G.R. No. 177131. June 7, 2011.
* Same; Same; Same; The ownership and control test is likewise irrelevant for a public
BOY SCOUTS OF THE PHILIPPINES, petitioner, vs. COMMISSION
ON AUDIT, respondent.
Corporation Law; Commission on Audit; Boy Scouts of the Philippines; The Boy
Scouts of the Philippines (BSP) is a public corporation and its funds are subject to the
Commission on Audit’s (COA’s) audit jurisdiction.—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 COA’s audit jurisdiction.
Same; Same; Same; Boy Scouts of the Philippines (BSP) as presently constituted
under Republic Act No. 7278, falls under the second classification of juridical persons
under Article 44 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.
Same; Same; Same; The Boy Scouts of the Philippines (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.—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.
Same; Same; Same; The Boy Scouts of the Philippines (BSP) is a public corporation
or a government agency or instrumentality with judicial 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.”—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.
corporation like the Boy Scouts of the Philippines (BSP).—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.
Same; Same; Same; Boy Scouts of the Philippines (BSP) is subject to the exercise by
the Commission on Audit (COA) of its audit jurisdiction in the manner consistent with
the provisions of the BSP charter.—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.
CARPIO, J., Dissenting Opinion: Corporation Law; Commission on Audit; Boy Scouts
of the Philippines; The Boy Scouts of the Philippines (BSP) is a private, non-stock,
and non-profit corporation beyond the Commission on Audit’s (COA’s) audit
jurisdiction.—The Boy Scouts of the Philippines (BSP) is neither a government-owned
or controlled corporation nor a government instrumentality subject to the Commission
on Audit’s (COA) jurisdiction. The BSP is a private, non-stock, and non-profit
corporation beyond the COA’s audit jurisdiction.
Same; Same; Same; Entities over which Commission on Audit (COA) exercises
jurisdiction on a pre-audit and post-audit basis under Section 2 (1) Article IX-D of the
Constitution.—Based on this Constitutional provision, the COA exercises jurisdiction
on a pre-audit basis over the (1) Government, (2) any of its subdivisions, (3)
agencies, (4) instrumentalities, and (5) GOCCs with original charters. The COA also
has jurisdiction on a post-audit basis over (1) constitutional bodies, commissions and
offices that have been granted fiscal autonomy under the Constitution; (2)
autonomous state colleges and universities; (3) other GOCCs and their subsidiaries;
and (4) 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.
Same; Same; Same; The determining factor of Commission on Audit’s (COA’s) audit
jurisdiction is government ownership or control of the corporation.—In Feliciano v.
Commission on Audit, 419 SCRA 363 (2004), the Court declared that the determining
factor of COA’s audit jurisdiction is government ownership or control of the
corporation. Citing Philippine Veterans Bank Employees Union-NUBE v. Philippine
Veterans Bank, 189 SCRA 14 (1990), the Court held in Feliciano that the criterion of
ownership and control is more important than the issue of original charter.
Same; Same; Same; The structural set-up and membership of Boy Scouts of the
Philippines (BSP) governing body under RA 7278, where all except one come from
the private sector, glaringly negate any form of government control over the BSP.—As
pointed out by the BSP, under RA 7278 only one Cabinet Secretary remains a
member of the National Executive Board, as opposed to the previous composition
where the President of the Philippines and six cabinet secretaries were members of
the same board. To repeat, the National Executive Board is presently composed of (1)
a charter member of the BSP; (2) the regional chairmen of the scouts regions; (3) the
Secretary of Education, Culture and Sports; (4) National President of the Girl Scouts
of the Philippines; (5) a senior scout, one each from Luzon, Visayas and Mindanao;
(6) twelve regular members to be elected by the members of the National Council; (7)
at least ten but not more than fifteen additional members from the private sector.
Significantly, the lone cabinet member, who is the Education Secretary, merely serves
as an ex-officio member. Meanwhile, the President of the Philippines is no longer a
member of the National Executive Board and simply acts as the Chief Scout of the
BSP. Except for the Education Secretary, none of the other members of the National
Executive Board is a government official or holds such position or membership
through appointment or designation by the government. Moreover, the government
lacks the power to fill up vacancies in the National Executive Board of the BSP or
remove any of its members. In fact, “vacancies in the National Executive Board shall
be filled by a majority vote of the remaining members.” This structural set-up and
membership of BSP’s governing body under RA 7278, where all except one come
from the private sector, glaringly negate any form of government control over the BSP.
Same; Same; Same; It is crystal-clear that the funds of the Boy Scouts of the
Philippines (BSP) come from private sources; as such, the BSP funds are necessarily
beyond the jurisdiction of the Commission on Audit (COA), which exclusively audits
public funds and assets.—BSP’s properties are being managed and operated by the
BSP itself, not by the government or any of its agencies. Therefore, it is crystal-clear
that the funds of the BSP come from private sources. As such, the BSP funds are
necessarily beyond the jurisdiction of the COA, which exclusively audits public funds
and assets.
Same; Same; Same; Only corporations controlled and owned by the government,
which are subject to the test of economic viability, and government instrumentalities,
as defined by the Administrative Code, fall under Commission on Audit’s (COA’s)
audit jurisdiction.—The majority theorizes that public 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.”
This theory finds no basis in law. As the Court emphatically stated in Philippine
Society for the Prevention of Cruelty to Animals, “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.” Neither does “administrative relationship to the government” indicate that an
entity is an instrumentality within the purview of the COA’s audit jurisdiction. Only
corporations controlled and owned by the government, which are subject to the test of
economic viability, and government instrumentalities, as defined by the Administrative
Code, fall under COA’s audit jurisdiction. The BSP is neither; hence, it is beyond the
COA’s audit jurisdiction.
Same; Same; Same; Definition of a Government Instrumentality; Elements to be
Considered a Government Instrumentality; The BSP is not an agency of the National
Government because the Boy Scouts of the Philippines (BSP) is not a unit of the
National Government; Boy Scouts of the Philippines (BSP) is not vested with special
functions or jurisdiction by law.—A government instrumentality is defined by the
Revised Administrative Code as “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.” In other
words, to be considered a government instrumentality, an entity must be (1) an
agency of the National Government; (2) outside the department framework of the
National Government; (3) vested with special functions or jurisdiction by law; (4)
endowed with some, if not all, corporate powers; (5) administering special funds; and
(6) enjoying operational autonomy. The BSP is not an agency of the National
Government because the BSP is not a unit of the National Government, like a
“department, bureau, office, instrumentality or government owned or controlled
corporation, or a local government or a distinct unit therein.” There is also no dispute
that the BSP does not administer special funds of the government. While the BSP
may receive donations or contributions from the government just like other non-
government organizations, the same cannot be characterized as special funds.
Moreover, the BSP is not vested with special functions or jurisdiction by law. Hence,
the BSP is not a government instrumentality.
LEONARDO-DE CASTRO, J.:
The jurisdiction of the Commission on Audit (COA) over the Boy Scouts of the
Philippines (BSP) is the subject matter of this controversy that reached us via petition
for prohibition filed by the BSP under Rule 65 of the 1997 Rules of Court. In this
petition, the BSP seeks that the COA be prohibited from implementing its June 18,
2002 Decision, its February 21, 2007 Resolution, as well as all other issuances
arising therefrom, and that all of the foregoing be rendered null and void.
Antecedent Facts and Background of the Case
This case arose when the COA issued Resolution No. 99-011 on August 19, 1999
(“the COA Resolution”), with the subject “Defining the Commission’s policy with
respect to the audit of the Boy Scouts of the Philippines.” In its whereas clauses, the
COA Resolution stated that the BSP was created as a public corporation under
Commonwealth Act No. 111, as amended by Presidential Decree No. 460 and
Republic Act No. 7278; that in Boy Scouts of the Philippines v. National Labor
Relations Commission, the Supreme Court ruled that the BSP, as constituted under
its charter, was a “government-controlled corporation within the meaning of Article
IX(B)(2)(1) of the Constitution”; and that “the BSP is appropriately regarded as a
government instrumentality under the 1987 Administrative Code.” The COA
Resolution also cited its constitutional mandate under Section 2(1), Article IX (D).
Finally, the COA Resolution reads:
“NOW THEREFORE, in consideration of the foregoing premises, the COMMISSION
PROPER HAS RESOLVED, AS IT DOES HEREBY RESOLVE, to conduct an annual
financial audit of the Boy Scouts of the Philippines 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.
xxxx
BE IT RESOLVED FURTHERMORE, that for purposes of audit supervision, the Boy
Scouts of the Philippines 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.” (Emphases supplied.)
The BSP sought reconsideration of the COA Resolution in a letter dated November
26, 1999 signed by the BSP National President Jejomar C. Binay, who is now the
Vice President of the Republic, wherein he wrote:
“It is the position of the BSP, with all due respect, that it is not subject to the
Commission’s jurisdiction on the following grounds:
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
BSP’s 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 case’s 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.
  x x x x
  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 Memorandum dated 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 Court’s 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 government participation is
only one (1) of the three (3) grounds relied upon by the Court in the resolution of the
case. Other considerations include the character of the BSP’s purposes and functions
which has a public aspect and the statutory designation of the BSP as a “public
corporation”. These grounds have not been deleted by R.A. No. 7278. On the
contrary, these were strengthened as evidenced by the amendment made relative to
BSP’s purposes stated in Section 3 of R.A. No. 7278.
On the argument that BSP is not appropriately regarded as “a government
instrumentality” and “agency” of the government, such has already been answered
and clarified. The Supreme Court has elucidated this matter in the BSP case when it
declared that BSP is regarded as, both a “government-controlled corporation with an
original charter” and as an “instrumentality” of the Government. Likewise, it is not
disputed that the Administrative Code of 1987 designated the BSP as one of the
attached agencies of DECS. Being an attached agency, however, it does not change
its nature as a government-controlled corporation with original charter and,
necessarily, subject to COA audit jurisdiction. Besides, 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 Government, 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 Sunico wrote:
“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.”
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.
Upon the BSP’s 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 COA’s 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 COA’s 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 BSP’s corporate identity in the same way that the government’s
privatization program changed PAL’s, 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. The BSP further claims
as follows:
“It is not far-fetched, in fact, to concede that BSP’s 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 BSP.
xxxx
As stated in petitioner’s third argument, BSP’s 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. x x x.”
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, 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.
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, 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.
xxxx
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 government’s policy to stimulate patriotic sentiments and love of
country, the BSP’s 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 BSP’s funds may not bar
the subsequent exercise of its audit jurisdiction.
The BSP filed its Reply 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 COA’s 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 COA’s audit
jurisdiction.
Thereafter, considering the BSP’s claim that it is a private corporation, this Court, in a
Resolution 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 Court’s resolution, the parties filed their respective Comments.
In its Comment 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 COA’s 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, have not been fully met. Moreover, the COA maintains that behind every
law lies the presumption of constitutionality. The COA likewise argues that contrary to
the BSP’s position, repeal of a law by implication is not favored. 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,
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 latter’s 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.”
For its part, in its Comment 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 COA’s 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:
“Petitioner’s purpose is embodied in Section 3 of C.A. No. 111, as amended by
Section 1 of R.A. No. 7278, thus:
xxxx
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 petitioner’s 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. Petitioner’s 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 BSP’s
charter, 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 COA’s 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 by-laws, 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 the 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.
xxxx
“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 BSP’s Classification Under the Ad-
ministrative 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:
xxxx
(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:
xxxx
(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.” (Emphasis ours.)
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 eco-
nomic/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,” 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, 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.” (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.” (Emphases
supplied.)
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:
xxxx
(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.
xxxx
(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.
xxxx
THE PRESIDENT. Commissioner Quesada is recognized.
MS. QUESADA. Madam President, may we be clarified by the committee on what is
meant by economic viability?
THE PRESIDENT. Please proceed.
MR. MONSOD. Economic viability normally is determined by cost-benefit 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.
xxxx
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 x x.
xxxx
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.
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?
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.
xxxx
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 government-controlled 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.
(Emphases supplied.)
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.
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 bill’s 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 BSP’s
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.
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 shouldn’t it be, this rhetorical question, shouldn’t it be better for
this organization to seek a mandate from, let’s 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 that’s a rhetorical
question, they may or they may not answer, ano. I don’t 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 don’t 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,
don’t take that as an objection, I’m not objecting. I’m 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 don’t 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, that’s very well taken so I will proceed with other issues, Mr.
Chairman. x x x. (Emphases added.)
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 BSP’s 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.” (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
dissent’s 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 COA’s Jurisdiction
Regarding the COA’s 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.”
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.”
The nature of the funds of the BSP and the COA’s 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 don’t fall
under the jurisdiction 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 there’s 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.
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.”
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.
SO ORDERED.
Corona (C.J.), Velasco, Jr., Nachura, Brion, Peralta, Bersamin, Del Castillo, Abad,
Villarama, Jr. and Mendoza, JJ., concur.
Carpio, J., See Dissenting Opinion.
Carpio-Morales, J., I join J. Carpio’s dissent.
Perez and Sereno, JJ., Join the Dissent of J. Carpio.
——o0o——
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., RAKIL DAGALANGIT,
and BIMBO SINSUAT, respondents.
Constitutional Law; Due Process in Administrative Proceedings; Access to Judicial
Remedies; No one may be punished for seeking redress in the courts, unless the
recourse amounts to malicious prosecution.—In the second place, the resolution
appears strongly to be a bare act of vendetta by the other Assemblyman against the
petitioner arising from what the former perceive to be obduracy 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 Assembly—an act which some members claimed
unnecessarily and unduly assails their integrity and character as representative of the
people,” an act that cannot possibly justify expulsion. Access to judicial remedies is
guaranteed by the Constitution, and, unless the recourse amounts to malicious
prosecution, no one may be punished for seeking redress in the courts.
Same; Autonomous Regions; Administrative Law; The autonomous governments of
Mindanao are subject to the jurisdiction of our national courts.—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.” In the
second place, the Sangguniang Pampook, their legislative arm, is made to discharge
chiefly administrative services. x x x 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.
Same; Same; Same; Decentralization; Autonomy is either decentralization of
administration or decentralization of power.—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 subdivision in order to broaden the base of government power and in the
process to make local governments “more responsive and accountable,” and “ensure
their fullest development as self-reliant communities and make them more effective
partners in the pursuit of national development and social progress.” At the same
time, it relieves the central government of the burden of managing local affairs and
enables it to concentrate on national concerns. The President exercises “general
supervision” over them, but only to “ensure that local affairs are administered
according to law.” He has no control over their acts in the sense that he can substitute
their judgments with his own.
Same; Same; Same; Same; Same; Decentralization of power involves an abdication
of political power in favor of local government units declared to be autonomous.—
Decentralization of power, on the other hand, involves an abdication of political power
in favor of local government units declared to be autonomous. In that case, the
autonomous government is free to chart its own destiny and shape its future with
minimum intervention from central authorities. According to a constitutional author,
decentralization of power amounts to “self-immolation,” since in that event, the
autonomous government becomes accountable not to the central authorities but to its
constituency.
SARMIENTO, J.:
The acts of the Sangguniang Pampook of Region XII are assailed in this petition. The
antecedent facts are as follows:
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.
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 Rakil 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 will 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 presence in the house committee hearing of Congress
take (sic) precedence over any pending business in batasang pampook x x x.”
6. In compliance with the aforesaid instruction of the petitioner, Acting Secretary
Alimbuyao sent to the members of the Assembly the following telegram:
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 9. Ortiz, Jesus
PROPOSED AUTONOMY ORGANIC NOV. 1ST TO 15. HENCE WIRE ALL
ASSEMBLYMEN THAT THERE SHALL BE NO SESSION IN NOVEMBER AS OUR 10. Palamares, Diego
PRESENCE IN THE HOUSE COMMITTEE HEARING OF CONGRESS TAKE
11. Quijano, Jesus
PRECEDENCE OVER ANY PENDING BUSINESS IN BATASANG PAMPOOK OF
MATALAM FOLLOWS UNQUOTE REGARDS. 12. Sinsuat, Bimbo
7. On November 2, 1987, the Assembly held session in defiance of petitioner’s 13. Tomawis, Acmad
advice, with the following assemblymen present:
14. Tomawis, Jerry
1. Sali, Salic
An excerpt from the debates and proceeding of said session reads:
2. Conding, Pilipinas (sic)
HON. DAGALANGIT: Mr. Speaker, Honorable Members of the House, with the
3. Dagalangit, Rakil 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
4. Dela Fuente, Antonio
motion to declare the position of the Speaker vacant. But before doing so, I move also
5. Mangelen, Conte that the designation of the Speaker Pro Tempore as the Presiding Officer and Mr.
Johnny Evangelista as Acting Secretary in the session last November 2, 1987 be
6. Ortiz, Jesus reconfirmed in today’s session.

7. Palomares, Diego HON. SALIC ALI: I second the motions.

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:
PRESIDING OFFICER: Any comment or objections on the two motions presented?
The chair hears none and the said motions are approved. x x x.
Twelve (12) members voted in favor of the motion to declare the seat of the Speaker
vacant; one abstained and none voted against.
Accordingly, the petitioner prays for judgment as follows:
WHEREFORE, petitioner respectfully prays that—
(a) This Petition be given due course;

1. Mangelen Conte—Presiding Officer (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,
2. Ali Salic 1987, and on any day thereafter;

3. Ali Salindatu (c) After hearing, judgment be rendered declaring the proceedings held by
respondents of their session on November 2, 1987 as null and void;
4. Aratuc, Malik
(d) Holding the election of petitioner as Speaker of said Legislative Assembly or
5. Cajelo, Rene Batasan Pampook, Region XII held on March 12, 1987 valid and subsisting; and
6. Conding, Pilipinas (sic) (e) Making the injunction permanent.
7. Dagalangit, Rakil Petitioner likewise prays for such other relief as may be just and equitable.
8. Dela Fuente, Antonio Pending further proceedings, this Court, on January 19, 1988, received a resolution
filed by the Sangguniang Pampook, “EXPELLING ALIMBUSAR P. LIMBONA FROM
MEMBERSHIP OF THE SANGGUNIANG PAMPOOK, AUTONOMOUS REGION XII,”
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 . . .” and that “such action of Mr. Limbona in paying Abdula his salaries
and emoluments without authority from the Assembly . . . constituted a usurpation of
the power of the Assembly,” 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],” 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,” for which the respondents
now submit that the petition had become “moot and academic”.
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.” To be sure, the private respondents aver that “[t]he Assemblymen, in a
conciliatory gesture, wanted him to come to Cotabato City,” but that was “so that their
differences could be threshed out and settled.” 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, 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 Assembly—an act which some
members claimed unnecessarily and unduly assails their integrity and character as
representative of the people,” an act that cannot possibly justify expulsion. Access to
judicial remedies is guaranteed by the Constitution, 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 hand 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. 161815 promulgated on July 25, 1979. Among other things,
the Decree established “internal autonomy” in the two regions “[w]ithin the framework
of the national sovereignty and territorial integrity of the Republic of the Philippines
and its Constitution,” “with legislative and executive machinery to exercise the powers
and responsibilites” specified therein. It requires the autonomous regional
governments to “undertake all internal administrative matters for the respective
regions,” except to “act on matters which are within the jurisdiction and competence
of the National Government,” “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 naturalization;
(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 xxx.”
Now, autonomy is either decentralization of administration or decentralization of
power. There is decentralization of administration when the central government
delegates administrative powers to political subdivisions in order to broaden the base
of government power and in the process to make local governments “more
responsive and accountable,” and “ensure their fullest development as self-reliant
communities and make them more effective partners in the pursuit of national
development and social progress.” At the same time, it relieves the central
government of the burden of managing local affairs and enables it to concentrate on
national concerns. The President exercises “general supervision” over them, but only
to “ensure that local affairs are administered according to law.” He has no control over
their acts in the sense that he can substitute their judgments with his own.
Decentralization of power, on the other hand, involves an abdication of political power
in the favor of local governments units declared to be autonomous. In that case, the
autonomous government is free to chart its own destiny and shape its future with
minimum intervention from central authorities. According to a constitutional author,
decentralization of power amounts to “self-immolation,” since in that event, the
autonomous government becomes accountable not to the central authorities but to its
constituency.
But the question of whether or not the grant of autonomy to 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. There shall be autonomous
regions in Muslim Mindanao and the Cordilleras as hereinafter provided.
Sec. 2. The territorial and political subdivisions shall enjoy local autonomy.
xxx xxx xxx
Sec. 15. There 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.
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). 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.” 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.
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.
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 he petitioner should initiate obstructive moves, the Court is certain that
it is armed with enough coercive remedies to thwart them.
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.

Upon the facts presented, we hold that the November 2 and 5, 1987 sessions were SO ORDERED.
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 Note.—Due process is also required in administrative proceedings. (Doruelo vs.
Sangguniang Pampook,” but it provides likewise that “the Speaker may, on [sic] his Commission on Elections, 133 SCRA 376.)
discretion, declare a recess of “short intervals.” Of course, there is disagreement
——o0o——
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.” 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. 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.
 G.R. No. 91649. May 14, 1991.* 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
ATTORNEYS HUMBERTO BASCO, EDILBERTO BALCE, local taxes. Otherwise, its operation might be burdened, impeded or subjected to
SOCRATES MARANAN AND LORENZO SANCHEZ, petitioners, vs. 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
PHILIPPINE AMUSEMENTS AND GAMING CORPORATION constitutional laws enacted by Congress to carry into execution the powers vested in
(PAGCOR), respondent. the federal government.” (MC Culloch v. Maryland, 4 Wheat 316, 4 L Ed. 579) This
doctrine emanates from the “supremacy” of the National Government over local
Constitutional Law; Taxation; Municipal Corporations; Municipal corporations have no
governments. “Justice Holmes, speaking for the Supreme Court, made reference to
inherent power to tax; their power to tax must always yield to a legislative act.—The
the entire absence of power on the part of the States to touch, in that way (taxation)
City of Manila, being a mere Municipal corporation has no inherent right to impose
at least, the instrumentalities of the United States (Johnson v. Maryland, 254 US 51)
taxes (Icard v. City of Baguio, 83 Phil. 870; City of Iloilo v. Villanueva, 105 Phil. 337;
and it can be agreed that no state or political subdivision can regulate a federal
Santos v. Municipality of Caloocan, 7 SCRA 643). Thus, “the Charter or statute must
instrumentality in such a way as to prevent it from consummating its federal
plainly show an intent to confer that power or the municipality cannot assume it”
responsibilities, or even to seriously burden it in the accomplishment of them.”
(Medina v. City of Baguio, 12 SCRA 62). Its “power to tax” therefore must always yield
(Antieau, Modern Constitutional Law, Vol. 2, p. 140, italics supplied). Otherwise, mere
to a legislative act which is superior having been passed upon by the state itself
creatures of the State can defeat National policies thru extermination of what local
which has the “inherent power to tax” (Bernas, the Revised [1973] Philippine
authorities may perceive to be undesirable activities or enterprise using the power to
Constitution, Vol. 1, 1983 ed. p. 445).
tax as “a tool for regulation” (U.S. v. Sanchez, 340 US 42). The power to tax which
Same; Same; Same; Same; Congress has the power of control over local was called by Justice Marshall as the “power to destroy” (Mc Culloch v. Maryland,
governments; if Congress can grant a municipal corporation the power to tax certain supra) cannot be allowed to defeat an instrumentality or creation of the very entity
matters, it can also provide for exemptions or even take back the power.—The which has the inherent power to wield it.
Charter of the City of Manila is subject to control by Congress. It should be stressed
Same; Same; Same; Same; The power of local government to impose taxes and fees
that “municipal corporations are mere creatures of Congress” (Unson v. Lacson, G.R.
is always subject to limitations which Congress may provide by law.—The power of
No. 7909, January 18, 1957) which has the power to “create and abolish municipal
local government to “impose taxes and fees” is always subject to “limitations” which
corporations” due to its “general legislative powers” (Asuncion v. Yriantes, 28 Phil. 67;
Congress may provide by law. Since PD 1869 remains an “operative” law until
Merdanillo v. Orandia, 5 SCRA 541). Congress, therefore, has the power of control
“amended, repealed or revoked” (Sec. 3, Art. XVIII, 1987 Constitution), its “exemption
over local governments (Hebron v. Reyes, G.R. No. 9124, July 2, 1950). And if
clause” remains as an exception to the exercise of the power of local governments to
Congress can grant the City of Manila the power to tax certain matters, it can also
impose taxes and fees. It cannot therefore be violative but rather is consistent with
provide for exemptions or even take back the power.
the principle of local autonomy.
Same; Same; Same; License Fees; The power of local governments to regulate
Same; Same; Same; Local Autonomy; The principle of local autonomy does not make
gambling thru the grant of franchises, licenses or permits was withdrawn by PD 771, it
local governments sovereign within the state, it simply means decentralization.—
is now vested exclusively on the National Government.—The City of Manila’s power
Besides, the principle of local autonomy under the 1987 Constitution simply means
to impose license fees on gambling, has long been revoked. As early as 1975, the
“decentralization” (III Records of the 1987 Constitutional Commission, pp. 435-436,
power of local governments to regulate gambling thru the grant of “franchise, licenses
as cited in Bernas, the Constitution of the Republic of the Philippines, Vol. II, First Ed.,
or permits” was withdrawn by P.D. No. 771 and was vested exclusively on the
1988, p. 374). It does not make local governments sovereign within the state or an
National Government. xxx xxx Therefore, only the National Government has the
“imperium in imperio.” Local Government has been described as a political
power to issue “licenses or permits” for the operation of gambling. Necessarily, the
subdivision of a nation or state which is constituted by law and has substantial control
power to demand or collect license fees which is a consequence of the issuance of
of local affairs. In a unitary system of government, such as the government under the
“licenses or permits” is no longer vested in the City of Manila.
Philippine Constitution, local governments can only be an intra sovereign subdivision
Same; Same; Same; Same; Local governments have no power to tax of one sovereign nation, it cannot be an imperium in imperio. Local government in
instrumentalities of the National Government; PAGCOR, being an instrumentality of such a system can only mean a measure of decentralization of the function of
the Government, is therefore exempt from local taxes.—Local governments have no government. (italics supplied)
power to tax instrumentalities of the National Government. PAGCOR is a government
Same; Equal Protection Clause; The “equal protection” clause does not preclude
owned or controlled corporation with an original charter, PD 1869. All of its shares of
classification of individuals who may be accorded different treatment under the law as
stocks are owned by the National Government. xxx xxx PAGCOR has a dual role, to
long as the classification is not unreasonable or arbitrary.—Petitioners next contend
operate and to regulate gambling casinos. The latter role is governmental, which
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 14 th Amendment does not mean that all occupations called by the
same name must be treated the same way; the state may do what it can to prevent
which is deemed as evil and stop short of those cases in which harm to the few
concerned is not less than the harm to the public that would insure if the rule laid
down were made mathematically exact.” (Dominican Hotel v. Arizana, 249 U.S. 2651).
Same; Statutes; Every law has in its favor the presumption of constitutionality, for a
law to be nullified, it must be shown that there is a clear and unequivocal breach of
the Constitution.—Every law has in its favor the presumption of constitutionality (Yu
Cong Eng v. Trinidad, 47 Phil. 387; Salas v. Jarencio, 48 SCRA 734; Peralta v.
Comelec, 82 SCRA 30; Abbas v. Comelec, 179 SCRA 287). Therefore, for PD 1869 to
be nullified, it must be shown that there is a clear and unequivocal breach of the
Constitution, not merely a doubtful and equivocal one. In other words, the grounds for
nullity must be clear and beyond reasonable doubt. (Peralta v. Comelec, supra)
Those who petition this Court to declare a law, or parts thereof, unconstitutional must
clearly establish the basis for such a declaration. Otherwise, their petition must fail.
Based on the grounds raised by petitioners to challenge the constitutionality of P.D.
1869, the Court finds that petitioners have failed to overcome the presumption. The
dismissal of this petition is therefore, inevitable. But as to whether P.D. 1869 remains
a wise legislation considering the issues of “morality, monopoly, trend to free
enterprise, privatization as well as the state principles on social justice, role of youth
and educational values” being raised, is up for Congress to determine.
PADILLA, J., Concurring: Constitutional Law; Legislative Department; The legislative
department must outlaw all forms of gambling, as a fundamental policy.—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. 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.
PARAS, J.:
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;
“C. 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 socioeconomic projects, thus, P.D. 1399
was passed on June 2, 1978 for PAGCOR to fully attain this objective.
Subsequently, on July 11, 1983, PAGCOR was created under P.D. 1869 to enable the
Government to regulate and centralize all games of chance authorized by existing
franchise or permitted by law, under the following declared policy— “Section 1 .
Declaration of Policy.—It is hereby declared to be the policy of the State to centralize
and integrate all games of chance not heretofore authorized by existing franchises or
permitted by law in order to attain the following objectives:
“(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 sociocultural 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—
“x x x 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. 2 nd 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 coextensive with self-protection and is most aptly
termed the “law of overwhelming necessity.” (Rubi v. Provincial Board of Mindoro, 39
Phil. 660, 708) It is “the most essential, insistent, and illimitable of powers.” (Smith
Bell & Co. v. National, 40 Phil. 136) It is a dynamic force that enables the state to
meet the exigencies of the winds of change.
What was the reason behind the enactment of P.D. 1869?
P.D. 1869 was enacted pursuant to the policy of the government to “regulate and
centralize thru an appropriate institution all games of chance authorized by existing
franchise or permitted by law” (1st whereas clause, PD 1869). As was subsequently
proved, regulating and centralizing gambling operations in one corporate entity—the
PAGCOR, was beneficial not just to the Government but to society in general. It is a
reliable source of much needed revenue for the cash strapped Government. It
provided funds for social impact projects and subjected gambling to “close scrutiny,
regulation, supervision and control of the Government” (4th Whereas Clause, PD
1869). With the creation of PAGCOR and the direct intervention of the Government,
the evil practices and corruptions that go with gambling will be minimized if not totally
eradicated. Public welfare, then, lies at the bottom of the enactment of PD 1896.
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 of tax or charge attach in any way to the earnings of
the Corporation, except a franchise tax of five (5%) percent of the gross revenues or
earnings derived by the Corporation from its operations under this franchise. Such tax
shall be due and payable quarterly to the National Government and shall be in 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:
“Section 1. Any provision of law to the contrary notwithstanding, the authority of
chartered cities and other local governments to issue license, permit or other form of
franchise to operate, maintain and establish horse and dog race tracks, jai-alai and
other forms of gambling is hereby revoked.
“Section 2. Hereafter, all permits or franchises to operate, maintain and establish,
horse and dog race tracks, jai-alai and other forms of gambling shall be issued by the
national government upon proper application and verification of the qualification of the
applicant x x x.”
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 accmplishment of them.” (Antieau, Modern Constitutional
Law, Vol. 2, p. 140, italics 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.” (italics 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. (italics 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. x x x 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, italics supplied)
Petitioners next contend that P.D. 1869 violates the equal protection clause of the
Constitution, because “it legalized PAGCOR—conducted gambling, while most
gambling are outlawed together with prostitution, drug trafficking and other vices” (p.
82, Rollo).
We, likewise, find no valid ground to sustain this contention. The petitioners’ posture
ignores the well-accepted meaning of the clause “equal protection of the laws.” The
clause does not preclude classification of individuals who may be accorded different
treatment under the law as long as the classification is not unreasonable or arbitrary
(Itchong v. Hernandez, 101 Phil. 1155). A law does not have to operate in equal force
on all persons or things to be conformable to Article III, Section 1 of the Constitution
(DECS v. San Diego, G.R. No. 89572, December 21, 1989).
The “equal protection clause” does not prohibit the Legislature from establishing
classes of individuals or objects upon which different rules shall operate (Laurel v.
Misa, 43 O.G. 2847). The Constitution does not require situations which are different
in fact or opinion to be treated in law as though they were the same (Gomez v.
Palomar, 25 SCRA 827).
Just how P.D. 1869 in legalizing gambling conducted by PAGCOR is violative of the
equal protection is not clearly explained in the petition. The mere fact that some
gambling activities like cockfighting (P.D 449) horse racing (R.A. 306 as amended by
RA 983), sweepstakes, lotteries and races (RA 1169 as amended by B.P. 42) are
legalized under certain conditions, while others are prohibited, does not render the
applicable laws, P.D. 1869 for one, unconstitutional.
“If the law presumably hits the evil where it is most felt, it is not to be overthrown
because there are other instances to which it might have been applied.” (Gomez v.
Palomar, 25 SCRA 827)
“The equal protection clause of the 14th Amendment does not mean that all
occupations called by the same name must be treated the same way; the state may
do what it can to prevent which is deemed as evil and stop short of those cases in
which harm to the few concerned is not less than the harm to the public that would
insure if the rule laid down were made mathematically exact.” (Dominican Hotel v.
Arizana, 249 US 2651).
Anent petitioners’ claim that PD 1869 is contrary to the “avowed trend of the Cory
Government away from monopolies and crony economy and toward free enterprise
and privatization” suffice it to state that this is not a ground for this Court to nullify P.D.
1869. If, indeed, PD 1869 runs counter to the 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. 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.
“In general, therefore, the 1935 provisions were not intended to be self-executing
principles ready for enforcement through the courts. They were rather directives
addressed to the executive and the legislature. If the executive and the legislature
failed to heed the directives of the articles the available remedy was not judicial or
political. The electorate could express their displeasure with the failure of the
executive and the legislature through the language of the ballot.” (Bernas, Vol. II, p. 2)
Every law has in its favor the presumption of constitutionality (Yu Cong Eng v.
Trinidad, 47 Phil. 387; Salas v. Jarencio, 48 SCRA 734; Peralta v. Comelec, 82 SCRA
30; Abbas v. Comelec, 179 SCRA 287). Therefore, for PD 1869 to be nullified, it must
be shown that there is a clear and unequivocal breach of the Constitution, not merely
a doubtful and equivocal one. In other words, the grounds for nullity must be clear
and beyond reasonable doubt. (Peralta v. Comelec, supra) Those who petition this
Court to declare a law, or parts thereof, unconstitutional must clearly establish the
basis for such a declaration. Otherwise, their petition must fail. Based on the grounds
raised by petitioners to challenge the constitutionality of P.D. 1869, the Court finds
that petitioners have failed to overcome the presumption. The dismissal of this
petition is therefore, inevitable. But as to whether P.D. 1869 remains a wise legislation
considering the issues of “morality, monopoly, trend to free enterprise, privatization as
well as the state principles on social justice, role of youth and educational values”
being raised, is up for Congress to determine.

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

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.

SO ORDERED.

Note.—It is presumed that an act of the law-making body is valid and constitutional.
(National Housing Authority vs. Reyes, 123 SCRA 245.)

——o0o——
 G.R. No. 129093. August 30, 2001.*
HON. JOSE D. LINA, JR., SANGGUNIANG PANLALAWIGAN OF
LAGUNA, and HON. CALIXTO CATAQUIZ, petitioners, vs. HON.
FRANCISCO DIZON PAÑO and TONY CALVENTO, respondents.
Municipal Corporations; Local Government Units; Ordinances; Gambling; An
ordinance which merely states the “objection” of the council to lotto is but a mere
policy statement on the part of the local council which is not self-executing, and could
not serve as a valid ground to prohibit the operation of the lotto system in the
province.—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.
Same; Same; Same; Same; While a policy statement expressing the local
government’s objection to the lotto is valid, as it is part of the local government’s
autonomy to air its views which may be contrary to that of the national government’s,
this freedom to exercise contrary views does not mean that local governments may
actually enact ordinances that go against laws duly enacted by Congress.—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.
Same; Same; Same; Same; What the national legislature allows by law, such as lotto,
a provincial board may not disallow by ordinance or resolution.—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, x x x 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.
Same; Same; Same; 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.—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, ordinances should not contravene
an existing statute enacted by Congress. The reasons for this is obvious, as
elucidated in Magtajas v. Pryce Properties Corp. 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. 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).
Same; Same; Same; Ours is a unitary form of government, not a federal state.—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.”
Same; Same; Same; Gambling; Sections 2 (c) and 27 of the Local Government Code
(Republic Act 7160) 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, and it is far
fetched to say that lotto falls within the contemplation of aforesaid legal provisions.—
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.
QUISUMBING, J.:
For our resolution is a petition for review on certiorari seeking the reversal of the
decision 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 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, Taon
1995 which was issued on September 18, 1995. The ordinance reads:
ISANG KAPASIYAHAN TINUTUTULAN ANG MGA “ILLEGAL GAM
BLING” LALO NA ANG LOTTO SA LALAWIGAN NG LAGUNA
SAPAGKAT, ang sugal dito sa lalawigan ng Laguna ay talamak na;
SAPAGKAT, ang sugal ay nagdudulot ng masasamang impluwensiya lalo’t higit sa
mga kabataan;
KUNG KAYAT 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;
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;
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.”
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, Taon 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, Taon
1995.
On February 10, 1997, the respondent judge, Francisco Dizon Paño, promulgated his
decision enjoining the petitioners from implementing or enforcing resolution or
Kapasiyahan Blg. 508, Taon 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, Taon 1995 of the Sangguniang Panlalawigan ng Laguna prohibiting the
operation of the lotto in the province of Laguna.
SO ORDERED.
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
plaintiffs 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.
On May 23, 1997, petitioners filed this petition alleging that the following errors were
committed by the respondent trial court:
I. THE TRIAL COURT ERRED IN ENJOINING THE PETITIONERS FROM
IMPLEMENTING KAPASIYAHAN BLG. 508, TAON 1995 OF THE SANGGUNIANG
PANLALAWIGAN OF LAGUNA PROHIBITING THE OPERATION OF THE LOTTO IN
THE PROVINCE OF LAGUNA.
II. THE 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. 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. 7180.
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.
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. 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.
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. 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,
Taon 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 self-executing. 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.
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.
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:
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.
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, ordinances should not contravene an existing
statute enacted by Congress. The reasons for this is obvious, as elucidated in
Magtajas v. Pryce Properties Corp.
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.
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.
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.”
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, x x x
(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.
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.
In sum, we find no reversible error in the RTC decision enjoining Mayor Cataquiz from
enforcing or implementing the Kapasiyahan Blg. 508, Taon 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 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, Taon 1995, of the Provincial Board of
Laguna is hereby AFFIRMED. No costs.
SO ORDERED.
Notes.—Gambling is not illegal per se. (Kilosbayan, Incorporated vs. Morato, 246
SCRA 540 [1995])

Section 27 of the Code should be read in conjunction with Section 26 thereof.17 Horse racing although authorized by law is still a form of gambling. (Manila Jockey
Section 26 reads: Club, Inc. vs. Court of Appeals, 300 SCRA 181 [1998])

Section 26. Duty of National Government Agencies in the Maintenance of Ecological ——o0o——
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 Sections
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
 G.R. No. 79956. January 29, 1990.*
CORDILLERA BROAD COALITION, petitioner, vs. COMMISSION ON
AUDIT, respondent.
G.R. No. 82217. January 29, 1990.*
LILIA YARANON and BONA BAUTISTA, assisted by their spouses,
BRAULIO D. YARANON and DEMETRIO D. BAUTISTA, JR.,
respectively; JAMES BRETT and SINAI C. HAMADA, petitioners, vs.
THE COMMISSION ON AUDIT, HON. CATALINO MACARAIG,
Executive Secretary, HON. VICENTE JAYME, Secretary of Finance,
HON. GUILLERMO N. CARAGUE, Secretary of Budget and
Management, and HON. ROSALINA S. CAJUCOM, OIC National
Treasurer, respondents.
Constitutional Law; Legislative Enactments; Legislative enactments must be accorded
the presumption of constitutionality.—It is well-settled in our jurisprudence that
respect for the inherent and stated powers and prerogatives of the law-making body,
as well as faithful adherence to the principle of separation of powers, require that its
enactment be accorded the presumption of constitutionality. Thus, in any challenge to
the constitutionality of a statute, the burden of clearly and unequivocally proving its
unconstitutionality always rests upon the challenger. Conversely, failure to so prove
will necessarily defeat the challenge.
Same; Same; Autonomous Regions; E.O. 220; E.O. 220 does not create the
autonomous region, it merely provides for transitory measures in anticipation of the
enactment of an organic act and the creation of an autonomous region; E.O. 220, not
unconstitutional.—A reading of E.O. No. 220 will easily reveal that what it actually
envisions is the consolidation and coordination of the delivery of services of line
departments and agencies of the National Government in the areas covered by the
administrative region as a step preparatory to the grant of autonomy to the
Cordilleras. It does not create the autonomous region contemplated in the
Constitution. It merely provides for transitory measures in anticipation of the
enactment of an organic act and the creation of an autonomous region. In short, it
prepares the ground for autonomy. This does not necessarily conflict with the
provisions of the Constitution on autonomous regions, as we shall show later.
Same; Same; Same; Same; The Cordillera Administrative Region is not a territorial or
political subdivision, it is a mere sophisticated version of a regional consultative
council.—After carefully considering the provisions of E.O. No. 220, we find that it did
not create a new territorial and political subdivision or merge existing ones into a
larger subdivision. 1. Firstly, the CAR is not a public corporation or a territorial and
political subdivision. It does not have a separate juridical personality, unlike provinces,
cities and municipalities. x x x Then, considering the control and supervision
exercised by the President over the CAR and the offices created under E.O. No. 220,
and considering further the indispensable participation of the line departments of the
National Government, the CAR may be considered more than anything else as a
regional coordinating agency of the National Government, similar to the regional
development councils which the President may create under the Constitution [Art. X,
sec. 14]. x x x In this wise, the CAR may be considered as a more sophisticated
version of the regional development council.
Same; Same; Same; Same; Creation of autonomous regions in Muslim Mindanao
and the Cordilleras contemplates the grant of political autonomy and not just
administrative autonomy to these regions.—The creation of autonomous regions in
Muslim Mindanao and the Cordilleras, which is peculiar to the 1987 Constitution,
contemplates the grant of political autonomy and not just administrative autonomy to
these regions. Thus, the provision in the Constitution for an autonomous regional
government with a basic structure consisting of an executive department and a
legislative assembly and special courts with personal, family and property law
jurisdiction in each of the autonomous regions [Art. X, sec. 18].
GUTIERREZ, JR., J., Concurring: Same; Same; Same; Same; The Cordillera
Administrative Region has become functus oficio upon enactment of R.A. 6658 and
R.A. 6766 creating the Cordillera Regional Consultative Commission and the
Cordillera Autonomous Region.—I concur in the result because with the enactments
of Republic Acts No. 6658 and No. 6766, the questioned Executive Order No. 220
has been superseded. The basic issues have become moot and academic. The
Cordillera Regional Consultative Commission and the Cordillera Autonomous Region
have taken over the functions of the Cordillera Administrative Region. The latter office
has become functus oficio. Moreover, there can be no question about the validity of
its acts because if it is not de jure, at the very least it is a de facto office.
Same; Same; Same; Same; The Cordillera Administrative Region was a de facto
agency whose acts are valid but not a de jure or fully valid creation.—I make these
observations because I have grave doubts about the authority of the President to
create such an office as the Cordillera Administrative Region (CAR) by mere
executive fiat. The office has to be created by statute. To me, the functions of CAR go
beyond ordinary planning and preparation for the real office. In fact, Congress had to
pass Republic Act 6658 for this purpose. CAR was an agency which accelerated
economic and social growth in the Cordilleras, coordinated the implementation of
programs, accepted projects and activities in the Cordilleras, and discharged basic
administrative functions. It was a de facto agency whose acts are valid but not a de
jure or fully valid creation.
CORTÉS, J.:
In these consolidated petitions, the constitutionality of Executive Order No. 220, dated
July 15, 1987, which created the Cordillera Administrative Region, is assailed on the
primary ground that it pre-empts the enactment of an organic act by the Congress
and the creation of the autonomous region in the Cordilleras conditional on the
approval of the act through a plebiscite.
Relative to the creation of autonomous regions, the Constitution, in Article X,
provides:
AUTONOMOUS REGIONS
Sec. 15. There 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.
SEC. 16. The President shall exercise general supervision over autonomous regions
to ensure that 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 department and legislative assembly, both of which shall
be elective 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 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 regions shall be the responsibility of the National Government.
A study of E.O. No. 220 would be incomplete without reference to its historical
background.
In April 1986, just after the EDSA Revolution, Fr. Conrado M. Balweg, S.V.D., broke
off on ideological grounds from the Communist Party of the Philippines (CPP) and its
military arm___the New People’s Army (NPA).
After President Aquino was installed into office by People Power, she advocated a
policy of national reconciliation. She called on all revolutionary forces to a peace
dialogue. The CPLA heeded this call of the President. After the preliminary
negotiations, President Aquino and some members of her Cabinet flew to Mt. Data in
the Mountain Province on September 13, 1986 and signed with Fr. Conrado M.
Balweg (As Commander of the CPLA) and Ama Mario Yag-ao (as President of
Cordillera Bodong Administration, the civil government of the CPLA) a ceasefire
agreement that signified the cessation of hostilities (WHEREAS No. 7, E.O. 220).
The parties arrived at an agreement in principle: the Cordillera people shall not
undertake their demands through armed and violent struggle but by peaceful means,
such as political negotiations. The negotiations shall be a continuing process until the
demands of the Cordillera people shall have been substantially granted.
On March 27, 1987, Ambassador Pelaez [Acting as Chief Negotiator of the
government], in pursuance of the September 13, 1986 agreement, flew to the
Mansion House, Baguio City, and signed with Fr. Balweg (as Chairman of the
Cordillera panel) a joint agreement, paragraphs 2 and 3 of which state:
Par. 2—Work together in drafting an Executive Order to create a preparatory body
that could perform policy-making and administrative functions and undertake
consultations and studies leading to a draft organic act for the Cordilleras.
Par. 3—Have representatives from the Cordillera panel join the study group of the
R.P. Panel in drafting the Executive Order.
Pursuant to the above joint agreement, E.O. 220 was drafted by a panel of the
Philippine government and of the representatives of the Cordillera people.
On July 15, 1987, President Corazon C. Aquino signed the joint draft into law, known
now as E.O. 220. [Rejoinder, G.R. No. 82217, pp. 2-3].
Executive Order No. 220, issued by the President in the exercise of her legislative
powers under Art. XVIII, sec. 6 of the 1987 Constitution, created the Cordillera
Administrative Region (CAR), which covers the provinces of Abra, Benguet, Ifugao,
Kalinga-Apayao and Mountain Province and the City of Baguio [secs. 1 and 2]. It was
created to accelerate economic and social growth in the region and to prepare for the
establishment of the autonomous region in the Cordilleras [sec. 3]. Its main function is
to coordinate the planning and implementation of programs and services in the
region, particularly, to coordinate with the local government units as well as with the
executive departments of the National Government in the supervision of field offices
and in identifying, planning, monitoring, and accepting projects and activities in the
region [sec. 5]. It shall also monitor the implementation of all ongoing national and
local government projects in the region [sec. 20]. The CAR shall have a Cordillera
Regional Assembly as a policy-formulating body and a Cordillera Executive Board as
an implementing arm [secs. 7, 8 and 10]. The CAR and the Assembly and Executive
Board shall exist until such time as the autonomous regional government is
established and organized [sec. 17].
Explaining the rationale for the issuance of E.O. No. 220, its last “Whereas” clause
provides:
WHEREAS, pending the convening of the first Congress and the enactment of the
organic act for a Cordillera autonomous region, there is an urgent need, in the interest
of national security and public order, for the President to reorganize immediately the
existing administrative structure in the Cordilleras to suit it to the existing political
realities therein and the Government’s legitimate concerns in the areas, without
attempting to pre-empt the constitutional duty of the first Congress to undertake the
creation of an autonomous region on a permanent basis.
During the pendency of this case, Republic Act No. 6766 entitled “An Act Providing for
an Organic Act for the Cordillera Autonomous Region,” was enacted and signed into
law. The Act recognizes the CAR and the offices and agencies created under E.O.
No. 220 and its transitory nature is reinforced in Art. XXI of R.A. No. 6766, to wit:
SEC. 3. The Cordillera Executive Board, the Cordillera Regional Assembly, as well as
all offices and agencies created under Executive Order No. 220 shall cease to exist
immediately upon the ratification of this Organic Act.
All funds, properties and assets of the Cordillera Executive Board and the Cordillera
Regional Assembly shall automatically be transferred to the Cordillera Autonomous
Government.
I we have seen earlier, they do not.
It is well-settled in our jurisprudence that respect for the inherent and stated powers
and prerogatives of the law-making body, as well as faithful adherence to the principle
of separation of powers, require that its enactment be accorded the presumption of
constitutionality. Thus, in any challenge to the constitutionality of a statute, the burden
of clearly and unequivocally proving its unconstitutionality always rests upon the
challenger. Conversely, failure to so prove will necessarily defeat the challenge.
We shall be guided by these principles in considering these consolidated petitions.
In these cases, petitioners principally argue that by issuing E.O. No. 220 the
President, in the exercise of her legislative powers prior to the convening of the first
Congress under the 1987 Constitution, has virtually pre-empted Congress from its
mandated task of enacting an organic act and created an autonomous region in the
Cordilleras. We have carefully studied the Constitution and E.O. No. 220 and we have
come to the conclusion that petitioners’ assertions are unfounded. Events subsequent
to the issuance of E.O. No. 220 also bear out this conclusion.
1. A reading of E.O. No. 220 will easily reveal that what it actually envisions is the
consolidation and coordination of the delivery of services of line departments and
agencies of the National Government in the areas covered by the administrative
region as a step preparatory to the grant of autonomy to the Cordilleras. It does not
create the autonomous region contemplated in the Constitution. It merely provides for
transitory measures in anticipation of the enactment of an organic act and the
creation of an autonomous region. In short, it prepares the ground for autonomy. This
does not necessarily conflict with the provisions of the Constitution on autonomous
regions, as we shall show later.
The Constitution outlines a complex procedure for the creation of an autonomous
region in the Cordilleras. A regional consultative commission shall first be created.
The President shall then appoint the members of a regional consultative commission
from a list of nominees from multisectoral bodies. The commission shall assist the
Congress in preparing the organic act for the autonomous region. The organic act
shall be passed by the first Congress under the 1987 Constitution within eighteen
months from the time of its organization and enacted into law. Thereafter there shall
be held a plebiscite for the approval of the organic act [Art. X, sec. 18]. Only then,
after its approval in the plebiscite, shall the autonomous region be created.
Undoubtedly, all of these will take time. The President, in 1987 still exercising
legislative powers, as the first Congress had not yet convened, saw it fit to provide for
some measures to address the urgent needs of the Cordilleras in the meantime that
the organic act had not yet been passed and the autonomous region created. These
measures we find in E.O. No. 220. The steps taken by the President are obviously
perceived by petitioners, particularly petitioner Yaranon who views E.O. No. 220 as
capitulation to the Cordillera People’s Liberation Army (CPLA) of Balweg, as unsound,
but the Court cannot inquire into the wisdom of the measures taken by the President.
We can only inquire into whether or not the measures violate the Constitution. But as
2. Moreover, the transitory nature of the CAR does not necessarily mean that it is, as
petitioner Cordillera Broad Coalition asserts, “the interim autonomous region in the
Cordil-leras” [Petition, G.R. No. 79956, p. 25].
The Constitution provides for a basic structure of government in the autonomous
region composed of an elective executive and legislature and special courts with
personal, family and property law jurisdiction [Art. X, sec. 18]. Using this as a guide,
we find that E.O. No. 220 did not establish an autonomous regional government. It
created a region, covering a specified area, for administrative purposes with the main
objective of coordinating the planning and implementation of programs and services
[secs. 2 and 5]. To determine policy, it created a representative assembly, to convene
yearly only for a five-day regular session, tasked with, among others, identifying
priority projects and development programs [sec. 9]. To serve as an implementing
body, it created the Cordillera Executive Board composed of the Mayor of Baguio City,
provincial governors and representatives of the Cordillera Bodong Administration,
ethno-linguistic groups and non-governmental organizations as regular members and
all regional directors of the line departments of the National Government as ex-officio
members and headed by an Executive Director [secs. 10 and 11]. The bodies created
by E.O. No. 220 do not supplant the existing local governmental structure, nor are
they autonomous government agencies. They merely constitute the mechanism for
an “umbrella” that brings together the existing local governments, the agencies of the
National Government, the ethno-linguistic groups or tribes, and non-governmental
organizations in a concerted effort to spur development in the Cordilleras.
The creation of the CAR for purposes of administrative coordination is underscored
by the mandate of E.O. No. 220 for the President and appropriate national
departments and agencies to make available sources of funds for priority
development programs and projects recommended by the CAR [sec. 21] and the
power given to the President to call upon the appropriate executive departments and
agencies of the National Government to assist the CAR [sec. 24].
3. Subsequent to the issuance of E.O. No. 220, the Congress, after it was convened,
enacted Republic Act No. 6658 which created the Cordillera Regional Consultative
Commission. The President then appointed its members. The commission prepared a
draft organic act which became the basis for the deliberations of the Senate and the
House of Representatives. The result was Republic Act No. 6766, the organic act for
the Cordillera autonomous region, which was signed into law on October 23, 1989. A
plebiscite for the approval of the organic act, to be conducted shortly, shall complete
the process outlined in the Constitution.
In the meantime, E.O. No. 220 had been in force and effect for more than two years
and we find that, despite E.O. No. 220, the autonomous region in the Cordilleras is
still to be created, showing the lack of basis of petitioners’ assertion. Events have
shown that petitioners’ fear that E.O. No. 220 was a “shortcut” for the creation of the
autonomous region in the Cordilleras was totally unfounded.
Clearly, petitioners’ principal challenge has failed.
II
A collateral issue raised by petitioners is the nature of the CAR: whether or not it is a
territorial and political subdivision. The Constitution provides in Article X:
Section 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 hereinafter provided.
xxx
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.
We have seen earlier that the CAR is not the autonomous region in the Cordilleras
contemplated by the Constitution. Thus, we now address petitioners’ assertion that
E.O. No. 220 contravenes the Constitution by creating a new territorial and political
subdivision.
After carefully considering the provisions of E.O. No. 220, we find that it did not create
a new territorial and political subdivision or merge existing ones into a larger
subdivision.
1. Firstly, the CAR is not a public corporation or a territorial and political subdivision. It
does not have a separate juridical personality, unlike provinces, cities and
municipalities. Neither is it vested with the powers that are normally granted to public
corporations, e.g. the power to sue and be sued, the power to own and dispose of
property, the power to create its own sources of revenue, etc. As stated earlier, the
CAR was created primarily to coordinate the planning and implementation of
programs and services in the covered areas.
The creation of administrative regions for the purpose of expediting the delivery of
services is nothing new. The Integrated Reorganization Plan of 1972, which was
made as part of the law of the land by virtue of Presidential Decree No. 1, established
eleven (11) regions, later increased to twelve (12), with definite regional centers and
required departments and agencies of the Executive Branch of the National
Government to set up field offices therein. The functions of the regional offices to be
established pursuant to the Reorganization Plan are: (1) to implement laws, policies,
plans, programs, rules and regulations of the department or agency in the regional
areas; (2) to provide economical, efficient and effective service to the people in the
area; (3) to coordinate with regional offices of other departments, bureaus and
agencies in the area; (4) to coordinate with local government units in the area; and (5)
to perform such other functions as may be provided by law. [See Part II, chap. III, art.
I, of the Reorganization Plan].
We can readily see that the CAR is in the same genre as the administrative regions
created under the Reorganization Plan, albeit under E.O. No. 220 the operation of the
CAR requires the participation not only of the line departments and agencies of the
National Government but also the local governments, ethnolinguistic groups and non-
governmental organizations in bringing about the desired objectives and the
appropriation of funds solely for that purpose.
2. Then, considering the control and supervision exercised by the President over the WHEREFORE, the petitions are DISMISSED for lack of merit.
CAR and the offices created under E.O. No. 220, and considering further the
indispensable participation of the line departments of the National Government, the SO ORDERED.
CAR may be considered more than anything else as a regional coordinating agency
of the National Government, similar to the regional development councils which the
President may create under the Constitution [Art. X, sec. 14]. These councils are GUTIERREZ, JR., J., Concurring opinion
“composed of local government officials, regional heads of departments and other
government offices, and representatives from non-governmental organizations within I concur in the result because with the enactments of Republic Acts No. 6658 and No.
the region for purposes of administrative decentralization to strengthen the autonomy 6766, the questioned Executive Order No. 220 has been superseded. The basic
of the units therein and to accelerate the economic and social growth and issues have become moot and academic. The Cordillera Regional Consultative
development of the units in the region.” [Ibid.] In this wise, the CAR may be Commission and the Cordillera Autonomous Region have taken over the functions of
considered as a more sophisticated version of the regional development council. III the Cordillera Administrative Region. The latter office has become functus oficio.
Finally, petitioners incidentally argue that the creation of the CAR contravened the Moreover, there can be no question about the validity of its acts because if it is not de
constitutional guarantee of the local autonomy for the provinces (Abra, Benguet, jure, at the very least it is a de facto office.
Ifugao, Kalinga-Apayao and Mountain Province) and city (Baguio City) which
I make these observations because I have grave doubts about the authority of the
compose the CAR.
President to create such an office as the Cordillera Administrative Region (CAR) by
We find first a need to clear up petitioners’ apparent misconception of the concept of mere executive fiat. The office has to be created by statute. To me, the functions of
local autonomy. CAR go beyond ordinary planning and preparation for the real office. In fact,
Congress had to pass Republic Act 6658 for this purpose. CAR was an agency which
It must be clarified that the constitutional guarantee of local autonomy in the accelerated economic and social growth in the Cordilleras, coordinated the
Constitution [Art. X, sec. 2] refers to the administrative autonomy of local government implementation of programs, accepted projects and activities in the Cordilleras, and
units or, cast in more technical language, the decentralization of government authority discharged basic administrative functions. It was a de facto agency whose acts are
[Villegas v. Subido, G.R. No. L-31004, January 8, 1971, 37 SCRA 1]. Local autonomy valid but not a de jure or fully valid creation.
is not unique to the 1987 Constitution, it being guaranteed also under the 1973
Constitution [Art. II, sec. 10]. And while there was no express guarantee under the
1935 Constitution, the Congress enacted the Local Autonomy Act (R.A. No. 2264)
Petition dismissed.
and the Decentralization Act (R.A. No. 5185), which ushered the irreversible march
towards further enlargement of local autonomy in the country [Villegas v. Subido,
supra.]
Note.—In interpreting statutes, that which will avoid finding of unconstitutionality is to
On the other hand, the creation of autonomous regions in Muslim Mindanao and the be preferred. (Paredes, vs. Executive Secretary, 128 SCRA 6.)
Cordilleras, which is peculiar to the 1987 Constitution, contemplates the grant of
political autonomy and not just administrative autonomy to these regions. Thus, the ——o0o——
provision in the Constitution for an autonomous regional government with a basic
structure consisting of an executive department and a legislative assembly and
special courts with personal, family and property law jurisdiction in each of the
autonomous regions [Art. X, sec. 18].

As we have said earlier, the CAR is a mere transitory coordinating agency that would
prepare the stage for political autonomy for the Cordilleras. It fills in the resulting gap
in the process of transforming a group of adjacent territorial and political subdivisions
already enjoying local or administrative autonomy into an autonomous region vested
with political autonomy.

Anent petitioners’ objection, we note the obvious failure to show how the creation of
the CAR has actually diminished the local autonomy of the covered provinces and
city. It cannot be over-emphasized that pure speculation and a resort to probabilities
are insufficient to cause the invalidation of E.O. No. 220.
 G.R. No. 195770. July 17, 2012.*
AQUILINO Q. PIMENTEL, JR., SERGIO TADEO and NELSON
ALCANTARA, petitioners, vs. EXECUTIVE SECRETARY PAQUITO
N. OCHOA and SECRETARY CORAZON JULIANO-SOLIMAN OF
THE DEPARTMENT OF SOCIAL WELFARE and DEVELOPMENT,
respondents.
Constitutional Law; Autonomy of Local Governments; State Policies; The Constitution
declares it a policy of the State to ensure the autonomy of local governments.―The
Constitution declares it a policy of the State to ensure the autonomy of local
governments and even devotes a full article on the subject of local governance which
includes the following pertinent provisions: Section 3. The Congres shall enact a local
government code which shall provide for a more responsive and accountable local
government structure instituted through a system of decentralization with effective
mechanisms of recall, initiative, and referendum, allocate among the different local
government units their powers, responsibilities, and resources, and provide for the
qualifications, election, appointment and removal, term, salaries, powers and
functions and duties of local officials, and all other matters relating to the organization
and operation of the local units. x x x Section 14. The President shall provide for
regional development councils or other similar bodies composed of local government
officials, regional heads of departments and other government offices, and
representatives from non-governmental organizations within the regions for purposes
of administrative decentralization to strengthen the autonomy of the units therein and
to accelerate the economic and social growth and development of the units in the
region. (Underscoring supplied)
Same; Same; Same; While it is through a system of decentralization that the State
shall promote a more responsive and accountable local government structure, the
concept of local autonomy does not imply the conversion of local government units
into “mini-states.”―The Court held in Ganzon v. Court of Apeals, 200 SCRA 271
(1991), that while it is through a system of decentralization that the State shall
promote a more responsive and accountable local government structure, the concept
of local autonomy does not imply the conversion of local government units into “mini-
states.” We explained that, with local autonomy, the Constitution did nothing more
than “to break up the monopoly of the national government over the afairs of the local
government” and, thus, did not intend to sever “the relation of partnership and
interdependence betwen the central administration and local government units.”
Same; Every law has in its favor the presumption of constitutionality, and to justify its
nullification, there must be a clear and unequivocal breach of the Constitution, not a
doubtful and argumentative one.―Every law has in its favor the presumption of
constitutionality, and to justify its nullification, there must be a clear and unequivocal
breach of the Constitution, not a doubtful and argumentative one. Petitioners have
failed to discharge the burden of proving the invalidity of the provisions under the
GAA of 2011. The allocation of a P21 billion budget for an intervention program
formulated by the national government itself but implemented in partnership with the
local government units to achieve the common national goal development and social
progress can by no means be an encroachment upon the autonomy of local
governments.
PERLAS-BERNABE, J.:
The Case
For the Court’s consideration in this Petition for Certiorari and Prohibition is the
constitutionality of certain provisions of Republic Act No. 10147 or the General
Appropriations Act [GAA] of 2011 which provides a P21 Billion budget allocation for
the Conditional Cash Transfer Program (CCTP) headed by the Department of Social
Welfare & Development (DSWD). Petitioners seek to enjoin respondents Executive
Secretary Paquito N. Ochoa and DSWD Secretary Corazon Juliano-Soliman from
implementing the said program on the ground that it amounts to a “recentralization” of
government functions that have already been devolved from the national government
to the local government units.
The Facts
In 2007, the DSWD embarked on a poverty reduction strategy with the poorest of the
poor as target beneficiaries.
Dubbed “Ahon Pamilyang Pilipino,” it was pre-pilot tested in the municipalities of
Sibagat and Esperanza in Agusan del Sur; the municipalities of Lopez Jaena and
Bonifacio in Misamis Occidental, the Caraga Region; and the cities of Pasay and
Caloocan upon the release of the amount of P50 Million Pesos under a Special
Allotment Release Order (SARO) issued by the Department of Budget and
Management.
On July 16, 2008, the DSWD issued Administrative Order No. 16, series of 2008
(A.O. No. 16, s. 2008), setting the implementing guidelines for the project renamed
“Pantawid Pamilyang Pilipino Program” (4Ps), upon the following stated objectives, to
wit:
1. To improve preventive health care of pregnant women and young children
2. To increase enrollment/attendance of children at elementary level
3. To reduce incidence of child labor
4. To raise consumption of poor households on nutrient dense foods
5. To encourage parents to invest in their children’s (and their own) future
6. To encourage parent’s participation in the growth and development of young
children, as well as involvement in the community.
This government intervention scheme, also conveniently referred to as CCTP,
“provides cash grant to extreme poor households to allow the members of the families
to meet certain human development goals.” Eligible households that are selected
from priority target areas consisting of the poorest provinces classified by the National
Statistical Coordination Board (NCSB) are granted a health assistance of
P500.00/month, or P6,000.00/year, and an educational assistance of P300.00/month
for 10 months, or a total of P3,000.00/year, for each child but up to a maximum of
three children per family. Thus, after an assessment on the appropriate assistance
package, a household beneficiary could receive from the government an annual
subsidy for its basic needs up to an amount of P15,000.00, under the following
conditionalities:
a) Pregnant women must get pre natal care starting from the 1st trimester, child
birth is attended by skilled/trained professional, get post natal care thereafter
b) Parents/guardians must attend family planing sessions/mother’s class, Parent
Effectiveness Service and others
c) Children 0-5 years of age get regular preventive health check-ups and vaccines
d) Children 3-5 years old must attend day care program/pre-school
e) Children 6-14 years of age are enrolled in schools and attend at least 85% of the
time.10
Under A.O. No. 16, s. 2008, the DSWD also institutionalized a coordinated inter-
agency network among the Department of Education (DepEd), Department of Health
(DOH), Department of Interior and Local Government (DILG), the National Anti-
Poverty Commission (NAPC) and the local government units (LGUs), identifying
specific roles an d functions in order to ensure effective and efficient implementation
of the CCTP. As the DSWD takes on the role of lead implementing agency that must
“oversee and coordinate the implementation, monitoring and evaluation of the
program,” the concerned LGU as partner agency is particularly tasked to―
a. Ensure availability of the supply side on health and education in the target areas
b. Provide necessary technical assistance for Program implementation
c. Coordinate the implementation/operationalization of sectoral activities at the
City/Municipal level to better execute Program objectives and functions
d. Coordinate with various concerned government agencies at the local level,
sectoral representatives and NGO to ensure effective Program implementation
e. Prepare reports on issues and concerns regarding Program implementation and
submit to the Regional Advisory Committee
and
f. Hold monthly committee meetings
A Memorandum of Agreement (MOA) executed by the DSWD with each participating
LGU outlines in detail the obligation of both parties during the intended five-year
implementation of the CCTP.
Congress, for its part, sought to ensure the success of the CCTP by providing it with
funding under the GA of 2008 in the amount of Two Hundred Ninety-Eight Million Five
Hundred Fifty Thousand Pesos (P298,550,000.00). This budget allocation increased
tremendously to P5 Billion Pesos in 2009, with the amount doubling to P10 Billion
Pesos in 2010. But the biggest allotment given to the CCTP was in the GA of 2011 at
Twenty One Billion One Hundred Ninety-Four Million One Hundred Seventeen
Thousand Pesos (P21,194,117,000.00).
Petitioner Aquilino Pimentel, Jr., a former Senator, joined by Sergio Tadeo, incumbent
President of the Association of Barangay Captains of Cabanatuan City, Nueva Ecija,
and Nelson Alcantara, incumbent Barangay Captain of Barangay Sta. Monica,
Quezon City, challenges before the Court the disbursement of public funds and the
implementation of the CCTP which are alleged to have encroached into the local
autonomy of the LGUs.
The Issue
THE P21 BILLION CCTP BUDGET ALLOCATION UNDER THE DSWD IN THE GAA
FY 2011 VIOLATES ART. II, SEC. 25 & ART. X, SEC. 3 OF THE 1987
CONSTITUTION IN RELATION TO SEC. 17 OF THE LOCAL GOVERNMENT CODE
OF 1991 BY PROVIDING FOR THE RECENTRALIZATION OF THE NATIONAL
GOVERNMENT IN THE DELIVERY OF BASIC SERVICES ALREADY DEVOLVED
TO THE LGUS.
Petitioners admit that the wisdom of adopting the CCTP as a poverty reduction
strategy for the Philippines is with the legislature. They take exception, however, to
the manner by which it is being implemented, that is, primarily through a national
agency like DSWD instead of the LGUs to which the responsibility and functions of
delivering social welfare, agriculture and health care services have been devolved
pursuant to Section 17 of Republic Act No. 7160, also known as the Local
Government Code of 191, in relation to Section 25, Article II & Section 3, Article X of
the 1987 Constitution.
Petitioners assert that giving the DSWD full control over the identification of
beneficiaries and the manner by which services are to be delivered or conditionalities
are to be complied with, instead of allocating the P21 Billion CCTP Budget directly to
the LGUs that would have enhanced its delivery of basic services, results in the
“recentralization” of basic government functions, which is contrary to the precepts of
local autonomy and the avowed policy of decentralization.
Our Ruling
The Constitution declares it a policy of the State to ensure the autonomy of local
governments and even devotes a full article on the subject of local governance15
which includes the following pertinent provisions:
“Section 3. The Congress shall enact a local government code which shall provide
for a more responsive and accountable local government structure instituted through
a system of decentralization with effective mechanisms of recall, initiative, and
referendum, allocate among the different local government units their powers,
responsibilities, and resources, and provide for the qualifications, election,
appointment and removal, term, salaries, powers and functions and duties of local
officials, and all other matters relating to the organization and operation of the local
units.
xxx
Section 14. The President shall provide for regional development councils or other
similar bodies composed of local government officials, regional heads of departments
and other government offices, and representatives from non-governmental
organizations within the regions for purposes of administrative decentralization to
strengthen the autonomy of the units therein and to accelerate the economic and
social growth and development of the units in the region.” (Underscoring supplied)
In order to fully secure to the LGUs the genuine and meaningful autonomy that would
develop them into self-reliant communities and effective partners in the attainment of
national goals,16 Section 17 of the Local Government Code vested upon the LGUs
the duties and functions pertaining to the delivery of basic services and facilities, as
follows:
“SECTION 17. Basic Services and Facilities.―(a) Local government units shall
endeavor to be self-reliant and shall continue exercising the powers and discharging
the duties and functions currently vested upon them. They shall also discharge the
functions and responsibilities of national agencies and offices devolved to them
pursuant to this Code. Local government units shall like wise exercise such other
powers and discharge such other functions and responsibilities as are necessary,
appropriate, or incidental to efficient and effective provision of the basic services and
facilities enumerated herein.
(b) Such basic services and facilities include, but are not limited to, x x x.”
While the aforementioned provision charges the LGUs to take on the functions and
responsibilities that have already been devolved upon them from the national
agencies on the aspect of providing for basic services and facilities in their respective
jurisdictions, paragraph (c) of the same provision provides a categorical exception of
cases involving nationally-funded projects, facilities, programs and services, thus:
“(c) Notwithstanding the provisions of subsection (b) hereof, public works and
infrastructure projects and other facilities, programs and services funded by the
National Government under the annual General Appropriations Act, other special
laws, pertinent executive orders, and those wholly or partially funded from foreign
sources, are not covered under this Section, except in those cases where the local
government unit concerned is duly designated as the implementing agency for such
projects, facilities, programs and services.” (Underscoring supplied)
The essence of this express reservation of power by the national government is that,
unles an LGU is particularly designated as the implementing agency, it has no power
over a program for which funding has ben provided by the national government under
the anual general apropriations act, even if the program involves the delivery of basic
services within the jurisdiction of the LGU.
The Court held in Ganzon v. Court of Apeals that while it is through a system of
decentralization that the State shall promote a more responsive and accountable local
government structure, the concept of local autonomy does not imply the conversion of
local government units into “mini-states.” We explained that, with local autonomy, the
Constitution did nothing more than “to break up the monopoly of the national
government over the afairs of the local government” and, thus, did not intend to sever
“the relation of partnership and interdependence betwen the central administration
and local government units.” In Pimentel v. Aguirre, the Court defined the extent of the
local government’s autonomy in terms of its partnership with the national government
in the pursuit of common national goals, refering to such key concepts as integration
and cordination. Thus:
“Under the Philippine concept of local autonomy, the national government has not
completely relinquished all its powers over local governments, including autonomous
regions. Only administrative powers over local affairs are delegated to political
subdivisions. The purpose of the delegation is to make governance more directly
responsive and effective at the local levels. In turn, economic, political and social
development at the smaller political units are expected to propel social and economic
growth and development. But to enable the country to develop as a whole, the
programs and policies effected localy must be integrated and cordinated towards a
common national goal. Thus, policy-setting for the entire country still lies in the
President and Congress.”
Certainly, to yield unreserved power of governance to the local government unit as to
preclude any and all involvement by the national government in programs
implemented in the local level would be to shift the tide of monopolistic power to the
other extreme, which would amount to a decentralization of power explicated in
Limbona v. Mangelin as beyond our constitutional concept of autonomy, thus:
“Now, autonomy is either decentralization of administration or decentralization of
power. There is decentralization of administration when the central government
delegates administrative powers to political subdivisions in order to broaden the base
of government power and in the process to make local governments ‘more responsive
and accountable’ and ‘ensure their fullest development a self-reliant communities and
make them more effective partners in the pursuit of national development and social
progress.’ At the same time, it relieves the central government of the burden of
managing local affairs and enables it to concentrate on national concerns. The
President exercises ‘general supervision’ over them, but only to ‘ensure that local
affairs are administered according to law.’ He has no control over their acts in the
sense that he can substitute their judgments with his own.
Decentralization of power, on the other hand, involves an abdication of political power
in the [sic] favor of local governments [sic] units declared to be autonomous. In that
case, the autonomous government is free to chart its own destiny and shape its future
with minimum intervention from central authorities. According to a constitutional
author, decentralization of power amounts to ‘self-immolation,’ since in that event, the
autonomous government becomes accountable not to the central authorities but to its
constituency.”
Indeed, a complete relinquishment of central government powers on the matter of
providing basic facilities and services cannot be implied as the Local Government
Code itself weighs against it. The national government is, thus, not precluded from
taking a direct hand in the formulation and implementation of national development
programs especially where it is implemented locally in coordination with the LGUs
concerned.

Every law has in its favor the presumption of constitutionality, and to justify its
nullification, there must be a clear and unequivocal breach of the Constitution, not a
doubtful and argumentative one. Petitioners have failed to discharge the burden of
proving the invalidity of the provisions under the GAA of 2011. The allocation of a P21
billion budget for an intervention program formulated by the national government itself
but implemented in partnership with the local government units to achieve the
common national goal development and social progress can by no means be an
encroachment upon the autonomy of local governments.

WHEREFORE, premises considered, the petition is hereby DISMISSED.

SO ORDERED.

Notes.—Consistent with the state policy of local autonomy as guaranteed by the 1987
Constitution, under Section 25, Article II and Section 2, Article X, and the Local
Government Code of 1991, the Court declares that the grant and release of the
hospitalization and health care insurance benefits given to petitioner’s officials and
employees were validly enacted through an ordinance passed by petitioner’s
Sangguniang Panlalawigan. (The Province of Negros Occidental vs. The
Commissioners, Commission on Audit, 631 SCRA 431 [2010])

Both autonomy and the synchronization of national and local elections are recognized
and established constitutional mandates, with one being as compelling as the other.
(Kida vs. Senate of the Philippines, 659 SCRA 270 [2011])

――o0o――
 G.R. Nos. 120865-71. December 7, 1995.*
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner, vs. COURT OF APPEALS;
HON. JUDGE HERCULANO TECH, PRESIDING JUDGE, BRANCH 70, REGIONAL
TRIAL COURT OF BINANGONAN RIZAL; FLEET DEVELOPMENT, INC. and
CARLITO ARROYO; THE MUNICIPALITY OF BINANGONAN and/or MAYOR ISIDRO
B. PACIS, respondents.
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner, vs. COURT OF APPEALS;
HON. JUDGE AURELIO C. TRAMPE, PRESIDING JUDGE, BRANCH 163,
REGIONAL TRIAL COURT OF PASIG; MANILA MARINE LIFE BUSINESS
RESOURCES, INC. represented by, MR. TOBIAS REYNALD M. TIANGCO;
MUNICIPALITY OF TAGUIG, METRO MANILA and/or MAYOR RICARDO D. PAPA,
JR., respondents.
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner, vs. COURT OF APPEALS;
HON. JUDGE ALEJANDRO A. MARQUEZ, PRESIDING JUDGE, BRANCH 79,
REGIONAL TRIAL COURT OF MORONG, RIZAL; GREENFIELD VENTURES
INDUSTRIAL DEVELOPMENT CORPORATION and R.J. ORION DEVELOPMENT
CORPORATION; MUNICIPALITY OF JALA-JALA and/or MAYOR WALFREDO M. DE
LAVEGA, respondents.
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner, vs. COURT OF APPEALS;
HON. JUDGE MANUEL S. PADOLINA, PRESIDING JUDGE, BRANCH 162,
REGIONAL TRIAL COURT OF PASIG, METRO MANILA; IRMA FISHING &
TRADING CORP.; ARTM FISHING CORP.; BDR CORPORATION, MIRT
CORPORATION and TRIM CORPORATION; MUNICIPALITY OF BINANGONAN
and/or MAYOR ISIDRO B. PACIS, respondents.
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner, vs. COURT OF APPEALS;
HON. JUDGE ARTURO A. MARAVE, PRESIDING JUDGE, BRANCH 78, REGIONAL
TRIAL COURT OF MORONG, RIZAL; BLUE LAGOON FISHING CORP. and ALCRIS
CHICKEN GROWERS, INC.; MUNICIPALITY OF JALA-JALA and/or MAYOR
WALFREDO M. DE LA VEGA, respondents.
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner, vs. COURT OF APPEALS;
HON. JUDGE ARTURO A. MARAVE, PRESIDING JUDGE, BRANCH 78, REGIONAL
TRIAL COURT OF MORONG, RIZAL; AGP FISH VENTURES, INC., represented by
its PRESIDENT ALFONSO PUYAT; MUNICIPALITY OF JALA-JALA and/or MAYOR
WALFREDO M. DE LA VEGA, respondents.
LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner vs. COURT OF APPEALS;
HON. JUDGE EUGENIO S. LABITORIA PRESIDING JUDGE, BRANCH 161,
REGIONAL TRIAL COURT OF PASIG, METRO MANILA; SEA MAR TRADING CO.,
INC.; EASTERN LAGOON FISHING CORP.; MINAMAR FISHING CORP.;
MUNICIPALITY OF BINANGONAN and/or MAYOR ISIDRO B. PACIS, respondents.
Ecology; It is difficult for a man, scavenging on the garbage dump or fishing in the
murky waters of the Pasig River and the Laguna Lake or making a clearing in the
forest to understand why protecting birds, fish, and trees is more important than
protecting him and keeping his family alive.—It is difficult for a man, scavenging on
the garbage dump created by affluence and profligate consumption and extravagance
of the rich or fishing in the murky waters of the Pasig River and the Laguna Lake or
making a clearing in the forest so that he can produce food for his family, to
understand why protecting birds, fish, and trees is more important than protecting him
and keeping his family alive.
Administrative Law; Laguna Lake Development Authority (LLDA); Local Government
Code; Statutes; The provisions of R.A. 7160 do not necessarily repeal the laws
creating the Laguna Lake Development Authority and granting the latter water rights
authority over Laguna de Bay and the lake region.—Section 4 (k) of the charter of the
Laguna Lake Development Authority, Republic Act No. 4850, the provisions of
Presidential Decree No. 813, and Section 2 of Executive Order No. 927, cited above,
specifically provide that the Laguna Lake Development Authority shall have exclusive
jurisdiction to issue permits for the use of all surface water for any projects or
activities in or affecting the said region, including navigation, construction, and
operation of fishpens, fish enclosures, fish corrals and the like. On the other hand,
Republic Act No. 7160, the Local Government Code of 1991, has granted to the
municipalities the exclusive authority to grant fishery privileges in municipal waters.
The Sangguniang Bayan may grant fishery privileges to erect fish corrals, oyster,
mussels or other aquatic beds or bangus fry area within a definite zone of the
municipal waters. We hold that the provisions of Republic Act No. 7160 do not
necessarily repeal the aforementioned laws creating the Laguna Lake Development
Authority and granting the latter water rights authority over Laguna de Bay and the
lake region.
Same; Same; Same; Same; Statutory Construction; The repeal of laws should be
made clear and expressed.—The Local Government Code of 1991 does not contain
any express provision which categorically expressly repeal the charter of the
Authority. It has to be conceded that there was no intent on the part of the legislature
to repeal Republic Act No. 4850 and its amendments. The repeal of laws should be
made clear and expressed.
Same; Same; Same; Same; Same; It is basic in statutory construction that the
enactment of a later legislation which is a general law cannot be construed to have
repealed a special law.—It has to be conceded that the charter of the Laguna Lake
Development Authority constitutes a special law. Republic Act No. 7160, the Local
Government Code of 1991, is a general law. It is basic in statutory construction that
the enactment of a later legislation which is a general law cannot be construed to
have repealed a special law. It is a well-settled rule in this jurisdiction that a “special
statute, provided for a particular case or class of cases, is not repealed by a
subsequent statute, general in its terms, provisions and application, unless the intent
to repeal or alter is manifest, although the terms of the general law are broad enough
to include the cases embraced in the special law.”
Same; Same; Same; Same; Same; A special law cannot be re pealed, amended or
altered by a subsequent general law by mere implication—thus, the charter of the
LLDA should prevail over the Local Government Code of 1991.—Where there is a
conflict between a general law and a special statute, the special statute should prevail
since it evinces the legislative intent more clearly than the general statute. The
special law is to be taken as an exception to the general law in the absence of special
circumstances forcing a contrary conclusion. This is because implied repeals are not
favored and as much as possible, effect must be given to all enactments of the
legislature. A special law cannot be repealed, amended or altered by a subsequent
general law by mere implication. Thus, it has to be concluded that the charter of the
Authority should prevail over the Local Government Code of 1991.
Same; Same; Same; Police Power; The charter of the LLDA should prevail over the
Local Government Code of 1991 on matters affecting Laguna de Bay.—The power of
the local government units to issue fishing privileges was clearly granted for revenue
purposes. This is evident from the fact that Section 149 of the New Local Government
Code empowering local governments to issue fishing permits is embodied in Chapter
2, Book II, of Republic Act No. 7160 under the heading, “Specific Provisions On The
Taxing And Other Revenue Raising Power Of Local Government Units” On the other
hand, the power of the Authority to grant permits for fishpens, fishcages and other
aquaculture structures is for the purpose of effectively regulating and monitoring
activities in the Laguna de Bay region (Section 2, Executive Order No. 927) and for
lake quality control and management. It does partake of the nature of police power
which is the most pervasive, the least limitable and the most demanding of all State
powers including the power of taxation. Accordingly, the charter of the Authority which
embodies a valid exercise of police power should prevail over the Local Government
Code of 1991 on matters affecting Laguna de Bay.
Same; Same; The LLDA has express powers as a regulatory and quasi-judicial body.
—In respect to the question as to whether the Authority is a quasi-judicial agency or
not, it is our holding that, considering the provisions of Section 4 of Republic Act No.
4850 and Section 4 of Executive Order No. 927, series of 1983, and the ruling of this
Court in Laguna Lake Development Authority vs. Court of Appeals, 231 SCRA 304,
306 (1994), there is no question that the Authority has express powers as a regulatory
and quasi-judicial body in respect to pollution cases with authority to issue a “cease
and desist order” and on matters affecting the construction of illegal fishpens,
fishcages and other aqua culture structures in Laguna de Bay.
Same; Same; Courts; Jurisdiction; The LLDA is not co-equal to the Regional Trial
Courts, and on actions necessitating the resolution of legal questions affecting the
powers of the Authority as provided in its charter, the Regional Trial Courts have
jurisdiction.—The Authority’s pretense, however, that it is co equal to the Regional
Trial Courts such that all actions against it may only be instituted before the Court of
Appeals cannot be sustained. On actions necessitating the resolution of legal
questions affecting the powers of the Authority as provided for in its charter, the
Regional Trial Courts have jurisdiction.
Same; Same; Jurisdiction; The LLDA has the exclusive jurisdic tion to issue permits
for the enjoyment of fishery privileges in Laguna de Bay to the exclusion of
municipalities situated therein and the authority to exercise such powers as are by its
charter vested on it.—In view of the foregoing, this Court holds that Section 149 of
Republic Act No. 7160, otherwise known as the Local Government Code of 1991, has
not repealed the provisions of the charter of the Laguna Lake Development Authority,
Republic Act No. 4850, as amended. Thus, the Authority has the exclusive jurisdiction
to issue permits for the enjoyment of fishery privileges in Laguna de Bay to the
exclusion of municipalities situated therein and the authority to exercise such powers
as are by its charter vested on it.
HERMOSISIMA, JR., J.:
It is difficult for a man, scavenging on the garbage dump created by affluence and
profligate consumption and extravagance of the rich or fishing in the murky waters of
the Pasig River and the Laguna Lake or making a clearing in the forest so that he can
produce food for his family, to understand why protecting birds, fish, and trees is more
important than protecting him and keeping his family alive.
How do we strike a balance between environmental protection, on the one hand, and
the individual personal interests of people, on the other?
Towards environmental protection and ecology, navigational safety, and sustainable
development, Republic Act No. 4850 created the “Laguna Lake Development
Authority.” This Government Agency is supposed to carry out and effectuate the
aforesaid declared policy, so as to accelerate the development and balanced growth
of the Laguna Lake area and the surrounding provinces, cities and towns, in the act
clearly named, within the context of the national and regional plans and policies for
social and economic development.
Presidential Decree No. 813 of former President Ferdinand E. Marcos amended
certain sections of Republic Act No. 4850 because of the concern for the rapid
expansion of Metropolitan Manila, the suburbs and the lakeshore towns of Laguna de
Bay, combined with current and prospective uses of the lake for municipal-industrial
water supply, irrigation, fisheries, and the like. Concern on the part of the Government
and the general public over:—the environment impact of development on the water
quality and ecology of the lake and its related river systems; the inflow of polluted
water from the Pasig River, industrial, domestic and agricultural wastes from
developed areas around the lake; the increasing urbanization which induced the
deterioration of the lake, since water quality studies have shown that the lake will
deteriorate further if steps are not taken to check the same; and the floods in
Metropolitan Manila area and the lakeshore towns which will influence the hydraulic
system of Laguna de Bay, since any scheme of controlling the floods will necessarily
involve the lake and its river systems,—likewise gave impetus to the creation of the
Authority.
Section 1 of Republic Act No. 4850 was amended to read as follows:
“SECTION 1. Declaration of Policy.—It is hereby declared to be the national policy to
promote, and accelerate the development and balanced growth of the Laguna Lake
area and the surrounding provinces, cities and towns hereinafter referred to as the
region, within the context of the national and regional plans and policies for social and
economic development and to carry out the development of the Laguna Lake region
with due regard and adequate provisions for environmental management and control,
preservation of the quality of human life and ecological systems, and the prevention
of undue ecological disturbances, deterioration and pollution.”
Special powers of the Authority, pertinent to the issues in this case, include:
“SEC. 3. Section 4 of the same Act is hereby further amended by adding thereto
seven new paragraphs to be known as paragraphs (j), (k), (1), (m), (n), (o), and (p)
which shall read as follows:
xxx xxx xxx
‘(j) The provisions of existing laws to the contrary notwithstanding, to engage in fish
production and other aqua-culture projects in Laguna de Bay and other bodies of
water within its jurisdiction and in pursuance thereof to conduct studies and make
experiments, whenever necessary, with the collaboration and assistance of the
Bureau of Fisheries and Aquatic Resources, with the end in view of improving present
techniques and practices. Provided, that until modified, altered or amended by the
procedure provided in the following sub-paragraph, the present laws, rules and
permits or authorizations remain in force;
(k) For the purpose of effectively regulating and monitoring activities in Laguna de
Bay, the Authority shall have exclusive jurisdiction to issue new permit for the use of
the lake waters for any projects or activities in or affecting the said lake including
navigation, construction, and operation of fishpens, fish enclo sures, fish corrals and
the like, and to impose necessary safeguards for lake quality control and
management and to collect necessary fees for said activities and projects Provided,
That the fees collected for fisheries may be shared between the Authority and other
government agencies and political sub-divisions in such proportion as may be
determined by the President of the Philippines upon recommendation of the
Authority’s Board Provided, further, That the Authority’s Board may determine new
areas of fishery development or activities which it may place under the supervision of
the Bureau of Fisheries and Aquatic Resources taking into account the overall
development plans and programs for Laguna de Bay and related bodies of water
Provided, finally, That the Authority shall subject to the approval of the President of
the Philippines promulgate such rules and regulations which shall govern fisheries
development activities in Laguna de Bay which shall take into consideration among
others the following socio-economic amelioration of bonafide resident fishermen
whether individually or collectively in the form of cooperatives, lakeshore town
development, a master plan for fishpen construction and operation, communal fishing
ground for lake shore town residents, and preference to lake shore town residents in
hiring laborers for fishery projects;
(l) To require the cities and municipalities embraced within the region to pass
appropriate zoning ordinances and other regulatory measures necessary to carry out
the objectives of the Authority and enforce the same with the assistance of the
Authority;
(m) The provisions of existing laws to the contrary notwithstanding, to exercise water
rights over public waters within the Laguna de Bay region whenever necessary to
carry out the Authority’s projects;
(n) To act in coordination with existing governmental agencies in establishing water
quality standards for industrial, agricultural and municipal waste discharges into the
lake and to cooperate with said existing agencies of the government of the Philippines
in enforcing such standards, or to separately pursue enforcement and penalty actions
as provided for in Section 4 (d) and Section 39-A of this Act Provided, That in case of
conflict on the appropriate water quality standard to be enforced such conflict shall be
resolved thru the NEDA Board’ ”;
To more effectively perform the role of the Authority under Republic Act No. 4850, as
though Presidential Decree No. 813 were not thought to be completely effective, the
Chief Executive, feeling that the land and waters of the Laguna Lake Region are
limited natural resources requiring judicious management to their optimal utilization to
insure renewability and to preserve the ecological balance, the competing options for
the use of such resources and conflicting jurisdictions over such uses having created
undue constraints on the institutional capabilities of the Authority in the light of the
limited powers vested in it by its charter, Executive Order No. 927 further defined and
enlarged the functions and powers of the Authority and named and enumerated the
towns, cities and provinces encompassed by the term “Laguna de Bay Region.”
Also, pertinent to the issues in this case are the following provisions of Executive
Order No. 927 which include in particular the sharing of fees:
“SEC. 2. Water Rights Over Laguna de Bay and Other Bodies of Water within the
Lake Region: To effectively regulate and monitor activities in the Laguna de Bay
region, the Authority shall have exclusive jurisdiction to issue permit for the use of all
surface water for any projects or activities in or affecting the said region including
navigation, construction, and operation of fishpens, fish enclosures, fish corrals and
the like.
For the purpose of this Executive Order, the term ‘Laguna de Bay Region’ shall refer
to the Provinces of Rizal and Laguna; the Cities of San Pablo, Pasay, Caloocan,
Quezon, Manila and Tagaytay, the towns of Tanauan, Sto. Tomas and Malvar in
Batangas Province; the towns of Silang and Carmona in Cavite Province; the town of
Lucban in Quezon Province, and the towns of Marikma, Pasig, Taguig, Muntinlupa,
and Pateros in Metro Manila.
SEC. 3. Collection of Fees. The Authority is hereby empowered to collect fees for the
use of the lake water and its tributaries for all beneficial purposes including but not
limited to fisheries, recreation, municipal, industrial, agricultural, navigation, irrigation,
and waste disposal purpose; Provided, that the rates of the fees to be collected, and
the sharing with other government agencies and political subdivisions, if necessary,
shall be subject to the approval of the President of the Philippines upon
recommendation of the Authority’s Board, except fishpen fee, which will be shared in
the following manner: 20 percent of the fee shall go to the lakeshore local
governments, 5 percent shall go to the Project Development Fund which shall be
administered by a Council and the remaining 75 percent shall constitute the share of
LLDA. However, after the implementation within the three-year period of the Laguna
Lake Fishery Zoning and Management Plan, the sharing will be modified as follows:
35 percent of the fishpen fee goes to the lakeshore local governments, 5 percent
goes to the Project Development Fund and the remaining 60 percent shall be retained
by LLDA; Provided, however, that the share of LLDA shall form part of its corporate
funds and shall not be remitted to the National Treasury as an exception to the
provisions of Presidential Decree No. 1234.” (Italics for emphasis)
It is important to note that Section 29 of Presidential Decree No. 813 defined the term
“Laguna Lake” in this manner:
“SECTION 41. Definition of Terms.
(11) Laguna Lake or Lake.—Whenever Laguna Lake or lake is used in this Act, the
same shall refer to Laguna de Bay which is that area covered by the lake water when
it is at the average annual maximum lake level of elevation 12.50 meters, as referred
to a datum 10.00 meters below mean lower low water (M.L.L.W.). Lands located at
and below such elevation are public lands which form part of the bed of said lake.”
Then came Republic Act No. 7160, the Local Government Code of 1991. The
municipalities in the Laguna Lake Region interpreted the provisions of this law to
mean that the newly passed law gave municipal governments the exclusive
jurisdiction to issue fishing privileges within their municipal waters because R.A. 7160
provides:
“Sec. 149. Fishery Rentals, Fees and Charges.—(a) Municipalities shall have the
exclusive authority to grant fishery privileges in the municipal waters and impose
rental fees or charges therefor in accordance with the provisions of this Section.
(b) The Sangguniang Bayan may:
(1) Grant fishing privileges to erect fish corrals, oyster, mussel or other aquatic beds
or bangus fry areas, within a definite zone of the municipal waters, as determined by
it; x x x.
(2) Grant privilege to gather, take or catch bangus fry, prawn fry or kawag-kawag or
fry of other species and fish from the municipal waters by nets, traps or other fishing
gears to marginal fishermen free from any rental fee, charges or any other imposition
whatsoever.
xxx xxx xxx
Sec. 447. Power, Duties, Functions and Compensation. x x x.
(1) x x x xxx xxx
(2) x x x xxx xxx
(XI) Subject to the provisions of Book II of this Code, grant exclusive privileges of
constructing fish corrals or fishpens, or the taking or catching of bangus fry, prawn fry
or kawag-kawag or fry of any species or fish within the municipal waters.
xxx xxx xxx
Municipal governments thereupon assumed the authority to issue fishing privileges
and fishpen permits. Big fishpen operators took advantage of the occasion to
establish fishpens and fishcages to the consternation of the Authority. Unregulated
fishpens and fishcages, as of July, 1995, occupied almost one-third of the entire lake
water surface area, increasing the occupation drastically from 7,000 hectares in 1990
to almost 21,000 hectares in 1995. The Mayor’s permit to construct fishpens and
fishcages were all undertaken in violation of the policies adopted by the Authority on
fishpen zoning and the Laguna Lake carrying capacity.
To be sure, the implementation by the lakeshore municipalities of separate
independent policies in the operation of fishpens and fishcages within their claimed
territorial municipal waters in the lake and their indiscriminate grant of fishpen permits
have already saturated the lake area with fishpens, thereby aggravating the current
environmental problems and ecological stress of Laguna Lake.
In view of the foregoing circumstances, the Authority served notice to the general
public that:
“In compliance with the instructions of His Excellency PRESIDENT FIDEL V. RAMOS
given on June 23, 1993 at Pila, Laguna, pursuant to Republic Act 4850 as amended
by Presidential Decree 813 and Executive Order 927 series of 1983 and in line with
the policies and programs of the Presidential Task Force on Illegal Fishpens and
Illegal Fishing, the general public is hereby notified that:
1. All fishpens, fishcages and other aqua-culture structures in the Laguna de Bay
Region, which were not registered or to which no application for registration and/or
permit has been filed with Laguna Lake Development Authority as of March 31, 1993
are hereby declared outrightly as illegal.
2. All fishpens, fishcages and other aqua-culture structures so declared as illegal shall
be subject to demolition which shall be undertaken by the Presidential Task Force for
Illegal Fishpen and Illegal Fishing.
3. Owners of fishpens, fishcages and other aqua-culture structures declared as illegal
shall, without prejudice to demolition of their structures be criminally charged in
accordance with Section 39-A of Republic Act 4850 as amended by P.D. 813 for
violation of the same laws. Violations of these laws carries a penalty of imprisonment
of not exceeding 3 years or a fine not exceeding Five Thousand Pesos or both at the
discretion of the court.
All operators of fishpens, fishcages and other aqua-culture structures declared as
illegal in accordance with the foregoing Notice shall have one (1) month on or before
27 October 1993 to show cause before the LLDA why their said fishpens, fishcages
and other aqua-culture structures should not be demolished/dismantled.”
One month, thereafter, the Authority sent notices to the concerned owners of the
illegally constructed fishpens, fishcages and other aqua-culture structures advising
them to dismantle their respective structures within 10 days from receipt thereof,
otherwise, demolition shall be effected.
Reacting thereto, the affected fishpen owners filed injunction cases against the
Authority before various regional trial courts, to wit: (a) Civil Case No. 759-B, for
Prohibition, Injunction and Damages, Regional Trial Court, Branch 70, Binangonan,
Rizal, filed by Fleet Development, Inc. and Carlito Arroyo; (b) Civil Case No. 64049,
for Injunction, Regional Trial Court, Branch 162, Pasig, filed by IRMA Fishing and
Trading Corp., ARTM
Fishing Corp., BDR Corp., MIRT Corp. and TRIM Corp.; (c) Civil Case No. 566, for
Declaratory Relief and Injunction, Regional Trial Court, Branch 163, Pasig, filed by
Manila Marine Life Business Resources, Inc. and Tobias Reynaldo M. Tiangco; (d)
Civil Case No. 556-M, for Prohibition, Injunction and Damages, Regional Trial Court,
Branch 78, Morong, Rizal, filed by AGP Fishing Ventures, Inc.; (e) Civil Case No. 522-
M, for Prohibition, Injunction and Damages, Regional Trial Court, Branch 78, Morong,
Rizal, filed by Blue Lagoon and Alcris Chicken Growers, Inc.; (f) Civil Case No. 554,
for Certiorari and Prohibition, Regional Trial Court, Branch 79, Morong, Rizal, filed by
Greenfields Ventures Industrial Corp. and R.J. Orion Development Corp.; and (g) Civil
Case No. 64124, for Injunction, Regional Trial Court, Branch 15, Pasig, filed by SEA-
MAR Trading Co., Inc. and Eastern Lagoon Fishing Corp. and Minamar Fishing
Corporation.
The Authority filed motions to dismiss the cases against it on jurisdictional grounds.
The motions to dismiss were invariably denied. Meanwhile, temporary restraining
order/writs of preliminary mandatory injunction were issued in Civil Cases Nos.
64124, 759 and 566 enjoining the Authority from demolishing the fishpens and similar
structures in question.
Hence, the herein petition for certiorari, prohibition and injunction, G.R. Nos. 120865-
71, were filed by the Authority with this court. Impleaded as parties-respondents are
concerned regional trial courts and respective private parties, and the municipalities
and/or respective Mayors of Binangonan, Taguig and Jala-jala, who issued permits for
the construction and operation of fishpens in Laguna de Bay. The Authority sought the
following reliefs, viz.:
“(A) Nullification of the temporary restraining order/writs of preliminary injunction
issued in Civil Cases Nos. 64124, 759 and 566;
(B) Permanent prohibition against the regional trial courts from exercising jurisdiction
over cases involving the Authority which is a co-equal body;
(C) Judicial pronouncement that R.A. 7610 (Local Government Code of 1991) did not
repeal, alter or modify the provisions of R.A. 4850, as amended, empowering the
Authority to issue permits for fishpens, fishcages and other aqua-culture structures in
Laguna de Bay and that, the Authority the government agency vested with exclusive
authority to issue said permits.”
By this Court’s resolution of May 2, 1994, the Authority’s consolidated petitions were
referred to the Court of Appeals. In a Decision, dated June 29, 1995, the Court of
Appeals dismissed the Authority’s consolidated petitions, the Court of Appeals holding
that: (A) LLDA is not among those quasi-judicial agencies of government whose
decision or order are appealable only to the Court of Appeals; (B) the LLDA charter
does vest LLDA with quasi-judicial functions insofar as fishpens are concerned; (C)
the provisions of the LLDA charter insofar as fishing privileges in Laguna de Bay are
concerned had been repealed by the Local Government Code of 1991; (D) in view of
the aforesaid repeal, the power to grant permits devolved to and is now vested with
their respective local government units concerned.
Not satisfied with the Court of Appeals decision, the Authority has returned to this
Court charging the following errors:
“1. THE HONORABLE COURT OF APPEALS PROBABLY COMMITTED AN ERROR
WHEN IT RULED THAT THE LAGUNA LAKE DEVELOPMENT AUTHORITY IS NOT
A QUASI-JUDICIAL AGENCY.
2. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR
WHEN IT RULED THAT R.A. 4850 AS AMENDED BY P.D. 813 AND E.O. 927
SERIES OF 1983 HAS BEEN REPEALED BY REPUBLIC ACT 7160. THE SAID
RULING IS CONTRARY TO ESTABLISHED PRINCIPLES AND JURISPRUDENCE
OF STATUTORY CONSTRUCTION.
3. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR
WHEN IT RULED THAT THE POWER TO ISSUE FISHPEN PERMITS IN LAGUNA
DE BAY HAS BEEN DEVOLVED TO CONCERNED (LAKESHORE) LOCAL
GOVERNMENT UNITS.”
We take a simplistic view of the controversy. Actually, the main and only issue posed
is: Which agency of the Government—the Laguna Lake Development Authority or the
towns and municipalities comprising the region—should exercise jurisdiction over the
Laguna Lake and its environs insofar as the issuance of permits for fishery privileges
is concerned?
Section 4 (k) of the charter of the Laguna Lake Development Authority, Republic Act
No. 4850, the provisions of Presidential Decree No. 813, and Section 2 of Executive
Order No. 927, cited above, specifically provide that the Laguna Lake Development
Authority shall have exclusive jurisdiction to issue permits for the use of all surface
water for any projects or activities in or affecting the said region, including navigation,
construction, and operation of fishpens, fish enclosures, fish corrals and the like. On
the other hand, Republic Act No. 7160, the Local Government Code of 1991, has
granted to the municipalities the exclusive authority to grant fishery privileges in
municipal waters. The Sangguniang Bayan may grant fishery privileges to erect fish
corrals, oyster, mussels or other aquatic beds or bangus fry area within a definite
zone of the municipal waters.
We hold that the provisions of Republic Act No. 7160 do not necessarily repeal the
aforementioned laws creating the Laguna Lake Development Authority and granting
the latter water rights authority over Laguna de Bay and the lake region.
The Local Government Code of 1991 does not contain any express provision which
categorically expressly repeal the charter of the Authority. It has to be conceded that
there was no intent on the part of the legislature to repeal Republic Act No. 4850 and
its amendments. The repeal of laws should be made clear and expressed.
It has to be conceded that the charter of the Laguna Lake Development Authority
constitutes a special law. Republic Act No. 7160, the Local Government Code of
1991, is a general law. It is basic in statutory construction that the enactment of a later
legislation which is a general law cannot be construed to have repealed a special law.
It is a well-settled rule in this jurisdiction that “a special statute, provided for a
particular case or class of cases, is not repealed by a subsequent statute, general in
its terms, provisions and application, unless the intent to repeal or alter is manifest,
although the terms of the general law are broad enough to include the cases
embraced in the special law.”
Where there is a conflict between a general law and a special statute, the special
statute should prevail since it evinces the legislative intent more clearly than the
general statute. The special law is to be taken as an exception to the general law in
the absence of special circumstances forcing a contrary conclusion. This is because
implied repeals are not favored and as much as possible, effect must be given to all
enactments of the legislature. A special law cannot be repealed, amended or altered
by a subsequent general law by mere implication.
Thus, it has to be concluded that the charter of the Authority should prevail over the
Local Government Code of 1991.
Considering the reasons behind the establishment of the Authority, which are
environmental protection, navigational safety, and sustainable development, there is
every indication that the legislative intent is for the Authority to proceed with its
mission.
We are on all fours with the manifestation of petitioner Laguna Lake Development
Authority that “Laguna de Bay, like any other single body of water has its own unique
natural ecosystem. The 900 km2 lake surface water, the eight (8) major river
tributaries and several other smaller rivers that drain into the lake, the 2,920 km2
basin or watershed transcending the boundaries of Laguna and Rizal provinces,
greater portion of Metro Manila, parts of Cavite, Batangas and Quezon provinces,
constitute one integrated delicate natural ecosystem that needs to be protected with
uniform set of policies; if we are to be serious in our aims of attaining sustainable
development. This is an exhaustible natural resource—a very limited one—which
requires judicious management and optimal utilization to ensure renewability and
preserve its ecological integrity and balance.”
“Managing the lake resources would mean the implementation of a national policy
geared towards the protection, conservation, balanced growth and sustainable
development of the region with due regard to the inter-generational use of its
resources by the inhabitants in this part of the earth. The authors of Republic Act
4850 have foreseen this need when they passed this LLDA law—the special law
designed to govern the management of our Laguna de Bay lake resources.”
“Laguna de Bay therefore cannot be subjected to fragmented concepts of
management policies where lakeshore local government units exercise exclusive
dominion over specific portions of the lake water. The garbage thrown or sewage
discharged into the lake, abstraction of water therefrom or construction of fishpens by
enclosing its certain area, affect not only that specific portion but the entire 900 km2
of lake water. The implementation of a cohesive and integrated lake water resource
management policy, therefore, is necessary to conserve, protect and sustainably
develop Laguna de Bay.”
The power of the local government units to issue fishing privileges was clearly
granted for revenue purposes. This is evident from the fact that Section 149 of the
New Local Government Code empowering local governments to issue fishing permits
is embodied in Chapter 2, Book II, of Republic Act No. 7160 under the heading,
“Specific Provisions On The Taxing And Other Revenue Raising Power Of Local
Government Units.”
On the other hand, the power of the Authority to grant permits for fishpens, fishcages
and other aqua-culture structures is for the purpose of effectively regulating and
monitoring activities in the Laguna de Bay region (Section 2, Executive Order No.
927) and for lake quality control and management.6 It does partake of the nature of
police power which is the most pervasive, the least limitable and the most demanding
of all State powers including the power of taxation. Accordingly, the charter of the
Authority which embodies a valid exercise of police power should prevail over the
Local Government Code of 1991 on matters affecting Laguna de Bay.
There should be no quarrel over permit fees for fishpens, fishcages and other aqua-
culture structures in the Laguna de Bay area. Section 3 of Executive Order No. 927
provides for the proper sharing of fees collected.
In respect to the question as to whether the Authority is a quasi-judicial agency or not,
it is our holding that, considenng the provisions of Section 4 of Republic Act No. 4850
and Section 4 of Executive Order No. 927, series of 1983, and the ruling of this Court
in Laguna Lake Development Authority vs. Court of Appeals, 231 SCRA 304, 306,
which we quote:
“x x x xxx xxx
As a general rule, the adjudication of pollution cases generally pertains to the
Pollution Adjudication Board (PAB), except in cases where the special law provides
for another forum. It must be recognized in this regard that the LLDA, as a specialized
administrative agency, is specifically mandated under Republic Act No. 4850 and its
amendatory laws to carry out and make effective the declared national policy of
promoting and accelerating the development and balanced growth of the Laguna
Lake area and the surrounding provinces of Rizal and Laguna and the cities of San
Pablo, Manila, Pasay, Quezon and Caloocan with due regard and adequate
provisions for environmental management and control, preservation of the quality of
human life and ecological systems, and the prevention of undue ecological
disturbances, deterioration and pollution Under such a broad grant of power and
authority, the LLDA, by virtue of its special charter, obviously has the responsibility to
protect the inhabitants of the Laguna Lake region from the deleterious effects of
pollutants emanating from the discharge of wastes from the surrounding areas. In
carrying out the aforementioned declared policy, the LLDA is mandated, among
others, to pass upon and approve or disapprove all plans, programs, and projects
proposed by local government offices/agencies within the region, public corporations,
and private persons or enterprises where such plans, programs and/or projects are
related to those of the LLDA for the development of the region.
xxx xxx xxx
x x x. While it is a fundamental rule that an administrative agency has only such
powers as are expressly granted to it by law, it is likewise a settled rule that an
administrative agency has also such powers as are necessarily implied in the
exercise of its express powers In the exercise, therefore, of its express powers under
its charter, as a regulatory and quasi-judicial body with respect to pollution cases in
the Laguna Lake region, the authority of the LLDA to issue a ‘cease and desist order’
is, perforce, implied. Otherwise, it may well be reduced to a ‘toothless’ paper agency.”
there is no question that the Authority has express powers as a regulatory and quasi-
judicial body in respect to pollution cases with authority to issue a “cease and desist
order” and on matters affecting the construction of illegal fishpens, fishcages and
other aqua-culture structures in Laguna de Bay. The Authority’s pretense, however,
that it is co-equal to the Regional Trial Courts such that all actions against it may only
be instituted before the Court of Appeals cannot be sustained. On actions
necessitating the resolution of legal questions affecting the powers of the Authority as
provided for in its charter, the Regional Trial Courts have jurisdiction.
In view of the foregoing, this Court holds that Section 149 of Republic Act No. 7160,
otherwise known as the Local Government Code of 1991, has not repealed the
provisions of the charter of the Laguna Lake Development Authority, Republic Act No.
4850, as amended. Thus, the Authority has the exclusive jurisdiction to issue permits
for the enjoyment of fishery privileges in Laguna de Bay to the exclusion of
municipalities situated therein and the authority to exercise such powers as are by its
charter vested on it.
Removal from the Authority of the aforesaid licensing authority will render nugatory its
avowed purpose of protecting and developing the Laguna Lake Region. Otherwise
stated, the abrogation of this power would render useless its reason for being and will
in effect denigrate, if not abolish, the Laguna Lake Development Authority. This, the
Local Government Code of 1991 had never intended to do.
WHEREFORE, the petitions for prohibition, certiorari and injunction are hereby
granted, insofar as they relate to the authority of the Laguna Lake Development
Authority to grant fishing privileges within the Laguna Lake Region.
The restraining orders and/or writs of injunction issued by Judge Arturo Marave, RTC,
Branch 78, Morong, Rizal; Judge Herculano Tech, RTC, Branch 70, Binangonan,
Rizal; and Judge Aurelio Trampe, RTC, Branch 163, Pasig, Metro Manila, are hereby
declared null and void and ordered set aside for having been issued with grave abuse
of discretion.
The Municipal Mayors of the Laguna Lake Region are hereby prohibited from issuing
permits to construct and operate fishpens, fishcages and other aqua-culture
structures within the Laguna Lake Region, their previous issuances being declared
null and void. Thus, the fishing permits issued by Mayors Isidro B. Pacis, Municipality
of Binangonan; Ricardo D. Papa, Municipality of Taguig; and Walfredo M. de la Vega,
Municipality of Jala-jala, specifically, are likewise declared null and void and ordered
cancelled.
The fishpens, fishcages and other aqua-culture structures put up by operators by
virtue of permits issued by Municipal Mayors within the Laguna Lake Region,
specifically, permits issued to Fleet Development, Inc. and Carlito Arroyo; Manila
Marine Life Business Resources, Inc., represented by, Mr. Tobias Reynald M.
Tiangco; Greenfield Ventures Industrial Development Corporation and R.J. Orion
Development Corporation; IRMA Fishing And Trading Corporation, ARTM Fishing
Corporation, BDR Corporation, Mirt Corporation and Trim Corporation; Blue Lagoon
Fishing Corporation and ALCRIS Chicken Growers, Inc.; AGP Fish Ventures, Inc.,
represented by its President Alfonso Puyat; SEA MAR Trading Co., Inc., Eastern
Lagoon Fishing Corporation, and MINAMAR Fishing Corporation, are hereby
declared illegal structures subject to demolition by the Laguna Lake Development
Authority.
SO ORDERED.
CONCURRING OPINION
PADILLA, J.:
I fully concur with the decision written by Mr. Justice R. Hermosisima, Jr.. I would only
like to stress what the decision already states, i.e., that the local government units in
the Laguna Lake area are not precluded from imposing permits on fishery operations
for revenue raising purposes of such local government units. In other words, while the
exclusive jurisdiction to determine whether or not projects or activities in the lake area
should be allowed, as well as their regulation, is with the Laguna Lake Development
Authority, once the Authority grants a permit, the permittee may still be subjected to
an additional local permit or license for revenue purposes of the local government
units concerned. This approach would clearly harmonize the special law, Rep. Act No.
4850, as amended, with Rep. Act No. 7160, the Local Government Code. It will also
enable small towns and municipalities in the lake area, like Jala-Jala, to rise to some
level of economic viability.
Petitions granted.
——o0o——
G.R. No. 135962. March 27, 2000.*
METROPOLITAN MANILA DEVELOPMENT AUTHORITY, petitioner,
vs. BEL-AIR VILLAGE ASSOCIATION, INC., respondent.
Constitutional Law; Political Subdivision; Police Power; Definition of Police Power.—
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. 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.
Same; Same; Same; Police power is lodged primarily in the National Legislature
which may delegate the power to the President and administrative boards as well as
the lawmaking bodies of municipal corporations or local government units.—It bears
stressing that police power is lodged primarily in the National Legislature. It cannot be
exercised by any group or body of individuals not possessing legislative power. 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. Once delegated, the agents can exercise only such legislative
powers as are conferred on them by the national lawmaking body.
Same; Same; Same; Definition of Local Government.—A local government is a
“political subdivision of a nation or state which is constituted by law and has
substantial control of local affairs.” The Local Government Code of 1991 defines a
local government unit as a “body politic and corporate”—one endowed with powers as
a political subdivision of the National Government and as a corporate entity
representing the inhabitants of its territory. Local government units are the provinces,
cities, municipalities and barangays. They are also the territorial and political
subdivisions of the state.
Same; Same; Same; Same; Police power delegated to the local government units in
the Local Government Code of 1991.—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.
Same; Same; Same; Same; Local government units exercise police power through
their respective legislative bodies.—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 x
x x.” 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.”
Same; Same; Same; There is no syllable in Republic Act No. 7924 that grants the
Metro Manila Development Authority police power, let alone legislative power.—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
and appropriate funds for the general welfare” of the inhabitants of Metro Manila. The
MMDA is, as termed in the charter itself, a “development authority.”
Same; Same; Same; Metro Manila Development Authority is not a political unit of
government.—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.
Same; Same; Same; Metro Manila Development Authority is not a local government
unit or a public corporation endowed with legislative power.—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. 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, whereas in local government
units, the President merely exercises supervisory authority. This emphasizes the
administrative character of the MMDA.
Same; Same; Same; Unlike the Metro Manila Commission, the Metro Manila
Development Authority has no power to enact ordinances for the welfare of the
community.—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.
PUNO, J.:
Not infrequently, the government is tempted to take legal shortcuts to 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 BelAir Village.
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
“Dear President Lindo,
“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.
“Finally, we are furnishing you with a copy of the handwritten instruction of the
President on the matter.
“Very truly yours,
PROSPERO I. ORETA
Chairman”
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. 96-001 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. 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 and on February 13, 1996, it issued a writ of preliminary injunction
enjoining the implementation of the MMDA’s proposed action.
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:
“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.
“No pronouncement as to costs.
“SO ORDERED.”
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?
IV. WAS RESPONDENT DEPRIVED OF DUE PROCESS DESPITE THE SEVERAL
MEETINGS HELD BETWEEN MMDA AND THE AFFECTED BEL-AIR RESIDENTS
AND BAVA OFFICERS?
V. HAS RESPONDENT COME TO COURT WITH UNCLEAN HANDS?”
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. 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.
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. 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.
It bears stressing that police power is lodged primarily in the National Legislature. It
cannot be exercised by any group or body of individuals not possessing legislative
power. 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. Once delegated, the agents can exercise only such
legislative powers as are conferred on them by the national lawmaking body.
A local government is a “political subdivision of a nation or state which is constituted
by law and has substantial control of local affairs.” The Local Government Code of
1991 defines a local government unit as a “body politic and corporate”—one endowed
with powers as a political subdivision of the National Government and as a corporate
entity representing the inhabitants of its territory. Local government units are the
provinces, cities, municipalities and barangays. They are also the territorial and
political subdivisions of the state.
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.”
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 x x x.” 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.”
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, Parañaque and Valenzuela, and the municipalities of Malabon, Navotas,
Pateros, San Juan and Taguig. With the passage of Republic Act (R.A.) No. 7924 in
1995, Metropolitan Manila was declared as a “special development and administrative
region” and the Administration of “metrowide” basic services affecting the region
placed under “a development authority” referred to as the MMDA.
“Metro-wide services” are those “services which have metrowide 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.” 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;”
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 metrowide 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 non-governmental 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, nongovernmental 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 cooperative arrangements with these bodies for
the delivery of the required services within Metro Manila.
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. The Council is headed by a 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 promulgates 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 this 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 and appropriate funds for the general welfare” of the inhabitants of Metro
Manila. The MMDA is, as termed in the charter itself, a “development authority.” It is
an agency created for the purpose of laying down policies and coordinating with the
various national government agencies, people’s organizations, non-governmental
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.—x x x.
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.”
Petitioner cannot seek refuge in the cases of Sangalang v. Intermediate Appellate
Court 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, while the second decision
denied reconsideration of the first case and in addition discussed the case of Yabut v.
Court of Appeals.
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.
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.
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. 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. 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.
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 ordinancemaking 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 Piñas, Malabon, Navotas, Pasig, Pateros, Parañaque,
Marikina, Muntinlupa and Taguig in the province of Rizal, and Valenzuela in the
province of Bulacan. 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.” Metropolitan Manila was established as a “public
corporation” with the following powers:
“Section 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.”
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 Ma-nila;
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 policymaking 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.
x x x.
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 and 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:
“Section 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.
Section 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:
“Section 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.”
The 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 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.:
“Section 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.”
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. 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.” The MMA’s governing body, the Metropolitan
Manila Council, although composed of the mayors of the component cities and
municipalities, was merely given the power of: (1) formulation of policies on the
delivery of basic services requiring coordination and consolidation; and (2)
promulgation of resolutions and other issuances, approval of a code of basic services
and the exercise of its rule-making power.
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.”
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, 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.
x x x.”
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 metrowide 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. 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.”
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.”
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.
When the bill was forwarded to the Senate, several amendments were made. These
amendments, however, did not affect the nature of the MMDA as originally conceived
in the House of Representatives.
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. 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, 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.

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.

SO ORDERED.

Petition denied, judgment and resolution affirmed.

Note.—In order that a local government may exercise police power, there must be a
legislative grant which necessarily sets the limits for the exercise of the power. (Tano
vs. Socrates, 278 SCRA 154 [1997])

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