philippine society for the prevention of cruelty to animals vs

8/3/2019 Philippine Society for the Prevention Of Cruelty to Animals Vs

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PHILIPPINE SOCIETY FOR THE PREVENTIONOF CRUELTY TO ANIMALS vs. COA.

G.R. No. 169752 September 25, 2007

Austria-Martinez, J

Facts:The petitioner was incorporated as a juridical entity over one hundred years ago by virtue

of Act No. 1285, enacted on January 19, 1905, by the Philippine Commission. The petitioner, atthe time it was created, was composed of animal aficionados and animal propagandists. The

objects of the petitioner, as stated in Section 2 of its charter, shall be to enforce laws relating to

cruelty inflicted upon animals or the protection of animals in the Philippine Islands, and

generally, to do and perform all things which may tend in any way to alleviate the suffering of

animals and promote their welfare. At the time of the enactment of Act No. 1285, the originalCorporation Law, Act No. 1459, was not yet in existence. Act No. 1285 antedated both the

Corporation Law and the constitution of the Securities and Exchange Commission. Important tonote is that the nature of the petitioner as a corporate entity is distinguished from the

Sociedadanonimas under the Spanish Code of Commerce. For the purpose of enhancing its

powers in promoting animal welfare and enforcing laws for the protection of animals, the

petitioner was initially imbued under its charter with the power to apprehend violators of animalwelfare laws. In addition, the petitioner was to share one-half (1/2) of the fines imposed and

collected through its efforts for violations of the laws related thereto. As originally worded,

Sections 4and 5 of Act No. 1285 provide: Subsequently, however, the power to make arrests aswell as the privilege to retain a portion of the fines collected for violation of animal-related laws

were recalled by virtue of Commonwealth Act (C.A.) No. 148, which reads, in its entirety, thus:Immediately thereafter, then President Manuel L. Quezon issued Executive Order(E.O.) No. 63

dated November 12, 1936, portions of which provide: Whereas, during the first regular sessionof the National Assembly, Commonwealth Act Numbered One Hundred Forty Eight was enacted

depriving the agents of the Society for the Prevention of Cruelty to Animals of their power to

arrest persons who have violated the laws prohibiting cruelty to animals thereby correcting aserious defect in one of the laws existing in our statute books .Whereas, the cruel treatment of

animals is an offense against the State, penalized under our statutes, which the Government is

duty bound to enforce; By this when the COA was to perform an audit on them they refuse to doso, by the reason that they are a private entity and not under the said commission. On the

other hand the COA decided that they are a government entity.

Issue: is the said petitioner a private entity?

Ruling:


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First , the Court agrees with the petitioner that the charter test cannot be applied. Essentially,

the charter test as it stands today provides:[T]he test to determine whether a corporation isgovernment owned or controlled, or private in nature is simple.

Is it created by its own charter for the exercise of a public function, or by incorporation under the

general corporation law? Those with special charters are government corporations subject to itsprovisions, and its employees are under the jurisdiction of the Civil Service Commission, and are

compulsory members of the Government Service Insurance System. The petitioner is correct instating that the charter test is predicated, at best, on the legal regime established by the 1935

Constitution, Section 7, Article XIII, which states: Sec. 7. The National Assembly shall not,

except by general law, provide for the formation, organization, or regulation of privatecorporations, unless such corporations are owned or controlled by the Government or any

subdivision or instrumentality thereof. During the formulation of the 1935 Constitution, the

Committee on Franchises recommended the foregoing proscription to prevent the pressure of

special interests upon the lawmaking body in the creation of corporations or in the regulation ofthe same. To permit the lawmaking body by special law to provide for the organization,

formation, or regulation of private corporations would be in effect to offer to it the temptation inmany cases to favor certain groups, to the prejudice of others or to the prejudice of the interestsof the country. And since the underpinnings of the charter test had been introduced by the1935Constitution and not earlier, it follows that the test cannot apply to the petitioner, which was

incorporated by virtue of Act No. 1285, enacted on January 19, 1905.Settled is the rule that laws

in general have no retroactive effect, unless the contrary is provided. All statutes are to beconstrued as having only a prospective operation, unless the purpose and intention of the

legislature to give them a retrospective effect is expressly declared or is necessarily implied from

the language used. In case of doubt, the doubt must be resolved against the retrospective effect.

There are a few exceptions. Statutes can be given retroactive effect in the following cases: (1)when the law itself so expressly provides; (2) in case of remedial statutes; (3) in case of curative

statutes; (4) in case of laws interpreting others; and(5) in case of laws creating new rights. None

of the exceptions is present in the instant case.

As a curative statute, and based on the doctrines so far discussed, C.A. No.148 has to be given

retroactive effect, thereby freeing all doubt as to which class of corporations the petitionerbelongs, that is, it is a quasi-public corporation, a kind of private domestic corporation, which the

Court will further elaborate on under the fourth point. The general principle of prospectivity of

the law likewise applies to Act No. 1459,otherwise known as the Corporation Law, which had

been enacted by virtue of the plenary powers of the Philippine Commission on March 1, 1906, alittle over a yearafter January 19, 1905, the time the petitioner emerged as a juridical entity.

Eventhe Corporation Law respects the rights and powers of juridical entities

organizedbeforehand

Second , a reading of petitioners charter shows that it is not subject to controlor supervision by

any agency of the State, unlike government-owned and -controlledcorporations. No governmentrepresentative sits on the board of trustees of thepetitioner. Like all private corporations, the

successors of its members aredetermined voluntarily and solely by the petitioner in accordance


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with its by-laws,and may exercise those powers generally accorded to private corporations, such

asthe powers to hold property, to sue and be sued, to use a common seal, and soforth. It mayadopt by-laws for its internal operations: the petitioner shall bemanaged or operated by its

officers in accordance with its by-laws in force. Thepertinent provisions of the charter provide:

Section 1. Anna L. Ide, Kate S. Wright, John L. Chamberlain, William F. Tucker,Mary S.Fergusson, Amasa S. Crossfield, Spencer Cosby, Sealy B. Rossiter, RichardP. Strong, Jose

Robles Lahesa, Josefina R. de Luzuriaga, and such other persons asmay be associated with themin conformity with this act, and their successors, arehereby constituted and created a body politic

and corporate at law, under the nameand style of The Philippines Society for the Prevention of

Cruelty to Animals.

As incorporated by this Act, said society shall have the power to add to itsorganization such and

as many members as it desires, to provide for and choosesuch officers as it may deem advisable,

and in such manner as it may wish,and to remove members as it shall provide.It shall have theright to sue and be sued, to use a common seal, to receivelegacies and donations, to conduct

social enterprises for the purpose of obtaining funds, to levy dues upon its members and providefor their collection tohold real and personal estate such as may be necessary for theaccomplishment of the purposes of the society, and to adopt such by-laws for its government as

maynot be inconsistent with law or this charter.xxxxSec. 3. The said society shall be operated

under the direction of its officers, inaccordance with its by-laws in force, and thischarter.xxxxSec. 6. The principal office of the society shall be kept in the city of Manila, and

thesociety shall have full power to locate and establish branch offices of the societywherever it

may deem advisable in the Philippine Islands, such branch offices to beunder the supervision and

control of the principal office.

Third . The employees of the petitioner are registered and covered by theSocial Security System

at the latters initiative, and not through the GovernmentService Insurance System, which shouldbe the case if the employees are consideredgovernment employees. This is another indication of

petitioners nature as a privateentity. Section 1 of Republic Act No.1161, as amended by

Republic Act No. 8282,otherwise known as the Social Security Act of 1997, defines theemployer:Employer Any person, natural or juridical, domestic or foreign, who carries on inthe

Philippines any trade, business, industry, undertaking or activity of any kind anduses the services

of another person who is under his orders as regards theemployment,except the Government andany of its political subdivisions, branchesor instrumentalities, including corporations owned or

controlled by the Government :Provided, That a self-employed person shall be both employee

and employer at thesame time. (Emphasis supplied)

Fourth. The respondents contend that the petitioner is a body politic because its primary

purpose is to secure the protection and welfare of animals which,in turn, redounds to the public

good.This argument, is, at best, specious. The fact that a certain juridical entity isimpressed with

public interest does not, by that circumstance alone, make the entitya public corporation,inasmuch as a corporation may be private although its chartercontains provisions of a public

character, incorporated solely for the public good.This class of corporations may be considered


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quasi-public corporations, which areprivate corporations that render public service, supply public

wants, or pursue othereleemosynary objectives. While purposely organized for the gain orbenefit of itsmembers, they are required by law to discharge functions for the public

benefit.Examples of these corporations are utility, railroad, warehouse, telegraph,

telephone,water supply corporations and transportation companies. It must be stressed that

aquasi-public corporationis a species of private corporations, but the qualifyingfactor is the typeof service the former renders to the public: if it performs a publicservice, then it becomes a

quasi-public corporation.Authorities are of the view that the purpose alone of the corporation

cannot betaken as a safe guide, for the fact is that almost all corporations are nowadayscreated topromote the interest, good, or convenience of the public. A bank, forexample, is a private

corporation; yet, it is created for a public benefit. Privateschools and universities are likewise

private corporations; and yet, they arerendering public service. Private hospitals and wards arecharged with heavy socialresponsibilities. More so with all common carriers. On the other hand,

there mayexist a public corporation even if it is endowed with gifts or donations from

privateindividuals.The true criterion, therefore, to determine whether a corporation is public

orprivate is found in the totality of the relation of the corporation to the State. If thecorporation is

created by the State as the latters own agency or instrumentality tohelp it in carrying out itsgovernmental functions, then that corporation is consideredpublic; otherwise, it is private.

Applying the above test, provinces, chartered cities,and

barangayscan best exemplify public corporations. They are created by theState as its own device

and agency for the accomplishment of parts of its own publicworks.It is clear that theamendments introduced by C.A. No. 148 revoked thepowers of the petitioner to arrest offenders

of animal welfare laws and the power toserve processes in connection therewith.

Fifth. The respondents argue that since the charter of the petitioner requiresthe latter to renderperiodic reports to the Civil Governor, whose functions have beeninherited by the President, the

petitioner is, therefore, a governmentinstrumentality.This contention is inconclusive. By virtue of

the fiction that all corporationsowe their very existence and powers to the State, the reportorialrequirement isapplicable to all corporations of whatever nature, whether they are public, quasi-

public, or private corporationsas creatures of the State, there is a reserved right inthe legislatureto investigate the activities of a corporation to determine whether itacted within its powers. In

other words, the reportorial requirement is the principalmeans by which the State may see to it

that its creature acted according to thepowers and functions conferred upon it. These principles

were extensively discussedin Bataan Shipyard & Engineering Co., Inc. v. PresidentialCommission on Good Government . Here, the Court, in holding that the subject corporation

could notinvoke the right against self-incrimination whenever the State demanded theproduction

of its corporate books and papers, extensively discussed the purpose of reportorialrequirements,viz :xxx The corporation is a creature of the state. It is presumed to be incorporated

forthe benefit of the public. It received certain special privileges and franchises, andholds them

subject to the laws of the state and the limitations of its charter. Itspowers are limited by law. Itcan make no contract not authorized by its charter. Itsrights to act as a corporation are only


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preserved to it so long as it obeys the laws of its creation. There is a reserve[d] right in the

legislature to investigate its contractsand find out whether it has exceeded its powers.

It would be a strange anomaly tohold that a state, having chartered a corporation to make use ofcertain franchises,could not, in the exercise of sovereignty, inquire how these franchises hadbeenemployed, and whether they had been abused, and demand the production of thecorporate

books and papers for that purpose. The defense amounts to this, that anofficer of the corporation

which is charged with a criminal violation of the statutemay plead the criminality of such

corporation as a refusal to produce its books. Tostate this proposition is to answer it. While anindividual may lawfully refuse toanswer incriminating questions unless protected by an

immunity statute, it does not follow that a corporation vested with special privileges and

franchises may refuse toshow its hand when charged with an abuse of such privileges . (Wilson

v. UnitedStates, 55 Law Ed., 771, 780.)

EN BANC

G.R. No. 80391 February 28, 1989

SULTAN ALIMBUSAR P. LIMBONA, petitioner,

vs.

CONTE MANGELIN, SALIC ALI, SALINDATO ALI, PILIMPINAS CONDING,

ACMAD TOMAWIS, GERRY TOMAWIS, JESUS ORTIZ, ANTONIO DELA FUENTE,DIEGO PALOMARES, JR., RAUL DAGALANGIT, and BIMBO SINSUAT, respondents.

Ambrosio Padilla, Mempin & Reyes Law Offices for petitioner petitioner.

Makabangkit B. Lanto for respondents.

SARMIENTO, J.:

Facts: Petitioner, Sultan Alimbusar Limbona, was elected Speaker of the Regional LegislativeAssembly or Batasang Pampook of Central Mindanao (Assembly). On October 21, 1987

Congressman Datu Guimid Matalam, Chairman of the Committee on Muslim Affairs of the

House of Representatives, invited petitioner in his capacity as Speaker of the Assembly ofRegion XII in a consultation/dialogue with local government officials. Petitioner accepted the

invitation and informed the Assembly members through the Assembly Secretary that there shall

be no session in November as his presence was needed in the house committee hearing ofCongress. However, on November 2, 1987, the Assembly held a session in defiance of the


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Limbona's advice, where he was unseated from his position. Petitioner prays that the session's

proceedings be declared null and void and be it declared that he was still the Speaker of theAssembly. Pending further proceedings of the case, the SC received a resolution from the

Assembly expressly expelling petitioner's membership therefrom. Respondents argue that

petitioner had "filed a case before the Supreme Court against some members of the Assembly on

a question which should have been resolved within the confines of the Assembly," for which therespondents now submit that the petition had become "moot and academic" because its

resolution.

Issue: Whether or not the courts of law have jurisdiction over the autonomous governments or

regions. What is the extent of self-government given to the autonomous governments of Region

XII?

Held: Autonomy is either decentralization of administration or decentralization of power. There

is decentralization of administration when the central government delegates administrative

powers to political subdivisions in order to broaden the base of government power and in theprocess to make local governments "more responsive and accountable". At the same time, it

relieves the central government of the burden of managing local affairs and enables it toconcentrate on national concerns. The President exercises "general supervision" over them, butonly to "ensure that local affairs are administered according to law." He has no control over their

acts in the sense that he can substitute their judgments with his own. Decentralization of power,

on the other hand, involves an abdication of political power in the favor of local governments

units declared to be autonomous. In that case, the autonomous government is free to chart its

own destiny and shape its future with minimum intervention from central authorities.

An autonomous government that enjoys autonomy of the latter category [CONST. (1987), Art.X, Sec. 15.] is subject alone to the decree of the organic act creating it and accepted principles on

the effects and limits of "autonomy." On the other hand, an autonomous government of the

former class is, as we noted, under the supervision of the national government acting through the

President (and the Department of Local Government). If the Sangguniang Pampook (of RegionXII), then, is autonomous in the latter sense, its acts are, debatably beyond the domain of this

Court in perhaps the same way that the internal acts, say, of the Congress of the Philippines are

beyond our jurisdiction. But if it is autonomous in the former category only, it comes unarguably

under our jurisdiction. An examination of the very Presidential Decree creating the autonomousgovernments of Mindanao persuades us that they were never meant to exercise autonomy in the

second sense (decentralization of power). PD No. 1618, in the first place, mandates that "[t]he

President shall have the power of general supervision and control over Autonomous Regions."Hence, we assume jurisdiction. And if we can make an inquiry in the validity of the expulsion in

question, with more reason can we review the petitioner's removal as Speaker.


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This case involves the application of a most important constitutional policy and principle, that of

local autonomy. We have to obey the clear mandate on local autonomy.

Where a law is capable of two interpretations, one in favor of centralized power in Malacaang

and the other beneficial to local autonomy, the scales must be weighed in favor of autonomy.

Upon the facts presented, we hold that the November 2 and 5, 1987 sessions were invalid. It is

true that under Section 31 of the Region XII Sanggunian Rules, "[s]essions shall not be

suspended or adjourned except by direction of the Sangguniang Pampook". But while this

opinion is in accord with the respondents' own, we still invalidate the twin sessions in question,

since at the time the petitioner called the "recess," it was not a settled matter whether or not hecould do so. In the second place, the invitation tendered by the Committee on Muslim Affairs of

the House of Representatives provided a plausible reason for the intermission sought. Also,assuming that a valid recess could not be called, it does not appear that the respondents called his

attention to this mistake. What appears is that instead, they opened the sessions themselves

behind his back in an apparent act of mutiny. Under the circumstances, we find equity on his

side. For this reason, we uphold the "recess" called on the ground of good faith.

EN BANC

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.:


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Facts: The Philippine Amusement and Gaming Corporation (PAGCOR) is a corporation created

directly by Presidential Decree 1869 to help centralize and regulate all games of chance,including casinos on land and sea within the territorial jurisdiction of the Philippines (the

constitutionality of the decree was sustained in Basco v. Philippine Amusements and Gambling

Corporation). 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 withthe police power under what is known as the General Welfare Clause embodied in Section 16. Its

Sangguniang Panglungsod derives its powers, duties and functions under Section 458 of said

Code. In 1992, following its success in several cities, PAGCOR decided to expand its operationsto Cagayan de Oro City. To this end, it leased a portion of a building belonging to Pryce

Properties Corporation Inc., renovated and equipped the same, and prepared to inaugurate its

casino there during the Christmas season. The reaction of the Sangguniang Panlungsod ofCagayan de Oro City was swift and hostile. On 7 December 1992, it enacted Ordinance 3353

(An Ordinance Prohibiting the issuance of business permit and canceling existing business

permit to any establishment for the using and allowing to be used its premises or portion thereof

for the operation of Casino). On 4 January 1993, it adopted a sterner Ordinance 3375-93 (An

Ordinance prohibiting the operation of Casino and providing penalty for violation therefore).Pryce assailed the ordinances before the Court of Appeals, where it was joined by PAGCOR as

intervenor and supplemental petitioner. The Court found the ordinances invalid and issued thewrit prayed for to prohibit their enforcement. Reconsideration of the decision was denied on 13

July 1993. Cagayan de Oro City and its mayor filed a petition for review under Rules of Court

with the Supreme Court.

Issue: Whether the Sangguniang Panlungsod of Cagayan de Oro can prohibit the establishment

of a casino, or gambling, operated by PAGCOR through an ordinance or resolution.

Held: The morality of gambling is not 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. Itis 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.Further, there are 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 suggestion that the Local Government Code (LGC) authorize Local

Government Units (LGUs) to prohibit all kinds of gambling would erase the distinction betweenthese two forms of gambling without a clear indication that this is the will of legislature.

Ordinances should not contravene a statute as 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 theprincipal or exercise powers higher than those of the latter.


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Laguna Lake Development Authority vs CA

Date: December 7, 1995

Petitioner: Laguna Lake Development Authority

Respondents: CA, Hon. Judge Herculano Tech, Fleet Development Inc and Carlito Arroyo

Ponente: Hermosisima Jr

Facts: RA 4850 was enacted creating the "Laguna Lake Development Authority." This agency

was supposed to accelerate the development and balanced growth of the Laguna Lake area andthe surrounding provinces, cities and towns, in the act, within the context of the national and

regional plans and policies for social and economic development.

PD 813 amended certain sections RA 4850 because of the concern for the rapid expansion of

Metropolitan Manila, the suburbs and the lakeshore towns of Laguna de Bay, combined withcurrent and prospective uses of the lake for municipal-industrial water supply, irrigation,

fisheries, and the like. To effectively perform the role of the Authority under RA 4850, the ChiefExecutive issued EO 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 EO 927which include in particular the sharing of fees:

Sec 2: xxx 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.

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 governmentagencies 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 theimplementation 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.


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Then came Republic Act No. 7160. The municipalities in the Laguna Lake Region interpreted

the provisions of this law to mean that the newly passed law gave municipal governments theexclusive 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 exclusiveauthority to grant fishery privileges in the municipal waters and impose rental fees or charges

therefor in accordance with the provisions of this Section.

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 fishcagesto the consternation of the Authority. Unregulated fishpens and fishcages occupied almost one-

third the entire lake water surface area, increasing the occupation drastically from 7,000 ha in

1990 to almost 21,000 ha 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 theLaguna Lake carrying capacity. In view of the foregoing circumstances, the Authority served

notice to the general public 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 filedwith Laguna Lake Development Authority as of March 31, 1993 are hereby declared outrightlyas illegal.

2. All fishpens; fishcages and other aqua-culture structures so declared as illegal shall be subjectto 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 LLDAwhy 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.

The fishpen owners filed injunction cases against the LLDA. The LLDA filed motions to dismiss

the cases against it on jurisdictional grounds. The motions to dismiss were denied. Meanwhile,TRO/writs of preliminary mandatory injunction were issued enjoining the LLDA from


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demolishing the fishpens and similar structures in question. Hence, the present petition for

certiorari, prohibition and injunction. The CA dismissed the LLDAs consolidated petitions. Itruled that (A) LLDA is not among those quasi-judicial agencies of government 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 of1991; (D) in view of the aforesaid repeal, the power to grant permits devolved to respective local

government units concerned.

Issue: Which agency of the Government - the LLDA or the towns and municipalities comprising

the region - should exercise jurisdiction over the Laguna Lake and its environs insofar as theissuance of permits for fishery privileges is concerned?

Held: LLDA

Ratio: Section 4 (k) of RA 4850, the provisions of PD 813, and Section 2 of EO 927, specifically

provide that the LLDA shall have exclusive jurisdiction to issue permits for the use or 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, RA 7160 has granted to themunicipalities 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.

The provisions of RA7160 do not necessarily repeal the laws creating the LLDA and grantingthe latter water rights authority over Laguna de Bay and the lake region. The Local GovernmentCode 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 bemade clear and expressed.

It has to be conceded that the charter of the LLDA constitutes a special law. RA 7160 is a

general law. It is basic 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 rulein 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 toinclude the cases embraced in the special law." Where there is a conflict between a general law

and a special statute, the special statute should prevail since it evinces the legislative intent more

clearly that the general statute. The special law is to be taken as an exception to the general lawin the absence of special circumstances forcing a contrary conclusion. This is because implied


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repeals are not favored and as much as possible, given to all enactments of the legislature. A

special law cannot be repealed, amended or altered by a subsequent general law by mere

implication. 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 LLDA that "Laguna de Bay, like any other singlebody of water has its own unique natural ecosystem. The 900 km lake surface water, the 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, constitute one integrated

delicate natural ecosystem that needs to be protected with uniform set of policies; if we are to beserious 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 resourceswould mean the implementation of a national policy geared towards the protection, conservation,

balanced growth and sustainable development of the regionwith 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 lawdesigned 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 implementation

of a cohesive and integrated lake water resource management policy, therefore, is necessary to

conserve, protect and sustainably develop Laguna de Bay."

The power of the LGUs to issue fishing privileges was clearly granted for revenue purposes. Thisis 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 LGUs.

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 inthe Laguna de Bay region 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 GovernmentCode of 1991 on matters affecting Laguna de

Bay.


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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.

THIRD DIVISION

G. R. No. 136809.July 27, 2004

DEMOCRITO D. PLAZA II and VIRGINIA V. TUAZON, Petitioners, v. CAROLINA M.

CASSION, ALBERTA M. SAMPAYAN, JOSEPHINE NATALIA U. LOPEZ, JOCELYN

M. ALMANZOR, LUZVIMINDA G. ARDECER, MAGDALENA S. BALACUIT,

WINDELYN B. CABUSAO, JULIETA R. JANDAYAN, NERI O. SAMUYA, INES V.

YAOYAO, TERESITA I. ROSALES, MARIA DEBRA M. LANAJA, RUTH O.

NICOLASURA,Respondents.

D E C I S I O N

SANDOVAL-GUTIERREZ, J.:

Republic Act No. 7160, otherwise known as The Local Government Code of 1991, aims to

transform local government units into self-reliant communities and active partners of the national

government in the attainment of effective services to the people.As a result of the devolution ofconcerned personnel from the national government to the various local government unitspursuant to the same Code, the interest of the service demands that their working relations with

the local employees should be harmonious.

This is a petition for review on certiorari1 assailing the Decision2 of the Court of Appeals dated

February 14, 1996 and its Resolution dated December 9, 1998 in CA-G.R. SP No. 55052,Carolina M. Cassion, et al. vs. Civil Service Commission, et al.

Before the passage of Republic Act No. 7160, the task of delivering basic social services was

dispensed by the national government through the Department of Social Welfare andDevelopment (DSWD). Upon the promulgation and implementation of the Local Government

Code, some of the functions of the DSWD were transferred to the local government units.

The City of Butuan, through its Sangguniang Panglungsod(Sanggunian) passed SP Resolution

427-92,3 entitled Resolution Authorizing the City Mayor, Honorable Democrito D. Plaza II, toSign the Memorandum of Agreement for the Devolution of the DSWD to the City of Butuan.

Pursuant to the Memorandum of Agreement (MOA)4 entered into between the City of Butuan,

through then Mayor Democrito Plaza II, Petitioner, and the DSWD, the latters services,personnel, assets and liabilities, and technical support systems were transferred to its city

counterpart.


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By virtue of the same MOA, Mayor Plaza issued Executive Order (EO) No. 06-925 dated

October 5, 1992 reconstituting the City Social Services Development Office (CSSDO),devolving or adding thereto 19 national DSWD employees headed by petitioner Virginia

Tuazon, Social Welfare Officer V. Mayor Plaza designated her Officer-in-Charge of the

reconstituted CSSDO.Its office was transferred from the original CSSDO building to the DSWD

building.

The CSSDO was originally composed of herein respondents, headed by Carolina M. Cassion,Social Welfare Officer IV. Aggrieved by such development, they refused to recognize petitioner

Tuazon as their new head and to report at the DSWD building.They contended that the issuance

of EO No. 06-92 by Mayor Plaza and the designation of petitioner Tuazon as Officer-in-chargeof the CSSDO are illegal.

Despite Mayor Plazas series of orders to respondents to report for work at the DSWD building,

they failed to do so.

On January 18, 1993, Mayor Plaza issued a memorandum to the City Legal Officer directing himto conduct an administrative investigation against respondents.They then submitted their

respective explanations.Thereafter, they were charged administratively for grave misconduct and

insubordination and were preventively suspended for 60 days.This prompted them to file with

the Civil Service Regional Office No. 10 a complaint against Mayor Plaza for violation of theCivil Service Law.However, their complaint was dismissed for lack of merit.

Upon expiration of their preventive suspension, respondents informed Mayor Plaza that they are

willing to return to work, but to their old office, not to the DSWD building.

For the last time, or on April 14, 1993, Mayor Plaza notified respondents to report to petitioner

Tuazon at the new office in the DSWD building, but they remained obstinate.

On February 9, 1994, Mayor Plaza inquired from the Civil Service Commission (CSC) on what

appropriate action could be taken against respondents for their continued refusal to report for

work since April 1993.In turn, the CSC, through Atty. Lorea, Director II, informed the Mayorthat respondents could be dropped from the rolls pursuant to CSC Memorandum Circular No. 38,

Series of 1993.

On February 16, 1994, Mayor Plaza issued an Order dropping respondents from the rolls

pursuant to the said CSC Memorandum Circular.

Forthwith, respondents appealed to the CSC.

On August 22, 1994, the CSC issued Resolution Nos. 94-4626 and 94-6243 dismissingrespondents appeal.In affirming Mayor Plazas Order dropping respondents from the rolls, the

CSC held:

CSC Memorandum Circular No. 38, series of 1993 dated September 10, 1993 provides as

follows:


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Officers and employees who are absent for at least thirty (30) days without approved leave are

considered on Absence Without Official Leave (AWOL) and may be dropped from the servicewithout prior notice.

A notice or order of the dropping from the rolls of an employee shall be issued by the appointing

authority and submitted to the CSC Office concerned for record purposes.

Based on the above-quoted provision, it is undeniable that the appointing authority has the legal

right to drop from the rolls a civil service officer or employee.Nowhere in the quoted provision is

it stated that only the Commission has the exclusive authority to drop from the rolls civil service

officers or employees.Hence, contrary to the first contention of the appellants, Mayor Plaza actedin conformity with the law when he ordered the dropping from the rolls of herein Appellants.The

records of the case show the fact that appellants did not report for work from April 1993 up to

the time they were dropped from the rolls.Although they manifested intention to return to work

upon expiration of their preventive suspension, still they adamantly insisted that they wouldreport only in their old office and not in the new one created by Executive Order No. 06-92.The

legal excuse being given by the appellants is highly untenable.The Executive Order issued by theMayor is presumed valid until annulled by the proper authorities.The same presumption shallalso apply insofar as the designation of Mrs. Tuazon as OIC is concerned.The proper course of

action for the appellants is to comply with the Mayors directives and then challenge the

questioned Executive Order before the proper forum, otherwise, the appellants should suffer theconsequence of their acts.

We find without merit the contention of the appellants that they were denied due process for lackof notice and opportunity to be heard before they were dropped from the rolls.The separation of

an employee who is dropped from the rolls is a non-disciplinary action wherein the respondent is

entitled to notice and hearing.In the above-quoted provision, an officer or employee may be

dropped from the rolls if he was continuously absent without official leave for a period of at leastthirty days.Prior notice is not necessary.

As to the last contention of the appellants that it was really the intention of the mayor tosystematically remove them, the Commission likewise finds it without merit.No evidence was

submitted by the appellants to support such contention.

Respondents then filed with the Court of Appeals a petition for review.

On February 14, 1996, the Appellate Court rendered its Decision setting aside the assailed CSC

Resolutions and EO No. 06-92 issued by Mayor Plaza and reinstating respondents to their former

positions without loss of seniority rights and emoluments with full back wages and other benefits

corresponding to the period from January 1993 up to actual reinstatement.Petitioners filed amotion for reconsideration but was denied.

The Court of Appeals ratiocinated as follows:

The fundamental rule of due process, on the other hand, requires that a person be accorded noticeand opportunity to be heard (Rebuena v. Civil Service Commission, G.R. No. 115942, 31 May


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1995; Klaveness Maritime Agency, Inc. v. Palmos, 232 SCRA 448 [1994]).Ample opportunity

contemplated by law connotes every kind of assistance which must be accorded to the employeeto enable him to prepare adequately for his defense including legal representation (Segismundo

v. NLRC, G.R. No. 112203, 13 December 1994, 329 SCRA 167, citing Abiera v. NLRC, 215

SCRA 476 [1992]).Non-compliance with the twin requirements of notice and hearing is fatal

because these requirements are conditions sine qua non before a dismissal may be validlyeffected (Maneho v. NLRC, 229 SCRA 240 [1994], citing Tiu v. NLRC, 215 SCRA 540

[1992]).In fact, notice and hearing must be accorded an employee even though the employee

does not affirmatively demand it (Century Textile Mills v. NLRC, 161 SCRA 528 [1988]).

A circumspect scrutiny of the record leaves Us unconvinced that petitioners were accorded thisopportunity to be heard when they sought relief before respondent CSCs Regional Office No. X

which dismissed their complaint, docketed as ADM. Case No. ND 93-023, against respondents

City Mayor and Virginia V. Tuazon for violation of the Civil Service Law and its implementing

rules and regulations. x x x

x x x

As regards the validity of the issuance of E.O. No. 06-92, there can be no dispute over the power

of the government to reorganize, whether traditional, progressive or whatever adjective is

appended to it.However, the essence of constitutional government is adherence to basic rules.Therule of law requires that no government official should feel free to do as he pleases using only his

avowedly sincere intentions and conscience to guide him.The fundamental standards of fairness

embodied in the bona fide rule can not be disregarded (Mendoza v. Quisumbing, 186 SCRA 108[1990]; see also Romualdez-Yap v. CSC, 225 SSCRA 285 [1993].

In the main, petitioners contend that the Court of Appeals erred in setting aside the CSC

Resolutions dropping respondents from the rolls and EO No. 06-92 directing the devolution of19 national DSWD employees to the local or city DSWD to be headed by petitioner Virginia

Tuazon.

Private respondents, on the other hand, aver that their refusal to report for work is justified since

EO No. 06-92 is not valid as it was issued without prior approval by the Sanggunian in violationof Article 164, Rule XXII of the Rules and Regulations Implementing the Local Government

Code.

Section 17 of the Local Government Code authorizes the devolution of personnel, assets and

liabilities, records of basic services, and facilities of a national government agency to local

government units.Under this Code, the term devolution refers to the act by which the national

government confers power and authority upon the various local government units to performspecific functions and responsibilities.

As a consequence of the devolution of national agencies, Executive Order No. 503 was enactedby then President Corazon C. Aquino to govern and ensure the efficient transfer of

responsibilities to the local government unit concerned.Section 2 (g) provides:


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The local chief executive shall be responsible for all devolved functions.He may delegate such

powers and functions to his duly authorized representative whose position shall preferably not belower than the rank of a local government department head.In all cases of delegated authority,

the local chief executive shall at all times observe the principle of command responsibility.

Section 2 (a) states that:

Except as herein otherwise provided, devolved permanent personnel shall be automatically

reappointed by the local chief executive concerned immediately upon their transfer which shall

not go beyond June 30, 1992.

Likewise, Section 22 of CSC Memorandum Circular No. 19, Series of 1992, specifies that:

The positions absorbed by the local government units from the national government agencies

shall be automatically created upon transfer of their corresponding budgetary allocation.

Devolved permanent personnel shall be automatically reappointed by the local chief executiveconcerned immediately upon their transfer.

However, pending the completion of the new organizational structure and staffing pattern, the

local government executives may assign devolved personnel to divisions/sections/units where

their qualifications are best suited or appropriate.

It is thus clear that Mayor Plaza is empowered to issue EO No. 06-92 in order to give effect tothe devolution decreed by the Local Government Code.As the local chief executive of ButuanCity, Mayor Plaza has the authority to reappoint devolved personnel and may designate an

employee to take charge of a department until the appointment of a regular head, as was done by

the Mayor here.

CSC Memorandum Circular No. 19, Series of 1992, provides further that heads of departments

appointed by the local chief executive must have the concurrence of the majority of all themembers of the Sanggunian concerned.While initially, the Sanggunian rejected petitioner

Tuazons appointment as the City Government Department Head II of the CSSDO, however, it

later confirmed her appointment.

The Court Appeals erred in ruling that EO No. 06-92 violated respondents security of tenure as

they were transferred to another office without their consent.There was no such transfer.Transfer

is a movement from one position to another which is of equivalent rank, level or salary without

break in service and may be imposed as an administrative penalty.6 The change of respondentsplace of work from the original CSSDO office to the DSWD building is not a transfer. It was

only a physical transfer of their office to a new one done in the interest of public

service.There were no new movements or appointments from one position to another.

Private respondents argue that they were denied due process when they were dropped from therolls.


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CSC Memorandum Circular No. 38, Series of 1993, provides:

VI. Requirements For Certain Mode of Separation.

Dropping from the Rolls Non-disciplinary in nature, executory but appealable to the CSC office

concerned within fifteen (15) days from receipt of the order or notice.

Officers and employees who are absent for at least thirty (30) days without approved leave are

considered on Absence Without Leave (AWOL) and may be dropped from the service without

prior notice.

A notice or order of the dropping from the rolls of an employee shall be issued by the appointingauthority and submitted to the CSC office concerned for record purposes.

Pursuant to the above provisions and as ruled by the CSC, the dropping from the rolls of private

respondents is not disciplinary in nature.Thus, their assertion that they were denied due process

is untenable.Since the dropping from the rolls is not an administrative sanction, they need not benotified or be heard.

WHEREFORE, the Decision dated February 14, 1996 of the Court of Appeals is

REVERSED.The CSC Resolution No. 94-4626 dated August 22, 1994, and Resolution No. 94-

6243 dated November 17, 1994 dropping private respondents from the rolls are AFFIRMED.

SO ORDERED.

FIRST DIVISION

[G.R. No. 135962. March 27, 2000]

METROPOLITAN MANILA DEVELOPMENT AUTHORITY,petitioner, vs. BEL-AIR

VILLAGE ASSOCIATION, INC.,respondent.

D E C I S I O N

PUNO,J.:

MMDA vs Bel Air Village Association

Date: March 27, 2000

Petitioner: Metropolitan Manila Development Authority


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Respondent: Bel Air Village Association Inc

Ponente: Puno

Facts: MMDA is a government agency tasked with the delivery of basic services in Metro

Manila. Bel-Air Village Association, Inc. is a non-stock, non-profit corporation whose membersare homeowners in Bel-Air Village, a private subdivision in Makati City. BAVA is the registeredowner of Neptune Street, a road inside Bel-Air Village.

On December 30, 1995, respondent received from petitioner, through its Chairman, a noticedated December 22, 1995 requesting respondent to open Neptune Street to public vehicular

traffic starting January 2, 1996. BAVA was apprised that the perimeter wall separating the

subdivision from the adjacent Kalayaan Avenue would be demolished.

On January 2, 1996, BAVA instituted against petitioner before the RTC a civil case for

injunction. Respondent prayed for the issuance of a TRO and preliminary injunction enjoining

the opening of Neptune Street and prohibiting the demolition of the perimeter wall. The trialcourt issued a temporary restraining order the following day. After due hearing, the trial court

denied the issuance of preliminary injunction.

On appeal, the CA rendered a Decision on the merits of the case finding that the MMDA has no

authority to order the opening of Neptune Street, a private subdivision road and cause the

demolition of its perimeter walls. It held that the authority is lodged in the City Council ofMakati by ordinance.

Issue: WON the MMDA has authority to open Neptune Road to the public

Held: No

Ratio: MMDA claims that it has the authority to open Neptune Street to public traffic because it

is an agent of the state endowed with police power in the delivery of basic services in MetroManila. One of these basic services is traffic management which involves the regulation of the

use of thoroughfares to insure the safety, convenience and welfare of the general public. It is

alleged that the police power of MMDA was affirmed by this Court in the consolidated cases ofSangalang v. IAC. From the premise that it has police power, it is now urged that there is no

need for the City of Makati to enact an ordinance opening Neptune street to the public.

Police power is an inherent attribute of sovereignty. It has been defined as the power vested by

the Constitution in the legislature to make, ordain, and establish all manner of wholesome andreasonable laws, statutes and ordinances, either with penalties or without, not repugnant to the

Constitution, as they shall judge to be for the good and welfare of the commonwealth, and for thesubjects of the same. The power is plenary and its scope is vast and pervasive, reaching and

justifying measures for public health, public safety, public morals, and the general welfare.

It bears stressing that police power is lodged primarily in the National Legislature. It cannot be

exercised by any group or body of individuals not possessing legislative power. The National


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Legislature, however, may delegate this power to the President and administrative boards as well

as the lawmaking bodies of municipal corporations or local government units. Once delegated,the agents can exercise only such legislative powers as are conferred on them by the national

lawmaking body.

Metropolitan or Metro Manila is a body composed of several local government units -i .e .,twelve (12) cities and five (5) municipalities, namely, the cities of Caloocan, Manila,

Mandaluyong, Makati, Pasay, Pasig, Quezon, Muntinlupa, Las Pinas, Marikina, Paranaque andValenzuela, and the municipalities of Malabon, , Navotas, , Pateros, San Juan and Taguig. With

the passage of RA 7924 in 1995, Metropolitan Manila was declared as a "special development

and administrative region" and the Administration of "metro-wide" basic services affecting theregion placed under "a development authority" referred to as the MMDA.

The implementatio n of the MMDAs plans, programs and projects is undertaken by the local

government units, national government agencies, accredited peoples organizations, non-governmental organizations, and the private sector as well as by the MMDA itself. For this

purpose, the MMDA has the power to enter into contracts, memoranda of agreement and other

cooperative arrangements with these

bodies for the delivery of the required services within Metro Manila.

Clearly, the scope of the MMDAs function is limited to the delivery of the seven (7) basicservices. One of these is transport and traffic management which includes the formulation and

monitoring of policies, standards and projects to rationalize the existing transport operations,infrastructure requirements, the use of thoroughfares and promotion of the safe movement ofpersons and goods. It also covers the mass transport system and the institution of a system of

road regulation, the administration of all traffic enforcement operations, traffic engineering

services and traffic education programs, including the institution of a single ticketing system inMetro Manila for traffic violations. Under this service, the

MMDA is expressly authorized "to set the policies concerning traffic" and "coordinate andregulate the implementation of all traffic management programs." In addition, the MMDA may

"install and administer a single ticketing system," fix, impose and collect fines and penalties for

all traffic violations.

It will be noted that the powers of the MMDA are limited to the following acts: formulation,

coordination, regulation, implementation, preparation, management, monitoring, setting of

policies,installation of a system and administration. There is no syllable in R. A. No. 7924 thatgrants the MMDA police power, let alone legislative power. Even the Metro Manila Council has

not been delegated any legislative power. Unlike the legislative bodies of the local government


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units, there is no provision in R. A. No. 7924 that empowers the MMDA or its Council to "enact

ordinances, approve

resolutions and appropriate funds for the general welfare" of the inhabitants of Metro Manila.

The MMDA is as termed in the charter itself, a "development authority." It is an agency created

for the purpose of laying down policies and coordinating with the various national governmentagencies, peoples organizations, non-governmental organizations and the private sector for the

efficient and expeditious delivery of basic services in the vast metropolitan area. All its functionsare administrative in nature and these are actually summed up in the charter itself

Petitioner cannot seek refuge in the cases of Sangalang v. Intermediate Appellate Court where

we upheld a zoning ordinance issued by the Metro Manila Commission (MMC), the predecessorof the MMDA, as an exercise of police power. The firstSang alang decision was on the merits of

the petition, while the second decision denied reconsideration of the first case and in addition

discussed the case of Yabut v. Court of Appeals. Contrary to petitioners claim, the twoSangalang cases do not apply to the case at bar. Firstly, both involved zoning ordinances passed by

the municipal council of Makati and the MMC. In the instant case, the basis for the proposed

opening of Neptune Street is contained in the notice of December 22, 1995 sent by petitioner to

respondent BAVA, through its president. The notice does not cite any ordinance or law, either bythe Sangguniang Panlungsod of Makati City or by the MMDA, as the legal basis for the

proposed opening of Neptune Street. Petitioner MMDA simply relied on its authority under its

charter "to rationalize the use of roads and/or thoroughfares for the safe and convenientmovement of persons." Rationalizing the use of roads and thoroughfares is one of the acts that

fall within the scope of transport and traffic management. By no stretch of the imagination,

however, can this be interpreted as an

express or implied grant of ordinance-making power, much less police power. Misjuris

Secondly, the MMDA is not the same entity as the MMC inSang alang . Although the MMC is

the forerunner of the present MMDA, an examination of Presidential Decree (P. D.) No. 824, the

charter of the MMC, shows that the latter possessed greater powers which were not

bestowed on the present MMDA.J jle x

In 1990, President Aquino issued Executive Order (E. O.) No. 392 and constituted theMetropolitan Manila Authority (MMA). The powers and functions of the MMC were devolved

to the MMA. It ought to be stressed, however, that not all powers and functions of the MMC

were


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passed to the MMA. The MMAs power was limited to the "delivery of basic urban services

requiring coordination in Metropolitan Manila." The MMAs governing body, the MetropolitanManila Council, although composed of the mayors of the component cities and municipalities,

was merely given the power of: (1) formulation of policies on the delivery of basic services

requiring coordination and consolidation; and (2) promulgation of resolutions and other

issuances, approval of a code of basic services and the exercise of its rule-making power.

Under the 1987 Constitution, the local government units became primarily responsible for thegovernance of their respective political subdivisions. The MMAs jurisdiction was limited toaddressing common problems involving basic services that transcended local boundaries. It did

not have

legislative power. Its power was merely to provide the local government units technical

assistance in the preparation of local development plans. Any semblance of legislative power it

had was confined to a "review [of] legislation proposed by the local legislative assemblies toensure consistency among local governments and with the comprehensive development plan of

Metro Manila," and to "advise the local

governments accordingly."

When R.A. No. 7924 took effect, Metropolitan Manila became a "special development and

administrative region" and the MMDA a "special development authority" whose functions were"without prejudice to the autonomy of the affected local government units." The

character of the MMDA was clearly defined in the legislative debates enacting its charter.

It is thus beyond doubt that the MMDA is not a local government unit or a public corporation

endowed with legislative power. It is not even a "special metropolitan political subdivision" ascontemplated in Section 11, Article X of the Constitution. The creation of a "special

metropolitan political subdivision" requires the approval by a majority of the votes cast in a

plebiscite in the political units directly affected. R. A. No. 7924 was not submitted to the

inhabitants of Metro Manila in a plebiscite. The Chairman of the MMDA is not an official

elected by the people, but appointed by the

President with the rank and privileges of a cabinet member. In fact, part of his function is toperform such other duties as may be assigned to him by the President, whereas in local

government units, the President merely exercises supervisory authority. This emphasizes the

administrative character of the MMDA.


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Clearly then, the MMC under P. D. No. 824 is not the same entity as the MMDA under R. A.

No. 7924. Unlike the MMC, the MMDA has no power to enact ordinances for the welfare of thecommunity. It is the local government units, acting through their respective legislative councils,

that possess legislative power and police power. In the case at bar, the Sangguniang Panlungsod

of Makati City did not pass any ordinance or resolution ordering the opening of Neptune Street,

hence, its proposed opening by petitioner MMDA is illegal and the respondent Court of Appealsdid not err in so ruling. We desist from ruling on the other issues as they are unnecessary. Esmso

We stress that this decision does not make light of the MMDAs noble efforts to solve thechaotic traffic condition in Metro Manila. Everyday, traffic jams and traffic bottlenecks plague

the metropolis. Even our once sprawling boulevards and avenues are now crammed with cars

while city streets are clogged with motorists and pedestrians. Traffic has become a social malaise

affecting our peoples productivity and the efficient delivery of goods and services in thecountry. The MMDA was created to put some order in the metropolitan transportation system

but unfortunately the powers granted by its charter are limited. Its good intentions cannot justifythe opening for public use of a private street in a private subdivision without any legal warrant.The promotion of the general welfare is not antithetical to the preservation of the rule of law.

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.

PARAS,J.:p

G.R. No. 91649 May 14, 1991

Basco vs. PAGCOR

H.B. Basco & Associates for petitioners Valmonte Law Offices collaborating counsel for

petitioners

Aguirre, Laborte and Capule for respondent PAGCOR

Facts:

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


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January 1, 1977 "to establish, operate and maintain gambling casinos on land or water within the

territorial jurisdiction of the Philippines."

Petitioners filed an instant petition seeking to annul the Philippine Amusement and Gaming

Corporation (PAGCOR) CharterPD 1869, because it is allegedly contrary to morals, public

policy and order

Petitioners claim 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 in violation of the

principle of local autonomy.

o Section 13 par. (2) of P.D. 1869 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."

Issue: Does the local Government of Manila have the power to impose taxes on PAGCOR?

Held No, the court rules that The City government of Manila has no power to impose taxes on

PAGCOR.

Reason:

The principle of Local autonomy does not make local governments sovereign within the state;

the principle of local autonomy within the constitution simply means decentralization. It cannot

be an Imperium in imperio it can only act intra sovereign, or as an arm of the NationalGovernment.

PAGCOR has a dual role, to operate and to regulate gambling casinos. The latter role isgovernmental, 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.

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 localautonomy.

EN BANC

[G.R. No. 152774. May 27, 2004]


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

MANDANAS,petitioner, vs. HON. ALBERTO G. ROMULO, Executive Secretary andChairman of the Oversight Committee on Devolution; HON. EMILIA BONCODIN, Secretary,

Department of Budget and Management; HON. JOSE D. LINA, JR., Secretary, Department of

Interior and Local Government, respondents.

D E C I S I O N

CALLEJO, SR.,J.:

Relevant Background:

It was a case filed by Hon. HERMILANDO I. MANDANAS, Governor of Batangas petition for

certiorari, prohibition and mandamus to declare as unconstitutional and void certain provisos

contained in the General Appropriations Acts (GAA) of 1999, 2000 and 2001, insofar as they

uniformly earmarked (allocated) for each corresponding year the amount of five billion pesos

(P5,000,000,000.00) of the Internal Revenue Allotment (IRA) for the Local Government ServiceEqualization Fund (LGSEF) and imposed conditions for the release thereof.

It started in 1998 when then President Joseph Estrada issued Executive Order No. 48 entitled

ESTABLISHING A PROGRAM FOR DEVOLUTION ADJUSTMENT AND

EQUALIZATION to facilitate the process of enhancing the capabilities of local government

units in the discharge of the functions and services devolved to them pursuant to the LocalGovernment Code. Included in the EO No. 48 is the appointment of the Oversight Committee

authorized to issue the implementing rules and regulations governing the equitable allocation and

distribution of said fund to the LGUs..

Subject of the case are the resolutions passed by the Oversight Committee (Chaired by theExecutive Secretary Ronaldo B. Zamora). These are the resolutions with numbers OCD-99- 005,OCD-99-006, and OCD-99-003. Further, these OCDs were approved by then Pres. Estrada on

October 6, 1999. The guidelines along with these OCDs as formulated by the Oversight

Committee requires the LGUs to identify the projects eligible for funding under the portion ofLGSEF and submit the project proposals and other requirements to the DILG for appraisal before

the Committee serves notice to the DBM for the subsequent release of corresponding funds.

For the year 2000 and 2001, the same LGSEF of 1999 GAA were adopted due to failure of

Congress to enact general appropriation laws.

The standing point was when Gov. Mandanas received the LGSEF in the GAA of 1991.

The 5Billion LGESF for 2001 were as follows:

Modified Codal Formula


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P3.0Billion

Priority Projects

P1.9 Billion

Capability Building Fund

P0.1 Billion, Total = P5Billion

Furthere, the P3.0Billion of the abovementioned LGESF shall be allocated according to the

modified codal formula and be released to the four levels of LGUs., ie., provinces, cities,municipalities and barangays as follos:

Provinces, 25%

-

P0.750Billion

Cities, 25%

-

0.750

Municipalities, 35% -

1.050

Barangays, 15%

-

0.450, Total = P3Billion

Resolved Further, the P1.9Billion earmarked for Priority Projects shall be distributed

according to the following criteria:

1. For projects of the 4th, 5th, and 6th class LGUs, or

2. Projects in consonance with the Presidents SONA

Upon Upon receipt of a copy of the above resolution, Gov. Mandanas wrote to the individual

members of the Oversight Committee seeking the reconsideration of Resolution No. OCD- 2002-


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001. He also wrote to Pres. Macapagal-Arroyo urging her to disapprove said resolution as it

violates the Constitution and the Local Government Code of 1991 but otherwise, approved byPres. Arroyo on January 25, 2002.

The Petitioner Points the Following Issues:

1. Unconstitutionality and void provisos in the GAAs of 1999, 2000, and 2001.

2. Unlawful and illegal imposition of conditions issued by the Oversight Committee requiring

project proposals and documentary requirements prior to the release of LGUs just share in theIRA is an anathema to the principle of local autonomy as embodied in the Constitution and the

Local Government Code of 1991 (and that the possible disapproval by the Committee of the

project proposals of the LGUs is a diminution to then latters share in the IRA).

The petitioner contends the following:

In issue No.1 & 3, the respondent theorized that Section 285 of the Local Government Code of1991 which provides for the percentage sharing of the IRA among the LGUs was not intended to

be a fixed determination of share in the national taxes as the Congress may enact other laws,including the aforementioned oppropriations law providing for a different sharing formula.

Section 285 merely intended to be the default share of the LGUs to do away with the need to

determine annually.

Further, the respondent avers that the petition has already been rendered as moot and academic

as it no longer presents a justifiable controversy because the IRAs of the years 1999, 2000 and

2001 have already been released and therefore, nothing more to prohibit, aside from the fact thatthe petition should not have been filed with the Supreme Court because this court is not a trier of

facts, but, the lower courts of jurisdiction.

In issue No.2, the assailed resolutions issued by the Oversight Committee are not constitutionally

infirm. The respondents stands that Section 6 of Article X of the Constitution does not specify

the just share of the LGUs shall be determined solely by the Local Government Code of 1991

and that the phrase to be determined by law in the same provision means that there exists nolimitation on the power of Congress to determine what is the just share of the LGUs in the

national taxes. In effect, the Congress serves as the arbiter of what should be the just share.

Courts Ruling:

The Court finds the petition to involve a significant legal issue. Issue No.1 is the crux of theinstant controversy as contained in the GAAs of 1999, 2000 and 2001 and the OCD resolutions

infringe the Constitution and the Local Government Code of 1991 and undoubtedly a legalquestion. However, the earmarking of the LGSEF, the promulgation of the assailed OCD

resolutions and the release of the LGSEF to the LGU following the requirements are not

disputed.


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Substantive issues stated above, in the course of the argument, although the supervening events

as the IRA including the LGSEF for 1999, 2000 and 2001 had already been released, still, therewas a compelling reason to resolve the substantive issue raised in the instant petition, whether

intended or incidental, cannot prevent the Court from rendering a decision if grave violation of

the Constitution is proved even where the supervening events had made the cases moot in order

to resolve the legal or constitutional issues raised to formulate controlling principles to guide thebench, bar and public.

The court held that, the state shall ensure the autonomy of local governments. (Art. II Sec. 25of the Constitution). Consistent with the principle of local autonomy, the Constitution confines

the Presidents power over the LGUs to one of general supervision and has no power to control

The Local Government Code of 1991 was enacted to flesh out the mandate of the

Constitution. The State policy on local autonomy is amplified in Section 2 thereof:

Sec. 2. Declaration of Policy.(a) It is hereby declared the policy of the State that the territorialand 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 fora 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.

Guided by these precepts, the Court shall now determine whether the assailed provisos in theGAAs of 1999, 2000 and 2001, earmarking for each corresponding year the amount of five

billion pesos of the IRA for the LGSEF and the OCD resolutions promulgated pursuant thereto,transgress the Constitution and the Local Government Code of 1991.

To the Courts mind, the entire process involving the distribution and release of the LGSEF is

constitutionally impermissible. The LGSEF is part of the IRA or just share of the LGUs in thenational taxes. To subject its distribution and release to the vagaries of the implementing rules

and regulations, including the guidelines and mechanisms unilaterally prescribed by the

Oversight Committee from time to time, as sanctioned by the assailed provisos in the GAAs of1999, 2000 and 2001 and the OCD resolutions, makes the release not automatic, a flagrant

violation of the constitutional and statutory mandate that the just share of the LGUs shall be

automatically released to them. The LGUs are, thus, placed at the mercy of the Oversight

Committee.

That the automatic release of the IRA was precisely intended to guarantee and promote local

autonomy can be gleaned from the discussion below between Messrs. Jose N. Nolledo andRegalado M. Maambong, then members of the 1986 Constitutional Commission.

Our national officials should not only comply with the constitutional provisions on local

autonomy but should also appreciate the spirit and liberty upon which these provisions are based.


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WHEREFORE, the petition is GRANTED.

The assailed provisos in the General Appropriations Acts of 1999, 2000 and 2001, and the

assailed OCD Resolutions, are declared UNCONSTITUTIONAL.

SECOND DIVISION

G.R. No. 152675 April 28, 2004

BATANGAS POWER CORPORATION, petitioner,

vs.

BATANGAS CITY and NATIONAL POWER CORPORATION, respondents.

x - - - - - - - - - - - - - - - - - - - - x

G.R. No. 152771 April 28, 2004

NATIONAL POWER CORPORATION, petitioner,

vs.

HON. RICARDO R. ROSARIO, in his capacity as Presiding Judge, RTC, Br. 66, Makati

City; BATANGAS CITY GOVERNMENT; ATTY. TEODULFO DEGUITO, in his

capacity as Chief Legal Officer, Batangas City; and BENJAMIN PARGAS, in his capacityas City Treasurer, Batangas City, respondents.

DECISION

PUNO,J.:

Before us are two (2) consolidated petitions for review under Rule 45 of the Rules of CivilProcedure, seeking to set aside the rulings of the Regional Trial Court of Makati in its February

27, 2002 Decision in Civil Case No. 00-205.

The facts show that in the early 1990s, the country suffered from a crippling power crisis. Power

outages lasted 8-12 hours daily and power generation was badly needed. Addressing the

problem, the government, through the National Power Corporation (NPC), sought to attractinvestors in power plant operations by providing them with incentives, one of which was through


30/34

the NPCs assumption of payment of their taxes in the Build Operate and Transfer (BOT)

Agreement.

On June 29, 1992, Enron Power Development Corporation (Enron) and petitioner NPC entered

into a Fast Track BOT Project. Enron agreed to supply a power station to NPC and transfer its

plant to the latter after ten (10) years of operation. Section 11.02 of the BOT Agreementprovided that NPC shall be responsible for the payment of all taxes that may be imposed on the

power station, except income taxes and permit fees. Subsequently, Enron assigned its obligationunder the BOT Agreement to petitioner Batangas Power Corporation (BPC).

On September 13, 1992, BPC registered itself with the Board of Investments (BOI) as a pioneerenterprise. On September 23, 1992, the BOI issued a certificate of registration1 to BPC as a

pioneer enterprise entitled to a tax holiday for a period of six (6) years. The construction of the

power station in respondent Batangas City was then completed. BPC operated the station.

On October 12, 1998, Batangas City (the city, for brevity), thru its legal officer Teodulfo A.

Deguito, sent a letter to BPC demanding payment of business taxes and penalties, commencingfrom the year 1994 as provided under Ordinance XI or the 1992 Batangas City Tax Code.2 BPC

refused to pay, citing its tax-exempt status as a pioneer enterprise for six (6) years under Section

133 (g) of the Local Government Code (LGC).3

On April 15, 1999, city treasurer Benjamin S. Pargas modified the citys tax claim4 anddemanded payment of business taxes from BPC only for the years 1998-1999. He acknowledgedthat BPC enjoyed a 6-year tax holiday as a pioneer industry but its tax exemption period expired

on September 22, 1998, six (6) years after its registration with the BOI on September 23, 1992.

The city treasurer held that thereafter BPC became liable to pay its business taxes.

BPC still refused to pay the tax. It insisted that its 6-year tax holiday commenced from the dateof its commercial operation on July 16, 1993, not from the date of its BOI registration in

September 1992.5 It furnished the city with a BOI letter6 wherein BOI designated July 16, 1993

as the start of BPCs income tax holiday as BPC was not able to immediately operate due toforce majeure. BPC claimed that the local tax holiday is concurrent with the income tax holiday.

In the alternative, BPC asserted that the city should collect the tax from the NPC as the latterassumed responsibility for its payment under their BOT Agreement.

The matter was not put to rest. The city legal officer insisted7 that BPCs tax holiday has alreadyexpired, while the city argued that it directed its tax claim to BPC as it is the entity doing

business in the city and hence liable to pay the taxes. The city alleged that it was not privy to

NPCs assumption of BPCs tax payment under their BOT Agreement as the only parties thereto

were NPC and BPC.

BPC adamantly refused to pay the tax claims and reiterated its position.8 The city was likewise

unyielding on its stand.9 On August 26, 1999, the NPC intervened.10 While admittingassumption of BPCs tax obligations under their BOT Agreement, NPC refused to pay BPCs

business tax as it allegedly constituted an indirect tax on NPC which is a tax-exempt corporation

under its Charter.11


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In view of the deadlock, BPC filed a petition for declaratory relief12 with the Makati Regional

Trial Court (RTC) against Batangas City and NPC, praying for a ruling that it was not bound topay the business taxes imposed on it by the city. It alleged that under the BOT Agreement, NPC

is responsible for the payment of such taxes but as NPC is exempt from taxes, both the BPC and

NPC are not liable for its payment. NPC and Batangas City filed their respective answers.

On February 23, 2000, while the case was still pending, the city refused to issue a permit to BPC

for the operation of its business unless it paid the assessed business taxes amounting to close toP29M.

In view of this supervening event, BPC, whose principal office is in Makati City, filed asupplemental petition13with the Makati RTC to convert its original petition into an action for

injunction to enjoin the city from withholding the issuance of its business permit and closing its

power plant. The city opposed on the grounds of lack of jurisdiction and lack of cause of

action.14The Supplemental Petition was nonetheless

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