1

THE PROVINCE OF BATANGAS, represented by its Governor, HERMILANDO I.

MANDANAS, petitioner, vs. HON. ALBERTO G. ROMULO, Executive
Secretary and Chairman of the Oversight Committee on Devolution;
HON. EMILIA BONCODIN, Secretary, Department of Budget and
Management; HON. JOSE D. LINA, JR., Secretary, Department of
Interior and Local Government, respondents.

based on the devolution status appraisal surveys undertaken by the DILG.[4] The initial
fund was to be sourced from the available savings of the national government for CY
1998.[5] For 1999 and the succeeding years, the corresponding amount required to
sustain the program was to be incorporated in the annual GAA.[6] The Oversight
Committee has been authorized to issue the implementing rules and regulations
governing the equitable allocation and distribution of said fund to the LGUs.[7]

DECISION
The LGSEF in the GAA of 1999

CALLEJO, SR., J.:

The Province of Batangas, represented by its Governor, Hermilando I.
Mandanas, filed the present petition for certiorari, prohibition and mandamus under
Rule 65 of the Rules of Court, as amended, to declare as unconstitutional and void
certain provisos contained in the General Appropriations Acts (GAA) of 1999, 2000
and 2001, insofar as they uniformly earmarked for each corresponding year the
amount of five billion pesos (P5,000,000,000.00) of the Internal Revenue Allotment
(IRA) for the Local Government Service Equalization Fund (LGSEF) and imposed
conditions for the release thereof.
Named as respondents are Executive Secretary Alberto G. Romulo, in his
capacity as Chairman of the Oversight Committee on Devolution, Secretary Emilia
Boncodin of the Department of Budget and Management (DBM) and Secretary Jose
Lina of the Department of Interior and Local Government (DILG).

Background
On December 7, 1998, then President Joseph Ejercito Estrada issued Executive
Order (E.O.) No. 48 entitled ESTABLISHING A PROGRAM FOR DEVOLUTION
ADJUSTMENT AND EQUALIZATION. The program was established to facilitate the
process of enhancing the capacities of local government units (LGUs) in the
discharge of the functions and services devolved to them by the National Government
Agencies concerned pursuant to the Local Government Code.[1] The Oversight
Committee (referred to as the Devolution Committee in E.O. No. 48) constituted under
Section 533(b) of Republic Act No. 7160 (The Local Government Code of 1991) has
been tasked to formulate and issue the appropriate rules and regulations necessary
for its effective implementation.[2] Further, to address the funding shortfalls of functions
and services devolved to the LGUs and other funding requirements of the program,
the Devolution Adjustment and Equalization Fund was created.[3]For 1998, the DBM
was directed to set aside an amount to be determined by the Oversight Committee

In Republic Act No. 8745, otherwise known as the GAA of 1999, the program
was renamed as the LOCAL GOVERNMENT SERVICE EQUALIZATION FUND
(LGSEF). Under said appropriations law, the amount of P96,780,000,000 was allotted
as the share of the LGUs in the internal revenue taxes. Item No. 1, Special Provisions,
Title XXXVI A. Internal Revenue Allotment of Rep. Act No. 8745 contained the
following proviso:
... PROVIDED, That the amount of FIVE BILLION PESOS (P5,000,000,000) shall be
earmarked for the Local Government Service Equalization Fund for the funding
requirements of projects and activities arising from the full and efficient
implementation of devolved functions and services of local government units pursuant
to R.A. No. 7160, otherwise known as the Local Government Code of 1991:
PROVIDED, FURTHER, That such amount shall be released to the local government
units subject to the implementing rules and regulations, including such mechanisms
and guidelines for the equitable allocations and distribution of said fund among local
government units subject to the guidelines that may be prescribed by the Oversight
Committee on Devolution as constituted pursuant to Book IV, Title III, Section 533(b)
of R.A. No. 7160. The Internal Revenue Allotment shall be released directly by the
Department of Budget and Management to the Local Government Units concerned.
On July 28, 1999, the Oversight Committee (with then Executive Secretary
Ronaldo B. Zamora as Chairman) passed Resolution Nos. OCD-99-003, OCD-99-005
and OCD-99-006 entitled as follows:
OCD-99-005
RESOLUTION ADOPTING THE ALLOCATION SCHEME FOR THE
PhP5 BILLION CY 1999 LOCAL GOVERNMENT SERVICE
EQUALIZATION FUND (LGSEF) AND REQUESTING HIS

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EXCELLENCY PRESIDENT JOSEPH EJERCITO ESTRADA TO
APPROVE SAID ALLOCATION SCHEME.

cities and municipalities to the OCD. The modified CODEF sharing

formula is as follows:

OCD-99-006
RESOLUTION ADOPTING THE ALLOCATION SCHEME FOR THE
PhP4.0 BILLION OF THE 1999 LOCAL GOVERNMENT SERVICE
EQUALIZATION FUND AND ITS CONCOMITANT GENERAL
FRAMEWORK, IMPLEMENTING GUIDELINES AND MECHANICS
FOR ITS IMPLEMENTATION AND RELEASE, AS PROMULGATED BY
THE OVERSIGHT COMMITTEE ON DEVOLUTION.
OCD-99-003
RESOLUTION REQUESTING HIS EXCELLENCY PRESIDENT
JOSEPH EJERCITO ESTRADA TO APPROVE THE REQUEST OF
THE OVERSIGHT COMMITTEE ON DEVOLUTION TO SET ASIDE
TWENTY PERCENT (20%) OF THE LOCAL GOVERNMENT
SERVICE
EQUALIZATION
FUND
(LGSEF)
FOR
LOCAL
AFFIRMATIVE ACTION PROJECTS AND OTHER PRIORITY
INITIATIVES FOR LGUs INSTITUTIONAL AND CAPABILITY
BUILDING IN ACCORDANCE WITH THE IMPLEMENTING
GUIDELINES AND MECHANICS AS PROMULGATED BY THE
COMMITTEE.
These OCD resolutions were approved by then President Estrada on October 6,
1999.
Under the allocation scheme adopted pursuant to Resolution No. OCD-99-005,
the five billion pesos LGSEF was to be allocated as follows:
1. The PhP4 Billion of the LGSEF shall be allocated in accordance with the
allocation scheme and implementing guidelines and mechanics
promulgated and adopted by the OCD. To wit:
a. The first PhP2 Billion of the LGSEF shall be allocated in accordance
with the codal formula sharing scheme as prescribed under the
1991 Local Government Code;
b. The second PhP2 Billion of the LGSEF shall be allocated in accordance
with a modified 1992 cost of devolution fund (CODEF) sharing
scheme, as recommended by the respective leagues of provinces,

Province : 40%
Cities : 20%
Municipalities : 40%
This is applied to the P2 Billion after the approved amounts granted to
individual provinces, cities and municipalities as assistance to cover
decrease in 1999 IRA share due to reduction in land area have been
taken out.
2. The remaining PhP1 Billion of the LGSEF shall be earmarked to support
local affirmative action projects and other priority initiatives submitted
by LGUs to the Oversight Committee on Devolution for approval in
accordance with its prescribed guidelines as promulgated and adopted
by the OCD.
In Resolution No. OCD-99-003, the Oversight Committee set aside the one
billion pesos or 20% of the LGSEF to support Local Affirmative Action Projects
(LAAPs) of LGUs. This remaining amount was intended to respond to the urgent need
for additional funds assistance, otherwise not available within the parameters of other
existing fund sources. For LGUs to be eligible for funding under the one-billion-peso
portion of the LGSEF, the OCD promulgated the following:
III. CRITERIA FOR ELIGIBILITY:
1. LGUs (province, city, municipality, or barangay), individually or by group
or multi-LGUs or leagues of LGUs, especially those belonging to
the 5th and 6th class, may access the fund to support any projects or
activities that satisfy any of the aforecited purposes. A barangay
may also access this fund directly or through their respective
municipality or city.
2. The proposed project/activity should be need-based, a local priority, with
high development impact and are congruent with the socio-cultural,
economic and development agenda of the Estrada Administration,
such as food security, poverty alleviation, electrification, and peace
and order, among others.
3. Eligible for funding under this fund are projects arising from, but not
limited to, the following areas of concern:

3
a. delivery of local health and sanitation services, hospital services
and other tertiary services;

a. acquisition/procurement of supplies and materials critical to the

full and effective implementation of devolved programs,
projects and activities;

b. delivery of social welfare services;

b. repair and/or improvement of facilities;
c. provision of socio-cultural services and facilities for youth and
community development;

c. repair and/or upgrading of equipment;

d. provision of agricultural and on-site related research;

d. acquisition of basic equipment;

e. improvement of community-based forestry projects and other

local projects on environment and natural resources
protection and conservation;

e. construction of additional or new facilities;

f. improvement of tourism facilities and promotion of tourism;

f. counterpart contribution to joint arrangements or collective

projects among groups of municipalities, cities and/or
provinces related to devolution and delivery of basic
services.

g. peace and order and public safety;

h. construction, repair and maintenance of public works and
infrastructure, including public buildings and facilities for
public use, especially those destroyed or damaged by
man-made or natural calamities and disaster as well as
facilities for water supply, flood control and river dikes;
i. provision of local electrification facilities;
j. livelihood and food production services, facilities and equipment;
k. other projects that may be authorized by the OCD consistent with
the aforementioned objectives and guidelines;
4. Except on extremely meritorious cases, as may be determined by the
Oversight Committee on Devolution, this portion of the LGSEF shall
not be used in expenditures for personal costs or benefits under
existing laws applicable to governments. Generally, this fund shall
cover the following objects of expenditures for programs, projects
and activities arising from the implementation of devolved and
regular functions and services:

5. To be eligible for funding, an LGU or group of LGU shall submit to the

Oversight Committee on Devolution through the Department of
Interior and Local Governments, within the prescribed schedule and
timeframe, a Letter Request for Funding Support from the
Affirmative Action Program under the LGSEF, duly signed by the
concerned LGU(s) and endorsed by cooperators and/or
beneficiaries, as well as the duly signed Resolution of Endorsement
by the respective Sanggunian(s) of the LGUs concerned. The LGUproponent shall also be required to submit the Project Request
(PR), using OCD Project Request Form No. 99-02, that details the
following:
(a) general description or brief of the project;
(b) objectives and justifications for undertaking the project, which
should highlight the benefits to the locality and the
expected impact to the local program/project arising from
the full and efficient implementation of social services and
facilities, at the local levels;
(c) target outputs or key result areas;
(d) schedule of activities and details of requirements;

4
(e) total cost requirement of the project;
(f) proponents counterpart funding share, if any, and identified
source(s) of counterpart funds for the full implementation
of the project;
(g) requested amount of project cost to be covered by the LGSEF.
Further, under the guidelines formulated by the Oversight Committee as
contained in Attachment - Resolution No. OCD-99-003, the LGUs were required to
identify the projects eligible for funding under the one-billion-peso portion of the
LGSEF and submit the project proposals thereof and other documentary requirements
to the DILG for appraisal. The project proposals that passed the DILGs appraisal
would then be submitted to the Oversight Committee for review, evaluation and
approval. Upon its approval, the Oversight Committee would then serve notice to the
DBM for the preparation of the Special Allotment Release Order (SARO) and Notice
of Cash Allocation (NCA) to effect the release of funds to the said LGUs.

The LGSEF in the GAA of 2000

Under Rep. Act No. 8760, otherwise known as the GAA of 2000, the amount
of P111,778,000,000 was allotted as the share of the LGUs in the internal revenue
taxes. As in the GAA of 1999, the GAA of 2000 contained a proviso earmarking five
billion pesos of the IRA for the LGSEF. This proviso, found in Item No. 1, Special
Provisions, Title XXXVII A. Internal Revenue Allotment, was similarly worded as that
contained in the GAA of 1999.
The Oversight Committee, in its Resolution No. OCD-2000-023 dated June 22,
2000, adopted the following allocation scheme governing the five billion pesos LGSEF
for 2000:
1. The PhP3.5 Billion of the CY 2000 LGSEF shall be allocated to and
shared by the four levels of LGUs, i.e., provinces, cities,
municipalities, and barangays, using the following percentagesharing formula agreed upon and jointly endorsed by the various
Leagues of LGUs:
For Provinces 26% or P 910,000,000
For Cities 23% or 805,000,000

For Municipalities 35% or 1,225,000,000

For Barangays 16% or 560,000,000
Provided that the respective Leagues representing the provinces,
cities, municipalities and barangays shall draw up and adopt the
horizontal distribution/sharing schemes among the member LGUs
whereby the Leagues concerned may opt to adopt direct financial
assistance or project-based arrangement, such that the LGSEF
allocation for individual LGU shall be released directly to the LGU
concerned;
Provided further that the individual LGSEF shares to LGUs are used
in accordance with the general purposes and guidelines
promulgated by the OCD for the implementation of the LGSEF at
the local levels pursuant to Res. No. OCD-99-006 dated October 7,
1999 and pursuant to the Leagues guidelines and mechanism as
approved by the OCD;
Provided further that each of the Leagues shall submit to the OCD
for its approval their respective allocation scheme, the list of LGUs
with the corresponding LGSEF shares and the corresponding
project categories if project-based;
Provided further that upon approval by the OCD, the lists of LGUs
shall be endorsed to the DBM as the basis for the preparation of the
corresponding NCAs, SAROs, and related budget/release
documents.
2. The remaining P1,500,000,000 of the CY 2000 LGSEF shall be
earmarked to support the following initiatives and local affirmative
action projects, to be endorsed to and approved by the Oversight
Committee on Devolution in accordance with the OCD
agreements, guidelines, procedures and documentary
requirements:
On July 5, 2000, then President Estrada issued a Memorandum authorizing then
Executive Secretary Zamora and the DBM to implement and release the 2.5 billion
pesos LGSEF for 2000 in accordance with Resolution No. OCD-2000-023.
Thereafter, the Oversight Committee, now under the administration of President
Gloria Macapagal-Arroyo, promulgated Resolution No. OCD-2001-29 entitled

5
ADOPTING RESOLUTION NO. OCD-2000-023 IN THE ALLOCATION,
IMPLEMENTATION AND RELEASE OF THE REMAINING P2.5 BILLION LGSEF
FOR CY 2000. Under this resolution, the amount of one billion pesos of the LGSEF
was to be released in accordance with paragraph 1 of Resolution No. OCD-2000-23,
to complete the 3.5 billion pesos allocated to the LGUs, while the amount of 1.5 billion
pesos was allocated for the LAAP. However, out of the latter amount, P400,000,000
was to be allocated and released as follows: P50,000,000 as financial assistance to
the LAAPs of LGUs; P275,360,227 as financial assistance to cover the decrease in
the IRA of LGUs concerned due to reduction in land area; and P74,639,773 for the
LGSEF Capability-Building Fund.

The LGSEF in the GAA of 2001

In view of the failure of Congress to enact the general appropriations law for
2001, the GAA of 2000 was deemed re-enacted, together with the IRA of the LGUs
therein and the proviso earmarking five billion pesos thereof for the LGSEF.
On January 9, 2002, the Oversight Committee adopted Resolution No. OCD2002-001 allocating the five billion pesos LGSEF for 2001 as follows:
Modified Codal Formula P 3.000 billion
Priority Projects 1.900 billion
Capability Building Fund .100 billion
P 5.000 billion
RESOLVED FURTHER, that the P3.0 B of the CY 2001 LGSEF which is to be
allocated according to the modified codal formula shall be released to the four levels
of LGUs, i.e., provinces, cities, municipalities and barangays, as follows:
LGUs Percentage Amount
Provinces 25 P 0.750 billion
Cities 25 0.750
Municipalities 35 1.050
Barangays 15 0.450

100 P 3.000 billion

RESOLVED FURTHER, that the P1.9 B earmarked for priority projects shall be
distributed according to the following criteria:
1.0 For projects of the 4th, 5th and 6th class LGUs; or
2.0 Projects in consonance with the Presidents State of the Nation Address
(SONA)/summit commitments.
RESOLVED FURTHER, that the remaining P100 million LGSEF capability building
fund shall be distributed in accordance with the recommendation of the Leagues of
Provinces, Cities, Municipalities and Barangays, and approved by the OCD.
Upon receipt of a copy of the above resolution, Gov. Mandanas wrote to the
individual members of the Oversight Committee seeking the reconsideration of
Resolution No. OCD-2002-001. He also wrote to Pres. Macapagal-Arroyo urging her
to disapprove said resolution as it violates the Constitution and the Local Government
Code of 1991.
On January 25, 2002, Pres. Macapagal-Arroyo approved Resolution No. OCD2002-001.

The Petitioners Case

The petitioner now comes to this Court assailing as unconstitutional and void the
provisos in the GAAs of 1999, 2000 and 2001, relating to the LGSEF. Similarly
assailed are the Oversight Committees Resolutions Nos. OCD-99-003, OCD-99-005,
OCD-99-006, OCD-2000-023, OCD-2001-029 and OCD-2002-001 issued pursuant
thereto. The petitioner submits that the assailed provisos in the GAAs and the OCD
resolutions, insofar as they earmarked the amount of five billion pesos of the IRA of
the LGUs for 1999, 2000 and 2001 for the LGSEF and imposed conditions for the
release thereof, violate the Constitution and the Local Government Code of 1991.
Section 6, Article X of the Constitution is invoked as it mandates that the just
share of the LGUs shall be automatically released to them. Sections 18 and 286 of
the Local Government Code of 1991, which enjoin that the just share of the LGUs
shall be automatically and directly released to them without need of further action are,
likewise, cited.

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The petitioner posits that to subject the distribution and release of the five-billionpeso portion of the IRA, classified as the LGSEF, to compliance by the LGUs with the
implementing rules and regulations, including the mechanisms and guidelines
prescribed by the Oversight Committee, contravenes the explicit directive of the
Constitution that the LGUs share in the national taxes shall be automatically released
to them. The petitioner maintains that the use of the word shall must be given a
compulsory meaning.
To further buttress this argument, the petitioner contends that to vest the
Oversight Committee with the authority to determine the distribution and release of the
LGSEF, which is a part of the IRA of the LGUs, is an anathema to the principle of local
autonomy as embodied in the Constitution and the Local Government Code of
1991. The petitioner cites as an example the experience in 2001 when the release of
the LGSEF was long delayed because the Oversight Committee was not able to
convene that year and no guidelines were issued therefor. Further, the possible
disapproval by the Oversight Committee of the project proposals of the LGUs would
result in the diminution of the latters share in the IRA.
Another infringement alleged to be occasioned by the assailed OCD resolutions
is the improper amendment to Section 285 of the Local Government Code of 1991 on
the percentage sharing of the IRA among the LGUs. Said provision allocates the IRA
as follows: Provinces 23%; Cities 23%; Municipalities 34%; and Barangays 20%.
[8]
This formula has been improperly amended or modified, with respect to the fivebillion-peso portion of the IRA allotted for the LGSEF, by the assailed OCD resolutions
as they invariably provided for a different sharing scheme.
The modifications allegedly constitute an illegal amendment by the executive
branch of a substantive law. Moreover, the petitioner mentions that in the Letter dated
December 5, 2001 of respondent Executive Secretary Romulo addressed to
respondent Secretary Boncodin, the former endorsed to the latter the release of funds
to certain LGUs from the LGSEF in accordance with the handwritten instructions of
President Arroyo. Thus, the LGUs are at a loss as to how a portion of the LGSEF is
actually allocated. Further, there are still portions of the LGSEF that, to date, have not
been received by the petitioner; hence, resulting in damage and injury to the
petitioner.
The petitioner prays that the Court declare as unconstitutional and void the
assailed provisos relating to the LGSEF in the GAAs of 1999, 2000 and 2001 and the
assailed OCD resolutions (Resolutions Nos. OCD-99-003, OCD-99-005, OCD-99006, OCD-2000-023, OCD-2001-029 and OCD-2002-001) issued by the Oversight
Committee pursuant thereto. The petitioner, likewise, prays that the Court direct the
respondents to rectify the unlawful and illegal distribution and releases of the LGSEF
for the aforementioned years and release the same in accordance with the sharing

formula under Section 285 of the Local Government Code of 1991. Finally, the
petitioner urges the Court to declare that the entire IRA should be released
automatically without further action by the LGUs as required by the Constitution and
the Local Government Code of 1991.

The Respondents Arguments

The respondents, through the Office of the Solicitor General, urge the Court to
dismiss the petition on procedural and substantive grounds. On the latter, the
respondents contend that the assailed provisos in the GAAs of 1999, 2000 and 2001
and the assailed resolutions issued by the Oversight Committee are not
constitutionally infirm. The respondents advance the view that Section 6, Article X of
the Constitution does not specify that the just share of the LGUs shall be determined
solely by the Local Government Code of 1991. Moreover, the phrase as determined
by law in the same constitutional provision means that there exists no limitation on the
power of Congress to determine what is the just share of the LGUs in the national
taxes. In other words, Congress is the arbiter of what should be the just share of the
LGUs in the national taxes.
The respondents further theorize that Section 285 of the Local Government
Code of 1991, which provides for the percentage sharing of the IRA among the LGUs,
was not intended to be a fixed determination of their just share in the national
taxes. Congress may enact other laws, including appropriations laws such as the
GAAs of 1999, 2000 and 2001, providing for a different sharing formula. Section 285
of the Local Government Code of 1991 was merely intended to be the default share of
the LGUs to do away with the need to determine annually by law their just
share. However, the LGUs have no vested right in a permanent or fixed percentage as
Congress may increase or decrease the just share of the LGUs in accordance with
what it believes is appropriate for their operation. There is nothing in the Constitution
which prohibits Congress from making such determination through the appropriations
laws. If the provisions of a particular statute, the GAA in this case, are within the
constitutional power of the legislature to enact, they should be sustained whether the
courts agree or not in the wisdom of their enactment.
On procedural grounds, the respondents urge the Court to dismiss the petition
outright as the same is defective. The petition allegedly raises factual issues which
should be properly threshed out in the lower courts, not this Court, not being a trier of
facts. Specifically, the petitioners allegation that there are portions of the LGSEF that
it has not, to date, received, thereby causing it (the petitioner) injury and damage, is
subject to proof and must be substantiated in the proper venue, i.e., the lower courts.

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Further, according to the respondents, the petition has already been rendered
moot and academic as it no longer presents a justiciable controversy. The IRAs for
the years 1999, 2000 and 2001, have already been released and the government is
now operating under the 2003 budget. In support of this, the respondents submitted
certifications issued by officers of the DBM attesting to the release of the allocation or
shares of the petitioner in the LGSEF for 1999, 2000 and 2001. There is, therefore,
nothing more to prohibit.
Finally, the petitioner allegedly has no legal standing to bring the suit because it
has not suffered any injury. In fact, the petitioners just share has even
increased. Pursuant to Section 285 of the Local Government Code of 1991, the share
of the provinces is 23%. OCD Nos. 99-005, 99-006 and 99-003 gave the provinces
40% of P2 billion of the LGSEF. OCD Nos. 2000-023 and 2001-029 apportioned 26%
of P3.5 billion to the provinces. On the other hand, OCD No. 2001-001 allocated 25%
of P3 billion to the provinces. Thus, the petitioner has not suffered any injury in the
implementation of the assailed provisos in the GAAs of 1999, 2000 and 2001 and the
OCD resolutions.

The Ruling of the Court

Procedural Issues
Before resolving the petition on its merits, the Court shall first rule on the
following procedural issues raised by the respondents: (1) whether the petitioner has
legal standing or locus standi to file the present suit; (2) whether the petition involves
factual questions that are properly cognizable by the lower courts; and (3) whether the
issue had been rendered moot and academic.

The petitioner has locus standi

to maintain the present suit
The gist of the question of standing is whether a party has alleged such a
personal stake in the outcome of the controversy as to assure that concrete
adverseness which sharpens the presentation of issues upon which the court so
largely depends for illumination of difficult constitutional questions. [9] Accordingly, it
has been held that the interest of a party assailing the constitutionality of a statute
must be direct and personal. Such party must be able to show, not only that the law or

any government act is invalid, but also that he has sustained or is in imminent danger
of sustaining some direct injury as a result of its enforcement, and not merely that he
suffers thereby in some indefinite way. It must appear that the person complaining has
been or is about to be denied some right or privilege to which he is lawfully entitled or
that he is about to be subjected to some burdens or penalties by reason of the statute
or act complained of.[10]
The Court holds that the petitioner possesses the requisite standing to maintain
the present suit. The petitioner, a local government unit, seeks relief in order to protect
or vindicate an interest of its own, and of the other LGUs. This interest pertains to the
LGUs share in the national taxes or the IRA. The petitioners constitutional claim is, in
substance, that the assailed provisos in the GAAs of 1999, 2000 and 2001, and the
OCD resolutions contravene Section 6, Article X of the Constitution, mandating the
automatic release to the LGUs of their share in the national taxes. Further, the injury
that the petitioner claims to suffer is the diminution of its share in the IRA, as provided
under Section 285 of the Local Government Code of 1991, occasioned by the
implementation of the assailed measures. These allegations are sufficient to grant the
petitioner standing to question the validity of the assailed provisos in the GAAs of
1999, 2000 and 2001, and the OCD resolutions as the petitioner clearly has a plain,
direct and adequate interest in the manner and distribution of the IRA among the
LGUs.

The petition involves a significant

legal issue
The crux of the instant controversy is whether the assailed provisos contained in
the GAAs of 1999, 2000 and 2001, and the OCD resolutions infringe the Constitution
and the Local Government Code of 1991. This is undoubtedly a legal question. On the
other hand, the following facts are not disputed:
1. The earmarking of five billion pesos of the IRA for the LGSEF in the
assailed provisos in the GAAs of 1999, 2000 and re-enacted budget for
2001;
2. The promulgation of the assailed OCD resolutions providing for the
allocation schemes covering the said five billion pesos and the
implementing rules and regulations therefor; and
3. The release of the LGSEF to the LGUs only upon their compliance with
the implementing rules and regulations, including the guidelines and
mechanisms, prescribed by the Oversight Committee.

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Considering that these facts, which are necessary to resolve the legal question
now before this Court, are no longer in issue, the same need not be determined by a
trial court.[11] In any case, the rule on hierarchy of courts will not prevent this Court
from assuming jurisdiction over the petition. The said rule may be relaxed when the
redress desired cannot be obtained in the appropriate courts or where exceptional
and compelling circumstances justify availment of a remedy within and calling for the
exercise of this Courts primary jurisdiction.[12]
The crucial legal issue submitted for resolution of this Court entails the proper
legal interpretation of constitutional and statutory provisions. Moreover, the
transcendental importance of the case, as it necessarily involves the application of the
constitutional principle on local autonomy, cannot be gainsaid. The nature of the
present controversy, therefore, warrants the relaxation by this Court of procedural
rules in order to resolve the case forthwith.

The substantive issue needs to be resolved

notwithstanding the supervening events
Granting arguendo that, as contended by the respondents, the resolution of the
case had already been overtaken by supervening events as the IRA, including the
LGSEF, for 1999, 2000 and 2001, had already been released and the government is
now operating under a new appropriations law, still, there is compelling reason for this
Court to resolve the substantive issue raised by the instant petition. Supervening
events, whether intended or accidental, cannot prevent the Court from rendering a
decision if there is a grave violation of the Constitution.[13] Even in cases where
supervening events had made the cases moot, the Court did not hesitate to resolve
the legal or constitutional issues raised to formulate controlling principles to guide the
bench, bar and public.[14]
Another reason justifying the resolution by this Court of the substantive issue
now before it is the rule that courts will decide a question otherwise moot and
academic if it is capable of repetition, yet evading review. [15] For the GAAs in the
coming years may contain provisos similar to those now being sought to be
invalidated, and yet, the question may not be decided before another GAA is
enacted. It, thus, behooves this Court to make a categorical ruling on the substantive
issue now.

Substantive Issue

As earlier intimated, the resolution of the substantive legal issue in this case
calls for the application of a most important constitutional policy and principle, that of
local autonomy.[16] In Article II of the Constitution, the State has expressly adopted as
a policy that:
Section 25. The State shall ensure the autonomy of local governments.
An entire article (Article X) of the Constitution has been devoted to guaranteeing
and promoting the autonomy of LGUs. Section 2 thereof reiterates the State policy in
this wise:
Section 2. The territorial and political subdivisions shall enjoy local autonomy.
Consistent with the principle of local autonomy, the Constitution confines the
Presidents power over the LGUs to one of general supervision. [17] This provision has
been interpreted to exclude the power of control. The distinction between the two
powers was enunciated in Drilon v. Lim:[18]
An officer in control lays down the rules in the doing of an act. If they are not followed,
he may, in his discretion, order the act undone or re-done by his subordinate or he
may even decide to do it himself. Supervision does not cover such authority. The
supervisor or superintendent merely sees to it that the rules are followed, but he
himself does not lay down such rules, nor does he have the discretion to modify or
replace them. If the rules are not observed, he may order the work done or re-done
but only to conform to the prescribed rules. He may not prescribe his own manner for
doing the act. He has no judgment on this matter except to see to it that the rules are
followed.[19]
The Local Government Code of 1991[20] was enacted to flesh out the mandate of
the Constitution.[21] The State policy on local autonomy is amplified in Section 2
thereof:
Sec. 2. Declaration of Policy. (a) It is hereby declared the policy of the State that the
territorial and political subdivisions of the State shall enjoy genuine and meaningful
local autonomy to enable them to attain their fullest development as self-reliant
communities and make them more effective partners in the attainment of national
goals. Toward this end, the State shall provide for a more responsive and accountable
local government structure instituted through a system of decentralization whereby
local government units shall be given more powers, authority, responsibilities, and
resources. The process of decentralization shall proceed from the National
Government to the local government units.

9
Guided by these precepts, the Court shall now determine whether the assailed
provisos in the GAAs of 1999, 2000 and 2001, earmarking for each corresponding
year the amount of five billion pesos of the IRA for the LGSEF and the OCD
resolutions promulgated pursuant thereto, transgress the Constitution and the Local
Government Code of 1991.

The assailed provisos in the GAAs of 1999, 2000

and 2001 and the OCD resolutions violate the
constitutional precept on local autonomy
Section 6, Article X of the Constitution reads:
Sec. 6. Local government units shall have a just share, as determined by law, in the
national taxes which shall be automatically released to them.
When parsed, it would be readily seen that this provision mandates that (1) the
LGUs shall have a just share in the national taxes; (2) the just share shall be
determined by law; and (3) the just share shall be automatically released to the LGUs.
The Local Government Code of 1991, among its salient provisions, underscores
the automatic release of the LGUs just share in this wise:
Sec. 18. Power to Generate and Apply Resources. Local government units shall have
the power and authority to establish an organization that shall be responsible for the
efficient and effective implementation of their development plans, program objectives
and priorities; to create their own sources of revenue and to levy taxes, fees, and
charges which shall accrue exclusively for their use and disposition and which shall
be retained by them; to have a just share in national taxes which shall be
automatically and directly released to them without need of further action;
...
Sec. 286. Automatic Release of Shares. (a) The share of each local government unit
shall be released, without need of any further action, directly to the provincial, city,
municipal or barangay treasurer, as the case may be, on a quarterly basis within five
(5) days after the end of each quarter, and which shall not be subject to any lien or
holdback that may be imposed by the national government for whatever purpose.

(b) Nothing in this Chapter shall be understood to diminish the share of local
government units under existing laws.
Websters Third New International Dictionary defines automatic as involuntary
either wholly or to a major extent so that any activity of the will is largely negligible; of
a reflex nature; without volition; mechanical; like or suggestive of an automaton.
Further, the word automatically is defined as in an automatic manner: without thought
or conscious intention. Being automatic, thus, connotes something mechanical,
spontaneous and perfunctory. As such, the LGUs are not required to perform any act
to receive the just share accruing to them from the national coffers. As emphasized by
the Local Government Code of 1991, the just share of the LGUs shall be released to
them without need of further action. Construing Section 286 of the LGC, we held
in Pimentel, Jr. v. Aguirre,[22] viz:
Section 4 of AO 372 cannot, however, be upheld. A basic feature of local fiscal
autonomy is the automatic release of the shares of LGUs in the National internal
revenue. This is mandated by no less than the Constitution. The Local Government
Code specifies further that the release shall be made directly to the LGU concerned
within five (5) days after every quarter of the year and shall not be subject to any lien
or holdback that may be imposed by the national government for whatever
purpose. As a rule, the term SHALL is a word of command that must be given a
compulsory meaning. The provision is, therefore, IMPERATIVE.
Section 4 of AO 372, however, orders the withholding, effective January 1, 1998, of 10
percent of the LGUs IRA pending the assessment and evaluation by the Development
Budget Coordinating Committee of the emerging fiscal situation in the country. Such
withholding clearly contravenes the Constitution and the law. Although temporary, it is
equivalent to a holdback, which means something held back or withheld, often
temporarily. Hence, the temporary nature of the retention by the national government
does not matter. Any retention is prohibited.
In sum, while Section 1 of AO 372 may be upheld as an advisory effected in times of
national crisis, Section 4 thereof has no color of validity at all. The latter provision
effectively encroaches on the fiscal autonomy of local governments. Concededly, the
President was well-intentioned in issuing his Order to withhold the LGUs IRA, but the
rule of law requires that even the best intentions must be carried out within the
parameters of the Constitution and the law. Verily, laudable purposes must be carried
out by legal methods.[23]
The just share of the LGUs is incorporated as the IRA in the appropriations law
or GAA enacted by Congress annually. Under the assailed provisos in the GAAs of

10
1999, 2000 and 2001, a portion of the IRA in the amount of five billion pesos was
earmarked for the LGSEF, and these provisos imposed the condition that such
amount shall be released to the local government units subject to the implementing
rules and regulations, including such mechanisms and guidelines for the equitable
allocations and distribution of said fund among local government units subject to the
guidelines that may be prescribed by the Oversight Committee on Devolution.
Pursuant thereto, the Oversight Committee, through the assailed OCD resolutions,
apportioned the five billion pesos LGSEF such that:
For 1999
P2 billion - allocated according to Sec. 285 LGC
P2 billion - Modified Sharing Formula (Provinces 40%;
Cities 20%; Municipalities 40%)
P1 billion projects (LAAP) approved by OCD.[24]
For 2000
P3.5 billion Modified Sharing Formula (Provinces 26%;
Cities 23%; Municipalities 35%; Barangays 16%);
P1.5 billion projects (LAAP) approved by the OCD.[25]
For 2001
P3 billion Modified Sharing Formula (Provinces 25%;
Cities 25%; Municipalities 35%; Barangays 15%)
P1.9 billion priority projects
P100 million capability building fund.[26]
Significantly, the LGSEF could not be released to the LGUs without the
Oversight Committees prior approval. Further, with respect to the portion of the
LGSEF allocated for various projects of the LGUs (P1 billion for 1999; P1.5 billion for
2000 and P2 billion for 2001), the Oversight Committee, through the assailed OCD
resolutions, laid down guidelines and mechanisms that the LGUs had to comply with
before they could avail of funds from this portion of the LGSEF. The guidelines
required (a) the LGUs to identify the projects eligible for funding based on the criteria
laid down by the Oversight Committee; (b) the LGUs to submit their project proposals
to the DILG for appraisal; (c) the project proposals that passed the appraisal of the
DILG to be submitted to the Oversight Committee for review, evaluation and
approval. It was only upon approval thereof that the Oversight Committee would direct
the DBM to release the funds for the projects.

To the Courts mind, the entire process involving the distribution and release of
the LGSEF is constitutionally impermissible. The LGSEF is part of the IRA or just
share of the LGUs in the national taxes. To subject its distribution and release to the
vagaries of the implementing rules and regulations, including the guidelines and
mechanisms unilaterally prescribed by the Oversight Committee from time to time, as
sanctioned by the assailed provisos in the GAAs of 1999, 2000 and 2001 and the
OCD resolutions, makes the release not automatic, a flagrant violation of the
constitutional and statutory mandate that the just share of the LGUs shall be
automatically released to them. The LGUs are, thus, placed at the mercy of the
Oversight Committee.
Where the law, the Constitution in this case, is clear and unambiguous, it must
be taken to mean exactly what it says, and courts have no choice but to see to it that
the mandate is obeyed.[27] Moreover, as correctly posited by the petitioner, the use of
the word shall connotes a mandatory order. Its use in a statute denotes an imperative
obligation and is inconsistent with the idea of discretion.[28]
Indeed, the Oversight Committee exercising discretion, even control, over the
distribution and release of a portion of the IRA, the LGSEF, is an anathema to and
subversive of the principle of local autonomy as embodied in the Constitution.
Moreover, it finds no statutory basis at all as the Oversight Committee was created
merely to formulate the rules and regulations for the efficient and effective
implementation of the Local Government Code of 1991 to ensure compliance with the
principles of local autonomy as defined under the Constitution.[29] In fact, its creation
was placed under the title of Transitory Provisions, signifying its ad
hoc character. According to Senator Aquilino Q. Pimentel, the principal author and
sponsor of the bill that eventually became Rep. Act No. 7160, the Committees work
was supposed to be done a year from the approval of the Code, or on October 10,
1992.[30] The Oversight Committees authority is undoubtedly limited to the
implementation of the Local Government Code of 1991, not to supplant or subvert the
same. Neither can it exercise control over the IRA, or even a portion thereof, of the
LGUs.
That the automatic release of the IRA was precisely intended to guarantee and
promote local autonomy can be gleaned from the discussion below between Messrs.
Jose N. Nolledo and Regalado M. Maambong, then members of the 1986
Constitutional Commission, to wit:
MR. MAAMBONG. Unfortunately, under Section 198 of the Local Government Code,
the existence of subprovinces is still acknowledged by the law, but the statement of
the Gentleman on this point will have to be taken up probably by the Committee on
Legislation. A second point, Mr. Presiding Officer, is that under Article 2, Section 10 of
the 1973 Constitution, we have a provision which states:

11
The State shall guarantee and promote the autonomy of local government
units, especially the barrio, to insure their fullest development as selfreliant communities.
This provision no longer appears in the present configuration; does this
mean that the concept of giving local autonomy to local governments is no
longer adopted as far as this Article is concerned?
MR. NOLLEDO. No. In the report of the Committee on Preamble, National Territory,
and Declaration of Principles, that concept is included and widened upon the initiative
of Commissioner Bennagen.
MR. MAAMBONG. Thank you for that.
With regard to Section 6, sources of revenue, the creation of sources as provided by
previous law was subject to limitations as may be provided by law, but now, we are
using the term subject to such guidelines as may be fixed by law. In Section 7,
mention is made about the unique, distinct and exclusive charges and contributions,
and in Section 8, we talk about exclusivity of local taxes and the share in the national
wealth. Incidentally, I was one of the authors of this provision, and I am very
thankful. Does this indicate local autonomy, or was the wording of the law changed to
give more autonomy to the local government units?[31]
MR. NOLLEDO. Yes. In effect, those words indicate also decentralization because
local political units can collect taxes, fees and charges subject merely to guidelines,
as recommended by the league of governors and city mayors, with whom I had a
dialogue for almost two hours. They told me that limitations may be questionable in
the sense that Congress may limit and in effect deny the right later on.
MR. MAAMBONG. Also, this provision on automatic release of national tax share
points to more local autonomy. Is this the intention?
[32]

MR. NOLLEDO. Yes, the Commissioner is perfectly right.

The concept of local autonomy was explained in Ganzon v. Court of

Appeals[33] in this wise:
As the Constitution itself declares, local autonomy means a more responsive and
accountable local government structure instituted through a system of
decentralization. The Constitution, as we observed, does nothing more than to break
up the monopoly of the national government over the affairs of local governments and

as put by political adherents, to liberate the local governments from the imperialism of
Manila. Autonomy, however, is not meant to end the relation of partnership and
interdependence between the central administration and local government units, or
otherwise, to usher in a regime of federalism. The Charter has not taken such a
radical step. Local governments, under the Constitution, are subject to regulation,
however limited, and for no other purpose than precisely, albeit paradoxically, to
enhance self-government.
As we observed in one case, decentralization means devolution of national
administration but not power to the local levels. 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 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 [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.[34]
Local autonomy includes both administrative and fiscal autonomy. The fairly
recent case of Pimentel v. Aguirre[35] is particularly instructive. The Court declared
therein that local fiscal autonomy includes the power of the LGUs to, inter alia,
allocate their resources in accordance with their own priorities:
Under existing law, local government units, in addition to having administrative
autonomy in the exercise of their functions, enjoy fiscal autonomy as well. Fiscal
autonomy means that local governments have the power to create their own sources
of revenue in addition to their equitable share in the national taxes released by the
national government, as well as the power to allocate their resources in accordance

12
with their own priorities. It extends to the preparation of their budgets, and local
officials in turn have to work within the constraints thereof. They are not formulated at
the national level and imposed on local governments, whether they are relevant to
local needs and resources or not ...[36]
Further, a basic feature of local fiscal autonomy is the constitutionally
mandated automatic release of the shares of LGUs in the national internal revenue.[37]
Following this ratiocination, the Court in Pimentel struck down as
unconstitutional Section 4 of Administrative Order (A.O.) No. 372 which ordered the
withholding, effective January 1, 1998, of ten percent of the LGUs IRA pending the
assessment and evaluation by the Development Budget Coordinating Committee of
the emerging fiscal situation.
In like manner, the assailed provisos in the GAAs of 1999, 2000 and 2001, and
the OCD resolutions constitute a withholding of a portion of the IRA. They put on hold
the distribution and release of the five billion pesos LGSEF and subject the same to
the implementing rules and regulations, including the guidelines and mechanisms
prescribed by the Oversight Committee from time to time. Like Section 4 of A.O. 372,
the assailed provisos in the GAAs of 1999, 2000 and 2001 and the OCD resolutions
effectively encroach on the fiscal autonomy enjoyed by the LGUs and must be struck
down. They cannot, therefore, be upheld.

The assailed provisos in the GAAs of 1999, 2000

and 2001 and the OCD resolutions cannot amend
Section 285 of the Local Government Code of 1991
Section 284[38] of the Local Government Code provides that, beginning the third
year of its effectivity, the LGUs share in the national internal revenue taxes shall be
40%. This percentage is fixed and may not be reduced except in the event the
national government incurs an unmanageable public sector deficit" and only upon
compliance with stringent requirements set forth in the same section:
Sec. 284. ...
Provided, That in the event that the national government incurs an unmanageable
public sector deficit, the President of the Philippines is hereby authorized, upon
recommendation of Secretary of Finance, Secretary of Interior and Local Government
and Secretary of Budget and Management, and subject to consultation with the
presiding officers of both Houses of Congress and the presidents of the liga, to make

the necessary adjustments in the internal revenue allotment of local government units
but in no case shall the allotment be less than thirty percent (30%) of the collection of
the national internal revenue taxes of the third fiscal year preceding the current fiscal
year; Provided, further That in the first year of the effectivity of this Code, the local
government units shall, in addition to the thirty percent (30%) internal revenue
allotment which shall include the cost of devolved functions for essential public
services, be entitled to receive the amount equivalent to the cost of devolved
personnel services.
Thus, from the above provision, the only possible exception to the mandatory
automatic release of the LGUs IRA is if the national internal revenue collections for
the current fiscal year is less than 40 percent of the collections of the preceding third
fiscal year, in which case what should be automatically released shall be a
proportionate amount of the collections for the current fiscal year. The adjustment may
even be made on a quarterly basis depending on the actual collections of national
internal revenue taxes for the quarter of the current fiscal year. In the instant case,
however, there is no allegation that the national internal revenue tax collections for the
fiscal years 1999, 2000 and 2001 have fallen compared to the preceding three fiscal
years.
Section 285 then specifies how the IRA shall be allocated among the LGUs:
Sec. 285. Allocation to Local Government Units. The share of local government units
in the internal revenue allotment shall be allocated in the following manner:
(a) Provinces Twenty-three (23%)
(b) Cities Twenty-three percent (23%);
(c) Municipalities Thirty-four (34%); and
(d) Barangays Twenty percent (20%).
However, this percentage sharing is not followed with respect to the five billion
pesos LGSEF as the assailed OCD resolutions, implementing the assailed provisos in
the GAAs of 1999, 2000 and 2001, provided for a different sharing scheme.For
example, for 1999, P2 billion of the LGSEF was allocated as follows: Provinces 40%;
Cities 20%; Municipalities 40%.[39] For 2000, P3.5 billion of the LGSEF was allocated
in this manner: Provinces 26%; Cities 23%; Municipalities 35%; Barangays 26%.
[40]
For 2001, P3 billion of the LGSEF was allocated, thus: Provinces 25%; Cities 25%;
Municipalities 35%; Barangays 15%.[41]
The respondents argue that this modification is allowed since the Constitution
does not specify that the just share of the LGUs shall only be determined by the Local
Government Code of 1991. That it is within the power of Congress to enact other

13
laws, including the GAAs, to increase or decrease the just share of the LGUs. This
contention is untenable. The Local Government Code of 1991 is a substantive
law. And while it is conceded that Congress may amend any of the provisions therein,
it may not do so through appropriations laws or GAAs. Any amendment to the Local
Government Code of 1991 should be done in a separate law, not in the appropriations
law, because Congress cannot include in a general appropriation bill matters that
should be more properly enacted in a separate legislation.[42]
A general appropriations bill is a special type of legislation, whose content is
limited to specified sums of money dedicated to a specific purpose or a separate fiscal
unit.[43] Any provision therein which is intended to amend another law is considered an
inappropriate provision. The category of inappropriate provisions includes
unconstitutional provisions and provisions which are intended to amend other laws,
because clearly these kinds of laws have no place in an appropriations bill.[44]
Increasing or decreasing the IRA of the LGUs or modifying their percentage
sharing therein, which are fixed in the Local Government Code of 1991, are matters of
general and substantive law. To permit Congress to undertake these amendments
through the GAAs, as the respondents contend, would be to give Congress the
unbridled authority to unduly infringe the fiscal autonomy of the LGUs, and thus put
the same in jeopardy every year. This, the Court cannot sanction.
It is relevant to point out at this juncture that, unlike those of 1999, 2000 and
2001, the GAAs of 2002 and 2003 do not contain provisos similar to the herein
assailed provisos. In other words, the GAAs of 2002 and 2003 have not earmarked
any amount of the IRA for the LGSEF. Congress had perhaps seen fit to discontinue
the practice as it recognizes its infirmity. Nonetheless, as earlier mentioned, this Court
has deemed it necessary to make a definitive ruling on the matter in order to prevent
its recurrence in future appropriations laws and that the principles enunciated herein
would serve to guide the bench, bar and public.

Conclusion
In closing, it is well to note that the principle of local autonomy, while concededly
expounded in greater detail in the present Constitution, dates back to the turn of the
century when President William McKinley, in his Instructions to the Second Philippine
Commission dated April 7, 1900, ordered the new Government to devote their
attention in the first instance to the establishment of municipal governments in which
the natives of the Islands, both in the cities and in the rural communities, shall be
afforded the opportunity to manage their own affairs to the fullest extent of which they
are capable, and subject to the least degree of supervision and control in which a

careful study of their capacities and observation of the workings of native control show
to be consistent with the maintenance of law, order and loyalty. [45] While the 1935
Constitution had no specific article on local autonomy, nonetheless, it limited the
executive power over local governments to general supervision ... as may be provided
by law.[46] Subsequently, the 1973 Constitution explicitly stated that [t]he State shall
guarantee and promote the autonomy of local government units, especially the
barangay to ensure their fullest development as self-reliant communities. [47] An entire
article on Local Government was incorporated therein. The present Constitution, as
earlier opined, has broadened the principle of local autonomy. The 14 sections in
Article X thereof markedly increased the powers of the local governments in order to
accomplish the goal of a more meaningful local autonomy.
Indeed, the value of local governments as institutions of democracy is measured
by the degree of autonomy that they enjoy. [48] As eloquently put by M. De Tocqueville,
a distinguished French political writer, [l]ocal assemblies of citizens constitute the
strength of free nations. Township meetings are to liberty what primary schools are to
science; they bring it within the peoples reach; they teach men how to use and enjoy
it. A nation may establish a system of free governments but without the spirit of
municipal institutions, it cannot have the spirit of liberty.[49]
Our national officials should not only comply with the constitutional provisions on
local autonomy but should also appreciate the spirit and liberty upon which these
provisions are based.[50]
WHEREFORE, the petition is GRANTED. The assailed provisos in the General
Appropriations Acts of 1999, 2000 and 2001, and the assailed OCD Resolutions, are
declared UNCONSTITUTIONAL.
SO ORDERED.
Vitug, (Acting Chief Justice), Panganiban, Quisumbing, Ynares-Santiago,
Sandoval-Gutierrez,
Carpio,
Austria-Martinez,
Corona,
Carpio-Morales,
Azcuna, and Tinga, JJ., concur.
Davide, Jr., C.J., and Puno, J., on official leave.
THE NATIONAL LIGA NG MGA BARANGAY, represented by ALEX L. DAVID in
his capacity as National President and for his own Person, President
ALEX L. DAVID, petitioners, vs. HON. VICTORIA ISABEL A. PAREDES,
Presiding Judge, Regional Trial Court, Branch 124, Caloocan City, and
THE DEPARTMENT OF INTERIOR and LOCAL GOVERNMENT,
represented the HON. SECRETARY ROBERT Z. BARBERS and
MANUEL A. RAYOS, respondents.

14
[G.R. No. 131939. September 27, 2004]

LEANDRO YANGOT, BONIFACIO LACWASAN and BONY TACIO, petitioners,

vs. DILG Secretary ROBERT Z. BARBERS and DILG Undersecretary
MANUEL SANCHEZ, respondents.
DECISION
Tinga, J.:
At bottom, the present petition inquires into the essential nature of the Liga ng
mga Barangay and questions the extent of the power of Secretary of the Department
of Interior and Local Government (DILG), as alter ego of the President. More
immediately, the petition disputes the validity of the appointment of the DILG as
the interim caretaker of the Liga ng mga Barangay.
On 11 June 1997, private respondent Manuel A. Rayos [as petitioner
therein], Punong Barangay of Barangay 52, District II, Zone 5, District II, Caloocan
City, filed a petition for prohibition and mandamus, with prayer for a writ of preliminary
injunction and/or temporary restraining order and damages before the Regional Trial
Court (RTC) of Caloocan,[1] alleging that respondent therein Alex L. David [now
petitioner], Punong Barangay of Barangay 77, Zone 7, Caloocan City and then
president of the Liga Chapter of Caloocan City and of the Liga ng mga
Barangay National Chapter, committed certain irregularities in the notice, venue and
conduct of the proposed synchronized Liga ng mga Barangay elections in
1997. According to the petition, the irregularities consisted of the following: (1) the
publication of the notice in the Manila Bulletin but without notifying in writing the
individual punong barangays of Caloocan City;[2] (2) the Notice of Meeting dated 08
June 1997 for the Liga Chapter of Caloocan City did not specify whether the meeting
scheduled on 14 June 1997 was to be held at 8:00 a.m. or 8:00 p.m., and worse, the
meeting was to be held in Lingayen, Pangasinan;[3] and (3) the deadline for the filing of
the Certificates of Candidacy having been set at 5:00 p.m. of the third day prior to the
above election day, or on 11 June 1997,[4] Rayos failed to meet said deadline since he
was not able to obtain a certified true copy of the COMELEC Certificate of Canvas
and Proclamation of Winning Candidate, which were needed to be a delegate, to vote
and be voted for in the Liga election. On 13 June 1997, the Executive Judge issued a
temporary restraining order (TRO), effective for seventy-two (72) hours, enjoining the
holding of the general membership and election meeting of Liga Chapter
of Caloocan City on 14 June 1975.[5]

However, the TRO was allegedly not properly served on herein petitioner David,
and so the election for the officers of the Liga-Caloocan was held as scheduled.
[6]
Petitioner David was proclaimed President of the Liga-Caloocan, and thereafter
took his oath and assumed the position of ex-officio member of the Sangguniang
Panlungsod of Caloocan.
On 17 July 1997, respondent Rayos filed a second petition, this time for quo
warranto, mandamus and prohibition, with prayer for a writ of preliminary injunction
and/or temporary restraining order and damages, against David, Nancy Quimpo,
Presiding Officer of the Sangguniang Panlungsod of Caloocan City, and Secretary
Barbers.[7] Rayos alleged that he was elected President of the Liga Caloocan Chapter
in the elections held on 14 June 1997 by the members of the Caloocan Chapter
pursuant to their Resolution/Petition No. 001-97.[8] On 18 July 1997, the presiding
judge granted the TRO, enjoining therein respondents David, Quimpo and Secretary
Barbers from proceeding with the synchronized elections for the Provincial and
Metropolitan Chapters of the Liga scheduled on 19 July 1997, but only for the purpose
of maintaining the status quo and effective for a period not exceeding seventy-two
(72) hours.[9]
Eventually, on 18 July 1997, at petitioner Davids instance, Special Civil Action
(SCA) No. C-512 pending before Branch 126 was consolidated with SCA No. C-508
pending before Branch 124.[10]
Before the consolidation of the cases, on 25 July 1997, the DILG through
respondent Secretary Barbers, filed in SCA No. C-512 an Urgent Motion,[11] invoking
the Presidents power of general supervision over all local government units and
seeking the following reliefs:
WHEREFORE, in the interest of the much-needed delivery of basic services to the
people, the maintenance of public order and to further protect the interests of the
forty-one thousand barangays all over the country, herein respondent respectfully
prays:
a) That the Department of the Interior and Local Government (DILG),
pursuant to its delegated power of general supervision, be appointed
as the Interim Caretaker to manage and administer the affairs of the
Liga, until such time that the new set of National Liga Officers shall
have been duly elected and assumed office; ...[12]
The prayer for injunctive reliefs was anchored on the following grounds: (1) the
DILG Secretary exercises the power of general supervision over all government units
by virtue of Administrative Order No. 267 dated 18 February 1992; (2) the Liga ng
mga Barangay is a government organization; (3) undue interference by some local

15
elective officials during the Municipal and City Chapter elections of the Liga ng mga
Barangay; (4) improper issuance of confirmations of the elected Liga Chapter officers
by petitioner David and the National Liga Board; (5) the need for the DILG to provide
remedies measured in view of the confusion and chaos sweeping the Liga ng mga
Barangay and the incapacity of the National Liga Board to address theproblems
properly.
On 31 July 1997, petitioner David opposed the DILGs Urgent Motion, claiming
that the DILG, being a respondent in the case, is not allowed to seek any sanction
against a co-respondent like David, such as by filing a cross-claim, without first
seeking leave of court.[13] He also alleged that the DILGs request to be appointed
interim caretaker constitutes undue interference in the internal affairs of the Liga,
since the Liga is not subject to DILG control and supervision.[14]
Three (3) days after filing its Urgent Motion, on 28 July 1997, and before it was
acted upon by the lower court, the DILG through then Undersecretary Manuel
Sanchez, issued Memorandum Circular No. 97-176.[15] It cited the reported violations
of the Liga ng mga Barangay Constitution and By-Laws by David and widespread
chaos and confusion among local government officials as to who were the
qualified ex-officio Liga members in their respective sangunians.[16] Pending the
appointment of the DILG as the Interim Caretaker of the Liga ng mga Barangay by the
court and until the officers and board members of the national Liga Chapter have
been elected and have assumed office, the Memorandum Circular directed all
provincial governors, vice governors, city mayors, city vice mayors, members of
the sangguniang panlalawigan and panlungsod, DILG regional directors and other
concerned officers, as follows:
1. All concerned are directed not to recognize and/or honor any Liga Presidents of the
Provincial and Metropolitan Chapters as ex-officio members of the sanggunian
concerned until further notice from the Courts or this Department;
2. All concerned are directed to disregard any pronouncement and/or directive issued
by Mr. Alex David on any issue or matter relating to the affairs of the Liga ng mga
Barangay until further notice from the Courts or this Department.[17]
On 04 August 1997, public respondent Judge Victoria Isabel A. Paredes issued
the assailed order,[18] the pertinent portions of which read, thus:
The authority of the DILG to exercise general supervisory jurisdiction over local
government units, including the different leagues created under the Local Government
Code of 1991 (RA 7160) finds basis in Administrative Order No. 267 dated February
18, 1992. Specifically, Section 1 (a) of the said Administrative Order provides a broad

premise for the supervisory power of the DILG. Administratively, the DILGs
supervision has been tacitly recognized by the local barangays, municipalities, cities
and provinces as shown by the evidences presented by respondent David himself
(See Annexes A to C). The fact that the DILG has sought to refer the matters therein
to the National Liga Board/Directorate does not ipso facto mean that it has lost
jurisdiction to act directly therein. Jurisdiction is conferred by law and cannot be
claimed or lost through agreements or inaction by individuals. What respondent David
may term as interference should caretakership be allowed, this Court would rather
view as a necessary and desirable corollary to the exercise of supervision.[19]
Political motivations must not preclude, hamper, or obstruct the delivery of basic
services and the perquisites of public service. In this case, the fact of confusion
arising from conflicting appointments, non-action, and uninformed or wavering
decisions of the incumbent National Liga Board/Directorate, having been satisfactorily
established, cannot simply be brushed aside as being politically motivated or arising
therefrom. It is incumbent, therefore, that the DILG exercise a more active role in the
supervision of the affairs and operations of the National Liga Board/ Directorate at
least until such time that the regular National Liga Board/Directorate may have been
elected, qualified and assumed office.[20]
xxx
WHEREFORE, premises considered, the Urgent Motion of the DILG for appointment
as interim caretaker, until such time that the regularly elected National Liga Board of
Directors shall have qualified and assumed office, to manage and administer the
affairs of the National Liga Board, is hereby GRANTED.[21]
On 11 August 1997, petitioner David filed an urgent motion for the
reconsideration of the assailed order and to declare respondent Secretary Barbers in
contempt of Court.[22] David claimed that the 04 August 1997 order divested the duly
elected members of the Board of Directors of the Liga National Directorate of their
positions without due process of law. He also wanted Secretary Barbers declared in
contempt for having issued, through his Undersecretary, Memorandum Circular No.
97-176, even before respondent judge issued the questioned order, in mockery of the
justice system. He implied that Secretary Barbers knew about respondent judges
questioned order even before it was promulgated.[23]
On 11 August 1997, the DILG issued Memorandum Circular No. 97-193,
providing supplemental guidelines for the 1997 synchronized elections of the
provincial and metropolitan chapters and for the election of the national chapter of
the Liga ng mga Barangay. The Memorandum Circular set the synchronized elections
[24]

16
for the provincial and metropolitan chapters on 23 August 1997 and for the national
chapter on 06 September 1997.
On 12 August 1997, the DILG issued a Certificate of Appointment [25] in favor of
respondent Rayos as president of the Liga ng mga Barangay of Caloocan City. The
appointment purportedly served as Rayoss legal basis for ex-officio membership in
the Sangguniang Panlungsod of Caloocan City and to qualify and participate in the
forthcoming National Chapter Election of the Liga ng mga Barangay.[26]
On 23 August 1997, the DILG conducted the synchronized elections of
Provincial and Metropolitan Liga Chapters. Thereafter, on 06 September 1997, the
National Liga Chapter held its election of officers and board of directors, wherein
James Marty L. Lim was elected as President of the National Liga.[27]
On 01 October 1997, public respondent judge denied Davids motion for
reconsideration,[28] ruling that there was no factual or legal basis to reconsider the
appointment of the DILG as interim caretaker of the National Liga Board and to cite
Secretary Barbers in contempt of court.[29]
[30]

On 10 October 1997, petitioners filed the instant Petition for Certiorari under
Rule 65 of the Rules of Court, seeking to annul public respondent judges orders of 04
August 1997 and 01 October 1997. They dispute the latters opinion on the power of
supervision of the President under the Constitution, through the DILG over local
governments, which is the same as that of the DILGs as shown by its application of
the power on the Liga ng mga Barangay. Specifically, they claim that the public
respondent judges designation of the DILG as interim caretaker and the acts which
the DILG sought to implement pursuant to its designation as such are beyond the
scope of the Chief Executives power of supervision.
To support the petition, petitioners argue that under Administrative Order No.
267, Series of 1992, the power of general supervision of the President over local
government units does not apply to the Liga and its various chapters precisely
because the Liga is not a local government unit, contrary to the stance of the
respondents.[31]
Section 507 of the Local Government Code (Republic Act No. 7160) [32] provides
that the Liga shall be governed by its own Constitution and By-laws. Petitioners posit
that the duly elected officers and directors of the National Liga elected in 1994 had a
vested right to their positions and could only be removed therefrom for cause by
affirmative vote of two-thirds (2/3) of the entire membership pursuant to
the Liga Constitution and By-Laws, and not by mere issuances of the DILG, even if
bolstered by the dubious authorization of respondent judge.[33] Thus, petitioners claim
that the questioned order divested the then incumbent officers and directors of
the Liga of their right to their respective offices without due process of law.

Assuming the Liga could be subsumed under the term local governments, over
which the President, through the DILG Secretary, has the power of supervision,
[34]
petitioners point out that still there is no legal or constitutional basis for the
appointment of the DILG as interim caretaker. [35] They stress that the actions
contemplated by the DILG as interim caretaker go beyond supervision, as what it had
sought and obtained was authority to alter, modify, nullify or set aside the actions of
the Liga Board of Directors and even to substitute its judgment over that of the latter
which are all clearly one of control.[36] Petitioners question the appointment of Rayos
as Liga-Caloocan President since at that time petitioner David was occupying that
position which was still the subject of the quo warranto proceedings Rayos himself
had instituted.[37] Petitioners likewise claim that DILG Memorandum Circular No. 97193, providing supplemental guidelines for the synchronized elections of the Liga,
replaced the implementing rules adopted by the Liga pursuant to its Constitution and
By-laws.[38] In fact, even before its appointment as interim caretaker, DILG specifically
enjoined all heads of government units from recognizing petitioner David and/or
honoring any of his pronouncements relating to the Liga.[39]
Petitioners rely on decision in Taule v. Santos,[40] which, they claim, already
passed upon the extent of authority of the then Secretary of Local Government over
the katipunan ng mga barangay or the barangay councils, as it specifically ruled that
the Secretary [of Local Government] has no authority to pass upon the validity or
regularity of the election of officers of the katipunan.[41]
For his part, respondent Rayos avers that since the Secretary of the DILG
supervises the acts of local officials by ensuring that they act within the scope of their
prescribed powers and functions and since members of the various leagues, such as
the Liga in this case, are themselves officials of local government units, it follows that
the Liga members are subject to the power of supervision of the DILG. [42] He adds that
as the DILGs management and administration of the Liga affairs was limited only to
the conduct of the elections, its actions were consistent with its rule-making power
and power of supervision under existing laws.[43] He asserts that in assailing the
appointment of the DILG as interim caretaker, petitioners failed to cite any provision of
positive law in support of their stance. Thus, he adds, if a law is silent, obscure or
insufficient, a judge may apply a rule he sees fit to resolve the issue, as long as the
rule chosen is in harmony with general interest, order, morals and public policy,[44] in
consonance with Article 9 of the Civil Code.[45]
On the other hand, it is quite significant that the Solicitor General has shared
petitioners position. He states that the DILGs act of managing and administering the
affairs of the National Liga Board are not merely acts of supervision but plain
manifestations of control and direct takeover of the functions of the
National Liga Board,[46] going beyond the limits of the power of general supervision of
the President over local governments.[47] Moreover, while the Liga may be deemed a

17
government organization, it is not strictly a local government unit over which the DILG
has supervisory power.[48]
Meanwhile, on 24 September 1998, James Marty L. Lim, the newly elected
President of the National Liga, filed a Motion for Leave to File Comment in
Intervention,[49] with his Comment in Intervention attached,[50] invoking the validity of
the DILGs actions relative to the conduct of the Liga elections.[51] In addition, he
sought the dismissal of the instant petition on the following grounds: (1) the issue of
validity or invalidity of the questioned order has been rendered moot and academic by
the election of Liga officers; (2) the turn-over of the administration and management
of Liga affairs to the Liga officers; and (3) the recognition and acceptance by the
members of the Liga nationwide.[52]
In the interim, another petition, this time for Prohibition with Prayer for a
Temporary Restraining Order, [53] was filed by several presidents of Liga Chapters,
praying that this Court declare the DILG Secretary and Undersecretary are not vested
with any constitutional or legal power to exercise control or even supervision over the
National Liga ng mga Barangay, nor to take over the functions of its officers or
suspend its constitution; and declare void any and all acts committed by respondents
therein in connection with their caretakership of the Liga.[54] The petition was
consolidated with G.R. No. 130775, but it was eventually dismissed because the
petitioners failed to submit an affidavit of service and proof of service of the petition.[55]
Meanwhile, on 01 December 1998, petitioner David died and was substituted by
his legal representatives.[56]
Petitioners have raised a number of issues.[57] Integrated and simplified, these
issues boil down to the question of whether or not respondent Judge acted with grave
abuse of discretion in appointing the DILG as interim caretaker to administer and
manage the affairs of the National Liga Board, per its order dated 04 August 1997.
[58]
In turn, the resolution of the question of grave abuse of discretion entails a couple
of definitive issues, namely: (1) whether the Liga ng mga Barangay is a government
organization that is subject to the DILG Secretarys power of supervision over local
governments as the alter ego of the President, and (2) whether the respondent
Judges designation of the DILG as interim caretaker of the Liga has invested the DILG
with control over the Liga and whether DILG Memorandum Circular No. 97-176,
issued before it was designated as such interim caretaker, and DILG Memorandum
Circular No. 97-193 and other acts which the DILG made in its capacity as
interim caretaker of the Liga, involve supervision or control of the Liga.
However, the Court should first address the question of mootness which
intervenor Lim raised because, according to him, during the pendency of the present
petition a general election was held; the new set of officers and directors had
assumed their positions; and that supervening events the DILG had turned-over the

management and administration of the Liga to new Liga officers and directors.
[59]
Respondent Rayos has joined him in this regard.[60] Forthwith, the Court declares
that these supervening events have not rendered the instant petition moot, nor
removed it from the jurisdiction of this Court.
This case transcends the elections ordered and conducted by the DILG as
interim caretaker of the Liga and the Liga officers and directors who were elected to
replace petitioner David and the former officers. At the core of the petition is the
validity of the DILGs caretakership of the Liga and the official acts of the DILG as such
caretaker which exceeded the bounds of supervision and were exercise of control. At
stake in this case is the realization of the constitutionally ensconced principle of local
government autonomy;[61] the statutory objective to enhance the capabilities of
barangays and municipalities by providing them opportunities to participate actively in
the implementation of national programs and projects;[62] and the promotion of the
avowed aim to ensure the independence and non-partisanship of the Liga ng mga
Barangay. The mantle of local autonomy would be eviscerated and remain an empty
buzzword if unconstitutional, illegal and unwarranted intrusions in the affairs of the
local governments are tolerated and left unchecked.
Indeed, it is the declared policy of the State that its territorial and political
subdivisions should enjoy genuine meaningful local autonomy to enable them to attain
their fullest development as self-reliant communities and make them more effective
partners in the attainment of national goals.[63] In the case of De Leon v. Esguerra,
[64]
the Court ruled that even barangays are meant to possess genuine and meaningful
local autonomy so that they may develop fully as self-reliant communities.[65]
Furthermore, well-entrenched is the rule that courts will decide a question
otherwise moot and academic if it is capable of repetition, yet evading review. [66] For
the question of whether the DILG may validly be appointed as interim caretaker, or
assume a similar position and perform acts pursuant thereto, is likely to resurrect
again, and yet the question may not be decided before the actual assumption, or the
termination of said assumption even.
So too, dismissing the petition on the ground of mootness could lead to the
wrong impression that the challenged order and issuances are valid. Verily, that does
not appear to be the correct conclusion to make since by applying opposite
precedents to the issues the outcome points to invalidating the assailed order and
memorandum circulars.
The resolution of the issues of whether the Liga ng mga Barangay is subject to
DILG supervision, and whether the questioned caretakership order of the respondent
judge and the challenged issuances and acts of the DILG constitute control in
derogation of the Constitution, necessitates a brief overview of the barangay, as the
lowest LGU, and the Liga, as a vehicle of governance and coordination.

18
As the basic political unit, the barangay serves as the primary planning and
implementing unit of government policies, plans, programs, projects and activities in
the community, and as a forum wherein the collective views of the people may be
expressed, crystallized and considered, and where disputes may be amicably settled.
[67]

On the other hand, the Liga ng mga Barangay[68] is the organization of

all barangays, the primary purpose of which is the determination of the representation
of the Liga in the sanggunians, and the ventilation, articulation, and crystallization of
issues affecting barangay government administration and securing solutions thereto,
through proper and legal means.[69] The Liga ng mga Barangay shall have chapters at
the municipal, city and provincial and metropolitan political subdivision levels. [70] The
municipal and city chapters of the Liga are composed of the barangay representatives
from the municipality or city concerned. The presidents of the municipal and city
chapters of the Liga form the provincial or metropolitan political subdivision chapters
of the Liga. The presidents of the chapters of the Liga in highly urbanized cities,
provinces and the Metro Manila area and other metropolitan political subdivisions
constitute the National Liga ng mga Barangay.[71]
As conceptualized in the Local Government Code, the barangay is positioned to
influence and direct the development of the entire country. This was heralded by the
adoption of the bottom-to-top approach process of development which requires the
development plans of the barangay to be considered in the development plans of the
municipality, city or province,[72] whose plans in turn are to be taken into account by
the central government[73] in its plans for the development of the entire country.
[74]
The Liga is the vehicle assigned to make this new development approach
materialize and produce results.
The presidents of the Liga at the municipal, city and provincial levels,
automatically become ex-officio members of the Sangguniang Bayan, Sangguniang
Panlungsod and Sangguniang Panlalawigan, respectively. They shall serve as such
only during their term of office as presidents of the Liga chapters, which in no case
shall be beyond the term of office of the sanggunian concerned.[75]
The Liga ng mga Barangay has one principal aim, namely: to promote the
development of barangays and secure the general welfare of their inhabitants.[76] In
line with this, the Liga is granted the following functions and duties:
a) Give priority to programs designed for the total development of the
barangays and in consonance with the policies, programs and projects
of the national government;

b) Assist in the education of barangay residents for peoples participation in

local government administration in order to promote untied and
concerted action to achieve country-wide development goals;
c) Supplement the efforts of government in creating gainful employment
within the barangay;
d) Adopt measures to promote the welfare of barangay officials;
e) Serve as forum of the barangays in order to forge linkages with
government and non-governmental organizations and thereby promote
the social, economic and political well-being of the barangays; and
f) Exercise such other powers and perform such other duties and functions
which will bring about stronger ties between barangays and promote
the welfare of the barangay inhabitants.[77]
The Ligas are primarily governed by the provisions of the Local Government
Code. However, they are empowered to make their own constitution and by-laws to
govern their operations. Sec. 507 of the Code provides:
Sec. 507. Constitution and By-Laws of the Liga and the Leagues. - All other matters
not herein otherwise provided for affecting the internal organization of the leagues of
local government units shall be governed by their respective constitution and by-laws
which are hereby made suppletory to the provision of this Chapter: Provided, That
said Constitution and By-laws shall always conform to the provision of the Constitution
and existing laws.
Pursuant to the Local Government Code, the Liga ng mga Barangay adopted its
own Constitution and By-Laws. It provides that the corporate powers of
the Liga, expressed or implied, shall be vested in the board of directors of each level
of the Liga which shall:
a) Have jurisdiction over all officers, directors and committees of the said Liga;
including the power of appointment, assignment and delegation;
b) Have general management of the business, property, and funds of said Liga;
c) Prepare and approve a budget showing anticipated receipts and expenditures for
the year, including the plans or schemes for funding purposes; and
d) Have the power to suspend or remove from office any officer or member of the said
board on grounds cited and in the manner provided in hereinunder provisions.[78]

19
The National Liga Board of Directors promulgated the rules for the conduct of
its Ligas general elections.[79] And, as early as 28 April 1997, the Liga National
Chapter had already scheduled its general elections on 14 June 1997.[80]
The controlling provision on the issues at hand is Section 4, Article X of the
Constitution, which reads in part:
Sec. The President of the Philippines shall exercise general supervision over local
governments.
The 1935, 1973 and 1987 Constitutions uniformly differentiate the Presidents
power of supervision over local governments and his power of control of the executive
departments bureaus and offices.[81] Similar to the counterpart provisions in the earlier
Constitutions, the provision in the 1987 Constitution provision has been interpreted to
exclude the power of control.[82]
In the early case of Mondano v. Silvosa, et al.,[83] this Court defined supervision
as overseeing, or the power or authority of an officer to see that subordinate officers
perform their duties, and to take such action as prescribed by law to compel his
subordinates to perform their duties. Control, on the other hand, means the power of
an officer to alter or modify or nullify or set aside what a subordinate officer had done
in the performance of his duties and to substitute the judgment of the former for that of
the latter.[84] In Taule v. Santos,[85] the Court held that the Constitution permits the
President to wield no more authority than that of checking whether a local government
or its officers perform their duties as provided by statutory enactments. [86] Supervisory
power, when contrasted with control, is the power of mere oversight over an inferior
body; it does not include any restraining authority over such body.[87]

Does the Presidents power of general supervision extend to the liga ng mga
barangay, which is not a local government unit?
We rule in the affirmative. In Opinion No. 41, Series of 1995, the Department of
Justice ruled that the liga ng mga barangay is a government organization, being an
association, federation, league or union created by law or by authority of law, whose
members are either appointed or elected government officials. The Local Government
Code defines the liga ng mga barangay as an organization of all barangays for the
primary purpose of determining the representation of the liga in the sanggunians, and
for ventilating, articulating and crystallizing issues affecting barangay government
administration and securing, through proper and legal means, solutions thereto.[91]
The rationale for making the Liga subject to DILG supervision is quite evident,
whether from the perspectives of logic or of practicality. The Liga is an aggroupment
of barangays which are in turn represented therein by their respective punong
barangays. The representatives of the Liga sit in an ex officio capacity at the
municipal, city and provincial sanggunians. As such, they enjoy all the powers and
discharge all the functions of regular municipal councilors, city councilors or provincial
board members, as the case may be. Thus, the Liga is the vehicle through which
the barangay participates in the enactment of ordinances and formulation of policies
at all the legislative local levels higher than the sangguniang barangay, at the same
time serving as the mechanism for the bottom-to-top approach of development.

In Section 4, Article X of the Constitution applicable to the Liga ng mga

Barangay? Otherwise put, is the Liga legally susceptible to DILG suspension?

In the case at bar, even before the respondent Judge designated the DILG
as interim caretaker of the Liga, on 28 July 1997, it issued Memorandum Circular No.
97-176, directing local government officials not to recognize David as the
National Liga President and his pronouncements relating to the affairs of the Liga. Not
only was the action premature, it even smacked of superciliousness and
injudiciousness. The DILG is the topmost government agency which maintains
coordination with, and exercises supervision over local government units and its multilevel leagues. As such, it should be forthright, circumspect and supportive in its
dealings with the Ligas especially the Liga ng mga Barangay. The indispensable role
played by the latter in the development of the barangays and the promotion of the
welfare of the inhabitants thereof deserve no less than the full support and respect of
the other agencies of government. As the Court held in the case of San Juan v. Civil
Service Commission,[92] our national officials should not only comply with the
constitutional provisions on local autonomy but should also appreciate the spirit of
liberty upon which these provisions are based.[93]

This question was resolved in Bito-Onon v. Fernandez,[90] where the Court ruled
that the Presidents power of the general supervision, as exercised therein by the
DILG Secretary as his alter ego, extends to the Liga ng mga Barangay.

When the respondent judge eventually appointed the DILG as interim caretaker
to manage and administer the affairs of the Liga, she effectively removed the
management from the National Liga Board and vested control of the Liga on the

The case of Drilon v. Lim[88] clearly defined the extent of supervisory power, thus:
The supervisor or superintendent merely sees to it that the rules are followed, but he
himself does not lay down such rules, nor does he have the discretion to modify or
replace them. If the rules are not observed, he may order the work done or re-done
but only to conform to the prescribed rules. He may not prescribe his own manner for
the doing of the act. He has no judgment on this matter except to see that the rules
are followed[89]

20
DILG.Even a cursory glance at the DILGs prayer for appointment as interim caretaker
of the Liga to manage and administer the affairs of the Liga, until such time that
the new set of National Liga officers shall have been duly elected and assumed office
reveals that what the DILG wanted was to take control over the Liga. Even if said
caretakership was contemplated to last for a limited time, or only until a new set of
officers assume office, the fact remains that it was a conferment of control in
derogation of the Constitution.
With his Department already appointed as interim caretaker of the Liga,
Secretary Barbers nullified the results of the Liga elections and promulgated DILG
Memorandum Circular No. 97-193 dated 11 August 1997, where he laid down the
supplemental guidelines for the 1997 synchronized elections of the provincial and
metropolitan chapters and for the election of the national chapter of the Liga ng mga
Barangay; scheduled dates for the new provincial, metropolitan and national chapter
elections; and appointed respondent Rayos as president of Liga-Caloocan Chapter.
These acts of the DILG went beyond the sphere of general supervision and
constituted direct interference with the political affairs, not only of the Liga, but more
importantly, of the barangay as an institution. The election of Liga officers is part of
the Ligas internal organization, for which the latter has already provided guidelines. In
succession, the DILG assumed stewardship and jurisdiction over the Liga affairs,
issued supplemental guidelines for the election, and nullified the effects of the Ligaconducted elections. Clearly, what the DILG wielded was the power of control which
even the President does not have.
Furthermore, the DILG assumed control when it appointed respondent Rayos as
president of the Liga-Caloocan Chapter prior to the newly scheduled
general Liga elections, although petitioner Davids term had not yet expired. The DILG
substituted its choice, who was Rayos, over the choice of majority of the punong
barangay of Caloocan, who was the incumbent President, petitioner David. The latter
was elected and had in fact been sitting as an ex-officio member of the sangguniang
panlungsod in accordance with the Liga Constitution and By-Laws. Yet, the DILG
extended the appointment to respondent Rayos although it was aware that the
position was the subject of a quo warranto proceeding instituted by Rayos himself,
thereby preempting the outcome of that case. It was bad enough that the DILG
assumed the power of control, it was worse when it made use of the power with
evident bias and partiality.
As the entity exercising supervision over the Liga ng mga Barangay, the DILGs
authority over the Liga is limited to seeing to it that the rules are followed, but it cannot
lay down such rules itself, nor does it have the discretion to modify or replace them. In
this particular case, the most that the DILG could do was review the acts of the
incumbent officers of the Liga in the conduct of the elections to determine if they

committed any violation of the Ligas Constitution and By-laws and its implementing
rules. If the National Liga Board and its officers had violated Liga rules, the DILG
should have ordered the Liga to conduct another election in accordance with the Ligas
own rules, but not in obeisance to DILG-dictated guidelines.Neither had the DILG the
authority to remove the incumbent officers of the Liga and replace them, even
temporarily, with unelected Liga officers.
Like the local government units, the Liga ng mga Barangay is not subject to
control by the Chief Executive or his alter ego.
In the Bito-Onon[94] case, this Court held that DILG Memorandum Circular No.
97-193, insofar as it authorized the filing of a petition for review of the decision of the
Board of Election Supervisors (BES) with the regular courts in a post-proclamation
electoral protest, involved the exercise of control as it in effect amended the guidelines
already promulgated by the Liga. The decision reads in part:
xxx. Officers in control, lay down the rules in the doing of an act. If they are not
followed, it is discretionary on his part to order the act undone or redone by his
subordinate or he may even decide to do it himself. Supervision does not cover such
authority. Supervising officers merely see to it that the rules are followed, but he
himself does not lay down such rules, nor does he have the discretion to modify or
replace them. If the rules are not observed, he may order the work done or re-done to
conform for to the prescribed rules. He cannot prescribe his own manner the doing of
the act.
xxx
xxx. The amendment of the GUIDELINES is more than an exercise of the power of
supervision but is an exercise of the power of control, which the President does not
have over the LIGA. Although the DILG is given the power to prescribe rules,
regulations and other issuances, the Administrative Code limits its authority to merely
monitoring compliance by local government units of such issuances. To monitor
means to watch, observe or check and is compatible with the power of supervision of
the DILG Secretary over local governments, which is limited to checking whether the
local government unit concerned or the officers thereof perform their duties as per
statutory enactments. Besides, any doubt as to the power of the DILG Secretary to
interfere with local affairs should be resolved in favor of the greater autonomy of the
local government.[95]
In Taule,[96] the Court ruled that the Secretary of Local Government had no
authority to pass upon the validity or regularity of the election of officers of katipunan
ng mga barangay or barangay councils. In that case, a protest was lodged before the

21
Secretary of Local Government regarding several irregularities in, and seeking the
nullification of, the election of officers of the Federation of Associations of Barangay
Councils (FABC) of Catanduanes. Then Local Government Secretary Luis Santos
issued a resolution nullifying the election of officers and ordered a new one to be
conducted. The Court ruled:
Construing the constitutional limitation on the power of general supervision of the
President over local governments, We hold that respondent Secretary has no
authority to pass upon the validity or regularity of the officers of the katipunan. To
allow respondent Secretary to do so will give him more power than the law or the
Constitution grants. It will in effect give him control over local government officials for it
will permit him to interfere in a purely democratic and non-partisan activity aimed at
strengthening the barangay as the basic component of local governments so that the
ultimate goal of fullest autonomy may be achieved. In fact, his order that the new
elections to be conducted be presided by the Regional Director is a clear and direct
interference by the Department with the political affairs of the barangays which is not
permitted by the limitation of presidential power to general supervision over local
governments.[97]

THE MUNICIPALITY OF CATBALOGAN, petitioner-appellee,

vs.
THE DIRECTOR OF LANDS, opponent-appellant.
Attorney-General Villamor, for appellant.
Provincial fiscal Barrios, for appellee.

TORRES, J.:
On June 19, 1908, the municipal president of the pueblo of Catbalogan, Province of
Samar, filed, in the name of the municipality, an application with the Court of Land
Registration in which he asked for the registration, in conformity with the Land
Registration Act, of a parcel of land of which the said municipality was the absolute
owner, bounded on the north by calle Corto south of the church square, on the east
by Second Avenue, on the south by land belonging to Smith, Bell & Co., and on the

All given, the Court is convinced that the assailed order was issued with grave
abuse of discretion while the acts of the respondent Secretary, including DILG
Memorandum Circulars No. 97-176 and No. 97-193, are unconstitutional and ultra
vires, as they all entailed the conferment or exercise of control a power which is
denied by the Constitution even to the President.

west by First Avenue; the application states that the said land has an area of 666.60

WHEREFORE, the Petition is GRANTED. The Order of the Regional Trial Court
dated 04 August 1997 is SET ASIDE for having been issued with grave abuse of
discretion amounting to lack or excess of jurisdiction. DILG Memorandum Circulars
No. 97-176 and No. 97-193, are declared VOID for being unconstitutional and ultra
vires.

the latter's best knowledge and belief, has any right or interest therein; that the said

No pronouncements as to costs.
SO ORDERED.

square meters and its description and boundaries are given in detail in the map
attached to the application, which sets forth that the property described was
appraised at the last assessment levied for the purpose of the payment of the land
tax, and that there is no encumbrance on it; that no one other than the applicant, to
land was acquired by possession and material occupation for a large number of years
and is at present occupied by the applicant as a municipal corporation duly organized;
and that, in the unlikely event of the denial of the said application, made in
accordance with the Land Registration Act, the applicant invokes the benefits of
chapter 6 of Act No. 926, since the said corporation has been in poossession of the
land mentioned, which is entirely surrounded by a fence, and has been cultivating it

Davide, Jr., C.J., Puno, Panganiban, Quisumbing, Ynares-Santiago, SandovalGutierrez,

Carpio,
Austria-Martinez,
Corona,
Carpio-Morales,
Callejo,
Sr., and Azcuna, JJ., concur.
Chico-Nazario, J., on leave.

for a great many years.

On March 18, 1909, the Attorney-General, in representation of the Director of Lands,
filed a writing opposing the registration solicited and alleged that the land in question
belonged to the United States and was under the control of the Government of the

G.R. No. L-5631

October 17, 1910

Philippines Islands. He asked that the applicant's prayer be denied and that, in case
the said property should be declared to belong to the Insular Government, the same

22
be awarded to it, together with the issuance thereto of the proper certificate of

Law 6, title 5, book 4, of the Recompilation of the Laws of the Indies, provides, among

registration.

other things:

The case having been heard on March 22, 23, and 24, 1909, and oral evidence

That within the boundaries which may be assigned to it, there must be at

adduced by both parties, the judge, on the 24th of the said month, overruled the

least thirty residents, and each one of them must have a house, etc.

opposition of the Director of Lands, and decreed, after a declaration of general

default, that the property in question be awarded to the applicant, the municipality of

Law 7 of the same title and book contains this provision:

Catbalogan, and be registered in its name. The Attorney-General, in representation of

the Director of Lands, excepted to this ruling and announced his purpose of filing a bill

Whoever wishes to undertake to establish a new town in the manner

of exceptions. He asked at the same time for a new trial on the grounds that the

provided for, of not more than thirty nor less than ten residents, shall be

findings of fact of the court were openly and manifestly contrary to the weight of the

granted the time and territory necessary for the purpose and under the same

evidence, and that the latter did not justify the said decision which, he alleged, was

conditions.

contrary to law. This motion was denied and exception was taken thereto by the
Attorney-General, who duly presented the required bill of exceptions which was

It may be affirmed that years afterwards all the modern pueblos of the Archipelago

certified and forwarded to this court.

were formed by taking as a basis for their establishment the barrios already populated

The question submitted to the decision of this court, through the appeal raised by the

new pueblo, the court-house, and afterwards the schoolhouse, obtained from the

Attorney-General in representation of the Director of Lands, is whether the lot

General Government the administrative separation of their barrio from the pueblo on

occupied by the court-house of the municipality of Catbalogan, of the Islands and

which it depended and in whose territory it was previously comprised. In such cases

Province of Samar, belongs to the said municipality or is state land under the control

procedure analogous to that prescribed by the Laws of the Indies was observed.

of the Insular Government.

by a large number of residents who, under the agreement to build the church of the

For the establishment, then, of new pueblos, the administrative authority of the

In order to obtain a better understanding of the final conclusion to be established in

province, in representation of the Governor-General, designated the territory for their

this decision, it is meet to state: That for the purpose of the establishment of new

location and extension and the metes and bounds of the same; and before alloting the

pueblos in this Archipelago, at the beginning of its occupation by the Spaniards, an

lands among the new settlers, a special demarcation was made of the places which

endeavor was always made to find, in favorable places, a nucleus of inhabitants and,

were to serve as the public square of the pueblo, for the erection of the church, and

later, near the pueblos already established, barrios, which ordinarily served as a basis

as sites for the public buildings, among others, the municipal building or the casa real,

for the formation of other new pueblos that became a populated as the centers on

as well as of the lands which were to constitute the commons, pastures,

which they were dependent.

and propios of the municipality and the streets and roads which were to intersect the
new town were laid out, as many be seen by the following laws:

The executive authorities and other officials who then represented the Spanish
Government in these Islands were obliged to adjust their procedure, in the fulfillment
of their duties with regard to the establishment and laying out of new towns, to the
Laws of the Indies, which determined the course that they were to pursue for such
purposes, as may be seen by the following:

Law 7, title 7, book 4, of the Recompilation of the Laws of the Indies, provides:
The district or territory to be given for settlement by composition shall be
allotted in the following manner: There shall be first be set apart the portion
required for the lots of the pueblo, the exido or public lands, and pastures

23
amply sufficient for the stock which the residents may have, and as much

pueblo and on proceeding to designate and demarcate the area of land to be

more as propios del lugar or common lands of the locality; the rest of the

occupied by the town of Catbalogan, with its square, streets, church, and other public

territory and district shall be divided into four parts one of them, of his

buildings, the said lot was also designated as a site for the municipal or court building,

choice, shall be for him who takes upon himself the obligation to fund the

in accordance with the laws hereinbefore mentioned, and that the adjudication of the

pueblo, and the other three shall be apportioned equally among the settlers.

lot to the municipality for its court-house was duly confirmed by the Spanish
Government, as must be inferred, in view of the continuous possession for so long a

Law 8, of the same title and book, prescribes, among other things:

time up to the present; nor does the record show that the court-house of the said
pueblo was ever built on any other lot than the one in question.

That, between the main square and the church, there shall be constructed
the casas reales or municipal buildings, the cabildo, concejo, customs

It is to be noted that, in former times, the court-house buildings of the pueblos were

buildings, etc.

called casas reales (royal buildings), undoubtedly for the purpose of giving greater
dignity to the principle of authority represented in them and inculcating respect among

Law 14 of the said title and book, also directs among other things:
That the viceroys shall set aside such lands as to them appear suitable as
the common lands (propios) of the pueblos that have none, therewith to
assist in the payment of the salaries of the corregidores, and sufficient public
lands (exidos) and pasture lands as provided for and prescribed by law.
Law 1, title 13 of the aforesaid book, provides the following:
Such viceroys and governors as have due authority shall designate to
each villa and lugar newly founded and settled the lands and lots which they
may need and may be given to them, without detriment to a third party, as
propios, and a statement shall be sent to us of what was designated and
given to each, in order that we may have such action approved.
The municipality of Catbalogan, as the provincial seat of Samar, must have been the
first and oldest pueblo established in the said province and has been occupying, if not
since time immemorial, as affirmed in the application, at least for a long period of
years, some forty or forty-five years according to the evidence given at trial, the lot in
litigation on which it had built the successive court-house buildings constructed for the
public service of the head municipality authority and his council. Some of these
buildings were burned and others were ruined by typhoons. The court-house building
aforesaid has been used and enjoyed quietly and peaceably and without any
opposition up to the present time, wherefore it is to be presumed that, on founding the

the inhabitants of the pueblo toward the building where the chief local authority
exercised his governmental duties and at the same time administered justice, for the
old pedaneos or petty mayors, later called capitanes or gobernadorcillos, while they
had governmental powers, at the same time administered justice as local judges.
In paragraph 92 of the royal ordinances of February 26, 1768, the following appears,
among other things:
And because, while there is a notable excess of pomp in the buildings of the
ministers and parish priests, there is, on the other hand, great abandonment
of the casas reales which, as a general rule, are not habitable on account of
their uncomfortable and ruinous conditions, etc., . . . it is ordered that in all
the pueblos, and especially in those of the seats of government, the native
inhabitants thereof shall erect decent and convenient municipal buildings
modeled after the plans to be furnished by the central government, and that
therein the gobernadorcillos shall have their court rooms and their jails for
the security of prisoners, and all leaks and other damages shall be repaired
in time in order that, through neglect they may not cause greater detriment
and expense.
If the inhabitants of a pueblo, at the time of its foundation, were obliged to erect
their casa real of municipal building, it is to be supposed that they built it on their own
ground after a designation of the site had been made by the governmental authority of
the province a designation which had to be made, according to the Laws of the

24
Indies, at the same time as that of the main plaza and of the site to be occupied by

authorization of the competent superior authorities in accordance with the

the temple of church, which latter building is so necessary and indispensable for

administrative laws.

every pueblo as well as the casa real or court-house, since in them, respectively,
divine worship is had and the local authorities perform their duties. The land

It is therefore unquestionable that the assets of each pueblo comprised its bienes

designated for the church is considered to belong thereto, and likewise the land

propios and the revenues or products derived therefrom, and this fact is recognized in

intended for the court-house should be deemed to be the property of municipality,

the Ordenanza de Intendentes of 1786, the forty-seventh article of which reads:

since no pueblo was able to exist administratively without having a church of its own
and a court-house which should be the seat of its local authority and its municipal

The funds which any pueblo may have left over as an annual surplus from

government.

the products of its property and its taxes, after meeting the expenses
specified in its own particular ordinance, shall be invested in the purchase of

It should be remembered that the court-house and the church of every pueblo were

real estate and revenue-bearing investments, so that, having a sufficient

always built, in accordance with the provisions of the Laws of the Indies, on one of the

income for the payment of its obligations and to aid in defraying its ordinary

sides of the plaza mayor or main square of the town, either together or the same side,

needs, the excise taxes, which are always a burden to the public, may be

or each buildings on an opposite side; but the said square nearly always occupies a

abolished; and in case it should have no such taxes, nor annuities to redeem

central site within the territory of the pueblo, with the frequent exception of where the

on its common properties (propios), the said surplus shall be applied to

town has extended toward only one end or side of the territory, in which event its main

promote establishments useful to the pueblo and to its province, or by

square ceased to be in the center of the town. However, the said square was never

investments to be previous proposed by the intendentes and approved by

located outside of the inhabited place, as were the commons and pasturages. (Law

the junta superior.

13, title 7, book 4, Recompilation of the Laws of the Indies.)

From the foregoing it is concluded that the land in question is the common property of
It is of course to presumed, in accordance with the provisions of the laws

the pueblo and is comprised within the patrimonial property of the municipality of

aforementioned, that the main square of the pueblo of Catbalogan occupies nearly the

Catbalogan, to which it was awarded for the construction thereon of the court-house,

central part of its territory, and that the lot on which were successively constructed the

on the demarcation and distribution being made of the lands which were to be

several court-houses which the said pueblo has and, in situated on one of the sides of

occupied by the town in its development, in accordance with the provisions of the

the said square and consequently in a central point and not outside the town. It can

Laws of the Indies, and other complementary laws, at a time when there was an

not, however, on account of this circumstances, be concluded that the said lot formed

excess of land and a few inhabitants to occupy them. It was for this reason that the

a part of the commons, exido, or the pasturage lands of the said pueblo, but consisted

royal cedula of October 15, 1754, directed that neither the possessors of

of land which belonged to the pueblo and was legally acquired through the distribution

unappropriate crown lands, nor their successors in interest, should be disturbed or

and adjudication of lots made at the beginning of its foundation, as proved by the laws

denounced, although they had no titles, it being sufficient for them to prove their prior

hereinbefore quoted.

possession to obtain a title by just prescription.

In technical administrative terms bienes propios are: Cultivated real properties,

The said municipality is today in possession of the land in litigation, as the owner

pasturage, houses or any other property which a city, village, or hamlet has for the

thereof, under the protection of the civil and administrative laws which guarantee the

payment of the public expenses. The administration of this class of property lay with

right of ownership of the corporations that are capable of contracting, acquiring, and

the municipalities, and they could be alienated after proper procedure and

possessing real and personal property.

25
Article 343 of the Civil Code reads:

under its exclusive ownership, on the founding of the pueblo, for the erection of the
courthouse, the record of the case showing no proof nor data to the contrary. As the

The property of provinces an of towns is divided into property for public use

plaintiff municipality, the applicant, has been occupying the property on which its

and patrimonial property.

court-house is situated during such a long space of time, much longer than that
required for extraordinary prescription (art. 1959 of the Civil Code), it can not be

Article 344 of the same codes prescribes:

Property for public use in provinces and in towns comprises the provincial
and town roads, the squares, streets, fountains, and public waters, the
promenades, and public works of general services supported by the said
towns or provinces.
All other property possessed by either is patrimonial, and shall be governed
by the provisions of this code, unless otherwise prescribed in special laws.
Section 2 of Act No. 82, entitled "The Municipal Code," is as follows:
(a) Pueblos incorporated under this Act shall be designated as municipalities
(municipios), and shall be known respectively by the names heretofore
adopted. Under such names they may sue and be sued, contract and be
contracted with, acquire and hold real and personal property for the general
interest of the municipality, and exercise all the powers hereinafter conferred
upon them.
(b) All property and property rights vested in any pueblo under its former
organization shall continue to be vested in the same municipality after its
incorporation under this Act.
By this last-cited administrative Act the rights of the old municipalities to acquire real
and personal property, in accordance with their former organization, are recognized,
and it is declared that the said property and rights shall continue to pertain to the
municipalities created in harmony with the provisions of the Municipal Code, on
account of such property being the patrimonial property of the municipalities.
Under these principles, perfectly in accord with both the old and the mother legislation
of this country, the municipality of Catbalogan ought to be considered as the owner of
the land in question, on account of the same having been awarded to it as its own,

denied that the presumption exists, in its favor, that it has been holding the land in its
character of owner, since the trial record exhibits no proof that any other parcel of
land, distinct from that in controversy, was awarded to the said municipality for the
erection thereon of its court-house, a court-house and the land on which to build it
being necessary and indispensable for the existence of the pueblo.
The title under which the municipality of Catbalogan holds and enjoys the said lot is
the same as that under which it is recognized as a pueblo and under which the
municipality is justified in its present occupancy of the territory where the town is
established with its streets, squares, and common lands (terreno comunal), a title
identical with that now held by the church, as a religious institution, to the land now
occupied by the temple that exists in the said pueblo. 1awph!l.net
At the time of the beginning of the foundation of the pueblo mentioned and of the
distribution or allotment of the lands among its first inhabitants, who, in accordance
with the Laws of the Indies, must have numbered at least thirty men with their
respective families, for the purpose of founding a pueblo, perhaps none of them was
provided with any particular title to accredit the fact that this or that parcel of land had
fallen to him in the allotment. Possibly the facts pertaining to the distribution of the
lands were entered in the record kept of the organization of the pueblo, if one such
was made, for it must be remembered that, in ancient times and up to the years
immediately preceding the beginning of the nineteenth century, fewer records were
made than in modern times, and, besides, the Laws of the Indies themselves
recommended that, in administrative proceeding, the institution of suits should be
avoided in so far as possible where verbal information and investigations could be had
to enable proper action to be taken.
Besides the reasons hereinabove noted, there is that of the continuous and constant
renovation of the personnel which composed the officials of a municipality in the
Philippines, for the pedaneo or gobernadorcillo, his tenientes, judges, and other
subordinates were first chosen and appointed annually, and after every two years;

26
and, though in the beginning the capitan pedaneo of the pueblo may have had in his

Notwithstanding the number of years during which the municipality of Catbalogan has

possession the record of the necessary concession and award of the land on which

been in possession of the lot, once it has been shown by unquestionable evidence

the court-house was built, and that of the pueblo of Catbalogan was constructed of

that the property was assigned to it as its own, in order that it might erect its court-

stone, it would in nowise be strange that, in spite of the zeal and diligence which may

house thereon, as it did do at the beginning of its foundation, and its possession of

have been exercised by his many successors, the said record or title should have

the said land not being by mere unlawful occupation, the municipality has no need to

disappeared or been destroyed in the case of Catbalogan, during the lapse of so long

rely upon the right of prescription, although, being entitled to acquire and possess

a time; indeed, it would be marvelous and extraordinary that such a document should

property in the character of owner, according to its organic law, it is not understood

exist, intrusted to the more or less diligent care of so many municipal officials who, at

why it could not acquire such right by prescription in accordance with law, it being, as

the most, occupied their offices but two years. It is certain, however, that the

it is, a juridical person susceptible of rights and duties.

successive court-houses which the said pueblo has had have occupied the land in
question without opposition on the part of anyone, or of the state, and including the

The present case has nothing to do with any contract made by the old municipality of

building which served as a court-house, together with the land on which it is built, as

Catbalogan, nor administrative acts or procedure of the applicant herein, but relates to

one of the properties which form the assets of the pueblo of Catbalogan, as they

its right of ownership in a parcel of land vested with the character of bien propio of its

should be classed, it is incontrovertible that the right of the said municipality therein

own, or patrimonial property; for which reason the doctrine established in the decision

must be respected, as the right of ownership is consecrated and sanctioned by the

rendered in the case of Aguado vs. The City of Manila (9 Phil. Rep., 513) is also

laws of every civilized county in the interest and for the benefit of society, public order,

inapplicable, inasmuch as the said municipality, in the exercise of the right of

and civilization itself.

ownership in its own property, has an independent personality of its own, recognized
by law, and does not act as a mere delegate of the central authority.

As has been shown in the preceding paragraphs, the land in litigation, which is a lot
occupied by the court-house, anciently termed the casa real, of the pueblo of

For the foregoing reasons, and considering that the municipality of Catbalogan is the

Catbalogan, pertains to the said pueblo, awarded to the same, not gratuitously, but on

owner of the land occupied by its court-house and that it is entitled to have the said

account of the necessity arising from its organization, and forms a part, as a

property registered in its name in the Court of Land Registration, it is proper, in our

patrimonial property, of its municipal assets, and therefore it is not comprised within

opinion, to affirm and we hereby affirm the judgment appealed from in its present

the common land (terreno comunal) which may have been granted to the said pueblo.

form.

Law 8, title 3, book 6 of the Recompilation of the Laws of the Indies, is not applicable
to the question at issue with respect to the said land or lot, nor are the provisions of
article 53 of the ordinances of good government, before cited, of February 26, 1768,
nor the subsequent royal decrees of February 28, August 1, 1883, and of January 17,
1885, relative to the legua or terreno comunal; and, consequently, the doctrine laid
down in the decision rendered in the case of The City of Manila vs. The Insular
Government (10 Phil. Rep., 327) is likewise inapplicable, for the reason that the land
in dispute is not that of a common, but of a building lot of which the pueblo of
Catbalogan had absolute need at the beginning of its organization for the erection
thereon of its court-house. This was duly proved at trial, without possible
contradiction.

Arellano, C.J., Moreland and Trent, JJ., concur.

G.R. No. L-7708

May 30, 1955

JOSE MONDANO, petitioner,

vs.
FERNANDO SILVOSA, Provincial Governor of Surigao, JOSE ARREZA and
OLIMPIO EPIS, Members of the Provincial Board, respondents.
D. Avila and C. H. Lozada for petitioner.
Olimpio R. Epis in his own behalf and for his co-respondents.

27
PADILLA, J.:

Constitution, all executive and administrative organizations are adjuncts of the

Executive Departments, the heads of the various executive departments are

The petitioner is the duly elected and qualified mayor of the municipality of Mainit,

assistants and agents of the Chief Executive."

province of Surigao. On 27 February 1954 Consolacion Vda. de Mosende filed a

sworn complaint with the Presidential Complaints and Action Committee accusing him

The executive departments of the Government of the Philippines created and

of (1) rape committed on her daughter Caridad Mosende; and (2) concubinage for

organized before the approval of the Constitution continued to exist as "authorized by

cohabiting with her daughter in a place other than the conjugal dwelling. On 6 March

law until the Congress shall provide otherwise."1 Section 10, paragraph 1, Article VII,

the Assistant Executive Secretary indorsed the complaint to the respondent provincial

of the Constitution provides: "The President shall have control of all the executive

governor for immediate investigation, appropriate action and report. On 10 April the

departments, bureaus, or offices, exercise general supervision over all local

petitioner appeared before the provincial governor in obedience to his summons and

governments as may be provided by law, and take care that the laws be faithfully

was served with a copy of the complaint filed by the provincial governor with provincial

executed." Under this constitutional provision the President has been invested with the

board. On the same day, the provincial governor issued Administrative Order No. 8

power of control of all the executive departments, bureaus, or offices, but not of all

suspending the petitioner from office. Thereafter, the Provincial Board proceeded to

local governments over which he has been granted only the power of general

hear the charges preferred against the petitioner over his objection.

supervision as may be provided by law. The Department head as agent of the

President has direct control and supervision over all bureaus and offices under his

The petitioner prays for a writ of prohibition with preliminary injunction to enjoin the

jurisdiction as provided for in section 79 (c) of the Revised Administrative Code, but

respondents from further proceeding with the hearing of the administrative case

he does not have the same control of local governments as that exercised by him over

against him and for a declaration that the order of suspension issued by the

bureaus and offices under his jurisdiction. Likewise, his authority to order the

respondent provincial governor is illegal and without legal effect.

investigation of any act or conduct of any person in the service of any bureau or office
under his department is confined to bureaus or offices under his jurisdiction and does

On 4 May 1954 the writ of preliminary injunction prayed for was issued after filing and

not extend to local governments over which, as already stated, the President

approval of a bond for P500.

exercises only general supervision as may be provided by law. If the provisions of

The answer of the respondents admits the facts alleged in the petition except those
that are inferences and conclusions of law and invokes the provisions of section 79
(c)of the Revised Administrative Code which clothes the department head with "direct
control, direction, and supervision over all bureaus and offices under his jurisdiction . .
." and to that end "may order the investigation of any act or conduct of any person in
the service of any bureau or office under his Department and in connection therewith
may appoint a committee or designate an official or person who shall conduct such
investigations; . . ."and the rule in the case of Villena vs. Secretary of Interior, 67 Phil.
452, which upheld "the power of the Secretary of Interior to conduct at its own
initiative investigation of charges against local elective municipal officials and to
suspend them preventively," on the board proposition "that under the presidential type
of government which we have adopted and considering the departmental organization
established and continued in force by paragraph 1, section 11, Article VII, of our

section 79 (c) of the Revised Administrative Code are to be construed as conferring

upon the corresponding department head direct control, direction, and supervision
over all local governments and that for the reason he may order the investigation of an
official of a local government for malfeasance in office, such interpretation would be
contrary to the provisions of paragraph 1, section 10, Article VII, of the Constitution. If
"general supervision over all local governments" is to be construedas the same power
granted to the Department Head in section 79 (c) of the Revised Administrative Code,
then there would no longer be a distinction or difference between the power of control
and that of supervision. In administrative law supervision means overseeing or the
power or authority of an officer to see that subordinate officers perform their duties. If
the latter fail or neglect to fulfill them the former may take such action or step as
prescribed by law to make them perform their duties. Control, on the other hand,
means the power of an officer to alter or modify or nullify or set aside what a
subordinate officer had done in the performance of his duties and to substitute the

28
judgment of the former for that of the latter. Such is the import of the provisions of

concubinage have nothing to do with the performance of his duties as mayor nor do

section 79 (c) of the Revised Administrative Code and 37 of Act No. 4007. The

they constitute or involve" neglect of duty, oppression, corruption or any other form of

Congress has expressly and specifically lodged the provincial supervision over

maladministration of office." True, they may involve moral turpitude, but before the

municipal officials in the provincial governor who is authorized to "receive and

provincial governor and board may act and proceed in accordance with the provisions

investigate complaints made under oath against municipal officers for neglect of duty,

of the Revised Administrative Code referred to, a conviction by final judgment must

oppression, corruption or other form of maladministration of office, and conviction by

precede the filing by the provincial governor of charges and trial by the provincial

final judgment of any crime involving moral turpitude."2 And if the charges are serious,

board. Even the provincial fiscal cannot file an information for rape without a sworn

"he shall submit written charges touching the matter to the provincial board, furnishing

complaint of the offended party who is 28 years of age and the crime of concubinage

a copy of such charges to the accused either personally or by registered mail, and he

cannot be prosecuted but upon sworn complaint of the offended spouse.4 The

may in such case suspend the officer (not being the municipal treasurer) pending

charges preferred against the petitioner, municipal mayor of Mainit, province of

action by the board, if in his opinion the charge be one affecting the official integrity of

Surigao, not being those or any of those specified in section 2188 of the Revised

the officer in question." Section 86 of the Revised Administrative Code adds nothing

Administrative Code, the investigation of such charges by the provincial board is

to the power of supervision to be exercised by the Department Head over the

unauthorized and illegal. The suspension of the petitioner as mayor of the municipality

administration of . . . municipalities . . .. If it be construed that it does and such

of Mainit is, consequently, unlawful and without authority of law.

additional power is the same authority as that vested in the Department Head by
section 79 (c) of the Revised Administrative Code, then such additional power must

The writ of prohibition prayed for is granted, without pronouncement as to costs.

be deemed to have been abrogated by section 10 (1), Article VII, of the Constitution.
Pablo, Acting C.J., Bengzon, Montemayor, Reyes, A., Bautista Angelo, Labrador,
In Lacson vs. Roque, 49 Off. Gaz. 93, this Court held that the power of the President

Concepcion and Reyes, J.B.L., JJ., concur.

to remove officials from office as provided for in section 64 (b) of the Revised
Administrative Code must be done "conformably to law;" and only for disloyalty to the
Republic of the Philippines he "may at any time remove a person from any position of
trust or authority under the Government of the (Philippine Islands) Philippines." Again,
this power of removal must be exercised conformably to law.
In the indorsement to the provincial governor the Assistant Executive Secretary
requested immediate investigation, appropriate action and report on the complaint

G.R. No. 203883, November 10, 2015

HOMEOWNERS ASSOCIATION OF TALAYAN VILLAGE INC., Petitioner, v. J.M.
TUASON & CO., INC., TALAYAN HOLDINGS, INC., QUEZON CITY MAYOR AND
EQUITABLE BANKING CORPORATION (NOW BANCO DE ORO BANKING
CORPORATION), Respondents.
G.R. NO. 203930

indorsed to him, and called his attention to section 2193 of the Revised Administrative
Code which provides for the institution of judicial proceedings by the provincial fiscal
upon direction of the provincial governor. If the indorsement of the Assistant Executive
Secretary be taken as a designation of the provincial governor to investigate the
petitioner, then he would only be acting as agent of the Executive, but the
investigation to be conducted by him would not be that which is provided for in
sections 2188, 2189 and 2190 of the Revised Administrative Code. The charges
preferred against the respondent are not malfeasances or any of those enumerated or
specified in section 2188 of the Revised Administrative Code, because rape and

J.M. TUASON & CO., AND TALAYAN HOLDINGS,

INC., Petitioner, v. HOMEOWNERS ASSOCIATION OF TALAYAN VILLAGE, INC.
AND QUEZON CITY MAYOR, Respondent.
DECISION
PEREZ, J.:

29
Assailed in these Rule 45 petitions for review on certiorari is the Decision1 dated 5
March 2012 rendered by the Eighth Division of the Court of Appeals (CA) in CA-G.R.
CV No. 80351, the dispositive portion of which states:chanRoblesvirtualLawlibrary
WHEREFORE, in view of the foregoing premises, the assailed Decision of the
Regional Trial Court, Branch 77, Quezon City in Civil Case No. Q-98-35548 is
AFFIRMED with MODIFICATION that x x x J.M. Tuazon & Company, Inc. and Talayan
Holdings Corporation, having been adjudged herein as owners in bad faith, are
hereby held accountable to x x x Homeowners Association of Talayan [Village], Inc.
and the Local Government of Quezon City for the payment of the value of the facilities
which were built on Block 494 including the payment of damages in accordance with
the provisions of Article 447 of the New Civil Code. However, these shall be
determined in a separate proceeding specially commenced for the purpose of
determining the actual value of the properties therein built as well as the extent and
amount of damages and expenses these entities are entitled to receive from [J.M.
Tuazon & Company, Inc. and Talayan Holdings
Corporation].2ChanRoblesVirtualawlibrary
cralawlawlibrary
The Facts
The subject matter of the instant suit is a 22,012 square meter parcel of land
denominated as Block 494 of the Talayan Village which forms part of the Sta. Mesa
Heights Subdivision in Quezon City. Block 494 was previously registered under
Transfer Certificate of Title (TCT) No. RT-110168 (29132)3 in the name of J.M. Tuason
Co., Inc. (J.M. Tuason) which, thru its representative, Gregorio Araneta, Inc.
(Araneta), sold subdivision lots in the 1950's to the general public, in accordance with
Subdivision Plan PSD-52256. Approved in an Order dated 22 April 1958 issued by
Branch 4 of the then Court of First Instance (CFI) of Rizal in LRC (GLRO) Rec. No.
7681, Subdivision Plan PSD-52256 designated Block 503 as the park/open space for
the subdivision.4 In the subdivision plan approved by the National Planning
Commission and the Quezon City Council, however, Block 494 remained undivided
even as the lots surrounding the same were divided into home lots5 which were sold
to interested buyers. In an undated certification issued by Araneta, moreover, Block
494 was listed as one of the open spaces for the Sta. Mesa Heights Subdivision.6
On 7 June 1962, the Quezon City Council passed Ordinance No. 5095, series of
1962, directing all subdivision owners to turn over to the city government the open
spaces in city subdivisions7 which were required to be equivalent to 6% of the total
land area being developed.8 Ostensibly in compliance with said ordinance, J.M.
Tuason, through Araneta, executed in favor of the city government a Deed of Donation

and Acceptance (Deed of Donation) over its subdivisions' open spaces which
included, among others, Block 494.9 Accompanied by a Certification issued by
Araneta authorizing one Luis Ma. Araneta to donate the open spaces listed, the Deed
of Donation which had yet to be notarized was submitted to the city government thru
Araneta's letter dated 16 April 1969.10 Although the Deed of Donation was, however,
referred for comment and recommendation to the City Engineer in an Indorsement
dated 21 April 1969 issued by the Office of the Quezon City. Mayor,11 no record or
document exists to show that the donation was, indeed, accepted.
There is no dispute regarding the fact that Block 494 became the site of the Talayan
Village Barangay Hall, a multi-purpose hall, basketball, tennis and football courts and
a children's playground which were developed at the expense of Homeowners
Association of Talayan Village, Inc. (HATVI) and the Quezon City government. For
failure of J.M. Tuason to pay its realty taxes, however, Block 494 was scheduled for a
tax delinquency sale by the city government sometime in 1996. In letters dated 20 and
29 May 1996 addressed to the Quezon City Sangguniang Panglungsod and then
Mayor Ishmael Mathay (Mayor Mathay), the Barangay Captain and the homeowners
of Talayan Village made known their opposition/objection to the impending
sale.12 Aside from the fact that no replies to said letters were received, the tax
delinquency sale pushed through on 26 June 1996 and Block "494 was sold to J.M.
Tuason, the highest bidder, for the aggregate sum of Php641,651.93, representing the
total amount of the unpaid taxes and penalties due thereon.13
On 9 July 1996, J.M. Tuason executed a Unilateral Deed of Absolute Sale transferring
Block 494 in favor of respondent Talayan Holdings, Inc. (THI) for a stated
consideration of Php33,018,000.00.14 Having caused TCT No 110168 (29132) to be
cancelled with the issuance of TCT No. N-160418 in its favor,15 THI subdivided Block
494 into four lots which were registered in its name under TCT Nos. N-192112, N192113, N-192114 and N-192115.16 On 22 October 1996, the Manila Bulletin
published in its Classified Ads Section an advertisement offering the sale of a 22,000
square meters property in Talayan Village for the price of Php25,000.00 per square
meter. Inquiring from the designated broker, Eastcoast Properties & Holdings Corp.
(EPHC), one Dr. Rosario Agustin received a letter dated 22 October
199617 confirming, among other matters, that the land being sold was Block 494 and
that the same was previously purchased in a delinquency sale by J.M. Tuason.18 On
17 January 1997, THI eventually obtained a loan in the sum of Phpl50,000,000.00
from Equitable Banking Corporation (Equitable Bank), secured by real estate
mortgages over the four lots into which Block 494 had been subdivided.19
On 15 September 1998, HATVI filed against J.M. Tuason, THI, Equitable Bank and
Mayor Mathay the complaint which was docketed as Civil Case No. Q-98-35548

30
before the Regional Trial Court (RTQ, Branch 77, Quezon City and styled one for
annulment of sale, cancellation of titles and mortgage, acceptance of donation and
damages. Contending that it had no knowledge of the delinquency sale and that its
members purchased their respective home lots on the belief that Block 494 was an
open space for use as in fact it was used - as a public park, HATVI argued that the
subject parcel is beyond the commerce of man.20 J.M. Tuason and THI moved for the
dismissal of the complaint on the ground, among others, that the donation was not
accepted and that, as a consequence, Block 494 remained a private property.21 With
Equitable Bank likewise filing a motion to dismiss on the ground that it was a
mortgagee in good faith,22 Mayor Mathay also filed a. motion to drop him as defendant
in the case.23 The same motions were, however, denied for lack of merit in the RTC's
Order dated 30 March 1999,24 prompting said defendants to file their separate
answers.
Reiterating the arguments raised in their motion to dismiss, J.M. Tuason and THI
maintained that no donation was perfected and that, if at all, the right under said
contract pertained to the Quezon City government. Invoking the CFI's ruling in LRC
(GLRO) Rec. No. 7681, they insisted that it was Block 503 and not Block 494 which
was the designated open space for the Talayan Village. With Act No. 496 or the Land
Registration Act then not requiring a minimum area for open spaces, it was argued
that J.M. Tuason had more than amply complied with the Quezon City ordinances
requiring the same when it segregated a total of 275,770.79 square meters out of the
aggregate 4,596,197.90 square meters it developed.25 Asserting that J.M. Tuason
retained and never lost ownership over Block 494, on the other hand, Equitable Bank
called attention to the fact that, having purchased the land at a tax delinquency sale,
the former acquired the same free from all liens and encumbrances, whether
annotated or not on the property's title.26 Admitting that the donation was not
accepted, Mayor Mathay, in turn, alleged that he could not confirm the expenditure of
city funds on the amenities built on Block 494.27
The issues joined, the RTC proceeded to conduct the pre-trial conference where the
parties stipulated on: (a) Subdivision Plan PSD-52256 being the subdivision plan for
Talayan Village; (b) the identity of Block 494; (c) the non-acceptance of the donation
by the Quezon City Government; and (d) the excess of 48,679.040 square meters in
the designated open spaces for the Sta. Mesa Heights Subdivision.28 Subsequent to
the trial of the case on the merits at which the parties adduced evidence in support of
their respective positions, the RTC went on to render its 24 June 2002 Decision
finding, among other matters, that Block 494 is not an open space and that the Deed
of Donation J.M. Tuason executed over the same was null and void due to nonacceptance and non-notarization. Further concluding that Equitable Bank was a

mortgagee in good faith,29 the RTC disposed of the case in the following
wise:chanRoblesvirtualLawlibrary
WHEREFORE, premises considered, the complaint is hereby dismissed. The
counterclaims of the defendants are likewise dismissed. The cross-claim of Equitable
Banking Corporation is also dismissed.
No pronouncements as to costs.30cralawlawlibrary
Aggrieved, HATVI elevated the foregoing decision on appeal before the Court of
Appeals under docket of CA-G.R. 80351. On 5 March 2012, the CA's then Eight
Division rendered the herein assailed Decision, upon the following findings and
conclusions: (a) as PD No. 1216 was not yet in existence at the time Talayan Village
was developed, the applicable law is the Land Registration Act, the dearth of
minimum requirement for open spaces of which was filled in by ordinances passed by
the Quezon City government which had been complied with by J.M. Tuason; (b) the
Deed of Donation executed by J.M. Tuason had no legal effect since it was not
accepted and effected in accordance with law; (c) aside from not being designated as
an open space, the tax delinquency sale conducted over Block 494 indicated that it
remained a private property; (d) rather than estoppel being applicable, the proven
facts of the case show only accrual of a cause of action for damages in favor of
HATVI's members; and (e) Equitable Bank is a mortgagee in good faith because J.M.
Tuason purchased Block 494 at a tax delinquency sale.31
In modification of the RTC's decision, however, the CA ruled that J.M. Tuason and THI
were in bad faith for allowing the amenities to be built on Block 494 and are, therefore,
accountable to HATVI and the Quezon City local government for damages to be
determined in separate proceedings commenced to ascertain the extent thereof.32The
motions for reconsideration of the assailed Decision filed by J.M. Tuason and THI as
well as HATVI were respectively denied for lack of merit in the CA's Resolution33 dated
9 October 2012. Dissatisfied, said parties filed these petitions which were ordered
consolidated in the Court's Resolution dated 1 July 2013.34
The Issues
HATVI's petition for review in G.R. No. 203883 seeks the reversal of the assailed CA
decision on the following grounds:chanRoblesvirtualLawlibrary
I.
THE COURT OF APPEALS ERRED IN RULING THAT THE CORE ISSUE IS THE
APPLICABLE LAW AT THE TIME OF THE DEVELOPMENT OF TALAYAN

31
VILLAGE AND NOT WHETHER BLOCK 494 WAS RESERVED BY J.M. TUAZON
AS AN OPEN SPACE.
II.
THE COURT OF APPEALS ERRED IN CONCLUDING THAT ESTOPPEL DOES
NOT APPLY AGAINST J.M.TUAZON AND THI.
III.
THE COURT OF APPEALS ERRED IN CONCLUDING THAT BLOCK 494
REMAINED A PRIVATE PROPERTY BECAUSE OF QUEZON CITY'S FAILURE TO
ACCEPT THE DEVELOPER'S DONATION.
IV.
THE COURT OF APPEALS ERRED IN CONCLUDING THAT BLOCK 494
REMAINED A PRIVATE PROPERTY BECAUSE OF THE TAX DELINQUENCY
SALE CONDUCTED THEREON BY QUEZON CITY.
V.
THE COURT OF APPEALS ERRED IN CONCLUDING THAT EQUITABLE BANK
(NOW BDO) IS A MORTGAGEE IN GOOD FAITH.35
On the other hand, J.M. Tuason and THI urge the grant of their petition in G.R. No.
203930 on the following grounds:chanRoblesvirtualLawlibrary
A.
THE COURT OF APPEALS ERRED IN RULING THAT J.M. TUAZON AND THI ARE
OWNERS IN BAD FAITH AND ARE THUS LIABLE FOR DAMAGES TO HATVI
AND THE QUEZON CITY LOCAL GOVERNMENT.
B.
THE COURT OF APPEALS ERRED IN DECIDING A MATTER WHICH WAS
NEVER RAISED BY THE PARTIES ON APPEAL.36cralawlawlibrary
The Court's Ruling
In G.R. No. 203883, HATVI insists that the case was never about the applicable law at

the time Talayan Village was developed but, rather, whether Block 494 is an open
space on account of its reservation as such and the execution of a Deed of Donation
over the same by J.M. Tuason which allowed its exclusive use as a park/open space
over the years. Invoking this Court's ruling in White Plains Association, Inc. v.
CA37 and Anonuevo v. CA,38 HATVI argues that J.M. Tuason had represented to its
buyers that Block 494 is an open space and should therefore be considered estopped
from taking a stand contrary to said representation. Aside from the fact that the nonacceptance of the donation supposedly did not alter the nature of the subject land,
HATVI posits that the rights of its members should not be prejudiced by the Quezon
City government's mistake in conducting a tax delinquency sale over the same. For
failing to exercise extraordinary diligence before approving the mortgage THI
executed over the four lots into which Block 494 had been subdivided, it is argued that
Equitable Bank should have been declared a mortgagee in bad faith.
The fact, however, that the applicable laws at the time of the development of Talayan
Village was raised a quo impels us to rule that the CA did not err in considering the
same in rendering the assailed decision. Granted that the same is not the pivotal
issue in the case, the application of said laws is nevertheless germane to the
determination of whether or not Block 404 remained a private property in the face of
HATVI's claim to the contrary on the strength of P.D. 1216. Passed on 14 October
1977, however, said law was correctly found by the CA to be inapplicable to the case
at bench since Talayan Village was developed in the 1950s. Considering that P.D.
1216 does not provide for the retroactive application of its provisions,39 moreover, the
CA cannot be faulted for ruling that the applicable law is the Land Registration Act
whose lack of requirement for' the reservation of open spaces in subdivisions was
filled in by the requirement for the same in the ordinances passed by the Quezon City
government. Having already designated sufficient open spaces for the Sta. Mesa
Heights subdivision to an excess of 48,679.040 square meters, J.M. Tuason was
admitted by the parties to have complied with said ordinances by executing the Deed
of Donation over Block 494 in favor of the Quezon City government.
Considered in the light of the foregoing factual antecedents, the next question that
pleads for the Court's resolution is whether or not Block 494 was effectively removed
from the commerce of men as claimed by HATVI. In resolving this issue in the
negative, uppermost in the mind of the Court is the parties' admission during the pretrial stage that the development of Talayan Village was pursuant to Subdivision Plan
PSD-52256 which was approved by the CFI of Rizal in LRC (GLRO) Rec. No. 7681.
Rather than Block 494, said subdivision plan significantly designated Block 503 as the
park/open space for said subdivision. That J.M., Tuason donated Block 494 to the
Quezon City government in compliance with the latter's ordinances also did not
operate to divest the property of its private character. In addition to the fact that the

32
donation was not embodied in a public document as provided under Article 74940 of
the Civil Code of the Philippines, the record is entirely bereft of showing that said
donation was duly accepted in accordance with Article 74541 of the same Code. The
purpose of the formal requirement for acceptance of a donation is to ensure that such
acceptance is duly communicated to the donor.42 Since the donation is considered
perfected only upon the moment the donor is apprised of such acceptance, it has
been ruled that lack of such acceptance, as expressly provided under the law, renders
the donation null and void.43
Given that Block 494 has been used as an open space over the years, however,
HATVI argues that J.M. Tuason and THI should be considered estopped from
claiming the contrary on the strength of this Court's rulings in the White Plains
Association, Inc. and the Anonuevo cases. Aside from the fact, however, that estoppel
is an equitable principle rooted on natural justice44 which can be invoked only in highly
exceptional and justifiable cases,45 HATVI loses sight of the fact that, on the third time
that the case was presented for its review, this Court ruled in White Plains Association
v. CAA46 that, absent a deed of donation or legitimate acquisition thereof by the
government, the area claimed to have been reserved for public use and/or as an open
space still pertained to the subdivision developer. Unlike in the Anonuevo case where
there was no record of an. approved subdivision plan, it is moreover clear that the
parties in this case are in agreement that Talayan Village was covered by Subdivision
Plan PSD-52256 which identified Block 503 as the required open space. In contrast.to
the subdivision developer in said latter case who appears not to have segregated any
other lot for the open space required under the law, furthermore, J.M. Tuason had
already done so to an excess 48,679.040 square meters.
That Block 494 was the subject of the tax delinquency sale conducted by the Quezon
City government further serves to confirm the private character of said property. While
it is true that said tax delinquency sale was conducted in June 1996 or when P.D.
1216 was already in effect, HATVI still cannot validly invoke Section 2 of said law
which, in amending Section 31 of P.D. No. 957, in part, provides that "[t]hese areas
reserved for parks, playgrounds and recreational use shall be non-alienable public
lands, and non-buildable." Unlike Block 503 which was specifically identified as such
under Subdivision Plan PSD-52256, there was, for starters, no operative reservation
of Block 494 as the designated open space for Talayan Village, Although there is no
dispute regarding the fact that J.M. Tuason later endeavored to donate Block 494 to
the Quezon City government, the transfer was not efficacious not only for lack of
notarization of the document embodying the same but, more importantly, for failure of
the donee to accept the donation. Not having been thus segregated and/or
transferred, it necessarily follows that Block 494 was not removed from the commerce
of man.

Since the Block 494 remained in private ownership, HATVI has neither factual nor
legal basis to question the sale thereof by the Quezon City government for tax
delinquency. As highest bidder at the tax delinquency sale, J.M. Tuason was acting
well within its rights when it sold the property to THI which had the right to rely on
what appears on the title covering the same. After the expiration of the redemption
period, after all, a property acquired pursuant to a tax delinquency sale, like that
purchased from a public auction sale,47 passes to the purchaser, free from any
encumbrance or third party claim48 not inscribed on the certificate of title. Also, having
purchased the property from J.M. Tuason, THI was likewise acting well-. within its
rights to cause the subdivision thereof, offer the same to the general public and to
utilize the same as security for the loan it obtained from Equitable Bank. Given that
the property was purchased at a tax delinquency sale, on the other hand, Equitable
Bank cannot be considered in bad faith when it primarily relied on what appeared on
the title over the property.
The rule is long and well-settled that every person dealing with registered land has a
right to rely on the face of the title when determining its ownership.49 A mortgagee has
a right to rely in good faith on the certificate of title of the mortgagor of the property
given as security and has no obligation to undertake further investigation in the
absence of any sign that might arouse suspicion.50 Since their business is imbued
with public interest, banks are, concededly, are expected to be more cautious than
ordinary individuals in dealing with lands, even registered ones.51 Before approving a
loan, it has become the practice of banks and other financial institutions to conduct an
ocular inspection of the property offered to be mortgaged and verify the genuineness
of the title to determine the real owners thereof.52 The record shows that, despite
being confronted with THI's clean titles, Equitable Bank nevertheless caused an
ocular inspection of Block 494. Considering the validity of the mortgage THI executed
in its favor, however, there is no need to resolve the issue of whether or not Equitable
Bank was in good faith in proceeding with the mortgage despite the visible
improvements on the property.53
In G.R. No. 203930, J.M. Tuason and THI, in turn, take exception to the CA's finding
that, as owners of the land, they were in bad faith for not opposing the construction of
the structures and amenities thereon pursuant to Articles 45454 and 44755 of the Civil
Code. Aside from the fact, however, that THI appears to have purchased the property
long after said improvements were built on Block 494, the supposed bad faith of J.M.
Tuason and THI is a matter that was neither litigated before the RTC nor raised as
error before the CA. Necessitated by basic considerations of due process,56 the rule is
settled that, unless it affects the jurisdiction over the subject matter or the validity of
the appealed judgment, no error will be considered unless assigned as such or is

33
closely related to or dependent on an assigned error and properly argued in the
brief.57 Courts are, moreover, called upon to resolve actual cases and controversies,
not to render advisory opinions58 which are beyond the permissible scope of judicial
power.59 The CA contravened these rule when, simultaneous to its determination of
bad faith on the part of J.M. Tuason and THI, it ruled that the resultant damages will
have to be determined in a sparate proceeding specially commenced for the purpose.
WHEREFORE, the Decision dated 5 March 2012 and Resolution dated 9 October
2012 of the Court of Appeals are AFFIRMED insofar as they affirm the Regional Trial
Court of Quezon City, Branch 77, Decision dated 24 June 2002, finding that:
a.

Block 494 is not an open space or a park;

b.

The Deed of Donation executed by J.M. Tuason Co., Inc. in favor of the
Quezon City government is void for lack of acceptance by the done and for
not having been made in a public instrument;

c.

J.M. Tuason Co., Inc. was able to redeem the subject property;

d.

The mortgage executed by Talayan-Holdings, Inc. in favor of Equitable

Banking Corporation is valid; and

e.

Equitable Banking Corporation is a mortgagee in good faith.

but the same are REVERSED and SET ASIDE in part insofar as the Court of Appeals
declared that (1) J.M. Tuason Co., Inc. and Talayan Holdings, Inc. are owners in bad
faith, and (2) the mortgage rights of Banco de Oro over Block 494 are subject to the
rights of Homeowners Association of Talayan Village, Inc. and the Quezon City
government to damages and to be reimbursed by J.M. Tuason Co., Inc. and Talayan
Holdings, Inc.
Accordingly, the Petition for Review on Certiorari under Rule 45 of the Rules of Court
filed by J.M. Tuason Co., Inc. and Talayan Holdings, Inc. in G.R. No. 203930 seeking
to reverse, annul and set aside the Decision dated 5 March 2012 issued by the Court
of Appeals in CA-GR CV No. 80351 as well as the Petition-in-Intervention filed by
Banco de Oro in G.R. No. 203930, are PARTLY GRANTED, and the Motion for
Reconsideration dated 25 March 2013 of Homeowners Association of Talayan Village,
Inc. of the Court's Resolution dated 28 January 2013 is DENIED for lack of merit.
No pronouncement as to costs.

VILLAS V CITY OF MANILA

REPUBLIC OF THE PHILIPPINES, represented by HON. HEHERSON T.
ALVAREZ, in his capacity as Secretary of the DEPARTMENT OF
ENVIRONMENT AND NATURAL RESOURCES (DENR), CLARENCE L.
BAGUILAT, in his capacity as the Regional Executive Director of DENRRegion XI and ENGR. BIENVENIDO L. LIPAYON, in his capacity as the
Regional Director of the DENR-ENVIRONMENTAL MANAGEMENT
BUREAU (DENR-EMB), Region XI, petitioners, vs. THE CITY OF DAVAO,
represented by BENJAMIN C. DE GUZMAN, City Mayor, respondent.
DECISION
YNARES-SANTIAGO, J.:
Before us is a petition for review[1] on certiorari assailing the decision[2] dated
May 28, 2001 of the Regional Trial Court of Davao City, Branch 33, which granted the
writ of mandamus and injunction in favor of respondent, the City of Davao, and
against petitioner, the Republic, represented by the Department of Environment and
Natural Resources (DENR). The trial court also directed petitioner to issue a
Certificate of Non-Coverage in favor of respondent.
The antecedent facts of the case are as follows:
On August 11, 2000, respondent filed an application for a Certificate of NonCoverage (CNC) for its proposed project, the Davao City Artica Sports Dome, with the
Environmental Management Bureau (EMB), Region XI. Attached to the application
were the required documents for its issuance, namely, a) detailed location map of the
project site; b) brief project description; and c) a certification from the City Planning
and Development Office that the project is not located in an environmentally critical
area (ECA). The EMB Region XI denied the application after finding that the proposed
project was within an environmentally critical area and ruled that, pursuant to Section
2, Presidential Decree No. 1586, otherwise known as the Environmental Impact
Statement System, in relation to Section 4 of Presidential Decree No, 1151, also
known as the Philippine Environment Policy, the City of Davao must undergo the
environmental impact assessment (EIA) process to secure an Environmental
Compliance Certificate (ECC), before it can proceed with the construction of its
project.
Believing that it was entitled to a Certificate of Non-Coverage, respondent filed a
petition for mandamus and injunction with the Regional Trial Court of Davao, docketed

34
as Civil Case No. 28,133-2000. It alleged that its proposed project was neither an
environmentally critical project nor within an environmentally critical area; thus it was
outside the scope of the EIS system. Hence, it was the ministerial duty of the DENR,
through the EMB-Region XI, to issue a CNC in favor of respondent upon submission
of the required documents.
The Regional Trial Court rendered judgment in favor of respondent, the
dispositive portion of which reads as follows:
WHEREFORE, finding the petition to be meritorious, judgment granting the writ of
mandamus and injunction is hereby rendered in favor of the petitioner City of Davao
and against respondents Department of Environment and Natural Resources and the
other respondents by:
1) directing the respondents to issue in favor of the petitioner City of Davao a
Certificate of Non-Coverage, pursuant to Presidential Decree No. 1586 and related
laws, in connection with the construction by the City of Davao of the Artica Sports
Dome;
2) making the preliminary injunction issued on December 12, 2000 permanent.
Costs de oficio.
SO ORDERED.[3]
The trial court ratiocinated that there is nothing in PD 1586, in relation to PD
1151 and Letter of Instruction No. 1179 (prescribing guidelines for compliance with
the EIA system), which requires local government units (LGUs) to comply with the EIS
law. Only agencies and instrumentalities of the national government, including
government owned or controlled corporations, as well as private corporations, firms
and entities are mandated to go through the EIA process for their proposed projects
which have significant effect on the quality of the environment. A local government
unit, not being an agency or instrumentality of the National Government, is deemed
excluded under the principle of expressio unius est exclusio alterius.
The trial court also declared, based on the certifications of the DENRCommunity Environment and Natural Resources Office (CENRO)-West, and the data
gathered from the Philippine Institute of Volcanology and Seismology (PHIVOLCS),
that the site for the Artica Sports Dome was not within an environmentally critical
area. Neither was the project an environmentally critical one. It therefore becomes
mandatory for the DENR, through the EMB Region XI, to approve respondents
application for CNC after it has satisfied all the requirements for its

issuance. Accordingly, petitioner can be compelled by a writ of mandamus to issue

the CNC, if it refuses to do so.
Petitioner filed a motion for reconsideration, however, the same was
denied. Hence, the instant petition for review.
With the supervening change of administration, respondent, in lieu of a
comment, filed a manifestation expressing its agreement with petitioner that, indeed, it
needs to secure an ECC for its proposed project. It thus rendered the instant petition
moot and academic. However, for the guidance of the implementors of the EIS law
and pursuant to our symbolic function to educate the bench and bar,[4] we are inclined
to address the issue raised in this petition.
Section 15 of Republic Act 7160,[5] otherwise known as the Local Government
Code, defines a local government unit as a body politic and corporate endowed with
powers to be exercised by it in conformity with law. As such, it performs dual
functions, governmental and proprietary. Governmental functions are those that
concern the health, safety and the advancement of the public good or welfare as
affecting the public generally.[6] Proprietary functions are those that seek to obtain
special corporate benefits or earn pecuniary profit and intended for private advantage
and benefit.[7] When exercising governmental powers and performing governmental
duties, an LGU is an agency of the national government.[8] When engaged in
corporate activities, it acts as an agent of the community in the administration of local
affairs.[9]
Found in Section 16 of the Local Government Code is the duty of the LGUs to
promote the peoples right to a balanced ecology. [10] Pursuant to this, an LGU, like the
City of Davao, can not claim exemption from the coverage of PD 1586. As a body
politic endowed with governmental functions, an LGU has the duty to ensure the
quality of the environment, which is the very same objective of PD 1586.
Further, it is a rule of statutory construction that every part of a statute must be
interpreted with reference to the context, i.e., that every part must be considered with
other parts, and kept subservient to the general intent of the enactment. [11] The trial
court, in declaring local government units as exempt from the coverage of the EIS law,
failed to relate Section 2 of PD 1586[12] to the following provisions of the same law:
WHEREAS, the pursuit of a comprehensive and integrated environmental protection
program necessitates the establishment and institutionalization of a system whereby
the exigencies of socio-economic undertakings can be reconciled with the
requirements of environmental quality; x x x.

35
Section 1. Policy. It is hereby declared the policy of the State to attain and maintain a
rational and orderly balance between socio-economic growth and environmental
protection.
xxxxxxxxx
Section 4. Presidential Proclamation of Environmentally Critical Areas and
Projects. The President of the Philippines may, on his own initiative or upon
recommendation of the National Environmental Protection Council, by proclamation
declare certain projects, undertakings or areas in the country as environmentally
critical. No person, partnership or corporation shall undertake or operate any such
declared environmentally critical project or area without first securing an
Environmental Compliance Certificate issued by the President or his duly authorized
representative. For the proper management of said critical project or area, the
President may by his proclamation reorganize such government offices, agencies,
institutions, corporations or instrumentalities including the realignment of government
personnel, and their specific functions and responsibilities.
Section 4 of PD 1586 clearly states that no person, partnership or corporation
shall undertake or operate any such declared environmentally critical project or area
without first securing an Environmental Compliance Certificate issued by the
President or his duly authorized representative.[13] The Civil Code defines a person as
either natural or juridical. The state and its political subdivisions, i.e., the local
government units[14] are juridical persons.[15] Undoubtedly therefore, local government
units are not excluded from the coverage of PD 1586.
Lastly, very clear in Section 1 of PD 1586 that said law intends to implement the
policy of the state to achieve a balance between socio-economic development and
environmental protection, which are the twin goals of sustainable development. The
above-quoted first paragraph of the Whereas clause stresses that this can only be
possible
if
we
adopt
a
comprehensive
and integrated environmental protection program where all the sectors of the
community are involved, i.e., the government and the private sectors. The local
government units, as part of the machinery of the government, cannot therefore be
deemed as outside the scope of the EIS system.[16]
The foregoing arguments, however, presuppose that a project, for which an
Environmental Compliance Certificate is necessary, is environmentally critical or
within an environmentally critical area. In the case at bar, respondent has sufficiently
shown that the Artica Sports Dome will not have a significant negative environmental
impact because it is not an environmentally critical project and it is not located in an

environmentally critical area. In support of this contention, respondent submitted the

following:
1. Certification from the City Planning and Development Office that the project is not
located in an environmentally critical area;
2. Certification from the Community Environment and Natural Resources Office
(CENRO-West) that the project area is within the 18-30% slope, is outside the scope
of the NIPAS (R.A. 7586), and not within a declared watershed area; and
3. Certification from PHILVOCS that the project site is thirty-seven (37) kilometers
southeast of the southernmost extension of the Davao River Fault and forty-five (45)
kilometers west of the Eastern Mindanao Fault; and is outside the required minimum
buffer zone of five (5) meters from a fault zone.
The trial court, after a consideration of the evidence, found that the Artica Sports
Dome is not within an environmentally critical area. Neither is it an environmentally
critical project. It is axiomatic that factual findings of the trial court, when fully
supported by the evidence on record, are binding upon this Court and will not be
disturbed on appeal.[17] This Court is not a trier of facts.[18]
There are exceptional instances when this Court may disregard factual findings
of the trial court, namely: a) when the conclusion is a finding grounded entirely on
speculations, surmises, or conjectures; b) when the inference made is manifestly
mistaken, absurd, or impossible; c) where there is a grave abuse of discretion; d)
when the judgment is based on a misapprehension of facts; e) when the findings of
fact are conflicting; f) when the Court of Appeals, in making its findings, went beyond
the issues of the case and the same are contrary to the admissions of both appellant
and appellee; g) when the findings of the Court of Appeals are contrary to those of the
trial court; h) when the findings of fact are conclusions without citation of specific
evidence on which they are based; i) when the finding of fact of the Court of Appeals
is premised on the supposed absence of evidence but is contradicted by the evidence
on record; and j) when the Court of Appeals manifestly overlooked certain relevant
facts not disputed by the parties and which, if properly considered, would justify a
different conclusion.[19] None of these exceptions, however, obtain in this case.
The Environmental Impact Statement System, which ensures environmental
protection and regulates certain government activities affecting the environment, was
established by Presidential Decree No. 1586. Section 2 thereof states:
There is hereby established an Environmental Impact Statement System founded and
based on the environmental impact statement required under Section 4 of Presidential

36
Decree No. 1151, of all agencies and instrumentalities of the national government,
including government-owned or controlled corporations, as well as private
corporations, firms and entities, for every proposed project and undertaking which
significantly affect the quality of the environment.
Section 4 of PD 1151, on the other hand, provides:
Environmental Impact Statements. Pursuant to the above enunciated policies and
goals, all agencies and instrumentalities of the national government, including
government-owned or controlled corporations, as well as private corporations, firms
and entities shall prepare, file and include in every action, project or undertaking
which significantly affects the quality of the environment a detailed statement on
(a) the environmental impact of the proposed action, project or undertaking

A. Environmentally Critical Projects

I. Heavy Industries
a. Non-ferrous metal industries
b. Iron and steel mills
c. Petroleum and petro-chemical industries including oil and gas
d. Smelting plants
II. Resource Extractive Industries
a. Major mining and quarrying projects
b. Forestry projects
1. Logging
2. Major wood processing projects
3. Introduction of fauna (exotic-animals) in
public/private forests
4. Forest occupancy
5. Extraction of mangrove products

(b) any adverse environmental effect which cannot be avoided should the proposal be
implemented
(c) alternative to the proposed action
(d) a determination that the short-term uses of the resources of the environment are
consistent with the maintenance and enhancement of the long-term productivity of the
same; and

6. Grazing

(e) whenever a proposal involves the use of depletable or nonrenewable resources, a

finding must be made that such use and commitment are warranted.

1. Dikes for/and fishpond development projects

c. Fishery Projects

III. Infrastructure Projects

Before an environmental impact statement is issued by a lead agency, all agencies
having jurisdiction over, or special expertise on, the subject matter involved shall
comment on the draft environmental impact statement made by the lead agency
within thirty (30) days from receipt of the same.
Under Article II, Section 1, of the Rules and Regulations Implementing PD 1586,
the declaration of certain projects or areas as environmentally critical, and which shall
fall within the scope of the Environmental Impact Statement System, shall be by
Presidential Proclamation, in accordance with Section 4 of PD 1586 quoted above.
Pursuant thereto, Proclamation No. 2146 was issued on December 14, 1981,
proclaiming the following areas and types of projects as environmentally critical and
within the scope of the Environmental Impact Statement System established under
PD 1586:

a. Major dams
b. Major power plants (fossil-fueled, nuclear fueled,
hydroelectric or geothermal)
c. Major reclamation projects
d. Major roads and bridges
B. Environmentally Critical Areas
1. All areas declared by law as national parks, watershed reserves,
wildlife preserves and sanctuaries;
2. Areas set aside as aesthetic potential tourist spots;

37
3. Areas which constitute the habitat for any endangered or
threatened species of indigenous Philippine Wildlife (flora and
fauna);
4. Areas of unique historic, archaeological, or scientific interests;
5. Areas which are traditionally occupied by cultural communities or tribes;
6. Areas frequently visited and/or hard-hit by natural calamities
(geologic hazards, floods, typhoons, volcanic activity, etc.);
7. Areas with critical slopes;
8. Areas classified as prime agricultural lands;
9. Recharged areas of aquifers;
10. Water bodies characterized by one or any combination of the following conditions;
a. tapped for domestic purposes
b. within the controlled and/or protected areas declared by
appropriate authorities
c. which support wildlife and fishery activities
11. Mangrove areas characterized by one or any combination of the following
conditions:
a. with primary pristine and dense young growth;
b. adjoining mouth of major river systems;
c. near or adjacent to traditional productive fry or fishing
grounds;
d. which act as natural buffers against shore erosion,
strong winds and storm floods;
e. on which people are dependent for their livelihood.
12. Coral reefs, characterized by one or any combinations of the following conditions:
a. with 50% and above live coralline cover;
b. spawning and nursery grounds for fish;
c. which act as natural breakwater of coastlines.
In this connection, Section 5 of PD 1586 expressly states:
Environmentally Non-Critical Projects. All other projects, undertakings and areas not
declared by the President as environmentally critical shall be considered as noncritical and shall not be required to submit an environmental impact statement.The
National Environmental Protection Council, thru the Ministry of Human Settlements

may however require non-critical projects and undertakings to provide additional

environmental safeguards as it may deem necessary.
The Artica Sports Dome in Langub does not come close to any of the projects or
areas enumerated above. Neither is it analogous to any of them. It is clear, therefore,
that the said project is not classified as environmentally critical, or within an
environmentally critical area. Consequently, the DENR has no choice but to issue the
Certificate of Non-Coverage. It becomes its ministerial duty, the performance of which
can be compelled by writ of mandamus, such as that issued by the trial court in the
case at bar.
WHEREFORE, in view of the foregoing, the instant petition is DENIED. The
decision of the Regional Trial Court of Davao City, Branch 33, in Civil Case No.
28,133-2000, granting the writ of mandamus and directing the Department of
Environment and Natural Resources to issue in favor of the City of Davao a Certificate
of Non-Coverage, pursuant to Presidential Decree No. 1586 and related laws, in
connection with the construction of the Artica Sports Dome, is AFFIRMED.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Vitug, and Carpio, JJ., concur.

GREENHILLS EAST ASSOCIATION, G.R. No. 169741

INC., represented by its President
JOSEFINA J. CASTILLO,
Petitioner, Present:
Carpio, J., Chairperson,
- versus - Brion,
Del Castillo,
Abad, and
Perez, JJ.
E. GANZON, INC., represented by its
President EULALIO GANZON, Promulgated:
Respondent.
January 20, 2010
x --------------------------------------------------------------------------------------- x
DECISION
ABAD, J.:

38
north, Lot 11, Block 4 of the Subdivision and a narrow creek on the west, and Ortigas
This case is about a residential subdivisions resistance to the construction of a high-

Avenue on the south.

rise building beside it and a failure to promptly file a memorandum appeal with the
Office of the President (OP), resulting in the dismissal of the case for failure to perfect
the appeal.

Sometime in April or May 1997, respondent EGI fenced its land site, demolished the
structures on it, and began excavation works without first getting a clearance from
the Barangay. On July 10, 1997 the Housing and Land Use Regulatory Board

The Facts and the Case

(HLURB) issued to EGI a Certificate of Locational Viability and on August 11, 1997
the City of Mandaluyong issued to it an Excavation and Ground Preparation

Petitioner Greenhills East Association, Inc. (GEA) is the homeowners association of

Greenhills East Subdivision, a residential subdivision in Barangay Wack-Wack,

Permit. On September 15, 1997 the HLURB further issued to EGI a Preliminary
Approval and Locational Clearance for its project.

Greenhills East, Mandaluyong City.

In January 1998 petitioner GEA wrote the HLURB National Capital Region, Regional
For a time now, respondent E. Ganzon, Inc. (EGI) has sought to develop a 4,109square

meter

lot

(the

land

site)

at

the

corner

of

EDSA

and Ortigas

Avenue in Barangay Wack-Wack (the Barangay) with its owner, the San Buena Realty
and Development Corp. EGI wanted to build on the property a 77-storey mixed-used
building with an 8-storey basement for a total of 85 storeys (the project). The
proposed SKYCITY Condominium, when built, will be the tallest building in the
country.

Petitioner GEAs subdivision has been classified under Section 4, Article IV of the
Metropolitan Manila Commission Ordinance 81-01 (MMZO 81-01) as an R-1 low
density residential zone. The subdivision consists of about 380 lots. It has a church
(the Sanctuario de San Jose), a school (the La Salle Greenhills), and a private road
network.

As it happened, the land site on which the project will rise is adjacent to Greenhills
East Subdivision although MMZO 81-01 had classified that site as C-2 or a Major
Commercial Zone. It is bounded by EDSA on the east, Florida Street on the

Director, opposing respondent EGIs project. Not content with its HLURB opposition,
GEA filed a separate one addressed to the Department of Public Works and
Highways (DPWH). On June 4, 1998 the DPWH advised the Building Official of
Mandaluyong to require EGI to secure a Development Permit and a valid Locational
Clearance for its project from the HLURB. In a separate development, EGI applied
with the Barangay for clearance covering its project. On July 15, 1998, however,
the Barangay denied the application.

On November 24, 1999 the HLURB Arbiter rendered a decision, dismissing petitioner
GEAs opposition to respondent EGIs project. On March 20, 2001 acting on GEAs
petition for review of the Arbiters decision, the HLURB Board of Commissioners
issued a resolution, denying the petition. It also denied GEAs motion for
reconsideration on October 30, 2001.

On November 20, 2001 petitioner GEA filed its Notice of Appeal with the OP,
simultaneously paying the required appeal and legal fees. On December 12, 2001
GEA received a copy of the OPs order dated November 27, 2001, requiring GEA to
file its memorandum on appeal within 15 days from notice. But before the period was

39
up or on December 27, 2001, GEA filed a motion for extension of 15 days within

2. Whatever be the answer, if the substantial matter need

which to submit its memorandum on appeal. On January 11, 2002 GEA filed another

to be addressed, whether or not the HLURB erred in finding no valid

motion for extension, this time for five days or until January 16, 2002, within which to

ground to restrict respondent EGIs use of the subject land site,

file the required memorandum.

which lies beside a residential subdivision, for constructing a highrise building.

Petitioner GEA filed the required Memorandum on Appeal with the OP on January 16,
2002 but asked that office for an extension of two days within which to file the required

The Rulings of the Court

draft decision. On January 18, 2002 GEA filed still another motion for extension, this
time for one day, within which to file the required draft. GEA claims that it intended to

One. Petitioner GEA contends that it had already perfected its appeal when it filed on

file the same on January 21, 2002 but, due to a nationwide brownout on that day, it

November 20, 2001 a notice of appeal with the OP from the decision of the HLURB.

had to ask for five more days within which to do so. Finally, GEA filed its draft decision
with the OP on January 28, 2002.

The Rules and Regulations Governing Appeals to the Office of the President of the
Philippines[1] requires the appellant to file, not only a notice of appeal, but also a

On February 10, 2003 petitioner GEA received a copy of an order from the OP dated

memorandum on appeal that must, among other things, state the grounds relied on

January 28, 2003, denying its appeal on the ground of GEAs failure to perfect it on

for the appeal, the issues involved, and the reliefs sought.[2] The appellant must, to

time. GEA moved for a reconsideration of the Order, but the OP denied the same.

perfect his appeal, comply with these requirements within 15 days from receipt of a
copy of the HLURB decision. Petitioner GEA, however, failed to submit an appeal

On August 13, 2003 petitioner GEA filed with the Court of Appeals (CA) a petition for

memorandum.

review of the OPs orders. On December 21, 2004, the CA rendered judgment,
denying GEAs petition. GEA filed a motion for reconsideration but this, too, was
denied, hence, the present recourse to this Court.
The Issues Presented

Still, the OP actually gave petitioner GEA a chance to comply with the
omitted requirement by directing it in the Order of November 27, 2001 to submit its
appeal memorandum and draft decision within 15 days from notice; otherwise, it
would dismiss the case. Since GEA received the above order on December 12, 2001,

Petitioner GEA basically presents the following issues for resolution:

it had until December 27, 2001 within which to comply with it.

1. Whether or not the CA correctly upheld the ruling of the

Petitioner GEA points out that it filed two successive motions for extension of

OP that petitioner GEA failed to perfect on time its appeal to that

time within which to file the required memorandum appeal and draft decision. Since

office from the decision of the HLURB; and

GEA had already filed its memorandum appeal before the OP could deny those
motions, it cannot be said that GEA filed the memorandum appeal out of time.

40
But petitioner GEA gambled when it did not file the memorandum appeal and

zones and these included those on the western side of respondent EGIs land site,

draft decision within the extra 15 days that the OP gave it. It asked first for an

namely Lot 11, Block 4, and Lot 11, Block 20. Consequently, the subject land site

extension of 15 days and then an additional extension of five days. GEA had no right

ceased to be adjacent to an R-1 zone and no longer suffered from height restrictions.

to assume, however, that the OP would grant these extensions. The governing rules
did not provide for them. Consequently, GEA has only itself to blame when its appeal
was dismissed.[3]

Petitioner GEA of course claims that the lots that Ordinance 128 converted
into C-2 zones were only the lots between Ortigas Avenue and Notre Dame
Street that run parallel to EDSA but at some depth from it. They are on the Wack-

Notably, the OP also required petitioner GEA to file, along with its memorandum

Wack side of Ortigas Avenue. Ordinance 128 describes the newly converted C-2

appeal, a draft decision. GEA did not. It instead filed two more motions for extension

zones relevant to this case as a lot deep along Ortigas Avenue from EDSA to Notre

of time within which to do so. Section 5 of the Rules of that office provides that failure

Dame Street.Because of the mention of Notre Dame Street, which is found on only

to comply with its orders may warrant a dismissal of the appeal. Consequently, the OP

one side of Ortigas Avenue, GEA concludes that the new C-2 zones did not extend to

acted within its authority in dismissing GEAs appeal for this additional reason.

the other side of Ortigas Avenue where Greenhills East Subdivision and respondent

Two. With the above ruling, this decision should end here. But petitioner GEA asks

EGIs land site are located.

the Court to dispense with the technicalities involved and rule instead on the merits of
the case, given that GEA and its members had gone through a lot of trouble to get the

But, as HLURB pointed out, if the purpose of the ordinance was to limit the

HLURB to stop the project from rising on the contested land site. To avert the

land classification conversion only to the side of Ortigas Avenue where the Wack-

likelihood that this case would shift to another forum under the guise of some other

Wack Subdivision lay, it would have simply stated, using the technical language

issue or issues, the Court deems it wise to resolve the substantial issue that petitioner

applied to the other converted areas,[4] a lot deep along the Wack-Wack side of

GEA presents considering that both sides have amply argued the same.

Ortigas Avenue from EDSA to Notre Dame Street, instead of saying, a lot deep along
Ortigas Avenue.It could only mean, therefore, that the ordinance intended to convert

Petitioner GEA invokes Section 10, Article V of MMZO 81-01. This section provides

all the lots, on both sides and margins of Ortigas Avenue up to the point where Notre

height restrictions on a C-2 property that adjoins an R-1 property without an

Dame Street was.

intervening street or permanent open space that is over six meters wide and that the
properties have adjacent front yards, or even when there are none, the intervening

The Court finds either conclusion unclear, given the essentially vague way by which

street or permanent open space does not exceed three meters in width.

Ordinance 128 describes the affected areas. What really clears up the issue for the
Court is the HLURBs recourse to the Revised Zoning Map of Mandaluyong City. The

But MMZO 81-01 applies to a situation where an R-1 property adjoins a C-2

color-coded map shows identical color and captions for the lots stretching at some

property. This has ceased to be the case between the land site and the subdivision

depth from EDSA, but running parallel to it, on both sides of Ortigas Avenue, including

after the Mandaluyong City government enacted Ordinance 128 in 1993. That was

Lot 11, Block 4, and Lot 11, Block 20 on the Greenhills East Subdivision side. The

before the present case came up. Ordinance 128 converted certain R-1 zones to C-2

map tags both sides of Ortigas Avenue with the same C-2 classification.

41
In relying on the Mandaluyong zoning map, the HLURB took note of the

expertise in applying zonal classifications on specific properties and since petitioner

standard procedure observed in fixing the boundaries of lands, where the preparation

GEA fails to make out a clear case that it has erred, the Court must rely on its finding

and drafting of the illustrative maps precede the drafting of the text that describes

that respondent EGIs land site does not, for the purpose of applying height

those boundaries. Although the text of the ordinance is controlling, any doubt or

restrictions, adjoin an R-1 zone.[6]

vagueness in the meaning of its provisions may be cleared up by a reference to the

Petitioner GEA nonetheless contends that the proposed 77-storey building would have

official map. As a quasi-judicial body, which enjoys an expertise in land zoning

mixed uses, part residential, part office, and part commercial, which would not be

classifications, the HLURB can take judicial notice of such official maps as are

accord with the patterns of land uses suitable to C-2 zones. The buildings in C-2

generated and used in government zoning activities. The Court has no reason to

zones, it suggests, should rise no higher than 40 or 50 storeys from the ground. GEA

disturb its findings in this case.

invokes Article IV, Section 4, paragraph 5 of MMZO 81-01, which states that
establishments in a C-2 zone should be sufficient to provide the needs of the district

Petitioner GEA argues, however, that even on the assumption that Ordinance 128

level. GEA infers from this that a C-2 establishment must be such that it will provide

converted the lots on the Greenhills East Subdivision side of Ortigas Avenue into a C-

the needs of the district level only and that, beyond those needs, the establishment

2 zone, such conversion affected only Lot 11, Block 20. It did not convert Lot 11,

should be in High Intensity or C-3 Zone.

Block 4, which was adjacent to the controversial land site, and which retained an R-1
classification.

But such contention has no basis. MMZO 81-01 contains no provision that
allows the construction of not more than 40 or 50-storey buildings in a C-1 or C-2

But, as the HLURB Board of Commissioners noted, using the sketch map

zone and restricts higher buildings to a C-3 zone.There are just no height restrictions

submitted to it, although the land site indeed adjoins Lot 11, Block 4, it does so not in

under the law for buildings located in C-2 zones, save probably for height clearances

the manner that would properly call for the application of the zoning ordinance. Based

prescribed by the Air Transportation Office.

on the HLURBs observation, Lot 11 of Block 4 and the land site do not have common
boundaries that join them. Rather, they touch each other only at a certain point due to

The Court cannot find fault in HLURBs assertion that the real test of whether a land

the irregular shape of the properties, following the direction of the meandering creek

use serves the need of a district is not in the size or height of the buildings but in the

that lies between them. For this reason, it cannot be said that Section 10, Article V of

sufficiency or surplus of the business or human activities in a given district to which

MMZO 81-01, which sets height restrictions, applies to the project.

they cater. Land use is affected by the intensity of such activities. Extraordinary
population density or overcrowding, brought about by competition for space in the

No matter how hard it tries to learn the technical intricacies of certain highly regulated

scarce area of the district, is to be avoided. Using this test, the HLURB, which is the

human activities, the Supreme Court will always be inadequately equipped to identify

clearing house for efficient land use, found no clear showing that respondent EGIs

the facts that matter when resolving issues involving such activities. Invariably, the

project if finished would cause havoc in the population level of the land district where

Court must respect the factual findings of administrative agencies which have

the project lies.

expertise on matters that fall within their jurisdiction.[5] Here, since the HLURB has the

42
What is more, the houses of petitioner GEAs members are separated by

The Court will not dwell on the other matters raised concerning

fence and guarded gates from the adjacent areas outside their subdivision. Their

environmental requirements respecting light, ventilation, drainage, sewerage, waste

exclusiveness amply protects their yen for greater space than the rest of the people of

disposal, and pollution relating to the project. These matters very well fall under the

the metropolis outside their enclave can hope for. Respondent EGIs project offers no

competence of other government agencies. Surely, the HLURB decision does not and

threat to the subdivisions privacy. It is on the other side of the fence, wholly

cannot in any way confer a blanket passport for constructing a building that does not

unconnected to the workings within the subdivision. The new building would be in the

meet the requirements of other laws.

stream of human traffic that passes EDSA and Ortigas Avenue. Consequently, it
would largely attract people whose primary activities connect to those wide

ACCORDINGLY, the Court DENIES the petition for lack of merit and affirms the

avenues. It would seem unreasonable for petitioner GEA to dictate on property

decision of the Court of Appeals dated December 21, 2004 and its Resolution dated

owners outside their gates how they should use their lands if such use is not in

September 14, 2005.

contravention of law.

SO ORDERED.

Finally, petitioner GEA contends that the lack of approval of the project by the

ROBERTO A. ABAD

homeowners association or the Barangay precludes it from proceeding. GEA invokes

Section 14, Article V of MMZO 81-01 which provides that, where a proposed land use
will necessarily affect the character of the residential zone, the proponent needs to get
such approval. It is a prerequisite for the issuance of a locational clearance and a
building permit.

But,

although

Section

152

(c)

of

the

Local

Government

Code

requires

a barangay clearance for any activity within its jurisdiction, such clearance cannot be

G.R. No. 182574 : September 28, 2010

THE PROVINCE OF NEGROS OCCIDENTAL, represented by its Governor
ISIDRO P. ZAYCO, Petitioner, v. THE COMMISSIONERS, COMMISSION ON AUDIT;
THE DIRECTOR, CLUSTER IV-VISAYAS; THE REGIONAL CLUSTER
DIRECTORS; and THE PROVINCIAL AUDITOR, NEGROS
OCCIDENTAL, Respondents.
DECISION

denied when the activity is in a permissible zone. The denial would otherwise be

CARPIO, J.:

illegal. Here, as discussed above, the applicable ordinance of Mandaluyong City does
not preclude the construction of the project on the land site in question over the
unreasonable objection of a nearby association of subdivision dwellers. Indeed, the
city or municipality to which the barangay unit belongs may still issue the required
license or building permit[7] despite the withholding of the barangay clearance as had
happened in this case.

The Case
Before the Court is a petition for certiorari 1cralaw assailing Decision No. 20060442cralaw dated 14 July 2006 and Decision No. 2008-0103cralaw dated 30 January
2008 of the Commission on Audit (COA) disallowing premium payment for the
hospitalization and health care insurance benefits of 1,949 officials and employees of
the Province of Negros Occidental.
The Facts

43
On 21 December 1994, the Sangguniang Panlalawigan of Negros Occidental passed
Resolution No. 720-A4cralaw allocating P4,000,000 of its retained earnings for the
hospitalization and health care insurance benefits of 1,949 officials and employees of
the province. After a public bidding, the Committee on Awards granted the insurance
coverage to Philam Care Health System Incorporated (Philam Care).nad
Petitioner Province of Negros Occidental, represented by its then Governor Rafael L.
Coscolluela, and Philam Care entered into a Group Health Care Agreement involving
a total payment of P3,760,000 representing the insurance premiums of its officials and
employees. The total premium amount was paid on 25 January 1996.
On 23 January 1997, after a post-audit investigation, the Provincial Auditor issued
Notice of Suspension No. 97-001-1015cralaw suspending the premium payment
because of lack of approval from the Office of the President (OP) as provided under
Administrative Order No. 1036cralaw (AO 103) dated 14 January 1994. The Provincial
Auditor explained that the premium payment for health care benefits violated Republic
Act No. 6758 (RA 6758),7cralaw otherwise known as the Salary Standardization Law.
Petitioner complied with the directive post-facto and sent a letter-request dated 12
January 1999 to the OP. In a Memorandum dated 26 January 1999,8cralaw then
President Joseph E. Estrada directed the COA to lift the suspension but only in the
amount of P100,000. The Provincial Auditor ignored the directive of the President and
instead issued Notice of Disallowance No. 99-005-101(96)9cralaw dated 10
September 1999 stating similar grounds as mentioned in Notice of Suspension No.
97-001-101.
Petitioner appealed the disallowance to the COA. In a Decision dated 14 July 2006,
the COA affirmed the Provincial Auditor's Notice of Disallowance dated 10 September
1999.10cralaw The COA ruled that under AO 103, no government entity, including a
local government unit, is exempt from securing prior approval from the President
granting additional benefits to its personnel. This is in conformity with the policy of
standardization of compensation laid down in RA 6758. The COA added that Section
468(a)(1)(viii)11cralaw of Republic Act No. 7160 (RA 7160) or the Local Government
Code of 1991 relied upon by petitioner does not stand on its own but has to be
harmonized with Section 1212cralaw of RA 6758.
Further, the COA stated that the insurance benefits from Philam Care, a private
insurance company, was a duplication of the benefits provided to employees under
the Medicare program which is mandated by law. Being merely a creation of a local
legislative body, the provincial health care program should not contravene but instead

be consistent with national laws enacted by Congress from where local legislative
bodies draw their authority.
The COA held the following persons liable: (1) all the 1,949 officials and employees of
the province who benefited from the hospitalization and health care insurance benefits
with regard to their proportionate shares; (2) former Governor Rafael L. Coscolluela,
being the person who signed the contract on behalf of petitioner as well as the person
who approved the disbursement voucher; and (3) the Sangguniang
Panlalawigan members who passed Resolution No. 720-A. The COA did not hold
Philam Care and Provincial Accountant Merly P. Fortu liable for the disallowed
disbursement. The COA explained that it was unjust to require Philam Care to refund
the amount received for services it had duly rendered since insurance law prohibits
the refund of premiums after risks had already attached to the policy contract. As for
the Provincial Accountant, the COA declared that the Sangguniang
Panlalawigan resolution was sufficient basis for the accountant to sign the
disbursement voucher since there were adequate funds available for the purpose.
However, being one of the officials who benefited from the subject disallowance, the
inclusion of the accountant's name in the persons liable was proper with regard to her
proportionate share of the premium.
The dispositive portion of the COA's 14 July 2006 decision
states:chanroblesvirtuallawlibrar
WHEREFORE, premises considered, and finding no substantial ground or cogent
reason to disturb the subject disallowance, the instant appeal is hereby denied for
lack of merit. Accordingly, Notice of Disallowance No. 99-005-101(96) dated 10
September 1999 in the total amount of P3,760,000.00 representing the hospitalization
and insurance benefits of the officials and employees of the Province of Negros
Occidental is hereby AFFIRMED and the refund thereof is hereby ordered.
The Cluster Director, Cluster IV-Visayas, COA Regional Office No. VII, Cebu City shall
ensure the proper implementation of this decision.13cralaw
Petitioner filed a Motion for Reconsideration dated 23 October 2006 which the COA
denied in a Resolution dated 30 January 2008.
Hence, the instant petition.
The Issue

44
The main issue is whether COA committed grave abuse of discretion in affirming the
disallowance of P3,760,000 for premium paid for the hospitalization and health care
insurance benefits granted by the Province of Negros Occidental to its 1,949 officials
and employees.
The Court's Ruling
Petitioner insists that the payment of the insurance premium for the health benefits of
its officers and employees was not unlawful and improper since it was paid from an
allocation of its retained earnings pursuant to a valid appropriation ordinance.
Petitioner states that such enactment was a clear exercise of its express powers
under the principle of local fiscal autonomy which includes the power of Local
Government Units (LGUs) to allocate their resources in accordance with their own
priorities. Petitioner adds that while it is true that LGUs are only agents of the national
government and local autonomy simply means decentralization, it is equally true that
an LGU has fiscal control over its own revenues derived solely from its own tax base.
Respondents, on the other hand, maintain that although LGUs are afforded local fiscal
autonomy, LGUs are still bound by RA 6758 and their actions are subject to the
scrutiny of the Department of Budget and Management (DBM) and applicable auditing
rules and regulations enforced by the COA. Respondents add that the grant of
additional compensation, like the hospitalization and health care insurance benefits in
the present case, must have prior Presidential approval to conform with the state
policy on salary standardization for government workers.
AO 103 took effect on 14 January 1994 or eleven months before the Sangguniang
Panlalawigan of the Province of Negros Occidental passed Resolution No. 720-A. The
main purpose of AO 103 is to prevent discontentment, dissatisfaction and
demoralization among government personnel, national or local, who do not receive, or
who receive less, productivity incentive benefits or other forms of allowances or
benefits. This is clear in the Whereas Clauses of AO 103 which
state:chanroblesvirtuallawlibrar
WHEREAS, the faithful implementation of statutes, including the Administrative Code
of 1987 and all laws governing all forms of additional compensation and personnel
benefits is a Constitutional prerogative vested in the President of the Philippines
under Section 17, Article VII of the 1987 Constitution;
WHEREAS, the Constitutional prerogative includes the determination of the rates, the
timing and schedule of payment, and final authority to commit limited resources of

government for the payment of personal incentives, cash awards, productivity bonus,
and other forms of additional compensation and fringe benefits;
WHEREAS, the unilateral and uncoordinated grant of productivity incentive
benefits in the past gave rise to discontentment, dissatisfaction and
demoralization among government personnel who have received less or have
not received at all such benefits;
NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the
Philippines, by virtue of the powers vested in me by law and in order to forestall
further demoralization of government personnel do hereby direct: x x x (Emphasis
supplied)
Sections 1 and 2 of AO 103 state:chanroblesvirtuallawlibrar
SECTION 1. All agencies of the National Government including governmentowned and/or -controlled corporations and government financial institutions,
and local government units, are hereby authorized to grant productivity incentive
benefit in the maximum amount of TWO THOUSAND PESOS (P2,000.00) each to
their permanent and full-time temporary and casual employees, including contractual
personnel with employment in the nature of a regular employee, who have rendered
at least one (1) year of service in the Government as of December 31, 1993.
SECTION 2. All heads of government offices/agencies, including government
owned and/or controlled corporations, as well as their respective governing
boards are hereby enjoined and prohibited from authorizing/granting Productivity
Incentive Benefits or any and all forms of allowances/benefits without prior approval
and authorization via Administrative Order by the Office of the President. Henceforth,
anyone found violating any of the mandates in this Order, including all officials/agency
found to have taken part thereof, shall be accordingly and severely dealt with in
accordance with the applicable provisions of existing administrative and penal laws.
Consequently, all administrative authorizations to grant any form of
allowances/benefits and all forms of additional compensation usually paid outside of
the prescribed basic salary under R.A. 6758, the Salary Standardization Law, that are
inconsistent with the legislated policy on the matter or are not covered by any
legislative action are hereby revoked. (Emphasis supplied)
It is clear from Section 1 of AO 103 that the President authorized all agencies of the
national government as well as LGUs to grant the maximum amount of P2,000
productivity incentive benefit to each employee who has rendered at least one year of

45
service as of 31 December 1993. In Section 2, the President enjoined all heads of
government offices and agencies from granting productivity incentive benefits or any
and all similar forms of allowances and benefits without the President's prior approval.
In the present case, petitioner, through an approved Sangguniang
Panlalawigan resolution, granted and released the disbursement for the
hospitalization and health care insurance benefits of the province's officials and
employees without any prior approval from the President. The COA disallowed the
premium payment for such benefits since petitioner disregarded AO 103 and RA
6758.
We disagree with the COA. From a close reading of the provisions of AO 103,
petitioner did not violate the rule of prior approval from the President since Section 2
states that the prohibition applies only to "government offices/agencies, including
government-owned and/or controlled corporations, as well as their respective
governing boards." Nowhere is it indicated in Section 2 that the prohibition also
applies to LGUs. The requirement then of prior approval from the President under AO
103 is applicable only to departments, bureaus, offices and government-owned and
controlled corporations under the Executive branch. In other words, AO 103 must be
observed by government offices under the President's control as mandated by
Section 17, Article VII of the Constitution which states:chanroblesvirtuallawlibrar
Section 17. The President shall have control of all executive departments, bureaus
and offices. He shall ensure that the laws be faithfully executed. (Emphasis supplied)
Being an LGU, petitioner is merely under the President's general supervision pursuant
to Section 4, Article X of the Constitution:chanroblesvirtuallawlibrar
Sec. 4. The President of the Philippines shall exercise general supervision over
local governments. Provinces with respect to component cities and municipalities,
and cities and municipalities with respect to component barangays shall ensure that
the acts of their component units are within the scope of their prescribed powers and
functions. (Emphasis supplied)
The President's power of general supervision means the power of a superior officer to
see to it that subordinates perform their functions according to law.14cralaw This is
distinguished from the President's power of control which is the power to alter or
modify or set aside what a subordinate officer had done in the performance of his
duties and to substitute the judgment of the President over that of the subordinate
officer.15cralaw The power of control gives the President the power to revise or reverse

the acts or decisions of a subordinate officer involving the exercise of

discretion.16cralaw
Since LGUs are subject only to the power of general supervision of the President, the
President's authority is limited to seeing to it that rules are followed and laws are
faithfully executed. The President may only point out that rules have not been followed
but the President cannot lay down the rules, neither does he have the discretion to
modify or replace the rules. Thus, the grant of additional compensation like
hospitalization and health care insurance benefits in the present case does not need
the approval of the President to be valid.
Also, while it is true that LGUs are still bound by RA 6758, the COA did not clearly
establish that the medical care benefits given by the government at the time under
Presidential Decree No. 151917cralaw were sufficient to cover the needs of
government employees especially those employed by LGUs.
Petitioner correctly relied on the Civil Service Commission's (CSC) Memorandum
Circular No. 33 (CSC MC No. 33), series of 1997, issued on 22 December 1997
which provided the policy framework for working conditions at the workplace. In this
circular, the CSC pursuant to CSC Resolution No. 97-4684 dated 18 December 1997
took note of the inadequate policy on basic health and safety conditions of work
experienced by government personnel. Thus, under CSC MC No. 33, all government
offices including LGUs were directed to provide a health program for government
employees which included hospitalization services and annual mental, medicalphysical examinations.
Later, CSC MC No. 33 was further reiterated in Administrative Order No.
40218cralaw (AO 402) which took effect on 2 June 1998. Sections 1, 2, and 4 of AO
402 state:chanroblesvirtuallawlibrar
Section 1. Establishment of the Annual Medical Check-up Program. - An annual
medical check-up for government of officials and employees is hereby authorized to
be established starting this year, in the meantime that this benefit is not yet integrated
under the National Health Insurance Program being administered by the Philippine
Health Insurance Corporation (PHIC).nad
Section 2. Coverage. - x x x Local Government Units are also encouraged to
establish a similar program for their personnel.

46
Section 4. Funding. - x x x Local Government Units, which may establish a similar
medical program for their personnel, shall utilize local funds for the purpose.
(Emphasis supplied)
The CSC, through CSC MC No. 33, as well as the President, through AO 402,
recognized the deficiency of the state of health care and medical services
implemented at the time. Republic Act No. 787519cralaw or the National Health
Insurance Act of 1995 instituting a National Health Insurance Program (NHIP) for all
Filipinos was only approved on 14 February 1995 or about two months after
petitioner's Sangguniang Panlalawigan passed Resolution No. 720-A. Even with the
establishment of the NHIP, AO 402 was still issued three years later addressing a
primary concern that basic health services under the NHIP either are still inadequate
or have not reached geographic areas like that of petitioner.
Thus, consistent with the state policy of local autonomy as guaranteed by the 1987
Constitution, under Section 25, Article II20cralaw and Section 2, Article X,21cralaw and
the Local Government Code of 1991,22cralaw we declare 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.
In sum, since petitioner's grant and release of the questioned disbursement without
the President's approval did not violate the President's directive in AO 103, the COA
then gravely abused its discretion in applying AO 103 to disallow the premium
payment for the hospitalization and health care insurance benefits of petitioner's
officials and employees.
WHEREFORE, we GRANT the petition. We REVERSE AND SET ASIDE Decision
No. 2006-044 dated 14 July 2006 and Decision No. 2008-010 dated 30 January 2008
of the Commission on Audit.
SO ORDERED.
[G.R. No. 131481, March 16 : 2011]
BUKLOD NANG MAGBUBUKID SA LUPAING RAMOS, INC., PETITIONER, VS. E.
M. RAMOS AND SONS, INC., RESPONDENT.
[G.R. No. 131624]
DEPARTMENT OF AGRARIAN REFORM, PETITIONER, VS. E. M. RAMOS AND

SONS, INC., RESPONDENT.

DECISION
LEONARDO-DE CASTRO, J.:
Before the Court are consolidated Petitions for Review on Certiorari, under Rule 45 of
the 1997 Rules of Civil Procedure, filed by the Buklod ng Maqbubukid Sa Lupaing
Ramos, Inc. (Buklod) and the Department of Agrarian Regorm (DAR), assailing the
Decision[1] dated March 26, 1997 and the Resolution[2] dated November 24, 1997 of
the Court of Appeals in CA G.R. SP No. 40950.
The Court of Appeals declared the parcels of land owned by E.M. Ramos and Sons,
Inc. (EMRASON), located in Barangay Langkaan, Dasmarias, Cavite (subject
property), exempt from the coverage of the Comprehensive Agrarian Reform Program
(CARP), thus, nullifying and setting aside the Decision[3] dated February 7, 1996 and
Resolution[4] dated May 14, 1996 of the Office of hte President (OP) in O.P. Case No.
5461.
Quoted hereunder are the facts of the case as found by the Court of Appeals:
At the core of the controversy are several parcels of unirrigated land (303.38545
hectares) which from part of a larger expanse with an area of 372 hectares situated at
Barangay Langkaan, Dasmarias, Cavite. Originally owned by the MAnila Golf and
Country Club, he property was aquired by the [herein repondent EMRASON] in 1965
for the purpose of developing the same into a residential subdivision known as
"Traveller's Life Homes".
Sometime in 1971, the Municipal Council of Dasmarias, Cavite, acting pursuant to
Republic Act (R.A.) No. 2264, otherwise known as the "Loval Autonomy Act",
enacteed Municipal Ordinance No. 1, hereinafter referred to as Ordinance No. 1,
enitled "An Ordinance Providing Subdivision Regulation and Providing Penalties for
Violation Thereof."
In May, 1972, [respondent] E.M. Ramos and Sons, Inc., applied for an authority to
convert and development its aforementioned 372-hectare property into a residential
subdivision, ataching to the apllication detailed development plans and development
proposals from Bancom Development Corporation and San Miguel Corporation.
Acting thereon the Municipal Council of Dasmarias, Cavite passed on July 9, 1972
Municipal Ordinance No. 29-A (Ordinance "No. 29-A, for brevity), approving
[EMRASON's] application. Ordinance No. 29-A pertinently reads:

47
"Resolved, as it is hereby resolved, to approve the application for subdivision
containing an area of Three Hundred Seventy-Two (372) Hectares situated in Barrios
Bocal and Langkaan, named as Traveller's Life Homes.

batches of notices of acquisition, each of which drew protest from [EMRASON]. All
told, these notices covered 303.38545 hectares of land situated at Barangay
Langkaan, Dasmarias, Cavite owned by [EMRASON].

Resolved that the Municipal Ordinance regarding subdivision regulations existing in

this municipality shall be strictly followed by the subdivision ".

In the meantime, [EMRASON] filed with the Department of Agrarian Reform

Adjudication Board (DARAB), Region IV, Pasig, Metro Manila, separate petitions to
nullify the first three sets of the above notices. Collectively docketed as DARAB Case
No. IV-Ca-0084-92, these petitions were subsequently referred to the Office of the
Regional Director, Region IV, which had jurisdiction thereon. In his referral action, the
Provincial Agrarian Adjudicator directed the DAR Region IV, through its Operations
Division, to conduct a hearing and/or investigation lo determine whether or not the
subject property is covered by the Comprehensive Agrarian Reform Program (CARP)
and, if not, to cancel the notices of acquisition.

Subsequently, [EMRASON] paid the fees, dues and licenses needed to proceed with
property development.
It appears, however, that the actual implementation of the subdivision project suffered
delay owing to the confluence of events. Among these was the fact that the property
in question was then mortgaged to, and the titles thereto were in the possession of,
the Overseas Bank of Manila, which during the period material was under liquidation.
On June 15. 1988, Republic Act No. 6657, otherwise known as the Comprehensive
Agrarian Reform Law or CARL, took effect, ushering in a new process of land
classification, acquisition and distribution.
On September 23, 1988, the Municipal Mayor of Dasmarias, Cavite addressed a
letter to [EMRASON], stating in part, as follows:
"In reply to your letter of June 2, 1988, we wish to clarify that the Municipality
of Dasmarias, Cavite, has approved the development of your property situated in
Barrios Bukal and Langkaan, Dasmarias, Cavite, with a total area of 3 72 hectares,
more or less, into residential, industrial, commercial and golf course project.
This conversion conforms with the approved Development Plan of the Municipality
of Dasmarias Cavite ".
Then came the Aquino government's plan to convert the tenanted neighboring
property of the National Development Company (NDC) into an industrial estate to be
managed through a joint venture scheme by NDC and the Marubeni Corporation. Part
of the overall conversion package called for providing the tenant-farmers, opting to
remain at the NDC property, with three (3) hectares each. However, the size of the
NDC property turned out to be insufficient for both the demands of the proposed
industrial project as well as the government's commitment to the tenant-farmers. To
address this commitment, the Department of Agrarian Reform (DAR) was thus tasked
with acquiring additional lands from the nearby areas. The DAR earmarked for this
purpose the subject property of [EMRASON].
On August 29, 1990, then OAR Secretary Benjamin Leong sent out the first of four

Forthwith, the DAR regional office conducted an on-site inspection of the subject
property.
In the course of the hearing, during which [EMRASON] offered Exhibits :'A" to "UU-2"
as documentary evidence, [EMRASON] received another set of notices of acquisition.
As lo be expected, [EMRASON] again protested.
On August 28, 1992, the Legal Division of DAR, Region IV, through Hearing Officer
Victor Baguilat, rendered a decision declaring as null and void all the notices of
acquisitions, observing that the property covered thereby is, pursuant to Department
of Justice (DOJ) Opinion No. 44, series of 1990, exempt from CARP. The dispositive
portion of the decision reads, as follows;
''WHEREFORE, in the light of the foregoing x x x, considering that the notices of
acquisition dated August 29, 1990 relative to the 39 hectares partly covered by
Transfer Certificate of Title No. T-19298; notices of acquisition all dated April 3, 1991
relative to the 131.41975 hectares partly covered by Transfer Certificates of Title Nos.
x x x; notices of acquisition all dated August 28, 1991 relative lo the 56.9201 hectares
covered by Transfer Certificates of Title Nos. x x x; and notices of acquisition all dated
May 15, 1992 relative to the 76.0456 covered by Transfer Certificates of Title Nos. xx,
all located at Barangay Langkaan, Dasmarias, Cavite and owned by petitioner EM
RAMOS and SONS, INC. are null and void on the ground that the subject properties
are exempted from CARP coverage pursuant to DOJ Opinion No. 44, Series of 1990,
therefore, the aforesaid notices of acquisition be cancelled and revoked. "
The DOJ Opinion adverted to, rendered by then Justice Secretary Franklin Drilon,
clarified that lands already converted to non-agricultural uses before June 15, 1988

48
were no longer covered by CARP.
On September 3, 1992, the Region IV DAR Regional Director motu propio elevated
the case to the Office of the Agrarian Reform Secretary, it being his view that Hearing
Officer Baguilat's decision ran contrary to the department's official position "to pursue
the coverage of the same properties and its eventual distribution to qualified
beneficiaries particularly the Langkaan farmers in fulfillment of the commitment of the
government to deliver to them the balance of thirty-nine hectares x x x".
On January 6, 1993, the herein respondent DAR Secretary Ernesto Garilao [(DAR
Secretary Garilao)] issued an order, the decretal portion of which partly reads:
"WHEREFORE, in the interest of law and justice, an order is hereby rendered:
1. Affirming the Notices of Acquisition dated August 29, 1990, April 3, 1991, August
28, 1991 and May 15, 1992 covering 303.38545 hectares of the property owned by
the E.M. RAMOS & SONS, INC, located at Barangay Langkaan, Dasmarinas, Cavite
x x x;
xxxx
3. Directing the OAR field officials concerned to pursue (he coverage under RA 6657
of the properties of E.M. Ramos & Sons, Inc. for which subject Notices of Acquisition
had been issued.
SO ORDERED".
Its motion for reconsideration of the aforesaid order having been denied by the [DAR
Secretary Garilao] in his subsequent order of January 6, 1993, [EMRASON] appealed
to the Office of the President where the recourse was docketed as O.P. Case No.
5461.
On February 7, 1996, the Office of the President, through herein
respondent Deputy Executive Secretary Renato C. Corona [(Deputy Executive
Secretary Corona)], rendered the herein assailed decision x x x, dismissing
[EMRASON's] appeal on the strength of the following observation:
"To recapitulate, this Office holds that [EMRASON's] property has remained
AGRICULTURAL in classification and therefore falls within the coverage of the CARP,
on the basis of the following:br>

1.

[EMRASON] failed to comply with the mandatory requirements and

conditions of Municipal Ordinance Nos. 1 and 29-A, specifically, among
others, the need for approval of the National Planning Commission
through the Highway District Engineer, and the Bureau of Lands before final
submission to the Municipal Council and Municipal Mayor;

2.

[EMRASON] failed to comply with Administrative Order No. 152, dated

December 16, 1968, and

3.

The certification of the Human Settlements Regulatory Commission

(HSRC) in 1981 and the Housing and Land Use Regulatory Board (HLRB)
in 1992 that the property of [EMRASON] is agricultural".

Undaunted, [EMRASON] interposed a motion for reconsideration, followed later by

another motion whereunder it invited attention to legal doctrines involving land
conversion recently enunciated by no less than the Office of the President itself.
On May 14, 1996, the [Deputy Executive Secretary Corona] came out with his second
challenged issuance denying [EMRASON's] aforementioned motion for
reconsideration x x x.[5]
From the denial of its Motion for Reconsideration by the OP, EMRASON filed a
Petition for Review with the Court of Appeals, which was docketed as CA-G.R. SP No.
40950.
On July 3, 1996, the Court of Appeals issued a Temporary Restraining Order (TRO),
[6]
which enjoined then DAR Secretary Ernesto Garilao and Deputy Executive
Secretary Renato C. Corona from implementing the OP Decision of February 7, 1996
and Resolution of May 14, 1996 until further orders from the court. On September 17,
1996, the appellate court issued a Resolution[8] granting the prayer of EMRASON for
the issuance of a writ of preliminary injunction. The writ of preliminary
injunction[9] was actually issued on September 30, 1996 after EMRASON posted the
required bond of P500,000,00.
The DAR Secretary filed a Motion for Reconsideration of the Resolution dated
September 17, 1996 of the Court of Appeals, with the prayer that the writ of
preliminary injunction already issued be lifted, recalled and/or dissolved.
At this juncture, the DAR had already prepared Certificates of Land Ownership Award
(CLOAs) to distribute the subject property to farmer-beneficiaries. However, the writ of

49
preliminary injunction issued by the Court of Appeals enjoined the release of the
CLOAs. Buklod, on behalf of the alleged 300 farmer-beneficiaries of the subject
property, filed a Manifestation and Omnibus Motion, wherein it moved that it be
allowed to intervene as an indispensable party in CA-G.R. SP No. 40950; that the writ
of preliminary injunction be immediately dissolved, having been issued in violation of
Section 55 of the CARL; and that the Petition for Review of EMRASON be dismissed
since the appropriate remedy should have been a petition for certiorari before the
Supreme Court.
On March 26, 1997, the Court of Appeals promulgated its assailed Decision.
The Court of Appeals allowed the intervention of Buklod because -the latter's
participation was "not being in any way prejudicial to the interest of the original
parties, nor will such intervention change the factual legal complexion of the case."
The appellate court, however, affirmed the propriety of the remedy availed by
EMRASON given that under Section 5 of Supreme Court Revised Administrative
Circular No. 1-95 dated May 16, 1995, appeals from judgments or final orders of the
OP or the DAR under the CARL shall be taken to the Court of Appeals, through a
verified petition for review; and that under Section 3 of the same Administrative
Circular, such a petition for review may raise questions of facts, law, or mixed
questions of facts and law.
Ultimately, the Court of Appeals ruled in favor of EMRASON because the subject
property was already converted/classified as residential by the Municipality of
Dasmarias prior to the effectivity of the CARL. The appellate court reasoned:
For one, whether or not the Municipality of Dasmarias, Cavite had in place in the
early seventies a general subdivision plan is to us of no moment. The absence of
such general plan at that time cannot be taken, for the nonce, against the [herein
respondent EMRASON]. To our mind, the more weighty consideration is the
accomplished fact that the municipality, conformably with its statutory-conferred local
autonomy, had passed a subdivision measure, I.e., Ordinance No. 1, and had
approved in line thereto, through the medium of Ordinance No. 29-A, [EMRASON's]
application for subdivision, or with like effect approved the conversion/classification of
the lands in dispute as residential. Significantly, the Municipal Mayor of Dasmarias,
Cavite, in his letter of September 23, 1988 to [EMRASON], clarified that such
conversion conforms with the approved development plan of the municipality.
For another, the requirement prescribed by the cited Section 16[a] of Ordinance No. 1
relates to the approval in the first instance by the National Planning Commission of

the final plat of the scheme of the subdivision, not the conversion from agricultural to
residential itself. As [EMRASON] aptly puts it:
"x x x the final plat or final plan, map or chart of the subdivision is not a condition sine
qua non for the conversion x x x as the conversion was already done by the Municipal
Council of Dasmarias, Cavite. Municipal Ordinance NO. 29-A merely required that
the final plat, or final plan x x x of the subdivision be done in conformity with Municipal
Ordinance No. 1, the same to be followed by (he subdivision itself. [EMRASON]
therefore did not have to undertake the immediate actual development of the subject
parcel of lands as the same had already been converted and declared residential by
law. x x x " (Petition, pp. 17 and 18).
[EMRASON's] pose has the merit of logic. As may be noted, Ordinance No. 29-A
contained two (2) resolutory portions, each interrelated to, but nonetheless
independent of, the other. The first resolution, reading "Resolved, as it is hereby resolved, to approve the application for subdivision
containing an area of Three Hundred Seventy-Two (372) Hectares situated in Barrios
Bocal and Langkaan, named as Travellers Life Homes "
approved the application for subdivision or the conversion of the 372-hectare area into
residential, while the second, reading "Resolved that the Municipal Ordinance regarding subdivision regulations existing in
this municipality shall be strictly followed by the subdivision "
provides that the subdivision owner/developer shall follow subdivision regulations, it
will be noted further that the second resolution already referred to the [EMRASON's]
property as "'subdivision", suggesting that the Municipal Council already considered
as of that moment [EMRASON's] area to be for residential use.
Another requirement which [EMRASON] allegedly failed to comply with is found in
Administrative Order (A.O.) No. 152, series of 1968, which pertinently provides "1. All Municipal Boards or City Councils, and all Municipal Councils in cities and
municipalities in which a subdivision ordinance is in force, shall submit three copies of
every proposed subdivision plan for which approval is sought together with the
subdivision ordinance, to the National Planning Commission for comment and
recommendation ".
This Court is at a loss to understand how [EMRASON] could be expected to heed a
directive addressed to local government legislative bodies. From a perusal of the title

50
of A.O. No. 152, it is at once obvious from whom it exacts compliance with its
command, thus: "REQUIRING THE MUNICIPAL BOARDS OR CITY COUNCILS AND
MUNICIPAL COUNCILS TO SUBMIT PROPOSED ORDINANCES AND
SUBDIVISION PLANS TO THE NATIONAL PLANNING COMMISSION FOR
COMMENT AND RECOMMENDATION, BEFORE TAKING ACTION ON THE SAME,
AND TO FORWARD A COPY OF THEIR APPROVED SUBDIVISION ORDINANCES
TO THE SAID COMMISSION".
To be sure, [EMRASON] cannot be made to bear the consequences for the noncompliance, if this be the case, by the Municipal Council of Dasmarinas, Cavite with
what A.O. 152 required. A converse proposition would be antithetical to the sporting
idea of fair play.[11]
As for the other requirements which EMRASON purportedly failed to comply with, the
Court of Appeals held that these became obligatory only after the subject property
was already converted to non-agricultural, to wit:
Foregoing considered, this Court holds that everything needed to validly effect the
conversion of the disputed area to residential had been accomplished. The only
conceivable step yet to be taken relates to the obtention of a conversion order from
the DAR, or its predecessor, the Ministry of Agrarian Reform (MAR.) under its rather
intricate procedure established under Memorandum Circular No. 11-79. But then, this
omission can hardly prejudice the [herein respondent EMRASON] for the DAR7MAR
guidelines were promulgated only in 1979, at which time the conversion of
[EMRASON's] property was already a fait accompli.
Like the conversion procedure set up under Memorandum Circular No. 11-79, the
revised methodology under the CARL cannot also be made to apply retroactively to
lands duly converted/classified as residential under the aegis of the Local Autonomy
Act. For, as a rule, a statute is not intended to affect transactions which occurred
before it becomes operational (Tolentino, COMMENTARIES AND JURISPRUDENCE
ON THE CIVIL CODE, Vol. I, 1983 ed.; p. 23). And as the landmark case of Natalia
Realty, Inc. vs. Department of Agrarian Reform, 225 SCRA 278, teaches:
"Indeed, lands not devoted to agricultural activity are outside the coverage of CARL.
These include lands previously converted to non-agricultural uses prior to the
effectively of CARL by government agencies other than respondent DAR x x x.
xxxx
Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is

hound by such conversion. It was therefore error to include the underdeveloped

portions x x x within the coverage of CARL".
It may be so, as the assailed decision stated, that in Natalia the lands therein involved
received a locational clearance from the Housing and Land Use Regulatory Board
(HLRB, formerly the Human Settlement Regulatory Commission [HSRC], as
residential or commercial, a factor [EMRASON] cannot assert in its favor. This
dissimilarity, however, hardly provides a compelling justification not to apply the
lessons of Natalia. This is because the property involved in this case, unlike that
in Natalia, underwent classification/conversion before the creation on May 13, 1976 of
the HSRC, then known as the Human Settlements Regulatory Commission (P.D. No.
933). Furthermore, what is recognized as the HSRC's authority to classify and to
approve subdivisions and comprehensive land use development plans of local
governments devolved on that agency only upon its reorganization on February 7,
1981, with the issuance of Executive Order No. 648 known as the Charter of the
Human Settlements Regulatory Commission. Section 5 of the same executive
order invested the HSRC with the above classifying and approving authority. In fine,
the property of [EMRASON] went into the process of conversion at the time when the
intervention thereon of the HSRC, which was even then non-existent, was
unnecessary. Shortly before the creation of the HSRC, it would appear that to
provincial, city, or municipal councils/boards, as the case may be, belong the
prerogative, albeit perhaps not exclusive, to classify private lands within their
respective territorial jurisdiction and approve their conversion from agricultural to
residential or other non-agricultural uses. To paraphrase the holding in Patalinghug
vs. Court of Appeals, 229 SCRA 554, once a local government has, pursuant to its
police power, reclassified an area as residential, that determination ought to prevail
and must be respected.[12]
The Court of Appeals further observed that the subject property has never been
devoted to any agricultural activity and is, in fact, more suitable for non-agricultural
purposes, thus:
It is worthy to note that the CARL defines "agricultural lands" as "lands devqtedto
agricultural activity x x x and not classified as mineral, forest, residential, commercial
or industrial lands" (Sec. 3[c]). Guided by this definition, it is clear that [herein
respondent EMRASON's] area does not fall under the category of agricultural lands.
For, let alone the reality that the property is not devoted to some agricultural activity,
being in fact unirrigated, and, as implied in the decision of the DAR Hearing Officer
Victor Baguilat, without duly instituted tenants, the same had been effectively
classified as residential. The bare circumstance of its not being actually developed as
subdivision or that it is underdeveloped would not alter the conclusion. For, according

51
to Natalia, what actually determines the applicability of the CARL to a given piece of
land is its previous classification and not its current use or stages of development as
non-agricultural property.
As a pragmatic consideration, the disputed area, in terms of its location in relation to
existing commercial/industrial sites and its major economic use, is more suitable for
purposes other than agriculture. In this connection, this Court notes that the property
is situated at the heart of the CALABARZON, and, as Annex "C" of the petition
demonstrates, lies adjacent to huge industrial/commercial complexes. The San
Miguel-Monterey meat plant, the NDC-Marubeni complex and the Reynolds Aluminum
plant may be mentioned. For sure, the Sangguniang Panlalawigan of Cavite,
obviously cognizant of the economic potential of certain areas in the Municipality of
Dasmarias has, by Resolution No. 105, series of 1988. declared defined tracts of
lands in the Municipality of Dasmarias as "industrial-residential-institutional mix."[13]
As a last point, the Court of Appeals justified its issuance of a writ of preliminary
injunction enjoining the implementation of the OP Decision dated February 7, 1996
and Resolution dated May 14, 1996, viz:
As a final consideration, we will address the [herein petitioners] OAR Secretary's and
Buklod's joint concern regarding the propriety of the preliminary injunction issued in
this case. They alleged that the issuance is violative of Section 55 of the CARL which
reads:
"SEC. 55. No Restraining Order or Preliminary
Injunction. - No Court in the Philippines shall have jurisdiction to issue any restraining
order or writ of preliminary injunction against the PARC or any of its duly authorized or
designated agencies in any case, dispute, controversy arising from, necessary to, or
in connection with the application, implementation, enforcement, or interpretation of
this Act and other pertinent laws on agrarian reform". (Underscoring added.)
As will be noted, the aforequoted section specifically mentions the Presidential
Agrarian Reform Council (PARC) of which the DAR Secretary is the Vice Chairman, or
any of its duly designated agencies as protected from an injunctive action of any
court. These agencies include the PARC Executive Committee, the PARC Secretariat,
which the DAR Secretary heads, and. on the local level, the different Agrarian Reform
Action Committees (Sees. 41 to 45, R.A. No. 6657).
From the records, there is no indication that the [petitioner] Agrarian Reform
Secretary acted vis-a-vis the present controversy for, or as an agency of, the PARC.

Hence, he cannot rightfully invoke Section 55 of the CARL and avail himself of the
protective mantle afforded by that provision. The PARC, it bears to stress, is a policyformulating and coordinating body (Sec. 18. E.O. 229, July 22, 1987) without express
adjudicatory mandate, unlike the DAR Secretary who, as department head, is "vested
with primary jurisdiction to determine and adjudicate agrarian reform matters and shall
have exclusive jurisdiction over all matters involving the implementation of agrarian
reform" (Sec. 50. R.A. 6657). Thus, it is easy lo accept the proposition that the
[petitioner] Agrarian Reform Secretary issued his challenged orders in the exercise
of his quasi-judicial power as department head.[14]
In the end, the Court of Appeals decreed:
WHEREFORE, the instant petition for review is hereby GRANTED. Accordingly, the
challenged decision dated February 7, 1996 and the resolution of May 14, 1996 of the
Office of the President in O.P. Case No. 5461 are hereby NULLIFIED,
VACATED and SET ASIDE, and the notices of acquisition issued by the Department
of Agrarian Reform covering the 372-hectare property of the [herein respondent
EMRASON] at Barangay Langkaan, Dasmarias, Cavite declared VOID.
The writ of preliminary injunction issued by this Court on September 30, 1996 is
hereby made permanent.[15]
Buklod and DAR. filed their respective Motions for Reconsideration of the foregoing
Decision but both Motions were denied by the Court of Appeals in a Resolution dated
November 24, 1997.
Aggrieved, Buklod and DAR filed the instant Petitions, which were consolidated by this
Court in a Resolution[16]dated August 19, 1998.
In G.R. No. 131481, Buklod raises the following arguments:
1] THE MUNICIPAL ORDINANCE INVOKED BY [EMRASON] AS CONVERSION OF
THE PROPERTY IN QUESTION ENACTED ON JULY 9, 1972 BY THE MUNICIPAL
COUNCIL OF DASMARIAS, CAVITE IS IMPOTENT BECAUSE THE MUNICIPAL
ORDINANCE IMPOSED CONDITIONS WHICH [EMRASON] NEVER COMPLIED.
NO COMPLIANCE NO CONVERSION.
2] AT THE TIME THE ALLEGED ORDINANCE WAS ENACTED, A LAND REFORM
LAW WAS ALREADY IN EFFECT GRANTING SECURITY OF TENURE TO THE
FARMERS SO THAT A LANDOWNER CANNOT ARBITRARILY CONVERT AN
AGRICULTURAL LAND INTO A DIFFERENT CLASSIFICATION WITHOUT

52
COMPLYING WITH LEGAL REQUIREMENTS (R.A. 3844).
3] A MERE MUNICIPAL ORDINANCE CANNOT NEGATE LAND REFORM RIGHTS
GRANTED TO THE FARMERS BY LEGISLATIVE ENACTMENT UNDER R.A. 3844
AND SUBSEQUENT LAWS. LAND REFORM LAW BEING A SOCIAL LEGISLATION
IS PARAMOUNT.
4] LAND REFORM IS A CONSTITUTIONAL MANDATE FOR THE BENEFIT OF THE
LANDLESS FARMERS SO THAT THE LAND REFORM LAW SHOULD BE
CONSTRUED AND APPLIED IN ORDER TO ATTAIN THE LEGISLATIVE INTENT
OF RELIEVING THE FARMERS FROM THEIR POVERTY AND BONDAGE. THE
COURT OF APPEALS IGNORED THIS CONSTITUTIONAL MANDATE TO FAVOR
THE LANDLORD [EMRASON].
5] THE COURT OF APPEALS ISSUED A RESTRAINING ORDER/INJUNCTION
AGAINST THE CLEAR PROHIBITION IN THE CARL (SEC. 55 RA 6657) AND SO
FAR DEPARTED FROM THE USUAL COURSE OF BY REFUSING TO GRANT THE
PETITIONER FARMERS A HEARING INSPITE OF THE PROCEDURE
PRESCRIBED BY RA 7902 (SEC. ]).[17]
In G.R. No. 131624, the DAR ascribes the following errors on the part of the Court of
Appeals:
I.
THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT THE
MUNICIPALITY OF DASMARIAS, CAVITE, WAS AUTHORIZED, UNDER THE
LOCAL AUTONOMY ACT, TO CLASSIFY AND/OR RECLASSIFY LANDS
CONSIDERING THAT WHAT WAS CONFERRED THEREUNDER WAS ONLY
ZONING AUTHORITY, THUS, RENDER THE EXERCISE THEREOF BY THE
MUNICIPAL COUNCIL OF DASMARIAS, CAVITE, ULTRA VIRES;
II.
EVEN ASSUMING, IN GRATIA ARGUMENTI, THAT THE AUTHORITY TO
CLASSIFY AND RECLASSIFY LANDS IS POSSESSED BY MUNICIPAL
CORPORATIONS, STILL THE HONORABLE COURT OF APPEALS ERRED WHEN
IT CONSIDERED THE ALLEGED PASSAGE OF ORDINANCE NO. 29-A OF THE
MUNICIPAL COUNCIL OF DASMARIAS, CAVITE, AS A VALID MEASURE
RECLASSIFYING SUBJECT AGRICULTURAL LAND TO NON-AGRICULTURAL
USE CONSIDERING THAT THE SAID APPROVAL OF THE SUBDIVISION, PER

LETTER OF THE MUNICIPAL MAYOR, FAILED TO COMPLY WITH EXISTING

RULES AND REGULATIONS ON THE MATTER AND, THEREFORE,
NONCOMPLYING AND INEFFECTUAL; AND
III.
THE HONORABLE COURT OF APPEALS ERRED WHEN IT APPLIED THE RULING
OF THE HONORABLE COURT IN THE NATALIA REALTY CASE DUE TO
SUBSTANTIAL DISSIMILARITY IN FACTUAL SETTING AND MILIEU.[18]
At the crux of the present controversy is the question of whether the subject property
could be placed under the CARP.
DAR asserts that the subject property could be compulsorily acquired by the State
from EMRASON and distributed to qualified farmer-beneficiaries under the CARP
since it was still agricultural land when the CARL became effective on June 15, 1988.
Ordinance Nos. 1 and 29-A, approved by the Municipality of Dasmarias on July 13,
1971 and July 9, 1972, respectively, did not reclassify the subject property from
agricultural to non-agricultural. The power to reclassify lands is an inherent power of
the National Legislature under Section 9 of Commonwealth Act No. 141, otherwise
known as the Public Land Act, as amended, which, absent a specific delegation,
could not be exercised by any local government unit (LGU). The Local Autonomy Act
of 1959 - in effect when the Municipality of Dasmarias approved Ordinance Nos. 1
and 29-A - merely delegated to cities and municipalities zoning authority, to be
understood as the regulation of the uses of property in accordance with the existing
character of the land and structures. It was only Section 20 of Republic Act No. 7160,
otherwise known as the Local Government Code of 1991, which extended to cities
and municipalities limited authority to reclassity agricultural lands.
DAR also argues that even conceding that cities and municipalities were already
authorized in 1972 to issue an ordinance reclassifying lands from agricultural to nonagricultural, Ordinance No. 29-A of the Municipality of Dasmarias was not valid
since it failed to comply with Section 3 of the Local Autonomy Act of 1959, Section
16(a) of Ordinance No. 1 of the Municipality of Dasmarinas, and Administrative Order
No. 152 dated December 16, 1968, which all required review and approval of such an
ordinance by the National Planning Commission (NPC). Subsequent developments
further necessitated review and approval of Ordinance No. 29-A by the Human
Settlements Regulatory Commission (HSRC), which later became the Housing and
Land Use Regulatory Board (HLURB).
DAR further avers that the reliance by the Court of Appeals -on Natalia Realty, Inc. v.

53
Department of Agrarian Reform[19] (Natalia Realty case) is misplaced because the
lands involved therein were converted from agricultural to residential use by
Presidential Proclamation No. 1637, issued pursuant to the authority delegated to the
President under Section 71, et seq., of the Public Land Act.[20]
Buklod adopts the foregoing arguments of DAR. In addition, it submits that prior to
Ordinance Nos. 1 and 29-A, there were already laws implementing agrarian reform,
particularly: (1) Republic Act No. 3844, otherwise known as the Agricultural Land
Reform Code, in effect since August 8, 1963, and subsequently amended by Republic
Act No. 6389 on September 1.0, 1971, after which it became known as the Code of
Agrarian Reforms; and (2) Presidential Decree No. 27, otherwise known as the
Tenants Emancipation Decree, which took effect on November 19, 1972. Agricultural
land could not be converted for the purpose of evading land reform for there were
already laws granting farmer-tenants security of tenure, protection from ejectment
without just cause, and vested rights to the land they work on.
Buklod contends that EMRASON failed to comply with Section 36 of the Code of
Agrarian Reforms, which provided that the conversion of land should be implemented
within one year, otherwise, the conversion is deemed in bad faith. Given the failure of
EMRASON to comply with many other requirements for a valid conversion, the
subject property has remained agricultural. Simply put, no compliance means no
conversion. In fact, Buklod points out, the subject property is still declared as
"agricultural" for real estate tax purposes. Consequently, EMRASON is now estopped
from insisting that the subject property is actually "residential."
Furthermore, Buklod posits that land reform is a constitutional mandate which should
be given paramount consideration. Pursuant to said constitutional mandate, the
Legislature enacted the CARL. It is a basic legal principle that a legislative statute
prevails over a mere municipal ordinance.
Finally, Buklod questions the issuance by the Court of Appeals of a writ of preliminary
injunction enjoining the distribution of the subject property to the farmer-beneficiaries
in violation of Section 55 of the CARL; as well as the refusal of the appellate court to
hold a hearing despite Section 1 of Republic Act No. 7902,[21] prescribing the
procedure for reception of evidence before the Court of Appeals. At such a hearing,
Buklod intended to present evidence that the subject property is actually agricultural
and that Buklod members have been working on said property for decades, qualifying
them as farmer-beneficiaries.
EMRASON, on the other hand, echoes the ruling of the Court of Appeals that the
subject property is exempt from CARP because it had already been reclassified as

residential with the approval of Ordinance No. 29-A by the Municipality of

Dasmarias on July 9, 1972. EMRASON cites Ortigas & Co., Ltd. Partnership v.
Feati Bank and Trust Co.[22] (Ortigas case) where this Court ruled that a municipal
council is empowered to adopt zoning and subdivision ordinances or regulations
under Section 3 of the Local Autonomy Act of 1959.
Still relying on the Ortigas case, EMRASON avows that the Municipality of
Dasmarias, taking into account the conditions prevailing in the area, could validly
zone and reclassify the subject property in the exercise of its police power in order to
safeguard the health, safety, peace, good order, and general welfare of the people in
the locality. EMRASON describes the whole area surrounding the subject property as
residential subdivisions (i.e., Don Gregorio, Metro Gate, Vine Village, and Cityland
Greenbreeze 1 and 2 Subdivisions) and industrial estates (i.e., Reynolds Aluminum
Philippines, Inc. factory; NDC-Marubeni industrial complex, San Miguel CorporationMonterey cattle and piggery farm and slaughterhouse), traversed by national
highways (i.e., Emilio Aguinaldo National Highway, Trece Martirez, Puerto Azul Road,
and Governor's Drive). EMRASON mentions that on March 25, 1988,
the Sangguniang Panlalawigan of the Province of Cavite passed Resolution No. 105
which declared the area where subject property is located as "industrial-residentialinstitutional mix."
EMRASON further maintains that Ordinance No. 29-A of the Municipality of
Dasmarias is valid. Ordinance No. 29-A is complete in itself, and there is no more
need to comply with the alleged requisites which DAR and Buklod are insisting upon.
EMRASON quotes from Patalinghug v. Court of Appeals[23] (Patalinghug case) that
"once a local government has reclassified an area as commercial, that determination
for zoning purposes must prevail."
EMRASON points out that Ordinance No. 29-A, reclassifying the subject property,
was approved by the Municipality of Dasmarias on July 9, 1972. Executive Order
No. 648, otherwise known as the Charter of the Human Settlements Regulatory
Commission (HSRC Charter) - which conferred upon the HSRC the power and duty to
review, evaluate, and approve or disapprove comprehensive land use and
development plans and zoning ordinances of LGUs - was issued only on February 7,
1981. The exercise by HSRC of such power could not be applied retroactively to this
case without impairing vested rights of EMRASON. EMRASON disputes as well the
absolute necessity of submitting Ordinance No. 29-A to the NPC for approval. Based
on the language of Section 3 of the Local Autonomy Act of 1959, which used the word
"may," review by the NPC of the local planning and zoning ordinances was merely
permissive. EMRASON additionally posits that Ordinance No. 1 of the Municipality of
Dasmarias simply required approval by the NPC of the final plat or plan, map, or

54
chart of the subdivision, and not of the rcclassification and/or conversion by the
Municipality of the subject property from agricultural to residential. As for
Administrative Order No. 152 dated December 16, 1968, it was directed to and should
have been complied with by the city and municipal boards and councils. Thus,
EMRASON should not be made to suffer for the non-compliance by the Municipal
Council of Dasmarinas with said administrative order.
EMRASON likewise reasons that since the subject property was already reclassified
as residential with the mere approval of Ordinance No. 29-A by the Municipality of
Dasmarinas, then EMRASON did not have to immediately undertake actual
development of the subject property. Reclassification and/or conversion of a parcel of
land are different from the implementation of the conversion.
EMRASOK is resolute in its stance that the Court of Appeals correctly applied
the Natalia Realty case to the present case since both have similar facts; the only
difference being that the former involves a presidential fiat while the latter concerns a
legislative fiat.
EMRASON denies that the Buklod members are farmer-tenants of the subject
property. The subject property has no farmer-tenants because, as the Court of
Appeals observed, the property is unirrigated and not devoted to any agricultural
activity. The subject property was placed under the CARP only to accommodate the
farmer-tenants of the NDC property who were displaced by the NDC-Marubeni
Industrial Project. Moreover, the Buklod members are still undergoing a screening
process before the DAR-Region IV, and are yet to be declared as qualified farmerbeneficiaries of the subject property. Hence, Buklod members tailed to establish they
already have vested right over the subject property.
EMRASON urges the Court not to consider issues belatedly raised by Buklod, It may
be recalled that Buklod intervened in CA-G.R. SP No. 40950 just before the Court of
Appeals rendered judgment in said case. When the appellate court promulgated its
Decision on March 26, 1997 favoring EMRASON, Buklod filed a Motion for
Reconsideration of said judgment, to which EMRASON, in turn, filed a Comment and
Opposition. In its Reply to the aforementioned Comment and Opposition of
EMRASON, Buklod raised new factual matters, specifically, that: (1) EMRASON has
not even subdivided the title to the subject property 27 years after its purported
reclassification/conversion; (2) EMRASON never obtained a development permit nor
mayor's permit to operate a business in Dasmarinas; and (3) the farmer-tenants
represented by Buklod have continuously cultivated the subject property. There was
no cogent or valid reason for the Court oi' Appeals to allow Buklod to present
evidence to substantiate the foregoing allegations. The DAR Region IV Hearing

Officer already conducted extensive hearings during which the farmers were duly
represented. Likewise, Buklod raises for the first time in its Petition before this Court
the argument that the Tenants Emancipation Decree prescribes a procedure for
conversion which EMRASON failed to comply with.
Lastly, EMRASON defends the issuance by the Court of Appeals of a writ of
preliminary injunction in CA-G.R. SP No. 40950. Section 55 of the CARL is
inapplicable to the case at bar because said provision only prohibits the issuance by a
court of a TRO or writ of preliminary injunction "against the PARC or any ol^ its duly
authorized or designated agencies." As the Court of Appeals declared, the PARC is a
policy-formulating and coordinating body. There is no indication whatsoever that the
DAR Secretary was acting herein as an agent of the PARC. The DAR Secretary
issued the orders of acquisition for the subject property in the exercise of his quasijudicial powers as department head.
The Court, after consideration of the issues and arguments in the Petitions at bar,
affirms the Court of Appeals and rules in favor of EMRASON.
CARP coverage limited to agricultural land
Section 4, Chapter II of the CARL, as amended,24 particularly defines the coverage of
the CARP, to wit:
SEC. 4. Scope. - The Comprehensive Agrarian Reform Law of 1988 shall cover,
regardless of tenurial arrangement and commodity produced, all public and private
agricultural lands as provided in Proclamation No. 131 and Executive Order No.
229, including other lands of the public domain suitable for agriculture: Provided, That
landholdings of landowners with a total area of five (5) hectares and below shall not
be covered for acquisition and distribution to qualified beneficiaries.
More specifically, the following lands are covered by the CARP:
(a) All alienable and disposable lands of the public domain devoted to or suitable for
agriculture. No reclassification of forest or mineral lands to agricultural lands shall be
undertaken after the approval of this Act until Congress, taking into account
ecological, developmental and equity considerations, shall have determined by law,
the specific limits of the public domain;
(b) All lands of the public domain in excess of the specific limits as determined by
Congress in the preceding paragraph;

55
(c) All other lands owned by the Government devoted to or suitable for agriculture;
and
(d) All private lands devoted to or suitable for agriculture regardless of the
agricultural products raised or that can be raised thereon.
A comprehensive inventory system in consonance with the national land use plan
shall be instituted by the Department of Agrarian Reform (DAR), in accordance with
the Local Government Code, for the purpose of properly identifying and classifying
farmlands within one (1) year from effectivity of this /Vet. without prejudice to the
implementation of the land acquisition and distribution." (Emphases supplied.)
Section 3(c), Chapter I of the CARL further narrows down the definition of agricultural
land that is subject to CARP to "land devoted to agricultural activity as defined in this
Act and not classified as mineral, forest, residential, commercial or industrial land."
The CARL took effect on June 15, 1988. To be exempt from the CARP, the subject
property should have already been reclassified as residential prior to said date.
The Local Autonomy Act of 1959
The Local Autonomy Act of 1959, precursor of the Local Government Code of 1991,
provided;
SEC. 3. Additional powers of provincial boards, municipal boards or city councils and
municipal and regularly organized municipal district councils. - x x x
xxxx
Power to adopt zoning and planning ordinances. Any provision of law to the
contrary notwithstanding, Municipal Boards or City Councils in cities, and Municipal
Councils in municipalities are hereby authorized to adopt zoning and subdivision
ordinances or regulations for their respective cities and municipalities subject to the
approval of the City Mayor or Municipal Mayor, as the case may be. Cities and
municipalities may, however, consult the National Planning Commission on
matters pertaining to planning and zoning. (Emphases supplied.)
Pursuant to the foregoing provision, the Municipal Council of Dasmarias
approved Ordinance No. 1 on July 13, 1971, which laid down the general
subdivision regulations for the municipality; and Resolution No. 29-A on July 9,
1972, which approved the application for subdivision of the subject property.

The Court observes that the OP, the Court of Appeals, and even the parties
themselves referred to Resolution No. 29-A as an ordinance. Although it may not be
its official designation, calling Resolution No. 29-A as Ordinance No. 29-A is not
completely inaccurate. In the Ortigas & Co. case, the Court found it immaterial that
the then Municipal Council of Mandaluyong declared certain lots as part of the
commercial and industrial zone through a resolution, rather than an ordinance,
because:
Section 3 of R.A. No. 2264, otherwise known as the Local Autonomy Act, empowers a
Municipal Council "to adopt zoning and subdivision ordinances or regulations" for the
municipality. Clearly, the law docs not restrict the exercise of the power through
an ordinance. Therefore, granting that Resolution No. 27 is not an ordinance, it
certainly is a regulatory measure within the intendment or ambit of the word
"regulation" under the provision. As a matter oi' fact the same section declares that
the power exists "(A)ny provision of law to the contrary notwithstanding x x x."[25]
(Emphases supplied.)
Zoning and reclassification
Section 3(c), Chapter I of the CARL provides that a parcel oi^ land reclassified for
non-agricultural uses prior to June 15, 1988 shall no longer be considered agricultural
land subject to CARP. The Court is now faced with the question of whether Resolution
No. 29-A of the Municipality of Dasmarias dated July 9, 1972, which approved the
subdivision of the subject property for residential purposes, had also reclassified the
same from agricultural to residential.
Zoning classification is an exercise by the local government of police power, not the
power of eminent domain. A zoning ordinance is defined as a local city or municipal
legislation which logically arranges, prescribes, defines, and apportions a given
political subdivision into specific land uses as present and future projection of needs.
[26]

The Court gave a more extensive explanation of zoning in Pampanga Bus Company,
Inc. v. Municipality of Tarlac,[27]thus:
The appellant argues that Ordinance No. 1 is a zoning ordinance which the Municipal
Council is authorized to adopt. McQuillin in his treaties on Municipal Corporations
(Volume 8, 3rd ed.) says:

56
Zoning is governmental regulation of the uses of land and buildings according to
districts or zones. It is comprehensive where it is governed by a single plan for the
entire municipality and prevails throughout the municipality in accordance with that
plan. It is partial or limited where it is applicable only to a certain part of the
municipality or to certain uses. Fire limits, height districts and building regulations are
forms of partial or limited zoning or use regulation that are antecedents of modern
comprehensive zoning, (pp. 11-12.)

(a)

Agricultural;

(b)

Residential, commercial, industrial, or for similar productive purposes;

(c)

Educational, charitable, or other similar purposes; and

(d)

Reservations for townsites and for public and quasi-public uses.

The term "zoning," ordinarily used with the connotation of comprehensive or general
zoning, refers to governmental regulation of the uses of land and buildings according
to districts or zones. This regulation must and does utilize classification of uses within
districts as well as classification of districts, inasmuch as it manifestly is impossible to
deal specifically with each of the innumerable uses made of land and buildings.
Accordingly, (zoning has been defined as the confining of certain classes of buildings
and uses to certain localities, areas, districts or zones.) It has been stated that zoning
is the regulation by districts of building development and uses of property, and that the
term "zoning" is not only capable of this definition but has acquired a technical and
artificial meaning in accordance therewith. (Zoning is the separation of the
municipality into districts and the regulation of buildings and structures within the
districts so created, in accordance with their construction, and nature and extent of
their use. It is a dedication of districts delimited to particular uses designed to
subserve the general welfare.) Numerous other definitions of zoning more or less in
accordance with these have been given in the cases, (pp. 27-28.)[28]

The President, upon recommendation by the Secretary of Agriculture and Natural

Resources, shall from time to time make the classifications provided for in this
section, and may, at any time and in a similar manner, transfer lands from one class to
another. (Emphasis supplied.)

According to Section 1(b) of Ordinance No. 1, "[s]ubdivision means the division of a

tract or parcel of land into two or more lots, sites or other divisions for the purpose,
whether immediate or future, o[f| a sale or building development. It includes
resubdivision, and when appropriate to the context, relates to the process of
subdividing as to the land of territory subdivided." Subdivision ordinances or
regulations such as Resolution No. 29-A, in relation to Ordinance No. 1,
constitute partial or limited zoning, for they are applicable to a specific property in
the city or municipality to be devoted for a certain use.

Conversion is the act of changing the current use of a piece of agricultural land into
some other use as approved by the Department of Agrarian Reform. Reclassification,
on the other hand, is the act of specifying how agricultural lands shall be utilized for
non-agricultural uses such as residential, industrial, commercial, as embodied in the
land use plan, subject to the requirements and procedure for land use conversion, x x
x. (Italics supplied.)

Section 9 of the Public Land Act - cited by the DAR and Buklod as the purported
delegation by the National Legislature of the power to reclassify - is immaterial to the
instant cases. Said provision reads:
SEC. 9. For the purpose of their administration and disposition, the lands of the public
domain alienable or open to disposition shall be classified, according to the use or
purposes to which such lands are destined, as follows:

The power delegated to the President under the aforequoted provision of the Public
Land Act is limited to the classification of lands of the public domain that are
alienable or open to disposition. It finds no application in the present cases for the
simple reason that the subject property involved herein is no longer part of the public
domain. The subject property is already privately owned and accordingly covered by
certificates of title.
The concept that concerns this Court in the instant cases is the reclassification of
agricultural lands. In Alarcon v. Court of Appeals,[29] the Court had the occasion to
define and distinguish reclassification from conversion as follows:

Reclassification also includes the reversion of non-agricultural lands to agricultural

use.[31]
Under the present Local Government Code, it is clear that the authority to reclassify
agricultural lands primarily resides in the sanggunian of the city or municipality. Said
provision reads in full:
Sec. 20. Reclassification of Lands. - (a) A city or municipality may, through an
ordinance passed by the sanggunian after conducting public hearing for the
purpose, authorize the reclassification of agricultural lands and provide for the

57
manner of their utilization or disposition in the following cases: (X) when the land
ceases to be economically feasible and sound for agricultural purposes as determined
by the Department of Agriculture or (2) where the land shall have substantially greater
economic value for residential, commercial, or industrial purposes, as determined by
the sanggunian concerned: Provided, That such reclassification shall be limited to the
following percentage of the total agricultural land area at the time of the passage of
the ordinance:

expressly granted to city and municipal boards and councils, under Section 3 thereof,
was the power to adopt zoning and subdivision ordinances and regulations.

(1)

Such arguments are easily refuted by reference to the definitions of zoning and
reclassification earlier presented herein, which support a more extensive concept of
zoning than that which DAR and BUKLOD assert.

For highly urbanized and independent component cities, fifteen percent (15%);

(2) For component cities and first to the third class municipalities, ten percent
(10%); and
(3) For fourth to sixth class municipalities, five percent (5%): Provided, further, That
agricultural lands distributed to agrarian reform beneficiaries pursuant to Republic
Act Numbered Sixty-six hundred fifty-seven (R.A. No. 6657), otherwise known as
"The Comprehensive Agrarian Reform Law", shall not be affected by the said
reclassification and the conversion of such lands into other purposes shall be
governed by Section 65 of said Act.
(b) The President may, when public interest so requires and upon recommendation
of the National Economic and Development Authority, authorize a city or municipality
to reclassify lands in excess of the limits set in the next preceding paragraph.
(c) The local government units shall, in conformity with existing laws, continue
to prepare their respective comprehensive land use plans enacted through
zoning ordinances which shall be the primary and dominant bases for the future
use of land resources: Provided, That the requirements for food production, human
settlements, and industrial expansion shall be taken into consideration in the
preparation of such plans.
(d) When approval by a national agency is required for reclassification, such
approval shall not be unreasonably withheld. Failure to act on a proper and complete
application for reclassification within three (3) months from receipt of the same shall
be deemed as approval thereof.
(e) Nothing in this Section shall be construed as repealing, amending, or modifying
in any manner the provisions of R.A. No. 6657. (Emphases supplied.)
Prior to the Local Government Code of 1991, the Local Autonomy Act of 1959 was
silent on the authority to reclassify agricultural lands. What the earlier statute

DAR and Buklod insist that zoning is merely the regulation of land use based on
the existing character of the property and the structures thereon; and that zoning is
a lesser power compared to reclassification so that the delegation of the former to the
local government should not be deemed to include the latter.

By virtue of a zoning ordinance, the local legislature may arrange, prescribe, define,
and apportion the land within its political jurisdiction into specific uses based not only
on the present, but also on the future projection of needs. To limit zoning to the
existing character of the property and the structures thereon would completely negate
the power of the local legislature to plan land use in its city or municipality. Under such
circumstance, zoning would involve no planning at all, only the rubber-stamping by the
local legislature of the current use of the land.
Moreover, according to the definition of reclassification, the specified non-agricultural
use of the land must be embodied in a land use plan, and the land use plan is
enacted through a zoning ordinance. Thus, zoning and planning ordinances take
precedence over reclassification. The reclassification of land use is dependent on
the zoning and land use plan, not the other way around.
It may, therefore, be reasonably presumed that when city and municipal boards and
councils approved an ordinance delineating an area or district in their cities or
municipalities as residential, commercial, or industrial zone, pursuant to the power
granted to them under Section 3 of the Local Autonomy Act of 1959, they were, at the
same time, reclassifying any agricultural lands within the zone for non-agri cultural
use; hence, ensuring the implementation of and compliance with their zoning
ordinances. The logic and practicality behind such a presumption is more evident
when considering the approval by local legislative bodies of subdivision ordinances
and regulations. The approval by city and municipal boards and councils of an
application for subdivision through an ordinance should already be understood to
include approval of the reclassification of the land, covered by said application, from
agricultural to the intended non-agricultural use. Otherwise, the approval of the
subdivision application would serve no practical effect; for as long as the property
covered by the application remains classified as agricultural, it could not be
subdivided and developed for non-agricultural use.

58
A liberal interpretation of the zoning power of city and municipal boards and councils,
as to include the power to accordingly reclassify the lands within the zones, would be
in accord with the avowed legislative intent behind the Local Autonomy Act of 1959,
which was to increase the autonomy of local governments. Section 12 of the Local
Autonomy Act of 1959 itself laid down rules for interpretation of the said statute:
SEC. 12. Rules for the interpretation of the Local Autonomy Act. 1. Implied power of a province, a city or municipality shall be liberally construed in
its favor. Any fair and reasonable doubt as to the existence of the power should be
interpreted in favor of the local government and it shall be presumed to exist.
2. The general welfare clause shall be liberally interpreted in case of doubt so as
to give more power to local governments in promoting the economic condition, social
welfare and material progress of the people in the community.
3. Vested rights existing at the time of the promulgation of this law arising out of a
contract between a province, city or municipality on one hand and a third party on the
other, should be governed by the original terms and provisions of the same, and in no
case would this act infringe existing rights.
Moreover, the regulation by local legislatures of land use in their respective territorial
jurisdiction through zoning and reclassification is an exercise of police power. In Binay
v. Domingo,32] the Court recognized that police power need not always be expressly
delegated, it may also be inferred:
The police power is a governmental function, an inherent attribute of sovereignty,
which was born with civilized government. It is founded largely on the maxims, "Sic
utere tuo et alienum non laedas" and "Salus populi est suprema lex" Its fundamental
purpose is securing the general welfare, comfort and convenience of the people.
Police power is inherent in the state but not in municipal corporations (Balacuit v. CFI
of Agusan del Norte, 163 SCRA 182). Before a municipal corporation may exercise
such power, there must be a valid delegation of such power by the legislature which is
the repository of the inherent powers of the State. A valid delegation of police
power may arise from express delegation, or be inferred from the mere fact of
the creation of the municipal corporation; and as a general rule, municipal
corporations may exercise police powers within the fair intent and purpose of
their creation which are reasonably proper to give effect to the powers
expressly granted, and statutes conferring powers on public corporations have

been construed as empowering them to do the things essential to the

enjoyment of life and desirable for the safety of the people. (62 C.J.S., p. 277).
The so-called inferred police powers of such corporations are as much delegated
powers as arc those conferred in express terms, the inference of their delegation
growing out of the fact of the creation of the municipal corporation and the additional
fact that the corporation can only fully accomplish the objects of its creation by
exercising such powers. (Crawfordsville vs. Braden, 28 N.E. 849).
Furthermore, municipal corporations, as governmental agencies, must have
such measures of the power as are necessary to enable them to perform their
governmental functions. The power is a continuing one, founded on public
necessity. (62 C.J.S. p. 273) Thus, not only does the State effectuate its purposes
through the exercise of the police power but the municipality does also. (U.S. v.
Salaveria, 39 Phil. 102).
Municipal governments exercise this power under the general welfare clause:
pursuant thereto they are clothed with authority to "enact such ordinances and issue
such regulations as may be necessary to carry out and discharge the responsibilities
conferred upon it by law, and such as shall be necessary and proper to provide for the
health, safety, comfort and convenience, maintain peace and order, improve public
morals, promote the prosperity and general welfare of the municipality and the
inhabitants thereof, and insure the protection of property therein." (Sections 91, 149,
177 and 208, BP 337). And under Section 7 of BP 337, "every local government unit
shall exercise the powers expressly granted, those necessarily implied therefrom, as
well as powers necessary and proper for governance such as to promote health and
safety, enhance prosperity, improve morals, and maintain peace and order in the local
government unit, and preserve the comfort and convenience of the inhabitants
therein."
Police power is the power to prescribe regulations to promote the health, morals,
peace, education, good order or safety and general welfare of the people. It is the
most essential, insistent, and illimitable of powers. In a sense it is the greatest and
most powerful attribute of the government. It is elastic and must be responsive to
various social conditions. (Sangalang, el al. vs. IAC, 176 SCRA 719). On it depends
the security of social order, the life and health of the citizen, the comfort of an
existence in a thickly populated community, the enjoyment of private and social life,
and the beneficial use of property, and it has been said to be the very foundation on
which our social system rests. (16 C.J.S., p. 896) However, it is not confined within
narrow circumstances of precedents resting on past conditions; it must follow the legal
progress of a democratic way of life. (Sangalang, el al. vs. IAC, supra).
xxxx

59
In the case of Sangalang vs. IAC, supra, We ruled that police power is not capable of
an exact definition but has been, purposely, veiled in general terms to underscore its
all-comprehensiveness. Its scope, over-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 assuring the
greatest benefits.
The police power of a municipal corporation is broad, and has been said to be
commensurate with, but not to exceed, the duty to provide for the real needs of the
people in their health, safely, comfort, and convenience as consistently as may be
with private rights. It extends to all the great public needs, and, in a broad sense
includes all legislation and almost every function of the municipal government. It
covers a wide scope of subjects, and, while it is especially occupied with whatever
affects the peace, security, health, morals, and general welfare of the community, it is
not limited thereto, but is broadened to deal with conditions which exists so as to bring
out of them the greatest welfare of the people by promoting public convenience or
general prosperity, and to everything worthwhile for the preservation of comfort of the
inhabitants of the corporation (62 C.J.S. Sec. 128). Thus, it is deemed inadvisable to
attempt to frame any definition which shall absolutely indicate the limits of police
power.[33] (Emphases supplied.)
Based on the preceding discussion, it cannot be said that the power to reclassify
agricultural land was first delegated to the city and municipal legislative bodies under
Section 26 of the Local Government Code of 1991. Said provision only articulates a
power of local legislatures, which, previously, had only been implied or inferred.
Compliance with other requirements or conditions
Resolution No. 29-A is a valid ordinance, which, upon its approval on July 9, 1972,
immediately effected the zoning and reclassifying of the subject property for
residential use. It need not comply with any of the requirements or conditions which
DAR and Buklod are insisting upon.
DAR and Buklod aver that Resolution No. 29-A was not reviewed and approved by the
NPC, in violation of the line in Section 3 of the Local Autonomy Act of 1959, stating
that "[c]ities and municipalities may, however, consult the National Planning
Commission on matters pertaining to planning and zoning." Consideration must be
given, however, to the use of the word "may" in the said sentence. Where the
provision reads "may," this word shows that it is not mandatory but discretionary. It is
an auxiliary verb indicating liberty, opportunity, permission and possibility.[34] The use

of the word "may" in a statute denotes that it is directory in nature and generally
permissive only. The "plain meaning rule" or verba legis in statutory construction is
thus applicable in this case. Where the words of a statute are clear, plain, and free
from ambiguity, it must be given its literal meaning and applied without attempted
interpretation.[35] Since consultation with the NPC was merely discretionary, then there
were only two mandatory requirements for a valid zoning or subdivision ordinance or
regulation under Section 3 of the Local Autonomy Act of 1959, namely, that (1) the
ordinance or regulation be adopted by the city or municipal board or council; and (2) it
be approved by the city or municipal mayor, both of which were complied with byl
Resolution No. 29-A.
Section 16(a) of Ordinance No. 1 of the Municipality of Dasmarias likewise
mentions the NPC, to wit:
a. Final plat of subdivision - As essential requirements before a subdivision is
accepted for verification by the Bureau of Lands, the final plat of the scheme of the
subdivision must comply with the provision of this ordinance. Application for plat
approval shall be submitted to the Municipal Mayor and shall be forwarded to
the National Planning Commission thru the Highway District Engineer for
comment and/or recommendations, before action is taken by the Municipal
Council. The final approval of the plat shall be made by the Municipal Mayor upon
recommendation of the Municipal Council by means of a resolution. (Emphasis
supplied.)
The aforementioned provision of Ordinance No. 1 refers to the final plat of the
subdivision. The term plat includes "plat, plan, plot or replot."[36] It must be
distinguished from the application for subdivision.
The Court concurs with the analysis of the Court of Appeals that Resolution No. 29-A
actually contains two resolutions. The first reads:
Resolved, As it is hereby Resolved to approve the application for
subdivision containing an area of Three Hundred Seventy-Two Hectares (372)
situated in barrio Bocal and Langkaan, named as Travellers Life Homes.[37]
(Efriphasis supplied.)
It is manifest, even from just a plain reading of said resolution, that the application for
subdivision covering the subject property was categorically and unconditionally
approved by the Municipality of Dasmarinas. As a consequence of such approval, the
subject property is immediately deemed zoned and reclassified as residential.

60
Meanwhile, the second resolution in Resolution No. 29-A states:
Resolved, that this municipal ordinance regarding subdivision
regulations existing in this municipality shall be strictly followed by the subdivision.
[38]
(Emphases supplied.)
Significantly, this second resolution already refers to a "subdivision," supporting the
immediately executory nature of the First resolution. The municipal ordinance which
the subdivision must follow is Ordinance No. 1, the general subdivision regulations of
the Municipality of Dasmarinas. Most provisions of Ordinance No. 1 laid down the
minimum standards for the streets, roadways, sidewalks, intersections, lots and
blocks, and other improvements in the subdivision, with which the final plat must
comply or conform. Irrefragably, the review of the final plat of the subdivision calls for
a certain level of technical expertise; hence, the directive to the Municipal Mayor to
refer the final plat to the NPC, through the Highway District Engineer, for comments
and recommendation, before the same is approved by the Municipal Council, then the
Mayor.
In relation to the preceding paragraph, Administrative Order No. 152 dated December
16, 1968 required city and municipal boards and councils to submit proposed
subdivision ordinances and plans or forward approved subdivision ordinances to the
NPC. The OP imposed such a requirement because "it has come to the attention of
[the] Office that the minimum standards of such ordinances regarding design,
servicing and streets, and open spaces for parks and other recreational purposes are
not being complied with[.]"[39] Review by the NPC of the proposed subdivision plan
was for the purpose of determining "if it conforms with the subdivision ordinance."[40]
It is apparent that Section 16(a) of Ordinance No. 1 and Administrative Ordinance No.
152 contained the same directive: that the final plat of the subdivision be reviewed by
the NPC to determine its conformity with the minimum standards set in the subdivision
ordinance of the municipality. A closer scrutiny will reveal that Section 16(a) of
Ordinance No. 1 and Administrative Order No. 152 related to the duties and
responsibilities of local government and NPC officials as regards the final plat of the
subdivision. There is no evidence to establish that the concerned public officers
herein did not follow the review process for the final plat as provided in Section 16(a)
of Ordinance No. 1 and Administrative Order No. 152 before approving the same.
Under Section 3(m), Rule 131 of the Rules of Court, there is a presumption that
official duty has been regularly performed. Thus, in the absence of evidence to the
contrary, there is a presumption that public officers performed their official duties
regularly and legally and in compliance with applicable laws, in good faith, and in the

exercise of sound judgment.[41] And - just as the Court of Appeals observed - even if it
is established that the accountable public officials failed to comply with their duties
and responsibilities under Section 16(a) of Ordinance No. 1 and Administrative Order
No. 152, it would be contrary to the fundamental precepts of fair play to make
EMRASON bear the consequences of such non-compliance.
Although the two resolutions in Resolution No. 29-A may be related to the same
subdivision, they are independent and separate. Non-compliance with the second
resolution may result in the delay or discontinuance of subdivision development, or
even the imposition of the. penalties[42] provided in Ordinance No. 1, but not the
annulment or reversal of the first resolution and its consequences.
The Court again agrees with the Court of Appeals that Resolution No. 29-A need not
be subjected to review and approval by the HSRC/HLURB. Resolution No. 29-A was
approved by the Municipality of Dasmarinas on July 9, 1972, at which time, there was
even no HSRC/HLURB to speak of.
The earliest predecessor of the HSRC, the Task Force on Human Settlements, was
created through Executive Order No. 419 more than a year later on September 19,
1973. And even then, the Task Force had no power to review and approve zoning and
subdivision ordinances and regulations.
It was only on August 9, 1978, with the issuance of Letter of Instructions No. 729,
that local governments were required to submit their existing land use plans, zoning
ordinances, enforcement systems, and procedures to the Ministry of Human
Settlements for review and ratification.
The HSRC was eventually established on February 7, 1981. Section 5(b) of the
HSRC Charter43 contained the explicit mandate for the HSRC to:
b. Review, evaluate and approve or disapprove comprehensive land use
development plans and zoning ordinances of local government; and the zoning
component of civil works and infrastructure projects of national, regional and local
governments; subdivisions, condominiums or estate development projects including
industrial estates, of both the public and private sectors and urban renewal plans,
programs and projects: Provided, that the land use Development Plans and Zoning
Ordinances of Local Governments herein subject to review, evaluation and approval of
the commission shall respect the classification of public lands for forest purposes as
certified by the Ministry of Natural Resources: Provided, further, that the classification
of specific alienable and disposable lands by the Bureau of Lands shall be in
accordance with the relevant zoning ordinance of: Local government where it exists;

61
and provided, finally, that in cities and municipalities where there are as yet no zoning
ordinances, the Bureau of Lands may dispose of specific alienable and disposable
lands in accordance with its own classification scheme subject to the condition that
the classification of these lands may be subsequently change by the local
governments in accordance with their particular zoning ordinances which may be
promulgated later. (Emphases supplied.)
Neither the Ministry of Human Settlements nor the HSRC, however, could have
exercised its power of review retroactively absent an express provision to that effect in
Letter of Instructions No. 729 or the HSRC Charter, respectively. A sound cannon of
statutory construction is that a statute operates prospectively only and never
retroactively, unless the legislative intent to the contrary is made manifest either by the
express terms oi' the statute or by necessary implication. Article 4 of the Civil Code
provides that: "Laws shall have no retroactive effect, unless the contrary is provided."
Hence, in order that a law may have retroactive effect, it is necessary that an express
provision to this effect be made in the law, otherwise nothing should be understood
which is not embodied in the law. Furthermore, it must be borne in mind that a law is a
rule established to guide our actions without no binding effect until it is enacted,
wherefore, it has no application to past times but only to future time, and that is why it
is said that the law looks to the future only and has no retroactive effect unless the
legislator may have formally given that effect to some legal provisions.[44]
Subsequent zoning ordinances

vested before the cffectivity of this Ordinance shall not be impaired."

In Ayog v. Cusi, Jr.,[46] the Court expounded on vested right and its protection:
That vested right has to be respected. It could not be abrogated by the new
Constitution. Section 2, Article XIII of the 1935 Constitution allows private
corporations to purchase public agricultural lands not exceeding one thousand and
twenty-four hectares. Petitioners' prohibition action is barred by the doctrine of vested
rights in constitutional law.
"All right is vested when the right to enjoyment has become the property of some
particular person or persons as a present interest" (16 C.J.S. 1173). It is "the privilege
to enjoy property legally vested, to enforce contracts, and enjoy the rights of property
conferred by the existing law" (12 C.J.S. 955, Note 46, No. 6) or "some right or
interest in property which has become fixed and established and is no longer open to
doubt or controversy" (Downs vs. Blount, 170 Fed. 15, 20, cited in Balboa vs.
Farrales, 51 Phil. 498, 502).
The due process clause prohibits the annihilation of vested rights. "A state may not
impair vested rights by legislative enactment, by the enactment or by the
subsequent repeal of a municipal ordinance, or by a change in the constitution
of the State, except in a legitimate exercise of the police power" (16 C.J.S. 117778).

Still by the authority vested upon it by Section 3 of the Local Autonomy Act,
the Sangguniang Bayan of Dasmarias subsequently enacted a Comprehensive
Zoning Ordinance, ratified by the HLURB under Board Resolution No. 42-A-3
dated February 11, 1981 (1981 Comprehensive Zoning Ordinance of Dasmarinas).
Upon the request of the DAR, Engr. Alfredo Gil M. Tan, HLURB Regional Technical
Coordinator, issued a certification[45] dated September 10, 1992 stating that per the
1981 Comprehensive Zoning Ordinance of Dasmarinas, the subject property was
within the agricultural zone. Does this mean that the subject property reverted from
residential to agricultural classification?

It has been observed that, generally, the term "vested right" expresses the concept of
present fixed interest, which in right reason and natural justice should be protected
against arbitrary State action, or an innately just and imperative right which an
enlightened free society, sensitive to inherent and irrefragable individual rights, cannot
deny (16 C.J.S. 1174, Note 71, No. 5, citing Pennsylvania Greyhound Lines, Inc. vs.
Rosenthal, 192 Atl. 2nd 587).47 (Emphasis supplied.)

The Court answers in the negative. While the subject property may be physically
located within an agricultural zone under the 1981 Comprehensive Zoning Ordinance
of Dasmarinas, said property retained its residential classification.

A law enacted in the exercise of police power to regulate or govern certain activities or
transactions could be given retroactive effect and may reasonably impair vested rights
or contracts. Police power legislation is applicable not only to future contracts, but
equally to Ihose already in existence. Non-impairment of contracts or vested rights
clauses will have to yield to the superior and legitimate exercise by the State of police
power to promote the health, morals, peace, education, good order, safety, and
general welfare of the people, x x x.[48]

According to Section 17, the Repealing Clause, of the 1981 Comprehensive Zoning
Ordinance of Dasmarinas: "AH other ordinances, rules or regulations in conflict with
the provision of this Ordinance are hereby repealed: Provided, that rights that have

It is true that protection of vested rights is not absolute and must yield to the exercise
of police power:

62
Nonetheless, the Sangguniang Bayan of Dasmarias in this case, in its exercise of
police power through the enactment of the 1981 Comprehensive Zoning Ordinance,
itself abided by the general rule and included in the very same ordinance an express
commitment to honor rights that had already vested under previous ordinances, rules,
and regulations. EMRASON acquired the vested right to use and develop the subject
property as a residential subdivision on July 9, 1972 with the approval of Resolution
No. 29-A by the Municipality of Dasmarinas. Such right cannot be impaired by the
subsequent enactment of the 1981 Comprehensive Zoning Ordinance of Dasmarinas,
in which the subject property was included in an agricultural zone. Hence, the
Municipal Mayor of Dasmariflas had been continuously and consistently recognizing
the subject property as a residential subdivision.[49]
Incidentally, EMRASON mentions Resolution No. 105, Defining and Declaring the
Boundaries of Industrial and Residential Land Use Plan in the Municipalities of Imus
and Parts of Dasmariflas, Carmona, Gen. Mariano Alvarez, Gen. Trias, Silang, Tanza,
Naic, Rosario, and Trece Martires City, Province o[ Cavite, approved by
the Sangguniang Panlalawigan of Cavite on March 25, 1988. The Sangguniang
Panlalawigan determined that "the lands extending from the said designated industrial
areas would have greater economic value for residential and institutional uses, and
would serve the interest and welfare for the greatest good of the greatest number of
people."50 Resolution No. 105, approved by the HLURB in 1990, partly reads:
Tracts of land in the Municipality of Carmona from the People's Technology Complex
to parts of the Municipality of Silang, parts of the Municipalities of Dasmarias,
General Trias, Trece Martires City, Municipalities of Tanza and Naic forming the strip
of land traversed by the Puerto Azul Road extending two kilometers more or less from
each side of the road which are hereby declared as industrial-residentialinstitutional mix. (Emphases supplied.)
There is no question that the subject property is located within the afore-described
area. And even though Resolution No. 105 has no direct bearing on the classification
of the subject property prior to the CARL - it taking effect only in 1990 after being
approved by the HLURB - it is a confirmation that at present, the subject property and
its surrounding areas are deemed by the Province of Cavite better suited and
prioritized for industrial and residential development, than agricultural purposes.
CARP exemption
The Court reiterates that since July 9, 1972, upon approval of Resolution No. 29-A by
the Municipality of Dasmarinas, the subject property had been reclassified from

agricultural to residential. The tax declarations covering the subject property,

classifying the same as agricultural, cannot prevail over Resolution No. 29-A. The
following pronouncements of the Court in the Patalinghug case are of particular
relevance herein:
The reversal by the Court of Appeals of the trial court's decision was based on
Tepoot's building being declared for taxation purposes as residential. It is our
considered view, however, that a tax declaration is not conclusive of (he nature of
the property for zoning purposes. A property may have been declared by its owner
as residential for real estate taxation purposes but it may well be within a commercial
zone. A discrepancy may thus exist in the determination of the nature of property for
real estate taxation purposes vis-a-vis the determination of a property for zoning
purposes.
xxxx
The trial court's determination that Mr. Tepoot's building is commercial and, therefore,
Sec. 8 is inapplicable, is strengthened by the fact that the Sangguniang Panlungsod
has declared the questioned area as commercial or C-2. Consequently, even if
Tepoot's building was declared for taxation purposes as residential, once a local
government has reclassified an area as commercial, that determination for
zoning purposes must prevail. While the commercial character of the questioned
vicinity has been declared thru the ordinance, private respondents have failed to
present convincing arguments to substantiate their claim that Cabaguio Avenue,
where the funeral parlor was constructed, was still a residential zone. Unquestionably,
the operation of a funeral parlor constitutes a "commercial purpose," as gleaned from
Ordinance No. 363.[52](Emphases supplied.)
Since the subject property had been reclassified as residential land by virtue of
Resolution No. 29-A dated July 9, 1972, it is no longer agricultural land by the time the
CARL took effect on June 15, 1988 and is, therefore, exempt from the CARP.
This is not the first time that the Court made such a ruling.
In the Natalia Realty case, Presidential Proclamation No. 1637 dated April 18,
1979 set aside land in the Municipalities of Antipolo, San Mateo, and Montalban,
Province of Rizal, as townsite areas. The properties owned by Natalia Realty, Inc.
(Natalia properties) were situated within the areas proclaimed as townsite
reservation. The developer of the Natalia properties was granted the necessary
clearances and permits by the PJSRC for the development of a subdivision in the
area. Thus, the Natalia properties later became the Antipolo Hills Subdivision.

63
Following the effectivity of the CARL on June 15, 1988, the DAR placed the
undeveloped portions of the Antipolo Hills Subdivision under the CARP. For having
done so, the Court found that the DAR committed grave abuse of discretion, thus:
Section 4 of R.A. 6657 provides that the CARL shall "cover, regardless of tenurial
arrangement and commodity produced, all public and private agricultural lands." As to
what constitutes "agricultural land," it is referred to as "land devoted to agricultural
activity as defined in this Act and not classified as mineral, forest, residential,
commercial or industrial land." The deliberations of the Constitutional Commission
confirm this limitation. "Agricultural lands" arc only those lands which are "arable and
suitable agricultural lands" and "do not include commercial, industrial and residential
lands."
Based on the foregoing, it is clear that the undeveloped portions of the Antipolo Hills
Subdivision cannot in any language be considered as "agricultural lands." These lots
were intended for residential use. They ceased to be agricultural lands upon
approval of their inclusion in the Lungsod Silangan Reservation. Even today, the
areas in question continue to be developed as a low-cost housing subdivision, albeit
at a snail's pace, x x x The enormity of the resources needed for developing a
subdivision may have delayed its completion but this does not detract from the
fact that these lands are still residential lands and outside the ambit of the
CARL.
Indeed, lands not devoted to agricultural activity are outside the coverage of CARL.
These include lands previously converted to non-agricultural uses prior to the
eifectivity of CARL by government agencies other than respondent OAR. In its
Revised Rules and Regulations Governing Conversion of Private Agricultural Lands to
Non-Agricultural Uses, DAR itself defined ''agricultural land" thus "x x x Agricultural land refers to those devoted to agricultural activity as defined in
R.A. 6657 and not classified as mineral or forest by the Department of Environment
and Natural Resources (DENR) and its predecessor agencies, and not classified in
town plans and zoning ordinances as approved by the Housing and Land Use
Regulatory Board (BLURB) and its preceding competent authorities prior to 15 June
1988 for residential, commercial or industrial use."
Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is
bound by such conversion. It was therefore error to include the undeveloped portions
of the Antipolo Hills Subdivision within the coverage of CARL.
Be that as it may, the Secretary of Justice, responding to a query by the Secretary of

Agrarian Reform, noted in an Opinion that lands covered by Presidential Proclamation

No. 1637, inter alia, of which the NATALIA lands are part, having been reserved for
townsite purposes "to be developed as human settlements by the proper land and
housing agency," are "not deemed 'agricultural lands' within the meaning and intent of
Section 3 (c) of R.A. No. 6657." Not being deemed "agricultural lands," they are
outside the coverage of CARL.[53] (Emphases supplied.)
That the land in the Natalia Realty case was reclassified as residential by a
presidential proclamation, while the subject property herein was reclassified as
residential by a local ordinance, will not preclude the application of the ruling of this
Court in the former to the latter. The operative fact that places a parcel of land beyond
the ambit of the CARL is its valid reclassification from agricultural to non-agricultural
prior to the effectivity of the CARL on June 15, 1988, not by how or whose authority it
was reclassified.
In Pasong Bayabas Farmers Association, Inc. v. Court of Appeals[54] (Pasong Bayabas
case), the Court made the following findings:
Under Section 3(c) of Rep. Acl No. 6657. agricultural lands refer to lands devoted to
agriculture as conferred in the said law and not classified as industrial land.
Agricultural lands are only those lands which are arable or suitable lands that do not
include commercial, industrial and residential lands. Section 4(e) of the law provides
that it covers all private lands devoted to or suitable for agriculture regardless of the
agricultural products raised or that can be raised thereon. Rep. Act No. 6657 took
effect only on June 15, 1988. But long before the law took effect, the property
subject of the suit had already been reclassified and converted from
agricultural to non-agricultural or residential land by the following
administrative agencies: (a) the Bureau of Lands, when it approved the subdivision
plan of the property consisting of 728 subdivision lots; (b) the National Planning
Commission which approved the subdivision plan subdivided by the LDC/CAI for the
development of the property into a low-cost housing project; (c) the Municipal
Council of Carmona, Cavite, when it approved Kapasiyahang Blg. 30 on May 30,
1976; (d) Agrarian Reform Minister Conrado F. Estrella, on July 3, 1979, when he
granted the application of the respondent for the development of the Hakone Housing
Project with an area of 35.80 hectares upon the recommendation of the Agrarian
Reform Team, Regional Director of Region IV, which found, after verification and
investigation, that the property was not covered by P.D. No. 27, it being untenanted
and not devoted to the production of palay/or corn and that the property was suitable
for conversion to residential subdivision: (e) by the Ministry of Local Government and
Community Development; (f) the Human Settlements Regulatory Commission which
issued a location clearance, development permit, Certificate of Inspection and

64
License to Sell to the LDC/private respondent: and, (g) the Housing and Land Use
Regulatory Board which also issued to the respondent CAI/LDC a license to sell the
subdivision lots." (Emphases supplied.)
Noticeably, there were several government agencies which reclassified and converted
the property from agricultural to non-agricultural in the Pasong Bayabas case. The
CARL though does not specify which specific government agency should have done
the reclassification. To be exempt from CARP, all that is needed is one valid
reclassification of the land from agricultural to non-agricultural by a duly authorized
government agency before June 15, 1988, when the CARL took effect. All similar
actions as regards the land subsequently rendered by other government agencies
shall merely serve as confirmation of the reclassification. The Court actually
recognized in the Pasong Bayabas case the power of the local government to convert
or reclassify lands through a zoning ordinance:
Section 3 of Rep. Act No. 2264, amending the Local Government Code,
specifically empowers municipal and/or city councils to adopt zoning and
subdivision ordinances or regulations in consultation with the National
Planning Commission. A zoning ordinance prescribes, defines, and apportions a
given political subdivision into specific land uses as present and future projection of
needs. The power of the local government to convert or reclassify lands to
residential lands to non-agricultural lands rcclassificd is not subject to the
approval of the Department of Agrarian Reform. Section 65 of Rep. Act No. 6657
relied upon by the petitioner applies only to applications by the landlord or the
beneficiary for the conversion of lands previously placed under the agrarian reform
law after the lapse of five years from its award. It docs not apply to agricultural lands
already converted as residential lands prior to the passage of Rep. Act No. 6657.
[56]
(Emphases supplied.)
At the very beginning of Junto v. Garilao,[57] the Court already declared that:
Lands already classified and identified as commercial, industrial or residential before
June 15, 1988 - the date of effectivity of the Comprehensive Agrarian Reform Law
(CARL) - are outside the coverage of this law. Therefore, they no longer need any
conversion clearance from the Department of Agrarian Reform (DAR).[58]
The Court then proceeded to uphold the authority of the City Council of Bacolod to
reclassify as residential a parcel of land through Resolution No. 5153-A, series of
1976. The reclassification was later affirmed by the HSRC. Resultantly, the Court
sustained the DAR Order dated September 13, 1994, exempting the same parcel of
land from CARP Coverage.

The writ of preliminary injunction

Any objection of Buklod against the issuance by the Court of Appeals of a writ of
preliminary injunction, enjoining then DAR Secretary Garilao and Deputy Executive
Secretary Corona from implementing the OP Decision of February 7, 1996 and
Resolution of May 14, 1996 during the pendency of CA-G.R. SP No. 40950, had been
rendered moot and academic when the appellate court already promulgated its
Decision in said case on March 26, 1997 which made the injunction permanent. As
the Court held in Kho v. Court of Appeals[59]:
We cannot likewise overlook the decision of the trial court in the case for final
injunction and damages. The dispositive portion of said decision held that the
petitioner does not have trademark rights on the name and container of the beauty
cream product. The said decision on the merits of the trial court rendered the
issuance of the writ of a preliminary injunction moot and academic notwithstanding
the fact that the same has been appealed in the Court of Appeals. This is supported
by our ruling in La Vista Association, Inc. v. Court of Appeals, to wit:
Considering that preliminary injunction is a provisional remedy which may be granted
at any time after the commencement of the action and before judgment when it is
established that the plaintiff is entitled to the relief demanded and only when his
complaint shows facts entitling such reliefs xxx and it appearing that the trial court
had already granted the issuance of a final injunction in favor of petitioner in its
decision rendered after trial on the merits xxx the Court resolved to Dismiss the
instant petition having been rendered moot and academic. An injunction issued by the
trial court after it has already made a clear pronouncement as to the plaintiffs right
thereto, that is, after the same issue has been decided on the merits, the trial court
having appreciated the evidence presented, is proper, notwithstanding the fact that the
decision rendered is not yet final xxx. Being an ancillary remedy, the proceedings for
preliminary injunction cannot stand separately or proceed independently of the
decision rendered on the merit of the main case for injunction. The merit of the main
case having been already determined in favor of the applicant, the preliminary
determination of its non-existence ceases to have any force and effect, (italics
supplied)
La Vista categorically pronounced that the issuance of a final injunction renders any
question on the preliminary injunctive order moot and academic despite the fact that
the decision granting a final injunction is pending appeal. Conversely, a decision
denying the applicant-plaintiffs right to a final injunction, although appealed, renders
moot and academic any objection to the prior dissolution of a writ of preliminary
injunction.[60]

65
Issues belatedly raised
Buklod sought to intervene in CA-G.R. SP No. 40950, then pending before the Court
of Appeals, by filing a Manifestation and Omnibus Motion in which it argued only two
points: (1) the writ of preliminary injunction be immediately dissolved for having been
issued in violation of Section 55 of the CARL; and (2) that the Petition for Review of
EMRASON be dismissed for being the wrong remedy.
It was only after the Court of Appeals rendered its Decision dated March 26, 1997
unfavorable to both DAR and Buklod did Buklod raise in its Motion for
Reconsideration several other issues, both factual and legal,[61] directly assailing the
exemption of the subject property from the CARP. The Court of Appeals refused to
consider said issues because they were raised by Buklod for the first time in its
Motion for Reconsideration.
Buklod persistently raises the same issues before this Court, and the Court, once
more, refuses to take cognizance of the same.
As a rule, no issue may be raised on appeal unless it has been brought before the
lower tribunal for its consideration. Higher courts are precluded from entertaining
matters neither alleged in the pleadings nor raised during the proceedings below, but
ventilated for the first time only in a motion for reconsideration or on appeal.[62] The
issues were first raised only in the Motion for Reconsideration of the Decision of the
Court of Appeals, thus, it is as if they were never duly raised in that court at all.
"Hence, this Court cannot now, for the first time on appeal, entertain these issues, for
to do so would plainly violate the basic rule of fair play, justice and due process. The
Court reiterates and emphasizes the well-settled rule that an issue raised for the first
time on appeal and not raised timely in the proceedings in the lower court is barred by
estoppel.[63]
Indeed, there are exceptions to the aforecited rule that no question may be raised for
the first time on appeal. Though not raised below, the issue of lack of jurisdiction over
the subject matter may be considered by the reviewing court, as it may be raised at
any stage. The said court may also consider an issue not properly raised during trial
when there is plain error. Likewise, it may entertain such arguments when there are
jurisprudential developments affecting the issues, or when the issues raised present a
matter of public policy.[64] Buklod, however, did not allege, much less argue, that its
case falls under any of these exceptions.
Nonetheless, even when duly considered by this Court, the issues belatedly raised by

Buklod are without merit.

Contrary to the contention of Buklod, there is no necessity to carry out the conversion
of the subject property to a subdivision within one year, at the risk of said property
reverting to agricultural classification.
Section 36(1) of the Agricultural Land Reform Code, in effect since August 8, 1963,
provided:
SEC. 36. Possession of Landholding; Exceptions. Notwithstanding any agreement
as to the period or future surrender, of the land, an agricultural lessee shall continue in
the enjoyment and possession of his landholding except when his dispossession has
been authorized by the Court in a judgment that is final and executory if after due
hearing it is shown that:
(1) The agricultural lessor-owner or a member of his immediate family will personally
cultivate the landholding or will convert the landholding, if suitably located, into
residential, factory, hospital or school site or other useful non-agricultural purposes:
Provided, That the agricultural lessee shall be entitled to disturbance compensation
equivalent to five years rental on his landholding in addition to his rights under
Sections twenty-five and thirty-four, except when the land owned and leased by the
agricultural lessor is not more than five hectares, in which case instead of disturbance
compensation the lessee may be entitled to an advanced notice of at least one
agricultural year before ejectment proceedings are filed against him: Provided,
further, That should the landholder not cultivate the land himself for three years
or fail to substantially carry out such conversion within one year after the
dispossession of the tenant, it shall be presumed that he acted in bad faith and
the tenant shall have the right to demand possession of the land and recover
damages for any loss incurred by him because of said dispossessions; xxx.
(Emphasis supplied.)
On September 10, 1971, the Agricultural Land Reform Code was amended and it
came to be known as the Code of Agrarian Reforms. After its amendment, Section
36(1) stated:
(1) The landholding is declared by the department head upon recommendation of the
National Planning Commission to be suited for residential, commercial, industrial or
some other urban purposes: Provided, That the agricultural lessee shall be entitled to
disturbance compensation equivalent to five times the average of the gross harvests
on his landholding during the last five preceding calendar years.

66
At the time Resolution No. 29-A was enacted by the Municipality of Dasmarinas
on July 9, 1972, the Code of Agrarian Reforms was already in effect. The amended
Section 36(3) thereof no longer contained the one-year time frame within which
conversion should be carried out.
More importantly, Section 36(1) of the Code o[ Agrarian Reforms would apply only if
the land in question was subject of an agricultural leasehold, a fact that was not
established in the proceedings below. It may do well for the Buklod members to
remember that they filed their present Petition to seek award of ownership over
portions of the subject property as qualified farmer-beneficiaries under the CARP; and
not payment of disturbance compensation as agricultural lessees under the Code of
Agrarian Reforms. The insistence by Buklod on the requisites under Section 36(1) of
the Agricultural Land Reform Code/Code of Agrarian Reforms only serves to muddle
the issues rather than support its cause.
Buklod likewise invokes the vested rights of its members under the Agricultural Land
Reform Code/Code of Agrarian Reforms and the Tenants Emancipation Decree,
which preceded the CARP. Yet, for the Buklod
members to be entitled to any of the rights and benefits under the said laws, it is
incumbent upon them to prove first that they qualify as agricultural lessees or farm
workers of the subject property, as defined in Section 166(2)[65] and (15)[66]of the Code
of Agrarian Reforms; and/or they are tenant-farmers of private agricultural lands
primarily devoted to rice and corn, under a system of share-crop or lease tenancy, and
are members of a duly recognized farmer's cooperative, as required by the Tenants
Emancipation Decree. None of these determinative facts were established by Buklod.
Buklod counters that it precisely moved for a hearing before the Court of Appeals so
that it could present evidence to prove such facts, but the appellate court erroneously
denied its motion.
The Court finds that the Court of Appeals did not err on this matter.
In the recent case of Office of the Ombudsman v. Sison,[67] the Court expounded on
the rules on intervention:
It is fundamental that the allowance or disallowance of a Motion 10 Intervene is
addressed to the sound discretion of the court. The permissive tenor of the rules
shows the intention lo give to the court the full measure of discretion in permitting or
disallowing the intervention, thus:

SECTION 1. Who may intervene, - A person who has a Icga) interest in the mailer in
litigation, or in the success of either of the parties, or an interest against both, or is so
situated as to be adversely affected by a distribution or other disposition of property in
the custody of the court or of an officer thereof may, with leave of court, be allowed to
intervene in the action. The court shall consider whether or not the intervention will
unduly delay or prejudice the adjudication of the rights of the original parties, and
whether or not the intcrvenor's rights may be fully protected in a separate proceeding.
SECTION 2. Time to intervene. - The motion to intervene may be filed al any time
before rendition of judgment by the trial court. A copy of the pleading-inintervention shall be attached to the motion and served on the original parties.
(Emphasis supplied.)
Simply, intervention is a procedure by which third persons, not originally parties to the
suit but claiming an interest in the subject matter, come into the case in order to
protect their right or interpose their claim. Its main purpose is to settle in one action
and by a single judgment all conflicting claims of, or the whole controversy among, the
persons involved.
To warrant intervention under Rule 19 of the Rules of Court, two requisites must
concur: (1) the movant has a legal interest in the matter in litigation; and (2)
intervention must not unduly delay or prejudice the adjudication of the rights of the
parties, nor should the claim of the intervenor be capable of being properly decided in
a separate proceeding. The interest,' which entitles one to intervene, must involve the
matter in litigation and of such direct and immediate character that the intervenor will
either gain or lose by the direct legal operation and effect of the judgment.[68]
To apply the rules strictly, the motion of Buklod to intervene was filed too late.
According to Section 2, Rule 19 of the Rules of Civil Procedure, "a motion to intervene
may be filed at any time before rendition of judgment by the trial court." Judgment
was already rendered in DARAB Case No. IV-Ca-0084-92 (the petition of EMRASON
to nullify the notices of acquisition over the subject property), not only by the DAR
Hearing Officer, who originally heard the case, but also the DAR Secretary, and
then the OP, on appeal.
Buklod only sought to intervene when the case was already before the Court of
Appeals. The appellate court, in the exercise of its discretion, still allowed the
intervention of Buklod in CA-G.R. SP No. 40950 only because it was "not being in any
way prejudicial to the interest of the original parties, nor will such intervention
change the factual legal complexion of the case."[69] The intervention of Buklod
challenged only the remedy availed by EMRASON and the propriety of the preliminary

67
injunction issued by the Court of Appeals, which were directly and adequately
addressed by the appellate court in its Decision dated March 26, 1997.
The factual matters raised by Buklod in its Motion for Reconsideration of the March
26, 1997 Decision of the Court of Appeals, and which it sought to prove by evidence,
inevitably changes "the factual legal complexion of the case." The allegations of
Buklod that its members are tenant-farmers of the subject property who acquired
vested rights under previous agrarian reform laws, go against the findings of the DAR
Region IV Hearing Officer, adopted by the DAR Secretary, the OP, and Court of
Appeals, that the subject property was being acquired under the CARP for distribution
to the tenant-farmers of the neighboring NDC property, after a determination that the
latter property was insufficient for the needs of both the NDC-Marubeni industrial
estate and the tenant-farmers.
Furthermore, these new claims of Buklod are beyond the appellate jurisdiction of the
Court of Appeals, being within the primary jurisdiction of the DAR. As Section 50 of
the CARL, as amended, reads:
SEC. 50. Quasi-Judicial Powers of the DAR. - The DAR is hereby vested with primary
jurisdiction to determine and adjudicate agrarian reform matters and shall have
exclusive original jurisdiction over all matters involving the implementation of agrarian
reform, except those falling under the exclusive jurisdiction of the Department of
Agriculture (DA) and the Department of Environment and Natural Resources (DENR).
In fact, records reveal that Buklod already sought remedy from the DARAB. DARAB
Case No. IV-CA-0261, entitled Buklod nang Magbubukid sa Lupaing Ramos, rep. by
Edgardo Mendoza, et at. v. E.M. Ramos and Sons, Inc., et al., was pending at about
the same time as DARAB Case No. lV-Ca-0084-92, the petition of EMRASON for
nullification of the notices of acquisition covering the subject property. These two
cases were initially consolidated before the DARAB Region IV. The DARAB Region IV
eventually dismissed DARAB Case No. IV-Ca-0084-92 and referred the same to the
DAR Region IV Office, which had jurisdiction over the case. Records failed to reveal
the outcome of DARAB Case No. IV-CA-0261,
On a final note, this Court has stressed more than once that social justice - or any
justice for that matter - is for the deserving, whether he be a millionaire in his mansion
or a pauper in his hovel. It is true that, in case of reasonable doubt, the Court is called
upon to tilt the balance in favor of the poor to whom the Constitution fittingly extends
its sympathy and compassion. But never is it justified to give preference to the poor
simply because they are poor, or to reject the rich simply because they are rich, for
justice must always be served for poor and rich alike, according to the mandate of the

law.[70] Vigilance over the rights of the landowners is equally important because social
justice cannot be invoked to trample on the rights of property owners, who under our
Constitution and laws are also entitled to protection.[71]
WHEREFORE, the Petitions for Review filed by the Buklod Nang Magbubukid Sa
Lupaing Ramos, Inc. in G.R. No. 131481 and the Department of Agrarian Reform in
G.R. No. 131624 are hereby DENIED. The Decision dated March 26, 1997 and the
Resolution dated November 24, 1997 of the Court of Appeals in CA-G.R. SP No.
40950 are hereby AFFIRMED.
SO ORDERED.

FIRST DIVISION
G.R. No. 200454, October 22, 2014
HOLY TRINITY REALTY & DEVELOPMENT
CORPORATION, Petitioner, v. VICTORIO DELA CRUZ, LORENZO MANALAYSAY,
RICARDO MARCELO, JR. AND LEONCIO DE GUZMAN, Respondents.
DECISION
BERSAMIN, J.:
Land on which no agricultural activity is being conducted is not subject to the
coverage of either Presidential Decree No. 27 or Republic Act No. 6657
(Comprehensive Agrarian Reform Law).
The Case
The petitioner appeals the decision promulgated on July 27, 2011,1 whereby the Court
of Appeals (CA) reversed the decision issued by the Office of the President (OP) on
March 1, 2010,2 and reinstated the order of the OIC-Regional Director of the
Department of Agrarian Reform in Regional Office III rendered on August 18, 2006.3
Antecedents
Subject of the controversy is a parcel of land located in Brgy. Dakila, Malolos, Bulacan
(Dakila property) registered in the name of Freddie Santiago under Transfer
Certificate of Title (TCT) No. T-103698 of the Registry of Deeds of Bulacan with an

68
area of 212,500 square meters. The Dakila property used to be tenanted by Susana
Surio, Cipriano Surio, Alfonso Espiritu, Agustin Surio, Aurelio Surio, Pacifico Eugenio,
Godofredo Alcoriza, Lorenza Angeles, Ramon Manalad, Toribio Hernandez,
Emerciana Montealegre, Pedro Manalad, Celerino Ramos and Cecilia L. Martin,4 but
in August 1991, these tenants freely and voluntarily relinquished their tenancy rights
in favor of Santiago through their respective sinumpaang pahayag5 in exchange for
some financial assistance and individual homelots titled and distributed in their
names, as follows:6

to its name as well as subdivided the Dakila property into six lots,8 to
wit:chanRoblesvirtualLawlibrary
TCT No.

Area (sq. m.)

81618

50,000

81619

50,000

81620

50,000

81621

54,810

TCT No.

Name of Tenant/Successor

Area (sq. m.)

73022

2,401

T-73006

Susana Surio

186

73023

839

T-73007

Cipriano Surio

150

TOTAL

208,050

T-73008

Alfonso Espiritu

300

T-73009

Agustin Surio

300

T-73010

Aurelio Surio

264

T-73011

Pacifico Eugenio

300

T-73012

Godofredo Alcoriza

300

T-73013

Lorenza Angeles

300

Ramon Manalad

300

Toribio M. Hernandez

300

Emerciana Montealegre

300

Pedro Manalad

300

T-73015

Celerino Ramos

300

T-73016

Cecilia L. Martin

300

T-73017

Pablo dela Cruz

T-73014

300
T-73018

Aurelio dela Cruz

300

T-73019

Julita Leoncio

300

Anicia L. de Guzman
T-73020

Ramon Centeno

300

T-73021

Miguel Centeno

300

TOTAL

4,500

On September 17, 1992, the petitioner purchased the remaining 208,050 square
meters of the Dakila property from Santiago,7 and later caused the transfer of the title

The petitioner then developed the property by dumping filling materials on the topsoil,
and by erecting a perimeter fence and steel gate. It established its field office on the
property.9
On March 4, 1998, the Sanggunian Bayan ng Malolos passed Municipal Resolution
No. 16-98 reclassifying four of the six subdivided lots belonging to the petitioner, to
wit:chanRoblesvirtualLawlibrary
MUNICIPAL RESOLUTION NO. 16-98
A RESOLUTION RE-CLASSIFYING AS RESIDENTIAL LOTS THE FOUR (4)
PARCELS OF LAND SEPARATELY COVERED BY TCT NO. 81618, TCT NO. 81619,
TCT NO.81620 AND TCT NO. 81621 CONTAINING AN AREA OF 50,000 SQ MTS,
50,000 SQ. MTS, 50,000 SQ M (sic) AND 54,810 SQ M (sic) RESPECTIVELY ALL
LOCATED AT DAKILA, MALOLOS, BULACAN REGISTERED IN THE NAME OF THE
HOLY TRINITY REALTY AND DEVELOPMENT CORPORATION
WHEREAS, Ms. Jennifer M. Romero, Auditor Representative of Holy Trinity Realty
and Development Corporation in [her] letter to the Sangguniang Bayan made a
request for re-classification of four parcel(s) of land registered in the name of Holy
Trinity and Development Corporation under TCT NO. 81618, TCT NO. 81619, TCT
NO.81620 AND TCT NO. 81621 with an area of 50,000 sq. m., 50,000 sq. m., 50,000
sq. m. AND 54,810 sq. m. respectively all located at Dakila, Malolos, Bulacan.
WHEREAS, after an ocular inspection of the subject lots and matured deliberation,
the Sangguniang Bayan found merit in the request for the following reasons, thus:

69
1. The Properties are untenanted;cralawlawlibrary
2. That they are not fitted (sic) for agricultural use for lack of sufficient
irrigation;cralawlawlibrary
3. There are improvements already introduce[d] on the property by its owner like
construction of subdivision roads;cralawlawlibrary
4. Lack of oppositor to the intend[ed] subdivision project on the properties by its
owner;cralawlawlibrary

In April 2006, a certain Silvino Manalad and the alleged heirs of Felix Surio wrote to
the Provincial Agrarian Reform Officer (PARO) of Bulacan to request an investigation
of the sale of the Dakila property.14 This was followed by the letter request of
Sumapang Matanda Barangay Agrarian Reform Council (BARC) Chairman
Numeriano L. Enriquez to place the Dakila property within the coverage of Operation
Land Transfer (OLT) pursuant to Presidential Decree No. 27, which was docketed as
A-0302-0608-06, A.R. Case No. LSD-032406.15
Several days later, the DAR Provincial Office of Bulacan filed a petition to annul the
sale of the Dakila property with the Provincial Agrarian Reform Adjudicator (PARAD)
of Bulacan, docketed as DARAB Case No. R-03-02-287306.

5. That they are more suitable for residential use considering their location vi[s]-vi[s] with (sic) the residential lots in the area.
NOW THEREFORE, on motion of Hon. Romeo L. Maclang as seconded by all
Sangguniang Bayan members present,
RESOLVED, as is hereby resolved to re-classify into residential properties four (4)
parcels of land separately covered by TCT NO. 81618, TCT NO. 81619, TCT
NO.81620 AND TCT NO. 81621 of the Registry of Deeds of Bulacan, containing an
area of 50,000 sq. m. respectively, registered in ownership of Holy Trinity and
Development Corporation located and adjacent to one another in Barangay Dakila of
this Municipality pursuant to the power vested to this Sangguniang [sic] by the Local
Government Code of the Philippines.
RESOLVED further that the owner and/or developer of the said property shall provide
adequate [illegible] to protect the adjacent lots and its owners from any inconvenience
and prejudice caused by the development of the above mentioned property.
APPROVED.10
Consequently, the Municipal Planning and Development Office (MPDO) of Malolos,
Bulacan issued a Certificate of Eligibility for Conversion (Certificate of Zoning
Conformance),11 as well as a Preliminary Approval and Locational Clearance in favor
of the petitioner for its residential subdivision project on the Dakila property.12
On August 23, 1999, the petitioner purchased from Santiago another parcel of land
with an area of 25,611 located in Barangay Sumapang Matanda, Malolos, Bulacan
(Sumapang Matanda property) and covered by TCT No. T-103697 of the Registry of
Deeds of Bulacan.13

Ruling of the DAR Regional Office

On August 18, 2006, the OIC-Regional Director in San Fernando, Pampanga issued
an order granting the letter request of BARC Chairman Enriquez in A-0302-0608-06,
A.R. Case No. LSD-032406,16viz:chanRoblesvirtualLawlibrary
WHEREFORE, in the light of the foregoing premises and for the reason indicated
therein, this Office resolves to give due course to this instant request. Accordingly, the
MARO and PARO concerned are hereby DIRECTED to place within the ambit of PD
27/RA 6657 the following titles TCT Nos. T-81618, T-81619, T-81620, T-81621, T81622 and T-73023, all situated at Sumapang Matanda, Malolos City, Bulacan,
registered in the name of Holy Trinity Realty and Development Corporation for
distribution to qualified farmer beneficiary (sic).
Finally, the DAR reserves the right to cancel or withdraw this Order in case of
misrepresentation of facts material to its issuance and for violation of pertinent
agrarian laws including applicable implementing guidelines or rules and regulations.
SO ORDERED.17
The OIC-Regional Director opined that the sale of the Dakila property was a
prohibited transaction under Presidential Decree No. 27, Section 6 of Republic Act
No. 665718 and DAR Administrative Order No. 1, Series of 1989; and that the
petitioner was disqualified from acquiring land under Republic Act No. 6657 because
it was a corporation.19
Aggrieved, the petitioner assailed the order through its Motion to Withdraw/Quash/Set
Aside,20 citing lack of jurisdiction and denial of due process. It argued that the letter
request was in the nature of a collateral attack on its title.

70
Pending resolution of the Motion to Withdraw/Quash/Set Aside, the Register of Deeds
issued emancipation patents (EPs) pursuant to the order of the OIC-Regional
Director. The petitioners titles were canceled and EPs were issued to the respondents
as follows:21
Emancipation
Patent No.

Beneficiary/ies

Area (sqm)

T-2007-EP22

00783329

Victorio dela Cruz

50,000

23

00783330

Lorenzo Manalaysay

50,000

24

00783331

Ricardo Marcelo, Jr.

50,000

T-2010EP cralawred

00783332

Leoncio de Guzman

54,810

T-2011-EP26

00783334

Gonzalo Caspe

2,401

27

00783333

TCT No.

T-2008-EP
T-2009-EP
25

T-2012-EP

839

Almost two months after the EPs were issued, the OIC-Regional Director denied the
petitioners motion for reconsideration.28
Ruling of the DAR Secretary
The petitioner appealed to the DAR Secretary, submitting that: (1) the letter request
for coverage under Presidential Decree No. 27 and the subsequent filing of the
petition for annulment of sale in the DARAB constituted forum shopping; and (2) the
EPs were prematurely issued.
On November 22, 2007, DAR Secretary Nasser C. Pangandaman issued an order
denying the appeal,29 and holding that forum shopping was not committed because
the causes of action in the letter request and the action for cancellation of the deed of
sale before the DARAB were distinct and separate; that the EPs were regularly
issued; and that the resolution of the DARAB would not in any manner affect the
validity of the EPs.
Ruling on the petitioners motion for reconsideration, the DAR Secretary said that the
Dakila property was not exempt from the coverage of Presidential Decree No. 27 and
Republic Act No. 6657 because Municipal Resolution No. 16-98 did not change or
reclassify but merely re-zoned the Dakila property.30
Ruling of the Office of the President
On March 1, 2010, the Office of the President (OP) reversed the ruling of DAR

Secretary Pangandaman upon its finding that the Dakila property had ceased to be
suitable for agriculture, and had been reclassified as residential land pursuant to
Municipal Resolution No. 16-98, thus:31
We find merit in the appeal.
Under Section 3 (c) of RA 6657, agricultural lands refer to lands devoted to agriculture
as conferred in the said law and not classified as industrial land. Agricultural lands are
only those lands which are arable or suitable lands that do not include commercial,
industrial and residential lands.
In this case, the subject landholdings are not agricultural lands but rather residential
lands. The lands are located in a residential area. Likewise, there are agricultural
activities within or near the area. Even today, the areas in question continued (sic) to
be developed as a residential community, albeit at a snails pace. This can be readily
gleaned from the fact that both the City Assessor of Malolos and the Provincial
Assessor of Bulacan have considered these lands as residential for taxation
purposes.
Based on the foregoing, it is clear that appellants landholding cannot in any language
be considered as agricultural lands. These lots were intended for residential use.
They ceased to be agricultural lands upon approval of Municipal Resolution No. 1698. The authority of the municipality (now City) of Malolos to issue zoning
classification is an exercise of its police power, not the power of eminent domain.
Section 20, Chapter 2, Title I of RA 7160 specifically empowers municipal and/or city
councils to adopt zoning and subdivision ordinances or regulations within its territorial
jurisdiction. A zoning ordinance/resolution prescribes, defines, and apportions a given
political subdivision into specific land uses as present and future projection of needs.
The power of the local government to convert or reclassify agricultural lands to nonagricultural lands is not subject to the approval of the Department of Agrarian Reform.
It bears stressing that in his Decision dated April 30, 2002, as affirmed by the
Department of Agrarian Reform Adjudication Board (DARAB) in its Resolution dated
March 17, 2006, Bulacan Provincial Adjudicator Toribio Ilao, Jr., declared that the
properties were not tenanted and/or agricultural and that the alleged farmersoccupants are mere squatters thereto. These decision and resolution were not
appealed by the farmers-occupants and, as such, it became final and executory. By
declaring, in its assailed Order of November 22, 2007, that the properties subject of
the suit, were agricultural lands, the DAR Secretary thereby reversed the said DARAB
rulings, issued more than a year before, and nullified Resolution No. 16-98 of the
Municipal Council of Malolos, approved nine (9) years earlier, on March 4, 1998.

71
Thus, the DAR Secretary acted with grave abuse of discretion amounting to excess or
lack of jurisdiction.
IN VIEW OF THE FOREGOING, the appeal is hereby GRANTED. Accordingly, the
November 22, 2007 Order and February 22, 2008 Resolution of the Department of
Agrarian Reform are hereby REVERSED and SET ASIDE.
SO ORDERED.32
The respondents moved to reconsider, but the OP denied their motion for
reconsideration. Hence, they appealed to the CA by petition for review.33
Ruling of the CA
In the now assailed decision promulgated on July 27, 2011,34 the CA reversed and set
aside the decision of the OP. It declared that prior to the effectivity of Republic Act No.
6657 on June 15, 1988 and even after the passage of Municipal Resolution No. 16-98
on March 4, 1998, the Dakila property was an agricultural land; that there was no valid
reclassification because Section 20 of Republic Act No. 7160 (The Local Government
Code) and Memorandum Circular No. 54 required an ordinance, not a resolution; and
that findings of the DAR on the Dakila property being an agricultural land should be
respected,35 subject to the clarification to the effect that its determination was only
limited to the issue of whether the Dakila property was an agricultural land covered by
Republic Act No. 6657.
The petitioner sought reconsideration but its motion for that purpose was denied.36
Hence, this appeal by petition for review on certiorari.
Issues
The petitioner presents the following issues for our
consideration:chanRoblesvirtualLawlibrary

TENANTS OF THE DAKILA PROPERTY; B.) THE SALE AND TRANSFER OF

TITLES IN THE NAME OF PETITIONER HAVE NOT HERETOFORE BEEN
NULLIFIED EITHER BY THE DARAB CENTRAL OFFICE OR THE REGULAR
COURTS; C.) THE BONAFIDE TENANTS OF THE DAKILA PROPERTY HAVE
VALIDLY SURRENDERED THEIR TENANCY RIGHTS IN FAVOR OF PETITIONERS
PREDECESSOR-IN-INTEREST; D.) THE DAKILA PROPERTY WAS NO LONGER
TENANTED AND, FURTHER, WAS NO LONGER SUITABLE TO AGRICULTURE, AT
THE TIME OF ITS COVERAGE UNDER AGRARIAN REFORM, ITS ACTUAL USE
BEING ALREADY RESIDENTIAL
II
WHETHER OR NOT THE HONORABLE COURT OF APPEALS LIKEWISE ERRED
IN FAILING TO RULE ON THE ILLEGALITY OF THE MANNER BY WHICH THE
DAR CAUSED THE SUMMARY COVERAGE OF THE DAKILA PROPERTY UNDER
THE CARP, ITS EXTRA-JUDICIAL CANCELLATION OF PETITIONERS TITLES
WITHOUT DUE PROCESS OF LAW, AND ITS PREMATURE ISSUANCE OF
EMANCIPATION PATENTS IN FAVOR OF RESPONDENTS
III
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRONEOUSLY
APPLIED THE PROVISIONS OF RA 6657 IN RESOLVING THE SUBJECT
PETITION, EVEN THOUGH THE DAR PLACED THE SUBJECT DAKILA
PROPERTY UNDER THE COVERAGE OF PRESIDENTIAL DECREE NO. 27
IV.
WHETHER OR NOT HEREIN RESPONDENTS PETITION FOR REVIEW A QUO
OUGHT TO HAVE BEEN DISMISSED OUTRIGHT BY THE HONORABLE COURT
OF APPEALS FOR FAILURE TO COMPLY WITH SECTION 4, RULE 7 OF THE 1997
REVISED RULES OF CIVIL PROCEDURE.37

The petitioner argues that the CA ignored issues vital to the complete determination of
the parties respective rights over the Dakila property.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRONEOUSLY

OMITTED TO RULE UPON, ALBEIT WITHOUT CITING ANY VALID REASONS, THE
VARIOUS INTERRELATED ISSUES PROFFERED IN PETITIONERS COMMENT
RELATIVE TO DARS INCLUSION OF THE SUBJECT DAKILA PROPERTY UNDER
THE COVERAGE OF THE AGRARIAN REFORM LAW, TO WIT: A.) RESPONDENTGRANTEES OF EMANCIPATION PATENTS FROM DAR ARE NOT LEGITIMATE

Firstly, the CA should have ruled on the propriety of issuing the EPs. In view of the
pending petition before the DARAB, the DAR should have withheld the issuance of the
EPs. Even granting that a final decision had already been rendered by the DARAB,
the issuance of the EPs remained premature inasmuch as the DAR had not yet
commenced any court proceedings for the cancellation of the petitioners title.
Accordingly, the petitioners title remained indefeasible and could not be disturbed by

72
the collateral orders by the OIC-Regional Director and the DAR Secretary.
Secondly, the petitioner was deprived of due process because the requirements of
notice and the conduct of a public hearing and a field investigation were not strictly
complied with by the DAR pursuant to Republic Act No. 6657 and DAR Administrative
Order No. 12, Series of 1998.
Thirdly, the CA erred in placing the Dakila property under the coverage of Republic
Act No. 6657 when the order of the OIC-Regional Director applied the provisions of
Presidential Decree No. 27. The two laws should be differentiated from each other; on
one hand, Presidential Decree No. 27 required the beneficiary to be a tenant-farmer
of an agricultural land devoted to rice or corn, while on the other Republic Act No.
6657 was relatively broader and covered all public and private agricultural lands
regardless of the tenurial arrangement and the commodity produced.
Lastly, the CA should have dismissed the respondents petition for review due to its
defective certification, pointing to the verification having been executed by the
respondents despite the letter request having been signed by BARC Chairman
Enriquez; and assailing the verification for containing the statement that the
allegations therein were based on their knowledge and belief instead of their
personal knowledge and authentic records as required by the Rules of Court.
The respondents countered that: (1) the CA correctly set aside the issue of whether or
not they were qualified beneficiaries, because that was not the issue raised in the
letter request; (2) the CA could not have ruled on the validity of the sale of the Dakila
property in light of the pending action in the DARAB; (3) it was within the jurisdiction
of the DAR to determine whether or not the respondents were qualified beneficiaries;
(4) the waivers by the tenants were illegal; and (5) the issuance of the EPs was a
necessary consequence of placing the Dakila property under the coverage of
Presidential Decree No. 27.
In view of the foregoing, the Court needs to consider and resolve the
following:chanRoblesvirtualLawlibrary
1.

Did the CA gravely err in limiting its decision to the issue of whether or not
the Dakila property was subject to the coverage of Republic Act No. 6657?

2.

Was the Dakila property agricultural land within the coverage of Republic Act
No. 6657 or Presidential Decree No. 27?

3.

Was the issuance of the EPs pursuant to the August 16, 2006 order of the
DAR Regional Office proper?

Ruling
We reverse the CA, and reinstate the decision of the OP.
I.
Procedural Issue
We first resolve the issue of the supposedly defective verification.
The verification of a petition is intended to secure an assurance that the allegations
contained in the petition have been made in good faith, are true and correct and not
merely speculative.38 This requirement affects the form of the pleading, and its noncompliance will not render the pleading defective. It is a formal, not a jurisdictional
requisite.39The courts may order the correction of the pleading if the verification is
lacking, and may even act on an unverified pleading if doing so will serve the ends of
justice.40
Under the foregoing, the CA rightly allowed the petition for review of the respondents
despite the statement that the allegations therein were based on their knowledge and
belief. We underscore that the defect was even lifted upon the voluntary submission
by the respondents themselves of their corrected verification in order to comply with
the Rules of Court.
We cannot also subscribe to the argument that the respondents were not appropriate
parties to sign the verification. They were, considering that when the DAR issued the
EPs, they became the real parties in interest in the proceedings, giving them the
requisite personality to sign the verification. Moreover, there is no question that the
party himself need not sign the verification, for it was enough that the partys
representative, lawyer, or any person who personally knew the truth of the facts
alleged in the pleadings could sign the verification.41 In any event, the respondents, as
the identified beneficiaries, had legal standing and interest to intervene to protect their
rights or interests under Republic Act No. 6657. This is clear from Section 19 of
Republic Act No. 9700,42 which amended Republic Act No. 6657 by adding Section
50-A, to wit:chanRoblesvirtualLawlibrary
Section 19. Section 50 of Republic Act No. 6657, as amended, is hereby further
amended by adding Section 50-A to read as follows:

73
Section 50-A. Exclusive Jurisdiction on Agrarian Dispute. x x x
In cases where regular courts or quasi-judicial bodies have competent jurisdiction,
agrarian reform beneficiaries or identified beneficiaries and/or their associations shall
have legal standing and interest to intervene concerning their individual or collective
rights and/or interests under the CARP.
xxxx
II.
Courts can pass upon matters
related to the issues raised by the parties
As a general rule, appellate courts are precluded from discussing and delving into
issues that are not raised by the parties. The pertinent rule is Section 8, Rule 51 of
the Rules of Court, to wit:chanRoblesvirtualLawlibrary
Section 8. Questions that may be decided. No error which does not affect the
jurisdiction over the subject matter or the validity of the judgment appealed from or the
proceedings therein will be considered unless stated in the assignment of errors, or
closely related to or dependent on an assigned error and properly argued in the brief,
save as the court may pass upon plain errors and clerical errors.
In Philippine National Bank v. Rabat,43 the Court explained how this rule operates,
thus:chanRoblesvirtualLawlibrary
In his book, Mr. Justice Florenz D. Regalado commented on this section,
thus:chanRoblesvirtualLawlibrary
1. Sec. 8, which is an amendment of the former Sec. 7 of this Rule, now includes
some substantial changes in the rules on assignment of errors. The basic procedural
rule is that only errors claimed and assigned by a party will be considered by the
court, except errors affecting its jurisdiction over the subject matter. To this exception
has now been added errors affecting the validity of the judgment appealed from
or the proceedings therein.
Also, even if the error complained of by a party is not expressly stated in his
assignment of errors but the same is closely related to or dependent on an
assigned error and properly argued in his brief, such error may now be
considered by the court. These changes are of jurisprudential origin.

2. The procedure in the Supreme Court being generally the same as that in the Court
of Appeals, unless otherwise indicated (see Secs. 2 and 4, Rule 56), it has been held
that the latter is clothed with ample authority to review matters, even if they are not
assigned as errors on appeal, if it finds that their consideration is necessary in arriving
at a just decision of the case. Also, an unassigned error closely related to an error
properly assigned (PCIB vs. CA, et al., L-34931, Mar. 18, 1988), or upon which the
determination of the question raised by error properly assigned is dependent, will be
considered by the appellate court notwithstanding the failure to assign it as error
(Ortigas, Jr. vs. Lufthansa German Airlines, L-28773, June 30, 1975; Soco vs.
Militante, et al., G.R. No. 58961, June 28, 1983).
It may also be observed that under Sec. 8 of this Rule, the appellate court is
authorized to consider a plain error, although it was not specifically assigned by the
appellant (Dilag vs. Heirs of Resurreccion, 76 Phil. 649), otherwise it would be
sacrificing substance for technicalities.44(Emphasis supplied)
Conformably with the foregoing, the CA is vested with sufficient authority and
discretion to review matters, not assigned as errors on appeal, if it finds that
consideration thereof is necessary in arriving at a complete and just resolution of the
case or to serve the interests of justice or to avoid dispensing piecemeal justice.45 In
fact, the CA is possessed with inherent authority to review unassigned errors that are
closely related to an error properly raised, or upon which the determination of the
error properly assigned is dependent, or where it finds that consideration thereof is
necessary in arriving at a just decision of the case.46
It cannot be gainsaid that the validity of the EPs was closely intertwined with the issue
of whether the Dakila property was covered by the agrarian reform laws. When the CA
declared that the Dakila property came within the coverage of Republic Act No. 6657,
the CA barely scraped the surface and left more questions unresolved rather than
writing finis on the matter. To recall, this case originated from the letter of BARC
Chairman Enriquez requesting that the Dakila property be placed under the OLT
pursuant to Presidential Decree No. 27. But, as the petitioner correctly argues, the
two laws, although similarly seeking to alleviate the plight of landless farmers or
farmworkers from the bondage of tilling the soil, are distinct from each other. Republic
Act No. 6657 is broader in scope than Presidential Decree No. 27, for the former
applies to all agricultural lands in which agricultural activities are conducted, while the
latter requires that the covered agricultural land be tenanted and primarily devoted to
rice or corn cultivation.
In Sigre v. Court of Appeals,47 the Court also stated:chanRoblesvirtualLawlibrary

74
[T]he Court need not belabor the fact that R.A. 6657 or the CARP Law operates
distinctly from P.D. 27. R.A. 6657 covers all public and private agricultural land
including other lands of the public domain suitable for agriculture as provided for in
Proclamation No. 131 and Executive Order No. 229; while, P.D. 27 covers rice and
corn lands. On this score, E.O. 229, which provides for the mechanism of the
Comprehensive Agrarian Reform Program, specifically states: (P)residential Decree
No. 27, as amended, shall continue to operate with respect to rice and corn lands,
covered thereunder. x x x It cannot be gainsaid, therefore, that R.A. 6657 did not
repeal or supersede, in any way, P.D. 27. And whatever provisions of P.D. 27 that are
not inconsistent with R.A. 6657 shall be suppletory to the latter, and all rights acquired
by the tenant-farmer under P.D. 27 are retained even with the passage of R.A. 6657.48

Section 20. Reclassification of Lands. (a) A city or municipality may, through an

ordinance passed by the sanggunian after conducting public hearings for the
purpose, authorize the reclassification of agricultural lands and provide for the
manner of their utilization or disposition in the following cases: (1) when the land
ceases to be economically feasible and sound for agricultural purposes as determined
by the Department of Agriculture or (2) where the land shall have substantially greater
economic value for residential, commercial, or industrial purposes, as determined by
the sanggunian concerned: x x x. (Emphasis supplied)

In addition, the tenurial instruments issued to agrarian reform beneficiaries differ

under these laws. Ownership of the beneficiary under Presidential Decree No. 27 is
evidenced by an EP while a certificate of land ownership award (CLOA) is issued
under Republic Act No. 6657. For this reason, the CA could not have simply set aside
the issue of whether the EPs issued to the respondents were validly made by the DAR
considering its declaration that the Dakila property was subject to Republic Act No.
6657.

The petitioner claims the reclassification on the basis of Municipal Resolution No. 1698. Given the foregoing clarifications, however, the resolution was ineffectual for that
purpose. A resolution was a mere declaration of the sentiment or opinion of the
lawmaking body on a specific matter that was temporary in nature, and differed from
an ordinance in that the latter was a law by itself and possessed a general and
permanent character.49 We also note that the petitioner did not show if the requisite
public hearings were conducted at all. In the absence of any valid and complete
reclassification, therefore, the Dakila property remained under the category of an
agricultural land.

III.
The Dakila property was not an agricultural land
within the coverage of R.A. No. 6657 or P.D. No. 27
The CA declared that the Dakila property as an agricultural land; and that there was
no valid reclassification under Municipal Resolution No. 16-98 because the law
required an ordinance, not a resolution.
We agree in part with the CA.
Under Republic Act No. 7160, local government units, such as the Municipality of
Malolos, Bulacan, are vested with the power to reclassify lands. However, Section 20,
Chapter II, Title I of Republic Act No. 7160 ordains:chanRoblesvirtualLawlibrary

Clearly, an ordinance is required in order to reclassify agricultural lands, and such

may only be passed after the conduct of public hearings.

Nonetheless, the Dakila property was not an agricultural land subject to the coverage
of Republic Act No. 6657 or Presidential Decree No. 27.
Verily, the basic condition for land to be placed under the coverage of Republic Act
No. 6657 is that it must either be primarily devoted to or be suitable for
agriculture.50 Perforce, land that is not devoted to agricultural activity is outside the
coverage of Republic Act No. 6657.51 An agricultural land, according to Republic Act
No. 6657, is one that is devoted to agricultural activity and not classified as mineral,
forest, residential, commercial or industrial land.52Agricultural activity includes the
cultivation of the soil, planting of crops, growing of fruit trees, raising livestock, poultry
or fish, including the harvesting of such farm products; and other farm activities and
practices performed by a farmer in conjunction with such farming operations done by
persons whether natural or juridical.53
Consequently, before land may be placed under the coverage of Republic Act No.
6657, two requisites must be met, namely: (1) that the land must be devoted to
agricultural activity; and (2) that the land must not be classified as mineral, forest,
residential, commercial or industrial land. Considering that the Dakila property has not
been classified as mineral, forest, residential, commercial or industrial, the second

75
requisite is satisfied. For the first requisite to be met, however, there must be a
showing that agricultural activity is undertaken on the property.

5. That they are more suitable for residential use considering their location viz-a-viz
(sic) with (sic) the residential lots in the area.58 (Emphasis supplied)

It is not difficult to see why Republic Act No. 6657 requires agricultural activity in order
to classify land as agricultural. The spirit of agrarian reform laws is not to distribute
lands per se, but to enable the landless to own land for cultivation. This is why the
basic qualification laid down for the intended beneficiary is to show the willingness,
aptitude and ability to cultivate and make the land as productive as possible.54 This
requirement conforms with the policy direction set in the 1987 Constitution to the
effect that agrarian reform laws shall be founded on the right of the landless farmers
and farmworkers to own, directly or collectively, the lands they till.55 In Luz Farms v.
Secretary of the Department of Agrarian Reform,56 we even said that the framers of
the Constitution limited agricultural lands to the arable and suitable agricultural
lands.

The terse statement by the OIC-Regional Director that the Dakila property would still
be subject to Republic Act No. 6657 should Presidential Decree No. 27 be
inapplicable59 did not meet the requirements under Republic Act No. 6657. Section 7
of Republic Act No. 6657 identified rice and corn lands subject to Presidential Decree
No. 27 for priority distribution in the first phase and implementation of the CARP.
Insofar as the interplay of these two laws was concerned, the Court has said that
during the effectivity of the Republic Act No. 6657 and in the event of incomplete
acquisition under Presidential Decree No. 27, the former should apply, with the
provisions of the latter and Executive Order No. 22860 having only suppletory effect.61

Here, no evidence was submitted to show that any agricultural activity like
cultivation of the land, planting of crops, growing of fruit trees, raising of livestock, or
poultry or fish, including the harvesting of such farm products, and other farm
activities and practices were being performed on the Dakila property in order to
subject it to the coverage of Republic Act No. 6657. We take particular note that the
previous tenants had themselves declared that they were voluntarily surrendering their
tenancy rights because the land was not conducive to farming by reason of its
elevation, among others.57 Also notable is the second Whereas Clause of Municipal
Resolution No. 16-98, which mentioned that the Dakila property was not fit for
agricultural use due to lack of sufficient irrigation and that it was more suitable for
residential use, thus:chanRoblesvirtualLawlibrary
WHEREAS, after an ocular inspection of the subject lots and matured deliberation,
the Sangguniang Bayan found merit in the request for the following reasons, thus:
1. The properties are untenanted;cralawlawlibrary
2. That they are not fitted [sic] for agricultural use for lack of sufficient
irrigation;
3. There are improvements already introduce[d] on the property by its owner like
construction of subdivision roads;cralawlawlibrary
4. Lack of oppositor to the intend[ed] subdivision project on the properties by its
owner;cralawlawlibrary

Even if we supplemented the provisions of Presidential Decree No. 27, the outcome is
still the same, because the Dakila property was still not within the scope of the law.
For land to be covered under Presidential Decree No. 27, it must be devoted to rice or
corn crops, and there must be a system of share-crop or lease-tenancy obtaining
therein. If either requisite is absent, the land must be excluded. Hence, exemption
from coverage followed when the land was not devoted to rice or corn even if it was
tenanted; or the land was untenanted even though it was devoted to rice or
corn.62 Based on these conditions, the DAR Regional Office erred in subjecting the
Dakila property under the OLT.
The first requirement, that the land be devoted to rice or corn cultivation, was not
sufficiently established. In this regard, the OIC-Regional Director inaccurately based
his holding on the report submitted by the Legal Services Division that
[P]ortion of the property embraced under TCT No. 103697 with an area of 2.5611
hectares more or less, was placed under PD [No.] 27 and subsequently an approved
survey plan (Psd-03-020270) has been prepared which was then the basis of the
issuance of titles in favor of Felix Surio and Silvino Manalad under EP Nos. 345262
and 342561. On the other hand, the land subject of this controversy was, likewise,
subdivided and now covered by an approved plan ASP No. Psd-031410-066532.63
What can be gathered from the report of the Legal Services Division was that the land
owned by the petitioner and covered by Presidential Decree No. 27 was the
Sumapang Matanda property under TCT No. 103697. As to the Dakila property, we
can only infer from the report that it was merely subdivided. The report did not
mention whatsoever the agricultural activities performed in the Dakila property. Nor
was there a finding that the Dakila property was devoted to either rice or corn

76
cultivation as to justify its coverage under Presidential Decree No. 27. Such a finding
was necessary, for the Court has observed in Solmayor v. Arroyo:64
Although this Court will not disregard the evidence presented by petitioners that the
land is devoted to rice and corn crops in 1993, when the ocular inspection by the DAR
personnel was conducted, it must be noted that around the time of the passage of
Presidential Decree No. 27 up to 1978, when the subject property was placed under
the coverage of Operation Land Transfer, the available evidence issued and certified
by the different government agencies, closer in time to the mentioned time frame will
show that respondents property has, indeed, been classified as within the residential
and commercial zones of Davao City. It cannot escape the notice of this Court that
more than a decade before the issuance of the said ocular investigation report stating
that the land is devoted to agricultural production, government agencies equipped with
the technical expertise to determine the proper classification of the subject land have
already determined that the land is part of the residential and commercial zones of
Davao City making it suitable for other urban use. Therefore, it is only reasonable to
conclude, based on the certification of various executive agencies issued when this
controversy arose, that at the time of the passage of Presidential Decree No. 27,
respondents property was not agricultural.65
For land to come within the coverage of the OLT, indeed, there must be a showing that
it is devoted to the cultivation of rice or corn, and there must be a system of sharecrop or lease tenancy obtaining on October 21, 1972, the time when Presidential
Decree No. 27 took effect.66 Unfortunately, no such evidence was presented, nor was
there any field investigation conducted to verify whether or not the landholding was
primarily devoted to the cultivation of rice or corn. Accordingly, the Dakila property
should be excluded from the OLT.
The DAR Secretary affirmed the validity of the EPs in favor of the respondents
only pursuant to the Order of the Regional Director.67 We note, however, that the
evidence to establish in the proceedings below that they or their predecessors had
been tenants of the petitioners predecessor-in-interest to make them the rightful
beneficiaries of the Dakila property was severely wanting. For tenancy to exist, there
must be proof that: (1) the parties are the landholder and the tenant; (2) the subject is
agricultural land; (3) there is consent; (4) the purpose is agricultural production; (5)
there is consideration;68 and (6) there is a sharing of the harvests. All these requisites
are necessary to create a tenancy relationship, and the absence of one or more of
them will not make the alleged tenant a de facto tenant.69 Unless a person has
established his status as a de jure tenant, he is not entitled to security of tenure; nor is
he covered by the land reform program of the Government under the existing tenancy
laws.70 Here, the consent to establish a tenant-landlord relationship was manifestly

absent. In view of the petitioners repeated denial of the tenancy, the respondents
ought then to establish the tenancy relationship, but did not do so. Tenancy could not
be presumed, but must be established by evidence; its mere allegation is neither
evidence nor equivalent to proof of its existence.71
There was also no showing that the respondents were engaged in any agricultural
activities, or agreed with Santiago or the petitioner on the sharing of harvests. The
OIC-Regional Director obviously disregarded the affidavit of Barangay Captain Felino
M. Teodoro of Dakila, Malolos, Bulacan stating that the respondents were never the
actual farmers on the Dakila property.72
IV.
The petitioner was deprived of due process
The petitioner posits that it was denied due process by the failure of the OIC-Regional
Director to see to the compliance with the procedures outlined by Republic Act No.
6657 and Presidential Decree No. 27. It claims that the OIC-Regional Director
resorted to procedural shortcuts and irregularities73 in issuing the EPs to the
respondents.
We agree with the petitioners position.
In Reyes v. Barrios,74 we identified the procedural requirements that must be followed
prior to the issuance of an EP, viz:chanRoblesvirtualLawlibrary
The Primer on Agrarian Reform enumerates the steps in transferring the land to the
tenant-tiller, thus:
a. First step: the identification of tenants, landowners, and the land covered by OLT.
b. Second step: land survey and sketching of the actual cultivation of the tenant to
determine parcel size, boundaries, and possible land use;cralawlawlibrary
c. Third step: the issuance of the Certificate of Land Transfer (CLT). To ensure
accuracy and safeguard against falsification, these certificates are processed at the
National Computer Center (NCC) at Camp Aguinaldo;cralawlawlibrary
d. Fourth step: valuation of the land covered for amortization
computation;cralawlawlibrary
e. Fifth step: amortization payments of tenant-tillers over fifteen (15) year period; and
f. Sixth step: the issuance of the Emancipation Patent.

77
Thus, there are several steps to be undertaken before an Emancipation Patent can be
issued. x x x.
xxxx
Furthermore, there are several supporting documents which a tenant-farmer must
submit before he can receive the Emancipation Patent, such as:
a. Application for issuance of Emancipation Patent;cralawlawlibrary
b. Applicant's (owner's) copy of Certificate of Land Transfer.
c. Certification of the landowner and the Land Bank of the Philippines that the
applicant has tendered full payment of the parcel of land as described in the
application and as actually tilled by him;cralawlawlibrary
d. Certification by the President of the Samahang Nayon or by the head of farmers'
cooperative duly confirmed by the municipal district officer (MDO) of the Ministry of
Local Government and Community Development (MLGCD) that the applicant is a fullfledged member of a duly registered farmers' cooperative or a certification to these
effect;cralawlawlibrary
e. Copy of the technical (graphical) description of the land parcel applied for prepared
by the Bureau of Land Sketching Team (BLST) and approved by the regional director
of the Bureau of Lands;cralawlawlibrary
f. Clearance from the MAR field team (MARFT) or the MAR District Office (MARDO)
legal officer or trial attorney; or in their absence, a clearance by the MARFT leader to
the effect that the land parcel applied for is not subject of adverse claim, duly
confirmed by the legal officer or trial attorney of the MAR Regional Office or, in their
absence, by the regional director;cralawlawlibrary
g. Xerox copy of Official Receipts or certification by the municipal treasurer showing
that the applicant has fully paid or has effected up-to-date payment of the realty taxes
due on the land parcel applied for; and
h. Certification by the MARFT leader whether applicant has acquired farm
machineries from the MAR and/or from other government agencies.
Majority of these supporting documents are lacking in this case. Hence, it was
improper for the DARAB to order the issuance of the Emancipation Patent in favor of
respondent without the required supporting documents and without following the
requisite procedure before an Emancipation Patent may be validly issued.75

Furthermore, Section 16 of Republic Act No. 6657 outlines the procedure in acquiring
private lands subject to its coverage, viz:chanRoblesvirtualLawlibrary
Section 16. Procedure for Acquisition of Private Lands. - For purposes of acquisition
of private lands, the following procedures shall be
followed:chanRoblesvirtualLawlibrary
(a) After having identified the land, the landowners and the beneficiaries, the DAR
shall send its notice to acquire the land to the owners thereof, by personal delivery or
registered mail, and post the same in a conspicuous place in the municipal building
and barangay hall of the place where the property is located. Said notice shall contain
the offer of the DAR to pay a corresponding value in accordance with the valuation set
forth in Sections 17, 18 and other pertinent provisions hereof.
(b) Within thirty (30) days from the date of receipt of written notice by personal
delivery or registered mail, the landowners, his administrator or representative shall
inform the DAR of his acceptance or rejection of the former.
(c) If the landowner accepts the offer of the DAR, the Land Bank of the Philippines
shall pay the landowner the purchase price of the land within thirty (30) days after he
executes and delivers a deed of transfer in favor of the Government and surrenders
the Certificate of Title and other muniments of title.
(d) In case of rejection or failure to reply, the DAR shall conduct summary
administrative proceedings to determine the compensation for the land by requiring
the landowner, the LBP and other interested parties to submit evidence as to the just
compensation for the land, within fifteen (15) days from the receipt of notice. After the
expiration of the above period, the matter is deemed submitted for decision. The DAR
shall decide the case within thirty (30) days after it is submitted for decision.
(e) Upon receipt by the landowner of the corresponding payment or in case of
rejection or no response from the landowner, upon the deposit with an accessible
bank designated by the DAR of the compensation in cash or in LBP bonds in
accordance with this Act, the DAR shall take immediate possession of the land and
shall request the proper Register of Deeds to issue a Transfer Certificate of Title
(TCT) in the name of the Republic of the Philippines. The DAR shall thereafter
proceed with the redistribution of the land to the qualified beneficiaries.
(f) Any party who disagrees with the decision may bring the matter to the court of
proper jurisdiction for final determination of just compensation.

78
Under Republic Act No. No. 6657 and DAR A.O. No. 12, Series of 1989, two notices
should be sent to the landowner the first, the notice of coverage; and the other, the
notice of acquisition.
The Court cannot consider and declare the proceedings conducted by the OICRegional Director as a substantial compliance with the notice requirements.
Compliance with such requirements, being necessary to render the implementation of
the CARP valid, was mandatory. As the Court observed in Roxas & Co., Inc. v. Court
of Appeals:76
For a valid implementation of the CAR Program, two notices are required:
(1) the Notice of Coverage and letter of invitation to a preliminary conference
sent to the landowner, the representatives of the BARC, LBP, farmer
beneficiaries and other interested parties pursuant to DAR A.O. No. 12, Series
of 1989; and (2) the Notice of Acquisition sent to the landowner under Section
16 of the CARL.
The importance of the first notice, i.e., the Notice of Coverage and the letter of
invitation to the conference, and its actual conduct cannot be understated.
They are steps designed to comply with the requirements of administrative due
process. The implementation of the CARL is an exercise of the States police
power and the power of eminent domain. To the extent that the CARL
prescribes retention limits to the landowners, there is an exercise of police
power for the regulation of private property in accordance with the
Constitution. But where, to carry out such regulation, the owners are deprived
of lands they own in excess of the maximum area allowed, there is also a taking
under the power of eminent domain. The taking contemplated is not a mere
limitation of the use of the land. What is required is the surrender of the title to
and physical possession of the said excess and all beneficial rights accruing to
the owner in favor of the farmer beneficiary. The Bill of Rights provides that
"[n]o person shall be deprived of life, liberty or property without due process of
law." The CARL was not intended to take away property without due process of
law. The exercise of the power of eminent domain requires that due process be
observed in the taking of private property.
xxxx
Clearly then, the notice requirements under the CARL are not confined to the Notice
of Acquisition set forth in Section 16 of the law. They also include the Notice of
Coverage first laid down in DAR A. O. No. 12, Series of 1989 and subsequently

amended in DAR A. O. No. 9, Series of 1990 and DAR A. O. No. 1, Series of 1993.
This Notice of Coverage does not merely notify the landowner that his property shall
be placed under CARP and that he is entitled to exercise his retention right; it also
notifies him, pursuant to DAR A. O. No. 9, Series of 1990, that a public hearing shall
be conducted where he and representatives of the concerned sectors of society may
attend to discuss the results of the field investigation, the land valuation and other
pertinent matters. Under DAR A. O. No. 1, Series of 1993, the Notice of Coverage
also informs the landowner that a field investigation of his landholding shall be
conducted where he and the other representatives may be present.77(Emphasis
supplied)
The procedures provided by Section 16 of Republic Act No. 6657 and its relevant
DAR administrative issuances are to ensure the compliance with the due process
requirements of the law. The result of their non-compliance is to deprive the
landowner of its constitutional right to due process.
The Court has carefully explained in Roxas & Co., Inc. v. Court of Appeals that the
taking under the CARL is an exercise of police power as well as of eminent domain.
The taking of the landholding by the State effectively results in the surrender by the
landowner of its title and physical possession to the beneficiaries. Hence,
compensation should be given to the landowner prior to the taking. This is the clearcut directive of Section 16(e) of Republic Act No. 6657 which mandates the DAR to
take immediate possession of the land only after full payment and to thereafter
request the Register of Deeds to transfer title in the name of the Republic of the
Philippines, and later on to the intended beneficiaries.
However, there was no evidence of payment prior to the cancellation of the petitioners
TCTs submitted here. The requirement of prior payment was found in Republic Act
No. 6657 and Presidential Decree No. 27, under which full payment by the intended
beneficiary was a condition prior to the award of an EP. We have explicitly
pronounced in Corua v. Cinamin78 that the emancipation of tenants does not come
free. The transfer of lands under Presidential Decree No. 27 remained subject to the
terms and conditions provided in said law. In Paris v. Alfeche,79 we
said:chanRoblesvirtualLawlibrary
x x x. Section 2 of PD 266 states:
After the tenant-farmer shall have fully complied with the requirements for a grant of
title under Presidential Decree No. 27, an Emancipation Patent and/or Grant shall be
issued by the Department of Agrarian Reform on the basis of a duly approved survey
plan.

79
On the other hand, paragraphs 8 and 9 of PD 27 reads as
follows:chanRoblesvirtualLawlibrary
For the purpose of determining the cost of the land to be transferred to the tenantfarmer pursuant to this Decree, the value of the land shall be equivalent to two and
one-half (2 ) times the average harvest of three normal crop years immediately
preceding the promulgation of this Decree;cralawlawlibrary
The total cost of the land, including interest at the rate of six (6) per centum per
annum, shall be paid by the tenant in fifteen (15) years of fifteen (15) equal annual
amortizations[.]
Although, under the law, tenant farmers are already deemed owners of the land
they till, they are still required to pay the cost of the land, including interest,
within fifteen years before the title is transferred to them.80 (Emphasis supplied)
The unquestioned non-compliance with the procedures set by Republic Act No. 6657
and its relevant rules and regulations further denied to the petitioner the exercise of its
right of retention.81 In doing so, the OIC-Regional Director disregarded this
constitutionally guaranteed right. We cannot understate the value of the right of
retention as the means to mitigate the effects of compulsory land acquisition by
balancing the rights of the landowner and the tenant and by implementing the doctrine
that social justice is not meant to perpetrate an injustice against the landowner.82
We also consider the manner by which the Dakila property was apportioned to the
respondents highly suspect. It appears from the face of the EPs that the individual lots
were allocated based on how the landholding was subdivided by the petitioner.
Moreover, all the respondents were awarded lots exceeding three hectares in violation
of Section 23 of Republic Act No. 6657, which provides that [n]o qualified beneficiary
may own more than three (3) hectares of agricultural land.
In fine, the order of the OIC-Regional Director was patently null and void. The denial
of due process to the petitioner sufficed to cast the impress of nullity on the official act
thereby taken. A decision rendered without due process is void ab initio and may be
attacked directly or collaterally.83 All the resulting acts were also null and void.
Consequently, the EPs awarded to the respondents should be nullified.
WHEREFORE, the Court GRANTS the petition for review
on certiorari; REVERSES and SETS ASIDE the decision promulgated on July 27,
2011 by the Court of Appeals; REINSTATES the assailed decision of the Office of the
President issued on March 1, 2010; DIRECTS the cancellation of Emancipation

Patents No. 00783329, No. 00783330, No. 0078331, No. 0078332, No. 0078333, and
No. 0078334 issued to the respondents for being NULL and VOID; and ORDERS the
respondents to pay the costs of suit.
SO ORDERED.
Sereno, C.J., Leonardo-De Castro, Perez, and Perlas-Bernabe, JJ., concur.

[G.R. NO. 187298 - July 03, 2012]

JAMAR M. KULAYAN, TEMOGEN S. TULAWIE, HJI. MOH. YUSOP ISMI,
JULHAJAN AWADI, and SPO1 SATTAL H. JADJULI, Petitioners, v. GOV.
ABDUSAKUR M. TAN, in his capacity as Governor of Sulu; GEN. JUANCHO
SABAN, COL. EUGENIO CLEMEN PN, P/SUPT. JULASIRIM KASIM and P/SUPT.
BIENVENIDO G. LATAG, in their capacity as officers of the Phil. Marines and
Phil. National Police, respectively, Respondents.
DECISION
SERENO, J.:
On 15 January 2009, three members from the International Committee of the Red
Cross (ICRC) were kidnapped in the vicinity of the Provincial Capitol in Patikul,
Sulu.1 Andres Notter, a Swiss national and head of the ICRC in Zamboanga City,
Eugenio Vagni, an Italian national and ICRC delegate, and Marie Jean Lacaba, a
Filipino engineer, were purportedly inspecting a water and sanitation project for the
Sulu Provincial Jail when inspecting a water and sanitation project for the Sulu
Provincial Jail when they were seized by three armed men who were later confirmed
to be members of the Abu Sayyaf Group (ASG).2 The leader of the alleged kidnappers
was identified as Raden Abu, a former guard at the Sulu Provincial Jail. News reports
linked Abu to Albader Parad, one of the known leaders of the Abu Sayyaf.
On 21 January 2009, a task force was created by the ICRC and the Philippine
National Police (PNP), which then organized a parallel local group known as the Local
Crisis Committee.3 The local group, later renamed Sulu Crisis Management
Committee, convened under the leadership of respondent Abdusakur Mahail Tan, the
Provincial Governor of Sulu. Its armed forces component was headed by respondents
General Juancho Saban, and his deputy, Colonel Eugenio Clemen. The PNP
component was headed by respondent Police Superintendent Bienvenido G. Latag,

80
the Police Deputy Director for Operations of the Autonomous Region of Muslim
Mindanao (ARMM).4rll

2) The AFP/PNP shall ensure the orderly deployment of the CEF in the performance
of their assigned task(s);

Governor Tan organized the Civilian Emergency Force (CEF), a group of armed male
civilians coming from different municipalities, who were redeployed to surrounding
areas of Patikul.5 The organization of the CEF was embodied in a "Memorandum of
Understanding"6 entered into

3) The AFP/PNP shall ensure the safe movements of the CEF in identified areas of
operation(s);

between three parties: the provincial government of Sulu, represented by Governor

Tan; the Armed Forces of the Philippines, represented by Gen. Saban; and the
Philippine National Police, represented by P/SUPT. Latag. The Whereas clauses of
the Memorandum alluded to the extraordinary situation in Sulu, and the willingness of
civilian supporters of the municipal mayors to offer their services in order that "the
early and safe rescue of the hostages may be achieved."7rll
This Memorandum, which was labeled secret on its all pages, also outlined the
responsibilities of each of the party signatories, as follows:
Responsibilities of the Provincial Government:rbl r l l
lbrr
1) The Provincial Government shall source the funds and logistics needed for the
activation of the CEF;
2) The Provincial Government shall identify the Local Government Units which shall
participate in the operations and to propose them for the approval of the parties to this
agreement;
3) The Provincial Government shall ensure that there will be no unilateral action(s) by
the CEF without the knowledge and approval by both parties.
chanrobles virtual law library
Responsibilities of AFP/PNP/ TF ICRC (Task Force ICRC):rbl
r l l lbrr
1) The AFP/PNP shall remain the authority as prescribed by law in military operations
and law enforcement;

4) The AFP/PNP shall provide the necessary support and/or assistance as called for
in the course of operation(s)/movements of the CEF.8
Meanwhile, Ronaldo Puno, then Secretary of the Department of Interior and Local
Government, announced to the media that government troops had cornered some
one hundred and twenty (120) Abu Sayyaf members along with the three (3)
hostages.9 However, the ASG made
contact with the authorities and demanded that the military pull its troops back from
the jungle area.10 The government troops yielded and went back to their barracks; the
Philippine Marines withdrew to their camp, while police and civilian forces pulled back
from the terrorists stronghold by ten (10) to fifteen (15) kilometers. Threatening that
one of the hostages will be beheaded, the ASG further demanded the evacuation of
the military camps and bases in the different barangays in Jolo.11 The authorities were
given no later than 2:00 o clock in the afternoon of 31 March 2009 to comply.12rll
On 31 March 2009, Governor Tan issued Proclamation No. 1, Series of 2009
(Proclamation 1-09), declaring a state of emergency in the province of Sulu.13 It cited
the kidnapping incident as a ground for the said declaration, describing it as a terrorist
act pursuant to the Human Security
Act (R.A. 9372). It also invoked Section 465 of the Local Government Code of 1991
(R.A. 7160), which bestows on the Provincial Governor the power to carry out
emergency measures during man-made and natural disasters and calamities, and to
call upon the appropriate national law enforcement agencies to suppress disorder and
lawless violence.
In the same Proclamation, respondent Tan called upon the PNP and the CEF to set
up checkpoints and chokepoints, conduct general search and seizures including
arrests, and other actions necessary to ensure public safety. The pertinent portion of
the proclamation states:rbl r l l lbrr
NOW, THEREFORE, BY VIRTUE OF THE POWERS VESTED IN ME BY LAW, I,
ABDUSAKUR MAHAIL TAN, GOVERNOR OF THE PROVINCE OF SULU, DO
HEREBY DECLARE A STATE OF EMERGENCY IN THE PROVINCE OF SULU, AND

81
CALL ON THE PHILIPPINE NATIONAL POLICE WITH THE ASSISTANCE OF THE
ARMED FORCES OF THE PHILIPPINES AND THE CIVILIAN EMERGENCY FORCE
TO IMPLEMENT THE FOLLOWING:rbl r l l lbrr
1. The setting-up of checkpoints and chokepoints in the province;
2. The imposition of curfew for the entire province subject to such Guidelines as may
be issued by proper authorities;
3. The conduct of General Search and Seizure including arrests in the pursuit of the
kidnappers and their supporters; and
4. To conduct such other actions or police operations as may be necessary to ensure
public safety.
chanrobles virtual law library
DONE AT THE PROVINCIAL CAPITOL, PROVINCE OF SULU THIS
31STDAY OF MARCH 2009. Sgd. Abdusakur M. Tan Governor.14rll
chanrobles virtual law library
On 1 April 2009, SPO1 Sattal Jadjuli was instructed by his superior to report to
respondent P/SUPT. Julasirim Kasim.15 Upon arriving at the police station, he was
booked, and interviewed about his relationship to Musin, Jaiton, and Julamin, who
were all his deceased relatives. Upon admitting that he was indeed related to the
three, he was detained. After a few hours, former Punong Barangay Juljahan Awadi,
Hadji Hadjirul Bambra, Abdugajir Hadjirul, as well as PO2 Marcial Hajan, SPO3
Muhilmi Ismula, Punong Barangay Alano Mohammad and jeepney driver Abduhadi
Sabdani, were also arrested.16 The affidavit17 of the apprehending officer alleged that
they were suspected ASG supporters and were being arrested under Proclamation 109. The following day, 2 April 2009, the hostage Mary Jane Lacaba was released by
the ASG.
On 4 April 2009, the office of Governor Tan distributed to civic organizations, copies of
the "Guidelines for the Implementation of Proclamation No. 1, Series of 2009
Declaring a State of Emergency in the Province of Sulu."18These Guidelines
suspended all Permits to Carry

Firearms Outside of Residence (PTCFORs) issued by the Chief of the PNP, and
allowed civilians to seek exemption from the gun ban only by applying to the Office of
the Governor and obtaining the appropriate identification cards. The said guidelines
also allowed general searches and seizures in designated checkpoints and
chokepoints.
On 16 April 2009, Jamar M. Kulayan, Temogen S. Tulawie, Hadji Mohammad Yusop
Ismi, Ahajan Awadi, and SPO1 Sattal H. Jadjuli, residents of Patikul, Sulu, filed the
present Petition for Certiorari and Prohibition,19 claiming that Proclamation 1-09 was
issued with grave abuse of discretion amounting to lack or excess of jurisdiction, as it
threatened fundamental freedoms guaranteed under Article III of the 1987
Constitution.
Petitioners contend that Proclamation No. 1 and its Implementing Guidelines were
issued ultra vires, and thus null and void, for violating Sections 1 and 18, Article VII of
the Constitution, which grants the President sole authority to exercise emergency
powers and calling-out powers as the chief executive of the Republic and commanderin-chief of the armed forces.20 Additionally, petitioners claim that the Provincial
Governor is not authorized by any law to create civilian armed forces under his
command, nor regulate and limit the issuances of PTCFORs to his own private army.
In his Comment, Governor Tan contended that petitioners violated the doctrine on
hierarchy of courts when they filed the instant petition directly in the court of last
resort, even if both the Court of Appeals (CA) and the Regional Trial Courts (RTC)
possessed concurrent jurisdiction with the
Supreme Court under Rule 65.21 This is the only procedural defense raised by
respondent Tan. Respondents Gen. Juancho Saban, Col. Eugenio Clemen, P/SUPT.
Julasirim Kasim, and P/SUPT. Bienvenido Latag did not file their respective
Comments.
On the substantive issues, respondents deny that Proclamation 1-09 was issued ultra
vires, as Governor Tan allegedly acted pursuant to Sections 16 and 465 of the Local
Government Code, which empowers the Provincial Governor to carry out emergency
measures during calamities and disasters, and to call upon the appropriate national
law enforcement agencies to suppress disorder, riot, lawless violence, rebellion or
sedition.22 Furthermore, the Sangguniang Panlalawigan of Sulu authorized the
declaration of a state of emergency as evidenced by Resolution No. 4, Series of 2009
issued on 31 March 2009 during its regular session.23rll

82
The threshold issue in the present case is whether or not Section 465, in relation to
Section 16, of the Local Government Code authorizes the respondent governor to
declare a state of emergency, and exercise the powers enumerated under
Proclamation 1-09, specifically the conduct of general searches and seizures.
Subsumed herein is the secondary question of whether or not the provincial governor
is similarly clothed with authority to convene the CEF under the said provisions.

The instant case stems from a petition for certiorari and prohibition, over which the
Supreme Court possesses original jurisdiction.28 More crucially, this case involves
acts of a public official which pertain to restrictive custody, and is thus impressed with
transcendental public importance that would warrant the relaxation of the general rule.
The Court would be remiss in its constitutional duties were it to dismiss the present
petition solely due to claims of judicial hierarchy.

We grant the petition.

In David v. Macapagal-Arroyo,29 the Court highlighted the transcendental public

importance involved in cases that concern restrictive custody, because judicial review
in these cases serves as "a manifestation of the crucial defense of civilians in police
power cases due to the diminution of their basic liberties under the guise of a state of
emergency."30 Otherwise, the importance of the high tribunal as the court of last resort
would be put to naught, considering the nature of "emergency" cases, wherein the
proclamations and issuances are inherently short-lived. In finally disposing of the
claim that the issue had become moot and academic, the Court also cited
transcendental public importance as an exception, stating:rbl r
l l lbrr

I. Transcendental public Importance warrants a relaxation of the Doctrine of Hierarchy

of Courts
We first dispose of respondents invocation of the doctrine of hierarchy of courts which
allegedly prevents judicial review by this Court in the present case, citing for this
specific purpose, Montes v. Court of Appeals and Purok Bagong Silang Association,
Inc. v. Yuipco.24 Simply put, the
doctrine provides that where the issuance of an extraordinary writ is also within the
competence of the CA or the RTC, it is in either of these courts and not in the
Supreme Court, that the specific action for the issuance of such writ must be sought
unless special and important laws are clearly and specifically set forth in the petition.
The reason for this is that this Court is a court of last resort and must so remain if it is
to perform the functions assigned to it by the Constitution and immemorial tradition. It
cannot be burdened with deciding cases in the first instance.25rll

Sa kabila ng pagiging akademiko na lamang ng mga isyu tungkol sa mahigpit na

pangangalaga (restrictive custody) at pagmonitor ng galaw (monitoring of movements)
ng nagpepetisyon, dedesisyunan namin ito (a) dahil sa nangingibabaw na interes ng
madla na nakapaloob dito,
chanrobles virtual law library

The said rule, however, is not without exception. In Chavez v. PEA-Amari,26 the Court
stated:rbl r l l lbrr

(b) dahil sa posibilidad na maaaring maulit ang pangyayari at (c) dahil kailangang
maturuan ang kapulisan tungkol dito.rbl r l l lbrr

PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking relief
directly from the Court. The principle of hierarchy of courts applies generally to cases
involving factual questions. As it is not a trier of facts, the Court cannot entertain
cases involving factual issues. The instant case, however, raises constitutional
questions of transcendental importance to the public. The Court can resolve this case
without determining any factual issue related to the case. Also, the instant case is a
petition for mandamus which falls under the original jurisdiction of the Court under
Section 5, Article VIII of the Constitution. We resolve to exercise primary jurisdiction
over the instant case.27rll

The moot and academic principle is not a magical formula that can automatically
dissuade the courts in resolving a case. Courts will decide cases, otherwise moot and
academic, if: first, there is a grave violation of the Constitution; second, the
exceptional character of the situation and the paramount public interest is involved;
third, when [the] constitutional issue raised requires formulation of controlling
principles to guide the bench, the bar, and the public; and fourth, the case is capable
of repetition yet evading review.

chanrobles virtual law library

There is no question that the issues being raised affect the public interest, involving as
they do the people s basic rights to freedom of expression, of assembly and of the
press. Moreover, the

83
Court has the duty to formulate guiding and controlling constitutional precepts,
doctrines or rules. It has the symbolic function of educating the bench and the bar,
and in the present petitions, the military and the police, on the extent of the protection
given by constitutional guarantees. And lastly, respondents contested actions are
capable of repetition. Certainly, the petitions are subject to judicial review.
Evidently, the triple reasons We advanced at the start of Our ruling are justified under
the foregoing exceptions. Every bad, unusual incident where police officers figure in
generates public interest and people watch what will be done or not done to them.
Lack of disciplinary steps taken against them erode public confidence in the police
institution. As petitioners themselves assert, the restrictive custody of policemen
under investigation is an existing practice, hence, the issue is bound to crop up every
now and then. The matter is capable of repetition or susceptible of recurrence. It
better be resolved now for the education and guidance of all concerned.31 (Emphasis
supplied)cralawlibrary
chanrobles virtual law library
Hence, the instant petition is given due course, impressed as it is with transcendental
public importance.
II. Only the President is vested with calling-out powers, as the commander-in-chief of
the Republic
i. One executive, one commander-in-chief
As early as Villena v. Secretary of Interior,32 it has already been established that there
is one repository of executive powers, and that is the President of the Republic. This
means that when Section 1, Article VII of the Constitution speaks of executive power,
it is granted to the President and no one else.33 As emphasized by Justice Jose P.
Laurel, in his ponencia in Villena:rbl r l l lbrr
With reference to the Executive Department of the government, there is one purpose
which is crystal-clear and is readily visible without the projection of judicial searchlight,
and that is the establishment of a single, not plural, Executive. The first section of
Article VII of the Constitution, dealing with the Executive Department, begins with the
enunciation of the principle that "The executive power shall be vested in a President of
the Philippines." This means that the President of the Philippines is the Executive of
the Government of the Philippines, and no other.34rll
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Corollarily, it is only the President, as Executive, who is authorized to exercise

emergency powers as provided under Section 23, Article VI, of the Constitution, as
well as what became known as the calling-out powers under Section 7, Article VII
thereof.
ii. The exceptional character of Commander-in-Chief powers dictate that they are
exercised by one president
Springing from the well-entrenched constitutional precept of One President is the
notion that there are certain acts which, by their very nature, may only be performed
by the president as the Head of the State. One of these acts or prerogatives is the
bundle of Commander-in-Chief powers to which the "calling-out" powers constitutes a
portion. The President s Emergency Powers, on the other hand, is balanced only by
the legislative act of Congress, as embodied in the second paragraph of Section 23,
Article 6 of the Constitution:rbl r l l lbrr
Article 6, Sec 23(2). In times of war or other national emergency, the Congress may,
by law, authorize the President, for a limited period and subject to such restrictions as
it may prescribe, to exercise powers necessary and proper to carry out a declared
national policy. Unless sooner withdrawn by resolution of the Congress, such powers
shall cease upon the next adjournment thereof.35rll
Article 7, Sec 18. The President shall be the Commander-in-Chief of all armed forces
of the Philippines and whenever it becomes necessary, he may call out such armed
forces to prevent or suppress lawless violence, invasion or rebellion. In case of
invasion or rebellion, when the public safety requires it, he may, for a period not
exceeding sixty days, suspend the privilege of the writ of habeas corpus or place the
Philippines or any part thereof under martial law. Within forty-eight hours from the
proclamation of martial law or the suspension of the privilege of the writ of habeas
corpus, the President shall submit a report in person or in writing to the Congress.
The Congress, voting jointly, by a vote of at least a majority of all its Members in
regular or special session, may revoke such proclamation or suspension, which
revocation shall not be set aside by the President. Upon the initiative of the President,
the Congress may, in the same manner, extend such proclamation or suspension for a
period to be determined by the Congress, if the invasion or rebellion shall persist and
public safety requires it.
The Congress, if not in session, shall, within twenty-four hours following such
proclamation or suspension, convene in accordance with its rules without need of a
call.36rll

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The power to declare a state of martial law is subject to the Supreme Court s authority
to review the factual basis thereof.37 By constitutional fiat, the calling-out powers,
which is of lesser gravity than the power to declare martial law, is bestowed upon the
President alone. As noted in Villena, "(t)here are certain constitutional powers and
prerogatives of the Chief Executive of the Nation which must be exercised by him in
person and no amount of approval or ratification will validate the exercise of any of
those powers by any other person. Such, for instance, is his power to suspend the writ
of habeas corpus and proclaim martial law x x x.38rll
Indeed, while the President is still a civilian, Article II, Section 339 of the Constitution
mandates that civilian authority is, at all times, supreme over the military, making the
civilian president the nation s supreme military leader. The net effect of Article II,
Section 3, when read with Article VII,
Section 18, is that a civilian President is the ceremonial, legal and administrative head
of the armed forces. The Constitution does not require that the President must be
possessed of military training and talents, but as Commander-in-Chief, he has the
power to direct military operations and to determine military strategy. Normally, he
would be expected to delegate the actual command of the armed forces to military
experts; but the ultimate power is his.40 As Commander-in-Chief, he is authorized to
direct the movements of the naval and military forces placed by law at his command,
and to employ them in the manner he may deem most effectual.41rll
In the case of Integrated Bar of the Philippines v. Zamora,42 the Court had occasion to
rule that the calling-out powers belong solely to the President as commander-inchief:rbl r l l lbrr
When the President calls the armed forces to prevent or suppress lawless violence,
invasion or rebellion, he necessarily exercises a discretionary power solely vested in
his wisdom. This is clear from the intent of the framers and from the text of the
Constitution itself. The Court, thus, cannot be called upon to overrule the President s
wisdom or substitute its own. However, this does not prevent an examination of
whether such power was exercised within permissible constitutional limits or whether
it was exercised in a manner constituting grave abuse of discretion. In view of the
constitutional intent to give the President full discretionary power to determine the
necessity of calling out the armed forces, it is incumbent upon the petitioner to show
that the President s decision is totally bereft of factual basis.

There is a clear textual commitment under the Constitution to bestow on the President
full discretionary power to call out the armed forces and to determine the necessity for
the exercise of such power.43 (Emphasis supplied)cralawlibrary
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Under the foregoing provisions, Congress may revoke such proclamation or
suspension and the Court may review the sufficiency of the factual basis thereof.
However, there is no such equivalent provision dealing with the revocation or review of
the President s action to call out the armed forces. The distinction places the calling
out power in a different category from the power to declare martial law and the power
to suspend the privilege of the writ of habeas corpus, otherwise, the framers of the
Constitution would have simply lumped together the three powers and provided for
their revocation and review without any qualification.44rll
That the power to call upon the armed forces is discretionary on the president is clear
from the deliberation of the Constitutional Commission:rbl r l
l lbrr
FR. BERNAS. It will not make any difference. I may add that there is a graduated
power of the President as Commander-in-Chief. First, he can call out such Armed
Forces as may be necessary to suppress lawless violence; then he can suspend the
privilege of the writ of habeas corpus, then he can impose martial law. This is a
graduated sequence.
When he judges that it is necessary to impose martial law or suspend the privilege of
the writ of habeas corpus, his judgment is subject to review. We are making it subject
to review by the Supreme Court and subject to concurrence by the National Assembly.
But when he exercises this lesser power of calling on the Armed Forces, when he
says it is necessary, it is my opinion that his judgment cannot be reviewed by
anybody.
xxx

xxx

xxx

MR. REGALADO. That does not require any concurrence by the legislature nor is it
subject to judicial review.
The reason for the difference in the treatment of the aforementioned powers highlights
the intent to grant the President the widest leeway and broadest discretion in using
the power to call out because it is considered as the lesser and more benign power
compared to the power to suspend the privilege of the writ of habeas corpus and the

85
power to impose martial law, both of which involve the curtailment and suppression of
certain basic civil rights and individual freedoms, and thus necessitating safeguards
by Congress and review by this Court.
x x x Thus, it is the unclouded intent of the Constitution to vest upon the President, as
Commander-in-Chief of the Armed Forces, full discretion to call forth the military when
in his judgment it is necessary to do so in order to prevent or suppress lawless
violence, invasion or rebellion.45(Emphasis Supplied)
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In the more recent case of Constantino, Jr. v. Cuisia,46 the Court characterized these
powers as exclusive to the President, precisely because they are of exceptional
import:rbl r l l lbrr
These distinctions hold true to this day as they remain embodied in our fundamental
law. There are certain presidential powers which arise out of exceptional
circumstances, and if exercised, would involve the suspension of fundamental
freedoms, or at least call for the supersedence of executive prerogatives over those
exercised by co-equal branches of government. The declaration of martial law, the
suspension of the writ of habeas corpus, and the exercise of the pardoning power,
notwithstanding the judicial determination of guilt of the accused, all fall within this
special class that demands the exclusive exercise by the President of the
constitutionally vested power. The list is by no means exclusive, but there must be a
showing that the executive power in question is of similar gravitas and exceptional
import.47rll
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In addition to being the commander-in-chief of the armed forces, the President also
acts as the leader of the country s police forces, under the mandate of Section 17,
Article VII of the Constitution, which provides that, "The President shall have control of
all the executive departments, bureaus, and offices. He shall ensure that the laws be
faithfully executed." During the deliberations of the Constitutional Commission on the
framing of this provision, Fr. Bernas defended the retention of the word "control,"
employing the same rationale of singularity of the office of the president, as the only
Executive under the presidential form of government.48rll
Regarding the country s police force, Section 6, Article XVI of the Constitution states
that: "The State shall establish and maintain one police force, which shall be national
in scope and civilian in character, to be administered and controlled by a national

police commission. The authority of local executives over the police units in their
jurisdiction shall be provided by law."49rll
A local chief executive, such as the provincial governor, exercises operational
supervision over the police,50 and may exercise control only in day-to-day
operations, viz:rbl r l l lbrr
Mr. Natividad: By experience, it is not advisable to provide either in our Constitution or
by law full control of the police by the local chief executive and local executives, the
mayors. By our experience, this has spawned warlordism, bossism and sanctuaries
for vices and abuses. If the national government does not have a mechanism to
supervise these 1,500 legally, technically separate police forces, plus 61 city police
forces, fragmented police system, we will have a lot of difficulty in presenting a
modern professional police force. So that a certain amount of supervision and control
will have to be exercised by the national government.
For example, if a local government, a town cannot handle its peace and order
problems or police problems, such as riots, conflagrations or organized crime, the
national government may come in, especially if requested by the local executives.
Under that situation, if they come in under such an extraordinary situation, they will be
in control. But if the day-to-day business of police investigation of crime, crime
prevention, activities, traffic control, is all lodged in the mayors, and if they are in
complete operational control of the day-to-day business of police service, what the
national government would control would be the administrative aspect.
xxx

xxx

xxx

Mr. de los Reyes: so the operational control on a day-to-day basis, meaning, the usual
duties being performed by the ordinary policemen, will be under the supervision of the
local executives?chanroblesvirtualawlibrary
Mr. Natividad: Yes, Madam President.
xxx

xxx

xxx

Mr. de los Reyes: But in exceptional cases, even the operational control can be taken
over by the National Police Commission?chanroblesvirtualawlibrary
Mr. Natividad: If the situation is beyond the capacity of the local
governments.51 (Emphases supplied)

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Furthermore according to the framers, it is still the President who is authorized to

exercise supervision and control over the police, through the National Police
Commission:rbl r l l lbrr

In the discussions of the Constitutional Commission regarding the above provision it is

clear that the framers never intended for local chief executives to exercise unbridled
control over the police in emergency situations. This is without prejudice to their
authority over police units in their jurisdiction as provided by law, and their prerogative
to seek assistance from the police in day to day situations, as contemplated by the
Constitutional Commission. But as a civilian agency of the government, the police,
through the NAPOLCOM, properly comes within, and is subject to, the exercise by the
President of the power of executive control.53rll

Mr. Rodrigo: Just a few questions. The President of the Philippines is the
Commander-in-Chief of all the armed forces.
Mr. Natividad: Yes, Madam President.
Mr. Rodrigo: Since the national police is not integrated with the armed forces, I do not
suppose they come under the Commander-in-Chief powers of the President of the
Philippines.
Mr. Natividad: They do, Madam President. By law, they are under the supervision and
control of the President of the Philippines.
Mr. Rodrigo: Yes, but the President is not the Commander-in-Chief of the national
police.
Mr. Natividad: He is the President.
Mr. Rodrigo: Yes, the Executive. But they do not come under that specific provision
that the President is the Commander-in-Chief of all the armed forces.
Mr. Natividad: No, not under the Commander-in-Chief provision.
Mr. Rodrigo: There are two other powers of the President. The
President has control over ministries, bureaus and offices, and supervision over local
governments. Under which does the police fall, under control or under supervision?
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Mr. Natividad: Both, Madam President.
Mr. Rodrigo: Control and supervision.
Mr. Natividad: Yes, in fact, the National Police Commission is under the Office of the
President.52rll

iii. The provincial governor does not possess the same calling-out powers as the
President
Given the foregoing, respondent provincial governor is not endowed with the power to
call upon the armed forces at his own bidding. In issuing the assailed proclamation,
Governor Tan exceeded his authority when he declared a state of emergency and
called upon the Armed Forces, the police, and his own Civilian Emergency Force. The
calling-out powers contemplated under the Constitution is exclusive to the President.
An exercise by another official, even if he is the local chief executive, is ultra vires, and
may not be justified by the invocation of Section 465 of the Local Government Code,
as will be discussed subsequently.
Respondents, however, justify this stance by stating that nowhere in the seminal case
of David v. Arroyo, which dealt squarely with the issue of the declaration of a state of
emergency, does it limit the said authority to the President alone. Respondents
contend that the ruling in David expressly limits the authority to declare a national
emergency, a condition which covers the entire country, and does not include
emergency situations in local government units.54 This claim is belied by the clear
intent of the framers that in all situations involving threats to security, such as lawless
violence, invasion or rebellion, even in localized areas, it is still the President who
possesses the sole authority to exercise calling-out powers. As reflected in the
Journal of the Constitutional Commission:rbl r l l
lbrr
Thereafter, Mr. Padilla proposed on line 29 to insert the phrase OR PUBLIC
DISORDER in lieu of "invasion or rebellion." Mr. Sumulong stated that the committee
could not accept the amendment because under the first section of Section 15, the
President may call out and make use of the armed forces to prevent or suppress not
only lawless violence but even invasion or rebellion without declaring martial law. He
observed that by deleting "invasion or rebellion" and substituting PUBLIC DISORDER,

87
the President would have to declare martial law before he can make use of the armed
forces to prevent or suppress lawless invasion or rebellion.
Mr. Padilla, in reply thereto, stated that the first sentence contemplates a lighter
situation where there is some lawless violence in a small portion of the country or
public disorder in another at which times, the armed forces can be called to prevent or
suppress these incidents. He noted that the Commander-in-Chief can do so in a minor
degree but he can also exercise such powers should the situation worsen. The words
"invasion or rebellion" to be eliminated on line 14 are covered by the following
sentence which provides for "invasion or rebellion." He maintained that the proposed
amendment does not mean that under such circumstances, the President cannot call
on the armed forces to prevent or suppress the same.55 (Emphasis
supplied)cralawlibrary
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III. Section 465 of the Local
Government Code cannot be invoked to justify the powers enumerated under
Proclamation 1-09
Respondent governor characterized the kidnapping of the three ICRC workers as a
terroristic act, and used this incident to justify the exercise of the powers enumerated
under Proclamation 1-09.56 He invokes Section 465, in relation to Section 16, of the
Local Government Code, which purportedly allows the governor to carry out
emergency measures and call upon the appropriate national law enforcement
agencies for assistance. But a closer look at the said proclamation shows that there is
no provision in the Local Government Code nor in any law on which the broad and
unwarranted powers granted to the Governor may be based.
Petitioners cite the implementation of "General Search and Seizure including arrests
in the pursuit of the kidnappers and their supporters,"57 as being violative of the
constitutional proscription on general search warrants and general seizures.
Petitioners rightly assert that this alone would be sufficient to render the proclamation
void, as general searches and seizures are proscribed, for being violative of the rights
enshrined in the Bill of Rights, particularly:rbl r l l
lbrr
The right of the people to be secure in their persons, houses, papers, and effects
against unreasonable searches and seizures of whatever nature and for any purpose
shall be inviolable, and no search warrant or warrant of arrest shall issue except upon

probable cause to be determined personally by the judge after examination under

oath or affirmation of the complainant and the witnesses he may produce, and
particularly describing the place to be searched and the persons or things to be
seized.58rll
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In fact, respondent governor has arrogated unto himself powers exceeding even the
martial law powers of the President, because as the Constitution itself declares, "A
state of martial law does not suspend the operation of the Constitution, nor supplant
the functioning of the civil courts or legislative assemblies, nor authorize the
conferment of the jurisdiction on military courts and agencies over civilians where civil
courts are able to function, nor automatically suspend the privilege of the writ."59rll
We find, and so hold, that there is nothing in the Local Government Code which
justifies the acts sanctioned under the said Proclamation. Not even Section 465 of the
said Code, in relation to Section 16, which states:rbl r l l
lbrr
Section 465. The Chief Executive: Powers, Duties, Functions, and Compensation.
xxx

xxx

xxx

(b) For efficient, effective and economical governance the purpose of which is the
general welfare of the province and its inhabitants pursuant to Section 16 of this
Code, the provincial governor shall:rl
(1) Exercise general supervision and control over all programs, projects, services, and
activities of the provincial government, and in this connection, shall:
xxx

xxx

xxx

(vii) Carry out such emergency measures as may be necessary during and in the
aftermath of man-made and natural disasters and calamities;
(2) Enforce all laws and ordinances relative to the governance of the province and the
exercise of the appropriate corporate powers provided for under Section 22 of this
Code, implement all approved policies, programs, projects, services and activities of
the province and, in addition to the foregoing, shall:

88
xxx

xxx

xxx

(vi) Call upon the appropriate national law enforcement agencies to suppress
disorder, riot, lawless violence, rebellion or sedition or to apprehend violators of the
law when public interest so requires and the police forces of the component city or
municipality where the disorder or violation is happening are inadequate to cope with
the situation or the violators.
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Section 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. (Emphases supplied)
Respondents cannot rely on paragraph 1, subparagraph (vii) of Article 465 above, as
the said provision expressly refers to calamities and disasters, whether man-made or
natural. The governor, as local chief executive of the province, is certainly empowered
to enact and implement emergency measures during these occurrences. But the
kidnapping incident in the case at bar cannot be considered as a calamity or a
disaster. Respondents cannot find any legal mooring under this provision to justify
their actions.
Paragraph 2, subparagraph (vi) of the same provision is equally inapplicable for two
reasons. First, the Armed Forces of the Philippines does not fall under the category of
a "national law enforcement agency," to which the National Police Commission
(NAPOLCOM) and its departments belong.
Its mandate is to uphold the sovereignty of the Philippines, support the Constitution,
and defend the Republic against all enemies, foreign and domestic. Its aim is also to
secure the integrity of the national territory.60rll

were inadequate, the recourse of the provincial governor was to ask the assistance of
the Secretary of Interior and Local Government, or such other authorized officials, for
the assistance of national law enforcement agencies.
The Local Government Code does not involve the diminution of central powers
inherently vested in the National Government, especially not the prerogatives solely
granted by the Constitution to the President in matters of security and defense.
The intent behind the powers granted to local government units is fiscal, economic,
and administrative in nature. The Code is concerned only with powers that would
make the delivery of basic services more effective to the constituents,61 and should
not be unduly stretched to confer calling-out powers on local executives.
In the sponsorship remarks for Republic Act 7160, it was stated that the devolution of
powers is a step towards the autonomy of local government units (LGUs), and is
actually an experiment whose success heavily relies on the power of taxation of the
LGUs. The underpinnings of the Code can be found in Section 5, Article II of the 1973
Constitution, which allowed LGUs to create their own sources of revenue.62 During the
interpellation made by Mr. Tirol addressed to Mr. de Pedro, the latter emphasized that
"Decentralization is an administrative concept and the process of shifting and
delegating power from a central point to subordinate levels to promote independence,
responsibility, and quicker decision-making. (I)t does not involve any transfer of final
authority from the national to field levels, nor diminution of central office powers and
responsibilities. Certain government agencies, including the police force, are
exempted from the decentralization process because their functions are not inherent
in local government units."63rll
IV. Provincial governor is not authorized to convene CEF
Pursuant to the national policy to establish one police force, the organization of
private citizen armies is proscribed. Section 24 of Article XVIII of the Constitution
mandates that:rbl r l l lbrr
Private armies and other armed groups not recognized by duly constituted authority
shall be dismantled. All paramilitary forces including Civilian Home Defense Forces
(CHDF) not consistent with the citizen armed force established in this Constitution,
shall be dissolved or, where appropriate, converted into the regular force.
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Second, there was no evidence or even an allegation on record that the local police
forces were inadequate to cope with the situation or apprehend the violators. If they

89
Additionally, Section 21of Article XI states that, "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."

WHEREFORE, the instant petition is GRANTED. Judgment is rendered commanding

respondents to desist from further proceedings m implementing Proclamation No. 1,
Series of 2009, and its Implementing Guidelines. The said proclamation and
guidelines are hereby declared NULL and VOID for having been issued in grave
abuse of discretion, amounting to lack or excess of jurisdiction.

Taken in conjunction with each other, it becomes clear that the Constitution does not
authorize the organization of private armed groups similar to the CEF convened by
the respondent Governor. The framers of the Constitution were themselves wary of
armed citizens groups, as shown in the following proceedings:rbl
r l l lbrr

SO ORDERED.

MR. GARCIA: I think it is very clear that the problem we have here is a paramilitary
force operating under the cloak, under the mantle of legality is creating a lot of
problems precisely by being able to operate as an independent private army for many
regional warlords. And at the same time, this I think has been the thrust, the intent of
many of the discussions and objections to the paramilitary units and the armed
groups.
MR. PADILLA: My proposal covers two parts: the private armies of political warlords
and other armed torces not recognized by constituted authority which shall be
dismantled and dissolved. In my trips to the provinces, I heard of many abuses
committed by the CHDF (Civilian Home Defense Forces), specially in Escalante,
Negros Occidental. But I do not know whether a particular CHDF is approved or
authorized by competent authority. If it is not authorized, then the CHDF will have to
be dismantled. If some CHDFs, say in other provinces, are authorized by constituted
authority, by the Armed Forces of the Philippines, through the Chief of Staff or the
Minister of National Defense, if they are recognized and authorized, then they will not
be dismantled. But I cannot give a categorical answer to any specific CHDF unit, only
the principle that if they are armed forces which are not authorized, then they should
be dismantled.64 (Emphasis supplied)cralawlibrary
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Thus, with the discussions in the Constitutional Commission as guide, the creation of
the Civilian Emergency Force (CEF) in the present case, is also invalid.

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 (DSWD), Respondents.
DECISION
PERLAS-BERNABE, J.:
The Case
For the Courts 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 20111 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.2 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 Caloocan3 upon the release of the amount of P50

90
Million Pesos under a Special Allotment Release Order (SARO) issued by the
Department of Budget and Management.4

c) Children 0-5 years of age get regular preventive health check-ups and
vaccines

On July 16, 2008, the DSWD issued Administrative Order No. 16, series of 2008 (A.O.
No. 16, s. 2008),5 setting the implementing guidelines for the project renamed
"Pantawid Pamilyang Pilipino Program" (4Ps), upon the following stated objectives, to
wit:

d) Children 3-5 years old must attend day care program/pre-school

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.6
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."7

e) Children 6-14 years of age are enrolled in schools and attend at least 85%
of the time10
Under A.O. No. 16, s. 2008, the DSWD also institutionalized a coordinated interagency network among the Department of Education (DepEd), Department of Health
(DOH), Department of Interior and Local Government (DILG), the National AntiPoverty Commission (NAPC) and the local government units (LGUs), identifying
specific roles and 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

Eligible households that are selected from priority target areas consisting of the
poorest provinces classified by the National Statistical Coordination Board
(NCSB)8 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.9 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:

d. Coordinate with various concerned government agencies at the local level,

sectoral representatives and NGO to ensure effective Program
implementation

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

A Memorandum of Agreement (MOA)12 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.

b) Parents/guardians must attend family planning sessions/mother's class,

Parent Effectiveness Service and others

Congress, for its part, sought to ensure the success of the CCTP by providing it with
funding under the GAA of 2008 in the amount of Two Hundred Ninety-Eight Million

e. Prepare reports on issues and concerns regarding Program

implementation and submit to the Regional Advisory Committee, and
f. Hold monthly committee meetings11

91
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 GAA of
2011 at Twenty One Billion One Hundred Ninety-Four Million One Hundred Seventeen
Thousand Pesos (P21,194,117,000.00).131wphi1
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 Constitution declares it a policy of the State to ensure the autonomy of local
governments14 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

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.

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)

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
1991, in relation to Section 25, Article II & Section 3, Article X of the 1987
Constitution.

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:

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.

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 likewise 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.

Our Ruling
(b) Such basic services and facilities include, but are not limited to, x x x.

92
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,
unless an LGU is particularly designated as the implementing agency, it has no power
over a program for which funding has been provided by the national government
under the annual general appropriations 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 Appeals17 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."18 We explained that, with local autonomy, the
Constitution did nothing more than "to break up the monopoly of the national
government over the affairs of the local government" and, thus, did not intend to sever
"the relation of partnership and interdependence between the central administration
and local government units."19 In Pimentel v. Aguirre,20 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, referring to such key concepts
as integration and coordination. 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 locally must be integrated and coordinated 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. Mangelin21 as beyond our constitutional concept of autonomy, thus:
Now, autonomy is either decentralization of administration or decentralization of
power.1wphi1 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 selfreliant 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.22
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.23 Petitioners have failed to discharge the burden of
proving the invalidity of the provisions under the GAA of 2011. The allocation of a P21

93
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.

The subsequent Resolution No. 90-150 reiterates CSC's position upholding the
private respondent's appointment by denying the petitioner's motion for
reconsideration for lack of merit.
The antecedent facts of the case are as follows:

WHEREFORE, premises considered, the petition is hereby DISMISSED.

On March 22, 1988, the position of Provincial Budget Officer (PBO) for the province of
Rizal was left vacant by its former holder, a certain Henedima del Rosario.

SO ORDERED.
ESTELA M. PERLAS-BERNABE
Associate Justice
WE CONCUR:
G.R. No. 92299

April 19, 1991

REYNALDO R. SAN JUAN, petitioner,

vs.
CIVIL SERVICE COMMISSION, DEPARTMENT OF BUDGET AND MANAGEMENT
and CECILIA ALMAJOSE, respondents.
Legal Services Division for petitioner.
Sumulong, Sumulong, Paras & Abano Law Offices for private respondent.

In a letter dated April 18, 1988, the petitioner informed Director Reynaldo Abella of the
Department of Budget and Management (DBM) Region IV that Ms. Dalisay Santos
assumed office as Acting PBO since March 22, 1988 pursuant to a Memorandum
issued by the petitioner who further requested Director Abella to endorse the
appointment of the said Ms. Dalisay Santos to the contested position of PBO of Rizal.
Ms. Dalisay Santos was then Municipal Budget Officer of Taytay, Rizal before she
discharged the functions of acting PBO.
In a Memorandum dated July 26, 1988 addressed to the DBM Secretary, then
Director Abella of Region IV recommended the appointment of the private respondent
as PBO of Rizal on the basis of a comparative study of all Municipal Budget Officers
of the said province which included three nominees of the petitioner. According to
Abella, the private respondent was the most qualified since she was the only Certified
Public Accountant among the contenders.
On August 1, 1988, DBM Undersecretary Nazario S. Cabuquit, Jr. signed the
appointment papers of the private respondent as PBO of Rizal upon the aforestated
recommendation of Abella.

GUTIERREZ, JR., J.:

In this petition for certiorari pursuant to Section 7, Article IX (A) of the present
Constitution, the petitioner Governor of the Province of Rizal, prays for the nullification
of Resolution No. 89-868 of the Civil Service Commission (CSC) dated November 21,
1989 and its Resolution No. 90-150 dated February 9, 1990.
The dispositive portion of the questioned Resolution reads:
WHEREFORE, foregoing premises considered, the Commission resolved to
dismiss, as it hereby dismisses the appeal of Governor Reynaldo San Juan
of Rizal. Accordingly, the approved appointment of Ms. Cecilia Almajose as
Provincial Budget Officer of Rizal, is upheld. (Rollo, p. 32)

In a letter dated August 3, 1988 addressed to Secretary Carague, the petitioner

reiterated his request for the appointment of Dalisay Santos to the contested position
unaware of the earlier appointment made by Undersecretary Cabuquit.
On August 31, 1988, DBM Regional Director Agripino G. Galvez wrote the petitioner
that Dalisay Santos and his other recommendees did not meet the minimum
requirements under Local Budget Circular No. 31 for the position of a local budget
officer. Director Galvez whether or not through oversight further required the petitioner
to submit at least three other qualified nominees who are qualified for the position of
PBO of Rizal for evaluation and processing.
On November 2, 1988, the petitioner after having been informed of the private
respondent's appointment wrote Secretary Carague protesting against the said

94
appointment on the grounds that Cabuquit as DBM Undersecretary is not legally
authorized to appoint the PBO; that the private respondent lacks the required three
years work experience as provided in Local Budget Circular No. 31; and that under
Executive Order No. 112, it is the Provincial Governor, not the Regional Director or a
Congressman, who has the power to recommend nominees for the position of PBO.
On January 9, 1989 respondent DBM, through its Director of the Bureau of Legal &
Legislative Affairs (BLLA) Virgilio A. Afurung, issued a Memorandum ruling that the
petitioner's letter-protest is not meritorious considering that public respondent DBM
validly exercised its prerogative in filling-up the contested position since none of the
petitioner's nominees met the prescribed requirements.
On January 27, 1989, the petitioner moved for a reconsideration of the BLLA ruling.
On February 28, 1989, the DBM Secretary denied the petitioner's motion for
reconsideration.
On March 27, 1989, the petitioner wrote public respondent CSC protesting against the
appointment of the private respondent and reiterating his position regarding the
matter.
Subsequently, public respondent CSC issued the questioned resolutions which
prompted the petitioner to submit before us the following assignment of errors:
A. THE CSC ERRED IN UPHOLDING THE APPOINTMENT BY DBM
ASSISTANT SECRETARY CABUQUIT OF CECILIA ALMAJOSE AS PBO
OF RIZAL.
B. THE CSC ERRED IN HOLDING THAT CECILIA ALMA JOSE
POSSESSES ALL THE REQUIRED QUALIFICATIONS.
C. THE CSC ERRED IN DECLARING THAT PETITIONER'S NOMINEES
ARE NOT QUALIFIED TO THE SUBJECT POSITION.
D. THE CSC AND THE DBM GRAVELY ABUSED THEIR DISCRETION IN
NOT ALLOWING PETITIONER TO SUBMIT NEW NOMINEES WHO
COULD MEET THE REQUIRED QUALIFICATION (Petition, pp. 7-8, Rollo,
pp. 15-16)
All the assigned errors relate to the issue of whether or not the private respondent is
lawfully entitled to discharge the functions of PBO of Rizal pursuant to the

appointment made by public respondent DBM's Undersecretary upon the

recommendation of then Director Abella of DBM Region IV.
The petitioner's arguments rest on his contention that he has the sole right and
privilege to recommend the nominees to the position of PBO and that the appointee
should come only from his nominees. In support thereof, he invokes Section 1 of
Executive Order No. 112 which provides that:
Sec. 1. All budget officers of provinces, cities and municipalities shall be
appointed henceforth by the Minister of Budget and Management upon
recommendation of the local chief executive concerned, subject to civil
service law, rules and regulations, and they shall be placed under the
administrative control and technical supervision of the Ministry of Budget and
Management.
The petitioner maintains that the appointment of the private respondent to the
contested position was made in derogation of the provision so that both the public
respondents committed grave abuse of discretion in upholding Almajose's
appointment.
There is no question that under Section 1 of Executive Order No. 112 the petitioner's
power to recommend is subject to the qualifications prescribed by existing laws for the
position of PBO. Consequently, in the event that the recommendations made by the
petitioner fall short of the required standards, the appointing authority, the Minister
(now Secretary) of public respondent DBM is expected to reject the same.
In the event that the Governor recommends an unqualified person, is the Department
Head free to appoint anyone he fancies ? This is the issue before us.
Before the promulgation of Executive Order No. 112 on December 24, 1986, Batas
Pambansa Blg. 337, otherwise known as the Local Government Code vested upon
the Governor, subject to civil service rules and regulations, the power to appoint the
PBO (Sec. 216, subparagraph (1), BP 337). The Code further enumerated the
qualifications for the position of PBO. Thus, Section 216, subparagraph (2) of the
same code states that:
(2) No person shall be appointed provincial budget officer unless he is a
citizen of the Philippines, of good moral character, a holder of a degree
preferably in law, commerce, public administration or any related course from
a recognized college or university, a first grade civil service eligibility or its

95
equivalent, and has acquired at least five years experience in budgeting or in
any related field.
The petitioner contends that since the appointing authority with respect to the
Provincial Budget Officer of Rizal was vested in him before, then, the real intent
behind Executive Order No. 112 in empowering him to recommend nominees to the
position of Provincial Budget Officer is to make his recommendation part and parcel of
the appointment process. He states that the phrase "upon recommendation of the
local chief executive concerned" must be given mandatory application in consonance
with the state policy of local autonomy as guaranteed by the 1987 Constitution under
Art. II, Sec. 25 and Art. X, Sec. 2 thereof. He further argues that his power to
recommend cannot validly be defeated by a mere administrative issuance of public
respondent DBM reserving to itself the right to fill-up any existing vacancy in case the
petitioner's nominees do not meet the qualification requirements as embodied in
public respondent DBM's Local Budget Circular No. 31 dated February 9, 1988.
The questioned ruling is justified by the public respondent CSC as follows:
As required by said E.O. No. 112, the DBM Secretary may choose from
among the recommendees of the Provincial Governor who are thus qualified
and eligible for appointment to the position of the PBO of Rizal.
Notwithstanding, the recommendation of the local chief executive is merely
directory and not a condition sine qua non to the exercise by the Secretary of
DBM of his appointing prerogative. To rule otherwise would in effect give the
law or E.O. No. 112 a different interpretation or construction not intended
therein, taking into consideration that said officer has been nationalized and
is directly under the control and supervision of the DBM Secretary or through
his duly authorized representative. It cannot be gainsaid that said national
officer has a similar role in the local government unit, only on another area or
concern, to that of a Commission on Audit resident auditor. Hence, to
preserve and maintain the independence of said officer from the local
government unit, he must be primarily the choice of the national appointing
official, and the exercise thereof must not be unduly hampered or interfered
with, provided the appointee finally selected meets the requirements for the
position in accordance with prescribed Civil Service Law, Rules and
Regulations. In other words, the appointing official is not restricted or
circumscribed to the list submitted or recommended by the local chief
executive in the final selection of an appointee for the position. He may
consider other nominees for the position vis a vis the nominees of the local
chief executive. (CSC Resolution No. 89-868, p. 2; Rollo, p. 31)

The issue before the Court is not limited to the validity of the appointment of one
Provincial Budget Officer. The tug of war between the Secretary of Budget and
Management and the Governor of the premier province of Rizal over a seemingly
innocuous position involves the application of a most important constitutional policy
and principle, that of local autonomy. We have to obey the clear mandate on local
autonomy. Where a law is capable of two interpretations, one in favor of centralized
power in Malacaang and the other beneficial to local autonomy, the scales must be
weighed in favor of autonomy.
The exercise by local governments of meaningful power has been a national goal
since the turn of the century. And yet, inspite of constitutional provisions and, as in
this case, legislation mandating greater autonomy for local officials, national officers
cannot seem to let go of centralized powers. They deny or water down what little
grants of autonomy have so far been given to municipal corporations.
President McKinley's Instructions dated April 7, 1900 to the Second Philippine
Commission ordered the new Government "to devote their attention in the first
instance to the establishment of municipal governments in which natives of the
Islands, both in the cities and rural communities, shall be afforded the opportunity to
manage their own local officers to the fullest extent of which they are capable and
subject to the least degree of supervision and control which a careful study of their
capacities and observation of the workings of native control show to be consistent
with the maintenance of law, order and loyalty.
In this initial organic act for the Philippines, the Commission which combined both
executive and legislative powers was directed to give top priority to making local
autonomy effective.
The 1935 Constitution had no specific article on local autonomy. However, in
distinguishing between presidential control and supervision as follows:
The President shall have control of all the executive departments, bureaus,
or offices, exercise general supervision over all local governments as may be
provided by law, and take care that the laws be faithfully executed. (Sec. 11,
Article VII, 1935 Constitution)
the Constitution clearly limited the executive power over local governments to "general
supervision . . . as may be provided by law." The President controls the executive
departments. He has no such power over local governments. He has only supervision
and that supervision is both general and circumscribed by statute.

96
In Tecson v. Salas, 34 SCRA 275, 282 (1970), this Court stated:
. . . Hebron v. Reyes, (104 Phil. 175 [1958]) with the then Justice, now Chief
Justice, Concepcion as the ponente, clarified matters. As was pointed out,
the presidential competence is not even supervision in general, but general
supervision as may be provided by law. He could not thus go beyond the
applicable statutory provisions, which bind and fetter his discretion on the
matter. Moreover, as had been earlier ruled in an opinion penned by Justice
Padilla in Mondano V. Silvosa, (97 Phil. 143 [1955]) referred to by the
present Chief Justice in his opinion in the Hebron case, supervision goes no
further than "overseeing or the power or authority of an officer to see that
subordinate officers perform their duties. If the latter fail or neglect to fulfill
them the former may take such action or step as prescribed by law to make
them perform their duties." (Ibid, pp. 147-148) Control, on the other hand,
"means the power of an officer to alter or modify or nullify or set aside what a
subordinate had done in the performance of their duties and to substitute the
judgment of the former for that of the latter." It would follow then, according to
the present Chief Justice, to go back to the Hebron opinion, that the
President had to abide by the then provisions of the Revised Administrative
Code on suspension and removal of municipal officials, there being no power
of control that he could rightfully exercise, the law clearly specifying the
procedure by which such disciplinary action would be taken.
Pursuant to this principle under the 1935 Constitution, legislation implementing local
autonomy was enacted. In 1959, Republic Act No. 2264, "An Act Amending the Law
Governing Local Governments by Increasing Their Autonomy and Reorganizing Local
Governments" was passed. It was followed in 1967 when Republic Act No. 5185, the
Decentralization Law was enacted, giving "further autonomous powers to local
governments governments."
The provisions of the 1973 Constitution moved the country further, at least insofar as
legal provisions are concerned, towards greater autonomy. It provided under Article II
as a basic principle of government:
Sec. 10. The State shall guarantee and promote the autonomy of local
government units, especially the barangay to ensure their fullest
development as self-reliant communities.
An entire article on Local Government was incorporated into the Constitution. It called
for a local government code defining more responsive and accountable local
government structures. Any creation, merger, abolition, or substantial boundary

alteration cannot be done except in accordance with the local government code and
upon approval by a plebiscite. The power to create sources of revenue and to levy
taxes was specifically settled upon local governments.
The exercise of greater local autonomy is even more marked in the present
Constitution.
Article II, Section 25 on State Policies provides:
Sec. 25. The State shall ensure the autonomy of local governments
The 14 sections in Article X on Local Government not only reiterate earlier doctrines
but give in greater detail the provisions making local autonomy more meaningful.
Thus, Sections 2 and 3 of Article X provide:
Sec. 2. The territorial and political subdivisions shall enjoy local autonomy.
Sec. 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.
When the Civil Service Commission interpreted the recommending power of the
Provincial Governor as purely directory, it went against the letter and spirit of the
constitutional provisions on local autonomy. If the DBM Secretary jealously hoards the
entirety of budgetary powers and ignores the right of local governments to develop
self-reliance and resoluteness in the handling of their own funds, the goal of
meaningful local autonomy is frustrated and set back.
The right given by Local Budget Circular No. 31 which states:
Sec. 6.0 The DBM reserves the right to fill up any existing vacancy where
none of the nominees of the local chief executive meet the prescribed
requirements.
is ultra vires and is, accordingly, set aside. The DBM may appoint only from the list of
qualified recommendees nominated by the Governor. If none is qualified, he must

97
return the list of nominees to the Governor explaining why no one meets the legal
requirements and ask for new recommendees who have the necessary eligibilities
and qualifications.

Our national officials should not only comply with the constitutional provisions on local
autonomy but should also appreciate the spirit of liberty upon which these provisions
are based.

The PBO is expected to synchronize his work with DBM. More important, however, is
the proper administration of fiscal affairs at the local level. Provincial and municipal
budgets are prepared at the local level and after completion are forwarded to the
national officials for review. They are prepared by the local officials who must work
within the constraints of those budgets. They are not formulated in the inner sanctums
of an all-knowing DBM and unilaterally imposed on local governments whether or not
they are relevant to local needs and resources. It is for this reason that there should
be a genuine interplay, a balancing of viewpoints, and a harmonization of proposals
from both the local and national officials. It is for this reason that the nomination and
appointment process involves a sharing of power between the two levels of
government.

WHEREFORE, the petition is hereby GRANTED. The questioned resolutions of the

Civil Service Commission are SET ASIDE. The appointment of respondent Cecilia
Almajose is nullified. The Department of Budget and Management is ordered to
appoint the Provincial Budget Officer of Rizal from among qualified nominees
submitted by the Provincial Governor.

It may not be amiss to give by way of analogy the procedure followed in the
appointments of Justices and Judges.1wphi1 Under Article VIII of the Constitution,
nominations for judicial positions are made by the Judicial and Bar Council. The
President makes the appointments from the list of nominees submitted to her by the
Council. She cannot apply the DBM procedure, reject all the Council nominees, and
appoint another person whom she feels is better qualified. There can be no
reservation of the right to fill up a position with a person of the appointing power's
personal choice.
The public respondent's grave abuse of discretion is aggravated by the fact that
Director Galvez required the Provincial Governor to submit at least three other names
of nominees better qualified than his earlier recommendation. It was a meaningless
exercise. The appointment of the private respondent was formalized before the
Governor was extended the courtesy of being informed that his nominee had been
rejected. The complete disregard of the local government's prerogative and the smug
belief that the DBM has absolute wisdom, authority, and discretion are manifest.
In his classic work "Philippine Political Law" Dean Vicente G. Sinco stated that the
value of local governments as institutions of democracy is measured by the degree of
autonomy that they enjoy. Citing Tocqueville, he stated that "local assemblies of
citizens constitute the strength of free nations. . . . A people may establish a system of
free government but without the spirit of municipal institutions, it cannot have the spirit
of liberty." (Sinco, Philippine Political Law, Eleventh Edition, pp. 705-706).

SO ORDERED.
Fernan, C.J., Narvasa, Melencio-Herrera, Cruz, Paras, Feliciano, Gancayco, Padilla,
Bidin, Sarmiento, Grio-Aquino, Medialdea, Regalado and Davide, Jr., JJ., concur.

[G.R. No. 132988. July 19, 2000]

AQUILINO Q. PIMENTEL JR., petitioner, vs. Hon. ALEXANDER AGUIRRE in his

capacity as Executive Secretary, Hon. EMILIA BONCODIN in her
capacity as Secretary of the Department of Budget and
Management, respondents.
ROBERTO PAGDANGANAN, intervenor.
DECISION
PANGANIBAN, J.:
The Constitution vests the President with the power of supervision, not control,
over local government units (LGUs). Such power enables him to see to it that LGUs
and their officials execute their tasks in accordance with law. While he may issue
advisories and seek their cooperation in solving economic difficulties, he cannot
prevent them from performing their tasks and using available resources to achieve
their goals. He may not withhold or alter any authority or power given them by the
law. Thus, the withholding of a portion of internal revenue allotments legally due them
cannot be directed by administrative fiat.

98
The Case

Before us is an original Petition for Certiorari and Prohibition seeking (1) to annul
Section 1 of Administrative Order (AO) No. 372, insofar as it requires local
government units to reduce their expenditures by 25 percent of their authorized
regular appropriations for non-personal services; and (2) to enjoin respondents from
implementing Section 4 of the Order, which withholds a portion of their internal
revenue allotments.
On November 17, 1998, Roberto Pagdanganan, through Counsel Alberto C.
Agra, filed a Motion for Intervention/Motion to Admit Petition for Intervention,
[1]
attaching thereto his Petition in Intervention[2] joining petitioner in the reliefs
sought. At the time, intervenor was the provincial governor of Bulacan, national
president of the League of Provinces of the Philippines and chairman of the League of
Leagues of Local Governments. In a Resolution dated December 15, 1998, the Court
noted said Motion and Petition.

The Facts and the Arguments

On December 27, 1997, the President of the Philippines issued AO 372. Its full
text, with emphasis on the assailed provisions, is as follows:
"ADMINISTRATIVE ORDER NO. 372
ADOPTION OF ECONOMY MEASURES IN GOVERNMENT FOR FY 1998
WHEREAS, the current economic difficulties brought about by the peso depreciation
requires continued prudence in government fiscal management to maintain economic
stability and sustain the country's growth momentum;
WHEREAS, it is imperative that all government agencies adopt cash management
measures to match expenditures with available resources;
NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the
Philippines, by virtue of the powers vested in me by the Constitution, do hereby order
and direct:
SECTION 1. All government departments and agencies, including state
universities and colleges, government-owned and controlled corporations and

local governments units will identify and implement measures in FY 1998 that
will reduce total expenditures for the year by at least 25% of authorized regular
appropriations for non-personal services items, along the following suggested
areas:
1. Continued implementation of the streamlining policy on organization and
staffing by deferring action on the following:
a. Operationalization of new agencies;
b. Expansion of organizational units and/or creation of positions;
c. Filling of positions; and
d. Hiring of additional/new consultants, contractual and casual personnel, regardless
of funding source.
2. Suspension of the following activities:
a. Implementation of new capital/infrastructure projects, except those which
have already been contracted out;
b. Acquisition of new equipment and motor vehicles;
c. All foreign travels of government personnel, except those associated
with scholarships and trainings funded by grants;
d. Attendance in conferences abroad where the cost is charged to the
government except those clearly essential to Philippine
commitments in the international field as may be determined by the
Cabinet;
e. Conduct of trainings/workshops/seminars, except those conducted by
government training institutions and agencies in the performance of
their regular functions and those that are funded by grants;
f. Conduct of cultural and social celebrations and sports activities, except
those associated with the Philippine Centennial celebration and
those involving regular competitions/events;

99
g. Grant of honoraria, except in cases where it constitutes the only source
of compensation from government received by the person
concerned;
h. Publications, media advertisements and related items, except those
required by law or those already being undertaken on a regular
basis;
i. Grant of new/additional benefits to employees, except those expressly
and specifically authorized by law; and
j. Donations, contributions, grants and gifts, except those given by
institutions to victims of calamities.
3. Suspension of all tax expenditure subsidies to all GOCCs and LGUs
4. Reduction in the volume of consumption of fuel, water, office supplies,
electricity and other utilities
5. Deferment of projects that are encountering significant implementation
problems
6. Suspension of all realignment of funds and the use of savings and
reserves
SECTION 2. Agencies are given the flexibility to identify the specific sources of costsavings, provided the 25% minimum savings under Section 1 is complied with.
SECTION 3. A report on the estimated savings generated from these measures shall
be submitted to the Office of the President, through the Department of Budget and
Management, on a quarterly basis using the attached format.
SECTION 4. Pending the assessment and evaluation by the
Development Budget Coordinating Committee of the emerging
fiscal situation, the amount equivalent to 10% of the internal
revenue allotment to local government units shall be withheld.
SECTION 5. The Development Budget Coordination Committee shall
conduct a monthly review of the fiscal position of the National
Government and if necessary, shall recommend to the President the
imposition of additional reserves or the lifting of previously imposed
reserves.

SECTION 6. This Administrative Order shall take effect January 1, 1998

and shall remain valid for the entire year unless otherwise lifted.
DONE in the City of Manila, this 27th day of December, in the year of our Lord,
nineteen hundred and ninety-seven."
Subsequently, on December 10, 1998, President Joseph E. Estrada issued AO
43, amending Section 4 of AO 372, by reducing to five percent (5%) the amount of
internal revenue allotment (IRA) to be withheld from the LGUs.
Petitioner contends that the President, in issuing AO 372, was in effect
exercising the power of control over LGUs. The Constitution vests in the President,
however, only the power of general supervision over LGUs, consistent with the
principle of local autonomy. Petitioner further argues that the directive to withhold ten
percent (10%) of their IRA is in contravention of Section 286 of the Local Government
Code and of Section 6, Article X of the Constitution, providing for the automatic
releaseto each of these units its share in the national internal revenue.
The solicitor general, on behalf of the respondents, claims on the other hand
that AO 372 was issued to alleviate the "economic difficulties brought about by the
peso devaluation" and constituted merely an exercise of the President's power of
supervision over LGUs. It allegedly does not violate local fiscal autonomy, because it
merely directs local governments to identify measures that will reduce their total
expenditures for non-personal services by at least 25 percent. Likewise, the
withholding of 10 percent of the LGUs IRA does not violate the statutory prohibition on
the imposition of any lien or holdback on their revenue shares, because such
withholding is "temporary in nature pending the assessment and evaluation by the
Development Coordination Committee of the emerging fiscal situation."

The Issues

The Petition[3] submits the following issues for the Court's resolution:
"A. Whether or not the president committed grave abuse of discretion [in] ordering all
LGUS to adopt a 25% cost reduction program in violation of the LGU[']S fiscal
autonomy
"B. Whether or not the president committed grave abuse of discretion in ordering the
withholding of 10% of the LGU[']S IRA"

100
In sum, the main issue is whether (a) Section 1 of AO 372, insofar as it "directs"
LGUs to reduce their expenditures by 25 percent; and (b) Section 4 of the same
issuance, which withholds 10 percent of their internal revenue allotments, are valid
exercises of the President's power of general supervision over local governments.
Additionally, the Court deliberated on the question whether petitioner had
the locus standi to bring this suit, despite respondents' failure to raise the issue.
[4]
However, the intervention of Roberto Pagdanganan has rendered academic any
further discussion on this matter.

The Court's Ruling

The Petition is partly meritorious.

Main Issue:
Validity of AO 372
Insofar as LGUs Are Concerned

Before resolving the main issue, we deem it important and appropriate to define
certain crucial concepts: (1) the scope of the President's power of general supervision
over local governments and (2) the extent of the local governments' autonomy.

Scope of President's Power of Supervision Over LGUs

Section 4 of Article X of the Constitution confines the President's power over

local governments to one of general supervision. It reads as follows:
"Sec. 4. The President of the Philippines shall exercise general supervision over local
governments. x x x"
This provision has been interpreted to exclude the power of control. In Mondano
v. Silvosa,[5] the Court contrasted the President's power of supervision over local
government officials with that of his power of control over executive officials of the
national government. It was emphasized that the two terms -- supervision and control
-- differed in meaning and extent. The Court distinguished them as follows:
"x x x In administrative law, supervision means overseeing or the power or authority of
an officer to see that subordinate officers perform their duties. If the latter fail or
neglect to fulfill them, the former may take such action or step as prescribed by law to

make them perform their duties. Control, on the other hand, means the power of an
officer to alter or modify or nullify or set aside what a subordinate officer ha[s] done in
the performance of his duties and to substitute the judgment of the former for that of
the latter."[6]
In Taule v. Santos,[7] we further stated that the Chief Executive wielded no more
authority than that of checking whether local governments or their officials were
performing their duties as provided by the fundamental law and by statutes. He
cannot interfere with local governments, so long as they act within the scope of their
authority. "Supervisory power, when contrasted with control, is the power of mere
oversight over an inferior body; it does not include any restraining authority over such
body,"[8] we said.
In a more recent case, Drilon v. Lim,[9] the difference between control and
supervision was further delineated. Officers in control lay down the rules in the
performance or accomplishment of an act. If these rules are not followed, they may, in
their discretion, order the act undone or redone by their subordinates or even decide
to do it themselves. On the other hand, supervision does not cover such
authority. Supervising officials merely see to it that the rules are followed, but they
themselves do not lay down such rules, nor do they have the discretion to modify or
replace them. If the rules are not observed, they may order the work done or redone,
but only to conform to such rules. They may not prescribe their own manner of
execution of the act. They have no discretion on this matter except to see to it that the
rules are followed.
Under our present system of government, executive power is vested in the
President.[10] The members of the Cabinet and other executive officials are merely
alter egos. As such, they are subject to the power of control of the President, at
whose will and behest they can be removed from office; or their actions and decisions
changed, suspended or reversed.[11] In contrast, the heads of political subdivisions are
elected by the people. Their sovereign powers emanate from the electorate, to whom
they are directly accountable. By constitutional fiat, they are subject to the Presidents
supervision only, not control, so long as their acts are exercised within the sphere of
their legitimate powers. By the same token, the President may not withhold or alter
any authority or power given them by the Constitution and the law.

Extent of Local Autonomy

Hand in hand with the constitutional restraint on the President's power over local
governments is the state policy of ensuring local autonomy.[12]

101
In Ganzon v. Court of Appeals,[13] we said that local autonomy signified "a more
responsive and accountable local government structure instituted through a system of
decentralization." The grant of autonomy is intended to "break up the monopoly of the
national government over the affairs of local governments, x x x not x x x to end the
relation of partnership and interdependence between the central administration and
local government units x x x." Paradoxically, local governments are still subject to
regulation, however limited, for the purpose of enhancing self-government.[14]

common national goal. Thus, policy-setting for the entire country still lies in the
President and Congress. As we stated in Magtajas v. Pryce Properties Corp.,
Inc., municipal governments are still agents of the national government.[23]

Decentralization simply means the devolution of national administration, not

power, to local governments. Local officials remain accountable to the central
government as the law may provide.[15] The difference between decentralization of
administration and that of power was explained in detail in Limbona v. Mangelin[16] as
follows:

Consistent with the foregoing jurisprudential precepts, let us now look into the
nature of AO 372. As its preambular clauses declare, the Order was a "cash
management measure" adopted by the government "to match expenditures with
available resources," which were presumably depleted at the time due to "economic
difficulties brought about by the peso depreciation." Because of a looming financial
crisis, the President deemed it necessary to "direct all government agencies, state
universities and colleges, government-owned and controlled corporations as well as
local governments to reduce their total expenditures by at least 25 percent along
suggested areas mentioned in AO 372.

"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,'[17] and 'ensure their fullest development as self-reliant communities
and make them more effective partners in the pursuit of national development and
social progress.'[18] 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'[19] over them, but only to 'ensure that local
affairs are administered according to law.'[20] He has no control over their acts in the
sense that he can substitute their judgments with his own.[21]
Decentralization of power, on the other hand, involves an abdication of political power
in the 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."[22]
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 locally must be integrated and coordinated towards a

The Nature of AO 372

Under existing law, local government units, in addition to having administrative

autonomy in the exercise of their functions, enjoy fiscal autonomy as well. Fiscal
autonomy means that local governments have the power to create their own sources
of revenue in addition to their equitable share in the national taxes released by the
national government, as well as the power to allocate their resources in accordance
with their own priorities. It extends to the preparation of their budgets, and local
officials in turn have to work within the constraints thereof. They are not formulated at
the national level and imposed on local governments, whether they are relevant to
local needs and resources or not. Hence, the necessity of a balancing of viewpoints
and the harmonization of proposals from both local and national officials, [24] who in
any case are partners in the attainment of national goals.
Local fiscal autonomy does not however rule out any manner of national
government intervention by way of supervision, in order to ensure that local programs,
fiscal and otherwise, are consistent with national goals. Significantly, the President, by
constitutional fiat, is the head of the economic and planning agency of the
government,[25] primarily responsible for formulating and implementing continuing,
coordinated and integrated social and economic policies, plans and programs[26] for
the entire country. However, under the Constitution, the formulation and the
implementation of such policies and programs are subject to "consultations with the
appropriate public agencies, various private sectors, and local government units." The
President cannot do so unilaterally.
Consequently, the Local Government Code provides:[27]

102
"x x x [I]n the event the national government incurs an unmanaged public sector
deficit, the President of the Philippines is hereby authorized, upon the
recommendation of [the] Secretary of Finance, Secretary of the Interior and Local
Government and Secretary of Budget and Management, and subject to consultation
with the presiding officers of both Houses of Congress and the presidents of the liga,
to make the necessary adjustments in the internal revenue allotment of local
government units but in no case shall the allotment be less than thirty percent (30%)
of the collection of national internal revenue taxes of the third fiscal year preceding the
current fiscal year x x x."
There are therefore several requisites before the President may interfere in local
fiscal matters: (1) an unmanaged public sector deficit of the national government; (2)
consultations with the presiding officers of the Senate and the House of
Representatives and the presidents of the various local leagues; and (3) the
corresponding recommendation of the secretaries of the Department of Finance,
Interior and Local Government, and Budget and Management. Furthermore, any
adjustment in the allotment shall in no case be less than thirty percent (30%) of the
collection of national internal revenue taxes of the third fiscal year preceding the
current one.
Petitioner points out that respondents failed to comply with these requisites
before the issuance and the implementation of AO 372. At the very least, they did not
even try to show that the national government was suffering from an unmanageable
public sector deficit. Neither did they claim having conducted consultations with the
different leagues of local governments. Without these requisites, the President has no
authority to adjust, much less to reduce, unilaterally the LGU's internal revenue
allotment.
The solicitor general insists, however, that AO 372 is merely directory and has
been issued by the President consistent with his power of supervision over local
governments. It is intended only to advise all government agencies and
instrumentalities to undertake cost-reduction measures that will help maintain
economic stability in the country, which is facing economic difficulties. Besides, it does
not contain any sanction in case of noncompliance. Being merely an advisory,
therefore, Section 1 of AO 372 is well within the powers of the President. Since it is
not a mandatory imposition, the directive cannot be characterized as an exercise of
the power of control.
While the wordings of Section 1 of AO 372 have a rather commanding tone, and
while we agree with petitioner that the requirements of Section 284 of the Local
Government Code have not been satisfied, we are prepared to accept the solicitor
general's assurance that the directive to "identify and implement measures x x x that
will reduce total expenditures x x x by at least 25% of authorized regular

appropriation" is merely advisory in character, and does not constitute a mandatory or

binding order that interferes with local autonomy. The language used, while
authoritative, does not amount to a command that emanates from a boss to a
subaltern.
Rather, the provision is merely an advisory to prevail upon local executives to
recognize the need for fiscal restraint in a period of economic difficulty. Indeed, all
concerned would do well to heed the President's call to unity, solidarity and teamwork
to help alleviate the crisis. It is understood, however, that no legal sanction may be
imposed upon LGUs and their officials who do not follow such advice. It is in this light
that we sustain the solicitor general's contention in regard to Section 1.

Withholding a Part of LGUs' IRA

Section 4 of AO 372 cannot, however, be upheld. A basic feature of local fiscal

autonomy is the automatic release of the shares of LGUs in the national internal
revenue. This is mandated by no less than the Constitution.[28] The Local Government
Code[29] specifies further that the release shall be made directly to the LGU concerned
within five (5) days after every quarter of the year and "shall not be subject to any lien
or holdback that may be imposed by the national government for whatever
purpose."[30] As a rule, the term "shall" is a word of command that must be given a
compulsory meaning.[31] The provision is, therefore, imperative.
Section 4 of AO 372, however, orders the withholding, effective January 1, 1998,
of 10 percent of the LGUs' IRA "pending the assessment and evaluation by the
Development Budget Coordinating Committee of the emerging fiscal situation" in the
country. Such withholding clearly contravenes the Constitution and the law. Although
temporary, it is equivalent to a holdback, which means "something held back or
withheld, often temporarily."[32] Hence, the "temporary" nature of the retention by the
national government does not matter. Any retention is prohibited.
In sum, while Section 1 of AO 372 may be upheld as an advisory effected in
times of national crisis, Section 4 thereof has no color of validity at all. The latter
provision
effectively
encroaches
on
the
fiscal
autonomy
of
local
governments.Concededly, the President was well-intentioned in issuing his Order to
withhold the LGUs IRA, but the rule of law requires that even the best intentions must
be carried out within the parameters of the Constitution and the law. Verily, laudable
purposes must be carried out by legal methods.

Refutation of Justice Kapunan's Dissent

103
Mr. Justice Santiago M. Kapunan dissents from our Decision on the grounds
that, allegedly, (1) the Petition is premature; (2) AO 372 falls within the powers of the
President as chief fiscal officer; and (3) the withholding of the LGUs IRA is implied in
the President's authority to adjust it in case of an unmanageable public sector deficit.
First, on prematurity. According to the Dissent, when "the conduct has not yet
occurred and the challenged construction has not yet been adopted by the agency
charged with administering the administrative order, the determination of the scope
and constitutionality of the executive action in advance of its immediate adverse effect
involves too remote and abstract an inquiry for the proper exercise of judicial
function."
This is a rather novel theory -- that people should await the implementing evil to
befall on them before they can question acts that are illegal or unconstitutional. Be it
remembered that the real issue here is whether the Constitution and the law are
contravened by Section 4 of AO 372, not whether they are violated by the acts
implementing it. In the unanimous en banc case Taada v. Angara, [33] this Court held
that when an act of the legislative department is seriously alleged to have infringed
the Constitution, settling the controversy becomes the duty of this Court. By the mere
enactment of the questioned law or the approval of the challenged action, the dispute
is said to have ripened into a judicial controversy even without any other overt
act. Indeed, even a singular violation of the Constitution and/or the law is enough to
awaken judicial duty. Said the Court:
"In seeking to nullify an act of the Philippine Senate on the ground that it contravenes
the Constitution, the petition no doubt raises a justiciable controversy. Where an
action of the legislative branch is seriously alleged to have infringed the Constitution,
it becomes not only the right but in fact the duty of the judiciary to settle the
dispute. 'The question thus posed is judicial rather than political. The duty (to
adjudicate) remains to assure that the supremacy of the Constitution is
upheld.'[34]Once a 'controversy as to the application or interpretation of a constitutional
provision is raised before this Court x x x , it becomes a legal issue which the Court is
bound by constitutional mandate to decide.'[35]
xxxxxxxxx
"As this Court has repeatedly and firmly emphasized in many cases,[36] it will not shirk,
digress from or abandon its sacred duty and authority to uphold the Constitution in
matters that involve grave abuse of discretion brought before it in appropriate cases,
committed by any officer, agency, instrumentality or department of the government."

In the same vein, the Court also held in Tatad v. Secretary of the Department of
Energy:[37]
"x x x Judicial power includes not only the duty of the courts to settle actual
controversies involving rights which are legally demandable and enforceable, but also
the duty to determine whether or not there has been grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or instrumentality
of government. The courts, as guardians of the Constitution, have the inherent
authority to determine whether a statute enacted by the legislature transcends the
limit imposed by the fundamental law. Where the statute violates the Constitution, it is
not only the right but the duty of the judiciary to declare such act unconstitutional and
void."
By the same token, when an act of the President, who in our constitutional
scheme is a coequal of Congress, is seriously alleged to have infringed the
Constitution and the laws, as in the present case, settling the dispute becomes the
duty and the responsibility of the courts.
Besides, the issue that the Petition is premature has not been raised by the
parties; hence it is deemed waived. Considerations of due process really prevents its
use against a party that has not been given sufficient notice of its presentation, and
thus has not been given the opportunity to refute it.[38]
Second, on the President's power as chief fiscal officer of the country. Justice
Kapunan posits that Section 4 of AO 372 conforms with the President's role as chief
fiscal officer, who allegedly "is clothed by law with certain powers to ensure the
observance of safeguards and auditing requirements, as well as the legal
prerequisites in the release and use of IRAs, taking into account the constitutional and
statutory mandates."[39] He cites instances when the President may lawfully intervene
in the fiscal affairs of LGUs.
Precisely, such powers referred to in the Dissent have specifically been
authorized by law and have not been challenged as violative of the Constitution. On
the other hand, Section 4 of AO 372, as explained earlier, contravenes explicit
provisions of the Local Government Code (LGC) and the Constitution. In other words,
the acts alluded to in the Dissent are indeed authorized by law; but, quite the
opposite, Section 4 of AO 372 is bereft of any legal or constitutional basis.
Third, on the President's authority to adjust the IRA of LGUs in case of an
unmanageable public sector deficit. It must be emphasized that in striking down
Section 4 of AO 372, this Court is not ruling out any form of reduction in the IRAs of
LGUs.Indeed, as the President may make necessary adjustments in case of an
unmanageable public sector deficit, as stated in the main part of this Decision, and in

104
line with Section 284 of the LGC, which Justice Kapunan cites. He, however, merely
glances over a specific requirement in the same provision -- that such reduction is
subject to consultation with the presiding officers of both Houses of Congress and,
more importantly, with the presidents of the leagues of local governments.
Notably, Justice Kapunan recognizes the need for "interaction between the
national government and the LGUs at the planning level," in order to ensure that "local
development plans x x x hew to national policies and standards." The problem is that
no such interaction or consultation was ever held prior to the issuance of AO 372. This
is why the petitioner and the intervenor (who was a provincial governor and at the
same time president of the League of Provinces of the Philippines and chairman of
the League of Leagues of Local Governments) have protested and instituted this
action. Significantly, respondents do not deny the lack of consultation.
In addition, Justice Kapunan cites Section 287[40] of the LGC as impliedly
authorizing the President to withhold the IRA of an LGU, pending its compliance with
certain requirements. Even a cursory reading of the provision reveals that it is totally
inapplicable to the issue at bar. It directs LGUs to appropriate in their annual budgets
20 percent of their respective IRAs for development projects. It speaks of no positive
power granted the President to priorly withhold any amount. Not at all.
WHEREFORE, the Petition is GRANTED. Respondents and their successors
are hereby permanently PROHIBITED from implementing Administrative Order Nos.
372 and 43, respectively dated December 27, 1997 and December 10, 1998, insofar
as local government units are concerned.
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Melo, Puno, Vitug, Mendoza, Quisumbing, Pardo,
Buena, Gonzaga-Reyes, and De Leon, Jr., JJ., concur.
Kapunan, J., see dissenting opinion.
Purisima, and Ynares-Santiago, JJ., join J. Kapunan in his dissenting opinion.

DISSENTING OPINION

KAPUNAN, J.:
In striking down as unconstitutional and illegal Section 4 of Administrative Order
No. 372 ("AO No. 372"), the majority opinion posits that the President exercised
power of control over the local government units ("LGU), which he does not have, and
violated the provisions of Section 6, Article X of the Constitution, which states:

SEC. 6. Local government units shall have a just share, as determined by law, in the
national taxes which shall be automatically released to them.
and Section 286(a) of the Local Government Code, which provides:
SEC. 286. Automatic Release of Shares. - (a) The share of each local government
unit shall be released, without need of any further action, directly to the provincial, city,
municipal or barangay treasurer, as the case may be, on a quarterly basis within five
(5) days after the end of each quarter, and which shall not be subject to any lien or
holdback that may be imposed by the national government for whatever purpose.
The share of the LGUs in the national internal revenue taxes is defined in
Section 284 of the same Local Government Code, to wit:
SEC. 284. Allotment of Internal Revenue Taxes. - Local government units shall have a
share in the national internal revenue taxes based on the collection of the third fiscal
year preceding the current fiscal year as follows:
(a) On the first year of the effectivity of this Code, thirty percent (30%);
(b) On the second year, thirty-five (35%) percent; and
(c) On the third year and thereafter, forty percent (40%).
Provided, That in the event that the national government incurs an unmanageable
public sector deficit, the President of the Philippines is hereby authorized, upon the
recommendation of Secretary of Finance, Secretary of Interior and Local Government
and Secretary of Budget and Management, and subject to consultation with the
presiding officers of both Houses of Congress and the presidents of the liga, to make
the necessary adjustments in the internal revenue allotment of local government units
but in no case shall the allotment be less than thirty percent (30%) of the collection of
national internal revenue taxes of the third fiscal year preceding the current fiscal
year: Provided, further, That in the first year of the effectivity of this Code, the local
government units shall, in addition to the thirty percent (30%) internal revenue
allotment which shall include the cost of devolved functions for essential public
services, be entitled to receive the amount equivalent to the cost of devolved personal
services.
xxx

105
The majority opinion takes the view that the withholding of ten percent (10%) of
the internal revenue allotment ("IRA") to the LGUs pending the assessment and
evaluation by the Development Budget Coordinating Committee of the emerging fiscal
situation as called for in Section 4 of AO No. 372 transgresses against the abovequoted provisions which mandate the "automatic" release of the shares of the LGUs in
the national internal revenue in consonance with local fiscal autonomy. The pertinent
portions of AO No. 372 are reproduced hereunder:

ADMINISTRATIVE ORDER NO. 372

ADOPTION OF ECONOMY MEASURES IN GOVERNMENT FOR FY 1998

ADMINISTRATIVE ORDER NO. 43

AMENDING ADMINISTRATIVE ORDER NO. 372 DATED 27 DECEMBER 1997

ENTITLED "ADOPTION OF ECONOMY MEASURES IN GOVERNMENT FOR FY
1998"
WHEREAS, Administrative Order No. 372 dated 27 December 1997 entitled
"Adoption of Economy Measures in Government for FY 1998" was issued to address
the economic difficulties brought about by the peso devaluation in 1997;
WHEREAS, Section 4 of Administrative Order No. 372 provided that the amount
equivalent to 10% of the internal revenue allotment to local government units shall be
withheld; and,

WHEREAS, the current economic difficulties brought about by the peso depreciation
requires continued prudence in government fiscal management to maintain economic
stability and sustain the countrys growth momentum;

WHEREAS, there is a need to release additional funds to local government units for
vital projects and expenditures.

WHEREAS, it is imperative that all government agencies adopt cash management

measures to match expenditures with available resources; NOW THEREFORE, I,
FIDEL V. RAMOS, President of the Republic of the Philippines, by virtue of the
powers vested in me by the Constitution, do hereby order and direct:

NOW, THEREFORE, I, JOSEPH EJERCITO ESTRADA, President of the Republic of

the Philippines, by virtue of the powers vested in me by law, do hereby order the
reduction of the withheld Internal Revenue Allotment (IRA) of local government units
from ten percent to five percent.

SECTION 1. All government departments and agencies, including x x x local

government units will identify and implement measures in FY 1998 that will reduce
total appropriations for non-personal services items, along the following suggested
areas:

The five percent reduction in the IRA withheld for 1998 shall be released before 25
December 1998.
DONE in the City of Manila, this 10th day of December, in the year of our Lord,
nineteen hundred and ninety eight.

xxx
With all due respect, I beg to disagree with the majority opinion.
SECTION 4. Pending the assessment and evaluation by the Development Budget
Coordinating Committee of the emerging fiscal situation the amount equivalent to 10%
of the internal revenue allotment to local government units shall be withheld.
xxx
Subsequently, on December 10, 1998, President Joseph E. Estrada issued
Administrative Order No. 43 (AO No. 43), amending Section 4 of AO No. 372, by
reducing to five percent (5%) the IRA to be withheld from the LGUs, thus:

Section 4 of AO No. 372 does not present a case ripe for adjudication. The
language of Section 4 does not conclusively show that, on its face, the constitutional
provision on the automatic release of the IRA shares of the LGUs has been violated.
Section 4, as worded, expresses the idea that the withholding is merely temporary
which fact alone would not merit an outright conclusion of its unconstitutionality,
especially in light of the reasonable presumption that administrative agencies act in
conformity with the law and the Constitution. Where the conduct has not yet occurred
and the challenged construction has not yet been adopted by the agency charged
with administering the administrative order, the determination of the scope and
constitutionality of the executive action in advance of its immediate adverse effect
involves too remote and abstract an inquiry for the proper exercise of judicial function.

106
Petitioners have not shown that the alleged 5% IRA share of LGUs that was
temporarily withheld has not yet been released, or that the Department of Budget and
Management (DBM) has refused and continues to refuse its release. In view thereof,
the Court should not decide as this case suggests an abstract proposition on
constitutional issues.
The President is the chief fiscal officer of the country. He is ultimately
responsible for the collection and distribution of public money:
SECTION 3. Powers and Functions. - The Department of Budget and Management
shall assist the President in the preparation of a national resources and expenditures
budget, preparation, execution and control of the National Budget, preparation and
maintenance of accounting systems essential to the budgetary process, achievement
of more economy and efficiency in the management of government operations,
administration of compensation and position classification systems, assessment of
organizational effectiveness and review and evaluation of legislative proposals having
budgetary or organizational implications.1
In a larger context, his role as chief fiscal officer is directed towards "the nation's
efforts at economic and social upliftment" 2 for which more specific economic powers
are delegated. Within statutory limits, the President can, thus, fix "tariff rates, import
and export quotas, tonnage and wharfage dues, and other duties or imposts within
the framework of the national development program of the government,3 as he is also
responsible for enlisting the country in international economic agreements. 4More than
this, to achieve "economy and efficiency in the management of government
operations," the President is empowered to create appropriation reserves,5 suspend
expenditure appropriations,6 and institute cost reduction schemes.7
As chief fiscal officer of the country, the President supervises fiscal development
in the local government units and ensures that laws are faithfully executed.8 For this
reason, he can set aside tax ordinances if he finds them contrary to the Local
Government Code.9 Ordinances cannot contravene statutes and public policy as
declared by the national govemment.10 The goal of local economy is not to "end the
relation of partnership and inter-dependence between the central administration and
local government units,"11 but to make local governments "more responsive and
accountable" [to] "ensure their fullest development as self-reliant communities and
make them more effective partners in the pursuit of national development and social
progress."12
The interaction between the national government and the local government units
is mandatory at the planning level. Local development plans must thus hew to
"national policies and standards13 as these are integrated into the regional
development plans for submission to the National Economic Development Authority.

"14 Local budget plans and goals must also be harmonized, as far as practicable, with
"national development goals and strategies in order to optimize the utilization of
resources and to avoid duplication in the use of fiscal and physical resources."15
Section 4 of AO No. 372 was issued in the exercise by the President not only of
his power of general supervision, but also in conformity with his role as chief fiscal
officer of the country in the discharge of which he is clothed by law with certain
powers to ensure the observance of safeguards and auditing requirements, as well as
the legal prerequisites in the release and use of IRAs, taking into account the
constitutional16 and statutory17 mandates.
However, the phrase "automatic release" of the LGUs' shares does not mean
that the release of the funds is mechanical, spontaneous, self-operating or reflex.
IRAs must first be determined, and the money for their payment collected. 18 In this
regard, administrative documentations are also undertaken to ascertain their
availability, limits and extent. The phrase, thus, should be used in the context of the
whole budgetary process and in relation to pertinent laws relating to audit and
accounting requirements. In the workings of the budget for the fiscal year,
appropriations for expenditures are supported by existing funds in the national coffers
and by proposals for revenue raising. The money, therefore, available for IRA release
may not be existing but merely inchoate, or a mere expectation. It is not infrequent
that the Executive Department's proposals for raising revenue in the form of proposed
legislation may not be passed by the legislature. As such, the release of IRA should
not mean release of absolute amounts based merely on mathematical computations.
There must be a prior determination of what exact amount the local government units
are actually entitled in light of the economic factors which affect the fiscal situation in
the country. Foremost of these is where, due to an unmanageable public sector
deficit, the President may make the necessary adjustments in the IRA of LGUs. Thus,
as expressly provided in Article 284 of the Local Government Code:
x x x (I)n the event that the national government incurs an unmanageable
public sector deficit, the President of the Philippines is hereby authorized,
upon the recommendation of Secretary of Finance, Secretary of Interior
and Local Government and Secretary of Budget and Management and
subject to consultation with the presiding officers of both Houses of
Congress and the presidents of the "liga," to make the necessary
adjustments in the internal revenue allotment of local government units
but in no case shall the allotment be less than thirty percent (30%) of the
collection of national internal revenue taxes of the third fiscal year
preceding the current fiscal year. x x x.
Under the aforecited provision, if facts reveal that the economy has sustained or
will likely sustain such "unmanageable public sector deficit," then the LGUs cannot

107
assert absolute right of entitlement to the full amount of forty percent (40%) share in
the IRA, because the President is authorized to make an adjustment and to reduce
the amount to not less than thirty percent (30%). It is, therefore, impractical to
immediately release the full amount of the IRAs and subsequently require the local
government units to return at most ten percent (10%) once the President has
ascertained that there exists an unmanageable public sector deficit.
By necessary implication, the power to make necessary adjustments (including
reduction) in the IRA in case of an unmanageable public sector deficit, includes the
discretion to withhold the IRAs temporarily until such time that the determination of the
actual fiscal situation is made. The test in determining whether one power is
necessarily included in a stated authority is: "The exercise of a more absolute power
necessarily includes the lesser power especially where it is needed to make the first
power effective."19 If the discretion to suspend temporarily the release of the IRA
pending such examination is withheld from the President, his authority to make the
necessary IRA adjustments brought about by the unmanageable public sector deficit
would be emasculated in the midst of serious economic crisis. In the situation
conjured by the majority opinion, the money would already have been gone even
before it is determined that fiscal crisis is indeed happening.
The majority opinion overstates the requirement in Section 286 of the Local
Government Code that the IRAs "shall not be subject to any lien or holdback that may
be imposed by the national government for whatever purpose" as proof that no
withholding of the release of the IRAs is allowed albeit temporary in nature.
It is worthy to note that this provision does not appear in the Constitution.
Section 6, Art X of the Constitution merely directs that LGUs "shall have a just share"
in the national taxes "as determined by law" and which share shall be automatically
released to them. This means that before the LGUs share is released, there should be
first a determination, which requires a process, of what is the correct amount as
dictated by existing laws. For one, the Implementing Rules of the Local Government
Code allows deductions from the IRAs, to wit:
Article 384. Automatic Release of IRA Shares of LGUs:
xxx

(c) The IRA share of LGUs shall not be subject to any lien or hold back that may
be imposed by the National Government for whatever purpose unless otherwise
provided in the Code or other applicable laws and loan contract on project
agreements arising from foreign loans and international commitments, such as
premium contributions of LGUs to the Government Service Insurance System
and loans contracted by LGUs under foreign-assisted projects.
Apart from the above, other mandatory deductions are made from the IRAs prior
to their release, such as: (1) total actual cost of devolution and the cost of city-funded
hospitals;20 and (2) compulsory contributions21 and other remittances.22 It follows,
therefore, that the President can withhold portions of IRAs in order to set-off or
compensate legitimately incurred obligations and remittances of LGUs.
Significantly, Section 286 of the Local Government Code does not make mention
of the exact amount that should be automatically released to the LGUs. The provision
does not mandate that the entire 40% share mentioned in Section 284 shall be
released. It merely provides that the "share" of each LGU shall be released and
which "shall not be subject to any lien or holdback that may be imposed by the
national government for whatever purpose." The provision on automatic release of
IRA share should, thus, be read together with Section 284, including the proviso on
adjustment or reduction of IRAs, as well as other relevant laws. It may happen that the
share of the LGUs may amount to the full forty percent (40%) or the reduced amount
of thirty percent (30%) as adjusted without any law being violated. In other words, all
that Section 286 requires is the automatic release of the amount that the LGUs
are rightfully and legally entitled to, which, as the same section provides, should
not be less than thirty percent (30%) of the collection of the national revenue taxes.
So that even if five percent (5%) or ten percent (10%) is either temporarily or
permanently withheld, but the minimum of thirty percent (30%) allotment for the LGUs
is released pursuant to the President's authority to make the necessary adjustment in
the LGUS' share, there is still full compliance with the requirements of the automatic
release of the LGUs' share.
Finally, the majority insists that the withholding of ten percent (10%) or five
percent (5%) of the IRAs could not have been done pursuant to the power of the
President to adjust or reduce such shares under Section 284 of the Local Government
Code because there was no showing of an unmanageable public sector deficit by the
national government, nor was there evidence that consultations with the presiding
officers of both Houses of Congress and the presidents of the various leagues had
taken place and the corresponding recommendations of the Secretary of Finance,
Secretary of Interior and Local Government and the Budget Secretary were made.
I beg to differ. The power to determine whether there is an unmanageable public
sector deficit is lodged in the President. The President's determination, as fiscal

108
manager of the country, of the existence of economic difficulties which could amount
to "unmanageable public sector deficit" should be accorded respect. In fact, the
withholding of the ten percent (10%) of the LGUs' share was further justified by the
current economic difficulties brought about by the peso depreciation as shown by one
of the "WHEREASES" of AO No. 372.23 In the absence of any showing to the
contrary, it is presumed that the President had made prior consultations with the
officials thus mentioned and had acted upon the recommendations of the Secretaries
of Finance, Interior and Local Government and Budget.24
Therefore, even assuming hypothetically that there was effectively a deduction of
five percent (5%) of the LGUs' share, which was in accordance with the President's
prerogative in view of the pronouncement of the existence of an unmanageable public
sector deficit, the deduction would still be valid in the absence of any proof that the
LGUs' allotment was less than the thirty percent (30%) limit provided for in Section
284 of the Local Government Code.
In resume, the withholding of the amount equivalent to five percent (5%) of the
IRA to the LGUs was temporary pending determination by the Executive of the actual
share which the LGUs are rightfully entitled to on the basis of the applicable laws,
particularly Section 284 of the Local Government Code, authorizing the President to
make the necessary adjustments in the IRA of LGUs in the event of an unmanageable
public sector deficit. And assuming that the said five percent (5%) of the IRA
pertaining to the 1998 Fiscal Year has been permanently withheld, there is no
showing that the amount actually released to the LGUs that same year was less than
thirty percent (30%) of the national internal revenue taxes collected, without even
considering the proper deductions allowed by law.
WHEREFORE, I vote to DISMISS the petition.

[G.R. No. 149743. February 18, 2005]

LEONARDO TAN, ROBERT UY and LAMBERTO TE, petitioners, vs. SOCORRO

Y. PEREA, respondent.
DECISION
TINGA, J.:

The resolution of the present petition effectively settles the question of how
many cockpits may be allowed to operate in a city or municipality.
There are two competing values of high order that come to fore in this casethe
traditional power of the national government to enact police power measures, on one
hand, and the vague principle of local autonomy now enshrined in the Constitution on
the other. The facts are simple, but may be best appreciated taking into account the
legal milieu which frames them.
In 1974, Presidential Decree (P.D.) No. 449, otherwise known as the
Cockfighting Law of 1974, was enacted. Section 5(b) of the Decree provided for limits
on the number of cockpits that may be established in cities and municipalities in the
following manner:
Section 5. Cockpits and Cockfighting in General.
(b) Establishment of Cockpits. Only one cockpit shall be allowed in each city or
municipality, except that in cities or municipalities with a population of over one
hundred thousand, two cockpits may be established, maintained and operated.
With the enactment of the Local Government Code of 1991, [1] the municipal
sangguniang bayan were empowered, [a]ny law to the contrary notwithstanding, to
authorize and license the establishment, operation and maintenance of cockpits, and
regulate cockfighting and commercial breeding of gamecocks.[2]
In 1993, the Sangguniang Bayan of the municipality of Daanbantayan, [3] Cebu
Province, enacted Municipal Ordinance No. 6 (Ordinance No. 6), Series of 1993,
which served as the Revised Omnibus Ordinance prescribing and promulgating the
rules and regulations governing cockpit operations in Daanbantayan.[4] Section 5
thereof, relative to the number of cockpits allowed in the municipality, stated:
Section 5. There shall be allowed to operate in the Municipality of Daanbantayan,
Province of Cebu, not more than its equal number of cockpits based upon the
population provided for in PD 449, provided however, that this specific section can be
amended for purposes of establishing additional cockpits, if the Municipal population
so warrants.[5]
Shortly thereafter, the Sangguniang Bayan passed an amendatory ordinance,
Municipal Ordinance No. 7 (Ordinance No. 7), Series of 1993, which amended the
aforequoted Section 5 to now read as follows:

109
Section 5. Establishment of Cockpit. There shall be allowed to operate in the
Municipality of Daanbantayan, Province of Cebu, not more than three (3) cockpits.[6]
On 8 November 1995, petitioner Leonardo Tan (Tan) applied with the Municipal
Gamefowl Commission for the issuance of a permit/license to establish and operate a
cockpit in Sitio Combado, Bagay, in Daanbantayan. At the time of his application,
there was already another cockpit in operation in Daanbantayan, operated by
respondent Socorro Y. Perea (Perea), who was the duly franchised and licensed
cockpit operator in the municipality since the 1970s. Pereas franchise, per records,
was valid until 2002.[7]
The Municipal Gamefowl Commission favorably recommended to the mayor of
Daanbantayan, petitioner Lamberto Te (Te), that a permit be issued to Tan. On 20
January 1996, Te issued a mayors permit allowing Tan to establish/operate/conduct
the business of a cockpit in Combado, Bagay, Daanbantayan, Cebu for the period
from 20 January 1996 to 31 December 1996.[8]
This act of the mayor served as cause for Perea to file a Complaint for damages
with a prayer for injunction against Tan, Te, and Roberto Uy, the latter allegedly an
agent of Tan.[9] Perea alleged that there was no lawful basis for the establishment of a
second cockpit. She claimed that Tan conducted his cockpit fights not in Combado,
but in Malingin, at a site less than five kilometers away from her own cockpit. She
insisted that the unlawful operation of Tans cockpit has caused injury to her own
legitimate business, and demanded damages of at least Ten Thousand Pesos
(P10,000.00) per month as actual damages, One Hundred Fifty Thousand Pesos
(P150,000.00) as moral damages, and Fifty Thousand Pesos (P50,000.00) as
exemplary damages. Perea also prayed that the permit issued by Te in favor of Tan be
declared as null and void, and that a permanent writ of injunction be issued against Te
and Tan preventing Tan from conducting cockfights within the municipality and Te
from issuing any authority for Tan to pursue such activity.[10]
The case was heard by the Regional Trial Court (RTC), [11] Branch 61 of Bogo,
Cebu, which initially granted a writ of preliminary injunction.[12] During trial, herein
petitioners asserted that under the Local Government Code of 1991, the sangguniang
bayan of each municipality now had the power and authority to grant franchises and
enact ordinances authorizing the establishment, licensing, operation and maintenance
of cockpits.[13] By virtue of such authority, the Sangguniang Bayan of Daanbantayan
promulgated Ordinance Nos. 6 and 7. On the other hand, Perea claimed that the
amendment authorizing the operation of not more than three (3) cockpits in
Daanbantayan violated Section 5(b) of the Cockfighting Law of 1974, which allowed
for only one cockpit in a municipality with a population as Daanbantayan.[14]

In a Decision dated 10 March 1997, the RTC dismissed the complaint. The court
observed that Section 5 of Ordinance No. 6, prior to its amendment, was by specific
provision, an implementation of the Cockfighting Law.[15] Yet according to the RTC,
questions could be raised as to the efficacy of the subsequent amendment under
Ordinance No. 7, since under the old Section 5, an amendment allowing additional
cockpits could be had only if the municipal population so warrants. [16] While the RTC
seemed to doubt whether this condition had actually been fulfilled, it nonetheless
declared that since the case was only for damages, the [RTC] cannot grant more relief
than that prayed for.[17] It ruled that there was no evidence, testimonial or
documentary, to show that plaintiff had actually suffered damages. Neither was there
evidence that Te, by issuing the permit to Tan, had acted in bad faith, since such
issuance was pursuant to municipal ordinances that nonetheless remained in force.
[18]
Finally, the RTC noted that the assailed permit had expired on 31 December 1996,
and there was no showing that it had been renewed.[19]
Perea filed a Motion for Reconsideration which was denied in an Order dated 24
February 1998. In this Order, the RTC categorically stated that Ordinance Nos. 6 and
7 were valid and legal for all intents and purpose[s]. [20] The RTC also noted that the
Sangguniang Bayan had also promulgated Resolution No. 78-96, conferring on Tan a
franchise to operate a cockpit for a period of ten (10) years from February 1996 to
2006.[21] This Resolution was likewise affirmed as valid by the RTC. The RTC noted
that while the ordinances seemed to be in conflict with the Cockfighting Law, any
doubt in interpretation should be resolved in favor of the grant of more power to the
local government unit, following the principles of devolution under the Local
Government Code.[22]
The Decision and Order of the RTC were assailed by Perea on an appeal with
the Court of Appeals which on 21 May 2001, rendered the Decision now assailed.
[23]
The perspective from which the Court of Appeals viewed the issue was markedly
different from that adopted by the RTC. Its analysis of the Local Government Code,
particularly Section 447(a)(3)(V), was that the provision vesting unto the sangguniang
bayan the power to authorize and license the establishment of cockpits did not do
away with the Cockfighting Law, as these two laws are not necessarily inconsistent
with each other. What the provision of the Local Government Code did, according to
the Court of Appeals, was to transfer to the sangguniang bayan powers that were
previously conferred on the Municipal Gamefowl Commission.[24]
Given these premises, the appellate court declared as follows:
Ordinance No. 7 should [be] held invalid for allowing, in unconditional terms, the
operation of not more than three cockpits in Daan Bantayan (sic), clearly dispensing
with the standard set forth in PD 449. However, this issue appears to have been

110
mooted by the expiration of the Mayors Permit granted to the defendant which has not
been renewed.[25]
As to the question of damages, the Court of Appeals agreed with the findings of
the RTC that Perea was not entitled to damages. Thus, it affirmed the previous ruling
denying the claim for damages. However, the Court of Appeals modified the RTCs
Decision in that it now ordered that Tan be enjoined from operating a cockpit and
conducting any cockfights within Daanbantayan.[26]
Thus, the present Petition for Review on Certiorari.
Petitioners present two legal questions for determination: whether the Local
Government Code has rendered inoperative the Cockfighting Law; and whether the
validity of a municipal ordinance may be determined in an action for damages which
does not even contain a prayer to declare the ordinance invalid. [27] As the denial of the
prayer for damages by the lower court is not put in issue before this Court, it shall not
be passed upon on review.
The first question raised is particularly interesting, and any definitive resolution
on that point would have obvious ramifications not only to Daanbantayan, but all other
municipalities and cities. However, we must first determine the proper scope of judicial
inquiry that we could engage in, given the nature of the initiatory complaint and the
rulings rendered thereupon, the exact point raised in the second question.
Petitioners claim that the Court of Appeals, in declaring Ordinance No. 7 as
invalid, embarked on an unwarranted collateral attack on the validity of a municipal
ordinance.[28] Pereas complaint, which was for damages with preliminary injunction,
did not pray for the nullity of Ordinance No. 7. The Municipality of Daanbantayan as a
local government unit was not made a party to the case, nor did any legal counsel on
its behalf enter any appearance. Neither was the Office of the Solicitor General given
any notice of the case.[29]
These concerns are not trivial.[30] Yet, we must point out that the Court of
Appeals did not expressly nullify Ordinance No. 7, or any ordinance for that matter.
What the appellate court did was to say that Ordinance No. 7 should therefore be
held invalid for being in violation of the Cockfighting Law. [31] In the next breath
though, the Court of Appeals backtracked, saying that this issue appears to have
been mooted by the expiration of the Mayors Permit granted to Tan.[32]
But our curiosity is aroused by the dispositive portion of the assailed Decision,
wherein the Court of Appeals enjoined Tan from operating a cockpit and conducting
any cockfights within Daanbantayan.[33] Absent the invalidity of Ordinance No. 7, there
would be no basis for this injunction. After all, any future operation of a cockpit by Tan

in Daanbantayan, assuming all other requisites are complied with, would be validly
authorized should Ordinance No. 7 subsist.
So it seems, for all intents and purposes, that the Court of Appeals did deem
Ordinance No. 7 a nullity. Through such resort, did the appellate court in effect allow a
collateral attack on the validity of an ordinance through an action for damages, as the
petitioners argue?
The initiatory Complaint filed by Perea deserves close scrutiny. Immediately, it
can be seen that it is not only an action for damages, but also one for injunction. An
action for injunction will require judicial determination whether there exists a right
in esse which is to be protected, and if there is an act constituting a violation of such
right against which injunction is sought. At the same time, the mere fact of injury alone
does not give rise to a right to recover damages. To warrant the recovery of damages,
there must be both a right of action for a legal wrong inflicted by the defendant, and
damage resulting to the plaintiff therefrom. In other words, in order that the law will
give redress for an act causing damage, there must be damnum et injuriathat act
must be not only hurtful, but wrongful.[34]
Indubitably, the determination of whether injunction or damages avail in this case
requires the ascertainment of whether a second cockpit may be legally allowed in
Daanbantayan. If this is permissible, Perea would not be entitled either to injunctive
relief or damages.
Moreover, an examination of the specific allegations in the Complaint reveals
that Perea therein puts into question the legal basis for allowing Tan to operate
another cockpit in Daanbantayan. She asserted that there is no lawful basis for the
establishment of a second cockpit considering the small population of
[Daanbantayan],[35] a claim which alludes to Section 5(b) of the Cockfighting Law
which prohibits the establishment of a second cockpit in municipalities of less than ten
thousand (10,000) in population. Perea likewise assails the validity of the permit
issued to Tan and prays for its annulment, and also seeks that Te be enjoined from
issuing any special permit not only to Tan, but also to any other person outside of a
duly licensed cockpit in Daanbantayan, Cebu.[36]
It would have been preferable had Perea expressly sought the annulment of
Ordinance No. 7. Yet it is apparent from her Complaint that she sufficiently alleges
that there is no legal basis for the establishment of a second cockpit. More
importantly, the petitioners themselves raised the valid effect of Ordinance No. 7 at
the heart of their defense against the complaint, as adverted to in their Answer.[37] The
averment in the Answer that Ordinance No. 7 is valid can be considered as an
affirmative defense, as it is the allegation of a new matter which, while hypothetically
admitting the material allegations in the complaint, would nevertheless bar recovery.
[38]
Clearly then, the validity of Ordinance No. 7 became a justiciable matter for the

111
RTC, and indeed Perea squarely raised the argument during trial that said ordinance
violated the Cockfighting Law.[39]
Moreover,
the
assailed
rulings
of
the
RTC,
its Decision and
subsequent Order denying Pereas Motion for Reconsideration, both discuss the
validity of Ordinance No. 7. In the Decision, the RTC evaded making a categorical
ruling on the ordinances validity because the case was only for damages, [thus the
RTC could] not grant more relief than that prayed for. This reasoning is unjustified,
considering that Perea also prayed for an injunction, as well as for the annulment of
Tans permit. The resolution of these two questions could very well hinge on the
validity of Ordinance No. 7.
Still, in the Order denying Pereas Motion for Reconsideration, the RTC felt less
inhibited and promptly declared as valid not only Ordinance No. 7, but also Resolution
No. 78-96 of the Sangguniang Bayan dated 23 February 1996, which conferred on
Tan a franchise to operate a cockpit from 1996 to 2006.[40] In the Order, the RTC ruled
that while Ordinance No. 7 was in apparent conflict with the Cockfighting Law, the
ordinance was justified under Section 447(a)(3)(v) of the Local Government Code.
This express affirmation of the validity of Ordinance No. 7 by the RTC was the
first assigned error in Pereas appeal to the Court of Appeals. [41] In their Appellees
Brief before the appellate court, the petitioners likewise argued that Ordinance No. 7
was valid and that the Cockfighting Law was repealed by the Local Government
Code.[42] On the basis of these arguments, the Court of Appeals rendered its
assailed Decision, including its ruling that the Section 5(b) of the Cockfighting Law
remains in effect notwithstanding the enactment of the Local Government Code.
Indubitably, the question on the validity of Ordinance No. 7 in view of the
continuing efficacy of Section 5(b) of the Cockfighting Law is one that has been fully
litigated in the courts below. We are comfortable with reviewing that question in the
case at bar and make dispositions proceeding from that key legal question. This is
militated by the realization that in order to resolve the question whether injunction
should be imposed against the petitioners, there must be first a determination whether
Tan may be allowed to operate a second cockpit in Daanbantayan. Thus, the conflict
between Section 5(b) of the Cockfighting Law and Ordinance No. 7 now ripens for
adjudication.
In arguing that Section 5(b) of the Cockfighting Law has been repealed,
petitioners cite the following provisions of Section 447(a)(3)(v) of the Local
Government Code:
Section 447. Powers, Duties, Functions and Compensation. (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 pursuant to Section 16 of this Code and in the proper exercise of the
corporate powers of the municipality as provided for under Section 22 of this Code,
and shall:
....
(3) Subject to the provisions of Book II of this Code, grant franchises, enact
ordinances authorizing the issuance of permits or licenses, or enact ordinances
levying taxes, fees and charges upon such conditions and for such purposes intended
to promote the general welfare of the inhabitants of the municipality, and pursuant to
this legislative authority shall:
....
(v) Any law to the contrary notwithstanding, authorize and
license the establishment, operation, and maintenance of
cockpits, and regulate cockfighting and commercial breeding
of gamecocks; Provided, that existing rights should not be
prejudiced;
For the petitioners, Section 447(a)(3)(v) sufficiently repeals Section 5(b) of the
Cockfighting Law, vesting as it does on LGUs the power and authority to issue
franchises and regulate the operation and establishment of cockpits in their respective
municipalities, any law to the contrary notwithstanding.
However, while the Local Government Code expressly repealed several laws,
the Cockfighting Law was not among them. Section 534(f) of the Local Government
Code declares that all general and special laws or decrees inconsistent with the Code
are hereby repealed or modified accordingly, but such clause is not an express
repealing clause because it fails to identify or designate the acts that are intended to
be repealed.[43] It is a cardinal rule in statutory construction that implied repeals are
disfavored and will not be so declared unless the intent of the legislators is manifest.
[44]
As laws are presumed to be passed with deliberation and with knowledge of all
existing ones on the subject, it is logical to conclude that in passing a statute it is not
intended to interfere with or abrogate a former law relating to the same subject matter,
unless the repugnancy between the two is not only irreconcilable but also clear and
convincing as a result of the language used, or unless the latter Act fully embraces
the subject matter of the earlier.[45]
Is the one-cockpit-per-municipality rule under the Cockfighting Law clearly and
convincingly irreconcilable with Section 447(a)(3)(v) of the Local Government Code?

112
The clear import of Section 447(a)(3)(v) is that it is the sangguniang bayan which is
empowered to authorize and license the establishment, operation and maintenance of
cockpits, and regulate cockfighting and commercial breeding of gamecocks,
notwithstanding any law to the contrary. The necessity of the qualifying phrase any
law to the contrary notwithstanding can be discerned by examining the history of laws
pertaining to the authorization of cockpit operation in this country.
Cockfighting, or sabong in the local parlance, has a long and storied tradition in
our culture and was prevalent even during the Spanish occupation. When the newlyarrived Americans proceeded to organize a governmental structure in the Philippines,
they recognized cockfighting as an activity that needed to be regulated, and it was
deemed that it was the local municipal council that was best suited to oversee such
regulation. Hence, under Section 40 of Act No. 82, the general act for the organization
of municipal governments promulgated in 1901, the municipal council was
empowered to license, tax or close cockpits. This power of the municipal council to
authorize or license cockpits was repeatedly recognized even after the establishment
of the present Republic in 1946.[46] Such authority granted unto the municipal councils
to license the operation of cockpits was generally unqualified by restrictions.[47] The
Revised Administrative Code did impose restrictions on what days cockfights could be
held.[48]
However, in the 1970s, the desire for stricter licensing requirements of cockpits
started to see legislative fruit. The Cockfighting Law of 1974 enacted several of these
restrictions. Apart from the one-cockpit-per-municipality rule, other restrictions were
imposed, such as the limitation of ownership of cockpits to Filipino citizens. [49] More
importantly, under Section 6 of the Cockfighting Law, it was the city or municipal
mayor who was authorized to issue licenses for the operation and maintenance of
cockpits, subject to the approval of the Chief of Constabulary or his authorized
representatives.[50] Thus, the sole discretion to authorize the operation of cockpits was
removed from the local government unit since the approval of the Chief of
Constabulary was now required.
P.D. No. 1802 reestablished the Philippine Gamefowl Commission[51] and
imposed further structure in the regulation of cockfighting. Under Section 4 thereof,
city and municipal mayors with the concurrence of their respective sangguniang
panglunsod or sangguniang bayan, were given the authority to license and regulate
cockfighting, under the supervision of the City Mayor or the Provincial Governor.
However, Section 4 of P.D. No. 1802 was subsequently amended, removing the
supervision exercised by the mayor or governor and substituting in their stead the
Philippine Gamefowl Commission. The amended provision ordained:
Sec. 4. City and Municipal Mayors with the concurrence of their respective
Sanggunians shall have the authority to license and regulate regular cockfighting

pursuant to the rules and regulations promulgated by the Commission and subject to
its review and supervision.
The Court, on a few occasions prior to the enactment of the Local Government
Code in 1991, had opportunity to expound on Section 4 as amended. A discussion of
these cases will provide a better understanding of the qualifier any law to the contrary
notwithstanding provided in Section 447(a)(3)(v).
In Philippine Gamefowl Commission v. Intermediate Appellate Court,[52] the
Court, through Justice Cruz, asserted that the conferment of the power to license and
regulate municipal cockpits in municipal authorities is in line with the policy of local
autonomy embodied in the Constitution.[53] The Court affirmed the annulment of a
resolution of the Philippine Gamefowl Commission which ordered the revocation of a
permit issued by a municipal mayor for the operation of a cockpit and the issuance of
a new permit to a different applicant. According to the Court, the Philippine Gamefowl
Commission did not possess the power to issue cockpit licenses, as this was vested
by Section 4 of P.D. No. 1802, as amended, to the municipal mayor with the
concurrence of the sanggunian. It emphasized that the Philippine Gamefowl
Commission only had review and supervision powers, as distinguished from control,
over ordinary cockpits.[54] The Court also noted that the regulation of cockpits was
vested in municipal officials, subject only to the guidelines laid down by the Philippine
Gamefowl Commission.[55] The Court conceded that [if] at all, the power to review
includes the power to disapprove; but it does not carry the authority to substitute ones
own preferences for that chosen by the subordinate in the exercise of its sound
discretion.
The twin pronouncements that it is the municipal authorities who are empowered
to issue cockpit licenses and that the powers of the Philippine Gamefowl Commission
were limited to review and supervision were affirmed in Deang v. Intermediate
Appellate Court,[56] Municipality of Malolos v. Libangang Malolos Inc.[57] and Adlawan
v. Intermediate Appellate Court.[58] But notably in Cootauco v. Court of Appeals,[59] the
Court especially noted that Philippine Gamefowl Commissiondid indicate that the
Commissions power of review includes the power to disapprove. [60] Interestingly,
Justice Cruz, the writer of Philippine Gamefowl Commission, qualified his concurrence
in Cootauco subject to the reservations made in [Philippine Gamefowl
Commission] regarding the review powers of the PGC over cockpit licenses issued by
city and municipal mayors.[61]
These cases reiterate what has been the traditional prerogative of municipal
officials to control the issuances of licenses for the operation of cockpits.
Nevertheless, the newly-introduced role of the Philippine Gamefowl Commission vis-vis the operation of cockpits had caused some degree of controversy, as shown by
the cases above cited.

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Then, the Local Government Code of 1991 was enacted. There is no more
forceful authority on this landmark legislation than Senator Aquilino Pimentel, Jr., its
principal author. In his annotations to the Local Government Code, he makes the
following remarks relating to Section 447(a)(3)(v):
12. Licensing power. In connection with the power to grant licenses lodged with it,
the Sangguniang Bayan may now regulate not only businesses but also occupations,
professions or callings that do not require government examinations within its
jurisdiction. It may also authorize and license the establishment, operation and
maintenance of cockpits, regulate cockfighting, and the commercial breeding of
gamecocks. Existing rights however, may not be prejudiced. The power to license
cockpits and permits for cockfighting has been removed completely from the
Gamefowl Commission.
Thus, that part of the ruling of the Supreme Court in the case of Municipality of
Malolos v. Libangang Malolos, Inc. et al., which held that the regulation of
cockpits is vested in the municipal councils guidelines laid down by the
Philippine Gamefowl Commission is no longer controlling. Under [Section
447(a)(3)(v)], the power of the Sanggunian concerned is no longer subject to the
supervision of the Gamefowl Commission.[62]
The above observations may be faulted somewhat in the sense that they fail to
acknowledge the Courts consistent position that the licensing power over cockpits
belongs exclusively to the municipal authorities and not the Philippine Gamefowl
Commission. Yet these views of Senator Pimentel evince the apparent confusion
regarding the role of the Philippine Gamefowl Commission as indicated in the cases
previously cited, and accordingly bring the phrase Section 447(a)(3)(v) used in any
law to the contrary notwithstanding into its proper light. The qualifier serves notice, in
case it was still doubtful, that it is the sanggunian bayan concerned alone which has
the power to authorize and license the establishment, operation and maintenance of
cockpits, and regulate cockfighting and commercial breeding of gamecocks within its
territorial jurisdiction.
Given the historical perspective, it becomes evident why the legislature found
the need to use the phrase any law to the contrary notwithstanding in Section 447(a)
(3)(v). However, does the phrase similarly allow the Sangguniang Bayan to authorize
more cockpits than allowed under Section 5(d) of the Cockfighting Law? Certainly,
applying the test of implied repeal, these two provisions can stand together. While the
sanggunian retains the power to authorize and license the establishment, operation,
and maintenance of cockpits, its discretion is limited in that it cannot authorize more
than one cockpit per city or municipality, unless such cities or municipalities have a

population of over one hundred thousand, in which case two cockpits may be
established. Considering that Section 447(a)(3)(v) speaks essentially of the identity of
the wielder of the power of control and supervision over cockpit operation, it is not
inconsistent with previous enactments that impose restrictions on how such power
may be exercised. In short, there is no dichotomy between affirming the power and
subjecting it to limitations at the same time.
Perhaps more essential than the fact that the two controverted provisions are not
inconsistent when put together, the Court recognizes that Section 5(d) of the
Cockfighting Law arises from a valid exercise of police power by the national
government. Of course, local governments are similarly empowered under Section 16
of the Local Government Code. The national government ought to be attuned to the
sensitivities of devolution and strive to be sparing in usurping the prerogatives of local
governments to regulate the general welfare of their constituents.
We do not doubt, however, the ability of the national government to implement
police power measures that affect the subjects of municipal government, especially if
the subject of regulation is a condition of universal character irrespective of territorial
jurisdictions. Cockfighting is one such condition. It is a traditionally regulated activity,
due to the attendant gambling involved[63] or maybe even the fact that it essentially
consists of two birds killing each other for public amusement. Laws have been
enacted restricting the days when cockfights could be held,[64] and legislation has even
been emphatic that cockfights could not be held on holidays celebrating national
honor such as Independence Day[65] and Rizal Day.[66]
The Whereas clauses of the Cockfighting Law emphasize that cockfighting
should neither be exploited as an object of commercialism or business enterprise, nor
made a tool of uncontrolled gambling, but more as a vehicle for the preservation and
perpetuation of native Filipino heritage and thereby enhance our national identity.
[67]
The obvious thrust of our laws designating when cockfights could be held is to limit
cockfighting and imposing the one-cockpit-per-municipality rule is in line with that aim.
Cockfighting is a valid matter of police power regulation, as it is a form of gambling
essentially antagonistic to the aims of enhancing national productivity and selfreliance.[68] Limitation on the number of cockpits in a given municipality is a
reasonably necessary means for the accomplishment of the purpose of controlling
cockfighting, for clearly more cockpits equals more cockfights.
If we construe Section 447(a)(3)(v) as vesting an unlimited discretion to the
sanggunian to control all aspects of cockpits and cockfighting in their respective
jurisdiction, this could lead to the prospect of daily cockfights in municipalities, a
certain distraction in the daily routine of life in a municipality. This certainly goes
against the grain of the legislation earlier discussed. If the arguments of the
petitioners were adopted, the national government would be effectively barred from

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imposing any future regulatory enactments pertaining to cockpits and cockfighting
unless it were to repeal Section 447(a)(3)(v).
A municipal ordinance must not contravene the Constitution or any statute,
otherwise it is void.[69] Ordinance No. 7 unmistakably contravenes the Cockfighting
Law in allowing three cockpits in Daanbantayan. Thus, no rights can be asserted by
the petitioners arising from the Ordinance. We find the grant of injunction as ordered
by the appellate court to be well-taken.

WHEREFORE, the petition is DENIED. Costs against petitioners.

SO ORDERED.
Davide, Jr., CJ., Puno, Panganiban, Quisumbing, Ynares-Santiago, SandovalGutierrez, Carpio, Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., Azcuna,
Chico-Nazario and Garcia, JJ., concur.