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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.

SARMIENTO,J.:

The acts of the Sangguniang Pampook of Region XII are assailed in this petition. The antecedent facts are

as follows:

1. On September 24, 1986, petitioner Sultan Alimbusar Limbona was appointed as a

member of the Sangguniang Pampook, Regional Autonomous Government, Region XII,

representing Lanao del Sur.

2. On March 12, 1987 petitioner was elected Speaker of the Regional Legislative

Assembly or Batasang Pampook of Central Mindanao (Assembly for brevity).

3. Said Assembly is composed of eighteen (18) members. Two of said members,

respondents Acmad Tomawis and Pakil Dagalangit, filed on March 23, 1987 with the

Commission on Elections their respective certificates of candidacy in the May 11, 1987

congressional elections for the district of Lanao del Sur but they later withdrew from the

aforesaid election and thereafter resumed again their positions as members of the

Assembly.

4. On October 21, 1987 Congressman Datu Guimid Matalam, Chairman of the

Committee on Muslim Affairs of the House of Representatives, invited Mr. Xavier Razul,Pampook Speaker of Region XI, Zamboanga City and the petitioner in his capacity as

Speaker of the Assembly, Region XII, in a letter which reads:

The Committee on Muslim Affairs well undertake consultations and

dialogues with local government officials, civic, religious organizations

and traditional leaders on the recent and present political

developments and other issues affecting Regions IX and XII.

The result of the conference, consultations and dialogues would

hopefully chart the autonomous governments of the two regions as

envisioned and may prod the President to constitute immediately theRegional Consultative Commission as mandated by the Commission.

You are requested to invite some members of the Pampook Assembly of

your respective assembly on November 1 to 15, 1987, with venue at the

Congress of the Philippines. Your presence, unstinted support and

cooperation is (sic) indispensable.

5. Consistent with the said invitation, petitioner sent a telegram to Acting Secretary

Johnny Alimbuyao of the Assembly to wire all Assemblymen that there shall be no

session in November as "our presence in the house committee hearing of Congress take

(sic) precedence over any pending business in batasang pampook ... ."

6. In compliance with the aforesaid instruction of the petitioner, Acting Secretary

Alimbuyao sent to the members of the Assembly the following telegram:

TRANSMITTING FOR YOUR INFORMATION AND GUIDANCE TELEGRAM

RECEIVED FROM SPEAKER LIMBONA QUOTE CONGRESSMAN JIMMY

MATALAM CHAIRMAN OF THE HOUSE COMMITTEE ON MUSLIM

AFFAIRS REQUESTED ME TO ASSIST SAID COMMITTEE IN THE

DISCUSSION OF THE PROPOSED AUTONOMY ORGANIC NOV. 1ST TO 15.


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HENCE WERE ALL ASSEMBLYMEN THAT THERE SHALL BE NO SESSION IN

NOVEMBER AS OUR PRESENCE IN THE HOUSE COMMITTEE HEARING OF

CONGRESS TAKE PRECEDENCE OVER ANY PENDING BUSINESS IN

BATASANG PAMPOOK OF MATALAM FOLLOWS UNQUOTE REGARDS.

7. On November 2, 1987, the Assembly held session in defiance of petitioner's advice,

with the following assemblymen present:

1. Sali, Salic

2. Conding, Pilipinas (sic)

3. Dagalangit, Rakil

4. Dela Fuente, Antonio

5. Mangelen, Conte

6. Ortiz, Jesus

7. Palomares, Diego

8. Sinsuat, Bimbo

9. Tomawis, Acmad

10. Tomawis, Jerry

After declaring the presence of a quorum, the Speaker Pro-Tempore was authorized topreside in the session. On Motion to declare the seat of the Speaker vacant, all

Assemblymen in attendance voted in the affirmative, hence, the chair declared said seat

of the Speaker vacant. 8. On November 5, 1987, the session of the Assembly resumed

with the following Assemblymen present:

1. Mangelen Conte-Presiding Officer

2. Ali Salic

3. Ali Salindatu

4. Aratuc, Malik

5. Cajelo, Rene

6. Conding, Pilipinas (sic)

7. Dagalangit, Rakil

8. Dela Fuente, Antonio

9. Ortiz, Jesus

10 Palomares, Diego

11. Quijano, Jesus

12. Sinsuat, Bimbo

13. Tomawis, Acmad


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14. Tomawis, Jerry

An excerpt from the debates and proceeding of said session reads:

HON. DAGALANGIT: Mr. Speaker, Honorable Members of the House, with the presence

of our colleagues who have come to attend the session today, I move to call the names

of the new comers in order for them to cast their votes on the previous motion to

declare the position of the Speaker vacant. But before doing so, I move also that the

designation of the Speaker Pro Temporeas the Presiding Officer and Mr. Johnny

Evangelists as Acting Secretary in the session last November 2, 1987 be reconfirmed in

today's session.

HON. SALIC ALI: I second the motions.

PRESIDING OFFICER: Any comment or objections on the two motions presented? Me

chair hears none and the said motions are approved. ...

Twelve (12) members voted in favor of the motion to declare the seat of the Speaker

vacant; one abstained and none voted against. 1

Accordingly, the petitioner prays for judgment as follows:

WHEREFORE, petitioner respectfully prays that-

(a) This Petition be given due course;

(b) Pending hearing, a restraining order or writ of preliminary injunction be issued

enjoining respondents from proceeding with their session to be held on November 5,

1987, and on any day thereafter;

(c) After hearing, judgment be rendered declaring the proceedings held by respondents

of their session on November 2, 1987 as null and void;

(d) Holding the election of petitioner as Speaker of said Legislative Assembly or Batasan

Pampook, Region XII held on March 12, 1987 valid and subsisting, and

(e) Making the injunction permanent.

Petitioner likewise prays for such other relief as may be just and equitable. 2

Pending further proceedings, this Court, on January 19, 1988, received a resolution filed by the

Sangguniang Pampook, "EXPECTING ALIMBUSAR P. LIMBONA FROM MEMBERSHIP OF THE

SANGGUNIANG PAMPOOK AUTONOMOUS REGION XII," 3on the grounds, among other things, that the

petitioner "had caused to be prepared and signed by him paying [sic] the salaries and emoluments of

Odin Abdula, who was considered resigned after filing his Certificate of Candidacy for Congressmen for

the First District of Maguindanao in the last May 11, elections. . . and nothing in the record of the

Assembly will show that any request for reinstatement by Abdula was ever made . . ." 4and that "such

action of Mr. Lim bona in paying Abdula his salaries and emoluments without authority from the

Assembly . . . constituted a usurpation of the power of the Assembly," 5that the petitioner "had recently

caused withdrawal of so much amount of cash from the Assembly resulting to the non-payment of the

salaries and emoluments of some Assembly [sic]," 6and that he had "filed a case before the Supreme

Court against some members of the Assembly on question which should have been resolved within the

confines of the Assembly," 7for which the respondents now submit that the petition had become "moot

and academic". 8

The first question, evidently, is whether or not the expulsion of the petitioner (pending litigation) has

made the case moot and academic.


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We do not agree that the case has been rendered moot and academic by reason simply of the expulsion

resolution so issued. For, if the petitioner's expulsion was done purposely to make this petition moot

and academic, and to preempt the Court, it will not make it academic.

On the ground of the immutable principle of due process alone, we hold that the expulsion in question is

of no force and effect. In the first place, there is no showing that the Sanggunian had conducted an

investigation, and whether or not the petitioner had been heard in his defense, assuming that there was

an investigation, or otherwise given the opportunity to do so. On the other hand, what appears in the

records is an admission by the Assembly (at least, the respondents) that "since November, 1987 up to

this writing, the petitioner has not set foot at the Sangguniang Pampook." 9"To be sure, the private

respondents aver that "[t]he Assemblymen, in a conciliatory gesture, wanted him to come to Cotabato

City," 10but that was "so that their differences could be threshed out and settled."11Certainly, that

avowed wanting or desire to thresh out and settle, no matter how conciliatory it may be cannot be a

substitute for the notice and hearing contemplated by law.

While we have held that due process, as the term is known in administrative law, does not absolutely

require notice and that a party need only be given the opportunity to be heard, 12it does not appear

herein that the petitioner had, to begin with, been made aware that he had in fact stood charged ofgraft and corruption before his collegues. It cannot be said therefore that he was accorded any

opportunity to rebut their accusations. As it stands, then, the charges now levelled amount to mere

accusations that cannot warrant expulsion.

In the second place, (the resolution) appears strongly to be a bare act of vendetta by the other

Assemblymen against the petitioner arising from what the former perceive to be abduracy on the part

of the latter. Indeed, it (the resolution) speaks of "a case [having been filed] [by the petitioner] before

the Supreme Court . . . on question which should have been resolved within the confines of the

Assemblyman act which some members claimed unnecessarily and unduly assails their integrity and

character as representative of the people" 13an act that cannot possibly justify expulsion. Access to

judicial remedies is guaranteed by the Constitution,14

and, unless the recourse amounts to maliciousprosecution, no one may be punished for seeking redress in the courts.

We therefore order reinstatement, with the caution that should the past acts of the petitioner indeed

warrant his removal, the Assembly is enjoined, should it still be so minded, to commence proper

proceedings therefor in line with the most elementary requirements of due process. And while it is

within the discretion of the members of the Sanggunian to punish their erring colleagues, their acts are

nonetheless subject to the moderating band of this Court in the event that such discretion is exercised

with grave abuse.

It is, to be sure, said that precisely because the Sangguniang Pampook(s) are "autonomous," the courts

may not rightfully intervene in their affairs, much less strike down their acts. We come, therefore, to the

second issue: Are the so-called autonomous governments of Mindanao, as they are now constituted,

subject to the jurisdiction of the national courts? In other words, what is the extent of self-government

given to the two autonomous governments of Region IX and XII?

The autonomous governments of Mindanao were organized in Regions IX and XII by Presidential Decree

No. 161815promulgated on July 25, 1979. Among other things, the Decree established "internal

autonomy" 16in the two regions "[w]ithin the framework of the national sovereignty and territorial

integrity of the Republic of the Philippines and its Constitution," 17with legislative and executive

machinery to exercise the powers and responsibilities 18specified therein.

It requires the autonomous regional governments to "undertake all internal administrative matters for

the respective regions," 19except to "act on matters which are within the jurisdiction and competence of

the National Government," 20"which include, but are not limited to, the following:

(1) National defense and security;

(2) Foreign relations;

(3) Foreign trade;


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(4) Currency, monetary affairs, foreign exchange, banking and quasi-banking, and

external borrowing,

(5) Disposition, exploration, development, exploitation or utilization of all natural

resources;

(6) Air and sea transport

(7) Postal matters and telecommunications;

(8) Customs and quarantine;

(9) Immigration and deportation;

(10) Citizenship and naturalization;

(11) National economic, social and educational planning; and

(12) General auditing. 21

In relation to the central government, it provides that "[t]he President shall have the power of general

supervision and control over the Autonomous Regions ..." 22

Now, autonomy is either decentralization of administration or decentralization of power. There is

decentralization of administration when the central government delegates administrative powers to

political subdivisions in order to broaden the base of government power and in the process to make

local governments "more responsive and accountable," 23"and ensure their fullest development as self-

reliant communities and make them more effective partners in the pursuit of national development and

social progress." 24At the same time, it relieves the central government of the burden of managing localaffairs and enables it to concentrate on national concerns. The President exercises "general

supervision" 25over them, but only to "ensure that local affairs are administered according to law." 26He

has no control over their acts in the sense that he can substitute their judgments with his own. 27

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

local governments units declare to be autonomous . In that case, the autonomous government is free to

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

According to a constitutional author, decentralization of power amounts to "self-immolation," since in

that event, the autonomous government becomes accountable not to the central authorities but to its

constituency. 28

But the question of whether or not the grant of autonomy Muslim Mindanao under the 1987

Constitution involves, truly, an effort to decentralize power rather than mere administration is a

question foreign to this petition, since what is involved herein is a local government unit constituted

prior to the ratification of the present Constitution. Hence, the Court will not resolve that controversy

now, in this case, since no controversy in fact exists. We will resolve it at the proper time and in the

proper case.

Under the 1987 Constitution, local government units enjoy autonomy in these two senses, thus:

Section 1. The territorial and political subdivisions of the Republic of the Philippines are

the provinces, cities, municipalities, and barangays. Here shall be autonomous regions in

Muslim Mindanao ,and the Cordilleras as hereinafter provided. 29

Sec. 2. The territorial and political subdivisions shall enjoy local autonomy. 30

xxx xxx xxx

See. 15. Mere shall be created autonomous regions in Muslim Mindanao and in the

Cordilleras consisting of provinces, cities, municipalities, and geographical areas sharing

common and distinctive historical and cultural heritage, economic and social structures,


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and other relevant characteristics within the framework of this Constitution and the

national sovereignty as well as territorial integrity of the Republic of the Philippines. 31

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).32If the Sangguniang Pampook (of Region XII), then, is autonomous in

the latter sense, its acts are, debatably beyond the domain of this Court in perhaps the same way that

the internalacts, 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 autonomous governments of Mindanao persuades us that they

were never meant to exercise autonomy in the second sense, that is, in which the central government

commits an act of self-immolation. Presidential Decree No. 1618, in the first place, mandates that "[t]he

President shall have the power of general supervision and control over Autonomous Regions."33In the

second place, the Sangguniang Pampook, their legislative arm, is made to discharge chiefly

administrative services, thus:

SEC. 7. Powers of the Sangguniang Pampook. The Sangguniang Pampook shall exercise

local legislative powers over regional affairs within the framework of national

development plans, policies and goals, in the following areas:

(1) Organization of regional administrative system;

(2) Economic, social and cultural development of the Autonomous Region;

(3) Agricultural, commercial and industrial programs for the Autonomous Region;

(4) Infrastructure development for the Autonomous Region;

(5) Urban and rural planning for the Autonomous Region;

(6) Taxation and other revenue-raising measures as provided for in this Decree;

(7) Maintenance, operation and administration of schools established by the

Autonomous Region;

(8) Establishment, operation and maintenance of health, welfare and other social

services, programs and facilities;

(9) Preservation and development of customs, traditions, languages and culture

indigenous to the Autonomous Region; and

(10) Such other matters as may be authorized by law,including the enactment of such

measures as may be necessary for the promotion of the general welfare of the people in

the Autonomous Region.

The President shall exercise such powers as may be necessary to assure that enactment

and acts of the Sangguniang Pampook and the Lupong Tagapagpaganap ng Pook are in

compliance with this Decree, national legislation, policies, plans and programs.

The Sangguniang Pampook shall maintain liaison with the Batasang Pambansa. 34

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.

Briefly, the petitioner assails the legality of his ouster as Speaker on the grounds that: (1) the

Sanggunian, in convening on November 2 and 5, 1987 (for the sole purpose of declaring the office of the

Speaker vacant), did so in violation of the Rules of the Sangguniang Pampook since the Assembly was


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then on recess; and (2) assuming that it was valid, his ouster was ineffective nevertheless for lack of

quorum.

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," 35but it provides likewise that "the Speaker may, on

[sic] his discretion, declare a recess of "short intervals." 36Of course, there is disagreement between the

protagonists as to whether or not the recess called by the petitioner effective November 1 through 15,

1987 is the "recess of short intervals" referred to; the petitioner says that it is while the respondents

insist that, to all intents and purposes, it was an adjournment and that "recess" as used by their Rules

only refers to "a recess when arguments get heated up so that protagonists in a debate can talk things

out informally and obviate dissenssion [sic] and disunity. 37The Court agrees with the respondents on

this regard, since clearly, the Rules speak of "short intervals." Secondly, the Court likewise agrees that

the Speaker could not have validly called a recess since the Assembly had yet to convene on November

1, the date session opens under the same Rules. 38Hence, there can be no recess to speak of that could

possibly interrupt any session. 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 he could. do so. In the second place, the invitation tendered by theCommittee on Muslim Affairs of the House of Representatives provided a plausible reason for the

intermission sought. Thirdly, 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.

It does not appear to us, moreover, that the petitioner had resorted to the aforesaid "recess" in order to

forestall the Assembly from bringing about his ouster. This is not apparent from the pleadings before us.

We are convinced that the invitation was what precipitated it.

In holding that the "recess" in question is valid, we are not to be taken as establishing a precedent,since, as we said, a recess can not be validly declared without a session having been first opened. In

upholding the petitioner herein, we are not giving him a carte blancheto order recesses in the future in

violation of the Rules, or otherwise to prevent the lawful meetings thereof.

Neither are we, by this disposition, discouraging the Sanggunian from reorganizing itself pursuant to its

lawful prerogatives. Certainly, it can do so at the proper time. In the event that be petitioner should

initiate obstructive moves, the Court is certain that it is armed with enough coercive remedies to thwart

them. 39

In view hereof, we find no need in dwelling on the issue of quorum.

WHEREFORE, premises considered, the petition is GRANTED. The Sangguniang Pampook, Region XII, is

ENJOINED to (1) REINSTATE the petitioner as Member, Sangguniang Pampook, Region XII; and (2)

REINSTATE him as Speaker thereof. No costs.

SO ORDERED.

Limbona vs. Mangelin

GR No. 80391 28 February 1989

Facts:Petitioner, Sultan Alimbusar Limbona, was elected Speaker of the Regional Legislative Assembly

or Batasang Pampook of Central Mindanao (Assembly). On October 21, 1987 Congressman Datu GuimidMatalam, Chairman of the Committee on Muslim Affairs of the House of Representatives, invited

petitioner in his capacity as Speaker of the Assembly of Region 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 of Congress. However, on November 2, 1987, the Assembly held a session in

defiance of the 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 the

Assembly. 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
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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 the respondents 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 the process 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 to concentrate on national concerns.

The President exercises "general supervision" over them, but only to "ensure that local affairs are

administered according to law." He has no control over their acts in the sense that he can substitute

their judgments with his own. Decentralization of power, on the other hand, involves an abdication of

political power in the 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 Region XII), 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 autonomous governments 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.

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 he could 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.


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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.

CRUZ,J.:

There was instant opposition when PAGCOR announced the opening of a casino in Cagayan de Oro City.

Civic organizations angrily denounced the project. The religious elements echoed the objection and so

did the women's groups and the youth. Demonstrations were led by the mayor and the city legislators.

The media trumpeted the protest, describing the casino as an affront to the welfare of the city.

The trouble arose when in 1992, flush with its tremendous success in several cities, PAGCOR decided to

expand its operations to Cagayan de Oro City. To this end, it leased a portion of a building belonging to

Pryce Properties Corporation, Inc., one of the herein private respondents, renovated and equipped the

same, and prepared to inaugurate its casino there during the Christmas season.

The reaction of the Sangguniang Panlungsod of Cagayan de Oro City was swift and hostile. On December

7, 1992, it enacted Ordinance No. 3353 reading as follows:

ORDINANCE NO. 3353

AN ORDINANCE PROHIBITING THE ISSUANCE OF BUSINESS PERMIT AND CANCELLING

EXISTING BUSINESS PERMIT TO ANY ESTABLISHMENT FOR THE USING AND ALLOWING

TO BE USED ITS PREMISES OR PORTION THEREOF FOR THE OPERATION OF CASINO.

BE IT ORDAINED by the Sangguniang Panlungsod of the City of Cagayan de Oro, insession assembled that:

Sec. 1. That pursuant to the policy of the city banning the operation of casino within

its territorial jurisdiction, no business permit shall be issued to any person, partnership

or corporation for the operation of casino within the city limits.

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

partnership or corporation to use its business establishment or portion thereof, or allow

the use thereof by others for casino operation and other gambling activities.

Sec. 3. PENALTIES. Any violation of such existing business permit as defined in thepreceding section shall suffer the following penalties, to wit:

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

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

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

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

c) Permanent revocation of the business permit and

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

subsequent offenses.

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

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

ORDINANCE NO. 3375-93

AN ORDINANCE PROHIBITING THE OPERATION OF CASINO AND PROVIDING PENALTY

FOR VIOLATION THEREFOR.


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WHEREAS, the City Council established a policy as early as 1990 against CASINO under

its Resolution No. 2295;

WHEREAS, on October 14, 1992, the City Council passed another Resolution No. 2673,

reiterating its policy against the establishment of CASINO;

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

the issuance of Business Permit and to cancel existing Business Permit to any

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

the operation of CASINO;

WHEREAS, under Art. 3, section 458, No. (4), sub paragraph VI of the Local Government

Code of 1991 (Rep. Act 7160) and under Art. 99, No. (4), Paragraph VI of the

implementing rules of the Local Government Code, the City Council as the Legislative

Body shall enact measure to suppress any activity inimical to public morals and general

welfare of the people and/or regulate or prohibit such activity pertaining to amusement

or entertainment in order to protect social and moral welfare of the community;

NOW THEREFORE,

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

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

prohibited.

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

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

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

b) Imprisonment of not less than six (6) months nor more than one (1) year or a fine in

the amount of P5,000.00 or both at the discretion of the court against the manager,

supervisor, and/or any person responsible in the establishment, conduct and

maintenance of gambling CASINO.

Sec. 3. This Ordinance shall take effect ten (10) days after its publication in a local

newspaper of general circulation.

Pryce assailed the ordinances before the Court of Appeals, where it was joined by PAGCOR as intervenorand supplemental petitioner. Their challenge succeeded. On March 31, 1993, the Court of Appeals

declared the ordinances invalid and issued the writ prayed for to prohibit their

enforcement. 1Reconsideration of this decision was denied on July 13, 1993. 2

Cagayan de Oro City and its mayor are now before us in this petition for review under Rule 45 of the

Rules of Court. 3They aver that the respondent Court of Appeals erred in holding that:

1. Under existing laws, the Sangguniang Panlungsod of the City of Cagayan de Oro does

not have the power and authority to prohibit the establishment and operation of a

PAGCOR gambling casino within the City's territorial limits.

2. The phrase "gambling and other prohibited games of chance" found in Sec. 458, par.

(a), sub-par. (1) (v) of R.A. 7160 could only mean "illegal gambling."

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

point.

4. The questioned Ordinances are discriminatory to casino and partial to cockfighting

and are therefore invalid on that point.


11/87

5. The questioned Ordinances are not reasonable, not consonant with the general

powers and purposes of the instrumentality concerned and inconsistent with the laws

or policy of the State.

6. It had no option but to follow the ruling in the case of Basco, et al. v. PAGCOR,G.R.

No. 91649, May 14, 1991, 197 SCRA 53 in disposing of the issues presented in this

present case.

PAGCOR is a corporation created directly by P.D. 1869 to help centralize and regulate all games of

chance, including casinos on land and sea within the territorial jurisdiction of the Philippines. In Basco v.

Philippine Amusements and Gaming Corporation, 4this Court sustained the constitutionality of the

decree and even cited the benefits of the entity to the national economy as the third highest revenue-

earner in the government, next only to the BIR and the Bureau of Customs.

Cagayan de Oro City, like other local political subdivisions, is empowered to enact ordinances for the

purposes indicated in the Local Government Code. It is expressly vested with the police power under

what is known as the General Welfare Clause now embodied in Section 16 as follows:

Sec. 16. General Welfare. Every local government unit shall exercise the powers

expressly granted, those necessarily implied therefrom, as well as powers necessary,

appropriate, or incidental for its efficient and effective governance, and those which are

essential to the promotion of the general welfare. Within their respective territorial

jurisdictions, local government units shall ensure and support, among other things, the

preservation and enrichment of culture, promote health and safety, enhance the right

of the people to a balanced ecology, encourage and support the development of

appropriate and self-reliant scientific and technological capabilities, improve public

morals, enhance economic prosperity and social justice, promote full employment

among their residents, maintain peace and order, and preserve the comfort and

convenience of their inhabitants.

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

Sec. 458. Powers, Duties, Functions and Compensation. (a) The Sangguniang

Panlungsod, as the legislative body of the city, shall enact ordinances, approve

resolutions and appropriate funds for the general welfare of the city and its inhabitants

pursuant to Section 16 of this Code and in the proper exercise of the corporate powers

of the city as provided for under Section 22 of this Code, and shall:

(1) Approve ordinances and pass resolutions necessary for an efficient and effective city

government, and in this connection, shall:

xxx xxx xxx

(v) Enact ordinances intended to prevent, suppress and

impose appropriate penalties for habitual drunkenness

in public places, vagrancy, mendicancy, prostitution,

establishment and maintenance of houses of ill

repute,gamblingand other prohibited games of chance,

fraudulent devices and ways to obtain money or

property, drug addiction, maintenance of drug dens,

drug pushing, juvenile delinquency, the printing,

distribution or exhibition of obscene or pornographic

materials or publications, and such other activities

inimical to the welfare and morals of the inhabitants of

the city;

This section also authorizes the local government units to regulate properties and businesses within

their territorial limits in the interest of the general welfare. 5


12/87


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PAGCOR and authorizing it to operate casinos "on land and sea within the territorial jurisdiction of the

Philippines."

This is the opportune time to stress an important point.

The morality of gambling is not a justiciable issue. Gambling is not illegalper se. While it is generally

considered inimical to the interests of the people, there is nothing in the Constitution categorically

proscribing or penalizing gambling or, for that matter, even mentioning it at all. It is left to Congress to

deal with the activity as it sees fit. In the exercise of its own discretion, the legislature may prohibit

gambling altogether or allow it without limitation or it may prohibit some forms of gambling and allow

others for whatever reasons it may consider sufficient. Thus, it has prohibitedjuetengand montebut

permits lotteries, cockfighting and horse-racing. In making such choices, Congress has consulted its own

wisdom, which this Court has no authority to review, much less reverse. Well has it been said that courts

do not sit to resolve the merits of conflicting theories. 8That is the prerogative of the political

departments. It is settled that questions regarding the wisdom, morality, or practicibility of statutes are

not addressed to the judiciary but may be resolved only by the legislative and executive departments, to

which the function belongs in our scheme of government. That function is exclusive. Whichever way

these branches decide, they are answerable only to their own conscience and the constituents who willultimately judge their acts, and not to the courts of justice.

The only question we can and shall resolve in this petition is the validity of Ordinance No. 3355 and

Ordinance No. 3375-93 as enacted by the Sangguniang Panlungsod of Cagayan de Oro City. And we shall

do so only by the criteria laid down by law and not by our own convictions on the propriety of gambling.

The tests of a valid ordinance are well established. A long line of decisions 9has held that to be valid, an

ordinance must conform to the following substantive requirements:

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

2) It must not be unfair or oppressive.

3) It must not be partial or discriminatory.

4) It must not prohibit but may regulate trade.

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

6) It must not be unreasonable.

We begin by observing that under Sec. 458 of the Local Government Code, local government units areauthorized to prevent or suppress, among others, "gambling and otherprohibited games of chance."

Obviously, this provision excludes games of chance which are not prohibited but are in fact permitted by

law. The petitioners are less than accurate in claiming that the Code could have excluded such games of

chance but did not. In fact it does. The language of the section is clear and unmistakable. Under the rule

of noscitur a sociis, a word or phrase should be interpreted in relation to, or given the same meaning of,

words with which it is associated. Accordingly, we conclude that since the word "gambling" is associated

with "and other prohibited games of chance," the word should be read as referring to only illegal

gambling which, like the other prohibited games of chance, must be prevented or suppressed.

We could stop here as this interpretation should settle the problem quite conclusively. But we will not.

The vigorous efforts of the petitioners on behalf of the inhabitants of Cagayan de Oro City, and the

earnestness of their advocacy, deserve more than short shrift from this Court.

The apparent flaw in the ordinances in question is that they contravene P.D. 1869 and the public policy

embodied therein insofar as they prevent PAGCOR from exercising the power conferred on it to operate

a casino in Cagayan de Oro City. The petitioners have an ingenious answer to this misgiving. They deny

that it is the ordinances that have changed P.D. 1869 for an ordinance admittedly cannot prevail against

a statute. Their theory is that the change has been made by the Local Government Code itself, which

was also enacted by the national lawmaking authority. In their view, the decree has been, not really

repealed by the Code, but merely "modifiedpro tanto" in the sense that PAGCOR cannot now operate a


14/87

casino over the objection of the local government unit concerned. This modification of P.D. 1869 by the

Local Government Code is permissible because one law can change or repeal another law.

It seems to us that the petitioners are playing with words. While insisting that the decree has only been

"modifiedpro tanto," they are actually arguing that it is already dead, repealed and useless for all intents

and purposes because the Code has shorn PAGCOR of all power to centralize and regulate casinos.

Strictly speaking, its operations may now be not only prohibited by the local government unit; in fact,

the prohibition is not only discretionary but mandatedby Section 458 of the Code if the word "shall" as

used therein is to be given its accepted meaning. Local government units have now no choice but to

prevent and suppress gambling, which in the petitioners' view includes both legal and illegal gambling.

Under this construction, PAGCOR will have no more games of chance to regulate or centralize as they

must all be prohibited by the local government units pursuant to the mandatory duty imposed upon

them by the Code. In this situation, PAGCOR cannot continue to exist except only as a toothless tiger or

a white elephant and will no longer be able to exercise its powers as a prime source of government

revenue through the operation of casinos.

It is noteworthy that the petitioners have cited only Par. (f) of the repealing clause, conveniently

discarding the rest of the provision which painstakingly mentions the specific laws or the parts thereofwhich are repealed (or modified) by the Code. Significantly, P.D. 1869 is not one of them. A reading of

the entire repealing clause, which is reproduced below, will disclose the omission:

Sec. 534. Repealing Clause. (a) Batas Pambansa Blg. 337, otherwise known as the

"Local Government Code," Executive Order No. 112 (1987), and Executive Order No. 319

(1988) are hereby repealed.

(b) Presidential Decree Nos. 684, 1191, 1508 and such other decrees, orders,

instructions, memoranda and issuances related to or concerning the barangay are

hereby repealed.

(c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939 regarding hospital

fund; Section 3, a (3) and b (2) of Republic Act. No. 5447 regarding the Special Education

Fund; Presidential Decree No. 144 as amended by Presidential Decree Nos. 559 and

1741; Presidential Decree No. 231 as amended; Presidential Decree No. 436 as amended

by Presidential Decree No. 558; and Presidential Decree Nos. 381, 436, 464, 477, 526,

632, 752, and 1136 are hereby repealed and rendered of no force and effect.

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

projects.

(e) The following provisions are hereby repealed or amended insofar as they areinconsistent with the provisions of this Code: Sections 2, 16, and 29 of Presidential

Decree No. 704; Sections 12 of Presidential Decree No. 87, as amended; Sections 52, 53,

66, 67, 68, 69, 70, 71, 72, 73, and 74 of Presidential Decree No. 463, as amended; and

Section 16 of Presidential Decree No. 972, as amended, and

(f) All general and special laws, acts, city charters, decrees, executive orders,

proclamations and administrative regulations, or part or parts thereof which are

inconsistent with any of the provisions of this Code are hereby repealed or modified

accordingly.

Furthermore, it is a familiar rule that implied repeals are not lightly presumed in the absence of a clear

and unmistakable showing of such intention. In Lichauco & Co. v. Apostol, 10this Court explained:

The cases relating to the subject of repeal by implication all proceed on the assumption

that if the act of later date clearly reveals an intention on the part of the lawmaking

power to abrogate the prior law, this intention must be given effect; but there must

always be a sufficient revelation of this intention, and it has become an unbending rule

of statutory construction that the intention to repeal a former law will not be imputed

to the Legislature when it appears that the two statutes, or provisions, with reference to

which the question arises bear to each other the relation of general to special.


15/87

There is no sufficient indication of an implied repeal of P.D. 1869. On the contrary, as the private

respondent points out, PAGCOR is mentioned as the source of funding in two later enactments of

Congress, to wit, R.A. 7309, creating a Board of Claims under the Department of Justice for the benefit

of victims of unjust punishment or detention or of violent crimes, and R.A. 7648, providing for measures

for the solution of the power crisis. PAGCOR revenues are tapped by these two statutes. This would

show that the PAGCOR charter has not been repealed by the Local Government Code but has in fact

been improved as it were to make the entity more responsive to the fiscal problems of the government.

It is a canon of legal hermeneutics that instead of pitting one statute against another in an inevitably

destructive confrontation, courts must exert every effort to reconcile them, remembering that both

laws deserve a becoming respect as the handiwork of a coordinate branch of the government. On the

assumption of a conflict between P.D. 1869 and the Code, the proper action is not to uphold one and

annul the other but to give effect to both by harmonizing them if possible. This is possible in the case

before us. The proper resolution of the problem at hand is to hold that under the Local Government

Code, local government units may (and indeed must) prevent and suppress all kinds of gambling within

their territories except only those allowed by statutes like P.D. 1869. The exception reserved in such

laws must be read into the Code, to make both the Code and such laws equally effective and mutually

complementary.

This approach would also affirm that there are indeed two kinds of gambling, to wit, the illegal and

those authorized by law. Legalized gambling is not a modern concept; it is probably as old as illegal

gambling, if not indeed more so. The petitioners' suggestion that the Code authorizes them to prohibit

all kinds of gambling would erase the distinction between these two forms of gambling without a clear

indication that this is the will of the legislature. Plausibly, following this theory, the City of Manila could,

by mere ordinance, prohibit the Philippine Charity Sweepstakes Office from conducting a lottery as

authorized by R.A. 1169 and B.P. 42 or stop the races at the San Lazaro Hippodrome as authorized by

R.A. 309 and R.A. 983.

In light of all the above considerations, we see no way of arriving at the conclusion urged on us by thepetitioners that the ordinances in question are valid. On the contrary, we find that the ordinances

violate P.D. 1869, which has the character and force of a statute, as well as the public policy expressed

in the decree allowing the playing of certain games of chance despite the prohibition of gambling in

general.

The rationale of the requirement that the ordinances should not contravene a statute is obvious.

Municipal governments are only agents of the national government. Local councils exercise only

delegated legislative powers conferred on them by Congress as the national lawmaking body. The

delegate cannot be superior to the principal or exercise powers higher than those of the latter. It is a

heresy to suggest that the local government units can undo the acts of Congress, from which they have

derived their power in the first place, and negate by mere ordinance the mandate of the statute.

Municipal corporations owe their origin to, and derive their powers and rights wholly

from the legislature. It breathes into them the breath of life, without which they cannot

exist. As it creates, so it may destroy. As it may destroy, it may abridge and control.

Unless there is some constitutional limitation on the right, the legislature might, by a

single act, and if we can suppose it capable of so great a folly and so great a wrong,

sweep from existence all of the municipal corporations in the State, and the corporation

could not prevent it. We know of no limitation on the right so far as to the corporation

themselves are concerned. They are, so to phrase it, the mere tenants at will of the

legislature. 11

This basic relationship between the national legislature and the local government units has not beenenfeebled by the new provisions in the Constitution strengthening the policy of local autonomy.

Without meaning to detract from that policy, we here confirm that Congress retains control of the local

government units although in significantly reduced degree now than under our previous Constitutions.

The power to create still includes the power to destroy. The power to grant still includes the power to

withhold or recall. True, there are certain notable innovations in the Constitution, like the direct

conferment on the local government units of the power to tax, 12which cannot now be withdrawn by

mere statute. By and large, however, the national legislature is still the principal of the local government

units, which cannot defy its will or modify or violate it.


16/87

The Court understands and admires the concern of the petitioners for the welfare of their constituents

and their apprehensions that the welfare of Cagayan de Oro City will be endangered by the opening of

the casino. We share the view that "the hope of large or easy gain, obtained without special effort, turns

the head of the workman"13and that "habitual gambling is a cause of laziness and ruin." 14In People v.

Gorostiza, 15we declared: "The social scourge of gambling must be stamped out. The laws against

gambling must be enforced to the limit." George Washington called gambling "the child of avarice, the

brother of iniquity and the father of mischief." Nevertheless, we must recognize the power of the

legislature to decide, in its own wisdom, to legalize certain forms of gambling, as was done in P.D. 1869

and impliedly affirmed in the Local Government Code. That decision can be revoked by this Court only if

it contravenes the Constitution as the touchstone of all official acts. We do not find such contravention

here.

We hold that the power of PAGCOR to centralize and regulate all games of chance, including casinos on

land and sea within the territorial jurisdiction of the Philippines, remains unimpaired. P.D. 1869 has not

been modified by the Local Government Code, which empowers the local government units to prevent

or suppress only those forms of gambling prohibited by law.

Casino gambling is authorized by P.D. 1869. This decree has the status of a statute that cannot beamended or nullified by a mere ordinance. Hence, it was not competent for the Sangguniang

Panlungsod of Cagayan de Oro City to enact Ordinance No. 3353 prohibiting the use of buildings for the

operation of a casino and Ordinance No. 3375-93 prohibiting the operation of casinos. For all their

praiseworthy motives, these ordinances are contrary to P.D. 1869 and the public policy announced

therein and are therefore ultra vires and void.

WHEREFORE, the petition is DENIED and the challenged decision of the respondent Court of Appeals is

AFFIRMED, with costs against the petitioners. It is so ordered.

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

vs.

PRYCE PROPERTIES CORPORATION, INC. & PHILIPPINE AMUSEMENT AND GAMING

CORPORATION,respondents.

FACTS:

The Sangguniang Panlunsod enacted Ordinance No. 3353 prohibiting the operation of casino followed

by Ordinance No. 3375-93 providing penalty therefor. Petitioners also attack gambling as intrinsically

harmful and cite various provisions of the Constitution and several decisions of this Court expressive of

the general and official disapprobation of the vice. They invoke the State policies on the family and the

proper upbringing of the youth.

ISSUE:

Whether or not Ordinace No. 3355 and Ordinance No. 3375-93 as enacted by the Sangguniang

Panlunsod of Cagayan de Oro City are valid.

HELD:

NO. Petition was denied. Decision of respondent Court of Appeals was affirmed.

RATIO:

The morality of gambling is not a justiciable issue. Gambling is not illegalper se. While it is generallyconsidered inimical to the interests of the people, there is nothing in the Constitution categorically

proscribing or penalizing gambling or, for that matter, even mentioning it at all. It is left to Congress to

deal with the activity as it sees fit. In the exercise of its own discretion, the legislature may prohibit

gambling altogether or allow it without limitation or it may prohibit some forms of gambling and allow

others for whatever reasons it may consider sufficient. Thus, it has prohibitedjuetengand montebut

permits lotteries, cockfighting and horse-racing. In making such choices, Congress has consulted its own

wisdom, which this Court has no authority to review, much less reverse. Well has it been said that courts

do not sit to resolve the merits of conflicting theories.


17/87

The tests of a valid ordinance are well established. A long line of decisionshas held that to be valid, an

ordinance must conform to the following substantive requirements:

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

2) It must not be unfair or oppressive.

3) It must not be partial or discriminatory.

4) It must not prohibit but may regulate trade.

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

6) It must not be unreasonable.

The rationale of the requirement that the ordinances should not contravene a statute is obvious.

Municipal governments are only agents of the national government. Local councils exercise onlydelegated legislative powers conferred on them by Congress as the national lawmaking body. The

delegate cannot be superior to the principal or exercise powers higher than those of the latter. It is a

heresy to suggest that the local government units can undo the acts of Congress, from which they have

derived their power in the first place, and negate by mere ordinance the mandate of the statute.


18/87

G.R. No. 152774 May 27, 2004

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

vs.

HON. ALBERTO G. ROMULO, Executive Secretary and Chairman of the Oversight Committee on

Devolution; HON. EMILIA BONCODIN, Secretary, Department of Budget and Management; HON. JOSE

D. LINA, JR., Secretary, Department of Interior and Local Government,respondents.

CALLEJO, SR.,J.:

The Province of Batangas, represented by its Governor, Hermilando I. Mandanas, filed the present

petition for certiorari, prohibition and mandamus under Rule 65 of the Rules of Court, as amended, to

declare as unconstitutional and void certain provisos contained in the General Appropriations Acts

(GAA) of 1999, 2000 and 2001, insofar as they uniformly earmarked for each corresponding year the

amount of five billion pesos (P5,000,000,000.00) of the Internal Revenue Allotment (IRA) for the Local

Government Service Equalization Fund (LGSEF) and imposed conditions for the release thereof.

Named as respondents are Executive Secretary Alberto G. Romulo, in his capacity as Chairman of the

Oversight Committee on Devolution, Secretary Emilia Boncodin of the Department of Budget and

Management (DBM) and Secretary Jose Lina of the Department of Interior and Local Government

(DILG).

Background

On December 7, 1998, then President Joseph Ejercito Estrada issued Executive Order (E.O.) No. 48

entitled "ESTABLISHING A PROGRAM FOR DEVOLUTION ADJUSTMENT AND EQUALIZATION." The

program was established to "facilitate the process of enhancing the capacities of local government units

(LGUs) in the discharge of the functions and services devolved to them by the National Government

Agencies concerned pursuant to the Local Government Code."1

The Oversight Committee (referred to asthe Devolution Committee in E.O. No. 48) constituted under Section 533(b) of Republic Act No. 7160

(The Local Government Code of 1991) has been tasked to formulate and issue the appropriate rules and

regulations necessary for its effective implementation.2Further, to address the funding shortfalls of

functions and services devolved to the LGUs and other funding requirements of the program, the

"Devolution Adjustment and Equalization Fund" was created.3For 1998, the DBM was directed to set

aside an amount to be determined by the Oversight Committee based on the devolution status appraisal

surveys undertaken by the DILG.4The initial fund was to be sourced from the available savings of the

national government for CY 1998.5For 1999 and the succeeding years, the corresponding amount

required to sustain the program was to be incorporated in the annual GAA.6The Oversight Committee

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

and distribution of said fund to the LGUs.

7

The LGSEF in the GAA of 1999

In Republic Act No. 8745, otherwise known as the GAA of 1999, the program was renamed as the LOCAL

GOVERNMENT SERVICE EQUALIZATION FUND (LGSEF). Under said appropriations law, the amount

ofP96,780,000,000 was allotted as the share of the LGUs in the internal revenue taxes. Item No. 1,

Special Provisions, Title XXXVIA. Internal Revenue Allotment of Rep. Act No. 8745 contained the

following proviso:

... PROVIDED, That the amount of FIVE BILLION PESOS (P5,000,000,000) shall be earmarked for

the Local Government Service Equalization Fund for the funding requirements of projects and

activities arising from the full and efficient implementation of devolved functions and services of

local government units pursuant to R.A. No. 7160, otherwise known as the Local Government

Code of 1991: PROVIDED, FURTHER, That such amount shall be released to the local government

units subject to the implementing rules and regulations, including such mechanisms and

guidelines for the equitable allocations and distribution of said fund among local government

units subject to the guidelines that may be prescribed by the Oversight Committee on

Devolution as constituted pursuant to Book IV, Title III, Section 533(b) of R.A. No. 7160. The

Internal Revenue Allotment shall be released directly by the Department of Budget and

Management to the Local Government Units concerned.


19/87

On July 28, 1999, the Oversight Committee (with then Executive Secretary Ronaldo B. Zamora as

Chairman) passed Resolution Nos. OCD-99-003, OCD-99-005 and OCD-99-006 entitled as

follows:

OCD-99-005

RESOLUTION ADOPTING THE ALLOCATION SCHEME FOR THE PhP5 BILLION CY 1999 LOCAL

GOVERNMENT SERVICE EQUALIZATION FUND (LGSEF) AND REQUESTING HIS EXCELLENCY

PRESIDENT JOSEPH EJERCITO ESTRADA TO APPROVE SAID ALLOCATION SCHEME.

OCD-99-006

RESOLUTION ADOPTING THE ALLOCATION SCHEME FOR THE PhP4.0 BILLION OF THE 1999

LOCAL GOVERNMENT SERVICE EQUALIZATION FUND AND ITS CONCOMITANT GENERAL

FRAMEWORK, IMPLEMENTING GUIDELINES AND MECHANICS FOR ITS IMPLEMENTATION AND

RELEASE, AS PROMULGATED BY THE OVERSIGHT COMMITTEE ON DEVOLUTION.

OCD-99-003

RESOLUTION REQUESTING HIS EXCELLENCY PRESIDENT JOSEPH EJERCITO ESTRADA TO APPROVE

THE REQUEST OF THE OVERSIGHT COMMITTEE ON DEVOLUTION TO SET ASIDE TWENTY

PERCENT (20%) OF THE LOCAL GOVERNMENT SERVICE EQUALIZATION FUND (LGSEF) FOR LOCAL

AFFIRMATIVE ACTION PROJECTS AND OTHER PRIORITY INITIATIVES FOR LGUs INSTITUTIONAL

AND CAPABILITY BUILDING IN ACCORDANCE WITH THE IMPLEMENTING GUIDELINES AND

MECHANICS AS PROMULGATED BY THE COMMITTEE.

These OCD resolutions were approved by then President Estrada on October 6, 1999.

Under the allocation scheme adopted pursuant to Resolution No. OCD-99-005, the five billionpesos LGSEF was to be allocated as follows:

1. The PhP4 Billion of the LGSEF shall be allocated in accordance with the allocation

scheme and implementing guidelines and mechanics promulgated and adopted by the

OCD. To wit:

a. The first PhP2 Billion of the LGSEF shall be allocated in accordance with the

codal formula sharing scheme as prescribed under the 1991 Local Government

Code;

b. The second PhP2 Billion of the LGSEF shall be allocated in accordance with amodified 1992 cost of devolution fund (CODEF) sharing scheme, as

recommended by the respective leagues of provinces, cities and municipalities

to the OCD. The modified CODEF sharing formula is as follows:

Province : 40%

Cities : 20%

Municipalities : 40%

This is applied to the P2 Billion after the approved amounts granted to individualprovinces, cities and municipalities as assistance to cover decrease in 1999 IRA share

due to reduction in land area have been taken out.

2. The remaining PhP1 Billion of the LGSEF shall be earmarked to support local affirmative action

projects and other priority initiatives submitted by LGUs to the Oversight Committee on

Devolution for approval in accordance with its prescribed guidelines as promulgated and

adopted by the OCD.


20/87

In Resolution No. OCD-99-003, the Oversight Committee set aside the one billion pesos or 20% of the

LGSEF to support Local Affirmative Action Projects (LAAPs) of LGUs. This remaining amount was

intended to "respond to the urgent need for additional funds assistance, otherwise not available within

the parameters of other existing fund sources." For LGUs to be eligible for funding under the one-billion-

peso portion of the LGSEF, the OCD promulgated the following:

III. CRITERIA FOR ELIGIBILITY:

1. LGUs (province, city, municipality, or barangay), individually or by group or multi-LGUs or

leagues of LGUs, especially those belonging to the 5th and 6th class, may access the fund to

support any projects or activities that satisfy any of the aforecited purposes. A barangay may

also access this fund directly or through their respective municipality or city.

2. The proposed project/activity should be need-based, a local priority, with high development

impact and are congruent with the socio-cultural, economic and development agenda of the

Estrada Administration, such as food security, poverty alleviation, electrification, and peace and

order, among others.

3. Eligible for funding under this fund are projects arising from, but not limited to, the following

areas of concern:

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

services;

b. delivery of social welfare services;

c. provision of socio-cultural services and facilities for youth and community

development;

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

e. improvement of community-based forestry projects and other local projects on

environment and natural resources protection and conservation;

f. improvement of tourism facilities and promotion of tourism;

g. peace and order and public safety;

h. construction, repair and maintenance of public works and infrastructure, including

public buildings and facilities for public use, especially those destroyed or damaged byman-made or natural calamities and disaster as well as facilities for water supply, flood

control and river dikes;

i. provision of local electrification facilities;

j. livelihood and food production services, facilities and equipment;

k. other projects that may be authorized by the OCD consistent with the

aforementioned objectives and guidelines;

4. Except on extremely meritorious cases, as may be determined by the Oversight Committee onDevolution, this portion of the LGSEF shall not be used in expenditures for personal costs or

benefits under existing laws applicable to governments. Generally, this fund shall cover the

following objects of expenditures for programs, projects and activities arising from the

implementation of devolved and regular functions and services:

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

implementation of devolved programs, projects and activities;

b. repair and/or improvement of facilities;


21/87


22/87

For Provinces 26% or P 910,000,000

For Cities 23% or 805,000,000

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

For Barangays 16% or 560,000,000

Provided that the respective Leagues representing the provinces, cities, municipalities and

barangays shall draw up and adopt the horizontal distribution/sharing schemes among the

member LGUs whereby the Leagues concerned may opt to adopt direct financial assistance or

project-based arrangement, such that the LGSEF allocation for individual LGU shall be released

directly to the LGU concerned;

Provided further that the individual LGSEF shares to LGUs are used in accordance with the

general purposes and guidelines promulgated by the OCD for the implementation of the LGSEF

at the local levels pursuant to Res. No. OCD-99-006 dated October 7, 1999 and pursuant to the

Leagues' guidelines and mechanism as approved by the OCD;

Provided further that each of the Leagues shall submit to the OCD for its approval their

respective allocation scheme, the list of LGUs with the corresponding LGSEF shares and the

corresponding project categories if project-based;

Provided further that upon approval by the OCD, the lists of LGUs shall be endorsed to the DBM

as the basis for the preparation of the corresponding NCAs, SAROs, and related budget/release

documents.

2. The remaining P1,500,000,000 of the CY 2000 LGSEF shall be earmarked to support the

following initiatives and local affirmative action projects, to be endorsed to and approved by theOversight Committee on Devolution in accordance with the OCD agreements, guidelines,

procedures and documentary requirements:

On July 5, 2000, then President Estrada issued a Memorandum authorizing then Executive

Secretary Zamora and the DBM to implement and release the 2.5 billion pesos LGSEF for 2000 in

accordance with Resolution No. OCD-2000-023.

Thereafter, the Oversight Committee, now under the administration of President Gloria

Macapagal-Arroyo, promulgated Resolution No. OCD-2001-29 entitled "ADOPTING RESOLUTION

NO. OCD-2000-023 IN THE ALLOCATION, IMPLEMENTATION AND RELEASE OF THE

REMAINING P2.5 BILLION LGSEF FOR CY 2000." Under this resolution, the amount of one billion

pesos of the LGSEF was to be released in accordance with paragraph 1 of Resolution No. OCD-

2000-23, to complete the 3.5 billion pesos allocated to the LGUs, while the amount of 1.5 billion

pesos was allocated for the LAAP. However, out of the latter amount, P400,000,000 was to be

allocated and released as follows: P50,000,000 as financial assistance to the LAAPs of

LGUs; P275,360,227 as financial assistance to cover the decrease in the IRA of LGUs concerned

due to reduction in land area; and P74,639,773 for the LGSEF Capability-Building Fund.

The LGSEF in the GAA of 2001

In view of the failure of Congress to enact the general appropriations law for 2001, the GAA of

2000 was deemed re-enacted, together with the IRA of the LGUs therein and the proviso

earmarking five billion pesos thereof for the LGSEF.

On January 9, 2002, the Oversight Committee adopted Resolution No. OCD-2002-001 allocating

the five billion pesos LGSEF for 2001 as follows:

Modified Codal Formula P 3.000 billion

Priority Projects 1.900 billion


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Capability Building Fund .100 billion

P 5.000 billion

RESOLVED FURTHER, that the P3.0 B of the CY 2001 LGSEF which is to be allocated according to the

modified codal formula shall be released to the four levels of LGUs, i.e., provinces, cities, municipalitiesand barangays, as follows:

LGUs Percentage Amount

Provinces 25 P 0.750 billion

Cities 25 0.750

Municipalities 35 1.050

Barangays 15 0.450

100 P 3.000 billion

RESOLVED FURTHER, that the P1.9 B earmarked for priority projects shall be distributed according to the

following criteria:

1.0 For projects of the 4th, 5th and 6th class LGUs; or

2.0 Projects in consonance with the President's State of the Nation Address (SONA)/summit

commitments.

RESOLVED FURTHER, that the remaining P100 million LGSEF capability building fund shall be distributed

in accordance with the recommendation of the Leagues of Provinces, Cities, Municipalities andBarangays, and approved by the OCD.

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

Oversight Committee seeking the reconsideration of Resolution No. OCD-2002-001. He also wrote to

Pres. Macapagal-Arroyo urging her to disapprove said resolution as it violates the Constitution and the

Local Government Code of 1991.

On January 25, 2002, Pres. Macapagal-Arroyo approved Resolution No. OCD-2002-001.

The Petitioner's Case

The petitioner now comes to this Court assailing as unconstitutional and void the provisos in the GAAs of

1999, 2000 and 2001, relating to the LGSEF. Similarly assailed are the Oversight Committee's Resolutions

Nos. OCD-99-003, OCD-99-005, OCD-99-006, OCD-2000-023, OCD-2001-029 and OCD-2002-001 issued

pursuant thereto. The petitioner submits that the assailed provisos in the GAAs and the OCD resolutions,

insofar as they earmarked the amount of five billion pesos of the IRA of the LGUs for 1999, 2000 and

2001 for the LGSEF and imposed conditions for the release thereof, violate the Constitution and the

Local Government Code of 1991.

Section 6, Article X of the Constitution is invoked as it mandates that the "just share" of the LGUs shall

be automatically released to them. Sections 18 and 286 of the Local Government Code of 1991, which

enjoin that the "just share" of the LGUs shall be "automatically and directly" released to them "without

need of further action" are, likewise, cited.

The petitioner posits that to subject the distribution and release of the five-billion-peso portion of the

IRA, classified as the LGSEF, to compliance by the LGUs with the implementing rules and regulations,

including the mechanisms and guidelines prescribed by the Oversight Committee, contravenes the

explicit directive of the Constitution that the LGUs' share in the national taxes "shall be automatically

released to them." The petitioner maintains that the use of the word "shall" must be given a compulsory

meaning.


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To further buttress this argument, the petitioner contends that to vest the Oversight Committee with

the authority to determine the distribution and release of the LGSEF, which is a part of the IRA of the

LGUs, is an anathema to the principle of local autonomy as embodied in the Constitution and the Local

Government Code of 1991. The petitioner cites as an example the experience in 2001 when the release

of the LGSEF was long delayed because the Oversight Committee was not able to convene that year and

no guidelines were issued therefor. Further, the possible disapproval by the Oversight Committee of the

project proposals of the LGUs would result in the diminution of the latter's share in the IRA.

Another infringement alleged to be occasioned by the assailed OCD resolutions is the improper

amendment to Section 285 of the Local Government Code of 1991 on the percentage sharing of the IRA

among the LGUs. Said provision allocates the IRA as follows: Provinces23%; Cities23%;

Municipalities34%; and Barangays20%.8This formula has been improperly amended or modified,

with respect to the five-billion-peso portion of the IRA allotted for the LGSEF, by the assailed OCD

resolutions as they invariably provided for a different sharing scheme.

The modifications allegedly constitute an illegal amendment by the executive branch of a substantive

law. Moreover, the petitioner mentions that in the Letter dated December 5, 2001 of respondent

Executive Secretary Romulo addressed to respondent Secretary Boncodin, the former endorsed to thelatter the release of funds to certain LGUs from the LGSEF in accordance with the handwritten

instructions of President Arroyo. Thus, the LGUs are at a loss as to how a portion of the LGSEF is actually

allocated. Further, there are still portions of the LGSEF that, to date, have not been received by the

petitioner; hence, resulting in damage and injury to the petitioner.

The petitioner prays that the Court declare as unconstitutional and void the assailed provisos relating to

the LGSEF in the GAAs of 1999, 2000 and 2001 and the assailed OCD resolutions (Resolutions Nos. OCD-

99-003, OCD-99-005, OCD-99-006, OCD-2000-023, OCD-2001-029 and OCD-2002-001) issued by the

Oversight Committee pursuant thereto. The petitioner, likewise, prays that the Court direct the

respondents to rectify the unlawful and illegal distribution and releases of the LGSEF for the

aforementioned years and release the same in accordance with the sharing formula under Section 285of the Local Government Code of 1991. Finally, the petitioner urges the Court to declare that the entire

IRA should be released automatically without further action by the LGUs as required by the Constitution

and the Local Government Code of 1991.

The Respondents' Arguments

The respondents, through the Office of the Solicitor General, urge the Court to dismiss the petition on

procedural and substantive grounds. On the latter, the respondents contend that the assailed provisos

in the GAAs of 1999, 2000 and 2001 and the assailed resolutions issued by the Oversight Committee are

not constitutionally infirm. The respondents advance the view that Section 6, Article X of the

Constitution does not specify that the "just share" of the LGUs shall be determined solely by the Local

Government Code of 1991. Moreover, the phrase "as determined by law" in the same constitutional

provision means that there exists no limitation on the power of Congress to determine what is the "just

share" of the LGUs in the national taxes. In other words, Congress is the arbiter of what should be the

"just share" of the LGUs in the national taxes.

The respondents further theorize that Section 285 of the Local Government Code of 1991, which

provides for the percentage sharing of the IRA among the LGUs, was not intended to be a fixed

determination of their "just share" in the national taxes. Congress may enact other laws, including

appropriations laws such as the GAAs of 1999, 2000 and 2001, providing for a different sharing formula.

Section 285 of the Local Government Code of 1991 was merely intended to be the "default share" of the

LGUs to do away with the need to determine annually by law their "just share." However, the LGUs have

no vested right in a permanent or fixed percentage as Congress may increase or decrease the "justshare" of the LGUs in accordance with what it believes is appropriate for their operation. There is

nothing in the Constitution which prohibits Congress from making such determination through the

appropriations laws. If the provisions of a particular statute, the GAA in this case, are within the

constitutional power of the legislature to enact, they should be sustained whether the courts agree or

not in the wisdom of their enactment.

On procedural grounds, the respondents urge the Court to dismiss the petition outright as the same is

defective. The petition allegedly raises factual issues which should be properly threshed out in the lower


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courts, not this Court, not being a trier of facts. Specifically, the petitioner's allegation that there are

portions of the LGSEF that it has not, to date, received, thereby causing it (the petitioner) injury and

damage, is subject to proof and must be substantiated in the proper venue, i.e., the lower courts.

Further, according to the respondents, the petition has already been rendered moot and academic as it

no longer presents a justiciable controversy. The IRAs for the years 1999, 2000 and 2001, have already

been released and the government is now operating under the 2003 budget. In support of this, the

respondents submitted certifications issued by officers of the DBM attesting to the release of the

allocation or shares of the petitioner in the LGSEF for 1999, 2000 and 2001. There is, therefore, nothing

more to prohibit.

Finally, the petitioner allegedly has no legal standing to bring the suit because it has not suffered any

injury. In fact, the petitioner's "just share" has even increased. Pursuant to Section 285 of the Local

Government Code of 1991, the share of the provinces is 23%. OCD Nos. 99-005, 99-006 and 99-003 gave

the provinces 40% of P2 billion of the LGSEF. OCD Nos. 2000-023 and 2001-029 apportioned 26% of P3.5

billion to the provinces. On the other hand, OCD No. 2001-001 allocated 25% of P3 billion to the

provinces. Thus, the petitioner has not suffered any injury in the implementation of the assailed

provisos in the GAAs of 1999, 2000 and 2001 and the OCD resolutions.

The Ruling of the Court Procedural Issues

Before resolving the petition on its merits, the Court shall first rule on the following procedural issues

raised by the respondents: (1) whether the petitioner has legal standing or locus standi to file the

present suit; (2) whether the petition involves factual questions that are properly cognizable by the

lower courts; and (3) whether the issue had been rendered moot and academic.

The petitioner has locus standi to maintain the present suit

The gist of the question of standing is whether a party has "alleged such a personal stake in the outcomeof the controversy as to assure that concrete adverseness which sharpens the presentation of issues

upon which the court so largely depends for illumination of difficult constitutional

questions."9Accordingly, it has been held that the interest of a party assailing the constitutionality of a

statute must be direct and personal. Such party must be able to show, not only that the law or any

government act is invalid, but also that he has sustained or is in imminent danger of sustaining some

direct injury as a result of its enforcement, and not merely that he suffers thereby in some indefinite

way. It must appear that the person complaining has been or is about to be denied some right or

privilege to which he is lawfully entitled or that he is about to be subjected to some burdens or penalties

by reason of the statute or act complained of.10

The Court holds that the petitioner possesses the requisite standing to maintain the present suit. Thepetitioner, a local government unit, seeks relief in order to protect or vindicate an interest of its own,

and of the other LGUs. This interest pertains to the LGUs' share in the national taxes or the IRA. The

petitioner's constitutional claim is, in substance, that the assailed provisos in the GAAs of 1999, 2000

and 2001, and the OCD resolutions contravene Section 6, Article X of the Constitution, mandating the

"automatic release" to the LGUs of their share in the national taxes. Further, the injury that the

petitioner claims to suffer is the diminution of its share in the IRA, as provided under Section 285 of the

Local Government Code of 1991, occasioned by the implementation of the assailed measures. These

allegations are sufficient to grant the petitioner standing to question the validity of the assailed provisos

in the GAAs of 1999, 2000 and 2001, and the OCD resolutions as the petitioner clearly has "a plain,

direct and adequate interest" in the manner and distribution of the IRA among the LGUs.

The petition involves a significant legal issue

The crux of the instant controversy is whether the assailed provisos contained in the GAAs of 1999, 2000

and 2001, and the OCD resolutions infringe the Constitution and the Local Government Code of 1991.

This is undoubtedly a legal question. On the other hand, the following facts are not disputed:

1. The earmarking of five billion pesos of the IRA for the LGSEF in the assailed provisos in the

GAAs of 1999, 2000 and re-enacted budget for 2001;


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2. The promulgation of the assailed OCD resolutions providing for the allocation schemes

covering the said five billion pesos and the implementing rules and regulations therefor; and

3. The release of the LGSEF to the LGUs only upon their compliance with the implementing rules

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

Committee.

Considering that these facts, which are necessary to resolve the legal question now before this Court,

are no longer in issue, the same need not be determined by a trial court.11In any case, the rule on

hierarchy of courts will not prevent this Court from assuming jurisdiction over the petition. The said rule

may be relaxed when the redress desired cannot be obtained in the appropriate courts or where

exceptional and compelling circumstances justify availment of a remedy within and calling for the

exercise of this Court's primary jurisdiction.12

The crucial legal issue submitted for resolution of this Court entails the proper legal interpretation of

constitutional and statutory provisions. Moreover, the "transcendental importance" of the case, as it

necessarily involves the application of the constitutional principle on local autonomy, cannot be

gainsaid. The nature of the present controversy, therefore, warrants the relaxation by this Court ofprocedural rules in order to resolve the case forthwith.

The substantive issue needs to be resolved notwithstanding the supervening events

Granting arguendo that, as contended by the respondents, the resolution of the case had already been

overtaken by supervening events as the IRA, including the LGSEF, for 1999, 2000 and 2001, had already

been released and the government is now operating under a new appropriations law, still, there is

compelling reason for this Court to resolve the substantive issue raised by the instant petition.

Supervening events, whether intended or accidental, cannot prevent the Court from rendering a

decision if there is a grave violation of the Constitution.13

Even in cases where supervening events had

made the cases moot, the Court did not hesitate to resolve the legal or constitutional issues raised toformulate controlling principles to guide the bench, bar and public.14

Another reason justifying the resolution by this Court of the substantive issue now before it is the rule

that courts will decide a question ot

Case 1 labor

Documents

Transcript of Case 1 labor