pubcorp cases1

7/27/2019 PubCorp Cases1

1/14

BASCO v. PAGCOR

GR. No. 91649, May 14, 1991

Municipal Corporation Local Autonomyimperium in imperio

FACTS: On July 11, 1983, PAGCOR was created under PD 1869 to enable the Government to regulate

and centralize all games of chance authorized by existing franchise or permitted by law. Basco and four

others (all lawyers) assailed the validity of the law creating PAGCOR on constitutional grounds among

others particularly citing that the PAGCORs charter is against the constitutional provision on local

autonomy.

Basco et al contend that P.D. 1869 constitutes a waiver of the right of the City of Manila to impose taxes

and legal fees; that 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 is violative of the local autonomy principle.

ISSUE: Whether or not PAGCORs charter is violative of the principle of local autonomy.

HELD: NO. Section 5, Article 10 of the 1987 Constitution provides:

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.

A close reading of the above provision does not violate local autonomy (particularly on taxing powers) as

it was clearly stated that the taxing power of LGUs are subject to such guidelines and limitation as

Congress may provide.

Further, the City of Manila, being a mere Municipal corporation has no inherent right to impose taxes.

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 which has the power to create and abolish municipal

corporations due to its general legislative powers. Congress, therefore, has the power of control over

Local governments. 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.

Further still, 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. Otherwise, its operation might be burdened,

impeded or subjected to control by a mere Local government.

This doctrine emanates from the supremacy of the National Government over local government


2/14

TAN v. COMELEC

G.R. No. 73155 July 11, 1986

FACTS:

This case was prompted by the enactment of Batas Pambansa Blg. 885, An Act Creating a New

Province in the Island of Negros to be known as the Province of Negros del Norte, effective December 3,

1985 (Cities of Silay, Cadiz and San Carlos and the municipalities of Calatrava, Taboso, Escalante, Sagay,

Manapla, Victorias, E.R. Magalona, and Salvador Benedicto).

Pursuant to and in implementation of this law, the COMELEC scheduled a plebiscite in January 3,

1986. Petitioners opposed, filing a case for Prohibition and contending that the B.P. Blg. 885 is

unconstitutional and not in complete accord with the Local Government Code because:

1. The voters of the parent province of Negros Occidental, other than those living within theterritory of the new province of Negros del Norte, were not included I the plebiscite.

2. The area which would comprise the new province of Negros del Norte would only be about2,856.56 sq. km., which is lesser than the minimum area prescribed by the governing statute.

The Supreme Court was in recess at the time so the petition was not timely considered.

Consequently, petitioners filed a supplemental pleading on January 4, 1986, after the plebiscite sought

to be restrained was held the previous day, January 3.

ISSUE: Whether or not the plebiscite was legal and complied with the constitutional requisites under

Article XI, Sec. 3 of the Constitution

HELD: NO

In interpreting the above provision, the Supreme Court held that whether a province is created,

divided, or merged and there is substantial alteration of the boundaries, the approval of a majority of

votes in the plebiscite in the unit or units affected must first be obtained.

The creation of the proposed new province of Negros del Norte will necessarily result in the

division and alteration of the existing boundaries of Negros Occidental.

Plain and simple logic will demonstrate that two political units would be affected. The first

would be the parent province of Negros Occidental because its boundaries would be substantially

altered. The other affected entity would be composed of those in the area subtracted from the mother

province to constitute the proposed province of Negros del Norte.

The Supreme Court further held that the case of Governor Zosimo Paredes v. Hon. Executive

Secretary to the President, et. al. (128 SCRA 6), which respondents used to support their case, should

not be taken as a doctrinal or compelling precedent. Rather, it held that the dissenting view of Justice

Abad Santos in the aforementioned case is the forerunner of the applicable ruling, quoting that: when

the Constitution speaks of the unit or units affected, it means all of the people of the municipality if


3/14

the municipality is to be divided such as in the case at bar or of the people of two or more municipalities

if there be a merger. I see no ambiguity in the Constitutional provision.

It appeared that when Parliamentary Bill No. 3644 which proposed the creation of the new

province of Negros del Norte was passed for approval, it recited therein that the plebiscite shall be

conducted in the areas affected within a period of one hundred and twenty days from the approval of

this Act. However, when the bill was enacted into B.P. 885, there was an unexplained change from

areas affected to the proposed new province, which are the areas affected. The Supreme Court held

that it was a self-serving phrase to state that the new province constitutes the area affected.

Such additional statement serves no useful purpose for the same is misleading, erroneous, and

far from truth. The remaining portion of the parent province is as much an area affected. The substantial

alteration of the boundaries of the parent province, not to mention the adverse economic effects it

might suffer, eloquently argue the points raised by the petitioners.

Consequently, the Supreme Court pronounced that the plebiscite held on January 3, 1986 has

no legal effect for being a patent nullity.

Wherefore, Batas Pambansa Blg. 885 is hereby declared unconstitutional. The proclamation of

the new province of Negros del Norte, as well as the appointment of the officials thereof are also

declared null and void. SO ORDERED.


4/14

TATEL v. MUNICIPALITY OF VIRAC

G.R. No. 40243 March 11, 1992

FACTS:

Based from the complaints received from the residents of Barrio Sta. Elena against the

disturbance caused by the operation of the abaca boiling machine inside the warehouse of the

petitioner, the Municipal Council of Virac passed Resolution No. 29 declaring the warehouse a public

nuisance within the purview of Article 694 of the New Civil Code. The said machine affects the peace

and tranquility of the neighborhood due to the smoke, obnoxious odor and dust emitted by the

machine. Respondent municipal officials contended that the petitioners warehouse was constructed in

violation of Ordinance No. 13 which prohibits the construction of warehouses near a block of houses

either in the poblacion or barrios without maintaining the necessary distance of 200 meters from said

block of houses to avoid loss of lives and properties by accidental fire.

ISSUES: 1. Whether or not Ordinance No. 13 is a legitimate and valid exercise of police power of

the municipal council

2. Whether or not the trial court gave Ordinance No. 13 a meaning other than what it says

HELD: 1. YES.

Ordinance No. 13 passed by the Municipal Council of Virac in the exercise of its police power. It

is a settled principle of law that municipal corporations are agencies of the State for the promotion and

maintenance of local self-government and as such are endowed with police powers in order to

effectively accomplish and carry out the declared objects of their creation. Its authority emanates from

the general welfare clause under the Administrative Code. Also, the ordinance passed according to the

procedure prescribed by law and in consonance with certain well-established and basic principles of a

substantive nature.

HELD: 2. NO.

The trial court did not give the ordinance in question a meaning other than what it says.

Basically, what is regulated by the ordinance is the construction of warehouses wherein inflammable

materials are stored where such warehouses are located at a distance of 200m from a block of houses

and not the construction per se of a warehouse. The purpose is to avoid the loss of life and property in

case of fire which is one of the primordial obligations of the government. Clearly, it merely stated the

purpose of the ordinance and what it intends to prohibit to accomplish its purpose.


5/14

It is valid because it meets the criteria for a valid municipal ordinance:

1) must not contravene the Constitution or any statute,

2) must not be unfair or oppressive,

3) must not be partial or discriminatory,

4) must not prohibit but may regulate trade,

5) must be general and consistent with public policy, and

6) must not be unreasonable.


6/14

QUEZON CITY v. ERICTA

G.R. No. L-34915 June 24, 1983

FACTS: This is a petition for review which seeks the reversal of the decision of the Court of First Instance

of Rizal, Branch XVIII declaring Section 9 of Ordinance No. 6118, S-64, of the Quezon City Council null

and void.

Section 9 of Ordinance No. 6118, S-64, entitled "ORDINANCE REGULATING THE ESTABLISHMENT,

MAINTENANCE AND OPERATION OF PRIVATE MEMORIAL TYPE CEMETERY OR BURIAL GROUND WITHIN

THE JURISDICTION OF QUEZON CITY AND PROVIDING PENALTIES FOR THE VIOLATION THEREOF"

provides:

Sec. 9. At least six (6) percent of the total area of the memorial park cemetery shall be set aside for

charity burial of deceased persons who are paupers and have been residents of Quezon City for at least

5 years prior to their death, to be determined by competent City Authorities. The area so designated

shall immediately be developed and should be open for operation not later than six months from the

date of approval of the application.

For several years, the aforequoted section of the Ordinance was not enforced by city authorities but

seven years after the enactment of the ordinance, the Quezon City Council passed the following

resolution:

RESOLVED by the council of Quezon assembled, to request, as it does hereby request the City Engineer,

Quezon City, to stop any further selling and/or transaction of memorial park lots in Quezon City where

the owners thereof have failed to donate the required 6% space intended for paupers burial.

Pursuant to this petition, the Quezon City Engineer notified respondent Himlayang Pilipino, Inc. in

writing that Section 9 of Ordinance No. 6118, S-64 would be enforced

Respondent Himlayang Pilipino reacted by filing with the Court of First Instance of Rizal Branch XVIII at

Quezon City, a petition for declaratory relief, prohibition and mandamus with preliminary injunction (Sp.

Proc. No. Q-16002) seeking to annul Section 9 of the Ordinance in question The respondent alleged that

the same is contrary to the Constitution, the Quezon City Charter, the Local Autonomy Act, and the

Revised Administrative Code.

Petitioners argue that the taking of the respondent's property is a valid and reasonable exercise of

police power and that the land is taken for a public use as it is intended for the burial ground of paupers.

They further argue that the Quezon City Council is authorized under its charter, in the exercise of local

police power, " to make such further ordinances and resolutions not repugnant to law as may be

necessary to carry into effect and discharge the powers and duties conferred by this Act and such as it

shall deem necessary and proper to provide for the health and safety, promote the prosperity, improve

the morals, peace, good order, comfort and convenience of the city and the inhabitants thereof, and for

the protection of property therein."

On the other hand, respondent Himlayang Pilipino, Inc. contends that the taking or confiscation of

property is obvious because the questioned ordinance permanently restricts the use of the property

such that it cannot be used for any reasonable purpose and deprives the owner of all beneficial use of

his property.


7/14

The respondent also stresses that the general welfare clause is not available as a source of power for the

taking of the property in this case because it refers to "the power of promoting the public welfare by

restraining and regulating the use of liberty and property." The respondent points out that if an owner is

deprived of his property outright under the State's police power, the property is generally not taken for

public use but is urgently and summarily destroyed in order to promote the general welfare. The

respondent cites the case of a nuisance per se or the destruction of a house to prevent the spread of a

conflagration.

ISSUE: Whether or not the Section 9 of Ordinance No. 6118, S-64 is a valid exercise of police power?

HELD: We find the stand of the private respondent as well as the decision of the respondent Judge to be

well-founded. We quote with approval the lower court's ruling which declared null and void Section 9 of

the questioned city ordinance.

An examination of the Charter of Quezon City (Rep. Act No. 537), does not reveal any provision that

would justify the ordinance in question except the provision granting police power to the City. Section 9

cannot be justified under the power granted to Quezon City to tax, fix the license fee, and regulate suchother business, trades, and occupation as may be established or practised in the City.'

The power to regulate does not include the power to prohibit. A fortiori, the power to regulate does not

include the power to confiscate. The ordinance in question not only confiscates but also prohibits the

operation of a memorial park cemetery, because under Section 13 of said ordinance, 'Violation of the

provision thereof is punishable with a fine and/or imprisonment and that upon conviction thereof the

permit to operate and maintain a private cemetery shall be revoked or cancelled.'

Police power is defined by Freund as 'the power of promoting the public welfare by restraining and

regulating the use of liberty and property'. It is usually exerted in order to merely regulate the use and

enjoyment of property of the owner. If he is deprived of his property outright, it is not taken for publicuse but rather to destroy in order to promote the general welfare. In police power, the owner does not

recover from the government for injury sustained in consequence thereof.

It will be seen from the foregoing authorities that police power is usually exercised in the form of mere

regulation or restriction in the use of liberty or property for the promotion of the general welfare. It

does not involve the taking or confiscation of property with the exception of a few cases where there is

a necessity to confiscate private property in order to destroy it for the purpose of protecting the peace

and order and of promoting the general welfare as for instance, the confiscation of an illegally possessed

article, such as opium and firearms.

It seems to the court that Section 9 of Ordinance No. 6118, Series of 1964 of Quezon City is not a mere

police regulation but an outright confiscation. It deprives a person of his private property without due

process of law, nay, even without compensation.

There is no reasonable relation between the setting aside of at least six (6) percent of the total area of

an private cemeteries for charity burial grounds of deceased paupers and the promotion of health,

morals, good order, safety, or the general welfare of the people. The ordinance is actually a taking

without compensation of a certain area from a private cemetery to benefit paupers who are charges of


8/14

the municipal corporation. Instead of building or maintaining a public cemetery for this purpose, the city

passes the burden to private cemeteries.

The expropriation without compensation of a portion of private cemeteries is not covered by Section

12(t) of Republic Act 537, the Revised Charter of Quezon City which empowers the city council to

prohibit the burial of the dead within the center of population of the city and to provide for their burial

in a proper place subject to the provisions of general law regulating burial grounds and cemeteries.

When the Local Government Code, Batas Pambansa Blg. 337 provides in Section 177 (q) that a

Sangguniang panlungsod may "provide for the burial of the dead in such place and in such manner as

prescribed by law or ordinance" it simply authorizes the city to provide its own city owned land or to buy

or expropriate private properties to construct public cemeteries. This has been the law and practise in

the past. It continues to the present. Expropriation, however, requires payment of just compensation.

The questioned ordinance is different from laws and regulations requiring owners of subdivisions to set

aside certain areas for streets, parks, playgrounds, and other public facilities from the land they sell to

buyers of subdivision lots. The necessities of public safety, health, and convenience are very clear from

said requirements which are intended to insure the development of communities with salubrious and

wholesome environments. The beneficiaries of the regulation, in turn, are made to pay by the

subdivision developer when individual lots are sold to home-owners.


9/14

LIM v. PACQUING

G.R. No. 115044 January 27, 1995

FACTS:

The issuance of the permit/license to operate the jai-alai in favor of Associated DevelopmentCorporation (ADC) within the territorial boundaries of the City of Manila was the focus of this full blown

litigation that question, among others, P.D. 771 which revoked all existing Jai-Alai franchisers issued by

local governments as of 20 August 1975.

ISSUE: WON P.D. 771 is unconstitutional.

HELD: NO. Presidential Decree No. 771 valid and constitutional.

The time-honored doctrine is that all laws (PD No. 771 included) are presumed valid and

constitutional until or unless otherwise ruled by this Court. Not only this; Article XVIII Section 3 of the

Constitution states:

Sec. 3. All existing laws, decrees, executive orders, proclamations, letters of instructions and

other executive issuances not inconsistent with this Constitution shall remain operative until

amended, repealed or revoked.

There is nothing on record to show or even suggest that PD No. 771 has been repealed, altered

or amended by any subsequent law or presidential issuance (when the executive still exercised

legislative powers).

Neither can it be tenably stated that the issue of the continued existence of ADC's franchise by

reason of the unconstitutionality of PD No. 771 was settled in G.R. No. 115044, for the decision of the

Court's First Division in said case, aside from not being final, cannot have the effect of nullifying PD No.

771 as unconstitutional, since only the Court En Banc has that power under Article VIII, Section 4(2) of

the Constitution.


10/14

BINAY v. DOMINGO

G.R. NO. 92389, September 11, 1991

Facts:

The Burial Assistance Program (Resolution No. 60 assisting those who only earn less than

P2,000/month of burial assistance in the amount of P500.00) made by Makati Mayor Jejomar Binay, in

the exercise of the police power granted to him by the municipal charter, was referred to the

Commission on Audit after the municipal secretary certified the disbursement of four hundred thousand

pesos for its implementation was disallowed by said commission of such disbursements because there

cannot be seen any perceptible connection or relation between the objective sought to be attained and

the alleged public safety, general welfare, etc. of its inhabitants. Hence, this petition revolving around

the pivotal issue on whether or not Resolution No. 60 of the Municipality of Makati is a valid exercise of

police power under the general welfare clause.

Held:

Resolution No. 60 of the Municipality of Makati is a valid exercise of police power under the general

welfare clause. 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 (use your property so as not to impair others) and Salus populi est suprema lex (the welfare of

the people is the supreme law). Its fundamental purpose is securing the general welfare, comfort and

convenience of the people. 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. The care for the poor isgenerally 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.


11/14

GR L-31249 AUGUST 19, 1986

FACTS:

A petition for certiorari was raised against a decision of the Court of First Instance of Pangasinan

annulling an ordinance adopted by the municipal board of Dagupan City.

Ordinance 22, that sought to regulate subdivision plans in Dagupan City, ordained that every

proposed subdivision plan over any lot in the City of Dagupan, shall before the same is submitted for

approval and/or verification by the Bureau of Lands and/or the Land Registration Commission, be

previously submitted to the City Engineer of the City who shall see to it that no encroachment is made

on any portion of the public domain, that the zoning ordinance and all other pertinent rules and

regulations are observed, and that subsequent fees be imposed thereafter.

ISSUE: WON Ordinance 22 is a valid exercise of police power.

HELD : NO

In declaring the said ordinance null and void, the court a quo, and affirmed by the Supreme

Court, declared:

From the above-recited requirements, there is no showing that would justify the enactment of

the questioned ordinance. Section 1 of said ordinance clearly conflicts with Section 44 of Act

496, because the latter law does not require subdivision plans to be submitted to the City

Engineer before the same is submitted for approval to and verification by the General Land

Registration Office or by the Director of Lands as provided for in Section 58 of said Act. Section 2of the same ordinance also contravenes the provisions of Section 44 of Act 496, the latter being

silent on a service fee of PO.03 per square meter of every lot subject of such subdivision

application; Section 3 of the ordinance in question also conflicts with Section 44 of Act 496,

because the latter law does not mention of a certification to be made by the City Engineer

before the Register of Deeds allows registration of the subdivision plan; and the last section of

said ordinance imposes a penalty for its violation, which Section 44 of Act 496 does not impose.

In other words, Ordinance 22 of the City of Dagupan imposes upon a subdivision owner

additional conditions.

The Court takes note of the laudable purpose of the ordinance in bringing to a halt thesurreptitious registration of lands belonging to the government. But as already intimidated

above, the powers of the board in enacting such a laudable ordinance cannot be held valid when

it shall impede the exercise of rights granted in a general law and/or make a general law

subordinated to a local ordinance.


12/14

To sustain the ordinance would be to open the floodgates to other ordinances amending and so

violating national laws in the guise of implementing them. Thus, ordinances could be passed imposing

additional requirements for the issuance of marriage licenses, to prevent bigamy; the registration of

vehicles, to minimize carnaping; the execution of contracts, to forestall fraud; the validation of

passports, to deter imposture; the exercise of freedom of speech, to reduce disorder; and so on. The list

is endless, but the means, even if the end be valid, would be ultra vires.

We therefore urge that proper care attend the exercise of the police power lest it deteriorate into an

unreasonable intrusion into the purely private affairs of the individual. The so-called "general welfare" is

too amorphous and convenient an excuse for official arbitrariness.

Let it always be remembered that in the truly democratic state, protecting the rights of the individual is

as important as, if not more so than, protecting the rights of the public.

This advice is especially addressed to the local governments which exercise the police power only by

virtue of a valid delegation from the national legislature under the general welfare clause. In the instantcase, Ordinance No. 22 suffers from the additional defect of violating this authority for legislation in

contravention of the national law by adding to its requirements.


13/14

CRUZ v. PARAS

GR L-42571-72 JULY 25, 1983

FACTS:

The petitioners are operators of nightclubs in Bocaue, Bulacan. They filed prohibition suits to

stop the municipality of Bocaue from enforcing an ordinance prohibiting the operation of nightclubs,

cabarets, and dance halls in that municipality or renewal of licenses to operate them. The CFI upheld the

validity of the ordinance and dismissed the petition. Hence, this petition for certiorari.

ISSUE: Whether or not a municipal corporation can prohibit the operation of nightclubs

HELD: NO

A municipal corporation cannot prohibit the operation of nightclubs. Nightclubs may be

regulated but not prevented from carrying on their business. R.A. 938, as originally enacted, granted

municipalities the power to regulate the establishment, maintenance and operation of nightclubs and

the like. While it is true that on May, 21, 1954, the law was amended by R.A. 979 which purported to

give municipalities the power not only to regulate but likewise to prohibit the operation of nightclubs,

the fact is that the title of the law remained the same so that the power granted to municipalities

remains that of regulation, not prohibition. To construe the amendatory act as granting municipal

corporations the power to prohibit the operation of nightclubs would be to construe it in a way that it

violates the constitutional provision that every bill shall embrace only one subject which shall be

expressed in the title thereof. Moreover, the recently-enacted LGC (B.P. 337) speaks simply of the

power to regulate the establishment and operation of billiard pools, theatrical performances, circuses

and other forms of entertainment.


14/14

MAGTAJAS v. PRYCE PROPERTIES

G.R. No. 111097 July 20, 1994

FACTS:

Mayor Pablo Magtajas and the city legislators denounced the establishment of PAGCOR within

their city through an ordinance prohibiting the issuance of business permit and cancelling existing

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

for the operation of casinos. Also, an ordinance was passed prohibiting the operation of casinos and

providing penalty for its violation. 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 and is the third highest revenue-earner in the government.

ISSUE: Whether or not the ordinances are valid as enacted by the Sangguniang Panlungsod of

Cagayan de Oro City

HELD: NO.

Petition is denied and the decision of the Court of Appeals is affirmed.

TEST OF A VALID ORDINANCE:

Must not contravene the Constitution or any statute Must not be unfair or oppressive Must not be partial or discriminatory Must not prohibit but may regulate trade Must not be unreasonable Must be general and consistent with public policy

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.

Although LGC is permissible to modify P.D. 1869, there is no sufficient indication of an implied

repeal by the former.

LGUs may prevent and suppress all kinds of gambling within their territories except only those

allowed by statutes like P.D. 1869.This decree has the statutes of a statute that cannot be amended or nullified by a mere

ordinance.

pubcorp cases1

Documents