HON. FRANKLIN M. DRILON, in his capacity as SEC. OF JUSTICE, vs.

MAYOR ALFREDO S. LIM, VICE-MAYOR JOSE L. ATIENZA,

CITY TREASURER ANTHONY ACEVEDO, SANGGUNIANG PANGLUNSOD, AND
THE CITY OF MANILA
(August 4, 1994)

FACTS:
1. The City of Manila enacted Ordinance No. 7794 otherwise known as Manila Revenue
Code.
2. Thereafter, four (4) oil companies and one (1) taxpayer then appealed its enactment to
the Secretary of Justice.
3. Sec. of Justice Drilon declared Ordinance No. 7794 (Manila Revenue Code) null and
void for containing certain provisions contrary to law and public policy, and for non-
compliance with the procedure in the enactment of tax ordinances, specifically non-
compliance with Sec. 187 of the Local Government Code, which states:

Sec. 187. Procedure for Approval and Effectivity of Tax Ordinances and
Revenue Measures; Mandatory Public Hearings. The procedure for approval of
local tax ordinances and revenue measures shall be in accordance with the provisions
of this Code:

Provided, That public hearings shall be conducted for the purpose prior to the
enactment thereof;

Provided, further, That any question on the constitutionality or legality of tax

ordinances or revenue measures may be raised on appeal within 30 days from the
effectivity thereof to the Sec. of Justice who shall render a decision within 60 days
from the date of receipt of the appeal:

Provided, however, That such appeal shall not have the effect of suspending the
effectivity of the ordinance and the accrual and payment of the tax, fee, or
charge levied therein:

Provided, finally, That within 30 days after receipt of the decision or the lapse of 60-
day period without the Sec. of Justice acting upon the appeal, the aggrieved party may
file appropriate proceedings with a court of competent jurisdiction.

4. The City of Manila then filed a petition for certiorari to the RTC.

5. RTC sustained the constitutionality of the Ordinance 7794 ruling that procedural
requirements had been observed.
6. It also declared Section 187 of the LGC as unconstitutional since it vests in the Sec.
of Justice the power of control over LGUs in violation of the policy of local autonomy
mandated in the Constitution, and in violation of the specific provision therein
conferring to THE PRESIDENT ONLY the power of supervision over LGUs. RTCs Ratio
and Ruling:

a. Since Sec. 187 empowered Sec. of Justice to review tax ordinances and annul
them. RTC ruled that it gave the Sec. of Justice the power of control and not of
supervision only as vested in the President by the Constitution.
b. Hence, Sec. 187 of the LGC is null and void.
c. Power of control is the power of an officer to alter or modify or set aside what a
subordinate officer had done in the performance of his duties and to substitute
the judgment of the former for the latter.
 d. Power of supervision is the power of a superior officer to see to it that lower
officers perform their functions in accordance with law.

7. Hence, this petition by Sec. of Justice Drilon arguing that Sec. 187 of the LGC is
constitutional and the procedural requirements for the enactment of tax ordinances had not
been observed.

ISSUES/HELD/RATIO:

I. Whether or not Sec. 187 of the LGC is unconstitutional for granting the Justice
Secretary the power of control over LGUs.

NO. The RTC had jurisdiction to consider the constitutionality of Sec. 187 of the LGC.
Under BP 129, RTC has the jurisdiction over all civil cases incapable of pecuniary estimation.
Also under the Constitution, the Supreme Court has appellate jurisdiction over final
judgments and orders of the lower courts.
However, all courts has a duty of a purposeful hesitation before declaring a law
unconstitutional. The presumption of constitutional can be overcome ONLY BY THE
CLEAREST SHOWING THAT THERE WAS INDEED AN INFRACTION OF THE CONSTITUTION,
and only when such a conclusion is reached by the equipped majority may the Court
pronounce that the challenge law must be struck down.

Sec. 187 of the LGC authorizes the Sec. of Justice to review only the
constitutionality or legality of the tax ordinance and, if warranted, to revoke it on
either or both of these grounds. He is not permitted to substitute his own judgment
for the judgment of the local government that enacted the measure.

Here, Sec. of Justice Drilon set aside the Ordinance 9974, but, he did not replace it
with his own version of what the Code should be. He did not pronounce it as unwise or
unreasonable. All he said is that it is illegal. An officer in control lays down the rules in
the doing of an act. If they are not followed, such officer may, in his discretion,
order that the act be undone or redone by his subordinate or even decide to do it
himself. Such is not the case here. The act of the Sec. of Justice in declaring Ordinance
7794 null and void was not an act of control but of mere supervision.

Sec. 187 of the Local Government Code is CONSTITUTIONAL as it gives the

Sec. of Justice the power of mere supervision.

WHEREFORE, RTC Decision insofar as it declared Sec. 187 of the LGC

unconstitutional is REVERSED.

II. Whether or not the City of Manila complied with the procedural requirements
prescribed under Sec. 187 of the LCG.

YES. As regards the procedural requirements, they have all been observed as
correctly found by the trial court. Notices of the public hearings were sent to the interested
parties, the minutes are there, and they were published. The only exceptions are the
posting of the ordinances as approved but this omission does not affect its validity,
considering that its publication in three successive issues of a newspaper of general
circulation will satisfy due process. Although the text was not translated and disseminated,
this requirement applies to the approval of local development plans and public investment
programs and not to tax ordinances.
 SOLICITOR GENERAL,
Rodolfo Malapira,
Stephen Monsanto,
Dan Calderon,
Grandy Trieste
v.
METROPOLITAN MANILA AUTHORITY and
Municipality of Mandaluyong

GONONG CASE: Metropolitan Traffic Command, West Traffic District v. Hon. Arsenio
Gonong

HELD: The Court held that the confiscation of the license plates of motor vehicles for
traffic violations was not among the sanctions that could be imposed by the Metro Manila
Commission under PD 1605. Confiscation of license plates was permitted only under LOI 43
in the case of stalled vehicles obstructing the public streets.

Furthermore, confiscation of drivers licenses for traffic violations was not

directly prescribed by PD 1605 nor was it allowed by the decree to be imposed by the Metro
Manila Commission.

Date Promulgated: July 13, 1990

Date when the Ruling attained finality: August 6, 1990
Date it was entered in the Book of Entries of Judgments: July 13, 1990

FACTS:
1. After the ruling on the above case, the Court received letters from different complainant
regarding their drivers license, license plates, and traffic violations. However, these are
not formal challenges.

2. In October 1990, Malapira complained to the court that he was stopped for an alleged
traffic violation and his drivers license was confiscated by Traffic Enforcer De Los Reyes
in QC
3. In December 1990, The Caloocan-Manila Drivers and Operators Association also sent a
letter to the Court asking who should enforce the decision in the Gonong case, whether
they could seek damages for confiscation of their licenses, and where they can file their
complaints.
4. In February 1991, Monsanto complained to the court that he was stopped for an
alleged traffic violation and his drivers license was confiscated by Traffic Enforcer
Martinez in Mandaluyong.
5. In March 1991, Atty. Calderon complained that his drivers license was confiscated by
Pat. Tano-an of the Makati Police Force.
6. In April 1991, Atty. Trieste complained that his front license plate was confiscated by
one Ramos of Metropolitan Manila Authority Traffic Operations Center. His drivers
license was also allegedly confiscated by one Emmanuel of Metropolitan Police Command
Western Police District.

7. The traffic enforcers invoked Ordinance No. 7, Series of 1988, of Mandaluyong,

authorizing the confiscation of driver's licenses and the removal of license plates of
motor vehicles for traffic violations, and a Memorandum from the District
Commander of the Western Traffic District of the Philippine National Police,
authorizing such sanction under certain conditions.
8. However, Director General Nazareno of the PNP assured the Court in his own Comment
that his office had never authorized the removal of the license plates of illegally parked
vehicles and that he had in fact directed full compliance with the Gonong decision in a
memorandum entitled Removal of Motor Vehicle License Plates

9. Tano-an, on the other hand, argued that the Gonong decision prohibited only the
removal of license plates and not the confiscation of driver's licenses.

10. On May 24, 1990, the Metropolitan Manila Authority issued Ordinance No. 11, Series
of 1991, authorizing itself "to detach the license plate/tow and impound attended,
unattended, abandoned motor vehicles illegally parked or obstructing the flow of traffic
in Metro Manila."

11. On July 2, 1991, the Court issued a Resolution requiring MMA and the Solicitor General
to comment on what appears to be conflicting provisions between Ordinance No. 11 and
the Gonong decision. In the Gonong decision, it was held that the license plates of motor
vehicles may not be detached except only under the conditions prescribed in LOI 43.

MMAs Arguments:

Metropolitan Manila Authority defended Ordinance No. 11 on the ground that it was
adopted pursuant to the powers conferred upon it by EO 392. It particularly cited Section
2 thereof vesting in the Council (its governing body) the responsibility among others of:

(a) Formulation of policies on the delivery of basic services requiring

coordination or consolidation for the Authority; and
(b) Promulgation of resolutions and other issuances of metropolitan wide
application, approval of a code of basic services requiring coordination,
and exercise of its rule-making powers.

MMA argued that there was no conflict between the decision and the ordinance
because the ordinance was meant to supplement and not supplant the decision. It stressed
that the decision itself said that the confiscation of license plates was invalid in the
absence of a valid law or ordinance, which was why Ordinance No. 11 was
enacted.
The Authority also pointed out that the ordinance could not be attacked collaterally
but only in a direct action challenging its validity.

Solicitors Generals Arguments:

The ordinance was null and void because it represented an invalid exercise of a
delegated legislative power. The flaw in the measure was that it violated existing law,
specifically PD 1605, which does not permit, and so impliedly prohibits, the removal
of license plates and the confiscation of driver's licenses for traffic violations in
Metropolitan Manila.
He made no mention, however, of the alleged impropriety of examining the said
ordinance in the absence of a formal challenge to its validity.
On October 24, 1991, the Office of the Solicitor General submitted a motion for the
early resolution of the questioned sanctions, to remove once and for all the
uncertainty of their validity.
A similar motion was filed by the Metropolitan Manila Authority, which reiterated its
contention that the incidents in question should be dismissed because there was no actual
case or controversy before the Court.
 The Metropolitan Manila Authority is correct in invoking the doctrine that the validity
of a law or act can be challenged only in a direct action and not collaterally. That is indeed
the settled principle. However, that rule is not inflexible. The practices complained of have
created a great deal of confusion among motorists about the state of the law on the
questioned sanctions. More importantly, he maintains that these sanctions are illegal, being
violative of law and the Gonong decision, and should therefore be stopped. Regrettably, not
one of the complainants has filed a formal challenge to the ordinances, including Monsanto
and Trieste, who are lawyers and could have been more assertive of their rights.

ISSUE: Whether or not MMA Ordinance No. 11 and Mandaluyong Ordinance No. 7 are valid.

RULING: NO. MMA sustains Ordinance No. 11, Series of 1991, under the specific authority
conferred upon it by EO 392, while Ordinance No. 7, Series of 1988, is justified on the basis
of the General Welfare Clause embodied in the LGC. It is not disputed that both measures
were enacted to promote the comfort and convenience of the public and to
alleviate the worsening traffic problems in Metropolitan Manila due in large part to
violations of traffic rules.

For there to be a valid delegation of legislative power, the following requisites

must be present:
(1) Completeness of the statute making the delegation; and
(2) Presence of a sufficient standard.

Under the first requirement, the statute must leave the legislature complete in all its terms
and provisions such that all the delegate will have to do when the statute reaches it is to
implement it. What only can be delegated is not the discretion to determine what the law
shall be but the discretion to determine how the law shall be enforced. This has been done
in the case at bar.

As a second requirement, the enforcement may be effected only in accordance with a

sufficient standard, the function of which is to map out the boundaries of the delegate's
authority and thus "prevent the delegation from running riot." This requirement has also
been met. It is settled that the "convenience and welfare" of the public, particularly the
motorists and passengers in the case at bar, is an acceptable sufficient standard to delimit
the delegate's authority.

But the problem before us is not the validity of the delegation of legislative power. The
question we must resolve is the validity of the exercise of such delegated power. The
ordinances are enactments of local governments acting only as agents of the
national legislature. Necessarily, the acts of these agents must reflect and
conform to the will of their principal. To test the validity of such acts in the specific case
now before us, we apply the particular requisites of a valid ordinance as laid down by the
accepted principles governing municipal corporations.

A municipal ordinance, to be valid:

(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 not be unreasonable; and
(6) Must be general and consistent with public policy.
The Ordinances under consideration do not pass the first criterion because they do
not conform to existing law. The pertinent law is PD 1605 which does not allow
either the removal of license plates or the confiscation of driver's licenses for
traffic violations committed in Metropolitan Manila. There is nothing in the
following provisions of the decree authorizing the MMA to impose such sanctions.
In fact, the provisions prohibit the imposition of such sanctions in Metropolitan
Manila.

The MMA was allowed to "impose fines and otherwise discipline" traffic violators only "in
such amounts and under such penalties as are herein prescribed," that is, by the decree
itself. Nowhere is the removal of license plates directly imposed by the decree or at least
allowed by it to be imposed by the MMA. Notably, Section 5 thereof expressly provides that
"in case of traffic violations, the driver's license shall not be confiscated." These
restrictions are applicable to the MMA and all other local political subdivisions comprising
Metropolitan Manila, including the Municipality of Mandaluyong.

The requirement that the municipal enactment must not violate existing law explains itself.
Local political subdivisions are able to legislate only by virtue of a valid delegation
of legislative power from the national legislature (except only that the power to create
their own sources of revenue and to levy taxes is conferred by the Constitution itself). They
are mere agents vested with what is called the power of subordinate legislation.
As delegates of the Congress, the local government unit cannot contravene but
must obey at all times the will of their principal. In the case before us, the
ordinances in question, which are merely local in origin, cannot prevail against the
decree, which has the force and effect of a statute. The self-serving language of
Section 2 of the challenged ordinance is worth noting. Curiously, it is the ordinance itself,
enacted by MMA, which authorizes the them to impose the prohibited sanction.

In Villacorta vs. Bernardo, the Court nullified an ordinance enacted by the Municipal Board
of Dagupan City for being violative of the Land Registration Act. 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.

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 carnapping; the execution of contracts, to
forestall fraud; the validation of parts, 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.

The measures in question do not merely add to the requirement of PD 1605 but,
worse, impose sanctions the decree does not allow and in fact actually prohibits.
In so doing, the ordinances disregard and violate and in effect partially repeal the law.

We here emphasize the ruling in the Gonong case that PD 1605 applies only to the
Metropolitan Manila area. It is an exception to the general authority conferred by R.A. No.
413 on the Commissioner of Land Transportation to punish violations of traffic rules
elsewhere in the country with the sanction therein prescribed, including those here
questioned.

Rodolfo Ganzon
 v.
Court of Appeals, and
Luis Santos,
in his capacity as Sec. of DILG

(August 5, 1991)

Facts:
1. Mayor Ganzon is the mayor of Iloilo City and also a member of the Sanguniaang
Panglungsod thereof.
2. He was charged with 10 administrative complaints sometime in 1988 which
included abuse of authority, oppression, grave misconduct, disgraceful and immoral
conduct, intimidation, culpable violation of the Constitution, and arbitrary detention.
3. Initial hearings were set and conducted at the Regional Office of the DILG in Iloilo
City. Finding probable grounds and reasons, the respondent secretary issued a 1st
preventive suspension order on 11 August 1988 to last until 11 October 1988 for
a period of 60 days.
4. A second 60-day preventive suspension was imposed by the respondent secretary
dated 11 October 1988 on the Mayor for the prima facie evidence found to exist in
the case filed against him by a one barangay tanod named Erbite. However, this 2nd
preventive suspension was not enforced due to a TRO.
5. Ganzon filed a prohibition case against the DILG Secretary in the RTC of Iloilo where
he succeeded in obtaining a writ of prelimary injunction.
6. However, in 3 May 1990, respondent secretary issued a 3rd preventive suspension
order for another 60 days - the 3rd time in 20 months.
7. In June 1990, the Court issued a TRO barring the respondent secretary from
implementing the suspension orders.

Ganzons Arguments:

DILG denied him due process, that the Secretary had been biased, prejudicial and
hostile against him. The Sec. of DILG also has no authority to suspend or remove him. The
1987 Constitution no longer allows the President, as the 1935 and 1973 Constitution did, to
suspend/ remove local officials.

1935 Constitution, Sec. 10. The President shall have control of all the executive
departments, bureaus, or offices, exercise general supervision over all local governments as
may be provided by law, and take care that the laws be faith fully executed.

1987 Constitution, Sec. 4. The President of the Philippines shall exercise general
supervision over local governments. Provinces with respect to component cities and
municipalities, and cities and municipalities with respect to component barangays shall
ensure that the acts of their component units are within the scope of their prescribed
powers and functions.

The deletion of as may be provided by law is significant since the power of the
President is provided by law and no law may provide for it any longer.

Issue: Whether or not the Sec. of DILG can suspend and/or remove local officials. YES.

Held:
Since local governments remain accountable to the national authority, the latter may
impose disciplinary action against local officials. In the case at bar, the Secretary of Local
Government, as the President's alter ego, and in accordance with Batas Blg. 337 and the
Local Government Code, can suspend petitioner Mayor of Iloilo City and petitioner
member of the Sangguniang Panglunsod

Supervision is not incompatible with disciplinary authority. As this Court held in

Ganzon vs. Cayanan, "in administration law, supervision means overseeing or the
power or authority of an officer to see that subordinate officers perform their
duties. If the latter fail or neglect to fulfill them the former may take such action
or step as prescribed by law to make them perform their duties."

However, while the respondent Secretary of Interior has the Power to

suspend the petitioner Iloilo City Mayor, such power cannot be exercised
oppressively. Ten (10) administrative cases have been successively filed against the City
Mayor. The Mayor has been made to serve a total of 120 days of suspension for the first two
cases and the respondent Secretary has issued another order preventively suspending the
former for another 60 days, the 3rd time in 20 months. We are allowing the Mayor to
suffer the duration of his third suspension. However, we are precluding the
Secretary from meting out further suspensions based on those remaining
complaints, notwithstanding findings of prima facie evidence. We are also urging the
DILG to undertake steps to expedite the administrative cases against Mayor Ganzon.

Local autonomy involves a mere decentralization of administration, not of

power, in which local officials remain accountable to the central government in the
manner the law may provide. Autonomy does not contemplate making mini-states
out of local government units. Autonomy is subject to the guiding star, though not
control, of the legislature, albeit the legislative responsibility under the Constitution and
as the "supervision clause" itself suggests is to wean local government units from
overdependence on the central government. It is noteworthy that under the Charter, local
autonomy is not instantly self-executing, but subject to, among other things, the
passage of a local government code, a local tax law, income distribution legislation, and a
national representation law, and measures designed to realize autonomy at the local level.
It is also noteworthy that in spite of autonomy, the Constitution places the local
governments under the general supervision of the Executive. It is noteworthy finally,
that the Charter allows Congress to include in the local government code
provisions for removal of local officials, which suggests that Congress may
exercise removal powers, and as the existing Local Government Code has done,
delegate its exercise to the President.

As the Constitution itself declares, local autonomy means a more responsive

and accountable local government structure instituted through a system of
decentralization. The Constitution, as we observed, does nothing more than to break up
the monopoly of the national government over the affairs of local governments and as put
by political adherents, to "liberate the local governments from the imperialism of Manila."
Autonomy, however, is not meant to end the relation of partnership and
interdependence between the central administration and local government units,
or otherwise, to usher in a regime of federalism. The Charter has not taken such a
radical step. Local governments, under the Constitution, are subject to regulation, however
limited, and for no other purpose than precisely to enhance self-government.

With regard to the omission of as may be provided by law

(See Ganzons Arguments)
 It is our opinion that the omission of "as may be provided by law signifies
nothing more than to underscore local governments' autonomy from Congress and
to break Congress' control over local government affairs. The Constitution did not,
however, intend to deprive the legislature of all authority over municipal
corporations, in particular, concerning discipline. The change in constitutional
language did not exempt local governments from legislative regulation provided
regulation is consistent with the fundamental premise of autonomy.

Mactan Cebu International Airport Authority (MCIAA)

v.
 Hon. Ferdinand Marcos,
in his capacity as Judge of Cebu RTC Branch 20, and
City of Cebu, as represented by its Mayor, Hon. Tomas Osmena, and
Eustaquio Cesa

Facts:
1. Mactan Cebu International Airport Authority was created by virtue of RA 6958 to
manage the Mactan International Airport and the Lahug Airport. Since the time of its
creation, petitioner MCIAA enjoyed the privilege of exemption from payment of realty
taxes. Section 14 of MCIAAs Charter provides that it shall be exempt from realty
taxes imposed by the National Government or any of its political subdivisions,
agencies and instrumentalities.
2. However, in 1994, The Office of the Treasurer of Cebu City demanded payment for
realty taxes on several parcels of land belonging to MCIAA.
3. MCIAA objected, claiming that it is exempt from payment of reality taxes. It also said
that as it is an instrumentality of the government performing governmental
functions, it is exempted as provided for by Sec. 133 of the LGC.
4. Cebu City insisted that MCIAA is not tax exempt as its exemption had been
withdrawn by Sections 193 and 234 of the LGC.
5. MCIAA paid the tax account under protest but it filed a petition for declaratory
relief saying that the powers of LGUs do not extend to the levy of taxes or fees of
any kind on an instrumentality of the national government.
6. RTC dismissed the petition for declaratory relief. RTC denied MCIAAs MR. Hence, this
petition.

MCIAAs Arguments:
That it is a GOCC, mandated to perform functions in the same category as an
instrumentality of the government and it is an attached agency of the DOTC. Thus, it may
stand in the same footing as an agency or instrumentality of the national government.

Also, its tax exemption privilege cannot be considered as withdrawn with the passage
of the LGC because Sec. 133 specifically states that the taxing powers of LGUs shall not
extend to the levy of taxes or fees or charges of any kind on the national
government, its agencies or instrumentalities. Cebu City has no power nor authority to
impose realty taxes upon MCIAA, based on Sec. 133 of the LGC, in relation to Sec. 234 of
the LGC, which states the legislature meant to exclude instrumentalities of the
national government from the taxing power of the local government units.

Cebu Citys Arguments:

As local a government unit and a political subdivision, it has the power to impose,
levy, assess, and collect taxes within its jurisdiction. Such power is guaranteed by the
Constitution and enhanced further by the LGC. While it may be true that under its Charter,
MCIAA was exempt from the payment of realty taxes, this exemption was withdrawn by
Sec. 234 of the LGC. Sec. 234 does not distinguish between GOCCs performing
governmental functions and GOCCs performing purely proprietary functions.

Issue: Whether or not MCIAA is exempt from paying taxes. NO.

Held: Taxation is the rule and exemption is the exception. Thus, the exemption may be
withdrawn at the pleasure of the taxing authority. The only exception to this rule is where
the exemption was granted to private parties based on material consideration of a mutual
nature, which then becomes contractual and is thus covered by the non-impairment clause
of the Constitution.

The general rule, as laid down in Section 133 of the LGC is that the taxing powers of LGUs
cannot extend to the levy of, inter alia, taxes, fees and charges of any kind on the National
Government, its agencies, and instrumentalities, and LGUs. However, pursuant to Section
232, provinces, cities and municipalities in the Metro Manila Area MAY impose real property
taxes except on inter alia, real property owned by the Republic of the Philippines or any of
its political subdivisions except when the beneficial use thereof has been granted for
consideration or otherwise, to a taxable person (Sec. 234a).

As to tax exemptions/incentives granted to or presently enjoyed by natural or juridical

persons, including GOCCs,

GENERAL RULE: Tax exemptions or incentives are withdrawn upon the effectivity of
the LGC

EXCEPTION: Those granted to local water districts, cooperatives duly registered

under RA 6938, non-stock and non-profit hospitals and educational institutions, and
unless otherwise provided in the LGC. This latter proviso could refer to Section 234
enumerating the properties exempt from real property tax. The last paragraph of
Section 234 further qualifies the retention of the exemption insofar as real property
taxes are concerned by limiting the retention only to those enumerated therein; all
others not included in the enumeration therefore lost the privilege upon the
effectivity of the LGC. Even as to real property owned by the Rep. Of the Philippines
or any of its political subdivisions covered by item (a) of the first paragraph of
Section 234, the exemption is withdrawn if the beneficial use of such property has
been granted to a taxable person for consideration or otherwise.

Since the last paragraph of Section 234 unequivocally withdrew, upon the effectivity of the
LGC, exemptions from payment of real property taxes granted to natural or juridical
persons, including government-owned or controlled corporations, except as provided in the
said section, and the petitioner is, undoubtedly, a GOCC, it necessarily follows that its
exemption from such tax granted it by its charter has been withdrawn.

SULTAN ALIMBUSAR LIMBONA vs. CONTE MANGELIN

 GR. No. 80391, February 28, 1989

FACTS: In 1986, petitioner, Sultan Alimbusar Limbona was appointed as a member of

the Sangguniang Pampook, Regional Autonomous Government, Region XII, representing
Lanao del Sur. On March 12, 1987 he was elected Speaker of the Regional Legislative
Assembly or Batasang Pampook of Central Mindanao (Assembly for brevity), which
was composed of 18 members.
On October 1987 Congressman Datu Guimid Matalam, Chairman of the Committee
on Muslim Affairs of the House of Representatives, invited the indispensable presence of 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 conference, consultations and
dialogues to be held from November 1-15 1987 at the Congress of the Philippines.
Consistent with the invitation, petitioner sent a telegram to the Secretary of the Assembly to
wire all assembly men that there will be no session in November.
Despite the instruction, 10 assemblymen held a session on November 2, 1987.
After declaring quorum the speaker pro-tempore presided, a motion to declare the seat of
the speaker vacant was voted upon and affirmed by all. Finally on November 5, 1989 the
said motion was again voted upon and 12 members were in favor. This prompted the
petitioner to file a case, enjoining respondents from proceeding with their session to
be held on November 5, 1987 and on any day thereafter and to declare the
proceeding on November 2, 1987 null and void.

ISSUE: Whether or not so-called autonomous governments of Mindanao, as they are now
constituted, subject to the jurisdiction of the national courts.

RULING: YES. 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.

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

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, 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." In the second place, the Sangguniang Pampook,
their legislative arm, is made to discharge chiefly administrative services.

GOVERNOR REYNALDO SAN JUAN vs. CSC, DBM, and CECILIA ALMAJOSE
 GR. No. 92299 April 19, 1991

FACTS: The position of Provincial Budget Officer (PBO) of Rizal was left vacant its
former holder. In a letter addressed to Director Reynaldo Abella of DBM, Governor
Reynaldo San Juan, recommended Dalisay Santos to fill the position since she was already
discharging the same in an acting capacity. Moreover she was the Municipal Budget Officer
of Taytay before discharging the functions of Acting PBO.
In a memorandum, Abella recommended the appointment of Cecilia Almajose
because on the basis of a comparative study of all Municipal Budget Officers, which included
3 nominees of the governor, she was the most qualified, as she was the only CPA among
the contenders. In lieu of this recommendation, DBM Undersecretary Cabuquit signed
the appointment papers.
Unaware of the appointment, the governor reiterated his request to DBM to appoint
Dalisay Santos. However, DBM Regional Director Galvez informed him that Santos and his
other recommendees were not qualified. Later on, the governor found out about the earlier
appointment of Almajose and contested the same. Both DBM and CSC held that the
appointment was valid. CSC even went as far as saying that the recommendation of the
local chief executive is merely directory and not a condition sine qua non to the exercise by
the Secretary of DBM of his appointing prerogative. DBMs position the other hand posits
that they have the right to fill up vacancies in case the nominees of the local chief is not
qualified.

ISSUE: Whether or not the DBM can free to appoint a local official in the event that the
governor recommends an unqualified person.

RULING: NO. When the Civil Service Commission interpreted the recommending power of
the Provincial Governor as purely directory, it went against the letter and spirit of the
constitutional provisions on local autonomy. If the DBM Secretary jealously hoards the
entirety of budgetary powers and ignores the right of local governments to develop self-
reliance and resoluteness in the handling of their own funds, the goal of meaningful local
autonomy is frustrated and set back.

The right given by Local Budget Circular No. 31, which states:
Sec. 6.0 The DBM reserves the right to fill up any existing vacancy where none of the
nominees of the local chief executive meet the prescribed requirements.
Is ultra vires and is, accordingly, set aside. The DBM may appoint only from the
list of qualified recommendees nominated by the Governor. If none is qualified, he
must return the list of nominees to the Governor explaining why no one meets the
legal requirements and ask for new recommendees who have the necessary
eligibilities and qualifications.
The PBO is expected to synchronize his work with DBM. More important, however, is
the proper administration of fiscal affairs at the local level. Provincial and municipal budgets
are prepared at the local level and after completion are forwarded to the national officials
for review. They are prepared by the local officials who must work within the constraints of
those budgets. They are not formulated in the inner sanctums of an all-knowing DBM and
unilaterally imposed on local governments whether or not they are relevant to local needs
and resources. It is for this reason that there should be a genuine interplay, a balancing of
viewpoints, and a harmonization of proposals from both the local and national officials. It is
for this reason that the nomination and appointment process involves a sharing of
power between the two levels of government.

CORDILLERA BROAD COALITION vs. COA

 GR. No. 79956, January 29, 1990

FACTS: The constitutionality of Executive Order No. 220, dated July 15, 1987, which
created the Cordillera Administrative Region, is assailed on the primary ground that it pre-
empts the enactment of an organic act by the Congress and the creation of the
autonomous region in the Cordilleras conditional on the approval of the act
through a plebiscite.
After the EDSA revolution, President Corazon Aquino, CPLA Commander Fr. Conrado
Balweg and Ama Mario Yag-ao signed a ceasefire agreement that signified cessation of
hostilities, which in turn gave rise to the Enactment of EO 220. The same was issued by the
President in the exercise of her legislative powers under Art. XVIII, sec. 6 of the 1987
Constitution, created the Cordillera Administrative Region (CAR), which covers the provinces
of Abra, Benguet, Ifugao, Kalinga-Apayao and Mountain Province and the City of Baguio.
The WHEREAS clause provides: pending the convening of the first Congress and
the enactment of the organic act for a Cordillera autonomous region, there is an urgent
need, in the interest of national security and public order, for the President to
reorganize immediately the existing administrative structure in the Cordilleras to
suit it to the existing political realities therein and the Government's legitimate
concerns in the areas, without attempting to pre-empt the constitutional duty of
the first Congress to undertake the creation of an autonomous region on a
permanent basis.

ISSUE: Whether or not the creation of CAR contravened the constitutional guaranty of
autonomy for the provinces and city, which compose the CAR.

RULING: NO. It must be clarified that the constitutional guarantee of local autonomy in the
Constitution [Art. X, sec. 2] refers to the administrative autonomy of local government
units or, cast in more technical language, the decentralization of government
authority. Local autonomy is not unique to the 1987 Constitution, it being guaranteed also
under the 1973 Constitution [Art. II, sec. 10]. And while there was no express guarantee
under the 1935 Constitution, the Congress enacted the Local Autonomy Act (R.A. No. 2264)
and the Decentralization Act (R.A. No. 5185), which ushered the irreversible march towards
further enlargement of local autonomy in the country.
On the other hand, the creation of autonomous regions in Muslim Mindanao and the
Cordilleras, which is peculiar to the 1987 Constitution contemplates the grant of political
autonomy and not just administrative autonomy in these regions. Thus, the provision in
the Constitution for an autonomous regional government with a basic structure consisting of
an executive department and a legislative assembly and special courts with personal, family
and property law jurisdiction in each of the autonomous regions [Art. X, sec. 18]. CAR is a
mere transitory coordinating agency that would prepare the stage for political
autonomy for the Cordilleras. It fills in the resulting gap in the process of transforming a
group of adjacent territorial and political subdivisions already enjoying local or
administrative autonomy into an autonomous region vested with political autonomy.
 MAYOR PABLO MAGTAJAS vs PRYCE PROPERTIES CORP. and PHIL. AMUSEMENT
AND GAMING CORP.
GR. No. 111097, July 20, 1994

FACTS: In 1992, 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 Panlunsod was swift and hostile. It Enacted
Ordinance No. 3353 also known as An ordinance prohibiting the issuance of
business permit to any establishment for the using and allowing to be used its
premises or portion thereof for the operation of casinos. This was followed by a
sterner Ordinance No. 3375-93 also known as An ordinance prohibiting the
operation of casino and providing penalty for violation therefor.
Pryce assailed the ordinances before the Court of Appeals, where it was joined by
PAGCOR as intervenor and supplemental petitioner. Their challenge succeeded. On March
31, 1993, the Court of Appeals declared the ordinances invalid and issued the writ
prayed for to prohibit their enforcement. The Cagayan de Oro Mayor, Magtajas, is
questioning the validity of this decision.

ISSUE: Whether or not the enactment questioned ordinances were valid exercise of local
autonomy.

RULING: NO. 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.
The new provisions in the Constitution strengthening the policy of local autonomy
have not enfeebled this basic relationship between the national legislature and the local
government units. 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, which cannot now be withdrawn by mere
statute. By and large, however, the national legislature is still the principal of the local
government units, which cannot defy its will or modify or violate it.
 RUPERTO TAULE vs. SECRETARY LUIS T. SANTOS and GOV. LEANDRO VERCELES

G.R. No. 90336 August 12, 1991

FACTS:

On June 18, 1989, the Federation of Associations of Barangay Councils (FABC)

of Catanduanes, composed of eleven (11) members, in their capacities as Presidents of
the Association of Barangay Councils in their respective municipalities, convened in Virac,
Catanduanes with 6 members in attendance for the purpose of holding the election of
its officers. The Board of Election Supervisors/Consultants was composed of Provincial
Government Operation Officer (PGOO) as Chairman with Provincial Treasurer and Provincial
Election Supervisor as members. When the group decided to hold the election despite the
absence of five (5) of its members, the Provincial Treasurer and the Provincial Election
Supervisor walked out. The election nevertheless proceeded with PGOO as presiding officer.
Thereafter, Ruperto Taule was elected as President of the FABC.

On June 19, 1989, Leandro I. Verceles, Governor of Catanduanes, sent a letter to

Luis T. Santos, the Secretary of Local Government, protesting the election of the officers of
the FABC and seeking its nullification in view of several flagrant irregularities in the manner
it was conducted. Secretary Santos issued a resolution nullifying the election of the officers
of the FABC in Catanduanes as violation of Department of Local Government Circular
No. 89-09 which provides the guidelines for the conduct of the elections of officers of
the Katipunan ng mga Barangay at the municipal, city, provincial, regional and national
levels.

Taule contends that neither the constitution nor the law grants jurisdiction upon the
Secretary over election contests involving the election of officers of the FABC, the katipunan
ng mga barangay at the provincial level. It is his theory that under Article IX, C, Section 2 of
the 1987 Constitution, it is the Commission on Elections which has jurisdiction over
all contests involving elective barangay officials.

On the other hand, it is the opinion of the Secretary that any violation of the
guidelines as set forth in said circular would be a ground for filing a protest and
would vest upon the Department jurisdiction to resolve any protest that may be
filed in relation thereto.
ISSUE: Whether or not the respondent Secretary has jurisdiction to entertain an election
protest involving the election of the officers of the Federation of Association of Barangay
Councils. NO.

RULING:

The jurisdiction of the COMELEC does not cover protests over the organizational set-
up of the katipunan ng mga barangay composed of popularly elected punong barangays as
prescribed by law whose officers are voted upon by their respective members. The
COMELEC exercises only appellate jurisdiction over election contests involving
elective barangay officials decided by the Metropolitan or Municipal Trial Courts which
likewise have limited jurisdiction. The authority of the COMELEC over the katipunan ng mga
barangay is limited by law to supervision of the election of the representative of
the katipunan concerned to the sanggunian in a particular level conducted by their own
respective organization.

However, the Secretary of Local Government is not vested with jurisdiction to

entertain any protest involving the election of officers of the FABC. It is a well-settled
principle of administrative law that unless expressly empowered, administrative
agencies are bereft of quasi- judicial powers. There is neither a statutory nor
constitutional provision expressly or even by necessary implication conferring upon the
Secretary of Local Government the power to assume jurisdiction over an election protect
involving officers of the katipunan ng mga barangay.

Although the Department is given the power to prescribe rules, regulations and other
issuances, the Administrative Code limits its authority to merely "monitoring compliance"
by local government units of such issuances. To monitor means "to watch, observe or
check. This is compatible with the power of supervision of the Secretary over local
governments which is limited to checking whether the local government unit concerned or
the officers thereof perform their duties as provided by statutory enactments. Even the
Local Government Code which grants the Secretary power to issue implementing circulars,
rules and regulations is silent as to how these issuances should be enforced. Since the
respondent Secretary exercises only supervision and not control over local governments, it
is truly doubtful if he could enforce compliance with the DLG Circular. Any doubt
therefore as to the power of the Secretary to interfere with local affairs should be
resolved in favor of the greater autonomy of the local government.
 Thus, the Court holds that in assuming jurisdiction over the election protest filed by
respondent Governor and declaring the election of the officers of the FABC on June 18, 1989
as null and void, the respondent Secretary acted in excess of his jurisdiction. The
respondent Secretary not having the jurisdiction to hear an election protest involving
officers of the FABC, the recourse of the parties is to the ordinary courts. The
Regional Trial Courts have the exclusive original jurisdiction to hear the protest.
 HON. JEJOMAR C. BINAY and THE MUNICIPALITY OF MAKATI vs. HON. EUFEMIO
DOMINGO and COA

G.R. No. 92389 September 11, 1991

FACTS: On September 27, 1988, the Municipality of Makati approved Resolution No. 60
which provides an ongoing burial assistance program to qualified beneficiaries of
bereaved families of Makati whose gross family income does not exceed two thousand
pesos (P2,000.00) a month, upon fulfillment of other requirements, would receive the
amount of five hundred pesos (P500.00) cash relief. Resolution No. 60 was referred to
respondent Commission on Audit (COA) for its expected allowance in audit. Based on its
preliminary findings, COA disapproved Resolution No. 60 and disallowed in audit the
disbursement of finds for the implementation thereof. The grounds for disallowance are
the following:

(1) no perceptible connection or relation between the objective sought to be

attained under Resolution No. 60, s. 1988, supra, and the alleged public safety,
general welfare, etc. of the inhabitants of Makati;

(2) subject to limitations, the expenditure covered should be for a public

purpose, i.e., that the disbursement should be for the benefit of the whole, if
not the majority, of the inhabitants of the Municipality and not for the
benefit of only a few individuals as in the present case. On this point government
funds or property shall be spent or used solely for public purposes.
ISSUE: Whether or not Resolution No. 60, re-enacted under Resolution No. 243, of the
Municipality of Makati is a valid exercise of police power under the general welfare clause?
YES.

RULING: Police power is inherent in the state but not in municipal corporations.
Before a municipal corporation may exercise such power, there must be a valid delegation
of such power by the legislature which is the repository of the inherent powers of the
State. A valid delegation of police power may arise from express delegation, or be
inferred from the mere fact of the creation of the municipal corporation; and as a
general rule, municipal corporations may exercise police powers within the fair intent and
purpose of their creation which are reasonably proper to give effect to the powers expressly
granted, and statutes conferring powers on public corporations have been construed as
empowering them to do the things essential to the enjoyment of life and desirable for the
safety of the people.

Municipal governments exercise this power under the general welfare clause:
pursuant thereto they are clothed with authority to "enact such ordinances and issue such
regulations as may be necessary to carry out and discharge the responsibilities conferred
upon it by law, and such as shall be necessary and proper to provide for the health, safety,
comfort and convenience, maintain peace and order, improve public morals, promote the
prosperity and general welfare of the municipality and the inhabitants thereof, and insure
the protection of property therein."

In the case at bar, COA is of the position that there is "no perceptible connection or
relation between the objective sought to be attained under Resolution No. 60 and the
alleged public safety, general welfare. etc. of the inhabitants of Makati." Apparently, COA
tries to re-define the scope of police power by circumscribing its exercise to "public
safety, general welfare, etc. of the inhabitants of Makati." In the case of Sangalang vs. IAC,
supra, SC ruled that police power is not capable of an exact definition but has been,
purposely, veiled in general terms to underscore its all comprehensiveness. Its scope,
over-expanding to meet the exigencies of the times, even to anticipate the future where it
could be done, provides enough room for an efficient and flexible response to conditions and
circumstances thus assuring the greatest benefits. The police power of a municipal
corporation is broad, and has been said to be commensurate with, but not to exceed, the
duty to provide for the real needs of the people in their health, safety, comfort, and
convenience as consistently as may be with private rights. It extends to all the great public
needs, and, in a broad sense includes all legislation and almost every function of the
municipal government. Thus, it is deemed inadvisable to attempt to frame any definition
which shall absolutely indicate the limits of police power.

Public purpose is not unconstitutional merely because it incidentally

benefits a limited number of persons. There is no violation of the equal protection
clause in classifying paupers as subject of legislation. Paupers may be reasonably
classified. Different groups may receive varying treatment. Precious to the hearts of our
legislators, down to our local councilors, is the welfare of the paupers.
 CITY GOVERNMENT OF QUEZON CITY vs. HON. JUDGE VICENTE G. ERICTA and
HIMLAYANG PILIPINO,

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

FACTS:
 The City Council of Quezon City approved Ordinance No. 6118; Sec. 9 of which
provides that 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. After declaring Section 9 of the ordinance null and void, the
aforequoted section was not enforced by city authorities until seven years after the
enactment of the ordinance, the Quezon City Council passed a resolution requesting the City
Engineer 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, the Quezon City Engineer notified Himlayang Pilipino, Inc. that
Section 9 of Ordinance No. 6118, S-64 would be enforced. Himlayang Pilipino reacted by
filing with the CFI a petition for declaratory relief, prohibition and mandamus with
preliminary injunction seeking to annul Section 9 of the Ordinance for being
contrary to the Constitution, the Quezon City Charter, the Local Autonomy Act, and the
Revised Administrative Code.

The City government argues that the taking of the 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, Himlayang Pilipino, Inc. 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." It also 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.

ISSUE:

Is Section 9 of the ordinance in question a valid exercise of the police power? NO.
RULING:

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

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 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. The petitioners rely solely on the general welfare clause or on implied powers
of the municipal corporation, not on any express provision of law as statutory basis of their
exercise of power. The clause has always received broad and liberal interpretation but we
cannot stretch it to cover this particular taking.
 FELICIDAD VILLANUEVA, et. al vs. HON. MARIANO CASTANEDA, JR.

G.R. No. L-61311 September 2l, 1987

FACTS:

In November 7, 1961, the municipal council of San Fernando adopted Resolution

No. 218 authorizing some 24 members of the Fernandino United Merchants and
Traders Association to construct permanent stags and sell in the vicinity of the public
market of San Fernando, Pampanga (particularly along Mercado Street in a strip of land
measuring 12 by 77 meters on which stands a conglomeration of vendors stalls commonly
known as a talipapa).

The action was protested on November 10, 1961, in Civil Case No. 2040, where the
CFI of Pampanga, issued a writ of preliminary injunction that prevented the
petitioners from constructing the said stalls until final resolution of the controversy. While
the case was pending, the municipal council of San Fernando adopted Resolution G.R. No.
29, which declared the subject area as "the parking place and as the public plaza of the
municipality, thereby impliedly revoking Resolution No. 218, series of 1961. Thereafter, the
CFI decided and held that the land occupied by the petitioners, being public in nature, was
beyond the commerce of man and therefore could not be the subject of private
occupancy.

The CFI decision was apparently not enforced, for the petitioners were not
evicted from the place; in fact, they and 128 other persons were in 1971 assigned specific
areas or space allotments therein for which they paid daily fees to the municipal
government. In January 12, 1982, the Association of Concerned Citizens and
Consumers of San Fernando filed a petition for the immediate implementation of
Resolution No. 29, to restore the subject property "to its original and customary use as a
public plaza. Vicente A. Macalino acted on the petition as officer-in-charge of the office of
the mayor of San Fernando and issued a resolution requiring the municipal treasurer and
the municipal engineer to demolish the stalls in the subject place.
 The basic contention of the petitioners is that the disputed area is under lease to
them by virtue of contracts they had entered into with the municipal government,
first in 1961 insofar as the original occupants were concerned, and later with them and the
other petitioners by virtue of the space allocations made in their favor in 1971 for which
they saw they are paying daily fees.

ISSUE: Whether or not the contract of lease entered into with the municipal government
valid? NO.

RULING

A public plaza is beyond the commerce of man and so cannot be the subject
of lease or any other contractual undertaking. Indeed, this point was settled as early
as in Municipality of Cavite vs. Rojas, decided in 1915, where the Court declared as null and
void the lease of a public plaza of the said municipality in favor of a private person. Justice
Torres said in that case: According to Article 344 of the Civil Code: "Property for public use
in provinces and in towns comprises the provincial and town roads, the squares, streets,
fountains, and public waters, the promenades, and public works of general service
supported by said towns or provinces. The said Plaza Soledad being a promenade for public
use, the municipal council of Cavite could not in 1907 withdraw or exclude from public use a
portion thereof in order to lease it.

In Muyot vs. de la Fuente, it was held that the City of Manila could not lease a
portion of a public sidewalk on Plaza Sta. Cruz, being likewise beyond the commerce of
man. Echoing Rojas, the decision said: The City of Manila does not have any power or
authority at all to lease a portion of a public sidewalk. The sidewalk in question, forming
part of the public plaza of Sta. Cruz, could not be a proper subject matter of the contract, as
it was not within the commerce of man. Any contract entered into by the City of Manila in
connection with the sidewalk, is ipso facto null and ultra vires.

Exactly in point is Espiritu vs. Municipal Council of Pozorrubio, where the Supreme
Court declared: There is absolutely no question that the town plaza cannot be used for the
construction of market stalls, specially of residences, and that such structures constitute a
nuisance subject to abatement according to law. Town plazas are properties of public
dominion, to be devoted to public use and to be made available to the public in general.
They are outside the common of man and cannot be disposed of or even leased by the
municipality to private parties.
 Applying this well-settled doctrine, we rule that the petitioners had no right in the
first place to occupy the disputed premises and cannot insist in remaining there
now on the strength of their alleged lease contracts. Considering that even before
Civil Case No. 2040 was decided, the municipal council of San Fernando had already
adopted Resolution No. 29, series of 1964, declaring the area as the parking place and
public plaza of the municipality.

The problems caused by the usurpation of the place by the petitioners are covered
by the police power as delegated to the municipality under the general welfare clause.
This authorizes the municipal council "to enact such ordinances and make such regulations,
not repugnant to law, as may be necessary to carry into effect and discharge the powers
and duties conferred upon it by law and such as shall seem necessary and proper to provide
for the health and safety, promote the prosperity, improve the morals, peace, good order,
comfort, and convenience of the municipality and the inhabitants thereof, and for the
protection of property therein." This authority was validly exercised in this case through the
adoption of Resolution No. 29, series of 1964, by the municipal council of San Fernando.

Even assuming a valid lease of the property in dispute, the resolution could have
effectively terminated the agreement for it is settled that the police power cannot be
surrendered or bargained away through the medium of a contract. In fact, every
contract affecting the public interest suffers a congenital infirmity in that it contains an
implied reservation of the police power as a postulate of the existing legal order. This power
can be activated at any time to change the provisions of the contract, or even abrogate it
entirely, for the promotion or protection of the general welfare. Such an act will not militate
against the impairment clause, which is subject to and limited by the paramount police
power.

REPUBLIC OF THE PHILIPPINES vs. POLICARPIO GONZALEZ and AUGUSTO JOSUE

G.R. Nos. L-45338-39 July 31, 1991
FACTS: The republic of the Philippines is the owner of 2 parcels of land, namely Lot
1 and Lot 2, situated in F. Sevilla Boulevard in Malabon. A portion of Lot 2 were
occupied by Policarpio Gonzales and Augusta Josue who are brothers in law. On April
1955, Pres. Ramon Magsaysay issued a proclamation entitled "Reserving for Street
Widening and Parking Space Purposes Certain Parcels of the Public Domain Situated in the
Municipality of Malabon, Province of Rizal, Island of Luzon" which caused the sale of Lots 1
and 2 to be withdrawn and reserved for the purposes of the proclamation. The municipal
council of Malabon then passed resolutions authorizing the filing of ejectment cases
against Gonzales and Josue. On June 1995, the assistant provincial fiscal of Pasig, Rizal filed
separate complaints against appellants for recovery of the portions of Lot 2 they were
occupying which in agreement with the parties, was tried jointly. The RTC ruled against
Gonzales and Josue ordering them to vacate Lots 1 and 2. The appellants contend that
the proclamation is invalid because parking space purposes do not redound to the public
benefit since only those who have cars can avail of the parking facility.

ISSUE: Whether or not the street widening and parking space purposes redound to the
benefit of the general public.

RULING: YES. As observed by the trial court, Proclamation No. 144 was issued by then
President Ramon Magsaysay in response to several resolutions passed by the Municipal
Council of Malabon, Rizal, which had become particularly aware of the increasing vehicular
traffic and congestion along F. Sevilla Boulevard. 5 The Municipal Council had proposed to
widen F. Sevilla Boulevard and at the same time, to reserve an area for parking space to
ease up traffic problems, in anticipation of the completion of the then proposed market and
slaughterhouse located to the west of F. Sevilla Boulevard. In this day and age, it is hardly
open to debate that the public has much to gain from the proposed widening of F. Sevilla
Boulevard and from establishment of a municipal parking area. Indiscriminate parking along
F. Sevilla
Traffic congestion constitutes a threat to the health, welfare, safety and
convenience of the people and it can only be substantially relieved by widening
streets and providing adequate parking areas. Under the Land Transportation and
Traffic Code, parking in designated areas along public streets or highways is allowed which
clearly indicates that provision for parking spaces serves a useful purpose. In other
jurisdictions where traffic is at least as voluminous as here, the provision by municipal
governments of parking space is not limited to parking along public streets or highways.
There has been a marked trend to build off-street parking facilities with the view to
removing parked cars from the streets. While the provision of off-street parking facilities or
carparks has been commonly undertaken by private enterprise, municipal governments
have been constrained to put up carparks in response to public necessity where private
enterprise had failed to keep up with the growing public demand. American courts have
upheld the right of municipal governments to construct off-street parking facilities as clearly
redounding to the public benefit

Appellants, however, allege that the benefits, if any, that may be derived from the
proposed street-widening and parking space will be confined to people who have cars.
Appellants would restrict property reserved for public use or benefit to include only property
susceptible of being utilized by a generally unlimited number of people. The conception
urged by appellants is both flawed and obsolete since the number of users is not the
yardstick in determining whether property is properly reserved for public use or
public benefit. In the first place, Section 83 above speaks not only of use by a local
government but also of "quasi-public uses or purposes." To constitute public use, the
public in general should have equal or common rights to use the land or facility
involved on the same terms, however limited in number the people who can
actually avail themselves of it at a given time. There is nothing in Proclamation No.
144 which excludes non-car-owners from using a widened street or a parking area should
they in fact happen to be driving cars; the opportunity to avail of the use thereof remains
open for the public in general. Besides, the benefits directly obtained by car-owners do not
determine either the validity or invalidity of Proclamation No. 144. What is important are the
long-term benefits which the proposed street widening and parking areas make available
to the public in the form of enhanced, safe and orderly transportation on land. This is the
kind of public benefit envisioned by the Municipal Council of Malabon, Rizal and which was
sought to be promoted by the President in issuing Proclamation No. 144.
 ALFREDO PATALINGHUG VS. CA
GR NO. 104786 JANUARY 27, 1994

FACTS: In November 1982, the Sangguniang Panglungsod of Davao City enacted an

ordinance known as Expanded Zoning Ordinance of Davao City which states that
Funeral Parlors/Memorial Homes must be established less than 50 meters from any
residential structures, churches and other institutional buildings. The Zoning Administrator
issued on February 1987, building permit in favour of petitioners construction of a funeral
parlor. The petitioner then commenced the construction of his funeral parlor. Several
residents of the Barangay complained that the petitioners parlor violated the ordinance
which was found true by the Sangguniang Panglungsod. Despite the findings of the
Sangguiniang, petitioner continued the construction of his parlor which was finished on
November 1987. Consequently, the respondents filed a case against petitioner. The RTC
dismissed the complaint based on the findings that the residential building and INC chapel
are 63.25 meters and 55.95 meters away from the funeral parlor which is reversed by the
CA holding that although the residential building and the INC are beyond the 50 meter
radius, the parlor was within the 50 meter radius measured from Mr. Tepoots
building. The Appellate Court disagreed with the lower court's determination that Tepoot's
building was commercial and ruled that although it was used by Mr. Tepoot's lessee for
laundry business, it was a residential lot as reflected in the tax declaration, thus paving
the way for the application of Ordinance No. 363.

ISSUE: Whether or not Mr. Tepoots building is a residential simply because it was allegedly
declared as such for taxation purposes.

RULING: NO. A property may have been declared by its owner as residential for real estate
taxation purposes but it may well be within a commercial zone. A discrepancy may thus
exist in the determination of the nature of property for real estate taxation
purposes vis-a-vis the determination of a property for zoning purposes. The trial
court's determination that Mr. Tepoot's building is commercial and, therefore, Sec. 8 is
inapplicable, is strengthened by the fact that the Sangguniang Panlungsod has declared
the questioned area as commercial. Consequently, even if Tepoot's building was
declared for taxation purposes as residential, once a local government has reclassified an
area as commercial, such determination for zoning purposes must prevail. While the
commercial character of the questioned vicinity has been declared thru the ordinance,
private respondents have failed to present convincing arguments to substantiate
their claim that Cabaguio Avenue, where the funeral parlor was constructed, was still a
residential zone. Unquestionably, the operation of a funeral parlor constitutes a
"commercial purpose," as gleaned from Ordinance No. 363.
The declaration of the said area as a commercial zone thru a municipal
ordinance is an exercise of police power to promote the good order and general
welfare of the people in the locality. Corollary thereto, the state, in order to promote
the general welfare, may interfere with personal liberty, with property, and with business
and occupations. Thus, persons may be subjected to certain kinds of restraints and
burdens in order to secure the general welfare of the state and to this
fundamental aim of government, the rights of the individual may be subordinated.
The ordinance which regulates the location of funeral homes has been adopted as part of
comprehensive zoning plans for the orderly development of the area covered thereunder.
 CHUA HUAT, ET. AL. vs. CA
G.R. No. L-53851 July 9, 1991

FACTS: On 14 September 1982, Manuel Uy and Sons, Inc., respondent in G.R. No.
53851, requested Romulo M. del Rosario the City Engineer and Building Officials, of Manila,
to condemn the dilapidated structures located at 1271 to 1277 Pedro Gil St. and
1553 to 1557 Paz St., Paco, Manila, all occupied by petitioners.
On 17 November 1982, said official issued notices of condemnation addressed to
petitioners Chua Huat, Maria Gamboa, Lourdes Mempin, Dominador Felino, Ong Choan,
Rufino Clements, and several other persons. The condemnation orders stated that the
subject buildings were found to be in dangerous condition and therefore condemned,
subject to the confirmation of the Mayor as required by Section 276 of the
Compilation of Ordinances of the City of Manila. It further stated that the notice is not
an order to demolish as the findings of the City Engineer is (sic) still subject to the approval
of the Mayor. The orders were based on the inspection reports made by Architect Oscar D.
Andres and the Memorandum-Reports made by the Evaluation Committee of the Office of
the City Engineer, which all showed that the subject buildings suffer from structural
deterioration by more than 50% and as much as 80%.
On 19 January 1983, Civil Engineer Romulo C. Molas, a private practitioner,
inspected the abovementioned structures upon the request of petitioners herein. In his
evaluation report dated 21 January 1983, he CERTIFIED that although the buildings are
old, they are still structurally sound and have a remaining economic life of at least
eight years. On 22 February 1983, or three months after the notices of condemnation
were issued, petitioners formally protested against said notices of condemnation on the
ground that the buildings are still in good physical condition and are structurally sound
based on the abovementioned certification of Civil Engineer Romulo C. Molas dated 21
January 1983.
On 26 April 1983, Maria Gamboa, one of the petitioners herein, was informed of the
issuance by the City Engineer of the demolition order with respect to the building located at
1565 Paz St., Paco, Manila, and was told to vacate the premises within 15 days from notice.
On 2 May 1983, petitioners filed the instant Petition for Prohibition, with Preliminary
Injunction and/or Restraining Order, against City Mayor Ramon Bagatsing, City Engineer and
Building Officer Romulo del Rosario and Manuel Uy and Sons, Inc., praying that a restraining
order or preliminary injunction be issued enjoining respondents from proceeding with the
announced demolition of the subject buildings, this petition be given due course, and after
hearing, respondents be prohibited from demolishing said buildings. They alleged that the
respondents committed grave abuse of discretion amounting to lack of jurisdiction in issuing
the condemnation orders.

ISSUE: Whether or not respondents have the authority to order the condemnation.

RULING: YES. Section 215 of P.D. 1096, otherwise known as the National Building
Code, also states the authority of the Building Officials, with respect to dangerous buildings,
to wit:

When any building or structure is found or declared to be dangerous or

ruinous, the Building Officials, shall order its repair, vacation
or demolition depending upon the degree of danger to life, health, or safety.
 This is without prejudice to further action that may be taken under the
provisions of Articles 482 and 694 to 707 of the Civil Code of the Philippines.

From the abovementioned provisions, it is unquestionable that the Building Officials,

has the authority to order the condemnation and demolition of buildings which are found to
be in a dangerous or ruinous condition. It is also clear from the Compilation of Ordinances of
the City of Manila that the Mayor has the power to confirm or deny the action taken by the
Building Officials, with respect to the dangerous or ruinous buildings.

Respondent City Engineer and Building Official, Romulo M. del Rosario, can,
therefore, validly issue the questioned condemnation and demolition orders. This is also true
with the respondent Mayor who can approve or deny the condemnation orders as provided
in Section 276 of the Compilation of Ordinances of the City of Manila.

We find no grave abuse of discretion on the part of the respondent City Engineer
because the orders were made only after thorough ocular inspections were conducted by
the City's Building Inspectors.
 CELESTINO TATEL vs. MUN. OF VIRAC
GR NO. 40243 MARCH 11, 1992

FACTS: A committee was appointed by the municipal council of Virac to investigate

the complaints of the residents of the barrio against the disturbance caused by the
operation of the abaca bailing machine inside the warehouse of petitioner which affected
the tranquillity of the neighbourhood due to smoke, foul order, and dust emitted
by the machine. The committee noted that an accidental fire within the warehouse
occasioned by the continuance of the activity inside and storing of inflammable materials
created a danger to the lives and properties of the people with the neighbourhood; Hence,
the Mun. Coun. of Virac declared that the warehouse of petitioner is a public nuisance.
Respondents contend that petitioners warehouse was in violation of Ordinance no. 13
prohibiting the construction of warehouses near a block of houses without
maintaining the distance of 200 meters from said block of houses to avoid loss of
lives and properties by accidental fire. On the other hand, the petitioners contend that
the ordinance by the Municipal Councils of Virac is unconstitutional for not having passed in
accordance with law.

ISSUE: Whether or not the ordinance passed is unconstitutional.

RULING: NO. Ordinance No. 13, series of 1952, was 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 the 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.
The municipal council shall enact such ordinances and make such regulations, not
repugnant to law, as may be necessary to carry into effect and discharge the powers and
duties conferred upon it by law and such as shall seem necessary and proper to provide for
the health and safety, promote the prosperity, improve the morals, peace, good order,
comfort and convenience of the municipality and the inhabitants thereof, and for the
protection of property therein.
For an ordinance to be valid, it must not only be within the corporate powers of
the municipality to enact but must also be passed according to the procedure prescribed by
law, and must be in consonance with certain well established and basic principles of a
substantive nature. These principles require that a 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.

Ordinance No. 13, Series of 1952, meets the above criteria.

ATTORNEY HUMBERTO BASCO, et al vs.

PHILIPPINE AMUSEMENTS AND GAMING CORPORATION (PAGCOR)
G.R. No. 91649 May 14, 1991

FACTS
A PAGCOR TV ad proudly announces: "The new PAGCOR responding through
responsible gaming." The petitioners then filed the a petition to annul the Philippine
Amusement and Gaming Corporation (PAGCOR) Charter PD 1869, on the ground that it is
contrary to morals, public policy and order, and because
A. It waived the Manila City government's right to impose local taxes and license
fees.
B. It violates the equal protection clause of the constitution in that it legalizes
PAGCOR conducted gambling, while most other forms of gambling are outlawed,
together with prostitution, drug trafficking and other vices;
C. It violates the avowed trend of the Cory government away from monopolistic and
crony economy, and toward free enterprise and privatization.
They also claim that PD 1869 is contrary to the declared national policy of the "new
restored democracy" and the people's will because of the decrees "gambling objective" and
therefore is contrary to Sections 11, 12 and 13 of Article II, Sec. 1 of Article VIII and
Section 3 (2) of Article XIV, of the present Constitution.

ISSUE
(1) W/N the petitioners, as taxpayers have a legal personality to question the decree.
(2) W/N the decree contravenes the right of the local government to impose taxes.

RULING
(1) Yes. The requirement of proper party is satisfied by the petitioners and intervenors
because each of them has sustained or is in danger of sustaining an immediate injury as a
result of the acts or measures complained of. And even if, strictly speaking they are not
covered by the definition, it is still within the wide discretion of the Court to waive the
requirement and so remove the impediment to its addressing and resolving the serious
constitutional questions raised. Jurisprudence also provides that ordinary citizens and
taxpayers were allowed to question the constitutionality of laws due to the transcendental
importance to the public of these cases demands that they be settled promptly and
definitely, brushing aside, if we must technicalities of procedure.

(2) No. Petitioners contend 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.", constitutes a
waiver of the right of the City of Manila to impose taxes and legal fees and is violative of the
principle of local autonomy.
The SC ruled that the City of Manila, being a mere Municipal corporation has no
inherent right to impose taxes. Thus, "the Charter or statute must plainly show an intent to
confer that power or the municipality cannot assume it". Its "power to tax" therefore must
always yield to a legislative act which is superior having been passed upon by the state itself
which has the "inherent power to tax".
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, the City of Manila's power to impose license fees on gambling, has long
been revoked. As early as 1975, the power of local governments to regulate gambling thru
the grant of "franchise, licenses or permits" was withdrawn by P.D. No. 771 and was vested
exclusively on the National Government.
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.
PAGCOR as an agency or instrumentality of the Government is actually exempt from local
taxes.
 PHILIPPINE PETROLEUM CORPORATION vs. MUNICIPALITY OF PILILLA, RIZAL,
Represented by MAYOR NICOMEDES F. PATENIA
G.R. No. 90776 June 3, 1991

FACTS
Philippine Petroleum Corporation (PPC) owns and maintains an oil refinery including
forty-nine storage tanks for its petroleum products in Malaya, Pililla, Rizal.
Under Section 142 of the National Internal Revenue Code of 1939, manufactured oils
and other fuels are subject to specific tax. On June 28, 1973, PD 231 or the Local Tax Code
providing provinces, cities, municipalities and barrios of their taxing and other revenue-
raising powers that the municipality may impose taxes on business, except on those for
which fixed taxes are provided on manufacturers, importers or producers of any article of
commerce of whatever kind or nature, including brewers, distillers, rectifiers, repackers, and
compounders of liquors, distilled spirits and/or wines in accordance with the schedule listed
therein. (Sec 19, 19a)
The Secretary of Finance issued Provincial Circular No. 26-73 directing provincial, city
and municipal treasurers to refrain from collecting any local tax imposed in old or new tax
ordinances in the business of manufacturing, wholesaling, retailing, or dealing in petroleum
products subject to the specific tax under the National Internal Revenue Code.
Respondent Municipality of Pililla, Rizal, through Municipal Council Resolution No. 25,
S-1974 enacted Municipal Tax Ordinance No. 1, S-1974 otherwise known as "The Pililla Tax
Code of 1974". Sections 9 and 10 of the said ordinance imposed a tax on business, except
for those for which fixed taxes are provided in the Local Tax Code on manufacturers,
importers, or producers of any article of commerce of whatever kind or nature, including
brewers, distillers, rectifiers, repackers, and compounders of liquors, distilled spirits and/or
wines in accordance with the schedule found in the Local Tax Code, as well as mayor's
permit, sanitary inspection fee and storage permit fee for flammable, combustible or
explosive substances.
Respondent then filed a complaint against PPC for the collection of the business tax
from 1979 to 1986; storage permit fees from 1975 to 1986; mayor's permit and sanitary
inspection fees from 1975 to 1984.
RTC ruled in favour of Respondent Pilila, Rizal and ordering PPC to pay the amounts
representing the tax on their business.
 Petitioners contention: Provincial Circular No. 2673 declared as contrary to national
economic policy the imposition of local taxes on the manufacture of petroleum products as
they are already subject to specific tax under the National Internal Revenue Code.

ISSUE
W/N PPC is liable to pay the taxes imposed by the municipality.

RULING
Yes. PC No. 26-73 and PC No. 26 A-73 suspended the effectivity of local tax
ordinances imposing a tax on business under Section 19 (a) of the Local Tax Code (P.D. No.
231), with regard to manufacturers, retailers, wholesalers or dealers in petroleum products
subject to the specific tax under the National Internal Revenue Code NIRC, in view of
Section 22 (b) of the Code regarding non-imposition by municipalities of taxes on articles,
subject to specific tax under the provisions of the NIRC.
Pililla's Municipal Tax Ordinance No. 1 imposing the assailed taxes, fees and charges
is valid especially Section 9 (A) which according to the trial court "was lifted in toto and/or is
a literal reproduction of Section 19 (a) of the Local Tax Code as amended by P.D. No. 426."
It conforms with the mandate of said law. But P.D. No. 426 amending the Local Tax Code is
deemed to have repealed Provincial Circular Nos. 26-73 and 26 A-73 issued by the
Secretary of Finance when Sections 19 and 19 (a), were carried over into P.D. No. 426 and
no exemptions were given to manufacturers, wholesalers, retailers, or dealers in petroleum
products.
Well-settled is the rule that administrative regulations must be in harmony with the
provisions of the law. In case of discrepancy between the basic law and an implementing
rule or regulation, the former prevails. While Section 2 of P.D. 436 prohibits the imposition
of local taxes on petroleum products, said decree did not amend Sections 19 and 19 (a) of
P.D. 231 as amended by P.D. 426, wherein the municipality is granted the right to levy taxes
on business of manufacturers, importers, producers of any article of commerce of whatever
kind or nature. A tax on business is distinct from a tax on the article itself. Thus, if the
imposition of tax on business of manufacturers, etc. in petroleum products contravenes a
declared national policy, it should have been expressly stated in P.D. No. 436.
The exercise by local governments of the power to tax is ordained by the present
Constitution. To allow the continuous effectivity of the prohibition set forth in PC No. 26-73
(1) would be tantamount to restricting their power to tax by mere administrative issuances.
Under Section 5, Article X of the 1987 Constitution, only guidelines and limitations that may
be established by Congress can define and limit such power of local governments. Thus:
Each local government unit shall have the power to create its own sources of
revenues and to levy taxes, fees, and charges subject to such guidelines and
limitations as the Congress may provide, consistent with the basic policy of local
autonomy . . .
Provincial Circular No. 6-77 enjoining all city and municipal treasurers to refrain from
collecting the so-called storage fee on flammable or combustible materials imposed in the
local tax ordinance of their respective locality frees petitioner PPC from the payment of
storage permit fee. The storage permit fee being imposed by Pililla's tax ordinance is a fee
for the installation and keeping in storage of any flammable, combustible or explosive
substances. Inasmuch as said storage makes use of tanks owned not by the municipality of
Pililla, but by petitioner PPC, same is obviously not a charge for any service rendered by the
municipality as what is envisioned in Section 37 of the same Code.
Section 10 (z) (13) of Pililla's Municipal Tax Ordinance No. 1 prescribing a permit fee
is a permit fee allowed under Section 36 of the amended Code.
 FLORO CEMENT CORPORATION vs. HON. BENJAMIN K. GOROSPE, Judge, CFI of
Misamis Oriental, Branch I, and the MUNICIPALITY OF LUGAIT

G.R. No. L-46787 August 12, 1991

FACTS

The municipality of Lugait, Misamis Oriental filed a complaint for collection of

"manufacturers" and' exporter's "taxes against the defendant Floro Cement Corporation for
the period from January 1, 1974 to September 30, 1975, inclusive, in the total amount of
P161,875.00 plus 25% thereof as surcharge.

Plaintiff alleged that the imposition and collection of these taxes" is based on its
Municipal Ordinance No. 5, otherwise known as the Municipal Revenue Code of 1974, which
was passed pursuant to PD 231 and also Municipal Ordinance No. 10 pursuant to PD 426,
amending PD 231. On the other hand, the defendant contends that it is not liable to pay
manufacturer's and exporter's taxes alleging that the plaintiff,s power to levy and collect
taxes, fees, rentals, royalties or charges of any kind whatsoever on defendant has been
limited or withdrawn by Section 52 of PD 463 which provides:

Sec. 52. Power to Levy Taxes on Mines, Mining Corporation and Mineral Products.
Any law to the contrary notwithstanding, no province, city, municipality, barrio or
municipal district shall levy and collect taxes, fees, rentals, royalties or charges of
any kind whatsoever on mines, mining claims, mineral products, or on any operation,
process or activity connected therewith.
 RTC rule in favour of plaintiff ordering defendant Floro Cement Corporation to pay
the manufacturer's and exporter's taxes and surcharges.

ISSUE

W/N the local government has power to tax the respondent.

RULING

Yes. The municipality's power to levy taxes on manufacturers and exporters is

provided in Article 2, Sec. 19 of P.D. No. 231, as amended by P.D. No. 426 which provides
that "The municipality may impose a tax on business except those for which fixed taxes are
provided for in this Code:

(a) On manufacturers, importers, or producers of any article of commerce of

whatever kind or nature, including brewers, distillers, rectifiers, repackers,
and compounders of liquors, distilled spirits and/ or wines in accordance with
the following schedule:

xxx xxx xxx

(a-1) On retailers, independent wholesalers and distributors in accordance

with the following schedule:

xxx xxx xxx

The exemption mentioned in Sec. 52 of P.D. No. 463 refers only to machineries,
equipment, tools for production, etc., as provided in Sec. 53 of the same decree. The
manufacture and the export of cement does not fall under the said provision for it is not a
mineral product.

Furthermore, by the parties' own stipulation of facts, it is admitted that Floro Cement
Corporation is engaged in the manufacturing and selling, including exporting of cement. As
such, and since the taxes sought to be collected were levied on these activities pursuant to
Sec. 19 of P.D. No. 231, Ordinances Nos. 5 and 10 apply to petitioner Floro Cement
Corporation.
 DOMINGO A. TUZON and LOPE C. MAPAGU v. CA and SATURNINO T. JURADO

G.R. No. 90107. August 21, 1992.

FACTS
The petitioners are questioning the decision of the respondent court holding them
liable in damages to the private respondent for refusing to issue to him a mayors permit
and license to operate his palay-threshing business.
In 1977, the Sangguniang Bayan of Camalaniugan, Cagayan, adopted Resolution No.
9 providing for the construction of Sports and Nutrition Center. The dame had thought of a
fund-raising scheme, to help finance the construction of the project, by soliciting 1%
donation from the thresher operators who will apply for a permit to thresh within the
jurisdiction of this municipality, of all the palay threshed by them.
Private respondent Saturnino T. Jurado sent his agent to the municipal treasurers
office to pay the license fee of P285.00 for thresher operators. Mapagu refused to accept the
payment and required him to first secure a mayors permit. Mayor Domingo Tuzon said that
Jurado should first comply with Resolution No. 9 and sign the agreement before the permit
could be issued. Jurado ignored the requirement. Instead, he sent the P285.00 license fee
by postal money order to the office of the municipal treasurer who, however, returned the
said amount. The reason given was the failure of the respondent to comply with Resolution
No. 9.
Jurado filed with the CFI of Cagayan a special civil action for mandamus with actual
and moral damages to compel the issuance of the mayors permit and license. He then filed
another petition with the same court for declaratory judgment against the said resolution
(and the implementing agreement) for being illegal either as a donation or as a tax
measure.
The Trial court upheld the challenged measure and dismissed the claims for damages
of both parties for lack of evidence. Upon appeal, the CA affirmed the CFIs decision.

ISSUE
W/N private respondent Jurado is entitled to damages.
RULING
No. Resolution No. 9 was passed by the Sangguniang Bayan of Camalaniugan in the
lawful exercise of its legislative powers in pursuance to Article XI, Section 5 of the 1973
Constitution which provided that: "Each local government unit shall have the power to
create its own source of revenue and to levy taxes, subject to such limitation as may be
provided by law." And under Article 4, Section 29 of PD 231 (Enacting a Local Tax Code for
Provinces, Cities, Municipalities and Barrios), it is provided that:
"Section 29. Contributions. In addition to the above specified taxing and
other revenue-raising powers, the barrio council may solicit monies,
materials, and other contributions from the following sources:chanrob1es
virtual 1aw library
x x x
"(c) Monies from private agencies and individuals."

While it would appear from the wording of the resolution that the municipal
government merely intends to "solicit" the 1% contribution from the threshers, the
implementing agreement seems to make the donation obligatory and a condition precedent
to the issuance of the mayors permit. This goes against the nature of a donation, which is
an act of liberality and is never obligatory.
If, on the other hand, it is to be considered a tax ordinance, then it must be shown in
view of the challenge raised by the private respondents to have been enacted in accordance
with the requirements of the Local Tax Code. These would include the holding of a public
hearing on the measure and its subsequent approval by the Secretary of Finance, in addition
to the usual requisites for publication of ordinances in general.
However, since the validity of the Resolution was not questioned by the private
respondent in its appeal, the only issue that has to be resolved in this case is whether or not
the petitioners are liable in damages to the private respondent for having withheld from him
the mayors permit and license because of his refusal to comply with Resolution No. 9.
The private respondent anchors his claim for damages on Article 27 of the New Civil
Code, which reads:
Art. 27. Any person suffering material or moral loss because a public servant
or employee refuses or neglects, without just cause, to perform his official
duty may file an action for damages and other relief against the latter, without
prejudice to any disciplinary administrative action that may be taken.
The purpose of this article is to end the "bribery system, where the public official, for
some flimsy excuse, delays or refuses the performance of his duty until he gets some kind
of pabagsak." Official inaction may also be due to plain indolence or a cynical indifference to
the responsibilities of public service. The provision presupposes that the refusal or omission
of a public official to perform his official duty is attributable to malice or inexcusable
negligence. In any event, the erring public functionary is justly punishable under this article
for whatever loss or damage the complainant has sustained.
In the present case, it has not even been alleged that the Mayor Tuzons refusal to
act on the private respondents application was an attempt to compel him to resort to
bribery to obtain approval of his application. It cannot be said either that the mayor and the
municipal treasurer were motivated by personal spite or were grossly negligent in refusing
to issue the permit and license to Jurado.
Therefore, the petitioners acted within the scope of their authority and in consonance
with their honest interpretation of the resolution in question. We agree that it was not for
them to rule on its validity. In the absence of a judicial decision declaring it invalid, its
legality would have to be presumed.As executive officials of the municipality, they had the
duty to enforce it as long as it had not been repealed by the Sangguniang Bayan or annulled
by the courts.
As a rule, a public officer, whether judicial, quasi-judicial or executive, is not
personally liable to one injured in consequence of an act performed within the scope of his
official authority, and in line of his official duty.