MAGTAJAS VS PYRYCE COMPANY

Facts:

PAGCOR decided to expand its operations to Cagayan de Oro City. It leased a portion of a building belonging to Pryce Properties
Corporations, Inc., renovated & equipped the same, and prepared to inaugurate its casino during the Christmas season. Civil
organizations angrily denounced the project. Petitioners opposed the casino’s opening and enacted Ordinance No. 3353,
prohibiting the issuance of business permit and canceling existing business permit to the establishment for the operation of the
casino, and Ordinance No. 3375-93, prohibiting the operation of the casino and providing a penalty for its violation.

Respondents assailed the validity of the ordinances on the ground that they both violated Presidential Decree No. 1869. Petitioners
contend that, pursuant to the Local Government Code, they have the police power authority to prohibit the operation of casino for
the general welfare.

Issue:

Whether the Ordinances are valid.

Ruling:

No. Cagayan de Oro City, like other local political subdivisions, is empowered to enact ordinances for the purposes indicated in
the Local Government Code. It is expressly vested with the police power under what is known as the General Welfare Clause now
embodied in Section 16 as follows:Sec. 16.

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

Local Government Code, local government units are authorized to prevent or suppress, among others, "gambling and other
prohibited games of chance." Obviously, this provision excludes games of chance which are not prohibited but are in fact permitted
by law.

The tests of a valid ordinance are well established. A long line of decisions has held that to be valid, an ordinance must conform
to the following substantive requirements:
1) It must not contravene the constitution or any statute.
2) It must not be unfair or oppressive.
3) It must not be partial or discriminatory.
4) It must not prohibit but may regulate trade.
5) It must be general and consistent with public policy.
6) It must not be unreasonable.

The rationale of the requirement that the ordinances should not contravene a statute is obvious.Casino gambling is authorized by
P.D. 1869. This decree has the status of a statute that cannot be amended or nullified by a mere ordinance. Local councils exercise
only delegated legislative powers conferred on them by Congress as the national lawmaking body. The delegate cannot be superior
to the principal or exercise powers higher than those of the latter. It is a heresy to suggest that the local government units can undo
the acts of Congress, from which they have derived their power in the first place, and negate by mere ordinance the mandate of
the statute.Hence, it was not competent for the Sangguniang Panlungsod of Cagayan de Oro City to enact Ordinance No. 3353
prohibiting the use of buildings for the operation of a casino and Ordinance No. 3375-93 prohibiting the operation of casinos. For
all their praiseworthy motives, these ordinances are contrary to P.D. 1869 and the public policy announced therein and are therefore
ultra vires and void.

Wherefore, the petition is denied.

 PHILIPPINE PETROLEUM CORPORATION VS MUNICIPALITY OF PILILLA RIZAL
198 SCRA 82 [GR NO. 90776 JUNE 3, 1991]

Facts:

Philippine Petroleum Corporation is a business enterprise engaged in the manufacture of lubricated oil base stocks which is a
petroleum product, with its refinery plant situated at Malaya, Pilillia Rizal, conducting its business activities within the territorial
jurisdiction of municipality of Pilillia, Rizal and is in continuous operation up to the present. PPC owns and maintains an oil refinery
including 49 storage tanks for its petroleum products in Malaya, Pililla, Rizal.

Under section 142 of NIRC of 1939, manufactured oils and other fuels are subject to specific tax. Respondent municipality
of Pilillia, Rizal through municipal council resolution no. 25-s-1974 enacted municipal tax ordinance no. 1-s-1974 otherwise known
as “The Pililla Tax Code of 1974” on June 14, 1974 which took effect on July 1, 1974.

Sections 9 and 10 of the said ordinance imposed a tax on business, except for those which fixed taxes are provided in
the local tax code on manufacturers, importers, or producers of any article of commerce of whatever kind or nature,
including brewers, distiller, rectifiers, repackers and compounders of liquors distilled spirits and/or wines in accordance
with the schedule found in the local tax code, as well as mayor’s permit sanitary inspection fee and storage permit fee
for flammable, combustible or explosive substances, while section 139 of the disputed ordinance imposed surcharges
and interests on unpaid taxes, fees or charges.\

Enforcing the provisions of the above mentioned ordinance, the respondent filed a complaint on April 4, 1986 docketed as civil
case no. 057-T against PPC for the collection of the business tax from 1979 to 1986; storage permit fees from 1975 to 1986;
mayor’s permit fee and sanitary permit inspection fees from 1975 to 1984. PPC, however, have already paid the last named fees
starting 1985.

Issue: Whether or not the Municipality may validly impose taxes on petitioner’s business.

Held: No. While section 2 of PD 436 prohibits the imposition of local taxes on petroleum products, said decree did not amend
sections 19 and 19 (a) of PD 231 as amended by PD 426, wherein the municipality is granted the right to levy taxes on business
of manufacturers, importers, producers of any article of commerce of whatever kind or nature. A tax on business is distinct from a
tax on the article itself. Thus, if the imposition of tax on business of manufacturers, etc. in petroleum products contravenes a
declared national policy, it should have been expressly stated in PD No. 436.

The exercise by local governments of the power to tax is ordained by the present constitution. To allow the continuous
effectivity of the prohibition set forth in PC no. 26-73 would be tantamount to restricting their power to tax by mere
administrative issuances. Under section 5, article X of the 1987 constitution, only guidelines and limitations that may be
established by congress can define and limit such power of local governments.

The storage permit fee being imposed by Pilillia’s tax ordinance is a fee for the installation and keeping in storage of any flammable,
combustible or explosive substances. In as much as said storage makes use of tanks owned not by the Municipality of Pilillia but
by petitioner PPC, same is obviously not a charge for any service rendered by the municipality as what is envisioned in section 37
of the same code.
 DADOLE VS COA

G.R. No. 125350 December 3 2002

Facts:
Acting on the DBM's Local Budget Circular No. 55, the Mandaue City Auditor issued notices of disallowances to RTC and MTC
Judges, in excess of the amount (maximum of P1000 and P700 in provinces and cities and municipalities, respectively) authorized
by said circular. The additional monthly allowances of the judges shall be reduced to P1000 each. They were also asked to
reimbursed the amount they received in excess of P1000 from the last six months.

Issue:
Whether or not Local Budget Circular No. 55 void for going beyond the supervisory powers of the President.

Ruling:
Yes. Although the Constitution guarantees autonomy to local government units, the exercise of local autonomy remains subject to
the power of control by Congress and the power of supervision by the President. Sec 4 Art X of 1987 Constitution: "The President
of the Philippines shall exercise general supervision over local governments. x x x" The said provision has been interpreted to
exclude the power of control.

The members of the Cabinet and other executive officials are merely alter egos of the President. As such, they are subject to the
power of control of the President; he will see to it that the local governments or their officials were performing their duties as
provided by the Constitution and by statutes, at whose will and behest they can be removed from office; or their actions and
decisions changed, suspended or reversed. They are subject to the President's supervision only, not control, so long as their acts
are exercised within the sphere of their legitimate powers. The President can only interfere in the affairs and activities of a LGU if
he or she finds that the latter has acted contrary to law. This is the scope of the President's supervisory powers over LGUs.

JUDGE TOMAS C. LEYNES, petitioner,

vs.
THE COMMISSION ON AUDIT (COA), HON. GREGORIA S. ONG, DIRECTOR, COMMISSION ON AUDIT and HON.
SALVACION DALISAY, PROVINCIAL AUDITOR, respondents.

Facts:

Petitioner Judge Tomas C. Leynes, is the presiding judge of the Regional Trial Court of Calapan City, Oriental Mindoro, Branch
40. His salary and representation and transportation allowance (RATA) were drawn from the budget of the Supreme Court. Besides
that, petitioner also received a monthly allowance of P944 from the local funds of the Municipality of Naujan starting 1984.

On May 7, 1993, the Sangguniang Bayan unanimously approved a resolution increasing petitioner judge’s monthly allowance
from P944 to P1,600 (an increase of P656) starting May 1993. This supplemental budget was approved by the municipal
government (the Municipal Mayor and the Sangguniang Bayan) and was also likewise approved by the Sangguniang
Panlalawigan and the Office of Provincial Budget and Management of Oriental Mindoro.

On February 17, 1994, Provincial Auditor Salvacion M. Dalisay sent a letter to the Municipal Mayor and
the Sangguniang Bayan of Naujan directing them to stop the payment of the P1,600 monthly allowance or RATA to petitioner judge
and to require the immediate refund of the amounts previously paid to the latter. She reasoned that the Municipality of Naujan could
not grant RATA to petitioner judge in addition to the RATA the latter was already receiving from the Supreme Court. Petitioner
judge appealed the matter to COA Regional Director Gregoria S. Ong who, however, upheld the opinion of Provincial Auditor
Dalisay.

Issue/s:
 Whether or not the Municipality of Naujan, Oriental Mindoro can validly provide RATA to its Municipal Judge, in addition to
that provided by the Supreme Court.

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

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

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

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

Respondent COA, however, contends that the above section has been repealed, modified or amended by NCC No. 67, RA
7645 (the General Appropriations Act of 1993) and LBC No. 53. A review of the two laws, however, shows that this was not so.
Section 36 of RA 7645 merely provided for the different rates of RATA payable to national government officials or employees,
depending on their position, and stated that these amounts were payable from the programmed appropriations of the parent
agencies to which the concerned national officials or employees belonged. Furthermore, there was no other provision in RA 7645
from which a repeal of Section 447(a) (l)(xi) of RA 7160 could be implied. In the absence, therefore, of any clear repeal of Section
447(a)(l)(xi) of RA 7160, it cannot be presume to be such intention on the part of the legislature.

The NCC No. 67 on the other hand, seeks to prevent the dual collection of RATA by a national official from the budgets of
more than one national agency. It is in fact an administrative tool of the DBM to prevent the much-abused practice of multiple
allowances, thus standardizing the grant of RATA by national agencies. It was issued primarily to make the grant of RATA to
national officials under the national budget uniform. In other words, it applies only to the national funds administered by the DBM,
not the local funds of LGUs.

Now, though LBC No. 53 of the DBM may be considered within the ambit of the President's power of general supervision
over LGUs, the SC ruled that Section 3, paragraph (e) thereof is invalid. RA 7160, the Local Government Code of 1991, clearly
provides that provincial, city and municipal governments may grant allowances to judges as long as their finances allow. Section
3, paragraph (e) of LBC No. 53, by outrightly prohibiting LGUs from granting allowances to judges whenever such allowances are
(1) also granted by the national government or (2) similar to the allowances granted by the national government, violates Section
447(a)(l)(xi) of the Local Government Code of 1991. As already stated, a circular must conform to the law it seeks to implement
and should not modify or amend it. Moreover, by prohibiting LGUs from granting allowances similar to the allowances granted by
the national government, Section 3 (e) of LBC No. 53 practically prohibits LGUs from granting allowances to judges and, in effect,
totally nullifies their statutory power to do so. Being unduly restrictive therefore of the statutory power of LGUs to grant allowances
to judges and being violative of their autonomy guaranteed by the Constitution, Section 3, paragraph (e) of LBC No. 53 is hereby
declared null and void.