion is
quoted below:
MR. ESCUDERO. Yes, Mr. Chairman. The question is the sources of funds of the organization. First, Mr. Chairman,
the Boy Scouts of the Philippines do not receive annual allotment from the government. The organization has to raise
its own funds through fund drives and fund campaigns or fund raising activities. Aside from this, we have some
revenue producing projects in the organization that gives us funds to support the operation. x x x From time to time,
Mr. Chairman, when we have special activities we request for assistance or financial assistance from government
agencies, from private business and corporations, but this is only during special activities that the Boy Scouts of the
Philippines would conduct during the year. Otherwise, we have to raise our own funds to support the organization.62
The nature of the funds of the BSP and the COAs audit jurisdiction were likewise brought up in said congressional
deliberations, to wit:
HON. AQUINO: x x x Insofar as this organization being a government created organization, in fact, a government
corporation classified as such, are your funds or your finances subjected to the COA audit?
MR. ESCUDERO: Mr. Chairman, we are not. Our funds is not subjected. We dont fall under the jurisdictio of the
COA.
HON. AQUINO: All right, but before were you?
MR. ESCUDERO: No, Mr. Chairman.
MR. JESUS: May I? As historical backgrounder, Commonwealth Act 111 was written by then Secretary Jorge Vargas
and before and up to the middle of the Martial Law years, the BSP was receiving a subsidy in the form of an annual
a one draw from the Sweepstakes. And, this was the case also with the Girl Scouts at the Anti-TB, but then this was
and the Boy Scouts then because of this funding partly from government was being subjected to audit in the
contributions being made in the part of the Sweepstakes. But this was removed later during the Martial Law years
with the creation of the Human Settlements Commission. So the situation right now is that the Boy Scouts does not
receive any funding from government, but then in the case of the local councils and this legislative charter, so to
speak, enables the local councils even the national headquarters in view of the provisions in the existing law to
receive donations from the government or any of its instrumentalities, which would be difficult if the Boy Scouts is
registered as a private corporation with the Securities and Exchange Commission. Government bodies would be
estopped from making donations to the Boy Scouts, which at present is not the case because there is the Boy Scouts
charter, this Commonwealth Act 111 as amended by PD 463.
xxxx
HON. AMATONG: Mr. Chairman, in connection with that.
THE CHAIRMAN: Yeah, Gentleman from Zamboanga.

HON. AMATONG: There is no auditing being made because theres no money put in the organization, but how about
donated funds to this organization? What are the remedies of the donors of how will they know how their money are
being spent?
MR. ESCUDERO: May I answer, Mr. Chairman?
THE CHAIRMAN: Yes, gentleman.
MR. ESCUDERO: The Boy Scouts of the Philippines has an external auditor and by the charter we are required to
submit a financial report at the end of each year to the National Executive Board. So all the funds donated or
otherwise is accounted for at the end of the year by our external auditor. In this case the SGV.63
Historically, therefore, the BSP had been subjected to government audit in so far as public funds had been infused
thereto. However, this practice should not preclude the exercise of the audit jurisdiction of COA, clearly set forth under
the Constitution, which pertinently provides:

Section 2. (1) The Commission on Audit shall have the power,

authority, and duty to examine, audit, and settle all accounts
pertaining to the revenue and receipts of, and expenditures or uses
of funds and property, owned or held in trust by, or pertaining to,
the Government, or any of its subdivisions, agencies, or
instrumentalities, including government-owned and controlled
corporations with original charters, and on a post-audit basis: (a)
constitutional bodies, commissions and offices that have been
granted fiscal autonomy under this Constitution; (b) autonomous
state colleges and universities; (c) other government-owned or
controlled corporations with original charters and their subsidiaries;
and (d) such non-governmental entities receiving subsidy or equity,
directly or indirectly, from or through the Government, which are
required by law of the granting institution to submit to such audit
as a condition of subsidy or equity. x x x. 64
Since the BSP, under its amended charter, continues to be a public
corporation or a government instrumentality, we come to the
inevitable conclusion that it is subject to the exercise by the COA of
its audit jurisdiction in the manner consistent with the provisions of
the BSP Charter.
WHEREFORE, premises considered, the instant petition for
prohibition is DISMISSED.
G.R. No. 169752

September 25, 2007

PHILIPPINE SOCIETY FOR THE PREVENTION OF CRUELTY TO

ANIMALS, Petitioners,
vs.COAT, DIR. RODULFO J. ARIESGA (in his official capacity as
Director of the Commission on Audit), MS. MERLE M. VALENTIN and
MS. SUSAN GUARDIAN (in their official capacities as Team Leader
and Team Member, respectively, of the audit Team of the
Commission on Audit), Respondents.

Before the Court is a special civil action for Certiorari and

Prohibition under Rule 65 of the Rules of Court, in relation to
Section 2 of Rule 64, filed by the petitioner assailing Office Order
No. 2005-0211 dated September 14, 2005 issued by the
respondents which constituted the audit team, as well as its
September 23, 2005 Letter2 informing the petitioner that
respondents audit team shall conduct an audit survey on the
petitioner for a detailed audit of its accounts, operations, and
financial transactions. No temporary restraining order was issued.

requires, assist said society, its members or agents, in the

enforcement of all such laws.
SEC. 5. One-half of all the fines imposed and collected through the
efforts of said society, its members or its agents, for violations of
the laws enacted for the prevention of cruelty to animals and for
their protection, shall belong to said society and shall be used to
promote its objects.
(emphasis supplied)

The petitioner was incorporated as a juridical entity over one

hundred years ago by virtue of Act No. 1285, enacted on January
19, 1905, by the Philippine Commission. The petitioner, at the time
it was created, was composed of animal aficionados and animal
propagandists. The objects of the petitioner, as stated in Section 2
of its charter, shall be to enforce laws relating to cruelty inflicted
upon animals or the protection of animals in the Philippine Islands,
and generally, to do and perform all things which may tend in any
way to alleviate the suffering of animals and promote their
welfare.3

Subsequently, however, the power to make arrests as well as the

privilege to retain a portion of the fines collected for violation of
animal-related laws were recalled by virtue of Commonwealth Act
(C.A.) No. 148,4 which reads, in its entirety, thus:

At the time of the enactment of Act No. 1285, the original

Corporation Law, Act No. 1459, was not yet in existence. Act No.
1285 antedated both the Corporation Law and the constitution of
the Securities and Exchange Commission. Important to note is that
the nature of the petitioner as a corporate entity is distinguished
from the sociedad anonimas under the Spanish Code of Commerce.

Sec. 4. The said society is authorized to appoint not to exceed ten

agents in the City of Manila, and not to exceed one in each
municipality of the Philippines who shall have the authority to
denounce to regular peace officers any violation of the laws
enacted for the prevention of cruelty to animals and the protection
of animals and to cooperate with said peace officers in the
prosecution of transgressors of such laws.

For the purpose of enhancing its powers in promoting animal

welfare and enforcing laws for the protection of animals, the
petitioner was initially imbued under its charter with the power to
apprehend violators of animal welfare laws. In addition, the
petitioner was to share one-half (1/2) of the fines imposed and
collected through its efforts for violations of the laws related
thereto. As originally worded, Sections 4 and 5 of Act No. 1285
provide:
SEC. 4. The said society is authorized to appoint not to exceed five
agents in the City of Manila, and not to exceed two in each of the
provinces of the Philippine Islands who shall have all the power and
authority of a police officer to make arrests for violation of the laws
enacted for the prevention of cruelty to animals and the protection
of animals, and to serve any process in connection with the
execution of such laws; and in addition thereto, all the police force
of the Philippine Islands, wherever organized, shall, as occasion

Be it enacted by the National Assembly of the Philippines:

Section 1. Section four of Act Numbered Twelve hundred and
eighty-five as amended by Act Numbered Thirty five hundred and
forty-eight, is hereby further amended so as to read as follows:

Sec. 2. The full amount of the fines collected for violation of the
laws against cruelty to animals and for the protection of animals,
shall accrue to the general fund of the Municipality where the
offense was committed.
Sec. 3. This Act shall take effect upon its approval.
Approved, November 8, 1936. (Emphasis supplied)
Immediately thereafter, then President Manuel L. Quezon issued
Executive Order (E.O.) No. 63 dated November 12, 1936, portions
of which provide:
Whereas, during the first regular session of the National Assembly,
Commonwealth Act Numbered One Hundred Forty Eight was
enacted depriving the agents of the Society for the Prevention of

Cruelty to Animals of their power to arrest persons who have

violated the laws prohibiting cruelty to animals thereby correcting a
serious defect in one of the laws existing in our statute books.

keep the general accounts of the Government, and for such period
as may be provided by law, preserve the vouchers and other
supporting papers pertaining thereto. (Emphasis supplied)

xxxx

Petitioner explained thus:

a. Although the petitioner was created by special legislation, this
necessarily came about because in January 1905 there was as yet
neither a Corporation Law or any other general law under which it
may be organized and incorporated, nor a Securities and Exchange
Commission which would have passed upon its organization and
incorporation.

Whereas, the cruel treatment of animals is an offense against the

State, penalized under our statutes, which the Government is duty
bound to enforce;
Now, therefore, I, Manuel L. Quezon, President of the Philippines,
pursuant to the authority conferred upon me by the Constitution,
hereby decree, order, and direct the Commissioner of Public Safety,
the Provost Marshal General as head of the Constabulary Division of
the Philippine Army, every Mayor of a chartered city, and every
municipal president to detail and organize special members of the
police force, local, national, and the Constabulary to watch,
capture, and prosecute offenders against the laws enacted to
prevent cruelty to animals. (Emphasis supplied)
On December 1, 2003, an audit team from respondent Commission
on Audit (COA) visited the office of the petitioner to conduct an
audit survey pursuant to COA Office Order No. 2003-051 dated
November 18, 20035 addressed to the petitioner. The petitioner
demurred on the ground that it was a private entity not under the
jurisdiction of COA, citing Section 2(1) of Article IX of the
Constitution which specifies the general jurisdiction of the COA, viz:
Section 1. General Jurisdiction. The Commission on Audit shall have
the power, authority, and duty to examine, audit, and settle all
accounts pertaining to the revenue and receipts of, and
expenditures or uses of funds and property, owned or held in trust
by, or pertaining to the Government, or any of its subdivisions,
agencies, or instrumentalities, including government-owned and
controlled corporations with original charters, and on a post-audit
basis: (a) constitutional bodies, commissions and officers that have
been granted fiscal autonomy under the Constitution; (b)
autonomous state colleges and universities; (c) other governmentowned or controlled corporations and their subsidiaries; and (d)
such non-governmental entities receiving subsidy or equity, directly
or indirectly, from or through the government, which are required
by law or the granting institution to submit to such audit as a
condition of subsidy or equity. However, where the internal control
system of the audited agencies is inadequate, the Commission may
adopt such measures, including temporary or special pre-audit, as
are necessary and appropriate to correct the deficiencies. It shall

b. That Executive Order No. 63, issued during the Commonwealth

period, effectively deprived the petitioner of its power to make
arrests, and that the petitioner lost its operational funding,
underscore the fact that it exercises no governmental function. In
fine, the government itself, by its overt acts, confirmed petitioners
status as a private juridical entity.
The COA General Counsel issued a Memorandum6 dated May 6,
2004, asserting that the petitioner was subject to its audit
authority. In a letter dated May 17, 2004,7 respondent COA
informed the petitioner of the result of the evaluation, furnishing it
with a copy of said Memorandum dated May 6, 2004 of the General
Counsel.
Petitioner thereafter filed with the respondent COA a Request for
Re-evaluation dated May 19, 2004,8 insisting that it was a private
domestic corporation.
Acting on the said request, the General Counsel of respondent COA,
in a Memorandum dated July 13, 2004,9 affirmed her earlier opinion
that the petitioner was a government entity that was subject to the
audit jurisdiction of respondent COA. In a letter dated September
14, 2004, the respondent COA informed the petitioner of the result
of the re-evaluation, maintaining its position that the petitioner was
subject to its audit jurisdiction, and requested an initial conference
with the respondents.
In a Memorandum dated September 16, 2004, Director Delfin
Aguilar reported to COA Assistant Commissioner Juanito Espino,
Corporate Government Sector, that the audit survey was not
conducted due to the refusal of the petitioner because the latter
maintained that it was a private corporation.

Petitioner received on September 27, 2005 the subject COA Office

Order 2005-021 dated September 14, 2005 and the COA Letter
dated September 23, 2005.
Hence, herein Petition on the following grounds:
A.RESPONDENT COMMISSION ON AUDIT COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION
WHEN IT RULED THAT PETITIONER IS SUBJECT TO ITS AUDIT
AUTHORITY.
B.PETITIONER IS ENTITLED TO THE RELIEF SOUGHT, THERE BEING
NO APPEAL, NOR ANY PLAIN, SPEEDY AND ADEQUATE REMEDY IN
THE ORDINARY COURSE OF LAW AVAILABLE TO IT.10
The essential question before this Court is whether the petitioner
qualifies as a government agency that may be subject to audit by
respondent COA.
Petitioner argues: first, even though it was created by special
legislation in 1905 as there was no general law then existing under
which it may be organized or incorporated, it exercises no
governmental functions because these have been revoked by C.A.
No. 148 and E.O. No. 63; second, nowhere in its charter is it
indicated that it is a public corporation, unlike, for instance, C.A.
No. 111 which created the Boy Scouts of the Philippines, defined its
powers and purposes, and specifically stated that it was "An Act to
Create a Public Corporation" in which, even as amended by
Presidential Decree No. 460, the law still adverted to the Boy
Scouts of the Philippines as a "public corporation," all of which are
not obtaining in the charter of the petitioner; third, if it were a
government body, there would have been no need for the State to
grant it tax exemptions under Republic Act No. 1178, and the fact
that it was so exempted strengthens its position that it is a private
institution; fourth, the employees of the petitioner are registered
and covered by the Social Security System at the latters initiative
and not through the Government Service Insurance System, which
should have been the case had the employees been considered
government employees; fifth, the petitioner does not receive any
form of financial assistance from the government, since C.A. No.
148, amending Section 5 of Act No. 1285, states that the "full
amount of the fines, collected for violation of the laws against
cruelty to animals and for the protection of animals, shall accrue to
the general fund of the Municipality where the offense was
committed"; sixth, C.A. No. 148 effectively deprived the petitioner
of its powers to make arrests and serve processes as these

functions were placed in the hands of the police force; seventh, no

government appointee or representative sits on the board of
trustees of the petitioner; eighth, a reading of the provisions of its
charter (Act No. 1285) fails to show that any act or decision of the
petitioner is subject to the approval of or control by any
government agency, except to the extent that it is governed by the
law on private corporations in general; and finally, ninth, the
Committee on Animal Welfare, under the Animal Welfare Act of
1998, includes members from both the private and the public
sectors.
The respondents contend that since the petitioner is a "body
politic" created by virtue of a special legislation and endowed with
a governmental purpose, then, indubitably, the COA may audit the
financial activities of the latter. Respondents in effect divide their
contentions into six strains: first, the test to determine whether an
entity is a government corporation lies in the manner of its
creation, and, since the petitioner was created by virtue of a special
charter, it is thus a government corporation subject to respondents
auditing power; second, the petitioner exercises "sovereign
powers," that is, it is tasked to enforce the laws for the protection
and welfare of animals which "ultimately redound to the public
good and welfare," and, therefore, it is deemed to be a government
"instrumentality" as defined under the Administrative Code of
1987, the purpose of which is connected with the administration of
government, as purportedly affirmed by American jurisprudence;
third, by virtue of Section 23,11 Title II, Book III of the same Code,
the Office of the President exercises supervision or control over the
petitioner; fourth, under the same Code, the requirement under its
special charter for the petitioner to render a report to the Civil
Governor, whose functions have been inherited by the Office of the
President, clearly reflects the nature of the petitioner as a
government instrumentality; fifth, despite the passage of the
Corporation Code, the law creating the petitioner had not been
abolished, nor had it been re-incorporated under any general
corporation law; and finally, sixth, Republic Act No. 8485, otherwise
known as the "Animal Welfare Act of 1998," designates the
petitioner as a member of its Committee on Animal Welfare which
is attached to the Department of Agriculture.
In view of the phrase "One-half of all the fines imposed and
collected through the efforts of said society," the Court, in a
Resolution dated January 30, 2007, required the Office of the
Solicitor General (OSG) and the parties to comment on: a)
petitioner's authority to impose fines and the validity of the
provisions of Act No. 1285 and Commonwealth Act No. 148

considering that there are no standard measures provided for in the

aforecited laws as to the manner of implementation, the specific
violations of the law, the person/s authorized to impose fine and in
what amount; and, b) the effect of the 1935 and 1987 Constitutions
on whether petitioner continues to exist or should organize as a
private corporation under the Corporation Code, B.P. Blg. 68 as
amended.
Petitioner and the OSG filed their respective Comments.
Respondents filed a Manifestation stating that since they were
being represented by the OSG which filed its Comment, they opted
to dispense with the filing of a separate one and adopt for the
purpose that of the OSG.
The petitioner avers that it does not have the authority to impose
fines for violation of animal welfare laws; it only enjoyed the
privilege of sharing in the fines imposed and collected from its
efforts in the enforcement of animal welfare laws; such privilege,
however, was subsequently abolished by C.A. No. 148; that it
continues to exist as a private corporation since it was created by
the Philippine Commission before the effectivity of the Corporation
law, Act No. 1459; and the 1935 and 1987 Constitutions.
The OSG submits that Act No. 1285 and its amendatory laws did
not give petitioner the authority to impose fines for violation of
laws12 relating to the prevention of cruelty to animals and the
protection of animals; that even prior to the amendment of Act No.
1285, petitioner was only entitled to share in the fines imposed;
C.A. No. 148 abolished that privilege to share in the fines collected;
that petitioner is a public corporation and has continued to exist
since Act No. 1285; petitioner was not repealed by the 1935 and
1987 Constitutions which contain transitory provisions maintaining
all laws issued not inconsistent therewith until amended, modified
or repealed.
The petition is impressed with merit.
The arguments of the parties, interlaced as they are, can be
disposed of in five points.
First, the Court agrees with the petitioner that the "charter test"
cannot be applied.
Essentially, the "charter test" as it stands today provides:

[T]he test to determine whether a corporation is government

owned or controlled, or private in nature is simple. Is it created by
its own charter for the exercise of a public function, or by
incorporation under the general corporation law? Those with special
charters are government corporations subject to its provisions, and
its employees are under the jurisdiction of the Civil Service
Commission, and are compulsory members of the Government
Service Insurance System. xxx (Emphasis supplied)13
The petitioner is correct in stating that the charter test is
predicated, at best, on the legal regime established by the 1935
Constitution, Section 7, Article XIII, which states:
Sec. 7. The National Assembly shall not, except by general law,
provide for the formation, organization, or regulation of private
corporations, unless such corporations are owned or controlled by
the Government or any subdivision or instrumentality thereof.14
The foregoing proscription has been carried over to the 1973 and
the 1987 Constitutions. Section 16 of Article XII of the present
Constitution provides:
Sec. 16. The Congress shall not, except by general law, provide for
the formation, organization, or regulation of private corporations.
Government-owned or controlled corporations may be created or
established by special charters in the interest of the common good
and subject to the test of economic viability.
Section 16 is essentially a re-enactment of Section 7 of Article XVI
of the 1935 Constitution and Section 4 of Article XIV of the 1973
Constitution.
During the formulation of the 1935 Constitution, the Committee on
Franchises recommended the foregoing proscription to prevent the
pressure of special interests upon the lawmaking body in the
creation of corporations or in the regulation of the same. To permit
the lawmaking body by special law to provide for the organization,
formation, or regulation of private corporations would be in effect
to offer to it the temptation in many cases to favor certain groups,
to the prejudice of others or to the prejudice of the interests of the
country.15
And since the underpinnings of the charter test had been
introduced by the 1935 Constitution and not earlier, it follows that
the test cannot apply to the petitioner, which was incorporated by
virtue of Act No. 1285, enacted on January 19, 1905. Settled is the

rule that laws in general have no retroactive effect, unless the

contrary is provided.16 All statutes are to be construed as having
only a prospective operation, unless the purpose and intention of
the legislature to give them a retrospective effect is expressly
declared or is necessarily implied from the language used. In case
of doubt, the doubt must be resolved against the retrospective
effect.17
There are a few exceptions. Statutes can be given retroactive effect
in the following cases: (1) when the law itself so expressly provides;
(2) in case of remedial statutes; (3) in case of curative statutes; (4)
in case of laws interpreting others; and (5) in case of laws creating
new rights.18 None of the exceptions is present in the instant case.
The general principle of prospectivity of the law likewise applies to
Act No. 1459, otherwise known as the Corporation Law, which had
been enacted by virtue of the plenary powers of the Philippine
Commission on March 1, 1906, a little over a year after January 19,
1905, the time the petitioner emerged as a juridical entity. Even the
Corporation Law respects the rights and powers of juridical entities
organized beforehand, viz:
SEC. 75. Any corporation or sociedad anonima formed, organized,
and existing under the laws of the Philippine Islands and lawfully
transacting business in the Philippine Islands on the date of the
passage of this Act, shall be subject to the provisions hereof so far
as such provisions may be applicable and shall be entitled at its
option either to continue business as such corporation or to reform
and organize under and by virtue of the provisions of this Act,
transferring all corporate interests to the new corporation which, if
a stock corporation, is authorized to issue its shares of stock at par
to the stockholders or members of the old corporation according to
their interests. (Emphasis supplied).
As pointed out by the OSG, both the 1935 and 1987 Constitutions
contain transitory provisions maintaining all laws issued not
inconsistent therewith until amended, modified or repealed.19
In a legal regime where the charter test doctrine cannot be applied,
the mere fact that a corporation has been created by virtue of a
special law does not necessarily qualify it as a public corporation.
What then is the nature of the petitioner as a corporate entity?
What legal regime governs its rights, powers, and duties?

As stated, at the time the petitioner was formed, the applicable law
was the Philippine Bill of 1902, and, emphatically, as also stated
above, no proscription similar to the charter test can be found
therein.
The textual foundation of the charter test, which placed a limitation
on the power of the legislature, first appeared in the 1935
Constitution. However, the petitioner was incorporated in 1905 by
virtue of Act No. 1258, a law antedating the Corporation Law (Act
No. 1459) by a year, and the 1935 Constitution, by thirty years.
There being neither a general law on the formation and
organization of private corporations nor a restriction on the
legislature to create private corporations by direct legislation, the
Philippine Commission at that moment in history was well within its
powers in 1905 to constitute the petitioner as a private juridical
entity.1wphi1
Time and again the Court must caution even the most brilliant
scholars of the law and all constitutional historians on the danger of
imposing legal concepts of a later date on facts of an earlier
date.20
The amendments introduced by C.A. No. 148 made it clear that the
petitioner was a private corporation and not an agency of the
government. This was evident in Executive Order No. 63, issued by
then President of the Philippines Manuel L. Quezon, declaring that
the revocation of the powers of the petitioner to appoint agents
with powers of arrest "corrected a serious defect" in one of the laws
existing in the statute books.
As a curative statute, and based on the doctrines so far discussed,
C.A. No. 148 has to be given retroactive effect, thereby freeing all
doubt as to which class of corporations the petitioner belongs, that
is, it is a quasi-public corporation, a kind of private domestic
corporation, which the Court will further elaborate on under the
fourth point.
Second, a reading of petitioners charter shows that it is not subject
to control or supervision by any agency of the State, unlike
government-owned and -controlled corporations. No government
representative sits on the board of trustees of the petitioner. Like all
private corporations, the successors of its members are determined
voluntarily and solely by the petitioner in accordance with its bylaws, and may exercise those powers generally accorded to private
corporations, such as the powers to hold property, to sue and be
sued, to use a common seal, and so forth. It may adopt by-laws for

its internal operations: the petitioner shall be managed or operated

by its officers "in accordance with its by-laws in force." The
pertinent provisions of the charter provide:
Section 1. Anna L. Ide, Kate S. Wright, John L. Chamberlain, William
F. Tucker, Mary S. Fergusson, Amasa S. Crossfield, Spencer Cosby,
Sealy B. Rossiter, Richard P. Strong, Jose Robles Lahesa, Josefina R.
de Luzuriaga, and such other persons as may be associated with
them in conformity with this act, and their successors, are hereby
constituted and created a body politic and corporate at law, under
the name and style of "The Philippines Society for the Prevention of
Cruelty to Animals."
As incorporated by this Act, said society shall have the power to
add to its organization such and as many members as it desires, to
provide for and choose such officers as it may deem advisable, and
in such manner as it may wish, and to remove members as it shall
provide.
It shall have the right to sue and be sued, to use a common seal, to
receive legacies and donations, to conduct social enterprises for
the purpose of obtaining funds, to levy dues upon its members and
provide for their collection to hold real and personal estate such as
may be necessary for the accomplishment of the purposes of the
society, and to adopt such by-laws for its government as may not
be inconsistent with law or this charter.
xxxx
Sec. 3. The said society shall be operated under the direction of its
officers, in accordance with its by-laws in force, and this charter.
xxxx
Sec. 6. The principal office of the society shall be kept in the city of
Manila, and the society shall have full power to locate and establish
branch offices of the society wherever it may deem advisable in the
Philippine Islands, such branch offices to be under the supervision
and control of the principal office.
Third. The employees of the petitioner are registered and covered
by the Social Security System at the latters initiative, and not
through the Government Service Insurance System, which should
be the case if the employees are considered government
employees. This is another indication of petitioners nature as a
private entity. Section 1 of Republic Act No. 1161, as amended by

Republic Act No. 8282, otherwise known as the Social Security Act
of 1997, defines the employer:
Employer Any person, natural or juridical, domestic or foreign,
who carries on in the Philippines any trade, business, industry,
undertaking or activity of any kind and uses the services of another
person who is under his orders as regards the employment, except
the Government and any of its political subdivisions, branches or
instrumentalities, including corporations owned or controlled by the
Government: Provided, That a self-employed person shall be both
employee and employer at the same time. (Emphasis supplied)
Fourth. The respondents contend that the petitioner is a "body
politic" because its primary purpose is to secure the protection and
welfare of animals which, in turn, redounds to the public good.
This argument, is, at best, specious. The fact that a certain juridical
entity is impressed with public interest does not, by that
circumstance alone, make the entity a public corporation, inasmuch
as a corporation may be private although its charter contains
provisions of a public character, incorporated solely for the public
good. This class of corporations may be considered quasi-public
corporations, which are private corporations that render public
service, supply public wants,21 or pursue other eleemosynary
objectives. While purposely organized for the gain or benefit of its
members, they are required by law to discharge functions for the
public benefit. Examples of these corporations are utility,22
railroad, warehouse, telegraph, telephone, water supply
corporations and transportation companies.23 It must be stressed
that a quasi-public corporation is a species of private corporations,
but the qualifying factor is the type of service the former renders to
the public: if it performs a public service, then it becomes a quasipublic corporation.241wphi1
Authorities are of the view that the purpose alone of the
corporation cannot be taken as a safe guide, for the fact is that
almost all corporations are nowadays created to promote the
interest, good, or convenience of the public. A bank, for example, is
a private corporation; yet, it is created for a public benefit. Private
schools and universities are likewise private corporations; and yet,
they are rendering public service. Private hospitals and wards are
charged with heavy social responsibilities. More so with all common
carriers. On the other hand, there may exist a public corporation
even if it is endowed with gifts or donations from private
individuals.

The true criterion, therefore, to determine whether a corporation is

public or private is found in the totality of the relation of the
corporation to the State. If the corporation is created by the State
as the latters own agency or instrumentality to help it in carrying
out its governmental functions, then that corporation is considered
public; otherwise, it is private. Applying the above test, provinces,
chartered cities, and barangays can best exemplify public
corporations. They are created by the State as its own device and
agency for the accomplishment of parts of its own public works.25
It is clear that the amendments introduced by C.A. No. 148 revoked
the powers of the petitioner to arrest offenders of animal welfare
laws and the power to serve processes in connection therewith.
Fifth. The respondents argue that since the charter of the petitioner
requires the latter to render periodic reports to the Civil Governor,
whose functions have been inherited by the President, the
petitioner is, therefore, a government instrumentality.
This contention is inconclusive. By virtue of the fiction that all
corporations owe their very existence and powers to the State, the
reportorial requirement is applicable to all corporations of whatever
nature, whether they are public, quasi-public, or private
corporationsas creatures of the State, there is a reserved right in
the legislature to investigate the activities of a corporation to
determine whether it acted within its powers. In other words, the
reportorial requirement is the principal means by which the State
may see to it that its creature acted according to the powers and
functions conferred upon it. These principles were extensively
discussed in Bataan Shipyard & Engineering Co., Inc. v. Presidential
Commission on Good Government.26 Here, the Court, in holding
that the subject corporation could not invoke the right against selfincrimination whenever the State demanded the production of its
corporate books and papers, extensively discussed the purpose of
reportorial requirements, viz:
x x x The corporation is a creature of the state. It is presumed to be
incorporated for the benefit of the public. It received certain special
privileges and franchises, and holds them subject to the laws of the
state and the limitations of its charter. Its powers are limited by law.
It can make no contract not authorized by its charter. Its rights to
act as a corporation are only preserved to it so long as it obeys the
laws of its creation. There is a reserve[d] right in the legislature to
investigate its contracts and find out whether it has exceeded its
powers. It would be a strange anomaly to hold that a state, having
chartered a corporation to make use of certain franchises, could

not, in the exercise of sovereignty, inquire how these franchises

had been employed, and whether they had been abused, and
demand the production of the corporate books and papers for that
purpose. The defense amounts to this, that an officer of the
corporation which is charged with a criminal violation of the statute
may plead the criminality of such corporation as a refusal to
produce its books. To state this proposition is to answer it. While an
individual may lawfully refuse to answer incriminating questions
unless protected by an immunity statute, it does not follow that a
corporation vested with special privileges and franchises may
refuse to show its hand when charged with an abuse of such
privileges. (Wilson v. United States, 55 Law Ed., 771, 780.)27
WHEREFORE, the petition is GRANTED. Petitioner is DECLARED a
private domestic corporation subject to the jurisdiction of the
Securities and Exchange Commission. The respondents are
ENJOINED from investigating, examining and auditing the
petitioner's fiscal and financial affairs.
United States Supreme Court
VILAS v. CITY OF MANILA, (1911)
No. 53
Argued:
Decided: April 3, 1911
[220 U.S. 345, 346] Messrs. Frederic R. Coudert, Howard Thayer
Kingsbury, Paul Fuller, and Harry Weston Van Dyke for plaintiffs in
error and appellants.
[220 U.S. 345, 349] Messrs. Paul Charlton andIsaac Adams for
appellee.
[220 U.S. 345, 351]
Mr. Justice Lurton delivered the opinion of the court:
The plaintiffs in error, who were plaintiffs below, are creditors of the
city of Manila as it existed before the cession of the Philippine
Islands to the United States by the treaty of Paris, December 10,
1898 [30 Stat. at L. 1754]. Upon the theory that the city, under its
present charter from the government of the Philippine Islands, is
the same juristic person and liable upon the obligations of the old
city, these actions were brought against it. The supreme court of
the Philippine Islands denied relief, holding that the present
municipality is a totally different corporate entity, and in no way
liable for the debts of the Spanish municipality. [220 U.S. 345, 352]

The fundamental question is whether, notwithstanding the cession

of the Philippine Islands to the United States, followed by a
reincorporation of the city, the present municipality is liable for the
obligations of the city incurred prior to the cession to the United
States.
We shall confine ourselves to the question whether the plaintiffs in
error are entitled to judgments against the city upon their several
claims. Whether there is a remedy adequate to the collection when
reduced to judgment is not presented by the record. But whether
there is or is not a remedy affords no reason why the plaintiffs in
error may not reduce their claims to judgment. Mt. Pleasant v.
Beckwith, 100 U.S. 514, 530 , 25 S. L. ed. 699, 703. The city
confessedly may be sued under its existing charter, and that
implies at least a right to judgment if they establish their demands.
The city as now incorporated has succeeded to all of the property
rights of the old city and to the right to enforce all of its causes of
action. There is identity of purpose between the Spanish and
American charters and substantial identity of municipal powers.
The area and the inhabitants incorporated are substantially the
same. But for the change of sovereignty which has occurred under
the treaty of Paris, the question of the liability of the city under its
new charter for the debts of the old city would seem to be of easy
solution. The principal question would therefore seem to be the
legal consequence of the cession referred to upon the property
rights and civil obligations of the city incurred before the cession.
And so the question was made to turn in the court below upon the
consequence of a change in sovereignty and a reincorporation of
the city by the substituted sovereignty.
This disposes of the question of the jurisdiction of this court,
grounded upon the absence from the petition of the plaintiffs of any
distinct claim under the treaty of Paris, since, under 10 of the
Philippine organic act [220 U.S. 345, 353] of July 1, 1902 [32 Stat.
at L. 695, chap. 1369, U. S. Comp. Stat. Supp. 1909, p. 226], this
court is given jurisdiction to review any final decree or judgment of
the supreme court of the Philippine Islands where any treaty of the
United States 'is involved.' That treaty was necessarily 'involved,'
since neither the court below nor this court can determine the
continuity of the municipality nor the liability of the city as it now
exists for the obligation of the old city, without considering the
effect of the change of sovereignty resulting from that treaty. See
Reavis v. Fianza, 215 U.S. 16, 22 , 54 S. L. ed. 72, 75, 30 Sup. Ct.
rep. 1.

The historical continuity of a municipality embracing the

inhabitants of the territory now occupied by the city of Manila is
impressive. Before the conquest of the Philippine Islands by Spain,
Manila existed. The Spaniards found on the spot now occupied a
populous and fortified community of Moros. In 1571 they occupied
what was then and is now known as Manila, and established it as a
municipal corporation. In 1574 there was conferred upon it the title
of 'Illustrious and ever loyal city of Manila.' From time to time there
occurred amendments, and, on January 19, 1894, there was a
reorganization of the city government under a royal decree of that
date. Under that charter there was power to incur debts for
municipal purposes and power to sue and be sued. The obligations
here in suit were incurred under the charter referred to, and are
obviously obligations strictly within the provision of the municipal
power. To pay judgments upon such debts it was the duty of the
ayuntamiento of Manila, which was the corporate name of the old
city, to make provision in its budget.
The contention that the liability of the city upon such obligations
was destroyed by a mere change of sovereignty is obviously one
which is without a shadow of moral force, and, if true, must result
from settled principles of rigid law. While the contracts from which
the claims in suit resulted were in progress, war between the
United [220 U.S. 345, 354] States and Spain ensued. On August
13, 1898, the city was occupied by the forces of this government,
and its affairs conducted by military authority. On July 31, 1901, the
present incorporating act was passed, and the city since that time
has been an autonomous municipality. The charter in force is act
183 of the Philippine Commission, and now may be found as
chapters 68 to 75 of the compiled acts of the Philippine
Commission. The 1st section of the charter of 1901 reads as
follows:
'The inhabitants of the city of Manila, residing within the territory
described in 2 of this act, are hereby constituted a municipality,
which shall be known as the city of Manila, and by that name shall
have perpetual succession, and shall possess all the rights of
property herein granted or heretofore enjoyed and possessed by
the city of Manila as organized under Spanish sovereignty.'
The boundaries described in 2 include substantially the area and
inhabitants which had theretofore constituted the old city.
By 4 of the same act, the government of the city was invested in a
municipal board.

Section 16 grants certain legislative powers to the board, and

provides that it shall 'take possession of all lands, buildings, offices,
books, papers, records, moneys, credits, securities, assets,
accounts, or other property or rights belonging to the former city of
Manila, or pertaining to the business or interests thereof, and,
subject to the provisions herein set forth, shall have control of all its
property except the building known as the ayuntamiento, provision
for the occupation and control of which is made in 15 of this act;
shall collect taxes and other revenues, and apply the same in
accordance with appropriations, as hereinbefore provided, to the
payment of the municipal expenses; shall supervise and control the
discharge of official duties by subordinates; shall institute judicial
proceedings to recover property and [220 U.S. 345, 355] funds of
the city wherever found, or otherwise to protect the interests of the
city, and shall defend all suits against the city,' etc.
Section 69 of the charter expressly preserved 'all city ordinances
and orders in force at the time of the passage of this act, and not
inconsistent herewith,' until modified or repealed by ordinances
passed under this act.
Section 72 is the repealing clause, and provides for the repeal of 'all
acts, orders, and regulations' which are inconsistent with the
provisions of the act.
The charter contains no reference to the obligations or contracts of
the old city.
If we understand the argument against the liability here asserted, it
proceeds mainly upon the theory that inasmuch as the predecessor
of the present city, the ayuntamiento of Manila, was a corporate
entity created by the Spanish government, when the sovereignty of
Spain in the islands was terminated by the treaty of cession, if not
by the capitulation of August 13, 1898, the municipality ipso facto
disappeared for all purposes. This conclusion is reached upon the
supposed analogy to the doctrine of principal and agent, the death
of the principal ending the agency. So complete is the supposed
death and annihilation of a municipal entity by extinction of
sovereignty of the creating state that it was said in one of the
opinions below that all of the public property of Manila passed to
the United States, 'for a consideration, which was paid,' and that
the United States was therefore justified in creating an absolutely
new municipality, and endowing it with all of the assets of the
defunct city, free from any obligation to the creditors of that city.
And so the matter was dismissed in the Trigas Case by the court of
first instance, by the suggestion that 'the plaintiff may have a claim

against the Crown of Spain, which has received from the United
States payment for that done by the plaintiff.' [220 U.S. 345, 356]
We are unable to agree with the argument. It loses sight of the dual
character of municipal corporations. They exercise powers which
are governmental and powers which are of a private or business
character. In the one character a municipal corporation is a
governmental subdivision, and for that purpose exercises by
delegation a part of the sovereignty of the state. In the other
character it is a mere legal entity or juristic person. In the latter
character it stands for the community in the administration of local
affairs wholly beyond the sphere of the public purposes for which
its governmental powers are conferred.
The distinction is observed in South Carolina v. United States, 199
U.S. 437, 461 , 50 S. L. ed. 261, 269, 26 Sup. Ct. Rep. 110, 4 A. & E.
Ann. Cas. 737, where Lloyd v. New York, 5 N. Y. 369, 374, 55 Am.
Dec. 347, and Western Sav. Fund Soc. v. Philadelphia, 31 Pa. 175,
72 Am. Dec. 730, are cited and approved. In Lloyd v. New York,
supra, it is said:
'The corporation of the city of New York possesses two kinds of
powers: one governmental and public, and to the extent they are
held and exercised, is clothed with sovereignty; the other private,
and to the extent they are held and exercised, is a legal individual.
The former are given and used for public purposes, the latter for
private purposes. While in the exercise of the former, the
corporation is a municipal government; and while in the exercise of
the latter, is a corporate legal individual.'
See also Dill. Mun. Corp. 4th ed. 66; Petersburg v. Applegarth, 28
Gratt. 321, 343, 26 Am. Rep. 357, and Oliver v. Worcester, 102
Mass. 489, 3 Am. Rep. 485.
In view of the dual character of municipal corporations there is no
public reason for presuming their total dissolution as a mere
consequence of military occupation or territorial cession. The
suspension of such governmental functions as are obviously
incompatible with the new political relations thus brought about
may be presumed. [220 U.S. 345, 357] But no such implication
may be reasonably indulged beyond that result.
Such a conclusion is in harmony with the settled principles of public
law as declared by this and other courts and expounded by the
text-books upon the laws of war and international law. Taylor,
International Pub. Law , 578.

That there is a total abrogation of the former political relations of

the inhabitants of the ceded region is obvious. That all laws
theretofore in force which are in confiict with the political character,
constitution, or institutions of the substituted sovereign, lose their
force, is also plain. Alvarez y Sanchez v. United States, 216 U.S. 167
, 54 L. ed. 432, 30 Sup. Ct. Rep. 367. But it is equally settled in the
same public law that that great body of municipal law which
regulates private and domestic rights continues in force until
abrogated or changed by the new ruler. In Chicago, R. I. & P. R. Co.
v. McGlinn, 114 U.S. 542, 546 , 29 S. L. ed. 270, 271, 5 Sup. Ct. Rep.
1005, it was said:
'It is a general rule of public law, recognized and acted upon by
the United States, that whenever political jurisdiction and
legislative power over any territory are transferred from one nation
or sovereign to another, the municipal laws of the country, that is,
laws which are intended for the protection of private rights,
continue in force until abrogated or changed by the new
government or sovereign. By the cession, public property passes
from one government to the other, but private property remains as
before, and with it those municipal laws which are designed to
secure its peaceful use and enjoyment. As a matter of course, all
laws, ordinances, and regulations in conflict with the political
character, institutions, and constitution of the new government are
at once displaced. Thus, upon a cession of political jurisdiction and
legislative power-and the latter is involved in the former-to the
United States, the laws of the country in support of an established
religion, or abridging the freedom of the [220 U.S. 345, 358] press,
or authorizing cruel and unusual punishments, and the like, would
at once cease to be of obligatory force without any declaration to
that effect; and the laws of the country on other subjects would
necessarily be superseded by existing laws of the new government
upon the same matters. But with respect to other laws affecting the
possession, use, and transfer of property, and designed to secure
good order and peace in the community, and promote its health
and prosperity, which are strictly of a municipal character, the rule
is general, that a change of government leaves them in force until,
by direct action of the new government, they are altered or
repealed.'
The above language was quoted with approval in Downes v.
Bidwell, 182 U.S. 244, 298 , 45 S. L. ed. 1088, 1110, 21 Sup. Ct.
Rep. 770.
That the United States might, by virtue of its situation under a
treaty ceding full title, have utterly extinguished every municipality

which it found in existence in the Philippine Islands, may be

conceded. That it did so, in view of the practice of nations to the
contrary, is not to be presumed, and can only be established by
cogent evidence.
That during military occupation the affairs of the city were in a
large part administered by officials put in place by military order
did not operate to dissolve the corporation, or relieve it from
liability upon obligations incurred before the occupation, nor those
created for municipal purposes by the administrators of its affairs
while its old officials were displaced. New Orleans v. New York Mail
S. S. Co. 20 Wall. 387, 394, 22 L. ed. 354, 358. During that
occupation and military administration the business of the city was
carried on as usual. Taxes were assessed and taxes collected and
expended for local purposes, and many of the officials carrying on
the government were those found in office when the city was
occupied. The continuity of the corporate city was not inconsistent
with military occupation or the constitution or institutions of the
occupying power. This [220 U.S. 345, 359] is made evident by the
occurrences at the time of capitulation. Thus, the articles of
capitulation concluded in these words: 'This city, its inhabitants, . . .
and its private property of all descriptions, are placed under the
special safeguard of the faith and honor of the American Army.' This
was quoted in President McKinley's instructions of April 7, 1900, to
the Philippine Commission, and touching this he said: 'I believe that
this pledge has been faithfully kept.' And the commission was
directed to labor for the full performance of this obligation. This
instruction was in line with and in fulfilment of the 8th article of the
treaty of Paris of December 10, 1898. Under the 3d article of that
treaty the archipelago known as the Philippine Islands was ceded to
the United States, the latter agreeing to pay to Spain the sum of
$20,000,000. Under the first paragraph of the 8th article, Spain
relinquished to the United States 'all the buildings, wharves,
barracks, forts, structures, public highways, and other immovable
property which, in conformity with law, belong to the public
domain, and as such belong to the Crown of Spain.' It is under this
clause, in connection with the clause agreeing to pay to Spain
$20,000,000 for the cession of the Philippine group, that the
contention that all of the public rights of the city of Manila were
acquired by the United States, which country was therefore
justified, as absolute owner, in granting the property rights so
acquired to what is called the 'absolutely new corporation' created
thereafter. But the qualifying words touching property rights
relinquished by Spain limit the relinquishment to 'property which, in
conformity with law, belonging to the public domain, and as such
belong to the Crown of Spain.' It did not affect property which did

not, in 'conformity with law, belong to the Crown of Spain.' That it

was not intended to apply to property which, 'in conformity with
law,' belonged to the city of Manila as a municipal cor- [220 U.S.
345, 360] poration, is clear. This is demonstrated by the second
paragraph of the same article, which reads: 'And it is hereby
declared that the relinquishment or cession, as the case may be, to
which the preceding paragraph refers, cannot in any respect impair
the property or rights which by law belong to the peaceful
possession of property of all kinds, of provinces, municipalities,
public or private establishments . . . having legal capacity to
acquire and possess property in the aforesaid territories renounced
or ceded, or of private individuals.' Thus, the property and property
rights of municipal corporations were protected and safeguarded
precisely as were the property and property rights of individuals.
That the cession did not operate as an extinction or dissolution of
corporations is herein recognized, for the stipulation against
impairment of their property rights has this plain significance.
The conclusion we reach, that the legal entity survived both the
military occupation and the cession which followed, finds support in
the cases which hold that the Pueblos of San Francisco and Los
Angeles, which existed as municipal organizations prior to the
cession of California by Mexico, continued to exist with their
community and property rights intact. Cohas v. Raisin, 3 Cal. 443;
Hart v. Burnett, 15 Cal. 530; Townsend v. Greeley, 5 Wall. 326, 18 L.
ed. 547; Merryman v. Bourne, 9 Wall. 592, 602, 19 L. ed. 683, 686;
Moore v. Steinbach, 127 U.S. 70 , 32 L. ed. 51, 8 Sup. Ct. Rep. 1067;
Los Angeles Farming & Mill. Co. v. Los Angeles, 217 U.S. 217 , 54 L.
ed. 736, 30 Sup. Ct. Rep. 452.
Were corporate identity and corporate liability extinguished as a
necessary legal result of the new charter granted in 1901 by the
Philippine Commission? The inhabitants of the old city are the
incorporators of the new. There is substantially identity of area.
There are some changes in the form of government and some
changes in corporate powers and methods of administration. the
new corporation is endowed with all of the property and [220 U.S.
345, 361] property rights of the old. It has the same power to sue
and be sued which the former corporation had. There is not the
slightest suggestion that the new corporation shall not succeed to
the contracts and obligations of the old corporation. Laying out of
view any question of the constitutional guaranty against
impairment of the obligation of contracts, there is, in the absence
of express legislative declaration of a contrary purpose, no reason
for supposing that the reincorporation of an old municipality is

intended to permit an escape from the obligations of the old, to

whose property and rights it has succeeded. The juristic identity of
the corporation has been in no wise affected, and, in law, the
present city is, in every legal sense, the successor of the old. As
such it is entitled to the property and property rights of the
predecessor corporation, and is, in law, subject to all of its
liabilities. Broughton v. Pensacola 93 U.S. 266 , 23 L. ed. 896; Mt.
Pleasant v. Beckwith, 100 U.S. 520 , 25 L. ed. 699; Mobile v.
Watson, 116 U.S. 289 , 29 L. ed. 620, 6 Sup. Ct. Rep. 398;
Shapleigh v. San Angelo, 167 U.S. 646, 655 , 42 S. L. ed. 310, 313,
17 Sup. Ct. Rep. 957; O'Connor v. Memphis, 6 Lea, 730; Colchester
v. Seaber, 3 Burr. 1866, 1870, in which case, when a municipality
became disabled to act and obtained a new charter, in an action
upon an obligation of the old corporation, there was judgment for
the creditor, Lord Mansfield saying:
'Many corporations, for want of legal magistrates, have lost their
activity, and obtained new charters. Maidstone, Radnor,
Carmarthen, and many more are in the same case with Colchester.
And yet it has never been disputed but that the new charters revive
and give activity to the old corporation; except, perhaps, in that
case in Levinz, where the corporation had a new name; and even
there the court made no doubt. Where the question has arisen
upon any remarkable metamorphosis, it has always been
determined 'that they remain the same as to debts and rights."
Morris v. State, 62 Tex. 728, 730. [220 U.S. 345, 362] In Shapleigh
v. San Angelo, supra, this court said in a similar case:
'The state's plenary power over its municipal corporations to
change their organization, to modify their method of internal
government, or to abolish them altogether, is not restricted by
contracts entered into by the municipality with its creditors or with
private parties. An absolute repeal of a municipal charter is therefor
effectual so far as it abolishes the old corporate organization; but
when the same or substantially the same inhabitants are erected
into a new corporation, whether with extended or restricted
territorial limits, such new corporation is treated as in law the
successor of the old one, entitled to its property rights, and subject
to its liabilities.'
The cases of Trigas and Vilas went off upon demurrers, and no
question of remedy arises here.
The appeal of Aguado is from a decree upon a final hearing denying
him all relief.

That all three of the plaintiffs in error are entitled to proceed to

judgment when they shall establish their several claims is obvious
from what we have said. But in the Aguado Case it is sought to
establish his claim as a charge against certain property and funds
held by the city as trustee, known as the Carriedo fund. In 1734
one Don Francisco Carriedo y Perodo bequeathed to the city a fund
for the establishment of waterworks, to be kept as a separate fund
and devoted to the erection and maintenance of the works. This
fund was loyally kept and greatly increased, and was enlarged by a
special tax upon meat, devoted to that purpose. The works were
finally completed in 1878, and have been since operated by the
city, the income and special tax going to maintenance. Certain
securities belonging to the fund are now held by the city, the
income being applied to the operation of the works. Aguado took a
contract to supply coal for the use of the [220 U.S. 345, 363]
Carriedo works, and made a deposit to guarantee the contract.
When the city was occupied by the American Army it was indebted
to him for coal so supplied, as well as for the deposit so made. That
the coal was bought for and used in the operation of the Carriedo
works is not denied. But there is no evidence that the credit was
given to the Carriedo fund so held in trust under the will of
Carriedo. The contract was made with the ayuntamiento of Manila,
just as all other contracts for city supplies or works were made. The
contract not having been made with special reference to the
liability of the fund held in trust by the city, but apparently upon
the general credit of the city, we are not disposed to reverse the
judgment of the court below, holding that the claim of Aguado did
not constitute a charge upon the Carriedo fund.
Aguado is, nevertheless, entitled to a judgment. The designation of
the city in the petition as trustee may be regarded as descriptive.
The debt having been incurred by the city, it must be regarded as a
city liability. Taylor v. Davis (Taylor v. Mayo), 110 U.S. 330, 336 , 28
S. L. ed. 163, 165, 4 Sup. Ct. Rep. 147.
Our conclusion is that the decree in the Aguado Case must be
reversed and the case remanded, with direction to render judgment
and such other relief as may seem in conformity with law. The
judgments in the Trigas and Vilas Cases will be reversed and the
cases remanded, with direction to overrule the respective
demurrers, and for such other action as may be consistent with law,
and consistent with this opinion.

G.R. No. L-1925, Mejia et al. and Venecia v. Balolong et al., 81 Phil.
486
September 16, 1948
G.R. No. L-1925
FLAVIANO MEJIA, TEOFILO P. GUADIZ, RUPERTO Z. TANDOC and
POLICRONIO DE VENECIA, petitioners,
vs.
PEDRO U. BALOLONG, RICARDO VILLAMIL, TORIBIO QUIMOSING and
CRISOLOGO ZARATE, respondents.
Ramon Diokno and Alejo Mabanag for petitioners.
Alipio F. Fernandez, Jacinto Callanta and Jose Fenoy for respondents.
FERIA, J.:
This is an action of quo warranto instituted by the petitioners,
Flaviano Mejia, Teofilo P. Guadiz, Ruperto Z. Tandoc and Policronio
de Venecia against the respondents, Pedro U. Balolong, Ricardo
Villamil, Toribio Quimosing and Crisologo Zarate on the ground that
the appointments of the latter by the President as councilors of the
City of Dagupan were null and void, and therefore they are
unlawfully holding their offices, and that the former are entitled to
said offices because they were elected as such in the general
election for provincial, municipal, and city officials on November,
1947.
The petitioners in this case presented their certificates of candidacy
for councilors of the City of Dagupan and were elected as such on
the general election for provincial and municipal officials held on
November 11, 1947, in conformity with the provision of the Election
Code. The four respondents have also presented their certificates of
candidacy for councilors of Dagupan and were defeated; but the
President of the Philippines on December 30, 1947, appointed the
respondents as councilors of the City of Dagupan, in lieu of the
petitioners elected as such in said general election.
Under sections 7 and 11 of Act No. 170, the Mayor of the City of
Dagupan shall be appointed by the President of the Philippines, and
the municipal or city councilors thereof shall be elected during
every general election for provincial, municipal officers in
accordance with the Election Code. Section 7 of the Revised
Election Code prescribes that on the second Tuesday of November,
1947, and on the same date every four years thereafter a regular
election shall be held to elect the officials who will occupy all

elective provincial, city and municipal offices throughout the

Philippines. And, according to section 88 of the same Act No. 170,
"the city government provided for in this charter shall be organized
on such a date as may be fixed by the President of the Philippines
and upon the qualification of the City Mayor and the appointment
or election of the members of the Municipal Board. Pending the
next general election for provincial and municipal officials, the
offices of the members of the Municipal Board shall be filled by
appointment of the President of the Philippines, with the consent of
the Commission on Appointments.
The validity of the appointment of the respondents as councilors of
the City of Dagupan by the President of the Philippines depends
upon whether the City of Dagupan was created and came into
existence on June 20, 1947, the date Act No. 170 became effective,
or on January 1, 1948, when the city government was organized by
Executive Order No. 96. If the first, it is obvious that the "next
general election" referred to in section 11 in connection with
section 88, of Act No. 170 above quoted, when the members of the
Municipal Council of the City of Dagupan were to be elected, was
that held on November 11, 1947, and the President had no power
to appoint the herein respondents. Because the offices of the
members of the Municipal Board of the City of Dagupan could be
filled by appointment of the President, with the consent of the
Commission on Appointments, only if the date for the organization
of the city government were fixed pending or before the next
general election for provincial and municipal officials according to
the above quoted provisions of section 88 of Act No. 170. After said
general election they shall be filled by the persons elected as such.
Section 2 of Act No. 170, which became effective upon its approval
on June 20, 1947, provides that:
Sec. 2 Territory of Dagupan City. The City of Dagupan, which is
hereby created, shall comprise the present territorial jurisdiction of
the municipality of Dagupan, in the Province of Pangasinan.
The President of the Philippines may, by executive order, increase
the territory of the City of Dagupan by adding thereto such
contiguous barrios or municipalities as may be necessary and
desirable in the public interest. (Emphasis ours.)
It is evident that the City of Dagupan created by said Act came into
existence as a legal entity or a public corporation upon the
approval of Act No. 170, on June 20, 1947; because a statute which,
like Act No. 170, is to take effect upon its approval, is operative

from the exact instance upon its approval or becoming a law. The
fact that by Executive Order No. 96 promulgated in October 1947,
the President of the Philippines added the municipality of Calasiao
"to the City of Dagupan" as expressly stated in said Executive
Order, is a recognition that the city was already created and in
existence then, because the President is only authorized to
increase the territory of the City and not of the Municipality of
Dagupan. But as a city is a public corporation or a judicial entity,
and as such can not operate or transact business by itself but
through its agents or officers, it was necessary that the government
of the city be organized, that is, that the officials thereof be
appointed or elected in order that it may act or transact business
as such public corporation or city.
The date of the organization of the city government of Dagupan
which the President is authorized to fix by the provisions of section
88, is not and can not be the date of the creation of the city, not
only because, as we have stated, the City of Dagupan came into
existence on the same date June 20 in which Act No. 170 creating
the said city became effective, but because what was to be
organized, according to said section 88, is the city government, and
not the city as an entity, and the word "organize" means "to
prepare [the city] for transaction of business, as assembly, by
choosing officers, committees, etc." (Funk and Wagnall College
Standard Dictionary.) It is obvious that to create a public
corporation or city is one thing and to organize the government
thereof is another. A public corporation is created and comes into
existence from the moment the law or charter that creates it
becomes effective, and in case of a private corporation it comes
into existence as a juridical entity from the time the articles of
incorporation thereof is registered in the proper bureau or office in
accordance with law. But a public as well as a private corporation
cannot act or transact business before the governing body thereof
is organized or the officers who shall act for or in their
representation have been chosen either by appointment or
election. The organization of the government of a city presupposes
necessarily the previous existence of the city at the time its
government is organized, because no officials of the city may be
appointed or elected before the city has come into existence.
Undoubtedly, the contention of the respondents that the next
general election referred to in sections 11 and 88, in which the
members of the Municipal Board of the City of Dagupan shall be
elected, was not the one held on November 11, 1947, because the
City of Dagupan had not then been organized, but the next general
election in 1951, is predicated upon the erroneous assumption that

January 1 of 1948 fixed by Executive Order No. 115 as the date for
the organization of the city government of Dagupan was the date of
the creation of said city or when it came into existence, and is
apparently supported by the erroneous and confusing wording of
the said Executive Order No. 115 which uses the phrase
"organization of the City of Dagupan, instead of "organization of the
city government of Dagupan" as expressly provided in said section
88 of Act No. 170.
The territory of the City of Dagupan is fixed by section 2 of Act No.
170, as comprising the territory of the old municipality of Dagupan.
Although the President is authorized by the same section to
increase the territory of the city by adding to it such contiguous
territory as he may designate, the exercise of such authority by the
President would not and could not affect the existence of the city,
nor the organization of its government. If a new territory is annexed
to the City of Dagupan in time before the election the inhabitants
thereof may vote for the councilors of the city. Otherwise or if the
annexation takes place after the election, the inhabitants of the
territory so annexed shall come under the jurisdiction of the
government of said city, although they had not voted for the
members of the council thereof. There is nothing in the record to
show that the inhabitants of the Municipality of Calasiao annexed in
October 1947 to the City of Dagupan had voted for the councilors
of the city during the general election in November 1947; but
whether they had voted or not is immaterial for the reasons above
stated, and because said municipality was segregated from the City
of Dagupan by Executive Order No. 115 on December 1947, and
the government of said city was organized on January 1, 1948.
Since the election of the members of the Municipal Board of the
City of Dagupan created on June 20, 1947, was to take and took
place at the general election held on November 11, 1947, and the
President of the Philippines was empowered by section 88 to
appoint those members only if the organization of the city
government had taken place pending or before the said election, it
necessarily follows that the appointments of the respondents
effected on December 30, 1947, are null and void.
In view of all the foregoing, the four respondents shall be ousted
and altogether excluded from the position of councilor of the City of
Dagupan which they are now unlawfully holding, and that the four
petitioners elected by popular vote during the general election on
November 11, 1947, be placed in possession of those offices. It is
so ordered with costs against the respondents.

Moran, C.J., Perfecto, Briones, Padilla, and Tuason, JJ., concur.

Separate Opinions
PARAS, J., dissenting:
Section 2 of Republic Act No. 170 provides that "the City of
Dagupan, which is hereby created, shall comprise the present
territorial jurisdiction of the municipality of Dagupan, in the
Province of Pangasinan," and that "the President of the Philippines
may, by executive order, increase the territory of the City of
Dagupan by adding thereto such contiguous barrios or
municipalities as may be necessary and desirable in the public
interest." Upon the other hand, section 88 of the Act provides as
follows: "The City government provided for in this Chapter shall be
organized on such a date as may be fixed by the President of the
Philippines and upon the qualification of the City Mayor and the
appointment or election of the members of the Municipal Board.
Pending the next general election for provincial and municipal
officials, the offices of the members of the municipal board shall be
filled by appointment of the President of the Philippines, with the
consent of the Commission on Appointments.
It is noteworthy that section 88 is entitled "Change of government"
and falls under Article XV in turn entitled "Transitory provisions." It
may, therefore, be considered as the enabling provisions of the
Charter of the City of Dagupan. In other words, the municipality of
Dagupan was to assume its legal transformation into a city only on
compliance with the conditions set forth in section 88 of Republic
Act No. 170. Which conditions were complied with when the
President of the Philippines in his Executive Order No. 96, later
superseded by Executive Order No. 115, fixed "the first of January,
nineteen hundred and forty-eight, as the date for the organization
of the City of Dagupan and qualification of the City Mayor and
members of the Municipal Board appointed in accordance with
section 88 of Republic Act No. 170." Section 2, which merely
delimits the territorial jurisdiction of the City of Dagupan, should be
construed in relation to section 88. If, as contended by the
petitioners, the City of Dagupan came into existence on June 20,
1947, when Act No. 170 was approved, section 88 should logically
have been eliminated or should have provided, to suit petitioners'
theory, that "the City government shall be organized upon the
qualification of the City Mayor and the election of the members of
the Municipal Board at the next general election." The lawmakers
well knew that a general election was to be held on the second
Tuesday of November, 1947. And yet, in section 88, the President of

the Philippines is empowered to fill by appointment the offices of

the members of the Municipal Board pending the next general
election, and this power was undoubtedly inserted to enable the
City of Dagupan to have even an appointive governing body
between the date of the organization of the City government as
fixed by the President and the general election to be held after said
date. In our opinion, therefore, the government of the City of
Dagupan must be deemed to have been formally organized
which also completed the juridical existence of the City of Dagupan
as a political division only on January 1, 1948, the date fixed in
Executive Order No. 96 which was subsequently superseded by
Executive Order No. 115.

into two provinces completely independent from each other, which

shall be denominated Oriental Leyte and Occidental Leyte,
respectively, and the Governor-General is hereby authorized to
designate by executive order the date on which the division herein
provided for is to take effect, which shall in no case be prior to the
year nineteen hundred and twenty-four." For all we know, the
Governor-General never issued such executive order. Will any one
now dare allege that two provinces in Leyte had in fact been
created or organized by the mere passage of Act No. 3117? In the
case at bar, suppose the President did not issue Executive Orders
Nos. 96 and 115, may it be pretended that the City of Dagupan has
ever become a complete political entity?

Even accepting petitioners' contention that the creation of the City

of Dagupan on June 20, 1947 (when Act No. 170 was approved) is
one thing, and the organization of its government on January 1,
1948, by proper executive order is another thing, the fact remains
that section 88 expressly empowers the President to fix the date of
the organization of said city government and to appoint the
members of the municipal board pending the next general election,
which can only mean the election following the date fixed by the
President. In view of the specific provisions of section 88 of Act No.
170, section 10 of the Revised Election Code which lays down the
general rule as to the filling of elective offices in a new political
division, invoked by the petitioners, has no application.

Comparison is made to a private corporation which, it is argued,

becomes a juridical entity from the time its articles of incorporation
is registered. It should, however, be remembered that the
Corporation Law requires the names of the directors who are to
serve until their successors are elected and qualified as provided in
the by-laws, to be inserted in the articles of incorporation, with the
result that even in the case of private corporations, the existence of
a governing body arises simultaneously with the act of registration.

As the petitioners were elected in the general elections held on

November 11, 1947, their right to hold office pertained to the old
municipality of Dagupan or its government, and therefore did not
subsist upon the organization of the government of the City of
Dagupan on January 1, 1948. As a matter of fact, although in
Executive Order No. 96 the President decreed that "upon the
organization of the City of Dagupan, the municipality of Calasiao
shall be joined to, and made an integral part of, said City," the
voters in Calasiao did not vote, in the elections held on November
11, 1947, as electors of the City of Dagupan; the petitioners neither
campaigned nor obtained votes in Calasiao, and the electors of
Dagupan voted for a mayor and a vice-mayor, all of which
conclusively show that for all legal purposes Dagupan, which
(under the theory of the petitioners) would have included Calasiao
under said Executive Order No. 96, was not yet considered as
having become a City on November 11, 1947.
The enabling provisions of section 88 find practical analogy in Act
No. 3117 passed by the Philippine Legislature in 1923 which
provided, in section 1, that "the Province of Leyte is hereby divided

Wherefore, it is my view that the respondents, who were appointed

on December 30, 1947, in accordance with section 88 of Act No.
170, have a legal right to sit and act as members of the Municipal
Board of the City of Dagupan until the next general elections.
Whether or not this result bespeaks good politics is a question
addressed to the political department, and not to the courts.
PABLO, M.:
Concurro con esta disidencia.
RESOLUTIONJanuary 25, 1949
FERIA, J.:
The motion for reconsideration and the dissenting opinions are
predicated on an erroneous premise or confusion of the creation or
existence of a municipal corporation, be it called city or
municipality, with the functioning thereof through the officers
provided or designated by law to represent or act for said
corporation.
If the coming into existence of a juridical entity, such as a city or
municipality, and the organization of the government thereof and
appointment or election of its officers are one and the same thing,
it would not have been necessary for section 2168 of the

Administrative Code to provide as a legal fiction that "Where

provision is made for the creation or organization of a new
municipality, it shall come into existence as a separate corporate
body upon the qualification of the president, vice-president, and a
majority of the councilors, unless some other time be fixed therefor
by law." And the law could not fix some other time for its coming
into existence, different from the organization of its government or
appointment and qualification of its officers.
That Congress has expressly fixed the date for the creation or
coming into existence of the City of Dagupan in the Republic Act
No. 170, that is the date said Act became effective or was approved
on June 20, 1947, is evident. Because section 1 of said Act provides
that "The City of Dagupan which is hereby created shall comprise
the present territorial jurisdiction of Dagupan, Pangasinan," and
according to section 90 of the same Act, shall take effect upon its
approval on June 20 of 1947. (Emphasis ours.) And because the
President is not authorized to create the City of Dagupan, but only
to fix, by Proclamation, the organization of the government of the
City, and appoint the officers thereof, the Mayor and the members
of the city council, if the government of the City is organized before
the next general elections for provincial and municipal officials on
November 1947, in which the councilors of the City were to be
elected, or appoint only the Mayor if the organization is made after
the said elections. The government of the city could not be
organized and its officers appointed or elected before the city had
been created or come into existence, for it would be absurd to elect
or appoint the officers of a public or private corporation or any
other entity which does not yet exist.
A juridical institution or entity can not act as such, but it may exist,
before the officers provided by law to represent and act in its behalf
or representation had been appointed or elected. A court of justice
or a municipal corporation law creating or establishing it becomes
in force or effective, but it can not act as such court or municipal
corporation before the judge to preside the former, or the municipal
officers have been elected or appointed and have qualified. So the
City of Dagupan comprising the territory of the Municipality of
Dagupan came into existence from the date Act No. 170, which
created it was approved and became effective, although it could
not act or function as such city before the government thereof had
been organized or the city officers had been elected or appointed
and had qualified.

After Act No. 170 which created the City of Dagupan took effect,
and before the organization of the government of the City of
Dagupan, the political subdivision which comprises the territory of
the Municipality of Dagupan has continued to act as a municipality,
because the government of the city had not yet been organized
and the officers thereof appointed or elected. The conversion of
that municipality into a city by the above mentioned Act No. 170
did not make ipso facto the acts of the elected officers of the said
municipality acts of the City of Dagupan, because the latter can
only act as a city through the city officers designated by law after
they have been appointed or elected and have qualified. In the
meantime or during the period of transition the Municipality of
Dagupan had to act or function temporarily as such; otherwise
there would be chaos or no government at all within the boundaries
of the territory. The status of the Municipality of Dagupan may be
likened to that of a public officer who can not abandon his office
although his successor has already been appointed, and has to
continue in office, whatever the length of time of the interregnum,
until his successor qualifies or takes possession of the office.
We can not take into consideration and discuss the contention in
the motion for reconsideration that during the last general election
for municipal officers, there were also candidates for the position of
Mayor, Vice-Mayor or councilors of the Municipality of Dagupan,
because there were also no allegation to that effect in the verified
pleading of the parties, petition of the petitioners and answer of the
respondents, evidencing such fact. It was mentioned for the first
time in the memorandum filed by the respondents. This court can
not predicate its conclusion on facts not alleged and admitted in
the pleadings or proven during the hearing of the case. But even
assuming it to be true, the erroneous filing of such certificates of
candidacy can not change the law or vitiate the election of the
petitioners as councilors of the City of Dagupan. The only fact that
appears in the petition and can be considered as true because not
denied but admitted in the answer, is that the petitioners have
presented their certificates of candidacy as candidates for the
positions of councilors of the City of Dagupan.
The case of the City of Dansalan is a very different from the case at
bar. The City of Dagupan was created directly by Act No. 170, which
provides in its section 2 that the city is thereby created, and
therefore became a city from the date the said Act took effect or
approved on June 20, 1947. While Act No. 592 does not contain,
expressly or impliedly, similar provision as it only provides for the
charter of the City of Dansalan, which would come into existence
only upon the organization of the government of the city of the

appointment of the City Mayor and the majority of the members of

the city council by the President, because the law creating it does
not provide otherwise, that is, it does not fix the time of it its
creation different from that of the organization of its government or
appointment and election of its officers, as in the case at bar.
Section 2168 of the Administrative Code, applicable by analogy,
provides that "Where provision is made for the creation or
organization of a new municipality, it shall come into existence as a
separate corporate body upon the qualification of the president,
vice-president, and a majority of the councilors, unless some other
time be fixed therefore by law." (Emphasis ours.)
Having come to the conclusion that the City of Dagupan was
created and came into existence on June 20, 1947, it follows that
the phrase "pending the next general elections for provincial and
municipal officials" in section 88 of Act No. 170, must be construed
to refer to the general election for provincial and municipal officials
in November 1947, which was the next one after the creation or
coming into existence of the City of Dagupan on June 20, 1947, and
not to any general election for provincial or municipal officials after
the organization of the government of the City of Dagupan by
Presidential Proclamation, for the following reasons:
First, because section 11 of said Act No. 170 expressly provides that
the "municipal councilors of the City of Dagupan shall be elected
during every general election for provincial and municipal officials
in accordance with the Election Code," and according to section 7
of the Election Code, "When a new political division is created, the
inhabitants of which are entitled to participate in the elections, the
elective officers thereof shall, unless otherwise provided, be chosen
at the next general election" (Emphasis ours). And there is nothing
in Act No. 170 which provides otherwise. On the contrary said Act
follows the general provision of section 7 of the Election Code, with
the modification that the President is authorized only to appoint the
elective officers pending the election, and not to order a special
election of such officers, taking into consideration the short time
intervening between the creation of the City on June 20, and the
election of its officers in November, 1947, and their qualification on
January 1, 1948.
Secondly, section 88 of Act No. 170, provides that the city
government of Dagupan "shall be organized on such a date as may
be fixed by the President of the Philippines, and upon qualification
of the city mayor and the appointment or election of the members
of the municipal board." To hold that the next general elections to
which the law refers are those to be held after the date of the

organization of the City Government, set by the President, would

make the alternative provision "or election of the members of the
municipal board," nugatory or superfluous, because on the date set
for the organization of the Government of the City of Dagupan,
there would never be members of the Municipal Board elected.
And, finally, because to construe that the next general election for
provincial or municipal officers, refers to the general election next
or after the organization of the government of the City by
Presidential Proclamation, would be to grant the latter discretion to
defeat the purpose of the law or the creation of the City of Dagupan
by Congress, because as Act No. 170 does not fix the time within
which the President should proclaim the organization of the
government of the City, the President may never fix the date of
such organization, which is untenable.
Motion for reconsideration is denied.
I dissent.
OZAETA, J.:
I vote to grant respondents' motion for reconsideration so that the
court may re-examine its decision herein and rectify what I consider
an erroneous construction of the statute involved.
The case hinges on whether the city of Dagupan came into
existence as a public corporation or political entity upon the
approval of its charter (Republic Act No. 170) on June 20, 1947, or
upon the organization of the city government and the qualification
of its officers on January 1, 1948, as fixed by Executive Order No.
96 (later superseded by Executive Order No. 115) by virtue of
section 88 of the charter.
By a vote of six to two, the court held in effect that the former
municipality of Dagupan, Pangasinan, ipso facto became a city
that is to say, a political entity separate from and independent of
the province of Pangasinan by the mere approval of Republic Act
No. 170, on the ground that said Act took effect upon its approval
on June 20, 1947. I think that conclusion is erroneous and fraught
with absurd consequences, as I shall presently endeavor to
demonstrate:
1. A city as a municipal corporation cannot be said to exist until and
unless it is recognized and enabled to exercise the powers and
prerogatives conferred upon it by its charter. And since those

powers and prerogatives can only be exercised by its officers and

agents, it is patent that the corporation cannot be said to have
come to life until said officers and agents have been appointed or
elected and have duly qualified. It is futile, as the majority opinion
attempts, to distinguish between the "organization of the city of
Dagupan and the "and the "organization of the city government of
Dagupan," as if a city could be organized without organizing its
government. The city of Dagupan was a mere geographical
expression and did not become a political entity until its
government was organized and inaugurated by appointing its
officers and installing them in office. The majority opinion itself
says that "as a city is a public corporation or a juridical entity, and
as such can not operate or transact business by itself but through
its agents or officers, it was necessary that the government of the
city be organized, that is, that the officials thereof be appointed or
elected in order that it may act or transact business as such public
corporation or city." Yet the opinion adds that "the date of the
organization of the city government of Dagupan which the
President is authorized to fix by the provisions of section 88 is not
and can not be the date of the creation of the city, not only
because . . . the city of Dagupan came into existence on the same
date, June 20, on which Act No 170 creating said city became
effective, but because what was to organized, according to said
section 88, is the city government, and not the city as the
entity . . ." The error lies in the false assumption that there can be a
city without a city government; that the mere enactment of a city
charter ipso facto converts the territory comprised within the city
limits into a living political entity. We say such assumption is false
because a city cannot come into existence as a political entity
independent from the province of which it formerly formed part
unless these two indispensable steps are taken: first, it must be
created by law and, second, its government must be organized
according to the law. These two steps have to be taken
successively. They cannot be taken simultaneously because in
order to appoint or elect officers the law authorizing such
appointment or election must first be approved. When that law
says that it shall take effect upon its approval, it simply means that
once it is approved the second step may be taken and the city
government thus organized shall function in accordance with the
provisions of that law.
To say that a city can exist as a political entity without a city
government is just as absurd as to say that an automobile can
function without an engine. The approval of the charter of the city
of Dagupan by the Congress with the transitory provision in section
88 providing for the organization of the city government by the

President of the Philippines on such date he may fix, may properly

be likened to the manufacture of the body of an automobile; and
the selection and inauguration of the officers of the city, to the
selection and installation of the engine of the automobile. Just as
the manufactured vehicle did not become an automobile until its
engine was properly installed, the city of Dagupan did not become
a political entity until its government was organized and its officers
installed in office.
2. The Opinion of the majority that the municipality of Dagupan was
ipso facto converted into the city of Dagupan on June 20, 1947, by
the mere approval and the taking effect on that date of Republic
Act. No. 170, necessarily implies that the municipality of Dagupan
became a city, or a political entity independent of the province of
Pangasinan, on said date. Such a result, however, is utterly
unacceptable, not to say absurd, for no one will contend that the
municipal mayor and municipal councilors of the municipality of
Dagupan who were holding office as such on and before June 20,
1947, ipso facto became city mayor and city councilors of the city
of Dagupan on said date and hence free from any supervision or
intervention whatsoever by the provincial governor and provincial
board of Pangasinan by the mere approval of Republic Act No.
170. In reality, as everybody knows, Dagupan continued to be a
municipality and a part of the province of Pangasinan, and its
officers were subject to the supervision of the provincial governor
and the provincial board, until the government of the city of
Dagupan was inaugurated on January 1, 1948.
Under section 2188 of the Revised Administrative Code, the
provincial governor has supervisory authority over the municipal
officers. Section 2232 of the same Code requires the municipal
secretary to forward to the provincial board a correct copy of each
resolution and ordinance passed at a session of the municipal
council within thirty six hours after such session; and section 2233
authorizes the provincial board to declare invalid any such
resolution or ordinance, and "the effect of such action shall be the
annul the resolution or ordinance in question." Suppose that
between June 20 and December 31, 1947, the municipal council of
Dagupan passed an ordinance which, under section 2233, the
provincial board declared invalid. May the city of Dagupan now
insist on enforcing said ordinance with the decision of this court in
this case the provincial board of Pangasinan no longer had any
jurisdiction to annul said ordinance because Dagupan had become
a city and independent of the province when said ordinance was
approved by the municipal council? Moreover, following the
decision of this court, Dagupan may claim from the province of

Pangasinan all the land taxes collected in Dagupan corresponding

to the period from June 20 to December 31, 1947, on the ground
that during said period it was independent from the province. The
absurdity of such claims makes patent the absurdity of such claims
makes patent the absurdity of the decision on which they are
based.
3. The case of the city of Dansalan cited by the respondent is also
in point. Commonwealth Act No. 592, which was approved and took
effect on August 19, 1940, created the city of Dansalan out of the
territory comprised within the boundaries and limits of the
municipality of Dansalan (sections 1, 2, and 3). Section 4 provided
that "the President of the Philippines shall appoint, with the consent
of the Commission on Appointments of the National Assembly, the
mayor, the city secretary, the members of the city council, the city
health officer, the city engineer, the chief of police, the city
treasurer, the city assessor, and the city attorney, and he may
remove at pleasure any of them"; and section 33, entitled "Change
of government," provided that "the City Government provided for in
this Charter shall be organized immediately after the appointment
and qualifications of the city mayor and a majority of the members
of the city council." Nevertheless, the President has not appointed
said officers, and the city government of Dansalan has never been
organized, with the result that Dansalan has up to this date
continued to be a municipality and a part of the province of Lanao.
Following the decision of this court in this case the municipality of
Dansalan may now consider itself a city and proclaim its
independence from the province of Lanao.
G.R. No. 91649

May 14, 1991

ATTORNEYS HUMBERTO BASCO, EDILBERTO BALCE, SOCRATES

MARANAN AND LORENZO SANCHEZ, petitioners,
vs.
PHILIPPINE AMUSEMENTS AND GAMING CORPORATION (PAGCOR),
respondent.
H.B. Basco & Associates for petitioners.
Valmonte Law Offices collaborating counsel for petitioners.
Aguirre, Laborte and Capule for respondent PAGCOR.
A TV ad proudly announces:
"The new PAGCOR responding through responsible gaming."

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

A. It constitutes a waiver of a right prejudicial to a third person with

a right recognized by law. It waived the Manila City government's
right to impose taxes and license fees, which is recognized by law;
B. For the same reason stated in the immediately preceding
paragraph, the law has intruded into the local government's right to
impose local taxes and license fees. This, in contravention of the
constitutionally enshrined principle of local autonomy;
C. It violates the equal protection clause of the constitution in that
it legalizes PAGCOR conducted gambling, while most other forms
of gambling are outlawed, together with prostitution, drug
trafficking and other vices;
D. It violates the avowed trend of the Cory government away from
monopolistic and crony economy, and toward free enterprise and
privatization. (p. 2, Amended Petition; p. 7, Rollo)
In their Second Amended Petition, petitioners also claim that PD
1869 is contrary to the declared national policy of the "new
restored democracy" and the people's will as expressed in the 1987
Constitution. The decree is said to have a "gambling objective" and
therefore is contrary to Sections 11, 12 and 13 of Article II, Sec. 1 of
Article VIII and Section 3 (2) of Article XIV, of the present
Constitution (p. 3, Second Amended Petition; p. 21, Rollo).
The procedural issue is whether petitioners, as taxpayers and
practicing lawyers (petitioner Basco being also the Chairman of the
Committee on Laws of the City Council of Manila), can question and
seek the annulment of PD 1869 on the alleged grounds mentioned
above.
The Philippine Amusements and Gaming Corporation (PAGCOR) was
created by virtue of P.D. 1067-A dated January 1, 1977 and was
granted a franchise under P.D. 1067-B also dated January 1, 1977
"to establish, operate and maintain gambling casinos on land or
water within the territorial jurisdiction of the Philippines." Its
operation was originally conducted in the well known floating
casino "Philippine Tourist." The operation was considered a success
for it proved to be a potential source of revenue to fund

infrastructure and socio-economic projects, thus, P.D. 1399 was

passed on June 2, 1978 for PAGCOR to fully attain this objective.
Subsequently, on July 11, 1983, PAGCOR was created under P.D.
1869 to enable the Government to regulate and centralize all
games of chance authorized by existing franchise or permitted by
law, under the following declared policy
Sec. 1. Declaration of Policy. It is hereby declared to be the policy
of the State to centralize and integrate all games of chance not
heretofore authorized by existing franchises or permitted by law in
order to attain the following objectives:
(a) To centralize and integrate the right and authority to operate
and conduct games of chance into one corporate entity to be
controlled, administered and supervised by the Government.
(b) To establish and operate clubs and casinos, for amusement and
recreation, including sports gaming pools, (basketball, football,
lotteries, etc.) and such other forms of amusement and recreation
including games of chance, which may be allowed by law within the
territorial jurisdiction of the Philippines and which will: (1) generate
sources of additional revenue to fund infrastructure and socio-civic
projects, such as flood control programs, beautification, sewerage
and sewage projects, Tulungan ng Bayan Centers, Nutritional
Programs, Population Control and such other essential public
services; (2) create recreation and integrated facilities which will
expand and improve the country's existing tourist attractions; and
(3) minimize, if not totally eradicate, all the evils, malpractices and
corruptions that are normally prevalent on the conduct and
operation of gambling clubs and casinos without direct government
involvement. (Section 1, P.D. 1869)
To attain these objectives PAGCOR is given territorial jurisdiction all
over the Philippines. Under its Charter's repealing clause, all laws,
decrees, executive orders, rules and regulations, inconsistent
therewith, are accordingly repealed, amended or modified.
It is reported that PAGCOR is the third largest source of government
revenue, next to the Bureau of Internal Revenue and the Bureau of
Customs. In 1989 alone, PAGCOR earned P3.43 Billion, and directly
remitted to the National Government a total of P2.5 Billion in form
of franchise tax, government's income share, the President's Social
Fund and Host Cities' share. In addition, PAGCOR sponsored other
socio-cultural and charitable projects on its own or in cooperation
with various governmental agencies, and other private associations

and organizations. In its 3 1/2 years of operation under the present

administration, PAGCOR remitted to the government a total of P6.2
Billion. As of December 31, 1989, PAGCOR was employing 4,494
employees in its nine (9) casinos nationwide, directly supporting
the livelihood of Four Thousand Four Hundred Ninety-Four (4,494)
families.
But the petitioners, are questioning the validity of P.D. No. 1869.
They allege that the same is "null and void" for being "contrary to
morals, public policy and public order," monopolistic and tends
toward "crony economy", and is violative of the equal protection
clause and local autonomy as well as for running counter to the
state policies enunciated in Sections 11 (Personal Dignity and
Human Rights), 12 (Family) and 13 (Role of Youth) of Article II,
Section 1 (Social Justice) of Article XIII and Section 2 (Educational
Values) of Article XIV of the 1987 Constitution.
This challenge to P.D. No. 1869 deserves a searching and thorough
scrutiny and the most deliberate consideration by the Court,
involving as it does the exercise of what has been described as "the
highest and most delicate function which belongs to the judicial
department of the government." (State v. Manuel, 20 N.C. 144;
Lozano v. Martinez, 146 SCRA 323).
As We enter upon the task of passing on the validity of an act of a
co-equal and coordinate branch of the government We need not be
reminded of the time-honored principle, deeply ingrained in our
jurisprudence, that a statute is presumed to be valid. Every
presumption must be indulged in favor of its constitutionality. This
is not to say that We approach Our task with diffidence or timidity.
Where it is clear that the legislature or the executive for that
matter, has over-stepped the limits of its authority under the
constitution, We should not hesitate to wield the axe and let it fall
heavily, as fall it must, on the offending statute (Lozano v. Martinez,
supra).
In Victoriano v. Elizalde Rope Workers' Union, et al, 59 SCRA 54, the
Court thru Mr. Justice Zaldivar underscored the
. . . thoroughly established principle which must be followed in all
cases where questions of constitutionality as obtain in the instant
cases are involved. All presumptions are indulged in favor of
constitutionality; one who attacks a statute alleging
unconstitutionality must prove its invalidity beyond a reasonable
doubt; that a law may work hardship does not render it
unconstitutional; that if any reasonable basis may be conceived

which supports the statute, it will be upheld and the challenger

must negate all possible basis; that the courts are not concerned
with the wisdom, justice, policy or expediency of a statute and that
a liberal interpretation of the constitution in favor of the
constitutionality of legislation should be adopted. (Danner v. Hass,
194 N.W. 2nd 534, 539; Spurbeck v. Statton, 106 N.W. 2nd 660,
663; 59 SCRA 66; see also e.g. Salas v. Jarencio, 46 SCRA 734, 739
[1970]; Peralta v. Commission on Elections, 82 SCRA 30, 55 [1978];
and Heirs of Ordona v. Reyes, 125 SCRA 220, 241-242 [1983] cited
in Citizens Alliance for Consumer Protection v. Energy Regulatory
Board, 162 SCRA 521, 540)
Of course, there is first, the procedural issue. The respondents are
questioning the legal personality of petitioners to file the instant
petition.
Considering however the importance to the public of the case at
bar, and in keeping with the Court's duty, under the 1987
Constitution, to determine whether or not the other branches of
government have kept themselves within the limits of the
Constitution and the laws and that they have not abused the
discretion given to them, the Court has brushed aside technicalities
of procedure and has taken cognizance of this petition. (Kapatiran
ng mga Naglilingkod sa Pamahalaan ng Pilipinas Inc. v. Tan, 163
SCRA 371)
With particular regard to the requirement of proper party as applied
in the cases before us, We hold that the same is satisfied by the
petitioners and intervenors because each of them has sustained or
is in danger of sustaining an immediate injury as a result of the acts
or measures complained of. And even if, strictly speaking they are
not covered by the definition, it is still within the wide discretion of
the Court to waive the requirement and so remove the impediment
to its addressing and resolving the serious constitutional questions
raised.
In the first Emergency Powers Cases, ordinary citizens and
taxpayers were allowed to question the constitutionality of several
executive orders issued by President Quirino although they were
involving only an indirect and general interest shared in common
with the public. The Court dismissed the objection that they were
not proper parties and ruled that "the transcendental importance to
the public of these cases demands that they be settled promptly
and definitely, brushing aside, if we must technicalities of
procedure." We have since then applied the exception in many

other cases. (Association of Small Landowners in the Philippines,

Inc. v. Sec. of Agrarian Reform, 175 SCRA 343).
Having disposed of the procedural issue, We will now discuss the
substantive issues raised.
Gambling in all its forms, unless allowed by law, is generally
prohibited. But the prohibition of gambling does not mean that the
Government cannot regulate it in the exercise of its police power.
The concept of police power is well-established in this jurisdiction. It
has been defined as the "state authority to enact legislation that
may interfere with personal liberty or property in order to promote
the general welfare." (Edu v. Ericta, 35 SCRA 481, 487) As defined,
it consists of (1) an imposition or restraint upon liberty or property,
(2) in order to foster the common good. It is not capable of an exact
definition but has been, purposely, veiled in general terms to
underscore its all-comprehensive embrace. (Philippine Association
of Service Exporters, Inc. v. Drilon, 163 SCRA 386).
Its scope, ever-expanding to meet the exigencies of the times, even
to anticipate the future where it could be done, provides enough
room for an efficient and flexible response to conditions and
circumstances thus assuming the greatest benefits. (Edu v. Ericta,
supra)
It finds no specific Constitutional grant for the plain reason that it
does not owe its origin to the charter. Along with the taxing power
and eminent domain, it is inborn in the very fact of statehood and
sovereignty. It is a fundamental attribute of government that has
enabled it to perform the most vital functions of governance.
Marshall, to whom the expression has been credited, refers to it
succinctly as the plenary power of the state "to govern its citizens".
(Tribe, American Constitutional Law, 323, 1978). The police power
of the State is a power co-extensive with self-protection and is most
aptly termed the "law of overwhelming necessity." (Rubi v.
Provincial Board of Mindoro, 39 Phil. 660, 708) It is "the most
essential, insistent, and illimitable of powers." (Smith Bell & Co. v.
National, 40 Phil. 136) It is a dynamic force that enables the state
to meet the agencies of the winds of change.
What was the reason behind the enactment of P.D. 1869?
P.D. 1869 was enacted pursuant to the policy of the government to
"regulate and centralize thru an appropriate institution all games of
chance authorized by existing franchise or permitted by law" (1st

whereas clause, PD 1869). As was subsequently proved, regulating

and centralizing gambling operations in one corporate entity the
PAGCOR, was beneficial not just to the Government but to society
in general. It is a reliable source of much needed revenue for the
cash strapped Government. It provided funds for social impact
projects and subjected gambling to "close scrutiny, regulation,
supervision and control of the Government" (4th Whereas Clause,
PD 1869). With the creation of PAGCOR and the direct intervention
of the Government, the evil practices and corruptions that go with
gambling will be minimized if not totally eradicated. Public welfare,
then, lies at the bottom of the enactment of PD 1896.
Petitioners contend that P.D. 1869 constitutes a waiver of the right
of the City of Manila to impose taxes and legal fees; that the
exemption clause in P.D. 1869 is violative of the principle of local
autonomy. They must be referring to Section 13 par. (2) of P.D.
1869 which exempts PAGCOR, as the franchise holder from paying
any "tax of any kind or form, income or otherwise, as well as fees,
charges or levies of whatever nature, whether National or Local."
(2) Income and other taxes. a) Franchise Holder: No tax of any
kind or form, income or otherwise as well as fees, charges or levies
of whatever nature, whether National or Local, shall be assessed
and collected under this franchise from the Corporation; nor shall
any form or tax or charge attach in any way to the earnings of the
Corporation, except a franchise tax of five (5%) percent of the gross
revenues or earnings derived by the Corporation from its
operations under this franchise. Such tax shall be due and payable
quarterly to the National Government and shall be in lieu of all
kinds of taxes, levies, fees or assessments of any kind, nature or
description, levied, established or collected by any municipal,
provincial or national government authority (Section 13 [2]).
Their contention stated hereinabove is without merit for the
following reasons:
(a) The City of Manila, being a mere Municipal corporation has no
inherent right to impose taxes (Icard v. City of Baguio, 83 Phil. 870;
City of Iloilo v. Villanueva, 105 Phil. 337; Santos v. Municipality of
Caloocan, 7 SCRA 643). Thus, "the Charter or statute must plainly
show an intent to confer that power or the municipality cannot
assume it" (Medina v. City of Baguio, 12 SCRA 62). Its "power to
tax" therefore must always yield to a legislative act which is
superior having been passed upon by the state itself which has the
"inherent power to tax" (Bernas, the Revised [1973] Philippine
Constitution, Vol. 1, 1983 ed. p. 445).

(b) The Charter of the City of Manila is subject to control by

Congress. It should be stressed that "municipal corporations are
mere creatures of Congress" (Unson v. Lacson, G.R. No. 7909,
January 18, 1957) which has the power to "create and abolish
municipal corporations" due to its "general legislative powers"
(Asuncion v. Yriantes, 28 Phil. 67; Merdanillo v. Orandia, 5 SCRA
541). Congress, therefore, has the power of control over Local
governments (Hebron v. Reyes, G.R. No. 9124, July 2, 1950). And if
Congress can grant the City of Manila the power to tax certain
matters, it can also provide for exemptions or even take back the
power.
(c) The City of Manila's power to impose license fees on gambling,
has long been revoked. As early as 1975, the power of local
governments to regulate gambling thru the grant of "franchise,
licenses or permits" was withdrawn by P.D. No. 771 and was vested
exclusively on the National Government, thus:
Sec. 1. Any provision of law to the contrary notwithstanding, the
authority of chartered cities and other local governments to issue
license, permit or other form of franchise to operate, maintain and
establish horse and dog race tracks, jai-alai and other forms of
gambling is hereby revoked.
Sec. 2. Hereafter, all permits or franchises to operate, maintain and
establish, horse and dog race tracks, jai-alai and other forms of
gambling shall be issued by the national government upon proper
application and verification of the qualification of the applicant . . .
Therefore, only the National Government has the power to issue
"licenses or permits" for the operation of gambling. Necessarily, the
power to demand or collect license fees which is a consequence of
the issuance of "licenses or permits" is no longer vested in the City
of Manila.
(d) Local governments have no power to tax instrumentalities of
the National Government. PAGCOR is a government owned or
controlled corporation with an original charter, PD 1869. All of its
shares of stocks are owned by the National Government. In addition
to its corporate powers (Sec. 3, Title II, PD 1869) it also exercises
regulatory powers thus:
Sec. 9. Regulatory Power. The Corporation shall maintain a
Registry of the affiliated entities, and shall exercise all the powers,
authority and the responsibilities vested in the Securities and

Exchange Commission over such affiliating entities mentioned

under the preceding section, including, but not limited to
amendments of Articles of Incorporation and By-Laws, changes in
corporate term, structure, capitalization and other matters
concerning the operation of the affiliated entities, the provisions of
the Corporation Code of the Philippines to the contrary
notwithstanding, except only with respect to original incorporation.
PAGCOR has a dual role, to operate and to regulate gambling
casinos. The latter role is governmental, which places it in the
category of an agency or instrumentality of the Government. Being
an instrumentality of the Government, PAGCOR should be and
actually is exempt from local taxes. Otherwise, its operation might
be burdened, impeded or subjected to control by a mere Local
government.
The states have no power by taxation or otherwise, to retard,
impede, burden or in any manner control the operation of
constitutional laws enacted by Congress to carry into execution the
powers vested in the federal government. (MC Culloch v. Marland, 4
Wheat 316, 4 L Ed. 579)
This doctrine emanates from the "supremacy" of the National
Government over local governments.
Justice Holmes, speaking for the Supreme Court, made reference to
the entire absence of power on the part of the States to touch, in
that way (taxation) at least, the instrumentalities of the United
States (Johnson v. Maryland, 254 US 51) and it can be agreed that
no state or political subdivision can regulate a federal
instrumentality in such a way as to prevent it from consummating
its federal responsibilities, or even to seriously burden it in the
accomplishment of them. (Antieau, Modern Constitutional Law, Vol.
2, p. 140, emphasis supplied)
Otherwise, mere creatures of the State can defeat National policies
thru extermination of what local authorities may perceive to be
undesirable activities or enterprise using the power to tax as "a tool
for regulation" (U.S. v. Sanchez, 340 US 42).
The power to tax which was called by Justice Marshall as the
"power to destroy" (Mc Culloch v. Maryland, supra) cannot be
allowed to defeat an instrumentality or creation of the very entity
which has the inherent power to wield it.

(e) Petitioners also argue that the Local Autonomy Clause of the
Constitution will be violated by P.D. 1869. This is a pointless
argument. Article X of the 1987 Constitution (on Local Autonomy)
provides:
Sec. 5. Each local government unit shall have the power to create
its own source of revenue and to levy taxes, fees, and other
charges subject to such guidelines and limitation as the congress
may provide, consistent with the basic policy on local autonomy.
Such taxes, fees and charges shall accrue exclusively to the local
government. (emphasis supplied)
The power of local government to "impose taxes and fees" is
always subject to "limitations" which Congress may provide by law.
Since PD 1869 remains an "operative" law until "amended,
repealed or revoked" (Sec. 3, Art. XVIII, 1987 Constitution), its
"exemption clause" remains as an exception to the exercise of the
power of local governments to impose taxes and fees. It cannot
therefore be violative but rather is consistent with the principle of
local autonomy.
Besides, the principle of local autonomy under the 1987
Constitution simply means "decentralization" (III Records of the
1987 Constitutional Commission, pp. 435-436, as cited in Bernas,
The Constitution of the Republic of the Philippines, Vol. II, First Ed.,
1988, p. 374). It does not make local governments sovereign within
the state or an "imperium in imperio."
Local Government has been described as a political subdivision of a
nation or state which is constituted by law and has substantial
control of local affairs. In a unitary system of government, such as
the government under the Philippine Constitution, local
governments can only be an intra sovereign subdivision of one
sovereign nation, it cannot be an imperium in imperio. Local
government in such a system can only mean a measure of
decentralization of the function of government. (emphasis supplied)
As to what state powers should be "decentralized" and what may
be delegated to local government units remains a matter of policy,
which concerns wisdom. It is therefore a political question. (Citizens
Alliance for Consumer Protection v. Energy Regulatory Board, 162
SCRA 539).
What is settled is that the matter of regulating, taxing or otherwise
dealing with gambling is a State concern and hence, it is the sole

prerogative of the State to retain it or delegate it to local

governments.
As gambling is usually an offense against the State, legislative
grant or express charter power is generally necessary to empower
the local corporation to deal with the subject. . . . In the absence of
express grant of power to enact, ordinance provisions on this
subject which are inconsistent with the state laws are void. (Ligan
v. Gadsden, Ala App. 107 So. 733 Ex-Parte Solomon, 9, Cals. 440,
27 PAC 757 following in re Ah You, 88 Cal. 99, 25 PAC 974, 22 Am
St. Rep. 280, 11 LRA 480, as cited in Mc Quinllan Vol. 3 Ibid, p. 548,
emphasis supplied)
Petitioners next contend that P.D. 1869 violates the equal
protection clause of the Constitution, because "it legalized PAGCOR
conducted gambling, while most gambling are outlawed together
with prostitution, drug trafficking and other vices" (p. 82, Rollo).
We, likewise, find no valid ground to sustain this contention. The
petitioners' posture ignores the well-accepted meaning of the
clause "equal protection of the laws." The clause does not preclude
classification of individuals who may be accorded different
treatment under the law as long as the classification is not
unreasonable or arbitrary (Itchong v. Hernandez, 101 Phil. 1155). A
law does not have to operate in equal force on all persons or things
to be conformable to Article III, Section 1 of the Constitution (DECS
v. San Diego, G.R. No. 89572, December 21, 1989).
The "equal protection clause" does not prohibit the Legislature from
establishing classes of individuals or objects upon which different
rules shall operate (Laurel v. Misa, 43 O.G. 2847). The Constitution
does not require situations which are different in fact or opinion to
be treated in law as though they were the same (Gomez v. Palomar,
25 SCRA 827).
Just how P.D. 1869 in legalizing gambling conducted by PAGCOR is
violative of the equal protection is not clearly explained in the
petition. The mere fact that some gambling activities like
cockfighting (P.D 449) horse racing (R.A. 306 as amended by RA
983), sweepstakes, lotteries and races (RA 1169 as amended by
B.P. 42) are legalized under certain conditions, while others are
prohibited, does not render the applicable laws, P.D. 1869 for one,
unconstitutional.

If the law presumably hits the evil where it is most felt, it is not to
be overthrown because there are other instances to which it might
have been applied. (Gomez v. Palomar, 25 SCRA 827)
The equal protection clause of the 14th Amendment does not mean
that all occupations called by the same name must be treated the
same way; the state may do what it can to prevent which is
deemed as evil and stop short of those cases in which harm to the
few concerned is not less than the harm to the public that would
insure if the rule laid down were made mathematically exact.
(Dominican Hotel v. Arizona, 249 US 2651).
Anent petitioners' claim that PD 1869 is contrary to the "avowed
trend of the Cory Government away from monopolies and crony
economy and toward free enterprise and privatization" suffice it to
state that this is not a ground for this Court to nullify P.D. 1869. If,
indeed, PD 1869 runs counter to the government's policies then it
is for the Executive Department to recommend to Congress its
repeal or amendment.
The judiciary does not settle policy issues. The Court can only
declare what the law is and not what the law should be.1wphi1
Under our system of government, policy issues are within the
domain of the political branches of government and of the people
themselves as the repository of all state power. (Valmonte v.
Belmonte, Jr., 170 SCRA 256).
On the issue of "monopoly," however, the Constitution provides
that:
Sec. 19. The State shall regulate or prohibit monopolies when
public interest so requires. No combinations in restraint of trade or
unfair competition shall be allowed. (Art. XII, National Economy and
Patrimony)
It should be noted that, as the provision is worded, monopolies are
not necessarily prohibited by the Constitution. The state must still
decide whether public interest demands that monopolies be
regulated or prohibited. Again, this is a matter of policy for the
Legislature to decide.
On petitioners' allegation that P.D. 1869 violates Sections 11
(Personality Dignity) 12 (Family) and 13 (Role of Youth) of Article II;
Section 13 (Social Justice) of Article XIII and Section 2 (Educational
Values) of Article XIV of the 1987 Constitution, suffice it to state
also that these are merely statements of principles and, policies. As

such, they are basically not self-executing, meaning a law should

be passed by Congress to clearly define and effectuate such
principles.

this Court may not constitutionally pass upon. Those issues should
be addressed rather to the political departments of government:
the President and the Congress.

In general, therefore, the 1935 provisions were not intended to be

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

Parenthetically, We wish to state that gambling is generally

immoral, and this is precisely so when the gambling resorted to is
excessive. This excessiveness necessarily depends not only on the
financial resources of the gambler and his family but also on his
mental, social, and spiritual outlook on life. However, the mere fact
that some persons may have lost their material fortunes, mental
control, physical health, or even their lives does not necessarily
mean that the same are directly attributable to gambling. Gambling
may have been the antecedent, but certainly not necessarily the
cause. For the same consequences could have been preceded by
an overdose of food, drink, exercise, work, and even sex.
WHEREFORE, the petition is DISMISSED for lack of merit.
PADILLA, J., concurring:

Every law has in its favor the presumption of constitutionality (Yu

Cong Eng v. Trinidad, 47 Phil. 387; Salas v. Jarencio, 48 SCRA 734;
Peralta v. Comelec, 82 SCRA 30; Abbas v. Comelec, 179 SCRA 287).
Therefore, for PD 1869 to be nullified, it must be shown that there
is a clear and unequivocal breach of the Constitution, not merely a
doubtful and equivocal one. In other words, the grounds for nullity
must be clear and beyond reasonable doubt. (Peralta v. Comelec,
supra) Those who petition this Court to declare a law, or parts
thereof, unconstitutional must clearly establish the basis for such a
declaration. Otherwise, their petition must fail. Based on the
grounds raised by petitioners to challenge the constitutionality of
P.D. 1869, the Court finds that petitioners have failed to overcome
the presumption. The dismissal of this petition is therefore,
inevitable. But as to whether P.D. 1869 remains a wise legislation
considering the issues of "morality, monopoly, trend to free
enterprise, privatization as well as the state principles on social
justice, role of youth and educational values" being raised, is up for
Congress to determine.
As this Court held in Citizens' Alliance for Consumer Protection v.
Energy Regulatory Board, 162 SCRA 521
Presidential Decree No. 1956, as amended by Executive Order No.
137 has, in any case, in its favor the presumption of validity and
constitutionality which petitioners Valmonte and the KMU have not
overturned. Petitioners have not undertaken to identify the
provisions in the Constitution which they claim to have been
violated by that statute. This Court, however, is not compelled to
speculate and to imagine how the assailed legislation may possibly
offend some provision of the Constitution. The Court notes, further,
in this respect that petitioners have in the main put in question the
wisdom, justice and expediency of the establishment of the OPSF,
issues which are not properly addressed to this Court and which

I concur in the result of the learned decision penned by my brother

Mr. Justice Paras. This means that I agree with the decision insofar
as it holds that the prohibition, control, and regulation of the entire
activity known as gambling properly pertain to "state policy." It is,
therefore, the political departments of government, namely, the
legislative and the executive that should decide on what
government should do in the entire area of gambling, and assume
full responsibility to the people for such policy.
The courts, as the decision states, cannot inquire into the wisdom,
morality or expediency of policies adopted by the political
departments of government in areas which fall within their
authority, except only when such policies pose a clear and present
danger to the life, liberty or property of the individual. This case
does not involve such a factual situation.
However, I hasten to make of record that I do not subscribe to
gambling in any form. It demeans the human personality, destroys
self-confidence and eviscerates one's self-respect, which in the long
run will corrode whatever is left of the Filipino moral character.
Gambling has wrecked and will continue to wreck families and
homes; it is an antithesis to individual reliance and reliability as
well as personal industry which are the touchstones of real
economic progress and national development.
Gambling is reprehensible whether maintained by government or
privatized. The revenues realized by the government out of

"legalized" gambling will, in the long run, be more than offset and
negated by the irreparable damage to the people's moral values.
Also, the moral standing of the government in its repeated avowals
against "illegal gambling" is fatally flawed and becomes untenable
when it itself engages in the very activity it seeks to eradicate.

On December 30, 1995, respondent received from petitioner,

through its Chairman, a notice dated December 22, 1995
requesting respondent to open Neptune Street to public vehicular
traffic starting January 2, 1996. The notice reads:
SUBJECT: NOTICE of the Opening of Neptune Street to Traffic.

One can go through the Court's decision today and mentally

replace the activity referred to therein as gambling, which is legal
only because it is authorized by law and run by the government,
with the activity known as prostitution. Would prostitution be any
less reprehensible were it to be authorized by law, franchised, and
"regulated" by the government, in return for the substantial
revenues it would yield the government to carry out its laudable
projects, such as infrastructure and social amelioration? The
question, I believe, answers itself. I submit that the sooner the
legislative department outlaws all forms of gambling, as a
fundamental state policy, and the sooner the executive implements
such policy, the better it will be for the nation.

Dear President Lindo,

G.R. No. 135962

Finally, we are furnishing you with a copy of the handwritten

instruction of the President on the matter.

March 27, 2000

METROPOLITAN MANILA DEVELOPMENT AUTHORITY, petitioner,

vs.
BEL-AIR VILLAGE ASSOCIATION, INC., respondent.
PUNO, J.:
Not infrequently, the government is tempted to take legal shortcuts
solve urgent problems of the people. But even when government is
armed with the best of intention, we cannot allow it to run
roughshod over the rule of law. Again, we let the hammer fall and
fall hard on the illegal attempt of the MMDA to open for public use a
private road in a private subdivision. While we hold that the general
welfare should be promoted, we stress that it should not be
achieved at the expense of the rule of law.
Petitioner MMDA is a government agency tasked with the delivery
of basic services in Metro Manila. Respondent Bel-Air Village
Association, Inc. (BAVA) is a non-stock, non-profit corporation
whose members are homeowners in Bel-Air Village, a private
subdivision in Makati City. Respondent BAVA is the registered owner
of Neptune Street, a road inside Bel-Air Village.

Please be informed that pursuant to the mandate of the MMDA law

or Republic Act No. 7924 which requires the Authority to rationalize
the use of roads and/or thoroughfares for the safe and convenient
movement of persons, Neptune Street shall be opened to vehicular
traffic effective January 2, 1996.
In view whereof, the undersigned requests you to voluntarily open
the points of entry and exit on said street.
Thank you for your cooperation and whatever assistance that may
be extended by your association to the MMDA personnel who will
be directing traffic in the area.

Very truly yours,

PROSPERO I. ORETA
Chairman 1
On the same day, respondent was apprised that the perimeter wall
separating the subdivision from the adjacent Kalayaan Avenue
would be demolished.
On January 2, 1996, respondent instituted against petitioner before
the Regional Trial Court, Branch 136, Makati City, Civil Case No. 96001 for injunction. Respondent prayed for the issuance of a
temporary restraining order and preliminary injunction enjoining
the opening of Neptune Street and prohibiting the demolition of the
perimeter wall. The trial court issued a temporary restraining order
the following day.
On January 23, 1996, after due hearing, the trial court denied
issuance of a preliminary injunction. 2 Respondent questioned the
denial before the Court of Appeals in CA-G.R. SP No. 39549. The

appellate court conducted an ocular inspection of Neptune Street 3

and on February 13, 1996, it issued a writ of preliminary injunction
enjoining the implementation of the MMDA's proposed action. 4

IVWAS RESPONDENT DEPRIVED OF DUE PROCESS DESPITE THE

SEVERAL MEETINGS HELD BETWEEN MMDA AND THE AFFECTED
EEL-AIR RESIDENTS AND BAVA OFFICERS?

On January 28, 1997, the appellate court rendered a Decision on

the merits of the case finding that the MMDA has no authority to
order the opening of Neptune Street, a private subdivision road and
cause the demolition of its perimeter walls. It held that the
authority is lodged in the City Council of Makati by ordinance. The
decision disposed of as follows:

VHAS RESPONDENT COME TO COURT WITH UNCLEAN HANDS?7

WHEREFORE, the Petition is GRANTED; the challenged Order dated

January 23, 1995, in Civil Case No. 96-001, is SET ASIDE and the
Writ of Preliminary Injunction issued on February 13, 1996 is hereby
made permanent.
For want of sustainable substantiation, the Motion to Cite Roberto L.
del Rosario in contempt is denied. 5
No pronouncement as to costs.
SO ORDERED. 6
The Motion for Reconsideration of the decision was denied on
September 28, 1998. Hence, this recourse.
Petitioner MMDA raises the following questions:
I
HAS THE METROPOLITAN MANILA DEVELOPMENT AUTHORITY
(MMDA) THE MANDATE TO OPEN NEPTUNE STREET TO PUBLIC
TRAFFIC PURSUANT TO ITS REGULATORY AND POLICE POWERS?
II
IS THE PASSAGE OF AN ORDINANCE A CONDITION PRECEDENT
BEFORE THE MMDA MAY ORDER THE OPENING OF SUBDIVISION
ROADS TO PUBLIC TRAFFIC?
III
IS RESPONDENT BEL-AIR VILLAGE ASSOCIATION, INC. ESTOPPED
FROM DENYING OR ASSAILING THE AUTHORITY OF THE MMDA TO
OPEN THE SUBJECT STREET?

Neptune Street is owned by respondent BAVA. It is a private road

inside Bel-Air Village, a private residential subdivision in the heart
of the financial and commercial district of Makati City. It runs
parallel to Kalayaan Avenue, a national road open to the general
public. Dividing the two (2) streets is a concrete perimeter wall
approximately fifteen (15) feet high. The western end of Neptune
Street intersects Nicanor Garcia, formerly Reposo Street, a
subdivision road open to public vehicular traffic, while its eastern
end intersects Makati Avenue, a national road. Both ends of
Neptune Street are guarded by iron gates.
Petitioner MMDA claims that it has the authority to open Neptune
Street to public traffic because it is an agent of the state endowed
with police power in the delivery of basic services in Metro Manila.
One of these basic services is traffic management which involves
the regulation of the use of thoroughfares to insure the safety,
convenience and welfare of the general public. It is alleged that the
police power of MMDA was affirmed by this Court in the
consolidated cases of Sangalang v. Intermediate Appellate Court. 8
From the premise that it has police power, it is now urged that
there is no need for the City of Makati to enact an ordinance
opening Neptune street to the public. 9
Police power is an inherent attribute of sovereignty. It has been
defined as the power vested by the Constitution in the legislature
to make, ordain, and establish all manner of wholesome and
reasonable laws, statutes and ordinances, either with penalties or
without, not repugnant to the Constitution, as they shall judge to be
for the good and welfare of the commonwealth, and for the
subjects of the same. 10 The power is plenary and its scope is vast
and pervasive, reaching and justifying measures for public health,
public safety, public morals, and the general welfare. 11
It bears stressing that police power is lodged primarily in the
National Legislature. 12 It cannot be exercised by any group or
body of individuals not possessing legislative power. 13 The
National Legislature, however, may delegate this power to the
President and administrative boards as well as the lawmaking
bodies of municipal corporations or local government units. 14
Once delegated, the agents can exercise only such legislative

powers as are conferred on them by the national lawmaking body.

15
A local government is a "political subdivision of a nation or state
which is constituted by law and has substantial control of local
affairs." 16The Local Government Code of 1991 defines a local
government unit as a "body politic and corporate." 17 one
endowed with powers as a political subdivision of the National
Government and as a corporate entity representing the inhabitants
of its territory. 18 Local government units are the provinces, cities,
municipalities and barangays. 19 They are also the territorial and
political subdivisions of the state. 20
Our Congress delegated police power to the local government units
in the Local Government Code of 1991. This delegation is found in
Section 16 of the same Code, known as the general welfare clause,
viz:
Sec. 16. General Welfare. Every local government unit shall
exercise the powers expressly granted, those necessarily implied
therefrom, as well as powers necessary, appropriate, or incidental
for its efficient and effective governance, and those which are
essential to the promotion of the general welfare. Within their
respective territorial jurisdictions, local government units shall
ensure and support, among other things, the preservation and
enrichment of culture, promote health and safety, enhance the
right of the people to a balanced ecology, encourage and support
the development of appropriate and self-reliant scientific and
technological capabilities, improve public morals, enhance
economic prosperity and social justice, promote full employment
among their residents, maintain peace and order, and preserve the
comfort and convenience of their inhabitants. 21
Local government units exercise police power through their
respective legislative bodies. The legislative body of the provincial
government is the sangguniang panlalawigan, that of the city
government is the sangguniang panlungsod, that of the municipal
government is the sangguniang bayan, and that of the barangay is
the sangguniang barangay. The Local Government Code of 1991
empowers the sangguniang panlalawigan, sangguniang panlungsod
and sangguniang bayan to "enact ordinances, approve resolutions
and appropriate funds for the general welfare of the [province, city
or municipality, as the case may be], and its inhabitants pursuant
to Section 16 of the Code and in the proper exercise of the
corporate powers of the [province, city municipality] provided
under the Code . . . " 22 The same Code gives the sangguniang

barangay the power to "enact ordinances as may be necessary to

discharge the responsibilities conferred upon it by law or ordinance
and to promote the general welfare of the inhabitants thereon." 23
Metropolitan or Metro Manila is a body composed of several local
government units i.e., twelve (12) cities and five (5)
municipalities, namely, the cities of Caloocan, Manila,
Mandaluyong, Makati, Pasay, Pasig, Quezon, Muntinlupa, Las Pinas,
Marikina, Paranaque and Valenzuela, and the municipalities of
Malabon, Navotas, Pateros, San Juan and Taguig. With the passage
of Republic Act (R. A.) No. 7924 24 in 1995, Metropolitan Manila was
declared as a "special development and administrative region" and
the Administration of "metro-wide" basic services affecting the
region placed under "a development authority" referred to as the
MMDA. 25
"Metro-wide services" are those "services which have metro-wide
impact and transcend local political boundaries or entail huge
expenditures such that it would not be viable for said services to be
provided by the individual local government units comprising Metro
Manila." 26 There are seven (7) basic metro-wide services and the
scope of these services cover the following: (1) development
planning; (2) transport and traffic management; (3) solid waste
disposal and management; (4) flood control and sewerage
management; (5) urban renewal, zoning and land use planning, and
shelter services; (6) health and sanitation, urban protection and
pollution control; and (7) public safety. The basic service of
transport and traffic management includes the following:
(b) Transport and traffic management which include the
formulation, coordination, and monitoring of policies, standards,
programs and projects to rationalize the existing transport
operations, infrastructure requirements, the use of thoroughfares,
and promotion of safe and convenient movement of persons and
goods; provision for the mass transport system and the institution
of a system to regulate road users; administration and
implementation of all traffic enforcement operations, traffic
engineering services and traffic education programs, including the
institution of a single ticketing system in Metropolitan Manila;" 27
In the delivery of the seven (7) basic services, the MMDA has the
following powers and functions:
Sec. 5. Functions and powers of the Metro Manila Development
Authority. The MMDA shall:

(a) Formulate, coordinate and regulate the implementation of

medium and long-term plans and programs for the delivery of
metro-wide services, land use and physical development within
Metropolitan Manila, consistent with national development
objectives and priorities;
(b) Prepare, coordinate and regulate the implementation of
medium-term investment programs for metro-wide services which
shall indicate sources and uses of funds for priority programs and
projects, and which shall include the packaging of projects and
presentation to funding institutions;
(c) Undertake and manage on its own metro-wide programs and
projects for the delivery of specific services under its jurisdiction,
subject to the approval of the Council. For this purpose, MMDA can
create appropriate project management offices;
(d) Coordinate and monitor the implementation of such plans,
programs and projects in Metro Manila; identify bottlenecks and
adopt solutions to problems of implementation;
(e) The MMDA shall set the policies concerning traffic in Metro
Manila, and shall coordinate and regulate the implementation of all
programs and projects concerning traffic management, specifically
pertaining to enforcement, engineering and education. Upon
request, it shall be extended assistance and cooperation, including
but not limited to, assignment of personnel, by all other
government agencies and offices concerned;
(f) Install and administer a single ticketing system, fix, impose and
collect fines and penalties for all kinds of violations of traffic rules
and regulations, whether moving or non-moving in nature, and
confiscate and suspend or revoke drivers' licenses in the
enforcement of such traffic laws and regulations, the provisions of
RA 4136 and PD 1605 to the contrary notwithstanding. For this
purpose, the Authority shall impose all traffic laws and regulations
in Metro Manila, through its traffic operation center, and may
deputize members of the PNP, traffic enforcers of local government
units, duly licensed security guards, or members of nongovernmental organizations to whom may be delegated certain
authority, subject to such conditions and requirements as the
Authority may impose; and
(g) Perform other related functions required to achieve the
objectives of the MMDA, including the undertaking of delivery of
basic services to the local government units, when deemed

necessary subject to prior coordination with and consent of the

local government unit concerned.
The implementation of the MMDA's plans, programs and projects is
undertaken by the local government units, national government
agencies, accredited people's organizations, non-governmental
organizations, and the private sector as well as by the MMDA itself.
For this purpose, the MMDA has the power to enter into contracts,
memoranda of agreement and other arrangements with these
bodies for the delivery of the required services Metro Manila. 28
The governing board of the MMDA is the Metro Manila Council. The
Council is composed of the mayors of the component 12 cities and
5 municipalities, the president of the Metro Manila Vice-Mayors'
League and the president of the Metro Manila Councilors' League.
29 The Council is headed by Chairman who is appointed by the
President and vested with the rank of cabinet member. As the
policy-making body of the MMDA, the Metro Manila Council
approves metro-wide plans, programs and projects, and issues the
necessary rules and regulations for the implementation of said
plans; it approves the annual budget of the MMDA and promulgate
the rules and regulations for the delivery of basic services,
collection of service and regulatory fees, fines and penalties. These
functions are particularly enumerated as follows:
Sec. 6. Functions of the Metro Manila Council.
(a) The Council shall be the policy-making body of the MMDA;
(b) It shall approve metro-wide plans, programs and projects and
issue rules and regulations deemed necessary by the MMDA to
carry out the purposes of this Act;
(c) It may increase the rate of allowances and per diems of the
members of the Council to be effective during the term of the
succeeding Council. It shall fix the compensation of the officers and
personnel of the MMDA, and approve the annual budget thereof for
submission to the Department of Budget and Management (DBM);
(d) It shall promulgate rules and regulations and set policies and
standards for metro-wide application governing the delivery of
basic services, prescribe and collect service and regulatory fees,
and impose and collect fines and penalties.
Clearly, the scope of the MMDA's function is limited to the delivery
of the seven (7) basic services. One of these is transport and traffic

management which includes the formulation and monitoring of

policies, standards and projects to rationalize the existing transport
operations, infrastructure requirements, the use of thoroughfares
and promotion of the safe movement of persons and goods. It also
covers the mass transport system and the institution of a system of
road regulation, the administration of all traffic enforcement
operations, traffic engineering services and traffic education
programs, including the institution of a single ticketing system in
Metro Manila for traffic violations. Under the service, the MMDA is
expressly authorized "to set the policies concerning traffic" and
"coordinate and regulate the implementation of all traffic
management programs." In addition, the MMDA may "install and
administer a single ticketing system," fix, impose and collect fines
and penalties for all traffic violations.
It will be noted that the powers of the MMDA are limited to the
following acts: formulation, coordination, regulation,
implementation, preparation, management, monitoring, setting of
policies, installation of a system and administration. There is no
syllable in R.A. No. 7924 that grants the MMDA police power, let
alone legislative power. Even the Metro Manila Council has not been
delegated any legislative power. Unlike the legislative bodies of the
local government units, there is no provision in R.A. No. 7924 that
empowers the MMDA or its Council to "enact ordinances, approve
resolutions appropriate funds for the general welfare" of the
inhabitants of Metro Manila. The MMDA is, as termed in the charter
itself, "development authority." 30 It is an agency created for the
purpose of laying down policies and coordinating with the various
national government agencies, people's organizations, nongovernmental organizations and the private sector for the efficient
and expeditious delivery of basic services in the vast metropolitan
area. All its functions are administrative in nature and these are
actually summed up in the charter itself, viz:
Sec. 2. Creation of the Metropolitan Manila Development Authority.
....
The MMDA shall perform planning, monitoring and coordinative
functions, and in the process exercise regulatory and supervisory
authority over the delivery of metro-wide services within Metro
Manila, without diminution of the autonomy of the local
government units concerning purely local matters. 31
Petitioner cannot seek refuge in the cases of Sangalang v.
Intermediate Appellate Court 32 where we upheld a zoning
ordinance issued by the Metro Manila Commission (MMC), the

predecessor of the MMDA, as an exercise of police power. The first

Sangalang decision was on the merits of the petition, 33 while the
second decision denied reconsideration of the first case and in
addition discussed the case of Yabut v. Court of Appeals. 34
Sangalang v. IAC involved five (5) consolidated petitions filed by
respondent BAVA and three residents of Bel-Air Village against
other residents of the Village and the Ayala Corporation, formerly
the Makati Development Corporation, as the developer of the
subdivision. The petitioners sought to enforce certain restrictive
easements in the deeds of sale over their respective lots in the
subdivision. These were the prohibition on the setting up of
commercial and advertising signs on the lots, and the condition
that the lots be used only for residential purposes. Petitioners
alleged that respondents, who were residents along Jupiter Street
of the subdivision, converted their residences into commercial
establishments in violation of the "deed restrictions," and that
respondent Ayala Corporation ushered in the full
commercialization" of Jupiter Street by tearing down the perimeter
wall that separated the commercial from the residential section of
the village. 35
The petitions were dismissed based on Ordinance No. 81 of the
Municipal Council of Makati and Ordinance No. 81-01 of the Metro
Manila Commission (MMC). Municipal Ordinance No. 81 classified
Bel-Air Village as a Class A Residential Zone, with its boundary in
the south extending to the center line of Jupiter Street. The
Municipal Ordinance was adopted by the MMC under the
Comprehensive Zoning Ordinance for the National Capital Region
and promulgated as MMC Ordinance No. 81-01. Bel-Air Village was
indicated therein as bounded by Jupiter Street and the block
adjacent thereto was classified as a High Intensity Commercial
Zone. 36
We ruled that since both Ordinances recognized Jupiter Street as
the boundary between Bel-Air Village and the commercial district,
Jupiter Street was not for the exclusive benefit of Bel-Air residents.
We also held that the perimeter wall on said street was constructed
not to separate the residential from the commercial blocks but
simply for security reasons, hence, in tearing down said wall, Ayala
Corporation did not violate the "deed restrictions" in the deeds of
sale.
We upheld the ordinances, specifically MMC Ordinance No. 81-01,
as a legitimate exercise of police power. 37 The power of the MMC

and the Makati Municipal Council to enact zoning ordinances for the
general welfare prevailed over the "deed restrictions".
In the second Sangalang/Yabut decision, we held that the opening
of Jupiter Street was warranted by the demands of the common
good in terms of "traffic decongestion and public convenience."
Jupiter was opened by the Municipal Mayor to alleviate traffic
congestion along the public streets adjacent to the Village. 38 The
same reason was given for the opening to public vehicular traffic of
Orbit Street, a road inside the same village. The destruction of the
gate in Orbit Street was also made under the police power of the
municipal government. The gate, like the perimeter wall along
Jupiter, was a public nuisance because it hindered and impaired the
use of property, hence, its summary abatement by the mayor was
proper and legal. 39
Contrary to petitioner's claim, the two Sangalang cases do not
apply to the case at bar. Firstly, both involved zoning ordinances
passed by the municipal council of Makati and the MMC. In the
instant case, the basis for the proposed opening of Neptune Street
is contained in the notice of December 22, 1995 sent by petitioner
to respondent BAVA, through its president. The notice does not cite
any ordinance or law, either by the Sangguniang Panlungsod of
Makati City or by the MMDA, as the legal basis for the proposed
opening of Neptune Street. Petitioner MMDA simply relied on its
authority under its charter "to rationalize the use of roads and/or
thoroughfares for the safe and convenient movement of persons."
Rationalizing the use of roads and thoroughfares is one of the acts
that fall within the scope of transport and traffic management. By
no stretch of the imagination, however, can this be interpreted as
an express or implied grant of ordinance-making power, much less
police power.
Secondly, the MMDA is not the same entity as the MMC in
Sangalang. Although the MMC is the forerunner of the present
MMDA, an examination of Presidential Decree (P. D.) No. 824, the
charter of the MMC, shows that the latter possessed greater powers
which were not bestowed on the present MMDA.
Metropolitan Manila was first created in 1975 by Presidential
Decree (P.D.) No. 824. It comprised the Greater Manila Area
composed of the contiguous four (4) cities of Manila, Quezon, Pasay
and Caloocan, and the thirteen (13) municipalities of Makati,
Mandaluyong, San Juan, Las Pinas, Malabon, Navotas, Pasig,
Pateros, Paranaque, Marikina, Muntinlupa and Taguig in the
province of Rizal, and Valenzuela in the province of Bulacan. 40

Metropolitan Manila was created as a response to the finding that

the rapid growth of population and the increase of social and
economic requirements in these areas demand a call for
simultaneous and unified development; that the public services
rendered by the respective local governments could be
administered more efficiently and economically if integrated under
a system of central planning; and this coordination, "especially in
the maintenance of peace and order and the eradication of social
and economic ills that fanned the flames of rebellion and discontent
[were] part of reform measures under Martial Law essential to the
safety and security of the State." 41
Metropolitan Manila was established as a "public corporation" with
the following powers:
Sec. 1. Creation of the Metropolitan Manila. There is hereby
created a public corporation, to be known as the Metropolitan
Manila, vested with powers and attributes of a corporation
including the power to make contracts, sue and be sued, acquire,
purchase, expropriate, hold, transfer and dispose of property and
such other powers as are necessary to carry out its purposes. The
Corporation shall be administered by a Commission created under
this Decree. 42
The administration of Metropolitan Manila was placed under the
Metro Manila Commission (MMC) vested with the following powers:
Sec. 4. Powers and Functions of the Commission. The
Commission shall have the following powers and functions:
1. To act as a central government to establish and administer
programs and provide services common to the area;
2. To levy and collect taxes and special assessments, borrow and
expend money and issue bonds, revenue certificates, and other
obligations of indebtedness. Existing tax measures should,
however, continue to be operative until otherwise modified or
repealed by the Commission;
3. To charge and collect fees for the use of public service facilities;
4. To appropriate money for the operation of the metropolitan
government and review appropriations for the city and municipal
units within its jurisdiction with authority to disapprove the same if
found to be not in accordance with the established policies of the
Commission, without prejudice to any contractual obligation of the

local government units involved existing at the time of approval of

this Decree;
5. To review, amend, revise or repeal all ordinances, resolutions and
acts of cities and municipalities within Metropolitan Manila;
6. To enact or approve ordinances, resolutions and to fix penalties
for any violation thereof which shall not exceed a fine of
P10,000.00 or imprisonment of six years or both such fine and
imprisonment for a single offense;
7. To perform general administrative, executive and policy-making
functions;
8. To establish a fire control operation center, which shall direct the
fire services of the city and municipal governments in the
metropolitan area;
9. To establish a garbage disposal operation center, which shall
direct garbage collection and disposal in the metropolitan area;
10. To establish and operate a transport and traffic center, which
shall direct traffic activities;
11. To coordinate and monitor governmental and private activities
pertaining to essential services such as transportation, flood control
and drainage, water supply and sewerage, social, health and
environmental services, housing, park development, and others;
12. To insure and monitor the undertaking of a comprehensive
social, economic and physical planning and development of the
area;
13. To study the feasibility of increasing barangay participation in
the affairs of their respective local governments and to propose to
the President of the Philippines definite programs and policies for
implementation;
14. To submit within thirty (30) days after the close of each fiscal
year an annual report to the President of the Philippines and to
submit a periodic report whenever deemed necessary; and
15. To perform such other tasks as may be assigned or directed by
the President of the Philippines.

The MMC was the "central government" of Metro Manila for the
purpose of establishing and administering programs providing
services common to the area. As a "central government" it had the
power to levy and collect taxes and special assessments, the power
to charge and collect fees; the power to appropriate money for its
operation, and at the same time, review appropriations for the city
and municipal units within its jurisdiction. It was bestowed the
power to enact or approve ordinances, resolutions and fix penalties
for violation of such ordinances and resolutions. It also had the
power to review, amend, revise or repeal all ordinances, resolutions
and acts of any of the four (4) cities and thirteen (13) municipalities
comprising Metro Manila.
P.D. No. 824 further provided:
Sec. 9. Until otherwise provided, the governments of the four cities
and thirteen municipalities in the Metropolitan Manila shall continue
to exist in their present form except as may be inconsistent with
this Decree. The members of the existing city and municipal
councils in Metropolitan Manila shall, upon promulgation of this
Decree, and until December 31, 1975, become members of the
Sangguniang Bayan which is hereby created for every city and
municipality of Metropolitan Manila.
In addition, the Sangguniang Bayan shall be composed of as many
barangay captains as may be determined and chosen by the
Commission, and such number of representatives from other
sectors of the society as may be appointed by the President upon
recommendation of the Commission.
The Sangguniang Bayan may recommend to the Commission
ordinances, resolutions or such measures as it may adopt;
Provided, that no such ordinance, resolution or measure shall
become effective, until after its approval by the Commission; and
Provided further, that the power to impose taxes and other levies,
the power to appropriate money and the power to pass ordinances
or resolutions with penal sanctions shall be vested exclusively in
the Commission.
The creation of the MMC also carried with it the creation of the
Sangguniang Bayan. This was composed of the members of the
component city and municipal councils, barangay captains chosen
by the MMC and sectoral representatives appointed by the
President. The Sangguniang Bayan had the power to recommend to
the MMC the adoption of ordinances, resolutions or measures. It
was the MMC itself, however, that possessed legislative powers. All

ordinances, resolutions and measures recommended by the

Sangguniang Bayan were subject to the MMC's approval. Moreover,
the power to impose taxes and other levies, the power to
appropriate money, and the power to pass ordinances or
resolutions with penal sanctions were vested exclusively in the
MMC.
Thus, Metropolitan Manila had a "central government," i.e., the
MMC which fully possessed legislative police powers. Whatever
legislative powers the component cities and municipalities had
were all subject to review and approval by the MMC.
After President Corazon Aquino assumed power, there was a clamor
to restore the autonomy of the local government units in Metro
Manila. Hence, Sections 1 and 2 of Article X of the 1987
Constitution provided:
Sec. 1. The territorial and political subdivisions of the Republic of
the Philippines are the provinces, cities, municipalities and
barangays. There shall be autonomous regions in Muslim Mindanao
and the Cordilleras as herein provided.
Sec. 2. The territorial and political subdivisions shall enjoy local
autonomy.
The Constitution, however, recognized the necessity of creating
metropolitan regions not only in the existing National Capital
Region but also in potential equivalents in the Visayas and
Mindanao. 43 Section 11 of the same Article X thus provided:
Sec. 11. The Congress may, by law, create special metropolitan
political subdivisions, subject to a plebiscite as set forth in Section
10 hereof. The component cities and municipalities shall retain their
basic autonomy and shall be entitled to their own local executives
and legislative assemblies. The jurisdiction of the metropolitan
authority that will thereby be created shall be limited to basic
services requiring coordination.
Constitution itself expressly provides that Congress may, by law,
create "special metropolitan political subdivisions" which shall be
subject to approval by a majority of the votes cast in a plebiscite in
the political units directly affected; the jurisdiction of this
subdivision shall be limited to basic services requiring coordination;
and the cities and municipalities comprising this subdivision shall
retain their basic services requiring coordination; and the cities and
municipalities comprising this subdivision shall retain their basic

autonomy and their own local executive and legislative assemblies.

44 Pending enactment of this law, the Transitory Provisions of the
Constitution gave the President of the Philippines the power to
constitute the Metropolitan Authority, viz:
Sec. 8. Until otherwise provided by Congress, the President may
constitute the Metropolitan Authority to be composed of the heads
of all local government units comprising the Metropolitan Manila
area. 45
In 1990, President Aquino issued Executive Order (E. O.) No. 392
and constituted the Metropolitan Manila Authority (MMA). The
powers and functions of the MMC were devolved to the MMA. 46 It
ought to be stressed, however, that not all powers and functions of
the MMC were passed to the MMA. The MMA's power was limited to
the "delivery of basic urban services requiring coordination in
Metropolitan Manila." 47 The MMA's governing body, the
Metropolitan Manila Council, although composed of the mayors of
the component cities and municipalities, was merely given power
of: (1) formulation of policies on the delivery of basic services
requiring coordination and consolidation; and (2) promulgation
resolutions and other issuances, approval of a code of basic
services and the exercise of its rule-making power. 48
Under the 1987 Constitution, the local government units became
primarily responsible for the governance of their respective political
subdivisions. The MMA's jurisdiction was limited to addressing
common problems involving basic services that transcended local
boundaries. It did not have legislative power. Its power was merely
to provide the local government units technical assistance in the
preparation of local development plans. Any semblance of
legislative power it had was confined to a "review [of] legislation
proposed by the local legislative assemblies to ensure consistency
among local governments and with the comprehensive
development plan of Metro Manila," and to "advise the local
governments accordingly." 49
When R.A. No. 7924 took effect, Metropolitan Manila became a
"special development and administrative region" and the MMDA a
"special development authority" whose functions were "without
prejudice to the autonomy of the affected local government units."
The character of the MMDA was clearly defined in the legislative
debates enacting its charter.
R.A. No. 7924 originated as House Bill No. 14170/11116 and was
introduced by several legislators led by Dante Tinga, Roilo Golez

and Feliciano Belmonte. It was presented to the House of

Representatives by the Committee on Local Governments chaired
by Congressman Ciriaco R. Alfelor. The bill was a product of
Committee consultations with the local government units in the
National Capital Region (NCR), with former Chairmen of the MMC
and MMA, 50 and career officials of said agencies. When the bill
was first taken up by the Committee on Local Governments, the
following debate took place:
THE CHAIRMAN [Hon. Ciriaco Alfelor]: Okay, Let me explain. This
has been debated a long time ago, you know. It's a special . . . we
can create a special metropolitan political subdivision.
Actually, there are only six (6) political subdivisions provided for in
the Constitution: barangay, municipality, city, province, and we
have the Autonomous Region of Mindanao and we have the
Cordillera. So we have 6. Now. . . . .
HON. [Elias] LOPEZ: May I interrupt, Mr. Chairman. In the case of
the Autonomous Region, that is also specifically mandated by the
Constitution.
THE CHAIRMAN: That's correct. But it is considered to be a political
subdivision. What is the meaning of a political subdivision? Meaning
to say, that it has its own government, it has its own political
personality, it has the power to tax, and all governmental powers:
police power and everything. All right. Authority is different;
because it does not have its own government. It is only a council, it
is an organization of political subdivision, powers, "no, which is not
imbued with any political power.
If you go over Section 6, where the powers and functions of the
Metro Manila Development Authority, it is purely coordinative. And
it provides here that the council is policy-making. All right.
Under the Constitution is a Metropolitan Authority with coordinative
power. Meaning to say, it coordinates all of the different basic
services which have to be delivered to the constituency. All right.
There is now a problem. Each local government unit is given its
respective . . . as a political subdivision. Kalookan has its powers, as
provided for and protected and guaranteed by the Constitution. All
right, the exercise. However, in the exercise of that power, it might
be deleterious and disadvantageous to other local government
units. So, we are forming an authority where all of these will be

members and then set up a policy in order that the basic services
can be effectively coordinated. All right.
Of course, we cannot deny that the MMDA has to survive. We have
to provide some funds, resources. But it does not possess any
political power. We do not elect the Governor. We do not have the
power to tax. As a matter of fact, I was trying to intimate to the
author that it must have the power to sue and be sued because it
coordinates. All right. It coordinates practically all these basic
services so that the flow and the distribution of the basic services
will be continuous. Like traffic, we cannot deny that. It's before our
eyes. Sewerage, flood control, water system, peace and order, we
cannot deny these. It's right on our face. We have to look for a
solution. What would be the right solution? All right, we envision
that there should be a coordinating agency and it is called an
authority. All right, if you do not want to call it an authority, it's
alright. We may call it a council or maybe a management agency.
Clearly, the MMDA is not a political unit of government. The power
delegated to the MMDA is that given to the Metro Manila Council to
promulgate administrative rules and regulations in the
implementation of the MMDA's functions. There is no grant of
authority to enact ordinances and regulations for the general
welfare of the inhabitants of the metropolis. This was explicitly
stated in the last Committee deliberations prior to the bill's
presentation to Congress. Thus:
THE CHAIRMAN: Yeah, but we have to go over the suggested
revision. I think this was already approved before, but it was
reconsidered in view of the proposals, set-up, to make the MMDA
stronger. Okay, so if there is no objection to paragraph "f". . . And
then next is paragraph "b," under Section 6. "It shall approve
metro-wide plans, programs and projects and issue ordinances or
resolutions deemed necessary by the MMDA to carry out the
purposes of this Act." Do you have the powers? Does the MMDA...
because that takes the form of a local government unit, a political
subdivision.
HON. [Feliciano] BELMONTE: Yes, I believe so, your Honor. When we
say that it has the policies, it's very clear that those policies must
be followed. Otherwise, what's the use of empowering it to come
out with policies. Now, the policies may be in the form of a
resolution or it may be in the form of a ordinance. The term
"ordinance" in this case really gives it more teeth, your honor.
Otherwise, we are going to see a situation where you have the
power to adopt the policy but you cannot really make it stick as in

the case now, and I think here is Chairman Bunye. I think he will
agree that that is the case now. You've got the power to set a
policy, the body wants to follow your policy, then we say let's call it
an ordinance and see if they will not follow it.
THE CHAIRMAN: That's very nice. I like that. However, there is a
constitutional impediment.1wphi1 You are making this MMDA a
political subdivision. The creation of the MMDA would be subject to
a plebiscite. That is what I'm trying to avoid. I've been trying to
avoid this kind of predicament. Under the Constitution it states: if it
is a political subdivision, once it is created it has to be subject to a
plebiscite. I'm trying to make this as administrative. That's why we
place the Chairman as a cabinet rank.
HON. BELMONTE: All right, Mr. Chairman, okay, what you are saying
there is . . . . .
THE CHAIRMAN: In setting up ordinances, it is a political exercise,
Believe me.
HON. [Elias] LOPEZ: Mr. Chairman, it can be changed into issuances
of rules and regulations. That would be . . . it shall also be enforced.
HON. BELMONTE: Okay, I will . . . .
HON. LOPEZ: And you can also say that violation of such rule, you
impose a sanction. But you know, ordinance has a different legal
connotation.
HON. BELMONTE: All right, I defer to that opinion, your Honor.
THE CHAIRMAN: So instead of ordinances, say rules and
regulations.
HON. BELMONTE: Or resolutions. Actually, they are actually
considering resolutions now.
THE CHAIRMAN: Rules and resolutions.
HON. BELMONTE: Rules, regulations and resolutions. 52
The draft of H. B. No. 14170/11116 was presented by the
Committee to the House of Representatives. The explanatory note
to the bill stated that the proposed MMDA is a "development
authority" which is a "national agency, not a political government
unit." 53 The explanatory note was adopted as the sponsorship
speech of the Committee on Local Governments. No interpellations
or debates were made on the floor and no amendments introduced.
The bill was approved on second reading on the same day it was
presented. 54
When the bill was forwarded to the Senate, several amendments
were made.1wphi1 These amendments, however, did not affect

the nature of the MMDA as originally conceived in the House of

Representatives. 55
It is thus beyond doubt that the MMDA is not a local government
unit or a public corporation endowed with legislative power. It is not
even a "special metropolitan political subdivision" as contemplated
in Section 11, Article X of the Constitution. The creation of a
"special metropolitan political subdivision" requires the approval by
a majority of the votes cast in a plebiscite in the political units
directly affected." 56 R. A. No. 7924 was not submitted to the
inhabitants of Metro Manila in a plebiscite. The Chairman of the
MMDA is not an official elected by the people, but appointed by the
President with the rank and privileges of a cabinet member. In fact,
part of his function is to perform such other duties as may be
assigned to him by the President, 57 whereas in local government
units, the President merely exercises supervisory authority. This
emphasizes the administrative character of the MMDA.
Clearly then, the MMC under P.D. No. 824 is not the same entity as
the MMDA under R.A. No. 7924. Unlike the MMC, the MMDA has no
power to enact ordinances for the welfare of the community. It is
the local government units, acting through their respective
legislative councils, that possess legislative power and police
power. In the case at bar, the Sangguniang Panlungsod of Makati
City did not pass any ordinance or resolution ordering the opening
of Neptune Street, hence, its proposed opening by petitioner MMDA
is illegal and the respondent Court of Appeals did not err in so
ruling. We desist from ruling on the other issues as they are
unnecessary.
We stress that this decision does not make light of the MMDA's
noble efforts to solve the chaotic traffic condition in Metro Manila.
Everyday, traffic jams and traffic bottlenecks plague the metropolis.
Even our once sprawling boulevards and avenues are now
crammed with cars while city streets are clogged with motorists
and pedestrians. Traffic has become a social malaise affecting our
people's productivity and the efficient delivery of goods and
services in the country. The MMDA was created to put some order
in the metropolitan transportation system but unfortunately the
powers granted by its charter are limited. Its good intentions
cannot justify the opening for public use of a private street in a
private subdivision without any legal warrant. The promotion of the
general welfare is not antithetical to the preservation of the rule of
law.1wphi1.nt

IN VIEW WHEREOF, the petition is denied. The Decision and

Resolution of the Court of Appeals in CA-G.R. SP No. 39549 are
affirmed.

IPINASIYA, na tutulan gaya ng dito ay mahigpit na TINUTUTULAN

ang ano mang uri ng sugal dito sa lalawigan ng Laguna lalo't higit
ang Lotto;

G.R. No. 129093

IPINASIYA PA RIN na hilingin tulad ng dito ay hinihiling sa

Panlalawigang pinuno ng Philippine National Police (PNP) Col.
[illegible] na mahigpit na pag-ibayuhin ang pagsugpo sa lahat ng
uri ng illegal na sugal sa buong lalawigan ng Laguna lalo na ang
"Jueteng".3

August 30, 2001

HON. JOSE D. LINA, JR., SANGGUNIANG PANLALAWIGAN OF LAGUNA,

and HON. CALIXTO CATAQUIZ, petitioners,
vs.
HON. FRANCISCO DIZON PAO and TONY CALVENTO, respondents.
QUISUMBING, J.:
For our resolution is a petition for review on certiorari seeking the
reversal of the decision 1 dated February 10, 1997 of the Regional
Trial Court of San Pedro, Laguna, Branch 93, enjoining petitioners
from implementing or enforcing Kapasiyahan Bilang 508, Taon
1995, of the Sangguniang Panlalawigan of Laguna and its
subsequent Order 2 dated April 21, 1997 denying petitioners'
motion for reconsideration.
On December 29, 1995, respondent Tony Calvento was appointed
agent by the Philippine Charity Sweepstakes Office (PCSO) to install
Terminal OM 20 for the operation of lotto. He asked Mayor Calixto
Cataquiz, Mayor of San Pedro, Laguna, for a mayor's permit to open
the lotto outlet. This was denied by Mayor Cataquiz in a letter
dated February 19, 1996. The ground for said denial was an
ordinance passed by the Sangguniang Panlalawigan of Laguna
entitled Kapasiyahan Blg. 508, T. 1995 which was issued on
September 18, 1995. The ordinance reads:
ISANG KAPASIYAHAN TINUTUTULAN ANG MGA "ILLEGAL GAMBLING"
LALO NA ANG LOTTO SA LALAWIGAN NG LAGUNA
SAPAGKA'T, ang sugal dito sa lalawigan ng Laguna ay talamak na;
SAPAGKA'T, ang sugal ay nagdudulot ng masasamang
impluwensiya lalo't higit sa mga kabataan;
KUNG KAYA'T DAHIL DITO, at sa mungkahi nina Kgg. Kgd. Juan M.
Unico at Kgg. Kgd. Gat-Ala A. Alatiit, pinangalawahan ni Kgg. Kgd.
Meliton C. Larano at buong pagkakaisang sinangayunan ng lahat ng
dumalo sa pulong;

As a result of this resolution of denial, respondent Calvento filed a

complaint for declaratory relief with prayer for preliminary
injunction and temporary restraining order. In the said complaint,
respondent Calvento asked the Regional Trial Court of San Pedro
Laguna, Branch 93, for the following reliefs: (1) a preliminary
injunction or temporary restraining order, ordering the defendants
to refrain from implementing or enforcing Kapasiyahan Blg. 508, T.
1995; (2) an order requiring Hon. Municipal Mayor Calixto R
Cataquiz to issue a business permit for the operation of a lotto
outlet; and (3) an order annulling or declaring as invalid
Kapasiyahan Blg. 508, T. 1995.
On February 10, 1997, the respondent judge, Francisco Dizon Pao,
promulgated his decision enjoining the petitioners from
implementing or enforcing resolution or Kapasiyahan Blg. 508, T.
1995. The dispositive portion of said decision reads:
WHEREFORE, premises considered, defendants, their agents and
representatives are hereby enjoined from implementing or
enforcing resolution or kapasiyahan blg. 508, T. 1995 of the
Sangguniang Panlalawigan ng Laguna prohibiting the operation of
the lotto in the province of Laguna.
SO ORDERED.4
Petitioners filed a motion for reconsideration which was
subsequently denied in an Order dated April 21, 1997, which reads:
Acting on the Motion for Reconsideration filed by defendants Jose D.
Lina, Jr. and the Sangguniang Panlalawigan of Laguna, thru counsel,
with the opposition filed by plaintiff's counsel and the comment
thereto filed by counsel for the defendants which were duly noted,
the Court hereby denies the motion for lack of merit.
SO ORDERED.5

On May 23, 1997, petitioners filed this petition alleging that the
following errors were committed by the respondent trial court:
ITHE TRIAL COURT ERRED IN ENJOINING THE PETITIONERS FROM
IMPLEMENTING KAPASIYAHAN BLG. 508, T. 1995 OF THE
SANGGUNIANG PANLALAWIGAN OF LAGUNA PROHIBITING THE
OPERATION OF THE LOTTO IN THE PROVINCE OF LAGUNA.
IITHE TRIAL COURT FAILED TO APPRECIATE THE ARGUMENT
POSITED BY THE PETITIONERS THAT BEFORE ANY GOVERNMENT
PROJECT OR PROGRAM MAY BE IMPLEMENTED BY THE NATIONAL
AGENCIES OR OFFICES, PRIOR CONSULTATION AND APPROVAL BY
THE LOCAL GOVERNMENT UNITS CONCERNED AND OTHER
CONCERNED SECTORS IS REQUIRED.
Petitioners contend that the assailed resolution is a valid policy
declaration of the Provincial Government of Laguna of its vehement
objection to the operation of lotto and all forms of gambling. It is
likewise a valid exercise of the provincial government's police
power under the General Welfare Clause of Republic Act 7160,
otherwise known as the Local Government Code of 1991.6 They
also maintain that respondent's lotto operation is illegal because no
prior consultations and approval by the local government were
sought before it was implemented contrary to the express
provisions of Sections 2 (c) and 27 of R.A. 7160.7
For his part, respondent Calvento argues that the questioned
resolution is, in effect, a curtailment of the power of the state since
in this case the national legislature itself had already declared lotto
as legal and permitted its operations around the country.8 As for
the allegation that no prior consultations and approval were sought
from the sangguniang panlalawigan of Laguna, respondent
Calvento contends this is not mandatory since such a requirement
is merely stated as a declaration of policy and not a self-executing
provision of the Local Government Code of 1991.9 He also states
that his operation of the lotto system is legal because of the
authority given to him by the PCSO, which in turn had been granted
a franchise to operate the lotto by Congress.10
The Office of the Solicitor General (OSG), for the State, contends
that the Provincial Government of Laguna has no power to prohibit
a form of gambling which has been authorized by the national
government.11 He argues that this is based on the principle that
ordinances should not contravene statutes as municipal
governments are merely agents of the national government. The
local councils exercise only delegated legislative powers which
have been conferred on them by Congress. This being the case,

these councils, as delegates, cannot be superior to the principal or

exercise powers higher than those of the latter. The OSG also adds
that the question of whether gambling should be permitted is for
Congress to determine, taking into account national and local
interests. Since Congress has allowed the PCSO to operate lotteries
which PCSO seeks to conduct in Laguna, pursuant to its legislative
grant of authority, the province's Sangguniang Panlalawigan cannot
nullify the exercise of said authority by preventing something
already allowed by Congress.

The issues to be resolved now are the following: (1) whether

Kapasiyahan Blg. 508, T. 1995 of the Sangguniang Panlalawigan of
Laguna and the denial of a mayor's permit based thereon are valid;
and (2) whether prior consultations and approval by the concerned
Sanggunian are needed before a lotto system can be operated in a
given local government unit.
The entire controversy stemmed from the refusal of Mayor Cataquiz
to issue a mayor's permit for the operation of a lotto outlet in favor
of private respondent. According to the mayor, he based his
decision on an existing ordinance prohibiting the operation of lotto
in the province of Laguna. The ordinance, however, merely states
the "objection" of the council to the said game. It is but a mere
policy statement on the part of the local council, which is not selfexecuting. Nor could it serve as a valid ground to prohibit the
operation of the lotto system in the province of Laguna. Even
petitioners admit as much when they stated in their petition that:

5.7. The terms of the Resolution and the validity thereof are
express and clear. The Resolution is a policy declaration of the
Provincial Government of Laguna of its vehement opposition and/or
objection to the operation of and/or all forms of gambling including
the Lotto operation in the Province of Laguna.12

As a policy statement expressing the local government's objection

to the lotto, such resolution is valid. This is part of the local
government's autonomy to air its views which may be contrary to

that of the national government's. However, this freedom to

exercise contrary views does not mean that local governments may
actually enact ordinances that go against laws duly enacted by
Congress. Given this premise, the assailed resolution in this case
could not and should not be interpreted as a measure or ordinance
prohibiting the operation of lotto.

In our system of government, the power of local government units

to legislate and enact ordinances and resolutions is merely a
delegated power coming from Congress. As held in Tatel vs.
Virac,13 ordinances should not contravene an existing statute
enacted by Congress. The reasons for this is obvious, as elucidated
in Magtajas v. Pryce Properties Corp.14

The game of lotto is a game of chance duly authorized by the

national government through an Act of Congress. Republic Act
1169, as amended by Batas Pambansa Blg. 42, is the law which
grants a franchise to the PCSO and allows it to operate the
lotteries. The pertinent provision reads:

Municipal governments are only agents of the national government.

Local councils exercise only delegated legislative powers conferred
upon them by Congress as the national lawmaking body. The
delegate cannot be superior to the principal or exercise powers
higher than those of the latter. It is a heresy to suggest that the
local government units can undo the acts of Congress, from which
they have derived their power in the first place, and negate by
mere ordinance the mandate of the statute.

SECTION 1. The Philippine Charity Sweepstakes Office. The

Philippine Charity Sweepstakes Office, hereinafter designated the
Office, shall be the principal government agency for raising and
providing for funds for health programs, medical assistance and
services and charities of national character, and as such shall have
the general powers conferred in section thirteen of Act Numbered
One thousand four hundred fifty-nine, as amended, and shall have
the authority:

A. To hold and conduct charity sweepstakes races, lotteries, and

other similar activities, in such frequency and manner, as shall be
determined, and subject to such rules and regulations as shall be
promulgated by the Board of Directors.

This statute remains valid today. While lotto is clearly a game of

chance, the national government deems it wise and proper to
permit it. Hence, the Sangguniang Panlalawigan of Laguna, a local
government unit, cannot issue a resolution or an ordinance that
would seek to prohibit permits. Stated otherwise, what the national
legislature expressly allows by law, such as lotto, a provincial board
may not disallow by ordinance or resolution.

Municipal corporations owe their origin to, and derive their powers
and rights wholly from the legislature. It breathes into them the
breath of life, without which they cannot exist. As it creates, so it
may destroy. As it may destroy, it may abridge and control. Unless
there is some constitutional limitation on the right, the legislature
might, by a single act, and if we can suppose it capable of so great
a folly and so great a wrong, sweep from existence all of the
municipal corporations in the state, and the corporation could not
prevent it. We know of no limitation on the right so far as the
corporation themselves are concerned. They are, so to phrase it,
the mere tenants at will of the legislature (citing Clinton vs. Ceder
Rapids, etc. Railroad Co., 24 Iowa 455).

Nothing in the present constitutional provision enhancing local

autonomy dictates a different conclusion.

The basic relationship between the national legislature and the

local government units has not been enfeebled by the new

provisions in the Constitution strengthening the policy of local

autonomy. Without meaning to detract from that policy, we here
confirm that Congress retains control of the local government units
although in significantly reduced degree now than under our
previous Constitutions. The power to create still includes the power
to destroy. The power to grant still includes the power to withhold
or recall. True, there are certain notable innovations in the
Constitution, like the direct conferment on the local government
units of the power to tax (citing Art. X, Sec. 5, Constitution), which
cannot now be withdrawn by mere statute. By and large, however,
the national legislature is still the principal of the local government
units, which cannot defy its will or modify or violate it.15

Ours is still a unitary form of government, not a federal state. Being

so, any form of autonomy granted to local governments will
necessarily be limited and confined within the extent allowed by
the central authority. Besides, the principle of local autonomy under
the 1987 Constitution simply means "decentralization". It does not
make local governments sovereign within the state or an "imperium
in imperio".16

To conclude our resolution of the first issue, respondent mayor of

San Pedro, cannot avail of Kapasiyahan Bilang 508, Taon 1995, of
the Provincial Board of Laguna as justification to prohibit lotto in his
municipality. For said resolution is nothing but an expression of the
local legislative unit concerned. The Board's enactment, like spring
water, could not rise above its source of power, the national
legislature.

As for the second issue, we hold that petitioners erred in declaring

that Sections 2 (c) and 27 of Republic Act 7160, otherwise known
as the Local Government Code of 1991, apply mandatorily in the
setting up of lotto outlets around the country. These provisions
state:

SECTION 2. Declaration of Policy. . . .

(c) It is likewise the policy of the State to require all national

agencies and offices to conduct periodic consultations with
appropriate local government units, non-governmental and
people's organizations, and other concerned sectors of the
community before any project or program is implemented in their
respective jurisdictions.

SECTION 27. Prior Consultations Required. No project or program

shall be implemented by government authorities unless the
consultations mentioned in Section 2 (c) and 26 hereof are
complied with, and prior approval of the sanggunian concerned is
obtained; Provided, that occupants in areas where such projects are
to be implemented shall not be evicted unless, appropriate
relocation sites have been provided, in accordance with the
provisions of the Constitution.

From a careful reading of said provisions, we find that these apply

only to national programs and/or projects which are to be
implemented in a particular local community. Lotto is neither a
program nor a project of the national government, but of a
charitable institution, the PCSO. Though sanctioned by the national
government, it is far fetched to say that lotto falls within the
contemplation of Sections 2 (c) and 27 of the Local Government
Code.

Section 27 of the Code should be read in conjunction with Section

26 thereof.17 Section 26 reads:

SECTION 26. Duty of National Government Agencies in the

Maintenance of Ecological Balance. - It shall be the duty of every
national agency or government-owned or controlled corporation

authorizing or involved in the planning and implementation of any

project or program that may cause pollution, climatic change,
depletion of non-renewable resources, loss of crop land, range-land,
or forest cover, and extinction of animal or plant species, to consult
with the local government units, nongovernmental organizations,
and other sectors concerned and explain the goals and objectives
of the project or program, its impact upon the people and the
community in terms of environmental or ecological balance, and
the measures that will be undertaken to prevent or minimize the
adverse effects thereof.

Thus, the projects and programs mentioned in Section 27 should be

interpreted to mean projects and programs whose effects are
among those enumerated in Section 26 and 27, to wit, those that:
(1) may cause pollution; (2) may bring about climatic change; (3)
may cause the depletion of non-renewable resources; (4) may
result in loss of crop land, range-land, or forest cover; (5) may
eradicate certain animal or plant species from the face of the
planet; and (6) other projects or programs that may call for the
eviction of a particular group of people residing in the locality
where these will be implemented. Obviously, none of these effects
will be produced by the introduction of lotto in the province of
Laguna.

Moreover, the argument regarding lack of consultation raised by

petitioners is clearly an afterthought on their part. There is no
indication in the letter of Mayor Cataquiz that this was one of the
reasons for his refusal to issue a permit. That refusal was
predicated solely but erroneously on the provisions of Kapasiyahan
Blg. 508, Taon 1995, of the Sangguniang Panlalawigan of Laguna.

any act of implementation. It provides no sufficient legal basis for

respondent mayor's refusal to issue the permit sought by private
respondent in connection with a legitimate business activity
authorized by a law passed by Congress.

WHEREFORE, the petition is DENIED for lack of merit. The Order of

the Regional Trial Court of San Pedro, Laguna enjoining the
petitioners from implementing or enforcing Resolution or
Kapasiyahan Blg. 508, T. 1995, of the Provincial Board of Laguna is
hereby AFFIRMED. No costs.

SO ORDERED.

G.R. No. 80391 February 28, 1989

SULTAN ALIMBUSAR P. LIMBONA, petitioner,

vs.
CONTE MANGELIN, SALIC ALI, SALINDATO ALI, PILIMPINAS
CONDING, ACMAD TOMAWIS, GERRY TOMAWIS, JESUS ORTIZ,
ANTONIO DELA FUENTE, DIEGO PALOMARES, JR., RAUL
DAGALANGIT, and BIMBO SINSUAT, respondents.

Ambrosio Padilla, Mempin & Reyes Law Offices for petitioner

petitioner.
Makabangkit B. Lanto for respondents.

In sum, we find no reversible error in the RTC decision enjoining

Mayor Cataquiz from enforcing or implementing the Kapasiyahan
Blg. 508, T. 1995, of the Sangguniang Panlalawigan of Laguna. That
resolution expresses merely a policy statement of the Laguna
provincial board. It possesses no binding legal force nor requires

SARMIENTO, J.:

The acts of the Sangguniang Pampook of Region XII are assailed in

this petition. The antecedent facts are as follows:

presence in the house committee hearing of Congress take (sic)

precedence over any pending business in batasang pampook ... ."

1. On September 24, 1986, petitioner Sultan Alimbusar Limbona

was appointed as a member of the Sangguniang Pampook,
Regional Autonomous Government, Region XII, representing Lanao
del Sur.

6. In compliance with the aforesaid instruction of the petitioner,

Acting Secretary Alimbuyao sent to the members of the Assembly
the following telegram:

2. On March 12, 1987 petitioner was elected Speaker of the

Regional Legislative Assembly or Batasang Pampook of Central
Mindanao (Assembly for brevity).
3. Said Assembly is composed of eighteen (18) members. Two of
said members, respondents Acmad Tomawis and Pakil Dagalangit,
filed on March 23, 1987 with the Commission on Elections their
respective certificates of candidacy in the May 11, 1987
congressional elections for the district of Lanao del Sur but they
later withdrew from the aforesaid election and thereafter resumed
again their positions as members of the Assembly.
4. On October 21, 1987 Congressman Datu Guimid Matalam,
Chairman of the Committee on Muslim Affairs of the House of
Representatives, invited Mr. Xavier Razul, Pampook Speaker of
Region XI, Zamboanga City and the petitioner in his capacity as
Speaker of the Assembly, Region XII, in a letter which reads:
The Committee on Muslim Affairs well undertake consultations and
dialogues with local government officials, civic, religious
organizations and traditional leaders on the recent and present
political developments and other issues affecting Regions IX and
XII.
The result of the conference, consultations and dialogues would
hopefully chart the autonomous governments of the two regions as
envisioned and may prod the President to constitute immediately
the Regional Consultative Commission as mandated by the
Commission.
You are requested to invite some members of the Pampook
Assembly of your respective assembly on November 1 to 15, 1987,
with venue at the Congress of the Philippines. Your presence,
unstinted support and cooperation is (sic) indispensable.
5. Consistent with the said invitation, petitioner sent a telegram to
Acting Secretary Johnny Alimbuyao of the Assembly to wire all
Assemblymen that there shall be no session in November as "our

TRANSMITTING FOR YOUR INFORMATION AND GUIDANCE TELEGRAM

RECEIVED FROM SPEAKER LIMBONA QUOTE CONGRESSMAN JIMMY
MATALAM CHAIRMAN OF THE HOUSE COMMITTEE ON MUSLIM
AFFAIRS REQUESTED ME TO ASSIST SAID COMMITTEE IN THE
DISCUSSION OF THE PROPOSED AUTONOMY ORGANIC NOV. 1ST TO
15. HENCE WERE ALL ASSEMBLYMEN THAT THERE SHALL BE NO
SESSION IN NOVEMBER AS OUR PRESENCE IN THE HOUSE
COMMITTEE HEARING OF CONGRESS TAKE PRECEDENCE OVER ANY
PENDING BUSINESS IN BATASANG PAMPOOK OF MATALAM FOLLOWS
UNQUOTE REGARDS.
7. On November 2, 1987, the Assembly held session in defiance of
petitioner's advice, with the following assemblymen present:
1. Sali, Salic
2. Conding, Pilipinas (sic)
3. Dagalangit, Rakil
4. Dela Fuente, Antonio
5. Mangelen, Conte
6. Ortiz, Jesus
7. Palomares, Diego
8. Sinsuat, Bimbo
9. Tomawis, Acmad
10. Tomawis, Jerry
After declaring the presence of a quorum, the Speaker Pro-Tempore
was authorized to preside in the session. On Motion to declare the
seat of the Speaker vacant, all Assemblymen in attendance voted
in the affirmative, hence, the chair declared said seat of the
Speaker vacant. 8. On November 5, 1987, the session of the
Assembly resumed with the following Assemblymen present:
1.
2.
3.
4.
5.
6.
7.
8.
9.

Mangelen Conte-Presiding Officer

Ali Salic
Ali Salindatu
Aratuc, Malik
Cajelo, Ree
Conding, Pilipins (sic)
Dagalangit, Rakil
Dela Fuente, Antnio
Ortiz, Jesus

10 Palomares, Diego
11. Quijano, Jesus
12. Sinsuat, Bimbo
13. Tomawis, Acmad
14. Tomawis, Jerry
An excerpt from the debates and proceeding of said session reads:
HON. DAGALANGIT: Mr. Speaker, Honorable Members of the House,
with the presence of our colleagues who have come to attend the
session today, I move to call the names of the new comers in order
for them to cast their votes on the previous motion to declare the
position of the Speaker vacant. But before doing so, I move also
that the designation of the Speaker Pro Tempore as the Presiding
Officer and Mr. Johnny Evangelists as Acting Secretary in the
session last November 2, 1987 be reconfirmed in today's session.
HON. SALIC ALI: I second the motions.
PRESIDING OFFICER: Any comment or objections on the two
motions presented? Me chair hears none and the said motions are
approved. ...
Twelve (12) members voted in favor of the motion to declare the
seat of the Speaker vacant; one abstained and none voted against.
1
Accordingly, the petitioner prays for judgment as follows:
WHEREFORE, petitioner respectfully prays that(a) This Petition be given due course;
(b) Pending hearing, a restraining order or writ of preliminary
injunction be issued enjoining respondents from proceeding with
their session to be held on November 5, 1987, and on any day
thereafter;
(c) After hearing, judgment be rendered declaring the proceedings
held by respondents of their session on November 2, 1987 as null
and void;
(d) Holding the election of petitioner as Speaker of said Legislative
Assembly or Batasan Pampook, Region XII held on March 12, 1987
valid and subsisting, and
(e) Making the injunction permanent.

Petitioner likewise prays for such other relief as may be just and
equitable. 2
Pending further proceedings, this Court, on January 19, 1988,
received a resolution filed by the Sangguniang Pampook,
"EXPECTING ALIMBUSAR P. LIMBONA FROM MEMBERSHIP OF THE
SANGGUNIANG PAMPOOK AUTONOMOUS REGION XII," 3 on the
grounds, among other things, that the petitioner "had caused to be
prepared and signed by him paying [sic] the salaries and
emoluments of Odin Abdula, who was considered resigned after
filing his Certificate of Candidacy for Congressmen for the First
District of Maguindanao in the last May 11, elections. . . and
nothing in the record of the Assembly will show that any request for
reinstatement by Abdula was ever made . . ." 4 and that "such
action of Mr. Lim bona in paying Abdula his salaries and
emoluments without authority from the Assembly . . . constituted a
usurpation of the power of the Assembly," 5 that the petitioner
"had recently caused withdrawal of so much amount of cash from
the Assembly resulting to the non-payment of the salaries and
emoluments of some Assembly [sic]," 6 and that he had "filed a
case before the Supreme Court against some members of the
Assembly on question which should have been resolved within the
confines of the Assembly," 7 for which the respondents now submit
that the petition had become "moot and academic". 8
The first question, evidently, is whether or not the expulsion of the
petitioner (pending litigation) has made the case moot and
academic.
We do not agree that the case has been rendered moot and
academic by reason simply of the expulsion resolution so issued.
For, if the petitioner's expulsion was done purposely to make this
petition moot and academic, and to preempt the Court, it will not
make it academic.
On the ground of the immutable principle of due process alone, we
hold that the expulsion in question is of no force and effect. In the
first place, there is no showing that the Sanggunian had conducted
an investigation, and whether or not the petitioner had been heard
in his defense, assuming that there was an investigation, or
otherwise given the opportunity to do so. On the other hand, what
appears in the records is an admission by the Assembly (at least,
the respondents) that "since November, 1987 up to this writing, the
petitioner has not set foot at the Sangguniang Pampook." 9 "To be
sure, the private respondents aver that "[t]he Assemblymen, in a

conciliatory gesture, wanted him to come to Cotabato City," 10 but

that was "so that their differences could be threshed out and
settled." 11 Certainly, that avowed wanting or desire to thresh out
and settle, no matter how conciliatory it may be cannot be a
substitute for the notice and hearing contemplated by law.
While we have held that due process, as the term is known in
administrative law, does not absolutely require notice and that a
party need only be given the opportunity to be heard, 12 it does
not appear herein that the petitioner had, to begin with, been made
aware that he had in fact stood charged of graft and corruption
before his collegues. It cannot be said therefore that he was
accorded any opportunity to rebut their accusations. As it stands,
then, the charges now levelled amount to mere accusations that
cannot warrant expulsion.
In the second place, (the resolution) appears strongly to be a bare
act of vendetta by the other Assemblymen against the petitioner
arising from what the former perceive to be abduracy on the part of
the latter. Indeed, it (the resolution) speaks of "a case [having been
filed] [by the petitioner] before the Supreme Court . . . on question
which should have been resolved within the confines of the
Assemblyman act which some members claimed unnecessarily and
unduly assails their integrity and character as representative of the
people" 13 an act that cannot possibly justify expulsion. Access to
judicial remedies is guaranteed by the Constitution, 14 and, unless
the recourse amounts to malicious prosecution, no one may be
punished for seeking redress in the courts.
We therefore order reinstatement, with the caution that should the
past acts of the petitioner indeed warrant his removal, the
Assembly is enjoined, should it still be so minded, to commence
proper proceedings therefor in line with the most elementary
requirements of due process. And while it is within the discretion of
the members of the Sanggunian to punish their erring colleagues,
their acts are nonetheless subject to the moderating band of this
Court in the event that such discretion is exercised with grave
abuse.
It is, to be sure, said that precisely because the Sangguniang
Pampook(s) are "autonomous," the courts may not rightfully
intervene in their affairs, much less strike down their acts. We
come, therefore, to the second issue: Are the so-called autonomous
governments of Mindanao, as they are now constituted, subject to
the jurisdiction of the national courts? In other words, what is the

extent of self-government given to the two autonomous

governments of Region IX and XII?
The autonomous governments of Mindanao were organized in
Regions IX and XII by Presidential Decree No. 1618 15 promulgated
on July 25, 1979. Among other things, the Decree established
"internal autonomy" 16 in the two regions "[w]ithin the framework
of the national sovereignty and territorial integrity of the Republic
of the Philippines and its Constitution," 17 with legislative and
executive machinery to exercise the powers and responsibilities 18
specified therein.
It requires the autonomous regional governments to "undertake all
internal administrative matters for the respective regions," 19
except to "act on matters which are within the jurisdiction and
competence of the National Government," 20 "which include, but
are not limited to, the following:
(1) National defense and security;
(2) Foreign relations;
(3) Foreign trade;
(4) Currency, monetary affairs, foreign exchange, banking and
quasi-banking, and external borrowing,
(5) Disposition, exploration, development, exploitation or utilization
of all natural resources;
(6) Air and sea transport
(7) Postal matters and telecommunications;
(8) Customs and quarantine;
(9) Immigration and deportation;
(10) Citizenship and naturlization;
(11) National economic, social and educational planning; and
(12) General auditing.
In relation to the central government, it provides that "[t]he
President shall have the power of general supervision and control
over the Autonomous Regions ..." 22
Now, autonomy is either decentralization of administration or
decentralization of power. There is decentralization of
administration when the central government delegates
administrative powers to political subdivisions in order to broaden
the base of government power and in the process to make local
governments "more responsive and accountable," 23 "and ensure
their fullest development as self-reliant communities and make
them more effective partners in the pursuit of national
development and social progress." 24 At the same time, it relieves

the central government of the burden of managing local affairs and

enables it to concentrate on national concerns. The President
exercises "general supervision" 25 over them, but only to "ensure
that local affairs are administered according to law." 26 He has no
control over their acts in the sense that he can substitute their
judgments with his own. 27
Decentralization of power, on the other hand, involves an
abdication of political power in the favor of local governments units
declare to be autonomous . In that case, the autonomous
government is free to chart its own destiny and shape its future
with minimum intervention from central authorities. According to a
constitutional author, decentralization of power amounts to "selfimmolation," since in that event, the autonomous government
becomes accountable not to the central authorities but to its
constituency. 28
But the question of whether or not the grant of autonomy Muslim
Mindanao under the 1987 Constitution involves, truly, an effort to
decentralize power rather than mere administration is a question
foreign to this petition, since what is involved herein is a local
government unit constituted prior to the ratification of the present
Constitution. Hence, the Court will not resolve that controversy
now, in this case, since no controversy in fact exists. We will resolve
it at the proper time and in the proper case.
Under the 1987 Constitution, local government units enjoy
autonomy in these two senses, thus:
Section 1. The territorial and political subdivisions of the Republic of
the Philippines are the provinces, cities, municipalities, and
barangays. Here shall be autonomous regions in Muslim
Mindanao ,and the Cordilleras as hereinafter provided. 29
Sec. 2. The territorial and political subdivisions shall enjoy local
autonomy. 30
See. 15. Mere shall be created autonomous regions in Muslim
Mindanao and in the Cordilleras consisting of provinces, cities,
municipalities, and geographical areas sharing common and
distinctive historical and cultural heritage, economic and social
structures, and other relevant characteristics within the framework
of this Constitution and the national sovereignty as well as
territorial integrity of the Republic of the Philippines. 31

An autonomous government that enjoys autonomy of the latter

category [CONST. (1987), art. X, sec. 15.] is subject alone to the
decree of the organic act creating it and accepted principles on the
effects and limits of "autonomy." On the other hand, an
autonomous government of the former class is, as we noted, under
the supervision of the national government acting through the
President (and the Department of Local Government). 32 If the
Sangguniang Pampook (of Region XII), then, is autonomous in the
latter sense, its acts are, debatably beyond the domain of this
Court in perhaps the same way that the internal acts, say, of the
Congress of the Philippines are beyond our jurisdiction. But if it is
autonomous in the former category only, it comes unarguably
under our jurisdiction. An examination of the very Presidential
Decree creating the autonomous governments of Mindanao
persuades us that they were never meant to exercise autonomy in
the second sense, that is, in which the central government commits
an act of self-immolation. Presidential Decree No. 1618, in the first
place, mandates that "[t]he President shall have the power of
general supervision and control over Autonomous Regions." 33 In
the second place, the Sangguniang Pampook, their legislative arm,
is made to discharge chiefly administrative services, thus:
SEC. 7. Powers of the Sangguniang Pampook. The Sangguniang
Pampook shall exercise local legislative powers over regional affairs
within the framework of national development plans, policies and
goals, in the following areas:
(1) Organization of regional administrative system;
(2) Economic, social and cultural development of the Autonomous
Region;
(3) Agricultural, commercial and industrial programs for the
Autonomous Region;
(4) Infrastructure development for the Autonomous Region;
(5) Urban and rural planning for the Autonomous Region;
(6) Taxation and other revenue-raising measures as provided for in
this Decree;
(7) Maintenance, operation and administration of schools
established by the Autonomous Region;

(8) Establishment, operation and maintenance of health, welfare

and other social services, programs and facilities;
(9) Preservation and development of customs, traditions, languages
and culture indigenous to the Autonomous Region; and
(10) Such other matters as may be authorized by law,including the
enactment of such measures as may be necessary for the
promotion of the general welfare of the people in the Autonomous
Region.
The President shall exercise such powers as may be necessary to
assure that enactment and acts of the Sangguniang Pampook and
the Lupong Tagapagpaganap ng Pook are in compliance with this
Decree, national legislation, policies, plans and programs.
The Sangguniang Pampook shall maintain liaison with the Batasang
Pambansa. 34
Hence, we assume jurisdiction. And if we can make an inquiry in
the validity of the expulsion in question, with more reason can we
review the petitioner's removal as Speaker.
Briefly, the petitioner assails the legality of his ouster as Speaker
on the grounds that: (1) the Sanggunian, in convening on
November 2 and 5, 1987 (for the sole purpose of declaring the
office of the Speaker vacant), did so in violation of the Rules of the
Sangguniang Pampook since the Assembly was then on recess; and
(2) assuming that it was valid, his ouster was ineffective
nevertheless for lack of quorum.
Upon the facts presented, we hold that the November 2 and 5,
1987 sessions were invalid. It is true that under Section 31 of the
Region XII Sanggunian Rules, "[s]essions shall not be suspended or
adjourned except by direction of the Sangguniang Pampook," 35but
it provides likewise that "the Speaker may, on [sic] his discretion,
declare a recess of "short intervals." 36 Of course, there is
disagreement between the protagonists as to whether or not the
recess called by the petitioner effective November 1 through 15,
1987 is the "recess of short intervals" referred to; the petitioner
says that it is while the respondents insist that, to all intents and
purposes, it was an adjournment and that "recess" as used by their
Rules only refers to "a recess when arguments get heated up so
that protagonists in a debate can talk things out informally and
obviate dissenssion [sic] and disunity. 37 The Court agrees with the
respondents on this regard, since clearly, the Rules speak of "short

intervals." Secondly, the Court likewise agrees that the Speaker

could not have validly called a recess since the Assembly had yet
to convene on November 1, the date session opens under the same
Rules. 38 Hence, there can be no recess to speak of that could
possibly interrupt any session. But while this opinion is in accord
with the respondents' own, we still invalidate the twin sessions in
question, since at the time the petitioner called the "recess," it was
not a settled matter whether or not he could. do so. In the second
place, the invitation tendered by the Committee on Muslim Affairs
of the House of Representatives provided a plausible reason for the
intermission sought. Thirdly, assuming that a valid recess could not
be called, it does not appear that the respondents called his
attention to this mistake. What appears is that instead, they
opened the sessions themselves behind his back in an apparent act
of mutiny. Under the circumstances, we find equity on his side. For
this reason, we uphold the "recess" called on the ground of good
faith.
It does not appear to us, moreover, that the petitioner had resorted
to the aforesaid "recess" in order to forestall the Assembly from
bringing about his ouster. This is not apparent from the pleadings
before us. We are convinced that the invitation was what
precipitated it.
In holding that the "recess" in question is valid, we are not to be
taken as establishing a precedent, since, as we said, a recess can
not be validly declared without a session having been first opened.
In upholding the petitioner herein, we are not giving him a carte
blanche to order recesses in the future in violation of the Rules, or
otherwise to prevent the lawful meetings thereof.
Neither are we, by this disposition, discouraging the Sanggunian
from reorganizing itself pursuant to its lawful prerogatives.
Certainly, it can do so at the proper time. In the event that be
petitioner should initiate obstructive moves, the Court is certain
that it is armed with enough coercive remedies to thwart them. 39
In view hereof, we find no need in dwelling on the issue of quorum.
WHEREFORE, premises considered, the petition is GRANTED. The
Sangguniang Pampook, Region XII, is ENJOINED to (1) REINSTATE
the petitioner as Member, Sangguniang Pampook, Region XII; and
(2) REINSTATE him as Speaker thereof. No costs.
BAI SANDRA S. A. SEMA, G.R. No. 177597

Petitioner, - versus -COMMISSION ON ELECTIONSand DIDAGEN P.

DILANGALEN,
Respondents.

governor and majority of the regular members of the Sangguniang

Panlalawigan.

PERFECTO F. MARQUEZ, G.R. No. 178628Petitioner,

The incumbent elective provincial officials of the Province of

Maguindanao shall continue to serve their unexpired terms in the
province that they will choose or where they are residents:
Provided, that where an elective position in both provinces
becomes vacant as a consequence of the creation of the Province
of Shariff Kabunsuan, all incumbent elective provincial officials shall
have preference for appointment to a higher elective vacant
position and for the time being be appointed by the Regional
Governor, and shall hold office until their successors shall have
been elected and qualified in the next local elections; Provided,
further, that they shall continue to receive the salaries they are
receiving at the time of the approval of this Act until the new
readjustment of salaries in accordance with law. Provided,
furthermore, that there shall be no diminution in the number of the
members of the Sangguniang Panlalawigan of the mother province.

COMMISSION ON ELECTIONS, Promulgated:

Respondent. July 16, 2008
The Case
These consolidated petitions[1] seek to annul Resolution No. 7902,
dated 10 May 2007, of the Commission on Elections (COMELEC)
treating Cotabato City as part of the legislative district of the
Province of Shariff Kabunsuan.[2]
The Facts
The Ordinance appended to the 1987 Constitution apportioned two
legislative districts for the Province of Maguindanao. The first
legislative district consists of Cotabato City and eight
municipalities.[3] Maguindanao forms part of the Autonomous
Region in Muslim Mindanao (ARMM), created under its Organic Act,
Republic Act No. 6734 (RA 6734), as amended by Republic Act No.
9054 (RA 9054).[4] Although under the Ordinance, Cotabato City
forms part of Maguindanaos first legislative district, it is not part of
the ARMM but of Region XII, having voted against its inclusion in
the ARMM in the plebiscite held in November 1989.
On 28 August 2006, the ARMMs legislature, the ARMM Regional
Assembly, exercising its power to create provinces under Section
19, Article VI of RA 9054,[5] enacted Muslim Mindanao Autonomy
Act No. 201 (MMA Act 201) creating the Province of Shariff
Kabunsuan composed of the eight municipalities in the first district
of Maguindanao. MMA Act 201 provides:
Section 1. The Municipalities of Barira, Buldon, Datu Odin Sinsuat,
Kabuntalan, Matanog, Parang, Sultan Kudarat, Sultan Mastura, and
Upi are hereby separated from the Province of Maguindanao and
constituted into a distinct and independent province, which is
hereby created, to be known as the Province of Shariff Kabunsuan.
Sec. 5. The corporate existence of this province shall commence
upon the appointment by the Regional Governor or election of the

Except as may be provided by national law, the existing legislative

district, which includes Cotabato as a part thereof, shall remain.
Later, three new municipalities[6] were carved out of the original
nine municipalities constituting Shariff Kabunsuan, bringing its total
number of municipalities to 11. Thus, what was left of Maguindanao
were the municipalities constituting its second legislative district.
Cotabato City, although part of Maguindanaos first legislative
district, is not part of the Province of Maguindanao.
The voters of Maguindanao ratified Shariff Kabunsuans creation in
a plebiscite held on 29 October 2006.
On 6 February 2007, the Sangguniang Panlungsod of Cotabato City
passed Resolution No. 3999 requesting the COMELEC to clarify the
status of Cotabato City in view of the conversion of the First District
of Maguindanao into a regular province under MMA Act 201.
In answer to Cotabato Citys query, the COMELEC issued Resolution
No. 07-0407 on 6 March 2007 "maintaining the status quo with
Cotabato City as part of Shariff Kabunsuan in the First Legislative
District of Maguindanao. Resolution No. 07-0407, which adopted
the recommendation of the COMELECs Law Department under a
Memorandum dated 27 February 2007,[7] provides in pertinent
parts:

Considering the foregoing, the Commission RESOLVED, as it hereby

resolves, to adopt the recommendation of the Law Department that
pending the enactment of the appropriate law by Congress, to
maintain the status quo with Cotabato City as part of Shariff
Kabunsuan in the First Legislative District of Maguindanao.
(Emphasis supplied)

However, in preparation for the 14 May 2007 elections, the

COMELEC promulgated on 29 March 2007 Resolution No. 7845
stating that Maguindanaos first legislative district is composed only
of Cotabato City because of the enactment of MMA Act 201.[8]

On 10 May 2007, the COMELEC issued Resolution No. 7902, subject

of these petitions, amending Resolution No. 07-0407 by renaming
the legislative district in question as Shariff Kabunsuan Province
with Cotabato City (formerly First District of Maguindanao with
Cotabato City).[9]

In G.R. No. 177597, Sema, who was a candidate in the 14 May 2007
elections for Representative of Shariff Kabunsuan with Cotabato
City, prayed for the nullification of COMELEC Resolution No. 7902
and the exclusion from canvassing of the votes cast in Cotabato
City for that office. Sema contended that Shariff Kabunsuan is
entitled to one representative in Congress under Section 5 (3),
Article VI of the Constitution[10] and Section 3 of the Ordinance
appended to the Constitution.[11] Thus, Sema asserted that the
COMELEC acted without or in excess of its jurisdiction in issuing
Resolution No. 7902 which maintained the status quo in
Maguindanaos first legislative district despite the COMELECs earlier
directive in Resolution No. 7845 designating Cotabato City as the
lone component of Maguindanaos reapportioned first legislative
district.[12] Sema further claimed that in issuing Resolution No.
7902, the COMELEC usurped Congress power to create or
reapportion legislative districts.

In its Comment, the COMELEC, through the Office of the Solicitor

General (OSG), chose not to reach the merits of the case and
merely contended that (1) Sema wrongly availed of the writ of
certiorari to nullify COMELEC Resolution No. 7902 because the
COMELEC issued the same in the exercise of its administrative, not
quasi-judicial, power and (2) Semas prayer for the writ of
prohibition in G.R. No. 177597 became moot with the proclamation
of respondent Didagen P. Dilangalen (respondent Dilangalen) on 1
June 2007 as representative of the legislative district of Shariff
Kabunsuan Province with Cotabato City.

In his Comment, respondent Dilangalen countered that Sema is

estopped from questioning COMELEC Resolution No. 7902 because
in her certificate of candidacy filed on 29 March 2007, Sema
indicated that she was seeking election as representative of Shariff
Kabunsuan including Cotabato City. Respondent Dilangalen added
that COMELEC Resolution No. 7902 is constitutional because it did
not apportion a legislative district for Shariff Kabunsuan or
reapportion the legislative districts in Maguindanao but merely
renamed Maguindanaos first legislative district. Respondent
Dilangalen further claimed that the COMELEC could not reapportion
Maguindanaos first legislative district to make Cotabato City its sole
component unit as the power to reapportion legislative districts lies
exclusively with Congress, not to mention that Cotabato City does
not meet the minimum population requirement under Section 5 (3),
Article VI of the Constitution for the creation of a legislative district
within a city.[13]

Sema filed a Consolidated Reply controverting the matters raised in

respondents Comments and reiterating her claim that the COMELEC
acted ultra vires in issuing Resolution No. 7902.

In the Resolution of 4 September 2007, the Court required the

parties in G.R. No. 177597 to comment on the issue of whether a
province created by the ARMM Regional Assembly under Section
19, Article VI of RA 9054 is entitled to one representative in the
House of Representatives without need of a national law creating a

legislative district for such new province. The parties submitted

their compliance as follows:

(1) Sema answered the issue in the affirmative on the following

grounds: (a) the Court in Felwa v. Salas[14] stated that when a
province is created by statute, the corresponding representative
district comes into existence neither by authority of that statute
which cannot provide otherwise nor by apportionment, but by
operation of the Constitution, without a reapportionment; (b)
Section 462 of Republic Act No. 7160 (RA 7160) affirms the
apportionment of a legislative district incident to the creation of a
province; and (c) Section 5 (3), Article VI of the Constitution and
Section 3 of the Ordinance appended to the Constitution mandate
the apportionment of a legislative district in newly created
provinces.

(2) The COMELEC, again represented by the OSG, apparently

abandoned its earlier stance on the propriety of issuing Resolution
Nos. 07-0407 and 7902 and joined causes with Sema, contending
that Section 5 (3), Article VI of the Constitution is self-executing.
Thus, every new province created by the ARMM Regional Assembly
is ipso facto entitled to one representative in the House of
Representatives even in the absence of a national law; and

(3) Respondent Dilangalen answered the issue in the negative on

the following grounds: (a) the province contemplated in Section 5
(3), Article VI of the Constitution is one that is created by an act of
Congress taking into account the provisions in RA 7160 on the
creation of provinces; (b) Section 3, Article IV of RA 9054 withheld
from the ARMM Regional Assembly the power to enact measures
relating to national elections, which encompasses the
apportionment of legislative districts for members of the House of
Representatives; (c) recognizing a legislative district in every
province the ARMM Regional Assembly creates will lead to the
disproportionate representation of the ARMM in the House of
Representatives as the Regional Assembly can create provinces
without regard to the requirements in Section 461 of RA 7160; and
(d) Cotabato City, which has a population of less than 250,000, is
not entitled to a representative in the House of Representatives.

On 27 November 2007, the Court heard the parties in G.R. No.

177597 in oral arguments on the following issues: (1) whether
Section 19, Article VI of RA 9054, delegating to the ARMM Regional
Assembly the power to create provinces, is constitutional; and (2) if
in the affirmative, whether a province created under Section 19,
Article VI of RA 9054 is entitled to one representative in the House
of Representatives without need of a national law creating a
legislative district for such new province.[15]

In compliance with the Resolution dated 27 November 2007, the

parties in G.R. No. 177597 filed their respective Memoranda on the
issues raised in the oral arguments.[16] On the question of the
constitutionality of Section 19, Article VI of RA 9054, the parties in
G.R. No. 177597 adopted the following positions:

(1) Sema contended that Section 19, Article VI of RA 9054 is

constitutional (a) as a valid delegation by Congress to the ARMM of
the power to create provinces under Section 20 (9), Article X of the
Constitution granting to the autonomous regions, through their
organic acts, legislative powers over other matters as may be
authorized by law for the promotion of the general welfare of the
people of the region and (b) as an amendment to Section 6 of RA
7160.[17] However, Sema concedes that, if taken literally, the
grant in Section 19, Article VI of RA 9054 to the ARMM Regional
Assembly of the power to prescribe standards lower than those
mandated in RA 7160 in the creation of provinces contravenes
Section 10, Article X of the Constitution.[18] Thus, Sema proposed
that Section 19 should be construed as prohibiting the Regional
Assembly from prescribing standards x x x that do not comply with
the minimum criteria under RA 7160.[19]

(2) Respondent Dilangalen contended that Section 19, Article VI of

RA 9054 is unconstitutional on the following grounds: (a) the power
to create provinces was not among those granted to the
autonomous regions under Section 20, Article X of the Constitution
and (b) the grant under Section 19, Article VI of RA 9054 to the
ARMM Regional Assembly of the power to prescribe standards lower

than those mandated in Section 461 of RA 7160 on the creation of

provinces contravenes Section 10, Article X of the Constitution and
the Equal Protection Clause; and

The Issues

The petitions raise the following issues:

(3) The COMELEC, through the OSG, joined causes with respondent
Dilangalen (thus effectively abandoning the position the COMELEC
adopted in its Compliance with the Resolution of 4 September
2007) and contended that Section 19, Article VI of RA 9054 is
unconstitutional because (a) it contravenes Section 10 and Section
6,[20] Article X of the Constitution and (b) the power to create
provinces was withheld from the autonomous regions under Section
20, Article X of the Constitution.

On the question of whether a province created under Section 19,

Article VI of RA 9054 is entitled to one representative in the House
of Representatives without need of a national law creating a
legislative district for such new province, Sema and respondent
Dilangalen reiterated in their Memoranda the positions they
adopted in their Compliance with the Resolution of 4 September
2007. The COMELEC deemed it unnecessary to submit its position
on this issue considering its stance that Section 19, Article VI of RA
9054 is unconstitutional.

The pendency of the petition in G.R. No. 178628 was disclosed

during the oral arguments on 27 November 2007. Thus, in the
Resolution of 19 February 2008, the Court ordered G.R. No. 178628
consolidated with G.R. No. 177597. The petition in G.R. No. 178628
echoed Sema's contention that the COMELEC acted ultra vires in
issuing Resolution No. 7902 depriving the voters of Cotabato City of
a representative in the House of Representatives. In its Comment to
the petition in G.R. No. 178628, the COMELEC, through the OSG,
maintained the validity of COMELEC Resolution No. 7902 as a
temporary measure pending the enactment by Congress of the
appropriate law.

I. In G.R. No. 177597:

(A) Preliminarily
(1) whether the writs of Certiorari, Prohibition, and Mandamus are
proper to test the constitutionality of COMELEC Resolution No.
7902; and
(2) whether the proclamation of respondent Dilangalen as
representative of Shariff Kabunsuan Province with Cotabato City
mooted the petition in G.R. No. 177597.

(B) On the merits

(1) whether Section 19, Article VI of RA 9054, delegating to the
ARMM Regional Assembly the power to create provinces, cities,
municipalities and barangays, is constitutional; and
(2) if in the affirmative, whether a province created by the ARMM
Regional Assembly under MMA Act 201 pursuant to Section 19,
Article VI of RA 9054 is entitled to one representative in the House
of Representatives without need of a national law creating a
legislative district for such province.

II. In G.R No. 177597 and G.R No. 178628, whether COMELEC
Resolution No. 7902 is valid for maintaining the status quo in the
first legislative district of Maguindanao (as Shariff Kabunsuan
Province with Cotabato City [formerly First District of Maguindanao
with Cotabato City]), despite the creation of the Province of Shariff
Kabunsuan out of such district (excluding Cotabato City).

The Ruling of the Court

The petitions have no merit. We rule that (1) Section 19, Article VI
of RA 9054 is unconstitutional insofar as it grants to the ARMM
Regional Assembly the power to create provinces and cities; (2)
MMA Act 201 creating the Province of Shariff Kabunsuan is void;
and (3) COMELEC Resolution No. 7902 is valid.

to Test the Constitutionality of

Election Laws, Rules and Regulations

The purpose of the writ of Certiorari is to correct grave abuse of

discretion by any tribunal, board, or officer exercising judicial or
quasi-judicial functions.[21] On the other hand, the writ of
Mandamus will issue to compel a tribunal, corporation, board,
officer, or person to perform an act which the law specifically
enjoins as a duty.[22] True, the COMELEC did not issue Resolution
No. 7902 in the exercise of its judicial or quasi-judicial functions.
[23] Nor is there a law which specifically enjoins the COMELEC to
exclude from canvassing the votes cast in Cotabato City for
representative of Shariff Kabunsuan Province with Cotabato City.
These, however, do not justify the outright dismissal of the petition
in G.R. No. 177597 because Sema also prayed for the issuance of
the writ of Prohibition and we have long recognized this writ as
proper for testing the constitutionality of election laws, rules, and
regulations.[24]

Respondent Dilangalens Proclamation

Does Not Moot the Petition

On the Preliminary Matters

The Writ of Prohibition is Appropriate

There is also no merit in the claim that respondent Dilangalens

proclamation as winner in the 14 May 2007 elections for
representative of Shariff Kabunsuan Province with Cotabato City
mooted this petition. This case does not concern respondent
Dilangalens election. Rather, it involves an inquiry into the validity
of COMELEC Resolution No. 7902, as well as the constitutionality of
MMA Act 201 and Section 19, Article VI of RA 9054. Admittedly, the
outcome of this petition, one way or another, determines whether
the votes cast in Cotabato City for representative of the district of
Shariff Kabunsuan Province with Cotabato City will be included in
the canvassing of ballots. However, this incidental consequence is

no reason for us not to proceed with the resolution of the novel

issues raised here. The Courts ruling in these petitions affects not
only the recently concluded elections but also all the other
succeeding elections for the office in question, as well as the power
of the ARMM Regional Assembly to create in the future additional
provinces.

On the Main Issues

Whether the ARMM Regional Assembly

creation must not conflict with any provision of the Constitution.

Third, there must be a plebiscite in the political units affected.

There is neither an express prohibition nor an express grant of

authority in the Constitution for Congress to delegate to regional or
local legislative bodies the power to create local government units.
However, under its plenary legislative powers, Congress can
delegate to local legislative bodies the power to create local
government units, subject to reasonable standards and provided no
conflict arises with any provision of the Constitution. In fact,
Congress has delegated to provincial boards, and city and
municipal councils, the power to create barangays within their
jurisdiction,[25] subject to compliance with the criteria established
in the Local Government Code, and the plebiscite requirement in
Section 10, Article X of the Constitution. However, under the Local
Government Code, only x x x an Act of Congress can create
provinces, cities or municipalities.[26]

Can Create the Province of Shariff Kabunsuan

The creation of local government units is governed by Section 10,

Article X of the Constitution, which provides:

Sec. 10. No province, city, municipality, or barangay may be

created, divided, merged, abolished or its boundary substantially
altered except in accordance with the criteria established in the
local government code and subject to approval by a majority of the
votes cast in a plebiscite in the political units directly affected.

Thus, the creation of any of the four local government units

province, city, municipality or barangay must comply with three
conditions. First, the creation of a local government unit must follow
the criteria fixed in the Local Government Code. Second, such

Under Section 19, Article VI of RA 9054, Congress delegated to the

ARMM Regional Assembly the power to create provinces, cities,
municipalities and barangays within the ARMM. Congress made the
delegation under its plenary legislative powers because the power
to create local government units is not one of the express
legislative powers granted by the Constitution to regional
legislative bodies.[27] In the present case, the question arises
whether the delegation to the ARMM Regional Assembly of the
power to create provinces, cities, municipalities and barangays
conflicts with any provision of the Constitution.

There is no provision in the Constitution that conflicts with the

delegation to regional legislative bodies of the power to create
municipalities and barangays, provided Section 10, Article X of the
Constitution is followed. However, the creation of provinces and
cities is another matter. Section 5 (3), Article VI of the Constitution
provides, Each city with a population of at least two hundred fifty
thousand, or each province, shall have at least one representative
in the House of Representatives. Similarly, Section 3 of the
Ordinance appended to the Constitution provides, Any province
that may hereafter be created, or any city whose population may
hereafter increase to more than two hundred fifty thousand shall be

entitled in the immediately following election to at least one

Member x x x.

Clearly, a province cannot be created without a legislative district

because it will violate Section 5 (3), Article VI of the Constitution as
well as Section 3 of the Ordinance appended to the Constitution.
For the same reason, a city with a population of 250,000 or more
cannot also be created without a legislative district. Thus, the
power to create a province, or a city with a population of 250,000
or more, requires also the power to create a legislative district.
Even the creation of a city with a population of less than 250,000
involves the power to create a legislative district because once the
citys population reaches 250,000, the city automatically becomes
entitled to one representative under Section 5 (3), Article VI of the
Constitution and Section 3 of the Ordinance appended to the
Constitution. Thus, the power to create a province or city inherently
involves the power to create a legislative district.

For Congress to delegate validly the power to create a province or

city, it must also validly delegate at the same time the power to
create a legislative district. The threshold issue then is, can
Congress validly delegate to the ARMM Regional Assembly the
power to create legislative districts for the House of
Representatives? The answer is in the negative.

SECTION 5. (1) The House of Representatives shall be composed of

not more than two hundred and fifty members, unless otherwise
fixed by law, who shall be elected from legislative districts
apportioned among the provinces, cities, and the Metropolitan
Manila area in accordance with the number of their respective
inhabitants, and on the basis of a uniform and progressive ratio,
and those who, as provided by law, shall be elected through a
party-list system of registered national, regional, and sectoral
parties or organizations.

xxxx

(3) Each legislative district shall comprise, as far as practicable,

contiguous, compact, and adjacent territory. Each city with a
population of at least two hundred fifty thousand, or each province,
shall have at least one representative.

(4) Within three years following the return of every census, the
Congress shall make a reapportionment of legislative districts
based on the standards provided in this section. (Emphasis
supplied)

Legislative Districts are Created or Reapportioned

Only by an Act of Congress

Under the present Constitution, as well as in past[28] Constitutions,

the power to increase the allowable membership in the House of
Representatives, and to reapportion legislative districts, is vested
exclusively in Congress. Section 5, Article VI of the Constitution
provides:

Section 5 (1), Article VI of the Constitution vests in Congress the

power to increase, through a law, the allowable membership in the
House of Representatives. Section 5 (4) empowers Congress to
reapportion legislative districts. The power to reapportion
legislative districts necessarily includes the power to create
legislative districts out of existing ones. Congress exercises these
powers through a law that Congress itself enacts, and not through a
law that regional or local legislative bodies enact. The allowable
membership of the House of Representatives can be increased, and
new legislative districts of Congress can be created, only through a
national law passed by Congress. In Montejo v. COMELEC,[29] we

held that the power of redistricting x x x is traditionally regarded as

part of the power (of Congress) to make laws, and thus is vested
exclusively in Congress.

This textual commitment to Congress of the exclusive power to

create or reapportion legislative districts is logical. Congress is a
national legislature and any increase in its allowable membership
or in its incumbent membership through the creation of legislative
districts must be embodied in a national law. Only Congress can
enact such a law. It would be anomalous for regional or local
legislative bodies to create or reapportion legislative districts for a
national legislature like Congress. An inferior legislative body,
created by a superior legislative body, cannot change the
membership of the superior legislative body.

The creation of the ARMM, and the grant of legislative powers to its
Regional Assembly under its organic act, did not divest Congress of
its exclusive authority to create legislative districts. This is clear
from the Constitution and the ARMM Organic Act, as amended.
Thus, Section 20, Article X of the Constitution provides:

SECTION 20. Within its territorial jurisdiction and subject to the

provisions of this Constitution and national laws, the organic act of
autonomous regions shall provide for legislative powers over:
(1) Administrative organization;

(9) Such other matters as may be authorized by law for the

promotion of the general welfare of the people of the region.

Nothing in Section 20, Article X of the Constitution authorizes

autonomous regions, expressly or impliedly, to create or
reapportion legislative districts for Congress.

On the other hand, Section 3, Article IV of RA 9054 amending the

ARMM Organic Act, provides, The Regional Assembly may exercise
legislative power x x x except on the following matters: x x x (k)
National elections. x x x. Since the ARMM Regional Assembly has no
legislative power to enact laws relating to national elections, it
cannot create a legislative district whose representative is elected
in national elections. Whenever Congress enacts a law creating a
legislative district, the first representative is always elected in the
next national elections from the effectivity of the law.[30]
Indeed, the office of a legislative district representative to Congress
is a national office, and its occupant, a Member of the House of
Representatives, is a national official.[31] It would be incongruous
for a regional legislative body like the ARMM Regional Assembly to
create a national office when its legislative powers extend only to
its regional territory. The office of a district representative is
maintained by national funds and the salary of its occupant is paid
out of national funds. It is a self-evident inherent limitation on the
legislative powers of every local or regional legislative body that it
can only create local or regional offices, respectively, and it can
never create a national office.

(2) Creation of sources of revenues;

(3) Ancestral domain and natural resources;
(4) Personal, family, and property relations;
(5) Regional urban and rural planning development;
(6) Economic, social, and tourism development;
(7) Educational policies;
(8) Preservation and development of the cultural heritage; and

To allow the ARMM Regional Assembly to create a national office is

to allow its legislative powers to operate outside the ARMMs
territorial jurisdiction. This violates Section 20, Article X of the
Constitution which expressly limits the coverage of the Regional
Assemblys legislative powers [w]ithin its territorial jurisdiction x x x.

The ARMM Regional Assembly itself, in creating Shariff Kabunsuan,

recognized the exclusive nature of Congress power to create or
reapportion legislative districts by abstaining from creating a
legislative district for Shariff Kabunsuan. Section 5 of MMA Act 201
provides that:

according to the standards set forth in paragraph (3), Section 5 of

Article VI of the Constitution. The number of Members apportioned
to the province out of which such new province was created or
where the city, whose population has so increased, is
geographically located shall be correspondingly adjusted by the
Commission on Elections but such adjustment shall not be made
within one hundred and twenty days before the election. (Emphasis
supplied)

Except as may be provided by national law, the existing legislative

district, which includes Cotabato City as a part thereof, shall
remain. (Emphasis supplied)

However, a province cannot legally be created without a legislative

district because the Constitution mandates that each province shall
have at least one representative. Thus, the creation of the Province
of Shariff Kabunsuan without a legislative district is
unconstitutional.

Sema, petitioner in G.R. No. 177597, contends that Section 5 (3),

Article VI of the Constitution, which provides:

Each legislative district shall comprise, as far as practicable,

contiguous, compact, and adjacent territory. Each city with a
population of at least two hundred fifty thousand, or each province,
shall have at least one representative. (Emphasis supplied)

serve as bases for the conclusion that the Province of Shariff

Kabunsuan, created on 29 October 2006, is automatically entitled
to one member in the House of Representatives in the 14 May 2007
elections. As further support for her stance, petitioner invokes the
statement in Felwa that when a province is created by statute, the
corresponding representative district comes into existence neither
by authority of that statute which cannot provide otherwise nor by
apportionment, but by operation of the Constitution, without a
reapportionment.

The contention has no merit.

First. The issue in Felwa, among others, was whether Republic Act
No. 4695 (RA 4695), creating the provinces of Benguet, Mountain
Province, Ifugao, and Kalinga-Apayao and providing for
congressional representation in the old and new provinces, was
unconstitutional for creati[ng] congressional districts without the
apportionment provided in the Constitution. The Court answered in
the negative, thus:

and Section 3 of the Ordinance appended to the Constitution, which

states:
The Constitution ordains:
Any province that may hereafter be created, or any city whose
population may hereafter increase to more than two hundred fifty
thousand shall be entitled in the immediately following election to
at least one Member or such number of Members as it may be
entitled to on the basis of the number of its inhabitants and

The House of Representatives shall be composed of not more than

one hundred and twenty Members who shall be apportioned among
the several provinces as nearly as may be according to the number

of their respective inhabitants, but each province shall have at least

one Member. The Congress shall by law make an apportionment
within three years after the return of every enumeration, and not
otherwise. Until such apportionment shall have been made, the
House of Representatives shall have the same number of Members
as that fixed by law for the National Assembly, who shall be elected
by the qualified electors from the present Assembly districts. Each
representative district shall comprise as far as practicable,
contiguous and compact territory.
Pursuant to this Section, a representative district may come into
existence: (a) indirectly, through the creation of a province for each
province shall have at least one member in the House of
Representatives; or (b) by direct creation of several representative
districts within a province. The requirements concerning the
apportionment of representative districts and the territory thereof
refer only to the second method of creation of representative
districts, and do not apply to those incidental to the creation of
provinces, under the first method. This is deducible, not only from
the general tenor of the provision above quoted, but, also, from the
fact that the apportionment therein alluded to refers to that which
is made by an Act of Congress. Indeed, when a province is created
by statute, the corresponding representative district, comes into
existence neither by authority of that statute which cannot provide
otherwise nor by apportionment, but by operation of the
Constitution, without a reapportionment.
There is no constitutional limitation as to the time when, territory
of, or other conditions under which a province may be created,
except, perhaps, if the consequence thereof were to exceed the
maximum of 120 representative districts prescribed in the
Constitution, which is not the effect of the legislation under
consideration. As a matter of fact, provinces have been created or
subdivided into other provinces, with the consequent creation of
additional representative districts, without complying with the
aforementioned requirements.[32] (Emphasis supplied)

Thus, the Court sustained the constitutionality of RA 4695 because

(1) it validly created legislative districts indirectly through a special
law enacted by Congress creating a province and (2) the creation of
the legislative districts will not result in breaching the maximum
number of legislative districts provided under the 1935

Constitution. Felwa does not apply to the present case because in

Felwa the new provinces were created by a national law enacted by
Congress itself. Here, the new province was created merely by a
regional law enacted by the ARMM Regional Assembly.

What Felwa teaches is that the creation of a legislative district by

Congress does not emanate alone from Congress power to
reapportion legislative districts, but also from Congress power to
create provinces which cannot be created without a legislative
district. Thus, when a province is created, a legislative district is
created by operation of the Constitution because the Constitution
provides that each province shall have at least one representative
in the House of Representatives. This does not detract from the
constitutional principle that the power to create legislative districts
belongs exclusively to Congress. It merely prevents any other
legislative body, except Congress, from creating provinces because
for a legislative body to create a province such legislative body
must have the power to create legislative districts. In short, only an
act of Congress can trigger the creation of a legislative district by
operation of the Constitution. Thus, only Congress has the power to
create, or trigger the creation of, a legislative district.

Moreover, if as Sema claims MMA Act 201 apportioned a legislative

district to Shariff Kabunsuan upon its creation, this will leave
Cotabato City as the lone component of the first legislative district
of Maguindanao. However, Cotabato City cannot constitute a
legislative district by itself because as of the census taken in 2000,
it had a population of only 163,849. To constitute Cotabato City
alone as the surviving first legislative district of Maguindanao will
violate Section 5 (3), Article VI of the Constitution which requires
that [E]ach city with a population of at least two hundred fifty
thousand x x x, shall have at least one representative.

Second. Semas theory also undermines the composition and

independence of the House of Representatives. Under Section 19,
[33] Article VI of RA 9054, the ARMM Regional Assembly can create
provinces and cities within the ARMM with or without regard to the
criteria fixed in Section 461 of RA 7160, namely: minimum annual
income of P20,000,000, and minimum contiguous territory of 2,000

square kilometers or minimum population of 250,000.[34] The

following scenarios thus become distinct possibilities:

Atty. Vistan II:[35]

Yes, Your Honor, because the Constitution allows that.

(1) An inferior legislative body like the ARMM Regional Assembly

can create 100 or more provinces and thus increase the
membership of a superior legislative body, the House of
Representatives, beyond the maximum limit of 250 fixed in the
Constitution (unless a national law provides otherwise);

(2) The proportional representation in the House of Representatives

based on one representative for at least every 250,000 residents
will be negated because the ARMM Regional Assembly need not
comply with the requirement in Section 461(a)(ii) of RA 7160 that
every province created must have a population of at least 250,000;
and

Justice Carpio:
So, [the] Regional Assembly of [the] ARMM can create and create x
x x provinces x x x and, therefore, they can have thirty-five (35)
new representatives in the House of Representatives without
Congress agreeing to it, is that what you are saying? That can be
done, under your theory[?]

Atty. Vistan II:

Yes, Your Honor, under the correct factual circumstances.

(3) Representatives from the ARMM provinces can become the
majority in the House of Representatives through the ARMM
Regional Assemblys continuous creation of provinces or cities
within the ARMM.

The following exchange during the oral arguments of the petition in

G.R. No. 177597 highlights the absurdity of Semas position that the
ARMM Regional Assembly can create provinces:

Justice Carpio:
Under your theory, the ARMM legislature can create thirty-five (35)
new provinces, there may be x x x [only] one hundred thousand
(100,000) [population], x x x, and they will each have one
representative x x x to Congress without any national law, is that
what you are saying?

Atty. Vistan II:

Without law passed by Congress, yes, Your Honor, that is what we

are saying.
Justice Carpio:
So, you mean to say [a] Local Government can create legislative
district[s] and pack Congress with their own representatives [?]

xxxx
Justice Carpio:

So, they can also create one thousand (1000) new provinces,
sen[d] one thousand (1000) representatives to the House of
Representatives without a national law[,] that is legally possible,
correct?

Atty. Vistan II:

Yes, Your Honor.[36] (Emphasis supplied)

Neither the framers of the 1987 Constitution in adopting the

provisions in Article X on regional autonomy,[37] nor Congress in
enacting RA 9054, envisioned or intended these disastrous
consequences that certainly would wreck the tri-branch system of
government under our Constitution. Clearly, the power to create or
reapportion legislative districts cannot be delegated by Congress
but must be exercised by Congress itself. Even the ARMM Regional
Assembly recognizes this.

The Constitution empowered Congress to create or reapportion

legislative districts, not the regional assemblies. Section 3 of the
Ordinance to the Constitution which states, [A]ny province that
may hereafter be created x x x shall be entitled in the immediately
following election to at least one Member, refers to a province
created by Congress itself through a national law. The reason is that
the creation of a province increases the actual membership of the
House of Representatives, an increase that only Congress can
decide. Incidentally, in the present 14th Congress, there are
219[38] district representatives out of the maximum 250 seats in
the House of Representatives. Since party-list members shall
constitute 20 percent of total membership of the House, there
should at least be 50 party-list seats available in every election in
case 50 party-list candidates are proclaimed winners. This leaves
only 200 seats for district representatives, much less than the 219
incumbent district representatives. Thus, there is a need now for

Congress to increase by law the allowable membership of the

House, even before Congress can create new provinces.

It is axiomatic that organic acts of autonomous regions cannot

prevail over the Constitution. Section 20, Article X of the
Constitution expressly provides that the legislative powers of
regional assemblies are limited [w]ithin its territorial jurisdiction
and subject to the provisions of the Constitution and national laws,
x x x. The Preamble of the ARMM Organic Act (RA 9054) itself states
that the ARMM Government is established within the framework of
the Constitution. This follows Section 15, Article X of the
Constitution which mandates that the ARMM shall be created x x x
within the framework of this Constitution and the national
sovereignty as well as territorial integrity of the Republic of the
Philippines.

The present case involves the creation of a local government unit

that necessarily involves also the creation of a legislative district.
The Court will not pass upon the constitutionality of the creation of
municipalities and barangays that does not comply with the criteria
established in Section 461 of RA 7160, as mandated in Section 10,
Article X of the Constitution, because the creation of such
municipalities and barangays does not involve the creation of
legislative districts. We leave the resolution of this issue to an
appropriate case.

In summary, we rule that Section 19, Article VI of RA 9054, insofar

as it grants to the ARMM Regional Assembly the power to create
provinces and cities, is void for being contrary to Section 5 of
Article VI and Section 20 of Article X of the Constitution, as well as
Section 3 of the Ordinance appended to the Constitution. Only
Congress can create provinces and cities because the creation of
provinces and cities necessarily includes the creation of legislative
districts, a power only Congress can exercise under Section 5,
Article VI of the Constitution and Section 3 of the Ordinance
appended to the Constitution. The ARMM Regional Assembly cannot
create a province without a legislative district because the
Constitution mandates that every province shall have a legislative
district. Moreover, the ARMM Regional Assembly cannot enact a law
creating a national office like the office of a district representative

of Congress because the legislative powers of the ARMM Regional

Assembly operate only within its territorial jurisdiction as provided
in Section 20, Article X of the Constitution. Thus, we rule that MMA
Act 201, enacted by the ARMM Regional Assembly and creating the
Province of Shariff Kabunsuan, is void.

ANTONIO T. CARPIO
Associate Justice

Resolution No. 7902 Complies with the Constitution

WE CONCUR:
Consequently, we hold that COMELEC Resolution No. 7902,
preserving the geographic and legislative district of the First District
of Maguindanao with Cotabato City, is valid as it merely complies
with Section 5 of Article VI and Section 20 of Article X of the
Constitution, as well as Section 1 of the Ordinance appended to the
Constitution.
REYNATO S. PUNO
WHEREFORE, we declare Section 19, Article VI of Republic Act No.
9054 UNCONSTITUTIONAL insofar as it grants to the Regional
Assembly of the Autonomous Region in Muslim Mindanao the power
to create provinces and cities. Thus, we declare VOID Muslim
Mindanao Autonomy Act No. 201 creating the Province of Shariff
Kabunsuan. Consequently, we rule that COMELEC Resolution No.
7902 is VALID.

Chief Justice

LEONARDO A. QUISUMBING
Let a copy of this ruling be served on the President of the Senate
and the Speaker of the House of Representatives.

Associate Justice

SO ORDERED.

CONSUELO YNARES-SANTIAGO

Associate Justice

Associate Justice
ADOLFO S. AZCUNA
Associate Justice

MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice

DANTE O. TINGA
Associate Justice

RENATO C. CORONA
Associate Justice

MINITA V. CHICO-NAZARIO
Associate Justice

PRESBITERO J. VELASCO, JR.

Associate Justice

ANTONIO EDUARDO B. NACHURA

Associate Justice
CONCHITA CARPIO MORALES

G.R. No. 89651 November 10, 1989

RUBEN T. REYES
Associate Justice

DATU FIRDAUSI I.Y. ABBAS, DATU BLO UMPAR ADIONG, DATU

MACALIMPOWAC DELANGALEN, CELSO PALMA, ALI MONTANA
BABAO, JULMUNIR JANNARAL, RASHID SABER, and DATU JAMAL
ASHLEY ABBAS, representing the other taxpayers of Mindanao,
petitioners,
vs.
COMMISSION ON ELECTIONS, and HONORABLE GUILLERMO C.
CARAGUE, DEPARTMENT SECRETARY OF BUDGET AND
MANAGEMENT, respondents.
G.R. No. 89965 November 10, 1989

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

ATTY. ABDULLAH D. MAMA-O, petitioner,

vs.
HON. GUILLERMO CARAGUE, in his capacity as the Secretary of the
Budget, and the COMMISSION ON ELECTIONS, respondents.
Abbas, Abbas, Amora, Alejandro-Abbas & Associates for petitioners
in G.R. Nos. 89651 and 89965.
Abdullah D. Mama-o for and in his own behalf in 89965.

ARTURO D. BRION
Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, I certify that

the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the
opinion of the Court.

CORTES, J.:
The present controversy relates to the plebiscite in thirteen (13)
provinces and nine (9) cities in Mindanao and Palawan, 1 scheduled
for November 19, 1989, in implementation of Republic Act No.
6734, entitled "An Act Providing for an Organic Act for the
Autonomous Region in Muslim Mindanao."
These consolidated petitions pray that the Court: (1) enjoin the
Commission on Elections (COMELEC) from conducting the plebiscite
and the Secretary of Budget and Management from releasing funds
to the COMELEC for that purpose; and (2) declare R.A. No. 6734, or
parts thereof, unconstitutional .
After a consolidated comment was filed by Solicitor General for the
respondents, which the Court considered as the answer, the case

was deemed submitted for decision, the issues having been joined.
Subsequently, petitioner Mama-o filed a "Manifestation with Motion
for Leave to File Reply on Respondents' Comment and to Open Oral
Arguments," which the Court noted.
The arguments against R.A. 6734 raised by petitioners may
generally be categorized into either of the following:
(a) that R.A. 6734, or parts thereof, violates the Constitution, and
(b) that certain provisions of R.A. No. 6734 conflict with the Tripoli
Agreement.
The Tripoli Agreement, more specifically, the Agreement Between
the government of the Republic of the Philippines of the Philippines
and Moro National Liberation Front with the Participation of the
Quadripartie Ministerial Commission Members of the Islamic
Conference and the Secretary General of the Organization of
Islamic Conference" took effect on December 23, 1976. It provided
for "[t]he establishment of Autonomy in the southern Philippines
within the realm of the sovereignty and territorial integrity of the
Republic of the Philippines" and enumerated the thirteen (13)
provinces comprising the "areas of autonomy." 2
In 1987, a new Constitution was ratified, which the for the first time
provided for regional autonomy, Article X, section 15 of the charter
provides that "[t]here shall be created autonomous regions in
Muslim Mindanao and in the Cordilleras consisting of provinces,
cities, municipalities, and geographical areas sharing common and
distinctive historical and cultural heritage, economic and social
structures, and other relevant characteristics within the framework
of this Constitution and the national sovereignty as well as
territorial integrity of the Republic of the Philippines."
To effectuate this mandate, the Constitution further provides:
Sec. 16. The President shall exercise general supervision over
autonomous regions to ensure that the laws are faithfully executed.
Sec. 17. All powers, functions, and responsibilities not granted by
this Constitution or by law to the autonomous regions shall be
vested in the National Government.
Sec. 18. The Congress shall enact an organic act for each
autonomous region with the assistance and participation of the
regional consultative commission composed of representatives

appointed by the President from a list of nominees from

multisectoral bodies. The organic act shall define the basic
structure of government for the region consisting of the executive
and representative of the constituent political units. The organic
acts shall likewise provide for special courts with personal, family,
and property law jurisdiction consistent with the provisions of this
Constitution and national laws.
The creation of the autonomous region shall be effective when
approved by majority of the votes cast by the constituent units in a
plebiscite called for the purpose, provided that only the provinces,
cities, and geographic areas voting favorably in such plebiscite
shall be included in the autonomous region.
Sec. 19 The first Congress elected under this Constitution shall,
within eighteen months from the time of organization of both
Houses, pass the organic acts for the autonomous regions in
Muslim Mindanao and the Cordilleras.
Sec. 20. Within its territorial jurisdiction and subject to the
provisions of this Constitution and national laws, the organic act of
autonomous regions shall provide for legislative powers over:
(1) Administrative organization;
(2) Creation of sources of revenues;
(3) Ancestral domain and natural resources;
(4) Personal, family, and property relations;
(5) Regional urban and rural planning development;
(6) Economic, social and tourism development;
(7) Educational policies;
(8) Preservation and development of the cultural heritage; and
(9) Such other matters as may be authorized by law for the
promotion of the general welfare of the people of the region.
Sec. 21. The preservation of peace and order within the regions
shall be the responsibility of the local police agencies which shall
be organized, maintained, supervised, and utilized in accordance

with applicable laws. The defense and security of the region shall
be the responsibility of the National Government.

make the creation of such region dependent upon the outcome of

the plebiscite.

Pursuant to the constitutional mandate, R.A. No. 6734 was enacted

and signed into law on August 1, 1989.

In support of his argument, petitioner cites Article II, section 1(1) of

R.A. No. 6734 which declares that "[t]here is hereby created the
Autonomous Region in Muslim Mindanao, to be composed of
provinces and cities voting favorably in the plebiscite called for the
purpose, in accordance with Section 18, Article X of the
Constitution." Petitioner contends that the tenor of the above
provision makes the creation of an autonomous region absolute,
such that even if only two provinces vote in favor of autonomy, an
autonomous region would still be created composed of the two
provinces where the favorable votes were obtained.

1. The Court shall dispose first of the second category of arguments

raised by petitioners, i.e. that certain provisions of R.A. No. 6734
conflict with the provisions of the Tripoli Agreement.
Petitioners premise their arguments on the assumption that the
Tripoli Agreement is part of the law of the land, being a binding
international agreement . The Solicitor General asserts that the
Tripoli Agreement is neither a binding treaty, not having been
entered into by the Republic of the Philippines with a sovereign
state and ratified according to the provisions of the 1973 or 1987
Constitutions, nor a binding international agreement.
We find it neither necessary nor determinative of the case to rule
on the nature of the Tripoli Agreement and its binding effect on the
Philippine Government whether under public international or
internal Philippine law. In the first place, it is now the Constitution
itself that provides for the creation of an autonomous region in
Muslim Mindanao. The standard for any inquiry into the validity of
R.A. No. 6734 would therefore be what is so provided in the
Constitution. Thus, any conflict between the provisions of R.A. No.
6734 and the provisions of the Tripoli Agreement will not have the
effect of enjoining the implementation of the Organic Act. Assuming
for the sake of argument that the Tripoli Agreement is a binding
treaty or international agreement, it would then constitute part of
the law of the land. But as internal law it would not be superior to
R.A. No. 6734, an enactment of the Congress of the Philippines,
rather it would be in the same class as the latter [SALONGA, PUBLIC
INTERNATIONAL LAW 320 (4th ed., 1974), citing Head Money Cases,
112 U.S. 580 (1884) and Foster v. Nelson, 2 Pet. 253 (1829)]. Thus,
if at all, R.A. No. 6734 would be amendatory of the Tripoli
Agreement, being a subsequent law. Only a determination by this
Court that R.A. No. 6734 contravened the Constitution would result
in the granting of the reliefs sought. 3
2. The Court shall therefore only pass upon the constitutional
questions which have been raised by petitioners.
Petitioner Abbas argues that R.A. No. 6734 unconditionally creates
an autonomous region in Mindanao, contrary to the aforequoted
provisions of the Constitution on the autonomous region which

The matter of the creation of the autonomous region and its

composition needs to be clarified.
Firs, the questioned provision itself in R.A. No. 6734 refers to
Section 18, Article X of the Constitution which sets forth the
conditions necessary for the creation of the autonomous region.
The reference to the constitutional provision cannot be glossed
over for it clearly indicates that the creation of the autonomous
region shall take place only in accord with the constitutional
requirements. Second, there is a specific provision in the Transitory
Provisions (Article XIX) of the Organic Act, which incorporates
substantially the same requirements embodied in the Constitution
and fills in the details, thus:
SEC. 13. The creation of the Autonomous Region in Muslim
Mindanao shall take effect when approved by a majority of the
votes cast by the constituent units provided in paragraph (2) of
Sec. 1 of Article II of this Act in a plebiscite which shall be held not
earlier than ninety (90) days or later than one hundred twenty
(120) days after the approval of this Act: Provided, That only the
provinces and cities voting favorably in such plebiscite shall be
included in the Autonomous Region in Muslim Mindanao. The
provinces and cities which in the plebiscite do not vote for inclusion
in the Autonomous Region shall remain the existing administrative
determination, merge the existing regions.
Thus, under the Constitution and R.A. No 6734, the creation of the
autonomous region shall take effect only when approved by a
majority of the votes cast by the constituent units in a plebiscite,
and only those provinces and cities where a majority vote in favor
of the Organic Act shall be included in the autonomous region. The
provinces and cities wherein such a majority is not attained shall

not be included in the autonomous region. It may be that even if an

autonomous region is created, not all of the thirteen (13) provinces
and nine (9) cities mentioned in Article II, section 1 (2) of R.A. No.
6734 shall be included therein. The single plebiscite contemplated
by the Constitution and R.A. No. 6734 will therefore be
determinative of (1) whether there shall be an autonomous region
in Muslim Mindanao and (2) which provinces and cities, among
those enumerated in R.A. No. 6734, shall compromise it. [See III
RECORD OF THE CONSTITUTIONAL COMMISSION 482-492 (1986)].
As provided in the Constitution, the creation of the Autonomous
region in Muslim Mindanao is made effective upon the approval "by
majority of the votes cast by the constituent units in a plebiscite
called for the purpose" [Art. X, sec. 18]. The question has been
raised as to what this majority means. Does it refer to a majority of
the total votes cast in the plebiscite in all the constituent units, or a
majority in each of the constituent units, or both?
We need not go beyond the Constitution to resolve this question.
If the framers of the Constitution intended to require approval by a
majority of all the votes cast in the plebiscite they would have so
indicated. Thus, in Article XVIII, section 27, it is provided that "[t]his
Constitution shall take effect immediately upon its ratification by a
majority of the votes cast in a plebiscite held for the purpose ...
Comparing this with the provision on the creation of the
autonomous region, which reads:
The creation of the autonomous region shall be effective when
approved by majority of the votes cast by the constituent units in a
plebiscite called for the purpose, provided that only provinces,
cities and geographic areas voting favorably in such plebiscite shall
be included in the autonomous region. [Art. X, sec, 18, para, 2].
it will readily be seen that the creation of the autonomous region is
made to depend, not on the total majority vote in the plebiscite,
but on the will of the majority in each of the constituent units and
the proviso underscores this. for if the intention of the framers of
the Constitution was to get the majority of the totality of the votes
cast, they could have simply adopted the same phraseology as that
used for the ratification of the Constitution, i.e. "the creation of the
autonomous region shall be effective when approved by a majority
of the votes cast in a plebiscite called for the purpose."
It is thus clear that what is required by the Constitution is a simple
majority of votes approving the organic Act in individual constituent

units and not a double majority of the votes in all constituent units
put together, as well as in the individual constituent units.
More importantly, because of its categorical language, this is also
the sense in which the vote requirement in the plebiscite provided
under Article X, section 18 must have been understood by the
people when they ratified the Constitution.
Invoking the earlier cited constitutional provisions, petitioner
Mama-o, on the other hand, maintains that only those areas which,
to his view, share common and distinctive historical and cultural
heritage, economic and social structures, and other relevant
characteristics should be properly included within the coverage of
the autonomous region. He insists that R.A. No. 6734 is
unconstitutional because only the provinces of Basilan, Sulu, TawiTawi, Lanao del Sur, Lanao del Norte and Maguindanao and the
cities of Marawi and Cotabato, and not all of the thirteen (13)
provinces and nine (9) cities included in the Organic Act, possess
such concurrence in historical and cultural heritage and other
relevant characteristics. By including areas which do not strictly
share the same characteristics. By including areas which do not
strictly share the same characteristic as the others, petitioner
claims that Congress has expanded the scope of the autonomous
region which the constitution itself has prescribed to be limited.
Petitioner's argument is not tenable. The Constitution lays down the
standards by which Congress shall determine which areas should
constitute the autonomous region. Guided by these constitutional
criteria, the ascertainment by Congress of the areas that share
common attributes is within the exclusive realm of the legislature's
discretion. Any review of this ascertainment would have to go into
the wisdom of the law. This the Court cannot do without doing
violence to the separation of governmental powers. [Angara v.
Electoral Commission, 63 Phil 139 (1936); Morfe v. Mutuc, G.R. No.
L-20387, January 31, 1968, 22 SCRA 424].
After assailing the inclusion of non-Muslim areas in the Organic Act
for lack of basis, petitioner Mama-o would then adopt the extreme
view that other non-Muslim areas in Mindanao should likewise be
covered. He argues that since the Organic Act covers several nonMuslim areas, its scope should be further broadened to include the
rest of the non-Muslim areas in Mindanao in order for the other nonMuslim areas denies said areas equal protection of the law, and
therefore is violative of the Constitution.

Petitioner's contention runs counter to the very same constitutional

provision he had earlier invoked. Any determination by Congress of
what areas in Mindanao should compromise the autonomous
region, taking into account shared historical and cultural heritage,
economic and social structures, and other relevant characteristics,
would necessarily carry with it the exclusion of other areas. As
earlier stated, such determination by Congress of which areas
should be covered by the organic act for the autonomous region
constitutes a recognized legislative prerogative, whose wisdom
may not be inquired into by this Court.
Moreover, equal protection permits of reasonable classification
[People v. Vera, 65 Phil. 56 (1963); Laurel v. Misa, 76 Phil. 372
(1946); J.M. Tuason and Co. v. Land tenure Administration, G.R. No.
L-21064, February 18, 1970, 31 SCRA 413]. In Dumlao v.
Commission on Elections G.R. No. 52245, January 22, 1980, 95
SCRA 392], the Court ruled that once class may be treated
differently from another where the groupings are based on
reasonable and real distinctions. The guarantee of equal protection
is thus not infringed in this case, the classification having been
made by Congress on the basis of substantial distinctions as set
forth by the Constitution itself.
Both petitions also question the validity of R.A. No. 6734 on the
ground that it violates the constitutional guarantee on free exercise
of religion [Art. III, sec. 5]. The objection centers on a provision in
the Organic Act which mandates that should there be any conflict
between the Muslim Code [P.D. No. 1083] and the Tribal Code (still
be enacted) on the one had, and the national law on the other
hand, the Shari'ah courts created under the same Act should apply
national law. Petitioners maintain that the islamic law (Shari'ah) is
derived from the Koran, which makes it part of divine law. Thus it
may not be subjected to any "man-made" national law. Petitioner
Abbas supports this objection by enumerating possible instances of
conflict between provisions of the Muslim Code and national law,
wherein an application of national law might be offensive to a
Muslim's religious convictions.
As enshrined in the Constitution, judicial power includes the duty to
settle actual controversies involving rights which are legally
demandable and enforceable. [Art. VIII, Sec. 11. As a condition
precedent for the power to be exercised, an actual controversy
between litigants must first exist [Angara v. Electoral Commission,
supra; Tan v. Macapagal, G.R. No. L-34161, February 29, 1972, 43
SCRA 677]. In the present case, no actual controversy between real
litigants exists. There are no conflicting claims involving the

application of national law resulting in an alleged violation of

religious freedom. This being so, the Court in this case may not be
called upon to resolve what is merely a perceived potential conflict
between the provisions the Muslim Code and national law.
Petitioners also impugn the constitutionality of Article XIX, section
13 of R.A. No. 6734 which, among others, states:
. . . Provided, That only the provinces and cities voting favorably in
such plebiscite shall be included in the Autonomous Region in
Muslim Mindanao. The provinces and cities which in the plebiscite
do not vote for inclusion in the Autonomous Region shall remain in
the existing administrative regions: Provided, however, that the
President may, by administrative determination, merge the existing
regions.
According to petitioners, said provision grants the President the
power to merge regions, a power which is not conferred by the
Constitution upon the President. That the President may choose to
merge existing regions pursuant to the Organic Act is challenged as
being in conflict with Article X, Section 10 of the Constitution which
provides:
No province, city, municipality, or barangay may be created,
divided, merged, abolished, or its boundary substantially altered,
except in accordance with the criteria established in the local
government code and subject to approval by a majority of the votes
cast in a plebiscite in the political units directly affected.
It must be pointed out that what is referred to in R.A. No. 6734 is
the merger of administrative regions, i.e. Regions I to XII and the
National Capital Region, which are mere groupings of contiguous
provinces for administrative purposes [Integrated Reorganization
Plan (1972), which was made as part of the law of the land by Pres.
dec. No. 1, Pres. Dec. No. 742]. Administrative regions are not
territorial and political subdivisions like provinces, cities,
municipalities and barangays [see Art. X, sec. 1 of the
Constitution]. While the power to merge administrative regions is
not expressly provided for in the Constitution, it is a power which
has traditionally been lodged with the President to facilitate the
exercise of the power of general supervision over local
governments [see Art. X, sec. 4 of the Constitution]. There is no
conflict between the power of the President to merge
administrative regions with the constitutional provision requiring a
plebiscite in the merger of local government units because the
requirement of a plebiscite in a merger expressly applies only to

provinces, cities, municipalities or barangays, not to administrative

regions.
Petitioners likewise question the validity of provisions in the
Organic Act which create an Oversight Committee to supervise the
transfer to the autonomous region of the powers, appropriations,
and properties vested upon the regional government by the organic
Act [Art. XIX, Secs. 3 and 4]. Said provisions mandate that the
transfer of certain national government offices and their properties
to the regional government shall be made pursuant to a schedule
prescribed by the Oversight Committee, and that such transfer
should be accomplished within six (6) years from the organization
of the regional government.
It is asserted by petitioners that such provisions are
unconstitutional because while the Constitution states that the
creation of the autonomous region shall take effect upon approval
in a plebiscite, the requirement of organizing an Oversight
committee tasked with supervising the transfer of powers and
properties to the regional government would in effect delay the
creation of the autonomous region.
Under the Constitution, the creation of the autonomous region
hinges only on the result of the plebiscite. if the Organic Act is
approved by majority of the votes cast by constituent units in the
scheduled plebiscite, the creation of the autonomous region
immediately takes effect delay the creation of the autonomous
region.
Under the constitution, the creation of the autonomous region
hinges only on the result of the plebiscite. if the Organic Act is
approved by majority of the votes cast by constituent units in the
scheduled plebiscite, the creation of the autonomous region
immediately takes effect. The questioned provisions in R.A. No.
6734 requiring an oversight Committee to supervise the transfer do
not provide for a different date of effectivity. Much less would the
organization of the Oversight Committee cause an impediment to
the operation of the Organic Act, for such is evidently aimed at
effecting a smooth transition period for the regional government.
The constitutional objection on this point thus cannot be sustained
as there is no bases therefor.
Every law has in its favor the presumption of constitutionality [Yu
Cong Eng v. Trinidad, 47 Phil. 387 (1925); Salas v. Jarencio, G.R. No.
L-29788, August 30, 1979, 46 SCRA 734; Morfe v. Mutuc, supra;
Peralta v. COMELEC, G.R. No. L-47771, March 11, 1978, 82 SCRA

30]. Those who petition this Court to declare a law, or parts thereof,
unconstitutional must clearly establish the basis for such a
declaration. otherwise, their petition must fail. Based on the
grounds raised by petitioners to challenge the constitutionality of
R.A. No. 6734, the Court finds that petitioners have failed to
overcome the presumption. The dismissal of these two petitions is,
therefore, inevitable.
WHEREFORE, the petitions are DISMISSED for lack of merit.
SO ORDERED.
Fernan, C.J., Narvasa, Gutierrez, Jr., Cruz, Paras, Feliciano,
Gancayco, Padilla, Bidin, Sarmiento, Grio-Aquino, Medialdea and
Regalado, JJ., concur.
Melencio-Herrera, J., is on leave.

Footnotes
1 Art. II, Sec 1(2) of R.A. No. 6734 provides that "[t]he plebiscite
shall be conducted in the provinces of Basilan, Cotabato, Davao del
Sur, Lanao del Norte, Lanao del Sur, Maguindanao, Palawan, South
Cotabato, Sultan Kudarat, Sulu, Tawi-Tawi, Zamboanga del Norte,
and Zamboanga del Sur, and the cities of Cotabato, Dapitan,
Dipolog, General Santos, Iligan, Marawi, Pagadian, Puerto Princesa,
and Zamboanga."
2 The provinces enumerated in the Tripoli Agreement are the same
ones mentioned in R.A. No. 6734.
3 With regard to the controversy regarding the alleged
inconsistencies between R.A. No. 6734 and the Tripoli Agreement, it
may be enlightening to quote from the statement of Senator
Aquilino Pimentel, Jr., the principal sponsor of R.A. No. 6734:
xxx xxx xxx
The assertion that the organic Act is a "betrayal" of the Tripoli
Agreement is actually misplaced, to say the least. Misplaced
because it overlooks the fact that the Organic Act incorporates, at
least, 99 percent of the provisions of the Tripoli Agreement.
Misplaced, again, because it gratuitously assumes that the Tripoli

Agreement can bring more benefits to the people of Mulim

Mindanao than the Organic Act.
The truth of the matter is that the Organic Act addresses the basis
demands of the Muslim, tribal and Christian populations of the
proposed area of autonomy in a far more reasonable, realistic and
immediate manner than the Tripoli Agreement ever sought to do.
The Organic Act is, therefore, a boon to, not a betrayal, of the
interest of the people of Muslim Mindanao.
Ordillo vs Comelec (192 SCRA 100)
Posted on June 30, 2013 by winnieclaire
Standard
Facts: On January 30, 1990, the people of the provinces of Benguet,
Mountain Province, Ifugao, Abra and Kalinga-Apayao and the city of
Baguio cast their votes in a plebiscite held pursuant to Republic Act
No. 6766 entitled An Act Providing for an Organic Act for the
Cordillera Autonomous Region.
The official Commission on Elections (COMELEC) results of the
plebiscite showed that the creation of the Region was approved by
a majority of 5,889 votes in only the Ifugao Province and was
overwhelmingly rejected by 148,676 votes in the rest of the
provinces and city above-mentioned.
Consequently, the COMELEC, on February 14, 1990, issued
Resolution No. 2259 stating that the Organic Act for the Region has
been approved and/or ratified by majority of the votes cast only in
the province of Ifugao.
the petitioner filed a petition with COMELEC to declare the nonratification of the Organic Act for the Region. The petitioners
maintain that there can be no valid Cordillera Autonomous Region
in only one province as the Constitution and Republic Act No. 6766
require that the said Region be composed of more than one
constituent unit.
Issue: The question raised in this petition is whether or not the
province of Ifugao, being the only province which voted favorably
for the creation of the Cordillera Autonomous Region can, alone,
legally and validly constitute such Region.
Held: The sole province of Ifugao cannot validly constitute the
Cordillera Autonomous Region.
It is explicit in Article X, Section 15 of the 1987 Constitution. The
keywords provinces, cities, municipalities and geographical areas

connote that region is to be made up of more than one

constituent unit. The term region used in its ordinary sense
means two or more provinces. This is supported by the fact that the
thirteen (13) regions into which the Philippines is divided for
administrative purposes are groupings of contiguous provinces.
Ifugao is a province by itself. To become part of a region, it must
join other provinces, cities, municipalities, and geographical areas.
It joins other units because of their common and distinctive
historical and cultural heritage, economic and social structures and
other relevant characteristics. The Constitutional requirements are
not present in this case.
Article III, Sections 1 and 2 of Republic Act No. 6766 provide that
the Cordillera Autonomous Region is to be administered by the
Cordillera government consisting of the Regional Government and
local government units. It further provides that:
SECTION 2. The Regional Government shall exercise powers and
functions necessary for the proper governance and development of
all provinces, cities, municipalities, and barangay or ili within the
Autonomous Region . . .
From these sections, it can be gleaned that Congress never
intended that a single province may constitute the autonomous
region. Otherwise, we would be faced with the absurd situation of
having two sets of officials, a set of provincial officials and another
set of regional officials exercising their executive and legislative
powers over exactly the same small area.
A.M. No. P-06-2216
April 20, 2007
(Formerly OCA IPI No. 04-2037-P)
SAMMY RODRIGUEZ, Complainant,
vs.
JAIME C. EUGENIO, Process Server, REGIONAL TRIAL COURT,
BRANCH 123, CALOOCAN CITY, Respondent.
RESOLUTION
PER CURIAM:
This is an administrative complaint filed by complainant Sammy
Rodriguez against respondent Jaime C. Eugenio, Process Server at
the Regional Trial Court (RTC) of Caloocan City, Branch 121, for
Grave Misconduct (Violation of Republic Act No. 3019, otherwise
known as the Anti-Graft and Corrupt Practices Act).

Complainant alleges that he is the uncle of Sonny Acbay, accused

in Criminal Case No. C-69159 for Robbery filed before Caloocan
City, RTC- Branch 121, presided by Judge Adoracion G. Angeles.

entrapment operation initiated by complainant with the assistance

of Erwin Tulfo of ABS-CBN and the police, precipitated by
respondents repeated extortion from complainant.

The complaint states that sometime in June 2004, he went to Atty.

Isabelo E. Sicat (Atty. Sicat), Public Attorneys Office (PAO) counsel
de officio of his nephew Acbay, to inquire about the latters case
and was told to follow it up at the staff room of Caloocan City RTCBranch 121. On his way to Branch 121, he met respondent who
offered to work on the dismissal of the criminal case against his
nephew. Respondent asked complainant for P300.00 which the
latter promptly paid up. A week later, respondent again asked
P500.00 ostensibly to be given to Meycauayan policemen. On
several occasions thereafter, complainant avers that he had given
respondent an additional aggregate amount of P1,700.00 for the
dismissal of the case against his nephew.

Parenthetically, Atty. Sicat of the PAO accomplished an Affidavit2

attesting that he is the resident public attorney of Caloocan City
RTC-Branch 121, and the counsel de officio of accused Sonny Acbay
in Criminal Case No. C-69159; and that he never tasked respondent
to demand money from anyone for the dismissal of a case, much
less, did he ever receive money from respondent.

On 14 September 2004, after his nephews case was again reset,

he asked Atty. Sicat why the case was still not dismissed. Atty. Sicat
informed him that the court was still waiting for the return notice of
the subpoena sent to private complainant Geraldine Calderon.
Before noon of the same day, complainant went to see respondent
at Caloocan City RTC-Branch 124 and was told that if he will give
another P1,500.00 (P1,000.00 for Atty. Sicat and P500.00 for
transportation to serve the subpoena) the case will be dismissed.
Since he did not have any money with him, he agreed to give the
money late afternoon the next day.
Thereafter, complainant sought the help of Erwin Tulfo of ABS-CBN.
The next day, 15 September 2004, at around 3:00 p.m.,
complainant, accompanied by Erwin Tulfo, dropped by at the
Caloocan Police Station which proposed to undertake entrapment of
respondent. Subsequently, the entrapment in the vicinity of the
Judicial Complex was conducted with complainant handing the
white envelope containing P1,500.00 to respondent, who was then
apprehended.
Later, respondent was charged with robbery, docketed as Criminal
Case No. C-71514, before the Caloocan City RTC-Branch 122.
On 5 October 2004, Judge Adoracion G. Angeles, Presiding Judge of
Caloocan City RTC-Branch 121, endorsed1 the instant
administrative complaint and stated that on 7 July 2004, she
requested the immediate relief of respondent. On 15 September
2004, long after his relief from Branch 121, respondent was caught
in flagrante delicto near the Judicial Complex in another

In his Comment3 dated 28 January 2005, respondent vehemently

denies the allegations against him asserting that the "entrapment"
was really a "set-up" perpetrated by complainant. Prior to 15
September 2004, he met complainant only once, which was
sometime in June 2004, when he served a subpoena in
Meycauayan, Bulacan. Thereafter, he did not meet complainant
again until 15 September 2004 since he was transferred on 7 July
2004 to the Caloocan City RTC-Branch 124. Respondent asserts that
the charges against him are incredulous, for how could he ever
represent that he could have a case dismissed when he is only a
lowly process server and not a judge. Moreover, Judge Angeles is
very strict in requiring her personnel not to be involved in any case.
Thus, he has no influence at all over any case. What really
happened on 15 September 2004 was that he was invited by
complainant for a snack of "goto" which he accepted. While he was
looking at the cauldron containing "goto," complainant suddenly
thrust in his trouser pocket the money saying that it was for his
transportation fare to Meycauayan, Bulacan. Before respondent
could reply, policemen suddenly appeared and arrested him. He
was subjected to an ultra-violet examination of his hands which
yielded negative results for he never really touched the money
because he had no intention to receive it and Judge Angeles
already had another process server. Lastly, respondent contends
that since the charges against him are trumped up, complainant,
bothered by his conscience, executed an Affidavit of Desistance.
Thus, he prays for the dismissal of the instant complaint.
On 8 June 2006, the Office of the Court Administrator (OCA)
submitted its report4 and recommended the following:
Respectfully submitted for the consideration of the Honorable Court
is our recommendation that the instant administrative complaint be
docketed as a regular administrative case and respondent Jaime C.
Eugenio be DISMISSED from the service with forfeiture of his

retirement benefits except accrued leave credits, if any, and with

prejudice to his reinstatement in government service.5
On 2 August 2006, we required6 the parties to manifest within ten
days from notice if they were willing to submit the matter for
resolution based on the pleadings filed.
On 6 October 2006, respondent submitted his manifestation7
stating he was submitting the case for resolution based on the
pleadings filed.
Complainant failed to file his manifestation despite notice sent and
received by him.
Resultantly, the case was submitted for decision based on the
pleadings filed.
The Court, after examining the records of the case, upholds the
findings of the OCA.
At the outset, we reiterate the settled rule that a complainant who
suddenly changes his mind cannot simply withdraw an
administrative complaint filed against an official or employee of the
judiciary.
Administrative actions cannot depend on the will or pleasure of the
complainant who may, for reasons of his own, condone what may
be detestable. Neither can the Court be bound by the unilateral act
of the complainant in a matter relating to its disciplinary power.
Desistance cannot divest the Court of its jurisdiction to investigate
and decide the complaint against the respondent. To be sure, public
interest is at stake in the conduct and actuations of officials and
employees of the judiciary. And the program and efforts of this
Court in improving the delivery of justice to the people should not
be frustrated and put to naught by private arrangements between
the parties.8
The issue in administrative cases is not whether the complainant
has a cause of action against the respondent, but whether the
employee against whom the complaint is filed has breached the
norms and standards of service in the judiciary. Clearly, this Court
has the power and the duty to root out misconduct among its
employees, regardless of the complainants desistance.9 Besides,
the Desistance mentioned by respondent refers to the affidavit10
executed by complainant in the Robbery case filed before the
Caloocan City RTCBranch 122, which merely stated that the former

was no longer interested in pursuing the case as he believed that

there was no criminal intent on the part of respondent and the
incident arose from petty misunderstanding and misapprehension
of facts. Pertinent portions of the affidavit read:
2. That after due deliberation and studying regarding the
circumstances surrounding the facts of the case that lead to the
filing of the complaint, I was convinced that there was no criminal
intent on the part of the accused and that the incident arose merely
out of petty misunderstanding and misapprehension of facts;
3. That I am executing this affidavit to attest to the truth of the
foregoing and to inform the Court that I am desisting and no longer
interested in further pursuing the above-criminal case;
4. That I am further executing this affidavit of my own free will and
voluntary act and deed without any force, intimidation, as
monetary consideration on my part.11
It is well-settled that in administrative proceedings, the
complainant has the burden of proving by substantial evidence the
allegations in his complaint.12 Substantial evidence is the amount
of relevant evidence that a reasonable mind might accept as
adequate to support a conclusion.13 Evidence to support a
conviction in a criminal case is not necessary, as the standard of
integrity demanded of members of the Bench is not satisfied and
merely allows one to escape the penalties of the criminal law.14 In
the case at bar, complainant adduced substantial evidence to
support his allegations.
As gleaned from the complainants affidavit-complaint, respondent
demanded sums of money for the dismissal of the criminal case
against complainants nephew.
4. Noon din ay nag-follow-up ako sa staff room ng Branch 121 at
nakausap ko si Jimmy Eugenio na nagsabi sa akin na lalakarin daw
niya ma-dismiss ang kaso magbigay lamang ako sa kanya ng
tatlong daang (P300.00) piso;
5. Nagbigay ako ng tatlong daang (P300.00) piso kay Jimmy
Eugenio noong araw na iyon mismo.
6. Makalipas ang isang lingo pagkabigay ko ng tatlong daang
(P300.00) piso kay Jimmy Eugenio, sinabihan na naman ako ni
Jimmy na magbigay sa kanya ng 500 pesos para ibigay daw niya sa
pulis Meycauayan;

7. Muli ay nagbigay ako sa kanya (Jimmy) ng limandaang (P500.00)

piso noong buwan din ng Junio, 2004;
8. Noong July 2004, hindi pa rin na-dismiss ang kaso ng aking
pamangkin. Nag-text sa akin si Jimmy at sinabi na pumunta ako sa
Branch 121. Nagkita kami sa Branch 121 at muli ay nanghingi si
Jimmy ng tatlong daang (P300.00) piso para daw pambili ng papel
at panlakad ng subpoena. Ako ay nagbigay sa kanya ng tatlong
daan (P300.00) piso dahil sa hangarin ko na ma-dismiss ang kaso
ng aking pamangkin;
9. Noong July 2004 nagkita kami muli ni Jimmy sa husgado at siya
ay nagpadagdag ng 200 piso. Muli ay nagbigay uli ako kay Jimmy
ng dalawandaang (P200.00) piso;
10. Makalipas ang isang lingo matapos ang aking bigay na
dalawandaang (P200.00) piso, noong buwan din ng Julio, 2004 ay
muling nagpadagdag si Jimmy ng tatlong daang (P300.00) piso 300
piso (sic) dahil kulang daw ang perang ibinigay ko para ma-dismiss
ang kaso;
11. Hindi pa rin nadi-dismiss ang kaso ng aking pamangkin noong
buwan ng Agosto, 2004. Nagkita kami ni Jimmy sa husgado at muli
ay nanghingi si Jimmy ng 900 piso. Dahil sa kawalan ng sapat na
900 piso ang halagang ito ay sinikap ko na maibigay sa kanya mula
sa pagsasangla ng bracelet ng aking anak at isang VCD. Hinulugan
ko kay Jimmy ang siyam na raang (P900.00) piso na hinihingi niya
ng tatlong (3) beses na instllment na tig-tatatlong daang (P300.00)
piso;
12. Matapos kong maibigay kay Jimmy ang kumpletong siyam na
raang (P900.00) piso, hindi pa rin nadi-dismiss ang kaso ng aking
pamangkin;
13. Noong Septiembre 14, 2004, matapos ang hearing ng aking
pamangkin na si Sonny Acbay sa RTC Branch 121 at ma-reset na
naman ang kaso, kinausap ko si Atty. Sicat kung bakit hindi nadidismiss ang kaso ng aking pamangkin samantalang ang private
complainant na si Geraldine Calderon ay di sumisipot at wala na sa
kanyang tinitirahan sa Valenzuela City. Nagpaliwanag si Atty. Sicat
na kailangan nakasulat sa return ng subpoena na wala na ang
nagrereklamo sa kanyang address na natala sa Information. Sinabi
pa ni Atty. Sicat na na-reset ang kaso dahil wala pang return ang
notice kay Geraldine Calderon;

14. Dakong 11:45 AM, Sept. 14, 2004 pinuntahan ko si Jimmy sa

Branch 124 at sinabi ko na na-reset na naman sa September 30,
2004 ang hearing. Habang kami ay nasa pasilyo ng Justice Hall,
dumaan si Atty. Sicat at kinausap ni Jimmy Eugenio. Narinig ko muli
ang paliwanag ni Atty. Sicat na sinabi na niya sa akin ilang sandali
lamang ang nakalipas. Ang sabi ni Jimmy ay sundin ang sinasabi ni
Atty. Sicat;
15. Nang nakaalis na si Atty. Sicat, nagsabi sa akin si Jimmy ng
ganito, "Magbigay ka ng halagang 1,500 piso. Ang isang libo ay
ibibigay kay Atty. Sicat at ang 500 piso ay pamasahe para sa
pagpapadala ng subpoena." Ang sabi ni Jimmy ay ibigay ko ang
pera sa kanya sa dakong hapon ng araw na iyon. Nagtaka ako kung
bakit hinihingan ako ni Jimmy ng 1,000 piso para kay Atty. Sicat at
kung bakit sa kanya (Jimmy) ko ibibigay samantalang hindi naman
ako hinihingan ng pera ni Atty. Sicat at sa simula pa lamang na
makilala ko si Atty. Sicat ay sinabihan na niya ako na libre at walang
bayad and serbisyo ng PAO lawyer na tulad niya. Sinabihan pa rin
ako ni Atty. Sicat na bawal ang magbigay ng pera o anuman
pabuya sa kanilang mga PAO lawyer. Gayunman ay sinagot ko si
Jimmy na wala akong pera ng araw na iyon at ako ay nakiusap sa
kanya na bukas na lamang ibibigay ang naturang halaga;
16. Dahil sa walang-wala na akong pera na pambigay sa hinihingi ni
Jimmy na isang libo limandaang (P1,500) piso, ako ay nagsadya kay
G. Erwin Tulfo ng ABS CBN noong dakong hapon ng Septiembre 14,
2004. Ang sabi ko kay G. Erwin Tulfo, "Yung pamangkin ko
nakakulong sa Caloocan mag-iisang taon na sa Septiembre 14,
2004, nakapagbigay na ako kay Jimmy, isang empleado husgado,
ng 2,500 piso. Hindi pa kasama dito ang mga gastos ko kapag
pinapakain si Jimmy. Ngayon na naman ay hinihingan ako ng 1,500
piso." Sinabi ko na rin kay G. Erwin Tulfo ang usapan namin ni
Jimmy na magbibigay ako sa kanya ng 1,500 piso kinabukasan,
petsa 15 ng Septiembre 2004;
17. Kinabukasan, dakong ika-3 ng hapon, Septiembre 15, 2004,
muli ay nagsadya ako kay G. Erwin Tulfo. Sinamahan ako ni G.
Erwin Tulfo at kami ay nagtungo na sa Caloocan Police Station.15
The evidence presented by the complainant is sufficient to
convince the proper authorities to conduct an entrapment of
respondent. In entrapment, ways and means are resorted to for the
purpose of ensuring and capturing the law-breakers in the
execution of their criminal plan.16 Entrapment has received judicial
sanction as long as it is carried out with due regard to constitutional
and legal safeguards. Furthermore, there is no scintilla of evidence

that the manner in which the National Bureau of Investigation

agents conducted the operation was tainted with illegality. We rule
that absent strong and convincing proof to the contrary, this Court
is bound by the presumption that the arresting officers were aware
of the legal mandates in effecting arrest and strictly complied with
the same.17

the substance of the matters upon which he relies to support his

denial. It is settled that denial is inherently a weak defense. To be
believed, it must be buttressed by strong evidence of nonculpability; otherwise, such denial is purely self-serving and is with
nil evidentiary value. Like the defense of alibi, a denial crumbles in
the light of positive declarations.20

In Co v. Calimag, Jr.,18 this Court said: "[a]n accusation of bribery is

easy to concoct and difficult to disprove, thus, to our mind, the
complainant must present a panoply of evidence in support of such
an accusation." In order that the allegation of a charge of this
nature may not be considered a fairy tale, evidence, other than the
doubtful and questionable verbal testimony of a lone witness,
should be adduced. Entrapment should have been pursued.
Evidence of a reasonable report to police authorities should have
been presented. Record of where the bribe money came from, its
specific denominations and the manner respondent accepted and
disposed of it should have been clearly shown.

In an effort to escape liability, he interposes the defense that on 15

September 2004, complainant voluntarily gave him money as his
transportation fare in going to Meycauayan, Bulacan. Complainant
directly put the money in his pants pocket but before he could
react, though, a policeman appeared and arrested him. In other
words, he interposed the defense of frame-up.

In the case at bar, evidence on record shows that complainant has

complied with these requirements, such as:
1. On 15 September 2004, complainant sought the help of Erwin
Tulfo of the ABS-CBN to apprehend respondent;
2. Complainant and Erwin Tulfo went to the Caloocan Police Station
to report the matter;1vvphi1.nt
3. Entrapment in the vicinity of the Judicial Complex was conducted
with complainant handing the white envelope containing P1,500.00
to respondent;
4. The front left pocket of respondents pants tested positive for the
presence of ultraviolet fluorescent powder, based on the laboratory
report of the Philippine National Police, Northern Police District
Crime Laboratory Office, Caloocan City Police Station.
Clearly, respondent solicited and received money from the
complainant for the dismissal of the criminal case against the
latters nephew. The probative weight of the affidavit-complaint of
the complainant as well as the results of the entrapment cannot be
overcome by the latters bare denials.
A perusal of respondents Sinumpaang Salaysay19 reveals that
while he denies all the allegations that he asked and received
money from complainant on several occasions, he failed to set forth

This Court is not persuaded by respondents version that he was

framed up. Frame-up as a defense has been invariably viewed by
this Court with disfavor, for it can just easily be concocted but is
quite difficult to prove. And the defense of frame-up must be
proved by clear and convincing evidence because it is of the same
category as alibi. In the case at bar, respondent failed to present
convincing evidence to substantiate his claim. Worth noting is that
there is no proof on record that complainant was induced or
influenced by any improper motive to perpetrate such "set-up."
The Court also addresses respondents defense of absence of
fluorescent powder on his hands. This is a lame excuse. Laboratory
report of the Philippine National Police, Northern Police District
Crime Laboratory Office, Caloocan City Police Station, showed
presence of ultraviolet fluorescent powder on the front left pocket
of respondents pants which coincides with his own admission that
the money was placed in his pocket.
Lastly, in the affidavit of Atty. Sicat, he vigorously denied that he
asked respondent to demand money in exchange for the dismissal
of the case, much less received any single centavo from
respondent. These clearly demonstrate that respondent had been
working alone and further highlight his sole liability for his wrongful
actions.
Respondent has clearly demonstrated his failure to observe the
standard and behavior required of an employee in the judiciary and
he cannot avoid responsibility for his acts. He has shown beyond
doubt his unfitness for public office. The judiciary must be cleansed
of corrupt employees like Eugenio or run the risk of eroding the
public confidence.

Respondent as Process Server serves Court processes such as

subpoenas, subpoenas duces tecum, summonses, court orders and
notices; prepares and submits returns of service of processes;
monitors messages and/or delivers Court mail matters; keeps in
custody and maintains a record book of all mail matters received
and dispatched by the Court; and performs such other duties as
may be assigned by the Presiding Judge/Clerk of Court.21 Clearly,
then respondent should have known that he had absolutely no
power or authority to talk to litigants and give false hopes
regarding their cases.

prejudicial to the rights of the parties or to the right determination

of the cause. It generally means wrongful, improper or unlawful
conduct motivated by a premeditated, obstinate or intentional
purpose. The term, however, does not necessarily imply corruption
or criminal intent.25 Misconduct is a transgression of some
established and definite rule of action, a forbidden act, a dereliction
of duty, unlawful behavior, willful in character, improper or wrong
behavior;26 while "gross" has been defined as "out of all measure
beyond allowance; flagrant; shameful; such conduct as is not to be
excused."27

We cannot overly emphasize our previous pronouncements that,

circumscribed as it is with a heavy burden of responsibility, the
official and nonofficial conduct required of court personnel - from
the presiding judge to the rank and file - must always be beyond
reproach. It is imperative that they maintain the good name and
standing of the court as a true temple of justice, the administration
of which is a sacred task. By the very nature of their duties and
responsibilities, all those involved in it - from the highest officials to
the lower employees - must faithfully adhere to and hold inviolate
the principle solemnly enshrined in our Constitution: that a public
office is a public trust.

Respondents act of demanding and receiving money from the

uncle of a party litigant constitutes grave misconduct in office. It is
this kind of gross and flaunting misconduct, no matter how nominal
the amount involved on the part of those who are charged with the
responsibility of administering the law and rendering justice
quickly, which erodes the respect for law and the courts.28

Public service requires utmost integrity and discipline.1a\^/phi1.net

A public servant must exhibit at all times the highest sense of
honesty and integrity for no less than the Constitution mandates
the principle that "a public office is a public trust and all public
officers and employees must at all times be accountable to the
people, serve them with utmost responsibility, integrity, loyalty and
efficiency."22 All public officers and employees, especially those in
the judiciary, must at all times exercise a high degree of
professionalism and responsibility, which includes optimum
performance of duties. Hence, this Court shall never countenance
any conduct, act or omission that would violate the norm of public
accountability and diminish or even just tend to diminish public
confidence in the judiciary.
As the administration of justice is a sacred task, the persons
involved in it ought to live up to the strictest standard of honesty
and integrity.23 Their conduct, at all times, must not only be
characterized by propriety and decorum but, above all else, must
be above suspicion. Every employee of the judiciary should be an
example of integrity, uprightness and honesty.24
Misconduct has been defined as any unlawful conduct, on the part
of the person concerned with the administration of justice,

Pursuant to Section 23, Rule XIV of the Omnibus Rules

Implementing Book V of Executive Order 292, Grave Misconduct,
being in the nature of grave offenses, carries the extreme penalty
of dismissal from the service with forfeiture of retirement benefits
except accrued leave credits, and perpetual disqualification from
re-employment in government service.29
In addition, respondents solicitation of money from complainant in
exchange for a favorable decision violates Canon 1 of the Code of
Conduct for Court Personnel which took effect on 1 June 2004
pursuant to A.M. No. 03-06-13-SC. Sections 1 and 2, Canon 1 of the
Code of Conduct for Court Personnel expressly provide:
SECTON 1. Court Personnel shall not use their official position to
secure unwarranted benefits, privileges, or exemption for
themselves or for others.
SECTION 2. Court personnel shall not solicit or accept any gift, favor
or benefit on any explicit or implicit understanding that such gift
shall influence their official actions.
What brings our judicial system into disrepute are often the
actuations of a few erring court personnel peddling influence to
party-litigants, creating the impression that decisions can be
bought and sold, ultimately resulting in the disillusionment of the
public. This Court has never wavered in its vigilance in eradicating
the so-called "bad eggs" in the judiciary. And whenever warranted

by the gravity of the offense, the supreme penalty of dismissal in

an administrative case is meted to erring personnel.30
The following are cases of misconduct committed by court
employees who demanded money from litigants and were meted
the penalty of dismissal:
In Frankie N. Calabines v. Luis N. Gnilo, Dolor M. Catoc v. Feliciano
Calinga, Evelyn L. Caguitla, Luis N. Gnilo and Atty. Michael P.
Musico,31 the penalty of dismissal was imposed on four employees
of the Court of Appeals for receiving a sum of money from party
litigants in exchange for a supposed decision which did not actually
exist.
In Re: Criminal Case No. MC-02-5637 Against Arturo V. Peralta and
Larry C. De Guzman, Employees of MeTC, Br. 31, Q. C.,32 a clerk of
court and a sheriff were dismissed from service for receiving
marked money from a litigant in exchange for the execution of a
writ.
In Hidalgo v. Magtibay,33 a process server and a jail officer were
dismissed from service for asking grease money in the amount of
P2,000.00 to facilitate the release from detention of a certain
Dionisio Catimbang who had a pending case in the Tanuan City RTCBranch 6.
In Office of the Court Administrator v. Morante,34 we ruled that the
abominable act of a clerk of court of extorting money in exchange
for court orders warrants his dismissal from service and imposition
of accessory penalties.
In Fabian v. Galo,35 a court stenographer was dismissed from
service when she demanded and received various sums of money
on the promise that she would obtain a favorable decision for a
litigant.
In Office of the Court Administrator v. Barron,36 a judge was
dismissed for demanding and receiving money from a party litigant.
The conduct of respondent judge shows that he can be influenced
by monetary considerations.
We have been resolute in our drive to discipline and, if warranted,
to remove from the service errant magistrates, employees and
even justices of higher collegiate appellate courts37 for ANY
infraction which tends to give the Judiciary a bad name. To
underscore our earnestness in this pursuit, we have, in fact, been

unflinching in imposing discipline on errant personnel38 or in

purging the ranks of those undeserving to remain in the service.39
We can do no less in the case at bar.
WHEREFORE, Jaime C. Eugenio is found GUILTY of Gross
Misconduct. He is DISMISSED from service effective immediately,
with forfeiture of all retirement benefits, except accrued leave
credits, with prejudice to reemployment in any branch or
instrumentality in the government, including government-owned
and controlled corporations.
SO ORDERED.
G.R. Nos. 117589-92 May 22, 1996
ROMEO R. SALALIMA, DANILO S. AZAA, JUAN VICTORIA, LORENZO
REYEG, ARTURO OSIA, CLENIO CABREDO, VICENTE GO, SR., RAMON
FERNANDEZ, JR., MASIKAP FONTANILLA, WILBOR RONTAS and
NEMESIO BACLAO, petitioners,
vs.
HON. TEOFISTO T. GUINGONA, in his capacity as the Executive
Secretary, VICTOR R. SUMULONG, RENATO C. CORONA and ANGEL
V. SALDIVAR, in their capacity as Members of the Ad Hoc
Committee, MAYOR NAOMI C. CORRAL, KGD. FRANCISCO ALARTE,
MAYOR ANTONIO DEMETRIOU; and DOMINADOR LIM, JESUS JAMES
CALISIN, EVELYN SILVERIO, SILVERIO COPE, TOBIAS BETITO,
MANUEL LANUZA, JAMES ENRICO SALAZAR, RODOLFO ANTE, JUAN
RIVERA, MARCIAL TUANQUI, DR. SALVADOR SAMBITAN, ATTY.
EUTIQUIO NEPOMUCENO, in their capacity as ACTING GOVERNOR,
ACTING VICE-GOVERNOR, and ACTING MEMBERS OF THE
SANGGUNIANG PANLALAWIGAN OF ALBAY, respectively,
respondents.

DAVIDE, JR., J.:p

Petitioners seek to annul and set aside Administrative Order No.
153, signed on 7 October 1994 by the President and by public
respondent Executive Secretary Teofisto T. Guingona, Jr., approving
the findings of fact and recommendations of the Ad Hoc Committee
and holding the petitioners administratively liable for the following
acts or omissions: (a) wanton disregard of law amounting to abuse
of authority in O.P. Case No. 5470; (b) grave abuse of authority
under Section 60 (e) of the Local Government Code of 1991 (R.A.
No. 7160) in O.P. Case No. 5469; (c) oppression and abuse of

authority under Section 60 (c) and (e) of R.A. No. 7160 in O.P. Case
No. 5471; and (d) abuse of authority and negligence in O.P. Case
No. 5450. The said order meted out on each of the petitioners
penalties of suspension of different durations, to be served
successively but not to go beyond their respective unexpired terms
in accordance with Section 66 (b) of R.A. No. 7160.

IV.

Prefacing the petition with a claim that the challenged

administrative order is "an oppressive and capricious exercise of
executive power," the petitioners submit that:

We resolved to give due course to this petition and to decide it on

the basis of the pleadings thus far submitted, after due
consideration of the satisfactory explanation of the petitioners that
his case has not been mooted by the expiration of their term of
office on 30 June 1995 and the comment of the Office of the
Solicitor General that this case be resolved on the merits. In
seeking a resolution of this case on the merits, the office of the
Solicitor General invites the attention of the Court to the following:

I.
THE PUBLIC RESPONDENT HONORABLE EXECUTIVE SECRETARY
TEOFISTO T. GUINGONA, JR. ACTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN
SUSPENDING THE PETITIONERS FOR PERIODS RANGING FROM
TWELVE MONTHS TO TWENTY MONTHS IN VIOLATION OF THE
CONSTITUTIONAL MANDATES ON LOCAL AUTONOMY AND SECURITY
OF TENURE AND APPOINTING UNQUALIFIED PERSONS TO NONVACANT POSITIONS AS THEIR SUCCESSORS IN OFFICE.
II.
THE PUBLIC RESPONDENT HONORABLE EXECUTIVE SECRETARY
TEOFISTO T. GUINGONA, JR. ACTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN
HOLDING THE PETITIONERS GUILTY OF ABUSE OF AUTHORITY FOR
FAILURE TO SHARE WITH THE MUNICIPALITY OF TIWI THE AMOUNT
OF P40,724,471.74 PAID BY NAPOCOR TO THE PROVINCE OF ALBAY,
PURSUANT TO THE MEMORANDUM OF AGREEMENT DATED JULY 29,
1992.
III.

THE PUBLIC RESPONDENT EXCEEDED ITS JURISDICTION WHEN IT

PREMATURELY DECIDED THESE CASES ON THE BASIS OF THE SAO
REPORT NO. 93-11 WHICH IS PENDING APPEAL TO THE
COMMISSION ON AUDIT SITTING EN BANC.

(a) While the periods of suspension have been served by

petitioners and that some of them have even been elected to other
government positions, there is the primary issue of whether the
suspensions were valid and grounded on sufficient cause.
(b) If the suspensions are found to be valid, petitioners are not
entitled to reimbursement of salaries during their suspension
period.
(c) If upheld, Administrative Order No. 15, would be used as a
strong ground in filing cases against petitioners for violations of the
Anti Graft and Corrupt Practices Act.
(d) Corollary [sic] to these issues is the issue of the interpretation
and application of the [R]eal Property Tax Code and the Local
Government Code under the circumstances of this case.

THE PUBLIC RESPONDENT TEOFISTO T. GUINGONA, JR. ACTED WITH

ABUSE OF DISCRETION IN SUSPENDING THE PETITIONERS BASED
UPON THE PROVISIONS OF THE LOCAL GOVERNMENT CODE:

(e) The resolution of these issues would finally put to rest whether
respondents acted with grave abuse of discretion amounting to lack
of jurisdiction for having suspended petitioners on the basis of their
findings in the four (4) administrative cases filed against the
petitioners.

A. WHAT WERE NOT COMPLAINED OF;

The factual antecedents are not complicated.

B. UPON ACTS COMMITTED PRIOR TO ITS EFFECTIVITY; AND

Sometime in 1993, several administrative complaints against the

petitioners, who were elective officials of the Province of Albay,
were filed with the Office of the President and later docketed as O.P.
Cases Nos. 5450, 5469, 5470, and 5471. Acting thereon, the
President issued Administrative Order No. 94 creating an Ad Hoc

C. WHERE THE ADMINISTRATIVE CASES WHEN FILED WERE

ALREADY COVERED BY PRESCRIPTION.

Committee to investigate the charges and to thereafter submit its

findings and recommendations.
The Ad Hoc committee was composed of Undersecretary Victor R.
Sumulong of the Department of the Interior and Local Government
(DILG), Assistant Executive Secretary Renato C. Corona, and
Presidential Assistant Angel V. Saldivar.
On 26 August 1994, after conducting hearings, the Ad Hoc
Committee submitted its report to the Office of the President.
On 7 October 1994, the President promulgated Administrative
Order No. 153 quoting with approval the following pertinent
findings and recommendations of the Committee; thus:
The finding of the Ad-Hoc Committee in OP Case Nos. 547(1, 5469,
5471 and 5450 are as follows
I. OP Case No. 5470

Earlier, said properties were sold at an auction sale conducted by

the Province of Albay (the "Province") to satisfy NPC's tax liabilities.
Being the sole bidder at the auction, the Province acquired
ownership over said properties.
On 29 July 1992, the NPC through then President Pablo Malixi and
the Province represented by respondent Salalima, entered into a
Memorandum of agreement ("MOA") [Exhs. 7 to 7-A] whereby the
former agreed to settle its tax liabilities, then estimated at
P214,845,104.76.
Under the MOA, the parties agreed that:
the actual amount collectible from NPC will have to be
recomputed/revalidated;
NPC shall make an initial payment of P17,763,000.00 upon
signing of the agreement;

This refers to the administrative complaint filed by Tiwi Mayor

Naomi Corral against Albay Governor Romeo Salalima, ViceGovernor Danilo Azaa, and Albay Sangguniang Panlalawigan
Members Juan Victoria, Lorenzo Reyeg, Arturo Osia, Clenio Cabredo,
Vicente Go [S]r., Jesus Marcellana, Ramon Fernandez, Jr. Masikap
Fontilla, and Wilbor Rontas.

the balance of the recomputed/revalidated amount (less the

aforesaid initial payment), shall be paid in twenty-four (24) equal
monthly installments to commence in September 1992; and

Docketed as OP Case No. 5470, the complaint charges the

respondents for malversation and consistent & habitual violation of
pars. (c) and (d) of Section 60 of Republic Act (RA) No. 7160,
otherwise known as the "Local Government Code."

On 3 August 1992, Mayor Corral formally requested the Province

through respondent Salalima, to remit the rightful tax shares of Tiwi
and certain barangays of Tiwi where NPC's properties are located
("concerned barangays") relative to the payments made by NPC
(Exh. B).

The antecedent facts are as follows:

On 4 June 1990, the Supreme Court in the case entitled "National
Power Corporation (NPC) v. The Province of Albay, et al.", G.R. No.
87479 rendered judgment (Exhs. D to D-14) declaring, inter alia,
NPC liable for unpaid real estate taxes on its properties in Albay
covering the period 11 June 1984 to 10 March 1987.
Citing the fact that its tax exemption privileges had been revoked,
the Supreme Court held that NPC's real properties, consisting
mainly of geothermal plants in Tiwi and substation facilities in
Daraga, are subject to real estate tax in accordance with
Presidential Decree (PD) No. 464, as amended, otherwise known as
the "Real Property Tax Decree."

ownership over the auctioned properties shall revert to NPC upon

satisfaction of the tax liabilities.

On the same day, 3 August 1992, the Tiwi Sangguniang Bayan

passed Resolution No. 12-91 (Exhs. G to G-1) requesting the Albay
Sangguniang Panlalawigan to hold a joint session with the former
together with Mayor Corral and the Sangguniang Pambarangays of
the concerned barangays, for the purpose of discussing the
distribution or application of the NPC payments.
On 10 August 1992, respondent Salalima replied that the request
cannot be granted as the initial payment amounting to
P17,763,000.00 was only an "earnest money" and that the total
amount to be collected from NPC was still being validated (Exh. 1).

Not satisfied with respondent Salalima's response, Mayor Corral

complained to NPC about the Province's failure to remit Tiwi's and
the concerned barangays' shares in the payments made by NPC
(Exh. 50-C).
On 14 August 1992, President Malixi informed respondent Salalima
that the representatives of both NPC and the Province have
reconciled their accounts and determined that the amount due
from NPC was down to P207,375,774.52 (Exh. 20).
Due to the brewing misunderstanding between Tiwi and the
concerned barangays on the one hand, and the Province on the
other, and so as not to be caught in the middle of the controversy,
NPC requested a clarification from the Office of the President as to
the scope and extent of the shares of local government units in real
estate tax collections (Exh. 6 to 6-A).
Meantime, the Albay Sangguniang Panlalawigan passed Resolution
No. 178-92 dated 8 October 1992 (Exh. R) and Resolution No. 20492 dated 5 November 1992 (Exh. S) appropriating P9,778,932.57
and P17,663,431.58 or a total of P27,442,364.15 from the general
fund to satisfy "prior years" obligations and to implement certain
projects of the Province. These resolutions were approved by
respondent Salalima on 22 October 1992 and 6 November 1992,
respectively.
On 3 December 1992, the Office of the President through Chief
Presidential Legal Counsel Antonio Carpio opined that the MOA
entered into by NPC and the Province merely recognized and
established NPC's tax liability. He further clarified that the sharing
scheme and those entitled to the payments to be made by NPC
under the MOA should be that provided under the law, and since
Tiwi is entitled to share in said tax liabilities, NPC may remit such
share directly to Tiwi. The pertinent portion of Chief Presidential
Legal Counsel Carpio's letter dated 3 December 1992 (Exhs. H to H1) addressed to President Malixi reads:
xxx xxx xxx
The Memorandum of Agreement entered into by the Province of
Albay and NPC merely enunciates the tax liability of NPC. The
Memorandum of Agreement does not provide for the manner of
payment of NPC's liability. Thus, the manner of payment as
provided for by law shall govern. In any event, the Memorandum of
Agreement cannot amend the law allowing the payment of said
taxes to the Municipality of Tiwi.

The decision in the case of NPC v. Province of Albay (186 SCRA

198), likewise, only establishes the liability of NPC for real property
taxes but does not specifically provide that said back taxes be paid
exclusively to Albay province.
Therefore, it is our opinion that the NPC may pay directly to the
municipality of Tiwi the real property taxes accruing to the same.
Please be guided accordingly.
Very truly yours,
(Sgd.) ANTONIO T. CARPIO
Chief Presidential Legal Counsel
Because of this opinion, President Malixi, through a letter dated 9
December 1992 (Exh. I to I-1), informed Mayor Corral and
respondent Salalima that starting with the January 1993
installment, NPC will directly pay Tiwi its share in the payments
under the MOA. He also invited the parties to a clarificatory
meeting on 17 December 1992 at his Quezon City office to discuss
the matter in detail.
Only Mayor Corral attended the 17 December 1992 meeting with
President Malixi as respondent Salalima was indisposed. President
Malixi then provided Mayor Corral with schedules (Exhs. J to J-2) of
the payments already made by NPC under the MOA and the
computation and the distribution of shares.
As of 9 December 1992, payments made by NPC to the Province
reached P40,724,471.74, broken down as follows:
Payment Dates Amount
July 29, 1992 P 17,763,000.00
Sept. 3, 1992 4,660,255.80
Oct. 5, 1992 6,820,480.02
Nov. 5, 1992 5,740,367.96
Dec. 9, 1992 5,740,367.96


Total P 40,724,471.74
On 19 December 1992, in an apparent reaction to NPC's decision to
directly remit to Tiwi its share in the payments made and still to be
made pursuant to the MOA, the Albay Sangguniang Panlalawigan
passed Ordinance No. 09-92 (Exhs. K to K-1), which, among others:
authorized the Provincial Treasurer upon the direction of the
Provincial Governor to sell the real properties (acquired by the
Province at the auction sale) at a public auction, and to cause the
immediate transfer thereof to the winning bidder; and
declared as forfeited in favor of the Province, all the payments
already made by NPC under the MOA.
Realizing from the actuations of the respondents that Tiwi's share in
the P40,724,471.74 payments already made by NPC will not be
forthcoming, Mayor Corral filed the present complaint with the
Office of the President on 25 January 1993.
In determining whether the respondents are guilty of the charges
against them, the threshold issue of whether the payments to be
made by NPC under the MOA should accrue solely and exclusively
in favor of the Province, must first be resolved.
Sections 38, 39, 41, 86 and 87 of PD No. 464, as amended,
prescribe the authority of local government units to levy real
property tax as well as the sharing scheme among local
government units including the national government with respect
thereto. Said provisions read:
Sec. 38. Incidence of Real Property Tax. There shall be levied,
assessed, and collected in all provinces, cities and municipalities an
annual ad valorem tax on real property, such as land, buildings,
machinery and the improvements affixed or attached to real
property not hereinafter specifically exempted.
Sec. 39. Rates of Levy. The provincial, city or municipal board or
council shall fix a uniform rate of real property tax applicable to
their respective localities as follows:
(1) In the case of a province, the tax shall be fixed by ordinance of
the provincial board at the rate of not less than one-fourth of one

percent but not more than one-half of one percent of the assessed
value of real property;
(2) In the case of a city, the tax shall be fixed by ordinance of the
municipal board or city council at the rate of not less than one-half
of one percent but not more than two percent of the assessed value
of real property; and
(3) In the case of a municipality, the tax shall be fixed by ordinance
of the municipal council subject to the approval of the provincial
board at the rate of not less than one-fourth of one percent but not
more than one-half of one percent of the assessed value of real
property.
Sec. 41. An additional one percent tax on real property for the
Special Education Fund. There is hereby imposed an annual tax
of one percent on real property to accrue to the Special Education
Fund created under Republic Act No. 5447, which shall be in
addition to the basic real property tax which local governments are
authorized to levy, assess and collect under this Code; Provided,
That real property granted exemption under Section 40 of this code
shall also be exempt from the imposition accruing to the Special
Education Fund. (as amended by PD No. 1913).
Sec. 86. Distribution of proceeds. (a) The proceeds of the real
property tax, except as otherwise provided in this Code, shall
accrue to the province, city or municipality where the property
subject to the tax is situated and shall be applied by the respective
local government unit for its own use and benefit.
(b) Barrio shares in real property tax collections. The annual
shares of the barrios in real property tax collections shall be as
follows:
(1) Five percent of the real property tax collections of the province
and another five percent of the collections of the municipality shall
accrue to the barrio where the property subject to the tax is
situated.
(2) In the case of the city, ten percent of the collections of the tax
shall likewise accrue to the barrio where the property is situated.
xxx xxx xxx
Sec. 87. Application of proceeds. (a) The proceeds of the real
property tax pertaining to the city and to the municipality shall

accrue entirely to their respective general funds. In the case of the

province, one-fourth thereof shall accrue to its road and bridge fund
and remaining three-fourths of its general fund.
(b) The entire proceeds of the additional one percent real property
tax Levied for the Special Education Fund created under R.A. No.
6447 collected in the province or city on real property situated in
their respective territorial jurisdictions shall be distributed as
follows:
(1) Collections in the provinces: Fifty-five percent shall accrue to
the municipality where the property subject to the tax is situated;
twenty-five percent shall accrue to the province; and twenty
percent shall be remitted to the Treasurer of the Philippines. (as
amended by PD No. 1969).
xxx xxx xxx
(c) The proceeds of all delinquent taxes and penalties, as well as
the income realized from the use, lease or other disposition of real
property acquired by the province or city at a public auction in
accordance with the provisions of this Code, and the proceeds of
the sale of the delinquent real property or of the redemption
thereof, shall accrue to the province, city or municipality in the
same manner and proportion as if the tax or taxes had been paid in
regular course.
xxx xxx xxx (Emphasis supplied)
The foregoing provisions clearly show that local government units
may levy and collect real property tax ranging from a low of onefourth of one percent (0.25%) to a high of two percent (2.0%) of the
assessed value of real property depending on the local government
unit levying the same. It is likewise clear that a province, a
municipality and a city may each separately levy said tax on real
property located within their respective jurisdictions but not
exceeding the rates prescribed under Sec. 39 of PD No. 464.
And apart from said basic tax; the law authorizes the collection of
an additional tax equivalent to one percent (1.0%) of the assessed
value of the real property to accrue to the Special Education Fund
(SEF).
In accordance with the authority confirmed upon them by PD No.
464, the following tax resolutions or ordinances were passed:

By the province
Resolution No. 30, series of 1974, of the Provincial Board of Albay,
enacting Provincial Tax Ordinance No. 4 whose Section 1, provides:
There shall be levied, assessed and collected an annual ad valorem
tax on real properties including improvements thereon equivalent
to one-half of one percent of the assessed value of real property.
By the Municipality of Tiwi
Ordinance No. 25, series of 1974, of the Sangguniang Bayan of
Tiwi, Albay, whose Section 2 provides:
That the tax rate of real property shall be one-half of one percent of
the assessed value of real property.
By the Municipality of Daraga
Ordinance No. 27, series of 1980, of the Sangguniang Bayan of
Daraga, Albay, whose Section 3 provides:
Rates of Levy The tax herein levied is hereby fixed at one-half of
one percent (1/2 of 1%) of the assessed value of real property. (see
Exhs. 50-G; Emphasis supplied).
Applying said rates of levy, the real property taxes collectible from
the NPC are:
1. A basic tax of 1%, levied by the Province (0.5%) and Tiwi (0.5%)
on the one hand; and the Province (0.5%) and Daraga (0.5%) on
the other; and
2. The additional 1% tax pertaining to the SEF.
or a total of 2.0% on the assessed value of NPC's real properties.
On the other hand, sharing on said taxes, shall be as follows:
1. On the basic tax:
Province 47.5%
Municipality 47.5%
Barangay 5.0%


Total 100.0%
2. On the additional tax pertaining to the SEF:
Province 25.0%
Municipality 55.0%
National Government 20.0%

Total 100.0%
In real terms, the P40,724,471.74 in payments earlier made by NPC
should be shared by the Province, Tiwi and Daraga, the concerned
barangays and the national government, as follows:
Province Municipalities Barangay Natl. Govt.
Basic Tax
P 9,672,062.04 9,672,062.04 1,018,111.79 none
SEF
4,072,447.18 10,181,117.93 none 6,108,670.76

Total
P13,744,509.22 19,853,179.97 1,018,111.79 6,108,670.76
=========== ========== ========= =========
This shows that the Province is entitled only to P13,744,509.21 of
the P40,724,471.74 aggregate payments by NPC. On the other
hand, the balance of P26,979,962.52 represents the collective
shares of Tiwi, Daraga, the concerned barangays and the national
government.

The Province maintains, however, that considering that it acquired

ownership over the properties of NPC subject matter of the auction,
all the payments to be made by NPC under the MOA should accrue
exclusively to the Province.
This is untenable. The law clearly provides that "the proceeds of
all the delinquent taxes and penalties as well as the income
realized from the . . . disposition of real property acquired by the
province or city at a public auction . . ., and the sale of delinquent
property or the redemption thereof shall accrue to the province,
city or municipality in the same manner and proportion as if the tax
or taxes have been paid in the regular course" (Sec. 87(c) supra.).
It is immaterial that the Province was the highest bidder and
eventually became the owner of the properties sold at the auction
sale. What is essential is that the proceeds of the re-sale of said
properties acquired by the Province, be distributed in the same
manner and proportion among the rightful beneficiaries thereof as
provided by law.
This was the import and essence of Chief Presidential Legal Counsel
Carpio's opinion when he stated that the sharing scheme provided
by law cannot be amended by a mere agreement between the
taxpayer, in this case NPC, and the collecting authority, in this
instance, the Province of Albay.
Likewise, it is axiomatic that while "contracting parties may
establish stipulations, clauses, terms and conditions as they may
deem convenient", they may not do so if these are "contrary to law,
morals, good customs, public order or public policy" (Art 1306, New
Civil Code.).
Also relevant to the discussion are the following provisions of the
Local Government Code of 1991:
Sec. 307. Remittance of Government Monies to the Local Treasury.
Officers of local government authorized to receive and collect
monies arising from taxes, revenues, or receipts of any kind shall
remit the full amount received and collected to the treasury of such
Local government unit which shall be credited to the particular
account or accounts to which the monies in question properly
belong.
Sec. 308. Local Funds. Every local government unit shall
maintain a General Fund which shall be used to account for such
monies and resources as may be received by and disbursed from

the local treasury. The General Fund shall consist of monies and
resources of the local government which are available for the
payment of expenditures, obligations or purposes not specifically
declared by law as accruing and chargeable to, or payable from any
other fund.

However, in total disregard of the law, the Province treated the

P40,724,471.74 NPC payments as "surplus adjustment" (Account 792-419) and lodged the same in its general fund. No trust liability
accounts were created in favor of the rightful beneficiaries thereof
as required by law.

Sec. 309. Special Funds. There shall be maintained in every

provincial, city, or municipal treasury the following special funds:

Report No. 93-11 (Exh. N), prepared and made by the Special Audit
Office (SAG) of the Commission on Audit (COA) further support our
findings, thus

(a) Special Education Fund (SEF) shall consist of the respective

shares of provinces, cities, municipalities and barangays in the
proceeds of the additional tax on real property to be appropriated
for purposes prescribed in Section 272 of this Code; and
(b) Trust Funds shall consist of private and public monies which
have officially come into the possession of the local government or
of a local government official as trustee, agent or administrator, or
which have been received as a guaranty for the fulfillment of some
obligation. A trust fund shall only be used for the specific purpose
for which it was created or for which it came into the possession of
the Local government unit. (Emphasis supplied).
These provisions are restatements of Sec. 3(4) and (5) of PD No.
1445 and both Sec. 43, Book V and Sec. 2(4) of Book V(B) of
Executive Order No. 292, otherwise known as the "Administrative
Code of 1987."
It is unmistakable from the foregoing provisions that the shares of
Tiwi, Daraga, the concerned barangays and the national
government in the payments made by NPC under the MOA, should
be, as they are in fact, trust funds. As such, the Province should
have, upon receipt of said payments, segregated and lodged in
special accounts, the respective shares of Tiwi, Daraga, the
concerned barangays and the national government for eventual
remittance to said beneficiaries. Said shares cannot be lodged in,
nor remain part of, the Province's general fund. Moreover, the
Province cannot utilize said amounts for its own benefit or account
(see also Sec. 86, PD No. 464, as amended).
Therefore, the balance of P26,979,962.52 representing the
collective shares of Tiwi and Daraga, the concerned barangays and
the national government, cannot be appropriated nor disbursed by
the Province for the payment of its own expenditures or contractual
obligations.

xxx xxx xxx

Part II. Findings and Observations
The audit findings, which are discussed in detail in the attached
report, are summarized below:
1. The remittances of the NPC of the P40,724,471.74 from July to
December 1992 representing partial payments of real tax
delinquencies from June 22, 1984 to March 10, 1989, were not
shared with the Municipalities of Tiwi, Daraga, and the concerned
barangays and the National Government in violation of PD 464. The
Memorandum of Agreement entered into between the Province of
Albay and Napocor cannot amend the provisions of PD 464 which
specifies the sharing scheme of the real property tax among the
province, city or municipality where the property subject to tax is
situated and the National Government.
xxx xxx xxx
2. The collection of P40,724,471.74 was fully treated as surplus
adjustment (Account 7-92-419) being prior years income, without
creating a trust liability for the municipality and barangays
concerned and national government. As of December 31, 1992, the
balance of the account was only P25,668,653.12 thus, stressing
that P15,255,818.62 was spent. . . . Under the General Fund, cash
available was only P4,921,353.44 leaving practically no cash to
answer for the shares of the Municipalities of Tiwi and Daraga and
their barangays where the properties are located. (pp. 4 and 16;
(Emphasis supplied).
xxx xxx xxx
As pointed our earlier, the Province was entitled only to
P13,744,509.21 of the P40,724,471.74 in payments made by NPC.

Thus, it may only appropriate and disburse P13,744,509.21. Any

disbursements exceeding this amount would therefore be illegal.
This Committee particularly notes the factual finding of COA that as
of 31 December 1992, the actual cash balance of the Province's
general fund was only P4,921,353.44. This means that of the
P40,724,471.74 actually paid by the NPC and lodged in the
Province's general fund, P35,803,118.30 was disbursed or spent by
the Province. This exceeds the P13,744,509.21 share of the
Province by P22,058,609.09.
The foregoing may be illustrated as follows:
NPC Payments received by
the Province P40,724,471.74
Less Actual Cash Balance
general fund
as of 12-31-92 4,921,353.44

P35,803,118.30
===========
Less Share of the Province 13,744,509.21
Amount Illegally Disbursed
by the Province P22,058,609.09
===========
We have already shown that Ordinance No. 09-92 (Exhs. K to K-1)
declaring as forfeited in favor of the Province the entire amount of
P40,724,471.74 paid by NPC to be patently illegal as it unlawfully
deprives Tiwi and Daraga, the barangays concerned, and the
national government of their rightful shares in said payments.
Being illegal, said ordinance may not be used or relied upon by the
respondents to justify the disbursements of funds in excess of their
share.
Neither may Resolution Nos. 178-92 and 204-92 be used to justify
the disbursements considering that the appropriations made

thereunder totalling P27,442,364.51 are to be funded by the

P40,724,471.74 "surplus adjustment" that includes the "trust
funds" not belonging to the Province. Even assuring that Resolution
No. 178-92 authorizing the expenditure of P9,778,912.57 were to
be taken from the Province's share amounting to P13,744,509.21,
the rest of the disbursements still have no legal basis. Clearly, this
is violative of the fundamental rule that "(n)o money shall be paid
out of the local treasury except in pursuance of an appropriation
ordinance or law" (par [a], Sec. 305, Republic Act No. 7160).
Respondents raise the common defense that the findings obtained
in SAO Report No. 93-11 are not yet final as they have filed an
appeal therefrom.
It is important to stress that the exceptions (Exhs. 50-B, 50-I, & 50J) raised by the respondents to COA merely involve questions of
law, i.e., as to whether the Province alone should be entitled to the
payments made by NPC under the MOA, and whether the shares of
Tiwi and Daraga, the concerned barangays, and the national
government, should be held in trust for said beneficiaries.
Considering that the factual findings under SAO Report 93-11 are
not disputed, this Committee has treated said factual findings as
final or, at the very least, as corroborative evidence.
Respondents' contention that COA's factual findings, contained in
SAO Report No. 93-11 cannot be considered in this investigation is
untenable. For no administrative or criminal investigation can
proceed, if a respondent is allowed to argue that a particular COA
finding is still the subject of an appeal and move that the resolution
of such administrative or criminal case be held in abeyance. This
will inevitably cause unnecessary delays in the investigation of
administrative and criminal cases since an appeal from a COA
finding may be brought all the way up to the Supreme Court.
Besides, the matters raised by the respondents on appeal involve
only conclusions/interpretation of law. Surely, investigative bodies,
such as COA, the Ombudsman and even this Committee, are
empowered to make their own conclusions of law based on a given
set of facts.
Finally, sufficient evidence has been adduced in this case apart
from the factual findings contained in SAO Report, 93-11 to enable
this Committee to evaluate the merits of the instant complaint.

We also reject respondent Azaa's defense that since he did not

participate in the deliberation and passage of Resolution No. 09-92,
merely signing the same as presiding officer of the Sangguniang
Panlalawigan, and only certifying that the same had been passed,
he did not incur any administrative liability.
The fact remains that as presiding officer of the Sangguniang
Panlalawigan and being the second highest official of the Province,
respondent Azaa is jointly responsible with other provincial
officials in the administration of fiscal and financial transactions of
the Province. As presiding officer of the Sangguniang Panlalawigan,
respondent Azaa has a duty to see to it that resolutions or
ordinances passed are within the bounds of the law. He cannot
merely preside over the sessions of the Sangguniang Panlalawigan
unmindful of the legality and propriety of resolutions or ordinances
being proposed or deliberated upon by his colleagues.
This collective responsibility is provided under Secs. 304 and 305 of
Republic Act. No. 7160, thus
Sec. 304. Scope. This Title shall govern the conduct and
management of financial affairs, transactions and operations of
provinces, cities, municipalities, and barangays.
Sec. 305. Fundamental Principles. The financial affairs,
transactions, and operations of local government units shall be
governed by the following fundamental principles:
xxx xxx xxx
(1) Fiscal responsibility shall be shared by all those exercising
authority over the financial affairs, transactions, and operations of
local government units; and
xxx xxx xxx (Emphasis supplied)
It cannot be denied that the Sangguniang Panlalawigan has control
over the Province's "purse" as it may approve or not resolutions or
ordinances generating revenue or imposing taxes all well as
appropriating and authorizing the disbursement of funds to meet
operational requirements or for the prosecution of projects.
Being entrusted with such responsibility, the provincial governor,
vice-governor and the members of the Sangguniang Panlalawigan,
must always be guided by the so-called "fundamental" principles
enunciated under the Local Government Code, i.e., "No money shall

be paid out of the local treasury except in pursuance of an

appropriations ordinance or law; local revenue is generated only
from sources authorized by law or ordinance and collection thereof
shall at all times be acknowledged properly; all monies officially
received by a local government officer in any capacity or on any
occasion shall be accounted for as local funds, unless otherwise
provided by law; and trust funds in the local treasury shall not be
paid out except in fulfillment of the purposes for which the trust
was created or the funds received" (Sec. 305, R.A. 7160).
All the respondents could not claim ignorance of the law especially
with respect to the provisions of PD No. 464 that lay down the
sharing scheme among local government units concerned and the
national government, for both the basic real property tax and
additional tax pertaining to the Special Education Fund. Nor can
they claim that the Province could validly forfeit the
P40,724,471.74 paid by NPC considering that the Province is only
entitled to a portion thereof and that the balance was merely being
held in trust for the other beneficiaries.
As a public officer, respondent Azaa (and the other respondents as
well) has a duty to protect the interests not only of the Province but
also of the municipalities of Tiwi and Daraga and even the national
government. When the passage of an illegal or unlawful ordinance
by the Sangguniang Panlalawigan is imminent, the presiding officer
has a duty to act accordingly, but actively opposing the same by
temporarily relinquishing his chair and participating in the
deliberations. If his colleagues insist on its passage, he should
make known his opposition thereto by placing the same on record.
No evidence or any sort was shown in this regard by respondent
Azaa.
Clearly, all the respondents have, whether by act or omission,
denied the other beneficiaries of their rightful shares in the tax
delinquency payments made by the NPC and caused the illegal
forfeiture, appropriation and disbursement of funds not belonging
to the Province, through the passage and approval of Ordinance No.
09-92 and Resolution Nos. 178-92 and 204-92.
The foregoing factual setting shows a wanton disregard of law on
the part of the respondents tantamount to abuse of authority.
Moreover, the illegal disbursements made can qualify as technical
malversation.

This Committee, thus, finds all the respondents guilty of abuse of

authority, and acccordingly, recommends the imposition of the
following penalties of suspension without pay:
a. Respondent Salalima five (5)
months; and
b. All the other
respondents four (4)
months each.
II.

OP Case No. 5469

This refers to the administrative complaint filed against Albay

Governor Romeo Salalima, Vice-Governor Danilo Azaa, Albay
Sangguniang Panlalawigan Members Juan Victoria, Lorenzo Reyeg,
Jesus Marcellana, Arturo Osia, Clenio Cabredo, Ramon Fernandez,
Jr., Masikap Fontanilla, Vicente Go, Sr., and Nemesio Baclao relative
to the retainer contract for legal services entered into between the
Province of Albay, on the one hand, and Atty. Jesus R. Cornago and
the Cortes & Reyna Law Firm, on the other, and the disbursement
of public fund in payment thereof. The complaint was docketed as
OP Case No. 5469.
The antecedent facts are as follows.
Because of the refusal by the National Power Corporation ("NPC") to
pay real property taxes assessed by the Province of Albay ("the
Province") covering the period from 11 June 1984 up to 10 March
1987 amounting to P214,845,184.76, the Province sold at public
auction the properties of NPC consisting of geothermal power
plants, buildings, machinery and other improvements located at
Tiwi and Daraga, Albay. The Province was the sole and winning
bidder at the auction sale.
As NPC failed to redeem its properties sold at the auction, the
Province petitioned the Regional Trial Court in Tabaco, Albay to
issue a writ of possession over the same.
Sometime in 1989, NPC filed a petition with the Supreme Court,
which was docketed as G.R. No. 87479, questioning the validity of
the auction sale conducted by the Province. NPC claims, inter alia,
that its properties are not subject to real property tax.

On 17 May 1989, the Province, through Atty. Romulo Ricafort, the

legal officer of the Province, filed it; comment on the NPC petition
with the Supreme Court.
On 2 June 1989, the Albay Sangguniang Panlalawigan adopted
Resolution No. 129-89 (Exhs. B to B-1) authorizing respondent
Governor to engage the services of a Manila-based law firm to
handle the case against NPC.
On 25 August 1989, Atty. Jesus R. Cornago entered his appearance
with the Supreme Court as collaborating counsel for the Province in
G.R. No. 87479. The entry of appearance of Atty. Cornago bore the
conformity of respondent Governor.
On 14 November 1989, Atty. Antonio Jose F. Cortes of the Cortes &
Reyna Law Firm sent respondent Governor a letter (Exhs. D to D-1)
informing him that Atty. Jesus R. Cornago, as collaborating counsel
for the Province, has filed a memorandum with the Supreme Court,
suggesting that a retainer agreement be signed between the
Province, on the one hand, and Atty. Cornago and Cortes & Reyna
Law Firm, on the other hand, and setting forth the conditions of the
retainer agreement, thus:
As collaborating counsels for the respondents in the
aforementioned case, our law firm and that of Atty. Jesus R.
Cornago request that you pay us an Acceptance Fee of FIFTY
THOUSAND (P50,000.00) PESOS, while the aforementioned case is
pending in the Supreme Court. Thereafter, we will charge you a
contingent fee equivalent to eighteen percent (18%) of the value of
the property subject matter of the case which is P214 million,
payable to us in the event that we obtain a favorable judgment for
you from the Supreme Court in the case. Xerox expenses for copies
of motions, memorandum and other matters to be filed with the
Supreme Court in the case, together with xerox copies of
documentary evidence, as well as mailing expenses, will be for your
account also.
On 8 January 1990, the Albay Sangguniang Panlalawigan passed
Resolution No. 01-90 (Exhs. C to C-1) authorizing respondent
Governor to sign and confirm the retainer contract with the Cortes
& Reyna Law Firm.
Respondent Salalima signed the retainer agreement.

On 4 June 1990, the Supreme Court issued a decision dismissing

the NPC petition and upholding the validity of the auction sale
conducted by the province to answer for NPC's tax liabilities.
Subsequently, the following payments amounting to P7,380,410.31
(Exhs. E to N-1) were made by the Province to Atty. Antonio Jose
Cortes and Atty. Jesus R. Cornago:

DV No. 2475 Atty. Antonio Jose Cortes P 746,247.83

Dec. 9, 1992;
Check No. 253163
DV No. 2751 Atty. Antonio Jose Cortes P 747,247.84

Particulars Claimant/Payee Amount

Dec. 9, 1992;
Check No. 253163

Disbursement Cortes & Reyna P 60,508.75

DV No. 2752 Atty. Jesus R. Cornago P 267,018.40

Voucher (DV No. 4,

Jan. 8, 1990 Check No.
931019

Dec. 9, 1992;
Check No. 253164

DV No. 1889 Atty. Antonio Jose Cortes P 1,421,040.00

Aug. 13, 1992;
Check No. 236063-S
DV No. 1890 Atty. Jesus R. Cornago P 1,736,300.00
Aug. 13, 1992;
Check No. 236064-S
DV No. 2151 Atty. Antonio Jose Cortes P 838,851.44
Sept. 28, 1992;
Check No. 238174-S
DV No. 2226 Atty. Antonio Jose Cortes P 886,662.40
Oct. 8, 1992;
Check No. 239528-S
DV No. 2227 Atty. Jesus R. Cornago P 341,024.00
Oct. 8, 1992;
Check No. 239529-S
DV No. 2474 Atty. Jesus R. Cornago P 287,018.40
Nov. 6, 1992;
Check No. 250933

TOTAL P 7,380,410.31
Disbursement Voucher Nos. 2474 and 2475 were approved by
respondent Azaa. The rest were approved by respondent
Governor.
In a letter dated 31 May 1993 (Exh. O) and certificate of settlement
and balances dated 17 May 1993 (Exh. P), the Provincial Auditor of
Albay informed respondent Governor that payments made by the
Province as attorney's fees amounting to P7,380,410.31 have been
disallowed by the Commission on Audit (COA) with the following
notation:
The disbursement vouchers detailed hereunder represent
payments for attorney's fees of Cortes & Reyna Law Office for Legal
services rendered re: G.R. No. 87479 "NAPOCOR, Petitioner vs. The
Province of Albay, et al., Respondent," Supreme Court, en banc.
Total payments of P7,380,410.31 are disallowed for lack of the
requisite "prior written conformity and acquiescence of the Solicitor
General . . . as well as the written concurrence of the Commission
on Audit" as provided for and required under COA Circular No. 86255 dated April 2, 1986, re: "Inhibition against employment by
government: agencies and instrumentalities . . . of private lawyers
to handle their legal cases," viz.
The complaint alleges that by entering into the retainer agreement
with private lawyers and paying P7,380,410.31 to the said private
lawyers, respondents violated several provisions of law which
warrants the imposition of administrative penalties against them. It

is to be noted that respondents Victoria, Reyeg, Cabredo,

Marcellana and Osia were not yet members of the Sangguniang
Panlalawigan when Resolution No. 129 was passed. However, the
complaint alleges that these respondents were named in the
complaint because they approved the supplemental
budget/appropriation ordinances providing for the payment of the
attorney's fees.
The sole issue in this case is whether or not respondents have
incurred administrative liability in entering into the retainer
agreement with Atty. Cornago and the Cortes & Reyna Law Firm and
in making payments pursuant to said agreement for purposes of
the case filed by NPC with the Supreme Court against the province.
We find merit in the complaint and hold that under the
circumstances surrounding the transaction in question, the
respondents abused their authority.
Sec. 481 of the Local Government Code (RA. No. 7160) requires the
appointment of a legal officer for the province whose functions
include the following:
Represent the local government unit in all civil actions and special
proceedings wherein the local government unit or any official
thereof, in his official capacity is a party; Provided, That, in actions
or proceeding where a component city or municipality is a party
adverse to the provincial government or to another component city
or municipality, a special legal officer may be employed to
represent the adverse party.
The Supreme Court has ruled in Municipality of Bocaue, et al. v.
Manotok, 93 Phil 173 (1953), that local governments [sic] units
cannot be represented by private lawyers and it is solely the
Provincial Fiscal who can rightfully represent them, thus:
Under the law, the Provincial Fiscal of Bulacan and his assistants
are charged with the duty to represent the province and any
municipality thereof in all civil actions . . .
It would seem clear that the Provincial Fiscal is the only counsel
who can rightfully represent the plaintiffs and therefore, Attys. Alvir
and Macapagal [the private lawyers hired by the Province of
Bulacan] have no standing in the case. The appeal herein
interposed in behalf of the plaintiffs cannot therefore be
maintained.

This ruling applies squarely to the case at hand because Sec. 481
of the Local Government Code is based on Sec. 1681 of the Revised
Administrative Code which was the subject of interpretation in the
abovecited case of Municipality of Bocaue, et al. v. Manotok.
In hiring private lawyers to represent the Province of Albay,
respondents exceeded their authority and violated the
abovequoted section of the Local Government Code and the
doctrine laid down by the Supreme Court.
Moreover, the entire transaction was attended by irregularities.
First, the disbursements to the lawyers amounting to P7,380,410.31
were disallowed by the Provincial Auditor on the ground that these
were made without the prior written conformity of the Solicitor
General and the written concurrence of the Commission on Audit
(COA) as required by COA Circular No. 86-255 dated 2 April 1986.
The respondents attempted to dispute this finding by presenting
the Solicitor General's conformity dated 15 July 3993. This
conformity was, however obtained after the disbursements were
already made in 1990 and 1992. What is required by COA Circular
No. 85-255 is a prior written conformity and acquiescence of the
Solicitor General.
Another irregularity in the transaction concerns the lawyers.
Resolution No. 01-90 authorized the respondent Governor to sign
and confirm a retainer contract for legal services with the Cortes &
Reyna Law Firm at 202 E. Rodriguez Sr. Blvd., Quezon City. The
retainer contract signed by respondent Governor was, however, not
only with the Cortes & Reyna Law Firm but also with Atty. Jesus R.
Cornago of Jamecca Building, 280 Tomas Morato Avenue, Quezon
City. That Atty. Jesus R. Cornago and the Cortes & Reyna Law Firm
are two separate entities is evident from the retainer contract itself:
As collaborating counsels for the respondents in the
aforementioned case, our law firm and that of Atty. Jesus R.
Cornago request that you pay us an Acceptance Fee of FIFTY
THOUSAND (P50,000.00) PESOS, while the aforementioned case is
pending in the Supreme Court. Thereafter, we will charge you a
contingent fee equivalent to eighteen percent (18%) of the value of
the property subject matter of the case which is P214 Million,
payable to us in the event we obtain a favorable judgment for you
from the Supreme Court in the case. Xerox expenses for copies of
motions, memorandum and other matters to be filed with the
Supreme Court in the case, together with xerox copies of

documentary evidence, as well as mailing expenses, will be for your

account also.
xxx xxx xxx
Very truly yours,
CORTES & REYNA
LAW FIRM
-andAtty. JESUS R. CORNAGO
Jamecca Building
280 Tomas Morato Avenue
by:
(Sgd.) ANTONIO JOSE F. CORTES
With my conformity:
(Sgd) GOV. ROMEO R. SALALIMA
Province of Albay
(emphasis supplied.)
In entering into a retainer agreement not only with the Cortes &
Reyna Law Firm but also with Atty. Jose R. Cornago, respondent
Governor exceeded his authority under Resolution No. 01-90.
Complicating further the web of deception surrounding the
transaction is the fact that it was only Atty. Cornago who appeared
as collaborating counsel of record of the Province in the Supreme
Court case (G R. No. 87479). We quote the entry of appearance of
Atty. Cornago in full in said case:
APPEARANCE
COMES NOW, the undersigned counsel, and to this Honorable
Supreme Court, respectfully enters his appearance as counsel for
the respondents in the above-entitled case, in collaboration with

Atty. Romulo L. Ricafort, counsel of record for the respondents. This

appearance bears the conformity of the respondent Gov. Romeo R.
Salalima, as shown by his signature appearing at the space
indicated below. In this connection, it is respectfully requested that,
henceforth, the undersigned counsel be furnished with a copy of all
notices, orders, resolutions and other matters that may be issued in
this case at its office address indicated below.
Quezon City, for Manila, August 24, 1989.
(Sgd.) JESUS R. CORNAGO
Counsel for Respondents
280 Tomas Morato Avenue
Quezon City
PTR No. 561005-'89 Mandaluyong
IBP No. 279351-'89 Pasig, MM
With my conformity:
(Sgd) ROMEO R. SALALIMA
Respondent
Office of the Governor of Albay
Legaspi City
Even the Solicitor General, in his letter to respondent Governor
dated 15 July 1993, noted that the Province is represented in the
Supreme Court by Attys. Ricafort Cornago and Glenn Manahan but
not by the Cortes & Reyna Law Firm, thus:
Incidentally, a check with our office records of the case G.R. No.
87479 reveals that the Province of Albay and its officials named
respondents therein were represented in the Supreme Court by
Atty. Romulo Ricafort the Province's Legal Officer II, and Attys. Jesus
R. Cornago and Glenn Manahan of JAMECCA Building, 280 Tomas
Morato Avenue, Quezon City; no appearance was entered therein
by the Cortes & Reyna Law Firm. (Emphasis supplied.)

Furthermore, the memorandum with the Supreme Court filed for

the Province was signed by Atty. Cornago and not by the Cortes &
Reyna Law Firm. Consequently, the Cortes & Reyna Law Firm was
not counsel of record of the Province in G.R. No. 87479. And yet, six
of the ten checks paid by the Province and amounting to more than
P3.6 million were issued in favor of the Cortes & Reyna Law Firm
through Atty. Antonio Jose Cortes. In other words, respondents
disbursed money to the Cortes & Reyna Law Firm although the
latter did not appear as counsel for the Province in the Supreme
Court in G.R. No. 87479.
Finally, the attorney's fees agreed upon by respondent Salalima
and confirmed by the other respondents are not only unreasonable
but also unconscionable. The contingent fee of 18% of the "P214
million" claim of the Province against NPC amounts to P38.5 million.
The word "unconscionable", as applied to attorney's fee, "means
nothing more than that the fee contracted for, standing alone and
unexplained would be sufficient to show that an unfair advantage
had been taken of the client, or that a legal fraud had been taken of
the client, or that a legal fraud had been perpetrated on him."
(Moran, Comments on the Rules of Court, Vol. 6, p. 236.)

Atty. Cornago was then a graduate of San Beda and I am a

graduate of San Beda.
SECRETARY CORONA:
Were you classmates?
GOVERNOR SALALIMA:
No.
SECRETARY CORONA:
How many years apart were you?
GOVERNOR SALALIMA:
Two (2) years.
SECRETARY CORONA:

The Province has a legal officer, Atty. Ricafort, who had already filed
a comment on NPC's petition against the Province. The comment
filed by Atty. Ricafort already covers the basic issues raised in the
petition. When Atty. Cornago filed an appearance and subsequently
a memorandum for the Province, the petition was already been
given due course by the Supreme Court and the only pleading to be
filed by the parties before the Court would issue its decision was a
memorandum. Surely, one memorandum could not be worth P38.5
million.

So, you knew each other from the law school?

Furthermore, the professional character and social standing of Atty.

Cornago are not such as would merit a P38.5 million fee for the
legal services rendered for the Province. During the hearing,
respondent Governor admitted that he had hired Atty. Cornago
because they were schoolmates at San Beda College, thus:

GOVERNOR SALALIMA:

SECRETARY CORONA:

It is evident that respondent Governor hired Atty. Cornago not on

the basis of his competency and standing in the legal community
but purely for personal reasons. Likewise, the standing of the
Cortes & Reyna Law Firm is not such as would merit P38.5 million
for one memorandum, which, in this case, it had not even filed
because it was not the counsel of record. Hence, considering the
labor and time involved, the skill and experience called for in the
performance of the services and the professional character and

May I ask a question Governor, what was your basis for choosing
this particular law office? Why not ACCRA, why not Sycip Salazar,
why not Carpio Villaraza, why this particular Law office? Frankly, I
never heard of this law office. Who recommended it?
GOVERNOR SALALIMA:

GOVERNOR SALALIMA:
Yes.
SECRETARY CORONA:
Were you members of the same fraternity in San Beda?

Yes.
(TSN, 12 July 1992, pp. 27-29.)

social standing of the lawyers, the attorney's fee of P38.5 million is

unconscionable. By allowing such scandalously exorbitant
attorney's fees which is patently disadvantageous to the
government, respondents betrayed a personal bias to the lawyers
involved and committed abuse of authority.

and Azaa each; and

Parenthetically, the retainer contract containing such exorbitant

attorney's fees may also be violative of the following: (a) COA
Circular No. 85-55-A (8 September 1985) prohibiting irregular,
unnecessary, excessive or extravagant expenditures or uses of
funds; and (b) Sec. 3 (e) and (g) of RA No. 3019, otherwise known
as the Anti-Graft and Corrupt Practices Act.

each.

Finally, the Committee again applies in this case, as was applied in

OP Case No. 5470, the rule of joint responsibility as enunciated
under Sec. 305 (1) of the Local Government Code.
In view of the foregoing, the Committee holds that respondents
committed abuse of authority under Sec. 60(e) of the Local
Government Code for the following:
1. Hiring private lawyers, in violation of Sec. 481 of the Local
Government Code, to handle the case of the Province of Albay
before the Supreme Court in G.R. No. 87479;
2. Disbursing public money in violation of COA rules and
regulations;
3. Paying the Cortes & Reyna Law Firm public money although it
was only Atty. Cornago who was the counsel of record of the
Province of Albay in the Supreme Court case;
4. Authorizing an unconscionable and grossly disadvantageous
attorney's fees of P38.5 million; and
5. Additionally, as to respondent Governor, entering into a retainer
agreement not only with the Cortes & Reyna Law Firm but also with
Atty. Cornago, thus exceeding his authority under Resolution No.
01-90 passed by the Sangguniang Panlalawigan.

b. All the other

respondents four (4) months

III.

OP Case No. 5471

This refers to the administrative complaint filed by the Tiwi Mayor

Naomi Corral against Albay Governor Romeo Salalima, Albay
Sangguniang Panlalawigan Members Juan Victoria, Lorenzo Reyeg,
Arturo Osia, Jesus Marcellana, Nemesio Baclao, Ramon Fernandez,
Jr., Masikap Fontanilla, Vicente Go, Sr., Wilbor Rontas and Clenio
Cabredo, and Tiwi Vice-Mayor Rodolfo Benibe for "abuse of
authority and oppression" under Sec. 60 (c) and (e) of RA No. 7160.
The antecedent facts are as follows:
On 20 October 1992, Mayor Corral and seven (7) Kagawads of the
Tiwi Sangguniang Bayan charged herein respondent Governor
Salalima and Vice-Governor Azaa for abuse of authority,
misconduct in office and oppression. This administrative complaint,
initially docketed as OP Case No. 4982 (DILG Adm. Case No. P-893), arose from the refusal of said respondents to remit Tiwi's share
in the P40,724,471.74 tax delinquency payments made by NPC.
This case was subsequently substituted by OP Case No. 5470 filed
on 25 January 1993 which now included as respondents Albay
Sangguniang Panlalawigan Members Victoria, Reyeg, Osia,
Cabredo, Go, Marcellana, Fernandez, Fontanilla, and Rontas.
Subsequently, Mayor Corral became the subject of several
administrative and criminal complaints filed by certain individuals
with the following offices:
a. Achilles Berces v. Mayor Naomi Corral
(1) Albay Sangguniang Panlalawigan, Adm. Case No. 02-92

After taking all the attendant circumstances into consideration, the

Committee recommends that the following penalties of suspensions
without pay be meted out:

(2) Albay Sangguniang Panlalawigan, Adm. Case No. 05-92

a. Respondent Salalima six (6) months;

(4) Office of the Ombudsman, OMB Case No. 0930682

(3) Office of the Ombudsman, OMB Adm. Case No. 1930163

(5) Office of the Ombudsman, OMB-092-3008

b. Muriel Cortezano v. Mayor Naomi Corral
(6) Albay Sangguniang Panlalawigan, Adm. Case No. 10-93
(7) Office of the Ombudsman, OMB-0-92-3000
c. Amelia Catorce v. Mayor Naomi Corral
(8) Albay Sangguniang Panlalawigan, Adm. Case No. 09-93
d. Aida Marfil v. Mayor Naomi Corral
(9) Albay Sangguniang Panlalawigan, Adm. Case No. 07-93
(10) Office of the Ombudsman, OMB Case No. 5-93-0110
e. Rodolfo Belbis v. Mayor Naomi Corral
(11) Albay Sangguniang Panlalawigan, Adm. Case No. 06-93
(12) Office of the Ombudsman, OMB Case No. 0-93-0098
f. Kin. Juan Victoria, et al. v. Mayor Naomi Corral
(13) Office of the Prosecutor, I.S. No. 93-046 (for Libel), Legaspi City
g. Governor Romeo Salalima, et al. v. Mayor Naomi Corral
(14) Office of the Prosecutor, I.S. No. 93-044 (for Libel and Perjury),
Legaspi City
(15) Office of the Prosecutor, I.S. No. 93-045 (for Libel and Perjury),
Legaspi City
or a total of fifteen (15) cases.
On 7 January 1993, the respondent-members of the Sangguniang
Panlalawigan passed Omnibus Resolution No. 2 recommending that
Mayor Corral be placed under preventive suspension for sixty (60)
days pending the resolution of Adm. Case No. 05-92 (Exh. 18).
On 11 January 1993, respondent Salalima approved said resolution
and, on the same date, officially directed herein respondent Tiwi

Vice-Mayor Benibe to assume the office and discharge the functions

of Tiwi Mayor (Exh. 18).
On 21 January 1993, Department of the Interior and Local
Government (DILG) Secretary Rafael Alunan III directed the lifting of
the 11 January 1993 suspension order issued by respondent
Salalima. In his letter to Mayor Corral (Exh. C), he stated, thus:
Considering that the preventive suspension imposed upon you by
Governor Romeo R. Salalima of that province, was issued after the
latter's refusal to accept your answer, therefore, the issuance of
subject order of preventive suspension is premature, the issues
having not been joined.
In view thereof, the Order of Preventive Suspension dated 11
January 1993, issued by Governor Salalima, is hereby lifted.
On 26 January 1993, the Office of the President (OP), acting in OP
Case No. 4982, after finding that "the evidence of guilt is strong,
and given the gravity of the offense and the great probability that
the continuance in office of respondent Governor Romeo R.
Salalima would influence the witnesses or pose a threat to the
safety and integrity of the records and other evidence," placed
respondent Salalima under preventive suspension for sixty (60)
days (Exhs. D to D-2).
Respondent Salalima subsequently sought the reversal of the OP
Order dated 26 January 1993 but the same was dismissed by the
Supreme Court on 26 May 1993 in the case entitled "Salalima v. the
Hon. Executive Secretary," G.R. No. 108585 (Exh. E).
On 2 February 1993, Mayor Corral filed a motion to inhibit the
respondents from hearing the six cases filed against her with the
Sangguniang Panlalawigan (Adm. Case Nos. 02-92, 05-92, 06-93,
07-93, 09-93 and 10-93) asserting her constitutional right to due
process of law. This motion was however denied with the
respondent-members of the Sangguniang Panlalawigan assuming
jurisdiction over the cases.
After conducting marathon hearings, respondent-members of the
Sangguniang Panlalawigan rendered judgments against Mayor
Corral and imposing, among others, the following penalties of
suspension:
1. In Adm. Case No. 02-92 suspension for two (2) months (see
Decision dated 1 July 1993, [Exhs. F to F-2]);

2. In Adm Case No. 05-92 suspension for three (3) months (see
Resolution dated 5 July 1993, [Exhs. G to 6-2]);
3. In Adm Case No. 06-93 and 07-93 suspension for one (1)
month (see Resolution dated 8 July 1993, [Exhs. H to H-3]); and
4. In Adm Case No. 10-93 suspension for the period of unexpired
term (see Resolution dated 9 July 1993, [Exhs. I to I-21).
On 22 July 1993, respondent Salalima issued a directive addressed
to the Provincial Treasurer, Provincial Auditor, PNP Provincial
Director, Provincial Assessor, Provincial Accountant, Provincial
Budget Officer, Provincial DILG Officer, the Sangguniang
Panlalawigan and Provincial Prosecutor enjoining them to assist in
the implementation of the decisions suspending Mayor Corral "by
decreeing directives to your subordinate officials in Tiwi, Albay to
strictly adhere thereto."
Subsequently, Mayor Corral interposed appeals from the decisions
of respondent-members of the Sangguniang Panlalawigan
suspending her from office to the OP (docketed as OP Case Nos.
5337 and 5345) with a prayer that the implementation of said
decisions be stayed.
On 28 July 1993, the OP ordered the suspension/stay of execution
of the decisions in Adm. Case Nos. 02-92 and 05-92 (Exhs. J to 5-2).
Similarly, on 3 August 1993, the OP ordered the suspension/stay of
execution of the decisions in Adm. Case Nos. 06-93, 07-93 and 1093 (Exhs. K to K-1).
Also, with respect to Adm. Case Nos. 6-93 and 7-93, the Civil
Service Commission (CSC) issued Resolution Nos. 93-005 (dated 5
January 1993) and 92-817 (dated 4 March 1993), which provided
the bases and justifications for the acts of Mayor Corral complained
of in these two (2) cases. The Supreme Court subsequently
affirmed said CSC resolutions (Exhs. L to L-2).
In the multiple charges for libel and perjury against Mayor Corral,
arising from her complaint in OP Case No. 5470, filed with the
Regional Trial Court of Legaspi City, the Supreme Court ordered the
lower court to cease and desist from proceeding with the case in a
resolution dated 16 September 1993 (Exhs. Q to Q-2).

In determining whether respondents are guilty of the charges

levelled against them, the following issue has to be resolved, i.e.,
whether the conduct of the proceedings in the administrative cases
filed and the series of suspension orders imposed by the
respondent-members of the Sangguniang Panlalawigan on Mayor
Corral constitute oppression and abuse of authority?
Oppression" has been defined as an "act of cruelty, severity,
unlawful exaction, domination or excessive use of authority."
(Ochate v. Ty Deling, L-13298, March 30, 1959, 105 Phil. 384, 390.).
"Abuse" means "to make excessive or improper use of a thing, or to
employ it in a manner contrary to the natural or legal rules for its
use. To make an extravagant or excessive use, as to abuse one's
authority" (Black's Law Dictionary <5th Ed.>, 11). It includes
"misuse" (City of Baltimore v. Cornellsville & S.P. Ry, Co. 6 Phils.
190, 191, 3 Pitt 20, 23).
Moreover, Section 63(d) of RA No. 7160 expressly states that,
"[a]ny abuse of the exercise of the powers of preventive suspension
shall be penalized as abuse of authority."
Now, does the above narration of facts show commission by
respondents of the administrative offenses complained of?
A review of the proceedings reveal that the same were marked by
haste and arbitrariness. This was evident from the start when
Mayor Corral was preventively suspended (in Adm. Case No. 05-92)
even before she could file her answer. In the other cases,
respondent-members of Sangguniang Panlalawigan ruled that
Mayor Corral had waived her right to adduce evidence in her
defense.
Consequently, respondents did not also fully evaluate the
evidences presented to support the charges made. As such, all the
decisions of respondents suspending Mayor Corral were ordered
lifted suspended by the DILG and OP. Thus, even the cases filed
with the Office of the Ombudsman, which were based on the same
incidents complained of in the said administrative cases, were
subsequently dismissed.
Respondents should have inhibited themselves from assuming
jurisdiction over said cases (Adm Case Nos. 02-92, O6-92, 06-93,
07-93, 09-93, and 10-93) as timely moved by Mayor Corral
considering that they were the respondents in various
administrative complaints she earlier filed with the OP and with the

DILG starting with OP Case No. 4892. However, despite the

violation of due process resulting from their collective acts,
respondents, in their determination and eagerness to suspend and
harass Mayor Corral, proceeded to hear and decide said cases.
The OP has no jurisdiction over administrative complaints filed
against elective municipal officials. Under Sec. 61(b) of RA No.
7160, "[a] complaint against any elective official of a municipality
shall be filed before the Sangguniang Panlalawigan whose decision
may be appealed to the Office of the President."
WHEREFORE, the charges against Vice Mayor Benibe are dismissed.
However, all the other respondents herein are found guilty of
oppression and abuse of authority under Section 60 (c) and (e) of
RA No. 7160. Accordingly, it is recommended that each of them be
meted the penalty of four (4) months suspension without pay.
IV. OP Case No. 5450.
This refers to the administrative charges filed by Tabaco Mayor
Antonio Demetriou against Governor Romeo Salalima for violation
of Section 60, pars. (c) and (d) of the Local Government Code,
Section 3, par. (g) of Republic Act No. 3019, and the provisions of
PD No. 1594, as amended.
This case was filed with the Office of the President (OP) on 18
October 1993 and docketed as OP Case No. 5450.
The facts as found by this Committee are as follows:
On 27 September 1989 the Tabaco Public Market was destroyed by
fire (Exh. A, par. 1).
On 26 September 1990, the OP advised Mayor Demetriou and
respondent Salalima that the P12.0 Million in Budgetary Assistance
to Local (Government Units (BALGU) funds earlier remitted by the
national government to the Province, should be used for the
rehabilitation of the Tabaco Public Market, and that the project
should be implemented by the Provincial Governor in consultation
with the Mayor of Tabaco (Exh.. 37).
On 8 May 1991, a public bidding was conducted by the Albay
Provincial Government for the repair and rehabilitation of the
Tabaco Public Market (Exh. A, par. 1)

On 29 May 1991, the Province represented by respondent Salalima

and RYU Construction entered into a contract for P6,783,737.59 for
said repair and rehabilitation (Exh. H). Among others, the contract
stipulated that the contracted work should be completed in 150
days.
The contractor started the project on 1 July 1991 and completed
the same on 2 June 1992 (Exh. 41).
On 6 March 1992, the Province represented by respondent Salalima
entered into another contract (Exh. I) for P4,304,474.00 with RYU
Construction for additional repair and rehabilitation works for the
Tabaco Public Market. The terms and conditions of this contract are
the same as those stipulated in the 29 May 1991 contract except
for the construction period which is only for 90 days.
Construction of the second project commenced on 27 March 1992
and was completed on 2 June 1992 (Exh. 42).
In his complaint, Mayor Demetriou alleged that despite the delay in
the completion of work under the first contract, liquidated damages
were not imposed on, nor collected from, RYU Construction by the
Province. Moreover, he claims that the second contract with RYU
Construction was entered into in violation of PD No. 1594 as RYU
incurred delay with respect to the first contract.
We find merit in the complaint:
Pars. 1 and 2 of item CI 8, par. 1 of item CI 11, and par. 10.4.2 of
item IB of the Implementing Rules and Regulations (IRR) of PD No.
1594, as amended, read:
CI 3 LIQUIDATED DAMAGES.
1. Where the contractor refuses or fails to satisfactorily complete
the work within the specified contract time, plus any time extension
duly granted and is hereby in default under the contract, the
contractor shall pay the Government for Liquidated damages, and
not by way of penalty, an amount to be determined in accordance
with the following formula for each calendar day of delay, until the
work is completed and accepted or taken over by the Government:
xxx xxx xxx
2. To be entitled to such Liquidated, damages, the Government
does not have to prove that it has incurred actual damages. Such

amount shall be deducted from any money due or which may

become due the contractor under the contract and/or collect such
Liquidated damages from the retention money or other securities
posted the contractor whichever is convenient to the Government.
CI Extension of Contract time.
1. Should the amount of additional work of any kind or other special
circumstances of any kind whatsoever occur such as to fairly entitle
the contractor to an extension of contract time, the Government
shall determine the amount of such extension; provided that the
Government is not bound to take into account any claim for an
extension of time unless the contractor has prior to the expiration
of the contract time and within thirty (30) calendar days after such
work has been commenced or after the circumstances leading to
such claim have arisen, delivered to the Government notices in
order that it could have investigated them at that time. Failure to
provide such notice shall constitute a waiver by the contractor of
any claim. Upon receipt of full and detailed particulars, the
Government shall examine the facts and extend of the delay and
shall extend the contract title for completing the contract work
when, in the Government's opinion, the finding of facts justify an
extension.
xxx xxx xxx
IB 10.4.2 By Negotiated Contract
1. Negotiated contract may be entered into only where any of the
exists and the implementing following conditions
office/agency/corporation is not capable of undertaking the project
by administration:
xxx xxx xxx
c Where the subject project is adjacent or contiguous to an ongoing
project and it could be economical prosecuted by the same
contractor, in which case, direct negotiation may be undertaken
with the said contractor at the same unit prices adjusted to price
levels prevailing at the time of negotiation using parametric
formulae herein prescribed without the 5% deduction and contract
conditions, less mobilization cost, provided that he has no negative
slippage and has demonstrated a satisfactory performance.
(Emphasis supplied).
xxx xxx xxx

A reading of items CI 8 and CI 11 above shows that the collection of

liquidated damages is mandatory in cases of delay unless there are
valid orders of extension of contract work given by the
Government.
Under the 29 May 1991 contract, the repair works should have
been completed on 26 December 1991 since the project was
started on 1 July. But then the project was finished only on 2 June
1992.
This is confirmed by the COA through CAO Report No. 93-11 (Exh.
N), thus
. . . The project was completed only on June 2, 1992 or a delay of
132 working days, as shown in the following tabulation:
Billing As of Days Lapsed % Accomplished
First Dec. 2, 1991 130 26.48
Second Jan. 8, 1992 187 53.19
Third Feb. 10, 1992 100 75.23
Final June 2, 1992 202 100.00.
In view of the delays in project completion the Team requested
from the Provincial Engineer any copy of the order suspending and
resuming the work (suspension and resume order) since the same
was not, attached to the claims of the contractor or paid vouchers.
Unfortunately the Provincial Engineer could not provide said
document at the Engineering Office had not issued any. In effect.
there was no basis for the extension of contract time and the
contractor should have been considered as behind schedule in the
performance of the contract. Despite its deficiency, no liquidated
damages was ever imposed against the contractor. (pp. 25-26)
[emphasis supplied]
Respondent Salalima failed to submit an evidence concerning any
order issued by the Provincial Government extending RYU
Construction's contract.
The law requires that requests for contract extension as well as the
orders granting the same must be made and given prior to the
expiration of the contract. The rationale for this requirement is

obviously to prevent a contractor from justifying any "delay" after

the contract expires.
Before signing the 6 March 1992 contract, which was entered into
on a negotiated basis and not through bidding, respondent Salalima
should have inquired whether or not RYU Construction incurred
negative slippage. Had he done so, the matter of imposing and
collecting liquidated damages would have been given appropriate
attention. This is aggravated by the fact that respondent knew that
RYU Construction was the contractor for the original rehabilitation
and repair work for the Tabaco Public market being the signatory to
the first contract.
Clearly, therefore, there was a failure on the part of the Province to
impose and collect liquidated damages from the erring contractor,
RYU Construction.
Going to the second charge, we find that respondent Salalima
unmistakably violated the provision of PD No. 1594, as amended.

additional repair and rehabilitation work; for the Tabaco public

market. Failing to comply with the requirements of law, the 6 March
1992 contract is clearly irregular, if not illegal.
Finally, said contract may also be violative of the following: (a) COA
Circular No. 85-55-A (dated 8 September 1985) prohibiting irregular
expenditures or uses of funds; and (b) Sec. 3 (e) and (g) of RA No.
3019, otherwise known as the Anti-Graft and Corrupt Practices Act.
Premises considered, this Committee finds the respondent guilty of
abuse of authority and gross negligence. Accordingly, it is
recommended that the penalty of suspension without pay be meted
out on respondents Salalima for five (5) months. (pp. 2-35).
The President then concluded and disposed as follows:
After a careful review of the cases, I agree with and adopt the
findings and recommendations of the Ad-Hoc Committee,
supported as they are by the evidence on record.

Fundamental is the rule that government contracts especially

infrastructure contracts are awarded only through bidding. As
explicitly ordained by Sec. 4 of PD No. 1594, construction projects
shall generally be undertaken by contract after "competitive
bidding". By its very nature and characteristic, a competitive public
bidding aims to protect the public interest by giving the public the
best possible advantages through open competition. At the same
time, bidding seeks to prevent or curtail favoritism, fraud and
corruption in the award of the contract which otherwise might
prevail were the government official concerned is vested with the
full or absolute authority to select the prospective contractor
(Fernandez, Treatise on Government Contracts Under Philippine
Law, 1991 Ed. citing Caltex Phil., Inc. v. Delgado Bros. 96 Phil. 368;
San Diego v. Municipality of Naujan, 107 Phil. 118; and Matute v.
Hernandez, 66 Phil. 68).

WHEREFORE, the following penalties are meted out on each of the

respondents, to wit:

This is precisely the reason why negotiated contracts can be

resorted to only in a few instances such as that provided under par.
1 (c) of item IB 10.4.2 of the IRR' of PD No. 1594, supra. However,
said proviso requires that the contractor had not incurred negative
slippage and has demonstrated a satisfactory performance.

a. Governor Romeo Salalima and Vice-Governor Danilo Azaa

suspension without pay for six (6) months; and

And since RYU Construction incurred negative slippage with respect

to the repair works under the 29 May 1991 contract as found by
COA, it was anomalous for the Province through respondent
Salalima to enter into a negotiated contract with said contractor for

In OP Case No. 5470

a. Governor Romeo Salalima suspension without pay for five (5)
months;
b. Vice-Governor Danilo Azana, Albay Sangguniang Panlalawigan
members Juan Victoria, Lorenzo Reyeg, Arturo Osia, CLenio
Cabredo, Vicente Go, Sr., Jesus Marcellana, Ramon Fernandez, Jr.,
Masikap Fontanilla, and Wilbor Rontas suspension without pay for
four (4) months.
In OP Case No. 5469

b. Albay Sangguniang members Juan Victoria, Lorenzo Reyeg, Jesus

Marcellana, Arturo Osia, Clenio Cabredo, Ramon Fernandez, Jr.,
Masikap Fontilla, Vicente Go, Sr., and Nemesio Baclao suspension
without pay for four (4) months;
In OP Case No. 5471

a. Governor Romeo Salalima and Albay Sangguniang members Juan

Victoria, Lorenzo Reyeg, Jesus Marcellana, Arturo Osia, Wilbor
Rontas, Clenio Cabredo, Ramon Fernandez, Jr., Masikap Fontilla,
Vicente Go, Sr., and Nemesio Baclao suspension without pay for
four (4) months;.
In OP Case No. 5450
a. Governor Romeo Salalima suspension without pay for five (5)
months.
The suspension imposed on respondents shall be served
successively but shall not exceed their respective unexpired terms,
in accordance with the limitation imposed under Section 66 (b) of
the Local Government Code.
It must at once be pointed out that insofar as O.P. Case No. 5471 is
concerned, nothing of its substantive aspect is challenged in this
petition. The petitioners mentioned it only in their claim of
prematurity of Administrative Order No. 153 in view of their appeal
from Special Audit Office (SAO) Report No. 93-11 to the COA en
banc. O. P. Case No. 5471 is the administrative complaint, filed by
Tiwi Mayor Corral against the petitioners for abuse of authority and
oppression in connection with their conduct in the several
administrative cases filed by certain individuals against Mayor
Corral. It has no logical nexus to the appeal. The decision then in
O.P. Case No. 5471 stands unchallenged in this petition.
As to O.P. Cases Nos. 5450, 5469, and 5470, the issues presented
by the petitioners may be reformulated in this wise:
I. Did the Office of the President act with grave abuse of discretion
amounting to lack or excess of jurisdiction in suspending the
petitioners for periods ranging from twelve to twenty months?
II. Did the Office of the President commit grave abuse of discretion
in deciding O.P. cases Nos. 5450, 5469, and 5470 despite the
pendency of the petitioners' appeal to the COA en banc from
Special Audit Office (SAO) Report No. 93-11 and the Certificate of
Settlement and Balances (CSB)?
III. Did the Office of the President commit grave abuse of discretion
in holding the petitioners guilty of abuse of authority in denying the
Municipality of Tiwi of its rightful shore in the P40,724,471.74 which
the Province of Albay had received from the NPC under the
Memorandum of Agreement?

IV. Did the Office of the President commit grave abuse of discretion
in suspending in O.P. Cases Nos. 5469 and 5450 petitioner Salalima,
who was reelected on 11 May 1992, for an alleged administrative
offense committed during his first term; and in suspending in O.P.
Case No. 5469 the other petitioners, some of whom were elected
and others reelected on 11 May 1992, for an alleged administrative
offense committed in 1989?
V. Did the Office of the President commit grave abuse of discretion
in holding the petitioners in O.P. Case No. 5469 guilty of grave
abuse of authority under Section 60 (e) of the Local Government
Code of 1991 although they were charged under Section 3(g) of
R.A. No. 3019, as amended, and Section 60(d) of the Local
Government? Code of 1991, thereby depriving them of due process
of law?
We shall take up these issues in the order they are presented.
I
Anent the first issue, the petitioners contend that the challenged
administrative order deprived them of their respective offices
without procedural and substantive due process. Their suspensions
ranging from twelve months to twenty months or for the entire
duration of their unexpired term, which was then only seven
months, constituted permanent disenfranchisement or removal
from office in clear violation of Section 60 of R.A. No. 7160 which
mandates that an elective local official may be removed from office
by order of the court.
The Comment of the Solicitor General is silent on this issue.
However, respondents Mayor Corral and newly appointed provincial
officials maintain that the suspension imposed upon the petitioners
in each of the four cases was within the limits provided for in
Section 66(b) of R.A. No. 7160 and that the Aggregate thereof
ranging from twelve months to twenty months, but not to exceed
the unexpired portion of the petitioners term of office, did not
change its nature as to amount to removal.
Section 66(b, of R.A. No. 7160 expressly provides:
Sec. 66. Form and Notice of Decision. . . .
(b) The penalty of suspension shall not exceed the unexpired term
of the respondent or a period of six (6) months for every

administrative offense, nor shall said penalty be a bar to the

candidacy of the respondent so suspended as long as he meet the
qualifications for the office.
This provision sets the limits to the penalty of suspension , viz., it
should not exceed six months or the unexpired portion of the term
of office of the respondent for every administrative offense. An
administrative offense means every act or conduct or omission
which amounts to, or constitutes, every of the grounds or
disciplinary action. The offenses for which suspension may be
imposed are enumerated in Section 60 of the Code, which reads:
Sec. 60. Grounds for Disciplinary Action. An elective local official
may be disciplined, suspended, or removed from office on any of
the following grounds:
(a) Disloyalty to the Republic of the Philippines;
(b) Culpable violation of the Constitution;
(c) Dishonesty, oppression, misconduct in office, gross negligence,
or dereliction of duty;
(d) Commission of any offense involving moral turpitude or an
offense punishable by at Least prision mayor;
(e) Abuse of authority;
(f) Unauthorized absence for fifteen (15) consecutive working days,
except in the case of members of the sangguniang panlalawigan,
sangguniang panlungsod, sangguniang bayan, and sangguniang
barangay;
g) Acquisition for, or acquisition of, foreign citizenship or residence
or the status ,e an immigrant of another country; and
(h) Such other grounds as may be provided in this Code and other
laws.

six months and the unexpired portion of the petitioners' term of

office. The fact remains that the suspension imposed for each
administrative offense did not exceed six months and there was an
express provision that the successive service of the suspension
should not exceed the unexpired portion of the term of office of the
petitioners. Their term of office expired at noon of 30 June 1995. 2
And this Court is not prepared to rule that the suspension to the
petitioners' removal office. 3
II
Petitioners contend that the decisions in O.P. Cases Nos. 5450,
5470, and 5471 are predicated on SAO Report No. 93-11 of the COA
Audit Team, while that in O.P. Case No. 5469 is based on the CSB
issued by the Provincial Auditor of Albay. Since the Report and the
CSB are on appeal with, and pending resolution by, the Commission
on Audit En Banc, they are not yet final, conclusive, and executory
as admitted by the team leader of the COA Audit Team that
submitted the SAO Report and by the Provincial Auditor who issued
the CSB. The petitioners also point out that the COA Chairman had
already reversed the recommendation in the SAO Report No. 93-11
that the Provincial Government of Albay should share with the
Municipality of Tiwi the P40,724,471.74 representing payments of
the NPC as of December 1992. They then submit that
Administrative Order No. 153 suspending all the petitioners is
premature in view of the pendency of the appeal to the COA en
banc from SAO Report No. 93-11 and the CSB.
This issue of prematurity was raised before the Ad Hoc Committee.
In rejecting it, the Committee explained as follows:
It is important to stress that the exceptions (Exhs. 50-B, 50-I, & 50J) raised by the respondents to COA merely involve questions of
law, i.e., as to whether the Province alone should be entitled to the
payments made by NPC under the MOA, and whether the shares of
Tiwi and Daraga, the concerned barangays, and the national
government, should be held in trust for said beneficiaries.

An elective local official may be removed from office on the

grounds enumerated above by order of the proper court

Considering that the factual findings under SAO Report 93-11 are
not disputed, this Committee has treated said factual findings as
final or, as the very least, as corroborative evidence.

Assuming then that the findings and conclusions of the Office of the
President in each of the subject four administrative cases are
correct, it committed no grave abuse of discretion in imposing the
penalty of suspension, although the aggregate thereof exceeded

Respondents' contention that COA's factual finding, as contained in

SAO Report No. 93-11 cannot be considered in this investigation is
untenable. For no administrative and criminal investigation can
proceed, if a respondent is allowed to argue that a particular COA

finding is still the subject of an appeal and move that the resolution
of such administrative or criminal case be held it abeyance. This
will inevitably cause unnecessary delays in the investigation of
administrative and criminal cases since an appeal from a COA
finding may be brought all the way up to the Supreme Court.
Besides, the matters raised by the respondents on appeal involve
only conclusions/interpretation, of law. Surely, investigative bodies,
such as COA, the Ombudsman and even this Committee, are
empowered to make their own conclusions of law based on a given
set of facts.
Finally, sufficient evidence has been adduced in this case apart
from the factual findings contained in SAO Report No. 93-11 to
enable this Committee to evaluate the merits of the instant
complaint.
The alleged appeal from the CSB is unclear From the records, and in
light of the foregoing statement of the Ad Hoc Committee it is
obvious that such appeal was not raised.
We agree with the Ad Hoc Committee that the pendency of the
appeal was no obstacle to the investigation and resolution of their
administrative cases.
It may be further stressed that a special audit has a different
purpose in line with the constitutional power, authority, and duty of
the COA under Section 2, Subdivision D, Article IX of the
Constitution "to examine, audit, and settle all accounts pertaining
to the revenue and receipts of, and expenditures or uses of funds
and property, owned or held intrust by, or pertaining to, the
Government, or any of its subdivisions, agencies, or
instrumentalities, including government-owned or controlled
corporations with original charters" and its "exclusive authority . . .
to define the scope of its audit and examination, establish the
techniques and methods required therefor, and promulgate
accounting aid auditing rules and regulations, including those for
the prevention and disallowance of irregular, unnecessary,
excessive, extravagant, or unconscionable expenditures, or uses of
government funds and properties." 4
III
As to the third issue, the petitioners aver that the P40,724,471.74
received by the Province of Albay from the NPC represents part of
the price paid for properties owned by the province in a corporate

capacity and repurchased by the former owner. It constitutes

payment of a debt and net of a tax, which debt "arose from. and
was a consequence of the Memorandum of agreement dated May
29, 1992." They further contend that the Memorandum of
Agreement (MOA) partakes of a deed of sale. And nowhere in the
Real Property Tax Code (P.D. No. 464) 5 is there any provision
requiring provinces to share with the municipalities the proceeds of
a private sale. What are required to be shared are only the
collections of real property taxes and Special Education Fund (SBF);
proceeds of delinquent taxes and penalties, or of the sale of
delinquent real property, or of the redemption thereof; and income
realized from the use, lease, or disposition of real property seized
by the province.
It must be recalled that in August 1992, Governor Salalima and NPC
President; Pablo Malixi, were already agreed that the basic tax due
from the NPC was P207,375,774.72. 6 But later, Malixi informed the
former that upon recomputation of the real property tax payable to
the Province of Albay at the minimum of one-fourth of one percent
pursuant to Section 39(1) of the Real Property Tax Code, the NPC
came up with an adjusted figure of P129,609,859.20. 7 Governor
Salalima then explained that one percent was applied in the
computation for the reconciled figure of P207,375,774.72 because
the one-half percent imposed by the respective ordinances of the
municipalities where the delinquent properties are located was
added to the one-half percent imposed by the tax ordinance of the
Province. His reply reads as follows:
September 9, 1992
Hon Pablo V. Malixi
President, National Power
Corporation
Diliman, Quezon City.
Dear President Malixi:
As suggested in your letter of August 31, 1992, we are very pleased
to furnish you herewith the certified true copies of the local tax
ordinances which served as our basis in imposing the rate of 1% of
the reconciled figure of P207,375,774.72, to wit:
(a) Resolution No. 30, series of 1974 of the Provincial Board of
Albay, enacting Provincial Tax Ordinance No. 4, whose Section I,
provides:

"There shall be levied, assessed and collected as annual ad

valorem tax on real properties including improvements thereon
equivalent to one half of one percent, of the assessed value of real
property."

or the reconciled figure of P207,375,774.72 representing real

property taxes from 11 June 1984 to 10 March 1987 already
covered the real property taxes payable to the municipalities
concerned.

(b) Ordinance No. 25, series of 1974, of the Sangguniang Bayan of

Tiwi, Albay, whose Section 2 provides:

Hence, when the Province sold at public auction the delinquent

properties consisting of buildings, machines, and similar
improvements, it was acting not only in its own behalf but also in
behalf of the municipalities concerned. And rightly so, because
under Section 60 of P.D. No. 477, the Province, thru the Provincial
Treasurer, is duty bound collect taxes throughout the province,
including the national, provincial, and municipal taxes and other
revenues authorized by law. Moreover, under Section 73 of the Real
Property Tax Code, the provincial or city treasurer is the one
authorized to advertise the sale at public auction of the entire
delinquent real property, except real property mentioned in
Subsection (a) of Section 40, to satisfy all the taxes and penalties
due and costs of sale. He is also authorized to buy the delinquent
real property in the name of the province if there is no bidder or if
the highest bid is for an amount not sufficient to pay the taxes,
penalties, and costs of sale. 9

"That the tax rate of real property shall be one-half of one percent
of the assessed value of real property."
(c) Ordinance No. 27, series of 1980, of the Sangguniang Bayan of
Daraga, Albay, whose Section 3 provides:
"Rates of Levy The tax herein levied is hereby fixed at one-half of
one percent (1/2 of 1%) of the assessed value of the real property.
These tax ordinances were in pursuance to Sec. 39 (1) (3) of PD
464, the applicable law during the period 1984 to 1987. By adding
the one half percent imposed in the tax Ordinance of Tiwi to the
one half percent also imposed in the Provincial Tax Ordinance, we
have a total of one percent which we used as the rate of levy in
computing the basic tax due on the real properties in Tiwi.
On the real properties in Daraga, we also added the one-half
percent imposed by the Daraga Tax Ordinance to the one-half
percent of the Provincial Tax Ordinance.
The additional tax of one percent for the Special Educational Fund
(SEF) was imposed pursuant to Section 41 of PD 464, which
provides as follows:
"There is hereby imposed annual tax of one percent on real
property to accrue to the Special Educational Fund created under
Republic Act No. 5447, which shall be in addition to the basic real
property tax which local governments are authorized to levy,
assess and collect under this Code; . . . "
We hope that the foregoing clarification will settle whatever doubt
there is on why we applied 1% for basic tax and another 1% for SEF
in arriving at P207,375,774.72. 8 (emphasis supplied).
The petitioners even emphasized in the instant petition that
"Governor Salalima specifically included the amounts due to the
Municipalities of Tiwi and Daraga in asking Napocor to settle its
obligations." In other words, the original claim of P214,845,184.76

Since in this case, there was no bidder, the provincial treasurer

could buy, as he did, the delinquent properties in the name of the
province for the amount of taxes, penalties due thereon, and the
costs of sale, which included the amounts of taxes due the
municipalities concerned. It is therefore wrong for the petitioners to
say that the subject NPC properties are exclusively owned by the
Province. The Municipalities of Tiwi and Daraga may be considered
co-owners thereof to the extent of their respective shares in the
real property taxes and the penalties thereon.
It must further be noted that it is the provincial treasurer who has
charge of the delinquent real property acquired by the province. 10
He is also the one whom the delinquent taxpayer or any person
holding a lien or claim to the property deal with in case the latter
wishes to redeem the property. 11 He is also the one authorized to
effect the resale at public auction of the delinquent property. 12
Thus, the municipalities concerned had to depend on him for the
effective collection of real property taxes payable to them.
Accordingly, when the Province entered into the Memorandum of
Agreement with the NPC, it was also acting in behalf of the
municipalities concerned. And whatever benefits that might spring
from that agreement should also be shared with the latter.

The MOA, contrary to the position of the petitioners, is not an

ordinary contract of sale. Hereinbelow is the pertinent portion of
that agreement:
WHEREAS, the Supreme Court ruled in the NATIONAL POWER
CORPORATION VS. THE PROVINCE OF ALBAY, et al., G.R. No. 87479
that NAPOCOR is liable to pay Realty Tax for its properties in the
municipalities of Tiwi and Daraga, Albay for the period June 11,
1984 to March 10, 1987;
WHEREAS, NAPOCOR is willing to settle its realty tax liability in
favor of the PROVINCE OF ALBAY;
WHEREAS, there is a need to further validate/reconcile the
computation of the realty tax in the total amount of
P214,845,184.76;
NOW, THEREFORE, in view of the foregoing premises and for and in
consideration of the mutual covenant and stipulations hereinafter
provided, the parties hereto have agreed as follows:
1. NAPOCOR will make an initial payment of P17,783,000.00 receipt
of which is hereby/acknowledged.
2. The balance of the validated/reconciled amount of the real estate
taxes will be paid in 24 equal monthly installments, payable within
the first five (5) working days of the month. The first monthly
installment will commence in September 1992.
3. Should NAPOCOR default in any monthly installment, the balance
will immediately become due and demandable.
4. NAPOCOR will pay such other taxes and charges, such as the
franchise tax as provided for in the Local Government Code of
1991.
5. In consideration of settlement of NAPOCOR's tax Liability, the
PROVINCE OF ALBAY hereby waives its claim of ownership over
NAPOCOR' properties subject in G.R. No. 87479 upon full payment
of the balance due to the PROVINCE OF ALBAY. 13 (emphasis
supplied).
The tenor of the abovequoted agreement shows that the intention
of the parties was for the redemption of the subject properties in
that the Province would waive ownership over the properties "in
consideration of settlement of Napocor's tax liability.

Under Section 78 of the Real Property Tax Code, the delinquent real
property sold at public auction may be redeemed by paying the
total amount of taxes and penalties due up to the date of
redemption, costs of sale, and the interest at 20% of the purchase
price.
The petitioners are estopped from claiming that the amounts
received by the Province from the NPC constitute payments of a
debt under the MOA or of contract price in a private sale. They
constitute redemption price or payments of NPC's tax liabilities.
This is evident from the MOA as well as the entry in the receipt
issued by the Province, thru the Provincial Treasurer, which reads:
Date: July 29, 1992
Received from National Power Corp.
Manila.
In the amount of Seventeen Million Seven Hundred Sixty-Three
Thousand Pesos Philippine Currency P17,763,030.00
In payment of the following:
For Partial Payment = P17,763,000.00
of Realty Tax Delinquency of Case No. 87479, NPC vs. Province of
Albay.
Total P17,763,000.00.
(Sgd.) Abundio M. Nuez
Provincial Treasurer. 14
Also worth noting is Provincial Ordinance No. 09-92 adopted by the
petitioners which provides: "That the installments paid by said
corporation for the months of September to December 1992,
representing partial payments of the principal tax due are declared
forfeited in favor of the Provincial Government of Albay."
Moreover, in Resolution No. 197-92, the petitioners referred as "tax
benefits" the shares of certain municipalities and barangays from
the amount paid by the NPC under the MOA. The resolution reads in
part as follows:
WHEREAS, by virtue of the Memorandum agreement, signed by the
petitioner, Province of Albay and respondent-oppositor, National

Power Corporation (NPC), the latter have agreed and paid an initial
payment to the Province of Albay;

same proportion as if the tax or taxes had been paid in regular

course.

WHEREAS, the sharing based on the Local Government Code of

1991, the municipalities of Malinao and Ligao are entitled to their
shares of P1,435.00 and P4,416.82 respectively and the barangays
Bay in Lingao to P319.00 and Tagoytoy in Malinao to P981.00,

As early as 3 August 1992, respondent Mayor Corral had already

made a written demand for payment or remittance of the shares
accruing to the Municipality of Tiwi. Petitioner Governor Salalima
refused saying that the initial check of P17,763,000.00 was merely
an "earnest money." Yet, on 22 October 1992, the petitioners
passed the aforequoted Resolution No. 197-92 giving some local
government units, where smaller portions of the delinquent
properties are situated, shares from the payments made by the
NPC under the MOA..

WHEREAS, these tax benefits due them are not enough to pursue a
worthwhile project in said municipalities and barangays considering
the present economic situation. 15 (emphasis supplied).
As pointed out by the respondents, if the MOA was merely for the
repurchase by NPC of its properties from Albay, what could have
been executed was a simple deed of absolute sale in favor of NPC
at an agreed price not necessarily P214 million which was the total
amount of the realty tax in arrears. Additionally, there would have
been no need for the parties "to further validate/reconcile the tax
computation of the realty tax in the total amount of
P214,845,184,76."
Clearly, the P40,724,471.74 paid by the NPC to the Province
pursuant to the MOA was part of the redemption price or of the
realty taxes in arrears.
It is conceded that under Section 78 of the Real Property Tax Code,
redemption of delinquency property must be made within one year
from the date of registration of sale of the property. The auction
sale of the NPC properties was held on 30 March 1989 and declared
valid by this Court in its 4 June 1990 decision. It was only on 29 July
1992 that the NPC offered to repurchase its former properties by
paying its tax liabilities. When the Province accepted the offer, it
virtually waived the one-year redemption period. And having thus
allowed the MPC to redeem the subject properties and having
received part of the redemption price, the Province should have
shared with the municipalities concerned those amounts paid by
the NPC in the same manner and proportion as if the taxes had
been paid in, regular course conformably with Section 87(c) of the
Real Property Tax Code, which provides:
(c) the proceeds of all delinquent taxes and penalties, as well as
the income realized from the use, lease or other disposition of real
property acquired by the province or city at a public auction in
accordance with the provisions of this Code, and the proceeds of
the sale of the delinquent real property or of the redemption
thereof shall accrue to the province, city or municipality in the

The petitioners cannot claim to have acted in good faith in refusing

to give the municipalities of Tiwi and Daraga their share. As pointed
out by the Office of the Solicitor General, the petitioners were
aware of the local tax ordinances passed by the respective
Sangguniang Bayan of Tiwi and Daraga relative to the realty tax to
be imposed on properties located in their respective localities.
Petitioner Salalima had even quoted the said ordinances in his
letter to Mr. Pablo Malixi and attached copies thereof to that letter.
Significantly, the petitioners averred in the instant petition that
"Governor Salalima specifically included the amounts due to the
municipalities of Tiwi and Daraga in asking NPC to settle its
obligations."
When doubt arose as to whether the municipalities concerned are
entitled to share in the amounts paid by the NPC, the province filed
on 20 November 1992 a petition for declaratory relief, which the
Regional Trial Court of Albay decided only on 12 May 1994. Yet, as
of 31 December 1992, the province had already disbursed or spent
a large part of the NPC payments. As found by COA, "of the
P40,724,471.74 actually paid by the NPC and lodged in the
province's general fund, P35,803,118.300 was disbursed or spent
by the Province."
If petitioners were really in good faith, they should have held the
shares of Tiwi and Daraga in trust 16 pursuant to Section 309 (b) of
the Local Government Code of 1991, which provides:
Trust funds shall consist of private and public monies which have
officially come into the possession of the local government or of a
local government official as trustee, agent or administrator . . . A
trust fund shall only be used for the specific purpose for which it
came into the possession of the local government unit.

As pointed out by the Ad Hoc Committee in its report, which was

adopted by the Office of the President:
It is unmistakable from the foregoing provisions that the shares of
Tiwi, Daraga, the concerned barangays and the national
government in the payments made by NPC under the MOA, should
be, as they are in fact, trust funds. As such, the Province should
have, upon receipt of said payments, segregated and lodged in
special accounts, the respective shares of Tiwi, Daraga, the
concerned barangays and the national government for eventual
remittance to said beneficiaries. Said shares cannot be lodged in,
nor remain part of, the Province's general fund. Moreover, the
Province cannot utilize said amounts for its own benefit or account
(see also Sec. 86, PD No. 464, as amended).
Therefore, the balance of P26,979,962.52 representing the
collective shares of Tiwi and Daraga, the concerned barangays and
the national government, cannot be appropriated nor disbursed by
the Province for the payment of its own expenditures or contractual
obligations.
However, in total disregard of the law, the Province treated the
P40,724,471.74 NPC payments as "surplus adjustment" (Account 792-419) and lodged the same in its general fund. No trust liability
accounts were created in favor of the rightful beneficiaries thereof
as required by law.
We cannot therefore fault the public respondents with grave abuse
of discretion in holding the petitioners guilty of abuse of authority
for failure to share with the municipalities of Tiwi and Daraga the
amount of P40,724,471.74 paid by the NPC.
IV
We agree with the petitioners that Governor Salalima could no
longer be held administratively liable in C.P. Case No. 5450 in
connection with the negotiated contract entered into on 6 March
1992 with RYU Construction for additional rehabilitation work at the
Tabaco Public Market. Nor could the petitioners be held
administratively liable in O.P. Case No. 5469 for the execution in
November 1989 of the retainer contract with Atty. Jesus Cornago
and the Corte's and Reyna Law Firm. This is so because public
officials cannot be subject to disciplinary action for administrative
misconduct committed during a prior term, as held in Pascual vs.
Provincial Board of Nueva Ecija 17 and Aguinaldo vs. Santos. 18 In
Pascual, this Court ruled:

We now come to one main issue of the controversy the legality

of disciplining an elective municipal official for a wrongful act
committed by him during his immediately preceding term of office.
In the absence of any precedent in this jurisdiction, we have
resorted to American authorities. We found that cases on the
matter are conflicting due in part, probably, to differences in
statutes and constitutional provisions, and also, in part, to a
divergence of views with respect to the question of whether the
subsequent election or appointment condones the prior
misconduct. The weight of authority, however, seems to incline to
the rule denying the right to remove one from office because of
misconduct during a prior term, to which we fully subscribe.
Offenses committed, or acts done, during previous term are
generally held not to furnish cause for removal and this is
especially true where the constitution provides that the penalty in
proceedings for removal shall not extend beyond the removal from
office, and disqualification from holding office for the term for which
the office was elected or appointed. (67 C.J.S. p. 248, citing Rice vs.
State, 161 S.W. 2d. 401; Montgomery vs. Nowell, 40 S W. 2d 418;
People ex rel. Bagshaw vs. Thompson, 130 P. 2d 237; Board of
Com'rs of Kingfisher County vs. Shutler, 281 P. 222; State vs. Blake,
280 P. 388; In re Fudula, 147 A. 67; State vs. Ward, 43 S.V. 2d. 217).
The underlying theory is that each term is separate from other
terms, and that the reelection to office operates as a condonation
of the officer's previous misconduct to the extent of cutting off the
right to remove him therefor (43 Am. Jur. p. 45, citing Atty. Gen. vs.
Hasty, 184 Ala. 121, 63 So. 559, 50 L.R.A.. (NS) 553. As held on
Conant vs. Brogan (1887) 6 N.Y.S.R. 332, cited in 17 A.I.R. 281, 63
So. 559, 50 LRA (NS) 553
The Court should never remove a public officer for acts done prior
to his present term of office. To do otherwise would be to deprive
the people of their right to elect their officers. When the people
have elected a man to office, it must be assumed that they did this
with knowledge of his life and character, and that they disregarded
or forgave his faults or misconduct, if he had been guilty of any. It is
not for the court, by reason of such faults or misconduct to
practically overrule the will of the people.
This Court reiterated this rule in Aguinaldo and explicitly stated
therein:

Clearly then, the rule is that a public official can not be removed for
administrative misconduct committed during a prior term, since his
re-election to office operates a condonation of the officer's previous
misconduct to the extent of cutting off the right to remove him
therefor. The foregoing rule, however, finds no application to
criminal cases pending against petitioners for acts he may have
committed during the failed coup.
However, the Office of the Solicitor General maintains that
Aguinaldo does not apply because the case against the official
therein was already pending when he filed his certificate of
candidacy for his reelection bid. It is of the view that an official's
reelection renders moot and academic an administrative complaint
against him for acts done during his previous term only if the
complaint was filed before his reelection. The fine distinction does
not impress us. The rule makes no distinction. As a matter of fact,
in Pascual the administrative complaint against Pascual for acts
committed during his first term as Mayor of San Jose, Nueva Ecija,
was filed only a year after he was reelected.
The rule adopted in Pascual, qualified in Aguinaldo insofar as
criminal cases are concerned, is still a good law. Such a rule is not
only founded on the theory that an official's reelection expresses
the sovereign will of the electorate to forgive or condone any act or
omission constituting a ground for administrative discipline which
was committed during his previous term. We may add that sound
public policy dictates it. To rule otherwise would open the
floodgates to exacerbating endless partisan contests between the
reelected official and his political enemies, who may not stop to
hound the former during his new term with administrative cases for
acts alleged to have been committed during his previous term. His
second term may thus be devoted to defending himself in the said
cases to the detriment of public service. This doctrine of
forgiveness or condonation cannot, however, apply to criminal acts
which the reelected official may have committed during his
previous term.
We thus rule that any administrative liability which petitioner
Salalima might have incurred in the execution of the retainer
contract in O.P. Case No. 5469 and the incidents related therewith
and in the execution on 6 March 1992 of a contract for additional
repair and rehabilitation works for the Tabaco Public Market in O.P.
Case No. 5450 are deemed extinguished by his reelection in the 11
May 1992 synchronized elections. So are the liabilities, if any, of
petitioner members of the Sangguniang Panlalawigan ng Albay,
who signed Resolution No. 129 authorizing petitioner Salalima to

enter into the retainer contract in question and who were reelected
in the 1992 elections. This is, however, without prejudice to the
institution of appropriate civil and criminal cases as may be
warranted by the attendant circumstances. As to petitioners
Victoria, Marcellana, Reyeg, Osia, and Cabredo who became
members of the Sangguniang Panlalawigan only after their election
in 1992, they could not beheld administratively liable in O.P. case
No. 5469, for they had nothing to do with the said resolution which
was adopted in April 1989 yet.
Having thus held that the petitioners could no longer be
administratively liable in O.P. Case No. 5469, we find it unnecessary
to delve into, and pass upon, the fifth issue.
WHEREFORE, the instant special action for certiorari is hereby
partly GRANTED. That part of the challenged Administrative Order
No. 153 imposing the penalty of suspension on petitioner Governor
Romeo Salalima in O.P. Cases Nos. 5450 and 5469 and on
petitioners Vice Governor Danilo Azaa and Sangguniang
Panlalawigan Members Juan Victoria, Lorenzo Reyeg, Arturo Osia,
Wilbor Rontas, Clenio Cabredo, Ramon Fernandez, Jr., Masikap
Fontanilla, Vicente Go, Sr., and Nemesio Baclao in O.P. Case No.
5469 are hereby ANNULLED and SET ASIDE, without prejudice to
the filing of appropriate civil or criminal actions against them if
warranted by the attendant circumstances.
No pronouncement as to costs.
3 The Office of the President is without any power to remove
elected or officials, since such power is exclusively vested in the
proper courts as expressly provided for in the last paragraph of the
aforequoted Section 60. Parenthetically, it may be observed that
Article 125, Rule XIX of the Rules and Regulations Implementing the
Local Government Code of 1991 grants to the disciplining authority
the power to remove an elective local official. Paragraph (6) of the
said Article provides as follows:
(b) An elective Local official My be removed from office on the
grounds enumerated in paragraph (a) of this Article [The grounds
enumerated in Section 60, The Local Government Code of 1991] by
order of the proper court or the disciplining authority whichever
first acquires jurisdiction to the exclusion of the other. (emphasis
supplied).
This grant to the "disciplining authority" of the power to remove
elective Local officials is clearly beyond the authority of the

Oversight Committee that prepared the Rules and Regulations. It is

settled that no rule or regulation may alter, amend, or contravene a
provision of law, like the Local Government Code. Implementing
rules should conform, not clash, with the Law that they implement,
for a regulation which operates to create a rule out of harmony with
the statute is a nullity. (Regidor vs. Chiongbian, 173 SCRA 507
[1989]. See also Teoxol vs. Members of the Board of Administrators,
PVA, 33 SCRA 585 [1970]; Manuel vs. General Auditing Office, 42
SCRA 660 [1971]). No less than then principal author of the Local
Government Code of 1991, Senator Aquilino Q. Pimentel, Jr.,
expresses doubts on the validity of this power of removal on the
part of the disciplining authority which the oversight Committee
inserted in the Rules and Regulations. (AQUILINO P. PIMENTEL, JR.,
The Local Government Code of 1991, The Key to National
Development 171 [1993 ed.]).
The law on suspension or removal of elective public officials must
be strictly construed and applied, and the authority in whom such
power of suspension or removal invested must exercise it with
utmost good faith, for involved is not just an ordinary public official
out one chosen by the people through the exercise of their
constitutional right of suffrage. Their will must not be put to naught
by the caprice or partisanship of the disciplining authority. Where
the disciplining authority is given only the power to suspend and
not the power to remove, it should not be permitted to manipulate
the law by usurping the power to remove by arbitrarily exercising
the power to suspend in a manner that results in the removal of an
elected official from office. As we aptly stated in Lacson vs. Roque
(92 Phil. 456, 464 [1953]):
[T]he abridgment of the power to remove or suspend an elective
mayor is not without its own justification, and was, we think,
deliberately intended by the lawmakers. The evils resulting from a
restricted authority to suspend or remove must have been weighed
against the injustices and harms to the public interests which would
be likely to emerge from an unrestrained discretionary power to
suspend and remove.
The rationale against indefinite preventive suspension decreed in
Layno vs. Sandiganbayan (136 SCRA 536 [1985]) and in Ganzon vs.
Court of Appeals (200 SCRA 271 [1991]) may equally apply to the
imposition of suspension as a penalty and must guide the action of
disciplining authorities in imposing the penalty of suspension on
elective Local officials.

16 Fortunately, the municipalities of Tiwi and Daraga and the

National Government eventually received their respective shares,
which were paid directly to them by the NPC pursuant to the
directive of the Office of the President issued after the NPC
requested clarification regarding the right of the municipalities
concerned to share in the realty tax delinquencies. But this fact
does not detract from the administrative liability of the petitioners.
Notably, when the NPC advised the Province of Albay on 9
December 1992 that starting with the January 1993 installment it
would pay directly to the municipality of Tiwi by applying the
sharing scheme provided by law, the petitioners passed on 19
December 1992 an ordinance declaring as forfeited in favor of the
Province all the payments made by the NPC under the MOA and
authorizing the sale of the NPC properties at public auction. This
actuation of the petitioners reveals all the more their intention to
deprive the municipalities concerned of their shares in the NPC
payments.

G. R. No. 91860 January 13, 1992

ROSEO U. TEJADA and RADITO C. CHING, petitioners,
vs.
HON. EUFEMIO C. DOMINGO, in his capacity as Chairman of the
Commission on Audit, respondent.
Brillantes, Nachura, Navarro & Arcilla for petitioners.

DAVIDE, JR., J.:

In this special civil action for certiorari with prohibition and
mandamus, petitioners urge this Court to annul and set aside the
alleged "erroneous, arbitrary, wrongful and illegal interpretation
and implementation" 1 by the respondent Chairman of the
Commission on Audit (COA) of Republic Act. No. 6758, otherwise
known as the Compensation and Position Classification Act of 1989.
Specifically involved is Section 18 of the Act, which reads:

. . . Thus effective July 1, 1989, the salaries, allowances and other

emoluments to be received by COA officials and employees,
regardless of station or assignment, are only those that are paid
directly by COA out of its own appropriations and contributions.
Henceforth, the continued payment by any other government
entity, whether in the national, local or corporate sector, to any
COA official or employee of such compensation, including those
incorporated in the computerized payroll, would no longer have
legal basis. Accordingly, in order not to delay the processing of the
salary payroll of all COA officials and employees for September,
1989, all such additional emoluments will be deleted in the
computation of the said payroll. 2
The genesis of this controversy is not disputed.
Petitioners Roseo U. Tejada and Radito C. Ching are senior clerks of
the COA assigned to the auditing units of the Philippine National
Bank (PNB) and the Central Bank (CB), respectively.
Before the effectivity of R.A. No. 6758, Tejada's gross monthly
compensation was P3,673.20, broken down as follows:

Sec.18. Additional Compensation of Commission on Audit Personnel

and Other Agencies. In order to preserve the independence and
integrity of the Commission on Audit (COA), its officials and
employees are prohibited from receiving salaries, honoraria,
bonuses, allowances or other emoluments from any government
entity, local government unit, and government-owned and
controlled corporations, and government financial institutions,
except those compensation paid directly by the COA out of its
appropriations and contributions.

basic salary P 1,623.00

Government entities including government-owned or controlled

corporations including financial institutions and local government
units are hereby prohibited from assessing or billing other
government entities, government-owned or controlled corporations
including financial institutions or local government units for
services rendered by its officials and employees as part of their
regular functions for purposes of paying additional compensation to
said officials and employees.

P 3,673.20

The questioned interpretation and implementation are contained in

the memorandum of the respondent dated 24 August 1989, the
pertinent portion of which reads:

cost of living allowance 700.00

bank equity pay 648.00
longevity pay 140.00
amelioration pay 162.00
meal allowance 400.00

while Ching's was only P3,134.00, itemized as follows:

basic salary P 1,623.00
cost of living allowance 700.00
bank equity pay 649.00
amelioration pay 162.00

P 3,134.00
Of the foregoing, only the basic salary and the cost of living
allowance, in the total sum of P2,323.00, were due each of them as
senior clerks in the COA. The other benefits were voluntarily given
to them by the PNB and the CB, respectively.
Prior to the enactment of Presidential Decree No. 1445, otherwise
known as the Government Auditing Code of the Philippines, all
officials and employees of the COA, like herein petitioners, assigned
to, inter alia, government-owned or controlled corporations
(GOCCs), received their salaries, allowances, additional
compensation, emoluments and other fringe benefits directly from
such GOCCs. This practice was not deemed effective enough to
enhance the independence and protect the integrity of the COA.
Thus, with the end in view of insulating these COA officials and
employees, particularly the auditors, from unwarranted influence,
thereby preserving the independence and integrity of the COA,
Presidential Decree No. 1445 expressly mandates that the salaries
and other forms of compensation of the personnel of the COA shall
follow a common position classification and compensation plan
regardless of agency assignment and shall be subject to P.D. No.
985; and that all officials and employees thereof, including its
representatives and support personnel, shall be paid their salaries,
emoluments and allowances directly by the COA out of the latter's
appropriations and contributions, 3 which shall be considered as
part of its operating expenses to be included in the annual
appropriations law, but funded from the assessments made upon,
or from contributions of the GOCCs. 4 It directs GOCCs to
appropriate in their respective budgets and remit to the National
Treasury an amount at least equivalent to the appropriation for the
salaries and allowances of the representatives and staff of the
Commission during the preceding fiscal year. 5
The requirement of a common position and compensation plan did
away with the old practice of agencies concerned determining the
number, compensation and assignment of COA representatives,
which was both chaotic and unjust. The provision on direct
payment by COA of the salaries and other benefits was designed to
instill institution loyalty. 6
This policy was further strengthened by Executive Order No. 19
which President Corazon C. Aquino enacted on 19 June 1986. 7
Sections 2 and 3 thereof provide:

Sec. 2. (as amended by E.O. No. 271). The cost of audit services
rendered to government agencies by the Commission on Audit shall
be covered by the fund sources provided in Sec. 24 of Presidential
Decree No. 1445 which shall be incorporated in the national
government budget and included in the Annual General
Appropriations Law: provided, that in the case of governmentowned and/or controlled corporations and its subsidiaries, the cost
of audit services shall be based on the actual cost of the audit
function in the corporation concerned, plus a reasonable rate to
cover overhead expenses. The actual audit cost shall include
personal services, maintenance and other operating expenses,
depreciation on capital and equipment and out-of-pocket expenses.
This amount shall be remitted in six equal installments every sixty
days (the first installment to fall on January l5 of every calendar
year) to the National Treasury by each government
corporation/subsidiary concerned; provided, that if the operating
budgets of the government corporations/ subsidiary are reduced
during the year as a result of operating fund shortfall or reduction
of its operations, the cost of audit services previously determined
shall be reduced proportionately. . . .
Sec. 3. All allowances and fringe benefits granted by governmentowned or controlled corporations to the personnel of the
Commission's auditing units in such corporations shall be directly
defrayed by the Commission from its own appropriation pursuant to
Section 31 of the General Provisions of the General Appropriations
Act otherwise known as Batas Pambansa Bilang 879.
Thus, the law is clear that the contributions from the GOCCs are
limited to the cost of audit services which are based on the actual
cost of the audit function in the corporation concerned plus a
reasonable rate to cover overhead expenses. The actual audit cost
shall include personnel services, maintenance and other operating
expenses, depreciation on capital and equipment and out-of-pocket
expenses. In respect to the allowances and fringe benefits granted
by the GOCCs to the COA personnel assigned to the former's
auditing units, the same shall be directly defrayed by COA from its
own appropriations pursuant to Section 31 of the General
Provisions of the General Appropriations Act, otherwise known as
Batas Pambansa Bilang 879. The pertinent portion of said Section
31 reads as follows:
xxx xxx xxx

Officials and employees on detail with other offices, including

representatives and support personnel of auditing units assigned to
serve other offices and agencies, shall be paid their salaries,
emoluments, allowances and the foregoing supplemental
compensation, fringe benefits and other personal services costs
from appropriations of their parent agencies, and in no case shall
such be charged against appropriations of the agencies where they
are assigned or detailed, except when authorized by law.

the effectivity of P.D. No. 1445, "paid directly by the COA out of its
appropriations and contributions." 13

This provision was re-stated in the General Appropriations Acts

(GAA) of the succeeding calendar years. 8

Whether or not under R.A. No. 6758 COA personnel may still be
allowed to receive from any government agency, local or national,
including government-owned or controlled corporations and
government financing institutions, other allowances, emoluments
and fringe benefits over and above their legally set salaries and
allowances as COA employees.

Then came Section 18 of R.A. No. 6758, and its interpretation and
implementation 9 by respondent which provoked this case.
Disagreeing with the respondent's stand, petitioners, together with
other COA employees, sent to the former a letter-request 10 dated
27 September 1989, asking that the order for the deletion from the
COA Centralized or Special Payroll of their allowances, fringe
benefits and other emoluments, be reconsidered, and "be restored
or at least considered in the determination of their respective
compensation rates as of 1 July 1989, so that they will not suffer
any salary deduction when the standardized salary rates are finally
implemented."
On 27 October 1989, respondent issued another memorandum 11
denying, in effect, the letter-request. As a consequence, each of the
petitioners presently receive the reduced salary of P2,323.00.
Hence, they filed this petition on 7 February 1990. 12
They raise the following issues:
1. Does Section 18 of R.A. No. 6758 require, or even authorize, the
diminution of the gross compensation of COA personnel which they
were receiving prior to its effectivity, notwithstanding the
provisions of Sections 12 and 17 of the same law?
2. Were all the salaries, allowances, fringe benefits and other
emoluments which petitioners were receiving as part of their gross
compensation prior to the effectivity of R.A. No. 6758 "paid directly
by the COA out of its appropriations and contributions" within the
meaning of the exception under Section 18 of the same law?
and then submit a negative answer to the first, and an affirmative
answer to the second as they were, and have always been, since

We required respondent to Comment on the petition. 14

Respondent, represented by the Office of the Solicitor General, filed
his Comment on 11 May 1990. 15 He maintains that the real issue
to be resolved is:

He then asserts that petitioners are no longer entitled to the extra

allowances and benefits which they used to receive prior to the
effectivity of R.A. No. 6758 for: (a) they are not entitled as a matter
of right to the additional emoluments they have been receiving
from the agencies to which they are assigned such were
gratuitously given by the latter; (b) the extra emoluments from
GOCCs have no legal basis; (c) the additional allowances created a
salary distortion; (d) the additional allowances do not promote
auditing integrity and independence; (e) GOCCs no longer pay
extra emoluments and have been prohibited from doing so; and (f)
COA personnel assigned to GOCCs are subject to periodic
reshuffling or reassignment pursuant to Sections 20 (4) and 22 (1)
of P.D. No. 1445, hence they do not acquire a vested right to the
additional compensation or fringe benefits being paid by GOCCs as
the receiving of such would cease upon their reassignment.
We required the petitioners to file a Reply to the Comment, 16
which they complied with on 28 June 1990. 17 On 10 July 1990, this
Court gave due
course 18 to the petition and required both parties to
simultaneously file their respective Memoranda, which they
complied with.
To Our mind, the respondent presents the proper issue and a
careful scrutiny of the arguments adduced by the parties would
lead Us to no other conclusion but to sustain the respondent and
dismiss the petition for want of merit.
The two (2) main issues formulated by petitioners are clearly based
on erroneous premises or assumptions. Petitioners assume that

their gross compensation includes the extra emoluments given by

the GOCCs to which they are assigned, that Sections 12 and 17 of
the Act grant them vested rights to such extra emoluments and
that they were directly paid by the COA out of its appropriations
and contributions.
There can be no question that Section 18 of Republic Act No. 6758
is designed to strengthen further the policy, earlier mandated by
the Government Auditing Code of the Philippines and then by
Executive Order No. 19 (as amended by Executive Order No. 271),
to preserve the independence and integrity of the COA, by explicitly
PROHIBITING: (1) COA officials and employees from receiving
salaries, honoraria, bonuses, allowances or other emoluments from
any government entity, local government unit, GOCCs and
government financial institutions, except such compensation paid
directly by the COA out of its appropriations and contributions, and
(2) government entities, including GOCCS, government financial
institutions and local government units from assessing or billing
other government entities, GOCCs, government financial
institutions or local government units for services rendered by the
latter's officials and employees as part of their regular functions for
purposes of paying additional compensation to said official and
employees. While the cited section uses the word "prohibited,"
Section 22 of P.D. No. 1445 does not. No one may successfully
argue against the proposition that a total removal of the temptation
and enticement the extra emoluments provide would be one
effective way to vigorously and aggressively enforce the
Constitutional provision mandating the COA to prevent or disallow
irregular, unnecessary, excessive, extravagant, or unconscionable
expenditures, or uses of government funds and properties. 19 The
COA personnel assigned to the GOCCs who have absolutely nothing
to look forward to or expect from the latter in terms of extra
benefits would have no reason to accord special treatment to the
GOCCs by closing their eyes to irregular or unlawful expenditures or
use of funds or property, or conducting perfunctory audit. The law
realizes that such extra benefits could diminish the personnel's
seriousness and dedication in the pursuit of their assigned tasks,
affect their impartiality and provide a continuing temptation to
ingratiate themselves to the GOCCs or government financial
institutions concerned. In the end then, they would become
ineffective auditors.
Upon the other hand, as correctly contended by the respondent,
Memorandum Order No. 177 rationalizing the compensation
structure in GOCCs and government financial institutions, issued by
the President on 31 May 1988, limits the grant of extra allowances

and fringe benefits to their officials and employees. Section 2

thereof reads:
Sec. 2. Allowances of incumbents. Incumbents of positions in
corporate entities covered by the Memorandom Order who are
presently receiving additional monthly compensation/fringe
benefits and other emoluments which were continuously enjoyed
for a period of at least 12 months prior to the effectivity of this
Order, including those authorized solely by their governing boards
effected on or before December 31, 1987, the aggregate of which
exceeds the standardized rates prescribed pursuant to existing
laws, rules and regulations and ministered by the Department of
Budget and Management, shall continue to receive such excess
allowances, which shall be referred to as "transition allowance." The
"transition allowance" shall be correspondingly reduced by the
amount of any salary increase or salary adjustment that the
incumbent shall receive in the future.
The additional compensation, fringe benefits and other emoluments
which may be considered as "transition allowance" under this
Memorandum Order shall be limited to those which are of common
or general application to all the personnel of the entities covered
under Section 1 hereof.
The Corporate Budget Circular No. 15 issued by the Secretary of
the Department of Budget and Management on 5 July 1988, to
implement the aforesaid Memorandum Order, pertinently provides
for the coverage and exemption thereof, thus:
2.0 COVERAGE AND EXEMPTION.
2.1. The provisions of MO No. 177, series of 1988, shall apply only
to officials and employees of profit-making and financially viable
government-owned or controlled corporations and financial
institutions which are not receiving subsidies, for any operating
expenses from the National Government.
2.2. Members of the governing boards of any government-owned or
controlled corporation and financial institution, detailed personnel
from other government agencies/corporations including personnel
of the Commission on Audit (COA) and Civil Service Commission
(CSC) are not covered by the provisions of said Order. (Emphasis
supplied)
Then, too, among the laws specifically repealed by R.A. No. 6758 20
is the proviso under Section 2 of P.D. No. 985, which reads:

. . . Provided, that notwithstanding a standardized salary system

established for all employees, additional financial incentives may
be established by government corporations and financial
institutions for their employees to be supported fully from their
corporate funds and for such technical positions as may be
approved by the President in critical government agencies.
The foregoing legislative and executive pronouncements unerringly
reveal a two-pronged strategy to preserve and enhance the
independence and integrity of the COA and make its personnel
loyal to none other except that institution and beholden to nobody
but the people whose coffers they must guard with dedication and
responsibility.
The first aspect of the strategy is directed to the COA itself, while
the second aspect is addressed directly against the GOCCs and
government financial institutions. Under the first, COA personnel
assigned to auditing units of GOCCs or government financial
institutions can receive only such salaries, allowances or fringe
benefits paid directly by the COA out of its appropriations and
contributions. The contributions referred to are the cost of audit
services earlier mentioned which cannot include the extra
emoluments or benefits now claimed by petitioners. The COA is
further barred from assessing or billing GOCCs and government
financial institutions for services rendered by its personnel as part
of their regular audit functions for purposes of paying additional
compensation to such personnel. Under the second, GOCCs and
government financial institutions can no longer rely on Section 2 of
P.D. No. 985; moreover, fringe benefits and other emoluments in
excess of the standardized rates, which may be continued to be
received in the concept of "transition allowance" under
Memorandum Order No. 177, in relation to Corporate Budget
Circular No. 15 (15 July 1988), apply only to the officials and
employees of profit-making and financially viable GOCCs and
government financial institutions.
The strategy also promotes and is consistent with the policy behind
R.A. No. 6758, which Section 2 thereof announces:
Sec. 2. Statement of Policies It is hereby declared the policy of
the State to provide equal pay for substantially equal work and to
base differences in pay upon substantive differences in duties and
responsibilities, and qualification requirements of the positions. In
determining rates of pay, due regard shall be given to, among
others, prevailing rates in the private sector for comparable work.

For this purpose, the Department of Budget and Management

(DBM) is hereby directed to establish and administer a unified
Compensation and Position Classification System, hereinafter
referred to as the System, as provided for in Presidential Decree No.
985, as amended, that shall be applied for all government entities,
as mandated by the Constitution.
It goes without saying then that the PNB and the CB cannot legally
and validly continue to grant Tejada and Ching, respectively, the
extra emoluments in question because these could only be given to
its officials, employees or organic personnel, subject to
Memorandum Order No. 177 and Corporate Budget Circular No. 15.
Otherwise stated, Tejada and Ching cannot legally and validly
receive such extra benefits from the PNB and the CB, respectively,
because not only are they not organic personnel thereof, but also
because of the express prohibition of Section 18 of R.A. No. 6758.
Petitioners' contention that Sections 12 and 17 of R.A. No. 6758
authorize their continued receipt of the extra allowances from the
GOCCs to which they are assigned are patently untenable. These
sections read in full as follows:
Sec. 12. Consolidation of Allowances and Compensation All
allowances, except for representation and transportation
allowances; clothing and laundry allowances; subsistence
allowance of marine officers and crew on board government vessels
and hosoltal personnel; hazard pay, allowances of foreign service
personnel stationed abroad; and such other additional
compensation not otherwise specified herein as may be determined
by the DBM, shall be deemed included in the standardized salary
rates herein prescribed. Such other additional compensation,
whether in cash or in kind, being received by incumbents only as of
July 1, 1989, not integrated into the standardized salary rates shall
continue to be authorized.
Existing additional compensation of any national government
official or employee paid from local funds of a local government
unit shall be absorbed into the basic salary of said official or
employee and shall be paid by the National Government.
xxx xxx xxx
Sec. 17. Salaries of Incumbents. Incumbents of positions
presently receiving salaries and additional compensation/fringe
benefits including those absorbed from local government units and
other emoluments, the aggregate of which exceeds the

standardized salary rate as herein prescribed, shall salary rate as

herein prescribed, shall continue to receive such excess
compensation, which shall be referred to as transition allowance.
The transition allowance shall be reduced by the amount of salary
adjustment that the incumbent shall receive in the future.
The transition allowance referred to herein shall be treated as part
of the basic salary for purposes of computing retirement pay, year
end bonus and other similar benefits.
As basis for computation of the first across-the-board salary
adjustment of incumbents with transition allowance, no incumbent
who is receiving compensation exceeding the standardized salary
rate at the time of the effectivity of this Act, shall be assigned a
salary lower than ninety percent (90%) of his present compensation
or the standardized salary rate, whichever is higher. Subsequent
increases shall be based on the resultant adjusted salary.
Section 12 refers to the regular allowances and compensation
which an instrumentality, entity or agency of the government
grants to its organic personnel. In the case of COA personnel, such
allowances and compensation cannot include allowances, fringe
benefits or extra emoluments, such as those claimed by
petitioners, which are granted by GOCCs or government financial
institutions because Section 18 of the Act itself bans the COA
personnel from receiving them even as it also prohibits GOCCs and
government financial institutions from granting such benefits to
personnel of other government instrumentalities, entities or
agencies assigned to them to perform the regular functions of their
mother units. There is no indication at all that R.A. No. 6758 has
jettisoned the first aspect of the policy. On the contrary, it has
strengthened it. It would have been absurd and illogical for the law
to impose the prohibition and at the same time mandate its
integration in the standardized salary rates of the personnel of the
COA. In the second place, the Secretary of the DBM, Hon. Guillermo
Carague, has certified that "other than those authorized/mandated
by law, the allowances, fringe benefits and other emoluments that
were directly received by COA personnel from the various
government owned and controlled corporations, including
government financial institutions, to which they are assigned, were
not provided under the regular appropriations of the Commission in
the General Appropriations Act of 1989 and 1990." 21 They were
not so provided because, as discussed above, there was no legal
basis therefor.

Were this Court to accept petitioner's theory, it would ingraft into

the law that which the legislature never intended and interpret the
law in a manner that defeats or negates its purpose. Worse, it
would compel the PNB and the CB to conntinue granting petitioners
Tejada and Ching, respectively, the subject extra emoluments thus
writing into the law an exception for the benefit of COA personnel.
This would be judicial legislation, which We are not prepared to
experiment on. The questioned law is clear enough. Frankly, its
interpretation is not even called for. Neither may petitioners seek
refuge or consolation under Section 17. Again, the additional
compensation or fringe benefits and other emoluments referred to
therein are those granted by the mother or parent unit to the
incumbents thereof, i.e., the organic personnel, which include
benefits absorbed from local government units. As correctly
observed by respondent, the law does not mention benefits
absorbed from GOCCs or government financial institutions. This is
so because no such benefit was intended to be absorbed. On the
contrary, GOCCs and government financial institutions were
prohibited from granting them to non-organic personnel.
Petitioners, nevertheless, posit the view that since, in respect to
GOCCs and government financial institutions, the law does not
seem to make a distinction between an incumbent therein who is
an organic personnel thereof and an incumbent who is a COA
personnel assigned to their auditing units, petitioners must, for
purposes of Section 17, be considered "incumbents" of the PNB and
the CB. They appeal to the rule on statutory construction that
where the law does not make any distinction, no distinction should
be made. A distinction is not in order for the meaning of incumbent
is not doubtful nor susceptible of more than one interpretatioin. An
incumbent is a person who is in present possession of an office; one
who is legally authorized to discharge the duties of an office. 22 An
office is a public charge or employment, an employment on behalf
of the government in any station or public trust, not merely
transient, occasional or incidental. 23 An incumbent then can only
refer to the holder of an office either by appointment or by election.
Insofar as petitioners were concerned, they are incumbents of the
position to which they have been appointed senior clerks of the
COA and not of the PNB or the CB to which they are merely
temporarily assigned.
The foregoing disquisition renders unnecessary further discussion
on the other points raised by respondent.
WHEREFORE, for lack of merit, the petition is DISMISSED with costs
against petitioners.

IT IS SO ORDERED.
Narvasa, C.J., Melencio-Herrera, Paras, Feliciano, Padilla, Bidin,
Grio-Aquino, Medialdea, Regalado and Romero, JJ., concur.
Nocon, J., took no part.

Separate Opinion
GUTIERREZ, JR., J., concurring and dissenting:
I agree with the laudable objectives of Rep. Act No. 6758 but I
believe that it must be implemented in a more reasonable,
humane, and realistic manner.
The petitioner's problems are symptomatic of the improvident and
uncalculating approach of Government to the compensation and
money problems of its own employees. Judges are ordered to stop
receiving the allowances given to them for decades by local
governments. And yet, no provisions are made in the budget to
enable the Supreme Court to replace these allowances with
equivalent amounts and to provide them with the supplies,
telephone, electricity and maintenance services, and
accomodations which have been furnished by local governments
since the turn of the century. Public school teachers are given
increased salaries by the national government but, at the same
time, the "city share" which the local governments used to pay is
withdrawn. The salary increases are thus meaningless inspite of so
much publicity and fanfare given to them.
The two petitioners in this case are clerks. When a clerk joins the
government service, he does so on the basis of the total
compensation package regularly given for a fairly long period to
occupants of that position. Unlike the chief or assistant chief
auditor, he does not expect to be shifted from agency to agency. In
theory a clerk joins the COA as a national office but in actuality he
joins the COA Supreme Court, COA Philippine National Bank, COA
Bureau of Prisons, etc. To suddenly reduce the take home pay
which has been received for many years is cruel and unnecessary.

If standardization of incomes of all clerks in all government offices

is to be effected no matter how different the workloads, the
confidentiality or sensitivity of functions, the complexity and
magnitutde of assignments, and the amounts of funds and
properties being checked by the office, some kind of transition
arrangement to equal the lost income must be provided by the
Commission itself, at the very least.
It is easy to mount arguments in defense of implementing rules
intended to make certain offices more independent and,
supposedly, more effective. But the arguments become rhetorical,
quixotic, and illusive if they do not take into account the hardships
and sacrifices which affected personnel, especially rank and file
workers, are compelled to suffer.
I, therefore, regret that I cannot concur with the majority opinion in
its entirety until a more humane and practical mode of
implementation is devised.
Cruz, J., concurs.

Separate Opinion
GUTIERREZ, JR., J., concurring and dissenting:
I agree with the laudable objectives of Rep. Act No. 6758 but I
believe that it must be implemented in a more reasonable,
humane, and realistic manner.
The petitioner's problems are symptomatic of the improvident and
uncalculating approach of Government to the compensation and
money problems of its own employees. Judges are ordered to stop
receiving the allowances given to them for decades by local
governments. And yet, no provisions are made in the budget to
enable the Supreme Court to replace these allowances with
equivalent amounts and to provide them with the supplies,
telephone, electricity and maintenance services, and
accomodations which have been furnished by local governments
since the turn of the century. Public school teachers are given
increased salaries by the national government but, at the same
time, the "city share" which the local governments used to pay is
withdrawn. The salary increases are thus meaningless inspite of so
much publicity and fanfare given to them.

The two petitioners in this case are clerks. When a clerk joins the
government service, he does so on the basis of the total
compensation package regularly given for a fairly long period to
occupants of that position. Unlike the chief or assistant chief
auditor, he does not expect to be shifted from agency to agency. In
theory a clerk joins the COA as a national office but in actuality he
joins the COA Supreme Court, COA Philippine National Bank, COA
Bureau of Prisons, etc. To suddenly reduce the take home pay
which has been received for many years is cruel and unnecessary.
If standardization of incomes of all clerks in all government offices
is to be effected no matter how different the workloads, the
confidentiality or sensitivity of functions, the complexity and
magnitutde of assignments, and the amounts of funds and
properties being checked by the office, some kind of transition
arrangement to equal the lost income must be provided by the
Commission itself, at the very least.
It is easy to mount arguments in defense of implementing rules
intended to make certain offices more independent and,
supposedly, more effective. But the arguments become rhetorical,
quixotic, and illusive if they do not take into account the hardships
and sacrifices which affected personnel, especially rank and file
workers, are compelled to suffer.
I, therefore, regret that I cannot concur with the majority opinion in
its entirety until a more humane and practical mode of
implementation is devised.
Cruz, J., concurs.
G.R. No. 160846

February 22, 2008

BENJAMIN B. GERONGA, petitioner,

vs.
HON. EDUARDO VARELA, as City Mayor of Cadiz City, respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
The Petition for Review on Certiorari under Rule 45 of the Rules of
Court filed by Benjamin B. Geronga (petitioner) assails that portion
of the October 15, 2002 Joint Decision1 of the Court Appeals (CA)
affirming his dismissal from the service under Resolution No.

9921072 dated September 17, 1999 and Resolution No. 0007153

dated March 21, 2000 of the Civil Service Commission (CSC); as
well as the October 1, 2003 CA Resolution4 denying his Motion for
Reconsideration.
The facts are of record.
Petitioner works as Engineer IV at the General Services Department
of the local government of Cadiz City. In 1996, he was involved in
two administrative cases: 1) Administrative Case No. 96-045 for
Unjust Vexation, Contempt, Insubordination, Conduct Unbecoming a
Public Officer, and Alarm and Scandal; and 2) Administrative Case
No. 96-056 for Grave Misconduct and Engaging in Partisan Political
Activity. Impleaded with petitioner in Administrative Case No. 96-05
were Edwin Nuyad (Nuyad) and Nick Ambos (Ambos), also
employees of the local government of Cadiz City.
The two administrative cases were referred by Cadiz City Mayor
Eduardo Varela (respondent) to City Legal Officer Marcelo R. del
Pilar (Del Pilar) for investigation. After investigation, Del Pilar issued
in Administrative Case No. 96-04 a Resolution/Recommendation
dated December 1, 1997 for the dismissal of petitioner for grave
misconduct.7 In Administrative Case No. 96-05, Del Pilar issued a
separate Resolution/Recommendation dated December 4, 1997,
recommending the dismissal of petitioner, Nuyad and Ambos for
grave misconduct and partisan politics.8 Respondent approved
both recommendations.9
Consequently, on January 8, 1998, respondent issued to petitioner
Memorandum Order No. 98-V-05, addressed to petitioner, to wit:
Attached is a copy of the Resolution/Recommendation of the City
Legal Officer which this office has approved in toto and considered
an integral part hereof.
We find the recommendation as contained therein to be just and
proper under the premises.
In view hereof, you are hereby meted a penalty of dismissal from
the service as recommended effective January 09, 1998.
For strict compliance.10 (Emphasis supplied.)
Petitioner received copy of Memorandum Order No. 98-V-05 on
January 9, 1998.11 Without assistance of counsel, petitioner filed
with the CSC a Notice of Appeal, stating:

Appellant respectfully serves notice that he is appealing his

DISMISSAL FROM SERVICE by the City Mayor of Cadiz City, Negros
Occidental, Eduardo G. Varela, contained in the latter's
Memorandum Order No. 98-V-05 dated January 08, 1998.12
(Emphasis supplied.)
Still without assistance of counsel, petitioner, together with Nuyad
and Ambos, filed a Joint Memorandum in which he discussed
Administrative Case No. 96-05 only, and completely omitted
reference to Administrative Case No. 96-04.13

Both petitioner and respondent filed Motions for Reconsideration17

but the CSC denied the same in Resolution No. 000715.18 They
filed with the CA separate Petitions for Review,19 which were later
consolidated.20
In the October 15, 2002 Joint Decision21 assailed herein, the CA
dismissed both petitions and affirmed CSC Resolutions No. 992107
and No. 000715.
Only petitioner filed a Motion for Reconsideration22 which the CA
denied in its October 1, 2003 Resolution.23

Acting on the appeal, the CSC issued Resolution No. 990717 dated
March 25, 1999, thus:

Petitioner is now before this Court, seeking resolution of the

following issues:

WHEREFORE, the appeal of Edwin Nuyad, Nick Ambos and

[petitioner] is hereby granted. Accordingly, Mayor Eduardo G.
Varela is directed to reinstate Nuyad, Ambos and [petitioner] to
their former positions or, if no longer available, to comparable
positions.14

1. Whether or not the dismissal of the petitioner under

Memorandum Order No. 98-V-05 constitutes a denial of his
constitutional right to due process;

Respondent filed a Motion for Reconsideration,15 questioning the

order to reinstate Nuyad, Ambos and petitioner. Respondent
pointed out that petitioner cannot be reinstated anymore because
the latter failed to appeal from his dismissal in Administrative Case
No. 96-04, which consequently became final and executory.
The CSC partly granted the Motion for Reconsideration of
respondent in Resolution No. 992107, to wit:
WHEREFORE, the Motion for Reconsideration of Mayor Eduardo G.
Varela is partly granted.
His prayer for the reversal of CSC Resolution No. 990717 dated
March 25, 1999 is hereby denied. However, his request for the nonreinstatement of [petitioner] in view of the finality of the decision in
Administrative Case No. 96-04, finding [petitioner] guilty of Grave
Misconduct for which he was meted out the penalty of dismissal
from the service is granted.
Accordingly, CSC Resolution No. 990717 dated March 25, 1999 is
hereby modified insofar as the non-reinstatement of [petitioner] is
concerned. In all other matters, the said resolution stands.16
(Emphasis supplied.)

2. Whether or not the petitioner was denied due process under the
Resolution/Recommendation of the City Legal Officer in Adm. Case
No. 96-04 as adopted in toto by the City Mayor;
3. Whether or not the dismissal of the petitioner became final for
failure to appeal;
4. Whether or not the Civil Service Commission acted properly and
within the bounds of its own rules and regulations in entertaining
the motion for reconsideration of Mayor Varela from its Resolution
No. 990714 dated March 25, 1999; and
5. Whether or not the Court of Appeals erred in upholding the
dismissal of the petitioner.24
We shall first resolve the fourth issue whether the CSC may
entertain respondent's motion for reconsideration of its decision
exonerating petitioner.
Petitioner points out that after ordering his exoneration under
Resolution No. 990717, the CSC could no longer entertain a motion
for reconsideration filed by respondent who is not even a proper
party. He argues that in acting upon the motion for reconsideration
of respondent and worse, in modifying Resolution No. 990717, the
CSC violated Section 38, Rule III, in relation to Section 2(l), Rule I of
Memorandum Circular No. 19, series of 1999 or the Uniform Rules

on Administrative Cases in the Civil Service (URACCS); and the CA

erred in affirming it.25
Petitioner is mistaken.
Sections 37 (a) and 39 of Presidential Decree (P.D.) No. 807,26
otherwise known as The Philippine Civil Service Law, provide:
Section 37. (a) The Commission shall decide upon appeal all
administrative disciplinary cases involving the imposition of a
penalty of suspension for more than thirty days, or fine in an
amount exceeding thirty days salary, demotion in rank or salary or
transfer, removal or dismissal from office x x x.
Section 39. (a) Appeals, where allowable, shall be made by the
party adversely affected by the decision within fifteen days from
receipt of the decision unless a petition for reconsideration is
seasonably filed, which petition shall be decided within fifteen days
x x x. (Emphasis supplied.)
In addition, Section 47 of Executive Order (E.O.) No. 292 (The
Administrative Code of 1987)27 reiterates that the CSC may
entertain appeals only from (a) a penalty of suspension of more
than thirty days; or (b) a fine in an amount exceeding thirty days
salary; or (c) demotion in rank or salary or transfer; or (d) removal
or dismissal from office.
Interpreting the foregoing provisions, the Court has earlier held
that, in an administrative case, only a decision involving the
imposition of a penalty of suspension of more than 30 days, fine
exceeding 30-day salary, demotion, transfer, removal or dismissal
is appealable to the CSC; hence, a decision exonerating an
employee cannot be appealed.28 Moreover, given the nature of the
appealable decision, only said employee would qualify as the "party
adversely affected" who is allowed to appeal; other persons, such
as the appointing or disciplining authorities, cannot appeal.29
Consonant with the foregoing interpretation, the CSC adopted
Section 2(l), Rule I and Section 38, Rule III of the URACCS30 in
implementation of the pertinent provisions of P.D. No. 807 and E.O.
No. 292,31 to wit:
Section 2. Coverage and Definition of Terms. x x x (l) PARTY
ADVERSELY AFFECTED refers to the respondent against whom a
decision in a disciplinary case has been rendered.

xxxx
Section 38. Filing of Motion for Reconsideration. - The party
adversely affected by the decision may file a motion for
reconsideration with the disciplining authority who rendered the
same within fifteen (15) days from receipt thereof
The present view is different. In a long line of cases,32 beginning
with Civil Service Commission v. Dacoycoy,33 this Court has
maintained that a judgment of exoneration in an administrative
case is appealable, and that the CSC,34 as the agency mandated
by the Constitution to preserve and safeguard the integrity of our
civil service system, and/or the appointing authority, such as a
mayor35 who exercises the power to discipline or remove an erring
employee, qualifies as parties adversely affected by the judgment
who can file an appeal. The rationale for this is explained in the
concurring opinion of Associate Justice now Chief Justice Reynato S.
Puno in Civil Service Commission v. Dacoycoy:
In truth, the doctrine barring appeal is not categorically sanctioned
by the Civil Service Law. For what the law declares as "final" are
decisions of heads of agencies involving suspension for not more
than thirty (30) days or fine in an amount not exceeding thirty (30)
days salary x x x. It is thus non sequitur to contend that since some
decisions exonerating public officials from minor offenses can not
be appealed, ergo, even a decision acquitting a government official
from a major offense like nepotism cannot also be appealed.36
Thus, through Resolution No. 021600,37 the CSC amended the
URACCS, by allowing the disciplining authority to appeal from a
decision exonerating an erring employee, thus:
Section 2. Coverage and Definition of Terms. x x x (l) PARTY
ADVERSELY AFFECTED refers to the respondent against whom a
decision in a disciplinary case has been rendered or to the
disciplining authority in an appeal from a decision exonerating the
said employee.
In fine, the exoneration of petitioner under CSC Resolution No.
990717 may be subject to a motion for reconsideration by
respondent who, as the appointing and disciplining authority, is a
real party in interest. The CSC acted within the rubric of Civil
Service Commission v. Dacoycoy in allowing said motion for
reconsideration.

The next question then is whether the CSC was correct in granting
the motion for reconsideration of respondent, and the CA, in
agreeing with it.
The CA and CSC declared as final and executory the decision of
respondent in Administrative Case No. 96-04, finding petitioner
guilty of grave misconduct and sentencing him with a penalty of
dismissal from government service, on the sole ground that the
latter failed to appeal from said decision. The CSC found:
x x x It is worthy to note that a copy of the Decision dated
December 1, 1997 in Administrative Case No. 96-04 issued by
[respondent[ was received by [petitioner] himself on January 9,
1998. This is very apparent on the face of the Decision. Hence,
upon receipt of the same, [petitioner] had the option whether or
not to bring the said decision on appeal to the Commission.
Considering that he failed to appeal the said Decision within the
prescribed period of fifteen (15) days from receipt hereof, the same
became final and executory.38 (Emphasis supplied.)
The CA added that the appeal which petitioner interposed from the
decision in Administrative Case No. 96-05 cannot be treated also as
an appeal from the decision in Administrative Case No. 96-04
because the "Joint Memorandum before the CSC mentions only
Administrative Case No. 96-05, not Administrative Case No. 9604."39
The Court does not completely agree.
The CSC is under the impression that in Administrative Case No. 9604, respondent issued a "Decision dated December 1, 1997," and
that it is said decision which petitioner should have appealed. The
CA shared the notion. Both are wrong. What is dated December 1,
1997 is merely the Resolution/Recommendation issued by Del Pilar
in Administrative Case No. 96-04. The formal decision of
respondent is Memorandum Order No. 98-V-05 dated January 8,
1998.
There is a material difference between a mere recommendation to
dismiss an employee and an administrative decision/resolution
sentencing him with dismissal.
Under Section 35,40 Rule III of the URACCS, a recommendation to
dismiss is that contained in a formal investigation report issued by
a hearing or investigating officer and submitted to the disciplining
authority for approval. Falling under this category are the

December 1, 1997 Recommendation/Resolution in Administrative

Case No. 96-04 and the December 4, 1997
Recommendation/Resolution in Administrative Case No. 96-05
issued by Del Pilar as investigating officer. While they contain the
approval of respondent as disciplining authority, both
Recommendations/Resolutions merely state findings of probable
cause that petitioner is guilty of the administrative charges filed
against him, and recommend that he be dismissed. As we held in
Rubio v. Munar,41 such recommendations are not the proper
subject matter of an appeal to the CSC.
In contrast, a decision/resolution of dismissal is that rendered by
the disciplining authority after receipt of the recommendation of
the investigating/ hearing officer,42 and on the basis of his
independent assessment of the case.43 Memorandum Order No.
98-V-05 is one. It was issued by respondent after receipt of the
recommendations of Del Pilar. While it incorporates by reference
said recommendations, Memorandum Order No. 98-V-05 goes
further by categorically declaring petitioner guilty of the
administrative charges and imposing upon him the penalty of
dismissal. It is therefore the decision rendered by respondent as
disciplining authority which may be appealed or be subject of
execution, if already final.44
Furthermore, it bears emphasis that Memorandum Order No. 98-V05 is the decision of respondent not just in Administrative Case No.
96-05 but also in Administrative Case No. 96-04. While the
language employed in Memorandum Order No. 98-V-05 refers to a
singular "Resolution/Recommendation" of Del Pilar, what were
actually attached to the Memorandum were the December 1, 1997
Resolution/Recommendation in Administrative Case No. 96-04 and
the December 4, 1997 Resolution in Administrative Case No. 96-05.
These attachments were served on petitioner and personally
received by him on January 9, 1998 at 5 o'clock in the afternoon, at
exactly the same date and time he received Memorandum Order
No. 98-V-05.45
Thus, Memorandum Order No. 98-V-05 being the decision of
respondent in both Administrative Case No. 96-04 and
Administrative Case No. 96-05, it is crucial to emphasize that in the
Notice of Appeal which petitioner filed, he distinctly stated that
what he is appealing to the CSC is his dismissal as "contained in
[respondent's] Memorandum Order No. 98-V-05 dated January 08,
1998."46 By so doing, petitioner effectively included in his appeal
not just Administrative Case No. 96-05 but also Administrative Case
No. 96-04. Therefore, respondent erred in concluding that

Administrative Case No. 96-04 had become final and executory for
failure of petitioner to appeal the same to the CSC.
Unfortunately for petitioner, the CA and CSC did not anymore look
into the merits of the decision in Administrative Case No. 96-04
simply because he raised no issue or argument against it.47
Understandably, the CA and CSC could not be faulted for doing so;
they were merely adhering to a basic rule that in any proceeding, a
party who fails to cite specific grounds or raise particular
arguments is deemed to have waived them.48
Such rule, however, is not sacrosanct. It yields to the imperatives of
equity, which often arise in administrative cases where at stake is
the security of tenure of labor, the protection of which no less than
the Constitution guarantees.49 Deprivation of security of tenure
may be justified only for the causes specified and in the manner
prescribed by law. Should there be doubt in the legality of either
cause or mode of dismissal, public interest demands the resolution
of the doubt wholly on its substance, rather than solely on technical
minutiae.50
In Philippine Amusement and Gaming Corporation v. Angara,51 the
respondents-employees failed to appeal from a decision in which
the CSC ordered their reinstatement but omitted to award them
backwages. The Court condoned their technical lapse and granted
their belated claim so as to fulfill the guarantee of monetary
compensation which the law itself extends to those arbitrarily
dismissed.
Also, in Constantino-David v. Pangandaman-Gania,52 the
respondent-employee failed to question a CSC resolution which
omitted to award her backwages. Despite said resolution having
attained finality, the Court allowed its modification so as to entitle
the respondent-employee to backwages:
To prevent respondent from claiming back wages would leave
incomplete the redress of the illegal dismissal that had been done
to her and amount to endorsing the wrongful refusal of her
employer or whoever was accountable to reinstate her. A too-rigid
application of the pertinent provisions of the Revised Uniform Rules
on Administrative Cases in the Civil Service as well as the Rules of
Court will not be given premium where it would obstruct rather
than serve the broader interests of justice in the light of the
prevailing circumstances in the case under consideration.53

So too must the Court allow petitioner redress from the decision of
respondent in Administrative Case No. 96-04. While petitioner,
unaided by legal counsel, may have omitted to raise specific
grounds against the decision insofar as Administrative Case No. 9604 is concerned, it cannot be denied that he intended to appeal
from it. The least he deserves then is a scrutiny of the legal and
factual bases of his dismissal.
As it turns out, upon review, said decision, insofar as it relates to
Administrative Case No. 96-04, is patently void.
Two fundamental requirements54 of due process in administrative
cases are that a person must be duly informed of the charges
against him; and that he cannot be convicted of an offense or crime
with which he was not charged.55 A deviation from these
requirements renders the proceeding invalid and the judgment
issued therein a lawless thing that can be struck down anytime.56
In the present case, the records of Administrative Case No. 96-04
reveal that petitioner was dismissed for an act which was not
alleged in the administrative charge filed against him.
Administrative Case No. 96-04 sprung from a Sworn Complaint57
dated March 15, 1996 filed by Rodrigo Mateo (Mateo) against
petitioner for unjust vexation, gross misconduct, insubordination,
conduct unbecoming a public officer and alarm and scandal,58
allegedly committed through the following acts: a) his refusal to
comply with several orders issued by respondent and Mateo for the
filing of daily time records;59 and b) his having challenged Mateo to
a fistfight.60 The Subpoena61 which Del Pilar issued to petitioner
required the latter to answer the incidents cited by Mateo in his
Sworn Complaint. Even the evidence which Del Pilar summarized in
his December 1, 1997 Resolution/Recommendation pertains solely
to said incidents.62
Surprisingly, the conclusion which Del Pilar arrived at in his
December 1, 1997 Resolution/Recommendation, and which became
the basis of the dismissal of petitioner, has no bearing whatsoever
on the offenses with which the latter was charged under the Sworn
Complaint nor to the incidents/acts described therein. Rather, the
conclusion pertains solely to the alleged defamatory statements
which petitioner made in his April 1, 1996 Letter-Answer to the
Sworn Complaint, thus:

That respondent having failed and refused to file his answer in the
above-entitled case, this office has to resolve the case on the basis
of the evidence on records [sic].
There is no doubt that the findings of the City Prosecutors Office,
Cadiz City, of probable cause for libel on the basis of the
communication of April 1, 1996 by [petitioner] cannot be disturbed
x x x. It appears that the defamation against complainant Mateo
contained in said letter dated April 1, 1996 by [petitioner] is not
considered privilege communication as found by the Cadiz City
Prosecutor's Office. Such an act of [petitioner] in defaming
complainant Mateo in a letter dated April 1, 1996 sent to this office
furnishing copies of said letter to the City Mayor Eduardo G. Varela,
Atty. Abelardo Gayatin, Jr., and Atty. Jessie Caberoy of the Civil
Service Commission instead of filing an answer to complaint filed
against him no doubt constitute[s] Grave Misconduct which would
warrant dismissal from the government service.63 (Emphasis
supplied.)
Nowhere in the records of Administrative Case No. 96-04 does it
appear that petitioner was charged with grave misconduct, or that
he was held to answer for his alleged defamatory statements in his
April 1, 1996 letter. Thus, the December 1, 1997
Resolution/Recommendation of Del Pilar dismissing petitioner on
that ground, and Memorandum Order No. 98-V-05 of respondent
approving said resolution/ recommendation were issued in utter
contempt of the right of petitioner to due process. Both are void ab
initio and should be treated as inexistent64 -- it is as if no
December 1, 1997 Resolution/Recommendation was issued in
Administrative Case No. 96-04, and therefore, Memorandum Order
No. 98-V-05 could not have approved and adopted a void
resolution/recommendation. In effect, there was nothing for
petitioner to appeal from in Administrative Case No. 96-04.
Therefore, Memorandum Order No. 98-V-05 and the December 1,
1997 Resolution/Recommendation constituted an unlawful
deprivation of petitioner's security of tenure, insofar as
Administrative Case No. 96-04 is concerned. The CA and CSC
gravely erred in upholding them.
That said, however, the nullity of Memorandum Order No. 98-V-05
and the December 1, 1997 Resolution/Recommendation leaves
Administrative Case No. 96-04 unresolved. Although the Court may
already decide said case based on the records before us, the better
policy is for us to defer to the prerogative granted under Section
17,65 Rule 3 of the Rules of Court, to the primary disciplining

authority, the incumbent mayor of Cadiz City,66 whether or not to

pursue said administrative case.
WHEREFORE, the petition is GRANTED. The Court of Appeals Joint
Decision dated October 15, 2002 and Resolution dated October 1,
2003 are REVERSED and SET ASIDE only insofar as Benjamin B.
Geronga is concerned; Civil Service Commission Resolution No.
992107 dated September 17, 1999 and Resolution No. 000715
dated March 21, 2000 are ANNULLED. The December 1, 1997
Resolution/Recommendation of Cadiz City Legal Officer Marcelo R.
del Pilar and Memorandum Order No. 98-V-05 of Cadiz City Mayor
Eduardo Varela in Administrative Case No. 96-04 are also
ANNULLED. Administrative Case No. 96-04 is REMANDED to the
incumbent city mayor of Cadiz City for proper disposition.
No costs.
SO ORDERED.
G.R. No. 181559

October 2, 2009

LEAH M. NAZARENO, CARLO M. CUAL, ROGELIO B. CLAMONTE,

FLORECITA M. LLOSA, ROGELIO S. VILLARUBIA, RICARDO M.
GONZALES, JR., ROSSEL MARIE G. GUTIERREZ, NICANOR F.
VILLAROSA, JR., MARIE SUE F. CUAL, MIRAMICHI MAJELLA B.
MARIOT, ALMA F. RAMIREZ, ANTOLIN D. ZAMAR, JR., MARIO S.
ALILING, TEODULO SALVORO, JR., PHILIP JANSON ALTAMARINO,
ANTONIETTA PADURA, ADOLFO R. CORNELIA, IAN RYAN PATULA,
WILLIAM TANOY, VICTOR ARBAS, JEANITH CUAL, BRAULIO SAYSON,
DAWN M. VILLAROSA, AGUSTIN A. RENDOQUE, ENRIQUETA
TUMONGHA, LIONEL P. BANOGON, ROSALITO VERGANTINOS, MARIO
T. CUAL, JR., ELAINE MAY TUMONGHA, NORMAN F. VILLAROSA,
RICARDO C. PATULA, RACHEL BANAGUA, RODOLFO A.
CALUGCUGAN, PERGENTINO CUAL, BERNARD J. OZOA, ROGER JOHN
AROMIN, CHERYL E. NOCETE, MARIVIC SANCHEZ, CRISPIN DURAN,
REBECO LINGCONG, ANNA LEE ESTRABELA, MELCHOR B.
MAQUILING, RAUL MOLAS, OSCAR KINIKITO, DARWIN B. CONEJOS,
ROMEL CUAL, ROQUETA AMOR, DISODADO LAJATO, PAUL PINO, LITO
PINERO, RODULFO ZOSA, JR. and JORGE ARBOLADO, Petitioners,
vs.
CITY OF DUMAGUETE, represented by CITY MAYOR AGUSTIN
PERDICES, DOMINADOR DUMALAG, JR., ERLINDA TUMONGHA,
JOSEPHINE MAE FLORES AND ARACELI CAMPOS, Respondents.
DECISION

DEL CASTILLO, J.:

The integrity and reliability of our civil service is, perhaps, never
more sorely tested than in the impassioned demagoguery of
elections. Amidst the struggle of personalities, ideologies, and
platforms, the vigor and resilience of a professional civil service can
only be preserved where our laws ensure that partisanship plays no
part in the appointing process. Consequently, we affirm the validity
of a regulation issued by the Civil Service Commission (CSC or the
Commission) intended to ensure that appointments and promotions
in the civil service are made solely on the basis of qualifications,
instead of political loyalties or patronage.
This Petition for Review on Certiorari filed under Rule 45 of the
Rules of Court seeks to reverse the Decision1 of the Court of
Appeals dated August 28, 2007 and its Resolution2 dated January
11, 2008 in CA-G.R. CEB-SP No. 00665. The case stemmed from
CSC Field Offices invalidation of petitioners appointments as
employees of the City of Dumaguete, which was affirmed by the
CSC Regional Office, by the Commission en banc and by the Court
of Appeals.
Legal and Factual Backgrounds
Accreditation of Dumaguete City by the Civil Service Commission
On October 25, 1999, pursuant to the Commissions Accreditation
Program, the CSC issued Resolution No. 992411,3 which granted
the City Government of Dumaguete the authority to take final
action on all its appointments, subject to, inter alia, the following
conditions:
1. That the exercise of said authority shall be subject to Civil
Service Law, rules and regulations and within the limits and
restrictions of the implementing guidelines of the CSC Accreditation
Program as amended (MC No. 27, s. 1994);
xxxx
5. That appointments issued under this authority shall be subject to
monthly monitoring by the [Civil Service Field Office] CSFO
concerned;
xxxx

9. That appointments found in the course of monthly monitoring to

have been issued and acted upon in violation of pertinent rules,
standards, and regulations shall immediately be invalidated by the
Civil Service Regional Office (CSRO), upon recommendation by the
CSFO.
Appointments made by outgoing Mayor Remollo
Then Dumaguete City Mayor Felipe Antonio B. Remollo sought reelection in the May 14, 2001 elections, but lost to respondent
Mayor Agustin R. Perdices. Thereafter, on June 5, 7, and 11, 2001,
outgoing Mayor Remollo promoted 15 city hall employees, and
regularized another 74 city hall employees, including the herein 52
petitioners.
On July 2, 2001, Mayor Perdices publicly announced at the flag
raising ceremony at the Dumaguete City Hall grounds that he
would not honor the appointments made by former Mayor Remollo.
On the same day, he instructed the City Administrator, respondent
Dominador Dumalag, Jr., to direct respondent City Assistant
Treasurer Erlinda C. Tumongha (now deceased), to refrain from
making any cash disbursements for payments of petitioners' salary
differentials based on their new positions.
The Petition for Mandamus before the Regional Trial Court of
Dumaguete City
Thus, on August 1, 2001, petitioners filed a Petition for Mandamus
with Injunction and Damages with Prayer for a Temporary
Restraining Order against the City of Dumaguete, represented by
respondent city mayor Perdices and city officers Dumalag,
Tumongha, Josephine Mae Flores, and Araceli Campos. The petition
was docketed as Civil Case No. 13013, and raffled to Branch 41 of
the Regional Trial Court of Dumaguete City. Petitioners sought the
issuance of a writ of preliminary injunction to enjoin respondents
from taking any action or issuing any orders nullifying their
appointments.
In a Decision4 dated March 27, 2007, the Regional Trial Court
dismissed the petition; petitioners Motion for Reconsideration was
also denied in an Order5 dated April 26, 2007. The issues involved
in Civil Case No. 13013 have twice been elevated to and eventually
resolved by the Court in G.R. Nos. 1777956 and 168484.7
Revocation of Appointments by the Civil Service Commission Field
Office

Relative to this main case, on August 1, 2001, the CSC Field Office
in Dumaguete City, through Director II Fabio R. Abucejo, revoked
and invalidated the appointments of the petitioners (the August 1,
2001 Order) based of the following findings:
1. There were a total of 15 promotional appointments and 74
original appointments issued as reflected in the submitted [Report
of Personnel Actions] ROPA for the month of June 2001.
2. There was only one (1) en banc meeting of the City Personnel
Selection Board (PSB) held on 5 June 2001 to consider the number
of appointments thus issued and there was no other call for a PSB
meeting certified to by the City [Human Resource Management
Officer] HRMO.
3. There were no minutes available to show the deliberations of the
PSB of the 89 appointments listed in the ROPA as certified by the
City HRMO.
4. There were no PSB statements certifying that there was actual
screening and evaluation done on all candidates for each position.
5. The appointing officer of the 89 appointments was an outgoing
local official who lost during the 14 May 2001 elections for City
Mayor of Dumaguete City.
6. The 89 appointments were all issued after the elections and
when the new city mayor was about to assume office.8
Director Abucejo invalidated the appointments as the same were
done in violation of CSC Resolution No. 010988 dated June 4, 2001,
the pertinent portions of which provide:
WHEREAS, the May 14, 2001 national and local elections have just
concluded and the Commission anticipates controversies that
would arise involving appointments issued by outgoing local chief
executives immediately before or after the elections;
WHEREAS, the Commission observed the tendency of some
outgoing local chief executives to issue appointments even after
the elections, especially when their successors have already been
proclaimed.
WHEREAS, the practice of some outgoing local chief executives
causes animosities between the outgoing and incoming officials

and the people who are immediately affected and are made to
suffer the consequences thereof are the ordinary civil servants, and
eventually, to a large extent, their constituents themselves;
WHEREAS, one of the reasons behind the prohibition in issuing
appointments or hiring new employees during the prohibited period
as provided for in CSC Memorandum Circular No. 7, series of 2001,
is to prevent the occurrence of the foregoing, among others;9
WHEREAS, local elective officials whose terms of office are about to
expire, are deemed as "caretaker" administrators who are duty
bound to prepare for the smooth and orderly transfer of power and
authority to the incoming local chief executives;
WHEREAS, under Section 15, Article VII of the Constitution, the
President or Acting President is prohibited from making
appointments two (2) months immediately before the next
presidential elections and up to the end of his term, except
temporary appointments to executive positions when continued
vacancies therein will prejudice public service or endanger public
safety;
WHEREAS, while there is no equivalent provision in the Local
Government Code of 1991 (Republic Act 7160) or in the Civil
Service Law (Book V of Executive Order No. 292) of the
abovestated prohibition, the rationale against the prohibition on the
issuance of "midnight appointments" by the President is applicable
to appointments extended by outgoing local chief executives
immediately before and/or after the elections;
xxxx
NOW THEREFORE, the Commission, pursuant to its constitutional
mandate as the control personnel agency of the government,
hereby issues and adopts the following guidelines:
xxxx
3. All appointments, whether original, transfer, reemployment,
reappointment, promotion or demotion, except in cases of renewal
and reinstatement, regardless of status, which are issued AFTER
the elections, regardless of their dates of effectivity and/or date of
receipt by the Commission, including its Regional or Field Offices, of
said appointments or the Report of Personnel Actions (ROPA) as the

case may be, shall be disapproved unless the following requisites

concur relative to their issuance:
a) The appointment has gone through the regular screening by the
Personnel Selection Board (PSB) before the prohibited period on the
issuance of appointments as shown by the PSB report or minutes of
its meeting;
b) That the appointee is qualified;
c) There is a need to fill up the vacancy immediately in order not to
prejudice public service and/or endanger public safety;
d) That the appointment is not one of those mass appointments
issued after the elections.
4. The term "mass appointments" refers to those issued in bulk or
in large number after the elections by an outgoing local chief
executive and there is no apparent need for their immediate
issuance.
On September 4, 2001, petitioners filed a Motion for
Reconsideration of the August 1, 2001 Order before the CSC Region
VII Office in Cebu. The motion was, however, denied on the ground
that it should have been filed before the office of Director Abucejo
in Dumaguete City. Thereafter, on October 31, 2001, petitioners
asked the CSC Region VII Office in Cebu to treat their previous
Motion for Reconsideration as their appeal.1avvphi1
On February 14, 2002, the CSC Region VII Office affirmed the
August 1, 2001 Order. Subsequently, an Appeal to the Commission
en banc was filed through registered mail by 52 of the original 89
appointees, the petitioners herein, namely:
On August 23, 2004, the CSC en banc issued Resolution No. 040932
denying petitioners' appeal, and affirming the invalidation of their
appointments on the ground that these were mass appointments
made by an outgoing local chief executive.10 The Commission
explained:
The rationale behind the prohibition in CSC Resolution No. 01-0988
is not hard to comprehend. The prohibition is designed to
discourage losing candidates from extending appointments to their
protgs or from giving their constituents "promised" positions
(CSC Resolution No. 97-0317 dated January 17, 1997, Re: Roldan B.
Casinillo). Moreover, the same is intended to prevent the outgoing

local chief executive from hurriedly issuing appointments which

would subvert the policies of the incoming leadership. Thus, any
means that would directly or indirectly circumvent the purposes for
which said Resolution was promulgated should not be allowed,
particularly when the appointments were issued by the appointing
authority who lost in said election.
Petitioners filed a Motion for Reconsideration which was denied by
the Commission on April 11, 2005, through CSC Resolution No.
050473.
Petitioners then filed a petition for review before the Court of
Appeals, which was docketed as CA-G.R. CEB-SP No. 00665. On
August 28, 2007, the Court of Appeals denied the appeal and
affirmed CSC Resolution No. 040932 dated August 23, 2004 and
CSC Resolution No. 050473 dated April 11, 2005, ratiocinating that:
The spirit behind CSC Resolution No. 010988 is evident from its
preamble. It was issued to thwart the nefarious practice by
outgoing local chief executives in making appointments before,
during, and/or after the regular local elections for ulterior partisan
motives. Said practice being analogous to "midnight appointments"
by the President or Acting President, the CSC then promulgated
Resolution No. 010988, to suppress the mischief and evils
attributed to "mass appointments" made by local chief executives.
Petitioners Motion for Reconsideration was denied by the Court of
Appeals in a Resolution dated January 11, 2008.
The Parties Arguments
Before us, petitioners maintain that CSC Resolution No. 010988 is
invalid because the Commission is without authority to issue
regulations prohibiting mass appointments at the local government
level. Petitioners cite De Rama v. Court of Appeals11 which held
that Section 15, Article VII of the Constitution is only applicable to
the President or Acting President. They claim that outgoing or
defeated local appointing authorities are authorized to make
appointments of qualified individuals until their last day in office,
and that not all mass appointments are invalid. Finally, petitioners
claim that because Dumaguete City had been granted authority to
take "final action" on all appointments, the Commission did not
have any authority to disapprove the appointments made by
outgoing mayor Remollo.

In their Comment dated May 15, 2008,12 respondents argue that

petitioners appointments violated civil service rules and
regulations other than CSC Resolution No. 010988. Respondents
also assert that the Commission is authorized to invalidate the
petitioners appointments, because the CSC accreditation program
carried with it the caveat that "said exercise of authority shall be
subject to Civil Service law, rules and regulations." Finally,
respondents claim that petitioners were guilty of forum shopping
because the issues in this case and in G.R. No. 177795 are the
same.
Our Ruling
We find that the Civil Service Commission has the authority to issue
CSC Resolution No. 010988 and that the invalidation of petitioners
appointments was warranted. Consequently, we affirm the Decision
of the Court of Appeals dated August 28, 2007 and its Resolution
dated January 11, 2008 in CA-G.R. CEB-SP No. 00665.
The CSC has the authority to establish rules to promote efficiency
in the civil service
The Commission, as the central personnel agency of the
government,13 has statutory authority to establish rules and
regulations to promote efficiency and professionalism in the civil
service. Presidential Decree No. 807,14 or the Civil Service Decree
of the Philippines, provides for the powers of the Commission,
including the power to issue rules and regulations and to review
appointments:
Section 9: Powers and functions of the Commission The
Commission shall administer the Civil Service and shall have the
following powers and functions:
(b) Prescribe, amend, and enforce suitable rules and regulations for
carrying into effect the provisions of this Decree x x x
(c) Promulgate policies, standards, and guidelines for the Civil
Service and adopt plans and programs to promote economical,
efficient, and effective personnel administration in the government;
(h) Approve all appointments, whether original or promotional, to
positions in the civil service, except those of presidential
appointees, members of the armed forces of the Philippines, police
forces, firemen, and jailguards, and disapprove those where the
appointees do not possess the appropriate eligibility or required
qualifications; (Emphasis supplied)

Executive Order No. 292, or the Administrative Code of 1987, also

provides:
Section 12: Powers and Functions The Commission shall have the
following powers and functions:
(2) prescribe, amend, and enforce rules and regulations for carrying
into effect the provisions of the Civil Service Law and other
pertinent laws;
(3) promulgate policies, standards, and guidelines for the Civil
Service and adopt plans and programs to promote economical,
efficient, and effective personnel administration in the government;
(4) take appropriate action on all appointments and other personnel
matters in the Civil Service including extension of Service beyond
retirement age;
(5) inspect and audit the personnel actions and programs of the
departments, agencies, bureaus, offices, local government units,
and other instrumentalities of the government, including
government owned and controlled corporations. (emphasis
supplied)
Clearly, the above-cited statutory provisions authorize the
Commission to "prescribe, amend, and enforce" rules to cover the
civil service. The legislative standards to be observed and
respected in the exercise of such delegated authority are set out in
the statutes, to wit: to promote "economical, efficient, and effective
personnel administration."
The Reasons behind CSC Resolution No. 010988
We also find that there was substantial reason behind the issuance
of CSC Resolution No. 010988. It is true that there is no
constitutional prohibition against the issuance of "mass
appointments" by defeated local government officials prior to the
expiration of their terms. Clearly, this is not the same as a
"midnight appointment," proscribed by the Constitution, which
refers to those appointments made within two months immediately
prior to the next presidential election.15 As we ruled in De Rama v.
Court of Appeals:16
The records reveal that when the petitioner brought the matter of
recalling the appointments of the fourteen (14) private respondents
before the CSC, the only reason he cited to justify his action was
that these were midnight appointments that are forbidden under
Article VII, Section 15 of the Constitution. However, the CSC ruled,
and correctly so, that the said prohibition applies only to
presidential appointments. In truth and in fact, there is no law that

prohibits local elective officials from making appointments during

the last days of his or her tenure.
However, even while affirming De Rama, we explained in Quirog v.
Aumentado,17 that:
We, however, hasten to add that the aforementioned ruling does
not mean that the raison d' etre behind the prohibition against
midnight appointments may not be applied to those made by chief
executives of local government units, as here. Indeed, the
prohibition is precisely designed to discourage, nay, even preclude,
losing candidates from issuing appointments merely for partisan
purposes thereby depriving the incoming administration of the
opportunity to make the corresponding appointments in line with its
new policies. (Emphasis supplied)
Quirog also involved the disapproval of an appointment for noncompliance with CSC Resolution No. 010988. However, we found
that Quirogs appointment was made on June 1, 2001, or three days
prior to the issuance of CSC Resolution No. 010988. As such, we
ruled that the retroactive application of the law was not warranted.
In Sales v. Carreon, Jr.,18 we had occasion to discuss the reasons
behind the prohibition by the Commission of mass appointments
after the elections. Sales involved the issuance of 83 appointments
made by then Dapitan City Mayor Joseph Cedrick O. Ruiz in his last
month of office (on June 1, 18, and 27, 2001), which the newly
elected Mayor, Rodolfo H. Carreon, subsequently revoked, on the
ground that these violated CSC Resolution No. 010988 in relation to
CSC Memorandum Circular No. 7, Series of 2001, imposing a ban on
issuing appointments in the civil service during the election period.
In Sales, we declared:
This case is a typical example of the practice of outgoing local chief
executives to issue "midnight" appointments, especially after their
successors have been proclaimed. It does not only cause
animosities between the outgoing and the incoming officials, but
also affects efficiency in local governance. Those appointed tend to
devote their time and energy in defending their appointments
instead of attending to their functions.19
It is not difficult to see the reasons behind the prohibition on
appointments before and after the elections. Appointments are
banned prior to the elections to ensure that partisan loyalties will
not be a factor in the appointment process, and to prevent
incumbents from gaining any undue advantage during the

elections. To this end, appointments within a certain period of time

are proscribed by the Omnibus Election Code and related
issuances.20 After the elections, appointments by defeated
candidates are prohibited, except under the circumstances
mentioned in CSC Resolution No. 010988, to avoid animosities
between outgoing and incoming officials, to allow the incoming
administration a free hand in implementing its policies, and to
ensure that appointments and promotions are not used as a tool for
political patronage or as a reward for services rendered to the
outgoing local officials.
Not all Mass Appointments are Prohibited
Indeed, not all appointments issued after the elections by defeated
officials are invalid. CSC Resolution No. 010988 does not purport to
nullify all "mass appointments." However, it must be shown that
the appointments have undergone the regular screening process,
that the appointee is qualified, that there is a need to fill up the
vacancy immediately, and that the appointments are not in bulk. In
Nazareno v. Dumaguete,21 we explained:
CSC Resolution No. 010988 does not totally proscribe the local chief
executive from making any appointments immediately before and
after elections. The same Resolution provides that the validity of an
appointment issued immediately before and after elections by an
outgoing local chief executive is to be determined on the basis of
the nature, character, and merit of the individual appointment and
the particular circumstances surrounding the same.
Corollarily, we held in Sales,22 that:
x x x [e]ach appointment must be judged on the basis of the
nature, character, and merits of the individual appointment and the
circumstances surrounding the same. It is only when the
appointments were made en masse by the outgoing administration
and shown to have been made through hurried maneuvers and
under circumstances departing from good faith, morality, and
propriety that this Court has struck down "midnight" appointments.
In the instant case, Mayor Remollo issued the 89 original and
promotional appointments on three separate dates, but within a
ten-day period, in the same month that he left office.23 Further, the
Commissions audit found violations of CSC rules and regulations
that justified the disapproval of the appointments. In this regard,
CSC Memorandum Circular No. 40, otherwise known as the Revised
Rules on Appointments and Other Personnel Actions, provides:

Section 1 Appointments submitted to the CSC office concerned

should meet the requirements listed hereunder. Non-compliance
with such requirements shall be grounds for disapproval of said
appointments:
xxxx
(h) Personnel Selection Board (PSB) Evaluation/Screening.
Appointees should be screened and evaluated by the PSB, if
applicable. As proof thereof, a certification signed by the Chairman
of the Board at the back of the appointment or alternatively, a copy
of the proceedings/ minutes of the Boards deliberation shall be
submitted together with the appointment. The issuance of the
appointment shall not be earlier than the date of the final
screening/deliberation of the PSB.
Here, there was only one en banc meeting of the city PSB to
consider the appointments, without any evidence that there were
any deliberations on the qualifications of the petitioners, or any
indication that there was an urgent need for the immediate
issuance of such appointments. The absence of evidence showing
careful consideration of the merits of each appointment, and the
timing and the number of appointments, militate against
petitioners cause. On the contrary, the prevailing circumstances in
this case indicate that the appointments were hurriedly issued by
the outgoing administration.
The Accreditation of Dumaguete City did not remove the CSCs
authority to review appointments
We find that the authority granted by CSC Resolution No. 992411 to
the City Government of Dumaguete to "take final action" on all its
appointments did not deprive the Commission of its authority and
duty to review appointments. Indeed, Resolution No. 992411 states
that such exercise of authority shall be "subject to civil service law,
rules and regulations" and that appointments in violation of
pertinent rules "shall immediately be invalidated."
Moreover, Section 20, Rule VI of the Omnibus Rules Implementing
Book V of Executive Order No. 292 provides that notwithstanding
the initial approval of an appointment, the same may be recalled
for "[v]iolation of other existing Civil Service laws, rules and
regulations." The CSC is empowered to take appropriate action on
all appointments and other personnel actions and that such power
"includes the authority to recall an appointment initially approved

in disregard of applicable provisions of Civil Service law and

regulations."24
Petitioners have not engaged in forum shopping
The essence of forum-shopping is the filing of multiple suits
involving the same parties for the same cause of action, either
simultaneously or successively, for the purpose of obtaining a
favorable judgment.25 Forum-shopping has been defined as the act
of a party against whom an adverse judgment has been rendered in
one forum, seeking and possibly getting a favorable opinion in
another forum, other than by appeal or the special civil action of
certiorari, or the institution of two or more actions or proceedings
grounded on the same cause on the supposition that one or the
other court would make a favorable disposition.26
Although the factual antecedents of the cases brought before this
Court are the same, they involve different issues. The petition for
Mandamus with Injunction and Damages, docketed as Civil Case
No. 13013, and raised before this Court as G.R. No. 177795,
challenged respondents refusal to recognize petitioners
appointments and to pay petitioners salaries, salary adjustments,
and other emoluments. The petition only entailed the applications
for the issuance of a writ of mandamus and for the award of
damages. The present case docketed as G.R. No. 181559, on the
other hand, involves the merits of petitioners appeal from the
invalidation and revocation of their appointments by the CSC-Field
Office, which was affirmed by the CSC-Regional Office, CSC en
banc, and the Court of Appeals.
In any event, this issue had already been settled in our Decision of
June 19, 2009 in G.R. No. 177795, which found petitioners not guilty
of forum shopping, to wit:
True, that the [Petition in G.R. No. 177795] and the one in G.R. No.
181559 are interrelated, but they are not necessarily the same for
this Court to adjudge that the filing of both by petitioners
constitutes forum shopping. In G.R. No. 181559, the Court will
resolve whether or not the petitioners appointments are valid. [In
G.R. No. 177795], petitioners are claiming a right to the salaries,
salary adjustments and other emoluments during the pendency of
the administrative cases, regardless of how the CSC decided the
validity of their appointments.
WHEREFORE, the petition is DENIED for lack of merit. The Court of
Appeals Decision in CA-G.R. CEB-SP No. 00665 dated August 28,

2007 affirming CSC Resolution No. 040932 dated August 23, 2004
and CSC Resolution No. 050473 dated April 11, 2005, and its
Resolution dated January 11, 2008 denying the Motion for
Reconsideration are AFFIRMED.
SECTION 3. The Civil Service Commission, as the central personnel
agency of the Government, shall establish a career service and
adopt measures to promote morale, efficiency, integrity,
responsiveness, progressiveness, and courtesy in the civil service.
It shall strengthen the merit and rewards system, integrate all
human resources development programs for all levels and ranks,
and institutionalize a management climate conducive to public
accountability. It shall submit to the President and the Congress an
annual report on its personnel programs.
14 Providing For The Organization Of The Civil Service Commission
In Accordance With Provisions Of The Constitution, Prescribing Its
Powers And Functions And For Other Purposes (October 6, 1975).
15 Article VII, Section 15 of the 1987 Philippine Constitution
provides:
Two months immediately before the next presidential elections and
up to the end of his term, a President or Acting President shall not
make appointments, except temporary appointments to executive
positions when continued vacancies therein will prejudice public
service or endanger public safety.
(g) Appointment of new employees, creation of new position,
promotion, or giving salary increases During the period of forty
five (45) days before regular election and thirty days before a
special election (1) any head, official or appointing officer of a
government office, agency or instrumentality, whether national or
local, including government-owned or controlled corporations, who
appoints or hires any new employee, whether provisional,
temporary or casual, or creates and fills any new position, except
upon prior authority of the Commission. The Commission shall not
grant the authority sought unless, it is satisfied that the position to
be filled is essential to the proper functioning of the office or
agency concerned, and that the position shall not be filled in a
manner that may influence the election.
As an exception to the foregoing provisions, a new employee may
be appointed in case of urgent need; Provided, however, That
notice of the appointment shall be given to the Commission within

three days from the date of the appointment. Any appointment or

hiring in violation of this provision shall be null and void.
COMELEC Resolution No. 3401, entitled Enforcement Of The
Prohibition Against Appointment Or Hiring Of New Employees;
Creation Or Filling Up Of New Positions, Giving Salary Increases;
Transferring/Detailing Civil Service Employees; And Suspension Of
Elective Local Officials In Connection With The May 14, 2001
Elections (15 December 2000), also prohibited appointments prior
to the elections:
SECTION 1. Prohibited Acts
(b) Beginning March 30, 2001 until May 14, 2001, no head, official
or appointing officer of any national or local government office,
agency or instrumentally, including government owned or
controlled corporation shall: (1) appoint or hire any new employee,
whether permanent, provisional, temporary or casual; or (2) create
and fill any new positions, except upon prior authority of the
Commission.
G.R. No. L-47756

June 10, 1941

LUIS OCAMPO, petitioner,vs.THE PEOPLE OF THE PHILIPPINES,

respondent.
Charged with one Igmedia Refe of the crime of concubinage in the
Court of First Instance of Albay, petitioner Luis Ocampo was found
guilty and sentenced to an indeterminate penalty of from six (6)
months of arresto mayor to two (2) years, eleven (11) months and
ten (10) days of prision correccional, and to the accessories of the
law. This judgment was affirmed by the Court of Appeals.
The illicit relations between petitioner Luis Ocampo and his
coaccused Igmedia Refe began in 1937. In September of that year,
petitioner with Igmedia went to Naga where they dwelt together as
husband and wife in the same house and where often seen
together attending shows and dances. In October of the same year,
they went for a thermal bath in Tiwi, Albay, where, in the first visit,
they stayed for three days, and in the second, for four days. During
their entire stay, they dwelt together as husband wife in the house
of one Alfonsa Toledo, occupying one room where they slept alone.
The legal question raised in this appeal is whether, on the basis of
the foregoing facts, petitioner may properly be held guilty of
concubinage.

Under the provisions of article 334 of the Revised Penal Code,

concubinage may be committed in either of the following ways:(1)
by keeping a mistress in the conjugal dwelling; (2) by having sexual
intercourse, under scandalous circumstances, with a woman who is
not his wife; and (3) by cohabiting with such woman in any other
place.
We are here concerned only with the third way of committing the
offense under which petitioner was convicted. The term "cohabit"
means to dwell together, in the manner of husband and wife, for
some period of time, as distinguished from occasional, transient
interviews for unlawful intercourse. (People vs. Pitoc, 43 Phil., 758.)
And, whether an association, for illicit intercourse, has been such as
to constitute an unlawful assumption of the conjugal relation, is, in
every case a question of fact (74 A. L. R., 1363), and the extent of
such association as to constitute a cohabitation within the meaning
of the law, is a matter of court's appreciation.

On 22 May 1996, petitioner Nomer Ocampo, Elmer Miranda, and

Danilo Cruz were charged with the crime of robbery with physical
injuries. The Information reads:
That on or about the 14th day of November 1995, at around 8:15
oclock in the evening, in Barangay San Nicolas I, Municipality of
Magalang, Province of Pampanga, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused,
conspiring and confederating together and mutually
helping one another, did then and there willfully, unlawfully and
feloniously, with intent of gain and by means of force and
intimidation grab one Rommel Q. Misayah by the neck and armed
with a bladed weapon attack the latter, inflicting upon him physical
injuries which required and did require medical attendance, and on
the occasion thereof, accused in furtherance of their intent to gain
did then and there willfully, unlawfully and feloniously take, steal
and carry away with them the following, to wit:

In the instant case, petitioner's conduct with his coaccused was not
confined to isolated interviews for unlawful intercourse. He and his
coaccused dwelt together as husband and wife in the same house
in Naga, Camarines Sur, where they were seen attending shows
and dances; again, in Tiwi, Albay, they dwelt together as husband
and wife in the same house for seven days and nights where they
slept together and alone in one room. We are of the opinion and so
hold that such association is sufficient to constitute a cohabitation
within the meaning of the law even disregarding proofs of actual
sexual intercourse.

a) One (1) Icom radio . . . P4,500.00

b) Two (2) T-shirts . . . 350.00
c) A pair of maong pants . . . 345.00
d) A clutch bag . . . 150.00
e) Cash . . . 29,000.00

Petitioner maintains that the letter (Exhibit 2) sent to him by

complainant in the latter part of June, 1937, constitutes consent to
his illicit relations and is, therefore, a condonation within the
provisions of the second paragraph of article 344 of the Revised
Penal Code. The letter was construed by the trial court under the
facts and circumstances of the case as not constituting consent or
condonation, and this finding has not been reversed by the Court of
Appeals. At this stage of the proceeding we cannot review the
finding which involves questions of fact.

CONTRARY TO LAW.1

Judgment is affirmed, with costs against petitioner.

G.R. No. 163705
July 30, 2007
NOMER OCAMPO, Petitioner,vs.PEOPLE OF THE PHILIPPINES,
Respondent.

with a total value of THIRTY FOUR THOUSAND THREE HUNDRED

FORTY FIVE (P34,345.00) PESOS, Philippine Currency, belonging to
and owned by the said Rommel Q. Misayah, to the damage and
prejudice of the owner, in the afore-said [sic] amount.

Records show that there was an Amended Information2 dated 17

July 1996 changing the crime charged to Robbery with Violence and
Intimidation against all of the accusedOcampo, Cruz and Miranda.
Arraignment ensued on 19 July 19963 where all of the accused
pleaded not guilty. Accused Cruz jumped bail during the pendency
of the trial and was tried in absentia.4
The prosecution presented and offered the testimony of Rommel Q.
Misayah and several documentary evidence.
Misayah testified that on 14 November 1995, at around 8:10 p.m.,
he was walking along San Nicolas Street on his way home when
three male individuals approached him.5 As the place was
sufficiently lighted by a nearby post, he was able to identify the trio

as accused Cruz, Ocampo and Miranda. When the three accused

were already near him, Cruz grabbed Misayahs neck and choked
him while Miranda held his shoulder and got his shoulder bag.6
Ocampo meanwhile was in the middle, holding a knife, warning him
not to fight back. Sensing that he would be harmed anyway,
Misayah fought back by pushing the hands of the accused and
trying to parry their blows. He and Cruz then fell on the ground with
Cruz on top of him. When the handle of his shoulder bag snapped,
all of the accused ran away with the shoulder bag.7
By reason of the incident, Misayah sustained wounds in his hands
caused by the bladed weapon held by Ocampo when he attempted
to evade Ocampos blows.8 The shoulder bag taken from Misayah
contained the items enumerated in the aforequoted Information.
At the nearby Municipal Hall, Misayah reported the incident to
Police Officers de Leon, Mon Mendoza, and Catalino Mutuc.9
Misayah was brought to Balitucan Emergency Hospital for
treatment and thereafter proceeded to the precinct. After further
investigation, he then executed a statement before Sr/Insp.
Catalino Mutuc and SPO4 de Leon.
In their defense, accused Ocampo, Miranda, and another witness,
Oliver Santos, gave their version of what happened that night.
Miranda testified that he was with Ocampo in the afternoon of 14
November 1995 to accompany the latter to borrow a wheelbarrow
from a certain Lut Ocampo.11 Miranda and Ocampo played chess
until 6:00 in the evening at Lut Ocampos place while waiting for
him to arrive. As they were leaving that place, they met Cruz.
Instead of proceeding home, Ocampo invited Miranda for a drink at
an establishment identified as "Irmas" and Cruz went along with
them. That was already about 7:30 in the evening. While on their
way to
Irmas, Cruz and Misayah "bumped each other and had an
altercation."12 Then Miranda informed his companions that he
would go ahead. Miranda was about one yard away from Cruz and
Misayah when he saw Cruz strangle Misayah. Claiming that he did
not want to get into trouble, he did not pacify Cruz and Misayah. He
hurriedly left and proceeded to Sally Felicianos house and stayed
there until 11:00 in the evening. As he was in a hurry to leave the
incident where the altercation happened, he did not notice what
happened to Ocampo.13

Ocampo, on his behalf, testified that he knew Misayah who has a

drug store in Magalang, Pampanga. At about 8:00 p.m. of 14
November 1995, he was walking with Miranda and Cruz on their
way to Vannies Restaurant when Cruz crossed the street and
approached Misayah.14 Ocampo and Miranda continued walking
when Ocampo saw Cruz choke Misayah and then have an exchange
of fist blows. Ocampo and Miranda did not assist Cruz as it was only
a brief fist fight. Ocampo saw Cruz run away while he and Miranda
were left behind. Ocampo and Miranda saw Misayah run towards
the Municipal Hall and the two proceeded to their respective
homes.15
Defense witness Oliver Santos who knew the three accused
testified that on the evening of 14 November 1995, he was at
Vannies videoke having a drinking spree with his friends. At 9:00
p.m., he asked leave from his friends to go ahead. While waiting for
a motorcycle ride outside of Vannies videoke, he saw Cruz and
Misayah, whom he knew as the owner of a drug store, acting as if
they were strangling each other. The fight took about a minute. He
did not bother to do anything because he was afraid and also
because fighting was a common incident in that area.16 Santos
was somewhat inebriated when he witnessed the incident as he
had consumed one (1) pitcher of draft beer. However, he still
recognized the faces of Misayah and Cruz. On that occasion, he
also saw Ocampo and Miranda walking towards the town proper.17
All three accused were convicted by the trial court in a decision18
dated 31 May 2000, which held:
WHEREFORE, finding the three (3) accused, Danilo Cruz, Nomer
Ocampo and Elmer Miranda @ Mitoy guilty beyond reasonable
doubt of the crime of Robbery with Physical Injuries defined and
penalized under Article 294 (5) of the Revised Penal Code, with the
presence of an aggravating circumstance of conspiracy, they are
hereby sentenced to suffer each an imprisonment in an
indeterminate penalty of from [sic] eight (8) years to twenty one
(21) days of prision mayor, as minimum, to ten (10) years of prision
mayor, as maximum, and to indemnify the complainant Rommel Q.
Misayah the amount of P34,345.00 without subsidiary
imprisonment in case of insolvency.
SO ORDERED.
Ocampo and Miranda appealed their conviction to the Court of
Appeals. However, in its decision19 dated 10 February 2004, the

Court of Appeals affirmed with modification the trial courts

decision, stating thus:
As to the penalty, the crime of robbery with violence against
persons is penalized under par. 5, Article 294 of the Revised Penal
Code by prision correccional maximum to prision mayor medium.
Considering the attendant aggravating circumstance of abuse of
superior strength (not conspiracy as ruled by the trial court), which
is not offset by any mitigating circumstance, the penalty should be
imposed in its maximum period, which is prision mayor medium or
from eight (8) years and one (1) day to ten (10) years. Applying the
Indeterminate Sentence Law, the minimum of the imposable
penalty shall be the penalty next lower in degree which is arresto
mayor maximum to prision correccional medium, in any of its
periods, or from four (4) months and one (1) day to four (4) years
and two (2) months. Thus, appellants should have been meted the
indeterminate penalty of from [sic] 4 years and two months of
prision correccional, as minimum, to eight (8) years of prision
mayor medium, as maximum.
WHEREFORE, the judgment appealed from is hereby AFFIRMED with
the MODIFICATION that the accused-appellants are hereby
sentenced to suffer the indeterminate penalty of from [sic] four (4)
years and two months of prision correccional, as minimum to eight
(8) years of prision mayor, as maximum. Costs against appellants,
SO ORDERED.20
Miranda did not challenge the affirmance of his conviction by the
Court of Appeals. On the other hand, Ocampo filed a Motion for
Reconsideration21 which was denied through a Resolution dated 20
May 2004.22 Ocampo alone then filed the present Petition for
Review on Certiorari.23
Ocampo argues that the appellate court erred in finding him
criminally liable because: (i) Misayahs testimony was
uncorroborated; (ii) it was unbelievable that Misayah would just
walk on a slightly lighted street when he is carrying a considerable
amount of cash and other items; (iii) there was no clear record that
the prosecution presented any of the police officers who
apprehended and investigated petitioner; (iv) the court failed to
give credence to the testimony of Santos simply because he was
tipsy; (v) although Misayah claimed that he had been grabbed by
the neck, his medical certificate does not show any injury on the
neck or on the arm to confirm if he was indeed held by Miranda on
that part of his body; (vi) the examining doctor was not presented

to confirm the authenticity of the issued medical certificate and to

be cross-examined thereon; and (vii) it is very unlikely that
Misayahs shoulder bag could accommodate all the items he
claimed to have been contained therein. In sum, petitioner
reiterates that the prosecution failed to prove that he is guilty
beyond reasonable doubt of the crime for which he is being
charged.
Before proceeding to the merits of this case, certain observations
from the trial and appellate courts decisions have to be clarified.
The initial information filed by the prosecution in this case
designated the offense charged as Robbery with Physical
Injuries.24 This was later amended to Robbery with Violence and
Intimidation.25 Yet, the trial courts decision convicted the accused
of Robbery with Physical Injuries under Article 294 (5) of the
Revised Penal Code. The appellate court, on the other hand,
affirmed the conviction under Article 294 (5) but classified the
crime as robbery with violence against persons.
The variance in the assigned nomenclatures may give rise to the
false impression that robbery with physical injuries under Article
294 (5) of the Revised Penal Code is distinct from robbery with
intimidation as well as robbery with violence against persons. The
title or heading of Article 294 reads "Robbery with violence against
or intimidation of persons." Said heading is clearly the general
nomenclature given to all five (5) types of robbery enumerated
thereunder.26 Paragraphs 2 to 5 cover robbery with physical
injuries.27 Paragraph 5, in particular, defines what is known as
simple robbery. Simple robbery involves only slight or less serious
physical injuries.28 For conviction under this paragraph, the injury
inflicted should not fall within the categories provided for in
paragraphs 1 to 4 of Article 294. Thus, over and above the
dichotomy of the terms employed, it is certain and beyond dispute
that the three accused were tried for the crime under Article 294
(5) of the Revised Penal Code.
Now, to the merits.
The core of Ocampos arguments in this instant petition is that the
findings of the appellate court do not conform to the evidence on
record. It should be emphasized that factual matters cannot be
raised in a petition for review on certiorari before the Court as this
Court is limited to reviewing only questions of law.29 The findings
of fact of the trial court are binding upon this Court when affirmed

by the Court of Appeals.30 Exceptions to this rule are when the

findings of fact of the Court of Appeals are contrary to the findings
and conclusions of the trial court, or are not supported by the
evidence on record.31 Absent any ground to apply the exception to
this instant case, there is no reason, therefore, to disturb the
findings of the lower courts.
Petitioner claims it was erroneous for the appellate court to give
credence to Misayahs uncorroborated evidence because it failed to
establish where his money and other valuables came from and his
injuries did not conform to the nature of the attack made on him as
well.
Based on the records, we cannot see how and why the questions
raised by petitioner can cast doubt on the credibility of the
testimony of Misayah. As Misayah owns a drug store, it is not
unlikely that Misayah would have P29,000.00 cash in his possession
as he returned home from a days work. With respect to the injuries
suffered by Misayah, he stated in his cross examination that he
tried to parry the blows made by all the accused by the use of his
hands.32 Thus, it is believable that his hands would bear the brunt
of the blows. Further, Miranda himself admitted during his direct
examination that he "personally saw" Cruz strangle Misayah.33
Moreover, we give weight to the trial courts observation that
Misayah testified "in a straightforward manner" and positively
identified not only Cruz as the one who choked him but also the
other
two (2) accused.34 The testimony of a sole witness, though
uncorroborated, is sufficient for conviction if it is free from any sign
of impropriety or falsehood.35 The testimony of a lone eyewitness,
if found positive and credible by the trial court, is sufficient to
support a conviction especially when the testimony bears the
earmarks of truth and sincerity and had been delivered
spontaneously, naturally and in a straightforward manner.36
Indeed, the testimony of a single witness is sufficient and needs no
corroboration, save only in offenses where the law expressly
prescribes a minimum number of witnesses.37
On the lower courts disregard of defense witness Santoss
testimony, we have consistently held that where the credibility of
witnesses is an issue, the appellate court will generally not disturb
the findings of the trial court unless some facts and circumstances
may have been overlooked that may otherwise affect the result of
the

case.38 The Court accords deference to the trial courts appraisal

on a witnesss credibility, or lack thereof, because of its superior
advantage in observing the conduct and demeanor of the witness
while testifying.39 Given that the observation of the trial court with
respect to Santos is supported by evidence, there is no ground to
discredit the trial and appellate courts assessment of Santoss
testimony.
Petitioner likewise alleges that Misayahs testimony was filled with
inconsistencies such as his allegation that he immediately executed
an affidavit after the incident when in fact his affidavit was dated
20 November 1995 or six days after the incident. However, it is not
beyond reason if a victim like Misayah would immediately report
the incident but subsequently make a sworn statement days after
the incident especially when the victim, as did Misayah, suffered
injuries requiring medical attention. Moreover, the RTC records also
show that Misayah executed a separate sworn statement before
SPO1
Mutuc, investigator of Magalang Police Station, on 16 November
199540 and the prosecution submitted another affidavit by Misayah
taken before SPO2 Rivera41 in its formal offer of evidence. It is not
unlikely, therefore, that several affidavits were in fact executed by
Misayah in the days immediately following the incident.
Even as petitioner challenges the evidence of the prosecution, he
downplays the inconsistencies of the testimonies of the witnesses
for the defense. Said inconsistencies, particularly on the witnesses
accounts of what proceeded after the incident, are material and
have rendered their testimonies implausible. It is hard to believe
that there was a mere lapse of memory of either Miranda or
Ocampo on whether they were indeed left behind together or
whether one of them fled and the other was left behind even before
the departure of Cruz.42 Certainly, one cannot fail to observe or at
least recall later who was with whom considering the gravity of the
incident and the fact that only three of them were together that
evening.
More fundamentally, the defenses version of the incident is
contrary to human experience and behavior. As correctly pointed
out by the trial court:
It is incredible that accused Nomer Ocampo and Elmer Mirand[a]
have not done anything when their companion Danilo Cruz was in a

fight with complainant. The least they could do was to pacify the
two protagonists yet, they did not do this and

months of prision correccional, as minimum to eight (8) years of

prision mayor, as maximum. Costs against appellants.

they proceeded to go to their respective way home as if nothing

has happened. If indeed the incident happened so fast and that the
accused Danilo Cruz and complainant Rommel Misayah separated
immediately after that "sudden strangling" of each other" [sic], the
least that Ocampo and Miranda could do [sic] was to wait and ask
Cruz what happened. Yet, again, they did not do this. x x x x43

SO ORDERED.49

Evidence, to be believed, must not only proceed from the mouth of

a credible witness but must be credible in itself, such that the
common experience and observation of mankind can show it as
probable under the circumstances.44 And, the best test of the
credibility of a testimony is its compatibility with human
knowledge, observation and common experience of man.45
Whatever is repugnant to these standards becomes incredible and
lies outside of judicial cognizance.46
On the conspiracy aspect, it is worthy of note that while the Court
of Appeals in the body of its decision sustained the existence of
conspiracy as held by the lower court47 yet in the penultimate
paragraph of the decision as well as in the dispositive portion, it
ruled out the presence of conspiracy. Thus:
As to the penalty, the crime of robbery with violence against
persons is penalized under par. 5, Article 294 of the Revised Penal
Code by prision correccional maximum to prision mayor medium.
Considering the attendant aggravating circumstance of abuse of
superior strength (not conspiracy as ruled by the trial court),48
which is not offset by any mitigating
circumstance, the penalty should be imposed in its maximum
period, which is prision mayor medium or from eight (8) years and
one (1) day to ten (10) years. Applying the Indeterminate Sentence
Law, the minimum of the imposable penalty shall be the penalty
next lower in degree which is arresto mayor maximum to prision
correctional medium, in any of its periods, or from four (4) months
and one (1) day to four (4) years and two (2) months. Thus,
appellant should have been meted the indeterminate penalty of
from 4 years and two months of prision correccional, as minimum,
to eight (8) years of prision mayor medium, as maximum.
WHEREFORE, the judgment appealed from is hereby AFFIRMED with
the MODIFICATION that accused-appellants are hereby sentenced
to suffer the indeterminate penalty of from four (4) years and two

It is a well-settled rule that the dispositive portion of the decision

prevails over the opinion, the former being the final order while the
opinion is an informal expression of the views of the court, thus
forming no part of the judgment.50 Following this rule, the
appellate court thus found the presence of abuse of superior
strength as an aggravating circumstance but not conspiracy.
The appellate court is correct in ruling out conspiracy. The
existence of conspiracy cannot be presumed. The elements of
conspiracy must be proven beyond reasonable doubt.51 Conspiracy
must be shown to exist as clearly and convincingly as the
commission of the offense itself.52 Conspiracy exists when two or
more persons come to an agreement concerning the commission of
a felony and decide to commit it.53 It may be inferred from the
conduct of the accused before, during, and after the commission of
the crime. All taken together, however, the evidence therefor must
be reasonably strong enough to show a community of criminal
design.54
In the case at bar, there is no convincing evidence that all of the
accused had resolved to rob Misayah prior to the actual robbery.
What is evident is that the robbery that transpired was a spur of the
moment decision among the three accused. For one, Miranda and
Ocampo were consistent in their statement that they were on their
way to have a drink at the common time of the incident. For
another, they saw Misayah by chance. Still for another, there was
no evidence that all of the accused knew beforehand that Misayah
would be passing by the street where the robbery occurred that
fateful evening. Neither was it shown that the street was part of
Misayahs regular route on his way home.
According to Misayah in his testimony, Cruz grabbed his neck and
choked him while Miranda held his shoulder.1avvphi1 Ocampo
meanwhile was in the middle, holding a knife and warning him not
to fight back. While the evidence did not prove the existence of
conspiracy, it indelibly established that the accused took
advantage of their superior strength.55
Article 294, paragraph (5) of the Revised Penal Code fixes the
penalty for simple robbery at prision correccional in its maximum
period to prision mayor in its medium period, the range of which is

from four (4) years, two (2) months and one (1) day to ten (10)
years.56 Considering the aggravating circumstance of abuse of
superior strength, the penalty should be imposed in its maximum
period while the minimum shall be taken from the penalty next
lower in degree, which is arresto mayor maximum to prision
correccional medium in any of its periods, the range of which is four
(4) months and one (1) day to four (4) years and two (2) months.57
We note that the appellate courts decision did not order the
accused to indemnify Misayah the amount of P34,345.00. The
records do not show that this amount had already been paid
pursuant to the Decision of the trial court dated 31 May 2000. Thus,
we modify the appellate courts decision in this respect.
WHEREFORE, the decision dated 10 February 2004 of the Court of
Appeals is AFFIRMED with MODIFICATION. Accused Ocampo is
sentenced to the indeterminate penalty of four (4) years and two
(2) months of prision correccional as minimum to eight (8) years of
prision mayor as maximum. Petitioner Ocampo together with his
other co-accused Miranda and Cruz are ordered to indemnify
Rommel Q. Misayah the amount of P34,345.00 without subsidiary
imprisonment in case of insolvency. Costs against petitioner.

BANQUE, NUMERIANO B. MARIQUIT, and FEDERICO QUINIMON, and

THE PROVINCE OF MISAMIS OCCIDENTAL through the PROVINCIAL
BOARD OF MISAMIS OCCIDENTAL and its members, VICEGOVERNOR FLORENCIO L. GARCIA, BOARD MEMBERS MARIVIC S.
CHIONG, PACITA M. YAP, ALEGRIA V. CARINO, JULIO L. TIU,
LEONARDO R. REGALADO II, CONSTANCIO C. BALAIS, and ERNESTO
P. IRA, and THE COMMISSION ON AUDIT, through its Chairman, HON.
EUFEMIO DOMINGO, and THE DEPARTMENT OF LOCAL
GOVERNMENT through its Secretary, HON. LUIS SANTOS (now HON.
CESAR SARINO), and THE DEPARTMENT OF BUDGET AND
MANAGEMENT, through its Secretary, HON. GUILLERMO CARAGUE
(now HON. SALVADOR ENRIQUEZ), and The Hon. CATALINO
MACARAIG (now HON. FRANKLIN DRILON), EXECUTIVE SECRETARY
OFFICE OF THE PRESIDENT, respondents.
This is a petition for review of the decision dated March 4, 1992 of
the Regional Trial Court, Branch 14 of Oroquieta City, 1 affirming
the legal existence of the Municipality of Sinacaban in Misamis
Occidental and ordering the relocation of its boundary for the
purpose of determining whether certain areas claimed by it belong
to it.

G.R. No. 105746 December 2, 1996

The antecedent facts are as follows:

MUNICIPALITY OF JIMENEZ, through its MAYOR ELEUTERIO A.

QUIMBO, VICE-MAYOR ROBINSON B. LOMO, COUNCILORS TEOFILO
GALORIO, CASIANO ADORABLE, MARIO APAO, ANTONIO BIENES,
VEDE SULLANO, MARIETO TAN, SR., HERMINIO SERINO, BENJAMIN
DANO, and CRISPULO MUNAR, and ELEUTERIO A. QUIMBO,
ROBINSON B. LOMO, TEOFILO GALORIO, CASIANO ADORABLE,
MARIO APAO, ANTONIO BIENES, VEDE SULLANO, MARIETO TAN, SR.,
HERMINIO SERINO, BENJAMIN DANO, and CRISPULO MUNAR, in their
private capacities as taxpayer in the Province of Misamis Occidental
and in the Municipality of Jimenez, Misamis Occidental, and
BENJAMIN C. GALINDO and BENHUR B. BAUTISTA, in their private
capacities as taxpayers in the Province of Misamis Occidental and
the Municipality of Jimenez, Misamis Occidental, petitioners,

The Municipality of Sinacaban was created by Executive Order No.

258 of then President Elpidio Quirino, pursuant to 68 of the
Revised Administrative Code of 1917. The full text of the Order
reads:

vs.
HON. VICENTE T. BAZ, JR., Presiding Judge, REGIONAL TRIAL COURT,
BRANCH 14, 10th JUDICIAL REGION, OROQUIETA CITY, and
MUNICIPALITY OF SINACABAN through its MAYOR EUFRACIO D.
LOOD, VICE-MAYOR BASILIO M. BANAAG, COUNCILORS
CONCEPCION E. LAGA-AC, MIGUEL F. ABCEDE, JUANITO B. TIU,
CLAUDIO T. REGIL, ANICETO S. MEJAREZ NAZIANCINO PAYE, JOSE P.

EXECUTIVE ORDER NO. 258

CREATING THE MUNICIPALITY OF SINACABAN,
IN THE PROVINCE OF MISAMIS OCCIDENTAL
Upon the recommendation of the Secretary of the Interior, and
pursuant to the provisions of Section 68 of the Revised
Administrative Code, there is hereby created, in the Province of
Misamis Occidental, a municipality to be known as the municipality
of Sinacaban, which shall consist of the southern portion of the
municipality of Jimenez, Misamis Occidental, more particularly
described and bounded as follows:
On the north by a line starting from point 1, the center of the
lighthouse on the Tabo-o point S. 84 30'W., 7,250 meters to point 2
which is on the bank of Palilan River branch; thence following

Palilan River branch 2,400 meters southwesterly to point 3, thence

a straight line S 87 00' W, 22,550 meters to point 4, where this
intersects the Misamis Occidental-Zamboanga boundary; on the
west, by the present Misamis Occidental-Zamboanga boundary;
and on the south by the present Jimenez-Tudela boundary; and on
the east, by the limits of the municipal waters which the
municipality of Sinacaban shall have pursuant to section 2321 of
the Revised Administrative Code, (Description based on data shown
in Enlarged Map of Poblacion of Jimenez, Scale 1:8:000).
The municipality of Sinacaban contains the barrios of Sinacaban,
which shall be the seat of the municipal government, Sinonoc,
Libertad, the southern portion of the barrio of Macabayao, and the
sitios of Tipan, Katipunan, Estrella, Flores, Senior, Adorable, San
Isidro, Cagayanon, Kamanse, Kulupan and Libertad Alto.
The municipality of Jimenez shall have its present territory, minus
the portion thereof included in the municipality of Sinacaban.
The municipality of Sinacaban shall begin to exist upon the
appointment and qualification of the mayor, vice-mayor, and a
majority of the councilors thereof. The new municipality shall,
however, assume payment of a proportionate share of the loan of
the municipality of Jimenez with the Rehabilitation Finance
Corporation as may be outstanding on the date of its organization,
the proportion of such payment to be determined by the
Department of Finance.
Done in the City of Manila, this 30th day of August, in the year of
Our Lord, nineteen hundred and forty-nine, and of the
Independence of the Philippines, the fourth.
(SGD.) ELPIDIO QUIRINOPresident of the Philippines
By the President:(SGD.) TEODORO EVANGELISTAExecutive
Secretary
By virtue of Municipal Council Resolution No 171, 2 dated
November 22, 1988, Sinacaban laid claim to a portion of Barrio
Tabo-o and to Barrios Macabayao, Adorable, Sinara Baja, and Sinara
Alto, 3 based on the technical description in E.O. No. 258. The claim
was filed with the Provincial Board of Misamis Occidental against
the Municipality of Jimenez.
In its answer, the Municipality of Jimenez, while conceding that
under E.O. No. 258 the disputed area is part of Sinacaban,
nonetheless asserted jurisdiction on the basis of an agreement it

had with the Municipality of Sinacaban. This agreement was

approved by the Provincial Board of Misamis Occidental, in its
Resolution No. 77, dated February 18, 1950, which fixed the
common boundary of Sinacaban and Jimenez as follows: 4
From a point at Cagayanon Beach follow Macabayao Road until it
intersects Tabangag Creek at the back of the Macabayao
Elementary School. Follow the Tabangag Creek until it intersect the
Macabayao River at upper Adorable. Follow the Macabayao River
such that the barrio of Macabayao, Sitio Adorable and site will be a
part of Jimenez down and the sitios of San Vicente, Donan, Estrella,
Mapula will be a part of Sinacaban. (Emphasis added)
In its decision dated October 11, 1989, 5 the Provincial Board
declared the disputed area to be part of Sinacaban. It held that the
previous resolution approving the agreement between the
municipalities was void because the Board had no power to alter
the boundaries of Sinacaban as fixed in E.O. No. 258, that power
being vested in Congress pursuant to the Constitution and the Local
Government Code of 1983 (B.P. Blg. 337), 134. 6 The Provincial
Board denied in its Resolution No. 13-90 dated January 30, 1990 the
motion of Jimenez seeking reconsideration. 7
On March 20, 1990, Jimenez filed a petition for certiorari,
prohibition, and mandamus in the Regional Trial Court of Oroquieta
City, Branch 14. The suit was filed against Sinacaban, the Province
of Misamis Occidental and its Provincial Board, the Commission on
Audit, the Departments of Local Government, Budget and
Management, and the Executive Secretary. Jimenez alleged that, in
accordance with the decision in Pelaez v. Auditor General, 8 the
power to create municipalities is essentially legislative and
consequently Sinacaban, which was created by an executive order,
had no legal personality and no right to assert a territorial claim
vis-a-vis Jimenez, of which it remains part. Jimenez prayed that
Sinacaban be enjoined from assuming control and supervision over
the disputed barrios; that the Provincial Board be enjoined from
assuming jurisdiction over the claim of Sinacaban; that E.O. No. 258
be declared null and void; that the decision dated October 11, 1989
and Resolution No. 13-90 of the Provincial Board be set aside for
having been rendered without jurisdiction; that the Commission on
Audit be enjoined from passing in audit any expenditure of public
funds by Sinacaban; that the Department of Budget and
Management be enjoined from allotting public funds to Sinacaban;
and that the Executive Secretary be enjoined from exercising
control and supervision over said municipality.

During pre-trial, the parties agreed to limit the issues to the

following:
A. Whether the Municipality of Sinacaban is a legal juridical entity,
duly created in accordance with law;
B. If not, whether it is a de facto juridical entity;
C. Whether the validity of the existence of the Municipality can be
properly questioned in this action on certiorari;
D. Whether the Municipality of Jimenez which had recognized the
existence of the municipality for more than 40 years is estopped to
question its existence;
E. Whether the existence of the municipality has been recognized
by the laws of the land; and
F. Whether the decision of the Provincial Board had acquired finality.
On February 10, 1992, the RTC rendered its decision, the dispositive
portion of which reads:
WHEREFORE, premises considered, it is the finding of this Court
that the petition must be denied and judgment is hereby rendered
declaring a STATUS QUO, that is, the municipality of Sinacaban
shall continue to exist and operate as a regular municipality;
declaring the decision dated October 11, 1989 rendered by the
Sangguniang Panlalawigan fixing the boundaries between
Sinacaban and Jimenez, Misamis Occi. as null and void, the same
not being in accordance with the boundaries provided for in
Executive Order No. 258 creating the municipality of Sinacaban;
dismissing the petition for lack of merit, without pronouncement as
to costs and damages. With respect to the counterclaim, the same
is hereby ordered dismissed.
The Commissioners are hereby ordered to conduct the relocation
survey of the boundary of Sinacaban within 60 days from the time
the decision shall have become final and executory and another 60
days within which to submit their report from the completion of the
said relocation survey.
SO ORDERED.
The RTC, inter alia, held that Sinacaban is a de facto corporation
since it had completely organized itself even prior to the Pelaez

case and exercised corporate powers for forty years before its
existence was questioned; that Jimenez did not have the legal
standing to question the existence of Sinacaban, the same being
reserved to the State as represented by the Office of the Solicitor
General in a quo warranto proceeding; that Jimenez was estopped
from questioning the legal existence of Sinacaban by entering into
an agreement with it concerning their common boundary; and that
any question as to the legal existence of Sinacaban had been
rendered moot by 442(d) of the Local Government Code of 1991
(R.A. No. 7160), which provides:
Municipalities existing as of the date of the effectivity of this Code
shall continue to exist and operate as such. Existing municipal
districts organized pursuant to presidential issuances or executive
orders and which have their respective set of elective municipal
officials holding office at the time of the effectivity of this Code
shall henceforth be considered as regular municipalities.
On March 17, 1990, petitioner moved for a reconsideration of the
decision but its motion was denied by the RTC. Hence this petition
raising the following issues: (1) whether Sinacaban has legal
personality to file a claim, and (2) if it has, whether it is the
boundary provided for in E.O. No. 258 or in Resolution No. 77 of the
Provincial Board of Misamis Occidental which should be used as the
basis for adjudicating Sinacaban's territorial claim.
First. The preliminary issue concerns the legal existence of
Sinacaban. If Sinacaban legally exists, then it has standing to bring
a claim in the Provincial Board. Otherwise, it cannot.
The principal basis for the view that Sinacaban was not validly
created as a municipal corporation is the ruling in Pelaez v. Auditor
General that the creation of municipal corporations is essentially a
legislative matter and therefore the President was without power to
create by executive order the Municipality of Sinacaban. The ruling
in this case has been reiterated in a number of cases 9 later
decided. However, we have since held that where a municipality
created as such by executive order is later impliedly recognized
and its acts are accorded legal validity, its creation can no longer
be questioned. In Municipality of San Narciso, Quezon v. Mendez,
Sr., 10 this Court considered the following factors as having
validated the creation of a municipal corporation, which, like the
Municipality of Sinacaban, was created by executive order of the
President before the ruling in Pelaez v. Auditor General: (1) the fact
that for nearly 30 years the validity of the creation of the
municipality had never been challenged; (2) the fact that following

the ruling in Pelaez no quo warranto suit was filed to question the
validity of the executive order creating such municipality; and (3)
the fact that the municipality was later classified as a fifth class
municipality, organized as part of a municipal circuit court and
considered part of a legislative district in the Constitution
apportioning the seats in the House of Representatives. Above all, it
was held that whatever doubt there might be as to the de jure
character of the municipality must be deemed to have been put to
rest by the Local Government Code of 1991 (R.A. No. 7160),
442(d) of which provides that "municipal districts organized
pursuant to presidential issuances or executive orders and which
have their respective sets of elective officials holding office at the
time of the effectivity of this Code shall henceforth be considered
as regular municipalities."

1991 must be deemed to have cured any defect in the creation of

Sinacaban. This provision states:

Here, the same factors are present so as to confer on Sinacaban

the status of at least a de facto municipal corporation in the sense
that its legal existence has been recognized and acquiesced
publicly and officially. Sinacaban had been in existence for sixteen
years when Pelaez v. Auditor General was decided on December 24,
1965. Yet the validity of E.O. No. 258 creating it had never been
questioned. Created in 1949, it was only 40 years later that its
existence was questioned and only because it had laid claim to an
area that apparently is desired for its revenue. This fact must be
underscored because under Rule 66, 16 of the Rules of Court, a
quo warranto suit against a corporation for forfeiture of its charter
must be commenced within five (5) years from the time the act
complained of was done or committed. On the contrary, the State
and even the Municipality of Jimenez itself have recognized
Sinacaban's corporate existence. Under Administrative Order No.
33 dated June 13, 1978 of this Court, as reiterated by 31 of the
Judiciary Reorganization Act of 1980 (B. P. Blg. 129), Sinacaban is
constituted part of a municipal circuit for purposes of the
establishment of Municipal Circuit Trial Courts in the country. For its
part, Jimenez had earlier recognized Sinacaban in 1950 by entering
into an agreement with it regarding their common boundary. The
agreement was embodied in Resolution No. 77 of the Provincial
Board of Misamis Occidental.

This contention will not bear analysis. Since, as previously

explained, Sinacaban had attained de facto status at the time the
1987 Constitution took effect on February 2, 1987, it is not subject
to the plebiscite requirement. This requirement applies only to new
municipalities created for the first time under the Constitution.
Actually, the requirement of plebiscite was originally contained in
Art. XI, 3 of the previous Constitution which took effect on January
17, 1973. It cannot, therefore, be applied to municipal corporations
created before, such as the Municipality of Sinacaban in the case at
bar.

Indeed Sinacaban has attained de jure status by virtue of the

Ordinance appended to the 1987 Constitution, apportioning
legislative districts throughout the country, which considered
Sinacaban part of the Second District of Misamis Occidental.
Moreover, following the ruling in Municipality of San Narciso,
Quezon v. Mendez, Sr., 442(d) of the Local Government Code of

Municipalities existing as of the date of the effectivity of this Code

shall continue to exist and operate as such. Existing municipal
districts organized pursuant to presidential issuances or executive
orders and which have their respective set of elective municipal
officials holding office at the time of the effectivity of the Code shall
henceforth be considered as regular municipalities.
Second. Jimenez claims, however, that R.A. No. 7160, 442(d) is
invalid, since it does not conform to the constitutional and statutory
requirements for the holding of plebiscites in the creation of new
municipalities. 11

Third. Finally, Jimenez argues that the RTC erred in ordering a

relocation survey of the boundary of Sinacaban because the
barangays which Sinacaban are claiming are not enumerated in
E.O. No. 258 and that in any event in 1950 the parties entered into
an agreement whereby the barangays in question were considered
part of the territory of Jimenez.
E.O. No. 258 does not say that Sinacaban comprises only the
barrios (now called barangays) therein mentioned. What it says is
that "Sinacaban contains" those barrios, without saying they are
the only ones comprising it. The reason for this is that the technical
description, containing the metes and bounds of its territory, is
controlling. The trial court correctly ordered a relocation survey as
the only means of determining the boundaries of the municipality
and consequently the question to which the municipality the
barangays in question belong.
Now, as already stated, in 1950 the two municipalities agreed that
certain barrios belonged to Jimenez, while certain other ones
belonged to Sinacaban. This agreement was subsequently

approved by the Provincial Board of Misamis Occidental. Whether

this agreement conforms to E.O. No. 258 will be determined by the
result of the survey. Jimenez contends, however, that regardless of
its conformity to E.O. No. 258, the agreement as embodied in
Resolution No. 77 of the Provincial Board, is binding on Sinacaban.
This raises the question whether the Provincial Board had authority
to approve the agreement or, to put it in another way, whether it
had the power to declare certain barrios part of one or the other
municipality. We hold it did not if the effect would be to amend the
area as described in E.O. No. 258 creating the Municipality of
Sinacaban.
At the time the Provincial Board passed Resolution No. 77 on
February 18, 1950, the applicable law was 2167 of the Revised
Administrative Code of 1917 which provided:
Sec. 2167. Municipal boundary disputes. How settled.
Disputes as to jurisdiction of municipal governments over places or
barrios shall be decided by the provincial boards of the provinces in
which such municipalities are situated, after an investigation at
which the municipalities concerned shall be duly heard. From the
decision of the provincial board appeal may be taken by the
municipality aggrieved to the Secretary of the Interior [now the
Office of the Executive Secretary], whose decision shall be final.
Where the places or barrios in dispute are claimed by municipalities
situated in different provinces, the provincial boards of the
provinces concerned shall come to an agreement if possible, but, in
the event of their failing to agree, an appeal shall be had to the
Secretary of Interior [Executive Secretary], whose decision shall be
final.
As held in Pelaez v. Auditor General, 12 the power of provincial
boards to settle boundary disputes is "of an administrative nature
involving, as it does, the adoption of means and ways to carry
into effect the law creating said municipalities." It is a power "to fix
common boundary, in order to avoid or settle conflicts of
jurisdiction between adjoining municipalities." It is thus limited to
implementing the law creating a municipality. It is obvious that any
alteration of boundaries that is not in accordance with the law
creating a municipality is not the carrying into effect of that law but
its amendment. 13 If, therefore, Resolution No. 77 of the Provincial
Board of Misamis Occidental is contrary to the technical description
of the territory of Sinacaban, it cannot be used by Jimenez as basis
for opposing the claim of Sinacaban.

Jimenez properly brought to the RTC for review the decision of

October 11, 1989 and Resolution No. 13-90 of the Provincial Board.
Its action is in accordance with the Local Government Code of
1983, 79 of which provides that in case no settlement of boundary
disputes is made the dispute should be elevated to the RTC of the
province. In 1989, when the action was brought by Jimenez, this
Code was the governing law. The governing law is now the Local
Government Code of 1991 (R.A. No. 7160), 118-119.
Jimenez's contention that the RTC failed to decide the case "within
one year from the start of proceedings" as required by 79 of the
Local Government Code of 1983 and the 90-day period provided for
in Article VIII, 15 of the Constitution does not affect the validity of
the decision rendered. For even granting that the court failed to
decide within the period prescribed by law, its failure did not divest
it of its jurisdiction to decide the case but only makes the judge
thereof liable for possible administrative sanction.
WHEREFORE, the petition is DENIED and the decisionof the
Regional Trial Court of Oroquieta City, Branch 14 is AFFIRMED.
[G.R. No. 161414. January 17, 2005]
SULTAN OSOP B. CAMID, petitioner, vs. THE OFFICE OF THE
PRESIDENT, DEPARTMENT OF THE INTERIOR AND LOCAL
GOVERNMENT, AUTONOMOUS REGION IN MUSLIM MINDANAO,
DEPARTMENT of FINANCE, DEPARTMENT of BUDGET AND
MANAGEMENT, COMMISSION ON AUDIT, and the CONGRESS OF THE
PHILIPPINES (HOUSE of REPRESENTATIVES AND SENATE),
respondents.
DECISION
TINGA, J.:
This Petition for Certiorari presents this Court with the prospect of
our own Brigadoon[1]the municipality of Andong, Lanao del
Surwhich like its counterpart in filmdom, is a town that is not
supposed to exist yet is anyway insisted by some as actually alive
and thriving. Yet unlike in the movies, there is nothing mystical,
ghostly or anything even remotely charming about the purported
existence of Andong. The creation of the putative municipality was
declared void ab initio by this Court four decades ago, but the
present petition insists that in spite of this insurmountable obstacle
Andong thrives on, and hence, its legal personality should be given
judicial affirmation. We disagree.

The factual antecedents derive from the promulgation of our ruling

in Pelaez v. Auditor General[2] in 1965. As discussed therein, then
President Diosdado Macapagal issued several Executive Orders[3]
creating thirty-three (33) municipalities in Mindanao. Among them
was Andong in Lanao del Sur which was created by virtue of
Executive Order No. 107.[4]
These executive orders were issued after legislative bills for the
creation of municipalities involved in that case had failed to pass
Congress.[5] President Diosdado Macapagal justified the creation of
these municipalities citing his powers under Section 68 of the
Revised Administrative Code. Then Vice-President Emmanuel Pelaez
filed a special civil action for a writ of prohibition, alleging in main
that the Executive Orders were null and void, Section 68 having
been repealed by Republic Act No. 2370,[6] and said orders
constituting an undue delegation of legislative power.[7]
After due deliberation, the Court unanimously held that the
challenged Executive Orders were null and void. A majority of five
justices, led by the ponente, Justice (later Chief Justice) Roberto
Concepcion, ruled that Section 68 of the Revised Administrative
Code did not meet the well-settled requirements for a valid
delegation of legislative power to the executive branch,[8] while
three justices opined that the nullity of the issuances was the
consequence of the enactment of the 1935 Constitution, which
reduced the power of the Chief Executive over local governments.
[9] Pelaez was disposed in this wise:
WHEREFORE, the Executive Orders in question are declared null
and void ab initio and the respondent permanently restrained from
passing in audit any expenditure of public funds in implementation
of said Executive Orders or any disbursement by the municipalities
above referred to. It is so ordered.[10]
Among the Executive Orders annulled was Executive Order No. 107
which created the Municipality of Andong. Nevertheless, the core
issue presented in the present petition is the continued efficacy of
the judicial annulment of the Municipality of Andong.
Petitioner Sultan Osop B. Camid (Camid) represents himself as a
current resident of Andong,[11] suing as a private citizen and
taxpayer whose locus standi is of public and paramount interest
especially to the people of the Municipality of Andong, Province of
Lanao del Sur.[12] He alleges that Andong has metamorphosed into
a full-blown municipality with a complete set of officials appointed

to handle essential services for the municipality and its

constituents,[13] even though he concedes that since 1968, no
person has been appointed, elected or qualified to serve any of the
elective local government positions of Andong.[14] Nonetheless,
the municipality of Andong has its own high school, Bureau of
Posts, a Department of Education, Culture and Sports office, and at
least seventeen (17) barangay units with their own respective
chairmen.[15] From 1964 until 1972, according to Camid, the public
officials of Andong have been serving their constituents through the
minimal means and resources with least (sic) honorarium and
recognition from the Office of the then former President Diosdado
Macapagal. Since the time of Martial Law in 1972, Andong has
allegedly been getting by despite the absence of public funds, with
the Interim Officials serving their constituents in their own little
ways and means.[16]
In support of his claim that Andong remains in existence, Camid
presents to this Court a Certification issued by the Office of the
Community Environment and Natural Resources (CENRO) of the
Department of Environment and Natural Resources (DENR)
certifying the total land area of the Municipality of Andong, created
under Executive Order No. 107 issued [last] October 1, 1964.[17]
He also submits a Certification issued by the Provincial Statistics
Office of Marawi City concerning the population of Andong, which is
pegged at fourteen thousand fifty nine (14,059) strong. Camid also
enumerates a list of governmental agencies and private groups
that allegedly recognize Andong, and notes that other
municipalities have recommended to the Speaker of the Regional
Legislative Assembly for the immediate implementation of the
revival or re-establishment of Andong.[18]
The petition assails a Certification dated 21 November 2003, issued
by the Bureau of Local Government Supervision of the Department
of Interior and Local Government (DILG).[19] The Certification
enumerates eighteen (18) municipalities certified as existing, per
DILG records. Notably, these eighteen (18) municipalities are
among the thirty-three (33), along with Andong, whose creations
were voided by this Court in Pelaez. These municipalities are
Midaslip, Pitogo, Naga, and Bayog in Zamboanga del Sur; Siayan
and Pres. Manuel A. Roxas in Zamboanga del Norte; Magsaysay,
Sta. Maria and New Corella in Davao; Badiangan and Mina in Iloilo;
Maguing in Lanao del Sur; Gloria in Oriental Mindoro; Maasim in
Sarangani; Kalilangan and Lantapan in Bukidnon; and Maco in
Compostela Valley.[20]

Camid imputes grave abuse of discretion on the part of the DILG in

not classifying [Andong] as a regular existing municipality and in
not including said municipality in its records and official database
as [an] existing regular municipality.[21] He characterizes such
non-classification as unequal treatment to the detriment of Andong,
especially in light of the current recognition given to the eighteen
(18) municipalities similarly annulled by reason of Pelaez. As
appropriate relief, Camid prays that the Court annul the DILG
Certification dated 21 November 2003; direct the DILG to classify
Andong as a regular existing municipality; all public respondents, to
extend full recognition and support to Andong; the Department of
Finance and the Department of Budget and Management, to
immediately release the internal revenue allotments of Andong;
and the public respondents, particularly the DILG, to recognize the
Interim Local Officials of Andong.[22]
Moreover, Camid insists on the continuing validity of Executive
Order No. 107. He argues that Pelaez has already been modified by
supervening events consisting of subsequent laws and
jurisprudence. Particularly cited is our Decision in Municipality of
San Narciso v. Hon. Mendez,[23] wherein the Court affirmed the
unique status of the municipality of San Andres in Quezon as a de
facto municipal corporation.[24] Similar to Andong, the municipality
of San Andres was created by way of executive order, precisely the
manner which the Court in Pelaez had declared as unconstitutional.
Moreover, San Narciso cited, as Camid does, Section 442(d) of the
Local Government Code of 1991 as basis for the current recognition
of the impugned municipality. The provision reads:
Section 442. Requisites for Creation. - xxx
(d) Municipalities existing as of the date of the effectivity of this
Code shall continue to exist and operate as such. Existing municipal
districts organized pursuant to presidential issuances or executive
orders and which have their respective sets of elective municipal
officials holding office at the time of the effectivity of (the) Code
shall henceforth be considered as regular municipalities.[25]
There are several reasons why the petition must be dismissed.
These can be better discerned upon examination of the proper
scope and application of Section 442(d), which does not sanction
the recognition of just any municipality. This point shall be further
explained further on.

Notably, as pointed out by the public respondents, through the

Office of the Solicitor General (OSG), the case is not a fit subject for
the special civil actions of certiorari and mandamus, as it pertains
to the de novo appreciation of factual questions. There is indeed no
way to confirm several of Camids astonishing factual allegations
pertaining to the purported continuing operation of Andong in the
decades since it was annulled by this Court. No trial court has had
the opportunity to ascertain the validity of these factual claims, the
appreciation of which is beyond the function of this Court since it is
not a trier of facts.
The importance of proper factual ascertainment cannot be
gainsaid, especially in light of the legal principles governing the
recognition of de facto municipal corporations. It has been opined
that municipal corporations may exist by prescription where it is
shown that the community has claimed and exercised corporate
functions, with the knowledge and acquiescence of the legislature,
and without interruption or objection for period long enough to
afford title by prescription.[26] These municipal corporations have
exercised their powers for a long period without objection on the
part of the government that although no charter is in existence, it is
presumed that they were duly incorporated in the first place and
that their charters had been lost.[27] They are especially common
in England, which, as well-worth noting, has existed as a state for
over a thousand years. The reason for the development of that rule
in England is understandable, since that country was settled long
before the Roman conquest by nomadic Celtic tribes, which could
have hardly been expected to obtain a municipal charter in the
absence of a national legal authority.
In the United States, municipal corporations by prescription are less
common, but it has been held that when no charter or act of
incorporation of a town can be found, it may be shown to have
claimed and exercised the powers of a town with the knowledge
and assent of the legislature, and without objection or interruption
for so long a period as to furnish evidence of a prescriptive right.
[28]
What is clearly essential is a factual demonstration of the
continuous exercise by the municipal corporation of its corporate
powers, as well as the acquiescence thereto by the other
instrumentalities of the state. Camid does not have the opportunity
to make an initial factual demonstration of those circumstances
before this Court. Indeed, the factual deficiencies aside, Camids
plaint should have undergone the usual administrative gauntlet
and, once that was done, should have been filed first with the Court

of Appeals, which at least would have had the power to make the
necessary factual determinations. Camids seeming ignorance of
the principles of exhaustion of administrative remedies and
hierarchy of courts, as well as the concomitant prematurity of the
present petition, cannot be countenanced.
It is also difficult to capture the sense and viability of Camids
present action. The assailed issuance is the Certification issued by
the DILG. But such Certification does not pretend to bear the
authority to create or revalidate a municipality. Certainly, the
annulment of the Certification will really do nothing to serve
Camids ultimate cause- the recognition of Andong. Neither does the
Certification even expressly refute the claim that Andong still
exists, as there is nothing in the document that comments on the
present status of Andong. Perhaps the Certification is assailed
before this Court if only to present an actual issuance, rather than a
long-standing habit or pattern of action that can be annulled
through the special civil action of certiorari. Still, the relation of the
Certification to Camids central argument is forlornly strained.
These disquisitions aside, the central issue remains whether a
municipality whose creation by executive fiat was previously voided
by this Court may attain recognition in the absence of any curative
or reimplementing statute. Apparently, the question has never
been decided before, San Narciso and its kindred cases pertaining
as they did to municipalities whose bases of creation were dubious
yet were never judicially nullified. The effect of Section 442(d) of
the Local Government Code on municipalities such as Andong
warrants explanation. Besides, the residents of Andong who
belabor under the impression that their town still exists, much less
those who may comport themselves as the municipalitys Interim
Government, would be well served by a rude awakening.
The Court can employ a simplistic approach in resolving the
substantive aspect of the petition, merely by pointing out that the
Municipality of Andong never existed.[29] Executive Order No. 107,
which established Andong, was declared null and void ab initio in
1965 by this Court in Pelaez, along with thirty-three (33) other
executive orders. The phrase ab initio means from the beginning,
[30] at first,[31] from the inception.[32] Pelaez was never reversed
by this Court but rather it was expressly affirmed in the cases of
Municipality of San Joaquin v. Siva,[33] Municipality of Malabang v.
Benito,[34] and Municipality of Kapalong v. Moya.[35] No
subsequent ruling by this Court declared Pelaez as overturned or
inoperative. No subsequent legislation has been passed since 1965
creating a Municipality of Andong. Given these facts, there is hardly

any reason to elaborate why Andong does not exist as a duly

constituted municipality.
This ratiocination does not admit to patent legal errors and has the
additional virtue of blessed austerity. Still, its sweeping adoption
may not be advisedly appropriate in light of Section 442(d) of the
Local Government Code and our ruling in Municipality of San
Narciso, both of which admit to the possibility of de facto municipal
corporations.
To understand the applicability of Municipality of San Narciso and
Section 442(b) of the Local Government Code to the situation of
Andong, it is necessary again to consider the ramifications of our
decision in Pelaez.
The eminent legal doctrine enunciated in Pelaez was that the
President was then, and still is, not empowered to create
municipalities through executive issuances. The Court therein
recognized that the President has, for many years, issued executive
orders creating municipal corporations, and that the same have
been organized and in actual operation . . . .[36] However, the
Court ultimately nullified only those thirty-three (33) municipalities,
including Andong, created during the period from 4 September to
29 October 1964 whose existence petitioner Vice-President Pelaez
had specifically assailed before this Court. No pronouncement was
made as to the other municipalities which had been previously
created by the President in the exercise of power the Court deemed
unlawful.
Two years after Pelaez was decided, the issue again came to fore in
Municipality of San Joaquin v. Siva.[37] The Municipality of Lawigan
was created by virtue of Executive Order No. 436 in 1961. Lawigan
was not one of the municipalities ordered annulled in Pelaez. A
petition for prohibition was filed contesting the legality of the
executive order, again on the ground that Section 68 of the Revised
Administrative Code was unconstitutional. The trial court dismissed
the petition, but the Supreme Court reversed the ruling and entered
a new decision declaring Executive Order No. 436 void ab initio.
The Court reasoned without elaboration that the issue had already
been squarely taken up and settled in Pelaez which agreed with the
argument posed by the challengers to Lawigans validity.[38]
In the 1969 case of Municipality of Malabang v. Benito,[39] what
was challenged is the validity of the constitution of the Municipality
of Balabagan in Lanao del Sur, also created by an executive order,
[40] and which, similar to Lawigan, was not one of the

municipalities annulled in Pelaez. This time, the officials of

Balabagan invoked de facto status as a municipal corporation in
order to dissuade the Court from nullifying action. They alleged that
its status as a de facto corporation cannot be collaterally attacked
but should be inquired into directly in an action for quo warranto at
the instance of the State, and not by a private individual as it was
in that case. In response, the Court conceded that an inquiry into
the legal existence of a municipality is reserved to the State in a
proceeding for quo warranto, but only if the municipal corporation
is a de facto corporation.[41]
Ultimately, the Court refused to acknowledge Balabagan as a de
facto corporation, even though it had been organized prior to the
Courts decision in Pelaez. The Court declared void the executive
order creating Balabagan and restrained its municipal officials from
performing their official duties and functions.[42] It cited conflicting
American authorities on whether a de facto corporation can exist
where the statute or charter creating it is unconstitutional.[43] But
the Courts final conclusion was unequivocal that Balabagan was not
a de facto corporation.
In the cases where a de facto municipal corporation was recognized
as such despite the fact that the statute creating it was later
invalidated, the decisions could fairly be made to rest on the
consideration that there was some other valid law giving corporate
vitality to the organization. Hence, in the case at bar, the mere fact
that Balabagan was organized at a time when the statute had not
been invalidated cannot conceivably make it a de facto corporation,
as, independently of the Administrative Code provision in question,
there is no other valid statute to give color of authority to its
creation.[44]
The Court did clarify in Malabang that the previous acts done by the
municipality in the exercise of its corporate powers were not
necessarily a nullity.[45] Camid devotes several pages of his
petition in citing this point,[46] yet the relevance of the citation is
unclear considering that Camid does not assert the validity of any
corporate act of Andong prior to its judicial dissolution.
Notwithstanding, the Court in Malabang retained an emphatic
attitude as to the unconstitutionality of the power of the President
to create municipal corporations by way of presidential
promulgations, as authorized under Section 68 of the Revised
Administrative Code.
This principle was most recently affirmed in 1988, in Municipality of
Kapalong v. Moya.[47] The municipality of Santo Tomas, created by

President Carlos P. Garcia, filed a complaint against another

municipality, who challenged Santo Tomass legal personality to
institute suit. Again, Santo Tomas had not been expressly nullified
by prior judicial action, yet the Court refused to recognize its legal
existence. The blunt but simple ruling: Now then, as ruled in the
Pelaez case supra, the President has no power to create a
municipality. Since [Santo Tomas] has no legal personality, it can
not be a party to any civil action.[48]
Nevertheless, when the Court decided Municipality of San
Narciso[49] in 1995, it indicated a shift in the jurisprudential
treatment of municipalities created through presidential issuances.
The questioned municipality of San Andres, Quezon was created on
20 August 1959 by Executive Order No. 353 issued by President
Carlos P. Garcia. Executive Order No. 353 was not one of the thirtythree issuances annulled by Pelaez in 1965. The legal status of the
Municipality of San Andres was first challenged only in 1989,
through a petition for quo warranto filed with the Regional Trial
Court of Gumaca, Quezon, which did cite Pelaez as authority.[50]
The RTC dismissed the petition for lack of cause of action, and the
petitioners therein elevated the matter to this Court.
In dismissing the petition, the Court delved in the merits of the
petition, if only to resolve further doubt on the legal status of San
Andres. It noted a circumstance which is not present in the case at
barthat San Andres was in existence for nearly thirty (30) years
before its legality was challenged. The Court did not declare the
executive order creating San Andres null and void. Still, acting on
the premise that the said executive order was a complete nullity,
the Court noted peculiar circumstances that led to the conclusion
that San Andres had attained the unique status of a de facto
municipal corporation.[51] It noted that Pelaez limited its
nullificatory effect only to those executive orders specifically
challenged therein, despite the fact that the Court then could have
very well extended the decision to invalidate San Andres as well.
[52] This statement squarely contradicts Camids reading of San
Narciso that the creation of San Andres, just like Andong, had been
declared a complete nullity on the same ground of unconstitutional
delegation of legislative power found in Pelaez.[53]
The Court also considered the applicability of Section 442(d)[54] of
the Local Government Code of 1991. It clarified the implication of
the provision as follows:
Equally significant is Section 442(d) of the Local Government Code
to the effect that municipal districts "organized pursuant to

presidential issuances or executive orders and which have their

respective sets of elective municipal officials holding office at the
time of the effectivity of (the) Code shall henceforth be considered
as regular municipalities." No pretension of unconstitutionality per
se of Section 442(d) of the Local Government Code is preferred. It is
doubtful whether such a pretext, even if made, would succeed. The
power to create political subdivisions is a function of the legislature.
Congress did just that when it has incorporated Section 442(d) in
the Code. Curative laws, which in essence are retrospective, and
aimed at giving "validity to acts done that would have been invalid
under existing laws, as if existing laws have been complied with,"
are validly accepted in this jurisdiction, subject to the usual
qualification against impairment of vested rights. (Emphasis
supplied)[55]
The holding in San Narciso was subsequently affirmed in
Municipality of Candijay v. Court of Appeals[56] and Municipality of
Jimenez v. Baz[57] In Candijay, the juridical personality of the
Municipality of Alicia, created in a 1949 executive order, was
attacked only beginning in 1984. Pelaez was again invoked in
support of the challenge, but the Court refused to invalidate the
municipality, citing San Narciso at length. The Court noted that the
situation of the Municipality of Alicia was strikingly similar to that in
San Narciso; hence, the town should likewise benefit from the
effects of Section 442(d) of the Local Government Code, and should
[be] considered as a regular, de jure municipality. [58]
The valid existence of Municipality of Sinacaban, created in a 1949
executive order, was among the issues raised in Jimenez. The
Court, through Justice Mendoza, provided an expert summation of
the evolution of the rule.
The principal basis for the view that Sinacaban was not validly
created as a municipal corporation is the ruling in Pelaez v. Auditor
General that the creation of municipal corporations is essentially a
legislative matter and therefore the President was without power to
create by executive order the Municipality of Sinacaban. The ruling
in this case has been reiterated in a number of cases later decided.
However, we have since held that where a municipality created as
such by executive order is later impliedly recognized and its acts
are accorded legal validity, its creation can no longer be
questioned. In Municipality of San Narciso, Quezon v. Mendez, Sr.,
this Court considered the following factors as having validated the
creation of a municipal corporation, which, like the Municipality of
Sinacaban, was created by executive order of the President before
the ruling in Pelaez v. Auditor General: (1) the fact that for nearly

30 years the validity of the creation of the municipality had never

been challenged; (2) the fact that following the ruling in Pelaez no
quo warranto suit was filed to question the validity of the executive
order creating such municipality; and (3) the fact that the
municipality was later classified as a fifth class municipality,
organized as part of a municipal circuit court and considered part of
a legislative district in the Constitution apportioning the seats in the
House of Representatives. Above all, it was held that whatever
doubt there might be as to the de jure character of the municipality
must be deemed to have been put to rest by the Local Government
Code of 1991 (R. A. No. 7160), 442(d) of which provides that
"municipal districts organized pursuant to presidential issuances or
executive orders and which have their respective sets of elective
officials holding office at the time of the effectivity of this Code
shall henceforth be considered as regular municipalities."
Here, the same factors are present so as to confer on Sinacaban
the status of at least a de facto municipal corporation in the sense
that its legal existence has been recognized and acquiesced
publicly and officially. Sinacaban had been in existence for sixteen
years when Pelaez v. Auditor General was decided on December 24,
1965. Yet the validity of E.O. No. 258 creating it had never been
questioned. Created in 1949, it was only 40 years later that its
existence was questioned and only because it had laid claim to an
area that apparently is desired for its revenue. This fact must be
underscored because under Rule 66, 16 of the Rules of Court, a quo
warranto suit against a corporation for forfeiture of its charter must
be commenced within five (5) years from the time the act
complained of was done or committed. On the contrary, the State
and even the Municipality of Jimenez itself have recognized
Sinacaban's corporate existence. Under Administrative Order No.
33 dated June 13, 1978 of this Court, as reiterated by 31 of the
Judiciary Reorganization Act of 1980 (B. P. Blg. 129), Sinacaban is
constituted part of a municipal circuit for purposes of the
establishment of Municipal Circuit Trial Courts in the country. For its
part, Jimenez had earlier recognized Sinacaban in 1950 by entering
into an agreement with it regarding their common boundary. The
agreement was embodied in Resolution No. 77 of the Provincial
Board of Misamis Occidental.
Indeed Sinacaban has attained de jure status by virtue of the
Ordinance appended to the 1987 Constitution, apportioning
legislative districts throughout the country, which considered
Sinacaban part of the Second District of Misamis Occidental.
Moreover, following the ruling in Municipality of San Narciso,
Quezon v. Mendez, Sr., 442(d) of the Local Government Code of

1991 must be deemed to have cured any defect in the creation of

Sinacaban.[59]
From this survey of relevant jurisprudence, we can gather the
applicable rules. Pelaez and its offspring cases ruled that the
President has no power to create municipalities, yet limited its
nullificatory effects to the particular municipalities challenged in
actual cases before this Court. However, with the promulgation of
the Local Government Code in 1991, the legal cloud was lifted over
the municipalities similarly created by executive order but not
judicially annulled. The de facto status of such municipalities as San
Andres, Alicia and Sinacaban was recognized by this Court, and
Section 442(b) of the Local Government Code deemed curative
whatever legal defects to title these municipalities had labored
under.
Is Andong similarly entitled to recognition as a de facto municipal
corporation? It is not. There are eminent differences between
Andong and municipalities such as San Andres, Alicia and
Sinacaban. Most prominent is the fact that the executive order
creating Andong was expressly annulled by order of this Court in
1965. If we were to affirm Andongs de facto status by reason of its
alleged continued existence despite its nullification, we would in
effect be condoning defiance of a valid order of this Court. Court
decisions cannot obviously lose their efficacy due to the sheer
defiance by the parties aggrieved.
It bears noting that based on Camids own admissions, Andong does
not meet the requisites set forth by Section 442(d) of the Local
Government Code. Section 442(d) requires that in order that the
municipality created by executive order may receive recognition,
they must have their respective set of elective municipal officials
holding office at the time of the effectivity of [the Local
Government] Code. Camid admits that Andong has never elected
its municipal officers at all.[60] This incapacity ties in with the fact
that Andong was judicially annulled in 1965. Out of obeisance to
our ruling in Pelaez, the national government ceased to recognize
the existence of Andong, depriving it of its share of the public
funds, and refusing to conduct municipal elections for the void
municipality.
The failure to appropriate funds for Andong and the absence of
elections in the municipality in the last four decades are eloquent
indicia of the non-recognition by the State of the existence of the
town. The certifications relied upon by Camid, issued by the DENRCENRO and the National Statistics Office, can hardly serve the

purpose of attesting to Andongs legal efficacy. In fact, both these

certifications qualify that they were issued upon the request of
Camid, to support the restoration or re-operation of the Municipality
of Andong, Lanao del Sur,[61] thus obviously conceding that the
municipality is at present inoperative.
We may likewise pay attention to the Ordinance appended to the
1987 Constitution, which had also been relied upon in Jimenez and
San Narciso. This Ordinance, which apportioned the seats of the
House of Representatives to the different legislative districts in the
Philippines, enumerates the various municipalities that are
encompassed by the various legislative districts. Andong is not
listed therein as among the municipalities of Lanao del Sur, or of
any other province for that matter.[62] On the other hand, the
municipalities of San Andres, Alicia and Sinacaban are mentioned in
the Ordinance as part of Quezon,[63] Bohol,[64] and Misamis
Occidental[65] respectively.
How about the eighteen (18) municipalities similarly nullified in
Pelaez but certified as existing in the DILG Certification presented
by Camid? The petition fails to mention that subsequent to the
ruling in Pelaez, legislation was enacted to reconstitute these
municipalities.[66] It is thus not surprising that the DILG certified
the existence of these eighteen (18) municipalities, or that these
towns are among the municipalities enumerated in the Ordinance
appended to the Constitution. Andong has not been similarly
reestablished through statute. Clearly then, the fact that there are
valid organic statutes passed by legislation recreating these
eighteen (18) municipalities is sufficient legal basis to accord a
different legal treatment to Andong as against these eighteen (18)
other municipalities.
We thus assert the proper purview to Section 442(d) of the Local
Government Codethat it does not serve to affirm or reconstitute the
judicially dissolved municipalities such as Andong, which had been
previously created by presidential issuances or executive orders.
The provision affirms the legal personalities only of those
municipalities such as San Narciso, Alicia, and Sinacaban, which
may have been created using the same infirm legal basis, yet were
fortunate enough not to have been judicially annulled. On the other
hand, the municipalities judicially dissolved in cases such as Pelaez,
San Joaquin, and Malabang, remain inexistent, unless recreated
through specific legislative enactments, as done with the eighteen
(18) municipalities certified by the DILG. Those municipalities
derive their legal personality not from the presidential issuances or
executive orders which originally created them or from Section

442(d), but from the respective legislative statutes which were

enacted to revive them.
And what now of Andong and its residents? Certainly, neither
Pelaez or this decision has obliterated Andong into a hole on the
ground. The legal effect of the nullification of Andong in Pelaez was
to revert the constituent barrios of the voided town back into their
original municipalities, namely the municipalities of Lumbatan,
Butig and Tubaran.[67] These three municipalities subsist to this
day as part of Lanao del Sur,[68] and presumably continue to
exercise corporate powers over the barrios which once belonged to
Andong.
If there is truly a strong impulse calling for the reconstitution of
Andong, the solution is through the legislature and not judicial
confirmation of void title. If indeed the residents of Andong have, all
these years, been governed not by their proper municipal
governments but by a ragtag Interim Government, then an
expedient political and legislative solution is perhaps necessary. Yet
we can hardly sanction the retention of Andongs legal personality
solely on the basis of collective amnesia that may have allowed
Andong to somehow pretend itself into existence despite its judicial
dissolution. Maybe those who insist Andong still exists prefer to
remain unperturbed in their blissful ignorance, like the inhabitants
of the cave in Platos famed allegory. But the time has come for the
light to seep in, and for the petitioner and like-minded persons to
awaken to legal reality.
WHEREFORE, the Petition is DISMISSED for lack of merit. Costs
against petitioner.
SO ORDERED.
[G.R. No. 135927. June 26, 2000]
SULTAN USMAN SARANGANI, SORAIDA M. SARANGANI and HADJI
NOR HASSAN, petitioners, vs. COMMISSION ON ELECTIONS and
HADJI ABOLAIS R. OMAR, MANAN OSOP and ATTY. NASIB D. YASSIN,
respondents.
DECISION
BUENA, J.:
Way back in the 1950s and during the martial law era, it has been
said that even the dead, the birds and the bees voted in Lanao.

This petition for certiorari under Rule 65 of the Rules of Court which
seeks to nullify the Order issued by the Commission on Elections
[COMELEC, for brevity] dated June 29, 1998, finding Padian Torogan
in Madalum, Lanao Del Sur as "ghost precinct," is an illustrative
case.
The facts are as follows:
On September 15, 1997, a petition for annulment of several
precincts and annulment of book of voters in Madalum, Lanao Del
Sur was filed with the COMELEC by, among others, Hadji Oblais R.
Omar thru counsel Atty. Nasib D. Yasin, herein private respondents.
Among the precincts sought to be annulled was Padian Torogan,
subject matter of the present petition for certiorari.[1]
On September 18, 1997, the COMELEC, thru the Clerk of the
Commission sent telegrams to the respective Board of Election
Inspectors (BEI) of the questioned precincts in Madalum, Lanao Del
Sur, including Padian Torogan, to file their answer to the petition for
abolition of precincts and annulment of book of voters.[2]
On October 31, 1997, the incumbent mayor of Madalum, Lanao Del
Sur, Usman T. Sarangani, herein petitioner, together with other
oppositors who were allegedly barangay chairmen of the twentythree (23) barangays the "Books of Voters" and precincts of which
were sought to be annulled and abolished, respectively, filed an
"Answer in Opposition"[3] which included the affidavits of the
barangay chairmen of the affected precincts attesting to the fact
that the move to annul the book of voters and abolish the
questioned election precincts were for the purpose of diminishing
the bailiwicks of the incumbent mayor of Madalum, Lanao del Sur.
[4]
After hearing and submission of formal offer of exhibits and
memoranda by the parties, the COMELEC issued an Order[5] dated
February 11, 1998, referring the case to its Law Department for
appropriate investigation. The COMELEC - Law Department
conformably issued a memorandum dated April 29, 1998 directing
Atty. Muslemin Tahir, the Provincial Election Supervisor of Marawi
City, Lanao del Sur "to conduct a rigorous incisive investigation on
the alleged ghost precincts and thereafter submit a report on the
investigation conducted."[6] Consequently, Atty. Tahir created a
TASK FORCE INVESTIGATION TEAM by virtue of a memorandum
dated June 13, 1998 directing Election Officers Casan Macadato,
Sacrain Guro and Anuar Datudacula "to conduct ocular inspection

on the alleged twelve (12) ghost barangays in the Municipality of

Madalum, Lanao Del Sur."[7]
On June 18, 1998, an ocular inspection was conducted on the
alleged ghost precincts yielding the following results
"At 12:10 pm, the Task Force Investigation Team from the COMELEC
accompanied by traditional leaders, political leaders, many
concerned residents of this town, a representative from the Lanao
del Sur Provincial Statistics Office, Mr. Lacson Abdullah, and a Team
from the DILG-ARMM, Lanao del Sur, arrived in the area supposedly
Barangay Padian Torogan with these comments and observations:
"It appears that in this area there are only two structures: One is a
concrete house with no roof, and the other is a wooden structure
without walls and roof. This obviously mean that no single human
being could possibly reside in these two structures.
"Also, it came out that the name Padian-Torogan means a cemetery
not a residential place. So this contradicts the records being
brought by the COMELEC Team from the Census saying that the
area has 45 households with a total population of 285. (Ref.
Municipal census Report as of September 1, 1995).
"Besides, no less than the Chairman of the COMELEC Investigating
Team asked the people around who among them is a resident or a
registered voter in the so-called Barangay Padian-Torogan, and no
one answered affirmatively.
"Then at 12:50 PM, the COMELEC Investigating Team still with the
people mentioned above are in Barangay Lumbac to look for the
other supposed Barangay named Rakutan, and found this
observations.
"By the way, unfortunately, at the peak of this ocular inspection,
the Madalum Municipal Chief of Police Mahdi Mindalano, armed with
UZI pistolized Machine Gun, arrived at the scene at exactly 12:55
pm boarding an orange Mitsubishi car with four armed bodyguards,
the (sic) confronted the Team Leader of the COMELEC Investigating
Group and angrily insisted to stop the ocular inspection.
"This STACOM Mindalano, in warning a photographer not to take a
shot on him, pointed his pistolized Rifle to this man when the
photographer positioned his camera to take a picture of him while
he is arguing with the investigating leader, Mr. CASAN MACADATO.

"Moving camera film and several pictures are added hereto for
further information and as exhibits. Also attached hereof are the
names and signatures of among the more-or-less one hundred
people who observed the conduct of this ocular inspection.
(NOTE: This writer, Mr. Khalil Y. Alawi, is a member of the five (5)
man Committee from the DILG-ARMM, Lanao del Sur created in
respect to the Memo/Invitation from the COMELEC Provincial Office
of Lanao del Sur dated June 15, 1998 signed by Mr. CASAN
MACADATO, EO II, Chief Investigation Team. Mr. Macadato
designated verbally and in public Mr. ALAWI to be his Secretary
during this investigation, and of course, the (sic) with the consent
of the DILG Team).
"I hereby certify that the foregoing are true and correct to the best
of my knowledge.
Prepared by: (sgd) Khalil Y. Alawi
Member, DILG TeamSubmitted by: (sgd) Casan MacadatoElection
Officer II
Chairman, Task Force Investigation Team"
On the basis of the foregoing, Election Officer Casan Macadato
submitted to the Provincial Election Supervisor of COMELEC in
Marawi City its 1st Indorsement dated June 19, 1998 reporting the
results of the ocular inspection that Padian Torogan and Rakutan
were uninhabited.[9]
On June 29, 1998, the COMELEC issued the assailed Order finding
"Padian Torogan as ghost precinct." The dispositive portion of the
COMELEC Order reads:
"ACCORDINGLY, the Commission En Banc:
(1) resolves to GRANT the request and hereby:
(a).....DIRECTS the Task Force Investigating Team created pursuant
to the Order of the Commission en banc dated February 11, 1998,
to continue the conduct of ocular inspection and investigation as
contained in the original directive of the Law Department dated
April 29, 1998;
(b).....RECOMMENDS to the PNP Director and the Regional Director
of the Philippine National police, (1) to immediately relieve and
transfer Chief of Police Mahdi Mindalano of Madalum, Lanao del Sur

and transfer him to an area where it will be extremely difficult for

him to return to Mandalum and do further damage to effort of the
Commission to investigate ghost precincts in said area considering
the urgency of said investigation. (2) to look into the possibility of
involvement of other policement (sic) in Madalum in the
aforestated criminal mischief of the Police Station Commander or
their possible partisanship.
(c).....RECOMMENDS to AFP Regional Command, Armed Forces of
the Philippines, to immediately assign sufficient number of men to
maintain peace and order in the Municipality of Madalum, Lanao del
Sur, and to escort and secure the safety of the COMELEC
Investigating Team during the conduct of ocular inspections and
investigations.
(2) finds Padian Torogan as ghost precinct and shall be excluded
from the special election to be conducted in Madalum.
(3) Order the Investigating Team, thru Macadatu, to immediately
resume the investigation, the remaining ghost precincts in
Madalum and to submit its findings to the Commission with
dispatch, allowing it to submit partial findings if necessary.
The Law Department of this Commission is hereby directed to
implement this order.
SO ORDERED." (emphasis supplied)[10]
On November 3, 1998, Sultan Usman Sarangani, Soraida M.
Sarangani and Hadji Nor Hassan, in their respective capacity as
former Municipal Mayor, incumbent Mayor and Vice-Mayor of
Madalum filed the instant petition for certiorari and mandamus
urging us to nullify the Order issued by the COMELEC, for having
been issued with grave abuse of discretion. Likewise, petitioners
moved to consolidate this case with G.R. No. 134456 entitled
"Sultan Sarangani, et. al vs. COMELEC, et. al" alleging that G.R. No.
134456 also involves a COMELEC decision declaring the precinct
corresponding to eight (8) barangays in Madalum, Lanao del Sur as
ghosts precincts.
In a resolution issued by this Court on January 19, 1999, we denied
the motion to consolidate, considering that G.R. No. 134456 had
already been dismissed in our resolutions of August 4, 1998 and
August 18, 1998.

The basic issue to be resolved in this petition is whether or not the

respondent COMELEC committed grave abuse of discretion in
declaring Padian-Torogan as ghost precinct.
On a preliminary matter, though not clear, it appears from the
records that Padian Torogan is a barangay in Madalum, Lanao del
Sur and it was erroneous for the COMELEC to consider PadianTorogan as a ghost precinct. In any case, the court is not tasked to
determine whether the so-called Padian Torogan is a barangay or a
mere election precinct. The petition states that precinct No. 27A
located in Barangay Padian Torogan was the one declared as a
ghost precinct by the COMELEC although the assailed Order did not
mention any specific precinct but simply declared "Padian Torogan
as ghost precinct." To be clear, what was necessarily contemplated
by the assailed Order would be the election precinct in the said
place.
It must be noted that under the Omnibus Election Code, there
should be at least one precinct per barangay.[13] In designating
election precincts, the COMELEC usually refers to them by number.
Nevertheless, the determination of whether a certain election
precinct actually exists or not and whether the voters registered in
said precinct are real voters is a factual matter. On such issue, it is
a time-honored precept that factual findings of the COMELEC based
on its own assessments and duly supported by evidence, are
conclusive upon this Court, more so, in the absence of a
substantiated attack on the validity of the same.[14] Upon review
of the records, the Court finds that the COMELEC had exerted
efforts to investigate the facts and verified that there were no
public or private buildings in the said place, hence its conclusion
that there were no inhabitants. If there were no inhabitants, a
fortiori, there can be no registered voters, or the registered voters
may have left the place. It is not impossible for a certain barangay
not to actually have inhabitants considering that people migrate. A
barangay may officially exist on record and the fact that nobody
resides in the place does not result in its automatic cessation as a
unit of local government. Under the Local Government Code of
1991, the abolition of a local government unit (LGU) may be done
by Congress in the case of a province, city, municipality, or any
other political subdivision.[15] In the case of a barangay, except in
Metropolitan Manila area and in cultural communities, it may be
done by the Sangguniang Panlalawigan or Sangguniang
Panglungsod concerned subject to the mandatory requirement of a
plebiscite[16] conducted for the purpose in the political units
affected.

The findings of the administrative agency cannot be reversed on

appeal or certiorari particularly when no significant facts and
circumstances are shown to have been overlooked or disregarded
which when considered would have substantially affected the
outcome of the case. The COMELEC has broad powers to ascertain
the true results of an election by means available to it.[17] The
assailed order having been issued pursuant to COMELECs
administrative powers and in the absence of any finding of grave
abuse of discretion in declaring a precinct as non-existent, said
order shall stand. Judicial interference is unnecessary and uncalled
for.[18] No voter is disenfranchised because no such voter exist.
The sacred right of suffrage guaranteed by the Constitution[19] is
not tampered when a list of fictitious voters is excluded from an
electoral exercise. Suffrage is conferred by the Constitution only on
citizens who are qualified to vote and are not otherwise disqualified
by law. On the contrary, such exclusion of non-existent voters all
the more protects the validity and credibility of the electoral
process as well as the right of suffrage because the "electoral will"
would not be rendered nugatory by the inclusion of some ghost
votes. Election laws should give effect to, rather than frustrate the
will of the people.
WHEREFORE, the petition is hereby DISMISSED, and the assailed
Order dated June 29, 1998 of the Commission on Elections is
UPHELD. No pronouncement as to costs.
Quoted herein are the issues submitted by petitioners "I RESPONDENT COMELEC GRAVELY ABUSED ITS DISCRETION IN
ISSUING THE ASSAILED ORDER DATED 29 JUNE 1998 DECLARING
PRECINCT NO 27A OF BARANGAY PADIAN TOROGAN AS GHOST
PRECINCT BASED ON HALF-HAZARD AND PARTIAL INVESTIGATION
REPORT.
II RESPONDENT COMELEC GRAVELY ABUSED ITS DISCRETION IN
ISSUING THE ASSAILED ORDER DATED 29 JUNE 1998 DECLARING
PRECINCT NO. 27A OF BARANGAY PADIAN TOROGAN AS GHOST
PRECINCT WHICH, IN EFFECT, ANNULLED THE BOOK OF VOTERS
(AFFECTING ALLUDED BARANGAY) TWENTY-SIX (26) DAYS BEFORE
THE SCHEDULED SPECIAL ELECTION ON JULY 25, 1998 IN EVIDENT
VIOLATION OF SECTION 145 OF THE OMNIBUS ELECTION CODE...
III RESPONDENT COMELEC GRAVELY ABUSED ITS DISCRETION IN
ISSUING THE ASSAILED ORDER DATED 29 JUNE 1998 DECLARING
PRECINCT NO. 27 A OF BARANGAY PADIAN TOROGAN AS GHOST

PRECINCT WHICH, IN EFFECT, DEPRIVED ALLUDED BARANGAY OF

ITS ENTITLEMENT TO AT LEAST ONE (1) PRECINCT IN ACCORDANCE
WITH SECTION 150 OF BATAS PAMBANSA BLG. 881 (OTHERWISE
KNOWN AS THE OMNIBUS ELECTION CODE).
IV RESPONDENT COMELEC GRAVELY ABUSED ITS DISCRETION IN
ISSUING THE ASSAILED ORDER DATED 29 JULY 1998 DECLARING
PRECINCT NO. 27A OF BARANGAY PADIAN TOROGAN AS GHOST
PRECINCT WHICH, IN EFFECT, PRECIPITOUSLY DISENFRANCHISED
THE QUALIFIED VOTERS OF ALLUDED BARANGAY DURING THE
SPECIAL ELECTION HELD ON 25 JULY 1998 AND, IF NOT RECTIFIED,
IN FUTURE ELECTIONS OR POLITICAL EXERCISES IN VIOLATION OF
THEIR CONSTITUTIONAL RIGHT OF SUFFRAGE." (Petition, pp. 7-8;
Rollo, pp. 9-10)
[13] Section 149 of Batas Pambansa Blg. 881 otherwise known as
the Omnibus Election Code of the Philippines provides
The unit of territory for the purpose of voting is the election
precinct, and every barangay as of the approval of this Act shall
have at least one such precinct.
The Commission shall establish all election precincts.
The precincts actually established in the preceding regular
elections shall be maintained, but the Commission may introduce
such adjustments, changes or new divisions or abolish them, if
necessary; Provided, however, That the territory comprising an
election precinct shall not be altered or a new precinct established
within forty-five days before a regular election and thirty days
before a special election or a referendum plebiscite.
[14] Hadji Hussein Mohammad vs. COMELEC and Abdulajid Estino,
G.R. No. 136384, December 8, 1999. Citing Malonzo vs. COMELEC,
269 SCRA 380.
[15] Section 9, Republic Act No. 7160.
.....Section 9. Abolition of Local Government Units. A local
government unit may be abolished when its income, population or
land area has been irreversibly reduced to less than the minimum
standards prescribed for its creation under Book III of this Code, as
certified by the national agencies mentioned in Section 7 hereof to
Congress or the sanggunian concerned, as the case may be.

.....The law or ordinance abolishing a local government unit shall

specify the province, city, municipality, or barangay with which the
local government unit sought to be abolished will be incorporated
or merged.

the law, which while exempting public services owned or operated

by any instrumentality of the government or any governmentowned or controlled corporations from its supervision, jurisdiction
and control stops short of including "the fixing of rates."2

[16] Section 10, R. A. 7160. .....Section10. Plebiscite Requirement.

No creation, division, merger, abolition, or substantial alteration of
boundaries of local government units shall take effect unless
approved by a majority of the votes cast in a plebiscite called for
the purpose in the political unit or units directly affected. Said
plebiscite shall be conducted by the Commission on Election
(COMELEC) within one hundred twenty(120) days from the date
effectivity of the law or ordinance affecting such action unless said
law or ordinance fixes another date.

In this petition for review, a case of first impression, petitioner

Surigao Electric Co., Inc., a legislative franchise holder, and
petitioner Arturo Lumanlan to whom, on February 16, 1962, the
rights and privileges of the former as well as its plant and facilities
were transferred, challenge the validity of the order of respondent
Public Service Commission, dated July 11, 1963, wherein it held
that it had "no other alternative but to approve as [it did approve]
the tentative schedule of rates submitted by the applicant," the
other respondent herein, the Municipality of Surigao.3

[19] Article V, Section 1, 1987 Constitution. .....Suffrage may be

exercised by all citizens of the Philippines not otherwise disqualified
by law, who are at least eighteen years of age, and who shall have
resided in the Philippines for at least one year and in the place
wherein they propose to vote for at least six months immediately
preceding the election. No literacy, property, or other substantive
requirement shall be imposed on the exercise of suffrage.

In the above order, the issue, according to respondent Commission,

"boils down to whether or not a municipal government can directly
maintain and operate an electric plant without obtaining a specific
franchise for the purpose and without a certificate of public
convenience and necessity duly issued by the Public Service
Commission."4 Citing the above amendments introduced by
Republic Act No. 2677, respondent Commission answered the
question thus: "A municipal government or a municipal corporation
such as the Municipality of Surigao is a government entity
recognized, supported and utilized by the National Government as
a part of its government machinery and functions; a municipal
government actually functions as an extension of the national
government and, therefore, it is an instrumentality of the latter;
and by express provisions of Section 14(e) of Act 2677, an
instrumentality of the national government is exempted from the
jurisdiction of the PSC except with respect to the fixing of rates.
This exemption is even clearer in Section 13(a)." 5

G.R. No. L-22766

August 30, 1968

SURIGAO ELECTRIC, CO., INC. and ARTURO LUMANLAN, SR.,

petitioners,
vs.
MUNICIPALITY OF SURIGAO and HON. PUBLIC SERVICE
COMMISSION, respondents.
David G. Nitafan for petitioners.
Provincial Fiscal Bernardo Ll. Salas for respondent Municipality of
Surigao.
Office of the Solicitor General for respondent Public Service
Commission.
FERNANDO, J.:
On June 18, 1960, Congress further amended the Public Service
Act, one of the changes introduced doing away with the
requirement of a certificate of public convenience and necessity
from the Public Service Commission for "public services owned or
operated by government entities or government-owned or
controlled corporations," but at the same time affirming its power
of regulation,1 more specifically as set forth in the next section of

The above formulation of respondent Commission could be worded

differently. There is need for greater precision as well as further
elaboration. Its conclusion, however, can stand the test of scrutiny.
We sustain the Public Service Commission.
The question involved is one of statutory interpretation. We have to
ascertain the intent of Congress in introducing the above
amendments, more specifically, in eliminating the requirement of
the certificate of public convenience and necessity being obtained
by government entities, or by government-owned or controlled
corporations operating public services. Here, the Municipality of
Surigao is not a government-owned or controlled corporation. It
cannot be said, however, that it is not a government entity.

As early as 1916, in Mendoza v. de Leon,6 there has been a

recognition by this Court of the dual character of a municipal
corporation, one as governmental, being a branch of the general
administration of the state, and the other as quasi-private and
corporate. A well-known authority, Dillon, was referred to by us to
stress the undeniable fact that "legislative and governmental
powers" are "conferred upon a municipality, the better to enable it
to aid a state in properly governing that portion of its people
residing within its municipality, such powers [being] in their nature
public, ..."7 As was emphasized by us in the Mendoza decision:
"Governmental affairs do not lose their governmental character by
being delegated to the municipal governments. Nor does the fact
that such duties are performed by officers of the municipality
which, for convenience, the state allows the municipality to select,
change their character. To preserve the peace, protect the morals
and health of the community and so on is to administer
government, whether it be done by the central government itself or
is shifted to a local organization."8
It would, therefore, be to erode the term "government entities" of
its meaning if we are to reverse the Public Service Commission and
to hold that a municipality is to be considered outside its scope. It
may be admitted that there would be no ambiguity at all had the
term "municipal corporations" been employed. Our function,
however, is to put meaning to legislative words, not to denude
them of their contents. They may be at times, as Cohen pointed
out, frail vessels in which to embark legislative hopes, but we do
not, just because of that, allow them to disappear perpetually from
sight to find eternal slumber in the deep. It would be far from
manifesting fidelity to the judicial task of construing statutes if we
were to consider the order under review as a failure to abide by
what the law commands.
The above construction gives significance to every word of the
statute. It makes the entire scheme harmonious. Moreover, the
conclusion to which we are thus led is reinforced by a manifestation
of public policy as expressed in a legislative act of well-nigh
contemporaneous vintage. We refer to the Local Autonomy Act,9
approved a year earlier. It would be to impute to Congress a desire
not to extend further but to cut short what the year before it
considered a laudatory scheme to enlarge the scope of municipal
power, if the amendatory act now under scrutiny were to be so
restrictively construed. Municipal corporations should not be
excluded from the operation thereof.

There would be no warrant for such a view. Logic and common

sense would be affronted by such a conclusion, let alone the sense
of esteem which under the theory of separation of powers is owed a
coordinate branch. Again, this is one instance where assuming the
ambiguity of the words employed in a statute, its overriding
principle, to paraphrase Holmes, fixes the reach of statutory
language.
With the view we thus take of the amendatory statute, the errors
assigned by petitioner, which would seek to fasten, mistakenly to
our mind, an unwarranted restriction to the amendatory language
of Republic Act No. 2677, need not be passed upon.
An alleged error imputed to respondent Commission, however,
needs further discussion. Petitioners seek refuge in the legislative
franchise granted them. 10 Whatever privilege may be claimed by
petitioners cannot override the specific constitutional restriction
that no franchise or right shall be granted to any individual or
corporation except under a condition that it shall be subject to
amendment, alteration or repeal by Congress. 11 Such amendment
or alteration need not be express; it may be implied from a latter
act of general applicability, such as the one now under
consideration.
Moreover, under a well-settled principle of American origin, one
which upon the establishment of the Philippine Government under
American tutelage was adopted here and continued under our
Constitution, no such franchise or right can be availed of to defeat
the proper exercise of the police power. An early expression of this
view is found in the leading American case of Charles River Bridge
v. Warren Bridge, 12 an 1837 decision, the opinion being penned by
Chief Justice Taney: "The continued existence of a government
would be of no great value, if by implications and presumptions it
was disarmed of the powers necessary to accomplish the ends of
its creation; and the functions it was designed to perform,
transferred to the hands of privileged Corporations. .. While the
rights of private property are sacredly guarded, we must not forget
that the community also have rights, and that the happiness and
well-being of every citizen depend on their faithful preservation."
13
Reference by petitioners to the statute providing the procedure for
the taking over and operation by the government of public utilities,
14 in their view "to further strengthen [their] contention", as to the
commission of this alleged error is unavailing, even if such statute
were applicable, which it is not. In the language of their own brief:

"This Act provides for the procedure to be followed whenever the

Government or any political subdivision thereof decides to acquire
and operate a public utility owned and operated by any individual
or private corporation." 15 What is to be regulated, therefore, by
this enactment is the exercise of eminent domain, which is a taking
of private property for public use upon the payment of just
compensation. There is here no taking. There is here no
appropriation. What was owned before by petitioners continue to
remain theirs. There is to be no transfer of ownership.
Rather, a municipal corporation, by virtue of Commonwealth Act
No. 2677, may further promote community welfare by itself
engaging in supplying public services, without the need of a
certificate of public convenience. If at all then, the exercise of this
governmental prerogative comes within the broad, well-nigh,
undefined scope of the police power. It is not here, of course, the
ordinary case of restraint on property or liberty, by the imposition
of a regulation. What the amendatory act in effect accomplishes is
to lend encouragement and support for the municipal corporation
itself undertaking an activity as a result of which, profits of a
competing private firm would be adversely affected.
Clearly, then, the relevancy of the statute providing for the taking
or operation of the government of public utilities, appears, to put it
at its mildest, far from clear. Petitioners' contention as to this
alleged error being committed, therefore, far from being
strengthened by such a reference, suffers from a fate less
auspicious.
No other alleged error committed need be considered.
WHEREFORE, the order of respondent Public Service Commission of
July 11, 1963, as well as the order of February 7, 1964, denying the
motion for reconsideration, are affirmed. Costs against petitioners.
1According to Republic Act No. 2677, approved on June 18, 1960,
Section 13(a) is amended to read as follows: "SEC. 13. (a) The
Commission shall have jurisdiction, supervision, and control over all
public services and their franchises, equipment, and other
properties, and in the exercise of its authority, it shall have the
necessary powers and the aid of the public force: Provided, That
public services owned or operated by government entities or
government-owned or controlled corporations shall be regulated by
the Commission in the same way as privately-owned public service
but certificates of Public Convenience or certificates of public

convenience and necessity shall not be required of such entities or

corporations: And Provided, further, That it shall have no authority
to require steamboats, motorship lines, whether privately owned, or
owned or operated by any Government-controlled corporation or
instrumentality to obtain certificate of public convenience or to
prescribe their definite routes or lines of service." .
2Section 14 as now amended by the same Republic Act No. 2677
reads as follows: "SEC. 14. The following are exempted from the
provisions of the preceding section: ... (e) Public services owned or
operated by any instrumentality of the National Government or by
any government-owned or controlled corporation, except with
respect to the fixing of rates." Formerly, public services owned or
operated by any instrumentality of the government or by any
government-owned or controlled corporation were totally beyond
the jurisdiction of the Public Service Commission. See
Commonwealth Act No. 454, approved June 8, 1939, Section 14(a).
G.R. No. 153974 August 7, 2006
MIGUEL BELUSO, NATIVIDAD BELUSO, PEDRO BELUSO, ANGELITA
BELUSO, RAMON BELUSO, and AMADA DANIEL, substituted by her
heirs represented by TERESITA ARROBANG, Petitioners,
vs.
THE MUNICIPALITY OF PANAY (CAPIZ), represented by its Mayor,
VICENTE B. BERMEJO, Respondent.
Before this Court is a petition for review questioning the Decision 1
of the Court of Appeals (CA) dated March 20, 2002 in CA-G.R. SP
No. 47052, as well the Resolution 2 dated June 11, 2002 denying
petitioners Motion for Reconsideration thereof.
The facts are as follows:
Petitioners are owners of parcels of land with a total area of about
20,424 square meters, covered by Free Patent Nos. 7265, 7266,
7267, 7268, 7269, and 7270. 3 On November 8, 1995, the
Sangguniang Bayan of the Municipality of Panay issued Resolution
No. 95-29 authorizing the municipal government through the mayor
to initiate expropriation proceedings. 4 A petition for expropriation
was thereafter filed on April 14, 1997 by the Municipality of Panay
(respondent) before the Regional Trial Court (RTC), Branch 18 of
Roxas City, docketed as Civil Case No. V-6958.

Petitioners filed a Motion to Dismiss alleging that the taking is not

for public use but only for the benefit of certain individuals; that it
is politically motivated because petitioners voted against the
incumbent mayor and vice-mayor; and that some of the supposed
beneficiaries of the land sought to be expropriated have not
actually signed a petition asking for the property but their
signatures were forged or they were misled into signing the same.
On July 31, 1997, the trial court denied petitioners Motion to
Dismiss and declared that the expropriation in this case is for
"public use" and the respondent has the lawful right to take the
property upon payment of just compensation. 7
Petitioners filed an Answer on August 12, 1997 reasserting the
issues they raised in their Motion to Dismiss.
On October 1, 1997, the trial court issued an Order appointing
three persons as Commissioners to ascertain the amount of just
compensation for the property. 9 Petitioners filed a "Motion to Hold
in Abeyance the Hearing of the Court Appointed Commissioners to
Determine Just Compensation and for Clarification of the Courts
Order dated October 1, 1997" which was denied by the trial court
on November 3, 1997. 10 Petitioners Motion for Reconsideration
was also denied on December 9, 1997. 11
Petitioners then filed on March 2, 1998 a Petition for Certiorari
before the CA claiming that they were denied due process when the
trial court declared that the taking was for public purpose without
receiving evidence on petitioners claim that the Mayor of Panay
was motivated by politics in expropriating their property and in
denying their Motion to Hold in Abeyance the Hearing of the Court
Appointed Commissioners; and that the trial court also committed
grave abuse of discretion when it disregarded the affidavits of
persons denying that they signed a petition addressed to the
municipal government of Panay. 12 On January 17, 2001,
petitioners filed a Motion to Admit Attached Memorandum and the
Memorandum itself where they argued that based on the Petition
for Expropriation filed by respondent, such expropriation was based
only on a resolution and not on an ordinance contrary to Sec. 19 of
Republic Act (R.A.) No. 7160; there was also no valid and definite
offer to buy the property as the price offered by respondent to the
petitioners was very low. 13
On March 20, 2002, the CA rendered its Decision dismissing the
Petition for Certiorari. It held that the petitioners were not denied
due process as they were able to file an answer to the complaint

and were able to adduce their defenses therein; and that the
purpose of the taking in this case constitutes "public use". 14
Petitioners filed a Motion for Reconsideration which was denied on
June 11, 2002. 15
Thus, the present petition claiming that:
A. RESPONDENT IS WITHOUT, LACKS AND DOES NOT HAVE THE
LAWFUL POWER TO ACQUIRE ANY OR ALL OF THE SUBJECT
PROPERTIES THROUGH EMINENT DOMAIN, IT BEING EXERCISED BY
MEANS OF A MERE RESOLUTION, AND NOT THROUGH AN
ORDINANCE AS REQUIRED BY LAW AND APPLICABLE
JURISPRUDENCE;
B. RESPONDENT IS LIKEWISE WITHOUT, LACKS AND DOES NOT
HAVE THE LAWFUL POWER TO ACQUIRE ANY OR ALL OF THE
SUBJECT PROPERTIES THROUGH EMINENT DOMAIN, ITS PREVIOUS
OFFER TO BUY THEM BEING NOT VALID; and
C. IT WAS A SERIOUS ERROR ON THE PART OF THE HONORABLE
COURT OF APPEALS NOT TO DISCUSS, MUCH LESS RULE ON, BOTH
IN ITS QUESTIONED DECISION AND ITS RESOLUTION PROMULGATED
ON 11 JUNE 2002 PETITIONERS ARGUMENTS THAT RESPONDENT IS
WITHOUT, LACKS AND DOES NOT HAVE THE LAWFUL POWER TO
ACQUIRE ANY OR ALL OF THE SUBJECT PROPERTIES THROUGH
EMINENT DOMAIN, IT BEING EXERCISED BY MEANS OF A MERE
RESOLUTION, AND NOT THROUGH AN ORDINANCE AS REQUIRED BY
LAW AND APPLICABLE JURISPRUDENCE, AND ITS PREVIOUS OFFER
TO BUY THEM BEING NOT VALID, DESPITE THE FACT THAT THESE
OBJECTIONS WERE PROPERLY PLEADED IN PETITIONERS
MEMORANDUM WHICH WAS DULY ADMITTED IN ITS RESOLUTION
PROMULGATED ON 29 JANUARY 2001; and
D. PETITIONERS WERE UTTERLY DENIED PROCEDURAL DUE
PROCESS OF LAW BY THE COURT A QUO, WHEN IT SIMPLY
DECLARED IN ITS ORDER DATED 31 JULY 1997 THAT THE TAKING BY
RESPONDENT OF PETITIONERS PROPERTIES IS PURPORTEDLY FOR
PUBLIC PURPOSE WITHOUT RECEIVING EVIDENCE ON THEIR
ASSERTED CLAIM THAT RESPONDENTS MUNICIPAL MAYOR WAS
POLITICALLY MOTIVATED IN SEEKING THE EXPROPRIATION OF THEIR
PROPERTIES AND NOT FOR PUBLIC PURPOSE. 16
Petitioners argue that: contrary to Sec. 19 of R.A. No. 7160 of the
Local Government Code, which provides that a local government
may exercise the power of eminent domain only by "ordinance,"
respondents expropriation in this case is based merely on a

"resolution"; while objection on this ground was neither raised by

petitioners in their Motion to Dismiss nor in their Answer, such
objection may still be considered by this Court since the fact upon
which it is based is apparent from the petition for expropriation
itself; a defense may be favorably considered even if not raised in
an appropriate pleading so long as the facts upon which it is based
are undisputed; courts have also adopted a more censorious
attitude in resolving questions involving the proper exercise of local
bodies of the delegated power of expropriation, as compared to
instances when it is directly exercised by the national legislature;
respondent failed to give, prior to the petition for expropriation, a
previous valid and definite offer to petitioners as the amount
offered in this case was only P10.00 per square meter, when the
properties are residential in nature and command a much higher
price; the CA failed to discuss and rule upon the arguments raised
by petitioners in their Memorandum; attached to the Motion to
Dismiss were affidavits and death certificates showing that there
were people whose names were in the supposed petition asking
respondent for land, but who did not actually sign the same, thus
showing that the present expropriation was not for a public purpose
but was merely politically motivated; considering the conflicting
claims regarding the purpose for which the properties are being
expropriated and inasmuch as said issue may not be rightfully ruled
upon merely on the basis of petitioners Motion to Dismiss and
Answer as well as respondents Petition for Expropriation, what
should have been done was for the RTC to conduct hearing where
each party is given ample opportunity to prove its claim. 17
Respondent for its part contends that its power to acquire private
property for public use upon payment of just compensation was
correctly upheld by the trial court; that the CA was correct in
finding that the petitioners were not denied due process, even
though no hearing was conducted in the trial court, as petitioners
were still able to adduce their objections and defenses therein; and
that petitioners arguments have been passed upon by both the
trial court and the CA and were all denied for lack of substantial
merit. 18
Respondent filed a Memorandum quoting at length the decision of
the CA to support its position. 19 Petitioners meanwhile opted to
have the case resolved based on the pleadings already filed. 20
We find the petition to be impressed with merit.
Eminent domain, which is the power of a sovereign state to
appropriate private property to particular uses to promote public

welfare, is essentially lodged in the legislature. 21 While such

power may be validly delegated to local government units (LGUs),
other public entities and public utilities the exercise of such power
by the delegated entities is not absolute. 22 In fact, the scope of
delegated legislative power is narrower than that of the delegating
authority and such entities may exercise the power to expropriate
private property only when authorized by Congress and subject to
its control and restraints imposed through the law conferring the
power or in other legislations. 23 Indeed, LGUs by themselves have
no inherent power of eminent domain. 24 Thus, strictly speaking,
the power of eminent domain delegated to an LGU is in reality not
eminent but "inferior" since it must conform to the limits imposed
by the delegation and thus partakes only of a share in eminent
domain. 25 The national legislature is still the principal of the LGUs
and the latter cannot go against the principals will or modify the
same. 26
The exercise of the power of eminent domain necessarily involves a
derogation of a fundamental right. 27 It greatly affects a
landowners right to private property which is a constitutionally
protected right necessary for the preservation and enhancement of
personal dignity and is intimately connected with the rights to life
and liberty. 28 Thus, whether such power is exercised directly by
the State or by its authorized agents, the exercise of such power
must undergo painstaking scrutiny. 29
Indeed, despite the existence of legislative grant in favor of local
governments, it is still the duty of the courts to determine whether
the power of eminent domain is being exercised in accordance with
the delegating law.
Sec. 19 of R.A. No. 7160, which delegates to LGUs the power of
eminent domain expressly provides:
SEC. 19. Eminent Domain. - A local government unit may, through
its chief executive and acting pursuant to an ordinance, exercise
the power of eminent domain for public use, or purpose, or welfare
for the benefit of the poor and the landless, upon payment of just
compensation, pursuant to the provisions of the Constitution and
pertinent laws: Provided, however, That the power of eminent
domain may not be exercised unless a valid and definite offer has
been previously made to the owner, and such offer was not
accepted: Provided, further, That the local government unit may
immediately take possession of the property upon the filing of the
expropriation proceedings and upon making a deposit with the
proper court of at least fifteen percent (15%) of the fair market

value of the property based on the current tax declaration of the

property to be expropriated: Provided, finally, That, the amount to
be paid for the expropriated property shall be determined by the
proper court, based on the fair market value at the time of the
taking of the property.
It is clear therefore that several requisites must concur before an
LGU can exercise the power of eminent domain, to wit:
1. An ordinance is enacted by the local legislative council
authorizing the local chief executive, in behalf of the local
government unit, to exercise the power of eminent domain or
pursue expropriation proceedings over a particular private property.

not. In a clear divergence from the previous Local Government

Code, Sec. 19 of R.A. [No.] 7160 categorically requires that the local
chief executive act pursuant to an ordinance. x x x 33
As respondents expropriation in this case was based merely on a
resolution, such expropriation is clearly defective. While the Court
is aware of the constitutional policy promoting local autonomy, the
court cannot grant judicial sanction to an LGUs exercise of its
delegated power of eminent domain in contravention of the very
law giving it such power. 34

2. The power of eminent domain is exercised for public use,

purpose or welfare, or for the benefit of the poor and the landless.

The Court notes that petitioners failed to raise this point at the
earliest opportunity. Still, we are not precluded from considering the
same. This Court will not hesitate to consider matters even those
raised for the first time on appeal in clearly meritorious situations,
35 such as in this case.

3. There is payment of just compensation, as required under

Section 9, Article III of the Constitution, and other pertinent laws.

Thus, the Court finds it unnecessary to resolve the other issues

raised by petitioners.

4. A valid and definite offer has been previously made to the owner
of the property sought to be expropriated, but said offer was not
accepted. 30

It is well to mention however that despite our ruling in this case

respondent is not barred from instituting similar proceedings in the
future, provided that it complies with all legal requirements. 36

The Court in no uncertain terms have pronounced that a local

government unit cannot authorize an expropriation of private
property through a mere resolution of its lawmaking body. 31 R.A.
No. 7160 otherwise known as the Local Government Code expressly
requires an ordinance for the purpose and a resolution that merely
expresses the sentiment of the municipal council will not suffice. 32

WHEREFORE, the petition is GRANTED. The decision of the Court of

Appeals in CA-G.R. SP No. 47052 is REVERSED and SET ASIDE. The
Complaint in Civil Action No. V-6958 is DISMISSED without
prejudice.

A resolution will not suffice for an LGU to be able to expropriate

private property; and the reason for this is settled:

THE CITY OF ILOILO, Represented by HON. JERRY P. TREAS, City

Mayor, petitioner, vs. HON. JUDGE EMILIO LEGASPI, Presiding Judge,
RTC, Iloilo City, Branch 22, and HEIRS OF MANUELA YUSAY,
Represented by SYLVIA YUSAY DEL ROSARIO and ENRIQUE YUSAY,
JR., respondents.

x x x A municipal ordinance is different from a resolution. An

ordinance is a law, but a resolution is merely a declaration of the
sentiment or opinion of a lawmaking body on a specific matter. An
ordinance possesses a general and permanent character, but a
resolution is temporary in nature. Additionally, the two are enacted
differently -- a third reading is necessary for an ordinance, but not
for a resolution, unless decided otherwise by a majority of all the
Sanggunian members.
If Congress intended to allow LGUs to exercise eminent domain
through a mere resolution, it would have simply adopted the
language of the previous Local Government Code. But Congress did

[G. R. No. 154614. November 25, 2004]

Via a Petition for Certiorari and Prohibition with Prayer for Issuance
of a Writ of Preliminary Injunction and Temporary Restraining Order,
the City of Iloilo, represented by Mayor Jerry P. Treas, seeks the
nullification and/or modification of the Order dated 05 June 2002 of
Honorable Emilio Legaspi, Presiding Judge, Regional Trial Court,
Branch 22, Iloilo City, denying its Motion for Reconsideration of the
courts Order dated 15 April 2002, holding in abeyance the
resolution of the Motion for Issuance of Writ of Possession until after
it shall have rested its case.

The factual antecedents are the following:

On 07 March 2001, the Sangguniang Panlungsod of the City of Iloilo
enacted Regulation Ordinance No. 2001-037 granting authority to
its City Mayor to institute expropriation proceedings on Lot No. 935,
registered in the name of Manuela Yusay, located at Barangay Sto.
Nio Norte, Arevalo, Iloilo City. The regulation ordinance was
approved by then City Mayor Mansueto A. Malabor.[1]
On 14 March 2001, Mayor Malabor wrote the heirs of Manuela
Yusay, through Mrs. Sylvia Yusay del Rosario, Administratrix of the
estate of Manuela Yusay, making a formal offer to purchase their
property known as Cadastral Lot No. 935 with an area of 85,320
square meters covered by Transfer Certificate of Title (TCT) No. T67506 of the Registry of Deeds of Iloilo City for P250 per square
meter for the purpose of converting the same as an on-site
relocation for the poor and landless residents of the city in line with
the citys housing development program.[2]
In a letter dated 26 June 2001, Mayor Malabor informed
Administrators Sylvia Y. del Rosario and Enrique Yusay, Jr. that their
counter-proposal to the Citys proposal to purchase Lot No. 935 was
not acceptable to the City Government, particularly to the City
Council, which insisted that an expropriation case be filed per SP
Resolution No. 01-445. With their apparent refusal to sell the
property, the City terminated further proceedings on the matter.[3]
Petitioner City of Iloilo, represented by Mayor Jerry P. Treas, filed an
Amended Complaint[4] for Eminent Domain against private
respondents Heirs of Manuela Yusay, represented by Sylvia Yusay
del Rosario and Enrique Yusay, Jr.[5] The subject of the same is Lot
No. 935 of the Cadastral Survey of Arevalo covered by TCT No. T67506.
Private respondents filed an Answer,[6] dated 25 September 2001,
to which petitioner filed a Reply,[7] dated 19 October 2001.
On 23 October 2001, private respondents filed a Motion to Set Case
for Preliminary Hearing on the Special and Affirmative Defenses
they have raised in the Answer.[8] Petitioner opposed[9] the motion
to which private respondents filed a Reply.[10]
In an Order dated 04 February 2002, public respondent Hon. Emilio
B. Legaspi, Presiding Judge, Regional Trial Court of Iloilo City,
Branch 22, found the motion to be in order and meritorious, and

the grounds of the opposition to be untenable; thus, he set the case

for Preliminary Hearing on the Special and Affirmative Defenses.
[11]
Petitioner moved for the reconsideration[12] of the order which
private respondents opposed.[13]
On 01 April 2002, public respondent set the case for Pre-Trial after
Atty. Amelita K. del Rosario-Benedicto, counsel for private
respondents, manifested she was withdrawing the Motion for
Preliminary Hearing on the Special and Affirmative Defenses.
Petitioner did not interpose any objection.[14]
On 11 April 2002, petitioner filed a Motion for Issuance of Writ of
Possession alleging that since it has deposited with the Court the
amount of P2,809,696.50 representing fifteen percent (15%) of the
fair market value of the property sought to be expropriated based
on its current tax declaration, it may immediately take possession
of the property in accordance with Section 19, Republic Act No.
7160.[15]
On 15 April 2002, public respondent issued an Order with the
following disposition:
WHEREFORE, in view of the foregoing, Atty. Benedicto is given ten
(10) days from today within which to file an Opposition to the
pending Motion For Issuance of Writ of Possession, furnishing copy
of the same to plaintiffs counsel who has the same period to file a
Reply.
Parties agreed that the Court will resolve the Motion For Issuance of
Writ of Possession after the plaintiffs shall have rested their case
after the trial on the merits.[16]
Private respondents filed their Opposition to the Motion for
Issuance of Writ of Possession[17] to which petitioner filed a Reply.
[18]
On 09 May 2002, petitioner filed a Motion for Reconsideration
praying that the lower court reconsider its order of 15 April 2002,
and to consider its Motion for Issuance of Writ of Possession
submitted for resolution after the filing of its Reply to private
respondents Opposition to the motion. Citing the case of Robern
Development Corp. v. Judge Jesus V. Quitain, et al.,[19] it maintains
there is no need for a hearing before the Honorable Court can grant
[its] Motion for Issuance of Writ of Possession.[20]

Private respondents filed an Opposition to the Motion for

Reconsideration with Rejoinder to Reply to Opposition. They
vehemently opposed the motion arguing that counsels of the
parties had agreed that the lower court will resolve the Motion for
Issuance of Writ of Possession after petitioner shall have rested its
case after trial on the merits. They added that in view of the
defects as to form and substance of the amended complaint, the
issuance of a writ of possession ceases to be a ministerial duty on
the court; hence, there is a need for a court hearing.[21]
On 05 June 2002, the assailed order was issued, the dispositive
portion of which reads:
WHEREFORE, in view of the foregoing, the Motion for
Reconsideration is DENIED and resolution of the Motion for Writ of
Possession is hereby held in abeyance until further orders from this
Court.[22]
Hence, this petition.
The petition raises the following alleged errors of the lower court:
A. THAT THE LOWER COURT COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN
DENYING THE MOTION FOR RECONSIDERATION DATED MAY 9, 2002
AS CONTAINED IN ITS ORDER OF JUNE 5, 2002, AND IN HOLDING
THAT PETITIONERS MOTION FOR ISSUANCE OF WRIT OF
POSSESSION BE RESOLVED AFTER HEREIN PETITIONER HAS
CONVINCED THE TRIAL COURT THAT IT HAS A MERITORIOUS CASE
OF EMINENT DOMAIN, DESPITE THE PROVISIONS OF SECTION 2,
RULE 67 OF THE 1997 RULES OF CIVIL PROCEDURE AND DESPITE
THE RULING OF THE SUPREME COURT IN THE CASE OF ROBERN
DEVELOPMENT CORPORATION VS. JUDGE JESUS V. QUITAIN, ET AL.
B. THAT THE LOWER COURT COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN
ISSUING THE ORDER OF JUNE 5, 2002 WHICH IN EFFECT UPHELD
THE CONTENTION OF PRIVATE RESPONDENTS THAT THE AMENDED
COMPLAINT FOR EXPROPRIATION FILED BY HEREIN PETITIONER IS
NOT SUFFICIENT IN FORM AND SUBSTANCE, HENCE THE LATTER IS
NOT ENTITLED TO AN IMMEDIATE ISSUANCE OF A WRIT OF
POSSESSION.[23]
As to its Amended Complaint, petitioner maintains that the same is
sufficient in form and substance since it has complied with Section

19 of Rep. Act No. 7160 (1991 Local Government Code) and Section
1, Rule 67 of the 1997 Rules of Civil Procedure. It explains that
since public respondent has ordered the parties to proceed with the
Pre-Trial Conference and trial of the case, it can be concluded that
the Amended Complaint is sufficient in form and substance.
In compliance with Section 19 of the 1991 Local Government Code,
petitioner says it deposited the amount of P2,809,696.50 with the
Regional Trial Court of Iloilo, which is equivalent to fifteen percent
(15%) of the fair market value of the property sought to be
expropriated based on its current tax declaration. It further argues
that in the cases of Robern Development Corporation v. Judge Jesus
Quitain, et al.,[24] and Salvador Biglang-Awa v. Hon. Judge
Marciano I. Bacalla, et al.,[25] the duty to issue a Writ of Possession
becomes a ministerial duty upon the trial court without necessity of
a hearing once the provisional deposit under Section 2 of Rule
67[26] has been complied with.
In their Comment, private respondents maintain that there was
nothing for the lower court to reconsider because the order dated
15 April 2002 which was dictated in open court, and which
petitioner sought to be reconsidered, was already final (on 30 April
2002) when the latter filed its Motion for Reconsideration on 09
May 2002. Second, they insist that petitioner is estopped to change
its position with respect to the immediate issuance of the writ of
possession. The agreement entered into is binding and is the law
between the parties and should be accorded respect since it was
approved by public respondent. Third, they claim there is waiver on
the part of petitioner to ask for the immediate possession of Lot No.
935 since it took the latter eight (8) months and twelve (12) days
from the filing of the Amended Complaint, and nine (9) months and
thirteen (13) days from the filing of the Original Complaint before it
filed the Motion for Issuance of Writ of Possession. Moreover, they
assert that there is a need for a court hearing before a writ of
possession can be issued, because the amended complaint is being
assailed before the lower court for not being sufficient in form and
substance. Finally, they aver that the issuance of the writ of
possession ceases to be ministerial when the complaint for
expropriation fails to allege compliance with the mandatory
requirements for the exercise of the power of eminent domain for
purposes of socialized housing as interpreted in the cases of
Filstream International Incorporated v. Court of Appeals, et al.[27]
In its Reply, petitioner avers that the order of 15 April 2002 became
final only after fifteen (15) days from the time the same was

received by it on 26 April 2002, and not fifteen (15) days from the
time the order was made in open court on 15 April 2002.

draft thereof drawn up and signed and/or a copy thereof somehow

read or acquired by any party.[30]

Petitioner argues that there is nothing in the rules which prohibits it

from reversing its position with respect to the issuance of the writ
of possession in light of Section 2, Rule 67 of the 1997 Rules of Civil
Procedure which allows taking immediate possession of property
sought to be expropriated upon compliance with said section.
Further, it adds that its stand to seek immediate possession of the
property is supported by the Robern and Biglang-awa cases.

In the case at bar, the Motion for Reconsideration filed by petitioner

was filed before the 15 April 2002 order became final. The order
dictated in open court had no juridical existence before it is set in
writing, signed, promulgated and served on the parties. Since the
order orally pronounced in court had no juridical existence yet, the
period within which to file a motion for reconsideration cannot be
reckoned therefrom, but from the time the same was received in
writing. Petitioner had fifteen (15) days from its receipt of the
written order on 26 April 2002 within which to file a motion for
reconsideration. Thus, when it filed the motion for reconsideration
on 09 May 2002, the said motion was timely filed.

It insists that there is no waiver or estoppel on its part. There is no

provision of law which sets a time limit within which to file a motion
for the issuance of a writ of possession. It reiterated that the
sufficiency of the form and substance of the Amended Complaint
can be determined and resolved by the lower court through an
examination of the allegations contained therein and if the same
complies with the requisites set forth in Section 19 of Rep. Act No.
7160 and Section 1 of Rule 67.[28] Thus, there is no necessity of a
trial before the lower court can resolve the Motion for Issuance of a
Writ of Possession.
Finally, it argues that the Filstream[29] cases are not applicable. It
adds that the provisions of Rep. Act No. 7279 which private
respondents allege as not to have been complied with are not
conditions precedent for the exercise of the power of eminent
domain.
We first rule on the issue of whether the Order dated 15 April 2002,
which was dictated in open court, was already final when petitioner
filed a Motion for Reconsideration on 09 May 2002. Petitioner
maintains that the motion for reconsideration was filed before the
order became final fifteen (15) days from the time it received a
copy thereof in writing, and not from the time the same was
dictated in open court as claimed by private respondents.
Time-honored and of constant observance is the principle that no
judgment, or order, whether final or interlocutory, has juridical
existence until and unless it is set in writing, signed, and
promulgated, i.e., delivered by the Judge to the Clerk of Court for
filing, release to the parties and implementation, and that indeed,
even after promulgation, it does not bind the parties until and
unless notice thereof is duly served on them by any of the modes
prescribed by law. This is so even if the order or judgment has in
fact been orally pronounced in the presence of the parties, or a

Petitioner has the irrefutable right to exercise its power of eminent

domain. It being a local government unit, the basis for its exercise
is granted under Section 19 of Rep. Act No. 7160, to wit:
Sec. 19. Eminent Domain. - A local government unit may, through
its chief executive and acting pursuant to an ordinance, exercise
the power of eminent domain for public use, or purpose, or welfare
for the benefit of the poor and the landless, upon payment of just
compensation, pursuant to the provisions of the Constitution and
pertinent laws: Provided, however, That the power of eminent
domain may not be exercised unless a valid and definite offer has
been previously made to the owner, and such offer was not
accepted: Provided, further, That the local government unit may
immediately take possession of the property upon the filing of the
expropriation proceedings and upon making a deposit with the
proper court of at least fifteen percent (15%) of the fair market
value of the property based on the current tax declaration of the
property to be expropriated: Provided, finally, That the amount to
be paid for the expropriated property shall be determined by the
proper court, based on the fair market value at the time of the
taking of the property.
The requisites for authorizing immediate entry are as follows: (1)
the filing of a complaint for expropriation sufficient in form and
substance; and (2) the deposit of the amount equivalent to fifteen
percent (15%) of the fair market value of the property to be
expropriated based on its current tax declaration.[31] Upon
compliance with these requirements, the issuance of a writ of
possession becomes ministerial.[32]

In the case at bar, petitioner avers that the Amended Complaint it

filed complies with both requisites, thus entitling it to a writ of
possession as a matter of right and the issuance thereof becoming
ministerial on the part of the lower court even without any hearing.
On the other hand, private respondents allege that the Amended
Complaint is not sufficient in form and substance since it failed to
allege compliance with the mandatory requirements for the
exercise of the power of eminent domain for purposes of socialized
housing.
Section 1 of Rule 67 of the Revised Rules of Civil Procedure reads:
Section 1. The complaint. The right of eminent domain shall be
exercised by the filing of a verified complaint which shall state with
certainty the right and purpose of expropriation, describe the real
or personal property sought to be expropriated, and join as
defendants all persons owning or claiming to own, or occupying,
any part hereof or interest therein, showing, so far as practicable,
the separate interest of each defendant. If the title to any property
sought to be expropriated appears to be in the Republic of the
Philippines, although occupied by private individuals, or if the title
is otherwise obscure or doubtful so that the plaintiff cannot with
accuracy or certainty specify who are the real owners, averment to
that effect shall be made in the complaint.
The Court finds the Amended Complaint sufficient in form and
substance, and the amount of P2,809,696.50 deposited with the
Regional Trial Court of Iloilo is equivalent to fifteen percent (15%)
[33] of the fair market value of the property sought to be
expropriated per current tax declaration.
On the averment of private respondents that the Amended
Complaint failed to allege compliance with the mandatory
requirements[34] for the exercise of the power of eminent domain
for purposes of socialized housing as interpreted in the Filstream
cases, it appears that the Amended Complaint did contain
allegations showing compliance therewith.[35] However, whether
there is, indeed, compliance with these requirements, the Court
deems it not proper to resolve the issue at this time. Hearing must
be held to establish compliance.
In City of Manila v. Serrano,[36] this Court ruled that hearing is still
to be held to determine whether or not petitioner indeed complied
with the requirements provided in Rep. Act No. 7279. x x x The
determination of this question must await the hearing on the
complaint for expropriation, particularly the hearing for the

condemnation of the properties sought to be expropriated. From

the foregoing, it is clear that an evidentiary hearing must be
conducted if compliance with the requirements for socialized
housing has been made. This hearing, however, is not a hearing to
determine if a writ of possession is to be issued, but whether there
was compliance with the requirements for socialized housing.
For a writ of possession to issue, only two requirements are
required: the sufficiency in form and substance of the complaint
and the required provisional deposit. In fact, no hearing is required
for the issuance of a writ of possession. The sufficiency in form and
substance of the complaint for expropriation can be determined by
the mere examination of the allegations of the complaint. In this
case, the sufficiency of the Amended Complaint was further
confirmed by public respondent when he set the case for pre-trial
and hearing.
We likewise find private respondents claim that petitioner cannot
change its position regarding the immediate issuance of the writ of
possession on the ground of estoppel, to be untenable.
First, estoppel may be successfully invoked only if the party fails to
raise the question in the early stages of the proceedings.[37] In the
case before us, petitioner, through its counsel, undeniably
committed a mistake when it agreed that the resolution of its
Motion for Issuance of Writ of Possession be made by public
respondent after a hearing is conducted and after it has adduced
its evidence. To remedy this, petitioner immediately filed a Motion
for Reconsideration. The filing thereof was precisely for the purpose
of rectifying the error it committed. With the timely filing of the
motion for reconsideration, petitioner cannot be held in estoppel
because it right away asked the court to nullify the agreement it
entered into. The filing of the motion for reconsideration which was
done at the earliest possible time clearly negates the presence of
estoppel.
Second, under the facts of the case, estoppel should not apply
because petitioner is simply following the procedure laid down by
the rules and jurisprudence. Under Section 19[38] of Rep. Act No.
7160 (law governing exercise of eminent domain by local
government units [LGU]) and Section 2[39] of Rule 67 of the
Revised Rules of Civil Procedure (law governing exercise of eminent
domain by entities other than LGUs), and in the cases of Robern
Development Corporation v. Quitain, et al., and Biglang-awa v.
Bacalla, et al., a prior hearing is not required before a writ of
possession can be issued. As above discussed, a complaint,
sufficient in form and substance, and the required deposit, are the

only requirements before a writ of possession can be issued. Thus,

petitioner should not be prevented from changing and correcting its
position when the same is in accord with the rules and
jurisprudence.

Where on-site development is found more practicable and

advantageous to the beneficiaries, the priorities mentioned in this
section shall not apply, the local government units shall give
budgetary priority to on-site development of government lands.

Private respondents argue that petitioner waived its right to ask for
the immediate possession of Lot No. 935 since it took the latter
eight (8) months and twelve (12) days from the filing of the
Amended Complaint, and nine (9) months and thirteen (13) days
from the filing of the Original Complaint, before it filed the Motion
for Issuance of Writ of Possession.

SEC. 10. Modes of Land Acquisition. The modes of acquiring lands

for purposes of this Act shall include, among others, community
mortgage, land swapping, land assembly or consolidation, land
banking, donation to the Government, joint venture agreement,
negotiated purchase, and expropriation: Provided, however, That
expropriation shall be resorted to only when other modes of
acquisition have been exhausted: Provided, further, That where
expropriation is resorted to, parcels of land owned by small
property owners shall be exempted for purposes of this Act:
Provided, finally, That abandoned property, as herein defined, shall
be reverted and escheated to the State in a proceeding analogous
to the procedure laid down in Rule 91 of the Rules of Court.

Petitioner did not waive its right. Section 19 of Rep. Act No. 7160
does not put a time limit as to when a local government may
immediately take possession of the real property. Said section
provides that the local government unit may take immediate
possession of the property upon the filing of the expropriation
proceedings and upon making a deposit of at least fifteen percent
(15%) of the fair market value of the property based on its current
tax declaration. As long as the expropriation proceedings have
been commenced and the deposit has been made, the local
government unit cannot be barred from praying for the issuance of
a writ of possession.
WHEREFORE, the instant petition is GRANTED. The assailed orders
of respondent judge in Civil Case No. 01-26801 dated 05 June 2002
and 15 April 2002 are set aside. Respondent Judge is directed to
issue the writ of possession prayed for and to continue hearing the
case. No costs.
SEC. 9. Priorities in the Acquisition of Land. -- Lands for socialized
housing shall be acquired in the following order:
(a) Those owned by the Government or any of its subdivisions,
instrumentalities, or agencies, including government-owned or
controlled corporations and their subsidiaries;
(b) Alienable lands of the public domain;
(c) Unregistered or abandoned and idle lands;
d) Those within the declared Areas or Priority Development, Zonal
Improvement Program sites, and Slum Improvement and
Resettlement Program sites which have not yet been acquired;
(e) Bagong Lipunan Improvement of Sites and Services or BLISS
sites which have not yet been acquired; and
(f) Privately-owned lands.

For the purpose of socialized housing, government-owned and

foreclosed properties shall be acquired by the local government
units, or by the National Housing Authority primarily through
negotiated purchase: Provided, That qualified beneficiaries who are
actual occupants of the land shall be given the right of first refusal.
[35] Petitioner, in its Amended Complaint, alleged that:
4. That plaintiff urgently needs said property for the purpose of
converting the same into an On-Site Relocation and Housing
Development for the underprivileged and homeless residents of the
City of Iloilo;
5. That the acquisition of said property by plaintiff will benefit
hundreds of underprivileged and homeless/landless residents of the
City through the various improvements and projects which could be
introduced thereon by the City Government;
6. That offers to acquire the above-described property by
negotiated sale have been made by plaintiff to defendants, but the
same have been tacitly rejected by the latter, hence plaintiff was
constrained to seek the condemnation of said property by filing the
above-case. Lately, defendant Sylvia Yusay del Rosario announced
in radio that they will never sell Lot [No.] 935 to herein plaintiff;
7. That plaintiff through the incumbent Mayor Jerry P. Treas is
authorized to acquire the aforementioned parcel of land through
condemnation proceedings by virtue of Regulation Ordinance No.

2001-037 enacted on March 7, 2001 by the Sangguniang

Panlungsod of the City of Iloilo, machine copy of which is hereto
attached as Annex B;
8. That acting pursuant to the aforesaid Regulation Ordinance No.
2001-037, plaintiff sent a letter dated 14 March 2001 to defendants
formally offering to purchase Lot No. 935 for the amount of Two
Hundred Fifty (P250.00) Pesos per square meter, a machine copy of
which is hereto attached as Annex C;
9. That notwithstanding the formal offer to purchase aforesaid Lot
and several conferences held, defendants have not made any
concrete counter-offer but instead indulged in written semantics
which constrained plaintiff to terminate further negotiations per
letter dated 26 June 2001, a machine copy of which is hereto
attached as Annex D; . . . . (Rollo, pp. 207-208)
[38] Sec. 19. Eminent Domain. - A local government unit may,
through its chief executive and acting pursuant to an ordinance,
exercise the power of eminent domain for public use, or purpose, or
welfare for the benefit of the poor and the landless, upon payment
of just compensation, pursuant to the provisions of the Constitution
and pertinent laws: Provided, however, That the power of eminent
domain may not be exercised unless a valid and definite offer has
been previously made to the owner, and such offer was not
accepted: Provided, further, That the local government unit may
immediately take possession of the property upon the filing of the
expropriation proceedings and upon making a deposit with the
proper court of at least fifteen percent (15%) of the fair market
value of the property based on the current tax declaration of the
property to be expropriated: Provided, finally, That the amount to
be paid for the expropriated property shall be determined by the
proper court, based on the fair market value at the time of the
taking of the property.
[39] SEC. 2. Entry of plaintiff upon depositing value with authorized
government depositary. Upon the filing of the complaint or at any
time thereafter and after due notice to the defendant, the plaintiff
shall have the right to take or enter upon the possession of the real
property involved if he deposits with the authorized government
depositary an amount equivalent to the assessed value of the
property for purposes of taxation to be held by such bank subject
to the orders of the court. Such deposit shall be in money, unless in
lieu thereof the court authorizes the deposit of a certificate of
deposit of a government bank of the Republic of the Philippines
payable on demand to the authorized government depositary.

If personal property is involved, its value shall be provisionally

ascertained and the amount to be deposited shall be promptly fixed
by the court.
After such deposit is made the court shall order the sheriff or other
proper officer to forthwith place the plaintiff in possession of the
property involved and promptly submit a report thereof to the court
with service of copies to the parties.
Section 4 of Rep. Act No. 8974 (An Act To Facilitate The Acquisition
Of Right-Of-Way, Site Or Location For National Government
Infrastructure Projects And For Other Purposes) provides for the
guidelines for expropriation proceedings. It reads:
SECTION 4. Guidelines for Expropriation Proceedings. Whenever it
is necessary to acquire real property for the right-of-way, site or
location for any national government infrastructure project through
expropriation, the appropriate implementing agency shall initiate
the expropriation proceedings before the proper court under the
following guidelines:
(a) Upon the filing of the complaint, and after due notice to the
defendant, the implementing agency shall immediately pay
the owner of the property the amount equivalent to the sum
of (1) one hundred percent (100%) of the value of the
property based on the current relevant zonal valuation of
the Bureau of Internal Revenue (BIR); and (2) the value of
the improvements and/or structures as determined under
Section 7 hereof; . . . .
G.R. No. 136349
January 23, 2006 LOURDES DE LA PAZ
MASIKIP, Petitioner,
vs.THE CITY OF PASIG, HON. MARIETTA A. LEGASPI, in her capacity
as Presiding Judge of the Regional Trial Court of Pasig City, Branch
165 and THE COURT OF APPEALS, Respondents.
Where the taking by the State of private property is done for the
benefit of a small community which seeks to have its own sports
and recreational facility, notwithstanding that there is such a
recreational facility only a short distance away, such taking cannot
be considered to be for public use. Its expropriation is not valid. In
this case, the Court defines what constitutes a genuine necessity
for public use.
This petition for review on certiorari assails the Decision1 of the
Court of Appeals dated October 31, 1997 in CA-G.R. SP No. 41860
affirming the Order2 of the Regional Trial Court, Branch 165, Pasig

City, dated May 7, 1996 in S.C.A. No. 873. Likewise assailed is the
Resolution3 of the same court dated November 20, 1998 denying
petitioners Motion for Reconsideration.
The facts of the case are:
Petitioner Lourdes Dela Paz Masikip is the registered owner of a
parcel of land with an area of 4,521 square meters located at PagAsa, Caniogan, Pasig City, Metro Manila.
In a letter dated January 6, 1994, the then Municipality of Pasig,
now City of Pasig, respondent, notified petitioner of its intention to
expropriate a 1,500 square meter portion of her property to be
used for the "sports development and recreational activities" of the
residents of Barangay Caniogan. This was pursuant to Ordinance
No. 42, Series of 1993 enacted by the then Sangguniang Bayan of
Pasig.
Again, on March 23, 1994, respondent wrote another letter to
petitioner, but this time the purpose was allegedly "in line with the
program of the Municipal Government to provide land opportunities
to deserving poor sectors of our community."
On May 2, 1994, petitioner sent a reply to respondent stating that
the intended expropriation of her property is unconstitutional,
invalid, and oppressive, as the area of her lot is neither sufficient
nor suitable to "provide land opportunities to deserving poor
sectors of our community."
In its letter of December 20, 1994, respondent reiterated that the
purpose of the expropriation of petitioners property is "to provide
sports and recreational facilities to its poor residents."
Subsequently, on February 21, 1995, respondent filed with the trial
court a complaint for expropriation, docketed as SCA No. 873.
Respondent prayed that the trial court, after due notice and
hearing, issue an order for the condemnation of the property; that
commissioners be appointed for the purpose of determining the
just compensation; and that judgment be rendered based on the
report of the commissioners.
On April 25, 1995, petitioner filed a Motion to Dismiss the complaint
on the following grounds:
IPLAINTIFF HAS NO CAUSE OF ACTION FOR THE EXERCISE OF THE
POWER OF EMINENT DOMAIN, CONSIDERING THAT:

(A) THERE IS NO GENUINE NECESSITY FOR THE TAKING OF THE

PROPERTY SOUGHT TO BE EXPROPRIATED.
(B) PLAINTIFF HAS ARBITRARILY AND CAPRICIOUSLY CHOSEN THE
PROPERTY SOUGHT TO BE EXPROPRIATED.
(C) EVEN ASSUMING ARGUENDO THAT DEFENDANTS PROPERTY
MAY BE EXPROPRIATED BY PLAINTIFF, THE FAIR MARKET VALUE OF
THE PROPERTY TO BE EXPROPRIATED FAR EXCEEDS SEVENTY-EIGHT
THOUSAND PESOS (P78,000.00)
IIPLAINTIFFS COMPLAINT IS DEFECTIVE IN FORM AND SUBSTANCE,
CONSIDERING THAT:
(A) PLAINTIFF FAILS TO ALLEGE WITH CERTAINTY THE PURPOSE OF
THE EXPROPRIATION.
(B) PLAINTIFF HAS FAILED TO COMPLY WITH THE PREREQUISITES
LAID DOWN IN SECTION 34, RULE VI OF THE RULES AND
REGULATIONS IMPLEMENTING THE LOCAL GOVERNMENT CODE;
THUS, THE INSTANT EXPROPRIATION PROCEEDING IS PREMATURE.
IIITHE GRANTING OF THE EXPROPRIATION WOULD VIOLATE
SECTION 261 (V) OF THE OMNIBUS ELECTION CODE.
IVPLAINTIFF CANNOT TAKE POSSESSION OF THE SUBJECT PROPERTY
BY MERELY DEPOSITING AN AMOUNT EQUAL TO FIFTEEN PERCENT
(15%) OF THE VALUE OF THE PROPERTY BASED ON THE CURRENT
TAX DECLARATION OF THE SUBJECT PROPERTY.4
On May 7, 1996, the trial court issued an Order denying the Motion
to Dismiss,5 on the ground that there is a genuine necessity to
expropriate the property for the sports and recreational activities of
the residents of Pasig. As to the issue of just compensation, the trial
court held that the same is to be determined in accordance with
the Revised Rules of Court.
Petitioner filed a motion for reconsideration but it was denied by
the trial court in its Order of July 31, 1996. Forthwith, it appointed
the City Assessor and City Treasurer of Pasig City as commissioners
to ascertain the just compensation. This prompted petitioner to file
with the Court of Appeals a special civil action for certiorari,
docketed as CA-G.R. SP No. 41860. On October 31, 1997, the
Appellate Court dismissed the petition for lack of merit. Petitioners
Motion for Reconsideration was denied in a Resolution dated
November 20, 1998.
Hence, this petition anchored on the following grounds:

THE QUESTIONED DECISION DATED 31 OCTOBER 1997

(ATTACHMENT "A") AND RESOLUTION DATED 20 NOVEMBER 1998
(ATTACHMENT "B") ARE CONTRARY TO LAW, THE RULES OF COURT
AND JURISPRUDENCE CONSIDERING THAT:
I A. THERE IS NO EVIDENCE TO PROVE THAT THERE IS GENUINE
NECESSITY FOR THE TAKING OF THE PETITIONERS PROPERTY.
B. THERE IS NO EVIDENCE TO PROVE THAT THE PUBLIC USE
REQUIREMENT FOR THE EXERCISE OF THE POWER OF EMINENT
DOMAIN HAS BEEN COMPLIED WITH.
C. THERE IS NO EVIDENCE TO PROVE THAT RESPONDENT CITY OF
PASIG HAS COMPLIED WITH ALL CONDITIONS PRECEDENT FOR THE
EXERCISE OF THE POWER OF EMINENT DOMAIN.
THE COURT A QUOS ORDER DATED 07 MAY 1996 AND 31 JULY
1996, WHICH WERE AFFIRMED BY THE COURT OF APPEALS,
EFFECTIVELY AMOUNT TO THE TAKING OF PETITIONERS PROPERTY
WITHOUT DUE PROCESS OF LAW:
IITHE COURT OF APPEALS GRAVELY ERRED IN APPLYING OF RULE ON
ACTIONABLE DOCUMENTS TO THE DOCUMENTS ATTACHED TO
RESPONDENT CITY OF PASIGS COMPLAINT DATED 07 APRIL 1995
TO JUSTIFY THE COURT A QUOS DENIAL OF PETITIONERS
RESPONSIVE PLEADING TO THE COMPLAINT FOR EXPROPRIATION
(THE MOTION TO DISMISS DATED 21 APRIL 1995).
IIITHE COURT OF APPEALS GRAVELY ERRED IN APPLYING THE RULE
ON HYPOTHETICAL ADMISSION OF FACTS ALLEGED IN A COMPLAINT
CONSIDERING THAT THE MOTION TO DISMISS FILED BY PETITIONER
IN THE EXPROPRIATION CASE BELOW WAS THE RESPONSIVE
PLEADING REQUIRED TO BE FILED UNDER THE THEN RULE 67 OF
THE RULES OF COURT AND NOT AN ORIDNARY MOTION TO DISMISS
UNDER RULE 16 OF THE RULES OF COURT.
The foregoing arguments may be synthesized into two main issues
one substantive and one procedural. We will first address the
procedural issue.
Petitioner filed her Motion to Dismiss the complaint for
expropriation on April 25, 1995. It was denied by the trial court on
May 7, 1996. At that time, the rule on expropriation was governed
by Section 3, Rule 67 of the Revised Rules of Court which provides:
"SEC. 3. Defenses and objections. Within the time specified in the
summons, each defendant, in lieu of an answer, shall present in a
single motion to dismiss or for other appropriate relief, all his

objections and defenses to the right of the plaintiff to take his

property for the use or purpose specified in the complaint. All such
objections and defenses not so presented are waived. A copy of the
motion shall be served on the plaintiffs attorney of record and filed
with the court with proof of service."
The motion to dismiss contemplated in the above Rule clearly
constitutes the responsive pleading which takes the place of an
answer to the complaint for expropriation. Such motion is the
pleading that puts in issue the right of the plaintiff to expropriate
the defendants property for the use specified in the complaint. All
that the law requires is that a copy of the said motion be served on
plaintiffs attorney of record. It is the court that at its convenience
will set the case for trial after the filing of the said pleading.6
The Court of Appeals therefore erred in holding that the motion to
dismiss filed by petitioner hypothetically admitted the truth of the
facts alleged in the complaint, "specifically that there is a genuine
necessity to expropriate petitioners property for public use."
Pursuant to the above Rule, the motion is a responsive pleading
joining the issues. What the trial court should have done was to set
the case for the reception of evidence to determine whether there
is indeed a genuine necessity for the taking of the property, instead
of summarily making a finding that the taking is for public use and
appointing commissioners to fix just compensation. This is
especially so considering that the purpose of the expropriation was
squarely challenged and put in issue by petitioner in her motion to
dismiss.
Significantly, the above Rule allowing a defendant in an
expropriation case to file a motion to dismiss in lieu of an answer
was amended by the 1997 Rules of Civil Procedure, which took
effect on July 1, 1997. Section 3, Rule 67 now expressly mandates
that any objection or defense to the taking of the property of a
defendant must be set forth in an answer.
The fact that the Court of Appeals rendered its Decision in CA-G.R.
SP No. 41860 on October 31, after the 1997 Rules of Civil Procedure
took effect, is of no moment. It is only fair that the Rule at the time
petitioner filed her motion to dismiss should govern. The new
provision cannot be applied retroactively to her prejudice.
We now proceed to address the substantive issue.
In the early case of US v. Toribio,7 this Court defined the power of
eminent domain as "the right of a government to take and

appropriate private property to public use, whenever the public

exigency requires it, which can be done only on condition of
providing a reasonable compensation therefor." It has also been
described as the power of the State or its instrumentalities to take
private property for public use and is inseparable from sovereignty
and inherent in government.8
The power of eminent domain is lodged in the legislative branch of
the government. It delegates the exercise thereof to local
government units, other public entities and public utility
corporations,9 subject only to Constitutional limitations. Local
governments have no inherent power of eminent domain and may
exercise it only when expressly authorized by statute.10 Section 19
of the Local Government Code of 1991 (Republic Act No. 7160)
prescribes the delegation by Congress of the power of eminent
domain to local government units and lays down the parameters
for its exercise, thus:
"SEC. 19. Eminent Domain. A local government unit may, through
its chief executive and acting pursuant to an ordinance, exercise
the power of eminent domain for public use, purpose or welfare for
the benefit of the poor and the landless, upon payment of just
compensation, pursuant to the provisions of the Constitution and
pertinent laws: Provided, however, That, the power of eminent
domain may not be exercised unless a valid and definite offer has
been previously made to the owner and such offer was not
accepted: Provided, further, That, the local government unit may
immediately take possession of the property upon the filing of
expropriation proceedings and upon making a deposit with the
proper court of at least fifteen percent (15%) of the fair market
value of the property based on the current tax declaration of the
property to be expropriated: Provided, finally, That, the amount to
be paid for expropriated property shall be determined by the proper
court, based on the fair market value at the time of the taking of
the property."
Judicial review of the exercise of eminent domain is limited to the
following areas of concern: (a) the adequacy of the compensation,
(b) the necessity of the taking, and (c) the public use character of
the purpose of the taking.11
In this case, petitioner contends that respondent City of Pasig failed
to establish a genuine necessity which justifies the condemnation
of her property. While she does not dispute the intended public
purpose, nonetheless, she insists that there must be a genuine
necessity for the proposed use and purposes. According to

petitioner, there is already an established sports development and

recreational activity center at Rainforest Park in Pasig City, fully
operational and being utilized by its residents, including those from
Barangay Caniogan. Respondent does not dispute this. Evidently,
there is no "genuine necessity" to justify the expropriation.
The right to take private property for public purposes necessarily
originates from "the necessity" and the taking must be limited to
such necessity. In City of Manila v. Chinese Community of Manila,12
we held that the very foundation of the right to exercise eminent
domain is a genuine necessity and that necessity must be of a
public character. Moreover, the ascertainment of the necessity
must precede or accompany and not follow, the taking of the land.
In City of Manila v. Arellano Law College,13 we ruled that "necessity
within the rule that the particular property to be expropriated must
be necessary, does not mean an absolute but only a reasonable or
practical necessity, such as would combine the greatest benefit to
the public with the least inconvenience and expense to the
condemning party and the property owner consistent with such
benefit."
Applying this standard, we hold that respondent City of Pasig has
failed to establish that there is a genuine necessity to expropriate
petitioners property. Our scrutiny of the records shows that the
Certification14 issued by the Caniogan Barangay Council dated
November 20, 1994, the basis for the passage of Ordinance No. 42
s. 1993 authorizing the expropriation, indicates that the intended
beneficiary is the Melendres Compound Homeowners Association, a
private, non-profit organization, not the residents of Caniogan. It
can be gleaned that the members of the said Association are
desirous of having their own private playground and recreational
facility. Petitioners lot is the nearest vacant space available. The
purpose is, therefore, not clearly and categorically public. The
necessity has not been shown, especially considering that there
exists an alternative facility for sports development and community
recreation in the area, which is the Rainforest Park, available to all
residents of Pasig City, including those of Caniogan.
The right to own and possess property is one of the most cherished
rights of men. It is so fundamental that it has been written into
organic law of every nation where the rule of law prevails. Unless
the requisite of genuine necessity for the expropriation of ones
property is clearly established, it shall be the duty of the courts to
protect the rights of individuals to their private property. Important
as the power of eminent domain may be, the inviolable sanctity
which the Constitution attaches to the property of the individual
requires not only that the purpose for the taking of private property

be specified. The genuine necessity for the taking, which must be

of a public character, must also be shown to exist.
WHEREFORE, the petition for review is GRANTED. The challenged
Decision and Resolution of the Court of Appeals in CA-G.R. SP No.
41860 are REVERSED. The complaint for expropriation filed before
the trial court by respondent City of Pasig, docketed as SCA No.
873, is ordered DISMISSED.
[G.R. No. 150763. July 2, 2004]
RURAL BANK OF MAKATI, INC., ESTEBAN S. SILVA and MAGDALENA
V. LANDICHO, petitioners, vs. MUNICIPALITY OF MAKATI and ATTY.
VICTOR A. L. VALERO, respondents.
In its decision[1] dated July 17, 2001, in CA-G.R. CV No. 58214, the
Court of Appeals affirmed the decision[2] dated October 22, 1996
of the Regional Trial Court of Makati City, Branch 134, in Civil Case
No. 91-2866 dismissing petitioners complaint for recovery of a sum
of money and damages. Petitioners now assail said CA decision as
well as the Resolution[3] dated November 9, 2001, which denied
their Motion for Reconsideration.
The facts are as follows:
Sometime in August 1990, Atty. Victor A.L. Valero, then the
municipal attorney of the Municipality of Makati, upon request of
the municipal treasurer, went to the Rural Bank of Makati to inquire
about the banks payments of taxes and fees to the municipality. He
was informed, however, by petitioner Magdalena V. Landicho,
corporate secretary of the bank, that the bank was exempt from
paying taxes under Republic Act No. 720, as amended.[4]
On November 19, 1990, the municipality lodged a complaint with
the Prosecutors Office, charging petitioners Esteban S. Silva,
president and general manager of the bank and Magdalena V.
Landicho for violation of Section 21(a), Chapter II, Article 3 in
relation to Sections 105 and 169 of the Metropolitan Tax Code.
On April 5, 1991, an Information docketed as Criminal Case No.
140208, for violation of Municipal Ordinance Nos. 122 and 39 for
non-payment of the mayors permit fee, was filed with the
Metropolitan Trial Court (MeTC) of Makati against petitioners.
Another Information, docketed as Criminal Case No. 140209, for
non-payment of annual business tax, in violation of Metro Manila
Commission Ordinance No. 82-03, Section 21(a), Chapter II, Article
3, was likewise filed with the MeTC.

While said cases were pending with the municipal court,

respondent municipality ordered the closure of the bank. This
prompted petitioners to pay, under protest, the mayors permit fee
and the annual fixed tax in the amount of P82,408.66.
On October 18, 1991, petitioners filed with the RTC of Makati a
Complaint for Sum of Money and Damages, docketed as Civil Case
No. 91-2866. Petitioners alleged that they were constrained to pay
the amount of P82,408.66 because of the closure order, issued
despite the pendency of Criminal Cases Nos. 140208-09 and the
lack of any notice or assessment of the fees to be paid. They
averred that the collection of the taxes/fees was oppressive,
arbitrary, unjust and illegal. Additionally, they alleged that
respondent Atty. Valero had no power to enforce laws and
ordinances, thus his action in enforcing the collection of the permit
fees and business taxes was ultra vires. Petitioners claimed that the
bank lost expected earnings in the amount of P19,778. Petitioners
then assailed the municipal ordinances of Makati as invalid for want
of the requisite publication.
In its Answer, respondent municipality asserted that petitioners
payment of P82,408.66 was for a legal obligation because the
payment of the mayors permit fee as well as the municipal
business license was required of all business concerns. According to
respondent, said requirement was in furtherance of the police
power of the municipality to regulate businesses.
For his part, Atty. Valero filed an Answer claiming that there was no
coercion committed by the municipality, that payment was a legal
obligation of the bank, and that its claim of exemption had no legal
basis. He further alleged that petitioners action was clearly
intended to harass and humiliate him and as counterclaim, he
asked for moral and other damages.
On October 22, 1996, the RTC decided Civil Case No. 91-2866 as
follows:
WHEREFORE, in view of all the foregoing, judgment is hereby
rendered dismissing the complaint.
On the counterclaim, the plaintiffs are hereby ordered jointly and
severally to pay to defendant Victor Valero the sum of P200,000.00
as moral damages and the amount of P50,000.00 as attorneys fees.
The counterclaim of defendant Municipality is dismissed.
Cost against the plaintiffs.

SO ORDERED.[5]
In finding for respondents, the RTC ruled that the bank was
engaged in business as a rural bank. Hence, it should secure the
necessary permit and business license, as well as pay the
corresponding charges and fees. It found that the municipality had
authority to impose licenses and permit fees on persons engaging
in business, under its police power embodied under the general
welfare clause. Also, the RTC declared unmeritorious petitioners
claim for exemption under Rep. Act No. 720 since said exemption
had been withdrawn by Executive Order No. 93[6] and the Rural
Bank Act of 1992.[7] These statutes no longer exempted rural
banks from paying corporate income taxes and local taxes, fees
and charges. It also found petitioners claim of lack of publication of
MMC Ordinance Nos. 82-03 and Municipal Ordinance No. 122 to be
mere allegations unsupported by clear and convincing evidence.
In awarding damages to Atty. Valero, the RTC found that he had
been maliciously impleaded as defendant. It noted that Atty. Valero,
as a municipal legal officer, was tasked to enforce municipal
ordinances. In short, he was merely an agent of the local chief
executive and should not be faulted for performing his assigned
task.
Petitioners seasonably moved for reconsideration, but this was
denied by the RTC in its Order dated January 10, 1997.[8]
Petitioners appealed to the Court of Appeals in CA-G.R. CV No.
58214. The appellate court sustained the lower court in this wise:
WHEREFORE, premises considered, the appealed decision is hereby
AFFIRMED in toto.
The Court of Appeals found the order of closure of the bank valid
and justified since the bank was operating without any permit and
without having paid the requisite permit fee. Thus, declared the
Court of Appeals, it is not merely a matter of enforcement and
collection of fees, as the appellants would have it, but a violation of
the municipalitys authority to regulate the businesses operating
within its territory.[10]
The appellate court also brushed aside petitioners claim that the
general welfare clause is limited only to legislative action. It
declared that the exercise of police power by the municipality was
mandated by the general welfare clause, which authorizes the local

government units to enact ordinances, not only to carry into effect

and discharge such duties as are conferred upon them by law, but
also those for the good of the municipality and its inhabitants. This
mandate includes the regulation of useful occupations and
enterprises.
Petitioner moved for reconsideration, but the appellate court in its
Resolution[11] of November 9, 2001 denied the same.
Hence, this instant petition alleging that the Honorable Court of
Appeals seriously erred in:
1) .HOLDING THAT THE CLOSURE BY THE APPELLEE, VICTOR
VALERO, OF THE APPELLANT BANK WAS A LEGITIMATE EXERCISE OF
POLICE POWER BY THE MUNICIPALITY OF MAKATI;
2) .NOT CONSIDERING THE FACT THAT MAKATI ORDINANCE 122
REQUIRING MAYORS PERMIT FOR OPERATION OF AN
ESTABLISHMENT AND MMC ORDINANCE NO. 82-03 WERE ADMITTED
AS NOT PUBLISHED AS REQUIRED IN TAADA, ET AL., vs. TUVERA,
NO. L-63915, DECEMBER 29, 1986 AND THAT NO TAX ASSESSMENT
WAS PRESENTED TO THE BANK;
3) .AWARDING MORAL DAMAGES TO APPELLEE VICTOR VALERO IN
THE AMOUNT OF P200,000.00 AND ATTORNEYS FEES IN THE SUM
OF P50,000.00;
4) .NOT AWARDING TO THE APPELLANT BANK, THE AMOUNT OF
P57,854.00 REPRESENTING THE AMOUNT UNJUSTLY AND ILLEGALLY
COLLECTED FROM THE APPELLANT BANK;
5) .NOT AWARDING THE AMOUNT OF P10,413.75 YEARLY
REPRESENTING THE UNREALIZED PROFIT WHICH THE APPELLANT
BANK IS BEING DEPRIVED OF IN THE USE OF THE AFORESAID
AMOUNT PLUS LEGAL INTEREST ALLOWED IN JUDGMENT FROM THE
TIME OF THE EXTRAJUDICIAL DEMAND. (DEMAND LETTER, DATED
OCTOBER 4, 1991, EXHIBIT O FOR THE APPELLANTS);
6) .NOT GRANTING TO APPELLANTS ESTEBAN S. SILVA AND
MAGDALENA LANDICHO MORAL DAMAGES IN THE AMOUNT OF
P15,000.00;
7) .NOT AWARDING TO APPELLANTS, P1,000,000.00 EXEMPLARY
DAMAGES; 25% OF THE APPELLANTS CLAIM AS AND FOR
ATTORNEYS FEE AND COSTS OF SUIT.[12]
ISSUES
1. Whether or not petitioner bank is liable to pay the business taxes
and mayors permit fees imposed by respondent;
2. Whether or not the closure of petitioner bank is valid;
3. Whether or not petitioners are entitled to an award of unrealized
profit and damages;

4. Whether or not respondent Atty. Victor Valero is entitled to

damages.
On the first issue, petitioner bank claims that of the P82,408.66 it
paid under protest, it is actually liable only for the amount of
P24,154, representing taxes, fees and charges due beginning 1987,
or after the issuance of E.O. No. 93. Prior to said year, it was
exempt from paying any taxes, fees, and charges by virtue of Rep.
Act No. 720.
We find the banks claim for refund untenable now.
Section 14 of Rep. Act No. 720, as amended by Republic Act No.
4106,[13] approved on July 19, 1964, had exempted rural banks
with net assets not exceeding one million pesos (P1,000,000) from
the payment of all taxes, charges and fees. The records show that
as of December 29, 1986, petitioner banks net assets amounted
only to P745,432.29[14] or below the one million ceiling provided
for in Section 14 of the old Rural Banking Act. Hence, under Rep.
Act No. 720, petitioner bank could claim to be exempt from
payment of all taxes, charges and fees under the aforementioned
provision.
However, on December 17, 1986, Executive Order No. 93 was
issued by then President Corazon Aquino, withdrawing all tax and
duty incentives with certain exceptions. Notably, not included
among the exceptions were those granted to rural banks under
Rep. Act No. 720. With the passage of said law, petitioner could no
longer claim any exemption from payment of business taxes and
permit fees.
Now, as to the refund of P57,854 claimed by petitioners allegedly
because of overpayment of taxes and fees, we note that petitioners
have not adequately substantiated their claim. As found by the
Court of Appeals:
As to the computation of the payable fees, the plaintiffs-appellants
claim an overpayment and pray for a refund. It is not clearly shown
from their argument that such overpayment exists. And from their
initial complaint, they even asked for the refund of the whole
P82,408.66 paid, which complaint was instituted in 1991. They
claim having paid the fees and charges due since 1991, which is
irrelevant, since the P82,408.66 was paid for the period before
1991, and thus no deduction can be made for payments after that
period. It is not clear where their computation of P57,854.00 owed
them came from, and lacking solid support, their prayer for a

partial refund must fail. Plaintiffs-appellants have failed to show

that the payment of fees and charges even covered the period
before their exemption was withdrawn.[15]
Factual findings of the Court of Appeals, which are supported on
record, are binding and conclusive upon this Court. As repeatedly
held, such findings will not be disturbed unless they are palpably
unsupported by the evidence on record or unless the judgment
itself is based on misapprehension of facts.[16] Moreover, in a
petition for review, only questions of law are properly raised. On
this score, the refund sought by petitioners could not be
entertained much less granted.
Anent the second issue, petitioner bank claims that the closure of
respondent bank was an improper exercise of police power because
a municipal corporation has no inherent but only delegated police
power, which must be exercised not by the municipal mayor but by
the municipal council through the enactment of ordinances. It also
assailed the Court of Appeals for invoking the General Welfare
Clause embodied in Section 16[17] of the Local Government Code
of 1991, which took effect in 1992,[18] when the closure of the
bank was actually done on July 31, 1991.
Indeed the Local Government Code of 1991 was not yet in effect
when the municipality ordered petitioner banks closure on July 31,
1991. However, the general welfare clause invoked by the Court of
Appeals is not found on the provisions of said law alone. Even
under the old Local Government Code (Batas Pambansa Blg. 337)
[19] which was then in effect, a general welfare clause was
provided for in Section 7 thereof. Municipal corporations are
agencies of the State for the promotion and maintenance of local
self-government and as such are endowed with police powers in
order to effectively accomplish and carry out the declared objects
of their creation.[20] The authority of a local government unit to
exercise police power under a general welfare clause is not a recent
development. This was already provided for as early as the
Administrative Code of 1917.[21] Since then it has been reenacted
and implemented by new statutes on the matter. Thus, the closure
of the bank was a valid exercise of police power pursuant to the
general welfare clause contained in and restated by B.P. Blg. 337,
which was then the law governing local government units. No
reversible error arises in this instance insofar as the validity of
respondent municipalitys exercise of police power for the general
welfare is concerned.

The general welfare clause has two branches. The first, known as
the general legislative power, authorizes the municipal council to
enact ordinances and make regulations not repugnant to law, as
may be necessary to carry into effect and discharge the powers
and duties conferred upon the municipal council by law. The
second, known as the police power proper, authorizes the
municipality to enact ordinances as may be necessary and proper
for the health and safety, prosperity, morals, peace, good order,
comfort, and convenience of the municipality and its inhabitants,
and for the protection of their property.[22]
In the present case, the ordinances imposing licenses and requiring
permits for any business establishment, for purposes of regulation
enacted by the municipal council of Makati, fall within the purview
of the first branch of the general welfare clause. Moreover, the
ordinance of the municipality imposing the annual business tax is
part of the power of taxation vested upon local governments as
provided for under Section 8 of B.P. Blg. 337,[23] to wit:
Sec. 8. Authority to Create Sources of Revenue. (1) Each local
government unit shall have the power to create its own sources of
revenue and to levy taxes, subject to such limitations as may be
provided by law.
Implementation of these ordinances is vested in the municipal
mayor, who is the chief executive of the municipality as provided
for under the Local Government Code, to wit:
Sec. 141. Powers and Duties.
(1) The mayor shall be the chief executive of the municipal
government and shall exercise such powers, duties and functions
as provided in this Code and other laws.
(2) He shall:. ..
(k) Grant licenses and permits in accordance with existing laws or
municipal ordinances and revoke them for violation of the
conditions upon which they have been granted;. . .
(o) Enforce laws, municipal ordinances and resolutions and issue
necessary orders for their faithful and proper enforcement and
execution;
(p) Ensure that all taxes and other revenues of the municipality are
collected, and that municipal funds are spent in accordance with
law, ordinances and regulations;
...
(t) Cause to be instituted judicial proceedings in connection with
the violation of ordinances, for the collection of taxes, fees and
charges, and for the recovery of property and funds of the

municipality, and otherwise to protect the interest of the

municipality; [24] (Emphasis supplied). . .
Consequently, the municipal mayor, as chief executive, was clothed
with authority to create a Special Task Force headed by respondent
Atty. Victor A.L. Valero to enforce and implement said ordinances
and resolutions and to file appropriate charges and prosecute
violators.[25] Respondent Valero could hardly be faulted for
performing his official duties under the cited circumstances.
Petitioners contend that MMC Ordinance No. 82-03 and Municipal
Ordinance No. 122 are void for lack of publication. This again raises
a factual issue, which this Court may not look into. As repeatedly
held, this Court is not a trier of facts.[26] Besides, both the Court of
Appeals and the trial court found lack of sufficient evidence on this
point to support petitioners claim, thus:
And finally the matter of the lack of publication is once again
alleged by the plaintiffs-appellants, claiming that the matter was
skirted by the trial court. This argument must fail, in the light of the
trial courts squarely finding lack of evidence to support the
allegation of the plaintiffs-appellants. We quote from the trial courts
decision:
The contention that MMC Ordinance No. 82-03 and Municipal
Ordinance No. 122 of Makati are void as they were not publishced
(sic) is untenable. The mere allegation of the plaintiff is not
sufficient to declare said ordinances void. The plaintiffs failed to
adduce clear, convincing and competent evidence to prove said
Ordinances void. Moreover, in this jurisdiction, an ordinance is
presumed to be valid unless declared otherwise by a Court in an
appropriate proceeding where the validity of the ordinance is
directly put in issue
On the issue of the closure of the bank, we find that the bank was
not engaged in any illegal or immoral activities to warrant its
outright closure. The appropriate remedies to enforce payment of
delinquent taxes or fees are provided for in Section 62 of the Local
Tax Code, to wit:
SEC. 62. Civil Remedies. The civil remedies available to enforce
payment of delinquent taxes shall be by distraint of personal
property, and by legal action. Either of these remedies or both
simultaneously may be pursued at the discretion of the proper
authority.

The payment of other revenues accruing to local governments shall

be enforced by legal action.
Said Section 62 did not provide for closure. Moreover, the order of
closure violated petitioners right to due process, considering that
the records show that the bank exercised good faith and presented
what it thought was a valid and legal justification for not paying the
required taxes and fees. The violation of a municipal ordinance
does not empower a municipal mayor to avail of extrajudicial
remedies. It should have observed due process before ordering the
banks closure.
Finally, on the issue of damages, we agree with both the trial and
the appellate courts that the bank is not entitled to any damages.
The award of moral damages cannot be granted to a corporation, it
being an artificial person that exists only in legal contemplation and
cannot, therefore, experience physical suffering and mental
anguish, which can be experienced only by one having a nervous
system.[30] There is also no sufficient basis for the award of
exemplary damages. There being no moral damages, exemplary
damages could not be awarded also. As to attorneys fees, aside
from lack of adequate support and proof on the matter, these fees
are not recoverable as a matter of right but depend on the sound
discretion of the courts.
Under the circumstances of this case, the award of damages to
Atty. Valero is also baseless. We cannot ascribe any illegal motive or
malice to the bank for impleading Atty. Valero as an officer of
respondent municipality. The bank filed the case against
respondent municipality in the honest belief that it is exempt from
paying taxes and fees. Since Atty. Valero was the official charged
with the implementation of the ordinances of respondent
municipality, he was rightly impleaded as a necessary party in the
case.
WHEREFORE, the assailed Decision dated July 17, 2001, of the
Court of Appeals in CA-G.R. CV No. 58214 is AFFIRMED with
MODIFICATIONS, so that (1) the order denying any claim for refunds
and fees allegedly overpaid by the bank, as well as the denial of
any award for damages and unrealized profits, is hereby
SUSTAINED; (2) the order decreeing the closure of petitioner bank is
SET ASIDE; and (3) the award of moral damages and attorneys fees
to Atty. Victor A.L. Valero is DELETED. No pronouncement as to
costs.

[4] Republic Act No. 720. Entitled An Act Providing For The Creation,
Organization And Operation Of Rural Banks, And For Other
Purposes.
SEC. 14. of said law reads: All rural banks created and organized
under the provisions of this Act with net assets not exceeding one
million pesos, excluding the counterpart capital subscribed and
paid in by the Government under Sections seven and eight of this
Act, shall be exempt from the payment of all taxes, charges and
fees of whatever nature and description: Provided, however, That
when the net assets of a rural bank exceed one million pesos, the
taxes, charges and fees shall be levied in the proportion that such
excess bears to the said net assets: Provided, finally, That when the
net assets of a rural bank exceed three million pesos, it shall pay
taxes, fees and charges like any other bank.
[6] E.O. No. 93. Entitled Withdrawing All Tax and Duty Incentives,
Subject to Certain Exceptions, Expanding the Powers of the Fiscal
Incentives Review Board, and For Other Purposes. Section 1 of said
Executive Order states in part: The provisions of any general or
special law to the contrary notwithstanding, all tax and duty
incentives granted to government and private entities are hereby
withdrawn . . . .
[7] Republic Act No. 7353. an act providing for the creation,
organization and [17] SEC. 16. General Welfare. Every local
government unit shall exercise the powers expressly granted, those
necessarily implied therefrom, as well as powers necessary,
appropriate, or incidental for its efficient and effective governance
and those which are essential to the promotion of the general
welfare. Within their respective territorial jurisdictions, local
government units shall ensure and support, among other things,
the preservation and enrichment of culture, promote health and
safety, enhance the right of the people to a balanced ecology,
encourage and support the development of appropriate and selfreliant scientific and technological capabilities, improve public
morals, enhance economic prosperity and social justice, promote
full employment among their residents, maintain peace and order,
and preserve the comfort and convenience of their inhabitants.
[18] SEC. 536. Effectivity Clause This Code shall take effect on
January first, nineteen hundred and ninety-two, unless otherwise
provided herein, after its complete publication in at least one (1)
newspaper of general circulation.
[19] B.P. Blg. 337, Sec. 7. Governmental Powers in General. Every
local government unit shall exercise the powers expressly granted,
those necessarily implied therefrom, as well as powers necessary

and proper for governance such as to promote health and safety,

enhance prosperity, improve morals, and maintain peace and order
in the local government unit, and preserve the comfort and
convenience of the inhabitants therein.
[21] SEC. 2238. General power of council to enact ordinances and
make regulations. The municipal council shall enact such
ordinances and make such regulations, not repugnant to law, as
may be necessary to carry into effect and discharge the powers
and duties conferred upon it by law and such as shall seem
necessary and proper to provide for the health and safety, promote
the prosperity, improve the morals, peace, good order, comfort,
and convenience of the municipality and the inhabitants thereof,
and for the protection of the property therein.
G.R. No. 121920 August 9, 2005
THE MUNICIPALITY OF SAN JUAN, METRO MANILA, Petitioners,
vs.THE HON. COURT OF APPEALS, LAURA BIGLANG-AWA,
METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM (MWSS),
and KWOK CHEUNG, Respondent.
In this appeal by way of a petition for review on certiorari under
Rule 45 of the Rules of Court, petitioner Municipality of San Juan
urges us to annul and set aside the decision dated 08 September
19951 of the Court of Appeals in CA-G.R. CV No. 38906, affirming
with modification an earlier decision of the Regional Trial Court at
Pasig City in an action for damages thereat commenced by private
respondent Laura Biglang-awa against, among others, the herein
petitioner.
The material facts are not at all disputed:
Under a "Contract For Water Service Connections"2 entered into by
and between the Metropolitan Waterworks and Sewerage System
(MWSS) and Kwok Cheung as sole proprietor of K.C. Waterworks
System Construction (KC, for short), the former engaged the
services of the latter to install water service connections. Article 11
(Scope of Work), paragraph 2.01 of the agreement provides:
2.01 The CONTRACTOR agrees to install water service connections,
transfer location of tapping to the nearest main, undertake
separation of service connection, change rusted connections, within
the service area of the MWSS specified in each job order covered
by this Contract, from the water main up to the installation of the
verticals. Tapping of the service pipe connection and mounting of
water meter shall be undertaken exclusively or solely by the MWSS;

On 20 May 1988, KC was given a Job Order by the South Sector

Office of MWSS to conduct and effect excavations at the corner of
M. Paterno and Santolan Road, San Juan, Metro Manila, a national
road, for the laying of water pipes and tapping of water to the
respective houses of water concessionaires.
That same day, KC dispatched five (5) of its workers under Project
Engineer Ernesto Battad, Jr. to conduct the digging operations in
the specified place. The workers installed four (4) barricades made
up of two-inch thick GI pipes welded together, 1.3 meters wide and
1.2 meters high, at the area where the digging is to take place. The
digging operations started at 9 oclock in the morning and ended at
about 3 oclock in the afternoon. The workers dug a hole one (1)
meter wide and 1.5 meters deep, after which they refilled the
excavated portion of the road with the same gravel and stone
excavated from the area. At that time, only of the job was
finished in view of the fact that the workers were still required to reexcavate that particular portion for the tapping of pipes for the
water connections to the concessionaires.
Meanwhile, between 10 oclock and 11 oclock in the evening of 31
May 1988, Priscilla Chan was driving her Toyota Crown car with
Plate No. PDK 991 at a speed of thirty (30) kilometers per hour on
the right side of Santolan Road towards the direction of
Pinaglabanan, San Juan, Metro Manila. With her on board the car
and seated on the right front seat was Assistant City Prosecutor
Laura Biglang-awa. The road was flooded as it was then raining
hard. Suddenly, the left front wheel of the car fell on a manhole
where the workers of KC had earlier made excavations. As a result,
the humerus on the right arm of Prosecutor Biglang-awa was
fractured. Thereupon, Priscilla Chan contacted Biglang-awas
husband who immediately arrived at the scene and brought his
wife to the Cardinal Santos Hospital.
Dispatched to the scene of the accident to conduct an investigation
thereof, Pfc. Felix Ramos of the Traffic Division of the San Juan
Police Station, upon arriving thereat, saw Priscilla Chans car
already extracted from the manhole and placed beside the
excavated portion of the road. According to this police officer, he
did not see any barricades at the scene when he arrived less than
an hour later. A Traffic Accident Investigation Report3 was
thereafter prepared and signed by Pfc. Ramos.
At the hospital, the attending physician, after having performed a
close reduction and application of abduction splint on Biglang-awa,
placed a plastic cast on her right arm. Barring complications, the

injury she suffered was expected to heal in four (4) to six (6) weeks,
although she must revisit her doctor from time to time for check-up
and rehabilitation. After some time, the plastic cast was removed.
Biglang-awa sustained no deformity and no tenderness of the area
of the injury but she could not sleep on her right side because she
still felt pain in that portion of her body. A Medical Certificate4 on
her injuries was issued by Dr. Antonio Rivera.

1. The Appellees KC and MWSS and the Appellant San Juan are
hereby ordered to pay, jointly and severally, to [Biglang-awa] the
amounts of P50,000.00 by way of moral damages, P50,000.00 by
way of exemplary damages and P5,000.00 by way of attorneys
fees, without prejudice to the right of the Appellee MWSS for
reimbursement from the Appellee KC under the Contract, Exhibit
"3-MWSS":

Consequent to the foregoing incident, Biglang-awa filed before the

Regional Trial Court at Pasig, Metro Manila a complaint for damages
against MWSS, the Municipality of San Juan and a number of San
Juan municipal officials.

2. The counterclaims of the Appellees and Appellant San Juan and

the cross-claim of the latter are DISMISSED. Without
pronouncement as to costs.

Later, Biglang-awa amended her complaint twice. In her second

amended complaint, she included KC as one of the defendants.
After due proceedings, the trial court rendered judgment in favor of
Biglang-awa adjudging MWSS and the Municipality of San Juan
jointly and severally liable to her. Dated 29 February 1992, the
decision5 dispositively reads in full, thus:
WHEREFORE, foregoing considered, judgment is hereby rendered
declaring the Municipality of San Juan, Metro Manila and the
Metropolitan Waterworks and Sewerage System jointly and
severally liable to the plaintiff [Biglang-awa]. Both defendants are
ordered to pay plaintiff the amounts of:
(a) P18,389.55, for actual damages suffered by the plaintiff;
(b) P15,000.00, for moral damages;
(c) P10,000.00, for exemplary damages;
(d) P5,000.00, for attorneys fees; and
(e) to pay the costs.
SO ORDERED.
Unable to accept the judgment, both Biglang-awa and the
Municipality of San Juan went to the Court of Appeals via ordinary
appeal under Rule 41 of the Rules of Court, which appeal was
thereat docketed as CA-G.R. CV No. 38906.
As stated at the outset hereof, the appellate court, in a decision
dated 08 September 1995, affirmed with modification that of the
trial court, to wit:
IN THE LIGHT OF ALL THE FOREGOING, the Decision appealed from
is AFFIRMED but modified as follows:

SO ORDERED. (Words in bracket supplied).

Therefrom, petitioner Municipality of San Juan came to this Court
thru the present recourse, on its submissions that:
I.

THE RESPONDENT APPELLATE COURT HAS DECIDED A

QUESTION OF SUBSTANCE NOT HEREFORE DECIDED BY
THE SUPREME COURT.

II.

THE RESPONDENT APPELLATE COURT HAS DECIDED A

QUESTION PROBABLY NOT IN ACCORD WITH THE LAW
AND JURISPRUDENCE.
With no similar recourse having been taken by the other parties,
the Court shall limit itself to the liability or non-liability of petitioner
municipality for the injury sustained by Biglang-awa.
In denying liability for the subject accident, petitioner essentially
anchored its defense on two provisions of laws, namely: (1) Section
149, [1][z] of Batas Pambansa Blg. 337, otherwise known as the
Local Government Code of 1983; and (2) Section 8, Ordinance 8201, of the Metropolitan Manila Commission.
Petitioner maintains that under Section 149, [1][z] of the Local
Government Code,6 it is obliged to provide for the construction,
improvement, repair and maintenance of only municipal streets,
avenues, alleys, sidewalks, bridges, parks and other public places.
Ergo, since Santolan Road is concededly a national and not a
municipal road, it cannot be held liable for the injuries suffered by
Biglang-awa on account of the accident that occurred on said road.
Additionally, petitioner contends that under Section 8, Ordinance
No. 82-01, of the Metropolitan Manila Commission, which reads:

In the event of death, injury and/or damages caused by the noncompletion of such works and/or failure of one undertaking the
work to adopt the required precautionary measures for the
protection of the general public or violation of any of the terms or
conditions of the permit, the permittee/excavator shall assume fully
all liabilities for such death, injury or damage arising therefrom. For
this purpose, the excavator/permittee shall purchase insurance
coverage to answer for third party liability,
only the Project Engineer of KC and MWSS can be held liable for the
same accident.
The petition must have to be denied.
Jurisprudence7 teaches that for liability to arise under Article 21898
of the Civil Code, ownership of the roads, streets, bridges, public
buildings and other public works, is not a controlling factor, it being
sufficient that a province, city or municipality has control or
supervision thereof. This, we made clear in City of Manila vs.
Teotico, et al9:
At any rate, under Article 2189 of the Civil Code, it is not necessary
for the liability therein established to attach that the defective
roads or streets belong to the province, city or municipality from
which responsibility is exacted. What said article requires is that
the province, city or municipality have either "control or
supervision" over said street or road. x x x
It is argued, however, that under Section 149, [1][z] of the Local
Government Code, petitioner has control or supervision only over
municipal and not national roads, like Santolan Road.
Sadly, petitioner failed to take note of the other provisions of
Section 149 of the same Code, more particularly the following:
Section 149. Powers and Duties. (1) The sangguniang bayan shall:
(bb) Regulate the drilling and excavation of the ground for the
laying of gas, water, sewer, and other pipes; the building and repair
of tunnels, sewers, drains and other similar structures; erecting of
poles and the use of crosswalks, curbs and gutters therein, and
adopt measures to ensure public safety against open canals,
manholes, live wires and other similar hazards to life and property,
and provide just compensation or relief for persons suffering from
them; (Underscoring supplied)

Clear it is from the above that the Municipality of San Juan can
"regulate" the drilling and excavation of the ground for the laying of
gas, water, sewer, and other pipes within its territorial jurisdiction.
Doubtless, the term "regulate" found in the aforequoted provision
of Section 149 can only mean that petitioner municipality exercises
the power of control, or, at the very least, supervision over all
excavations for the laying of gas, water, sewer and other pipes
within its territory.
We must emphasize that under paragraph [1][bb] of Section 149,
supra, of the Local Government Code, the phrases "regulate the
drilling and excavation of the ground for the laying of gas, water,
sewer, and other pipes", and "adopt measures to ensure public
safety against open canals, manholes, live wires and other similar
hazards to life and property", are not modified by the term
"municipal road". And neither can it be fairly inferred from the
same provision of Section 149 that petitioners power of regulation
vis--vis the activities therein mentioned applies only in cases
where such activities are to be performed in municipal roads. To our
mind, the municipalitys liability for injuries caused by its failure to
regulate the drilling and excavation of the ground for the laying of
gas, water, sewer, and other pipes, attaches regardless of whether
the drilling or excavation is made on a national or municipal road,
for as long as the same is within its territorial jurisdiction.
We are thus in full accord with the following pronouncements of the
appellate court in the decision under review:
While it may be true that the Department of Public Works and
Highways may have issued the requisite permit to the Appellee KC
and/or concessionaires for the excavation on said road, the
Appellant San Juan is not thereby relieved of its liability to [Biglangawa] for its own gross negligence. Indeed, Evangeline Alfonso, the
witness for the Appellant San Juan unabashedly [sic] admitted,
when she testified in the Court a quo, that even if the Department
of Public Works and Highways failed to effect the requisite refilling,
the Appellant San Juan was mandated to undertake the necessary
precautionary measures to avert accidents and insure the safety of
pedestrians and commuters:
The [petitioner] cannot validly shirk from its obligation to maintain
and insure the safe condition of the road merely because the
permit for the excavation may have been issued by a government
entity or unit other than the Appellant San Juan or that the

excavation may have been done by a contractor under contract

with a public entity like the Appellee MWSS.
Neither is the [petitioner] relieved of liability based on its purported
lack of knowledge of the excavation and the condition of the road
during the period from May 20, 1988 up to May 30, 1988 when the
accident occurred. It must be borne in mind that the obligation of
the [petitioner] to maintain the safe condition of the road within its
territory is a continuing one which is not suspended while a street
is being repaired (Corpus Juris Secundum, Municipal Corporations,
page 120). Knowledge of the condition of the road and the defects
and/or obstructions on the road may be actual or constructive. It is
enough that the authorities should have known of the aforesaid
circumstances in the exercise of ordinary care (City of Louiseville
versus Harris, 180 Southwestern Reporter. page 65). In the present
recourse, Santolan Road and the Greenhills area coming from
Ortigas Avenue going to Pinaglabanan, San Juan, Metro Manila is a
busy thoroughfare. The gaping hole in the middle of the road of
Santolan Road could not have been missed by the authorities
concerned. After all, the [petitioner] San Juan is mandated to effect
a constant and unabated monitoring of the conditions of the roads
to insure the safety of motorists. Persuasive authority has it that:
It is the duty of the municipal authorities to exercise an active
vigilance over the streets; to see that they are kept in a reasonably
safe condition for public travel. They cannot fold their arms and
shut their eyes and say they have no notice. (Todd versus City of
Troy, 61 New York 506). (Words in bracket supplied).
Nor can petitioner seek shelter on Section 8 of Ordinance 82-01 of
the Metropolitan Manila Commission.
Concededly, Section 8 of the Ordinance makes the
permittee/excavator liable for death, injury and/or damages caused
by the non-completion of works and/or failure of the one
undertaking the works to adopt the required precautionary
measures for the protection of the general public. Significantly,
however, nowhere can it be found in said Ordinance any provision
exempting municipalities in Metro Manila from liabilities caused by
their own negligent acts. Afortiori, nothing prevents this Court from
applying other relevant laws concerning petitioners liability for the
injuries sustained by Biglang-awa on that fateful rainy evening of
31 May 1988.
WHEREFORE, the instant petition is DENIED and the assailed
decision of the appellate court AFFIRMED.

G.R. No. L-52179

April 8, 1991

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. BANIA, respondents.
Mauro C. Cabading, Jr. for petitioner.
Simeon G. Hipol for private respondent.
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 filed its answer and
raised affirmative defenses such as lack of cause of action, nonsuability of 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.
In the course of the proceedings, the respondent judge issued the
following questioned orders, 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.
G.R. No. 170626

March 3, 2008

THE SANGGUNIANG BARANGAY OF BARANGAY DON MARIANO

MARCOS, MUNICIPALITY OF BAYOMBONG PROVINCE OF NUEVA
VISCAYA represented by BARANGAY KAGAWAD JOSE CENEN
SANTOS, MARIO BACUD, WALTER FRANCISCO, ROSITA SEBASTIAN,
LAURETA CABAUATAN, CECILIA ALINDAYU and MELY SIMANGAN,
petitioners,
vs.PUNONG BARANGAY SEVERINO MARTINEZ, respondent.
This is a Petition for Review on Certiorari under Rule 45 of the Rules
of Court, assailing the Orders dated 20 October 20051 and 30
November 20052 of the Regional Trial Court (trial court), Branch 27,
of Bayombong, Nueva Vizcaya, in Special Civil Action No. 6727. In
its assailed Orders, the trial court ruled that the Sangguniang
Bayan of Bayombong, Neuva Vizcaya (Sangguniang Bayan),
exceeded its jurisdiction when it imposed upon respondent
Severino Martinez the administrative penalty of removal from
office.
Petitioner Sangguniang Barangay is the legislative body of
Barangay Don Mariano Marcos, Bayombong, Nueva Vizcaya, a local
government unit created, organized and existing as such under
pertinent laws of the Republic of the Philippines. Respondent
Martinez is the incumbent Punong Barangay of the said local
government unit.3
On 5 November 2004, Martinez was administratively charged with
Dishonesty and Graft and Corruption by petitioner through the filing
of a verified complaint before the Sangguniang Bayan as the
disciplining authority over elective barangay officials pursuant to
Section 614 of Rep. Act No. 7160, otherwise known as the Local
Government Code. Petitioner filed with the Sangguniang Bayan an
Amended Administrative Complaint against Martinez on 6
December 2004 for Dishonesty, Misconduct in Office and Violation
of the Anti-Graft and Corrupt Practices Act.5 Petitioner alleged that
Martinez committed the following acts:
1. Failure to submit and fully remit to the Barangay Treasurer the
income of their solid waste management project since 2001
particularly the sale of fertilizer derived from composting.

2. Failure to submit/remit to the barangay treasurer the sale of

recyclable materials taken from garbage collection.
3. Using the garbage truck for other purposes like hauling sand and
gravel for private persons without monetary benefit to the
barangay because no income from this source appears in the year
end report even if payments were collected x x x.
4. Using/spending barangay funds for repair, gasoline, lubricants,
wheels and other spare parts of the garbage truck instead of using
the money or income of said truck from the garbage fees collected
as income from its Sold Waste Management Project. x x x.
5. Unliquidated traveling expenses for Seminar/Lakbay-Aral in 2003
because although a cash advance was made by the respondent for
the said purpose, he, however, did not attend said seminar because
on the dates when he was supposed to be on seminar they saw him
in the barangay. x x x.
6. That several attempts to discuss said problem during sessions
were all in vain because respondent declined to discuss it and
would adjourn the session.x x x.6
Upon his failure to file an Answer to the Amended Administrative
Complaint dated 6 December 2004, Martinez was declared by the
Sangguniang Bayan as in default. Pending the administrative
proceedings, Martinez was placed under preventive suspension for
60 days or until 8 August 2005.7
On 28 July 2005, the Sangguniang Bayan rendered its Decision
which imposed upon Martinez the penalty of removal from office.8
The Decision dated 28 July 2005 was conveyed to the Municipal
Mayor of Bayombong, Nueva Ecija, Severino Bagasao, for its
implementation. On 3 August 2005, Municial Mayor Bagasao issued
a Memorandum, wherein he stated that the Sanggunaing Bayan is
not empowered to order Martinezs removal from service. However,
the Decision remains valid until reversed and must be executed by
him. For the meantime, he ordered the indefinite suspension of
Martinez since the period of appeal had not yet lapsed.9 The
dispositive portion of the said Memorandum states that:10
The FOREGOING considered come AUGUST 8, 2005, respondent
SEVERINO D. MARTINEZ is hereby directed NOT to ASSUME and
DISCHARGE the functions of the Office of the Punong Barangay of
Barangay Don Mariano Marcos, Bayombong, Nueva Vizcaya and for
complainant JOSE CENEN SANTOS to CONTINUE assuming and
discharging the functions of the said office in ACTING CAPACITY
pursuant to the provisions of Sections 67 and 68 of Republic Act No.
7160.

On 26 August 2005, Martinez filed a Special Civil Action for

Certiorari with a prayer for Temporary Restraining Order and
Preliminary Injunction before the trial court against petitioner, the
Sangguniang Bayan and Mayor Bagasao questioning the validity of
the Decision dated 28 July 2005 of the Sangguniang Bayan. This
case was docketed as Special Civil Action No. 6727, which was
initially heard by Branch 28, but later raffled to Branch 27 of the
trial court.11
On 20 October 2005, the trial court issued an Order declaring the
Decision of the Sangguniang Bayan and the Memorandum of Mayor
Bagasao void. It maintained that the proper courts, and not the
petitioner, are empowered to remove an elective local official from
office, in accordance with Section 60 of the Local Government
Code. Thus, the Order of the Sangguniang Bayan removing
Martinez from service is void. As a consequence, Mayor Bagasao
cannot prevent Martinez from assuming his office on the basis of a
void order. The trial court further ruled that Martinez properly
availed himself of the remedy of Special Civil Action, where the
order assailed was a patent nullity.12
On 10 November 2005, petitioner filed a Motion for
Reconsideration13 of the trial courts Order dated 10 October 2005.
The trial court denied the said motion in another Order dated 30
November 2005.14
Hence, the present petition was filed.
Although Martinezs term as Punong Baranggay expired upon the
holding of the 29 October 2007 Synchronized Barangay and
Sangguniang Kabataan elections and, thus, rendering this petition
moot and academic, the Court will nevertheless settle a legal
question that is capable of repetition yet evading review.15
The pivotal issue in this case is whether or not the Sangguniang
Bayan may remove Martinez, an elective local official, from office.
The pertinent legal provisions and cases decided by this Court
firmly establish that the Sanggunaing Bayan is not empowered to
do so.
Section 60 of the Local Government Code conferred upon the
courts the power to remove elective local officials from office:
Section 60. Grounds for Disciplinary Actions.An elective local
official may be disciplined, suspended, or removed from office on
any of the following grounds:

An elective local official may be removed from office on the

grounds enumerated above by order of the proper court. (Emphasis
provided.)
During the deliberations of the Senate on the Local Government
Code,16 the legislative intent to confine to the courts, i.e., regional
trial courts, the Sandiganbayan and the appellate courts,
jurisdiction over cases involving the removal of elective local
officials was evident:
Senator Pimentel. This has been reserved, Mr. President, including
the issue of whether or not the Department Secretary or the Office
of the President can suspend or remove an elective official.
Senator Saguisag. For as long as that is open for some later
disposition, may I just add the following thought: It seems to me
that instead of identifying only the proper regional trial court or the
Sandiganbayan, and since we know that in the case of a regional
trial court, particularly, a case may be appealed or may be the
subject of an injunction, in the framing of this later on, I would like
to suggest that we consider replacing the phrase "PROPER
REGIONAL TRIAL COURT OR THE SANDIGANBAYAN" simply by
"COURTS." Kasi po, maaaring sabihin nila na mali iyong regional
trial court o ang Sandiganbayan.
Senator Pimentel. "OR THE PROPER COURT."
Senator Saguisag. "OR THE PROPER COURT."
Senator Pimentel. Thank you. We are willing to accept that now, Mr.
President.
Senator Saguisag. It is to be incorporated in the phraseology that
we will craft to capture the other ideas that have been elevated.
(Emphasis provided.)
In Salalima v. Guingona, Jr.,17 the Court en banc categorically ruled
that the Office of the President is without any power to remove
elected officials, since the power is exclusively vested in the proper
courts as expressly provided for in the last paragraph of Section 60
of the Local Government Code. It further invalidated Article 125,
Rule XIX of the Rules and Regulations Implementing the Local
Government Code of 1991, which provided that:
Article 125. Grounds for Disciplinary Actions. x x x.
(b) An elective local official may be removed from office on the
grounds enumerated in paragraph (a) of this Article by order of the
proper court or the disciplining authority whichever first acquires
jurisdiction to the exclusion of the other.

The Court nullified the aforequoted rule since the Oversight

Committee that prepared the Rules and Regulations of the Local
Government Code exceeded its authority when it granted to the
"disciplining authority" the power to remove elective officials, a
power which the law itself granted only to the proper courts. Thus,
it is clear that under the law, the Sangguniang Bayan is not vested
with the power to remove Martinez.
Petitioner contends that administrative cases involving elective
barangay officials may be filed with, heard and decided by the
Sangguniang Panlungsod or Sangguniang Bayan concerned, which
can, thereafter, impose a penalty of removal from office. It further
claims that the courts are merely tasked with issuing the order of
removal, after the Sangguniang Panlungsod or Sangguniang Bayan
finds that a penalty of removal is warranted.18
The aforementioned position put forward by the petitioner would
run counter to the rationale for making the removal of elective
officials an exclusive judicial prerogative. In Pablico v. Villapando,19
the court declared that:
It is beyond cavil, therefore, that the power to remove erring
elective local officials from service is lodged exclusively with the
courts. Hence, Article 124 (sic 125)20 (b), Rule XIX, of the Rules
and Regulations Implementing the Local Government Code, insofar
as it vests power on the "disciplining authority" to remove from
office erring elective local officials, is void for being repugnant to
the last paragraph of Section 60 of the Local Government Code of
1991. The law on suspension or removal of elective public officials
must be strictly construed and applied, and the authority in whom
such power of suspension or removal is vested must exercise it with
utmost good faith, for what is involved is not just an ordinary public
official but one chosen by the people through the exercise of their
constitutional right of suffrage. Their will must not be put to naught
by the caprice or partisanship of the disciplining authority. Where
the disciplining authority is given only the power to suspend and
not the power to remove, it should not be permitted to manipulate
the law by usurping the power to remove. (Emphasis supplied.)
The rule which confers to the proper courts the power to remove an
elective local official from office is intended as a check against any
capriciousness or partisan activity by the disciplining authority.
Vesting the local legislative body with the power to decide whether
or not a local chief executive may be removed from office, and only
relegating to the courts a mandatory duty to implement the

decision, would still not free the resolution of the case from the
capriciousness or partisanship of the disciplining authority. Thus,
the petitioners interpretation would defeat the clear intent of the
law.

Petitioner alleged that an interpretation which gives the judiciary

the power to remove local elective officials violates the doctrine of
separation of powers. This allegation runs contrary to the 1987
Constitution itself, as well as jurisprudence.

Moreover, such an arrangement clearly demotes the courts to

nothing more than an implementing arm of the Sangguniang
Panlungsod, or Sangguniang Bayan. This would be an unmistakable
breach of the doctrine on separation of powers, thus placing the
courts under the orders of the legislative bodies of local
governments. The courts would be stripped of their power of
review, and their discretion in imposing the extreme penalty of
removal from office is thus left to be exercised by political factions
which stand to benefit from the removal from office of the local
elective official concerned, the very evil which Congress sought to
avoid when it enacted Section 60 of the Local Government Code.

The 1987 Constitution is explicit in defining the scope of judicial

power. It establishes the authority of the courts to determine in an
appropriate action the validity of acts of the political departments.
It speaks of judicial prerogative in terms of duty.21 Paragraph 2,
Section 1, Article VIII of the 1987 Constitution, provides that:

Congress clearly meant that the removal of an elective local official

be done only after a trial before the appropriate court, where court
rules of procedure and evidence can ensure impartiality and
fairness and protect against political maneuverings. Elevating the
removal of an elective local official from office from an
administrative case to a court case may be justified by the fact that
such removal not only punishes the official concerned but also, in
effect, deprives the electorate of the services of the official for
whom they voted.
As the law stands, Section 61 of the Local Government Code
provides for the procedure for the filing of an administrative case
against an erring elective barangay official before the Sangguniang
Panlungsod or Sangguniang Bayan. However, the Sangguniang
Panlungsod or Sangguniang Bayan cannot order the removal of an
erring elective barangay official from office, as the courts are
exclusively vested with this power under Section 60 of the Local
Government Code. Thus, if the acts allegedly committed by the
barangay official are of a grave nature and, if found guilty, would
merit the penalty of removal from office, the case should be filed
with the regional trial court. Once the court assumes jurisdiction, it
retains jurisdiction over the case even if it would be subsequently
apparent during the trial that a penalty less than removal from
office is appropriate. On the other hand, the most extreme penalty
that the Sangguniang Panlungsod or Sangguniang Bayan may
impose on the erring elective barangay official is suspension; if it
deems that the removal of the official from service is warranted,
then it can resolve that the proper charges be filed in court.

Judicial power includes the duty of the courts of justice to settle

actual controversies involving rights which are legally demandable
and enforceable, and to determine whether or not there has been a
grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the
Government. (Emphasis provided.)
The doctrine of separation of powers is not absolute in its
application; rather, it should be applied in accordance with the
principle of checks and balances. The removal from office of
elective officials must not be tainted with partisan politics and used
to defeat the will of the voting public. Congress itself saw it fit to
vest that power in a more impartial tribunal, the court.
Furthermore, the local government units are not deprived of the
right to discipline local elective officials; rather, they are prevented
from imposing the extreme penalty of dismissal.
Petitioner questions the Decision dated 20 October 2005 of the trial
court for allowing the petition filed before it as an exception to the
doctrine of exhaustion of administrative remedies. If, indeed, the
Sangguniang Bayan had no power to remove Martinez from office,
then Martinez should have sought recourse from the Sangguniang
Panlalawigan. This Court upholds the ruling of the trial court.
The doctrine of exhaustion of administrative remedies calls for
resort first to the appropriate administrative authorities in the
resolution of a controversy falling under their jurisdiction before the
same may be elevated to the courts of justice for review. Nonobservance of the doctrine results in lack of a cause of action,
which is one of the grounds allowed by the Rules of Court for the
dismissal of the complaint.22
The doctrine of exhaustion of administrative remedies, which is
based on sound public policy and practical consideration, is not
inflexible. There are instances when it may be dispensed with and

judicial action may be validly resorted to immediately. Among these

exceptions are: 1) where there is estoppel on the part of the party
invoking the doctrine; 2) where the challenged administrative act is
patently illegal, amounting to lack of jurisdiction; 3) where there is
unreasonable delay or official inaction that will irretrievably
prejudice the complainant; 4) where the amount involved is
relatively small as to make the rule impractical and oppressive; 5)
where the question raised is purely legal and will ultimately have to
be decided by the courts of justice; 6) where judicial intervention is
urgent; 7) where its application may cause great and irreparable
damage; 8) where the controverted acts violate due process; 9)
when the issue of non-exhaustion of administrative remedies has
been rendered moot; 10) where there is no other plain, speedy and
adequate remedy; 11) when strong public interest is involved; and
13) in quo warranto proceedings.23
As a general rule, no recourse to courts can be had until all
administrative remedies have been exhausted. However, this rule is
not applicable where the challenged administrative act is patently
illegal, amounting to lack of jurisdiction and where the question or
questions involved are essentially judicial.
In this case, it is apparent that the Sangguniang Bayan acted
beyond its jurisdiction when it issued the assailed Order dated 28
July 2005 removing Martinez from office. Such act was patently
illegal and, therefore, Martinez was no longer required to avail
himself of an administrative appeal in order to annul the said Order
of the Sangguniang Bayan.24 Thus, his direct recourse to regular
courts of justice was justified.
In addition, this Court in Castro v. Gloria25 declared that where the
case involves only legal questions, the litigant need not exhaust all
administrative remedies before such judicial relief can be sought.
The reason behind providing an exception to the rule on exhaustion
of administrative remedies is that issues of law cannot be resolved
with finality by the administrative officer. Appeal to the
administrative officer would only be an exercise in futility. A legal
question is properly addressed to a regular court of justice rather
than to an administrative body.26
In the present case, Martinez raised before the trial court the sole
issue of whether the Sangguniang Bayan has jurisdiction over a
case involving the removal of a local elective official from office.27
In Martinezs petition before the trial court, only a legal question
was raised, one that will ultimately be resolved by the courts.
Hence, appeal to the administrative officer concerned would only

be circuitous and, therefore, should no longer be required before

judicial relief can be sought.
IN VIEW OF THE FOREGOING, the instant Petition is DENIED and the
assailed Decision of the Bayombong RTC in Special Civil Action No.
6727 is AFFIRMED.
SO ORDERED.
G.R. No. 170810

August 7, 2007

AZUCENA B. DON, JOSEPH DETERA, NENITA B. GRESOLA, LETICIA L.

ESPENILLA, EDITH G. DETOITO, JULNA D. JAYCO, ROGER ARIARTE,
CALVIN DEL VALLE, and ERLYN RAMIREZ, Petitioners,vs.RAMON H.
LACSA as erstwhile Punong Barangay of Bacolod, Juban, Sorsogon,
Respondent.
Petitioners-public school teachers charged before the Sangguniang
Bayan of Juban, Sorsogon respondent Ramon H. Lacsa
(respondent), then Punong Barangay of Bacolod, Juban, Sorsogon,
with grave threats, oppression, grave misconduct, and abuse of
authority.
On the directive of the then vice mayor of the Municipality of Juban
in his capacity as presiding officer of the Sangguniang Bayan,
respondent filed his Answer.1
A Special Investigating Committee (SIC) created by the
Sangguniang Bayan to investigate the case found sufficient
evidence for the preventive suspension of respondent. The
Sangguniang Bayan thus passed a resolution recommending his
preventive suspension.
Acting on the recommendation, the mayor slapped a two-month
preventive suspension against respondent on January 7, 2005.2
The SIC later submitted its report finding respondent guilty of
oppression, grave misconduct, and abuse of authority.3 On March
7, 2005, the Sangguniang Bayan issued Resolution No. 12-20054
adopting the SIC Report. By the same resolution, respondent was
removed from office.5
On March 8, 2005, the mayor issued Executive Order No. 8, Series
of 20056 implementing Resolution No. 12-2005 of the Sangguniang
Bayan and installing Florencio H. Lacsa, the highest ranking
Sangguniang Barangay member, in place of Ramon H. Lacsa as

Punong Barangay of Bacolod.7 On even date, respondent received

a copy of the executive order, together with a copy of Sangguniang
Bayan Resolution No. 12-2005.8
Twenty one days after receiving a copy of Sangguniang Bayan
Resolution No. 12-2005 or on March 29, 2005, respondent filed
before the Regional Trial Court (RTC) of Sorsogon a Petition for
Certiorari (With Application for Temporary Restraining Order and/or
Writ of Preliminary Injunction)9 against herein petitioners, along
with the Sangguniang Bayan of Juban and Mayor Ma. Teresa GuabFragata. The case was docketed as Special Civil Action No. 20057513.
By Decision of October 24, 2005, Branch 53 of the RTC of Sorsogon
granted respondents petition and accordingly nullified the mayors
executive order. Thus the trial court ruled:
[Respondent] is entitled to be informed and have a copy of the
decision rendered by the Sangguniang Bayan of Juban, Sorsogon
pursuant to Section 66 of R.A. 7160, for him to seek the remedies
afforded by law, if he so desires. x x x [He] received Executive
Order No. 8 and attached thereto is Sangguniang Bayan Resolution
No. 12-2005, on the same day, March 8, 2005. It appears that
the . . . Sangguniang Bayan furnished [him] with a copy of the said
resolution not to afford him his remedies on appeal in violation of
Section 66 7160, but to execute said resolution hastily . . . in
utmost disregard of [his] constitutional right to due process.
Pursuant to Section 67 of R.A. 7160, [he] has thirty (30) days from
receipt of the said resolution to file an appeal. [He] was not
afforded the opportunity to elevate Resolution No. 12-2005 on
appeal.
Considering the foregoing findings . . . the municipal mayor gravely
abused her discretion, amounting to lack of jurisdiction in issuing
and executing Executive Order No. 8 . . .
The trial court thus disposed:
Wherefore, premises considered, this court grants the petition for
certiorari and orders the following:
1. The annulment and setting aside of Executive Order No. 8 dated
March 8, 2005 issued by the Municipal Mayor;
2. The reinstatement of . . . Ramon H. Lacsa to his position as
Punong Barangay of Bacolod, Juban, Sorsogon;

3. The payment to the said petitioner of the

emoluments/allowances accruing to him from the time of removal
from office up to the time of reinstatement thereat;
4. Directing the Sangguniang Bayan of Juban, Sorsogon to serve
anew the petitioner with a copy of the Decision/Resolution No. 122005 and from receipt of which the petitioner shall enjoy his right
to appeal such decision to the Sangguniang Panlalawigan pursuant
to Section [6]7 of R.A. 7160.
With costs against the respondents Sangguniang Bayan Members
and Municipal Mayor.
SO ORDERED.11
The trial court having denied12 petitioners Motion for
Reconsideration,13 the petitioners filed the present Petition for
Review on Certiorari, manifesting early on that they are raising only
questions of law. They fault the trial court14
1. . . . in holding that the Sangguniang Bayan of Juban, Sorsogon,
furnished respondent with a copy of its Resolution No. 12-2005, not
to afford him his remedy of appeal, but to execute the said
resolution hastily in violation of Section 66 of R.A. 7160.
2. . . . in holding that the respondent Municipal Mayor issued
Executive Order No. 8 in "utmost" disregard of respondents right to
due process, as pursuant to Section 67 of R.A. 7160, he has thirty
days from receipt of the aforesaid resolution to file an appeal.
3. . . . in holding that the municipal mayor, in promptly executing
Sangguniang Bayan Resolution No. 12-2005, committed "grave
abuse of discretion amounting to lack of jurisdiction."
4. The court a quo erred even more when it restored to respondent,
through a writ of execution, the right of administrative appeal
which he had abandoned and lost.
The petition is impressed with merit.
The pertinent provision of R.A. 7160, otherwise known as the Local
Government Code, reads:
Sec. 61(c) A complaint against any elective barangay official shall
be filed before the sangguniang panlungsod or Sangguniang Bayan
concerned whose decision shall be final and executory." (Emphasis
and underscoring supplied)
The "final and executory" phrase used in the immediately-quoted
provision was construed in Mendoza v. Laxina, Sr.16 to be
"immediately executory," albeit the respondent may appeal the
adverse decision to the proper office. Thus this Court declared:

Sections 61 and 67 of the Local Government Code, provide:

Section 61. Form and Filing of Administrative Complaints. A verified
complaint against any erring local elective official shall be prepared
as follows:

or quasi-judicial functions has acted without or in excess of its or

his jurisdiction, or with grave abuse of discretion amounting to lack
or excess of jurisdiction, and there is no appeal, or any plain,
speedy, and adequate remedy in the ordinary course of law are
not here present.1avvphi1

(c) A complaint against any elective barangay official shall be filed

before the sangguniang panlungsod or sangguniang bayan
concerned whose decision shall be final and executory, (Italics
supplied)

WHEREFORE, the petition is GRANTED. The October 24, 2005

Decision of the Regional Trial Court of Sorsogon City, Branch 53 in
Special Civil Action No. 2005-7513 is REVERSED and SET ASIDE.

Sec. 67. Administrative Appeals. Decisions in administrative cases

may, within thirty (30) days from receipt thereof, be appealed to
the following:

Resolution No. 12-2005 issued by the Juban, Sorsogon Sangguniang

Bayan and Executive Order No. 8, Series of 2005 issued by Mayor
Ma. Teresa Guab-Fragata are REINSTATED.

(b) the Office of the President, in the case of decisions of the

sangguniang panlalawigan and the sangguniang panlungsod of
highly urbanized cities and independent component cities.

G.R. No. 103702 December 6, 1994

Decisions of the Office of the President shall be final and executory.

In interpreting the foregoing provisions, the trial court did not
consider Section 68 of the same code which provides:
An appeal shall not prevent a decision from being final and
executory. The respondent shall be considered as having been
placed under preventive suspension during the pendency of an
appeal in the event that he wins such appeal. In the event that the
appeal results in exoneration, he shall be paid his salary and other
such emoluments during the pendency of the appeal.
Obviously, the said Code does not preclude the taking of an appeal.
On the contrary, it specifically allows a party to appeal to the Office
of the President. The [phrase] "final and executory" x x x in
Sections 67 and 68, respectively, of the Local Government Code,
are not, as erroneously ruled by the trial court, indicative of the
appropriate mode of relief from the decision of the Sanggunian
concerned. These phrases simply mean that the administrative
appeals will not prevent the enforcement of the decisions. The
decision is immediately executory but the respondent may
nevertheless appeal the adverse decision to the Office of the
President or to the Sangguniang Panlalawigan, as the case may
be.17 (Emphasis and underscoring supplied)
The conditions that would afford respondent to file a petition for
certiorari under Rule 65 of the Rules of Court as he did file one
before the RTC that a tribunal, board, or officer exercising judicial

MUNICIPALITY OF SAN NARCISO, QUEZON; MAYOR JUAN K. UY;

COUNCILORS: DEOGRACIAS R. ARGOSINO III, BENITO T. CAPIO,
EMMANUEL R. CORTEZ, NORMANDO MONTILLA, LEONARDO C. UY,
FIDEL C. AURELLANA, PEDRO C. CARABIT, LEONARDO D.
AURELLANA, FABIAN M. MEDENILLA, TRINIDAD F. CORTEZ,
SALVADOR M. MEDENILLA, CERELITO B. AUREADA and FRANCISCA
A. BAMBA, petitioners,
vs.
HON. ANTONIO V. MENDEZ, SR., Presiding Judge, Regional Trial
Court, Branch 62, 4th Judicial Region, Gumaca, Quezon;
MUNICIPALITY OF SAN ANDRES, QUEZON; MAYOR FRANCISCO DE
LEON; COUNCILORS: FE LUPINAC, TOMAS AVERIA, MANUEL O. OSAS,
WILFREDO O. FONTANIL, ENRICO U. NADRES, RODELITO LUZOIR,
LENAC, JOSE L. CARABOT, DOMING AUSA, VIDAL BANQUELES and
CORAZON M. MAXIMO, respondents.
On 20 August 1959, President Carlos P. Garcia, issued, pursuant to
the then Sections 68 and 2630 of the Revised Administrative Code,
as amended, Executive Order No. 353 creating the municipal
district of San Andres, Quezon, by segregating from the
municipality of San Narciso of the same province, the barrios of San
Andres, Mangero, Alibijaban, Pansoy, Camflora and Tala along with
their respective sitios.
Executive Order No. 353 was issued upon the request, addressed to
the President and coursed through the Provincial Board of Quezon,
of the municipal council of San Narciso, Quezon, in its Resolution
No. 8 of 24 May 1959. 1

By virtue of Executive Order No. 174, dated 05 October 1965,

issued by President Diosdado Macapagal, the municipal district of
San Andres was later officially recognized to have gained the status
of a fifth class municipality beginning 01 July 1963 by operation of
Section 2 of Republic Act No. 1515. 2 The executive order added
that "(t)he conversion of this municipal district into (a) municipality
as proposed in House Bill No. 4864 was approved by the House of
Representatives."
On 05 June 1989, the Municipality of San Narciso filed a petition for
quo warranto with the Regional Trial Court, Branch 62, in Gumaca,
Quezon, against the officials of the Municipality of San Andres.
Docketed Special Civil Action No. 2014-G, the petition sought the
declaration of nullity of Executive Order No. 353 and prayed that
the respondent local officials of the Municipality of San Andres be
permanently ordered to refrain from performing the duties and
functions of their respective offices. 3 Invoking the ruling of this
Court in Pelaez v. Auditor General, 4 the petitioning municipality
contended that Executive Order No. 353, a presidential act, was a
clear usurpation of the inherent powers of the legislature and in
violation of the constitutional principle of separation of powers.
Hence, petitioner municipality argued, the officials of the
Municipality or Municipal District of San Andres had no right to
exercise the duties and functions of their respective offices that
righfully belonged to the corresponding officials of the Municipality
of San Narciso.
In their answer, respondents asked for the dismissal of the petition,
averring, by way of affirmative and special defenses, that since it
was at the instance of petitioner municipality that the Municipality
of San Andres was given life with the issuance of Executive Order
No. 353, it (petitioner municipality) should be deemed estopped
from questioning the creation of the new municipality; 5 that
because the Municipality of San Andred had been in existence since
1959, its corporate personality could no longer be assailed; and
that, considering the petition to be one for quo warranto, petitioner
municipality was not the proper party to bring the action, that
prerogative being reserved to the State acting through the Solicitor
General. 6
On 18 July 1991, after the parties had submitted their respective
pre-trial briefs, the trial court resolved to defer action on the motion
to dismiss and to deny a judgment on the pleadings.
On 27 November 1991, the Municipality of San Andres filed anew a
motion to dismiss alleging that the case had become moot and

academic with the enactment of Republic Act No. 7160, otherwise

known as the Local Government Code of 1991, which took effect on
01 January 1991. The movant municipality cited Section 442(d) of
the law, reading thusly:
Sec. 442. Requisites for Creation. . . .
(d) Municipalities existing as of the date of the effectivity of this
Code shall continue to exist and operate as such. Existing municipal
districts organized pursuant to presidential issuances or executive
orders and which have their respective set of elective municipal
officials holding office at the time of the effectivity of this Code
shall henceforth be considered as regular municipalities.
The motion was opposed by petitioner municipality, contending
that the above provision of law was inapplicable to the Municipality
of San Andres since the enactment referred to legally existing
municipalities and not to those whose mode of creation had been
void ab initio. 7
In its Order of 02 December 1991, the lower court 8 finally
dismissed the petition 9 for lack of cause of action on what it felt
was a matter that belonged to the State, adding that "whatever
defects (were) present in the creation of municipal districts by the
President pursuant to presidential issuances and executive orders,
(were) cured by the enactment of R.A. 7160, otherwise known as
Local Government Code of 1991." In an order, dated 17 January
1992, the same court denied petitioner municipality's motion for
reconsideration.
Hence, this petition "for review on certiorari." Petitioners 10 argue
that in issuing the orders of 02 December 1991 and 17 January
1992, the lower court has "acted with grave abuse of discretion
amounting to lack of or in excess of jurisdiction." Petitioners assert
that the existence of a municipality created by a null and void
presidential order may be attacked either directly or even
collaterally by anyone whose interests or rights are affected, and
that an unconstitutional act is not a law, creates no office and is
inoperative such as though its has never been passed. 11
Petitioners consider the instant petition to be one for "review on
certiorari" under Rules 42 and 45 of the Rules of Court; at the same
time, however, they question the orders of the lower court for
having been issued with "grave abuse of discretion amounting to
lack of or in excess of jurisdiction, and that there is no other plain,
speedy and adequate remedy in the ordinary course of law

available to petitioners to correct said Orders, to protect their rights

and to secure a final and definitive interpretation of the legal issues
involved." 12 Evidently, then, the petitioners intend to submit their
case in this instance under Rule 65. We shall disregard the
procedural incongruence.
The special civil action of quo warranto is a "prerogative writ by
which the Government can call upon any person to show by what
warrant he holds a public office or exercises a public franchise." 13
When the inquiry is focused on the legal existence of a body politic,
the action is reserved to the State in a proceeding for quo warranto
or any other credit proceeding. 14 It must be brought "in the name
of the Republic of the Philippines" 15 and commenced by the
Solicitor General or the fiscal "when directed by the President of the
Philippines . . . ." 16 Such officers may, under certain
circumstances, bring such an action "at the request and upon the
relation of another person" with the permission of the court. 17 The
Rules of Court also allows an individual to commence an action for
quo warranto in his own name but this initiative can be done when
he claims to be "entitled to a public office or position usurped or
unlawfully held or exercised by another." 18 While the quo warranto
proceedings filed below by petitioner municipality has so named
only the officials of the Municipality of San Andres as respondents,
it is virtually, however, a denunciation of the authority of the
Municipality or Municipal District of San Andres to exist and to act
in that capacity.
At any rate, in the interest of resolving any further doubt on the
legal status of the Municipality of San Andres, the Court shall delve
into the merits of the petition.
While petitioners would grant that the enactment of Republic Act
No. 7160 may have converted the Municipality of San Andres into a
de facto municipality, they, however, contend that since the
petition for quo warranto had been filed prior to the passage of said
law, petitioner municipality had acquired a vested right to seek the
nullification of Executive Order No. 353, and any attempt to apply
Section 442 of Republic Act 7160 to the petition would perforce be
violative of due process and the equal protection clause of the
Constitution.
Petitioners' theory might perhaps be a point to consider had the
case been seasonably brought. Executive Order No. 353 creating
the municipal district of San Andres was issued on 20 August 1959
but it was only after almost thirty (30) years, or on 05 June 1989,
that the municipality of San Narciso finally decided to challenge the

legality of the executive order. In the meantime, the Municipal

District, and later the Municipality, of San Andres, began and
continued to exercise the powers and authority of a duly created
local government unit. In the same manner that the failure of a
public officer to question his ouster or the right of another to hold a
position within a one-year period can abrogate an action belatedly
filed, 19 so also, if not indeed with greatest imperativeness, must a
quo warranto proceeding assailing the lawful authority of a political
subdivision be timely raised. 20 Public interest demands it.
Granting the Executive Order No. 353 was a complete nullity for
being the result of an unconstitutional delegation of legislative
power, the peculiar circumstances obtaining in this case hardly
could offer a choice other than to consider the Municipality of San
Andres to have at least attained a status uniquely of its own closely
approximating, if not in fact attaining, that of a de facto municipal
corporation. Conventional wisdom cannot allow it to be otherwise.
Created in 1959 by virtue of Executive Order No. 353, the
Municipality of San Andres had been in existence for more than six
years when, on 24 December 1965, Pelaez v. Auditor General was
promulgated. The ruling could have sounded the call for a similar
declaration of the unconstitutionality of Executive Order No. 353
but it was not to be the case. On the contrary, certain
governmental acts all pointed to the State's recognition of the
continued existence of the Municipality of San Andres. Thus, after
more than five years as a municipal district, Executive Order No.
174 classified the Municipality of San Andres as a fifth class
municipality after having surpassed the income requirement laid
out in Republic Act No. 1515. Section 31 of Batas Pambansa Blg.
129, otherwise known as the Judiciary Reorganization Act of 1980,
constituted as municipal circuits, in the establishment of Municipal
Circuit Trial Courts in the country, certain municipalities that
comprised the municipal circuits organized under Administrative
Order No. 33, dated 13 June 1978, issued by this Court pursuant to
Presidential Decree No. 537. Under this administrative order, the
Municipality of San Andres had been covered by the 10th Municipal
Circuit Court of San Francisco-San Andres for the province of
Quezon.
At the present time, all doubts on the de jure standing of the
municipality must be dispelled. Under the Ordinance (adopted on
15 October 1986) apportioning the seats of the House of
Representatives, appended to the 1987 Constitution, the
Municipality of San Andres has been considered to be one of the
twelve (12) municipalities composing the Third District of the
province of Quezon. Equally significant is Section 442(d) of the

Local Government Code to the effect that municipal districts

"organized pursuant to presidential issuances or executive orders
and which have their respective sets of elective municipal officials
holding office at the time of the effectivity of (the) Code shall
henceforth be considered as regular municipalities." No pretension
of unconstitutionality per se of Section 442(d) of the Local
Government Code is proferred. It is doubtful whether such a
pretext, even if made, would succeed. The power to create political
subdivisions is a function of the legislature. Congress did just that
when it has incorporated Section 442(d) in the Code. Curative laws,
which in essence are retrospective, 21 and aimed at giving "validity
to acts done that would have been invalid under existing laws, as if
existing laws have been complied with," are validly accepted in this
jurisdiction, subject to the usual qualification against impairment of
vested rights. 22
All considered, the de jure status of the Municipality of San Andres
in the province of Quezon must now be conceded.
WHEREFORE, the instant petition for certiorari is hereby
DISMISSED. Costs against petitioners.
1 Present at the meeting when the municipal council of San
Narciso, Quezon adopted Resolution No. 8 were Municipal Mayor
Godofredo M. Tan, Vice-Mayor Jesus R. Cortez, and Councilors
Maximino F. Rivadulla, Eleuterio Aurellana, Juanito Conjares,
Dominador Nadres and Felix Aurellana. Councilor Eduardo L. Ausa
was absent. The reasons for the adoption of Resolution No. 8 are
stated in the following clauses:
"WHEREAS, this body has been informed that the chance for the approval of the bill
creating the barrios of San Andres, Mangero, Alibijaban, Pansoy, Camflora and Tala,
into a regular Municipality is very slim;
WHEREAS, the reason behind such disapproval is the patent inability of the proposed
Municipality to pay its would-to-be (sic) employees at the rate required in the
Minimum Wage Law;
WHEREAS, this body in particular, and the great majority of the people of San Andres
in general, nowithstanding the provision of the Minimum Wage Law, agitate for the
separation or segregation of the abovementioned barrios so as to have a corporate
personality in the eyes of the Provincial Board, in the eyes of Congress and in the
eyes of the President;
WHEREAS, once said barrios acquire a corporate personality in the eyes of the
Provincial Board, of Congress and of the President, the development of said barrios
and practically the whole southern tip of the Bondoc Peninsula will be hastened.
(Rollo, p. 162.)

2 This act has provided for a more autonomous government for

municipal districts, amending for the purpose Art. VI, Chapter 64 of
the Administrative Code. Sec. 2 thereof states that "any first class
municipal district the annual receipts of which shall average more
than four thousand pesos for four consecutive fiscal years shall ipso
facto be classified as a fifth class municipality and shall thereafter
be governed by the provisions of Articles one to five, Chapter 64 of
the same Code."
14 Only in few exceptions may a private person exercise this
function of government, an example of which is when the state law
allows a private person to question the regularity of the
incorporation of an entity; see E. McQuillin, THE LAW OF MUNICIPAL
CORPORATION, sec. 3.49, p. 592 (3rd ed. 1949).
19 Tumulak v. Egay, 82 Phil. 828; Tavora v. Ofiana, 83 Phil. 672;
Unabia v. City Mayor (99 Phil. 253). In Castro v. Del Rosario (19
SCRA 196), the Court stated that the one-year limitation for filing a
quo warranto proceedings is "an expression of policy on the part of
the State that persons claiming a right to an office of which they
are illegally dispossessed should immediately take steps to recover
said office and that if they do not do so within a period of one year,
they shall be considered as having lost their right thereto by
abandonment."
20 Noteworthy is Section 16, Rule 16, of the Rules of Court which
sets a five-year limitation for filing a quo warranto action if its
purpose is to bring about the "forfeiture of charter" of a
corporation, that period to be counted from the time "the act
complained of was done or committed."
G.R. Nos. 156547-51
February 4, 2008
MARIANO UN OCAMPO III, petitioner,vs.PEOPLE , respondent.
G.R. Nos. 156384-85
February 4, 2008
ANDRES S. FLORES, petitioner,vs.PEOPLE , respondent.
These are consolidated petitions for review on certiorari1 of the
Sandiganbayans Decision promulgated on March 8, 2002 and its
Resolution promulgated on January 6, 2003.
The Decision and Resolution of the Sandiganbayan held petitioners
Mariano Un Ocampo III and Andres S. Flores guilty of malversation
of public funds in Crim. Case Nos. 16794 and 16795.

The facts are as follows:

During the incumbency of President Corazon C. Aquino, Tarlac
Province was chosen as one of the four provinces that would serve
as a test case on decentralization of local government
administration.
For this purpose, the Department of Budget and Management
(DBM) released National Aid for Local Government Units (NALGU)
funds in the total amount of P100 million to the Province of Tarlac.
The NALGU is a fund set aside in the General Appropriations Act to
assist local governments in their various projects and services. The
distribution of this fund is entirely vested with the Secretary of the
DBM.
Petitioner Ocampo, provincial governor of Tarlac from February 22,
1988 up to June 30, 1992, loaned out P56.6 million of the P100
million to the Lingkod Tarlac Foundation, Inc. (LTFI) for the
implementation of various livelihood projects. The loan was made
pursuant to a Memorandum of Agreement (MOA) entered into by
the Province of Tarlac, represented by petitioner Ocampo, and LTFI,
represented by petitioner Flores, on August 8, 1988.
LTFI is a private non-stock corporation with petitioner Ocampo as its
first chairperson and petitioner Andres S. Flores as its executive
director. The Sandiganbayan, in its Resolution dated January 6,
2000, admitted the annexes2 submitted by petitioner Ocampo,
which annexes proved that petitioner Ocampo resigned as
chairperson and trustee of the LTFI prior to August 8, 1988, the
date when petitioner Ocampo and LTFI entered into the MOA.
How the P56.6 million released to LTFI was utilized became the
subject matter of 25 criminal cases. In a Resolution in G.R. Nos.
103754-78 dated October 22, 1992,3 this Court quashed 19 of the
25 Informations filed against petitioner Ocampo. The Fifth Division
of the Sandiganbayan dismissed one case4 on demurrer to
evidence. In its Decision promulgated on March 8, 2002, the Fifth
Division of the Sandiganbayan dismissed two5 of five criminal
cases for malversation of public funds against petitioners. On
motion for reconsideration, the Sandiganbayan dismissed one6
more case in a Resolution promulgated on January 6, 2003. The two
remaining cases are the subject matters in the instant consolidated
petitions.
The Informations of the remaining two cases filed on May 28, 1991
state:

Crim. Case No. 16794

That on or about the periods between November 2, 1988 to
February 27, 1989, or sometime subsequent thereto, in the
Province of Tarlac, Philippines and within the jurisdiction of this
Honorable Court, accused Mariano Un Ocampo III, then the
Governor of the province of Tarlac and at the same time PresidentChairman of the Board of Trustees of the Lingkod Tarlac Foundation,
Inc. (LTFI), a private entity, having received by reason of his
position, public funds amounting to more than Fifty Two Million
Pesos (P52,000,000) x x x from the National Aid for Local
Government Unit (NALGU) funds, which he is accountable by reason
of his official duties, did then and there with intent to defraud the
government aforethought release out of the aforesaid funds thru
the said LTFI, the amount of EIGHT MILLION EIGHT HUNDRED SIXTY
THOUSAND PESOS (P8,860,000) x x x for the payment of the
importation of Juki Embroidery Machines which actually cost SEVEN
MILLION SIX HUNDRED SEVENTY NINE THOUSAND FIVE HUNDRED
THIRTY PESOS AND FIFTY TWO CENTAVOS (P7,679,530.52) x x x
thereby leaving a balance of P1,180,463.48 which ought to have
been returned, but far from returning the said amount, accused
Mariano Un Ocampo III, in connivance with his co-accused, Andres
S. Flores and William Uy wilfully, unlawfully and feloniously
misapply, misappropriate and convert for their own personal use
and benefit the said amount resulting to the damage and prejudice
of the government in the aforesaid sum of One Million One Hundred
Eighty Thousand Four Hundred Sixty Three Pesos and Forty Eight
Centavos (P1,180,463.48).
CONTRARY TO LAW.
Crim. Case No. 16795
That on or about the periods between November 2, 1988 to
February 27, 1989, or sometime subsequent thereto, in the
Province of Tarlac, Philippines and within the jurisdiction of this
Honorable Court, accused Mariano Un Ocampo III, then the
Governor of the province of Tarlac, and at the same time PresidentChairman of the Board of Trustees of the Lingkod Tarlac Foundation,
Inc. (LTFI), a private entity, having received by reason of his
position, public funds amounting to more than Fifty Two Million
Pesos (P52,000,000.00) x x x from the National Aid for Local
Government Unit (NALGU) Funds, which he is accountable by
reason of his official duties, caused the withdrawal by co-accused
Andres S. Flores on April 28, 1989, then Executive Officer, LTFI,
from the PHILIPPINE NATIONAL BANK LTFI account the sum of FIFTY

EIGHT THOUSAND PESOS (P58,000.00), portion of the said NALGU

funds deposited by LTFI under Account No. 490-555744, both
accused conniving and confederating with one another, with intent
to gain and to defraud the government, did then and there, wilfully,
unlawfully and feloniously misappropriate, misapply and convert
the same to their own personal use and benefit to the damage and
prejudice of the government in the aforesaid amount of P58,000.00,
Philippine Currency.

(7) This amount, together with the P5,465,000.00 placed on the

personal account of William Uy and/or Andres Flores, made up the
cost of he machines or a total of P8,860,000.00 as recorded in the
books of LTFI;

CONTRARY TO LAW.7

(9) Thus, the total amount on deposit with PNB was P7,727,261.00
plus interest;

The Prosecution relied mainly on an audit conducted by the

Commission on Audit on LTFI from February 12, 1990 up to April 2,
1990. The audit covered the period from July 1, 1988 to December
31, 1989 and was confined to the examination of the loans granted
by the Provincial Government of Tarlac for the implementation of its
Rural Industrialization Can Happen Program. The result of the audit
was embodied in Special Audit Report No. 90-91, offered as Exhibit
"B" by the prosecution.
According to the Sandiganbayan, the money trail with respect to
the two cases, as proven by the prosecution, is as follows:
(1) Accused Ocampo released P11.5 Million to LTFI, P7,023,836.00
of which was intended for the purchase of 400 embroidery
machines;
(2) The total amount released was deposited by LTFI to the Rural
Bank of Tarlac, Inc.;
(3) Within two (2) months from the deposit, a total of
P5,465,000.00 was withdrawn and given to William Uy (LTFIs
broker for the importation of the machines);
(4) This amount (P5,465,000) was thereafter deposited to the
personal account of "Willam Uy and/or Andres Flores" under S/A No.
26127;
(5) Another account (PNB S/A No. 490-555744-6) was opened by
"LTFI by Andres Flores," this time with PNB, intended solely for the
purchase of the machines;
(6) A check in the amount of P3,395,000.00 dated February 27,
1989, was remitted for the payment of the machines;

(8) To the PNB account was added a total of P4,332,261.00

deposited on different dates from March 6 to April 17, 1989 which
funds came from S/A No. 26127;

(10) Of this amount, P7,679,530.52 was used for the opening of the
LC (for the payment of the machines) leaving a balance of
P47,730,48.00 plus interest;
(11) Between the amount listed in the books of the corporation
(P8,860,000) and the amount of the LC (P7,679,530), a discrepancy
of P1,180,496.48 existed.
(12) Between the total amount deposited in PNB S/A No. 490555744-6 (P7,727,261.00) and the total amount withdrawn from
the account for the payment of the machines (P7,679,530.52), a
balance of P47,730.48 remained. This balance (plus interest), in the
amount of P58,000.00, was later withdrawn upon authorization of
accused Flores.8
Petitioner Ocampo did not testify regarding the subject cases on
the ground that he was not competent to testify on the
disbursements made by LTFI but only as to the receipt of the
NALGU funds from the government.
The Sandiganbayan declared that petitioner Ocampo as governor of
Tarlac, who personally received the NALGU funds from the DBM and
thereafter released some of them to the LTFI, was duty bound to
put up regular and effective measures for the monitoring of the
projects approved by him.
According to the Sandiganbayan, Sec. 203(t) of the Local
Government Code obligated provincial governors to "adopt
measures to safeguard all the lands, buildings, records, monies,
credits and other property rights of the province." However,
petitioner Ocampo, as governor of Tarlac, neglected to set up
safeguards for the proper handling of the NALGU funds in the hands
of LTFI which resulted in the disappearance of P1,132,739 and
P58,000 of the said funds. The Sandiganbayan held:

For such gross and inexcusable negligence, accused is liable for

malversation. In so ruling, we are guided by the oft-repeated
principle that malversation may be committed through a positive
act of misappropriation of public funds or passively though
negligence by allowing another to commit such misappropriation
(Cabello vs. Sandiganbayan, 197 SCRA 94 [1991]). Although
accused was charged with willful malversation, he can validly be
convicted of malversation through negligence where the evidence
sustains the latter mode of committing the offense (Cabello,
supra).9
Further, the Sandiganbayan stated that under Sec. 203(f) of the
Local Government Code of 1983,10 the provincial governor, as
chief executive of the provincial government, has the power to
"represent the province in all its business transactions and sign on
its behalf all bonds, contracts and obligations and other official
documents made in accordance with law or ordinance."
Sec. 2 (c) of Rule XI11 of the Rules and Regulations Implementing
the Local Government Code of 1983 provides that the local chief
executive of a local government unit shall "[r]epresent the
respective local units in all their business transactions and sign on
its behalf all bonds, contracts and obligations and other official
documents made in accordance with law or ordinance." Sec. 2 of
Rule VI12 states that "[t]he power to sue, to acquire and convey
real or personal property, and to enter into contracts shall be
exercised by the local chief executive upon authority of the
Sanggunian concerned." Thus, the Sandiganbayan declared that
since the required authority from the Sangguniang Panlalawigan
was not shown to have been obtained by petitioner Ocampo, the
MOA is ineffective as far as the Province of Tarlac is concerned.
Petitioner Flores, as executive director of LTFI, was charged with
malversation of public funds in connivance with a public officer.
However, the Sandiganbayan found that there was no conspiracy
between the petitioners, and held petitioner Flores guilty of
malversation through his independent acts under Art. 222 of the
Revised Penal Code,13 since the purpose of Art. 222 is to extend
the provisions of the Penal Code on malversation to private
individuals. According to the Sandiganbayan, petitioner Flores
bound himself, as a signatory of the MOA representing LTFI, to
receive NALGU funds from the province of Tarlac. In such capacity,
he had charge of these funds.

In Crim. Case No. 16794, petitioner Flores was found to have

charge of missing NALGU funds deposited in his personal account in
the amount of P1,132,739, which formed part of the discrepancy of
the actual cost of the embroidery machines and the NALGU funds
released for payment of the said machines.
In defense, petitioner Flores claimed that the broker for the
importation of the machines made an initial payment to the
supplier of the machines, which initial payment would explain the
discrepancy between the reported cost as stated in the books of
the corporation and the letter of credit. However, the
Sandiganbayan stated that the explanation was hearsay as the
broker was not presented in court, and there was no proof of the
initial payment.
In Crim. Case No. 16795, the Sandiganbayan held that petitioner
Flores failure to explain the purpose of the withdrawal on April 28,
1989 of P58,000 upon his authorization, considering that he was in
charge of the PNB savings account, made him liable for
malversation of public funds.
Petitioners presented five documents to show that LTFIs obligations
to the Province of Tarlac, in the amount of P56.6 million, have been
extinguished. The documents are as follows:
1) The Tripartite Memorandum of Agreement (TMOA) dated May 23,
1990 executed by the Province of Tarlac, LTFI and the Barangay
Unity for Industrial and Leadership Development (BUILD)
Foundation whereby the liability of LTFI in favor of the Province of
Tarlac was transferred and assumed by BUILD in the total amount
of P40 million.
2) Resolution No. 76 of the Sangguniang Panlalawigan of Tarlac
dated April 5, 1990 showing that the authority of petitioner
Ocampo in entering into the TMOA was with prior approval of the
Sangguniang Panlalawigan.
3) A Deed of Assignment between Tarlac and LTFI whereby the
latter assigned its loan portfolios (including interests and
certificates of time deposit), the Juki embroidery machines and
other assignable documents to the Province of Tarlac in the total
amount of P16,618,403.
4) Resolution No. 199 of the Sangguniang Panlalawigan of Tarlac
dated October 18, 1990 authorizing petitioner Ocampo to enter into
the Deed of Assignment with LTFI.

5) A certified photocopy of a document dated June 16, 1992 issued

by the OIC provincial treasurer of Tarlac whereby the treasurer
affirmed the existence of the above documents.
The Sandiganbayan declared that the documents showing the
extinguishment of LTFIs obligations to the Province of Tarlace do
not mitigate the liability of petitioners since the crime is
consummated as of asportation, akin to the taking of anothers
property in theft. It held that the return of the amount malversed is
neither an exempting circumstance nor a ground for extinguishing
the criminal liability of petitioners.
On March 8, 2002, the Fifth Division of the Sandiganbayan rendered
a Decision acquitting petitioners of the crime of malversation of
public funds in Crim. Case Nos. 16796 and 16802, but finding them
guilty of the crime in Crim. Case Nos. 16787, 16794 and 16795. The
dispositive portion of the Decision reads:
WHEREFORE, premises considered, accused Mariano Un Ocampo III
and Andres S. Flores are hereby found GUILTY beyond reasonable
doubt of the crime of malversation of Public Funds under Crim.
Case No. 16787 and are sentenced to suffer the indeterminate
penalty of (10) years, and one (1) day of prision mayor, as
minimum, to eighteen (18) years, eight (8) months and one (1) day
of reclusion temporal as maximum and to pay a fine of sixty-six
thousand nine hundred thirty-two pesos and seventy centavos
(P66,932.70). They shall also suffer the penalty of perpetual special
disqualification. Costs against the accused.
For Crim. Case No. 16794, accused Mariano Un Ocampo III and
Andres S. Flores are hereby found GUILTY beyond reasonable doubt
of the crime of Malversation of Public Funds and are sentenced to
suffer the indeterminate penalty of (10) years, and one (1) day of
prision mayor, as minimum, to eighteen (18) years, eight (8)
months and one (1) day of reclusion temporal as maximum and to
pay a fine of one million one hundred thirty-two thousand seven
hundred thirty-nine pesos (P1,132,739.00). They shall also suffer
the penalty of perpetual special disqualification. Costs against the
accused.
For Crim. Case No. 16795, accused Mariano Un Ocampo III and
Andres S. Flores are hereby found GUILTY beyond reasonable doubt
of the crime of Malversation of Public Funds and are sentenced to
suffer the indeterminate penalty of (10) years, and one (1) day of
prision mayor, as minimum, to eighteen (18) years, eight (8)

months and one (1) day of reclusion temporal as maximum and to

pay a fine of fifty-eight thousand pesos (P58,000.00). They shall
also suffer the penalty of perpetual special disqualification. Costs
against the accused.
For Crim. Case No. 16796, on ground that the crime was not
committed by the accused, accused Mariano Un Ocampo III and
Andres S. Flores are hereby ACQUITTED of the crime charged. The
surety bonds posted by them for their provisional liberty are
cancelled.
For Crim. Case No. 16802, on ground of reasonable doubt, accused
Mariano Un Ocampo III and Andres S. Flores are hereby ACQUITTED
of the crime charged. The surety bonds posted by them for their
provisional liberty are cancelled.
SO ORDERED.14
Petitioners separately filed a motion for reconsideration of the
Decision.
In a Resolution promulgated on January 6, 2003, the
Sandiganbayan reconsidered its Decision in Crim. Case No. 16787,
and acquitted petitioners of the crime charged. In that case, the
prosecution alleged that P5 million of the NALGU funds loaned to
LTFI were placed in time deposits with the Rural Bank of Tarlac and
earned a total interest of P116,932.77, of which amount only
P50,000.00 was recorded in the books of LTFI. The unrecorded
interest of P66,932.77 was said to have been withdrawn from
December 27, 1988 to February 2, 1989 and allegedly malversed
by petitioners. The Sandiganbayan held that as this Court has
already labeled the subject agreement as one of loan, the said
"interest are private funds, hence, not the proper subject for
malversation of public funds." Thus, petitioners were acquitted in
Crim. Case No. 16787.
Petitioners thereafter filed their respective petitions, which were
consolidated by the Court in a Resolution dated February 20, 2006.
The pertinent issues raised by petitioners may be summarized as
follows:
1) Whether or not petitioners Ocampo and Flores are guilty of the
crime of malversation of public funds under Art. 217 and Art. 220
respectively of the RPC;

2) Whether or not the Sandiganbayan erred in holding that the MOA

is void and did not bind the Province of Tarlac on the ground that
the MOA was entered into by petitioner Ocampo without authority
from the Sangguniang Panlalawigan in violation of the Local
Government Code of 1983.
First Issue: Whether or not petitioners Ocampo and Flores are guilty
of the crime of malversation of public funds under Art. 217 and Art.
220 respectively of the Revised Penal Code?
Crucial to the resolution of the first issue is the nature of the
transaction entered into by the Province of Tarlac and LTFI.
Petitioners claim that in the instant cases, the public funds alleged
to have been malversed were loaned by the Province of Tarlac to
LTFI per the MOA; hence, LTFI acquired ownership of the funds
which thus shed their public character and became private funds.
Petitioner Ocampo also asserts that the Sandiganbayan impliedly
ruled that the funds were private in character and owned by LTFI
when it ruled in Crim. Case No. 16787 that since this Court has
already labeled the subject agreement as one of loan, the interests
from the loan are private funds; hence, not the proper subject for
malversation of public funds. Having declared the interests earned
by the funds loaned to LTFI as private funds, the Sandiganbayan
should have also declared the funds loaned as private.
Petitioners arguments are meritorious.
The MOA states:
WHEREAS, the First Party [the Provincial Government of Tarlac], in order to
vigorously pursue its livelihood program for rural development, has identified the
need to establish a RICH (Rural Industrialization Can Happen) Program;
WHEREAS, the First Party now realizes the effectivity and efficiency of designating a
professional private non-profit organization to implement the various livelihood
projects under the RICH Program;
WHEREAS, the Second Party [Lingkod Tarlac Foundation], has represented that it has
the technical expertise required by the First Party in the implementation of the
various livelihood projects under the RICH Program;
WHEREAS, the First Party desires to engage the Second Party and the latter agrees
as the implementing arm of the Provincial Government for its livelihood projects;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
Parties hereby agree as follows:

ARTICLE I UNDERTAKINGS OF THE FIRST PARTY

1. The First Party shall provide all the data and information as may
be required by [the] Second Party in the implementation of the
RICH Program;
ARTICLE III DESCRIPTION OF THE PRIORITY PROJECTS
A. Program For Lease Purchase Agreements on equipment,
machineries, buildings and structures:
B. Direct Lending Pogram:
Under this scheme, the Lingkod Tarlac Foundation shall engage in
direct lending operations to proponents of livelihood activities
under the Rural Industrialization Can Happen (RICH PROGRAM) at
variable interest rates and loan conditions depending on the
viability and nature of the livelihood projects availing of the loan.
C. Direct Borrowing by Lingkod Tarlac Foundation:
The Lingkod Tarlac Foundation shall be allowed to borrow funds
directly from the Provincial government to fund Lingkod Tarlac
Foundation projects provided the projects are livelihood projects
under the Rural Industrialization Can Happen (RICH Program).
D. Other project financing schemes that may be developed for the
RICH Program.
ARTICLE IV CONDITIONS FOR RELEASE OF FUNDS
The First Party shall release in lump sum the appropriate funds for
the approved projects covered by individual loan documents upon
signing of [the] respective loan agreement and approval of the
Commission on Audit.
ARTICLE V TERMS OF REPAYMENT
1. The Second Party shall repay the First Party only the total
amount of capital without interest in consideration of the following:
a) The Second Party shall shoulder all its operating expenses.
b) The Second Party shall not charge the Province any management
fees or whatever fees.
c) The Second Party shall, whenever necessary, assure the
beneficiaries of the project interests and management fees at rates
lower than the commercial financial rates.
2. The terms of repayment shall be based on the projects ability to
pay without sacrificing on the projects viability.
ARTICLE VISUCCESSORS AND ASSIGNEES

Except as may be mutually agreed in writing, neither party can

assign, sublet, or transfer its interest or duties under this
Agreement.
ARTICLE VIITERMS OF THE AGREEMENT
This Agreement shall exist for as long as the Program exists or any
extension thereof.
IN WITNESS WHEREOF, the Parties have hereunto set their hands on this
8th day of August, 1988 in Tarlac, Tarlac.
LINGKOD TARLAC FOUNDATION Second Party (Signed) ANDRES S, FLORES
Executive Director PROVINCE OF TARLAC First Party
(Signed)
MARIANO UN OCAMPO III Governor
CONCURRED IN BY: (Signed) GUILLERMO N. CARAGUE Secretary of
Budget & Management

The MOA shows that LTFI is "allowed to borrow funds directly from
the Provincial Government to fund Lingkod Tarlac Foundation
projects provided the projects are livelihood projects under the
Rural Industrialization Can Happen Program." Moreover, the
agreement stipulates under the "Conditions for Release of Funds"
that the Province of Tarlac "shall release in lump sum the
appropriate funds for the approved projects covered by individual
loan documents upon signing of the respective loan
agreement...."15
In Crim. Case No. 16794, the fund alleged to have been malversed
in the amount of P1,180,496.48 represents the discrepancy of the
cost of the Juki embroidery machines as listed in the books of LTFI
and the amount actually paid to open the letter of credit for the
payment of the machines. In the books of LTFI, the cost of the Juki
embroidery machines was listed as P8,860,000, while the amount
paid to open the letter of credit for the payment of the machines
was P7,679,530.52. Petitioner Flores was held liable only up to the
amount of P1,132,739.
In Crim. Case No. 16795, the fund alleged to have been malversed
in the amount of P58,000 is the money left (P47,730) in PNB S/A
No. 490-555744-6 after the withdrawal of the purchase price of the
Juki embroidery machines, plus interest. The amount of P58,000
was withdrawn upon the authorization of petitioner Flores. The
withdrawal was neither reflected as deposit in the bank accounts of
LTFI nor spent by it.
In both cases, the money trail proven by the prosecution shows
that the subject funds or the money used for the purchase of the

Juki embroidery machines came from the release of the Province of

Tarlac through petitioner Ocampo of NALGU funds in the amount of
P11.5 million to LTFI on October 24, 1988. The release of the funds
was covered by a loan document in accordance with the MOA which
states that the Province of Tarlac "shall release in lump sum the
appropriate funds for the approved projects covered by individual
loan documents upon signing of the respective loan agreement...."
The Report on the Special Audit of LTFI16 stated:
. . . For the period July 1988 to December 1989, LTFI received a
total of P56.6 million which consisted of six releases and covered
by individual loan agreements, as follows:
Date
Amount
08 30 88
P7, 000, 000
10 24 88
11,500, 000
12 08 88
1,500, 000
02 22 89
4,000, 000
04 12 89
18,000, 000
06 14 89
12,718, 403
Total
P
56,618, 403
On October 24, 1988, the Provincial Government of Tarlac approved
and released an amount of P11,500,000 to Lingkod Tarlac
Foundation, Inc. (LTFI) for the Rural Industrialization Can Happen
(RICH) Program. Of the amount released, P7,023,836 was intended
for the purchase of 400 sets embroidery machines for the
Embroidery Skills Training Project.17
Based on the foregoing, it is clear that the funds released by the
Province of Tarlac, including the money allegedly malversed by
petitioners in Crim. Case Nos. 16794 and 16795, were in the nature
of a loan to LTFI.
Art. 1953 of the Civil Code provides that "[a] person who receives a
loan of money or any other fungible thing acquires the ownership
thereof, and is bound to pay to the creditor an equal amount of the
same kind and quality."
Hence, petitioner Ocampo correctly argued that the NALGU funds
shed their public character when they were lent to LTFI as it
acquired ownership of the funds with an obligation to repay the
Province of Tarlac the amount borrowed. The relationship between
the Province of Tarlac and the LTFI is that of a creditor and debtor.
Failure to pay the indebtedness would give rise to a collection suit.

The Sandiganbayan convicted petitioner Ocampo of malversation of

public funds under Art. 217 of the Revised Penal Code for his "gross
and inexcusable negligence" in not setting up safeguards in
accordance with Sec. 203(t) of the Local Government Code18 for
the proper handling of the NALGU funds in the hands of LTFI which
resulted in the disappearance of P1,132,739 allegedly malversed in
Crim. Case No. 16794 and the disappearance of P58,000 in Crim.
Case No. 16795.
In his petition, petitioner Ocampo states that he made sure that
proper safeguards were in place within LTFI to ensure the proper
handling of NALGU funds by LTFI. On August 5, 1988, before the
Province of Tarlac and LTFI entered into the MOA, LTFIs Articles of
Incorporation were amended to add the following:
TENTH: That no part of the net income of the Foundation shall inure
to the benefit of any member of the Foundation and that at least
seventy percent (70%) of the funds shall be used for the projects
and not more than thirty percent (30%) of said funds shall be used
for administrative purposes.
Petitioner Ocampo argues that since he had resigned from LTFI both
as chairperson and as trustee on June 22, 1988, he ceased to
become accountable for the handling of the NALGU funds after the
same were loaned to LTFI pursuant to the MOA dated August 8,
1988. Consequently, he may not be held criminally liable for
disbursements made by LTFI since he had nothing to do with its
operations after his resignation.
Malversation may be committed by appropriating public funds or
property; by taking or misappropriating the same; by consenting, or
through abandonment or negligence, by permitting any other
person to take such public funds or property; or by being otherwise
guilty of the misappropriation or malversation of such funds or
property.19
The essential elements common to all acts of malversation under
Art. 217 of the Revised Penal Code20 are:
(a) That the offender be a public officer;
(b) That he had the custody or control of funds or property by
reason of the duties of his office;
(c) That those funds or property were public funds or property for
which he was accountable;

(d) That he appropriated, took, misappropriated or consented or,

through abandonment or negligence, permitted another person to
take them.21
There can be no malversation of public funds by petitioner Ocampo
in the instant cases since the loan of P11.5 million transferred
ownership and custody of the funds, which included the sum of
money allegedly malversed, to LTFI for which Ocampo could no
longer be held accountable. Thus, contrary to the allegation of the
Office of the Special Prosecutor, petitioner Ocampo cannot be held
culpable for malversation committed through negligence in
adopting measures to safeguard the money of the Province of
Tarlac, since the same were neither in his custody nor was he
accountable therefor after the loan to LTFI.
Thus, petitioner Flores, as the executive director of LTFI, cannot also
be held liable for malversation of public funds in a contract of loan
which transferred ownership of the funds to LTFI making them
private in character. Liwanag v. Court of Appeals22 held:
. . . in a contract of loan once the money is received by the debtor,
ownership over the same is transferred. Being the owner, the
borrower can dispose of it for whatever purpose he may deem
proper.
The Sandiganbayan erred when it stated that the intention of the
parties was for the funds to remain public, citing the MOA which
allegedly provided, thus:
The Province shall have the right to have access to all resources
and records of either LTF[I] or BUILD and may conduct COA
examination or audit on any or all matter affecting the loans or
assets covered by this agreement and funds from the Province of
Tarlac.
A review of the MOA did not show the presence of such provision.
But the cited provision is contained in the TMOA, which was later
entered into by the Province of Tarlac, LTFI and BUILD, whereby LTFI
transferred part of its obligation to BUILD.
What is controlling in the instant cases is that the parties entered
into a contract of loan for each release of NALGU funds. The second
release on October 24, 1988 included the subject funds in
controversy. By virtue of the contract of loan, ownership of the
subject funds was transferred to LTFI making them private in

character, and therefore not subject of the instant cases of

malversation of public funds.
The Court notes that the obligation of LTFI to repay the NALGU
Funds of P56,618,403 obtained by it from the Province of Tarlac
pursuant to the MOA was extinguished as follows:
(1) BUILD assumed LTFIs principal loan of P40 million;
(2) LTFI ceded, transferred and assigned to the Province of Tarlac all
the rights and interests of LTFI in certain loans including interests,
certificate of time deposit and certain Juki embroidery machines in
the total amount of P16,618,403.
Second Issue: Whether or not the Sandiganbayan erred in holding
that the MOA is void and did not bind the Province of Tarlac on the
ground that the MOA was entered into by petitioner Ocampo
without authority from the Sangguniang Panlalawigan in violation of
the Local Government Code of 1983?
In its Resolution dated January 6, 2003, the Sandiganbayan
concedes that the transaction between the Province of Tarlac
through petitioner Ocampo and the LTFI was one of loan. However,
it stated that since Ocampo was not authorized by the Sangguniang
Panlalawigan to enter into the MOA as required by the Local
Government Code of 1983, the MOA did not bind the province nor
did it give any benefits to the LTFI because a void contract has no
effect whatsoever.
Petitioner Ocampo alleges that he had ample authority to enter into
the MOA for the following reasons:
1) NALGU funds received by the Province of Tarlac came straight
from the national government and were intended for a specific
purpose, that is, the implementation of various livelihood projects
in the Province of Tarlac, as evidenced by the exchange of
correspondence between him (petitioner Ocampo) and DBM
Secretary Guillermo N. Carague.23
2) On July 15, 1988, the DBM released a revolving fund for the
implementation of various livelihood projects in the Province of
Tarlac under Advice Allotment No. BCS-0183-88-301.24 In August
1988, he (petitioner Ocampo) informed the DBM that the Province
of Tarlac had designated LTFI as the implementing arm for its
livelihood projects, and requested authority to extend loans to LTFI,
which request was approved by the DBM Secretary.25

3) The DBMs approval of petitioner Ocampos request constituted

the authority of petitioner Ocampo to enter into the MOA with LTFI.
4) DBM also approved and concurred with the terms of the MOA as
evidenced by the DBM Secretarys signature on the MOA.
Petitioner Ocampo also asserts that Sec. 203(f) of the Local
Government Code of 1983,26 which authorized the provincial
governor to enter into business transactions on behalf of the
province, did not expressly require the concurrence of the
provincial board unlike its counterpart provision in the Local
Government Code of 1991.27
Further, petitioner Ocampo states that in any case, the lack of
authority of one who enters into a contract in the name of another
does not render the contract void under Art. 1409 of the Civil
Code,28 as ruled by the Sandiganbayan, but only unenforceable
under Art. 1403(1) of the Civil Code. He points out that
unenforceable contracts are susceptible of ratification, and in this
case, the Provincial Board of Tarlac can be deemed to have ratified
the MOA when it passed the following resolutions:
(1) Resolution No. 76, which confirmed and ratified the TMOA
among the Province of Tarlac, LTFI and the BUILD, whereby the
liability of LTFI in favor of the Province of Tarlac in the total amount
of P40 million was transferred to and assumed by BUILD;29 and
(2) Resolution No. 199, which authorized petitioner Ocampo to sign
the Deed of Assignment between the Province of Tarlac and LTFI,
whereby LTFI assigned loans, sewing machines and other
assignable documents in favor of the Province of Tarlac to settle the
balance of its obligation in the amount of P16,618,403.00. 30
The Court holds that since petitioner Ocampo was not duly
authorized by the Sangguniang Panlalawigan to enter into the MOA,
the agreement is an unenforceable contract under Sec. 1403 of the
Civil Code:
Art. 403. The following contracts are unenforceable, unless they are
ratified:
(1) Those entered into in the name of another person by one who
has been given no authority or legal representation, or who has
acted beyond his powers; x x x.

Unenforceable contracts are governed by the following provisions

of the Civil Code:
Art. 1404. Unauthorized contracts are governed by article 1317 and
the principles of agency in Title X of this Book.
Art. 1317. No one may contract in the name of another without
being authorized by the latter, or unless he has by law or right to
represent him.
A contract entered into in the name of another by one who has no
authority or legal representation, or who has acted beyond his
powers, shall be unenforceable, unless it is ratified, expressly or
impliedly, by the person on whose behalf it has been executed,
before it is revoked by the other contracting party.31
The Court finds that the MOA has been impliedly ratified by the
Sangguniang Panlalawigan as it has not directly impugned the
validity of the MOA despite knowledge of this controversy. Implied
ratification is also shown by the following acts:
1) The Sangguniang Panlalawigan subsequently recognized the
transfer of liabilities of LTFI in favor of the Province of Tarlac to
BUILD in the amount of P40 million contained in a TMOA.32
2) It authorized petitioner Ocampo to sign in behalf of the Province
of Tarlac the Deed of Assignment entered into by the Province of
Tarlac and LTFI33 which extinguished the remaining loan obligations
of LTFI obtained under the MOA.
WHEREFORE, the consolidated petitions are GRANTED. The
Decision of the Sandiganbayan promulgated on March 8, 2002 and
its Resolution promulgated on January 6, 2003 are SET ASIDE.
Petitioner Mariano Un Ocampo III and petitioner Andres S. Flores are
hereby ACQUITTED of the crime of malversation of public funds in
Crim. Case Nos. 16794 and 16795.
13 Art. 222. Officers included in the preceding provisions. The
provision of this chapter shall apply to private individuals who, in
any capacity whatever, have charge of any insular, provincial or
municipal funds, revenues, or property attached, seized, or
deposited by public authority even if such property belongs to a
private individual.

20 Art. 217. Malversation of public funds or property Presumption

of malversation.Any public officer, who, by reason of the duties of
his office, is accountable for public funds or property, shall
appropriate the same, or shall take or misappropriate or shall
consent, or through abandonment or negligence, shall permit any
other person to take such public funds or property, wholly or
partially, or shall otherwise be guilty of the misappropriation or
malversation of such funds or property, shall suffer:
1. The penalty of prision correccional in its medium and maximum
periods, if the amount involved in the misappropriation or
malversation does not exceed two hundred pesos.
The failure of a public officer to have duly forthcoming any public
funds or property with which he is chargeable, upon demand by
any duly authorized officer, shall be prima facie evidence that he
has put such missing funds or property to personal uses.
21 Supra, note 19, at 242; Luis B. Reyes, The Revised Penal Code,
Book 2, Fourteenth Edition, Revised 1998, p. 406.
26 Sec. 203. Provincial Governor as Chief Executive of the Province;
Powers and Duties.(1) The governor shall be the chief executive
of the provincial government and shall exercise such powers and
duties as provided in this Code and other laws.
(2) The governor shall:
(a) Represent the province in all its business transactions and sign
on its behalf all bonds, contracts and obligations and other official
documents made in accordance with law or ordinance.
27 Sec. 465. The Chief Executive: Powers, Duties, Functions and
Compensation..- (a) The provincial governor, as the chief executive
of the provincial government, shall exercise such powers and
perform such duties and functions as provided by this Code and
other laws.
xxx
(1) Exercise general supervision and control over all programs,
projects, services, and activities of the provincial government, and
in this connection shall:
xxx

(vi) Represent the province in all its business transactions and sign
in its behalf all bonds, contracts and obligations, and such other
documents upon authority of the sangguniang panlalawigan or
pursuant to law or ordinance.
28 Art. 1409. The following contracts are inexistent and void from
the beginning:
(1) Those whose cause, object or purpose is contrary to law,
morals, good customs,
public order or public policy;
(2) Those which are absolutely simulated or fictitious;
(3) Those whose cause or object did not exist at the time of the
transaction;
(4) Those whose object is outside the commerce of men;
(5) Those which contemplate an impossible service;
(6) Those where the intention of the parties relative to the principal
object of the contract
cannot be ascertained;
(7) Those expressly prohibited or declared void by law.
These contracts cannot be ratified. Neither can the right to set up
the defense of
illegality be waived.

Name Former Position

New Position Date of Appointment
1. Leah M. Nazareno Legal Researcher
Asst. Dept. Head I
7Jun-01
2. Carlo M. Cual
Legislative Staff Officer I
Legislative Staff
Officer III5-Jun-01
3. Rogelio B. Clamonte Public Services Supply Officer IV 5-Jun01
4. Florecita Llosa Supply Officer I Records Officer II 11-Jun-01
5. Rogelio S. Villarubia Agriculturist II
Agriculturist III
5Jun-01
6. Rossel Marie G. Gutierrez Casl/Plantilla dupervising Envtal Mgt
Specialist5-Jun-01
7. Nicanor F. Villarosa, Jr.Casual/PlantillaDentist II5-Jun-01
8. Marie Sue CualCasual/PlantillaSocial Welfare Officer I7-Jun-01
9. Miramichi Majella B. MariotCasual/PlantillaRecords Officer II7-Jun01
10. Alma F. RamirezCasual/PlantillaClerk IV7-Jun-01
11. Antolin D. Zamar, Jr.Casual/PlantillaMetro Aide II11-Jun-01
12. Mario S. AlilingCasual/PlantillaDriver II5-Jun-01
13. Teodulo Salvoro, Jr.Casual/PlantillaMetro Aide II5-Jun-01
14. Philip Janson AltamarinoCasual/PlantillaClerk I5-Jun-01
15. Antonieta PaduraCasual/PlantillaMetro Aide II11-Jun-01
16. Adolfo CorneliaCasual/PlantillaMetro Aide II11-Jun-01
17. Ian Ryan PatulaCasual/PlantillaMetro Aide II7-Jun-01
18. William TanoyCasual/PlantillaMetro Aide II5-Jun-01
19. Victor ArbasCasual/PlantillaPublic Services Foreman7-Jun-01
20. Jeanith CualCasual/PlantillaUtility Worker II5-Jun-01

Casual/Plantilla
Utility Worker II
5-Jun-01
25. Lionel Banogon
Casual/Plantilla
Clerk II
5-Jun-01
26. Rosalito Vergantinos
Casual/Plantilla

21. Braulio Sayson

Pest Control Worker II

Casual/Plantilla

5-Jun-01
27. Mario Cual, Jr.

Mechanical Plant Superviso7-Jun-01

22. Dawn VillarosaCasual/PlantillaClerk I7-Jun-01
23. Agustin RendoqueCasual/Plantilla

Casual/Plantilla

Utility Worker I

Utility Foreman
7-Jun-01

7-Jun-01
24. Enriqueta Tumongha

28. Elaine Tumongha

Casual/Plantilla
Registration Officer I11-Jun-01
29. Norman Villarosa
Casual/Plantilla
Utility Worker I
5-Jun-01
30. Ricardo C. Patula
Casual/Plantilla
Revenue Collection Clerk I
5-Jun-01
31. Rachel Banagua
Casual/Plantilla
Utility Worker I
5-Jun-01
32. Rodolfo Calugcugan
Job Order
Driver I

7-Jun-01
33. Pergentino Cual
Job Order
Metro Aide II
11-Jun-01
34. Bernard Ozoa
Job Order
Utility Worker I
7-Jun-01
35. Roger J. Aromin
Job Order
Utility Worker I
7-Jun-01
36. Cheryl Nocete
Job Order
Utility Worker I

5-Jun-01
11-Jun-01

41. Melchor Maquiling

37. Marivic Sanchez

Job Order
Job Order
Engineer I
Utility Worker I
7-Jun-01
11-Jun-01

42. Raul Molas

38. Crispin Duran

Job Order
Job Order
Construction and Maintenance Foreman
Metro Aide II
7-Jun-01
11-Jun-01

43. Oscar Kinikito

39. Rebeco Lingcong

Job Order
Job Order
Electrician II
Metro Aide II
7-Jun-01
5-Jun-01

44. Darwin Conejos

40. Anna Lee Estrabela

Job Order
Job Order
Engineering Aide
Cash Clerk III
7-Jun-01

45. Romel Cual

Job Order

Job Order

Metro Aide II

Metro Aide II

11-Jun-01
50. Rodulfo Zosa, Jr.

11-Jun-01
46. Roqueta Amor

Job Order

Job Order

Metro Aide II

Dental Aide

11-Jun-01
51. Jorge Arbolado

5-Jun-01
47. Diosdado Lajato

Job Order

Job Order
Pest Control Worker II

Traffic Aide I

5-Jun-01

5-Jun-01

48. Paul Pino

52. Ricardo M. Gonzales, Jr.

Job Order

OIC-General Services Officer

Utility Worker II

Asst. Dept. Head I

5-Jun-01

5-Jun-01

49. Lito Piero

Ruling of the CSC en banc and the Court of Appeals