G.R. No.

L-21879             September 29, 1967

SAN MIGUEL BREWERY, INC., plaintiff-appellant,

vs.
FRANCISCO MAGNO, defendant-appellee.

Lichauco, Picazo and Agcaoili for plaintiff-appellant.

Jose V. Rosales and Jose R. Villanueva for defendant-appellee.

ANGELES, J.:

An appeal from a decision of the Court of First Instance of Manila, in civil case No. 46039, dismissing the complaint filed
by the San Miguel Brewery, Inc., and ordering it to pay to the defendant P2,000.00 in damages, P1,000.00 as attorney's
fees, and costs.

The appeal was originally lodged with the Court of Appeals which certified the case to this Court, the issue involved being
purely one of law. From the stipulation of facts submitted by the parties in the lower court and the various annexes
referred to therein, the facts of the case that gave rise to the controversy are as follows:

On December 14, 1950, the Municipal Board of Butuan City passed Ordinance No. 11 amending Ordinance No. 7 of said
City, imposing a tax of two per cent (2%) on the gross sales or receipts of those engaged in the sale, trading in, or
disposal of all alcoholic or malt beverages, wines and mixed or fermented liquors, including tuba, basi and tapuy. (Sec. 1
[e], Annex A.) On June 6, 1960, the same Municipal Board passed Ordinance No. 110 amending Ordinance No. 11, fixing
instead a tax on the sale of beer at the rate of P.25 per case of twenty-four bottles, and on the sales of soft drinks at the
rate of P.10 per case of twenty-four bottles of Coca-Cola, Pepsi-Cola, Tru-Orange, Seven-Up, Bireley, Soda Water, and
any other kind of soft drinks or carbonated drinks. (Sec. 2 [e] and Sec. 3, respectively, Annex B.)

The San Miguel Brewery, Inc., a corporation organized and existing under the laws of the Philippines with principal offices
at Manila, maintains a warehouse or branch office in the City of Butuan and is engaged in the sale of beer and soft drinks
in said City. Although it appears to have paid the required taxes under Ordinance No. 11 promptly and religiously upon the
effectivity of the ordinance, the company stopped paying the taxes thereafter (Annex D), and thereby incurred in back
taxes. Verbal demands were made by the City Treasurer of Butuan on the representative of the San Miguel Brewery, Inc.
at Butuan City with warnings that a warrant of distraint and levy will be issued against its properties unless it settles its tax
liability under the ordinance aforesaid. On September 23, 1960, counsel for the company wrote a letter to the City
Treasurer of Butuan questioning the power of the city government of Butuan to levy upon its properties pointing out, "that
the power of distraint and levy as embodied in your Charter (Republic Act No. 523, as amended), can only be exercised
by your goodselves in respect to delinquencies in the payment of real estate taxes". To this, the City Treasurer of Butuan,
in a letter dated September 29, 1960, promptly answered and explained that he may issue warrants of distraint and levy
upon properties of delinquent taxpayers under Ordinance No. 26 of the City of Butuan. Thereafter, the San Miguel
Brewery, Inc. received a formal letter of demand for payment of its tax liability from the City Treasurer of Butuan, to which
the Branch Manager of the company at Cagayan de Oro City who has supervision of the company's warehouse at Butuan
City, answered on October 10, 1960, requesting more time "within which to act on said demand and in order to refer the
matter to its Manila Office". Several other written demands were thereafter made by the City Treasurer of Butuan to
officials of plaintiff's branch office in said city, but failed to yield any concrete result. Accordingly, on January 6, 1961, the
city treasurer, with the approval of the Mayor of Butuan City issued a warrant of distraint and levy against the properties of
the San Miguel Brewery, Inc. at its branch office in that city to enforce the collection of the taxes assessed against it, i.e.,
under Ordinance Nos. 11 and 110, amounting to P9,129.42, including penalties corresponding to the period from May,
1957 to August 15, 1960, and under Ordinance No. 110, the amount of P15,618.96, including penalty, for the period
corresponding to June 6 up to October 30, 1960, or a total of P24,747.32. On January 9, 1961, at about 9 o'clock in the
morning, a notice of seizure by virtue of the warrant of distraint and levy was served on the company's Branch Manager at
Butuan City who, upon previous arrangement with the representative of the City Treasurer of Butuan, voluntarily
surrendered the two (2) delivery trucks of the company seized under the warrant to the said City Treasurer at about 5
o'clock in the afternoon of the same day.

On January 12, 1961, the San Miguel Brewery, Inc. instituted the present action in the Court of First Instance of Manila,
praying for an order directing the defendant Francisco Magno to release the delivery trucks seized and impounded by the
City Government of Butuan allegedly "without authority and for reasons unknown to the company", and to order the
defendant to pay to the plaintiff damages in the amount of P6,000.00 corresponding to the period from January 9, 1961 to
January 10, 1961, and P3,000.00 for each day thereafter that the trucks remain impounded and unused by the plaintiff,
plus the costs of the suit. Parenthetically, the action was brought against the defendant Francisco Magno in his individual
capacity, as disclosed in the allegations in the complaint, and as expressly admitted in the appellant's brief, thus — "As a
matter of fact, plaintiff filed this action against Francisco Magno, not in his official capacity, but in his individual capacity, . .
. ." (p. 13).

In his answer, defendant Francisco Marco interposed, among others, the defense that in seizing the delivery trucks of the
San Miguel Brewery, Inc., he was acting, and was in the performance of his official duty, as Treasurer of Butuan City, and,
can not be hold liable to pay to the company any damages. He set up a counterclaim of P40,000.00 and P10,000.00 as
moral and exemplary damages, respectively, allegedly sustained by him and the members of his family on account of the
shock, fright, wounded feelings, mental anguish, besmirched reputation, and social humiliation they suffered by reason of
the filing of the case against him by the plaintiff, plus attorney's fees in the amount of P2,000.00.

During the pendency of the action, the San Miguel Brewery, Inc. paid under protest the taxes assessed against it by the
City Treasurer of Butuan, and forthwith the impounded trucks were released.

The parties submitted no testimonial evidence. Instead, they submitted a stipulation of facts along with documentary
evidence on the basis of which the court a quo, on April 2, 1962, rendered the decision appealed from. A motion for
reconsideration of the decision having been denied, the plaintiff interposed the instant appeal.

Under the first assignment of error, appellant assails the conclusion of the court that "the allegation in the complaint (par.
5) that the seizure of plaintiff's trucks was made for reasons unknown to the plaintiff, is false", because it is not sustained
by the evidence; said appellant claiming that it was only at the time that the stipulation of facts was being prepared that
the defendant-appellee made mention for the first time of his alleged authority to issue a warrant of distraint and levy
against properties of tax delinquents under Ordinance No. 26 of the City of Butuan. The contention is untenable. In
paragraph 8 of the stipulation of facts, it is admitted that on September 29, 1960, in a letter of the City Treasurer of Butuan
to Attys. Ponce Enrile, Siguion Reyna, Montecillo & Belo, counsel for the plaintiff, said counsel was informed that the city
government was exercising its power of levy and distraint against properties of taxpayers under Ordinance No. 26 of the
city. Appellant, therefore, may not now feign ignorance of such notice which appears in the records.

To the charge that Ordinance No. 26 of the City of Butuan is ultra vires, suffice it to say that the same may not be
considered in this appeal. An examination of the complaint filed in this case, reveals that except for the general averment
therein that its delivery trucks were seized and impounded by order of the defendant Francisco Magno "without authority
of law and for reasons unknown to the plaintiff", which is without factual basis as pointed out above, no mention was made
in the stipulation of facts nor any evidence ever introduced during the trial of the case in the lower court, to show that it
was the intention of the appellant to place in issue the validity of the ordinance aforesaid.

In cases where the constitutionality of statutes are directly put in issue, the general rule is, that the question of
constitutionality must be raised at the earliest opportunity, so that if not raised by the pleadings, ordinarily it may not be
raised at the trial, and if not raised in the trial court, it will not be considered on appeal (People and Hongkong & Shanghai
Banking Corporation vs. Vera and Cu Unjieng. 37 O.G., 164 citing 12 C. J. p. 786). (See also Cadwallader-Gibson
Lumber Co. vs. Del Rosario, 26 Phil. 192; Robb and Hilscher vs. People of the Philippines, 68 Phil., 320; Macondray &
Co. vs. Benito and Ocampo, 62 Phil., 137; Sofronio L. Quimson vs. P. L. de Guzman, L-18240, January 31, 1963.) The
exceptions are, as stated in Hongkong etc. vs. Cu Unjieng, supra, in criminal cases, where the question may be raised at
any stage of the proceedings, either in the trial court or on appeal; in civil cases, it has been held that it is the duty of the
court to pass on the constitutional question, though raised for the first time on appeal, if it appears that a determination of
the question is necessary to a decision of the case; and it has been held that a constitutional question will be considered
by an appellate court at any time, where it involves the jurisdiction of the court below. The same rule should apply where
the validity of a municipal ordinance is questioned. We do not find any of the exceptions aforementioned applicable to this
case to justify a conclusion that the validity of Ordinance No. 26 of the City of Butuan may be properly passed upon in this
appeal.1awphîl.nèt

Moreover, Francisco Magno is sued in this case not in his capacity as City Treasurer of Butuan but in his individual
capacity. He is not the proper party against whom the alleged invalidity of the ordinance in question should be pleaded,
nor is this the proper proceeding wherein the alleged infirmity of the said ordinance may be raised. A municipal ordinance
is not subject to collateral attack. Public policy forbids collateral impeachment of legislative acts (43 C. J., 555-556).

Under the second assignment of error, it is contended that the trial court fell into error in not ordering the defendant-
appellee to pay to the appellant in damages the amount of P2,160.00, notwithstanding the admission of the defendant in
the stipulation of facts that the San Miguel Brewery, Inc. incurred damages in that amount, representing the hire of two (2)
trucks at the rate of P80.00 per day which the plaintiff was compelled to secure and use for the period from January 9,
1961 to February 8, 1961, during which time the two delivery trucks of the plaintiff were impounded by the appellee. The
argument is based on a wrong premise. It erroneously assumes that the defendant is personally liable for damages to the
appellant, disregarding the established fact that the defendant had issued the warrant of distraint and levy against
plaintiff's properties in his capacity as City Treasurer of Butuan who, under the law, is empowered to issue the warrant.
Ordinance No. 26 of the City of Butuan provides, among others, as follows:

Sec. 1. — Upon the failure of any person owing any delinquent tax or delinquent revenue to pay the same, at the
time required under existing ordinance, the City Treasurer, his deputy, or any of his clerks duly authorized in
writing by the City Treasurer may seize or distraint any goods, chattels or effects, and other personal property,
including stocks and other securities, debts, credits, bank accounts and any interest in and rights to personal
property, of such person in sufficient quantity to satisfy the tax, or charge, together with any increment thereto
incident to delinquency, and the expenses of the distraint.

Since there is no dispute that the appellee issued the warrant of distraint and levy against the delivery trucks of the
appellant on January 9, 1961, in his capacity as City Treasurer of Butuan, and as there is no disagreement that
defendant-appellee issued said warrant by virtue of Ordinance No. 26 of the City of Butuan above-quoted (Par. 15,
Stipulation of Facts), and not having been shown that the defendant, either as a private citizen or as City Treasurer of
Butuan, had acted in bad faith, there can be no question that appellee Francisco Magno, who was merely performing a
duty enjoined by law to be performed when he issued the warrant of distraint and levy, cannot be made to
answer personally  for damages to the appellant.

Finally, under the third assignment of error, appellant maintains that the trial court should not have awarded damages in
favor of the appellee under the counterclaim of the latter, for the reason that no evidence was introduced by the appellee
in support of the moral and exemplary damages he and his family allegedly suffered. It argues further that attorney's fees
should not have been assessed against it.

In respect of the appellee's counterclaim for moral and exemplary damages, the trial court said:

With respect to the counterclaim of defendant, it appears that defendant introduced no evidence to support his
claim for P40,000.00 moral damages, P10,000 exemplary damages and P2,000.00 attorney's fees.

Nevertheless, the trial court sentenced the plaintiff to pay to the defendant, damages in the sum of P2,000.00, and costs.

In order that moral damages may be awarded, there must be pleading and proof of moral suffering, mental anguish, fright
and the like (Darang vs. Belizar, L-19487, January 31, 1967). While no proof of pecuniary loss is necessary in order that
moral damages may be awarded, the amount of indemnity being left to the discretion of the court (Article 2216), it is,
nevertheless, essential that the claimant should satisfactorily prove the existence of the factual basis of the damages
(Article 2217) and its causal connection to defendant's acts. This is so, because moral damages, though incapable of
pecuniary estimation, are in the category of an award, designed to compensate the claimant for actual injury suffered and
not to impose a penalty on the wrong-doer (Algarra vs. Sandejas, 27 Phil. 284; Malonzo vs. Galang, L-13851, July 27,
1960). Neither may we consider the award as exemplary damages, because the mere findings that certain allegations in
the complaint are not true, and the plaintiff committed a mistake in instituting the action against the wrong party, do not
justify the award of this kind of damages. It infringes upon the right of a citizen to have access to the courts. The portals of
the courts of justice should not be closed to litigants who ask for the protection of their rights. Penalty in the concept of
damages should not be imposed simply because a complaint is found unmeritorious by the courts.

The amount of attorney's fees, on the other hand, is addressed to the sound discretion of the court. It may be awarded
along with expenses of litigation, other than judicial costs, in cases where the court deems it just and equitable under the
circumstances of the case. And when as in this case, the defendant public officer was sued in his private capacity for acts
done in the performance of official duty required by law, and was forced to employ the services of private counsel to
defend his rights, it is but proper that attorney's fees be charged against the plaintiff. Nominal damages may also be
adjudicated. We believe the award of P2,000.00 attorney's fees and P100.00 nominal damages, is just and equitable in
the premises.

WHEREFORE, the decision appealed from is modified, setting aside the award of P2,000.00 to the defendant in concept
of damages, but increasing the attorney's fees to P2,000.00, and ordering the plaintiff to pay to the defendant P100.00 as
nominal damages. Judgment is affirmed in all other respects. Costs against plaintiff-appellant.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro and Fernando, JJ., concur.
G.R. No. 118233 December 10, 1999

ANTONIO Z. REYES, ELISEO P. OCAMPO and EDITHA ARCIAGA-SANTOS, petitioners,

vs.
COURT OF APPEALS, HON. SECRETARY OF JUSTICE FRANKLIN DRILON and MAYOR JINGGOY ESTRADA
(JOSE EJERCITO) OF THE MUNICIPALITY OF SAN JUAN, METRO MANILA, respondents.

RESOLUTION

QUISUMBING, J.:

For review is the decision 1 of the Court of Appeals, dated August 3, 1994 and its resolution2 dated December 8, 1994 in
CA-G.R. SP No. 32473. Said decision dismissed the prohibition case brought by the petitioner against respondent officials
of the Municipality of San Juan to stop the enforcement of Tax Ordinance Nos. 87, 91, 95, 100 and 101.

The factual antecedents are as follows:

The Sangguniang Bayan of San Juan, Metro Manila implemented several tax ordinances as follows:

Ordinance No. Title

87 An ordinance imposing a municipal tax of fifty percent (50%) of one percent (1%) of the gross receipt
on business of printing and publication

91 An ordinance imposing a transfer tax equivalent to fifty percent (50%) of one percent (1%) of the total
consideration on the sale, donation, barter or any other mode of transferring ownership or title of real
property situated in San Juan, Metro Manila, or its fair market value, whichever is higher

95 An ordinance imposing fifty percent (50%) of one percent (1%) for social housing tax on the assessed
value of all real estate property in San Juan, Metro Manila in excess of P50,000.00 value as provided in
the New Urban Land Reform Law, also known as R.A. 7279.

100 An ordinance imposing new rates of business taxes of the Municipality of San Juan Metro Manila

101 An ordinance levying an annual "Ad Valorem" tax on real property and an additional tax accruing to
the special education fund (SEF)

On May 21, 1993, petitioners filed an appeal with the Department of Justice assailing the constitutionality of these tax
ordinances allegedly because they were promulgated without previous public hearings thereby constituting deprivation of
property without due process of law.

On June 10, 1993, respondent Secretary of Justice dismissed the appeal for having been filed out of time. Citing Section
187, R.A. No. 7160, he said:

It appears that the tax ordinances in question took effect on September 24, 1992, in the case of Tax
Ordinance No. 87, until October 22, 1992, in the case of Tax Ordinance Nos. 91 and 95, and until October
29, 1992, in the case of Tax Ordinance Nos. 100 and 101, or more than thirty (30) days from the
effectivity thereof when the appeal was filed and received by this Department on May 21, 1993 and
therefore not in accordance with the requirements provided for under Section 187 of the Local
Government Code of 1991.

WHEREFORE, the instant appeal, having been filed out of time, is hereby DISMISSED.3

Undaunted, petitioners filed with the Court of Appeals a petition for certiorari and prohibition (CA-G.R. SP No. 32473). But
respondent court affirmed the decision of the Secretary. On December 8, 1994, the motion for reconsideration filed by the
petitioners was denied for lack of merit.

Hence, the present petition for review, raising the following questions:
 1. Whether or not the questioned tax ordinances are violative of the Constitution, considering the
undisputed fact that no public hearings were ever held on the ordinances before they were passed and
approved as required by the Local Government Code of 1991, thereby constituting as they do a
deprivation of property without due process;

2. Whether or not the wording of the law under Section 187 of the Local Government Code of 1991 that
"any question on the constitutionality . . . of tax ordinance . . . may be raised on appeal within thirty (30)
days from the effectivity thereof . . ." is a reductio as absurdum, since if the tax ordinance is found to be
unconstitutional, it will be considered as never having become effective at all from the very beginning, for
which reason the thirty-day appeal period cannot be reckoned and cannot be enforced;

3. Whether or not the constitutionality of a tax ordinance, or any law for that matter, can be questioned at
any time despite the prescription of a limited period within which to question it, as in case at bar; and

4. Whether or not the constitutionality of an ordinance or a law may be questioned even if the question of
constitutionality may not have been originally or initially raised, or is not the lis mota of the case, if it
appears that a determination of the question of constitutionality is necessary to a decision of the case.4

In our view, the pertinent issues for our resolution now are:

1. Whether or not the Court of Appeals erred in affirming the decision of the Secretary of Justice who
dismissed the prohibition suit, on the ground that it was filed out of time?

2. Whether or not lack of mandatory public hearings prior to enacting Municipal Ordinance Nos. 87, 91,
95, 100 and 101 render them void on the ground of deprivation of property without due process?

3. Whether or not the constitutional validity of Sec. 187 of the Local Government Code could be raised for
the first time on appeal?

According to petitioners, respondent Secretary erred in declaring that they failed to file their appeal on time. Also, they
assail Municipal Ordinance Nos. 87, 91, 95, 100 and 101, for alleged failure of the Municipal Council of San Juan to
conduct mandatory public hearings. Because of this, they claim the ordinances are inoperative, as through they were
never passed. Consequently, no prescriptive thirty-day period to question the validity of the ordinance could toll to bar
their appeal to the Department of Justice.

Sec. 187 of R.A. 7160, cited by respondent Secretary, provides as follows:

Sec. 187 — Procedure for Approval and Effectivity of Tax Ordinances and Revenue
Measures; Mandatory Public Hearings. — The procedure for approval of local tax ordinances and
revenue measures shall be in accordance with the provisions of this Code: Provided, That public hearings
shall be conducted for the purpose prior to the enactment thereof: Provided further, That any question on
the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within
thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within
sixty (60) days from the date of receipt of the appeal: Provided, however, That such appeal not have the
effect of suspending the effectivity of the ordinance and the accrual and payment of the tax, fee, or charge
levied therein: Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of the
sixty-day period without the Secretary of Justice acting upon the appeal, the aggrieved party may file
appropriate proceedings with a court of competent jurisdiction.

Clearly, the law requires that the dissatisfied taxpayer who questions the validity or legality of a tax ordinance must file his
appeal to the Secretary of Justice, within 30 days from effectivity thereof. In case the Secretary decides the appeals, a
period also of 30 days is allowed for an aggrieved party to go to court. But if the Secretary does not act thereon, after the
lapse of 60 days, a party could already proceed to seek relief in court. These three separate periods are clearly given for
compliance as a prerequisite before seeking redress in a competent court. Such statutory periods are set to prevent
delays as well as enhance the orderly and speedy discharge of judicial functions. 5 For this reason the courts construct
these provisions of statutes as mandatory.6

A municipal tax ordinance empowers a local government unit to impose taxes. The power to tax is the most effective
instrument to raise needed revenues to finance and support the myriad activities of local government units for the delivery
of basic services essential to the promotion of the general welfare and enhancement of peace, progress, and prosperity of
the people. 7 Consequently, any delay in implementing tax measures would be to the detriment of the public. It is for this
reason that protests over tax ordinances are required to be done within certain time frames. In the instant case, it is our
view that the failure of petitioners to appeal to the Secretary of Justice within 30 days as required by Sec. 187 of R.A.
7160 is fatal to their cause.

On the second issue, petitioners allege that the Sangguniang Bayan of San Juan did not comply with the prescribed
procedure for enacting an ordinance because they failed to conduct public hearings.

In Figurres vs. Court of Appeals,8 where the municipality failed to conduct public hearings prior to enacting the revisions
on the schedule of fair market values and assessment level of classes of real estate properties, the Court said:

Petitioner is right in contending that public hearings are required to be conducted prior to the enactment of
an ordinance imposing real property taxes. R.A. No. 7160, Sec. 186, provides that an ordinance levying
taxes, fees, or charges "shall not be enacted without any prior public hearing conducted for the purpose."

However, it is noteworthy that part from her bare assertions, petitioner Figuerres has not presented any
evidence to show that no public hearings were conducted prior not the enactment of the ordinances in
question. On the other hand, the Municipality of Mandaluyong claims the public hearings were indeed
conducted before the subject ordinances were adopted, although it likewise failed to submit any evidence
to establish this allegation. However, in accordance with the presumption of validity in favor of an
ordinance, their constitutionality or legality should be upheld in the absence of evidences showing that
procedure prescribed by law was not observed in their enactment . . . .

Furthermore, the lack of a public hearings is a negative allegation essential to petitioner's cause of action
in the present case. Hence, as petitioner is the party asserting it, she has the burden of proof. Since
petitioner failed to rebut the presumption of validity in favor of the subject ordinances and to discharge the
burden of proving that no public hearings were conducted prior to the enactment thereof, we are
constrained to uphold their constitutionality or legality.9

We find Figuerres instructive. Petitioners have not proved in the case before us that the Sangguniang Bayan of San Juan
failed to conduct the required public hearings before the enactment of Ordinance Nos. 87, 91, 95, 100 and 101. Although
the Sanggunian had the control of records or the better means of proof regarding the facts alleged, petitioner as not
relieved from the burden of proving their averments. 10 Proof that public hearings were not held falls on petitioner'
shoulders. For failing to discharge that burden, their petition was properly dismissed.

In any event, for the purpose of securing certainty where doubt would be intolerable, it is a general rules that the regularity
of the enactment of an officially promulgated statute or ordinance may not be impeached by parol evidence or oral
testimony either of individual officers and members, or of strangers who may be interested in nullifying legislative
action. 11 This rules supplements the presumption in favor of the regularity of official conduct which we have upheld
repeatedly, absent a clear showing to the contrary.

Finally, on the validity of Section 187 of R.A. 7160, the Local Government Code, we must stress that the constitutionality
of an act of Congress will not be passed upon by the Court unless at the first opportunity that question is properly raised
and presented in an appropriate case, and is necessary to a determination of the case, particularly where the issue of
constitutionality is the very lis mota presented. 12 The constitutional validity of a statutory provision should not be
entertained by the Court where it was not specifically raised below, insisted upon, and adequately argued. 13 Moreover,
given the circumstances in this case, we find no genuine necessity to dwell on the issue of constitutional invalidity of
Section 187 in relation to issue of valid enactment of the subject ordinances, as shown in the foregoing discussion. Suffice
it now to say that, having resolved the first and second issues, we find no grave abuse of discretion nor reversible error in
the decision of respondent appellate court. Further constitutional scrutiny of Section 187 is unwarranted.

WHEREFORE, the present petition is DISMISSED for lack of merit and the assailed decision of the Court of Appeals is
AFFIRMED. No pronouncement as to costs.

SO ORDERED.
G.R. No. 143596               December 11, 2003

JUDGE TOMAS C. LEYNES, petitioner,

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

DECISION

CORONA, J.:

Before us is a petition for certiorari under Rule 65 in relation to Section 2, Rule 64 of the Rules of Court, seeking to
reverse and set aside the decision dated September 14, 1999 of the Commission on Audit (COA), affirming the
1 

resolution of COA Regional Director Gregoria S. Ong dated March 29, 1994 which in turn affirmed the opinion dated
October 19, 1993 of the Provincial Auditor of Oriental Mindoro, Salvacion M. Dalisay. All three denied the grant of
₱1,600 monthly allowance to petitioner Judge Tomas C. Leynes by the Municipality of Naujan, Oriental Mindoro.

FACTUAL ANTECEDENTS

Petitioner Judge Tomas C. Leynes who, at present, is the presiding judge of the Regional Trial Court of Calapan
City, Oriental Mindoro, Branch 40 was formerly assigned to the Municipality of Naujan, Oriental Mindoro as the sole
presiding judge of the Municipal Trial Court thereof. As such, his salary and representation and transportation
allowance (RATA) were drawn from the budget of the Supreme Court. In addition, petitioner received a monthly
allowance of ₱944 from the local funds of the Municipality of Naujan starting 1984.
2  3

On March 15, 1993, the Sangguniang Bayan of Naujan, through Resolution No. 057, sought the opinion of the
Provincial Auditor and the Provincial Budget Officer regarding any budgetary limitation on the grant of a monthly
allowance by the municipality to petitioner judge. On May 7, 1993, the Sangguniang Bayan unanimously approved
Resolution No. 101 increasing petitioner judge’s monthly allowance from ₱944 to ₱1,600 (an increase of ₱656)
starting May 1993. By virtue of said resolution, the municipal government (the Municipal Mayor and
4 

the Sangguniang Bayan) approved a supplemental budget which was likewise approved by the Sangguniang
Panlalawigan and the Office of Provincial Budget and Management of Oriental Mindoro. In 1994, the Municipal
Government of Naujan again provided for petitioner judge’s ₱1,600 monthly allowance in its annual budget which
was again approved by the Sangguniang Panlalawigan and the Office of Provincial Budget and Management of
Oriental Mindoro.5

On February 17, 1994, Provincial Auditor Salvacion M. Dalisay sent a letter to the Municipal Mayor and
the Sangguniang Bayan of Naujan directing them to stop the payment of the ₱1,600 monthly allowance or RATA to
petitioner judge and to require the immediate refund of the amounts previously paid to the latter. She opined that the
Municipality of Naujan could not grant RATA to petitioner judge in addition to the RATA the latter was already
receiving from the Supreme Court. Her directive was based on the following:

Section 36, RA No. 7645, General Appropriations Act of 1993

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

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

Subject: Representation and Transportation Allowances of National Government Officials and Employees

x x x           x x x          x x x
4. Funding Source: In all cases, commutable and reimbursable RATA shall be paid from the amount appropriated
for the purpose and other personal services savings of the agency or project from where the officials and employees
covered under this Circular draw their salaries. No one shall be allowed to collect RATA from more than one
source. (emphasis supplied)
6 

Petitioner judge appealed to COA Regional Director Gregoria S. Ong who, however, upheld the opinion of Provincial
Auditor Dalisay and who added that Resolution No. 101, Series of 1993 of the Sangguniang Bayan of Naujan failed
to comply with Section 3 of Local Budget Circular No. 53 dated September 1, 1993 outlining the conditions for the
grant of allowances to judges and other national officials or employees by the local government units (LGUs).
Section 3 of the said budget circular provides that:

Sec. 3 Allowances. ─ LGUs may grant allowances/additional compensation to the national government
officials/employees assigned to their locality at rates authorized by law, rules and regulations and subject to the
following preconditions:

a. That the annual income or finances of the municipality, city or province as certified by the Accountant
concerned will allow the grant of the allowances/additional compensation without exceeding the general
limitations for personal services under Section 325 of RA 7160;

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

c. That the LGU has fully implemented the devolution of personnel/functions in accordance with the
provisions of RA 7160;

d. That the LGU has already created mandatory positions prescribed in RA 7160; and

e. That similar allowances/additional compensation are not granted by the national government to the
officials/employees assigned to the LGU. 7

Petitioner judge appealed the unfavorable resolution of the Regional Director to the Commission on Audit. In the
meantime, a disallowance of the payment of the ₱1,600 monthly allowance to petitioner was issued. Thus he
received his ₱1,600 monthly allowance from the Municipality of Naujan only for the period May 1993 to January
1994.

On September 14, 1999, the COA issued its decision affirming the resolution of Regional Director Gregoria S. Ong:

The main issue . . . is whether or not the Municipality of Naujan, Oriental Mindoro can validly provide RATA to its
Municipal Judge, in addition to that provided by the Supreme Court.

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

1. Payable from the programmed /appropriated amount and others from personal services savings of the
respective offices where the officials or employees draw their salaries;

2. Not exceeding the rates prescribed by the Annual General Appropriations Act;

3. Officials /employees on detail with other offices or assigned to serve other offices or agencies shall be
paid from their parent agencies;

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

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

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

ASSIGNMENTS OF ERROR

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

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

II

WHETHER OR NOT THE POWER OF MUNICIPAL GOVERNMENTS TO GRANT ADDITIONAL ALLOWANCES

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

III

WHETHER OR NOT THE DEPARTMENT OF BUDGET AND MANAGEMENT (DBM) CAN, BY THE ISSUANCE OF
BUDGET CIRCULARS, RESTRICT A MUNICIPAL GOVERNMENT FROM EXERCISING ITS GIVEN
LEGISLATIVE POWERS OF PROVIDING ADDITIONAL ALLOWANCES AND OTHER BENEFITS TO NATIONAL
EMPLOYEES STATIONED OR ASSIGNED TO THEIR MUNICIPALITY FOR AS LONG AS THEIR FINANCES SO
ALLOW.

IV

WHETHER OR NOT THE LOCAL GOVERNMENT CODE OF 1991 PARTICULARLY SECTION 447 (a) (1) (xi)
WAS EXPRESSLY OR IMPLIEDLY REPEALED OR MODIFIED BY REPUBLIC ACT 7645 AND THE GENERAL
APPROPRIATIONS ACT OF 1993.

V
WHETHER OR NOT PETITIONER WAS ENTITLED TO RECEIVE THE ADDITIONAL ALLOWANCES GRANTED
TO HIM BY THE MUNICIPALITY OF NAUJAN, ORIENTAL MINDORO BY VIRTUE OF ITS RESOLUTION NO. 101,
SERIES OF 1993.

POSITION OF COA

Respondent Commission on Audit opposes the grant by the Municipality of Naujan of the ₱1,600 monthly allowance
to petitioner Judge Leynes for the reason that the municipality could not grant RATA to judges in addition to the
RATA already received from the Supreme Court. Respondent bases its contention on the following:
9 

1. National Compensation Circular No. 67 (hereafter NCC No. 67) dated January 1, 1992 of the Department
of Budget and Management (DBM) which provides that (a) the RATA of national officials and employees
shall be payable from the programmed appropriations or personal services savings of the agency where
such officials or employees draw their salary and (b) no one shall be allowed to collect RATA from more
than one source;

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

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

POSITION OF PETITIONER

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

HISTORY OF GRANT OF ALLOWANCES TO JUDGES

The power of local government units (LGUs) to grant allowances to judges stationed in their respective territories
was originally provided by Letter of Instruction No. 1418 dated July 18, 1984 (hereafter LOI No. 1418):

Whereas, the State is cognizant of the need to maintain the independence of the Judiciary;

Whereas, the budgetary allotment of the Judiciary constitutes only a small percentage of the national budget;

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

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

Now, therefore, I, Ferdinand E. Marcos, President of the Republic of the Philippines, do hereby direct:

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

"3. The allowances provided in this letter shall be borne exclusively by the National Government. However,
provincial, city and municipal governments may pay additional allowances to the members and personnel of the
Judiciary assigned in their respective areas out of available local funds but not to exceed ₱1,500.00; Provided, that
in Metropolitan Manila, the city and municipal governments therein may pay additional allowances not exceeding
₱3,000.00. (emphasis ours)" 12

On June 25, 1991, the DBM issued Circular No. 91-7 outlining the guidelines for the continued receipt of allowances
by judges from LGUs:

Consistent with the constitutional provision on the fiscal autonomy of the judiciary and the policy of the National
Government of allowing greater autonomy to local government units, judges of the Judiciary are hereby allowed to
continue to receive allowances at the same rates which they have been receiving from the Local Government Units
as of June 30, 1989, subject to the following guidelines:

1. That the continuance of payment of subject allowance to the recipient judge shall be entirely voluntary
and non-compulsory on the part of the Local Government Units;

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

3. That it shall be made only in compliance with the policy of non-diminution of compensation received by
the recipient judge before the implementation of the salary standardization;

4. That the subject allowance shall be given only to judges who were receiving the same as of June 30,
1989 and shall be co-terminous with the incumbent judges; and

5. That the subject allowance shall automatically terminate upon transfer of a judge from one local
government unit to another local government unit. (emphasis ours)

On October 10, 1991, Congress enacted RA 7160, otherwise known as the Local Government Code of 1991. The 13 

power of the LGUs to grant allowances and other benefits to judges and other national officials stationed in their
respective territories was expressly provided in Sections 447(a)(1)(xi), 458(a)(1)(xi) and 468(a)(1)(xi) of the Code.

On March 15, 1994, the DBM issued Local Budget Circular No. 55 (hereafter LBC No. 55) setting out the maximum
amount of allowances that LGUs may grant to judges. For provinces and cities, the amount should not exceed
₱1,000 and for municipalities, ₱700.

On December 3, 2002, we struck down the above circular in Dadole, et al. vs. COA. We ruled there that the Local
14 

Government Code of 1991 clearly provided that LGUs could grant allowances to judges, subject only to the
condition that the finances of the LGUs allowed it. We held that "setting a uniform amount for the grant of
allowances (was) an inappropriate way of enforcing said criterion." Accordingly, we declared that the DBM
exceeded its power of supervision over LGUs by imposing a prohibition that did not jibe with the Local Government
Code of 1991. 15

ESTABLISHED PRINCIPLES INVOLVED

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

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

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

3. in Circular No. 91-7, the national government merely provides the guidelines for the continued receipt of
allowances by judges from LGUs while in LBC No. 55, the national government merely tries to limit the
amount of allowances LGUs may grant to judges and
 4. in the recent case of Dadole, et al. vs. COA, the Court upheld the constitutionally enshrined autonomy of
LGUs to grant allowances to judges in any amount deemed appropriate, depending on availability of funds,
in accordance with the Local Government Code of 1991.

OUR RULING

We rule in favor of petitioner judge. Respondent COA erred in opposing the grant of the ₱1,600 monthly allowance
by the Municipality of Naujan to petitioner Judge Leynes.

DISCUSSION OF OUR RULING

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

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

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

x x x           x x x          x x x

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

Respondent COA, however, contends that the above section has been repealed, modified or amended by NCC No.
67 dated January 1, 1992, RA 7645 (the General Appropriations Act of 1993) and LBC No. 53 dated September 1,
1993.16

It is elementary in statutory construction that an administrative circular cannot supersede, abrogate, modify or nullify
a statute. A statute is superior to an administrative circular, thus the latter cannot repeal or amend it. In the present
17 

case, NCC No. 67, being a mere administrative circular, cannot repeal a substantive law like RA 7160.

It is also an elementary principle in statutory construction that repeal of statutes by implication is not favored, unless
it is manifest that the legislature so intended. The legislature is assumed to know the existing laws on the subject
and cannot be presumed to have enacted inconsistent or conflicting statutes. Respondent COA alleges that Section
18 

36 of RA 7645 (the GAA of 1993) repealed Section 447(a)(l)(xi) of RA 7160 (the LGC of 1991). A review of the two
laws, however, shows that this was not so. Section 36 of RA 7645 merely provided for the different rates of RATA
payable to national government officials or employees, depending on their position, and stated that these amounts
were payable from the programmed appropriations of the parent agencies to which the concerned national officials
or employees belonged. Furthermore, there was no other provision in RA 7645 from which a repeal of Section
447(a) (l)(xi) of RA 7160 could be implied. In the absence, therefore, of any clear repeal of Section 447(a)(l)(xi) of
RA 7160, we cannot presume such intention on the part of the legislature.

Moreover, the presumption against implied repeal becomes stronger when, as in this case, one law is special and
the other is general. The principle is expressed in the maxim generalia specialibus non derogant, a general law
19 

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

In this case, RA 7160 (the LGC of 1991) is a special law which exclusively deals with local government units
21 

(LGUs), outlining their powers and functions in consonance with the constitutionally mandated policy of local
autonomy. RA 7645 (the GAA of 1993), on the other hand, was a general law which outlined the share in the
22 

national fund of all branches of the national government. RA 7645 therefore, being a general law, could not have, by
mere implication, repealed RA 7160. Rather, RA 7160 should be taken as the exception to RA 7645 in the absence
of circumstances warranting a contrary conclusion. 23

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

The pertinent provisions of NCC No. 67 read:

3. Rules and Regulations:

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

x x x           x x x          x x x

4. Funding Source:

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

In construing NCC No. 67, we apply the principle in statutory construction that force and effect should not be
narrowly given to isolated and disjoined clauses of the law but to its spirit, broadly taking all its provisions together in
one rational view. Because a statute is enacted as a whole and not in parts or sections, that is, one part is as
24 

important as the others, the statute should be construed and given effect as a whole. A provision or section which is
unclear by itself may be clarified by reading and construing it in relation to the whole statute. 25

Taking NCC No. 67 as a whole then, what it seeks to prevent is the dual collection of RATA by a national official
from the budgets of "more than one national agency." We emphasize that the other source referred to in the
prohibition is another national agency. This can be gleaned from the fact that the sentence "no one shall be allowed
to collect RATA from more than one source" (the controversial prohibition) immediately follows the sentence that
RATA shall be paid from the budget of the national agency where the concerned national officials and employees
draw their salaries. The fact that the other source is another national agency is supported by RA 7645 (the GAA of
1993) invoked by respondent COA itself and, in fact, by all subsequent GAAs for that matter, because the GAAs all
essentially provide that (1) the RATA of national officials shall be payable from the budgets of their respective
national agencies and (2) those officials on detail with other national agencies shall be paid their RATA only from
the budget of their parent national agency:

Section 36, RA 7645, General Appropriations Act of 1993:

Representation and Transportation Allowances. The following officials and those of equivalent rank as may be
determined by the Department of Budget and Management (DBM) while in the actual performance of their
respective functions are hereby granted monthly commutable representation and transportation allowances payable
from the programmed appropriations provided for their respective offices, not exceeding the rates indicated below,
which shall apply to each type of allowance:

x x x           x x x          x x x

Officials on detail with other offices, including officials of the Commission of Audit assigned to serve other offices or
agencies, shall be paid the allowance herein authorized from the appropriations of their parent agencies. (emphasis
ours)
Clearly therefore, the prohibition in NCC No. 67 is only against the dual or multiple collection of RATA by a national
official from the budgets of two or more national agencies. Stated otherwise, when a national official is on detail with
another national agency, he should get his RATA only from his parent national agency and not from the other
national agency he is detailed to.

Since the other source referred in the controversial prohibition is another national agency, said prohibition clearly
does not apply to LGUs like the Municipality of Naujan. National agency of course refers to the different offices,
bureaus and departments comprising the national government. The budgets of these departments or offices are
fixed annually by Congress in the General Appropriations Act. An LGU is obviously not a national agency. Its
26 

annual budget is fixed by its own legislative council (Sangguniang Bayan, Panlungsod or Panlalawigan), not by
Congress. Without doubt, NCC No. 67 does not apply to LGUs.

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

This Circular is being issued to ensure uniformity and consistency of actions on claims for representation and
transportation allowance (RATA) which is primarily granted by law to national government officials and employees to
cover expenses incurred in the discharge or performance of their duties and responsibilities.

By no stretch of the imagination can NCC No. 67 be construed as nullifying the power of LGUs to grant allowances
to judges under the Local Government Code of 1991. It was issued primarily to make the grant of RATA to national
officials under the national budget uniform. In other words, it applies only to the national funds administered by the
DBM, not the local funds of LGUs.

To rule against the power of LGUs to grant allowances to judges as what respondent COA would like us to do will
subvert the principle of local autonomy zealously guaranteed by the Constitution. The Local Government Code of
27 

1991 was specially promulgated by Congress to ensure the autonomy of local governments as mandated by the
Constitution. By upholding, in the present case, the power of LGUs to grant allowances to judges and leaving to
their discretion the amount of allowances they may want to grant, depending on the availability of local funds, we
ensure the genuine and meaningful local autonomy of LGUs.

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

Sec. 3 Allowances. ─ LGUs may grant allowances/additional compensation to the national government
officials/employees assigned to their locality at rates authorized by law, rules and regulations and subject to the
following preconditions:

a. That the annual income or finances of the municipality, city or province as certified by the Accountant
concerned will allow the grant of the allowances/additional compensation without exceeding the general
limitations for personal services under Section 325 of RA 7160;

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

c. That the LGU has fully implemented the devolution of personnel/functions in accordance with the
provisions of RA 7160;

d. That the LGU has already created mandatory positions prescribed in RA 7160.

e. That similar allowances/additional compensation are not granted by the national government to the
officials/employees assigned to the LGU.
Though LBC No. 53 of the DBM may be considered within the ambit of the President's power of general supervision
over LGUs, we rule that Section 3, paragraph (e) thereof is invalid. RA 7160, the Local Government Code of 1991,
28 

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 29 

already stated, a circular must conform to the law it seeks to implement and should not modify or amend it. 30

Moreover, by prohibiting LGUs from granting allowances similar to the allowances granted by the national
government, Section 3 (e) of LBC No. 53 practically prohibits LGUs from granting allowances to judges and, in
effect, totally nullifies their statutory power to do so. Being unduly restrictive therefore of the statutory power of LGUs
to grant allowances to judges and being violative of their autonomy guaranteed by the Constitution, Section 3,
paragraph (e) of LBC No. 53 is hereby declared null and void. 1avvphi1

Paragraphs (a) to (d) of said circular, however, are valid as they are in accordance with Sections 324 and 325 of
31  32 

the Local Government Code of 1991; these respectively provide for the budgetary requirements and general
limitations on the use of provincial, city and municipal funds. Paragraphs (a) to (d) are proper guidelines for the
condition provided in Sections 447, 458 and 468 of the Local Government Code of 1991 that LGUs may grant
allowances to judges if their funds allow. 33

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

The argument is misplaced.

Guidelines (a) to (d) were met when the Sangguniang Panlalawigan of Oriental Mindoro approved Resolution No.
101 of the Sangguniang Bayan of Naujan granting the ₱1,600 monthly allowance to petitioner judge as well as the
corresponding budgets of the municipality providing for the said monthly allowance to petitioner judge. Under
Section 327 of the Local Government Code of 1991, the Sangguniang Panlalawigan was specifically tasked to
review the appropriation ordinances of its component municipalities to ensure compliance with Sections 324 and
325 of the Code. Considering said duty of the Sangguniang Panlalawigan, we will assume, in the absence of proof
to the contrary, that the Sangguniang Panlalawigan of Oriental Mindoro performed what the law required it to do,
that is, review the resolution and the corresponding budgets of the Municipality of Naujan to make sure that they
complied with Sections 324 and 325 of the Code. We presume the regularity of the Sangguniang
34 

Panlalawigan’s official act.

Moreover, it is well-settled that an ordinance must be presumed valid in the absence of evidence showing that it is
not in accordance with the law. Respondent COA had the burden of proving that Resolution No. 101 of
35 

the Sangguniang Bayan of Naujan did not comply with the condition provided in Section 447 of the Code, the
budgetary requirements and general limitations on the use of municipal funds provided in Sections 324 and 325 of
the Code and the implementing guidelines issued by the DBM, i.e., paragraphs (a) to (d), Section 3 of LBC No. 53.
Respondent COA also had the burden of showing that the Sangguniang Panlalawigan of Oriental Mindoro
erroneously approved said resolution despite its non-compliance with the requirements of the law. It failed to
discharge such burden. On the contrary, we find that the resolution of the Municipality of Naujan granting the ₱1,600
monthly allowance to petitioner judge fully complied with the law. Thus, we uphold its validity. 1âwphi1

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

WHEREFORE, the petition is hereby GRANTED. The assailed decision dated September 14, 1999 of the
Commission of Audit is hereby SET ASIDE and Section 3, paragraph (e) of LBC No. 53 is hereby declared NULL
and VOID.

No costs.
SO ORDERED.