TAXATION, POLICE POWER, EMINENT DOMAIN

G.R. No. 127820 July 20, 1998

MUNICIPALITY OF PARAÑAQUE, Petitioner, v. V.M. REALTY CORPORATION, Respondent.

PANGANIBAN, J.:

A local government unit (LGU), like the Municipality of Parañaque, cannot authorize an expropriation of
private property through a mere resolution of its lawmaking body. The Local Government Code expressly
and clearly requires an ordinance or a local law for the purpose. A resolution that merely expresses the
sentiment or opinion of the Municipal Council will not suffice. On the other hand, the principle of res judicata
does not bar subsequent proceedings for the expropriation of the same property when all the legal
requirements for its valid exercise are complied with.

Statement of the Case

These principles are applied by this Court in resolving this petition for review on certiorari of the
July 22, 1996 Decision 1 of the Court of Appeals 2 in CA GR CV No. 48048, which affirmed in toto 3 the
Regional Trial Court's August 9, 1994 Resolution. 4 The trial court dismissed the expropriation suit as
follows:

The right of the plaintiff to exercise the power of eminent domain is not disputed. However, such
right may be exercised only pursuant to an Ordinance (Sec. 19, R.A No. 7160). In the instant case, there is
no such ordinance passed by the Municipal Council of Parañaque enabling the Municipality, thru its Chief
Executive, to exercise the power of eminent domain. The complaint, therefore, states no cause of action.

Assuming that plaintiff has a cause of action, the same is barred by a prior judgment. On September
29, 1987, the plaintiff filed a complaint for expropriation involving the same parcels of land which was
docketed as Civil Case No. 17939 of this Court (page 26, record). Said case was dismissed with prejudice
on May 18, 1988 (page 39, record). The order of dismissal was not appealed, hence, the same became
final. The plaintiff can not be allowed to pursue the present action without violating the principle of [r]es
[j]udicata. While defendant in Civil Case No. 17939 was Limpan Investment Corporation, the doctrine of res
judicata still applies because the judgment in said case (C.C. No. 17939) is conclusive between the parties
and their successors-in-interest (Vda. de Buncio vs. Estate of the late Anita de Leon). The herein defendant
is the successor-in-interest of Limpan Investment Corporation as shown by the "Deed of Assignment
Exchange" executed on June 13, 1990.

WHEREFORE, defendant's motion for reconsideration is hereby granted. The order dated February 4, 1994
is vacated and set aside.

This case is hereby dismissed. No pronouncement as to costs.

SO ORDERED. 5

Factual Antecedents

Pursuant to Sangguniang Bayan Resolution No. 93-95, Series of 1993, 6 the Municipality of Parañaque
filed on September 20, 1993, a Complaint for expropriation 7 against Private Respondent V.M. Realty
Corporation over two parcels of land (Lots 2-A-2 and 2-B-1 of Subdivision Plan Psd-17917), with a
combined area of about 10,000 square meters, located at Wakas, San Dionisio, Parañaque, Metro Manila,
and covered by Torrens Certificate of Title No. 48700. Allegedly, the complaint was filed "for the purpose of
alleviating the living conditions of the underprivileged by providing homes for the homeless through a
socialized housing project." 8 Parenthetically, it was also for this stated purpose that petitioner, pursuant to
its Sangguniang Bayan Resolution No. 577, Series of 1991, 9 previously made an offer to enter into a
negotiated sale of the property with private respondent, which the latter did not accept. 10

Finding the Complaint sufficient in form and substance, the Regional Trial Court of Makati, Branch 134,
issued an Order dated January 10, 1994, 11 giving it due course. Acting on petitioner's motion, said court
issued an Order dated February 4, 1994, 12 authorizing petitioner to take possession of the subject property
upon deposit with its clerk of court of an amount equivalent to 15 percent of its fair market value based on
its current tax declaration.
On February 21, 1994, private respondent filed its Answer containing affirmative defenses and a
counterclaim, 13 alleging in the main that (a) the complaint failed to state a cause of action because it was
filed pursuant to a resolution and not to an ordinance as required by RA 7160 (the Local Government Code);
and (b) the cause of action, if any, was barred by a prior judgment or res judicata. On private respondent's
motion, its Answer was treated as a motion to dismiss. 14 On March 24, 1991, 15 petitioner filed its
opposition, stressing that the trial court's Order dated February 4, 1994 was in accord with Section 19 of
RA 7160, and that the principle of res judicata was not applicable.

Thereafter, the trial court issued its August 9, 1994 Resolution 16 nullifying its February 4, 1994 Order and
dismissing the case. Petitioner's motions for reconsideration and transfer of venue were denied by the trial
court in a Resolution dated December 2, 1994. 17 Petitioner then appealed to Respondent Court, raising
the following issues:

1. Whether or not the Resolution of the Parañaque Municipal Council No. 93-95, Series of 1993 is a
substantial compliance of the statutory requirement of Section 19, R.A. 7180 [sic] in the exercise of the
power of eminent domain by the plaintiff-appellant.

2. Whether or not the complaint in this case states no cause of action.

3. Whether or not the strict adherence to the literal observance to the rule of procedure resulted in
technicality standing in the way of substantial justice.

4. Whether or not the principle of res judicata is applicable to the present case. 18

As previously mentioned, the Court of Appeals affirmed in toto the trial court's Decision. Respondent Court,
in its assailed Resolution promulgated on January 8, 1997, 19 denied petitioner's Motion for
Reconsideration for lack of merit.

Hence, this appeal. 20

The Issues

Before this Court, petitioner posits two issues, viz.:

1. A resolution duly approved by the municipal council has the same force and effect of an ordinance and
will not deprive an expropriation case of a valid cause of action.

2. The principle of res judicata as a ground for dismissal of case is not applicable when public interest is
primarily involved. 21

The Court's Ruling

The petition is not meritorious.

First Issue:

Resolution Different from an Ordinance

Petitioner contends that a resolution approved by the municipal council for the purpose of initiating an
expropriation case "substantially complies with the requirements of the law" 22 because the terms
"ordinance" and "resolution" are synonymous for "the purpose of bestowing authority [on] the local
government unit through its chief executive to initiate the expropriation proceedings in court in the exercise
of the power of eminent domain." 23 Petitioner seeks to bolster this contention by citing Article 36, Rule VI
of the Rules and Regulations Implementing the Local Government Code, which provides. "If the LGU fails
to acquire a private property for public use, purpose, or welfare through purchase, the LGU may expropriate
said property through a resolution of the Sanggunian authorizing its chief executive to initiate expropriation
proceedings." 24 (Emphasis supplied.)

The Court disagrees. The power of eminent domain is lodged in the legislative branch of government, which
may delegate the exercise thereof to LGUs, other public entities and public utilities. 25 An LGU may
therefore exercise the power to expropriate private property only when authorized by Congress and subject
to the latter's control and restraints, imposed "through the law conferring the power or in other legislations."
26 In this case, Section 19 of RA 7160, which delegates to LGUs the power of eminent domain, also lays
down the parameters for its exercise. It provides as follows:

Sec. 19. Eminent Domain. A local government unit may, through its chief executive and acting pursuant to
an ordinance, exercise the power of eminent domain for public use, or purpose, or welfare for the benefit
of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the
Constitution and pertinent laws: Provided, however, That the power of eminent domain may not be
exercised unless a valid and definite offer has been previously made to the owner, and such offer was not
accepted: Provided, further, That the local government unit may immediately take possession of the
property upon the filing of the expropriation proceedings and upon making a deposit with the proper court
of at least fifteen percent (15%) of the fair market value of the property based on the current tax declaration
of the property to be expropriated: Provided, finally, That, the amount to be paid for the expropriated
property shall be determined by the proper court, based on the fair market value at the time of the taking of
the property. (Emphasis supplied)

Thus, the following essential requisites must concur before an LGU can exercise the power of eminent
domain

1. An ordinance is enacted by the local legislative council authorizing the local chief executive, in behalf of
the LGU, to exercise the power of eminent domain or pursue expropriation proceedings over a particular
private property.

2. The power of eminent domain is exercised for public use, purpose or welfare, or for the benefit of the
poor and the landless.

3. There is payment of just compensation, as required under Section 9, Article III of the Constitution, and
other pertinent laws.

4. A valid and definite offer has been previously made to the owner of the property sought to be expropriated,
but said offer was not accepted. 27

In the case at bar, the local chief executive sought to exercise the power of eminent domain pursuant to a
resolution of the municipal council. Thus, there was no compliance with the first requisite that the mayor be
authorized through an ordinance. Petitioner cites Camarines Sur vs. Court of Appeals 28 to show that a
resolution may suffice to support the exercise of eminent domain by an LGU. 29 This case, however, is not
in point because the applicable law at that time was BP 337, 30 the previous Local Government Code,
which had provided that a mere resolution would enable an LGU to exercise eminent domain. In contrast,
RA 7160, 31 the present Local Government Code which was already in force when the Complaint for
expropriation was filed, explicitly required an ordinance for this purpose.

We are not convinced by petitioner's insistence that the terms "resolution" and "ordinance" are synonymous.
A municipal ordinance is different from a resolution. An ordinance is a law, but a resolution is merely a
declaration of the sentiment or opinion of a lawmaking body on a specific matter. 32 An ordinance
possesses a general and permanent character, but a resolution is temporary in nature. Additionally, the two
are enacted differently - a third reading is necessary for an ordinance, but not for a resolution, unless
decided otherwise by a majority of all the Sanggunian members. 33

If Congress intended to allow LGUs to exercise eminent domain through a mere resolution, it would have
simply adopted the language of the previous Local Government Code. But Congress did not. In a clear
divergence from the previous Local Government Code, Section 19 of RA 7160 categorically requires that
the local chief executive act pursuant to an ordinance. Indeed, "[l]egislative intent is determined principally
from the language of a statute. Where the language of a statute is clear and unambiguous, the law is applied
according to its express terms, and interpretation would be resorted to only where a literal interpretation
would be resorted to only where a literal interpretation would be either impossible or absurd or would lead
to an injustice." 34 In the instant case, there is no reason to depart from this rule, since the law requiring an
ordinance is not at all impossible, absurd, or unjust.

Moreover, the power of eminent domain necessarily involves a derogation of a fundamental or private right
of the people. 35 Accordingly, the manifest change in the legislative language - from "resolution" under BP
337 to "ordinance" under RA 7160 - demands a strict construction. "No species of property is held by
individuals with greater tenacity, and is guarded by the Constitution and laws more sedulously, than the
right to the freehold of inhabitants. When the legislature interferes with that right and, for greater public
purposes, appropriates the land of an individual without his consent, the plain meaning of the law should
not be enlarged by doubtful interpretation." 36

Petitioner relies on Article 36, Rule VI of the Implementing Rules, which requires only a resolution to
authorize an LGU to exercise eminent domain. This is clearly misplaced, because Section 19 of RA 7160,
the law itself, surely prevails over said rule which merely seeks to implement it. 37 It is axiomatic that the
clear letter of the law is controlling and cannot be amended by a mere administrative rule issued for its
implementation. Besides, what the discrepancy seems to indicate is a mere oversight in the wording of the
implementing rules, since Article 32, Rule VI thereof, also requires that, in exercising the power of eminent
domain, the chief executive of the LGU act pursuant to an ordinance.
In this ruling, the Court does not diminish the policy embodied in Section 2, Article X of the Constitution,
which provides that "territorial and political subdivisions shall enjoy local autonomy." It merely upholds the
law as worded in RA 7160. We stress that an LGU is created by law and all its powers and rights are
sourced therefrom. It has therefore no power to amend or act beyond the authority given and the limitations
imposed on it by law. Strictly speaking, the power of eminent domain delegated to an LGU is in reality not
eminent but "inferior" domain, since it must conform to the limits imposed by the delegation, and thus
partakes only of a share in eminent domain. 38 Indeed, "the national legislature is still the principal of the
local government units, which cannot defy its will or modify or violate it." 39

Complaint Does Not

State a Cause of Action

In its Brief filed before Respondent Court, petitioner argues that its Sangguniang Bayan passed an
ordinance on October 11, 1994 which reiterated its Resolution No. 93-35, Series of 1993, and ratified all
the acts of its mayor regarding the subject expropriation. 40

This argument is bereft of merit. In the first place, petitioner merely alleged the existence of such an
ordinance, but it did not present any certified true copy thereof. In the second place, petitioner did not raise
this point before this Court. In fact, it was mentioned by private respondent, and only in passing. 41 In any
event, this allegation does not cure the inherent defect of petitioner's Complaint for expropriation filed on
September 23, 1993. It is hornbook doctrine that

. . . in a motion to dismiss based on the ground that the complaint fails to state a cause of action, the
question submitted before the court for determination is the sufficiency of the allegations in the complaint
itself. Whether those allegations are true or not is beside the point, for their truth is hypothetically admitted
by the motion. The issue rather is: admitting them to be true, may the court render a valid judgment in
accordance with the prayer of the complaint? 42

The fact that there is no cause of action is evident from the face of the Complaint for expropriation which
was based on a mere resolution. The absence of an ordinance authorizing the same is equivalent to lack
of cause of action. Consequently, the Court of Appeals committed no reversible error in affirming the trial
court's Decision which dismissed the expropriation suit.

Second Issue:

Eminent Domain Not Barred by Res Judicata

As correctly found by the Court of Appeals 43 and the trial court, 44 all the requisites for the application of
res judicata are present in this case. There is a previous final judgment on the merits in a prior expropriation
case involving identical interests, subject matter and cause of action, which has been rendered by a court
having jurisdiction over it.

Be that as it may, the Court holds that the principle of res judicata, which finds application in generally all
cases and proceedings, 45 cannot bar the right of the State or its agent to expropriate private property. The
very nature of eminent domain, as an inherent power of the State, dictates that the right to exercise the
power be absolute and unfettered even by a prior judgment or res judicata. The scope of eminent domain
is plenary and, like police power, can "reach every form of property which the State might need for public
use." 46 "All separate interests of individuals in property are held of the government under this tacit
agreement or implied reservation. Notwithstanding the grant to individuals, the eminent domain, the highest
and most exact idea of property, remains in the government, or in the aggregate body of the people in their
sovereign capacity; and they have the right to resume the possession of the property whenever the public
interest requires it." 47 Thus, the State or its authorized agent cannot be forever barred from exercising
said right by reason alone of previous non-compliance with any legal requirement.

While the principle of res judicata does not denigrate the right of the State to exercise eminent domain, it
does apply to specific issues decided in a previous case. For example, a final judgment dismissing an
expropriation suit on the ground that there was no prior offer precludes another suit raising the same issue;
it cannot, however, bar the State or its agent from thereafter complying with this requirement, as prescribed
by law, and subsequently exercising its power of eminent domain over the same property. 48 By the same
token, our ruling that petitioner cannot exercise its delegated power of eminent domain through a mere
resolution will not bar it from reinstituting similar proceedings, once the said legal requirement and, for that
matter, all others are properly complied with. Parenthetically and by parity of reasoning, the same is also
true of the principle of "law of the case." In Republic vs. De Knecht, 49 the Court ruled that the power of the
State or its agent to exercise eminent domain is not diminished by the mere fact that a prior final judgment
over the property to be expropriated has become the law of the case as to the parties. The State or its
authorized agent may still subsequently exercise its right to expropriate the same property, once all legal
requirements are complied with. To rule otherwise will not only improperly diminish the power of eminent
domain, but also clearly defeat social justice.

WHEREFORE, the petition is hereby DENIED without prejudice to petitioner's proper exercise of its
power of eminent domain over subject property. Costs against petitioner.

SO ORDERED.
G.R. No. 95279 July 25, 1991

ESTATE OF GREGORIA FRANCISCO, herein represented by SILVESTRE F. TAN, Administrator,

petitioner,

vs.

HON. COURT OF APPEALS, HON. SALVADOR A. MEMORACION, in his capacity as Presiding Judge of
the Regional Trial Court of Isabela, Basilan Province, Branch 2, MUNICIPALITY OF ISABELA, Basilan
Province, herein represented by BENJAMIN VALENCIA, in his capacity as Municipal Mayor, Isabela,
Basilan Province, ROGELIO L. IGOT, FELICISIMO PIOQUINTO, DANIEL PADINAS, ANTONIO
CABANGON, FELIX ROXAS, BENJAMIN FERRER, GREGORIO TABADA, EFREN DELOS REYES,
FLORENCIO HUGO, JESUS FRANCISCO, ALFREDO TUBILAG, PABLO ANDRES, respondents.

Bienvenido G. Martin for petitioner.

Laurencio Saavedra for private respondents.

MELENCIO-HERRERA, J.:

Litigated herein is a quonset building situated in Port Area, Strong Boulevard, Isabela, Basilan, which was
ordered demolished by respondent Municipal Mayor, Benjamin Valencia. Respondent municipal employees
implemented the demolition, for which reason they are also impleaded.

The quonset was constructed by the American Liberation Forces in 1944. It was purchased in 1946 by
Gregoria Francisco, who died in 1976. It stands on a lot owned by the Philippine Ports Authority and faces
the municipal wharf. By virtue of Proclamation No. 83 issued by President Elpidio Quirino, said land was
declared for the exclusive use of port facilities.

On 10 January 1989, the Philippine Ports Authority (Port of Zamboanga) issued to Tan Gin San, surviving
spouse of Gregoria Francisco, a permit to occupy the lot where the building stands for a period of one (1)
year, to expire on 31 December 1989. The permittee was using the quonset for the storage of copra

On 8 May 1989, Respondent Mayor, through respondent Municipal Action Officer, notified Tan Gin San by
mail to remove or relocate its quonset building, citing Zoning Ordinance No. 147 of the municipality; noting
its antiquated and dilapidated structure; and. stressing the "clean-up campaign on illegal squatters and
unsanitary surroundings along Strong Boulevard." This was followed by another letter of 19 May 1989 of
the same tenor.

Since the notifications remained unheeded by petitioner, Respondent Mayor ordered the demolition on 24
May 1989.

Aggrieved, petitioner sought a Writ of Prohibition with Injunction and Damages before the Regional Trial
Court of Basilan, Branch 2 (docketed as S.P. No. 4).

On 7 August 1989, the Trial Court1 denied the Writ of Prohibition and upheld the power of respondent Mayor
to order the demolition without judicial authority, adverting to Zoning Ordinance No. 147 of the Municipality
of Isabela, Basilan. Petitioner duly interposed an appeal.

On 6 September 1989, petitioner's quonset building was completely demolished (Rollo, p. 49). In its place
sprang shanties and nipa huts, photographs of which have been attached to petitioner's Memorandum.

On 25 January 1990, the Court of Appeals (in CA-G.R. SP No. 18822)2 initially reversed the Trial Court and
issued a Writ of Prohibition. It ruled that Respondent Mayor was not vested with power to order summarily,
and without any judicial proceeding, the demolition of the quonset building, which was not a nuisance per
se and that petitioner is in legal possession of the land on which the building stands by virtue of the permit
issued by the Philippine Ports Authority (Zamboanga Province). The restoration to petitioner of the building
materials removed upon demolition, and the payment to it of attorney's fees of P10,000.00, were also
ordered.

However, upon reconsideration sought by reswever, upon reconsideration sought by respondent officials,
Respondent Court3 reversed itself on 13 June 1990 stating that "although Municipal Mayor Valencia initially
issued an order demolition without judicial process, the deficiency was remedied when appellant (petitioners
herein) filed a petition for prohibition and injunction and was heard on oral argument after appellees
(respondent officials) filed their answer." Respondent Court then quashed the Writ of Prohibition and set
aside the order of restitution and payment of attorney's fees.
Petitioner's plea for reconsideration having been denied, it is now before us seeking a reversal.

The focal issue for determination is whether or not Respondent Mayor could summarily, without judicial
process, order the demolition of petitioner's quonset building.

Respondent justify the demolition in the exercise of police power and for reasons of health, safety and
general welfare. It also relies on Ordinance No. 147 (CA Records, pp. 85-104) of the Municipality of Isabela.
For its part petitioner consistently denies to the Mayor, such power, invoking provisions of the Local
Government Code.

Ordinance No. 147, enacted on 27 December 1977, and relied upon by respondents, is entitled "An
Ordinance Establishing Comprehensive Zoning Regulations for the Municipality of Isabela . . ." It is not
disputed that the quonset building, which is being used for the storage of copra, is located outside the zone
for warehouses. It is referred to in Ordinance as a non-conforming structure, which should be relocated.
And in the event that an immediate relocation of the building can not be accomplished, Section 16 of the
Ordinance provides:

A certificate of non-conformance for all non-conforming uses shall be applied for by the owner or agent of
the property involved within twelve (12) months from the approval of this Ordinance, otherwise the non-
conforming use may be condemned or removed at the owner's expense.

Even granting that petitioner failed to apply for a Certificate of Non-conformance, the foregoing provision
should not be interpreted as authorizing the summary removal of a non-conforming building by the
municipal government. For if it does, it must be struck down for being in contravention of the requirements
of due process, as originally held by the respondent Court.

Moreover, the enforcement and administration of the provisions of the Ordinance resides with the Zoning
Administrator (Article VII, Secs. 1 and 2, Ordinance No. 147). It is said official who may call upon the City
Fiscal to institute the necessary legal proceedings to enforce the provisions of the Ordinance (id., Sec. 2,
Ibid.). And any person aggrieved by the decision of the Zoning Administrator regarding the enforcement of
the Ordinance may appeal to the Board of Zoning Appeals (id., Sec. 7, Ibid.).

That a summary remedy can not be resorted to is further evident from the penal provisions of said
Ordinance, reading:

Any person who violates any of the provisions of this ordinance shall, upon conviction, be punished by a
fine of not less than fifty pesos (P50.00) but not more than two hundred pesos (P200.00) or by imprisonment
of not less than one (1) month but not exceeding six (6) months, or both, at the discretion of the Court . . .
(ibid., Sec. 11). [Emphasis ours].

Violation of a municipal ordinance neither empowers the Municipal Mayor to avail of extra-judicial
remedies.1avvphi1 On the contrary, the Local Government Code imposes upon him the duty "to cause to
be instituted judicial proceedings in connection with the violation of ordinances" (Local Government Code,
Sec. 141 [2] [t]).

Respondents can not seek cover under the general welfare clause authorizing the abatement of nuisances
without judicial proceedings. That tenet applies to a nuisance per se or one which affects the immediate
safety of persons and property and may be summarily abated under the undefined law of necessity
(Monteverde v. Generoso, 52 Phil. 123 [1982]). The storage of copra in the quonset building is a legitimate
business. By its nature, it can not be said to be injurious to rights of property, of health or of comfort of the
community.1âwphi1 If it be a nuisance per accidens it may be so proven in a hearing conducted for that
purpose. It is not per se a nuisance warranting its summary abatement without judicial intervention.

The provincial governor, district engineer or district health officer is not authorized to destroy private property
consisting of dams and fishponds summarily and without any judicial proceedings whatever under the
pretense that such private property constitutes a nuisance. A dam or a fishery constructed in navigable
rivers is not a nuisance per se. A dam or fishpond may be a nuisance per accidens where it endangers or
impairs the health or depreciates property by causing water to become stagnant. (Monteverde v. Generoso,
supra).

While the Sangguniang Bayan may provide for the abatement of a nuisance (Local Government Code, Sec.
149 [ee]), it can not declare a particular thing as a nuisance per se and order its condemnation. The
nuisance can only be so adjudged by judicial determination.

[Municipal councils] do not have the power to find as a fact that a particular thing is a nuisance when such
thing is not a nuisance per se nor can they authorize the extra judicial condemnation and destruction of that
as a nuisance which, in its nature, situation or use is not such. These things must be determined in the
ordinary courts of law. In the present case, . . . the ice factory of the plaintiff is not a nuisance per se. It is a
legitimate industry . . . . If it be in fact a nuisance due to the manner of its operation, that question cannot
be determined by a mere resolution of the board. The petitioner is entitled to a fair and impartial heating
before a judicial tribunal. (Iloilo Cold Storage v. Municipal Council, 24 Phil. 47 [1913]).

Petitioner was in lawful possession of the lot and quonset building by virtue of a permit from the Philippine
Ports Authority (Port of Zamboanga) when demolition was effected. It was not squatting on public land. Its
property was not of trifling value. It was entitled to an impartial hearing before a tribunal authorized to decide
whether the quonset building did constitute a nuisance in law. There was no compelling necessity for
precipitate action. It follows then that respondent public officials of the Municipality of Isabela, Basilan,
transcended their authority in abating summarily petitioner's quonset building. They had deprived petitioner
of its property without due process of law. The fact that petitioner filed a suit for prohibition and was
subsequently heard thereon will not cure the defect, as opined by the Court of Appeals, the demolition
having been a fait accompli prior to hearing and the authority to demolish without a judicial order being a
prejudicial issue.

For the precipitate demolition, therefore, petitioner should be entitled to just compensation, the amount of
which is for the Trial Court to determine. We are not inclined to grant petitioner damages, however, as it
simply ignored the demand to remove or relocate its quonset building.

WHEREFORE, the judgment under review of respondent Court of Appeals, dated 13 June 1990, is SET
ASIDE; its original Decision, promulgated on 25 January 1990, is REINSTATED; and this case is ordered
REMANDED to the Regional Trial Court of Basilan, Branch 2, for the determination of the just compensation
due petitioner for the demolition of its quonset building.

SO ORDERED.
G.R. No. 92389 September 11, 1991

HON. JEJOMAR C. BINAY and the MUNICIPALITY OF MAKATI, petitioners,

vs.
HON. EUFEMIO DOMINGO and the COMMISSION ON AUDIT, respondents.

Jejomar C. Binay for himself and for his co-petitioner.

Manuel D. Tamase and Rafael C. Marquez for respondents.

PARAS, J.:

The only pivotal issue before Us is whether or not Resolution No. 60, re-enacted under Resolution No. 243,
of the Municipality of Makati is a valid exercise of police power under the general welfare clause.

The pertinent facts are:

On September 27, 1988, petitioner Municipality, through its Council, approved Resolution No. 60 which
reads:

A RESOLUTION TO CONFIRM AND/OR RATIFY THE ONGOING BURIAL ASSISTANCE PROGRAM

INITIATED BY THE OFFICE OF THE MAYOR, OF EXTENDING FINANCIAL ASSISTANCE OF FIVE
HUNDRED PESOS (P500.00) TO A BEREAVED FAMILY, FUNDS TO BE TAKEN OUT OF
UNAPPROPRIATED AVAILABLE FUNDS EXISTING IN THE MUNICIPAL TREASURY. (Rollo, Annnex "A"
p. 39)

Qualified beneficiaries, under the Burial Assistance Program, are bereaved families of Makati whose gross
family income does not exceed two thousand pesos (P2,000.00) a month. The beneficiaries, upon fulfillment
of other requirements, would receive the amount of five hundred pesos (P500.00) cash relief from the
Municipality of Makati. (Reno, Annex "13", p. 41)

Metro Manila Commission approved Resolution No. 60. Thereafter, the municipal secretary certified a
disbursement fired of four hundred thousand pesos (P400,000.00) for the implementation of the Burial
Assistance Program. (Rollo, Annex "C", p. 43).

Resolution No. 60 was referred to respondent Commission on Audit (COA) for its expected allowance in
audit. Based on its preliminary findings, respondent COA disapproved Resolution No. 60 and disallowed in
audit the disbursement of finds for the implementation thereof. (Rollo, Annex "D", P. 44)

Two letters for reconsideration (Annexes "E" and "F", Rollo, pp. 45 and 48, respectively) filed by petitioners
Mayor Jejomar Binay, were denied by respondent in its Decision No. 1159, in the following manner:

Your request for reconsideration is predicated on the following grounds, to wit:

1. Subject Resolution No. 60, s. 1988, of the Municipal Council of Makati and the intended disbursements
fall within the twin principles of 'police power and parens patriae and

2. The Metropolitan Manila Commission (MMC), under a Certification, dated June 5, 1989, has already
appropriated the amount of P400,000.00 to implement the Id resolution, and the only function of COA on
the matter is to allow the financial assistance in question.

The first contention is believed untenable. Suffice it to state that:

a statute or ordinance must have a real substantial, or rational relation to the public safety, health, morals,
or general welfare to be sustained as a legitimate exercise of the police power. The mere assertion by the
legislature that a statute relates to the public health, safety, or welfare does not in itself bring the statute
within the police power of a state for there must always be an obvious and real connection between the
actual provisions of a police regulations and its avowed purpose, and the regulation adopted must be
reasonably adapted to accomplish the end sought to be attained. 16 Am. Jur 2d, pp. 542-543; emphasis
supplied).

Here, we see no perceptible connection or relation between the objective sought to be attained under
Resolution No. 60, s. 1988, supra, and the alleged public safety, general welfare, etc. of the inhabitants of
Makati.

Anent the second contention, let it be stressed that Resolution No. 60 is still subject to the limitation that
the expenditure covered thereby should be for a public purpose, i.e., that the disbursement of the amount
of P500.00 as burial assistance to a bereaved family of the Municipality of Makati, or a total of P400,000.00
appropriated under the Resolution, should be for the benefit of the whole, if not the majority, of the
inhabitants of the Municipality and not for the benefit of only a few individuals as in the present case. On
this point government funds or property shall be spent or used solely for public purposes. (Cf. Section 4[2],
P.D. 1445). (pp. 50-51, Rollo)

Bent on pursuing the Burial Assistance Program the Municipality of Makati, through its Council, passed
Resolution No. 243, re-affirming Resolution No. 60 (Rollo, Annex "H", p. 52).

However, the Burial Assistance Program has been stayed by COA Decision No. 1159. Petitioner, through
its Mayor, was constrained to file this special civil action of certiorari praying that COA Decision No. 1159
be set aside as null and void.

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 ahenum 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 are 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, et 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, et al. vs. IAC, supra).

In the case at bar, COA is of the position that there is "no perceptible connection or relation between the
objective sought to be attained under Resolution No. 60, s. 1988, supra, and the alleged public safety,
general welfare. etc. of the inhabitants of Makati." (Rollo, Annex "G", p. 51).

Apparently, COA tries to re-define the scope of police power by circumscribing its exercise to "public safety,
general welfare, etc. of the inhabitants of Makati."

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, safety, 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.

COA's additional objection is based on its contention that "Resolution No. 60 is still subject to the limitation
that the expenditure covered thereby should be for a public purpose, ... should be for the benefit of the
whole, if not the majority, of the inhabitants of the Municipality and not for the benefit of only a few individuals
as in the present case." (Rollo, Annex "G", p. 51).

COA is not attuned to the changing of the times. Public purpose is not unconstitutional merely because it
incidentally benefits a limited number of persons. As correctly pointed out by the Office of the Solicitor
General, "the drift is towards social welfare legislation geared towards state policies to provide adequate
social services (Section 9, Art. II, Constitution), the promotion of the general welfare (Section 5, Ibid) social
justice (Section 10, Ibid) as well as human dignity and respect for human rights. (Section 11, Ibid."
(Comment, p. 12)

The care for the poor is generally recognized as a public duty. The support for the poor has long been an
accepted exercise of police power in the promotion of the common good.

There is no violation of the equal protection clause in classifying paupers as subject of legislation. Paupers
may be reasonably classified. Different groups may receive varying treatment. Precious to the hearts of our
legislators, down to our local councilors, is the welfare of the paupers. Thus, statutes have been passed
giving rights and benefits to the disabled, emancipating the tenant-farmer from the bondage of the soil,
housing the urban poor, etc.

Resolution No. 60, re-enacted under Resolution No. 243, of the Municipality of Makati is a paragon of the
continuing program of our government towards social justice. The Burial Assistance Program is a relief of
pauperism, though not complete. The loss of a member of a family is a painful experience, and it is more
painful for the poor to be financially burdened by such death. Resolution No. 60 vivifies the very words of
the late President Ramon Magsaysay 'those who have less in life, should have more in law." This decision,
however must not be taken as a precedent, or as an official go-signal for municipal governments to embark
on a philanthropic orgy of inordinate dole-outs for motives political or otherwise.

PREMISES CONSIDERED, and with the afore-mentioned caveat, this petition is hereby GRANTED and
the Commission on Audit's Decision No. 1159 is hereby SET ASIDE.

SO ORDERED.
G.R. No. 91649 May 14, 1991

ATTORNEYS HUMBERTO BASCO, EDILBERTO BALCE, SOCRATES MARANAN AND LORENZO

SANCHEZ, petitioners,
vs.
PHILIPPINE AMUSEMENTS AND GAMING CORPORATION (PAGCOR), respondent.

H.B. Basco & Associates for petitioners.

Valmonte Law Offices collaborating counsel for petitioners.
Aguirre, Laborte and Capule for respondent PAGCOR.

PARAS, J.:

A TV ad proudly announces:

"The new PAGCOR — responding through responsible gaming."

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

A. It constitutes a waiver of a right prejudicial to a third person with a right recognized by law. It
waived the Manila City government's right to impose taxes and license fees, which is recognized
by law;

B. For the same reason stated in the immediately preceding paragraph, the law has intruded into
the local government's right to impose local taxes and license fees. This, in contravention of the
constitutionally enshrined principle of local autonomy;

C. It violates the equal protection clause of the constitution in that it legalizes PAGCOR —
conducted gambling, while most other forms of gambling are outlawed, together with prostitution,
drug trafficking and other vices;

D. It violates the avowed trend of the Cory government away from monopolistic and crony
economy, and toward free enterprise and privatization. (p. 2, Amended Petition; p. 7, Rollo)

In their Second Amended Petition, petitioners also claim that PD 1869 is contrary to the declared national
policy of the "new restored democracy" and the people's will as expressed in the 1987 Constitution. The
decree is said to have a "gambling objective" and therefore is contrary to Sections 11, 12 and 13 of Article
II, Sec. 1 of Article VIII and Section 3 (2) of Article XIV, of the present Constitution (p. 3, Second
Amended Petition; p. 21, Rollo).

The procedural issue is whether petitioners, as taxpayers and practicing lawyers (petitioner Basco being
also the Chairman of the Committee on Laws of the City Council of Manila), can question and seek the
annulment of PD 1869 on the alleged grounds mentioned above.

The Philippine Amusements and Gaming Corporation (PAGCOR) was created by virtue of P.D. 1067-A
dated January 1, 1977 and was granted a franchise under P.D. 1067-B also dated January 1, 1977 "to
establish, operate and maintain gambling casinos on land or water within the territorial jurisdiction of the
Philippines." Its operation was originally conducted in the well known floating casino "Philippine Tourist."
The operation was considered a success for it proved to be a potential source of revenue to fund
infrastructure and socio-economic projects, thus, P.D. 1399 was passed on June 2, 1978 for PAGCOR to
fully attain this objective.

Subsequently, on July 11, 1983, PAGCOR was created under P.D. 1869 to enable the Government to
regulate and centralize all games of chance authorized by existing franchise or permitted by law, under
the following declared policy —

Sec. 1. Declaration of Policy. — It is hereby declared to be the policy of the State to centralize
and integrate all games of chance not heretofore authorized by existing franchises or permitted
by law in order to attain the following objectives:

(a) To centralize and integrate the right and authority to operate and conduct games of chance
into one corporate entity to be controlled, administered and supervised by the Government.
 (b) To establish and operate clubs and casinos, for amusement and recreation, including sports
gaming pools, (basketball, football, lotteries, etc.) and such other forms of amusement and
recreation including games of chance, which may be allowed by law within the territorial
jurisdiction of the Philippines and which will: (1) generate sources of additional revenue to fund
infrastructure and socio-civic projects, such as flood control programs, beautification, sewerage
and sewage projects, Tulungan ng Bayan Centers, Nutritional Programs, Population Control and
such other essential public services; (2) create recreation and integrated facilities which will
expand and improve the country's existing tourist attractions; and (3) minimize, if not totally
eradicate, all the evils, malpractices and corruptions that are normally prevalent on the conduct
and operation of gambling clubs and casinos without direct government involvement. (Section 1,
P.D. 1869)

To attain these objectives PAGCOR is given territorial jurisdiction all over the Philippines. Under its
Charter's repealing clause, all laws, decrees, executive orders, rules and regulations, inconsistent
therewith, are accordingly repealed, amended or modified.

It is reported that PAGCOR is the third largest source of government revenue, next to the Bureau of
Internal Revenue and the Bureau of Customs. In 1989 alone, PAGCOR earned P3.43 Billion, and directly
remitted to the National Government a total of P2.5 Billion in form of franchise tax, government's income
share, the President's Social Fund and Host Cities' share. In addition, PAGCOR sponsored other socio-
cultural and charitable projects on its own or in cooperation with various governmental agencies, and
other private associations and organizations. In its 3 1/2 years of operation under the present
administration, PAGCOR remitted to the government a total of P6.2 Billion. As of December 31, 1989,
PAGCOR was employing 4,494 employees in its nine (9) casinos nationwide, directly supporting the
livelihood of Four Thousand Four Hundred Ninety-Four (4,494) families.

But the petitioners, are questioning the validity of P.D. No. 1869. They allege that the same is "null and
void" for being "contrary to morals, public policy and public order," monopolistic and tends toward "crony
economy", and is violative of the equal protection clause and local autonomy as well as for running
counter to the state policies enunciated in Sections 11 (Personal Dignity and Human Rights), 12 (Family)
and 13 (Role of Youth) of Article II, Section 1 (Social Justice) of Article XIII and Section 2 (Educational
Values) of Article XIV of the 1987 Constitution.

This challenge to P.D. No. 1869 deserves a searching and thorough scrutiny and the most deliberate
consideration by the Court, involving as it does the exercise of what has been described as "the highest
and most delicate function which belongs to the judicial department of the government." (State v. Manuel,
20 N.C. 144; Lozano v. Martinez, 146 SCRA 323).

As We enter upon the task of passing on the validity of an act of a co-equal and coordinate branch of the
government We need not be reminded of the time-honored principle, deeply ingrained in our
jurisprudence, that a statute is presumed to be valid. Every presumption must be indulged in favor of its
constitutionality. This is not to say that We approach Our task with diffidence or timidity. Where it is clear
that the legislature or the executive for that matter, has over-stepped the limits of its authority under the
constitution, We should not hesitate to wield the axe and let it fall heavily, as fall it must, on the offending
statute (Lozano v. Martinez, supra).

In Victoriano v. Elizalde Rope Workers' Union, et al, 59 SCRA 54, the Court thru Mr. Justice Zaldivar
underscored the —

. . . thoroughly established principle which must be followed in all cases where questions of
constitutionality as obtain in the instant cases are involved. All presumptions are indulged in favor
of constitutionality; one who attacks a statute alleging unconstitutionality must prove its invalidity
beyond a reasonable doubt; that a law may work hardship does not render it unconstitutional; that
if any reasonable basis may be conceived which supports the statute, it will be upheld and the
challenger must negate all possible basis; that the courts are not concerned with the wisdom,
justice, policy or expediency of a statute and that a liberal interpretation of the constitution in favor
of the constitutionality of legislation should be adopted. (Danner v. Hass, 194 N.W. 2nd 534, 539;
Spurbeck v. Statton, 106 N.W. 2nd 660, 663; 59 SCRA 66; see also e.g. Salas v. Jarencio, 46
SCRA 734, 739 [1970]; Peralta v. Commission on Elections, 82 SCRA 30, 55 [1978]; and Heirs of
Ordona v. Reyes, 125 SCRA 220, 241-242 [1983] cited in Citizens Alliance for Consumer
Protection v. Energy Regulatory Board, 162 SCRA 521, 540)

Of course, there is first, the procedural issue. The respondents are questioning the legal personality of
petitioners to file the instant petition.
Considering however the importance to the public of the case at bar, and in keeping with the Court's duty,
under the 1987 Constitution, to determine whether or not the other branches of government have kept
themselves within the limits of the Constitution and the laws and that they have not abused the discretion
given to them, the Court has brushed aside technicalities of procedure and has taken cognizance of this
petition. (Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas Inc. v. Tan, 163 SCRA 371)

With particular regard to the requirement of proper party as applied in the cases before us, We
hold that the same is satisfied by the petitioners and intervenors because each of them has
sustained or is in danger of sustaining an immediate injury as a result of the acts or measures
complained of. And even if, strictly speaking they are not covered by the definition, it is still within
the wide discretion of the Court to waive the requirement and so remove the impediment to its
addressing and resolving the serious constitutional questions raised.

In the first Emergency Powers Cases, ordinary citizens and taxpayers were allowed to question
the constitutionality of several executive orders issued by President Quirino although they were
involving only an indirect and general interest shared in common with the public. The Court
dismissed the objection that they were not proper parties and ruled that "the transcendental
importance to the public of these cases demands that they be settled promptly and definitely,
brushing aside, if we must technicalities of procedure." We have since then applied the exception
in many other cases. (Association of Small Landowners in the Philippines, Inc. v. Sec. of Agrarian
Reform, 175 SCRA 343).

Having disposed of the procedural issue, We will now discuss the substantive issues raised.

Gambling in all its forms, unless allowed by law, is generally prohibited. But the prohibition of gambling
does not mean that the Government cannot regulate it in the exercise of its police power.

The concept of police power is well-established in this jurisdiction. It has been defined as the "state
authority to enact legislation that may interfere with personal liberty or property in order to promote the
general welfare." (Edu v. Ericta, 35 SCRA 481, 487) As defined, it consists of (1) an imposition or restraint
upon liberty or property, (2) in order to foster the common good. It is not capable of an exact definition but
has been, purposely, veiled in general terms to underscore its all-comprehensive embrace. (Philippine
Association of Service Exporters, Inc. v. Drilon, 163 SCRA 386).

Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future where it could
be done, provides enough room for an efficient and flexible response to conditions and circumstances
thus assuming the greatest benefits. (Edu v. Ericta, supra)

It finds no specific Constitutional grant for the plain reason that it does not owe its origin to the charter.
Along with the taxing power and eminent domain, it is inborn in the very fact of statehood and
sovereignty. It is a fundamental attribute of government that has enabled it to perform the most vital
functions of governance. Marshall, to whom the expression has been credited, refers to it succinctly as
the plenary power of the state "to govern its citizens". (Tribe, American Constitutional Law, 323, 1978).
The police power of the State is a power co-extensive with self-protection and is most aptly termed the
"law of overwhelming necessity." (Rubi v. Provincial Board of Mindoro, 39 Phil. 660, 708) It is "the most
essential, insistent, and illimitable of powers." (Smith Bell & Co. v. National, 40 Phil. 136) It is a dynamic
force that enables the state to meet the agencies of the winds of change.

What was the reason behind the enactment of P.D. 1869?

P.D. 1869 was enacted pursuant to the policy of the government to "regulate and centralize thru an
appropriate institution all games of chance authorized by existing franchise or permitted by law" (1st
whereas clause, PD 1869). As was subsequently proved, regulating and centralizing gambling operations
in one corporate entity — the PAGCOR, was beneficial not just to the Government but to society in
general. It is a reliable source of much needed revenue for the cash strapped Government. It provided
funds for social impact projects and subjected gambling to "close scrutiny, regulation, supervision and
control of the Government" (4th Whereas Clause, PD 1869). With the creation of PAGCOR and the direct
intervention of the Government, the evil practices and corruptions that go with gambling will be minimized
if not totally eradicated. Public welfare, then, lies at the bottom of the enactment of PD 1896.

Petitioners contend that P.D. 1869 constitutes a waiver of the right of the City of Manila to impose taxes
and legal fees; that the exemption clause in P.D. 1869 is violative of the principle of local autonomy. They
must be referring to Section 13 par. (2) of P.D. 1869 which exempts PAGCOR, as the franchise holder
from paying any "tax of any kind or form, income or otherwise, as well as fees, charges or levies of
whatever nature, whether National or Local."
 (2) Income and other taxes. — a) Franchise Holder: No tax of any kind or form, income or
otherwise as well as fees, charges or levies of whatever nature, whether National or Local, shall
be assessed and collected under this franchise from the Corporation; nor shall any form or tax or
charge attach in any way to the earnings of the Corporation, except a franchise tax of five (5%)
percent of the gross revenues or earnings derived by the Corporation from its operations under
this franchise. Such tax shall be due and payable quarterly to the National Government and shall
be in lieu of all kinds of taxes, levies, fees or assessments of any kind, nature or description,
levied, established or collected by any municipal, provincial or national government authority
(Section 13 [2]).

Their contention stated hereinabove is without merit for the following reasons:

(a) The City of Manila, being a mere Municipal corporation has no inherent right to impose taxes (Icard v.
City of Baguio, 83 Phil. 870; City of Iloilo v. Villanueva, 105 Phil. 337; Santos v. Municipality of Caloocan,
7 SCRA 643). Thus, "the Charter or statute must plainly show an intent to confer that power or the
municipality cannot assume it" (Medina v. City of Baguio, 12 SCRA 62). Its "power to tax" therefore must
always yield to a legislative act which is superior having been passed upon by the state itself which has
the "inherent power to tax" (Bernas, the Revised [1973] Philippine Constitution, Vol. 1, 1983 ed. p. 445).

(b) The Charter of the City of Manila is subject to control by Congress. It should be stressed that
"municipal corporations are mere creatures of Congress" (Unson v. Lacson, G.R. No. 7909, January 18,
1957) which has the power to "create and abolish municipal corporations" due to its "general legislative
powers" (Asuncion v. Yriantes, 28 Phil. 67; Merdanillo v. Orandia, 5 SCRA 541). Congress, therefore, has
the power of control over Local governments (Hebron v. Reyes, G.R. No. 9124, July 2, 1950). And if
Congress can grant the City of Manila the power to tax certain matters, it can also provide for exemptions
or even take back the power.

(c) The City of Manila's power to impose license fees on gambling, has long been revoked. As early as
1975, the power of local governments to regulate gambling thru the grant of "franchise, licenses or
permits" was withdrawn by P.D. No. 771 and was vested exclusively on the National Government, thus:

Sec. 1. Any provision of law to the contrary notwithstanding, the authority of chartered cities and
other local governments to issue license, permit or other form of franchise to operate, maintain
and establish horse and dog race tracks, jai-alai and other forms of gambling is hereby revoked.

Sec. 2. Hereafter, all permits or franchises to operate, maintain and establish, horse and dog race
tracks, jai-alai and other forms of gambling shall be issued by the national government upon
proper application and verification of the qualification of the applicant . . .

Therefore, only the National Government has the power to issue "licenses or permits" for the operation of
gambling. Necessarily, the power to demand or collect license fees which is a consequence of the
issuance of "licenses or permits" is no longer vested in the City of Manila.

(d) Local governments have no power to tax instrumentalities of the National Government. PAGCOR is a
government owned or controlled corporation with an original charter, PD 1869. All of its shares of stocks
are owned by the National Government. In addition to its corporate powers (Sec. 3, Title II, PD 1869) it
also exercises regulatory powers thus:

Sec. 9. Regulatory Power. — The Corporation shall maintain a Registry of the affiliated entities,
and shall exercise all the powers, authority and the responsibilities vested in the Securities and
Exchange Commission over such affiliating entities mentioned under the preceding section,
including, but not limited to amendments of Articles of Incorporation and By-Laws, changes in
corporate term, structure, capitalization and other matters concerning the operation of the
affiliated entities, the provisions of the Corporation Code of the Philippines to the contrary
notwithstanding, except only with respect to original incorporation.

PAGCOR has a dual role, to operate and to regulate gambling casinos. The latter role is governmental,
which places it in the category of an agency or instrumentality of the Government. Being an
instrumentality of the Government, PAGCOR should be and actually is exempt from local taxes.
Otherwise, its operation might be burdened, impeded or subjected to control by a mere Local
government.

The states have no power by taxation or otherwise, to retard, impede, burden or in any manner
control the operation of constitutional laws enacted by Congress to carry into execution the
powers vested in the federal government. (MC Culloch v. Marland, 4 Wheat 316, 4 L Ed. 579)
This doctrine emanates from the "supremacy" of the National Government over local governments.

Justice Holmes, speaking for the Supreme Court, made reference to the entire absence of power
on the part of the States to touch, in that way (taxation) at least, the instrumentalities of the United
States (Johnson v. Maryland, 254 US 51) and it can be agreed that no state or political
subdivision can regulate a federal instrumentality in such a way as to prevent it from
consummating its federal responsibilities, or even to seriously burden it in the accomplishment of
them. (Antieau, Modern Constitutional Law, Vol. 2, p. 140, emphasis supplied)

Otherwise, mere creatures of the State can defeat National policies thru extermination of what local
authorities may perceive to be undesirable activities or enterprise using the power to tax as "a tool for
regulation" (U.S. v. Sanchez, 340 US 42).

The power to tax which was called by Justice Marshall as the "power to destroy" (Mc Culloch v.
Maryland, supra) cannot be allowed to defeat an instrumentality or creation of the very entity which has
the inherent power to wield it.

(e) Petitioners also argue that the Local Autonomy Clause of the Constitution will be violated by P.D.
1869. This is a pointless argument. Article X of the 1987 Constitution (on Local Autonomy) provides:

Sec. 5. Each local government unit shall have the power to create its own source of revenue and
to levy taxes, fees, and other charges subject to such guidelines and limitation as the congress
may provide, consistent with the basic policy on local autonomy. Such taxes, fees and charges
shall accrue exclusively to the local government. (emphasis supplied)

The power of local government to "impose taxes and fees" is always subject to "limitations" which
Congress may provide by law. Since PD 1869 remains an "operative" law until "amended, repealed or
revoked" (Sec. 3, Art. XVIII, 1987 Constitution), its "exemption clause" remains as an exception to the
exercise of the power of local governments to impose taxes and fees. It cannot therefore be violative but
rather is consistent with the principle of local autonomy.

Besides, the principle of local autonomy under the 1987 Constitution simply means "decentralization" (III
Records of the 1987 Constitutional Commission, pp. 435-436, as cited in Bernas, The Constitution of the
Republic of the Philippines, Vol. II, First Ed., 1988, p. 374). It does not make local governments sovereign
within the state or an "imperium in imperio."

Local Government has been described as a political subdivision of a nation or state which is
constituted by law and has substantial control of local affairs. In a unitary system of government,
such as the government under the Philippine Constitution, local governments can only be an intra
sovereign subdivision of one sovereign nation, it cannot be an imperium in imperio. Local
government in such a system can only mean a measure of decentralization of the function of
government. (emphasis supplied)

As to what state powers should be "decentralized" and what may be delegated to local government units
remains a matter of policy, which concerns wisdom. It is therefore a political question. (Citizens Alliance
for Consumer Protection v. Energy Regulatory Board, 162 SCRA 539).

What is settled is that the matter of regulating, taxing or otherwise dealing with gambling is a State
concern and hence, it is the sole prerogative of the State to retain it or delegate it to local governments.

As gambling is usually an offense against the State, legislative grant or express charter power is
generally necessary to empower the local corporation to deal with the subject. . . . In the absence
of express grant of power to enact, ordinance provisions on this subject which are inconsistent
with the state laws are void. (Ligan v. Gadsden, Ala App. 107 So. 733 Ex-Parte Solomon, 9, Cals.
440, 27 PAC 757 following in re Ah You, 88 Cal. 99, 25 PAC 974, 22 Am St. Rep. 280, 11 LRA
480, as cited in Mc Quinllan Vol. 3 Ibid, p. 548, emphasis supplied)

Petitioners next contend that P.D. 1869 violates the equal protection clause of the Constitution, because
"it legalized PAGCOR — conducted gambling, while most gambling are outlawed together with
prostitution, drug trafficking and other vices" (p. 82, Rollo).

We, likewise, find no valid ground to sustain this contention. The petitioners' posture ignores the well-
accepted meaning of the clause "equal protection of the laws." The clause does not preclude
classification of individuals who may be accorded different treatment under the law as long as the
classification is not unreasonable or arbitrary (Itchong v. Hernandez, 101 Phil. 1155). A law does not have
to operate in equal force on all persons or things to be conformable to Article III, Section 1 of the
Constitution (DECS v. San Diego, G.R. No. 89572, December 21, 1989).

The "equal protection clause" does not prohibit the Legislature from establishing classes of individuals or
objects upon which different rules shall operate (Laurel v. Misa, 43 O.G. 2847). The Constitution does not
require situations which are different in fact or opinion to be treated in law as though they were the same
(Gomez v. Palomar, 25 SCRA 827).

Just how P.D. 1869 in legalizing gambling conducted by PAGCOR is violative of the equal protection is
not clearly explained in the petition. The mere fact that some gambling activities like cockfighting (P.D
449) horse racing (R.A. 306 as amended by RA 983), sweepstakes, lotteries and races (RA 1169 as
amended by B.P. 42) are legalized under certain conditions, while others are prohibited, does not render
the applicable laws, P.D. 1869 for one, unconstitutional.

If the law presumably hits the evil where it is most felt, it is not to be overthrown because there
are other instances to which it might have been applied. (Gomez v. Palomar, 25 SCRA 827)

The equal protection clause of the 14th Amendment does not mean that all occupations called by
the same name must be treated the same way; the state may do what it can to prevent which is
deemed as evil and stop short of those cases in which harm to the few concerned is not less than
the harm to the public that would insure if the rule laid down were made mathematically exact.
(Dominican Hotel v. Arizona, 249 US 2651).

Anent petitioners' claim that PD 1869 is contrary to the "avowed trend of the Cory Government away from
monopolies and crony economy and toward free enterprise and privatization" suffice it to state that this is
not a ground for this Court to nullify P.D. 1869. If, indeed, PD 1869 runs counter to the government's
policies then it is for the Executive Department to recommend to Congress its repeal or amendment.

The judiciary does not settle policy issues. The Court can only declare what the law is and not
what the law should be.1âwphi1 Under our system of government, policy issues are within the
domain of the political branches of government and of the people themselves as the repository of
all state power. (Valmonte v. Belmonte, Jr., 170 SCRA 256).

On the issue of "monopoly," however, the Constitution provides that:

Sec. 19. The State shall regulate or prohibit monopolies when public interest so requires. No
combinations in restraint of trade or unfair competition shall be allowed. (Art. XII, National
Economy and Patrimony)

It should be noted that, as the provision is worded, monopolies are not necessarily prohibited by the
Constitution. The state must still decide whether public interest demands that monopolies be regulated or
prohibited. Again, this is a matter of policy for the Legislature to decide.

On petitioners' allegation that P.D. 1869 violates Sections 11 (Personality Dignity) 12 (Family) and 13
(Role of Youth) of Article II; Section 13 (Social Justice) of Article XIII and Section 2 (Educational Values)
of Article XIV of the 1987 Constitution, suffice it to state also that these are merely statements of
principles and, policies. As such, they are basically not self-executing, meaning a law should be passed
by Congress to clearly define and effectuate such principles.

In general, therefore, the 1935 provisions were not intended to be self-executing principles ready
for enforcement through the courts. They were rather directives addressed to the executive and
the legislature. If the executive and the legislature failed to heed the directives of the articles the
available remedy was not judicial or political. The electorate could express their displeasure with
the failure of the executive and the legislature through the language of the ballot. (Bernas, Vol. II,
p. 2)

Every law has in its favor the presumption of constitutionality (Yu Cong Eng v. Trinidad, 47 Phil. 387;
Salas v. Jarencio, 48 SCRA 734; Peralta v. Comelec, 82 SCRA 30; Abbas v. Comelec, 179 SCRA 287).
Therefore, for PD 1869 to be nullified, it must be shown that there is a clear and unequivocal breach of
the Constitution, not merely a doubtful and equivocal one. In other words, the grounds for nullity must be
clear and beyond reasonable doubt. (Peralta v. Comelec, supra) Those who petition this Court to declare
a law, or parts thereof, unconstitutional must clearly establish the basis for such a declaration. Otherwise,
their petition must fail. Based on the grounds raised by petitioners to challenge the constitutionality of
P.D. 1869, the Court finds that petitioners have failed to overcome the presumption. The dismissal of this
petition is therefore, inevitable. But as to whether P.D. 1869 remains a wise legislation considering the
issues of "morality, monopoly, trend to free enterprise, privatization as well as the state principles on
social justice, role of youth and educational values" being raised, is up for Congress to determine.

As this Court held in Citizens' Alliance for Consumer Protection v. Energy Regulatory Board, 162 SCRA
521 —

Presidential Decree No. 1956, as amended by Executive Order No. 137 has, in any case, in its
favor the presumption of validity and constitutionality which petitioners Valmonte and the KMU
have not overturned. Petitioners have not undertaken to identify the provisions in the Constitution
which they claim to have been violated by that statute. This Court, however, is not compelled to
speculate and to imagine how the assailed legislation may possibly offend some provision of the
Constitution. The Court notes, further, in this respect that petitioners have in the main put in
question the wisdom, justice and expediency of the establishment of the OPSF, issues which are
not properly addressed to this Court and which this Court may not constitutionally pass upon.
Those issues should be addressed rather to the political departments of government: the
President and the Congress.

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

WHEREFORE, the petition is DISMISSED for lack of merit.

SO ORDERED.
G.R. No. 103125 May 17, 1993

PROVINCE OF CAMARINES SUR, represented by GOV. LUIS R. VILLAFUERTE and HON.

BENJAMIN V. PANGA as Presiding Judge of RTC Branch 33 at Pili, Camarines Sur, petitioners,
vs.
THE COURT OF APPEALS (THIRD DIVISION), ERNESTO SAN JOAQUIN and EFREN SAN
JOAQUIN, respondents.

The Provincial Attorney for petitioners.

Reynaldo L. Herrera for Ernesto San Joaquin.

QUIASON, J.:

In this appeal by certiorari from the decision of the Court of Appeals in AC-G.R. SP No. 20551 entitled
"Ernesto N. San Joaquin, et al., v. Hon. Benjamin V. Panga, et al.," this Court is asked to decide whether
the expropriation of agricultural lands by local government units is subject, to the prior approval of the
Secretary of the Agrarian Reform, as the implementator of the agrarian reform program.

On December 22, 1988, the Sangguniang Panlalawigan of the Province of Camarines Sur passed
Resolution No. 129, Series of 1988, authorizing the Provincial Governor to purchase or expropriate
property contiguous to the provincial capitol site, in order to establish a pilot farm for non-food and non-
traditional agricultural crops and a housing project for provincial government employees.

The "WHEREAS" clause o:f the Resolution states:

WHEREAS, the province of Camarines Sur has adopted a five-year Comprehensive

Development plan, some of the vital components of which includes the establishment of
model and pilot farm for non-food and non-traditional agricultural crops, soil testing and
tissue culture laboratory centers, 15 small scale technology soap making, small scale
products of plaster of paris, marine biological and sea farming research center,and other
progressive feasibility concepts objective of which is to provide the necessary scientific
and technology know-how to farmers and fishermen in Camarines Sur and to establish a
housing project for provincial government employees;

WHEREAS, the province would need additional land to be acquired either by purchase or
expropriation to implement the above program component;

WHEREAS, there are contiguous/adjacent properties to be (sic) present Provincial

Capitol Site ideally suitable to establish the same pilot development center;

WHEREFORE . . . .

Pursuant to the Resolution, the Province of Camarines Sur, through its Governor, Hon. Luis R.Villafuerte,
filed two separate cases for expropriation against Ernesto N. San Joaquin and Efren N. San Joaquin,
docketed as Special Civil Action Nos. P-17-89 and P-19-89 of the Regional Trial Court, Pili, Camarines
Sur, presided by the Hon. Benjamin V. Panga.

Forthwith, the Province of Camarines Sur filed a motion for the issuance of writ of possession. The San
Joaquins failed to appear at the hearing of the motion.

The San Joaquins moved to dismiss the complaints on the ground of inadequacy of the price offered for
their property. In an order dated December 6, 1989, the trial court denied the motion to dismiss and
authorized the Province of Camarines Sur to take possession of the property upon the deposit with the
Clerk of Court of the amount of P5,714.00, the amount provisionally fixed by the trial court to answer for
damages that private respondents may suffer in the event that the expropriation cases do not prosper.
The trial court issued a writ of possession in an order dated January18, 1990.

The San Joaquins filed a motion for relief from the order, authorizing the Province of Camarines Sur to
take possession of their property and a motion to admit an amended motion to dismiss. Both motions
were denied in the order dated February 1990.

In their petition before the Court of Appeals, the San Joaquins asked: (a) that Resolution No. 129, Series
of 1988 of the Sangguniang Panlalawigan be declared null and void; (b) that the complaints for
expropriation be dismissed; and (c) that the order dated December 6, 1989 (i) denying the motion to
dismiss and (ii) allowing the Province of Camarines Sur to take possession of the property subject of the
expropriation and the order dated February 26, 1990, denying the motion to admit the amended motion to
dismiss, be set aside. They also asked that an order be issued to restrain the trial court from enforcing the
writ of possession, and thereafter to issue a writ of injunction.

In its answer to the petition, the Province of Camarines Sur claimed that it has the authority to initiate the
expropriation proceedings under Sections 4 and 7 of Local Government Code (B.P. Blg. 337) and that the
expropriations are for a public purpose.

Asked by the Court of Appeals to give his Comment to the petition, the Solicitor General stated that under
Section 9 of the Local Government Code (B.P. Blg. 337), there was no need for the approval by the Office
of the President of the exercise by the Sangguniang Panlalawigan of the right of eminent domain.
However, the Solicitor General expressed the view that the Province of Camarines Sur must first secure
the approval of the Department of Agrarian Reform of the plan to expropriate the lands of petitioners for
use as a housing project.

The Court of Appeals set aside the order of the trial court, allowing the Province of Camarines Sur to take
possession of private respondents' lands and the order denying the admission of the amended motion to
dismiss. It also ordered the trial court to suspend the expropriation proceedings until after the Province of
Camarines Sur shall have submitted the requisite approval of the Department of Agrarian Reform to
convert the classification of the property of the private respondents from agricultural to non-agricultural
land.

Hence this petition.

It must be noted that in the Court of Appeals, the San Joaquins asked for: (i) the dismissal of the
complaints for expropriation on the ground of the inadequacy of the compensation offered for the property
and (ii) the nullification of Resolution No. 129, Series of 1988 of the Sangguniang Panlalawigan of the
Province of Camarines Sur.

The Court of Appeals did not rule on the validity of the questioned resolution; neither did it dismiss the
complaints. However, when the Court of Appeals ordered the suspension of the proceedings until the
Province of Camarines Sur shall have obtained the authority of the Department of Agrarian Reform to
change the classification of the lands sought to be expropriated from agricultural to non-agricultural use, it
assumed that the resolution is valid and that the expropriation is for a public purpose or public use.

Modernly, there has been a shift from the literal to a broader interpretation of "public purpose" or "public
use" for which the power of eminent domain may be exercised. The old concept was that the condemned
property must actually be used by the general public (e.g. roads, bridges, public plazas, etc.) before the
taking thereof could satisfy the constitutional requirement of "public use". Under the new concept, "public
use" means public advantage, convenience or benefit, which tends to contribute to the general welfare
and the prosperity of the whole community, like a resort complex for tourists or housing project (Heirs of
Juancho Ardano v. Reyes, 125 SCRA 220 [1983]; Sumulong v. Guerrero, 154 SC.RA 461 [1987]).

The expropriation of the property authorized by the questioned resolution is for a public purpose. The
establishment of a pilot development center would inure to the direct benefit and advantage of the people
of the Province of Camarines Sur. Once operational, the center would make available to the community
invaluable information and technology on agriculture, fishery and the cottage industry. Ultimately, the
livelihood of the farmers, fishermen and craftsmen would be enhanced. The housing project also satisfies
the public purpose requirement of the Constitution. As held in Sumulong v. Guerrero, 154 SCRA 461,
"Housing is a basic human need. Shortage in housing is a matter of state concern since it directly and
significantly affects public health, safety, the environment and in sum the general welfare."

It is the submission of the Province of Camarines Sur that its exercise of the power of eminent domain
cannot be restricted by the provisions of the Comprehensive Agrarian Reform Law (R.A. No. 6657),
particularly Section 65 thereof, which requires the approval of the Department of Agrarian Reform before
a parcel of land can be reclassified from an agricultural to a non-agricultural land.

The Court of Appeals, following the recommendation of the Solicitor General, held that the Province of
Camarines Sur must comply with the provision of Section 65 of the Comprehensive Agrarian Reform Law
and must first secure the approval of the Department of Agrarian Reform of the plan to expropriate the
lands of the San Joaquins.

In Heirs of Juancho Ardana v. Reyes, 125 SCRA 220, petitioners raised the issue of whether the
Philippine Tourism Authority can expropriate lands covered by the "Operation Land Transfer" for use of a
tourist resort complex. There was a finding that of the 282 hectares sought to be expropriated, only an
area of 8,970 square meters or less than one hectare was affected by the land reform program and
covered by emancipation patents issued by the Ministry of Agrarian Reform. While the Court said that
there was "no need under the facts of this petition to rule on whether the public purpose is superior or
inferior to another purpose or engage in a balancing of competing public interest," it upheld the
expropriation after noting that petitioners had failed to overcome the showing that the taking of 8,970
square meters formed part of the resort complex. A fair and reasonable reading of the decision is that this
Court viewed the power of expropriation as superior to the power to distribute lands under the land reform
program.

The Solicitor General denigrated the power to expropriate by the Province of Camarines Sur by stressing
the fact that local government units exercise such power only by delegation. (Comment, pp. 14-15; Rollo,
pp. 128-129)

It is true that local government units have no inherent power of eminent domain and can exercise it only
when expressly authorized by the legislature (City of Cincinnati v. Vester, 28l US 439, 74 L.ed. 950, 50
SCt. 360). It is also true that in delegating the power to expropriate, the legislature may retain certain
control or impose certain restraints on the exercise thereof by the local governments (Joslin Mfg. Co. v.
Providence, 262 US 668 67 L. ed. 1167, 43 S Ct. 684). While such delegated power may be a limited
authority, it is complete within its limits. Moreover, the limitations on the exercise of the delegated power
must be clearly expressed, either in the law conferring the power or in other legislations.

Resolution No. 129, Series of 1988, was promulgated pursuant to Section 9 of B.P. Blg. 337, the Local
Government Code, which provides:

A local government unit may, through its head and acting pursuant to a resolution of its
sanggunian exercise the right of eminent domain and institute condemnation proceedings
for public use or purpose.

Section 9 of B.P. Blg. 337 does not intimate in the least that local government, units must first secure the
approval of the Department of Land Reform for the conversion of lands from agricultural to non-
agricultural use, before they can institute the necessary expropriation proceedings. Likewise, there is no
provision in the Comprehensive Agrarian Reform Law which expressly subjects the expropriation of
agricultural lands by local government units to the control of the Department of Agrarian Reform. The
closest provision of law that the Court of Appeals could cite to justify the intervention of the Department of
Agrarian Reform in expropriation matters is Section 65 of the Comprehensive Agrarian Reform Law,
which reads:

Sec. 65. Conversion of Lands. — After the lapse of five (5) years from its award, when
the land ceases to be economically feasible and sound for, agricultural purposes, or the
locality has become urbanized and the land will have a greater economic value for
residential, commercial or industrial purposes, the DAR, upon application of the
beneficiary or the landowner, with due notice to the affected parties, and subject to
existing laws, may authorize the reclassification or conversion of the land and its
disposition: Provided, That the beneficiary shall have fully paid his obligation.

The opening, adverbial phrase of the provision sends signals that it applies to lands previously placed
under the agrarian reform program as it speaks of "the lapse of five (5) years from its award."

The rules on conversion of agricultural lands found in Section 4 (k) and 5 (1) of Executive Order No. 129-
A, Series of 1987, cannot be the source of the authority of the Department of Agrarian Reform to
determine the suitability of a parcel of agricultural land for the purpose to which it would be devoted by the
expropriating authority. While those rules vest on the Department of Agrarian Reform the exclusive
authority to approve or disapprove conversions of agricultural lands for residential, commercial or
industrial uses, such authority is limited to the applications for reclassification submitted by the land
owners or tenant beneficiaries.

Statutes conferring the power of eminent domain to political subdivisions cannot be broadened or
constricted by implication (Schulman v. People, 10 N.Y. 2d. 249, 176 N.E. 2d. 817, 219 NYS 2d. 241).

To sustain the Court of Appeals would mean that the local government units can no longer expropriate
agricultural lands needed for the construction of roads, bridges, schools, hospitals, etc, without first
applying for conversion of the use of the lands with the Department of Agrarian Reform, because all of
these projects would naturally involve a change in the land use. In effect, it would then be the Department
of Agrarian Reform to scrutinize whether the expropriation is for a public purpose or public use.
Ordinarily, it is the legislative branch of the local government unit that shall determine whether the use of
the property sought to be expropriated shall be public, the same being an expression of legislative policy.
The courts defer to such legislative determination and will intervene only when a particular undertaking
has no real or substantial relation to the public use (United States Ex Rel Tennessee Valley Authority v.
Welch, 327 US 546, 90 L. ed. 843, 66 S Ct 715; State ex rel Twin City Bldg. and Invest. Co. v. Houghton,
144 Minn. 1, 174 NW 885, 8 ALR 585).

There is also an ancient rule that restrictive statutes, no matter how broad their terms are, do not
embrace the sovereign unless the sovereign is specially mentioned as subject thereto (Alliance of
Government Workers v. Minister of Labor and Employment, 124 SCRA 1 [1983]). The Republic of the
Philippines, as sovereign, or its political subdivisions, as holders of delegated sovereign powers, cannot
be bound by provisions of law couched in general term.

The fears of private respondents that they will be paid on the basis of the valuation declared in the tax
declarations of their property, are unfounded. This Court has declared as unconstitutional the Presidential
Decrees fixing the just compensation in expropriation cases to be the value given to the condemned
property either by the owners or the assessor, whichever was lower ([Export Processing Zone Authority v.
Dulay, 149 SCRA 305 [1987]). As held in Municipality of Talisay v. Ramirez, 183 SCRA 528 [1990], the
rules for determining just compensation are those laid down in Rule 67 of the Rules of Court, which allow
private respondents to submit evidence on what they consider shall be the just compensation for their
property.

WHEREFORE, the petition is GRANTED and the questioned decision of the Court of Appeals is set aside
insofar as it (a) nullifies the trial court's order allowing the Province of Camarines Sur to take possession
of private respondents' property; (b) orders the trial court to suspend the expropriation proceedings; and
(c) requires the Province of Camarines Sur to obtain the approval of the Department of Agrarian Reform
to convert or reclassify private respondents' property from agricultural to non-agricultural use.

The decision of the Court of Appeals is AFFIRMED insofar as it sets aside the order of the trial court,
denying the amended motion to dismiss of the private respondents.
G.R. No. 111097 July 20, 1994

MAYOR PABLO P. MAGTAJAS & THE CITY OF CAGAYAN DE ORO, petitioners,

vs.
PRYCE PROPERTIES CORPORATION, INC. & PHILIPPINE AMUSEMENT AND GAMING
CORPORATION, respondents.

Aquilino G. Pimentel, Jr. and Associates for petitioners.

R.R. Torralba & Associates for private respondent.

CRUZ, J.:

There was instant opposition when PAGCOR announced the opening of a casino in Cagayan de Oro
City. Civic organizations angrily denounced the project. The religious elements echoed the objection and
so did the women's groups and the youth. Demonstrations were led by the mayor and the city legislators.
The media trumpeted the protest, describing the casino as an affront to the welfare of the city.

The trouble arose when in 1992, flush with its tremendous success in several cities, PAGCOR decided to
expand its operations to Cagayan de Oro City. To this end, it leased a portion of a building belonging to
Pryce Properties Corporation, Inc., one of the herein private respondents, renovated and equipped the
same, and prepared to inaugurate its casino there during the Christmas season.

The reaction of the Sangguniang Panlungsod of Cagayan de Oro City was swift and hostile. On
December 7, 1992, it enacted Ordinance No. 3353 reading as follows:

ORDINANCE NO. 3353

AN ORDINANCE PROHIBITING THE ISSUANCE OF BUSINESS PERMIT AND

CANCELLING EXISTING BUSINESS PERMIT TO ANY ESTABLISHMENT FOR THE
USING AND ALLOWING TO BE USED ITS PREMISES OR PORTION THEREOF FOR
THE OPERATION OF CASINO.

BE IT ORDAINED by the Sangguniang Panlungsod of the City of Cagayan de Oro, in

session assembled that:

Sec. 1. — That pursuant to the policy of the city banning the operation of casino within its
territorial jurisdiction, no business permit shall be issued to any person, partnership or
corporation for the operation of casino within the city limits.

Sec. 2. — That it shall be a violation of existing business permit by any persons,

partnership or corporation to use its business establishment or portion thereof, or allow
the use thereof by others for casino operation and other gambling activities.

Sec. 3. — PENALTIES. — Any violation of such existing business permit as defined in

the preceding section shall suffer the following penalties, to wit:

a) Suspension of the business permit for sixty (60) days

for the first offense and a fine of P1,000.00/day

b) Suspension of the business permit for Six (6) months

for the second offense, and a fine of P3,000.00/day

c) Permanent revocation of the business permit and

imprisonment of One (1) year, for the third and
subsequent offenses.

Sec. 4. — This Ordinance shall take effect ten (10) days from publication thereof.

Nor was this all. On January 4, 1993, it adopted a sterner Ordinance No. 3375-93 reading as follows:

ORDINANCE NO. 3375-93

 AN ORDINANCE PROHIBITING THE OPERATION OF CASINO AND PROVIDING
PENALTY FOR VIOLATION THEREFOR.

WHEREAS, the City Council established a policy as early as 1990 against CASINO
under its Resolution No. 2295;

WHEREAS, on October 14, 1992, the City Council passed another Resolution No. 2673,
reiterating its policy against the establishment of CASINO;

WHEREAS, subsequently, thereafter, it likewise passed Ordinance No. 3353, prohibiting

the issuance of Business Permit and to cancel existing Business Permit to any
establishment for the using and allowing to be used its premises or portion thereof for the
operation of CASINO;

WHEREAS, under Art. 3, section 458, No. (4), sub paragraph VI of the Local Government
Code of 1991 (Rep. Act 7160) and under Art. 99, No. (4), Paragraph VI of the
implementing rules of the Local Government Code, the City Council as the Legislative
Body shall enact measure to suppress any activity inimical to public morals and general
welfare of the people and/or regulate or prohibit such activity pertaining to amusement or
entertainment in order to protect social and moral welfare of the community;

NOW THEREFORE,

BE IT ORDAINED by the City Council in session duly assembled that:

Sec. 1. — The operation of gambling CASINO in the City of Cagayan de Oro is hereby
prohibited.

Sec. 2. — Any violation of this Ordinance shall be subject to the following penalties:

a) Administrative fine of P5,000.00 shall be imposed against the proprietor, partnership or

corporation undertaking the operation, conduct, maintenance of gambling CASINO in the
City and closure thereof;

b) Imprisonment of not less than six (6) months nor more than one (1) year or a fine in
the amount of P5,000.00 or both at the discretion of the court against the manager,
supervisor, and/or any person responsible in the establishment, conduct and
maintenance of gambling CASINO.

Sec. 3. — This Ordinance shall take effect ten (10) days after its publication in a local
newspaper of general circulation.

Pryce assailed the ordinances before the Court of Appeals, where it was joined by PAGCOR as
intervenor and supplemental petitioner. Their challenge succeeded. On March 31, 1993, the Court of
Appeals declared the ordinances invalid and issued the writ prayed for to prohibit their
enforcement. 1 Reconsideration of this decision was denied on July 13, 1993. 2

Cagayan de Oro City and its mayor are now before us in this petition for review under Rule 45 of the
Rules of Court. 3 They aver that the respondent Court of Appeals erred in holding that:

1. Under existing laws, the Sangguniang Panlungsod of the City of Cagayan de Oro does
not have the power and authority to prohibit the establishment and operation of a
PAGCOR gambling casino within the City's territorial limits.

2. The phrase "gambling and other prohibited games of chance" found in Sec. 458, par.
(a), sub-par. (1) — (v) of R.A. 7160 could only mean "illegal gambling."

3. The questioned Ordinances in effect annul P.D. 1869 and are therefore invalid on that
point.

4. The questioned Ordinances are discriminatory to casino and partial to cockfighting and
are therefore invalid on that point.
 5. The questioned Ordinances are not reasonable, not consonant with the general
powers and purposes of the instrumentality concerned and inconsistent with the laws or
policy of the State.

6. It had no option but to follow the ruling in the case of Basco, et al. v. PAGCOR, G.R.
No. 91649, May 14, 1991, 197 SCRA 53 in disposing of the issues presented in this
present case.

PAGCOR is a corporation created directly by P.D. 1869 to help centralize and regulate all games of
chance, including casinos on land and sea within the territorial jurisdiction of the Philippines. In Basco v.
Philippine Amusements and Gaming Corporation, 4 this Court sustained the constitutionality of the decree
and even cited the benefits of the entity to the national economy as the third highest revenue-earner in
the government, next only to the BIR and the Bureau of Customs.

Cagayan de Oro City, like other local political subdivisions, is empowered to enact ordinances for the
purposes indicated in the Local Government Code. It is expressly vested with the police power under
what is known as the General Welfare Clause now embodied in Section 16 as follows:

Sec. 16. — General Welfare. — Every local government unit shall exercise the powers
expressly granted, those necessarily implied therefrom, as well as powers necessary,
appropriate, or incidental for its efficient and effective governance, and those which are
essential to the promotion of the general welfare. Within their respective territorial
jurisdictions, local government units shall ensure and support, among other things, the
preservation and enrichment of culture, promote health and safety, enhance the right of
the people to a balanced ecology, encourage and support the development of
appropriate and self-reliant scientific and technological capabilities, improve public
morals, enhance economic prosperity and social justice, promote full employment among
their residents, maintain peace and order, and preserve the comfort and convenience of
their inhabitants.

In addition, Section 458 of the said Code specifically declares that:

Sec. 458. — Powers, Duties, Functions and Compensation. — (a) The Sangguniang
Panlungsod, as the legislative body of the city, shall enact ordinances, approve
resolutions and appropriate funds for the general welfare of the city and its inhabitants
pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of
the city as provided for under Section 22 of this Code, and shall:

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

xxx xxx xxx

(v) Enact ordinances intended to prevent, suppress and

impose appropriate penalties for habitual drunkenness in
public places, vagrancy, mendicancy, prostitution,
establishment and maintenance of houses of ill
repute, gambling and other prohibited games of chance,
fraudulent devices and ways to obtain money or
property, drug addiction, maintenance of drug dens, drug
pushing, juvenile delinquency, the printing, distribution or
exhibition of obscene or pornographic materials or
publications, and such other activities inimical to the
welfare and morals of the inhabitants of the city;

This section also authorizes the local government units to regulate properties and businesses within their
territorial limits in the interest of the general welfare. 5

The petitioners argue that by virtue of these provisions, the Sangguniang Panlungsod may prohibit the
operation of casinos because they involve games of chance, which are detrimental to the people.
Gambling is not allowed by general law and even by the Constitution itself. The legislative power
conferred upon local government units may be exercised over all kinds of gambling and not only over
"illegal gambling" as the respondents erroneously argue. Even if the operation of casinos may have been
permitted under P.D. 1869, the government of Cagayan de Oro City has the authority to prohibit them
within its territory pursuant to the authority entrusted to it by the Local Government Code.
It is submitted that this interpretation is consonant with the policy of local autonomy as mandated in
Article II, Section 25, and Article X of the Constitution, as well as various other provisions therein seeking
to strengthen the character of the nation. In giving the local government units the power to prevent or
suppress gambling and other social problems, the Local Government Code has recognized the
competence of such communities to determine and adopt the measures best expected to promote the
general welfare of their inhabitants in line with the policies of the State.

The petitioners also stress that when the Code expressly authorized the local government units to prevent
and suppress gambling and other prohibited games of chance, like craps, baccarat, blackjack and
roulette, it meant all forms of gambling without distinction. Ubi lex non distinguit, nec nos distinguere
debemos. 6 Otherwise, it would have expressly excluded from the scope of their power casinos and other
forms of gambling authorized by special law, as it could have easily done. The fact that it did not do so
simply means that the local government units are permitted to prohibit all kinds of gambling within their
territories, including the operation of casinos.

The adoption of the Local Government Code, it is pointed out, had the effect of modifying the charter of
the PAGCOR. The Code is not only a later enactment than P.D. 1869 and so is deemed to prevail in case
of inconsistencies between them. More than this, the powers of the PAGCOR under the decree are
expressly discontinued by the Code insofar as they do not conform to its philosophy and provisions,
pursuant to Par. (f) of its repealing clause reading as follows:

(f) All general and special laws, acts, city charters, decrees, executive orders,
proclamations and administrative regulations, or part or parts thereof which are
inconsistent with any of the provisions of this Code are hereby repealed or modified
accordingly.

It is also maintained that assuming there is doubt regarding the effect of the Local Government Code on
P.D. 1869, the doubt must be resolved in favor of the petitioners, in accordance with the direction in the
Code calling for its liberal interpretation in favor of the local government units. Section 5 of the Code
specifically provides:

Sec. 5. Rules of Interpretation. — In the interpretation of the provisions of this Code, the
following rules shall apply:

(a) Any provision on a power of a local government unit shall be liberally interpreted in its
favor, and in case of doubt, any question thereon shall be resolved in favor of devolution
of powers and of the lower local government unit. Any fair and reasonable doubt as to the
existence of the power shall be interpreted in favor of the local government unit
concerned;

xxx xxx xxx

(c) The general welfare provisions in this Code shall be liberally interpreted to give more
powers to local government units in accelerating economic development and upgrading
the quality of life for the people in the community; . . . (Emphasis supplied.)

Finally, the petitioners also attack gambling as intrinsically harmful and cite various provisions of the
Constitution and several decisions of this Court expressive of the general and official disapprobation of
the vice. They invoke the State policies on the family and the proper upbringing of the youth and, as might
be expected, call attention to the old case of U.S. v. Salaveria,7 which sustained a municipal ordinance
prohibiting the playing of panguingue. The petitioners decry the immorality of gambling. They also impugn
the wisdom of P.D. 1869 (which they describe as "a martial law instrument") in creating PAGCOR and
authorizing it to operate casinos "on land and sea within the territorial jurisdiction of the Philippines."

This is the opportune time to stress an important point.

The morality of gambling is not a justiciable issue. Gambling is not illegal per se. While it is generally
considered inimical to the interests of the people, there is nothing in the Constitution categorically
proscribing or penalizing gambling or, for that matter, even mentioning it at all. It is left to Congress to
deal with the activity as it sees fit. In the exercise of its own discretion, the legislature may prohibit
gambling altogether or allow it without limitation or it may prohibit some forms of gambling and allow
others for whatever reasons it may consider sufficient. Thus, it has prohibited jueteng and monte but
permits lotteries, cockfighting and horse-racing. In making such choices, Congress has consulted its own
wisdom, which this Court has no authority to review, much less reverse. Well has it been said that courts
do not sit to resolve the merits of conflicting theories. 8 That is the prerogative of the political departments.
It is settled that questions regarding the wisdom, morality, or practicibility of statutes are not addressed to
the judiciary but may be resolved only by the legislative and executive departments, to which the function
belongs in our scheme of government. That function is exclusive. Whichever way these branches decide,
they are answerable only to their own conscience and the constituents who will ultimately judge their acts,
and not to the courts of justice.

The only question we can and shall resolve in this petition is the validity of Ordinance No. 3355 and
Ordinance No. 3375-93 as enacted by the Sangguniang Panlungsod of Cagayan de Oro City. And we
shall do so only by the criteria laid down by law and not by our own convictions on the propriety of
gambling.

The tests of a valid ordinance are well established. A long line of decisions 9 has held that to be valid, an
ordinance must conform to the following substantive requirements:

1) It must not contravene the constitution or any statute.

2) It must not be unfair or oppressive.

3) It must not be partial or discriminatory.

4) It must not prohibit but may regulate trade.

5) It must be general and consistent with public policy.

6) It must not be unreasonable.

We begin by observing that under Sec. 458 of the Local Government Code, local government units are
authorized to prevent or suppress, among others, "gambling and other prohibited games of chance."
Obviously, this provision excludes games of chance which are not prohibited but are in fact permitted by
law. The petitioners are less than accurate in claiming that the Code could have excluded such games of
chance but did not. In fact it does. The language of the section is clear and unmistakable. Under the rule
of noscitur a sociis, a word or phrase should be interpreted in relation to, or given the same meaning of,
words with which it is associated. Accordingly, we conclude that since the word "gambling" is associated
with "and other prohibited games of chance," the word should be read as referring to only illegal gambling
which, like the other prohibited games of chance, must be prevented or suppressed.

We could stop here as this interpretation should settle the problem quite conclusively. But we will not. The
vigorous efforts of the petitioners on behalf of the inhabitants of Cagayan de Oro City, and the
earnestness of their advocacy, deserve more than short shrift from this Court.

The apparent flaw in the ordinances in question is that they contravene P.D. 1869 and the public policy
embodied therein insofar as they prevent PAGCOR from exercising the power conferred on it to operate a
casino in Cagayan de Oro City. The petitioners have an ingenious answer to this misgiving. They deny
that it is the ordinances that have changed P.D. 1869 for an ordinance admittedly cannot prevail against a
statute. Their theory is that the change has been made by the Local Government Code itself, which was
also enacted by the national lawmaking authority. In their view, the decree has been, not really repealed
by the Code, but merely "modified pro tanto" in the sense that PAGCOR cannot now operate a casino
over the objection of the local government unit concerned. This modification of P.D. 1869 by the Local
Government Code is permissible because one law can change or repeal another law.

It seems to us that the petitioners are playing with words. While insisting that the decree has only been
"modified pro tanto," they are actually arguing that it is already dead, repealed and useless for all intents
and purposes because the Code has shorn PAGCOR of all power to centralize and regulate casinos.
Strictly speaking, its operations may now be not only prohibited by the local government unit; in fact, the
prohibition is not only discretionary but mandated by Section 458 of the Code if the word "shall" as used
therein is to be given its accepted meaning. Local government units have now no choice but to prevent
and suppress gambling, which in the petitioners' view includes both legal and illegal gambling. Under this
construction, PAGCOR will have no more games of chance to regulate or centralize as they must all be
prohibited by the local government units pursuant to the mandatory duty imposed upon them by the
Code. In this situation, PAGCOR cannot continue to exist except only as a toothless tiger or a white
elephant and will no longer be able to exercise its powers as a prime source of government revenue
through the operation of casinos.

It is noteworthy that the petitioners have cited only Par. (f) of the repealing clause, conveniently
discarding the rest of the provision which painstakingly mentions the specific laws or the parts thereof
which are repealed (or modified) by the Code. Significantly, P.D. 1869 is not one of them. A reading of the
entire repealing clause, which is reproduced below, will disclose the omission:
 Sec. 534. Repealing Clause. — (a) Batas Pambansa Blg. 337, otherwise known as the
"Local Government Code," Executive Order No. 112 (1987), and Executive Order No.
319 (1988) are hereby repealed.

(b) Presidential Decree Nos. 684, 1191, 1508 and such other decrees, orders,
instructions, memoranda and issuances related to or concerning the barangay are hereby
repealed.

(c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939 regarding hospital
fund; Section 3, a (3) and b (2) of Republic Act. No. 5447 regarding the Special
Education Fund; Presidential Decree No. 144 as amended by Presidential Decree Nos.
559 and 1741; Presidential Decree No. 231 as amended; Presidential Decree No. 436 as
amended by Presidential Decree No. 558; and Presidential Decree Nos. 381, 436, 464,
477, 526, 632, 752, and 1136 are hereby repealed and rendered of no force and effect.

(d) Presidential Decree No. 1594 is hereby repealed insofar as it governs locally-funded
projects.

(e) The following provisions are hereby repealed or amended insofar as they are
inconsistent with the provisions of this Code: Sections 2, 16, and 29 of Presidential
Decree No. 704; Sections 12 of Presidential Decree No. 87, as amended; Sections 52,
53, 66, 67, 68, 69, 70, 71, 72, 73, and 74 of Presidential Decree No. 463, as amended;
and Section 16 of Presidential Decree No. 972, as amended, and

(f) All general and special laws, acts, city charters, decrees, executive orders,
proclamations and administrative regulations, or part or parts thereof which are
inconsistent with any of the provisions of this Code are hereby repealed or modified
accordingly.

Furthermore, it is a familiar rule that implied repeals are not lightly presumed in the absence of a clear
and unmistakable showing of such intention. In Lichauco & Co. v. Apostol, 10 this Court explained:

The cases relating to the subject of repeal by implication all proceed on the assumption
that if the act of later date clearly reveals an intention on the part of the lawmaking power
to abrogate the prior law, this intention must be given effect; but there must always be a
sufficient revelation of this intention, and it has become an unbending rule of statutory
construction that the intention to repeal a former law will not be imputed to the Legislature
when it appears that the two statutes, or provisions, with reference to which the question
arises bear to each other the relation of general to special.

There is no sufficient indication of an implied repeal of P.D. 1869. On the contrary, as the private
respondent points out, PAGCOR is mentioned as the source of funding in two later enactments of
Congress, to wit, R.A. 7309, creating a Board of Claims under the Department of Justice for the benefit of
victims of unjust punishment or detention or of violent crimes, and R.A. 7648, providing for measures for
the solution of the power crisis. PAGCOR revenues are tapped by these two statutes. This would show
that the PAGCOR charter has not been repealed by the Local Government Code but has in fact been
improved as it were to make the entity more responsive to the fiscal problems of the government.

It is a canon of legal hermeneutics that instead of pitting one statute against another in an inevitably
destructive confrontation, courts must exert every effort to reconcile them, remembering that both laws
deserve a becoming respect as the handiwork of a coordinate branch of the government. On the
assumption of a conflict between P.D. 1869 and the Code, the proper action is not to uphold one and
annul the other but to give effect to both by harmonizing them if possible. This is possible in the case
before us. The proper resolution of the problem at hand is to hold that under the Local Government Code,
local government units may (and indeed must) prevent and suppress all kinds of gambling within their
territories except only those allowed by statutes like P.D. 1869. The exception reserved in such laws must
be read into the Code, to make both the Code and such laws equally effective and mutually
complementary.

This approach would also affirm that there are indeed two kinds of gambling, to wit, the illegal and those
authorized by law. Legalized gambling is not a modern concept; it is probably as old as illegal gambling, if
not indeed more so. The petitioners' suggestion that the Code authorizes them to prohibit all kinds of
gambling would erase the distinction between these two forms of gambling without a clear indication that
this is the will of the legislature. Plausibly, following this theory, the City of Manila could, by mere
ordinance, prohibit the Philippine Charity Sweepstakes Office from conducting a lottery as authorized by
R.A. 1169 and B.P. 42 or stop the races at the San Lazaro Hippodrome as authorized by R.A. 309 and
R.A. 983.

In light of all the above considerations, we see no way of arriving at the conclusion urged on us by the
petitioners that the ordinances in question are valid. On the contrary, we find that the ordinances violate
P.D. 1869, which has the character and force of a statute, as well as the public policy expressed in the
decree allowing the playing of certain games of chance despite the prohibition of gambling in general.

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

Municipal corporations owe their origin to, and derive their powers and rights wholly from
the legislature. It breathes into them the breath of life, without which they cannot exist. As
it creates, so it may destroy. As it may destroy, it may abridge and control. Unless there
is some constitutional limitation on the right, the legislature might, by a single act, and if
we can suppose it capable of so great a folly and so great a wrong, sweep from existence
all of the municipal corporations in the State, and the corporation could not prevent it. We
know of no limitation on the right so far as to the corporation themselves are concerned.
They are, so to phrase it, the mere tenants at will of the legislature. 11

This basic relationship between the national legislature and the local government units has not been
enfeebled by the new provisions in the Constitution strengthening the policy of local autonomy. Without
meaning to detract from that policy, we here confirm that Congress retains control of the local government
units although in significantly reduced degree now than under our previous Constitutions. The power to
create still includes the power to destroy. The power to grant still includes the power to withhold or recall.
True, there are certain notable innovations in the Constitution, like the direct conferment on the local
government units of the power to tax, 12 which cannot now be withdrawn by mere statute. By and large,
however, the national legislature is still the principal of the local government units, which cannot defy its
will or modify or violate it.

The Court understands and admires the concern of the petitioners for the welfare of their constituents and
their apprehensions that the welfare of Cagayan de Oro City will be endangered by the opening of the
casino. We share the view that "the hope of large or easy gain, obtained without special effort, turns the
head of the workman" 13 and that "habitual gambling is a cause of laziness and ruin." 14 In People v.
Gorostiza, 15 we declared: "The social scourge of gambling must be stamped out. The laws against
gambling must be enforced to the limit." George Washington called gambling "the child of avarice, the
brother of iniquity and the father of mischief." Nevertheless, we must recognize the power of the
legislature to decide, in its own wisdom, to legalize certain forms of gambling, as was done in P.D. 1869
and impliedly affirmed in the Local Government Code. That decision can be revoked by this Court only if it
contravenes the Constitution as the touchstone of all official acts. We do not find such contravention here.

We hold that the power of PAGCOR to centralize and regulate all games of chance, including casinos on
land and sea within the territorial jurisdiction of the Philippines, remains unimpaired. P.D. 1869 has not
been modified by the Local Government Code, which empowers the local government units to prevent or
suppress only those forms of gambling prohibited by law.

Casino gambling is authorized by P.D. 1869. This decree has the status of a statute that cannot be
amended or nullified by a mere ordinance. Hence, it was not competent for the Sangguniang Panlungsod
of Cagayan de Oro City to enact Ordinance No. 3353 prohibiting the use of buildings for the operation of
a casino and Ordinance No. 3375-93 prohibiting the operation of casinos. For all their praiseworthy
motives, these ordinances are contrary to P.D. 1869 and the public policy announced therein and are
therefore ultra vires and void.

WHEREFORE, the petition is DENIED and the challenged decision of the respondent Court of Appeals is
AFFIRMED, with costs against the petitioners. It is so ordered.
G.R. No. 104786 January 27, 1994

ALFREDO PATALINGHUG, petitioner,

vs.
HON. COURT OF APPEALS, RICARDO CRIBILLO, MARTIN ARAPOL, CORAZON ALCASID,
PRIMITIVA SEDO, respondents.

Gonzales, Batiller, Bilog & Associates for petitioner.

Garcilaso F. Vega for private respondents.

ROMERO, J.:

In the case before us, we are called upon to decide whether or not petitioner's operation of a funeral
home constitutes permissible use within a particular district or zone in Davao City.

On November 17, 1982, the Sangguniang Panlungsod of Davao City enacted Ordinance No. 363, series
of 1982 otherwise known as the "Expanded Zoning Ordinance of Davao City," Section 8 of which states:

Sec. 8. USE REGULATIONS IN C-2 DISTRICTS (Shaded light red in the Expanded
Zoning Map) — AC-2 District shall be dominantly for commercial and compatible
industrial uses as provided hereunder:

xxx xxx xxx

xxx xxx xxx

3.1 Funeral Parlors/Memorial Homes with adequate off street parking space (see parking
standards of P.D. 1096) and provided that they shall be established not less than 50
meters from any residential structures, churches and other institutional buildings.
(Emphasis provided)

Upon prior approval and certification of zoning compliance by Zoning Administrator issued on February
10, 1987 Building Permit No. 870254 in favor of petitioner for the construction of a funeral parlor in the
name and style of Metropolitan Funeral Parlor at Cabaguio Avenue, Agdao, Davao City.

Thereafter, petitioner commenced the construction of his funeral parlor.

Acting on the complaint of several residents of Barangay Agdao, Davao City that the construction of
petitioner's funeral parlor violated Ordinance
No. 363, since it was allegedly situated within a 50-meter radius from the Iglesia ni Kristo Chapel and
several residential structures, the Sangguniang Panlungsod conducted an investigation and found that
"the nearest residential structure, owned by Wilfred G. Tepoot is only 8 inches to the south. . . . ." 1

Notwithstanding the findings of the Sangguniang Panlungsod, petitioner continued to construct his funeral
parlor which was finished on November 3, 1987.

Consequently, private respondents filed on September 6, 1988 a case for the declaration of nullity of a
building permit with preliminary prohibitory and mandatory injunction and/or restraining order with the trial
court.2

After conducting its own ocular inspection on March 30, 1989, the lower court, in its order dated July 6,
1989, dismissed the complaint based on the following findings:3

1. that the residential building owned by Cribillo and Iglesia ni Kristo chapel are 63.25
meters and 55.95 meters away, respectively from the funeral parlor.

2. Although the residential building owned by certain

Mr. Tepoot is adjacent to the funeral parlor, and is only separated therefrom by a
concrete fence, said residential building is being rented by a certain Mr. Asiaten who
actually devotes it to his laundry business with machinery thereon.
 3. Private respondent's suit is premature as they failed to exhaust the administrative
remedies provided by Ordinance No. 363.

Hence, private respondents appealed to the Court of Appeals. (CA G.R. No. 23243).

In its decision dated November 29, 1991, the Court of Appeals reversed the lower court by annulling
building permit No. 870254 issued in favor of petitioner.4 It ruled that although the buildings owned by
Cribillo and Iglesia ni Kristo were beyond the 50-meter residential radius prohibited by Ordinance 363, the
construction of the funeral parlor was within the 50-meter radius measured from the Tepoot's building.
The Appellate Court disagreed with the lower court's determination that Tepoot's building was commercial
and ruled that although it was used by Mr. Tepoot's lessee for laundry business, it was a residential lot as
reflected in the tax declaration, thus paving the way for the application of Ordinance No. 363.

Hence, this appeal based on the following grounds:

The Respondent Court of Appeals erred in concluding that the Tepoot building adjacent
to petitioner's funeral parlor is residential simply because it was allegedly declared as
such for taxation purposes, in complete disregard of Ordinance No. 363 (The Expanded
Zoning Ordinance of Davao City) declaring the subject area as dominantly for commercial
and compatible industrial uses.

We reverse the Appellate Court and reinstate the ruling of the lower court that petitioner did not violate
Section 8 of Davao City Ordinance No. 363. It must be emphasized that the question of whether Mr.
Tepoot's building is residential or not is a factual determination which we should not disturb. As we have
repeatedly enunciated, the resolution of factual issues is the function of the lower courts where findings
on these matters are received with respect and are in fact binding on this court, except only where the
case is shown as coming under the accepted exceptions.5

Although the general rule is that factual findings of the Court of Appeals are conclusive on us, 6 this
admits of exceptions as when the findings or conclusions of the Court of Appeals and the trial court are
contrary to each other.7 While the trial court ruled that Tepoot's building was commercial, the Appellate
Court ruled otherwise. Thus we see the necessity of reading and examining the pleadings and transcripts
submitted before the trial court.

In the case at bar, the testimony of City Councilor Vergara shows that Mr. Tepoot's building was used for
a dual purpose both as a dwelling and as a place where a laundry business was conducted. 8 But while its
commercial aspect has been established by the presence of machineries and laundry paraphernalia, its
use as a residence, other than being declared for taxation purposes as such, was not fully substantiated.

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 the 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.

Needless to say, even if we are to examine the evidentiary value of a tax declaration under the Real
Property Tax Code, a tax declaration only enables the assessor to identify the same for assessment
levels. In fact, a tax declaration does not bind a provincial/city assessor, for under Sec. 22 of the Real
Estate Tax Code,9 appraisal and assessment are based on the actual use irrespective of "any previous
assessment or taxpayer's valuation thereon," which is based on a taxpayer's declaration. In fact, a piece
of land declared by a taxpayer as residential may be assessed by the provincial or city assessor as
commercial because its actual use is commercial.

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.

The declaration of the said area as a commercial zone thru a municipal ordinance is an exercise of police
power to promote the good order and general welfare of the people in the locality. Corollary thereto, the
state, in order to promote the general welfare, may interfere with personal liberty, with property, and with
business and occupations. 10 Thus, persons may be subjected to certain kinds of restraints and burdens
in order to secure the general welfare of the state and to this fundamental aim of government, the rights
of the individual may be subordinated. The ordinance which regulates the location of funeral homes has
been adopted as part of comprehensive zoning plans for the orderly development of the area covered
thereunder.

WHEREFORE, the decision of the Court of Appeals dated November 29, 1991 is hereby REVERSED
and the order dated July 6, 1989 of the Regional Trial Court of Davao City is REINSTATED.

SO ORDERED.
G.R. No. 112497 August 4, 1994

HON. FRANKLIN M. DRILON, in his capacity as SECRETARY OF JUSTICE, petitioner,

vs.
MAYOR ALFREDO S. LIM, VICE-MAYOR JOSE L. ATIENZA, CITY TREASURER ANTHONY
ACEVEDO, SANGGUNIANG PANGLUNSOD AND THE CITY OF MANILA, respondents.

The City Legal Officer for petitioner.

Angara, Abello, Concepcion, Regala & Cruz for Caltex (Phils.).

Joseph Lopez for Sangguniang Panglunsod of Manila.

L.A. Maglaya for Petron Corporation.

CRUZ, J.:

The principal issue in this case is the constitutionality of Section 187 of the Local Government Code
reading as follows:

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

Pursuant thereto, the Secretary of Justice had, on appeal to him of four oil companies and a taxpayer,
declared Ordinance No. 7794, otherwise known as the Manila Revenue Code, null and void for non-
compliance with the prescribed procedure in the enactment of tax ordinances and for containing certain
provisions contrary to law and public policy.1

In a petition for certiorari filed by the City of Manila, the Regional Trial Court of Manila revoked the
Secretary's resolution and sustained the ordinance, holding inter alia that the procedural requirements
had been observed. More importantly, it declared Section 187 of the Local Government Code as
unconstitutional because of its vesture in the Secretary of Justice of the power of control over local
governments in violation of the policy of local autonomy mandated in the Constitution and of the specific
provision therein conferring on the President of the Philippines only the power of supervision over local
governments.2

The present petition would have us reverse that decision. The Secretary argues that the annulled Section
187 is constitutional and that the procedural requirements for the enactment of tax ordinances as
specified in the Local Government Code had indeed not been observed.

Parenthetically, this petition was originally dismissed by the Court for non-compliance with Circular 1-88,
the Solicitor General having failed to submit a certified true copy of the challenged decision. 3 However, on
motion for reconsideration with the required certified true copy of the decision attached, the petition was
reinstated in view of the importance of the issues raised therein.

We stress at the outset that the lower court had jurisdiction to consider the constitutionality of Section
187, this authority being embraced in the general definition of the judicial power to determine what are the
valid and binding laws by the criterion of their conformity to the fundamental law. Specifically, BP 129
vests in the regional trial courts jurisdiction over all civil cases in which the subject of the litigation is
incapable of pecuniary estimation,4 even as the accused in a criminal action has the right to question in
his defense the constitutionality of a law he is charged with violating and of the proceedings taken against
him, particularly as they contravene the Bill of Rights. Moreover, Article X, Section 5(2), of the
Constitution vests in the Supreme Court appellate jurisdiction over final judgments and orders of lower
courts in all cases in which the constitutionality or validity of any treaty, international or executive
agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in
question.

In the exercise of this jurisdiction, lower courts are advised to act with the utmost circumspection, bearing
in mind the consequences of a declaration of unconstitutionality upon the stability of laws, no less than on
the doctrine of separation of powers. As the questioned act is usually the handiwork of the legislative or
the executive departments, or both, it will be prudent for such courts, if only out of a becoming modesty,
to defer to the higher judgment of this Court in the consideration of its validity, which is better determined
after a thorough deliberation by a collegiate body and with the concurrence of the majority of those who
participated in its discussion.5

It is also emphasized that every court, including this Court, is charged with the duty of a purposeful
hesitation before declaring a law unconstitutional, on the theory that the measure was first carefully
studied by the executive and the legislative departments and determined by them to be in accordance
with the fundamental law before it was finally approved. To doubt is to sustain. The presumption of
constitutionality can be overcome only by the clearest showing that there was indeed an infraction of the
Constitution, and only when such a conclusion is reached by the required majority may the Court
pronounce, in the discharge of the duty it cannot escape, that the challenged act must be struck down.

In the case before us, Judge Rodolfo C. Palattao declared Section 187 of the Local Government Code
unconstitutional insofar as it empowered the Secretary of Justice to review tax ordinances and,
inferentially, to annul them. He cited the familiar distinction between control and supervision, the first
being "the power of an officer 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 former for the latter," while the second is
"the power of a superior officer to see to it that lower officers perform their functions in accordance with
law."6 His conclusion was that the challenged section gave to the Secretary the power of control and not
of supervision only as vested by the Constitution in the President of the Philippines. This was, in his view,
a violation not only of Article X, specifically Section 4 thereof, 7 and of Section 5 on the taxing powers of
local governments,8 and the policy of local autonomy in general.

We do not share that view. The lower court was rather hasty in invalidating the provision.

Section 187 authorizes the Secretary of Justice to review only the constitutionality or legality of the tax
ordinance and, if warranted, to revoke it on either or both of these grounds. When he alters or modifies or
sets aside a tax ordinance, he is not also permitted to substitute his own judgment for the judgment of the
local government that enacted the measure. Secretary Drilon did set aside the Manila Revenue Code, but
he did not replace it with his own version of what the Code should be. He did not pronounce the
ordinance unwise or unreasonable as a basis for its annulment. He did not say that in his judgment it was
a bad law. What he found only was that it was illegal. All he did in reviewing the said measure was
determine if the petitioners were performing their functions in accordance with law, that is, with the
prescribed procedure for the enactment of tax ordinances and the grant of powers to the city government
under the Local Government Code. As we see it, that was an act not of control but of mere supervision.

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 the doing of the act. He has no
judgment on this matter except to see to it that the rules are followed. In the opinion of the Court,
Secretary Drilon did precisely this, and no more nor less than this, and so performed an act not of control
but of mere supervision.

The case of Taule v. Santos 9 cited in the decision has no application here because the jurisdiction
claimed by the Secretary of Local Governments over election contests in the Katipunan ng Mga Barangay
was held to belong to the Commission on Elections by constitutional provision. The conflict was over
jurisdiction, not supervision or control.

Significantly, a rule similar to Section 187 appeared in the Local Autonomy Act, which provided in its
Section 2 as follows:

A tax ordinance shall go into effect on the fifteenth day after its passage, unless the
ordinance shall provide otherwise: Provided, however, That the Secretary of Finance
shall have authority to suspend the effectivity of any ordinance within one hundred and
 twenty days after receipt by him of a copy thereof, if, in his opinion, the tax or fee therein
levied or imposed is unjust, excessive, oppressive, or confiscatory, or when it is contrary
to declared national economy policy, and when the said Secretary exercises this authority
the effectivity of such ordinance shall be suspended, either in part or as a whole, for a
period of thirty days within which period the local legislative body may either modify the
tax ordinance to meet the objections thereto, or file an appeal with a court of competent
jurisdiction; otherwise, the tax ordinance or the part or parts thereof declared suspended,
shall be considered as revoked. Thereafter, the local legislative body may not reimpose
the same tax or fee until such time as the grounds for the suspension thereof shall have
ceased to exist.

That section allowed the Secretary of Finance to suspend the effectivity of a tax ordinance if, in his
opinion, the tax or fee levied was unjust, excessive, oppressive or confiscatory. Determination of these
flaws would involve the exercise of judgment or discretion and not merely an examination of whether or
not the requirements or limitations of the law had been observed; hence, it would smack of control rather
than mere supervision. That power was never questioned before this Court but, at any rate, the Secretary
of Justice is not given the same latitude under Section 187. All he is permitted to do is ascertain the
constitutionality or legality of the tax measure, without the right to declare that, in his opinion, it is unjust,
excessive, oppressive or confiscatory. He has no discretion on this matter. In fact, Secretary Drilon set
aside the Manila Revenue Code only on two grounds, to with, the inclusion therein of certain ultra
vires provisions and non-compliance with the prescribed procedure in its enactment. These grounds
affected the legality, not the wisdom or reasonableness, of the tax measure.

The issue of non-compliance with the prescribed procedure in the enactment of the Manila Revenue
Code is another matter.

In his resolution, Secretary Drilon declared that there were no written notices of public hearings on the
proposed Manila Revenue Code that were sent to interested parties as required by Art. 276(b) of the
Implementing Rules of the Local Government Code nor were copies of the proposed ordinance published
in three successive issues of a newspaper of general circulation pursuant to Art. 276(a). No minutes were
submitted to show that the obligatory public hearings had been held. Neither were copies of the measure
as approved posted in prominent places in the city in accordance with Sec. 511(a) of the Local
Government Code. Finally, the Manila Revenue Code was not translated into Pilipino or Tagalog and
disseminated among the people for their information and guidance, conformably to Sec. 59(b) of the
Code.

Judge Palattao found otherwise. He declared that all the procedural requirements had been observed in
the enactment of the Manila Revenue Code and that the City of Manila had not been able to prove such
compliance before the Secretary only because he had given it only five days within which to gather and
present to him all the evidence (consisting of 25 exhibits) later submitted to the trial court.

To get to the bottom of this question, the Court acceded to the motion of the respondents and called for
the elevation to it of the said exhibits. We have carefully examined every one of these exhibits and agree
with the trial court that the procedural requirements have indeed been observed. Notices of the public
hearings were sent to interested parties as evidenced by Exhibits G-1 to 17. The minutes of the hearings
are found in Exhibits M, M-1, M-2, and M-3. Exhibits B and C show that the proposed ordinances were
published in the Balita and the Manila Standard on April 21 and 25, 1993, respectively, and the approved
ordinance was published in the July 3, 4, 5, 1993 issues of the Manila Standard and in the July 6, 1993
issue of Balita, as shown by Exhibits Q, Q-1, Q-2, and Q-3.

The only exceptions are the posting of the ordinance as approved but this omission does not affect its
validity, considering that its publication in three successive issues of a newspaper of general circulation
will satisfy due process. It has also not been shown that the text of the ordinance has been translated and
disseminated, but this requirement applies to the approval of local development plans and public
investment programs of the local government unit and not to tax ordinances.

We make no ruling on the substantive provisions of the Manila Revenue Code as their validity has not
been raised in issue in the present petition.

WHEREFORE, the judgment is hereby rendered REVERSING the challenged decision of the Regional
Trial Court insofar as it declared Section 187 of the Local Government Code unconstitutional but
AFFIRMING its finding that the procedural requirements in the enactment of the Manila Revenue Code
have been observed. No pronouncement as to costs.

SO ORDERED.
G.R. Nos. 120865-71 December 7, 1995

LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,

vs.
COURT OF APPEALS; HON. JUDGE HERCULANO TECH, PRESIDING JUDGE, BRANCH 70,
REGIONAL TRIAL COURT OF BINANGONAN RIZAL; FLEET DEVELOPMENT, INC. and CARLITO
ARROYO; THE MUNICIPALITY OF BINANGONAN and/or MAYOR ISIDRO B. PACIS, respondents.

LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,

vs.
COURT OF APPEALS; HON. JUDGE AURELIO C. TRAMPE, PRESIDING JUDGE, BRANCH 163,
REGIONAL TRIAL COURT OF PASIG; MANILA MARINE LIFE BUSINESS RESOURCES, INC.
represented by, MR. TOBIAS REYNALD M. TIANGCO; MUNICIPALITY OF TAGUIG, METRO
MANILA and/or MAYOR RICARDO D. PAPA, JR., respondents.

LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,

vs.
COURT OF APPEALS; HON. JUDGE ALEJANDRO A. MARQUEZ, PRESIDING JUDGE, BRANCH 79,
REGIONAL TRIAL COURT OF MORONG, RIZAL; GREENFIELD VENTURES INDUSTRIAL
DEVELOPMENT CORPORATION and R. J. ORION DEVELOPMENT CORPORATION; MUNICIPALITY
OF JALA-JALA and/or MAYOR WALFREDO M. DE LA VEGA, respondents.

LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,

vs.
COURT OF APPEALS; HON. JUDGE MANUEL S. PADOLINA, PRESIDING JUDGE, BRANCH 162,
REGIONAL TRIAL COURT OF PASIG, METRO MANILA; IRMA FISHING & TRADING CORP.; ARTM
FISHING CORP.; BDR CORPORATION, MIRT CORPORATION and TRIM CORPORATION;
MUNICIPALITY OF BINANGONAN and/or MAYOR ISIDRO B. PACIS, respondents.

LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,

vs.
COURT OF APPEALS; HON. JUDGE ARTURO A. MARAVE, PRESIDING JUDGE, BRANCH 78,
REGIONAL TRIAL COURT OF MORONG, RIZAL; BLUE LAGOON FISHING CORP. and ALCRIS
CHICKEN GROWERS, INC.; MUNICIPALITY OF JALA-JALA and/or MAYOR WALFREDO M. DE LA
VEGA, respondents.

LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,

vs.
COURT OF APPEALS; HON. JUDGE ARTURO A. MARAVE, PRESIDING JUDGE, BRANCH 78,
REGIONAL TRIAL COURT OF MORONG, RIZAL; AGP FISH VENTURES, INC., represented by its
PRESIDENT ALFONSO PUYAT; MUNICIPALITY OF JALA-JALA and/or MAYOR WALFREDO M. DE
LA VEGA, respondents.

LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,

vs.
COURT OF APPEALS; HON. JUDGE EUGENIO S. LABITORIA, PRESIDING JUDGE, BRANCH 161,
REGIONAL TRIAL COURT OF PASIG, METRO MANILA; SEA MAR TRADING CO. INC.; EASTERN
LAGOON FISHING CORP.; MINAMAR FISHING CORP.; MUNICIPALITY OF BINANGONAN and/or
MAYOR ISIDRO B. PACIS, respondents.

HERMOSISIMA, JR., J.:

It is difficult for a man, scavenging on the garbage dump created by affluence and profligate consumption
and extravagance of the rich or fishing in the murky waters of the Pasig River and the Laguna Lake or
making a clearing in the forest so that he can produce food for his family, to understand why protecting
birds, fish, and trees is more important than protecting him and keeping his family alive.

How do we strike a balance between environmental protection, on the one hand, and the individual
personal interests of people, on the other?

Towards environmental protection and ecology, navigational safety, and sustainable development,
Republic Act No. 4850 created the "Laguna Lake Development Authority." This Government Agency is
supposed to carry out and effectuate the aforesaid declared policy, so as to accelerate the development
and balanced growth of the Laguna Lake area and the surrounding provinces, cities and towns, in the act
clearly named, within the context of the national and regional plans and policies for social and economic
development.

Presidential Decree No. 813 of former President Ferdinand E. Marcos amended certain sections of
Republic Act No. 4850 because of the concern for the rapid expansion of Metropolitan Manila, the
suburbs and the lakeshore towns of Laguna de Bay, combined with current and prospective uses of the
lake for municipal-industrial water supply, irrigation, fisheries, and the like. Concern on the part of the
Government and the general public over: — the environment impact of development on the water quality
and ecology of the lake and its related river systems; the inflow of polluted water from the Pasig River,
industrial, domestic and agricultural wastes from developed areas around the lake; the increasing
urbanization which induced the deterioration of the lake, since water quality studies have shown that the
lake will deteriorate further if steps are not taken to check the same; and the floods in Metropolitan Manila
area and the lakeshore towns which will influence the hydraulic system of Laguna de Bay, since any
scheme of controlling the floods will necessarily involve the lake and its river systems, — likewise gave
impetus to the creation of the Authority.

Section 1 of Republic Act No. 4850 was amended to read as follows:

Sec. 1. Declaration of Policy. It is hereby declared to be the national policy to promote,

and accelerate the development and balanced growth of the Laguna Lake area and the
surrounding provinces, cities and towns hereinafter referred to as the region, within the
context of the national and regional plans and policies for social and economic
development and to carry out the development of the Laguna Lake region with due
regard and adequate provisions for environmental management and control, preservation
of the quality of human life and ecological systems, and the prevention of undue
ecological disturbances, deterioration and pollution.1

Special powers of the Authority, pertinent to the issues in this case, include:

Sec. 3. Section 4 of the same Act is hereby further amended by adding thereto seven
new paragraphs to be known as paragraphs (j), (k), (l), (m), (n), (o), and (p) which shall
read as follows:

xxx xxx xxx

(j) The provisions of existing laws to the contrary notwithstanding, to

engage in fish production and other aqua-culture projects in Laguna de
Bay and other bodies of water within its jurisdiction and in pursuance
thereof to conduct studies and make experiments, whenever necessary,
with the collaboration and assistance of the Bureau of Fisheries and
Aquatic Resources, with the end in view of improving present techniques
and practices. Provided, that until modified, altered or amended by the
procedure provided in the following sub-paragraph, the present laws,
rules and permits or authorizations remain in force;

(k) For the purpose of effectively regulating and monitoring activities in

Laguna de Bay, the Authority shall have exclusive jurisdiction to issue
new permit for the use of the lake waters for any projects or activities in
or affecting the said lake including navigation, construction, and
operation of fishpens, fish enclosures, fish corrals and the like, and to
impose necessary safeguards for lake quality control and management
and to collect necessary fees for said activities and projects: Provided,
That the fees collected for fisheries may be shared between the Authority
and other government agencies and political sub-divisions in such
proportion as may be determined by the President of the Philippines
upon recommendation of the Authority's Board: Provided, further, That
the Authority's Board may determine new areas of fishery development
or activities which it may place under the supervision of the Bureau of
Fisheries and Aquatic Resources taking into account the overall
development plans and programs for Laguna de Bay and related bodies
of water: Provided, finally, That the Authority shall subject to the approval
of the President of the Philippines promulgate such rules and regulations
which shall govern fisheries development activities in Laguna de Bay
which shall take into consideration among others the following: socio-
economic amelioration of bonafide resident fishermen whether
individually or collectively in the form of cooperatives, lakeshore town
development, a master plan for fishpen construction and operation,
 communal fishing ground for lake shore town residents, and preference
to lake shore town residents in hiring laborer for fishery projects;

(l) To require the cities and municipalities embraced within the region to
pass appropriate zoning ordinances and other regulatory measures
necessary to carry out the objectives of the Authority and enforce the
same with the assistance of the Authority;

(m) The provisions of existing laws to the contrary notwithstanding, to

exercise water rights over public waters within the Laguna de Bay region
whenever necessary to carry out the Authority's projects;

(n) To act in coordination with existing governmental agencies in

establishing water quality standards for industrial, agricultural and
municipal waste discharges into the lake and to cooperate with said
existing agencies of the government of the Philippines in enforcing such
standards, or to separately pursue enforcement and penalty actions as
provided for in Section 4 (d) and Section 39-A of this Act: Provided, That
in case of conflict on the appropriate water quality standard to be
enforced such conflict shall be resolved thru the NEDA Board.2

To more effectively perform the role of the Authority under Republic Act No. 4850, as though Presidential
Decree No. 813 were not thought to be completely effective, the Chief Executive, feeling that the land and
waters of the Laguna Lake Region are limited natural resources requiring judicious management to their
optimal utilization to insure renewability and to preserve the ecological balance, the competing options for
the use of such resources and conflicting jurisdictions over such uses having created undue constraints
on the institutional capabilities of the Authority in the light of the limited powers vested in it by its charter,
Executive Order No. 927 further defined and enlarged the functions and powers of the Authority and
named and enumerated the towns, cities and provinces encompassed by the term "Laguna de Bay
Region".

Also, pertinent to the issues in this case are the following provisions of Executive Order No. 927 which
include in particular the sharing of fees:

Sec 2. Water Rights Over Laguna de Bay and Other Bodies of Water within the Lake
Region: To effectively regulate and monitor activities in the Laguna de Bay region, the
Authority shall have exclusive jurisdiction to issue permit for the use of all surface water
for any projects or activities in or affecting the said region including navigation,
construction, and operation of fishpens, fish enclosures, fish corrals and the like.

For the purpose of this Executive Order, the term "Laguna de Bay Region" shall refer to
the Provinces of Rizal and Laguna; the Cities of San Pablo, Pasay, Caloocan, Quezon,
Manila and Tagaytay; the towns of Tanauan, Sto. Tomas and Malvar in Batangas
Province; the towns of Silang and Carmona in Cavite Province; the town of Lucban in
Quezon Province; and the towns of Marikina, Pasig, Taguig, Muntinlupa, and Pateros in
Metro Manila.

Sec 3. Collection of Fees. The Authority is hereby empowered to collect fees for the use
of the lake water and its tributaries for all beneficial purposes including but not limited to
fisheries, recreation, municipal, industrial, agricultural, navigation, irrigation, and waste
disposal purpose; Provided, that the rates of the fees to be collected, and the sharing
with other government agencies and political subdivisions, if necessary, shall be subject
to the approval of the President of the Philippines upon recommendation of the
Authority's Board, except fishpen fee, which will be shared in the following manner; 20
percent of the fee shall go to the lakeshore local governments, 5 percent shall go to the
Project Development Fund which shall be administered by a Council and the remaining
75 percent shall constitute the share of LLDA. However, after the implementation within
the three-year period of the Laguna Lake Fishery Zoning and Management Plan, the
sharing will be modified as follows: 35 percent of the fishpen fee goes to the lakeshore
local governments, 5 percent goes to the Project Development Fund and the remaining
60 percent shall be retained by LLDA; Provided, however, that the share of LLDA shall
form part of its corporate funds and shall not be remitted to the National Treasury as an
exception to the provisions of Presidential Decree No. 1234. (Emphasis supplied)

It is important to note that Section 29 of Presidential Decree No. 813 defined the term "Laguna Lake" in
this manner:
 Sec 41. Definition of Terms.

(11) Laguna Lake or Lake. Whenever Laguna Lake or lake is used in this Act, the same
shall refer to Laguna de Bay which is that area covered by the lake water when it is at the
average annual maximum lake level of elevation 12.50 meters, as referred to a datum
10.00 meters below mean lower low water (M.L.L.W). Lands located at and below such
elevation are public lands which form part of the bed of said lake.

Then came Republic Act No. 7160, the Local Government Code of 1991. The municipalities in the
Laguna Lake Region interpreted the provisions of this law to mean that the newly passed law gave
municipal governments the exclusive jurisdiction to issue fishing privileges within their municipal waters
because R.A. 7160 provides:

Sec. 149. Fishery Rentals, Fees and Charges.

(a) Municipalities shall have the exclusive authority to grant fishery privileges in the
municipal waters and impose rental fees or charges therefor in accordance with the
provisions of this Section.

(b) The Sangguniang Bayan may:

(1) Grant fishing privileges to erect fish corrals, oyster, mussel or other
aquatic beds or bangus fry areas, within a definite zone of the municipal
waters, as determined by it; . . . .

(2) Grant privilege to gather, take or catch bangus fry, prawn fry
or kawag-kawag or fry of other species and fish from the municipal
waters by nets, traps or other fishing gears to marginal fishermen free
from any rental fee, charges or any other imposition whatsoever.

xxx xxx xxx

Sec. 447. Power, Duties, Functions and Compensation. . . . .

xxx xxx xxx

(XI) Subject to the provisions of Book II of this Code, grant exclusive

privileges of constructing fish corrals or fishpens, or the taking or
catching of bangus fry, prawn fry or kawag-kawag or fry of any species
or fish within the municipal waters.

xxx xxx xxx

Municipal governments thereupon assumed the authority to issue fishing privileges and fishpen permits.
Big fishpen operators took advantage of the occasion to establish fishpens and fishcages to the
consternation of the Authority. Unregulated fishpens and fishcages, as of July, 1995, occupied almost
one-third of the entire lake water surface area, increasing the occupation drastically from 7,000 hectares
in 1990 to almost 21,000 hectares in 1995. The Mayor's permit to construct fishpens and fishcages were
all undertaken in violation of the policies adopted by the Authority on fishpen zoning and the Laguna Lake
carrying capacity.

To be sure, the implementation by the lakeshore municipalities of separate independent policies in the
operation of fishpens and fishcages within their claimed territorial municipal waters in the lake and their
indiscriminate grant of fishpen permits have already saturated the lake area with fishpens, thereby
aggravating the current environmental problems and ecological stress of Laguna Lake.

In view of the foregoing circumstances, the Authority served notice to the general public that:

In compliance with the instructions of His Excellency PRESIDENT FIDEL V. RAMOS

given on June 23, 1993 at Pila, Laguna pursuant to Republic Act 4850 as amended by
Presidential Decree 813 and Executive Order 927 series of 1983 and in line with the
policies and programs of the Presidential Task Force on Illegal Fishpens and Illegal
Fishing, the general public is hereby notified that:
 1. All fishpens, fishcages and other aqua-culture structures in the Laguna de Bay Region,
which were not registered or to which no application for registration and/or permit has
been filed with Laguna Lake Development Authority as of March 31, 1993 are hereby
declared outrightly as illegal.

2. All fishpens, fishcages and other aqua-culture structures so declared as illegal shall be
subject to demolition which shall be undertaken by the Presidential Task Force for Illegal
Fishpen and Illegal Fishing.

3. Owners of fishpens, fishcages and other aqua-culture structures declared as illegal

shall, without prejudice to demolition of their structures be criminally charged in
accordance with Section 39-A of Republic Act 4850 as amended by P.D. 813 for violation
of the same laws. Violations of these laws carries a penalty of imprisonment of not
exceeding 3 years or a fine not exceeding Five Thousand Pesos or both at the discretion
of the court.

All operators of fishpens, fishcages and other aqua-culture structures declared as illegal
in accordance with the foregoing Notice shall have one (1) month on or before 27
October 1993 to show cause before the LLDA why their said fishpens, fishcages and
other aqua-culture structures should not be demolished/dismantled.

One month, thereafter, the Authority sent notices to the concerned owners of the illegally constructed
fishpens, fishcages and other aqua-culture structures advising them to dismantle their respective
structures within 10 days from receipt thereof, otherwise, demolition shall be effected.

Reacting thereto, the affected fishpen owners filed injunction cases against the Authority before various
regional trial courts, to wit: (a) Civil Case No. 759-B, for Prohibition, Injunction and Damages, Regional
Trial Court, Branch 70, Binangonan, Rizal, filed by Fleet Development, Inc. and Carlito Arroyo; (b) Civil
Case No. 64049, for Injunction, Regional Trial Court, Branch 162, Pasig, filed by IRMA Fishing and
Trading Corp., ARTM Fishing Corp., BDR Corp., MIRT Corp. and TRIM Corp.; (c) Civil Case No. 566, for
Declaratory Relief and Injunction, Regional Trial Court, Branch 163, Pasig, filed by Manila Marine Life
Business Resources, Inc. and Tobias Reynaldo M. Tianco; (d) Civil Case No. 556-M, for Prohibition,
Injunction and Damages, Regional Trial Court, Branch 78, Morong, Rizal, filed by AGP Fishing Ventures,
Inc.; (e) Civil Case No. 522-M, for Prohibition, Injunction and Damages, Regional Trial Court, Branch 78,
Morong, Rizal, filed by Blue Lagoon and Alcris Chicken Growers, Inc.; (f) Civil Case No. 554-,
for Certiorari and Prohibition, Regional Trial Court, Branch 79, Morong, Rizal, filed by Greenfields
Ventures Industrial Corp. and R.J. Orion Development Corp.; and (g) Civil Case No. 64124, for Injunction,
Regional Trial Court, Branch 15, Pasig, filed by SEA-MAR Trading Co., Inc. and Eastern Lagoon Fishing
Corp. and Minamar Fishing Corporation.

The Authority filed motions to dismiss the cases against it on jurisdictional grounds. The motions to
dismiss were invariably denied. Meanwhile, temporary restraining order/writs of preliminary mandatory
injunction were issued in Civil Cases Nos. 64124, 759 and 566 enjoining the Authority from demolishing
the fishpens and similar structures in question.

Hence, the herein petition for certiorari, prohibition and injunction, G.R. Nos. 120865-71, were filed by the
Authority with this court. Impleaded as parties-respondents are concerned regional trial courts and
respective private parties, and the municipalities and/or respective Mayors of Binangonan, Taguig and
Jala-jala, who issued permits for the construction and operation of fishpens in Laguna de Bay. The
Authority sought the following reliefs, viz.:

(A) Nullification of the temporary restraining order/writs of preliminary injunction issued in

Civil Cases Nos. 64125, 759 and 566;

(B) Permanent prohibition against the regional trial courts from exercising jurisdiction over
cases involving the Authority which is a co-equal body;

(C) Judicial pronouncement that R.A. 7610 (Local Government Code of 1991) did not
repeal, alter or modify the provisions of R.A. 4850, as amended, empowering the
Authority to issue permits for fishpens, fishcages and other aqua-culture structures in
Laguna de Bay and that, the Authority the government agency vested with exclusive
authority to issue said permits.

By this Court's resolution of May 2, 1994, the Authority's consolidated petitions were referred to the Court
of Appeals.
In a Decision, dated June 29, 1995, the Court of Appeals dismissed the Authority's consolidated petitions,
the Court of Appeals holding that: (A) LLDA is not among those quasi-judicial agencies of government
whose decision or order are appealable only to the Court of Appeals; (B) the LLDA charter does vest
LLDA with quasi-judicial functions insofar as fishpens are concerned; (C) the provisions of the LLDA
charter insofar as fishing privileges in Laguna de Bay are concerned had been repealed by the Local
Government Code of 1991; (D) in view of the aforesaid repeal, the power to grant permits devolved to
and is now vested with their respective local government units concerned.

Not satisfied with the Court of Appeals decision, the Authority has returned to this Court charging the
following errors:

1. THE HONORABLE COURT OF APPEALS PROBABLY COMMITTED AN ERROR

WHEN IT RULED THAT THE LAGUNA LAKE DEVELOPMENT AUTHORITY IS NOT A
QUASI-JUDICIAL AGENCY.

2. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT

RULED THAT R.A. 4850 AS AMENDED BY P.D. 813 AND E.O. 927 SERIES OF 1983
HAS BEEN REPEALED BY REPUBLIC ACT 7160. THE SAID RULING IS CONTRARY
TO ESTABLISHED PRINCIPLES AND JURISPRUDENCE OF STATUTORY
CONSTRUCTION.

3. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT

RULED THAT THE POWER TO ISSUE FISHPEN PERMITS IN LAGUNA DE BAY HAS
BEEN DEVOLVED TO CONCERNED (LAKESHORE) LOCAL GOVERNMENT UNITS.

We take a simplistic view of the controversy. Actually, the main and only issue posed is: Which agency of
the Government — the Laguna Lake Development Authority or the towns and municipalities comprising
the region — should exercise jurisdiction over the Laguna Lake and its environs insofar as the issuance
of permits for fishery privileges is concerned?

Section 4 (k) of the charter of the Laguna Lake Development Authority, Republic Act No. 4850, the
provisions of Presidential Decree No. 813, and Section 2 of Executive Order No. 927, cited above,
specifically provide that the Laguna Lake Development Authority shall have exclusive jurisdiction to issue
permits for the use of all surface water for any projects or activities in or affecting the said region,
including navigation, construction, and operation of fishpens, fish enclosures, fish corrals and the like. On
the other hand, Republic Act No. 7160, the Local Government Code of 1991, has granted to the
municipalities the exclusive authority to grant fishery privileges in municipal waters. The Sangguniang
Bayan may grant fishery privileges to erect fish corrals, oyster, mussels or other aquatic beds or bangus
fry area within a definite zone of the municipal waters.

We hold that the provisions of Republic Act No. 7160 do not necessarily repeal the aforementioned laws
creating the Laguna Lake Development Authority and granting the latter water rights authority over
Laguna de Bay and the lake region.

The Local Government Code of 1991 does not contain any express provision which categorically
expressly repeal the charter of the Authority. It has to be conceded that there was no intent on the part of
the legislature to repeal Republic Act No. 4850 and its amendments. The repeal of laws should be made
clear and expressed.

It has to be conceded that the charter of the Laguna Lake Development Authority constitutes a special
law. Republic Act No. 7160, the Local Government Code of 1991, is a general law. It is basic in statutory
construction that the enactment of a later legislation which is a general law cannot be construed to have
repealed a special law. It is a well-settled rule in this jurisdiction that "a special statute, provided for a
particular case or class of cases, is not repealed by a subsequent statute, general in its terms, provisions
and application, unless the intent to repeal or alter is manifest, although the terms of the general law are
broad enough to include the cases embraced in the special law." 3

Where there is a conflict between a general law and a special statute, the special statute should prevail
since it evinces the legislative intent more clearly than the general statute. The special law is to be taken
as an exception to the general law in the absence of special circumstances forcing a contrary conclusion.
This is because implied repeals are not favored and as much as possible, effect must be given to all
enactments of the legislature. A special law cannot be repealed, amended or altered by a subsequent
general law by mere implication.4

Thus, it has to be concluded that the charter of the Authority should prevail over the Local Government
Code of 1991.
Considering the reasons behind the establishment of the Authority, which are environmental protection,
navigational safety, and sustainable development, there is every indication that the legislative intent is for
the Authority to proceed with its mission.

We are on all fours with the manifestation of petitioner Laguna Lake Development Authority that "Laguna
de Bay, like any other single body of water has its own unique natural ecosystem. The 900 km² lake
surface water, the eight (8) major river tributaries and several other smaller rivers that drain into the lake,
the 2,920 km² basin or watershed transcending the boundaries of Laguna and Rizal provinces, greater
portion of Metro Manila, parts of Cavite, Batangas, and Quezon provinces, constitute one integrated
delicate natural ecosystem that needs to be protected with uniform set of policies; if we are to be serious
in our aims of attaining sustainable development. This is an exhaustible natural resource — a very limited
one — which requires judicious management and optimal utilization to ensure renewability and preserve
its ecological integrity and balance."

"Managing the lake resources would mean the implementation of a national policy geared towards the
protection, conservation, balanced growth and sustainable development of the region with due regard to
the inter-generational use of its resources by the inhabitants in this part of the earth. The authors of
Republic Act 4850 have foreseen this need when they passed this LLDA law — the special law designed
to govern the management of our Laguna de Bay lake resources."

"Laguna de Bay therefore cannot be subjected to fragmented concepts of management policies where
lakeshore local government units exercise exclusive dominion over specific portions of the lake water.
The garbage thrown or sewage discharged into the lake, abstraction of water therefrom or construction of
fishpens by enclosing its certain area, affect not only that specific portion but the entire 900 km² of lake
water. The implementation of a cohesive and integrated lake water resource management policy,
therefore, is necessary to conserve, protect and sustainably develop Laguna de Bay." 5

The power of the local government units to issue fishing privileges was clearly granted for revenue
purposes. This is evident from the fact that Section 149 of the New Local Government Code empowering
local governments to issue fishing permits is embodied in Chapter 2, Book II, of Republic Act No. 7160
under the heading, "Specific Provisions On The Taxing And Other Revenue Raising Power Of Local
Government Units."

On the other hand, the power of the Authority to grant permits for fishpens, fishcages and other aqua-
culture structures is for the purpose of effectively regulating and monitoring activities in the Laguna de
Bay region (Section 2, Executive Order No. 927) and for lake quality control and management.6 It does
partake of the nature of police power which is the most pervasive, the least limitable and the most
demanding of all State powers including the power of taxation. Accordingly, the charter of the Authority
which embodies a valid exercise of police power should prevail over the Local Government Code of 1991
on matters affecting Laguna de Bay.

There should be no quarrel over permit fees for fishpens, fishcages and other aqua-culture structures in
the Laguna de Bay area. Section 3 of Executive Order No. 927 provides for the proper sharing of fees
collected.

In respect to the question as to whether the Authority is a quasi-judicial agency or not, it is our holding
that, considering the provisions of Section 4 of Republic Act No. 4850 and Section 4 of Executive Order
No. 927, series of 1983, and the ruling of this Court in Laguna Lake Development Authority vs. Court of
Appeals, 231 SCRA 304, 306, which we quote:

xxx xxx xxx

As a general rule, the adjudication of pollution cases generally pertains to the Pollution
Adjudication Board (PAB), except in cases where the special law provides for another
forum. It must be recognized in this regard that the LLDA, as a specialized administrative
agency, is specifically mandated under Republic Act No. 4850 and its amendatory laws to
carry out and make effective the declared national policy of promoting and accelerating
the development and balanced growth of the Laguna Lake area and the surrounding
provinces of Rizal and Laguna and the cities of San Pablo, Manila, Pasay, Quezon and
Caloocan with due regard and adequate provisions for environmental management and
control, preservation of the quality of human life and ecological systems, and the
prevention of undue ecological disturbances, deterioration and pollution. Under such a
broad grant of power and authority, the LLDA, by virtue of its special charter, obviously
has the responsibility to protect the inhabitants of the Laguna Lake region from the
deleterious effects of pollutants emanating from the discharge of wastes from the
surrounding areas. In carrying out the aforementioned declared policy, the LLDA is
 mandated, among others, to pass upon and approve or disapprove all plans, programs,
and projects proposed by local government offices/agencies within the region, public
corporations, and private persons or enterprises where such plans, programs and/or
projects are related to those of the LLDA for the development of the region.

xxx xxx xxx

. . . . While it is a fundamental rule that an administrative agency has only such powers as
are expressly granted to it by law, it is likewise a settled rule that an administrative
agency has also such powers as are necessarily implied in the exercise of its express
powers. In the exercise, therefore, of its express powers under its charter, as a regulatory
and quasi-judicial body with respect to pollution cases in the Laguna Lake region, the
authority of the LLDA to issue a "cease and desist order" is, perforce, implied. Otherwise,
it may well be reduced to a "toothless" paper agency.

there is no question that the Authority has express powers as a regulatory and quasi-judicial body
in respect to pollution cases with authority to issue a "cease and desist order" and on matters
affecting the construction of illegal fishpens, fishcages and other aqua-culture structures in
Laguna de Bay. The Authority's pretense, however, that it is co-equal to the Regional Trial Courts
such that all actions against it may only be instituted before the Court of Appeals cannot be
sustained. On actions necessitating the resolution of legal questions affecting the powers of the
Authority as provided for in its charter, the Regional Trial Courts have jurisdiction.

In view of the foregoing, this Court holds that Section 149 of Republic Act No. 7160, otherwise known as
the Local Government Code of 1991, has not repealed the provisions of the charter of the Laguna Lake
Development Authority, Republic Act No. 4850, as amended. Thus, the Authority has the exclusive
jurisdiction to issue permits for the enjoyment of fishery privileges in Laguna de Bay to the exclusion of
municipalities situated therein and the authority to exercise such powers as are by its charter vested on it.

Removal from the Authority of the aforesaid licensing authority will render nugatory its avowed purpose of
protecting and developing the Laguna Lake Region. Otherwise stated, the abrogation of this power would
render useless its reason for being and will in effect denigrate, if not abolish, the Laguna Lake
Development Authority. This, the Local Government Code of 1991 had never intended to do.

WHEREFORE, the petitions for prohibition, certiorari and injunction are hereby granted, insofar as they
relate to the authority of the Laguna Lake Development Authority to grant fishing privileges within the
Laguna Lake Region.

The restraining orders and/or writs of injunction issued by Judge Arturo Marave, RTC, Branch 78,
Morong, Rizal; Judge Herculano Tech, RTC, Branch 70, Binangonan, Rizal; and Judge Aurelio Trampe,
RTC, Branch 163, Pasig, Metro Manila, are hereby declared null and void and ordered set aside for
having been issued with grave abuse of discretion.

The Municipal Mayors of the Laguna Lake Region are hereby prohibited from issuing permits to construct
and operate fishpens, fishcages and other aqua-culture structures within the Laguna Lake Region, their
previous issuances being declared null and void. Thus, the fishing permits issued by Mayors Isidro B.
Pacis, Municipality of Binangonan; Ricardo D. Papa, Municipality of Taguig; and Walfredo M. de la Vega,
Municipality of Jala-jala, specifically, are likewise declared null and void and ordered cancelled.

The fishpens, fishcages and other aqua-culture structures put up by operators by virtue of permits issued
by Municipal Mayors within the Laguna Lake Region, specifically, permits issued to Fleet Development,
Inc. and Carlito Arroyo; Manila Marine Life Business Resources, Inc., represented by, Mr. Tobias Reynald
M. Tiangco; Greenfield Ventures Industrial Development Corporation and R.J. Orion Development
Corporation; IRMA Fishing And Trading Corporation, ARTM Fishing Corporation, BDR Corporation, Mirt
Corporation and Trim Corporation; Blue Lagoon Fishing Corporation and ALCRIS Chicken Growers, Inc.;
AGP Fish Ventures, Inc., represented by its President Alfonso Puyat; SEA MAR Trading Co., Inc.,
Eastern Lagoon Fishing Corporation, and MINAMAR Fishing Corporation, are hereby declared illegal
structures subject to demolition by the Laguna Lake Development Authority.

SO ORDERED.
G.R. No. L-28138 August 13, 1986

MATALIN COCONUT CO., INC., petitioner-appellee,

vs.
THE MUNICIPAL COUNCIL OF MALABANG, LANAO DEL SUR, AMIR M. BALINDONG and HADJI
PANGILAMUN MANALOCON, MUNICIPAL MAYOR and MUNICIPAL TREASURER OF MALABANG,
LANAO DEL SUR, respondents-appellants. PURAKAN PLANTATION COMPANY, intervenor-appellee.

YAP, J.:

On August 24, 1966, the Municipal Council of Malabang, Lanao del Sur, invoking the authority of Section
2 of Republic Act No. 2264, otherwise known as the Local Autonomy Act, enacted Municipal Ordinance
No. 45-46, entitled "AN ORDINANCE IMPOSING A POLICE INSPECTION FEE OF P.30 PER SACK OF
CASSAVA STARCH PRODUCED AND SHIPPED OUT OF THE MUNICIPALITY OF MALABANG AND
IMPOSING PENALTIES FOR VIOLATIONS THEREOF." The ordinance made it unlawful for any person,
company or group of persons "to ship out of the Municipality of Malabang, cassava starch or flour without
paying to the Municipal Treasurer or his authorized representatives the corresponding fee fixed by (the)
ordinance." It imposed a "police inspection fee" of P.30 per sack of cassava starch or flour, which shall be
paid by the shipper before the same is transported or shipped outside the municipality. Any person or
company or group of individuals violating the ordinance "is liable to a fine of not less than P100.00, but
not more than P1,000.00, and to pay Pl.00 for every sack of flour being illegally shipped outside the
municipality, or to suffer imprisonment of 20 days, or both, in the discretion of the court.

The validity of the ordinance was challenged by the Matalin Coconut, Inc. in a petition for declaratory
relief filed with the then Court of First Instance of Lanao del Sur against the Municipal Council, the
Municipal Mayor and the Municipal Treasurer of Malabang, Lanao del Sur. Alleging among others that the
ordinance is not only ultra vires, being violative of Republic Act No. 2264, but also unreasonable,
oppressive and confiscatory, the petitioner prayed that the ordinance be declared null and void ab
initio, and that the respondent Municipal Treasurer be ordered to refund the amounts paid by petitioner
under the ordinance. The petitioner also prayed that during the pendency of the action, a preliminary
injunction be issued enjoining the respondents from enforcing the ordinance. The application for
preliminary injunction, however, was denied by the trial court; instead respondent Municipal Treasurer
was ordered to allow payment of the taxes imposed by the ordinance under protest.

Claiming that it was also adversely affected by the ordinance, Purakan Plantation Company was granted
leave to intervene in the action. The intervenor alleged that while its cassava flour factory was situated in
another municipality, i.e., Balabagan, Lanao del Sur, it had to transport the cassava starch and flour it
produced to the seashore through the Municipality of Malabang for loading in coastwise vessels; that the
effect of the enactment of Ordinance No. 45-46, is that intervenor had to refrain from transporting its
products through the Municipality of Malabang in order to ship them by sea to other places.

After trial, the Court a quo rendered a decision declaring the municipal ordinance in question null and
void; ordering the respondent Municipal Treasurer to refund to the petitioner the payments it made under
the said ordinance from September 27, 1966 to May 2, 1967, amounting to P 25,500.00, as well as all
payments made subsequently thereafter; and enjoining and prohibiting the respondents, their agents or
deputies, from collecting the tax of P.30 per bag on the cassava flour or starch belonging to intervenor,
Purakan Plantation Company, manufactured or milled in the Municipality of Balabagan, but shipped out
through the Municipality of Malabang.

After the promulgation of the decision, the Trial Court issued a writ of preliminary mandatory injunction,
upon motion of petitioner, requiring the respondent Municipal Treasurer to deposit with the Philippine
National Bank, Iligan Branch, in the name of the Municipality of Malabang, whatever amounts the
petitioner had already paid or shall pay pursuant to the ordinance in question up to and until final
termination of the case; the deposit was not to be withdrawn from the said bank without any order from
the court. On motion for reconsideration by respondents, the writ was subsequently modified on July 20,
1967, to require the deposit only of amounts paid from the effectivity of the writ up to and until the final
termination of the suit.

From the decision of the trial court, the respondents appealed to this Court.

A motion to dismiss appeal filed by petitioner-appellee, was denied by this court in its resolution of
October 31, 1967. Subsequently, respondents-appellants filed a motion to dissolve the writ of preliminary
mandatory injunction issued by the trial court on July 20, 1967. This motion was also denied by this Court
on January 10, 1968.
Of the assignments of error raised by the appellants in their Brief, only the following need be discussed:
(1) that the trial court erred in adjudicating the money claim of the petitioner in an action for declaratory
relief; and (2) that the trial court erred in declaring the municipal ordinance in question null and void.

The respondents-appellants maintain that it was error for the trial court, in an action for declaratory relief,
to order the refund to petitioner-appellee of the amounts paid by the latter under the municipal ordinance
in question. It is the contention of respondents-appellants that in an action for declaratory relief, all the
court can do is to construe the validity of the ordinance in question and declare the rights of those
affected thereby. The court cannot declare the ordinance illegal and at the same time order the refund to
petitioner of the amounts paid under the ordinance, without requiring petitioner to file an ordinary action to
claim the refund after the declaratory relief judgment has become final. Respondents maintain that under
Rule 64 of the Rules of Court, the court may advise the parties to file the proper pleadings and convert
the hearing into an ordinary action, which was not done in this case.

We find no merit in such contention. Under Sec. 6 of Rule 64, the action for declaratory relief may be
converted into an ordinary action and the parties allowed to file such pleadings as may be necessary or
proper, if before the final termination of the case "a breach or violation of an...ordinance, should take
place." In the present case, no breach or violation of the ordinance occurred. The petitioner decided to
pay "under protest" the fees imposed by the ordinance. Such payment did not affect the case; the
declaratory relief action was still proper because the applicability of the ordinance to future transactions
still remained to be resolved, although the matter could also be threshed out in an ordinary suit for the
recovery of taxes paid (Shell Co. of the Philippines, Ltd. vs. Municipality of Sipocot, L-12680, March 20,
1959). In its petition for declaratory relief, petitioner-appellee alleged that by reason of the enforcement of
the municipal ordinance by respondents it was forced to pay under protest the fees imposed pursuant to
the said ordinance, and accordingly, one of the reliefs prayed for by the petitioner was that the
respondents be ordered to refund all the amounts it paid to respondent Municipal Treasurer during the
pendency of the case. The inclusion of said allegation and prayer in the petition was not objected to by
the respondents in their answer. During the trial, evidence of the payments made by the petitioner was
introduced. Respondents were thus fully aware of the petitioner's claim for refund and of what would
happen if the ordinance were to be declared invalid by the court.

Respondents' contention, if sustained, would in effect require a separate suit for the recovery of the fees
paid by petitioner under protest. Multiplicity of suits should not be allowed or encouraged and, in the
context of the present case, is clearly uncalled for and unnecessary.

The main issue to be resolve in this case whether not Ordinance No. 45-66 enacted by respondent
Municipal Council of Malabang, Lanao del Sur, is valid. The respondents-appellants contend that the
municipality has the power and authority to approve the ordinance in question pursuant to Section 2 of
the Local Autonomy Act (Republic Act No. 2264).

Since the enactment of the Local Autonomy Act, a liberal rule has been followed by this Court in
construing municipal ordinances enacted pursuant to the taxing power granted under Section 2 of said
law. This Court has construed the grant of power to tax under the above-mentioned provision as
sufficiently plenary to cover "everything, excepting those which are mentioned" therein, subject only to the
limitation that the tax so levied is for public purposes, just and uniform (Nin Bay Mining Company vs.
Municipality of Roxas, Province of Palawan, 14 SCRA 661; C.N. Hodges vs. Municipal Board, Iloilo City,
et al., 19 SCRA 28).

We agree with the finding of the trial court that the amount collected under the ordinance in question
partakes of the nature of a tax, although denominated as "police inspection fee" since its undeniable
purpose is to raise revenue. However, we cannot agree with the trial court's finding that the tax imposed
by the ordinance is a percentage tax on sales which is beyond the scope of the municipality's authority to
levy under Section 2 of the Local Autonomy Act. Under the said provision, municipalities and municipal
districts are prohibited from imposing" any percentage tax on sales or other taxes in any
form based thereon. " The tax imposed under the ordinance in question is not a percentage tax on sales
or any other form of tax based on sales. It is a fixed tax of P.30 per bag of cassava starch or flour
"shipped out" of the municipality. It is not based on sales.

However, the tax imposed under the ordinance can be stricken down on another ground. According to
Section 2 of the abovementioned Act, the tax levied must be "for public purposes, just and uniform"
(Emphasis supplied.) As correctly held by the trial court, the so-called "police inspection fee" levied by the
ordinance is "unjust and unreasonable." Said the court a quo:

... It has been proven that the only service rendered by the Municipality of Malabang, by
way of inspection, is for the policeman to verify from the driver of the trucks of the
petitioner passing by at the police checkpoint the number of bags loaded per trip which
are to be shipped out of the municipality based on the trip tickets for the purpose of
 computing the total amount of tax to be collect (sic) and for no other purpose. The
pretention of respondents that the police, aside from counting the number of bags
shipped out, is also inspecting the cassava flour starch contained in the bags to find out if
the said cassava flour starch is fit for human consumption could not be given credence by
the Court because, aside from the fact that said purpose is not so stated in the ordinance
in question, the policemen of said municipality are not competent to determine if the
cassava flour starch are fit for human consumption. The further pretention of respondents
that the trucks of the petitioner hauling the bags of cassava flour starch from the mill to
the bodega at the beach of Malabang are escorted by a policeman from the police
checkpoint to the beach for the purpose of protecting the truck and its cargoes from
molestation by undesirable elements could not also be given credence by the Court
because it has been shown, beyond doubt, that the petitioner has not asked for the said
police protection because there has been no occasion where its trucks have been
molested, even for once, by bad elements from the police checkpoint to the bodega at
the beach, it is solely for the purpose of verifying the correct number of bags of cassava
flour starch loaded on the trucks of the petitioner as stated in the trip tickets, when
unloaded at its bodega at the beach. The imposition, therefore, of a police inspection fee
of P.30 per bag, imposed by said ordinance is unjust and unreasonable.

The Court finally finds the inspection fee of P0.30 per bag, imposed by the ordinance in
question to be excessive and confiscatory. It has been shown by the petitioner, Matalin
Coconut Company, Inc., that it is merely realizing a marginal average profit of P0.40, per
bag, of cassava flour starch shipped out from the Municipality of Malabang because the
average production is P15.60 per bag, including transportation costs, while the prevailing
market price is P16.00 per bag. The further imposition, therefore, of the tax of P0.30 per
bag, by the ordinance in question would force the petitioner to close or stop its cassava
flour starch milling business considering that it is maintaining a big labor force in its
operation, including a force of security guards to guard its properties. The ordinance,
therefore, has an adverse effect on the economic growth of the Municipality of Malabang,
in particular, and of the nation, in general, and is contrary to the economic policy of the
government.

Having found the ordinance in question to be invalid, we find it unnecessary to rule on the other errors
assigned by the appellants.

WHEREFORE, petition is dismissed. The decision of the court a quo is hereby affirmed. No costs.

SO ORDERED.
G.R. No. 110249 August 21, 1997

ALFREDO TANO, BALDOMERO TANO, DANILO TANO, ROMUALDO TANO, TEOCENES MIDELLO,
ANGEL DE MESA, EULOGIO TREMOCHA, FELIPE ONGONION, JR., ANDRES LINIJAN, ROBERT
LIM, VIRGINIA LIM, FELIMON DE MESA, GENEROSO ARAGON, TEODORICO ANDRE, ROMULO
DEL ROSARIO, CHOLITO ANDRE, ERICK MONTANO, ANDRES OLIVA, VITTORIO SALVADOR,
LEOPOLDO ARAGON, RAFAEL RIBA, ALEJANDRO LEONILA, JOSE DAMACINTO, RAMIRO
MANAEG, RUBEN MARGATE, ROBERTO REYES, DANILO PANGARUTAN, NOE GOLPAN,
ESTANISLAO ROMERO, NICANOR DOMINGO, ROLDAN TABANG, ADRIANO TABANG, FREDDIE
SACAMAY, MIGUEL TRIMOCHA, PACENCIO LABABIT, PABLO H. OMPAD, CELESTINO A. ABANO,
ALLAN ALMODAI, BILLY D. BARTOLAY, ALBINO D. LIQUE, MECHOR J. LAYSON, MELANIE
AMANTE, CLARO E. YATOC, MERGELDO B. BALDEO, EDGAR M. ALMASETA, JOSELITO MANAEG,
LIBERATO ANDRADA, JR., ROBERTO BERRY, RONALD VILLANUEVA, EDUARDO VALMORIA,
WILFREDO MENDOZA, NAPOLEON BABANGGA, ROBERTO TADEPA, RUBEN ASINGUA, SILVERIO
GABO, JERRY ROMERO, DAVID PANGGARUTAN, DANIEL PANGGARUTAN, ROMEO AGAWIN,
FERNANDO EQUIZ, DITO LEQUIZ, RONILO MODERABLE, BENEDICTO TORRES, ROSITO A.
VALDEZ, CRESENCIO A. SAYANG, NICOMEDES S. ACOSTA, ERENEO A. SEGARINO, JR.,
WILFREDO A. RAUTO, DIOSDADO A. ACOSTA, BONIFACIO G. SISMO, TACIO ALUBA, DANIEL B.
BATERZAL, ELISEO YBAÑEZ, DIOSDADO E. HANCHIC, EDDIE ESCALICAS, ELEAZAR B.
BATERZAL, DOMINADOR HALICHIC, ROOSEVELT RISMO-AN, ROBERT C. MERCADER, TIRSO
ARESGADO, DANIEL CHAVEZ, DANILO CHAVEZ, VICTOR VILLAROEL, ERNESTO C. YBAÑEZ,
ARMANDO T. SANTILLAN, RUDY S. SANTILLAN, JODJEN ILUSTRISIMO, NESTOR SALANGRON,
ALBERTO SALANGRON, ROGER L. ROXAS, FRANCISCO T. ANTICANO, PASTOR SALANGRON,
BIENVENIDO SANTILLAN, GILBUENA LADDY, FIDEL BENJAMIN, JOVELITO BELGANO, HONEY
PARIOL, ANTONIO SALANGRON, NICASIO SALANGRON, & AIRLINE SHIPPERS ASSOCIATION OF
PALAWAN, petitioners,

vs.

HON. GOV. SALVADOR P. SOCRATES, MEMBERS OF SANGGUNIANG PANLALAWIGAN OF

PALAWAN, namely, VICE-GOVERNOR JOEL T. REYES, JOSE D. ZABALA, ROSALINO R. ACOSTA,
JOSELITO A. CADLAON, ANDRES R. BAACO, NELSON P. PENEYRA, CIPRIANO C. BARROMA,
CLARO E. ORDINARIO, ERNESTO A. LLACUNA, RODOLFO C. FLORDELIZA, GILBERT S. BAACO,
WINSTON G. ARZAGA, NAPOLEON F. ORDONEZ and GIL P. ACOSTA, CITY MAYOR EDWARD
HAGEDORN, MEMBERS OF SANGGUNIANG PANLUNGSOD NG PUERTO PRINCESA, ALL
MEMBERS OF BANTAY DAGAT, MEMBERS OF PHILIPPINE NATIONAL POLICE OF PALAWAN,
PROVINCIAL AND CITY PROSECUTORS OF PALAWAN and PUERTO PRINCESA CITY, and ALL
JUDGES OF PALAWAN, REGIONAL, MUNICIPAL AND METROPOLITAN, respondents.

DAVIDE, JR., J.:

Petitioners caption their petition as one for "Certiorari, Injunction With Preliminary and Mandatory
Injunction, with Prayer for Temporary Restraining Order" and pray that this Court: (1) declare as
unconstitutional: (a) Ordinance No. 15-92, dated 15 December 1992, of the Sangguniang Panglungsod of
Puerto Princesa; (b) Office Order No. 23, Series of 1993, dated 22 January 1993, issued by Acting City
Mayor Amado L. Lucero of Puerto Princesa City; and (c) Resolution No. 33, Ordinance No. 2, Series of
1993, dated 19 February 1993, of the Sangguniang Panlalawigan of Palawan; (2) enjoin the enforcement
thereof; and (3) restrain respondents Provincial and City Prosecutors of Palawan and Puerto Princesa
City and Judges of the Regional Trial Courts, Metropolitan Trial Courts 1 and Municipal Circuit Trial
Courts in Palawan from assuming jurisdiction over and hearing cases concerning the violation of the
Ordinances and of the Office Order.

More appropriately, the petition is, and shall be treated as, a special civil action for certiorari and
prohibition.

The following is petitioners' summary of the factual antecedents giving rise to the petition:

1. On December 15, 1992, the Sangguniang Panlungsod ng Puerto Princesa City enacted Ordinance No.
15-92 which took effect on January 1, 1993 entitled: "AN ORDINANCE BANNING THE SHIPMENT OF
ALL LIVE FISH AND LOBSTER OUTSIDE PUERTO PRINCESA CITY FROM JANUARY 1, 1993 TO
JANUARY 1, 1998 AND PROVIDING EXEMPTIONS, PENALTIES AND FOR OTHER PURPOSES
THEREOF", the full text of which reads as follows:
Sec. 1. Title of the Ordinance. — This Ordinance is entitled: AN ORDINANCE BANNING THE
SHIPMENT OF ALL LIVE FISH AND LOBSTER OUTSIDE PUERTO PRINCESA CITY FROM JANUARY
1, 1993 TO JANUARY 1, 1998 AND PROVIDING EXEMPTIONS, PENALTIES AND FOR OTHER
PURPOSES THEREOF.

Sec. 2. Purpose, Scope and Coverage. — To effectively free our City Sea Waters from Cyanide and other
Obnoxious substance[s], and shall cover all persons and/or entities operating within and outside the City
of Puerto Princesa who is are (sic) directly or indirectly in the business or shipment of live fish and lobster
outside the City.

Sec. 3. Definition of terms. — For purpose of this Ordinance the following are hereby defined:

A. SEA BASS — A kind of fish under the family of Centropomidae, better known as APAHAP;

B. CATFISH — A kind of fish under the family of Plotosidae, better known as HITO-HITO

C. MUDFISH — A kind of fish under the family of Orphicaphalisae better known as DALAG;

D. ALL LIVE FISH — All alive, breathing not necessarily moving of all specie[s] use[d] for food and for
aquarium purposes.

E. LIVE LOBSTER — Several relatively, large marine crusteceans [sic] of the genus Homarus that are
alive and breathing not necessarily moving.

Sec. 4. It shall be unlawful [for] any person or any business enterprise or company to ship out from Puerto
Princesa City to any point of destination either via aircraft or seacraft of any live fish and lobster except
SEA BASS, CATFISH, MUDFISH, AND MILKFISH FRIES.

Sec. 5. Penalty Clause. — Any person/s and or business entity violating this Ordinance shall be penalized
with a fine of not more than P5,000.00 or imprisonment of not more than twelve (12) months, cancellation
of their permit to do business in the City of Puerto Princesa or all of the herein stated penalties, upon the
discretion of the court.

Sec. 6. If the owner and/or operator of the establishment found violating the provisions of this ordinance is
a corporation or a partnership, the penalty prescribed in Section 5 hereof shall be imposed upon its
president and/or General Manager or Managing Partner and/or Manager, as the case maybe [sic].

Sec. 7. Any existing ordinance or any provision of any ordinance inconsistent to [sic] this ordinance is
deemed repealed.

Sec. 8. This Ordinance shall take effect on January 1, 1993.

SO ORDAINED.

xxx xxx xxx

2. To implement said city ordinance, then Acting City Mayor Amado L. Lucero issued Office Order No. 23,
Series of 1993 dated January 22, 1993 which reads as follows:

In the interest of public service and for purposes of City Ordinance No. PD 426-14-74, otherwise known
as "AN ORDINANCE REQUIRING ANY PERSON ENGAGED OR INTENDING TO ENGAGE IN ANY
BUSINESS, TRADE, OCCUPATION, CALLING OR PROFESSION OR HAVING IN HIS POSSESSION
ANY OF THE ARTICLES FOR WHICH A PERMIT IS REQUIRED TO BE HAD, TO OBTAIN FIRST A
MAYOR'S PERMIT" and "City Ordinance No. 15-92, AN ORDINANCE BANNING THE SHIPMENT OF
ALL LIVE FISH AND LOBSTER OUTSIDE PUERTO PRINCESA CITY FROM JANUARY 1, 1993 TO
JANUARY 1, 1998, you are hereby authorized and directed to check or conduct necessary inspections on
cargoes containing live fish and lobster being shipped out from the Puerto Princesa Airport, Puerto
Princesa Wharf or at any port within the jurisdiction of the City to any point of destinations [sic] either via
aircraft or seacraft.

The purpose of the inspection is to ascertain whether the shipper possessed the required Mayor's Permit
issued by this Office and the shipment is covered by invoice or clearance issued by the local office of the
Bureau of Fisheries and Aquatic Resources and as to compliance with all other existing rules and
regulations on the matter.
Any cargo containing live fish and lobster without the required documents as stated herein must be held
for proper disposition.

In the pursuit of this Order, you are hereby authorized to coordinate with the PAL Manager, the PPA
Manager, the local PNP Station and other offices concerned for the needed support and cooperation.
Further, that the usual courtesy and diplomacy must be observed at all times in the conduct of the
inspection.

Please be guided accordingly.

xxx xxx xxx

3. On February 19, 1993, the Sangguniang Panlalawigan, Provincial Government of Palawan enacted
Resolution No. 33 entitled: "A RESOLUTION PROHIBITING THE CATCHING, GATHERING,
POSSESSING, BUYING, SELLING AND SHIPMENT OF LIVE MARINE CORAL DWELLING AQUATIC
ORGANISMS, TO WIT: FAMILY: SCARIDAE (MAMENG), EPINE PHELUS FASCIATUS (SUNO).
CROMILEPTES ALTIVELIS (PANTHER OR SENORITA), LOBSTER BELOW 200 GRAMS AND
SPAWNING, TRIDACNA GIGAS (TAKLOBO), PINCTADA MARGARITEFERA (MOTHER PEARL,
OYSTERS, GIANT CLAMS AND OTHER SPECIES), PENAEUS MONODON (TIGER PRAWN-
BREEDER SIZE OR MOTHER), EPINEPHELUS SUILLUS (LOBA OR GREEN GROUPER) AND
FAMILY: BALISTIDAE (TROPICAL AQUARIUM FISHES) FOR A PERIOD FIVE (5) YEARS IN AND
COMING FROM PALAWAN WATERS", the full text of which reads as follows:

WHEREAS, scientific and factual researches [sic] and studies disclose that only five (5) percent of the
corals of our province remain to be in excellent condition as [a] habitat of marine coral dwelling aquatic
organisms;

WHEREAS, it cannot be gainsaid that the destruction and devastation of the corals of our province were
principally due to illegal fishing activities like dynamite fishing, sodium cyanide fishing, use of other
obnoxious substances and other related activities;

WHEREAS, there is an imperative and urgent need to protect and preserve the existence of the
remaining excellent corals and allow the devastated ones to reinvigorate and regenerate themselves into
vitlity within the span of five (5) years;

WHEREAS, Sec. 468, Par. 1, Sub-Par. VI of the [sic] R.A. 7160 otherwise known as the Local
Government Code of 1991 empowers the Sangguniang Panlalawigan to protect the environment and
impose appropriate penalties [upon] acts which endanger the environment such as dynamite fishing and
other forms of destructive fishing, among others.

NOW, THEREFORE, on motion by Kagawad Nelson P. Peneyra and upon unanimous decision of all the
members present;

Be it resolved as it is hereby resolved, to approve Resolution No. 33, Series of 1993 of the Sangguniang
Panlalawigan and to enact Ordinance No. 2 for the purpose, to wit:

ORDINANCE NO. 2

Series of 1993

BE IT ORDAINED BY THE SANGGUNIANG PANLALAWIGAN IN SESSION ASSEMBLED:

Sec. 1. TITLE — This Ordinance shall be known as an "Ordinance Prohibiting the catching, gathering,
possessing, buying, selling and shipment of live marine coral dwelling aquatic organisms, to wit: 1.
Family: Scaridae (Mameng), 2. Epinephelus Fasciatus (Suno) 3. Cromileptes altivelis (Panther or
Senorita), lobster below 200 grams and spawning), 4. Tridacna Gigas (Taklobo), 5. Pinctada
Margaretefera (Mother Pearl, Oysters, Giant Clams and other species), 6. Penaeus Monodon (Tiger
Prawn-breeder size or mother), 7. Epinephelus Suillus (Loba or Green Grouper) and 8. Family: Balistidae
(T[r]opical Aquarium Fishes) for a period of five (5) years in and coming from Palawan Waters.
Sec. II. PRELIMINARY CONSIDERATIONS

1. Sec. 2-A (Rep. Act 7160). 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

2. Sec. 5-A (R.A. 7160). Any provision on a power of [a] local Government Unit shall be liberally
interpreted in its favor, and in case of doubt, any question thereon shall be resolved in favor of devolution
of powers and of the lower government units. "Any fair and reasonable doubts as to the existence of the
power shall be interpreted in favor of the Local Government Unit concerned."

3. Sec. 5-C (R.A. 7160). The general welfare provisions in this Code shall be liberally interpreted to give
more powers to local government units in accelerating economic development and upgrading the quality
of life for the people in the community.

4. Sec. 16 (R.A. 7160). 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.

Sec. III. DECLARATION OF POLICY. — It is hereby declared to be the policy of the Province of Palawan
to protect and conserve the marine resources of Palawan not only for the greatest good of the majority of
the present generation but with [the] proper perspective and consideration of [sic] their prosperity, and to
attain this end, the Sangguniang Panlalawigan henceforth declares that is (sic) shall be unlawful for any
person or any business entity to engage in catching, gathering, possessing, buying, selling and shipment
of live marine coral dwelling aquatic organisms as enumerated in Section 1 hereof in and coming out of
Palawan Waters for a period of five (5) years;

Sec. IV. PENALTY CLAUSE. — Any person and/or business entity violating this Ordinance shall be
penalized with a fine of not more than Five Thousand Pesos (P5,000.00), Philippine Currency, and/or
imprisonment of six (6) months to twelve (12) months and confiscation and forfeiture of paraphernalias
[sic] and equipment in favor of the government at the discretion of the Court;

Sec. V. SEPARABILITY CLAUSE. — If for any reason, a Section or provision of this Ordinance shall be
held as unconditional [sic] or invalid, it shall not affect the other provisions hereof.

Sec. VI. REPEALING CLAUSE. — Any existing Ordinance or a provision of any ordinance inconsistent
herewith is deemed modified, amended or repealed.

Sec. VII. EFFECTIVITY — This Ordinance shall take effect ten (10) days after its publication.

SO ORDAINED.

xxx xxx xxx

4. The respondents implemented the said ordinances, Annexes "A" and "C" hereof thereby depriving all
the fishermen of the whole province of Palawan and the City of Puerto Princesa of their only means of
livelihood and the petitioners Airline Shippers Association of Palawan and other marine merchants from
performing their lawful occupation and trade;

5. Petitioners Alfredo Tano, Baldomero Tano, Teocenes Midello, Angel de Mesa, Eulogio Tremocha, and
Felipe Ongonion, Jr. were even charged criminally under criminal case no. 93-05-C in the 1st Municipal
Circuit Trial Court of Cuyo-Agutaya-Magsaysay, an original carbon copy of the criminal complaint dated
April 12, 1993 is hereto attached as Annex "D"; while xerox copies are attached as Annex "D" to the
copies of the petition;

6. Petitioners Robert Lim and Virginia Lim, on the other hand, were charged by the respondent PNP with
the respondent City Prosecutor of Puerto Princess City, a xerox copy of the complaint is hereto attached
as Annex "E";
Without seeking redress from the concerned local government units, prosecutor's office and courts,
petitioners directly invoked our original jurisdiction by filing this petition on 4 June 1993. In sum,
petitioners contend that:

First, the Ordinances deprived them of due process of law, their livelihood, and unduly restricted them
from the practice of their trade, in violation of Section 2, Article XII and Sections 2 and 7 of Article XIII of
the 1987 Constitution.

Second, Office Order No. 23 contained no regulation nor condition under which the Mayor's permit could
be granted or denied; in other words, the Mayor had the absolute authority to determine whether or not to
issue the permit.

Third, as Ordinance No. 2 of the Province of Palawan "altogether prohibited the catching, gathering,
possession, buying, selling and shipping of live marine coral dwelling organisms, without any distinction
whether it was caught or gathered through lawful fishing method," the Ordinance took away the right of
petitioners-fishermen to earn their livelihood in lawful ways; and insofar as petitioners-members of Airline
Shippers Association are concerned, they were unduly prevented from pursuing their vocation and
entering "into contracts which are proper, necessary, and essential to carry out their business endeavors
to a successful conclusion."

Finally, as Ordinance No. 2 of the Sangguniang Panlalawigan is null and void, the criminal cases based
thereon against petitioners Tano and the others have to be dismissed.

In the Resolution of 15 June 1993 we required respondents to comment on the petition, and furnished the
Office of the Solicitor General with a copy thereof.

In their comment filed on 13 August 1993, public respondents Governor Socrates and Members of the
Sangguniang Panlalawigan of Palawan defended the validity of Ordinance No. 2, Series of 1993, as a
valid exercise of the Provincial Government's power under the general welfare clause (Section 16 of the
Local Government Code of 1991 [hereafter, LGC]), and its specific power to protect the environment and
impose appropriate penalties for acts which endanger the environment, such as dynamite fishing and
other forms of destructive fishing under Section 447 (a) (1) (vi), Section 458 (a) (1) (vi), and Section 468
(a) (1) (vi), of the LGC. They claimed that in the exercise of such powers, the Province of Palawan had
"the right and responsibility . . . to insure that the remaining coral reefs, where fish dwells [sic], within its
territory remain healthy for the future generation." The Ordinance, they further asserted, covered only live
marine coral dwelling aquatic organisms which were enumerated in the ordinance and excluded other
kinds of live marine aquatic organisms not dwelling in coral reefs; besides the prohibition was for only five
(5) years to protect and preserve the pristine coral and allow those damaged to regenerate.

Aforementioned respondents likewise maintained that there was no violation of the due process and
equal protection clauses of the Constitution. As to the former, public hearings were conducted before the
enactment of the Ordinance which, undoubtedly, had a lawful purpose and employed reasonable means;
while as to the latter, a substantial distinction existed "between a fisherman who catches live fish with the
intention of selling it live, and a fisherman who catches live fish with no intention at all of selling it live,"
i.e., "the former uses sodium cyanide while the latter does not." Further, the Ordinance applied equally to
all those belonging to one class.

On 25 October 1993 petitioners filed an Urgent Plea for the Immediate Issuance of a Temporary
Restraining Order, claiming that despite the pendency of this case, Branch 50 of the Regional Trial Court
of Palawan was bent on proceeding with Criminal Case No. 11223 against petitioners Danilo Tano,
Alfredo Tano, Eulogio Tremocha, Romualdo Tano, Baldomero Tano, Andres Linijan and Angel de Mesa
for violation of Ordinance No. 2 of the Sangguniang Panlalawigan of Palawan. Acting on said plea, we
issued on 11 November 1993 a temporary restraining order directing Judge Angel Miclat of said court to
cease and desist from proceeding with the arraignment and pre-trial of Criminal Case No. 11223.

On 12 July 1994, we excused the Office of the Solicitor General from filing a comment, considering that
as claimed by said office in its Manifestation of 28 June 1994, respondents were already represented by
counsel.

The rest of the respondents did not file any comment on the petition.

In the resolution of 15 September 1994, we resolved to consider the comment on the petition as the
Answer, gave due course to the petition and required the parties to submit their respective memoranda. 2
On 22 April 1997 we ordered impleaded as party respondents the Department of Agriculture and the
Bureau of Fisheries and Aquatic Resources and required the Office of the Solicitor General to comment
on their behalf. But in light of the latter's motion of 9 July 1997 for an extension of time to file the comment
which would only result in further delay, we dispensed with said comment.

After due deliberation on the pleadings filed, we resolved to dismiss this petition for want of merit, and on
22 July 1997, assigned it to the ponente to write the opinion of the Court.

There are actually two sets of petitioners in this case. The first is composed of Alfredo Tano, Baldomero
Tano, Danilo Tano, Romualdo Tano, Teocenes Midello, Angel de Mesa, Eulogio Tremocha, Felipe
Ongonion, Jr., Andres Linijan, and Felimon de Mesa, who were criminally charged with violating
Sangguniang Panlalawigan Resolution No. 33 and Ordinance No. 2, Series of 1993, of the Province of
Palawan, in Criminal Case No. 93-05-C of the 1st Municipal Circuit Trial Court (MCTC) of Palawan; 3 and
Robert Lim and Virginia Lim who were charged with violating City Ordinance No. 15-92 of Puerto
Princesa City and Ordinance No. 2, Series of 1993, of the Province of Palawan before the Office of the
City Prosecutor of Puerto Princesa. 4 All of them, with the exception of Teocenes Midello, Felipe
Ongonion, Jr., Felimon de Mesa, Robert Lim and Virginia Lim, are likewise the accused in Criminal Case
No. 11223 for the violation of Ordinance No. 2 of the Sangguniang Panlalawigan of Palawan, pending
before Branch 50 of the Regional Trial Court of Palawan. 5

The second set of petitioners is composed of the rest of the petitioners numbering seventy-seven (77), all
of whom, except the Airline Shippers Association of Palawan — an alleged private association of several
marine merchants — are natural persons who claim to be fishermen.

The primary interest of the first set of petitioners is, of course, to prevent the prosecution, trial and
determination of the criminal cases until the constitutionality or legality of the Ordinances they allegedly
violated shall have been resolved. The second set of petitioners merely claim that being fishermen or
marine merchants, they would be adversely affected by the ordinance's.

As to the first set of petitioners, this special civil for certiorari must fail on the ground of prematurity
amounting to a lack of cause of action. There is no showing that said petitioners, as the accused in the
criminal cases, have filed motions to quash the informations therein and that the same were denied. The
ground available for such motions is that the facts charged therein do not constitute an offense because
the ordinances in question are unconstitutional. 6 It cannot then be said that the lower courts acted
without or in excess of jurisdiction or with grave abuse of discretion to justify recourse to the extraordinary
remedy of certiorari or prohibition. It must further be stressed that even if petitioners did file motions to
quash, the denial thereof would not forthwith give rise to a cause of action under Rule 65 of the Rules of
Court. The general rule is that where a motion to quash is denied, the remedy therefrom is not certiorari,
but for the party aggrieved thereby to go to trial without prejudice to reiterating special defenses involved
in said motion, and if, after trial on the merits an adverse decision is rendered, to appeal therefrom in the
manner authorized by law. 7 And, even where in an exceptional circumstance such denial may be the
subject of a special civil action for certiorari, a motion for reconsideration must have to be filed to allow
the court concerned an opportunity to correct its errors, unless such motion may be dispensed with
because of existing exceptional circumstances. 8 Finally, even if a motion for reconsideration has been
filed and denied, the remedy under Rule 65 is still unavailable absent any showing of the grounds
provided for in Section 1 thereof. 9 For obvious reasons, the petition at bar does not, and could not have,
alleged any of such grounds.

As to the second set of petitioners, the instant petition is obviously one for DECLARATORY RELIEF, i.e.,
for a declaration that the Ordinances in question are a "nullity . . . for being unconstitutional."10 As such,
their petition must likewise fail, as this Court is not possessed of original jurisdiction over petitions for
declaratory relief even if only questions of law are involved,11 it being settled that the Court merely
exercises appellate jurisdiction over such petitions.1

II

Even granting arguendo that the first set of petitioners have a cause of action ripe for the extraordinary
writ of certiorari, there is here a clear disregard of the hierarchy of courts, and no special and important
reason or exceptional and compelling circumstance has been adduced why direct recourse to us should
be allowed. While we have concurrent jurisdiction with Regional Trial courts and with the Court of Appeals
to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction, such
concurrence gives petitioners no unrestricted freedom of choice of court forum, so we held in People v.
Cuaresma.13
This concurrence of jurisdiction is not . . . to be taken as according to parties seeking any of the writs an
absolute unrestrained freedom of choice of the court to which application therefor will be directed. There
is after all hierarchy of courts. That hierarchy is determinative of the venue of appeals, and should also
serve as a general determinant of the appropriate forum for petitions for the extraordinary writs. A
becoming regard for that judicial hierarchy most certainly indicates that petitions for the issuance of
extraordinary writs against first level ("inferior") courts should be filed with the Regional Trial Court, and
those against the latter, with the Court of Appeals. A direct invocation of the Supreme Court's original
jurisdiction to issue these writs should be allowed only when there are special and important reasons
therefor, clearly and specifically set out in the petition. This is established policy. It is a policy necessary
to prevent inordinate demands upon the Court's time and attention which are better devoted to those
matters within its exclusive jurisdiction, and to prevent further over-crowding of the Court's docket. . . .

The Court feels the need to reaffirm that policy at this time, and to enjoin strict adherence thereto in the
light of what it perceives to be a growing tendency on the part of litigants and lawyers to have their
applications for the so-called extraordinary writs, and sometimes even their appeals, passed upon and
adjudicated directly and immediately by the highest tribunal of the land. . . .

In Santiago v. Vasquez,14 this Court forcefully expressed that the propensity of litigants and lawyers to
disregard the hierarchy of courts must be put to a halt, not only because of the imposition upon the
precious time of this Court, but also because of the inevitable and resultant delay, intended or otherwise,
in the adjudication of the case which often has to be remanded or referred to the lower court, the proper
forum under the rules of procedure, or as better equipped to resolve the issues since this Court is not a
trier of facts. We reiterated "the judicial policy that this Court will not entertain direct resort to it unless 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 [its] primary jurisdiction."

III

Notwithstanding the foregoing procedural obstacles against the first set of petitioners, we opt to resolve
this case on its merits considering that the lifetime of the challenged Ordinances is about to end.
Ordinance No. 15-92 of the City of Puerto Princesa is effective only up to 1 January 1998, while
Ordinance No. 2 of the Province of Palawan, enacted on 19 February 1993, is effective for only five (5)
years. Besides, these Ordinances were undoubtedly enacted in the exercise of powers under the new
LGC relative to the protection and preservation of the environment and are thus novel and of paramount
importance. No further delay then may be allowed in the resolution of the issues raised.

It is of course settled that laws (including ordinances enacted by local government units) enjoy the
presumption of constitutionality. 15 To overthrow this presumption, there must be a clear and unequivocal
breach of the Constitution, not merely a doubtful or argumentative contradiction. In short, the conflict with
the Constitution must be shown beyond reasonable doubt.16 Where doubt exists, even if well-founded,
there can be no finding of unconstitutionality. To doubt is to sustain.17

After a scrutiny of the challenged Ordinances and the provisions of the Constitution petitioners claim to
have been violated, we find petitioners' contentions baseless and so hold that the former do not suffer
from any infirmity, both under the Constitution and applicable laws.

Petitioners specifically point to Section 2, Article XII and Sections 2 and 7, Article XIII of the Constitution
as having been transgressed by the Ordinances.

The pertinent portion of Section 2 of Article XII reads:

Sec. 2. . . .

The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea, and exclusive
economic zone, and reserve its use and enjoyment exclusively to Filipino citizens.

The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well
as cooperative fish farming, with priority to subsistence fishermen and fishworkers in rivers, lakes, bays,
and lagoons.

Sections 2 and 7 of Article XIII provide:

Sec. 2. The promotion of social justice shall include the commitment to create economic opportunities
based on freedom of initiative and self-reliance.
xxxxxx xxx

Sec. 7. The State shall protect the rights of subsistence fishermen, especially of local communities, to the
preferential use of the communal marine and fishing resources, both inland and offshore. It shall provide
support to such fishermen through appropriate technology and research, adequate financial, production,
and marketing assistance, and other services. The State shall also protect, develop, and conserve such
resources. The protection shall extend to offshore fishing grounds of subsistence fishermen against
foreign intrusion. Fishworkers shall receive a just share from their labor in the utilization of marine and
fishing resources

There is absolutely no showing that any of the petitioners qualifies as a subsistence or marginal
fisherman. In their petition, petitioner Airline Shippers Association of Palawan is self-described as "a
private association composed of Marine Merchants;" petitioners Robert Lim and Virginia Lim, as
"merchants;" while the rest of the petitioners claim to be "fishermen," without any qualification, however,
as to their status.

Since the Constitution does not specifically provide a definition of the terms "subsistence" or "marginal"
fishermen,18 they should be construed in their general and ordinary sense. A marginal fisherman is an
individual engaged in fishing whose margin of return or reward in his harvest of fish as measured by
existing price levels is barely sufficient to yield a profit or cover the cost of gathering the fish,19 while a
subsistence fisherman is one whose catch yields but the irreducible minimum for his livelihood.20 Section
131(p) of the LGC (R.A. No. 7160) defines a marginal farmer or fisherman as "an individual engaged in
subsistence farming or fishing which shall be limited to the sale, barter or exchange of agricultural or
marine products produced by himself and his immediate family." It bears repeating that nothing in the
record supports a finding that any petitioner falls within these definitions.

Besides, Section 2 of Article XII aims primarily not to bestow any right to subsistence fishermen, but to lay
stress on the duty of the State to protect the nation's marine wealth. What the provision merely
recognizes is that the State may allow, by law, cooperative fish farming, with priority to subsistence
fishermen and fishworkers in rivers, lakes, bays and lagoons. Our survey of the statute books reveals that
the only provision of law which speaks of a preferential right of marginal fishermen is Section 149 of the
LGC, which pertinently provides:

Sec. 149. Fishery Rentals, Fees and Charges. — . . .

(b) The sangguniang bayan may:

(1) Grant fishery privileges to erect fish corrals, oyster, mussels or other aquatic beds or bangus fry areas,
within a definite zone of the municipal waters, as determined by it: Provided, however, That duly
registered organizations and cooperatives of marginal fishermen shall have the preferential right to such
fishery privileges . . . .

In a Joint Administrative Order No. 3 dated 25 April 1996, the Secretary of the Department of Agriculture
and the Secretary of the Department of Interior and Local Government prescribed guidelines concerning
the preferential treatment of small fisherfolk relative to the fishery right mentioned in Section 149. This
case, however, does not involve such fishery right.

Anent Section 7 of Article XIII, it speaks not only of the use of communal marine and fishing resources,
but of their protection, development and conservation. As hereafter shown, the ordinances in question are
meant precisely to protect and conserve our marine resources to the end that their enjoyment may be
guaranteed not only for the present generation, but also for the generations to come.

The so-called "preferential right" of subsistence or marginal fishermen to the use of marine resources is
not at all absolute. In accordance with the Regalian Doctrine, marine resources belong to the State, and,
pursuant to the first paragraph of Section 2, Article XII of the Constitution, their "exploration, development
and utilization . . . shall be under the full control and supervision of the State." Moreover, their mandated
protection, development and conservation as necessarily recognized by the framers of the Constitution,
imply certain restrictions on whatever right of enjoyment there may be in favor of anyone. Thus, as to the
curtailment of the preferential treatment of marginal fishermen, the following exchange between
Commissioner Francisco Rodrigo and Commissioner Jose F.S. Bengzon, Jr., took place at the plenary
session of the Constitutional Commission:

MR. RODRIGO:

Let us discuss the implementation of this because I would not raise the hopes of our people, and
afterwards fail in the implementation. How will this be implemented? Will there be a licensing or giving of
permits so that government officials will know that one is really a marginal fisherman? Or if policeman say
that a person is not a marginal fisherman, he can show his permit, to prove that indeed he is one.

MR. BENGZON:

Certainly, there will be some mode of licensing insofar as this is concerned and this particular question
could be tackled when we discuss the Article on Local Governments — whether we will leave to the local
governments or to Congress on how these things will be implemented. But certainly, I think our
congressmen and our local officials will not be bereft of ideas on how to implement this mandate.

xxx xxx xxx

MR. RODRIGO:

So, once one is licensed as a marginal fisherman, he can go anywhere in the Philippines and fish in any
fishing grounds.

MR. BENGZON:

Subject to whatever rules and regulations and local laws that may be passed, may be existing or will be
passed.21 (emphasis supplied)

What must likewise be borne in mind is the state policy enshrined in the Constitution regarding the duty of
the State to protect and advance the right of the people to a balanced and healthful ecology in accord
with the rhythm and harmony of nature. 22 On this score, in Oposa v. Factoran, 23 this Court declared:

While the right to a balanced and healthful ecology is to be found under the Declaration of Principles the
State Policies and not under the Bill of Rights, it does not follow that it is less important than any of the
civil and political rights enumerated in the latter. Such a right belongs to a different category of rights
altogether for it concerns nothing less than self-preservation and self-perpetuation — aptly and fittingly
stressed by the petitioners — the advancement of which may even be said to predate all governments
and constitutions. As a matter of fact, these basic rights need not even be written in the Constitution for
they are assumed to exist from the inception of humankind. If they are now explicitly mentioned in the
fundamental charter, it is because of the well-founded fear of its framers that unless the rights to a
balanced and healthful ecology and to health are mandated as state policies by the Constitution itself,
thereby highlighting their continuing importance and imposing upon the state a solemn obligation to
preserve the first and protect and advance the second, the day would not be too far when all else would
be lost not only for the present generation, but also for those to come — generations which stand to
inherit nothing but parched earth incapable of sustaining life.

The right to a balanced and healthful ecology carries with it a correlative duty to refrain from impairing the
environment. . . .

The LGC provisions invoked by private respondents merely seek to give flesh and blood to the right of the
people to a balanced and healthful ecology. In fact, the General Welfare Clause, expressly mentions this
right:

Sec. 16. General Welfare. — Every local government unit shall exercise the powers expressly granted,
those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its
efficient and effective governance, and those which are essential to the promotion of the general welfare.
Within their respective territorial jurisdictions, local government units shall ensure and support, among
other things, the preservation and enrichment of culture, promote health and safety, enhance the right of
the people to a balanced ecology, encourage and support the development of appropriate and self-reliant
scientific and technological capabilities, improve public morals, enhance economic prosperity and social
justice, promote full employment among their residents, maintain peace and order, and preserve the
comfort and convenience of their inhabitants. (emphasis supplied).

Moreover, Section 5(c) of the LGC explicitly mandates that the general welfare provisions of the LGC
"shall be liberally interpreted to give more powers to the local government units in accelerating economic
development and upgrading the quality of life for the people of the community."

The LGC vests municipalities with the power to grant fishery privileges in municipal waters and impose
rentals, fees or charges therefor; to penalize, by appropriate ordinances, the use of explosives, noxious or
poisonous substances, electricity, muro-ami, and other deleterious methods of fishing; and to prosecute
any violation of the provisions of applicable fishery laws.24 Further, the sangguniang bayan, the
sangguniang panlungsod and the sangguniang panlalawigan are directed to enact ordinances for the
general welfare of the municipality and its inhabitants, which shall include, inter alia, ordinances that
"[p]rotect the environment and impose appropriate penalties for acts which endanger the environment
such as dynamite fishing and other forms of destructive fishing . . . and such other activities which result
in pollution, acceleration of eutrophication of rivers and lakes, or of ecological imbalance."25

Finally, the centerpiece of LGC is the system of decentralization26 as expressly mandated by the
Constitution.27 Indispensable to decentralization is devolution and the LGC expressly provides that "[a]ny
provision on a power of a local government unit shall be liberally interpreted in its favor, and in case of
doubt, any question thereon shall be resolved in favor of devolution of powers and of the lower local
government unit. Any fair and reasonable doubt as to the existence of the power shall be interpreted in
favor of the local government unit concerned."28 Devolution refers to the act by which the National
Government confers power and authority upon the various local government units to perform specific
functions and responsibilities.29

One of the devolved powers enumerated in the section of the LGC on devolution is the enforcement of
fishery laws in municipal waters including the conservation of mangroves.30 This necessarily includes the
enactment of ordinances to effectively carry out such fishery laws within the municipal waters.

The term "municipal waters," in turn, includes not only streams, lakes, and tidal waters within the
municipality, not being the subject of private ownership and not comprised within the national parks,
public forest, timber lands, forest reserves, or fishery reserves, but also marine waters included between
two lines drawn perpendicularly to the general coastline from points where the boundary lines of the
municipality or city touch the sea at low tide and a third line parallel with the general coastline and fifteen
kilometers from it.31 Under P.D. No. 704, the marine waters included in municipal waters is limited to
three nautical miles from the general coastline using the above perpendicular lines and a third parallel
line.

These "fishery laws" which local government units may enforce under Section 17(b)(2)(i) in municipal
waters include: (1) P.D. No. 704; (2) P.D. No. 1015 which, inter alia, authorizes the establishment of a
"closed season" in any Philippine water if necessary for conservation or ecological purposes; (3) P.D. No.
1219 which provides for the exploration, exploitation, utilization and conservation of coral resources; (4)
R.A. No. 5474, as amended by B.P. Blg. 58, which makes it unlawful for any person, association or
corporation to catch or cause to be caught, sell, offer to sell, purchase, or have in possession any of the
fish specie called gobiidae or "ipon" during closed season; and (5) R.A. No. 6451 which prohibits and
punishes electrofishing, as well as various issuances of the BFAR.

To those specifically devolved insofar as the control and regulation of fishing in municipal waters and the
protection of its marine environment are concerned, must be added the following:

1. Issuance of permits to construct fish cages within municipal waters;

2. Issuance of permits to gather aquarium fishes within municipal waters;

3. Issuance of permits to gather kapis shells within municipal waters;

4. Issuance of permits to gather/culture shelled mollusks within municipal waters;

5. Issuance of licenses to establish seaweed farms within municipal waters;

6. Issuance of licenses to establish culture pearls within municipal waters;

7. Issuance of auxiliary invoice to transport fish and fishery products; and

8. Establishment of "closed season" in municipal waters.

These functions are covered in the Memorandum of Agreement of 5 April 1994 between the Department
of Agriculture and the Department of Interior and Local Government.

In light then of the principles of decentralization and devolution enshrined in the LGC and the powers
granted therein to local government units under Section 16 (the General Welfare Clause), and under
Sections 149, 447(a) (1) (vi), 458 (a) (1) (vi) and 468 (a) (1) (vi), which unquestionably involve the
exercise of police power, the validity of the questioned Ordinances cannot be doubted.
Parenthetically, we wish to add that these Ordinances find full support under R.A. No. 7611, otherwise
known as the Strategic Environmental Plan (SEP) for Palawan Act, approved on 19 June 1992. This
statute adopts a "comprehensive framework for the sustainable development of Palawan compatible with
protecting and enhancing the natural resources and endangered environment of the province," which
"shall serve to guide the local government of Palawan and the government agencies concerned in the
formulation and implementation of plans, programs and projects affecting said province."32

At this time then, it would be appropriate to determine the relation between the assailed Ordinances and
the aforesaid powers of the Sangguniang Panlungsod of the City of Puerto Princesa and the
Sangguniang Panlalawigan of the Province of Palawan to protect the environment. To begin, we
ascertain the purpose of the Ordinances as set forth in the statement of purposes or declaration of
policies quoted earlier.

It is clear to the Court that both Ordinances have two principal objectives or purposes: (1) to establish a
"closed season" for the species of fish or aquatic animals covered therein for a period of five years; and
(2) to protect the coral in the marine waters of the City of Puerto Princesa and the Province of Palawan
from further destruction due to illegal fishing activities.

The accomplishment of the first objective is well within the devolved power to enforce fishery laws in
municipal waters, such as P.D. No. 1015, which allows the establishment of "closed seasons." The
devolution of such power has been expressly confirmed in the Memorandum of Agreement of 5 April
1994 between the Department of Agriculture and the Department of Interior and Local Government.

The realization of the second objective clearly falls within both the general welfare clause of the LGC and
the express mandate thereunder to cities and provinces to protect the environment and impose
appropriate penalties for acts which endanger the environment.33

The destruction of coral reefs results in serious, if not irreparable, ecological imbalance, for coral reefs are
among nature's life-support systems.34 They collect, retain and recycle nutrients for adjacent nearshore
areas such as mangroves, seagrass beds, and reef flats; provide food for marine plants and animals; and
serve as a protective shelter for aquatic organisms.35 It is said that "[e]cologically, the reefs are to the
oceans what forests are to continents: they are shelter and breeding grounds for fish and plant species
that will disappear without them."36

The prohibition against catching live fish stems, in part, from the modern phenomenon of live-fish trade
which entails the catching of so-called exotic species of tropical fish, not only for aquarium use in the
West, but also for "the market for live banquet fish [which] is virtually insatiable in ever more affluent
Asia.37 These exotic species are coral-dwellers, and fishermen catch them by "diving in shallow water
with corraline habitats and squirting sodium cyanide poison at passing fish directly or onto coral crevices;
once affected the fish are immobilized [merely stunned] and then scooped by hand."38 The diver then
surfaces and dumps his catch into a submerged net attached to the skiff. Twenty minutes later, the fish
can swim normally. Back on shore, they are placed in holding pens, and within a few weeks, they expel
the cyanide from their system and are ready to be hauled. They are then placed in saltwater tanks or
packaged in plastic bags filled with seawater for shipment by air freight to major markets for live food
fish.39 While the fish are meant to survive, the opposite holds true for their former home as "[a]fter the
fisherman squirts the cyanide, the first thing to perish is the reef algae, on which fish feed. Days later, the
living coral starts to expire. Soon the reef loses its function as habitat for the fish, which eat both the algae
and invertebrates that cling to the coral. The reef becomes an underwater graveyard, its skeletal remains
brittle, bleached of all color and vulnerable to erosion from the pounding of the waves."40 It has been
found that cyanide fishing kills most hard and soft corals within three months of repeated application.41

The nexus then between the activities barred by Ordinance No. 15-92 of the City of Puerto Princesa and
the prohibited acts provided in Ordinance No. 2, Series of 1993 of the Province of Palawan, on one hand,
and the use of sodium cyanide, on the other, is painfully obvious. In sum, the public purpose and
reasonableness of the Ordinances may not then be controverted.

As to Office Order No. 23, Series of 1993, issued by Acting City Mayor Amado L. Lucero of the City of
Puerto Princesa, we find nothing therein violative of any constitutional or statutory provision. The Order
refers to the implementation of the challenged ordinance and is not the Mayor's Permit.

The dissenting opinion of Mr. Justice Josue N. Bellosillo relies upon the lack of authority on the part of the
Sangguniang Panglungsod of Puerto Princesa to enact Ordinance No. 15, Series of 1992, on the theory
that the subject thereof is within the jurisdiction and responsibility of the Bureau of Fisheries and Aquatic
Resources (BFAR) under P.D. No. 704, otherwise known as the Fisheries Decree of 1975; and that, in
any event, the Ordinance is unenforceable for lack of approval by the Secretary of the Department of
Natural Resources (DNR), likewise in accordance with P.D. No. 704.
The majority is unable to accommodate this view. The jurisdiction and responsibility of the BFAR under
P.D. No. 704, over the management, conservation, development, protection, utilization and disposition of
all fishery and aquatic resources of the country is not all-encompassing. First, Section 4 thereof excludes
from such jurisdiction and responsibility municipal waters, which shall be under the municipal or city
government concerned, except insofar as fishpens and seaweed culture in municipal centers are
concerned. This section provides, however, that all municipal or city ordinances and resolutions affecting
fishing and fisheries and any disposition thereunder shall be submitted to the Secretary of the Department
of Natural Resources for appropriate action and shall have full force and effect only upon his approval.42

Second, it must at once be pointed out that the BFAR is no longer under the Department of Natural
Resources (now Department of Environment and Natural Resources). Executive Order No. 967 of 30
June 1984 transferred the BFAR from the control and supervision of the Minister (formerly Secretary) Of
Natural Resources to the Ministry of Agriculture and Food (MAF) and converted it into a mere staff
agency thereof, integrating its functions with the regional offices of the MAF.

In Executive Order No. 116 of 30 January 1987, which reorganized the MAF, the BFAR was retained as
an attached agency of the MAF. And under the Administrative Code of 1987,43 the BFAR is placed under
the Title concerning the Department of Agriculture.44

Therefore, it is incorrect to say that the challenged Ordinance of the City of Puerto Princesa is invalid or
unenforceable because it was not approved by the Secretary of the DENR. If at all, the approval that
should be sought would be that of the Secretary of the Department of Agriculture. However, the
requirement of approval by the Secretary of the Department of Agriculture (not DENR) of municipal
ordinances affecting fishing and fisheries in municipal waters has been dispensed with in view of the
following reasons:

(1) Section 534 (Repealing Clause) of the LGC expressly repeals or amends Sections 16 and 29 of P.D.
No. 70445 insofar as they are inconsistent with the provisions of the LGC.

(2) As discussed earlier, under the general welfare clause of the LGC, local government units have the
power, inter alia, to enact ordinances to enhance the right of the people to a balanced ecology. It likewise
specifically vests municipalities with the power to grant fishery privileges in municipal waters, and impose
rentals, fees or charges therefor; to penalize, by appropriate ordinances, the use of explosives, noxious or
poisonous substances, electricity, muro-ami, and other deleterious methods of fishing; and to prosecute
any violation of the provisions of applicable fishery laws.46 Finally, it imposes upon the sangguniang
bayan, the sangguniang panlungsod, and the sangguniang panlalawigan the duty to enact ordinances to
"[p]rotect the environment and impose appropriate penalties for acts which endanger the environment
such as dynamite fishing and other forms of destructive fishing . . . and such other activities which result
in pollution, acceleration of eutrophication of rivers and lakes or of ecological imbalance."47

In closing, we commend the Sangguniang Panlungsod of the City of Puerto Princesa and Sangguniang
Panlalawigan of the Province of Palawan for exercising the requisite political will to enact urgently needed
legislation to protect and enhance the marine environment, thereby sharing in the herculean task of
arresting the tide of ecological destruction. We hope that other local government units shall now be
roused from their lethargy and adopt a more vigilant stand in the battle against the decimation of our
legacy to future generations. At this time, the repercussions of any further delay in their response may
prove disastrous, if not, irreversible.

WHEREFORE, the instant petition is DISMISSED for lack of merit and the temporary restraining order
issued on 11 November 1993 is LIFTED.

No pronouncement as to costs.

SO ORDERED.
G.R. No. 107916 February 20, 1997

PERCIVAL MODAY, ZOTICO MODAY (deceased) and LEONORA MODAY, petitioners,

vs.
COURT OF APPEALS, JUDGE EVANGELINE S. YUIPCO OF BRANCH 6, REGIONAL TRIAL COURT,
AGUSAN DEL SUR AND MUNICIPALITY OF BUNAWAN, respondents.

ROMERO, J.:

The main issue presented in this case is whether a municipality may expropriate private property by virtue
of a municipal resolution which was disapproved by the Sangguniang Panlalawigan. Petitioner seeks the
reversal of the Court of Appeals decision and resolution, promulgated on July 15, 1992 and October 22,
1992 respectively, 1 and a declaration that Municipal Resolution No. 43-89 of the Bunawan Sangguniang
Bayan is null and void.

On July 23, 1989, the Sangguniang Bayan of the Municipality of Bunawan in Agusan del Sur passed
Resolution No. 43-89, "Authorizing the Municipal Mayor to Initiate the Petition for Expropriation of a One
(1) Hectare Portion of Lot No. 6138-Pls-4 Along the National Highway Owned by Percival Moday for the
Site of Bunawan Farmers Center and Other Government Sports Facilities." 2

In due time, Resolution No. 43-89 was approved by then Municipal Mayor Anuncio C. Bustillo and
transmitted to the Sangguniang Panlalawigan for its approval. On September 11, 1989, the Sangguniang
Panlalawigan disapproved said Resolution and returned it with the comment that "expropriation is
unnecessary considering that there are still available lots in Bunawan for the establishment of the
government center." 3

The Municipality of Bunawan, herein public respondent, subsequently filed a petition for Eminent Domain
against petitioner Percival Moday before the Regional Trial Court at Prosperidad, Agusan del Sur. 4 The
complaint was later amended to include the registered owners, Percival Moday's parents, Zotico and
Leonora Moday, as party defendants.

On March 6, 1991, public respondent municipality filed a Motion to Take or Enter Upon the Possession of
Subject Matter of This Case stating that it had already deposited with the municipal treasurer the
necessary amount in accordance with Section 2, Rule 67 of the Revised Rules of Court and that it would
be in the government's best interest for public respondent to be allowed to take possession of the
property.

Despite petitioners' opposition and after a hearing on the merits, the Regional Trial Court granted
respondent municipality's motion to take possession of the land. The lower court held that the
Sangguniang Panlalawigan's failure to declare the resolution invalid leaves it effective. It added that the
duty of the Sangguniang Panlalawigan is merely to review the ordinances and resolutions passed by the
Sangguniang Bayan under Section 208 (1) of B.P. Blg. 337, old Local Government Code and that the
exercise of eminent domain is not one of the two acts enumerated in Section 19 thereof requiring the
approval of the Sangguniang Panlalawigan. 5 The dispositive portion of the lower court's Order dated July
2, 1991 reads:

WHEREFORE, it appearing that the amount of P632.39 had been deposited as per
Official Receipt No. 5379647 on December 12, 1989 which this Court now determines as
the provisional value of the land, the Motion to Take or Enter Upon the Possession of the
Property filed by petitioner through counsel is hereby GRANTED. The Sheriff of this
Court is ordered to forthwith place the plaintiff in possession of the property involved.

Let the hearing be set on August 9, 1991 at 8:30 o'clock in the morning for the purpose of
ascertaining the just compensation or fair market value of the property sought to be
taken, with notice to all the parties concerned.

SO ORDERED. 6

Petitioners' motion for reconsideration was denied by the trial court on October 31, 1991.

Petitioners elevated the case in a petition for certiorari alleging grave abuse of discretion on the part of
the trial court, but the same was dismissed by respondent appellate court on July 15, 1992. 7 The Court of
Appeals held that the public purpose for the expropriation is clear from Resolution No. 43-89 and that
since the Sangguniang Panlalawigan of Agusan del Sur did not declare Resolution No. 43-89 invalid,
expropriation of petitioners' property could proceed.

8
Respondent appellate court also denied petitioners' motion for reconsideration on October 22, 1992.

Meanwhile, the Municipality of Bunawan had erected three buildings on the subject property: the
Association of Barangay Councils (ABC) Hall, the Municipal Motorpool, both wooden structures, and the
Bunawan Municipal Gymnasium, which is made of concrete.

In the instant petition for review filed on November 23, 1992, petitioner seeks the reversal of the decision
and resolution of the Court of Appeals and a declaration that Resolution No. 43-89 of the Municipality of
Bunawan is null and void.

On December 8, 1993, the Court issued a temporary restraining order enjoining and restraining public
respondent Judge Evangeline Yuipco from enforcing her July 2, 1991 Order and respondent municipality
from using and occupying all the buildings constructed and from further constructing any building on the
land subject of this petition. 9

Acting on petitioners' Omnibus Motion for Enforcement of Restraining Order and for Contempt, the Court
issued a Resolution on March 15, 1995, citing incumbent municipal mayor Anuncio C. Bustillo for
contempt, ordering him to pay the fine and to demolish the "blocktiendas" which were built in violation of
the restraining order. 10

Former Mayor Anuncio C. Bustillo paid the fine and manifested that he lost in the May 8, 1995
election. 11 The incumbent Mayor Leonardo Barrios, filed a Manifestation, Motion to Resolve "Urgent
Motion for Immediate Dissolution of the Temporary Restraining Order" and Memorandum on June 11,
1996 for the Municipality of Bunawan. 12

Petitioners contend that the Court of Appeals erred in upholding the legality of the condemnation
proceedings initiated by the municipality. According to petitioners, the expropriation was politically
motivated and Resolution No. 43-89 was correctly disapproved by the Sangguniang Panlalawigan, there
being other municipal properties available for the purpose. Petitioners also pray that the former Mayor
Anuncio C. Bustillo be ordered to pay damages for insisting on the enforcement of a void municipal
resolution.

The Court of Appeals declared that the Sangguniang Panlalawigan's reason for disapproving the
resolution "could be baseless, because it failed to point out which and where are those available lots.'"
Respondent court also concluded that since the Sangguniang Panlalawigan did not declare the municipal
board's resolution as invalid, expropriation of petitioners' property could
proceed. 13

The Court finds no merit in the petition and affirms the decision of the Court of Appeals.

Eminent domain, the power which the Municipality of Bunawan exercised in the instant case, is a
fundamental State power that is inseparable from sovereignty. 14 It is government's right to appropriate, in
the nature of a compulsory sale to the State, private property for public use or purpose. 15 Inherently
possessed by the national legislature, the power of eminent domain may be validly delegated to local
governments, other public entities and public utilities. 16 For the taking of private property by the
government to be valid, the taking must be for public use and there must be just compensation. 17

The Municipality of Bunawan's power to exercise the right of eminent domain is not disputed as it is
expressly provided for in Batas Pambansa Blg. 337, the local Government Code 18 in force at the time
expropriation proceedings were initiated. Section 9 of said law states:

Sec. 9. Eminent Domain. — A local government unit may, through its head and acting
pursuant to a resolution of its sanggunian, exercise the right of eminent domain and
institute condemnation proceedings for public use or purpose.

What petitioners question is the lack of authority of the municipality to exercise this right since the
Sangguniang Panlalawigan disapproved Resolution No. 43-89.

Section 153 of B.P. Blg. 337 provides:

Sec. 153. Sangguniang Panlalawigan Review. — (1) Within thirty days after receiving
copies of approved ordinances, resolutions and executive orders promulgated by the
 municipal mayor, the sangguniang panlalawigan shall examine the documents or transmit
them to the provincial attorney, or if there be none, to the provincial fiscal, who shall
examine them promptly and inform the sangguniang panlalawigan in writing of any defect
or impropriety which he may discover therein and make such comments or
recommendations as shall appear to him proper.

(2) If the sangguniang panlalawigan shall find that any municipal ordinance, resolution or
executive order is beyond the power conferred upon the sangguniang bayan or the
mayor, it shall declare such ordinance, resolution or executive order invalid in whole or in
part, entering its actions upon the minutes and advising the proper municipal authorities
thereof. The effect of such an action shall be to annul the ordinance, resolution or
executive order in question in whole or in part. The action of the sangguniang
panlalawigan shall be final.

xxx xxx xxx (Emphasis supplied.)

The Sangguniang Panlalawigan's disapproval of Municipal Resolution No. 43-89 is an infirm action which
does not render said resolution null and void. The law, as expressed in Section 153 of B.P. Blg. 337,
grants the Sangguniang Panlalawigan the power to declare a municipal resolution invalid on the sole
ground that it is beyond the power of the Sangguniang Bayan or the Mayor to issue. Although pertaining
to a similar provision of law but different factual milieu then obtaining, the Court's pronouncements
in Velazco v. Blas, 19 where we cited significant early jurisprudence, are applicable to the case at bar.

The only ground upon which a provincial board may declare any municipal resolution,
ordinance, or order invalid is when such resolution, ordinance, or order is "beyond the powers
conferred upon the council or president making the same." Absolutely no other ground is
recognized by the law. A strictly legal question is before the provincial board in its
consideration of a municipal resolution, ordinance, or order. The provincial (board's)
disapproval of any resolution, ordinance, or order must be premised specifically upon the fact
that such resolution, ordinance, or order is outside the scope of the legal powers conferred by
law. If a provincial board passes these limits, it usurps the legislative function of the municipal
council or president. Such has been the consistent course of executive authority. 20

Thus, the Sangguniang Panlalawigan was without the authority to disapprove Municipal Resolution No.
43-89 for the Municipality of Bunawan clearly has the power to exercise the right of eminent domain and
its Sangguniang Bayan the capacity to promulgate said resolution, pursuant to the earlier-quoted Section
9 of B.P. Blg. 337. Perforce, it follows that Resolution No. 43-89 is valid and binding and could be used as
lawful authority to petition for the condemnation of petitioners' property.

As regards the accusation of political oppression, it is alleged that Percival Moday incurred the ire of then
Mayor Anuncio C. Bustillo when he refused to support the latter's candidacy for mayor in previous
elections. Petitioners claim that then incumbent Mayor C. Bustillo used the expropriation to retaliate by
expropriating their land even if there were other properties belonging to the municipality and available for
the purpose. Specifically, they allege that the municipality owns a vacant seven-hectare property adjacent
to petitioners' land, evidenced by a sketch plan. 21

The limitations on the power of eminent domain are that the use must be public, compensation must be
made and due process of law must be
observed. 22 The Supreme Court, taking cognizance of such issues as the adequacy of compensation,
necessity of the taking and the public use character or the purpose of the taking, 23 has ruled that the
necessity of exercising eminent domain must be genuine and of a public character. 24 Government may
not capriciously choose what private property should be taken.

After a careful study of the records of the case, however, we find no evidentiary support for petitioners'
allegations. The uncertified photocopy of the sketch plan does not conclusively prove that the municipality
does own vacant land adjacent to petitioners' property suited to the purpose of the expropriation. In the
questioned decision, respondent appellate court similarly held that the pleadings and documents on
record have not pointed out any of respondent municipality's "other available properties available for the
same purpose." 25 The accusations of political reprisal are likewise unsupported by competent evidence.
Consequently, the Court holds that petitioners' demand that the former municipal mayor be personally
liable for damages is without basis.WHEREFORE, the instant petition is hereby DENIED. The
questioned Decision and Resolution of the Court of Appeals in the case of "Percival Moday." et al.
v. Municipality of Bunawan, et al." (CA G.R. SP No. 26712) are AFFIRMED. The Temporary
Restraining Order issued by the Court on December 8, 1993 is LIFTED.

SO ORDERED.
G.R. No. 126232 November 27, 1998

THE PROVINCE OF BULACAN, ROBERTO M. PAGDANGANAN, FLORENCE CHAVES, and

MANUEL DJ SIAYNGCO in their capacity as PROVINCIAL GOVERNOR, PROVINCIAL TREASURER,
PROVINCIAL LEGAL ADVISER, respectively, petitioners,
vs.
THE HONORABLE COURT OF APPEALS (FORMER SPECIAL 12TH DIVISION), REPUBLIC CEMENT
CORPORATION, respondents.

ROMERO, J.:

Before us is a petition for certiorari seeking the reversal of the decision of the Court of Appeals dated
September 27, 1995 declaring petitioner without authority to levy taxes on stones, sand, gravel, earth and
other quarry resources extracted from private lands, as well as the August 26, 1996 resolution of the
appellate court denying its motion for reconsideration.

The facts are as follows:

On June 26, 1992, the Sangguniang Panlalawigan of Bulacan passed Provincial Ordinance No. 3, known
as "An Ordinance Enacting the Revenue Code of the Bulacan Province." which was to take effect on July
1, 1992. Section 21 of the ordinance provides as follows:

Sec. 21 Imposition of Tax. There is hereby levied and collected a tax of 10% of the fair
market value in the locality per cubic meter of ordinary stones, sand, gravel, earth and
other quarry resources, such, but not limited to marble, granite, volcanic cinders, basalt,
tuff and rock phosphate, extracted from public lands or from beds of seas, lakes, rivers,
streams, creeks and other public waters within its territorial jurisdiction (Emphasis ours)

Pursuant thereto, the Provincial Treasurer of Bulacan, in a letter dated November 11, 1993, assessed
private respondent Republic Cement Corporation (hereafter Republic Cement) P2,524,692.13 for
extracting limestone, shale and silica from several parcels of private land in the province during the third
quarter of 1992 until the second quarter of 1993. Believing that the province, on the basis of above-said
ordinance, had no authority to impose taxes on quarry resources extracted from private lands, Republic
Cement formally contested the same on December 23, 1993. The same was, however, denied by the
Provincial Treasurer on January 17, 1994. Republic Cement, consequently filed a petition for declaratory
relief with the Regional Trial Court of Bulacan on February 14, 1994. The province filed a motion to
dismiss Republic Cement's petition, which was granted by the trial court on May 13, 1993, which ruled
that declaratory relief was improper, allegedly because a breach of the ordinance had been committed by
Republic Cement.

On July 11, 1994, Republic Cement filed a petition for certiorari with the Supreme Court seeking to
reverse the trial court's dismissal of their petition. The Court, in a resolution dated July 27, 1994, referred
the same to the Court of Appeals, where it was docketed as CA G.R. SP No. 34915. The appellate court
required petitioners to file a comment, which they did on September 7, 1994.

In the interim, the Province of Bulacan issued a warrant of levy against Republic Cement, allegedly
because of its unpaid tax liabilities. Negotiations between Republic Cement and petitioners resulted in an
agreement and modus vivendi on December 12, 1994, whereby Republic Cement agreed to pay under
protest P1,262,346.00, 50% of the tax assessed by petitioner, in exchange for the lifting of the warrant of
levy. Furthermore, Republic Cement and petitioners agreed to limit the issue for resolution by the Court of
Appeals to the question as to whether or not the provincial government could impose and/or assess taxes
on quarry resources extracted by Republic Cement from private lands pursuant to Section 21 of
Provincial Ordinance No. 3. This agreement and modus vivendi were embodied in a joint manifestation
and motion signed by Governor Roberto Pagdanganan, on behalf of the Province of Bulacan, by
Provincial Treasurer Florence Chavez, and by Provincial Legal Officer Manuel Siayngco, as petitioners'
counsel and filed with the Court of Appeals on December 13, 1994. In a resolution dated December 29,
1994, the appellate court approved the same and limited the issue to be resolved to the question of
whether or not the provincial government could impose taxes on stones, sand, gravel, earth and other
quarry resources extracted from private lands.

After due trial, the Court of Appeals, on September 27, 1995, rendered the following judgment:

WHEREFORE, judgment is hereby rendered declaring the Province of Bulacan under its
Provincial Ordinance No. 3 entitled "An Ordinance Enacting The Revenue Code of
Bulacan Province" to be without legal authority to impose and assess taxes on quarry
resources extracted by RCC from private lands, hence the interpretation of Respondent
 Treasurer of Chapter II, Article D, Section 21 of the Ordinance, and the assessment
made by the Province of Bulacan against RCC is null and void.

Petitioners' motion for reconsideration, as well as their supplemental motion for reconsideration, was
denied by the appellate court on August 26, 1996, hence this appeal.

Petitioners claim that the Court of Appeals erred in:

1. NOT HAVING OUTRIGHTLY DISMISSED THE SUBJECT PETITION

ON THE GROUND THAT THE SAME IS NOT THE APPROPRIATE
REMEDY FROM THE TRIAL COURT'S GRANT OF THE PRIVATE
RESPONDENTS' (HEREIN PETITIONER) MOTION TO DISMISS;

2. NOT DISMISSING THE SUBJECT PETITION FOR BEING

VIOLATIVE OF CIRCULAR 2-90 ISSUED BY THE SUPREME COURT;

3. NOT DISMISSING THE PETITION FOR REVIEW ON THE GROUND

THAT THE TRIAL COURT'S ORDER OF MAY 13, 1994 HAD LONG
BECOME FINAL AND EXECUTORY;

4. GOING BEYOND THE PARAMETERS OF ITS APPELLATE

JURISDICTION IN RENDERING THE SEPTEMBER 27, 1995
DECISION;

5. HOLDING THAT PRIVATE RESPONDENT (HEREIN PETITIONER)

ARE ESTOPPED FROM RAISING THE PROCEDURAL ISSUE IN THE
MOTION FOR RECONSIDERATION;

6. THE INTERPRETATION OF SECTION 134 OF THE LOCAL

GOVERNMENT CODE AS STATED IN THE SECOND TO THE LAST
PARAGRAPH OF PAGE 5 OF ITS SEPTEMBER 27, 1995 DECISION;

7. SUSTAINING THE ALLEGATIONS OF HEREIN RESPONDENT

WHICH UNJUSTLY DEPRIVED PETITIONER THE POWER TO
CREATE ITS OWN SOURCES OF REVENUE;

8. DECLARING THAT THE ASSESSMENT MADE BY THE PROVINCE

OF BULACAN AGAINST RCC AS NULL AND VOID WHICH IN EFFECT
IS A COLLATERAL ATTACK ON PROVINCIAL ORDINANCE NO. 3;
AND

9. FAILING TO CONSIDER THE REGALIAN DOCTRINE IN FAVOR OF

THE LOCAL GOVERNMENT.

The issues raised by petitioners are devoid of merit. The number and diversity of errors raised by
appellants impel us, however, to discuss the points raised seriatim.

In their first assignment of error, petitioners contend that instead of filing a petition for certiorari with the
Supreme Court, Republic Cement should have appealed from the order of the trial court dismissing their
petition. Citing Martinez vs. CA,1 they allege that a motion to dismiss is a final order, the remedy against
which is not a petition for certiorari, but an appeal, regardless of the questions sought to be raised on
appeal, whether of fact or of law, whether involving jurisdiction or grave abuse of discretion of the trial
court.

Petitioners' argument is misleading. While it is true that the remedy against a final order is an appeal, and
not a petition for certiorari, the petition referred to is a petition for certiorari under Rule 65. As stated
in Martinez, the party aggrieved does not have the option to substitute the special civil action
of certiorari under Rule 65 for the remedy of appeal. The existence and availability of the right of appeal
are antithetical to the availment of the special civil action of certiorari.

Republic Cement did not, however, file a petition for certiorari under Rule 65, but an appeal
by certiorari under Rule 45. Even law students know that certiorari under Rule 45 is a mode of appeal, an
appeal from the Regional Trial Court being taken in either of two ways (a) by writ of error (involving
questions of fact and law) and (b) by certiorari (limited only to issues of law), with an appeal
by certiorari being brought to the Supreme Court, there being no provision of law for taking appeals
by certiorari to the Court of Appeals.2 It is thus clearly apparent that Republic Cement correctly contested
the trial court's order of dismissal by filing an appeal by certiorari under Rule 45. In fact, petitioners, in
their second assignment of error, admit that a petition for review on certiorari under Rule 45 is available to
a party aggrieved by an order granting a motion to dismiss. 3 They claim, however, that Republic Cement
could not avail of the same allegedly because the latter raised issues of fact, which is prohibited, Rule 45
providing that "(t)he petition shall raise only questions of law which must be distinctly set forth." 4 In this
respect, petitioners claim that Republic Cement's petition should have been dismissed by the appellate
court, Circular 2-90 providing:

4. Erroneous Appeals. — An appeal taken to either the Supreme Court or the Court of
Appeals by the wrong or inappropriate mode shall be dismissed.

xxx xxx xxx

d) No transfer of appeals erroneously taken. — No transfers of appeals erroneously

taken to the Supreme Court or to the Court of Appeals to whichever of these Tribunals
has appropriate appellate jurisdiction will be allowed; continued ignorance or wilful
disregard of the law on appeals will not be tolerated.

Petitioners even fault the Court for referring Republic Cement's petition to the Court of Appeals, claiming
that the same should have been dismissed pursuant to Circular 2-90. Petitioners conveniently overlook
the other provisions of Circular 2-90, specifically 4b) thereof, which provides:

b) Raising factual issues in appeal by certiorari. — Although submission of issues of fact

in an appeal by certiorari taken to the Supreme Court from the regional trial court is
ordinarily proscribed, the Supreme Court nonetheless retains the option, in the exercise
of its sound discretion and considering the attendant circumstances, either itself to take
cognizance of and decide such issues or to refer them to the Court of Appeals for
determination.

As can be clearly adduced from the foregoing, when an appeal by certiorari under Rule 45 erroneously
raises factual issues, the Court has the option to refer the petition to the Court of Appeals. The exercise
by the Court of this option may not now be questioned by petitioners.

As the trial court's order was properly appealed by Republic Cement, the trial court's May 13, 1994 order
never became final and executory, rendering petitioner's third assignment of error moot and academic.

Petitioners' fourth and fifth assignment of errors are likewise without merit. Petitioners assert that the
Court of Appeals could only rule on the propriety of the trial court's dismissal of Republic Cement's
petition for declaratory relief, allegedly because that was the sole relief sought by the latter in its petition
for certiorari. Petitioners claim that the appellate court overstepped its jurisdiction when it declared null
and void the assessment made by the Province of Bulacan against Republic Cement.

Petitioners gloss over the fact that, during the proceedings before the Court of Appeals, they entered into
an agreement and modus vivendi whereby they limited the issue for resolution to the question as to
whether or not the provincial government could impose and/or assess taxes on stones, sand, gravel,
earth and other quarry resources extracted by Republic Cement from private lands. This agreement
and modus vivendi were approved by the appellate court on December 29, 1994. All throughout the
proceedings, petitioners never questioned the authority of the Court of Appeals to decide this issue, an
issue which it brought itself within the purview of the appellate court. Only when an adverse decision was
rendered by the Court of Appeals did petitioners question the jurisdiction of the former.

Petitioners are barred by the doctrine of estoppel from contesting the authority of the Court of Appeals to
decide the instant case, as this Court has consistently held that "(a) party cannot invoke the jurisdiction of
a court to secure affirmative relief against his opponent and after obtaining or failing to obtain such relief,
repudiate or question that same jurisdiction." 5 The Supreme Court frowns upon the undesirable practice
of a party submitting his case for decision and then accepting the judgment, only if favorable, and
attacking it for lack of jurisdiction when adverse.6

In a desperate attempt to ward off defeat, petitioners now repudiate the above-mentioned agreement
and modus vivendi, claiming that the same was not binding on the Province of Bulacan, not having been
authorized by the Sangguniang Panlalawigan of Bulacan. While it is true that the Provincial Governor can
enter into contract and obligate the province only upon authority of the sangguniang panlalawigan,7 the
same is inapplicable to the case at bar. The agreement and modus vivendi may have been signed by
petitioner Roberto Pagdanganan, as Governor of the Province of Bulacan, without authorization from
the sangguniang panlalawigan, but it was also signed by Manuel Siayngco, the Provincial Legal Officer, in
his capacity as such, and as counsel of petitioners.

It is a well-settled rule that all proceedings in court to enforce a remedy, to bring a claim, demand, cause
of action or subject matter of a suit to hearing, trial, determination, judgment and execution are within the
exclusive control of the attorney.8 With respect to such matters of ordinary judicial procedure, the attorney
needs no special authority to bind his client.9 Such questions as what action or pleading to file, where and
when to file it, what are its formal requirements, what should be the theory of the case, what defenses to
raise, how may the claim or defense be proved, when to rest the case, as well as those affecting the
competency of a witness, the sufficiency, relevancy, materiality or immateriality of certain evidence and
the burden of proof are within the authority of the attorney to decide. 10 Whatever decision an attorney
makes on any of these procedural questions, even if it adversely affects a client's case, will generally bind
a client. The agreement and modus vivendi signed by petitioners' counsel is binding upon petitioners,
even if the Sanggunian had not authorized the same, limitation of issues being a procedural question
falling within the exclusive authority of the attorney to decide.

In any case, the remaining issues raised by petitioner are likewise devoid of merit, a province having no
authority to impose taxes on stones, sand, gravel, earth and other quarry resources extracted from
private lands. The pertinent provisions of the Local Government Code are as follows:

Sec. 134. Scope of Taxing Powers. — Except as otherwise provided in this Code, the
province may levy only the taxes, fees, and charges as provided in this Article.

Sec. 158. Tax on Sand, Gravel and Other Quarry Resources. — The province may levy
and collect not more than ten percent (10%) of fair market value in the locality per cubic
meter of ordinary stones, sand, gravel, earth, and other quarry resources, as defined
under the National Internal Revenue Code, as amended, extracted from public lands or
from the beds of seas, lakes, rivers, streams, creeks, and other public waters within its
territorial jurisdiction.

xxx xxx xxx (Emphasis supplied)

The appellate court, on the basis of Section 134, ruled that a province was empowered to impose taxes
only on sand, gravel, and other quarry resources extracted from public lands, its authority to tax being
limited by said provision only to those taxes, fees and charges provided in Article One, Chapter 2, Title
One of Book II of the Local Government Code. 11 On the other hand, petitioners claim that Sections
129 12 and 186 13 of the Local Government Code authorizes the province to impose taxes other than
those specifically enumerated under the Local Government Code.

The Court of Appeals erred in ruling that a province can impose only the taxes specifically mentioned
under the Local Government Code. As correctly pointed out by petitioners, Section 186 allows a province
to levy taxes other than those specifically enumerated under the Code, subject to the conditions specified
therein.

This finding, nevertheless, affords cold comfort to petitioners as they are still prohibited from imposing
taxes on stones, sand, gravel, earth and other quarry resources extracted from private lands. The tax
imposed by the Province of Bulacan is an excise tax, being a tax upon the performance, carrying on, or
exercise of an activity. 14 The Local Government Code provides:

Sec. 133. — Common Limitations on the Taxing Powers of Local Government Units. —
Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities,
municipalities, and barangays shall not extend to the levy of the following:

xxx xxx xxx

(h) Excise taxes on articles enumerated under the National Internal Revenue Code, as
amended, and taxes, fees or charges on petroleum products;

xxx xxx xxx

A province may not, therefore, levy excise taxes on articles already taxed by the National Internal
Revenue Code. Unfortunately for petitioners, the National Internal Revenue Code provides:

Sec. 151. — Mineral Products. —

 (A) Rates of Tax. — There shall be levied, assessed and collected on minerals, mineral
products and quarry resources, excise tax as follows:

xxx xxx xxx

(2) On all nonmetallic minerals and quarry resources, a tax of two

percent (2%) based on the actual market value of the gross output
thereof at the time of removal, in case of those locally extracted or
produced; or the values used by the Bureau of Customs in determining
tariff and customs duties, net of excise tax and value-added tax, in the
case of importation.

xxx xxx xxx

(B) [Definition of Terms]. — for purposes of this Section, the term-

xxx xxx xxx

(4) Quarry resources shall mean any common stone or other common
mineral substances as the Director of the Bureau of Mines and Geo-
Sciences may declare to be quarry resources such as, but not restricted
to, marl, marble, granite, volcanic cinders, basalt, tuff and rock
phosphate; Provided, That they contain no metal or metals or other
valuable minerals in economically workable quantities.

It is clearly apparent from the above provision that the National Internal Revenue Code levies a tax
on all quarry resources, regardless of origin, whether extracted from public or private land. Thus, a
province may not ordinarily impose taxes on stones, sand, gravel, earth and other quarry resources, as
the same are already taxed under the National Internal Revenue Code. The province can, however,
impose a tax on stones, sand, gravel, earth and other quarry resources extracted from public land
because it is expressly empowered to do so under the Local Government Code. As to stones, sand,
gravel, earth and other quarry resources extracted from private land, however, it may not do so, because
of the limitation provided by Section 133 of the Code in relation to Section 151 of the National Internal
Revenue Code.

Given the above disquisition, petitioners cannot claim that the appellate court unjustly deprived them of
the power to create their sources of revenue, their assessment of taxes against Republic Cement
being ultra vires, traversing as it does the limitations set by the Local Government Code.

Petitioners likewise aver that the appellate court' s declaration of nullity of its assessment against
Republic Cement is a collateral attack on Provincial Ordinance No. 3, which is prohibited by public
policy. 15 Contrary to petitioners' claim, the legality of the ordinance was never questioned by the Court of
Appeals. Rather, what the appellate court questioned was petitioners' assessment of taxes on Republic
Cement on the basis of Provincial Ordinance No. 3, not the ordinance itself.

Furthermore, Section 21 of Provincial Ordinance No. 3 is practically only a reproduction of Section 138 of
the Local Government Code. A cursory reading of both would show that both refer to ordinary sand,
stone, gravel, earth and other quarry resources extracted from public lands. Even if we disregard the
limitation set by Section 133 of the Local Government Code, petitioners may not, impose taxes on stones,
sand, gravel, earth and other quarry resources extracted from private lands on the basis of Section 21 of
Provincial Ordinance No. 3 as the latter clearly applies only to quarry resources extracted from public
lands. Petitioners may not invoke the Regalian doctrine to extend the coverage of their ordinance to
quarry resources extracted from private lands, for taxes, being burdens, are not to be presumed beyond
what the applicable statute expressly and clearly declares, tax statutes being construed strictissimi
juris against the government. 16

WHEREFORE, premises considered, the instant petition is DISMISSED for lack of merit and the decision
of the Court of Appeals is hereby AFFIRMED in toto. Costs against petitioner.

SO ORDERED.
 [G.R. No. 119172. March 25, 1999]

BELEN C. FIGUERRES, Petitioner, v. COURT OF APPEALS, CITY OF ASSESSORS OF

MANDALUYONG, CITY TREASURER OF MANDALUYONG, and SANGGUNIANG BAYAN OF
MANDALUYONG, Respondents.

DECISION

MENDOZA, J.:

This is a petition for review on certiorari of the decision of the Court of Appeals, dated February 8, 1995,
dismissing a prohibition suit brought by petitioner against respondent officials of the Municipality, now
City, of Mandaluyong to prevent them from enforcing certain ordinances revising the schedule of fair
market values of the various classes of real property in that municipality and the assessment levels
applicable thereto.

Petitioner Belen C. Figuerres is the owner of a parcel of land, covered by Transfer Certificate of Title No.
413305, and located at Amarillo Street, Barangay Mauway, City of Mandaluyong. In 1993, she received a
notice of assessment, dated October 20, 1993, from the municipal assessor of the then Municipality of
Mandaluyong, containing the following specifics:

TYPE AREA BASE VALUE MARKET ASSESSMENT ASSESSED

PER SQ. M. VALUE LEVEL VALUE

Residential 530 sq.m. P2,500.00 P1,325,000.00 20 P265,000.001

The assessment, effective in the year 1994, was based on Ordinance Nos. 119 and 125, series of 1993,
and Ordinance No. 135, series of 1994, of the Sangguniang Bayan of Mandaluyong. Ordinance No. 119,
series of 1993, which was promulgated on April 22, 1993, contains a schedule of fair market values of the
different classes of real property in the municipality.2 Ordinance No. 125, series of 1993, which was
promulgated on November 11, 1993, on the other hand, fixes the assessment levels applicable to such
classes of real property.3 Finally, Ordinance No. 135, series of 1994, which was promulgated on February
24, 1994, amended Ordinance No. 119, 6 by providing that only one third (1/3) of the increase in the
market values applicable to residential lands pursuant to the said ordinance shall be implemented in the
years 1994, 1995, and 1996.4cräläwvirtualibräry

Petitioner brought a prohibition suit in the Court of Appeals against the Assessor, the Treasurer, and the
Sangguniang Bayan to stop them from enforcing the ordinances in question on the ground that the
ordinances were invalid for having been adopted allegedly without public hearings and prior publication or
posting and without complying with the implementing rules yet to be issued by the Department of
Finance.5cräläwvirtualibräry

In its decision, dated February 8, 1995,6 the Court of Appeals threw out the petition. The appellate court
said in part:

Petitioners claim that Ordinance Nos. 119, 125 and 135 are null and void since they were prepared
without the approval and determination of the Department of Finance is without merit.

The approval and determination by the Department of Finance is not needed under the Local
Government Code of 1991, since it is now the city council of Mandaluyong that is empowered to
determine and approve the aforecited ordinances. Furthermore, contrary to the claim of petitioner that the
Department of Finance has not promulgated the necessary rules and regulations for the classification,
appraisal and assessment of real property as prescribed by the 1991 Local Government Code,
Department of Finance Local Assessment Regulation No. 1-92 dated October 6, 1992, which is
addressed to provincial, city, and municipal assessors and others concerned with the proper
implementation of Section 219 of R.A. No. 7160, provides for the rules relative to the conduct of general
revisions of real property assessments pursuant to Sections 201 and 219 of the Local Government Code
of 1991.

Regarding petitioners claim that there is need for municipal ordinances to be published in the Official
Gazette for their effectivity, the same is also without merit.

Section 511 of R.A. No. 7160 provides that

....

The secretary to the Sanggunian concerned shall transmit official copies of such ordinances to the chief
executive officer of the Official Gazette within seven (7) days following the approval of the said
ordinances for publication purposes. The Official Gazette may publish ordinances with penal sanctions for
archival and reference purposes.

Thus, the posting and publication in the Official Gazette of ordinances with penal sanctions is not a
prerequisite for their effectivity. This finds support in the case of Taada v. Tuvera (146 SCRA 446),
wherein the Supreme Court declared that municipal ordinances are covered by the Local Government
Code.

Moreover, petitioner failed to exhaust the administrative remedies available to him as provided for under
Section 187 of R.A. No. 7160, before filing the instant petition with this Court.

....

In fact, aside from filing an appeal to the Secretary of Justice as provided under Section 187 of R.A. No.
7160, the petitioner . . . could have appealed to the Local Board of Assessment Appeals, the decision of
which is in turn appealable to the Central Board of Assessment Appeals as provided under Sections 226
and 230 of the said law. According to current jurisprudence, administrative remedies must be exhausted
before seeking judicial intervention. (Gonzales v. Secretary of Education, 5 SCRA 657). If a litigant goes
to court without first pursuing the available administrative remedies, his action is considered premature
and not yet ripe for judicial determination (Allied Brokerage Corporation v. Commissioner of Customs, 40
SCRA 555).

As the petitioner has not pursued the administrative remedies available to him, his petition for prohibition
cannot prosper (Gonzales v. Provincial Auditor of Iloilo, 12 SCRA 711).

WHEREFORE, the petition is hereby DENIED due course and is hereby DISMISSED.7

Petitioner Figuerres assails the above decision. She contends that

1. THE HONORABLE COURT OF APPEALS PATENTLY ERRED IN FINDING LACK OF EXHAUSTION

OF ADMINISTRATIVE REMEDIES ON THE PART OF HEREIN PETITIONER WHEN UNDER THE
CIRCUMSTANCES, EXHAUSTION OF ADMINISTRATIVE REMEDIES IS NOT REQUIRED BY LAW
AND WOULD HAVE BEEN A USELESS FORMALITY.

2. THE HONORABLE COURT OF APPEALS ERRED WHEN IT STATED THAT THE CITY COUNCIL OF
MANDALUYONG IS EMPOWERED TO DETERMINE AND APPROVE THE AFORECITED
ORDINANCES WITHOUT TAKING INTO ACCOUNT THE MANDATORY PUBLIC HEARINGS
REQUIRED BY R.A. No. 7160.

3. WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS PATENTLY ERRED IN STATING
THAT THERE IS NO NEED FOR PUBLICATION OF TAX ORDINANCES.

4. THERE IS NON COMPLIANCE BY PUBLIC RESPONDENTS OF ASSESSMENT REGULATION No.

1-92 DATED OCTOBER 6, 1992, EVEN IF THE HONORABLE COURT OF APPEALS MENTIONED THE
EXISTENCE OF THE SAID ASSESSMENT REGULATIONS.8

On the other hand, the Municipality of Mandaluyong contends:

(1) the present case does not fall within any of the exceptions to the doctrine of exhaustion of
administrative remedies;

(2) apart from her bare allegations, petitioner Figuerres has not presented any evidence to show that no
public hearings were conducted prior to the enactment of the ordinances in question;

(3) although an ordinance concerning the imposition of real property taxes is not required to be published
in the Official Gazette in order to be valid, still the subject ordinances were disseminated before their
effectivity in accordance with the relevant provisions of R.A. No. 7160; and

(4) the Municipality of Mandaluyong complied with the regulations of the Department of Finance in
enacting the subject ordinances.
 Exhaustion of administrative remedies

In Lopez v. City of Manila,9 we recently held:

. . . Therefore, where a remedy is available within the administrative machinery, this should be resorted to
before resort can be made to the courts, not only to give the administrative agency the opportunity to
decide the matter by itself correctly, but also to prevent unnecessary and premature resort to courts. . . .

With regard to questions on the legality of a tax ordinance, the remedies available to the taxpayer are
provided under Sections 187, 226, and 252 of R.A. 7160.

Section 187 of R.A. 7160 provides, that the taxpayer may question the constitutionality or legality of a tax
ordinance on appeal within thirty (30) days from effectivity thereof, to the Secretary of Justice. The
petitioner after finding that his assessment is unjust, confiscatory, or excessive, may bring the case
before the Secretary of Justice for questions of legality or constitutionality of the city ordinance.

Under Section 226 of R.A. 7160, an owner of real property who is not satisfied with the assessment of his
property may, within sixty (60) days from notice of assessment, appeal to the Board of Assessment
Appeals.

Should the taxpayer question the excessiveness of the amount of tax, he must first pay the amount due,
in accordance with Section 252 of R.A. No. 7160. Then, he must request the annotation of the phrase
paid under protest and accordingly appeal to the Board of Assessment Appeals by filing a petition under
oath together with copies of the tax declarations and affidavits or documents to support his appeal.

Although cases raising purely legal questions are excepted from the rule requiring exhaustion of
administrative remedies before a party may resort to the courts, in the case at bar, the legal questions
raised by petitioner require, as will presently be shown, proof of facts for their resolution. Therefore, the
petitioners action in the Court of Appeals was premature, and the appellate court correctly dismissed her
action on the ground that she failed to exhaust available administrative remedies as above stated.

Petitioner argues that resort to the Secretary of Justice is not mandatory but only directory because R.A.
No. 7160, 187 provides that any question on the constitutionality or legality of tax ordinances or revenue
measures may be appealed to the Secretary of Justice. Precisely, the Secretary of Justice can take
cognizance of a case involving the constitutionality or legality of tax ordinances where, as in this case,
there are factual issues involved.

There need be no fear that compliance with the rule on exhaustion of administrative remedies will unduly
delay resort to the courts to the detriment of taxpayers. Although R.A. No. 7160, 187 provides that an
appeal to the Secretary of Justice shall not have the effect of suspending the effectivity of the ordinance
and the accrual and payment of the tax, fee, or charge levied therein, it likewise requires the Secretary of
Justice to render a decision within sixty (60) days from the date of receipt of the appeal, after which the
aggrieved party may file appropriate proceedings with a court of competent jurisdiction.

Public hearings on tax ordinance

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

However, it is noteworthy that apart from her bare assertions, petitioner Figuerres has not presented any
evidence to show that no public hearings were conducted prior to the enactment of the ordinances in
question. On the other hand, the Municipality of Mandaluyong claims that public hearings were indeed
conducted before the subject ordinances were adopted,10 although it likewise failed to submit any
evidence to establish this allegation. However, in accordance with the presumption of validity in favor of
an ordinance, their constitutionality or legality should be upheld in the absence of evidence showing that
the procedure prescribed by law was not observed in their enactment. In an analogous case, United
States v. Cristobal,11 it was alleged that the ordinance making it a crime for anyone to obstruct waterways
had not been submitted by the provincial board as required by 2232-2233 of the Administrative Code. In
rejecting this contention, the Court held:

From the judgment of the Court of First Instance the defendant appealed to this court upon the theory that
the ordinance in question was adopted without authority on the part of the municipality and was therefore
unconstitutional. The appellant argues that there was no proof adduced during the trial of the cause
showing that said ordinance had been approved by the provincial board. Considering the provisions of
law that it is the duty of the provincial board to approve or disapprove ordinances adopted by the
municipal councils of the different municipalities, we will assume, in the absence of proof to the contrary,
that the law has been complied with. We have a right to assume that officials have done that which the
law requires them to do, in the absence of positive proof to the contrary.12

Furthermore, the lack of a public hearing is a negative allegation essential to petitioners cause of action in
the present case. Hence, as petitioner is the party asserting it, she has the burden of proof.13 Since
petitioner failed to rebut the presumption of validity in favor of the subject ordinances and to discharge the
burden of proving that no public hearings were conducted prior to the enactment thereof, we are
constrained to uphold their constitutionality or legality.

Publication and posting of schedule of fair market values

Petitioner is also right that publication or posting of the proposed schedule of fair market values of the
different classes of real property in a local government unit is required pursuant to R.A. No. 7160, 212
which in part states:

. . . . The schedule of fair market values shall be published in a newspaper of general circulation in the
province, city, or municipality concerned, or in the absence thereof, shall be posted in the provincial
capitol, city or municipal hall and in two other conspicuous public places therein.

In Ty v. Trampe,14 it was held that, if the local government unit is part of Metro Manila, the abovequoted
portion of 212 must be understood to refer to the schedule of fair market values of the different classes of
real property in the district to which the city or municipality belongs, as prepared jointly by the local
assessors concerned.

In addition, an ordinance imposing real property taxes (such as Ordinance Nos. 119 and 135) must be
posted or published as required by R.A. No. 7160, 188 which provides:

Section 188. Publication of Tax Ordinances and Revenue Measures. Within ten (10) days after their
approval, certified true copies of all provincial, city, and municipal tax ordinances or revenue measures
shall be published in full for three (3) consecutive days in a newspaper of local circulation: Provided,
however, That in provinces, cities and municipalities where there are no newspapers of local circulation,
the same may be posted in at least two (2) conspicuous and publicly accessible places.

Hence, after the proposed schedule of fair market values of the different classes of real property in a local
government unit within Metro Manila, as prepared jointly by the local assessors of the district to which the
city or municipality belongs, has been published or posted in accordance with 212 of R.A. No. 7160 and
enacted into ordinances by the sanggunians of the municipalities and cities concerned, the ordinances
containing the schedule of fair market values must themselves be published or posted in the manner
provided by 188 of R.A. No. 7160.

With respect to ordinances which fix the assessment levels (such as Ordinance No. 125), being in the
nature of a tax ordinance, 188 likewise applies. Moreover, as Ordinance No. 125, 7 provides for a penal
sanction for violations thereof by means of a fine of not less than P1,000.00 nor more than P5,000.00, or
imprisonment of not less than one (1) month nor more than six (6) months, or both, in the discretion of the
court, not only 188 but 511(a) also must be observed:

Ordinances with penal sanctions shall be posted at prominent places in the provincial capitol, city,
municipal or barangay hall, as the case may be, for a minimum period of three (3) consecutive weeks.
Such ordinances shall also be published in a newspaper of general circulation, where available, within the
territorial jurisdiction of the local government unit concerned, except in the case of barangay ordinances.
Unless otherwise provided therein, said ordinances shall take effect on the day following its publication, or
at the end of the period of posting, whichever occurs later.

In view of 188 and 511(a) of R.A. No. 7160, an ordinance fixing the assessment levels applicable to the
different classes of real property in a local government unit and imposing penal sanctions for violations
thereof (such as Ordinance No. 125) should be published in full for three (3) consecutive days in a
newspaper of local circulation, where available, within ten (10) days of its approval, and posted in at least
two (2) prominent places in the provincial capitol, city, municipal, or barangay hall for a minimum of three
(3) consecutive weeks.

Apart from her allegations, petitioner has not presented any evidence to show that the subject ordinances
were not disseminated in accordance with these provisions of R.A. No. 7160. On the other hand, the
Municipality of Mandaluyong presented a certificate, dated November 12, 1993, of Williard S. Wong,
Sanggunian Secretary of the Municipality of Mandaluyong that Ordinance No. 125, S-1993 . . . has been
posted in accordance with 59(b) of R.A. No. 7160, otherwise known as the Local Government Code of
1991.15 Thus, considering the presumption of validity in favor of the ordinances and the failure of
petitioner to rebut such presumption, we are constrained to dismiss the petition in this case.

Compliance with regulations issued by the Department of Finance

Also without merit is the contention of petitioner that Ordinance No. 119 and Ordinance No. 135 are void
for not having been enacted in accordance with Local Assessment Regulation No. 1-92, dated October 6,
1992, of the Department of Finance, which provides guidelines for the preparation of proposed schedules
of fair market values of the different classes of real property in a local government unit, such as time
tables for obtaining information from owners of affected lands and buildings regarding the value thereof.
As in the case of the procedural requirements for the enactment of tax ordinances and revenue
measures, however, petitioner has not shown that the ordinances in this case were not enacted in
accordance with the applicable regulations of the Department of Finance. The Municipality of
Mandaluyong claims that, although the regulations are merely directory, it has complied with
them.16 Hence, in the absence of proof that the ordinances were not enacted in accordance with such
regulations, said ordinances must be presumed to have been enacted in accordance with such
regulations.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED.

SO ORDERED.
 [G.R. No. 127708. March 25, 1999.]

CITY GOVERNMENT OF SAN PABLO, LAGUNA, CITY TREASURER OF SAN PABLO, LAGUNA, and
THE SANGUNIANG PANGLUNSOD OF SAN PABLO, LAGUNA, Petitioners, v. HONORABLE
BIENVENIDO V. REYES, in his capacity as Presiding Judge, Regional Trial Court, Branch 29, San
Pablo City and the MANILA ELECTRIC COMPANY, Respondents.

DECISION

GONZAGA-REYES, J.:

This is a petition under Rule 45 of the Rules of Court to review on a pure question of law the decision of
the Regional Trial Court (RTC) of San Pablo City, Branch 29 in Civil Case No. SP-4459(96), entitled
"Manila Electric Company v. City of San Pablo, Laguna, City Treasurer of San Pablo Laguna, and the
Sanguniang Panglungsod of San Pablo City, Laguna." The RTC declared the imposition of a franchise tax
under Section 2.09, Article D of Ordinance No. 56 otherwise known as the Revenue Code of the City of
San Pablo as ineffective and void insofar as the respondent MERALCO is concerned for being violative of
Act No. 3648, Republic Act No. 2340 and PD 551. The RTC also granted MERALCO’S claim for refund of
franchise taxes paid under protest.

The following antecedent facts are undisputed:chanrob1es virtual 1aw library

Act No. 3648 granted the Escudero Electric Service Company a legislative franchise to maintain and
operate an electric light and power system in the City of San Pablo and nearby municipalities. Section 10
of Act No. 3648 provides:jgc:chanrobles.com.ph

". . . In consideration of the franchise and rights hereby granted, the grantee shall pay unto the municipal
treasury of each municipality in which it is supplying electric current to the public under this franchise, a
tax equal to two percentum of the gross earnings from electric current sold or supplied under this
franchise in each said municipality. Said tax shall be due and payable quarterly and shall be in lieu of any
and all taxes of any kind, nature or description levied, established or collected by any authority
whatsoever, municipal, provincial or insular, now or in the future, on its poles, wires, insulators, switches,
transformers, and structures, installations, conductors, and accessories placed in and over and under all
public property, including public streets and highways, provincial roads, bridges and public squares, and
on its franchise, rights, privileges, receipts, revenues and profits from which taxes the grantee is hereby
expressly exempted."cralaw virtua1aw library

Escudero’s franchise was transferred to the plaintiff (herein respondent) MERALCO under Republic Act
No. 2340.

Presidential Decree No. 551 was enacted on September 11, 1974. Section 1 thereof provides the
following:jgc:chanrobles.com.ph

"SECTION 1. Any provision of law or local ordinance to the contrary notwithstanding, the franchise tax
payable by all grantees of franchise to generate, distribute and sell electric current for light, heat and
power shall be two percent (2%) of their gross receipts received from the sale of electric current and from
transactions incident to the generation, distribution and sale of electric current.

Such franchise tax shall be payable to the Commissioner of Internal Revenue or his duly authorized
representative on or before the twentieth day of the month following the end of each calendar quarter or
month as may be provided in the respective franchise or pertinent municipal regulation and shall, any
provision of the Local Tax Code or any other law to the contrary notwithstanding, be in lieu of all taxes
and assessments of whatever nature imposed by any national or local authority on earnings, receipts,
income and privilege of generation, distribution and sale of electric current."cralaw virtua1aw library

Republic Act No. 7160, otherwise known as the "Local Government Code of 1991" (hereinafter referred to
as LGC) took effect on January 1, 1992. The said Code authorizes the province/city to impose a tax on
business enjoying a franchise at a rate not exceeding fifty percent (50%) of one percent (1%) of the gross
annual receipts for the preceding calendar year realized within its jurisdiction.

On October 5, 1992, the Sanguniang Panglunsod of San Pablo City enacted Ordinance No. 56, otherwise
known as the Revenue Code of the City of San Pablo. The said Ordinance took effect on October 30,
1992. 1

Section 2.09, Article D of said Ordinance provides:jgc:chanrobles.com.ph

"SECTION 2.09. Franchise Tax. — There is hereby imposed a tax on business enjoying a franchise, at a
rate of fifty percent (50%) of one percent (1%) of the gross annual receipts, which shall include both cash
sales and sales on account realized during the preceding calendar year within the city."cralaw virtua1aw
library

Pursuant to the above-quoted Section 2.09, the petitioner City Treasurer sent to private respondent a
letter demanding payment of the aforesaid franchise tax. From 1994 to 1996, private respondent paid
"under protest" a total amount of P1,857,711.67. 2

The private respondent subsequently filed this action before the Regional Trial Court to declare
Ordinance No. 56 null and void insofar as it imposes the franchise tax upon private respondent
MERALCO 3 and to claim for a refund of the taxes paid.

The Court ruled in favor of MERALCO and upheld its argument that the LGC did not expressly or
impliedly repeal the tax exemption/incentive enjoyed by it under its charter. The dispositive portion of the
decision reads:jgc:chanrobles.com.ph

"WHEREFORE, the imposition of a franchise tax under Sec. 2.09, Article D of Ordinance No. 56
otherwise known as the Revenue Code of the City of San Pablo, is declared ineffective and null and void
insofar as the plaintiff MERALCO is concerned for being violative of Republic Act No. 2340, PD 551, and
Republic Act No. 7160 and the defendants are ordered to refund to the plaintiff the amount of ONE
MILLION EIGHT HUNDRED FIFTY SEVEN THOUSAND SEVEN HUNDRED ELEVEN & 67/100
(P1,857,711.67) and such other amounts as may have been paid by the plaintiff under said Revenue
Ordinance No. 56 after the filing of the complaint. 4

SO ORDERED."cralaw virtua1aw library

Its motion for reconsideration having been denied by the trial court, 5 the petitioners filed the instant
petition with this Court raising pure questions of law based on the following grounds:chanrob1es virtual
1aw library

I. RESPONDENT JUDGE GRAVELY ERRED IN HOLDING THAT ACT NO. 3648, REPUBLIC ACT NO.
2340 AND PRESIDENTIAL DECREE NO. 551, AS AMENDED, INSOFAR AS THEY GRANT TAX
INCENTIVES, PRIVILEGES AND IMMUNITIES TO PRIVATE RESPONDENT, HAVE NOT BEEN
REPEALED BY REPUBLIC ACT NO. 7160.

II. RESPONDENT JUDGE GRAVELY ERRED IN RULING THAT SECTION 193 OF REPUBLIC ACT NO.
7160 HAS NOT WITHDRAWN THE TAX INCENTIVES, PRIVILEGES AND IMMUNITIES BEING
ENJOYED BY THE PRIVATE RESPONDENT UNDER ACT NO. 3648. REPUBLIC ACT NO. 2340 AND
PRESIDENTIAL DECREE NO. 551, AS AMENDED.

III. RESPONDENT JUDGE GRAVELY ERRED IN HOLDING THAT THE FRANCHISE TAX IN
QUESTION CONSTITUTES AN IMPAIRMENT OF THE CONTRACT BETWEEN THE GOVERNMENT
AND THE PRIVATE RESPONDENT.

Petitioners’ position is that RA 7160 (LGC) expressly repealed Act No. 3648. Republic Act no. 2340 and
Presidential Decree 551 and that pursuant to the provisions of Sections 137 and 193 of the LGC, the
province or city now has the power to impose a franchise tax on a business enjoying a franchise.
Petitioners rely on the ruling in the case of Mactan Cebu International Airport Authority v. Marcos 6 where
the Supreme Court held that the exemption from real property tax granted to Mactan Cebu International
Airport Authority under its charter has been withdrawn upon the effectivity of the LGC.

In addition, the petitioners cite in their Memorandum dated December 8, 1997 an administrative
interpretation made by the Bureau of Local Government Finance of the Department of Finance in its 3rd
indorsement dated February 15, 1994 to the effect that the earlier ruling of the Department of Finance
that holders of franchise which contain the phrase "in lieu of all taxes" proviso are exempt from the
payment of any kind of tax is no longer applicable upon the effectivity of the LGC in view of the withdrawal
of tax exemption privileges as provided in Sections 193 and 234 thereof.

We resolve to reverse the court a quo.

The pivotal issue is whether the City of San Pablo may impose a local franchise tax pursuant to the LGC
upon the Manila Electric Company which pays a tax equal to two percent of its gross receipts in lieu of all
taxes and assessments of whatever nature imposed by any national or local authority on savings or
income.

It is necessary to reproduce the pertinent provisions of the LGC.

SECTION 137. Franchise Tax. — Notwithstanding any exemption granted by any law or other special
law, the province may impose a tax on business enjoying a franchise, at a rate not exceeding fifty percent
50% of one percent 1% of the gross annual receipts for the preceding calendar year based on the
incoming receipts, or realized, within its territorial jurisdiction. . ."cralaw virtua1aw library

SECTION 151. Scope of Taxing Powers. — Except as otherwise provided in this Code, the city, may levy
the taxes, fees, and charges which the province or municipality may impose: Provided, however, That the
taxes, fees and charges levied and collected by highly urbanized and independent component cities shall
accrue to them and distributed in accordance with the provisions of this Code.

The rates of taxes that the city may levy may exceed the maximum rates allowed for the province or
municipality by not more than fifty percent (50%) except the rates of professional and amusement taxes.

SECTION 193. Withdrawal of Tax Exemption Privileges. — Unless otherwise provided in this Code, tax
exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or juridical,
including government-owned or controlled corporations, except local water districts, cooperatives duly
registered under R.A. 6938, non-stock and non-profit hospitals and educational institutions, are hereby
withdrawn upon the effectivity of this Code.

SECTION 534 (f). Repealing Clause. — All general and special laws, acts, city charters, decrees,
executive orders, proclamations and administrative regulations, or part or parts thereof which are
inconsistent with any of the provisions of this code are hereby repealed or modified accordingly.

Section 534 (f), the repealing clause of the LGC, provides that all general and special laws, acts, city
charters, decrees, executive orders, proclamations and administrative regulations or parts thereof which
are inconsistent with any of the provisions of the Code are hereby repealed or modified accordingly.

This clause partakes of the nature of a general repealing clause 7 . It is certainly not an express repealing
clause because it fails to designate the specific act or acts identified by number or title, that are intended
to be repealed. 8

Was there an implied repeal by Republic Act No. 7160 of the MERALCO franchise insofar as the latter
imposes a 2% tax "in lieu of all taxes and assessments of whatever nature" ?

We rule affirmatively.

We are mindful of the established rule that repeals by implication are not favored as laws are presumed
to be passed with deliberation and full knowledge of all laws existing on the subject. A general law cannot
be construed to have repealed a special law by mere implication unless the intent to repeal or alter is
manifest 9 and it must be convincingly demonstrated that the two laws are so clearly repugnant and
patently inconsistent that they cannot co-exist. 10

It is our view that petitioners correctly rely on the provisions of Sections 137 and 193 of the LGC to
support their position that MERALCO’s tax exemption has been withdrawn. The explicit language of
Section 137 which authorizes the province to impose franchise tax "notwithstanding any exemption
granted by any law or other special law" is all-encompassing and clear. The franchise tax is imposable
despite any exemption enjoyed under special laws.

Section 193 buttresses the withdrawal of extant tax exemption privileges. By stating that unless otherwise
provided in this Code, tax exemption or incentives granted to or presently enjoyed by all persons whether
natural or juridical, including government-owned or controlled corporations except 1) local water districts,
2) cooperatives duly registered under R.A. 6938, (3) non-stock and non-profit hospitals and educational
institutions, are withdrawn upon the effectivity of this code, the obvious import is to limit the exemptions to
the three enumerated entities. It is a basic precept of statutory construction that the express mention of
one person, thing, act, or consequence excludes all others as expressed in the familiar maxim expressio
unius est exclusio alterius. 11 In the absence of any provision of the Code to the contrary, and we find no
other provision in point, any existing tax exemption or incentive enjoyed by MERALCO under existing law
was clearly intended to be withdrawn.

Reading together Sections 137 and 193 of the LGC, we conclude that under the LGC the local
government unit may now impose a local tax at a rate not exceeding 50% of 1% of the gross annual
receipts for the preceding calendar year based on the incoming receipts realized within its territorial
jurisdiction. The legislative purpose to withdraw tax privileges enjoyed under existing law or charter is
clearly manifested by the language used in Sections 137 and 193 categorically withdrawing such
exemption subject only to exceptions enumerated. Since it would be not only tedious and impractical to
attempt to enumerate all the existing statutes providing for special tax exemptions or privileges, the LGC
provided for an express, albeit general, withdrawal of such exemptions or privileges. No more
unequivocal language could have been used.
It is true that the phrase "in lieu of all taxes" found in special franchises has been held in several cases to
exempt the franchise holder from payment of tax on its corporate franchise imposed by the Internal
Revenue Code, as the charter is in the nature of a private contract and the exemption is part of the
inducement for the acceptance of the franchise, and that the imposition of another franchise tax by the
local authority would constitute an impairment of contract between the government and the corporation.
12 But these "magic words" contained in the phrase "shall be in lieu of all taxes" 13 have to give way to
the peremptory language of the LGC specifically providing for the withdrawal of such exemption
privileges.

Accordingly in Mactan Cebu International Airport Authority v. Marcos, 14 this Court held that Section 193
of the LGC prescribes the general rule, viz., the tax exemptions or incentives granted to or presently
enjoyed by natural or juridical persons are withdrawn upon the effectivity of the LGC except with respect
to those entities expressly enumerated. In the same vein, We must hold that the express withdrawal upon
effectivity of the LGC of all exemptions except only as provided therein, can no longer be invoked by
Meralco to disclaim liability for the local tax.

Private respondents further argue that the "in lieu of" provision contained in PD 551, Act No. 3648 and RA
2340 does not partake of the nature of an exemption, but is a "commutative tax." This contention was
raised but was not upheld in Cagayan Electric Power and Light Co. Inc. v. Commissioner of Internal
Revenue 15 wherein the Supreme Court stated:jgc:chanrobles.com.ph

". . . Congress could impair petitioner’s legislative franchise by making it liable for income tax from which
heretofore it was exempted by virtue of the exemption provided for in section 3 of its franchise . . .

. . . Republic Act No. 5431, in amending section 24 of the Tax Code by subjecting to income tax all
corporate taxpayers not expressly exempted therein and in section 27 of the Code, had the effect of
withdrawing petitioner’s exemption from income tax . . ."cralaw virtua1aw library

Private respondent’s invocation of the non-impairment clause of the Constitution is accordingly

unavailing. The LGC was enacted in pursuance of the constitutional policy to ensure autonomy to local
governments 16 and to enable them to attain fullest development as self-reliant communities. 17 Thus in
Mactan Cebu International Airport Authority v. Marcos, supra, this Court pointed out, in upholding the
withdrawal of the real estate tax exemption previously enjoyed by the Mactan Cebu International Airport
Authority, as follows:jgc:chanrobles.com.ph

"Note that as reproduced in Section 234(a) the phrase "and any government-owned or controlled
corporation so exempt by its charter" was excluded. The justification for this restricted exemption in
Section 234(a) seems obvious: to limit further tax exemption privileges, especially in light of the general
provision on withdrawal of tax exemption privileges in Section 193 and the special provision on
withdrawal of exemption from payment of real property taxes in the last paragraph of Section 234. These
policy considerations are consistent with the State policy to ensure autonomy to local governments and
the objective of the LGC that they enjoy genuine and meaningful local autonomy to enable them to attain
their fullest development as self-reliant communities and make them effective partners in the attainment
of national goals. The power to tax is the most effective instrument to raise needed revenues to finance
and support myriad activities of local government units for the delivery of basic services essential to the
promotion of the general welfare and the enhancement of peace, progress, and prosperity of the people.
It may also be relevant to recall that the original reasons for the withdrawal of tax exemption privileges
granted to government-owned or controlled corporations and all other units of government were that such
privilege resulted in serious tax base erosion and distortions in the tax treatment of similarly situated
enterprises, and there was a need for these entities to share in the requirements of development, fiscal or
otherwise, by paying the taxes and other charges due from them." 18

The Court therein concluded that:jgc:chanrobles.com.ph

"nothing can prevent Congress from decreeing that even instrumentalities or agencies of the Government
performing governmental functions may be subject to tax. Where it is done precisely to fulfill a
constitutional mandate and national policy, no one can doubt its wisdom" 19

The power to tax is primarily vested in Congress. However, in our jurisdiction, it may be exercised by local
legislative bodies, no longer merely by virtue of a valid delegation as before, but pursuant to direct
authority conferred by Section 5, Article X of the Constitution. 20 Thus Article X, Section 5 of the
Constitution reads:jgc:chanrobles.com.ph

"SECTION 5. Each Local Government unit shall have the power to create its own sources of revenue and
to levy taxes, fees and charges subject to such guidelines and limitations as the Congress may provide,
consistent with the basic policy of local autonomy. Such taxes, fees and charges shall accrue exclusively
to the Local Governments."cralaw virtua1aw library
The important legal effect of Section 5 is that henceforth, in interpreting statutory provisions on municipal
fiscal powers, doubts will have to be resolved in favor of municipal corporations.
21chanroblesvirtuallawlibrary

There is further basis for the conclusion that the non-impairment of contract clause cannot be invoked to
uphold Meralco’s exemption from the local tax. Escudero Electric Co. was originally given the legislative
franchise under Act 3648 to operate an electric light and power system in the City of San Pablo and
nearby municipalities. The term of the franchise under Act No. 3648 is a period of fifty years from the
Act’s approval in 1929. The said law provided that the franchise is granted upon the condition that it shall
be subject to amendment, or repeal by the Congress of the United States. 22 Under the 1935, 23 the
1973 24 and the 1987 25 Constitutions, no franchise or right shall be granted except under the condition
that it shall be subject to amendment, alteration or repeal by the National Assembly when the public
interest so requires. With or without the reservation clause, franchises are subject to alterations through a
reasonable exercise of the police power; they are also subject to alteration by the power to tax, which like
police power cannot be contracted away. 26

Finally, while the matter is not of controlling significance, the Court notes that whereas the original
Escudero franchise exempted the franchise holder from all taxes levied or collected "now or in the future"
27 this phrase is noticeably omitted in the counterpart provision of P.D. 551; that said omission is
intended not to foreclose future taxes may reasonably be deduced by statutory construction.

WHEREFORE, the instant petition is GRANTED. The decision of the Regional Trial Court of San Pablo
City appealed from is hereby reversed and set aside, and the complaint of MERALCO is hereby
DISMISSED.

No pronouncement as to costs.

SO ORDERED.chanroblesvirtuallawlibrary
[ G.R. No. 119122. August 08, 2000 ]

PHILIPPINE BASKETBALL ASSOCIATION, PETITIONER, VS. COURT OF APPEALS, COURT OF

TAX APPEALS, AND COMMISSIONER OF INTERNAL REVENUE, RESPONDENTS.

DECISION

PURISIMA, J.:

At bar is a petition for review on certiorari under Rule 45 of the Rules of Court seeking a review of
the decision[1] of the Court of Appeals in CA-G.R. SP No. 34095 which affirmed the decision of the
Court of Tax Appeals in C.T.A. Case No. 4419.

The facts that matter are as follows:

On June 21, 1989, the petitioner received an assessment letter from the Commissioner of Internal
Revenue (respondent Commissioner) for the payment of deficiency amusement tax computed thus:

Deficiency Amusement Tax

Total gross receipts 1987 P19,970,928.00

15% tax due thereon 2,995,639.20

Less: Tax paid __602,063.35

Deficiency amusement tax P 2,393,575.85

Add:....75% surcharge 1,795,181.89

20% interest (2 years) 1,675,503.10

Total Amount Due & Collectible P 5,864,260.84

On July 18, 1989, petitioner contested the assessment by filing a protest with respondent Commissioner
who denied the same on November 6, 1989.

On January 8, 1990, petitioner filed a petition for review[2] with the Court of Tax Appeals (respondent
CTA) questioning the denial by respondent Commissioner of its tax protest.

On December 24, 1993, respondent CTA dismissed petitioner’s petition, holding:

"WHEREFORE, in all the foregoing, herein petition for review is hereby DISMISSED for lack of merit and
the Petitioner is hereby ORDERED to PAY to the Respondent the amount of P5,864,260.84 as deficiency
amusement tax for the year 1987 plus 20% annual delinquency interest from July 22, 1989 which is the
due date appearing on the notice and demand of the Commissioner (i.e. 30 days from receipt of the
assessment) until fully paid pursuant to the provisions of Sections 248 and 249 (c) (3) of the Tax Code, as
amended."[3]

Petitioner presented a motion for reconsideration[4] of the said decision but the same was denied by
respondent CTA in a resolution[5] dated April 8, 1994. Thereafter and within the reglementary period for
interposing appeals, petitioner appealed the CTA decision to the Court of Appeals.

On November 21, 1994, the Court of Appeals rendered its questioned Decision,[6] affirming the decision
of the CTA and dismissing petitioner’s appeal. Petitioner filed a Motion for Reconsideration of said
decision but to no avail. The same was denied by the Court of Appeals in a Resolution[7] dated January
31, 1995. Hence, this petition.

Undaunted, petitioner found its way to this Court via the present petition, contending that:

"1. Respondent Court of Appeals erred in holding that the jurisdiction to collect amusement taxes of PBA
games is vested in the national government to the exclusion of the local governments.
"2. Respondent Court of Appeals erred in holding that Section 13 of the Local Tax Code of 1973 limits
local government units to theaters, cinematographs, concert halls, circuses and other places of
amusement in the collection of the amusement tax.

"3. Respondent Court of Appeals erred in holding that Revenue Regulations No. 8-88 dated February 19,
1988 is an erroneous interpretation of law.

"4. Respondent Court of Appeals erred in giving retroactive effect to the revocation of Revenue
Regulations 8-88.

"5. Respondent Court of Appeals erred when it failed to consider the provisions of P.D. 851 the franchise
of Petitioner, Section 8 of which provides that amusement tax on admission receipts of Petitioner is 5%.

"6. Respondent Court of Appeals erred in holding that the cession of advertising and streamer spaces in
the venue to a third person is subject to amusement taxes.

"7. Respondent Court of Appeals erred in holding that the cession of advertising and streamer spaces
inside the venue is embraced within the term ‘gross receipts’ as defined in Section 123 (6) of the Tax
Code.

"8. Respondent Court of Appeals erred in holding that the amusement tax liability of Petitioner is subject
to a 75% surcharge."

The issues for resolution in this case may be simplified as follows:

Is the amusement tax on admission tickets to PBA games a national or local tax? Otherwise put, who
between the national government and local government should petitioner pay amusement taxes?

Is the cession of advertising and streamer spaces to Vintage Enterprises, Inc. (VEI) subject to the
payment of amusement tax?

If ever petitioner is liable for the payment of deficiency amusement tax, is it liable to pay a seventy-five
percent (75%) surcharge on the deficiency amount due?

Petitioner contends that PD 231, otherwise known as the Local Tax Code of 1973, transferred the power
and authority to levy and collect amusement taxes from the sale of admission tickets to places of
amusement from the national government to the local governments. Petitioner cited BIR Memorandum
Circular No. 49-73 providing that the power to levy and collect amusement tax on admission tickets was
transferred to the local governments by virtue of the Local Tax Code; and BIR Ruling No. 231-86 which
held that "the jurisdiction to levy amusement tax on gross receipts from admission tickets to places of
amusement was transferred to local governments under P.D. No. 231, as amended."[8] Further, petitioner
opined that even assuming arguendo that respondent Commissioner revoked BIR Ruling No. 231-86, the
reversal, modification or revocation cannot be given retroactive effect since even as late as 1988 (BIR
Memorandum Circular No. 8-88), respondent Commissioner still recognized the jurisdiction of local
governments to collect amusement taxes.

The Court is not persuaded by petitioner’s asseverations.

The laws on the matter are succinct and clear and need no elaborate disquisition. Section 13 of the Local
Tax Code provides:

"Sec. 13. Amusement tax on admission. -The province shall impose a tax on admission to be collected
from the proprietors, lessees, or operators of theaters, cinematographs, concert halls, circuses and other
places of amusement xxx."

The foregoing provision of law in point indicates that the province can only impose a tax on admission
from the proprietors, lessees, or operators of theaters, cinematographs, concert halls, circuses and other
places of amusement. The authority to tax professional basketball games is not therein included, as the
same is expressly embraced in PD 1959, which amended PD 1456 thus:

"SEC. 44. Section 268 of this Code, as amended, is hereby further amended to read as follows:

‘Sec. 268. Amusement taxes. -- There shall be collected from the proprietor, lessee or operator of
cockpits, cabarets, night or day clubs, boxing exhibitions, professional basketball games, Jai-Alai, race
tracks and bowling alleys, a tax equivalent to:
‘1. Eighteen per centum in the case of cockpits;

‘2. Eighteen per centum in the case of cabarets, night or day clubs;

‘3. Fifteen per centum in the case of boxing exhibitions;

‘4. Fifteen per centum in the case of professional basketball games as envisioned in Presidential Decree
No. 871. Provided, however, That the tax herein shall be in lieu of all other percentage taxes of whatever
nature and description;

‘5. Thirty per centum in the case of Jai-Alai and race tracks; and

‘6. Fifteen per centum in the case of bowling alleys of their gross receipts, irrespective of whether or not
any amount is charged or paid for admission. For the purpose of the amusement tax, the term gross
receipts’ embraces all the receipts of the proprietor, lessee or operator of the amusement place. Said
gross receipts also include income from television, radio and motion picture rights, if any. (A person or
entity or association conducting any activity subject to the tax herein imposed shall be similarly liable for
said tax with respect to such portion of the receipts derived by him or it.)

‘The taxes imposed herein shall be payable at the end of each quarter and it shall be the duty of the
proprietor, lessee, or operator concerned, as well as any party liable, within twenty days after the end of
each quarter, to make a true and complete return of the amount of the gross receipts derived during the
preceding quarter and pay the tax due thereon. If the tax is not paid within the time prescribed above, the
amount of the tax shall be increased by twenty-five per centum, the increment to be part of the tax.

‘In case of willful neglect to file the return within the period prescribed herein, or in case a false or
fraudulent return is willfully made, there shall be added to the tax or to the deficiency tax, in case any
payment has been made on the basis of the return before the discovery of the falsity or fraud, a
surcharge of fifty per centum of its amount. The amount so added to any tax shall be collected at the
same time and in the same manner and as part of the tax unless the tax has been paid before the
discovery of the falsity or fraud, in which case, the amount so assessed shall be collected in the same
manner as the tax." (underscoring ours)

From the foregoing it is clear that the "proprietor, lessee or operator of xxx professional basketball games"
is required to pay an amusement tax equivalent to fifteen per centum (15%) of their gross receipts to the
Bureau of Internal Revenue, which payment is a national tax. The said payment of amusement tax is in
lieu of all other percentage taxes of whatever nature and description.

While Section 13 of the Local Tax Code mentions "other places of amusement", professional basketball
games are definitely not within its scope. Under the principle of ejusdem generis, where general words
follow an enumeration of persons or things, by words of a particular and specific meaning, such general
words are not to be construed in their widest extent, but are to be held as applying only to persons or
things of the same kind or class as those specifically mentioned.[9] Thus, in determining the meaning of
the phrase "other places of amusement", one must refer to the prior enumeration of theaters,
cinematographs, concert halls and circuses with artistic expression as their common characteristic.
Professional basketball games do not fall under the same category as theaters, cinematographs, concert
halls and circuses as the latter basically belong to artistic forms of entertainment while the former caters
to sports and gaming.

A historical analysis of pertinent laws does reveal the legislative intent to place professional basketball
games within the ambit of a national tax. The Local Tax Code, which became effective on June 28, 1973,
allowed the province to collect a tax on admission from the proprietors, lessees, or operators of theaters,
cinematographs, concert halls, circuses and other places of amusement. On January 6, 1976, the
operation of petitioner was placed under the supervision and regulation of the Games and Amusement
Board by virtue of PD 871, with the proviso (Section 8) that "xxx all professional basketball games
conducted by the Philippine Basketball Association shall only be subject to amusement tax of five per
cent of the gross receipts from the sale of admission tickets." Then, on June 11, 1978, PD 1456 came into
effect, increasing the amusement tax to ten per cent, with a categorical referral to PD 871, to wit, "[t]en
per centum in the case of professional basketball games as envisioned in Presidential Decree No. 871
xxx." Later in 1984, PD 1959 increased the rate of amusement tax to fifteen percent by making reference
also to PD 871. With the reference to PD 871 by PD 1456 and PD 1959, there is a recognition under the
laws of this country that the amusement tax on professional basketball games is a national, and not a
local, tax. Even up to the present, the category of amusement taxes on professional basketball games as
a national tax remains the same. This is so provided under Section 125[10] of the 1997 National Internal
Revenue Code. Section 140[11] of the Local Government Code of 1992 (Republic Act 7160), meanwhile,
retained the areas (theaters, cinematographs, concert halls, circuses and other places of amusement)
where the province may levy an amusement tax without including therein professional basketball games.

Likewise erroneous is the stance of petitioner that respondent Commissioner’s issuance of BIR Ruling
No. 231-86[12] and BIR Revenue Memorandum Circular No. 8-88[13] -- both upholding the authority of
the local government to collect amusement taxes -- should bind the government or that, if there is any
revocation or modification of said rule, the same should operate prospectively.

It bears stressing that the government can never be in estoppel, particularly in matters involving taxes. It
is a well-known rule that erroneous application and enforcement of the law by public officers do not
preclude subsequent correct application of the statute, and that the Government is never estopped by
mistake or error on the part of its agents.[14]

Untenable is the contention that income from the cession of streamer and advertising spaces to VEI is not
subject to amusement tax. The questioned proviso may be found in Section 1 of PD 1456 which states:

"SECTION 1. Section 268 of the National Internal Revenue Code of 1977, as amended, is hereby further
amended to read as follows:

‘Sec. 268. Amusement taxes. -- There shall be collected from the proprietor, lessee or operator of
cockpits, cabarets, night or day clubs, boxing exhibitions, professional basketball games, Jai-Alai, race
tracks and bowling alleys, a tax equivalent to:

xxx xxx xxx

of their gross receipts, irrespective of whether or not any amount is charged or paid for admission. For the
purpose of the amusement tax, the term gross receipts’ embraces all the receipts of the proprietor, lessee
or operator of the amusement place. Said gross receipts also include income from television, radio and
motion picture rights, if any. (A person, or entity or association conducting any activity subject to the tax
herein imposed shall be similarly liable for said tax with respect to such portion of the receipts derived by
him or it.)" (underscoring ours)

The foregoing definition of gross receipts is broad enough to embrace the cession of advertising and
streamer spaces as the same embraces all the receipts of the proprietor, lessee or operator of the
amusement place. The law being clear, there is no need for an extended interpretation.[15]

The last issue for resolution concerns the liability of petitioner for the payment of surcharge and interest
on the deficiency amount due. Petitioner contends that it is not liable, as it acted in good faith, having
relied upon the issuances of the respondent Commissioner. This issue must necessarily fail as the same
has never been posed as an issue before the respondent court. Issues not raised in the court a quo
cannot be raised for the first time on appeal.[16]

All things studiedly considered, the Court rules that the petitioner is liable to pay amusement tax to the
national government, and not to the local government, in accordance with the rates prescribed by PD
1959.

WHEREFORE, the Petition is DENIED, and the Decisions of the Court of Appeals and Court of Tax
Appeals dated November 21, 1994 and December 24, 1993, respectively AFFIRMED. No pronouncement
as to costs.

SO ORDERED.
 [G.R. No. 137621. February 6, 2002.]

HAGONOY MARKET VENDOR ASSOCIATION, Petitioner, v. MUNICIPALITY OF HAGONOY,

BULACAN, Respondent.

DECISION

PUNO, J.:

Laws are of two (2) kinds: substantive and procedural. Substantive laws, insofar as their provisions are
unambiguous, are rigorously applied to resolve legal issues on the merits. In contrast, courts generally
frown upon an uncompromising application of procedural laws so as not to subvert substantial justice.
Nonetheless, it is not totally uncommon for courts to decide cases based on a rigid application of the so-
called technical rules of procedure as these rules exist for the orderly administration of justice.
Interestingly, the case at bar singularly illustrates both instances, i.e., when procedural rules are
unbendingly applied and when their rigid application may be relaxed.chanrobles.com.ph:red

This is a petition for review of the Resolution 1 of the Court of Appeals, dated February 15, 1999,
dismissing the appeal of petitioner Hagonoy Market Vendor Association from the Resolutions of the
Secretary of Justice for being formally deficient.

The facts: On October 1, 1996, the Sangguniang Bayan of Hagonoy, Bulacan, enacted an ordinance,
Kautusan Blg. 28, 2 which increased the stall rentals of the market vendors in Hagonoy. Article 3 provided
that it shall take effect upon approval. The subject ordinance was posted from November 4-25, 1996. 3

In the last week of November, 1997, the petitioner’s members were personally given copies of the
approved Ordinance and were informed that it shall be enforced in January, 1998. On December 8, 1997,
the petitioner’s President filed an appeal with the Secretary of Justice assailing the constitutionality of the
tax ordinance. Petitioner claimed it was unaware of the posting of the ordinance.

Respondent opposed the appeal. It contended that the ordinance took effect on October 6, 1996 and that
the ordinance, as approved, was posted as required by law. Hence, it was pointed out that petitioner’s
appeal, made over a year later, was already time-barred.

The Secretary of Justice dismissed the appeal on the ground that it was filed out of time, i.e., beyond
thirty (30) days from the effectivity of the Ordinance on October 1, 1996, as prescribed under Section 187
of the 1991 Local Government Code. Citing the case of Tañada v. Tuvera, 4 the Secretary of Justice held
that the date of effectivity of the subject ordinance retroacted to the date of its approval in October 1996,
after the required publication or posting has been complied with, pursuant to Section 3 of said ordinance.
5

After its motion for reconsideration was denied, petitioner appealed to the Court of Appeals. Petitioner did
not assail the finding of the Secretary of Justice that their appeal was filed beyond the reglementary
period. Instead, it urged that the Secretary of Justice should have overlooked this "mere technicality" and
ruled on its petition on the merits. Unfortunately, its petition for review was dismissed by the Court of
Appeals for being formally deficient as it was not accompanied by certified true copies of the assailed
Resolutions of the Secretary of Justice. 6

Undaunted, the petitioner moved for reconsideration but it was denied. 7

Hence, this appeal, where petitioner contends that:chanrob1es virtual 1aw library

THE HONORABLE COURT OF APPEALS, WITH DUE RESPECT, ERRED IN ITS STRICT, RIGID AND
TECHNICAL ADHERENCE TO SECTION 6, RULE 43 OF THE 1997 RULES OF COURT AND THIS, IN
EFFECT, FRUSTRATED THE VALID LEGAL ISSUES RAISED BY THE PETITIONER THAT
ORDINANCE (KAUTUSAN) NO. 28 WAS NOT VALIDLY ENACTED, IS CONTRARY TO LAW AND IS
UNCONSTITUTIONAL, TANTAMOUNT TO AN ILLEGAL EXACTION IF ENFORCED RETROACTIVELY
FROM THE DATE OF ITS APPROVAL ON OCTOBER 1, 1996.

II
THE HONORABLE COURT OF APPEALS, WITH DUE RESPECT, ERRED IN DENYING THE MOTION
FOR RECONSIDERATION NOTWITHSTANDING PETITIONER’S EXPLANATION THAT ITS FAILURE
TO SECURE THE CERTIFIED TRUE COPIES OF THE RESOLUTIONS OF THE DEPARTMENT OF
JUSTICE WAS DUE TO THE INTERVENTION OF AN ACT OF GOD — TYPHOON "LOLENG," AND
THAT THE ACTUAL COPIES RECEIVED BY THE PETITIONER MAY BE CONSIDERED AS
SUBSTANTIAL COMPLIANCE WITH THE RULES.

III

PETITIONER WILL SUFFER IRREPARABLE DAMAGE IF ORDINANCE/KAUTUSAN NO. 28 BE NOT

DECLARED NULL AND VOID AND IS ALLOWED TO BE ENFORCED RETROACTIVELY FROM
OCTOBER 1, 1996, CONTRARY TO THE GENERAL RULE, ARTICLE 4 OF THE CIVIL CODE, THAT
NO LAW SHALL HAVE RETROACTIVE EFFECT.

The first and second assigned errors impugn the dismissal by the Court of Appeals of its petition for
review for petitioner’s failure to attach certified true copies of the assailed Resolutions of the Secretary of
Justice. The petitioner insists that it had good reasons for its failure to comply with the rule and the Court
of Appeals erred in refusing to accept its explanation.

We agree.

In its Motion for Reconsideration before the Court of Appeals, 8 the petitioner satisfactorily explained the
circumstances relative to its failure to attach to its appeal certified true copies of the assailed Resolutions
of the Secretary of Justice, thus:jgc:chanrobles.com.ph

". . . (D)uring the preparation of the petition on October 21, 1998, it was raining very hard due to (t)yphoon
"Loleng." When the petition was completed, copy was served on the Department of Justice at about (sic)
past 4:00 p.m. of October 21, 1998, with (the) instruction to have the Resolutions of the Department of
Justice be stamped as "certified true copies. However, due to bad weather, the person in charge (at the
Department of Justice) was no longer available to certify to (sic) the Resolutions.

"The following day, October 22, 1998, was declared a nonworking holiday because of (t)yphoon "Loleng."
Thus, petitioner was again unable to have the Resolutions of the Department of Justice stamped "certified
true copies." In the morning of October 23, 1998, due to time constraint(s), herein counsel served a copy
by personal service on (r)espondent’s lawyer at (sic) Malolos, Bulacan, despite the flooded roads and
heavy rains. However, as the herein counsel went back to Manila, (official business in) government
offices were suspended in the afternoon and the personnel of the Department of Justice tasked with
issuing or stamping, "certified true copies" of their Resolutions were no longer available.

"To avoid being time-barred in the filing of the (p)etition, the same was filed with the Court of Appeals "as
is."cralaw virtua1aw library

We find that the Court of Appeals erred in dismissing petitioner’s appeal on the ground that it was formally
deficient. It is clear from the records that the petitioner exerted due diligence to get the copies of its
appealed Resolutions certified by the Department of Justice, but failed to do so on account of typhoon
"Loleng." Under the circumstances, respondent appellate court should have tempered its strict application
of procedural rules in view of the fortuitous event considering that litigation is not a game of technicalities.
9

Nonetheless, we hold that the petition should be dismissed as the appeal of the petitioner with the
Secretary of Justice is already time-barred. The applicable law is Section 187 of the 1991 Local
Government Code which provides:jgc:chanrobles.com.ph

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

The aforecited law requires that an appeal of a tax ordinance or revenue measure should be made to the
Secretary of Justice within thirty (30) days from effectivity of the ordinance and even during its pendency,
the effectivity of the assailed ordinance shall not be suspended. In the case at bar, Municipal Ordinance
No. 28 took effect in October 1996. Petitioner filed its appeal only in December 1997, more than a year
after the effectivity of the ordinance in 1996. Clearly, the Secretary of Justice correctly dismissed it for
being time barred. At this point, it is apropos to state that the timeframe fixed by law for parties to avail of
their legal remedies before competent courts is not a "mere technicality" that can be easily brushed aside.
The periods stated in Section 187 of the Local Government Code are mandatory. 10 Ordinance No. 28 is
a revenue measure adopted by the municipality of Hagonoy to fix and collect public market stall rentals.
Being its lifeblood, collection of revenues by the government is of paramount importance. The funds for
the operation of its agencies and provision of basic services to its inhabitants are largely derived from its
revenues and collections. Thus, it is essential that the validity of revenue measures is not left uncertain
for a considerable length of time. 11 Hence, the law provided a time limit for an aggrieved party to assail
the legality of revenue measures and tax ordinances.

In a last ditch effort to justify its failure to file a timely appeal with the Secretary of Justice, the petitioner
contends that its period to appeal should be counted not from the time the ordinance took effect in 1996
but from the time its members were personally given copies of the approved ordinance in November
1997. It insists that it was unaware of the approval and effectivity of the subject ordinance in 1996 on two
(2) grounds: first, no public hearing was conducted prior to the passage of the ordinance and, second, the
approved ordinance was not posted.

We do not agree.

Petitioner’s bold assertion that there was no public hearing conducted prior to the passage of Kautusan
Blg. 28 is belied by its own evidence. In petitioner’s two (2) communications with the Secretary of Justice,
12 it enumerated the various objections raised by its members before the passage of the ordinance in
several meetings called by the Sanggunian for the purpose. These show beyond doubt that petitioner was
aware of the proposed increase and in fact participated in the public hearings therefor. The respondent
municipality likewise submitted the Minutes and Report of the public hearings conducted by the
Sangguniang Bayan’s Committee on Appropriations and Market on February 6, July 15 and August 19, all
in 1996, for the proposed increase in the stall rentals. 13

Petitioner cannot gripe that there was practically no public hearing conducted as its objections to the
proposed measure were not considered by the Sangguniang Bayan. To be sure, public hearings are
conducted by legislative bodies to allow interested parties to ventilate their views on a proposed law or
ordinance. These views, however, are not binding on the legislative body and it is not compelled by law to
adopt the same. Sanggunian members are elected by the people to make laws that will promote the
general interest of their constituents. They are mandated to use their discretion and best judgment in
serving the people. Parties who participate in public hearings to give their opinions on a proposed
ordinance should not expect that their views would be patronized by their lawmakers.

On the issue of publication or posting, Section 188 of the Local Government Code
provides:jgc:chanrobles.com.ph

"Section 188. Publication of Tax Ordinance and Revenue Measures. — Within ten (10) days after their
approval, certified true copies of all provincial, city, and municipal tax ordinances or revenue measures
shall be published in full for three (3) consecutive days in a newspaper of local circulation; Provided,
however, That in provinces, cities and municipalities where there are no newspapers of local circulation,
the same may be posted in at least two (2) conspicuous and publicly accessible places." (Emphasis
supplied)

The records is bereft of any evidence to prove petitioner’s negative allegation that the subject ordinance
was not posted as required by law. In contrast, the respondent Sangguniang Bayan of the Municipality of
Hagonoy, Bulacan, presented evidence which clearly shows that the procedure for the enactment of the
assailed ordinance was complied with. Municipal Ordinance No. 28 was enacted by the Sangguniang
Bayan of Hagonoy on October 1, 1996. Then Acting Municipal Mayor Maria Garcia Santos approved the
Ordinance on October 7, 1996. After its approval, copies of the Ordinance were given to the Municipal
Treasurer on the same day. On November 9, 1996, the Ordinance was approved by the Sangguniang
Panlalawigan. The Ordinance was posted during the period from November 4-25, 1996 in three (3) public
places, viz: in front of the municipal building, at the bulletin board of the Sta. Ana Parish Church and on
the front door of the Office of the Market Master in the public market. 14 Posting was validly made in lieu
of publication as there was no newspaper of local circulation in the municipality of Hagonoy. This fact was
known to and admitted by petitioner. Thus, petitioner’s ambiguous and unsupported claim that it was only
"sometime in November 1997" that the Provincial Board approved Municipal Ordinance No. 28 and so the
posting could not have been made in November 1996 15 was sufficiently disproved by the positive
evidence of respondent municipality. Given the foregoing circumstances, petitioner cannot validly claim
lack of knowledge of the approved ordinance. The filing of its appeal a year after the effectivity of the
subject ordinance is fatal to its cause.

Finally, even on the substantive points raised, the petition must fail. Section 6c.04 of the 1993 Municipal
Revenue Code and Section 191 of the Local Government Code limiting the percentage of increase that
can be imposed apply to tax rates, not rentals. Neither can it be said that the rates were not uniformly
imposed or that the public markets included in the Ordinance were unreasonably determined or classified.
To be sure, the Ordinance covered the three (3) concrete public markets: the two-storey Bagong
Palengke, the burnt but reconstructed Lumang Palengke and the more recent Lumang Palengke with wet
market. However, the Palengkeng Bagong Munisipyo or Gabaldon was excluded from the increase in
rentals as it is only a makeshift, dilapidated place, with no doors or protection for security, intended for
transient peddlers who used to sell their goods along the sidewalk. 16

IN VIEW WHEREOF, the petition is DISMISSED for lack of merit. No pronouncement as to

costs.chanrob1es virtua1 1aw 1ibrary

SO ORDERED.
 OTHER LGU POWERS

G.R. No. L-28972 October 31, 1972

CITY COUNCIL OF CEBU CITY represented by COUNCILORS FLORENCIO S. UROT, EULOGIO E.

BORRES, RONALD DUTERTE, RAYMUNDO A. CRYSTAL, BIENVENIDO A. TUDTUD, JOHN H.
OSMEÑA and MARIO R. VELOSO, in their capacity as the Majority Members of the City Council of
Cebu and as Citizens of the said City; plaintiffs-appellants,
vs.
CARLOS J. CUIZON, Mayor of the City of Cebu, JESUS E. ZABATE, Acting City Treasurer of the
City of Cebu, PHILIPPINE NATIONAL BANK and TROPICAL COMMERCIAL COMPANY,
INCORPORATED, defendants-appellees.

City Attorneys Nazario R. Pacquiao and Metudio P. Belarmino for plaintiffs-appellants.

Ronald R. Duterte for and in his own behalf.

Jesus E. Zabate for and in his own behalf.

Conrado E. Medina, Andres L. Africa, Edgardo M. Magtalas and Artemio S. Tipon for defendant-appellee
Philippine National Bank.

Siguion Reyna, Montecillo, Belo and Ongsiako for defendant-appellee Tropical Commercial Co., Inc.

Emilio Benitez for other defendant-appellee.

TEEHANKEE, J.:p

Appeal on pure questions of law from an order of the Court of First Instance of Cebu, dismissing plaintiffs'
complaint upon the ground of their lack of legal capacity to institute the action.

The seven above-named plaintiffs-appellants "by themselves and representing the City Council of Cebu,
as majority members thereof"1 filed on May 31, 1966 their complaint in the court of first instance of Cebu
against defendants-appellees Carlos J. Cuizon, as mayor of Cebu City, Jesus E. Zabate, as acting Cebu
City treasurer, Philippine National Bank (hereinafter referred to as the bank) and Tropical Commercial
Company, Inc. (hereinafter referred to as Tropical), praying inter alia that the contract entered into on
February 5, 1966 by and between defendant Mayor Cuizon on behalf of the city for the purchase of road
construction equipment from Tropical (for $520,912.00 on a cash basis or $687,767.30 on a deferred
payment basis) be declared as null and void ab initio. (The contract, as eventually annexed by defendant
Tropical with its answer, shows that its total was for $685,767.30 on a five-year deferred payment plan.)2

Among the grounds invoked by plaintiffs-appellants for the nullity of the said contract and the
complementary transactions with the bank arising therefrom such as the corresponding letters of credit
opened therefor, were that the same were entered into without the necessary authority and approval of
the city council, and that the city treasurer had not certified to the city mayor, as required by section 607
of the Revised Administrative Code that funds have been duly appropriated for the said contract and that
the amount necessary to cover the contract was available for expenditure on account thereof, and that
accordingly, the purported contract entered into by the city mayor was "wholly void" under the provisions
of section 608 of the same code, which make "the officer assuming to make such contract ... liable to the
government or other contracting party for any consequent damage to the same extent as if the
transaction had been wholly between private parties." As summarized by plaintiffs-appellants, the
background facts that led to their filing of their complaint were as follows:

a) On November 20, 1965, the City Council approved Resolution No. 1648, quoted as
follows:

RESOLUTION NO. 1648

The City Council, on motion of City Councilor Borres, seconded by City

Councilor Tudtud,

RESOLVED, to authorize His Honor, the City Mayor, for and in behalf of
the City of Cebu, to negotiate and to contract for, by public bidding, on
 deferred payment plan and by lot bid, U.S. or European made road
construction equipments for the City of Cebu and authorizing him for this
purposes, to sign the corresponding contract and other pertinent papers.

RESOLVED FURTHER, to request the City Mayor to call soon a public

bidding for the early acquisition of said equipments.

CARRIED UNANIMOUSLY

b) On December 23, 1965, the City Council of Cebu approved Resolution No. 1831,
which also reads as follows:

RESOLUTION NO. 1831

The City Council, on motion of City Councilor Llanos, seconded by City

Councilor Veloso,

RESOLVED, to authorize the City Mayor, in connection with the authority

granted him under Resolution No. 1648, current series, to utilize the
Time Deposit of the City of Cebu with the Philippine National Bank, as
Bond guarantee in the opening of a Letter of Credit in connection with
the City of Cebu's application to directly purchase road construction
equipments from abroad, to the extent of the amount that the Letter of
Credit may require.

CARRIED UNANIMOUSLY

c) By reason of the fact that the call to bid by the defendant City Mayor Carlos J. Cuizon
were for bidders who should be exclusive distributors of the equipments being bidded
and the said supplier must have a sales and service outlet in the City of Cebu, the other
bidders then became disqualified and the bid was awarded to the only bidder, the
defendant Tropical Commercial Co., Inc. Hence, on January 20, 1966, the City Council
approved Resolution No. 122, which we quote as follows:

RESOLUTION NO. 122

The City Council on motion of City Councilor Borres, seconded by

Councilor Osmeña,

RESOLVED, to request the Award Committee to forward to this Body the

pertinent papers in connection with the bidding for two (2) complements
of light and heavy equipments to be used by the City Engineering
Department for ratification by this Body.

CARRIED UNANIMOUSLY

d) Notwithstanding the request contained in Resolution No. 122, the defendant City
Mayor, Carlos J. Cuizon, without having been duly authorized thru proper resolution of
the City Council, and without compliance with Resolution No. 122, signed a contract with
the Tropical Commercial Co., Inc. for the acquisition of the heavy equipments on
February 5, 1966.3

e) On February 14, 1966, the City Council, without knowledge that the contract had
already been signed by defendant City Mayor Carlos J. Cuizon and the Tropical
Commercial Co., Inc. — since the same was signed in the City of Manila — approved
Resolution No. 292, which we quote as follows:

RESOLUTION NO. 292

The City Council, on motion of City Councilor Osmeña, seconded by City

Councilor Tudtud,

RESOLVED, to reiterate this City Council's request embodied in its

Resolution No. 122, current series, addressed to the Award Committee
to forward to this body the pertinent papers in connection with the
 bidding for two (2) complements of light and heavy equipments to be
used by the City Engineering Department for ratification by this Body.

CARRIED UNANIMOUSLY

f) On March 10, 1966, in view of the fact that the defendant City Mayor ignored the
requests of the City Council, the said City Council approved Resolution No. 473, which
we quote as follows:

RESOLUTION NO. 473

The City Council, on motion of City Councilor Crystal, seconded by City

Councilor Duterte,

RESOLVED, to revoke Resolution No. 1648 dated November 29, 1965

and Resolution No. 1831, dated December 23, 1965, authorizing His
Honor, the City Mayor, to negotiate and to contract for, by public bidding,
on deferred payment plan and by lot bid, U.S. or European made road
construction equipments for the City of Cebu and authorizing him for this
purpose, to sign the corresponding contract and other pertinent papers
and authorizing the City Mayor to utilize the Time Deposit of the City of
Cebu with the Philippine National Bank, as bond guarantee in the
opening of a Letter of Credit in connection with the City of Cebu's
application to directly purchase road construction equipments from
abroad, to the extent of the amount that the Letter of Credit may require,
respectively.

RESOLVED FURTHER, to inform His Honor the City Mayor, that the City
Council, after careful deliberation, has decided to discontinue with the
purchase of road construction equipments.

RESOLVED FINALLY, to advise all bidders of the action of the City

Council and to reject their bids on the basis thereof.

CARRIED BY MAJORITY VOTES

Voting in favor: City Councilors Crystal, Duterte, Tudtud, Borres,

Osmeña, Veloso and Zamora (Presiding Officer Urot voted in favor)

Voting against: City Councilor Llanos.

g) On March 18, 1966, the presiding officer of the City Council, City Councilor Florencio
S. Urot, sent a telegram to the Manager of the Philippine National Bank, which we quote
as follows:

TELEGRAM

MANAGER
PHILNABANK
MANILA

BEEN INFORMED BY MANAGER DIKITANAN CEBU BRANCH THAT

MAYOR CUIZON CEBU CITY OPENED LETTER OF CREDIT FOR
PURCHASE OF HEAVY EQUIPMENT STOP PLEASE BE INFORMED
THAT CEBU CITY COUNCIL HAS REVOKED MAYOR'S AUTHORITY
ON THIS PARTICULAR MATTER LAST MARCH TEN THEREBY
SUSPENDING FURTHER NEGOTIATIONS ON THIS TRANSACTION
END.

PRESIDING OFFICER UROT

h) On March 18, 1966, the defendant Acting City Treasurer, Jesus E. Zabate, sent a reply
to the Asst. Vice-President of the defendant Philippine National Bank in Cebu
City refusing the request of the Philippine National Bank (to withhold P3,000,000.00 from
 the time deposit of the City of Cebu) on the ground that no appropriation for the purchase
of heavy equipments was made by the City Council.

i) That notwithstanding the knowledge of the revocation by Resolution No. 473 of

Resolution No. 1648 and Resolution No. 1831, series of 1965 of the City Council of Cebu
City, the said City Mayor, Carlos J. Cuizon, continued with the transaction by placing the
order with the Equipment Division of the Continental Ore Corporation of New York U.S.A.
for the purchase of the said heavy equipments.4

Hence, plaintiffs-appellants filed their complaint against defendants-appellees, incorporating the foregoing
antecedents and averments, and praying for judgment of the court

(a) to declare null and void ab initio the contract entered into by and between the City
Mayor, Carlos J. Cuizon and the defendant Tropical Commercial Company, Inc., for the
purchase of the equipments referred to in paragraph VII of this complaint;

(b) to declare null and void ab initio and without any effect the Letters of Credit opened
with the defendant Philippine National Bank by the defendant City Mayor of Cebu, Carlos
J. Cuizon;

(c) to exempt the City of Cebu and to hold the same not liable for any and all obligations
to the defendant Philippine National Bank which may result from the unauthorized
opening of the Letters of Credit by the defendant City Mayor of Cebu;

(d) to exempt and hold not liable the City Government of the City of Cebu from any
obligation regarding the contract specified in paragraph (a) hereof;

(e) to enjoin and order the defendant City Mayor of Cebu, the defendant City Treasurer of
Cebu, the City Auditor, City Engineer and any and all public officials and employees of
the City of Cebu not to receive the equipments if they were already ordered and in the
event that they will arrive for delivery;

(f) to grant any and other remedies to which the plaintiffs may be entitled under the law. 5

Defendants City Mayor and Tropical filed in due course their respective answers to the Complaint, with
counterclaims and traversed the allegations of the complaint.

Defendant mayor's counterclaim, contending that the suit was unfounded and intended to harass and
embarrass him prayed for judgment against plaintiffs for actual and temperate damages as may be
ascertained by the trial court, P1-million moral damages, P50,000. — exemplary damages, P50,000. —
attorney's fees and expenses of litigation with costs.6

Defendant Tropical's counterclaim, prayed for judgment "in the event that this Honorable Court should
hold that the plaintiffs have the capacity or interest to bring this suit in behalf of the City of Cebu," 7 in the
total sum of P242,939.90 with legal interest, representing bank charges in the sums of P86,267.76 and
P156,672.14 which it had as seller advanced in cash for two letters of credit opened by the bank to cover
the price of the equipment contracted for by the city mayor on behalf of the city. Defendant Tropical
averred that "said advances were actually cash payments made by (it) to the Philippine National Bank
upon request of the city mayor and upon the representation of the city mayor that (he) was acting for and
in behalf of the City of Cebu."8

Defendant acting city treasurer filed his separate answer in effect affirming the nullity ab initio of the
questioned contract for the reasons and circumstances averred in plaintiffs' complaint. He further set up
special defenses averring that the assignment by way of guaranty by the city mayor of P3-million of the
city's time deposit with the defendant bank was null and void and done without his consent nor knowledge
as the official responsible for said fund, and prayed for the dismissal of the case against him alone.

Defendant bank in its turn filed a motion to dismiss the plaintiffs' complaint on the grounds of plaintiffs'
lack of legal capacity to sue and failure of the complaint to state a cause of action against it. The first
stated ground of plaintiffs' alleged lack of legal capacity to bring the suit had also been alleged as an
affirmative defense by defendants mayor and Tropical in their respective answers, with defendant mayor
asking for a preliminary hearing on his affirmative defenses as if a motion to dismiss had been filed.9

Plaintiffs on their part filed their responsive pleadings. In their answer to the mayor's counterclaim, they
averred that "the present complaint was filed with no other purpose than to secure the annulment of a
contract which had been entered into by defendant mayor in violation of his authority from the City
Council of Cebu City, to the great prejudice and detriment of the City of Cebu and accordingly, well within
the concern of the plaintiffs to pursue, not only as majority members of the City Council but also as
individual taxpayers and citizens of this community which is the City of Cebu." 10

In their opposition to the motion to dismiss, 11 plaintiffs asserted inter alia their right as city officials and
taxpayers to question the validity of the contract entered into by the defendant city mayor and to contest
the expenditures of the city's funds therefor beyond the mayor's authority or the disposition thereof in an
unlawful or prohibited manner.

Plaintiffs also filed a separate reply to the mayor's affirmative defenses, 12 refuting the mayor's claim of
estoppel by citing the principle that estoppel cannot be founded upon an illegal act and submitting
therewith the Auditor General's endorsement of June 16, 1966 affirming the city auditor's prior
endorsement of nullity ab initio of the questioned contract for non-compliance with the requirements of
sections 607 and 608 of the Revised Administrative Code. Pertinent excerpts of Auditor-General Ismael
Mathay, Sr.'s endorsement read:

xxx xxx xxx

Opinion of this Office is being requested on the validity of the herein contract for the
purchase of heavy equipment and machineries entered into by and between Mayor
Carlos J. Cuizon of Cebu City for and in behalf of the City Government of Cebu by virtue
of Resolution No. 1648, series of 1965, of the City Council, and Tropical Commercial Co.,
Inc.

xxx xxx xxx

It appearing from the within papers that the City Council of Cebu has not appropriated
funds for purposes of the contract in question, for which reason the City Treasurer could
not have certified, even if he wanted to, as in fact he did not make the certification
required under the aforequoted provisions of law, which is a condition precedent to the
validity of the contract, this Office concurs in view of the City Auditor in the preceding
second indorsement that the said contract is null and void ab initio.

In view of the nullity of the herein contract, all claims arising therefrom may not be
allowed. 13

Defendant mayor, in turn, in his motion for immediate resolution of pending motion to dismiss dated
October 5, 1966, 14 contended that "the General Auditing Office, through the Auditor General, has already
withdrawn or recalled its ruling declaring the said contract null and void ab initio."

On October 6, 1966, the lower court issued the order of dismissal appealed from. In ordering the
dismissal of plaintiffs' complaint on the ground of their lack of legal capacity to sue and their not being the
"real party in interest," the lower court reasoned as follows:

It is uncontroverted that the contract now sought to be annulled was signed by the City
Mayor in behalf of the contracting party, the City of Cebu, by virtue of the authority
granted him by Resolution No. 1648 of the city council. Now, the majority members of this
council who have given authority to the City Mayor to execute the contract are filing this
complaint and seek to annul the said contract. Their power to file the action either as
such councilors or as private citizens is being questioned.

Article 1397 of the New Civil Code provides that action for annulment of contracts may be
instituted by all who are thereby obliged principally or subsidiarily. In other words, the
plaintiffs must have an interest in the contract. In the instant case the plaintiffs, in their
capacity as city councilors or tax payers are not parties to the contract executed by the
City of Cebu and there is no evidence to show that because of the contract they may be
prejudiced or may suffer injury different from that of the public in general. The City of
Cebu being the party to the contract, any action brought regarding the said contract must
be instituted in the name of the City of Cebu and by the person authorized to do so.
Section 20(c) of the Revised Charter of Cebu City (Republic Act No. 3857) empowers the
City Mayor to "cause to be instituted judicial proceedings to recover properties and funds
of the city wherever found and cause to be defended all suits against the City." There is
no provision in the said Charter which authorizes expressly or impliedly the city council or
its members to bring an action in behalf of the City.
 Section 2, Rule 3 of the new Rules of Court provides that every action must be
prosecuted in the name of the real party in interest. "The real party in interest is the party
who would be benefited or injured by the judgment, or the party entitled to the avails of
the suit" (Salonga vs. Warner Barnes & Co. Ltd., L-2246, Jan. 1, 1951). As stated above,
the plaintiffs acting either as members of the city council or as private citizens are not
bound by the contract in question and cannot maintain an action to annul the same since
they will not be benefited or prejudiced by the judgment of the case. They have no right to
the contract and they will not suffer injuries different from that of the public in general.
They are not, therefore, the real party in interest. In the same way as the plaintiffs are not
the real party in interest, the defendant Carlos Cuizon may not be bound by the judgment
herein and he cannot be sued as party defendant.

Hence this appeal. Plaintiffs-appellants and defendant-appellee Philippine National Bank filed their
respective briefs in due course. The other defendants-appellees, the city mayor, the city treasurer and
Tropical failed to file their briefs, with Tropical's extended period to do so having expired on January 4,
1969, and the case was deemed submitted for decision on March 17, 1969.

1. It seems clearly self-evident from the foregoing recitation of the undisputed antecedents and factual
background that the lower court gravely erred in issuing its dismissal order on the ground of plaintiffs'
alleged lack of interest or legal standing as city councilors or as taxpayers to maintain the case at bar.
The lower court founded its erroneous conclusion on the equally erroneous premise of citing and applying
Article 1397 of the Civil Code that "the action for the annulment of contracts may be instituted (only) by all
who are thereby obliged principally or subsidiarily." 15

The lower court's fundamental error was in treating plaintiffs' complaint as a personal suit on their own
behalf and applying the test in such cases that plaintiffs should show personal interest as parties who
would be benefited or injured by the judgment sought. Plaintiffs' suit is patently not a personal suit.
Plaintiffs clearly and by the express terms of their complaint filed the suit as a representative suit on
behalf and for the benefit of the city of Cebu.

Without passing upon or prejudging the merits of the complaint, it is not disputed that taken by
themselves without considering the contrary evidence or defenses that might properly be set up by
defendants at the trial, the allegations of the complaint state a sufficient cause of action on the basis of
which judgment could be validly rendered by the lower court declaring the nullity of the questioned
contract and letters of credit and declaring the City of Cebu exempt and free from any and all liability on
account thereof, as prayed for by plaintiffs. Defendant bank in its brief concedes that "we find no ruling
that the complaint was dismissed for lack of cause of action against the appellee Philippine National
Bank." 16

The appeal at bar must therefore be granted and the case ordered remanded to the lower court where the
parties may be properly given the opportunity at the trial to present evidence in support of their respective
contentions for disposition and judgment on the merits.

2. The lower court entirely missed the point that the action filed by plaintiffs-appellants as city councilors
(composing practically the entire city council, at that) and as city taxpayers is to declare null and void the
P3-million contract executed by defendant city mayor for the purchase of road construction equipment
purportedly on behalf of the city from its co-defendant Tropical and to declare equally null and void the
corresponding letters of credit opened with the bank by defendant mayor and to prevent the disbursement
of any city funds therefor and to exempt the City of Cebu and hold it not liable for any obligation arising
from such contract and letters of credit specifically and precisely questioned in the complaint filed by
plaintiffs on behalf of the City as having been executed without authority and contrary to law.

Plaintiffs' suit is clearly not one brought by them in their personal capacity for the annulment of a
particular contract entered into between two other contracting parties, in which situation Article 1397 of
the Civil Code may rightfully be invoked to question their legal capacity or interest to file the action, since
they are not in such case in anyway obliged thereby principally or subsidiarily.

On the contrary, plaintiffs' suit is one filed on behalf of the City of Cebu, instituted by them in pursuance of
their prerogative and duty as city councilors and taxpayers, in order to question and declare null and void
a contract which according to their complaint was executed by defendant city mayor purportedly on behalf
of the city without valid authority and which had been expressly declared by the Auditor-General to be null
and void ab initio and therefore could not give rise to any valid or allowable monetary claims against the
city.

3. Plaintiffs' right and legal interest as taxpayers to file the suit below and seek judicial assistance to
prevent what they believe to be an attempt to unlawfully disburse public funds of the city and to contest
the expenditure of public funds under contracts and commitments with defendants bank and Tropical
which they assert to have been entered into by the mayor without legal authority and against the express
prohibition of law have long received the Court's sanction and recognition. In Gonzales vs.
Hechanova, 17 the Court through the now Chief Justice dismissed the challenge against the sufficiency of
therein petitioner's interest to file the action, stating that "since the purchase of said commodity will have
to be effected with public funds mainly raised by taxation, and as a rice producer and landowner petitioner
must necessarily be a taxpayer, it follows that he has sufficient personality and interest to seek judicial
assistance with a view to restraining what he believes to be an attempt to unlawfully disburse said funds."

Even defendant Tropical so understood that plaintiffs' suit was a representative suit in behalf of the City of
Cebu, hence their counterclaim in their answer, should the lower court uphold plaintiffs' "capacity or
interest to bring this suit in behalf of the City of Cebu," for judgment against the City of Cebu for the
repayment with legal interest of bank charges in the total sum of P242,939.90 which it had advanced on
the letters of credit opened by the defendant bank at the mayor's instance in favor of its U.S.
supplier, supra." 18

Parenthetically, it may be noted with reference to said letters of credit opened by the bank at the mayor's
instance, that the same were caused by the mayor to be established, according to the allegations of the
complaint, notwithstanding the mayor's knowledge and notice of the city council having revoked by its
resolution No. 473 on March 10, 1966 its previous resolutions authorizing him to enter into the
transaction, supra. 19

4. Plaintiffs' right and legal interest as city councilors to file the suit below and to prevent what they
believe to be unlawful disbursements of city funds by virtue of the questioned contracts and commitments
entered into by the defendant city mayor notwithstanding the city council's revocation of his authority with
due notice thereof to defendant bank must likewise be recognized.

The lower court's narrow construction of the city charter, Republic Act No. 3857, that under section 20 (c)
thereof, it is only the city mayor who is empowered "to cause to be instituted judicial proceedings to
recover properties and funds of the city wherever found and cause to be defended all suits against the
city," and that plaintiffs' suit must therefore fail since "there is no provision in the said charter which
authorizes expressly or impliedly the city council or its members to bring an action in behalf of the city"
cannot receive the Court's sanction.

The case at bar shows the manifest untenability of such a narrow construction. Here where the defendant
city mayor's acts and contracts purportedly entered into on behalf of the city are precisely questioned as
unlawful, ultra vires and beyond the scope of his authority, and the city should therefore not be bound
thereby nor incur any liability on account thereof, the city mayor would be the last person to file such a
suit on behalf of the city, since he precisely maintains the contrary position that his acts have been lawful
and duly bind the city.

To adhere to the lower court's narrow and unrealistic interpretation would mean that no action against a
city mayor's actuations and contract in the name and on behalf of the city could ever be questioned in
court and subjected to judicial action for a declaration of nullity and invalidity, since no city mayor would
file such an action on behalf of the city to question, much less nullify, contracts executed by him on behalf
of the city and which he naturally believes to be valid and within his authority.

5. Section 20 (c) of the city charter invoked by the lower court, however, has no applicability to the
present suit, which is not one to recover properties and funds of the city or a suit against the city, but
rather a representative suit on behalf of and purportedly for the benefit of the city, which the city mayor is
however loath to institute.

Under such circumstances, in the same manner that a stockholder of a corporation is permitted to
institute derivative or representative suits as nominal party plaintiff for the benefit of the corporation which
is the real party in interest, 20 more so may plaintiffs as city councilors exclusively empowered by the city
charter to "make all appropriations for the expenses of the government of the city" 21 and who were the
very source of the authority granted to the city mayor to enter into the questioned transactions which
authority was later revoked by them, as per the allegations of the complaint at bar, be deemed to possess
the necessary authority, and interest, if not duty, to file the present suit on behalf of the City and to
prevent the disbursement of city funds under contracts impugned by them to have been entered into by
the city mayor without lawful authority and in violation of law.

ACCORDINGLY, the order appealed from is hereby set aside and the lower court is ordered to proceed
with the trial and disposition of the case below on its merits. No costs. So ordered.
G.R. No. 70684 October 10, 1986

CITY OF CEBU and/or CITY COUNCIL OF THE CITY OF CEBU, composed of Hon. FLORENCIO S.
UROT, RAYMUNDO A. CRYSTAL, BIENVENIDO B. TUDTUD, JOSE V. CUENCO, PABLO U.
ABELLA, GEORGE M. BALADJAY, ARTURO L. ABELLANA, JESUS S. GABUYA and MARIO R.
VELOSO, petitioners,

vs.

HON. INTERMEDIATE APPELLATE COURT, HON. CESAR VIRATA and HON. PEDRO M.
ALMANZOR, in their capacities as Secretary and Acting Secretary, respectively, Department of Finance,
respondents.

PARAS, J.:

Petitioners in this instant petition seek reversal of the judgment of the then Intermediate Appellate Court
in its AC-G.R. C.V. No. 64237 which affirmed the Decision of the then Court of First Instance of Cebu
Branch IV, Cebu City dismissing the appeal of petitioners and affirming the action taken by respondents
Secretary and Acting Secretary, Department of Finance, in suspending the effectivity of Section 57,
Section 65(G), Section 74 (Q) and (R) and Section 102, all of Cebu City Tax Ordinances I and 11, Series
of 1974.

Pursuant to Presidential Decree No. 231, as amended, otherwise known as the Local Tax Code, the City
Council of Cebu passed Ordinances I and II which were approved by the Mayor on June 15, 1974, to take
effect on July 1, 1974. The aforementioned ordinances were submitted to the respondents Secretary and
Acting Secretary of Finance for review. After review, said respondents ordered the suspension of the
following provisions with the corresponding reasons:

A. Tax Ordinance No. I

Section 57-Social Amelioration Tax (provided for an additional social amelioration tax of P0.05 on
owner/promoter of boxing exhibitions, or athletic games or exhibitions held for fund raising purposes).

Section 65-Fixed Tax on Business, in general (tax on amusement places wherein customers actively
participate without making bets or wagers).

Reason for suspension: Violative of uniformity of taxation required by sec. 13 of P.D. No. 231.

Section 74-Fees and charges for services rendered:

(Q) Food and Drugs Fees:

(To be collected from sari-sari stores, food establishments, drugstores, drugs, manufacturers, and drug
laboratories)

Reason for suspension: Unauthorized by P.D.No.231.

C. Section 74-Fees and charges for Services rendered. ...

(R) Storage fees, for attached properties stored in the Office of the City Sheriff: ...

Reason for suspension: Fees are excessive, violating Sec. 2(d) of P.D. No. 231.

D. Section 102-Fish inspection fees.

Reason for suspension: Fees are in restraint of trade violating Sec. 2(e) of P.D. No. 231.

B. Tax Ordinance No. II

Section 1. Imposed a city tax of P0.30 for every case of beer (24 bottles) or ten (10) cans sold in the City
of Cebu.
Reason for suspension: This tax was withdrawn by P.D. No. 426.

From the aforesaid order of suspension, petitioners filed a petition for review and/or appeal in the Court of
First Instance of Cebu. The petition was docketed as Civil Case No. R-14420 and assigned to Branch IV
of said court.

After hearing, the lower court rendered judgment, the dispositive portion of which nullified Section 57,
Section 65 (G), Section 74 (Q) and (R) and Section 102, all of Cebu City Tax Ordinance No. 1 and
Section 1 of City Tax Ordinance No. II, Series of 1974.

Petitioners appealed the foregoing decision to the Court of Appeals and after due proceedings, rendered
judgment affirming the lower court's decision. Hence, the instant petition, upon the following issues:

A. Whether or not the respondent Intermediate Appellate Court is correct in-

1. interpreting the provisions of the Local Tax Code (PD 231, as amended) in relation to section 57 and
section 65 of the City Tax Ordinance No. 1;

2. holding that Food and Drugs fees under Sec. 74 (Q) of City Tax Ordinance No. 1 violates the provision
of Sec. 35 of the Local Tax Code and the same is oppressive and unreasonable.

3. holding that the sheriff's storage fees under sec. 74 (R) of the City Tax Ordinance in question is
confiscatory.

4. interpreting and applying the provision of sec. 5 (K) of the Local Tax Code and sec. 2 (of the same
code) in relation to Sec. 102 of the City Tax Ordinance No. 1 of the City of Cebu which imposed an
inspection fee of three (3) centavos for every kilo of fish sold within the city of Cebu.

5. holding that City Tax Ordinance No. 2 which imposes a tax on sale of beer within the city is not within
the taxing power of the petitioner.

We find no merit in the petition.

1. Re: First assignment of error

The lower court ruled that section 57 and section 65 (G), item 14 of Cebu Tax Ordinance No. 1 imposing
an amusement tax (on top of the amusement tax the city is admittedly authorized to impose under section
23 of the Local Tax Code) violate Sec. 13 of the Local Tax Code in relation to section 23 of the same
Code which mandates that the taxes imposed "shall be uniform for the city and the province." Petitioners
argue that since all establishments of amusement within Cebu City are subject to the same rate of taxes
imposed by sections 57 and 65 (G), the rule on uniformity of taxation is not violated.

This contention is erroneous. Section 23, second paragraph of the Local Tax Code states:

The rates of the taxes, fees, or other impositions that the city shall fix may exceed the maximum rates
allowed for the province or municipality by not more than fifty percent, except the rates of the taxes and
fees provided in Section 12, 13, 14, 15-A and 19 (A-5) in Chapter II of this Code which shall be uniform
for the city and the province or municipality as the case maybe. (Emphasis supplied)

Under Section 13 of the Local Tax Code, the province is authorized to impose an amusement tax of 20%
or 30% depending on the amount paid for admission. But under secs. 57 and 65 (G) of its Tax Ordinance
No. 1 now in question, petitioner Cebu City is authorized to impose an additional P0.05 amusement tax
(on top of the amusement tax the city is admittedly authorized to impose under section 23 of the Local
Tax Code). In effect, Cebu City will have a higher rate of amusement tax than Cebu province. This
disparity in rates is precisely what is proscribed by the second paragraph of section 23 earlier quoted.
The said section speaks of "uniform for the city and the province or municipality." Hence, what is required
is uniformity of amusement taxes between the province and the city; not uniformity of the rates on the
same subject.

2. Re: Second assignment of error

Under this assignment of error, petitioners assert that the City of Cebu has the authority or power to
impose the food and drug fees and charges provided for in Section 74 (Q) of Tax Ordinance No. 1 even
though sari-sari stores and drug stores are already taxed under sec. 65-a, par. 2 of the ordinance as
retailers, and food establishments are also already taxed under sec. 65-b of the same ordinance as
manufacturers. The reason being that this kind of business requires close supervision and control which
would justify the imposition of higher and additional regulatory fees.

This contention is not tenable. Section 36 of the Local Tax Code provides as follows:

Sec. 36 Permit fee — The local government may collect a fee sufficient to cover the cost of regulation,
inspection and surveillance relative to the issuance of a permit which shall be required of an individual or
any juridical entity before the same shall engage in any business or occupation under the provisions of
this Code.

As correctly observed by respondent Court, the law (Section 36) contemplates a single fee for the
issuance of a permit to engage in any business or occupation. But Sec. 74 (Q) of Tax Ordinance No. 1
imposes another permit fee on foods and drugs establishments. As a result, the taxpayer will have to pay
another permit fee for conducting the same business in the same city. Such multiple imposition of permit
fees is unreasonable and oppressive and is definitely not sanctioned by the Local Tax Code.

3. Re: Third assignment of error

Petitioners assert that respondent court erred in its appreciation of the factual issues concerning the
excessiveness of the sheriff's storage fees under section 74 (R) of Tax Ordinance No. 1, leading it to
erroneously hold that section 74 (R) is violative of section 2 (D) of the Local Tax Code for being excessive
or confiscatory.

Again, the aforesaid contention is without merit. As illustrated by respondent court in its assailed decision,
quoting the observation of the trial court, a typewriter with a fair market value of P3,000.00 will have to
pay a sheriff's storage fee of P5.00 a day. Thus, it would take only 600 days, or less than two years, for
the typewriter to completely eat up its value on account of storage fees. Being excessive and
confiscatory, the suspension of the imposition of storage fees by the lower court was correct.

4. Re: Fourth assignment of error

The respondent court held that the final inspection fee under section 102 of City Tax Ordinance No. 1 is
violative of section 5 (K) and section 2 (E) of the Local Tax Code for being contrary to law, public policy
and/or in restraint of trade. Petitioners assail the aforesaid ruling pointing out that the said provision is not
against the fishermen but rather against the traders and fish vendors, and that the rate of imposition is
very minimal it being fixed at P0.03 per kilo of fish only.

This contention is not correct. Sec. 5 (K) of the Local Tax Code limits the taxing powers of Local
governments as follows —

Sec. 5. Common limitation on the taxing powers of local government.-The exercise of the taxing powers
of provinces, cities, municipalities and barrios shall not extend to the imposition of the following

(K) Taxes or fees on agricultural products when sold by the farmers or producers thereof, whether in their
original form or not

The aforequoted provision prohibits a local government from imposing an inspection fee on agricultural
products and fish is an agricultural product. Contrary to the claim of petitioners, under Section 102 of City
Ordinance No. 1 a fisherman selling his fish within the city has to pay the inspection fee of P0.03 for every
kilo of fish sold. Furthermore, the imposition of the tax will definitely restrict the free flow of fresh fish to
Cebu City because the price of fish will have to increase.

5. Re: Fifth assignment of error —

The lower court held that City Tax Ordinance No. 11 imposing a tax on the sale of beer is not within the
taxing power of Cebu City.

This ruling according to petitioners is erroneous because the City of Cebu is empowered by Sec. 24 of
the Local Tax Code, as amended to impose this kind of tax,

Again, the said contention of petitioners is not tenable. True, under the original provisions of Section 24 of
the Local Tax Code, a city could levy taxes on articles already subject to specific tax under the provisions
of the National Internal Revenue Code provided the rate imposed by the City did not exceed 25% of the
rates provided by the National Internal Revenue Code. But Section 24 was subsequently amended by PD
426 to read as follows
SEC. 24. Additional taxing powers. — The city may levy any tax, fee or other imposition not specifically
enumerated or otherwise provided for in this Code, subject to the provisions of sections 49 and 50 of this
Code as herein amended.

This power to tax articles subject to specific tax which was expressly granted to cities by the original
provisions of section 24, was deleted in the amendment. The said section 24, as it now reads, merely
grants the city the power to "levy any tax, fee or other imposition not specifically enumerated or otherwise
provided for" in the Local Tax Code. The amendment evinces the intent of the lawmaker to remove such
taxing authority (on articles already subject to the national specific tax) from the cities like Cebu City.

WHEREFORE, in view of the foregoing considerations, the petition is DISMISSED for lack of merit. No
pronouncement as to costs.
G.R. No. 78673 March 18, 1991

BRUNO S. CABRERA, petitioner,

vs.
HON. COURT OF APPEALS AND THE PROVINCE OF CATANDUANES, VICENTE M. ALBERTO,
ENCARNACION TORRES, SANTIAGO VALDERAMA, JEREMIAS TRINIDAD, ALFREDO DAYAWON,
ZACARIAS TATAD, FELIXBERTO CAMACHO, RUBEN GONZALES, FELIX RUBIO, RENE
ALCANTARA, ARISTEO ARCILLA, PAMFILO DAYAWON, REMEDIOS BAGADIONG,
FREDESWINDO ALCALA, ELENA S. LATORRE, BALDOMERO TOLENTINO, EULOGIA
ALEJANDRO, ANGELES S. VARGAS, ISIDRO REYES, ANSELMO PEÑA, and CATALINA
VELA, respondents.

Dominador B. Medroso, Jr. for petitioner.

CRUZ, J.:

On September 19, 1969, the Provincial Board of Catanduanes adopted Resolution No. 158, providing as
follows:

RESOLVED, as it is hereby resolved, to close the old road leading to the new Capitol Building of
this province to traffic effective October 31, 1969, and to give to the owners of the properties
traversed by the new road equal area as per survey by the Highway District Engineer's office
from the old road adjacent to the respective remaining portion of their properties.

RESOLVED FURTHER, that the Honorable Provincial Governor be, as he is hereby authorized to
sign for and in behalf of the province of Catanduanes, the pertinent Deed of Exchange and or
other documents pertaining thereto;

Pursuant thereto, Deeds of Exchange were executed under which the Province of Catanduanes
conveyed to Remedios R. Bagadiong, Fredeswindo F. Alcala, Elena S. Latorre, Baldomero Tolentino,
Eulogia T. Alejandro, Angeles S. Vargas, and Juan S. Reyes portions of the closed road in exchange for
their own respective properties, on which was subsequently laid a new concrete road leading to the
Capitol Building.

In 1978, part of the northern end of the old road fronting the petitioner's house was planted to vegetables
in 1977 by Eulogia Alejandro. Anselmo Peña, who had bought Angeles Vargas's share, also in the same
part of the road, converted it into a piggery farm.

Learning about Resolution 158, the petitioner filed on December 29, 1978, a complaint with the Court of
First Instance of Catanduanes for "Restoration of Public Road and/or Abatement of Nuisance, Annulment
of Resolutions and Documents with Damages." He alleged that the land fronting his house was a public
road owned by the Province of Catanduanes in its governmental capacity and therefore beyond the
commerce of man. He contended that Resolution No. 158 and the deeds of exchange were invalid, as so
too was the closure of the northern portion of the said road.

In a decision dated November 21, 1980, Judge Graciano P. Gayapa, Jr., while holding that the land in
question was not a declared public road but a mere "passageway" or "short-cut," nevertheless sustained
the authority of the provincial board to enact Resolution No. 158 under existing law. 1 Appeal was taken to
the respondent court,2 which found that the road was a public road and not a trail but just the same also
upheld Resolution 158. It declared:

Pursuant to Republic Act No. 5185, municipal authorities can close, subject to the approval or
direction of the Provincial Board, thoroughfares under Section 2246 of the Revised Administrative
Code. Although in this case the road was not closed by the municipality of Catanduanes but by
the provincial board of Catanduanes, the closure, nevertheless, is valid since it was ordered by
the approving authority itself. However, while it could do so, the provincial government of
Catanduanes could close the road only if the persons prejudiced thereby were indemnified,
Section 2246 of the Revised Administrative Code being very explicit on this.

Before us now, the petitioner insists that Sec. 2246 is not applicable because Resolution No. 158 is not
an order for the closure of the road in question but an authority to barter or exchange it with private
properties. He maintains that the public road was owned by the province in its governmental capacity
and, without a prior order of closure, could not be the subject of a barter. Control over public roads, he
insists, is with Congress and not with the provincial board.
The petitioner alleges that the closure of the road has especially injured him and his family as they can no
longer use it in going to the national road leading to the old capitol building but must instead pass through
a small passageway. For such inconvenience, he is entitled to damages in accordance with law.

The petition has no merit.

The Court cannot understand how the petitioner can seriously argue that there is no order of closure
when it is there in the resolution, in black and white. Resolution 158 clearly says that it is "hereby resolved
to close the old road." The closure is as plain as day except that the petitioner, with the blindness of those
who will not see, refuses to acknowledge it. The Court has little patience with such puerile arguments.
They border dangerously on a trifling with the administration of justice and can only prejudice the
pleader's cause.

The authority of the provincial board to close that road and use or convey it for other purposes is derived
from the following provisions of Republic Act No. 5185 in relation to Section 2246 of the Revised
Administrative Code:

R.A. No. 5185, Section 11 (II) (a):

II. The following actions by municipal officials or municipal councils, as provided for in the
pertinent sections of the Revised Administrative Code shall take effect without the need of
approval or direction from any official of the national government: Provided, That such actions
shall be subject to approval or direction by the Provincial Board:

(a) Authority to close thoroughfare under Section 2246;

xxx xxx xxx

Sec. 2246. Authority to close thoroughfare. — With the prior authorization of the Department
Head, a municipal council may close any municipal road, street, alley, park, or square; but no
such way or place aforesaid or any part thereof, shall be closed without indemnifying any person
prejudiced thereby.

Property thus withdrawn from public servitude may be used or conveyed for any purpose for
which other real property belonging to the municipality might be lawfully used or conveyed.

In the case of Cebu Oxygen and Acetylene Co., Inc. v. Bercilles,3 the Court held the closure of a city
street as within the powers of the city council under the Revised Charter of Cebu City, which provided:

Sec. 31. Legislative Powers.— Any provision of law and executive order to the contrary
notwithstanding, the City Council shall have the following legislative powers:

xxx xxx xxx

(34) . . .; to close any city road, street or alley, boulevard, avenue, park or square. Property thus
withdrawn from public servitude may be used or conveyed for any purpose for which other real
property belonging to the City may be lawfully used or conveyed;

It sustained the subsequent sale of the land as being in accordance not only with the charter but also with
Article 422 of the Civil Code, which provides: "Property of public dominion, when no longer intended for
public use or for public service, shall form part of the patrimonial property of the State."

In the case of Favis vs. City of Baguio,4 the power of the City Council of Baguio City to close city streets
and withdraw them from public use was also assailed. This Court said:

5. So it is, that appellant may not challenge the city council's act of withdrawing a strip of Lapu-
Lapu Street at its dead end from public use and converting the remainder thereof into an alley.
These are acts well within the ambit of the power to close a city street. The city council, it would
seem to us, is the authority competent to determine whether or not a certain property is still
necessary for public use.

Such power to vacate a street or alley is discretionary. And the discretion will not ordinarily be
controlled or interfered with by the courts, absent a plain case of abuse or fraud or collusion.
Faithfulness to the public trust will be presumed. So the fact that some private interests may be
served incidentally will not invalidate the vacation ordinance.
While it is true that the above cases dealt with city councils and not the provincial board, there is no
reason for not applying the doctrine announced therein to the provincial board in connection with the
closure of provincial roads. The provincial board has, after all, the duty of maintaining such roads for the
comfort and convenience of the inhabitants of the province. Moreover, this authority is inferable from the
grant by the national legislature of the funds to the Province of Catanduanes for the construction of
provincial roads. On this matter, Governor Vicente Alberto of Catanduanes testified as follows:

. . . when the Province was given funds to construct a road that will be more convenient to the
public, more solid and wider and to have a better town planning whereby the Capitol would be
reached directly from the pier for purposes of improving services to the public, it was
recommended by the District Highway Engineer that a new road would be constructed connecting
the Capitol with the veterans fountain, and believing this recommendation was for the good of the
community, it was carried out. The original passageway was already unnecessary and since
there was a problem of compensation the land owners where the new road was going to pass, so
they decided to close this passageway and instead of paying the owners of the property where
the new road was to be constructed, they exchanged some portions of this passageway with
properties where the proposed road would pass.5

The lower court found the petitioner's allegation of injury and prejudice to be without basis because he
had "easy access anyway to the national road, for in fact the vehicles used by the Court and the parties
during the ocular inspection easily passed and used it, reaching beyond plaintiff's house." However, the
Court of Appeals ruled that the he "was prejudiced by the closure of the road which formerly fronted his
house. He and his family were undoubtedly inconvenienced by the loss of access to their place of
residence for which we believe they should be compensated."

On this issue, the governing principle was laid down in Favis thus:

. . . The general rule is that one whose property does not abut on the closed section of a street
has no right to compensation for the closing or vacation of the street, if he still has reasonable
access to the general system of streets. The circumstances in some cases may be such as to
give a right to damages to a property owner, even though his property does not abut on the
closed section. But to warrant recovery in any such case the property owner must show that the
situation is such that he has sustained special damages differing in kind, and not merely in
degree, from those sustained by the public generally.

This rule was based on the following observations made in Richmond v. City of Hinton6 which were
quoted with approval by this Court:

The Constitution does not undertake to guarantee to a property owner the public maintenance of
the most convenient route to his door. The law will not permit him to be cut off from the public
thoroughfares, but he must content himself with such route for outlet as the regularly constituted
public authority may deem most compatible with the public welfare. When he acquires city
property, he does so in tacit recognition of these principles. If, subsequent to his acquisition, the
city authorities abandon a portion of the street to which his property is not immediately adjacent,
he may suffer loss because of the inconvenience imposed, but the public treasury cannot be
required to recompense him. Such case is damnum absque injuria.

Following the above doctrine, we hold that the petitioner is not entitled to damages because the injury he
has incurred, such as it is, is the price he and others like him must pay for the welfare of the entire
community. This is not a case where his property has been expropriated and he is entitled to just
compensation. The construction of the new road was undertaken under the general welfare clause. As
the trial judge acutely observed, whatever inconvenience the petitioner has suffered "pales in significance
compared to the greater convenience the new road, which is wide and concrete, straight to the veterans
fountain and down to the pier, has been giving to the public, plus the fact that the new road adds beauty
and color not only to the town of Virac but also to the whole province of Catanduanes." For the enjoyment
of those benefits, every individual in the province, including the petitioner, must be prepared to give his
share.

The dispositive portion of the challenged decision awarded the petitioner the sum of P5,000.00 as
nominal and/or temperate damages, and the sum of P2,000.00 as and for attorney's fees. For the
reasons stated above, these awards should all be deleted. The petitioner must content himself with the
altruistic feeling that for the prejudice he has suffered, the price he can expect is the improvement of the
comfort and convenience of the inhabitants of Catanduanes, of whom he is one. That is not a paltry
recompense.
WHEREFORE, the decision of the Court of Appeals dated February 17, 1987, is AFFIRMED as above
modified, with costs against the petitioner.

SO ORDERED.
G.R. No. 97764 August 10, 1992

LEVY D. MACASIANO, Brigadier General/PNP Superintendent, Metropolitan Traffic

Command, petitioner,
vs.
HONORABLE ROBERTO C. DIOKNO, Presiding Judge, Branch 62, Regional Trial Court of Makati,
Metro Manila, MUNICIPALITY OF PARAÑAQUE, METRO MANILA, PALANYAG KILUSANG BAYAN
FOR SERVICE, respondents.

Ceferino, Padua Law Office for Palanyag Kilusang Bayan for service.

Manuel de Guia for Municipality of Parañaque.

MEDIALDEA, J.:

This is a petition for certiorari under Rule 65 of the Rules of Court seeking the annulment of the decision
of the Regional Trial Court of Makati, Branch 62, which granted the writ of preliminary injunction applied
for by respondents Municipality of Parañaque and Palanyag Kilusang Bayan for Service (Palanyag for
brevity) against petitioner herein.

The antecedent facts are as follows:

On June 13, 1990, the respondent municipality passed Ordinance No. 86, Series of 1990 which
authorized the closure of J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena Streets
located at Baclaran, Parañaque, Metro Manila and the establishment of a flea market thereon. The said
ordinance was approved by the municipal council pursuant to MMC Ordinance No. 2, Series of 1979,
authorizing and regulating the use of certain city and/or municipal streets, roads and open spaces within
Metropolitan Manila as sites for flea market and/or vending areas, under certain terms and conditions.

On July 20, 1990, the Metropolitan Manila Authority approved Ordinance No. 86, s. 1990 of the municipal
council of respondent municipality subject to the following conditions:

1. That the aforenamed streets are not used for vehicular traffic, and that the majority of
the residents do not oppose the establishment of the flea market/vending areas thereon;

2. That the 2-meter middle road to be used as flea market/vending area shall be marked
distinctly, and that the 2 meters on both sides of the road shall be used by pedestrians;

3. That the time during which the vending area is to be used shall be clearly designated;

4. That the use of the vending areas shall be temporary and shall be closed once the
reclaimed areas are developed and donated by the Public Estate Authority.

On June 20, 1990, the municipal council of Parañaque issued a resolution authorizing Parañaque Mayor
Walfrido N. Ferrer to enter into contract with any service cooperative for the establishment, operation,
maintenance and management of flea markets and/or vending areas.

On August 8, 1990, respondent municipality and respondent Palanyag, a service cooperative, entered
into an agreement whereby the latter shall operate, maintain and manage the flea market in the
aforementioned streets with the obligation to remit dues to the treasury of the municipal government of
Parañaque. Consequently, market stalls were put up by respondent Palanyag on the said streets.

On September 13, 1990, petitioner Brig. Gen. Macasiano, PNP Superintendent of the Metropolitan Traffic
Command, ordered the destruction and confiscation of stalls along G.G. Cruz and J. Gabriel St. in
Baclaran. These stalls were later returned to respondent Palanyag.

On October 16, 1990, petitioner Brig. General Macasiano wrote a letter to respondent Palanyag giving the
latter ten (10) days to discontinue the flea market; otherwise, the market stalls shall be dismantled.

Hence, on October 23, 1990, respondents municipality and Palanyag filed with the trial court a joint
petition for prohibition and mandamus with damages and prayer for preliminary injunction, to which the
petitioner filed his memorandum/opposition to the issuance of the writ of preliminary injunction.
On October 24, 1990, the trial court issued a temporary restraining order to enjoin petitioner from
enforcing his letter-order of October 16, 1990 pending the hearing on the motion for writ of preliminary
injunction.

On December 17, 1990, the trial court issued an order upholding the validity of Ordinance No. 86 s. 1990
of the Municipality' of Parañaque and enjoining petitioner Brig. Gen. Macasiano from enforcing his letter-
order against respondent Palanyag.

Hence, this petition was filed by the petitioner thru the Office of the Solicitor General alleging grave abuse
of discretion tantamount to lack or excess of jurisdiction on the part of the trial judge in issuing the
assailed order.

The sole issue to be resolved in this case is whether or not an ordinance or resolution issued by the
municipal council of Parañaque authorizing the lease and use of public streets or thoroughfares as sites
for flea markets is valid.

The Solicitor General, in behalf of petitioner, contends that municipal roads are used for public service
and are therefore public properties; that as such, they cannot be subject to private appropriation or private
contract by any person, even by the respondent Municipality of Parañaque. Petitioner submits that a
property already dedicated to public use cannot be used for another public purpose and that absent a
clear showing that the Municipality of Parañaque has been granted by the legislature specific authority to
convert a property already in public use to another public use, respondent municipality is, therefore, bereft
of any authority to close municipal roads for the establishment of a flea market. Petitioner also submits
that assuming that the respondent municipality is authorized to close streets, it failed to comply with the
conditions set forth by the Metropolitan Manila Authority for the approval of the ordinance providing for the
establishment of flea markets on public streets. Lastly, petitioner contends that by allowing the municipal
streets to be used by market vendors the municipal council of respondent municipality violated its duty
under the Local Government Code to promote the general welfare of the residents of the municipality.

In upholding the legality of the disputed ordinance, the trial court ruled:

. . . that Chanter II Section 10 of the Local Government Code is a statutory grant of power
given to local government units, the Municipality of Parañaque as such, is empowered
under that law to close its roads, streets or alley subject to limitations stated therein (i.e.,
that it is in accordance with existing laws and the provisions of this code).

xxx xxx xxx

The actuation of the respondent Brig. Gen. Levi Macasiano, though apparently within its
power is in fact an encroachment of power legally vested to the municipality, precisely
because when the municipality enacted the ordinance in question — the authority of the
respondent as Police Superintendent ceases to be operative on the ground that the
streets covered by the ordinance ceases to be a public thoroughfare. (pp. 33-34, Rollo)

We find the petition meritorious. In resolving the question of whether the disputed municipal ordinance
authorizing the flea market on the public streets is valid, it is necessary to examine the laws in force
during the time the said ordinance was enacted, namely, Batas Pambansa Blg. 337, otherwise known as
Local Government Code, in connection with established principles embodied in the Civil Code an property
and settled jurisprudence on the matter.

The property of provinces, cities and municipalities is divided into property for public use and patrimonial
property (Art. 423, Civil Code). As to what consists of property for public use, Article 424 of Civil Code
states:

Art. 424. Property for public use, in the provinces, cities and municipalities, consists of
the provincial roads, city streets, the squares, fountains, public waters, promenades, and
public works for public service paid for by said provinces, cities or municipalities.

All other property possessed by any of them is patrimonial and shall be governed by this
Code, without prejudice to the provisions of special laws.

Based on the foregoing, J. Gabriel G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena streets are
local roads used for public service and are therefore considered public properties of respondent
municipality. Properties of the local government which are devoted to public service are deemed public
and are under the absolute control of Congress (Province of Zamboanga del Norte v. City of Zamboanga,
L-24440, March 28, 1968, 22 SCRA 1334). Hence, local governments have no authority whatsoever to
control or regulate the use of public properties unless specific authority is vested upon them by Congress.
One such example of this authority given by Congress to the local governments is the power to close
roads as provided in Section 10, Chapter II of the Local Government Code, which states:

Sec. 10. Closure of roads. — A local government unit may likewise, through its head
acting pursuant to a resolution of its sangguniang and in accordance with existing law
and the provisions of this Code, close any barangay, municipal, city or provincial road,
street, alley, park or square. No such way or place or any part of thereof shall be close
without indemnifying any person prejudiced thereby. A property thus withdrawn from
public use may be used or conveyed for any purpose for which other real property
belonging to the local unit concerned might be lawfully used or conveyed. (Emphasis
ours).

However, the aforestated legal provision which gives authority to local government units to close roads
and other similar public places should be read and interpreted in accordance with basic principles already
established by law. These basic principles have the effect of limiting such authority of the province, city or
municipality to close a public street or thoroughfare. Article 424 of the Civil Code lays down the basic
principle that properties of public dominion devoted to public use and made available to the public in
general are outside the commerce of man and cannot be disposed of or leased by the local government
unit to private persons. Aside from the requirement of due process which should be complied with before
closing a road, street or park, the closure should be for the sole purpose of withdrawing the road or other
public property from public use when circumstances show that such property is no longer intended or
necessary for public use or public service. When it is already withdrawn from public use, the property then
becomes patrimonial property of the local government unit concerned (Article 422, Civil Code; Cebu
Oxygen, etc. et al. v. Bercilles, et al., G.R. No. L-40474, August 29, 1975, 66 SCRA 481). It is only then
that the respondent municipality can "use or convey them for any purpose for which other real property
belonging to the local unit concerned might be lawfully used or conveyed" in accordance with the last
sentence of Section 10, Chapter II of Blg. 337, known as Local Government Code. In one case, the City
Council of Cebu, through a resolution, declared the terminal road of M. Borces Street, Mabolo, Cebu City
as an abandoned road, the same not being included in the City Development Plan. Thereafter, the City
Council passes another resolution authorizing the sale of the said abandoned road through public
bidding. We held therein that the City of Cebu is empowered to close a city street and to vacate or
withdraw the same from public use. Such withdrawn portion becomes patrimonial property which can be
the object of an ordinary contract (Cebu Oxygen and Acetylene Co., Inc. v. Bercilles, et al., G.R. No.
L-40474, August 29, 1975, 66 SCRA 481). However, those roads and streets which are available to the
public in general and ordinarily used for vehicular traffic are still considered public property devoted to
public use. In such case, the local government has no power to use it for another purpose or to dispose of
or lease it to private persons. This limitation on the authority of the local government over public
properties has been discussed and settled by this Court en banc in "Francisco V. Dacanay, petitioner v.
Mayor Macaria Asistio, Jr., et al., respondents, G.R. No. 93654, May 6, 1992." This Court ruled:

There is no doubt that the disputed areas from which the private respondents' market
stalls are sought to be evicted are public streets, as found by the trial court in Civil Case
No. C-12921. A public street is property for public use hence outside the commerce of
man (Arts. 420, 424, Civil Code). Being outside the commerce of man, it may not be the
subject of lease or others contract (Villanueva, et al. v. Castañeda and Macalino, 15
SCRA 142 citing the Municipality of Cavite v. Rojas, 30 SCRA 602; Espiritu v. Municipal
Council of Pozorrubio, 102 Phil. 869; And Muyot v. De la Fuente, 48 O.G. 4860).

As the stallholders pay fees to the City Government for the right to occupy portions of the
public street, the City Government, contrary to law, has been leasing portions of the
streets to them. Such leases or licenses are null and void for being contrary to law. The
right of the public to use the city streets may not be bargained away through contract.
The interests of a few should not prevail over the good of the greater number in the
community whose health, peace, safety, good order and general welfare, the respondent
city officials are under legal obligation to protect.

The Executive Order issued by acting Mayor Robles authorizing the use of Heroes del
'96 Street as a vending area for stallholders who were granted licenses by the city
government contravenes the general law that reserves city streets and roads for public
use. Mayor Robles' Executive Order may not infringe upon the vested right of the public
to use city streets for the purpose they were intended to serve: i.e., as arteries of travel
for vehicles and pedestrians.

Even assuming, in gratia argumenti, that respondent municipality has the authority to pass the disputed
ordinance, the same cannot be validly implemented because it cannot be considered approved by the
Metropolitan Manila Authority due to non-compliance by respondent municipality of the conditions
imposed by the former for the approval of the ordinance, to wit:

1. That the aforenamed streets are not used for vehicular traffic, and that the majority of
the residents do(es) not oppose the establishment of the flea market/vending areas
thereon;

2. That the 2-meter middle road to be used as flea market/vending area shall be marked
distinctly, and that the 2 meters on both sides of the road shall be used by pedestrians;

3. That the time during which the vending area is to be used shall be clearly designated;

4. That the use of the vending areas shall be temporary and shall be closed once the
reclaimed areas are developed and donated by the Public Estate Authority. (p. 38, Rollo)

Respondent municipality has not shown any iota of proof that it has complied with the foregoing
conditions precedent to the approval of the ordinance. The allegations of respondent municipality that the
closed streets were not used for vehicular traffic and that the majority of the residents do not oppose the
establishment of a flea market on said streets are unsupported by any evidence that will show that this
first condition has been met. Likewise, the designation by respondents of a time schedule during which
the flea market shall operate is absent.

Further, it is of public notice that the streets along Baclaran area are congested with people, houses and
traffic brought about by the proliferation of vendors occupying the streets. To license and allow the
establishment of a flea market along J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena
streets in Baclaran would not help in solving the problem of congestion. We take note of the other
observations of the Solicitor General when he said:

. . . There have been many instances of emergencies and fires where ambulances and
fire engines, instead of using the roads for a more direct access to the fire area, have to
maneuver and look for other streets which are not occupied by stalls and vendors thereby
losing valuable time which could, otherwise, have been spent in saving properties and
lives.

Along G.G. Cruz Street is a hospital, the St. Rita Hospital. However, its ambulances and
the people rushing their patients to the hospital cannot pass through G.G. Cruz because
of the stalls and the vendors. One can only imagine the tragedy of losing a life just
because of a few seconds delay brought about by the inaccessibility of the streets
leading to the hospital.

The children, too, suffer. In view of the occupancy of the roads by stalls and vendors,
normal transportation flow is disrupted and school children have to get off at a distance
still far from their schools and walk, rain or shine.

Indeed one can only imagine the garbage and litter left by vendors on the streets at the
end of the day. Needless to say, these cause further pollution, sickness and deterioration
of health of the residents therein. (pp. 21-22, Rollo)

Respondents do not refute the truth of the foregoing findings and observations of petitioners. Instead,
respondents want this Court to focus its attention solely on the argument that the use of public spaces for
the establishment of a flea market is well within the powers granted by law to a local government which
should not be interfered with by the courts.

Verily, the powers of a local government unit are not absolute. They are subject to limitations laid down by
toe Constitution and the laws such as our Civil Code. Moreover, the exercise of such powers should be
subservient to paramount considerations of health and well-being of the members of the community.
Every local government unit has the sworn obligation to enact measures that will enhance the public
health, safety and convenience, maintain peace and order, and promote the general prosperity of the
inhabitants of the local units. Based on this objective, the local government should refrain from acting
towards that which might prejudice or adversely affect the general welfare.

As what we have said in the Dacanay case, the general public have a legal right to demand the
demolition of the illegally constructed stalls in public roads and streets and the officials of respondent
municipality have the corresponding duty arising from public office to clear the city streets and restore
them to their specific public purpose.
The instant case as well as the Dacanay case, involves an ordinance which is void and illegal for lack of
basis and authority in laws applicable during its time. However, at this point, We find it worthy to note that
Batas Pambansa Blg. 337, known as Local Government Lode, has already been repealed by Republic
Act No. 7160 known as Local Government Code of 1991 which took effect on January 1, 1992. Section
5(d) of the new Code provides that rights and obligations existing on the date of effectivity of the new
Code and arising out of contracts or any other source of prestation involving a local government unit shall
be governed by the original terms and conditions of the said contracts or the law in force at the time such
rights were vested.

ACCORDINGLY, the petition is GRANTED and the decision of the respondent Regional Trial Court dated
December 17, 1990 which granted the writ of preliminary injunction enjoining petitioner as PNP
Superintendent, Metropolitan Traffic Command from enforcing the demolition of market stalls along J.
Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena streets is hereby RESERVED and SET
ASIDE.

SO ORDERED.
[G.R. No. 105909. June 28, 1994.]

MUNICIPALITY OF PILILLA, RIZAL, Petitioner, v. HON. COURT OF APPEALS, HON. ARTURO A.

MARAVE, as Presiding Judge, Regional Trial Court, Branch 78, Morong, Rizal, and PHILIPPINE
PETROLEUM CORPORATION, Respondents.

SYLLABUS

1. POLITICAL LAW; ADMINISTRATIVE LAW; AUTHORITY TO REPRESENT A PROVINCE OR

MUNICIPALITY IN A LAWSUIT; RULE AND EXCEPTION; APPLICATION IN CASE AT BAR. — The
Court of Appeals is correct in holding that Atty. Mendiola has no authority to file a petition in behalf of and
in the name of the Municipality of Pililla. The matter of representation of a municipality by a private
attorney has been settled in Ramos v. Court of Appeals, Et Al., 108 SCRA 728 [1981]) and reiterated in
Province of Cebu v. Intermediate Appellate Court, Et Al., (147 SCRA 447 [1987]) where we ruled that
private attorneys cannot represent a province or municipality in lawsuits. Section 1683 of the Revised
Administrative Code provides: "Section 1683. Duty of fiscal to represent provinces and provincial
subdivisions in litigation. — The provincial fiscal shall represent the province and any municipality or
municipal district thereof in any court, except in cases whereof original jurisdiction is vested in the
Supreme Court or in cases where the municipality or municipal district in question is a party adverse to
the provincial government or to some other municipality or municipal district in the same province. When
the interests of a provincial government and of any political division thereof are opposed, the provincial
fiscal shall act on behalf of the province. "When the provincial fiscal is disqualified to serve any
municipality or other political subdivision of a province, a special attorney may be employed by its
council." Under the above provision, complemented by Section 3, Republic Act No. 2264, the Local
Autonomy Law, (This section states that the municipal attorney, as the head of the legal division or office
of a municipality, "shall act as legal counsel of the municipality and perform such duties and exercise
such powers as may be assigned to him by the council.") only the provincial fiscal and the municipal
attorney can represent a province or municipality in their lawsuits. The provision is mandatory. The
municipality’s authority to employ a private lawyer is expressly limited only to situations where the
provincial fiscal is disqualified to represent it. (Municipality of Bocaue, Et. Al. v. Manotok, 93 Phil. 173
[1953] and other cases cited) For the aforementioned exception to apply, the fact that the provincial fiscal
was disqualified to handle the municipality’s case must appear on record. (De Guia v. The Auditor
General, Et Al., 44 SCRA 169) In the instant case, there is nothing in the records to show that the
provincial fiscal is disqualified to act as counsel for the Municipality of Pililla on appeal, hence the
appearance of herein private counsel is without authority of law.

2. ID.; ID.; ID.; FISCAL’S REFUSAL, NOT A LEGAL JUSTIFICATION FOR EMPLOYING THE
SERVICES OF PRIVATE COUNSEL. — The fiscal’s refusal to represent the municipality is not a legal
justification for employing the services of private counsel. Unlike a practising lawyer who has the right to
decline employment, a fiscal cannot refuse to perform his functions on grounds not provided for by law
without violating his oath of office. Instead of engaging the services of a special attorney, the municipal
council should request the Secretary of Justice to appoint an acting provincial fiscal in place of the
provincial fiscal who has declined to handle and prosecute its case in court, pursuant to Section 1679 of
the Revised Administrative Code. (Enriquez, Sr. v. Gimenez, etc., supra: De Guia v. The Auditor General,
Et Al., supra) It is also significant that the lack of authority of herein counsel. Atty. Mendiola, was even
raised by the municipality itself in its comment and opposition to said counsel’s motion for execution of his
lien, which was filed with the court a quo by the office of the Provincial Prosecutor of Rizal in behalf of
said municipality.

3. ID.; ID.; ID.; PRIVATE COUNSEL’S LACK OF AUTHORITY TO REPRESENT MUNICIPALITY; MAY
BE RAISED AT ANY STAGE OF THE PROCEEDINGS; CASE AT BAR. — The contention of Atty.
Mendiola that private respondent cannot raise for the first time on appeal his lack of authority to represent
the municipality is untenable. The legality of his representation can be questioned at any stage of the
proceedings. In the cases hereinbefore cited, the issue of lack of authority of private counsel to represent
a municipality was only raised for the first time in the proceedings for the collection of attorney’s fees for
services rendered in the particular case, after the decision in that case had become final and executory
and/or had been duly executed.

4. LEGAL AND JUDICIAL ETHICS; ATTORNEY; WHEN SERVICES DEEMED REVOKED; RULE; CASE
AT BAR. — even assuming that the representation of the municipality by Atty. Mendiola was duly
authorized, said authority is deemed to have been revoked by the municipality when the latter, through
the municipal mayor and without said counsel’s participation, entered into a compromise agreement with
herein private respondent with regard to the execution of the judgment in its favor and thereafter filed
personally with the court below two pleadings entitled and constitutive of a "Satisfaction of Judgment" and
a "Release and Quitclaim." A client, by appearing personally and presenting a motion by himself, is
considered to have impliedly dismissed his lawyer. Herein counsel cannot pretend to be authorized to
continue representing the municipality since the latter is entitled to dispense with his services at any time.
Both at common law and under Section 26, Rule 138 of the Rules of Court, a client may dismiss his
lawyer at any time or at any stage of the proceedings, and there is nothing to prevent a litigant from
appearing before the court to conduct his own litigation. (Rustia v. The Judge of the Court of First
Instance of Batangas, Et Al., 44 Phil. 62 [1922])

5. ID.; ID.; CLIENT’S RIGHT TO COMPROMISE; MAY NOT BE PREVENTED BY LAWYERS. — The
client has also an undoubted right to compromise a suit without the intervention of his lawyer. (Rustia v.
The Judge of the Court of First Instance of Batangas, Et Al., ante; Aro v. Nañawa, Et Al., L-24163, April
25, 1969, 27 SCRA 1090) Even the lawyers’ right to fees from their clients may not be invoked by the
lawyers themselves as a ground for disapproving or holding in abeyance the approval of a compromise
agreement. The lawyers concerned can enforce their rights in the proper court in an appropriate
proceeding in accordance with the Rules of Court, but said rights may not be used to prevent the
approval of the compromise agreement. (Jesalva, Et. Al. v. Bautista, Et Al., 105 Phi. 348 [1959]; Cabildo,
Et. Al. v. Navarro, Et Al., L-31865, November 26, 1973, 54 SCRA 26)

DECISION

REGALADO, J.:

Petitioner questions and seek the nullification of the resolution of respondent Court of Appeals in CA-G.R.
SP. No. 27504 dated March 31, 1992, dismissing the petition for having been filed by a private counsel,
as well as its succeeding resolution dated June 9, 1992, denying petitioner’s motion for reconsideration. 1

The records show that on March 17, 1989, the Regional Trial Court of Tanay, Rizal, Branch 80, rendered
judgment in Civil Case No. 057-T in favor of plaintiff, now herein petitioner Municipality of Pililla, Rizal,
against defendant, now herein private respondent Philippine Petroleum Corporation (PPC, for short),
ordering therein defendant to pay said plaintiff (1) the amount of P5,301,385.00 representing the tax on
business due from the defendant under Section 9(A) of Municipal Tax Ordinance No. 1 of said
municipality for the period from 1979 to 1983, inclusive, plus such amount of tax as may accrue until final
determination of the case; (2) storage permit fee in the amount of P3,321,730.00 due from the defendant
under Section 10, paragraph Z(13) (b-1-c) of the same municipal tax ordinance for the period from 1975
to 1986, inclusive, plus the amount of said fee that may accrue until final determination of the case; (3)
mayor’s permit fee due from the defendant under Section 10, paragraph (P) (2) of said municipal tax
ordinance from 1975 to 1984, inclusive, in the amount of P12,120.00, plus such amount of the same fee
as may accrue until final determination of the case; (4) sanitary inspection fee in the amount of P1,010.00
for the period from 1975 to 1984, plus the amount of this fee that may accrue until final determination of
the case; and (5) the costs of suit. 2

On June 3, 1991, in G.R. No. 90776 this Court affirmed the aforesaid judgment, with the modification that
business taxes accruing prior to 1976 are not to be paid by PPC because the same have prescribed, and
that storage fees are not also to be paid by PPC since the storage tanks are owned by PPC and not by
the municipality and, therefore, cannot be the bases of a charge for service by the municipality. 3 This
judgment became final and executory on July 13, 1991 and the records were remanded to the trial court
for execution.

On October 14, 1991, in connection with the execution of said judgment, Atty. Felix E. Mendiola filed a
motion in behalf of plaintiff municipality with the Regional Trial Court, Branch 78, Morong Rizal * for the
examination of defendant corporation’s gross sales for the years 1976 to 1978 and 1984 to 1991 for the
purpose of computing the tax on business imposed under the Local Tax Code, as amended. On October
21, 1991, defendant corporation filed a manifestation to the effect that on October 18, 1991, Pililla Mayor
Nicomedes Patenia received from it the sum of P11,457,907.00 as full satisfaction of the above-
mentioned judgment of the Supreme Court, as evidenced by the release and quitclaim documents
executed by said mayor. Accordingly, on October 31, 1991 the court below issued an order denying
plaintiff municipality’s motion for examination and execution of judgment on the ground that the judgment
in question had already been satisfied. 4

Thereafter, on November 21, 1991 Atty. Mendiola filed a motion for reconsideration of the court’s
aforesaid order of October 31, 1991, claiming that the total liability of defendant corporation to plaintiff
municipality amounted to 24,176,599.00, while the amount involved in the release and quitclaim executed
by Mayor Patenia was only P12,718,692; and that the said mayor could not waive the balance which
represents the taxes due under the judgment to the municipality and over which judgment the law firm of
Atty. Mendiola had registered two liens for alleged consultancy services of 25% and attorney’s fees of
25% which, when quantified and added, amount to more than P12 million. On January 28, 1992, the trial
court denied the aforesaid motion for reconsideration. 5

On February 18, 1992, Atty. Mendiola, again ostensibly in behalf of herein petitioner municipality, filed a
petition for certiorari with us, which petition we referred to the Court of Appeals for proper disposition and
was docketed therein as CA-G.R. SP No. 27504. 6 On March 2, 1992, respondent PPC filed a motion
questioning Atty. Mendiola’s authority to represent petitioner municipality. 7 Consequently, on March 31,
1992 respondent Court of Appeals dismissed the petition for having been filed by a private counsel in
violation of law and jurisprudence, but without prejudice to the filing of a similar petition by the Municipality
of Pililla through the proper provincial or municipal legal officer. 8 Petitioner filed a motion for
reconsideration which was denied by the Court of Appeals in its resolution of June 9, 1992. 9

Petitioner is once again before us with the following assignment of error:chanrobles virtual lawlibrary

"1. It is an error for the Court of Appeals to consider private respondent’s new issue raised for the first
time on appeal, as it could no longer be considered on appeal, because it was never been (sic) raised in
the court below.

2. It is an error for the Court of Appeals in dismissing (sic) the instant petition with alternative remedy of
filing similar petition as it is a departure from established jurisprudence.chanrobles.com.ph : virtual law
library

3. It is an error for the Court of Appeals to rule that the filing of the instant petition by the private counsel
is in violation of law and jurisprudence." 10

We find the present petition devoid of merit.

The Court of Appeals is correct in holding that Atty. Mendiola has no authority to file a petition in behalf of
and in the name of the Municipality of Pililla. The matter of representation of a municipality by a private
attorney has been settled in Ramos v. Court of Appeals, Et Al., 11 and reiterated in Province of Cebu v.
Intermediate Appellate Court, Et Al., 12 where we ruled that private attorneys cannot represent a province
or municipality in lawsuits.

Section 1683 of the Revised Administrative Code provides:chanroblesvirtualawlibrary

"Section 1683. Duty of fiscal to represent provinces and provincial subdivisions in litigation. — The
provincial fiscal shall represent the province and any municipality or municipal district thereof in any court,
except in cases whereof original jurisdiction is vested in the Supreme Court or in cases where the
municipality or municipal district in question is a party adverse to the provincial government or to some
other municipality or municipal district in the same province. When the interests of a provincial
government and of any political division thereof are opposed, the provincial fiscal shall act on behalf of
the province.

"When the provincial fiscal is disqualified to serve any municipality or other political subdivision of a
province, a special attorney may be employed by its council." 13

Under the above provision, complemented by Section 3, Republic Act No. 2264, the Local Autonomy
Law, 14 only the provincial fiscal and the municipal attorney can represent a province or municipality in
their lawsuits. The provision is mandatory. The municipality’s authority to employ a private lawyer is
expressly limited only to situations where the provincial fiscal is disqualified to represent it. 15

For the aforementioned exception to apply, the fact that the provincial fiscal was disqualified to handle the
municipality’s case must appear on record. 16 In the instant case, there is nothing in the records to show
that the provincial fiscal is disqualified to act as counsel for the Municipality of Pililla on appeal, hence the
appearance of herein private counsel is without authority of law.chanrobles law library : red

The submission of Atty. Mendiola that the exception is broad enough to include situations wherein the
provincial fiscal refuses to handle the case cannot be sustained. The fiscal’s refusal to represent the
municipality is not a legal justification for employing the services of private counsel. Unlike a practising
lawyer who has the right to decline employment, a fiscal cannot refuse to perform his functions on
grounds not provided for by law without violating his oath of office. Instead of engaging the services of a
special attorney, the municipal council should request the Secretary of Justice to appoint an acting
provincial fiscal in place of the provincial fiscal who has declined to handle and prosecute its case in
court, pursuant to Section 1679 of the Revised Administrative Code. 17

It is also significant that the lack of authority of herein counsel. Atty. Mendiola, was even raised by the
municipality itself in its comment and opposition to said counsel’s motion for execution of his lien, which
was filed with the court a quo by the office of the Provincial Prosecutor of Rizal in behalf of said
municipality. 18

The contention of Atty. Mendiola that private respondent cannot raise for the first time on appeal his lack
of authority to represent the municipality is untenable. The legality of his representation can be
questioned at any stage of the proceedings. In the cases hereinbefore cited, 19 the issue of lack of
authority of private counsel to represent a municipality was only raised for the first time in the proceedings
for the collection of attorney’s fees for services rendered in the particular case, after the decision in that
case had become final and executory and/or had been duly executed.

Furthermore, even assuming that the representation of the municipality by Atty. Mendiola was duly
authorized, said authority is deemed to have been revoked by the municipality when the latter, through
the municipal mayor and without said counsel’s participation, entered into a compromise agreement with
herein private respondent with regard to the execution of the judgment in its favor and thereafter filed
personally with the court below two pleadings entitled and constitutive of a "Satisfaction of Judgment" and
a "Release and Quitclaim." 20

A client, by appearing personally and presenting a motion by himself, is considered to have impliedly
dismissed his lawyer. Herein counsel cannot pretend to be authorized to continue representing the
municipality since the latter is entitled to dispense with his services at any time. Both at common law and
under Section 26, Rule 138 of the Rules of Court, a client may dismiss his lawyer at any time or at any
stage of the proceedings, and there is nothing to prevent a litigant from appearing before the court to
conduct his own litigation. 21

The client has also an undoubted right to compromise a suit without the intervention of his lawyer. 22
Even the lawyers’ right to fees from their clients may not be invoked by the lawyers themselves as a
ground for disapproving or holding in abeyance the approval of a compromise agreement. The lawyers
concerned can enforce their rights in the proper court in an appropriate proceeding in accordance with the
Rules of Court, but said rights may not be used to prevent the approval of the compromise agreement. 23

The apprehension of herein counsel that it is impossible that the municipality will file a similar petition,
considering that the mayor who controls its legislative body will not take the initiative, is not only
conjectural but without factual basis. Contrary to his pretensions, there is presently a manifestation and
motion pending with the trial court filed by the aforesaid municipal mayor for the withdrawal of the
"Satisfaction of Judgment" and the "Release and Quitclaim" 24 previously filed in the case therein as
earlier mentioned.chanrobles law library

WHEREFORE, the petition at bar is DENIED for lack of merit and the judgment of respondent Court of
Appeals is hereby AFFIRMED.cralawnad

SO ORDERED.
G.R. No. 131512 January 20, 2000

LAND TRANSPORTATION OFFICE [LTO], represented by Assistant Secretary Manuel F. Bruan,

LTO Regional Office, Region X represented by its Regional Director, Timoteo A. Garcia; and LTO
Butuan represented by Rosita G. Sadiaga, its Registrar, petitioners,
vs.
CITY OF BUTUAN, represented in this case by Democrito D. Plaza II, City Mayor, respondents.

VITUG, J.:

The 1987 Constitution enunciates the policy that the territorial and political subdivisions shall enjoy local
autonomy.1 In obedience to that mandate of the fundamental law, Republic Act ("R.A.") No. 7160,
otherwise known as the Local Government Code,2 expresses that the territorial and political subdivisions
of the State shall enjoy genuine and meaningful local autonomy in order to enable them to attain their
fullest development as self-reliant communities and make them more effective partners in the attainment
of national goals, and that it is a basic aim of the State to 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.

While the Constitution seeks to strengthen local units and ensure their viability, clearly, however, it has
never been the intention of that organic law to create an imperuim in imperio and install an infra sovereign
political subdivision independent of a single sovereign state.

The Court is asked in this instance to resolve the issue of whether under the present set up the power of
the Land Registration Office ("LTO") to register, tricycles in particular, as well as to issue licenses for the
driving thereof, has likewise devolved to local government units.

The Regional Trial Court (Branch 2) of Butuan City held3 that the authority to register tricycles, the grant of
the corresponding franchise, the issuance of tricycle drivers' license, and the collection of fees therefor
had all been vested in the Local Government Units ("LGUs"). Accordingly, it decreed the issuance of a
permanent writ of injunction against LTO, prohibiting and enjoining LTO, as well as its employees and
other persons acting in its behalf, from (a) registering tricycles and (b) issuing licenses to drivers of
tricycles. The Court of Appeals, on appeal to it, sustained the trial court.1âwphi1.nêt

The adverse rulings of both the court a quo and the appellate court prompted the LTO to file the instant
petition for review on certiorari to annul and set aside the decision,4 dated 17 November 1997, of the
Court of Appeals affirming the permanent injunctive writ order of the Regional Trial Court (Branch 2) of
Butuan City.

Respondent City of Butuan asserts that one of the salient provisions introduced by the Local Government
Code is in the area of local taxation which allows LGUs to collect registration fees or charges along with,
in its view, the corresponding issuance of all kinds of licenses or permits for the driving of tricycles.

The 1987 Constitution provides:

Each local government unit shall have the power to create its own sources of revenues and to
levy taxes, fees, and charges subject to such guidelines and limitations as the Congress may
provide, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall
accrue exclusively to the local governments.5

Sec. 129 and Section 133 of the Local Government Code read:

Sec. 129. Power to Create Sources or Revenue. — Each local government unit shall exercise its
power to create its own sources of revenue and to levy taxes, fees, and charges subject to the
provisions herein, consistent with the basic policy of local autonomy. Such taxes, fees, and
charges shall accrue exclusively to the local government units.

Sec. 133. Common Limitations on the Taxing Powers of Local Government Units. — Unless
otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities,
and barangays shall not extend to the levy of the following:

xxx xxx xxx

(l) Taxes, fees or charges for the registration of motor vehicles and for the issuance of all kinds of
licenses or permits for the driving thereof, except tricycles.
Relying on the foregoing provisions of the law, the Sangguniang Panglungsod ("SP") of Butuan, on 16
August 1992, passed SP Ordinance No. 916-92 entitled "An Ordinance Regulating the Operation of
Tricycles-for-Hire, providing mechanism for the issuance of Franchise, Registration and Permit, and
imposing Penalties for Violations thereof and for other Purposes." The ordinance provided for, among
other things, the payment of franchise fees for the grant of the franchise of tricycles-for-hire, fees for the
registration of the vehicle, and fees for the issuance of a permit for the driving thereof.

Petitioner LTO explains that one of the functions of the national government that, indeed, has been
transferred to local government units is the franchising authority over tricycles-for-hire of the Land
Transportation Franchising and Regulatory Board ("LTFRB") but not, it asseverates, the authority of LTO
to register all motor vehicles and to issue to qualified persons of licenses to drive such vehicles.

In order to settle the variant positions of the parties, the City of Butuan, represented by its City Mayor
Democrito D. Plaza, filed on 28 June 1994 with the trial court a petition for "prohibition, mandamus,
injunction with a prayer for preliminary restraining order ex-parte" seeking the declaration of the validity of
SP Ordinance No. 962-93 and the prohibition of the registration of tricycles-for-hire and the issuance of
licenses for the driving thereof by the LTO.

LTO opposed the prayer in the petition.

On 20 March 1995, the trial court rendered a resolution; the dispositive portion read:

In view of the foregoing, let a permanent injunctive writ be issued against the respondent Land
Transportation Office and the other respondents, prohibiting and enjoining them, their employees,
officers, attorney's or other persons acting in their behalf from forcing or compelling Tricycles to
be registered with, and drivers to secure their licenses from respondent LTO or secure franchise
from LTFRB and from collecting fees thereon. It should be understood that the registration,
franchise of tricycles and driver's license/permit granted or issued by the City of Butuan are valid
only within the territorial limits of Butuan City.

No pronouncement as to costs.6

Petitioners timely moved for a reconsideration of the above resolution but it was to no avail. Petitioners
then appealed to the Court of Appeals. In its now assailed decision, the appellate court, on 17 November
1997, sustained the trial court. It ruled:

WHEREFORE, the petition is hereby DISMISSED and the questioned permanent injunctive writ
issued by the court a quo dated March 20, 1995 AFFIRMED.7

Coming up to this Court, petitioners raise this sole assignment of error, to wit:

The Court of Appeals [has] erred in sustaining the validity of the writ of injunction issued by the
trial court which enjoined LTO from (1) registering tricycles-for-hire and (2) issuing licenses for the
driving thereof since the Local Government Code devolved only the franchising authority of the
LTFRB. Functions of the LTO were not devolved to the LGU's.8

The petition is impressed with merit.

The Department of Transportation and Communications9 ("DOTC"), through the LTO and the LTFRB, has
since been tasked with implementing laws pertaining to land transportation. The LTO is a line agency
under the DOTC whose powers and functions, pursuant to Article III, Section 4 (d) [1], 10 of R.A. No. 4136,
otherwise known as Land Transportation and Traffic Code, as amended, deal primarily with the
registration of all motor vehicles and the licensing of drivers thereof. The LTFRB, upon the other hand, is
the governing body tasked by E.O. No. 202, dated 19 June 1987, to regulate the operation of public utility
or "for hire" vehicles and to grant franchises or certificates of public convenience ("CPC").11 Finely put,
registration and licensing functions are vested in the LTO while franchising and regulatory responsibilities
had been vested in the LTFRB.

Under the Local Government Code, certain functions of the DOTC were transferred to the LGUs, thusly:

Sec. 458. Powers, Duties, Functions and Compensation. —

xxx xxx xxx

 (3) Subject to the provisions of Book II of this Code, enact ordinances granting franchises and
authorizing the issuance of permits or licenses, upon such conditions and for such purposes
intended to promote the general welfare of the inhabitants of the city and pursuant to this
legislative authority shall:

xxx xxx xxx

(VI) Subject to the guidelines prescribed by the Department of Transportation and

Communications, regulate the operation of tricycles and grant franchises for the operation thereof
within the territorial jurisdiction of the city. (Emphasis supplied).

LGUs indubitably now have the power to regulate the operation of tricycles-for-hire and to grant
franchises for the operation thereof. "To regulate" means to fix, establish, or control; to adjust by rule,
method, or established mode; to direct by rule or restriction; or to subject to governing principles or
laws.12 A franchise is defined to be a special privilege to do certain things conferred by government on an
individual or corporation, and which does not belong to citizens generally of common right. 13 On the other
hand, "to register" means to record formally and exactly, to enroll, or to enter precisely in a list or the
like,14 and a "driver's license" is the certificate or license issued by the government which authorizes a
person to operate a motor vehicle.15 The devolution of the functions of the DOTC, performed by the
LTFRB, to the LGUs, as so aptly observed by the Solicitor General, is aimed at curbing the alarming
increase of accidents in national highways involving tricycles. It has been the perception that local
governments are in good position to achieve the end desired by the law-making body because of their
proximity to the situation that can enable them to address that serious concern better than the national
government.

It may not be amiss to state, nevertheless, that under Article 458 (a)[3-VI] of the Local Government Code,
the power of LGUs to regulate the operation of tricycles and to grant franchises for the operation thereof
is still subject to the guidelines prescribed by the DOTC. In compliance therewith, the Department of
Transportation and Communications ("DOTC") issued "Guidelines to Implement the Devolution of
LTFRBs Franchising Authority over Tricycles-For-Hire to Local Government units pursuant to the Local
Government Code." Pertinent provisions of the guidelines state:

In lieu of the Land Transportation Franchising and Regulatory Board (LTFRB) in the DOTC, the
Sangguniang Bayan/Sangguniang Panglungsod (SB/SP) shall perform the following:

(a) Issue, amend, revise, renew, suspend, or cancel MTOP and prescribe the appropriate
terms and conditions therefor;

xxx xxx xxx

Operating Conditions:

1. For safety reasons, no tricycles should operate on national highways utilized by 4

wheel vehicles greater than 4 tons and where normal speed exceed 40 KPH. However,
the SB/SP may provide exceptions if there is no alternative route.

2. Zones must be within the boundaries of the municipality/city. However, existing zones
within more than one municipality/city shall be maintained, provided that operators
serving said zone shall secure MTOP's from each of the municipalities/cities having
jurisdiction over the areas covered by the zone.

3. A common color for tricycles-for-hire operating in the same zone may be imposed.
Each unit shall be assigned and bear an identification number, aside from its LTO license
plate number.

4. An operator wishing to stop service completely, or to suspend service for more than
one month, should report in writing such termination or suspension to the SB/SP which
originally granted the MTOP prior thereto. Transfer to another zone may be permitted
upon application.

5. The MTOP shall be valid for three (3) years, renewable for the same period. Transfer
to another zone, change of ownership of unit or transfer of MTOP shall be construed as
an amendment to an MTOP and shall require appropriate approval of the SB/SP.

6. Operators shall employ only drivers duly licensed by LTO for tricycles-for-hire.
 7. No tricycle-for-hire shall be allowed to carry more passengers and/or goods than it is
designed for.

8. A tricycle-for-hire shall be allowed to operate like a taxi service, i.e., service is

rendered upon demand and without a fixed route within a zone.16

Such as can be gleaned from the explicit language of the statute, as well as the corresponding guidelines
issued by DOTC, the newly delegated powers pertain to the franchising and regulatory powers
theretofore exercised by the LTFRB and not to the functions of the LTO relative to the registration of
motor vehicles and issuance of licenses for the driving thereof. Clearly unaffected by the Local
Government Code are the powers of LTO under R.A. No. 4136 requiring the registration of all kinds of
motor vehicles "used or operated on or upon any public highway" in the country. Thus —

Sec. 5. All motor vehicles and other vehicles must be registered. — (a) No motor vehicle shall be
used or operated on or upon any public highway of the Philippines unless the same is properly
registered for the current year in accordance with the provisions of this Act (Article 1, Chapter II,
R.A. No. 4136).

The Commissioner of Land Transportation and his deputies are empowered at anytime to
examine and inspect such motor vehicles to determine whether said vehicles are registered, or
are unsightly, unsafe, improperly marked or equipped, or otherwise unfit to be operated on
because of possible excessive damage to highways, bridges and other infrastructures. 17 The LTO
is additionally charged with being the central repository and custodian of all records of all motor
vehicles.18

The Court shares the apprehension of the Solicitor General if the above functions were to
likewise devolve to local government units; he states:

If the tricycle registration function of respondent LTO is decentralized, the incidence of

theft of tricycles will most certainly go up, and stolen tricycles registered in one local
government could be registered in another with ease. The determination of ownership
thereof will also become very difficult.

Fake driver's licenses will likewise proliferate. This likely scenario unfolds where a tricycle
driver, not qualified by petitioner LTO's testing, could secure a license from one
municipality, and when the same is confiscated, could just go another municipality to
secure another license.

Devolution will entail the hiring of additional personnel charged with inspecting tricycles
for road worthiness, testing drivers, and documentation. Revenues raised from tricycle
registration may not be enough to meet salaries of additional personnel and incidental
costs for tools and equipment.19

The reliance made by respondents on the broad taxing power of local government units, specifically
under Section 133 of the Local Government Code, is tangential. Police power and taxation, along with
eminent domain, are inherent powers of sovereignty which the State might share with local government
units by delegation given under a constitutional or a statutory fiat. All these inherent powers are for a
public purpose and legislative in nature but the similarities just about end there. The basic aim of police
power is public good and welfare. Taxation, in its case, focuses an the power of government to raise
revenue in order to support its existence and carry out its legitimate objectives. Although correlative to
each other in many respects, the grant of one does not necessarily carry with it the grant of the other. The
two powers are, by tradition and jurisprudence, separate and distinct powers, varying in their respective
concepts, character, scopes and limitations. To construe the tax provisions of Section 133(1)
indistinctively would result in the repeal to that extent of LTO's regulatory power which evidently has not
been intended. If it were otherwise, the law could have just said so in Section 447 and 458 of Book III of
the Local Government Code in the same manner that the specific devolution of LTFRB's power on
franchising of tricycles has been provided. Repeal by implication is not favored.20 The power over tricycles
granted under Section 458(8)(3)(VI) of the Local Government Code to LGUs is the power to regulate their
operation and to grant franchises for the operation thereof. The exclusionary clause contained in the tax
provisions of Section 133(1) of the Local Government Code must not be held to have had the effect of
withdrawing the express power of LTO to cause the registration of all motor vehicles and the issuance of
licenses for the driving thereof. These functions of the LTO are essentially regulatory in nature, exercised
pursuant to the police power of the State, whose basic objectives are to achieve road safety by insuring
the road worthiness of these motor vehicles and the competence of drivers prescribed by R.A. 4136. Not
insignificant is the rule that a statute must not be construed in isolation but must be taken in harmony with
the extant body of laws.21
The Court cannot end this decision without expressing its own serious concern over the seeming laxity in
the grant of franchises for the operation of tricycles-for-hire and in allowing the indiscriminate use by such
vehicles on public highways and principal thoroughfares. Senator Aquilino C. Pimentel, Jr., the principal
author and sponsor of the bill that eventually has become to be known as the Local Government Code,
has aptly remarked:

Tricycles are a popular means of transportation, specially in the countryside. They are,
unfortunately, being allowed to drive along highways and principal thoroughfares where they pose
hazards to their passengers arising from potential collisions with buses, cars and jeepneys.

The operation of tricycles within a municipality may be regulated by the Sangguniang Bayan. In
this connection, the Sangguniang concerned would do well to consider prohibiting the operation
of tricycles along or across highways invite collisions with faster and bigger vehicles and impede
the flow of traffic.22

The need for ensuring public safety and convenience to commuters and pedestrians alike is
paramount. It might be well, indeed, for public officials concerned to pay heed to a number of
provisions in our laws that can warrant in appropriate cases an incurrence of criminal and civil
liabilities. Thus —

The Revised Penal Code —

Art. 208. Prosecution of offenses; negligence and tolerance. — The penalty of prision
correccional in its minimum period and suspension shall be imposed upon any public officer, or
officer of the law, who, in dereliction of the duties of his office, shall maliciously refrain from
instituting prosecution for the punishment of violators of the law, or shall tolerate the commission
of offenses.

The Civil Code —

Art. 27. Any person suffering material or moral loss because a public servant or employee refuses
or neglects, without just cause, to perform his official duty may file an action for damages and
other relief against the latter, without prejudice to any disciplinary administrative action that may
be taken.1âwphi1.nêt

Art. 34. When a member of a city or municipal police force refuses or fails to render aid or
protection to any person in case of danger to life or property, such peace officer shall be primarily
liable for damages, and the city or municipality shall be subsidiarily responsible therefor. The civil
action herein recognized shall be independent of any criminal proceedings, and a preponderance
of evidence shall suffice to support such action.

Art. 2189. Provinces, cities and municipalities shall be liable for damages for the death of, or
injuries suffered by, any person by reason of the defective condition of roads, streets, bridges,
public buildings, and other public works under their control or supervision.

The Local Government Code —

Sec. 24. Liability for Damages. — Local government units and their officials are not exempt from
liability for death or injury to persons or damage to property.

WHEREFORE, the assailed decision which enjoins the Land Transportation Office from requiring the due
registration of tricycles and a license for the driving thereof is REVERSED and SET ASIDE.

No pronouncements on costs.

Let copies of this decision be likewise furnished the Department of Interior and Local Governments, the
Department of Public Works and Highways and the Department of Transportation and Communication.

SO ORDERED.
G.R. No. 100152 March 31, 2000

ACEBEDO OPTICAL COMPANY, INC., petitioner,

vs.
THE HONORABLE COURT OF APPEALS, Hon. MAMINDIARA MANGOTARA, in his capacity as
Presiding Judge of the RTC, 12th Judicial Region, Br. 1, Iligan City; SAMAHANG OPTOMETRIST
Sa PILIPINAS — Iligan City Chapter, LEO T. CAHANAP, City Legal Officer, and Hon. CAMILO P.
CABILI, City Mayor of Iligan, respondents.

PURISIMA, J.:

At bar is a petition for review under Rule 45 of the Rules of Court seeking to nullify the dismissal by the
Court of Appeals of the original petition for certiorari, prohibition and mandamus filed by the herein
petitioner against the City Mayor and City Legal Officer of Iligan and the Samahang Optometrist sa
Pilipinas — Iligan Chapter (SOPI, for brevity).

The antecedent facts leading to the filing of the instant petition are as follows:

Petitioner applied with the Office of the City Mayor of Iligan for a business permit. After consideration of
petitioner's application and the opposition interposed thereto by local optometrists, respondent City Mayor
issued Business Permit No. 5342 subject to the following conditions:

1. Since it is a corporation, Acebedo cannot put up an optical clinic but only a commercial store;

2. Acebedo cannot examine and/or prescribe reading and similar optical glasses for patients,
because these are functions of optical clinics;

3. Acebedo cannot sell reading and similar eyeglasses without a prescription having first been
made by an independent optometrist (not its employee) or independent optical clinic. Acebedo
can only sell directly to the public, without need of a prescription, Ray-Ban and similar
eyeglasses;

4. Acebedo cannot advertise optical lenses and eyeglasses, but can advertise Ray-Ban and
similar glasses and frames;

5. Acebedo is allowed to grind lenses but only upon the prescription of an independent
optometrist. 1

On December 5, 1988, private respondent Samahan ng Optometrist Sa Pilipinas (SOPI), Iligan Chapter,
through its Acting President, Dr. Frances B. Apostol, lodged a complaint against the petitioner before the
Office of the City Mayor, alleging that Acebedo had violated the conditions set forth in its business permit
and requesting the cancellation and/or revocation of such permit.

Acting on such complaint, then City Mayor Camilo P. Cabili designated City Legal Officer Leo T. Cahanap
to conduct an investigation on the matter. On July 12, 1989, respondent City Legal Officer submitted a
report to the City Mayor finding the herein petitioner guilty of violating all the conditions of its business
permit and recommending the disqualification of petitioner from operating its business in Iligan City. The
report further advised that no new permit shall be granted to petitioner for the year 1989 and should only
be given time to wind up its affairs.

On July 19, 1989, the City Mayor sent petitioner a Notice of Resolution and Cancellation of Business
Permit effective as of said date and giving petitioner three (3) months to wind up its affairs.

On October 17, 1989, petitioner brought a petition for certiorari, prohibition and mandamus with prayer for
restraining order/preliminary injunction against the respondents, City Mayor, City Legal Officer and
Samahan ng Optometrists sa Pilipinas-Iligan City Chapter (SOPI), docketed as Civil Case No. 1497
before the Regional Trial Court of Iligan City, Branch I. Petitioner alleged that (1) it was denied due
process because it was not given an opportunity to present its evidence during the investigation
conducted by the City Legal Officer; (2) it was denied equal protection of the laws as the limitations
imposed on its business permit were not imposed on similar businesses in Iligan City; (3) the City Mayor
had no authority to impose the special conditions on its business permit; and (4) the City Legal Officer
had no authority to conduct the investigation as the matter falls within the exclusive jurisdiction of the
Professional Regulation Commission and the Board of Optometry.
Respondent SOPI interposed a Motion to Dismiss the Petition on the ground of non-exhaustion of
administrative remedies but on November 24, 1989, Presiding Judge Mamindiara P. Mangotara deferred
resolution of such Motion to Dismiss until after trial of the case on the merits. However, the prayer for a
writ of preliminary injunction was granted. Thereafter, respondent SOPI filed its answer.1âwphi1.nêt

On May 30, 1990, the trial court dismissed the petition for failure to exhaust administrative remedies, and
dissolved the writ of preliminary injunction it earlier issued. Petitioner's motion for reconsideration met the
same fate. It was denied by an Order dated June 28, 1990.

On October 3, 1990, instead of taking an appeal, petitioner filed a petition for certiorari, prohibition and
mandamus with the Court of Appeals seeking to set aside the questioned Order of Dismissal, branding
the same as tainted with grave abuse of discretion on the part of the trial court.

On January 24, 1991, the Ninth Division 2 of the Court of Appeals dismissed the petition for lack of merit.
Petitioner's motion reconsideration was also denied in the Resolution dated May 15, 1991.

Undaunted, petitioner has come before this court via the present petition, theorizing that:

A.

THE RESPONDENT COURT, WHILE CORRECTLY HOLDING THAT THE RESPONDENT CITY
MAYOR ACTED BEYOND HIS AUTHORITY IN IMPOSING THE SPECIAL CONDITIONS IN
THE PERMIT AS THEY HAD NO BASIS IN ANY LAW OR ORDINANCE, ERRED IN HOLDING
THAT THE SAID SPECIAL CONDITIONS NEVERTHELESS BECAME BINDING ON
PETITIONER UPON ITS ACCEPTANCE THEREOF AS A PRIVATE AGREEMENT OR
CONTRACT.

B.

THE RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT THE CONTRACT

BETWEEN PETITIONER AND THE CITY OF ILIGAN WAS ENTERED INTO BY THE LATTER
IN THE PERFORMANCE OF ITS PROPRIETARY FUNCTIONS.

The petition is impressed with merit.

Although petitioner agrees with the finding of the Court of Appeals that respondent City Mayor acted
beyond the scope of his authority in imposing the assailed conditions in subject business permit, it has
excepted to the ruling of the Court of Appeals that the said conditions nonetheless became binding on
petitioner, once accepted, as a private agreement or contract. Petitioner maintains that the said special
conditions are null and void for being ultra vires and cannot be given effect; and therefore, the principle of
estoppel cannot apply against it.

On the other hand, the public respondents, City Mayor and City Legal Officer, private respondent SOPI
and the Office of the Solicitor General contend that as a valid exercise of police power, respondent City
Mayor has the authority to impose, as he did, special conditions in the grant of business permits.

Police power as an inherent attribute of sovereignty is the power to prescribe regulations to promote the
health, morals, peace, education, good order or safety and general welfare of the people. 9 The State,
through the legislature, has delegated the exercise of police power to local government units, as agencies
of the State, in order to effectively accomplish and carry out the declared objects of their creation. 4 This
delegation of police power is embodied in the general welfare clause of the Local Government Code
which provides:

Sec. 6. 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.
The scope of police power has been held to be so comprehensive as to encompass almost all matters
affecting the health, safety, peace, order, morals, comfort and convenience of the community. Police
power is essentially regulatory in nature and the power to issue licenses or grant business permits, if
exercised for a regulatory and not revenue-raising purpose, is within the ambit of this power. 5

The authority of city mayors to issue or grant licenses and business permits is beyond cavil. It is provided
for by law. Section 171, paragraph 2 (n) of Batas Pambansa Bilang 337 otherwise known as the Local
Government Code of 1983, reads:

Sec. 171. The City Mayor shall:

xxx xxx xxx

n) Grant or refuse to grant, pursuant to law, city licenses or permits, and revoke the same for
violation of law or ordinance or the conditions upon which they are granted.

However, the power to grant or issue licenses or business permits must always be exercised in
accordance with law, with utmost observance of the rights of all concerned to due process and equal
protection of the law.

Succinct and in point is the ruling of this Court, that:

. . . While a business may be regulated, such regulation must, however, be within the bounds of
reason, i.e., the regulatory ordinance must be reasonable, and its provision cannot be oppressive
amounting to an arbitrary interference with the business or calling subject of regulation. A lawful
business or calling may not, under the guise of regulation, be unreasonably interfered with even
by the exercise of police power. . . .

xxx xxx xxx

. . . The exercise of police power by the local government is valid unless it contravenes the
fundamental law of the land or an act of the legislature, or unless it is against public policy or is
unreasonable, oppressive, partial, discriminating or in derogation of a common right. 6

In the case under consideration, the business permit granted by respondent City Mayor to petitioner was
burdened with several conditions. Petitioner agrees with the holding by the Court of Appeals that
respondent City Mayor acted beyond his authority in imposing such special conditions in its permit as the
same have no basis in the law or ordinance. Public respondents and private respondent SOPI, on the
other hand, are one in saying that the imposition of said special conditions on petitioner's business permit
is well within the authority of the City Mayor as a valid exercise of police power.

As aptly discussed by the Solicitor General in his Comment, the power to issue licenses and permits
necessarily includes the corollary power to revoke, withdraw or cancel the same. And the power to revoke
or cancel, likewise includes the power to restrict through the imposition of certain conditions. In the case
of Austin-Hardware, Inc. vs. Court of Appeals, 7 it was held that the power to license carries with it the
authority to provide reasonable terms and conditions under which the licensed business shall be
conducted. As the Solicitor General puts it:

If the City Mayor is empowered to grant or refuse to grant a license, which is a broader power, it
stands to reason that he can also exercise a lesser power that is reasonably incidental to his
express power, i.e. to restrict a license through the imposition of certain conditions, especially so
that there is no positive prohibition to the exercise of such prerogative by the City Mayor, nor is
there any particular official or body vested with such authority. 8

However, the present inquiry does not stop there, as the Solicitor General believes. The power or
authority of the City Mayor to impose conditions or restrictions in the business permit is indisputable.
What petitioner assails are the conditions imposed in its particular case which, it complains, amount to a
confiscation of the business in which petitioner is engaged.

Distinction must be made between the grant of a license or permit to do business and the issuance of a
license to engage in the practice of a particular profession. The first is usually granted by the local
authorities and the second is issued by the Board or Commission tasked to regulate the particular
profession. A business permit authorizes the person, natural or otherwise, to engage in business or some
form of commercial activity. A professional license, on the other hand, is the grant of authority to a natural
person to engage in the practice or exercise of his or her profession.
In the case at bar, what is sought by petitioner from respondent City Mayor is a permit to engage in the
business of running an optical shop. It does not purport to seek a license to engage in the practice of
optometry as a corporate body or entity, although it does have in its employ, persons who are duly
licensed to practice optometry by the Board of Examiners in Optometry.

The case of Samahan ng Optometrists sa Pilipinas vs. Acebedo International Corporation, G.R. No.
117097, 9 promulgated by this Court on March 21, 1997, is in point. The factual antecedents of that case
are similar to those of the case under consideration and the issue ultimately resolved therein is exactly
the same issue posed for resolution by this Court en banc.

In the said case, the Acebedo International Corporation filed with the Office of the Municipal Mayor an
application for a business permit for the operation of a branch of Acebedo Optical in Candon, Ilocos Sur.
The application was opposed by the Samahan ng Optometrists sa Pilipinas-Ilocos Sur Chapter, theorizing
that Acebedo is a juridical entity not qualified to practice optometry. A committee was created by the
Office of the Mayor to study private respondent's application. Upon recommendation of the said
committee, Acebedo's application for a business permit was denied. Acebedo filed a petition with the
Regional Trial Court but the same was dismissed. On appeal, however, the Court of Appeals reversed the
trial court's disposition, prompting the Samahan ng Optometrists to elevate the matter to this Court.

The First Division of this Court, then composed of Honorable Justice Teodoro Padilla, Josue Bellosillo,
Jose Vitug and Santiago Kapunan, with Honorable Justice Regino Hermosisima, Jr. as ponente, denied
the petition and ruled in favor of respondent Acebedo International Corporation, holding that "the fact that
private respondent hires optometrists who practice their profession in the course of their employment in
private respondent's optical shops, does not translate into a practice of optometry by private respondent
itself," 10 The Court further elucidated that in both the old and new Optometry Law, R.A. No. 1998,
superseded by R.A. No. 8050, it is significant to note that there is no prohibition against the hiring by
corporations of optometrists. The Court concluded thus:

All told, there is no law that prohibits the hiring by corporations of optometrists or considers the
hiring by corporations of optometrists as a practice by the corporation itself of the profession of
optometry.

In the present case, the objective of the imposition of subject conditions on petitioner's business permit
could be attained by requiring the optometrists in petitioner's employ to produce a valid certificate of
registration as optometrist, from the Board of Examiners in Optometry. A business permit is issued
primarily to regulate the conduct of business and the City Mayor cannot, through the issuance of such
permit, regulate the practice of a profession, like that of optometry. Such a function is within the exclusive
domain of the administrative agency specifically empowered by law to supervise the profession, in this
case the Professional Regulations Commission and the Board of Examiners in Optometry.

It is significant to note that during the deliberations of the bicameral conference committee of the Senate
and the House of Representatives on R.A. 8050 (Senate Bill No. 1998 and House Bill No. 14100), the
committee failed to reach a consensus as to the prohibition on indirect practice of optometry by
corporations. The proponent of the bill, former Senator Freddie Webb, admitted thus:

Senator Webb: xxx xxx xxx

The focus of contention remains to be the proposal of prohibiting the indirect practice of
optometry by corporations.1âwphi1 We took a second look and even a third look at the issue in
the bicameral conference, but a compromise remained elusive. 11

Former Senator Leticia Ramos-Shahani likewise voted her reservation in casting her vote:

Senator Shahani: Mr. President.

The optometry bills have evoked controversial views from the members of the panel. While we
realize the need to uplift the standards of optometry as a profession, the consesnsus of both
Houses was to avoid touching sensitive issues which properly belong to judicial determination.
Thus, the bicameral conference committee decided to leave the issue of indirect practice of
optometry and the use of trade names open to the wisdom of the Courts which are vested with
the prerogative of interpreting the laws. 12

From the foregoing, it is thus evident that Congress has not adopted a unanimous position on the matter
of prohibition of indirect practice of optometry by corporations, specifically on the hiring and employment
of licensed optometrists by optical corporations. It is clear that Congress left the resolution of such issue
for judicial determination, and it is therefore proper for this Court to resolve the issue.
Even in the United States, jurisprudence varies and there is a conflict of opinions among the federal
courts as to the right of a corporation or individual not himself licensed, to hire and employ licensed
optometrists. 13

Courts have distinguished between optometry as a learned profession in the category of law and
medicine, and optometry as a mechanical art. And, insofar as the courts regard optometry as merely a
mechanical art, they have tended to find nothing objectionable in the making and selling of eyeglasses,
spectacles and lenses by corporations so long as the patient is actually examined and prescribed for by a
qualified practitioner. 14

The primary purpose of the statute regulating the practice of optometry is to insure that optometrical
services are to be rendered by competent and licensed persons in order to protect the health and
physical welfare of the people from the dangers engendered by unlicensed practice. Such purpose may
be fully accomplished although the person rendering the service is employed by a corporation. 15

Furthermore, it was ruled that the employment of a qualified optometrist by a corporation is not against
public policy. 16 Unless prohibited by statutes, a corporation has all the contractual rights that an individual
has 17 and it does not become the practice of medicine or optometry because of the presence of a
physician or optometrist. 18 The manufacturing, selling, trading and bartering of eyeglasses and
spectacles as articles of merchandise do not constitute the practice of optometry. 19

In the case of Dvorine vs. Castelberg Jewelry Corporation, 20 defendant corporation conducted as part of
its business, a department for the sale of eyeglasses and the furnishing of optometrical services to its
clients. It employed a registered optometrist who was compensated at a regular salary and commission
and who was furnished instruments and appliances needed for the work, as well as an office. In holding
that corporation was not engaged in the practice of optometry, the court ruled that there is no public policy
forbidding the commercialization of optometry, as in law and medicine, and recognized the general
practice of making it a commercial business by advertising and selling eyeglasses.

To accomplish the objective of the regulation, a state may provide by statute that corporations cannot sell
eyeglasses, spectacles, and lenses unless a duly licensed physician or a duly qualified optometrist is in
charge of, and in personal attendance at the place where such articles are sold. 21 In such a case, the
patient's primary and essential safeguard lies in the optometrist's control of the "treatment" by means of
prescription and preliminary and final examination. 22

In analogy, it is noteworthy that private hospitals are maintained by corporations incorporated for the
purpose of furnishing medical and surgical treatment. In the course of providing such treatments, these
corporations employ physicians, surgeons and medical practitioners, in the same way that in the course
of manufacturing and selling eyeglasses, eye frames and optical lenses, optical shops hire licensed
optometrists to examine, prescribe and dispense ophthalmic lenses. No one has ever charged that these
corporations are engaged in the practice of medicine. There is indeed no valid basis for treating
corporations engaged in the business of running optical shops differently.

It also bears stressing, as petitioner has pointed out, that the public and private respondents did not
appeal from the ruling of the Court of Appeals. Consequently, the holding by the Court of Appeals that the
act of respondent City Mayor in imposing the questioned special conditions on petitioner's business
permit is ultra vires cannot be put into issue here by the respondents. It is well-settled that:

A party who has not appealed from the decision may not obtain any affirmative relief from the
appellate court other than what he had obtain from the lower court, if any, whose decision is
brought up on appeal. 23

. . . an appellee who is not an appellant may assign errors in his brief where his purpose is to
maintain the judgment on other grounds, but he cannot seek modification or reversal of the
judgment or affirmative relief unless he has also appealed. 24

Thus, respondents' submission that the imposition of subject special conditions on petitioner's business
permit is not ultra vires cannot prevail over the finding and ruling by the Court of Appeals from which they
(respondents) did not appeal.

Anent the second assigned error, petitioner maintains that its business permit issued by the City Mayor is
not a contract entered into by Iligan City in the exercise of its proprietary functions, such that although
petitioner agreed to such conditions, it cannot be held in estoppel since ultra vires acts cannot be given
effect.
Respondents, on the other hand, agree with the ruling of the Court of Appeals that the business permit in
question is in the nature of a contract between Iligan City and the herein petitioner, the terms and
conditions of which are binding upon agreement, and that petitioner is estopped from questioning the
same. Moreover, in the Resolution denying petitioner's motion for reconsideration, the Court of Appeals
held that the contract between the petitioner and the City of Iligan was entered into by the latter in the
performance of its proprietary functions.

This Court holds otherwise. It had occasion to rule that a license or permit is not in the nature of a
contract but a special privilege.

. . . a license or a permit is not a contract between the sovereignty and the licensee or permitee,
and is not a property in the constitutional sense, as to which the constitutional proscription against
impairment of the obligation of contracts may extend. A license is rather in the nature of a special
privilege, of a permission or authority to do what is within its terms. It is not in any way vested,
permanent or absolute. 25

It is therefore decisively clear that estoppel cannot apply in this case. The fact that petitioner acquiesced
in the special conditions imposed by the City Mayor in subject business permit does not preclude it from
challenging the said imposition, which is ultra vires or beyond the ambit of authority of respondent City
Mayor. Ultra vires acts or acts which are clearly beyond the scope of one's authority are null and void and
cannot be given any effect. The doctrine of estoppel cannot operate to give effect to an act which is
otherwise null and void or ultra vires.

The Court of Appeals erred in adjudging subject business permit as having been issued by responded
City Mayor in the performance of proprietary functions of Iligan City. As hereinabove elaborated upon, the
issuance of business licenses and permits by a municipality or city is essentially regulatory in nature. The
authority, which devolved upon local government units to issue or grant such licenses or permits, is
essentially in the exercise of the police power of the State within the contemplation of the general welfare
clause of the Local Government Code.

WHEREFORE, the petition is GRANTED; the Decision of the Court of Appeals in CA-GR SP No. 22995
REVERSED: and the respondent City Mayor is hereby ordered to reissue petitioner's business permit in
accordance with law and with this disposition. No pronouncement as to costs.

SO ORDERED.
G.R. No. 129093 August 30, 2001

HON. JOSE D. LINA, JR., SANGGUNIANG PANLALAWIGAN OF LAGUNA, and HON. CALIXTO
CATAQUIZ, petitioners,
vs.
HON. FRANCISCO DIZON PAÑO and TONY CALVENTO, respondents.

QUISUMBING, J.:

For our resolution is a petition for review on certiorari seeking the reversal of the decision 1 dated
February 10, 1997 of the Regional Trial Court of San Pedro, Laguna, Branch 93, enjoining petitioners
from implementing or enforcing Kapasiyahan Bilang 508, Taon 1995, of the Sangguniang Panlalawigan of
Laguna and its subsequent Order 2 dated April 21, 1997 denying petitioners' motion for reconsideration.

On December 29, 1995, respondent Tony Calvento was appointed agent by the Philippine Charity
Sweepstakes Office (PCSO) to install Terminal OM 20 for the operation of lotto. He asked Mayor Calixto
Cataquiz, Mayor of San Pedro, Laguna, for a mayor's permit to open the lotto outlet. This was denied by
Mayor Cataquiz in a letter dated February 19, 1996. The ground for said denial was an ordinance passed
by the Sangguniang Panlalawigan of Laguna entitled Kapasiyahan Blg. 508, T. 1995 which was issued on
September 18, 1995. The ordinance reads:

ISANG KAPASIYAHAN TINUTUTULAN ANG MGA "ILLEGAL GAMBLING" LALO NA ANG

LOTTO SA LALAWIGAN NG LAGUNA

SAPAGKA'T, ang sugal dito sa lalawigan ng Laguna ay talamak na;

SAPAGKA'T, ang sugal ay nagdudulot ng masasamang impluwensiya lalo't higit sa mga

kabataan;

KUNG KAYA'T DAHIL DITO, at sa mungkahi nina Kgg. Kgd. Juan M. Unico at Kgg. Kgd. Gat-Ala
A. Alatiit, pinangalawahan ni Kgg. Kgd. Meliton C. Larano at buong pagkakaisang sinangayunan
ng lahat ng dumalo sa pulong;

IPINASIYA, na tutulan gaya ng dito ay mahigpit na TINUTUTULAN ang ano mang uri ng sugal
dito sa lalawigan ng Laguna lalo't higit ang Lotto;

IPINASIYA PA RIN na hilingin tulad ng dito ay hinihiling sa Panlalawigang pinuno ng Philippine

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

As a result of this resolution of denial, respondent Calvento filed a complaint for declaratory relief with
prayer for preliminary injunction and temporary restraining order. In the said complaint, respondent
Calvento asked the Regional Trial Court of San Pedro Laguna, Branch 93, for the following reliefs: (1) a
preliminary injunction or temporary restraining order, ordering the defendants to refrain from implementing
or enforcing Kapasiyahan Blg. 508, T. 1995; (2) an order requiring Hon. Municipal Mayor Calixto R
Cataquiz to issue a business permit for the operation of a lotto outlet; and (3) an order annulling or
declaring as invalid Kapasiyahan Blg. 508, T. 1995.

On February 10, 1997, the respondent judge, Francisco Dizon Paño, promulgated his decision enjoining
the petitioners from implementing or enforcing resolution or Kapasiyahan Blg. 508, T. 1995. The
dispositive portion of said decision reads:

WHEREFORE, premises considered, defendants, their agents and representatives are hereby
enjoined from implementing or enforcing resolution or kapasiyahan blg. 508, T. 1995 of the
Sangguniang Panlalawigan ng Laguna prohibiting the operation of the lotto in the province of
Laguna.

SO ORDERED.4

Petitioners filed a motion for reconsideration which was subsequently denied in an Order dated April 21,
1997, which reads:

Acting on the Motion for Reconsideration filed by defendants Jose D. Lina, Jr. and the
Sangguniang Panlalawigan of Laguna, thru counsel, with the opposition filed by plaintiff's counsel
 and the comment thereto filed by counsel for the defendants which were duly noted, the Court
hereby denies the motion for lack of merit.

SO ORDERED.5

On May 23, 1997, petitioners filed this petition alleging that the following errors were committed by the
respondent trial court:

THE TRIAL COURT ERRED IN ENJOINING THE PETITIONERS FROM IMPLEMENTING

KAPASIYAHAN BLG. 508, T. 1995 OF THE SANGGUNIANG PANLALAWIGAN OF LAGUNA
PROHIBITING THE OPERATION OF THE LOTTO IN THE PROVINCE OF LAGUNA.

II

THE TRIAL COURT FAILED TO APPRECIATE THE ARGUMENT POSITED BY THE

PETITIONERS THAT BEFORE ANY GOVERNMENT PROJECT OR PROGRAM MAY BE
IMPLEMENTED BY THE NATIONAL AGENCIES OR OFFICES, PRIOR CONSULTATION AND
APPROVAL BY THE LOCAL GOVERNMENT UNITS CONCERNED AND OTHER CONCERNED
SECTORS IS REQUIRED.

Petitioners contend that the assailed resolution is a valid policy declaration of the Provincial Government
of Laguna of its vehement objection to the operation of lotto and all forms of gambling. It is likewise a
valid exercise of the provincial government's police power under the General Welfare Clause of Republic
Act 7160, otherwise known as the Local Government Code of 1991. 6 They also maintain that
respondent's lotto operation is illegal because no prior consultations and approval by the local
government were sought before it was implemented contrary to the express provisions of Sections 2 (c)
and 27 of R.A. 7160.7

For his part, respondent Calvento argues that the questioned resolution is, in effect, a curtailment of the
power of the state since in this case the national legislature itself had already declared lotto as legal and
permitted its operations around the country.8 As for the allegation that no prior consultations and approval
were sought from the sangguniang panlalawigan of Laguna, respondent Calvento contends this is not
mandatory since such a requirement is merely stated as a declaration of policy and not a self-executing
provision of the Local Government Code of 1991.9 He also states that his operation of the lotto system is
legal because of the authority given to him by the PCSO, which in turn had been granted a franchise to
operate the lotto by Congress.10

The Office of the Solicitor General (OSG), for the State, contends that the Provincial Government of
Laguna has no power to prohibit a form of gambling which has been authorized by the national
government.11 He argues that this is based on the principle that ordinances should not contravene
statutes as municipal governments are merely agents of the national government. The local councils
exercise only delegated legislative powers which have been conferred on them by Congress. This being
the case, these councils, as delegates, cannot be superior to the principal or exercise powers higher than
those of the latter. The OSG also adds that the question of whether gambling should be permitted is for
Congress to determine, taking into account national and local interests. Since Congress has allowed the
PCSO to operate lotteries which PCSO seeks to conduct in Laguna, pursuant to its legislative grant of
authority, the province's Sangguniang Panlalawigan cannot nullify the exercise of said authority by
preventing something already allowed by Congress.

The issues to be resolved now are the following: (1) whether Kapasiyahan Blg. 508, T. 1995 of the
Sangguniang Panlalawigan of Laguna and the denial of a mayor's permit based thereon are valid; and (2)
whether prior consultations and approval by the concerned Sanggunian are needed before a lotto system
can be operated in a given local government unit.

The entire controversy stemmed from the refusal of Mayor Cataquiz to issue a mayor's permit for the
operation of a lotto outlet in favor of private respondent. According to the mayor, he based his decision on
an existing ordinance prohibiting the operation of lotto in the province of Laguna. The ordinance,
however, merely states the "objection" of the council to the said game. It is but a mere policy statement
on the part of the local council, which is not self-executing. Nor could it serve as a valid ground to prohibit
the operation of the lotto system in the province of Laguna. Even petitioners admit as much when they
stated in their petition that:

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

As a policy statement expressing the local government's objection to the lotto, such resolution is valid.
This is part of the local government's autonomy to air its views which may be contrary to that of the
national government's. However, this freedom to exercise contrary views does not mean that local
governments may actually enact ordinances that go against laws duly enacted by Congress. Given this
premise, the assailed resolution in this case could not and should not be interpreted as a measure or
ordinance prohibiting the operation of lotto.

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

SECTION 1. The Philippine Charity Sweepstakes Office. — The Philippine Charity Sweepstakes
Office, hereinafter designated the Office, shall be the principal government agency for raising and
providing for funds for health programs, medical assistance and services and charities of national
character, and as such shall have the general powers conferred in section thirteen of Act
Numbered One thousand four hundred fifty-nine, as amended, and shall have the authority:

A. To hold and conduct charity sweepstakes races, lotteries, and other similar activities, in such
frequency and manner, as shall be determined, and subject to such rules and regulations as shall
be promulgated by the Board of Directors.

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

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

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

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

Nothing in the present constitutional provision enhancing local autonomy dictates a different conclusion.

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

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

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

As for the second issue, we hold that petitioners erred in declaring that Sections 2 (c) and 27 of Republic
Act 7160, otherwise known as the Local Government Code of 1991, apply mandatorily in the setting up of
lotto outlets around the country. These provisions state:

SECTION 2. Declaration of Policy. — . . .

(c) It is likewise the policy of the State to require all national agencies and offices to conduct
periodic consultations with appropriate local government units, non-governmental and people's
organizations, and other concerned sectors of the community before any project or program is
implemented in their respective jurisdictions.

SECTION 27. Prior Consultations Required. — No project or program shall be implemented by

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

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

Section 27 of the Code should be read in conjunction with Section 26 thereof. 17 Section 26 reads:

SECTION 26. Duty of National Government Agencies in the Maintenance of Ecological Balance. -
It shall be the duty of every national agency or government-owned or controlled corporation
authorizing or involved in the planning and implementation of any project or program that may
cause pollution, climatic change, depletion of non-renewable resources, loss of crop land, range-
land, or forest cover, and extinction of animal or plant species, to consult with the local
government units, nongovernmental organizations, and other sectors concerned and explain the
goals and objectives of the project or program, its impact upon the people and the community in
terms of environmental or ecological balance, and the measures that will be undertaken to
prevent or minimize the adverse effects thereof.

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

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

In sum, we find no reversible error in the RTC decision enjoining Mayor Cataquiz from enforcing or
implementing the Kapasiyahan Blg. 508, T. 1995, of the Sangguniang Panlalawigan of Laguna. That
resolution expresses merely a policy statement of the Laguna provincial board. It possesses no binding
legal force nor requires any act of implementation. It provides no sufficient legal basis for respondent
mayor's refusal to issue the permit sought by private respondent in connection with a legitimate business
activity authorized by a law passed by Congress.
WHEREFORE, the petition is DENIED for lack of merit. The Order of the Regional Trial Court of San
Pedro, Laguna enjoining the petitioners from implementing or enforcing Resolution or Kapasiyahan Blg.
508, T. 1995, of the Provincial Board of Laguna is hereby AFFIRMED. No costs.

SO ORDERED.