1
B. Autonomy and Decentralilzation
Atty. Pareja
1.
G.R. No. 78059 August 31, 1987
ALFREDO M. DE LEON, ANGEL S. SALAMAT, MARIO C. STA. ANA, JOSE C.
TOLENTINO, ROGELIO J. DE LA ROSA and JOSE M.
RESURRECCION, petitioners,
vs.
HON. BENJAMIN B. ESGUERRA, in his capacity as OIC Governor of the
Province of Rizal, HON. ROMEO C. DE LEON, in his capacity as OIC Mayor of
the Municipality of Taytay, Rizal, FLORENTINO G. MAGNO, REMIGIO M.
TIGAS, RICARDO Z. LACANIENTA, TEODORO V. MEDINA, ROSENDO S. PAZ,
and TERESITA L. TOLENTINO, respondents.
MELENCIO-HERRERA, J.:
An original action for Prohibition instituted by petitioners seeking to enjoin
respondents from replacing them from their respective positions as
Barangay Captain and Barangay Councilmen of Barangay Dolores,
Municipality of Taytay, Province of Rizal.
As required by the Court, respondents submitted their Comment on the
Petition, and petitioner's their Reply to respondents' Comment.
In the Barangay elections held on May 17, 1982, petitioner Alfredo M. De
Leon was elected Barangay Captain and the other petitioners Angel S.
Salamat, Mario C. Sta. Ana, Jose C. Tolentino, Rogelio J. de la Rosa and Jose
M. Resurreccion, as Barangay Councilmen of Barangay Dolores, Taytay, Rizal
under Batas Pambansa Blg. 222, otherwise known as the Barangay Election
Act of 1982.
On February 9, 1987, petitioner Alfredo M, de Leon received a
Memorandum antedated December 1, 1986 but signed by respondent OIC
Governor Benjamin Esguerra on February 8, 1987 designating respondent
Florentino G. Magno as Barangay Captain of Barangay Dolores, Taytay, Rizal.
The designation made by the OIC Governor was "by authority of the
Minister of Local Government."
Also on February 8, 1987, respondent OIC Governor signed a Memorandum,
antedated December 1, 1986 designating respondents Remigio M. Tigas,
Ricardo Z. Lacanienta Teodoro V. Medina, Roberto S. Paz and Teresita L.
Tolentino as members of the Barangay Council of the same Barangay and
Municipality.
That the Memoranda had been antedated is evidenced by the Affidavit of
respondent OIC Governor, the pertinent portions of which read:
xxx xxx xxx
That I am the OIC Governor of Rizal having been appointed as
such on March 20, 1986;
That as being OIC Governor of the Province of Rizal and in the
performance of my duties thereof, I among others, have signed
as I did sign the unnumbered memorandum ordering the
replacement of all the barangay officials of all the barangay(s) in
the Municipality of Taytay, Rizal;
That the above cited memorandum dated December 1, 1986 was
signed by me personally on February 8,1987;
That said memorandum was further deciminated (sic) to all
concerned the following day, February 9. 1987.
FURTHER AFFIANT SAYETH NONE.
Pasig, Metro Manila, March 23, 1987.
Before us now, petitioners pray that the subject Memoranda of February 8,
1987 be declared null and void and that respondents be prohibited from
taking over their positions of Barangay Captain and Barangay Councilmen,
respectively. Petitioners maintain that pursuant to Section 3 of the Barangay
Election Act of 1982 (BP Blg. 222), their terms of office "shall be six (6) years
which shall commence on June 7, 1982 and shall continue until their
successors shall have elected and shall have qualified," or up to June 7,
1988. It is also their position that with the ratification of the 1987
Constitution, respondent OIC Governor no longer has the authority to
replace them and to designate their successors.
On the other hand, respondents rely on Section 2, Article III of the
Provisional Constitution, promulgated on March 25, 1986, which provided:
SECTION 2. All elective and appointive officials and employees
under the 1973 Constitution shall continue in office until otherwise
provided by proclamation or executive order or upon the
designation or appointment and qualification of their successors, if
such appointment is made within a period of one year from
February 25,1986.
By reason of the foregoing provision, respondents contend that the terms of
office of elective and appointive officials were abolished and that petitioners
continued in office by virtue of the aforequoted provision and not because
their term of six years had not yet expired; and that the provision in the
Barangay Election Act fixing the term of office of Barangay officials to six (6)
years must be deemed to have been repealed for being inconsistent with
the aforequoted provision of the Provisional Constitution.
Examining the said provision, there should be no question that petitioners,
as elective officials under the 1973 Constitution, may continue in office but
should vacate their positions upon the occurrence of any of the events
mentioned. 1
Since the promulgation of the Provisional Constitution, there has been no
proclamation or executive order terminating the term of elective Barangay
officials. Thus, the issue for resolution is whether or not the designation of
respondents to replace petitioners was validly made during the one-year
period which ended on February 25, 1987.
Considering the candid Affidavit of respondent OIC Governor, we hold that
February 8, 1977, should be considered as the effective date of replacement
and not December 1,1986 to which it was ante dated, in keeping with the
dictates of justice.
But while February 8, 1987 is ostensibly still within the one-year deadline,
the aforequoted provision in the Provisional Constitution must be deemed
to have been overtaken by Section 27, Article XVIII of the 1987 Constitution
reading.
SECTION 27. This Constitution shall take effect immediately upon
its ratification by a majority of the votes cast in a plebiscite held
for the purpose and shall supersede all previous Constitutions.
The 1987 Constitution was ratified in a plebiscite on February 2, 1987. By
that date, therefore, the Provisional Constitution must be deemed to have
been superseded. Having become inoperative, respondent OIC Governor
could no longer rely on Section 2, Article III, thereof to designate
respondents to the elective positions occupied by petitioners.
Petitioners must now be held to have acquired security of tenure specially
considering that the Barangay Election Act of 1982 declares it "a policy of
the State to guarantee and promote the autonomy of the barangays to
ensure their fullest development as self-reliant communities. 2 Similarly, the
1987 Constitution ensures the autonomy of local governments and of
political subdivisions of which the barangays form a part, 3 and limits the
President's power to "general supervision" over local
governments. 4 Relevantly, Section 8, Article X of the same 1987
Constitution further provides in part:
Sec. 8. The term of office of elective local officials, except barangay
officials, which shall be determined by law, shall be three years ...
Until the term of office of barangay officials has been determined by law,
therefore, the term of office of six (6) years provided for in the Barangay
Election Act of 1982 5 should still govern.
Contrary to the stand of respondents, we find nothing inconsistent between
the term of six (6) years for elective Barangay officials and the 1987
Constitution, and the same should, therefore, be considered as still
operative, pursuant to Section 3, Article XVIII of the 1987 Constitution,
reading:
Sec. 3. All existing laws, decrees, executive orders, proclamations
letters of instructions, and other executive issuances not
inconsistent, with this Constitution shall remain operative until
amended, repealed or revoked.
WHEREFORE, (1) The Memoranda issued by respondent OIC Governor on
February 8, 1987 designating respondents as the Barangay Captain and
Barangay Councilmen, respectively, of Barangay Dolores, Taytay, Rizal, are
both declared to be of no legal force and effect; and (2) the Writ of
Prohibition is granted enjoining respondents perpetually from proceeding
with the ouster/take-over of petitioners' positions subject of this Petition.
Without costs. SO ORDERED.

B. Autonomy and Decentralilzation
Atty. Pareja
2.
G.R. No. 92299 April 19, 1991
REYNALDO R. SAN JUAN, petitioner,
vs.
CIVIL SERVICE COMMISSION, DEPARTMENT OF BUDGET AND
MANAGEMENT and CECILIA ALMAJOSE,respondents.
GUTIERREZ, JR., J.:
In this petition for certiorari pursuant to Section 7, Article IX (A) of the
present Constitution, the petitioner Governor of the Province of Rizal, prays
for the nullification of Resolution No. 89-868 of the Civil Service Commission
(CSC) dated November 21, 1989 and its Resolution No. 90-150 dated
February 9, 1990.
The dispositive portion of the questioned Resolution reads:
WHEREFORE, foregoing premises considered, the Commission
resolved to dismiss, as it hereby dismisses the appeal of Governor
Reynaldo San Juan of Rizal. Accordingly, the approved
appointment of Ms. Cecilia Almajose as Provincial Budget Officer
of Rizal, is upheld. (Rollo, p. 32)
The subsequent Resolution No. 90-150 reiterates CSC's position upholding
the private respondent's appointment by denying the petitioner's motion
for reconsideration for lack of merit.
The antecedent facts of the case are as follows:
On March 22, 1988, the position of Provincial Budget Officer (PBO) for the
province of Rizal was left vacant by its former holder, a certain Henedima
del Rosario.
In a letter dated April 18, 1988, the petitioner informed Director Reynaldo
Abella of the Department of Budget and Management (DBM) Region IV that
Ms. Dalisay Santos assumed office as Acting PBO since March 22, 1988
pursuant to a Memorandum issued by the petitioner who further requested
Director Abella to endorse the appointment of the said Ms. Dalisay Santos to
the contested position of PBO of Rizal. Ms. Dalisay Santos was then
Municipal Budget Officer of Taytay, Rizal before she discharged the
functions of acting PBO.
In a Memorandum dated July 26, 1988 addressed to the DBM Secretary,
then Director Abella of Region IV recommended the appointment of the
private respondent as PBO of Rizal on the basis of a comparative study of all
Municipal Budget Officers of the said province which included three
nominees of the petitioner. According to Abella, the private respondent was
the most qualified since she was the only Certified Public Accountant among
the contenders.
On August 1, 1988, DBM Undersecretary Nazario S. Cabuquit, Jr. signed the
appointment papers of the private respondent as PBO of Rizal upon the
aforestated recommendation of Abella.
In a letter dated August 3, 1988 addressed to Secretary Carague, the
petitioner reiterated his request for the appointment of Dalisay Santos to
the contested position unaware of the earlier appointment made by
Undersecretary Cabuquit.
On August 31, 1988, DBM Regional Director Agripino G. Galvez wrote the
petitioner that Dalisay Santos and his other recommendees did not meet the
minimum requirements under Local Budget Circular No. 31 for the position
of a local budget officer. Director Galvez whether or not through oversight
further required the petitioner to submit at least three other qualified
nominees who are qualified for the position of PBO of Rizal for evaluation
and processing.
On November 2, 1988, the petitioner after having been informed of the
private respondent's appointment wrote Secretary Carague protesting
against the said appointment on the grounds that Cabuquit as DBM
Undersecretary is not legally authorized to appoint the PBO; that the private
respondent lacks the required three years work experience as provided in
Local Budget Circular No. 31; and that under Executive Order No. 112, it is
the Provincial Governor, not the Regional Director or a Congressman, who
has the power to recommend nominees for the position of PBO.
On January 9, 1989 respondent DBM, through its Director of the Bureau of
Legal & Legislative Affairs (BLLA) Virgilio A. Afurung, issued a Memorandum
ruling that the petitioner's letter-protest is not meritorious considering that
public respondent DBM validly exercised its prerogative in filling-up the
2
contested position since none of the petitioner's nominees met the
prescribed requirements.
On January 27, 1989, the petitioner moved for a reconsideration of the BLLA
ruling.
On February 28, 1989, the DBM Secretary denied the petitioner's motion for
reconsideration.
On March 27, 1989, the petitioner wrote public respondent CSC protesting
against the appointment of the private respondent and reiterating his
position regarding the matter.
Subsequently, public respondent CSC issued the questioned resolutions
which prompted the petitioner to submit before us the following assignment
of errors:
A. THE CSC ERRED IN UPHOLDING THE APPOINTMENT BY DBM
ASSISTANT SECRETARY CABUQUIT OF CECILIA ALMAJOSE AS PBO
OF RIZAL.
B. THE CSC ERRED IN HOLDING THAT CECILIA ALMA JOSE
POSSESSES ALL THE REQUIRED QUALIFICATIONS.
C. THE CSC ERRED IN DECLARING THAT PETITIONER'S NOMINEES
ARE NOT QUALIFIED TO THE SUBJECT POSITION.
D. THE CSC AND THE DBM GRAVELY ABUSED THEIR DISCRETION
IN NOT ALLOWING PETITIONER TO SUBMIT NEW NOMINEES
WHO COULD MEET THE REQUIRED QUALIFICATION (Petition, pp.
7-8, Rollo, pp. 15-16)
All the assigned errors relate to the issue of whether or not the private
respondent is lawfully entitled to discharge the functions of PBO of Rizal
pursuant to the appointment made by public respondent DBM's
Undersecretary upon the recommendation of then Director Abella of DBM
Region IV.
The petitioner's arguments rest on his contention that he has the sole right
and privilege to recommend the nominees to the position of PBO and that
the appointee should come only from his nominees. In support thereof, he
invokes Section 1 of Executive Order No. 112 which provides that:
Sec. 1. All budget officers of provinces, cities and municipalities
shall be appointed henceforth by the Minister of Budget and
Management upon recommendation of the local chief executive
concerned, subject to civil service law, rules and regulations, and
they shall be placed under the administrative control and
technical supervision of the Ministry of Budget and Management.
The petitioner maintains that the appointment of the private respondent to
the contested position was made in derogation of the provision so that both
the public respondents committed grave abuse of discretion in upholding
Almajose's appointment.
There is no question that under Section 1 of Executive Order No. 112 the
petitioner's power to recommend is subject to the qualifications prescribed
by existing laws for the position of PBO. Consequently, in the event that the
recommendations made by the petitioner fall short of the required
standards, the appointing authority, the Minister (now Secretary) of public
respondent DBM is expected to reject the same.
In the event that the Governor recommends an unqualified person, is the
Department Head free to appoint anyone he fancies ? This is the issue
before us.
Before the promulgation of Executive Order No. 112 on December 24, 1986,
Batas Pambansa Blg. 337, otherwise known as the Local Government Code
vested upon the Governor, subject to civil service rules and regulations, the
power to appoint the PBO (Sec. 216, subparagraph (1), BP 337). The Code
further enumerated the qualifications for the position of PBO. Thus, Section
216, subparagraph (2) of the same code states that:
(2) No person shall be appointed provincial budget officer unless
he is a citizen of the Philippines, of good moral character, a
holder of a degree preferably in law, commerce, public
administration or any related course from a recognized college or
university, a first grade civil service eligibility or its equivalent,

B. Autonomy and Decentralilzation
Atty. Pareja
and has acquired at least five years experience in budgeting or in
any related field.
The petitioner contends that since the appointing authority with respect to
the Provincial Budget Officer of Rizal was vested in him before, then, the
real intent behind Executive Order No. 112 in empowering him to
recommend nominees to the position of Provincial Budget Officer is to make
his recommendation part and parcel of the appointment process. He states
that the phrase "upon recommendation of the local chief executive
concerned" must be given mandatory application in consonance with the
state policy of local autonomy as guaranteed by the 1987 Constitution under
Art. II, Sec. 25 and Art. X, Sec. 2 thereof. He further argues that his power to
recommend cannot validly be defeated by a mere administrative issuance of
public respondent DBM reserving to itself the right to fill-up any existing
vacancy in case the petitioner's nominees do not meet the qualification
requirements as embodied in public respondent DBM's Local Budget Circular
No. 31 dated February 9, 1988.
The questioned ruling is justified by the public respondent CSC as follows:
As required by said E.O. No. 112, the DBM Secretary may choose
from among the recommendees of the Provincial Governor who
are thus qualified and eligible for appointment to the position of
the PBO of Rizal. Notwithstanding, 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. To rule otherwise would in effect give the law or
E.O. No. 112 a different interpretation or construction not
intended therein, taking into consideration that said officer has
been nationalized and is directly under the control and
supervision of the DBM Secretary or through his duly authorized
representative. It cannot be gainsaid that said national officer has
a similar role in the local government unit, only on another area
or concern, to that of a Commission on Audit resident auditor.
Hence, to preserve and maintain the independence of said officer
from the local government unit, he must be primarily the choice
of the national appointing official, and the exercise thereof must
not be unduly hampered or interfered with, provided the
appointee finally selected meets the requirements for the
position in accordance with prescribed Civil Service Law, Rules
and Regulations. In other words, the appointing official is not
restricted or circumscribed to the list submitted or recommended
by the local chief executive in the final selection of an appointee
for the position. He may consider other nominees for the
position vis a vis the nominees of the local chief executive. (CSC
Resolution No. 89-868, p. 2; Rollo, p. 31)
The issue before the Court is not limited to the validity of the appointment
of one Provincial Budget Officer. The tug of war between the Secretary of
Budget and Management and the Governor of the premier province of Rizal
over a seemingly innocuous position involves the application of a most
important constitutional policy and principle, that of local autonomy. We
have to obey the clear mandate on local autonomy. Where a law is capable
of two interpretations, one in favor of centralized power in Malacaang and
the other beneficial to local autonomy, the scales must be weighed in favor
of autonomy.
The exercise by local governments of meaningful power has been a national
goal since the turn of the century. And yet, inspite of constitutional
provisions and, as in this case, legislation mandating greater autonomy for
local officials, national officers cannot seem to let go of centralized powers.
They deny or water down what little grants of autonomy have so far been
given to municipal corporations.
President McKinley's Instructions dated April 7, 1900 to the Second
Philippine Commission ordered the new Government "to devote their
attention in the first instance to the establishment of municipal
governments in which natives of the Islands, both in the cities and rural
communities, shall be afforded the opportunity to manage their own local
officers to the fullest extent of which they are capable and subject to the
least degree of supervision and control which a careful study of their
capacities and observation of the workings of native control show to be
consistent with the maintenance of law, order and loyalty.
In this initial organic act for the Philippines, the Commission which
combined both executive and legislative powers was directed to give top
priority to making local autonomy effective.
The 1935 Constitution had no specific article on local autonomy. However,
in distinguishing between presidential control and supervision as follows:
3
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 faithfully executed. (Sec. 11, Article VII, 1935
Constitution)
the Constitution clearly limited the executive power over local governments
to "general supervision . . . as may be provided by law." The President
controls the executive departments. He has no such power over local
governments. He has only supervision and that supervision is both general
and circumscribed by statute.
In Tecson v. Salas, 34 SCRA 275, 282 (1970), this Court stated:
. . . Hebron v. Reyes, (104 Phil. 175 [1958]) with the then Justice,
now Chief Justice, Concepcion as theponente, clarified matters.
As was pointed out, the presidential competence is not even
supervision in general, but general supervision as may be
provided by law. He could not thus go beyond the applicable
statutory provisions, which bind and fetter his discretion on the
matter. Moreover, as had been earlier ruled in an opinion
penned by Justice Padilla in Mondano V. Silvosa, (97 Phil. 143
[1955]) referred to by the present Chief Justice in his opinion in
the Hebron case, supervision goes no further than "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." (Ibid, pp. 147-148)
Control, on the other hand, "means the power of an officer to
alter or modify or nullify or set aside what a subordinate had
done in the performance of their duties and to substitute the
judgment of the former for that of the latter." It would follow
then, according to the present Chief Justice, to go back to the
Hebron opinion, that the President had to abide by the then
provisions of the Revised Administrative Code on suspension and
removal of municipal officials, there being no power of control
that he could rightfully exercise, the law clearly specifying the
procedure by which such disciplinary action would be taken.
Pursuant to this principle under the 1935 Constitution, legislation
implementing local autonomy was enacted. In 1959, Republic Act No. 2264,
"An Act Amending the Law Governing Local Governments by Increasing
Their Autonomy and Reorganizing Local Governments" was passed. It was
followed in 1967 when Republic Act No. 5185, the Decentralization Law was
enacted, giving "further autonomous powers to local governments
governments."
The provisions of the 1973 Constitution moved the country further, at least
insofar as legal provisions are concerned, towards greater autonomy. It
provided under Article II as a basic principle of government:
Sec. 10. The State shall guarantee and promote the autonomy of
local government units, especially the barangay to ensure their
fullest development as self-reliant communities.
An entire article on Local Government was incorporated into the
Constitution. It called for a local government code defining more responsive
and accountable local government structures. Any creation, merger,
abolition, or substantial boundary alteration cannot be done except in
accordance with the local government code and upon approval by a
plebiscite. The power to create sources of revenue and to levy taxes was
specifically settled upon local governments.
The exercise of greater local autonomy is even more marked in the present
Constitution.
Article II, Section 25 on State Policies provides:
Sec. 25. The State shall ensure the autonomy of local
governments
The 14 sections in Article X on Local Government not only reiterate earlier
doctrines but give in greater detail the provisions making local autonomy
more meaningful. Thus, Sections 2 and 3 of Article X provide:
Sec. 2. The territorial and political subdivisions shall enjoy local
autonomy.
Sec. 3. The Congress shall enact a local government code which
shall provide for a more responsive and accountable local
 4
B. Autonomy and Decentralilzation
Atty. Pareja
government structure instituted through a system of
decentralization with effective mechanisms of recall, initiative,
and referendum, allocate among the different local government
units their powers, responsibilities, and resources, and provide
for the qualifications, election, appointment and removal, term,
salaries, powers and functions and duties of local officials, and all
other matters relating to the organization and operation of the
local units.

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.

It may not be amiss to give by way of analogy the procedure followed in the
appointments of Justices and Judges.1wphi1Under Article VIII of the
Constitution, nominations for judicial positions are made by the Judicial and
Bar Council. The President makes the appointments from the list of
nominees submitted to her by the Council. She cannot apply the DBM
procedure, reject all the Council nominees, and appoint another person
whom she feels is better qualified. There can be no reservation of the right
to fill up a position with a person of the appointing power's personal choice.

The public respondent's grave abuse of discretion is aggravated by the fact

that Director Galvez required the Provincial Governor to submit at least
three other names of nominees better qualified than his earlier
recommendation. It was a meaningless exercise. The appointment of the
private respondent was formalized before the Governor was extended the
courtesy of being informed that his nominee had been rejected. The
complete disregard of the local government's prerogative and the smug
belief that the DBM has absolute wisdom, authority, and discretion are
manifest.

In his classic work "Philippine Political Law" Dean Vicente G. Sinco stated
that the value of local governments as institutions of democracy is
measured by the degree of autonomy that they enjoy. Citing Tocqueville, he
stated that "local assemblies of citizens constitute the strength of free
nations. . . . A people may establish a system of free government but
without the spirit of municipal institutions, it cannot have the spirit of
liberty." (Sinco, Philippine Political Law, Eleventh Edition, pp. 705-706).

Our national officials should not only comply with the constitutional
provisions on local autonomy but should also appreciate the spirit of liberty
upon which these provisions are based.

WHEREFORE, the petition is hereby GRANTED. The questioned resolutions of

the Civil Service Commission are SET ASIDE. The appointment of respondent
Cecilia Almajose is nullified. The Department of Budget and Management is
ordered to appoint the Provincial Budget Officer of Rizal from among
qualified nominees submitted by the Provincial Governor.

SO ORDERED.

B. Autonomy and Decentralilzation
Atty. Pareja
3.
G.R. No. 93252 November 8, 1991
RODOLFO T. GANZON, petitioner,
vs.
THE COURT OF APPEALS AND LUIS T. SANTOS, respondents.
G.R. No. 93746 November 8, 1991
MARY ANN RIVERA ARTIEDA, petitioner,
vs.
HON. LUIS SANTOS, in his capacity as Secretary of the Department of Local
Government, NICANOR M. PATRICIO, in his capacity as Chief, Legal Service
of the Department of Local Government and SALVADOR
CABALUNA, respondents.
G.R. No. 95245 November 8, 1991
RODOLFO T. GANZON, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and LUIS T. SANTOS, in his capacity
as the Secretary of the Department of Local Government, respondents.
Manuel Lazaro and Vincent Rondaris for petitioner in G.R. Nos. 93252 &
95245.
PADILLA, J.:p
Before the Court for resolution are the various issues raised by Rodolfo T.
Ganzon's urgent motion, dated 7 September 1991, wherein he asks the
Court to dissolve the temporary restraining order (TRO) it had issued, dated
5 September 1991, against the TRO earlier issued by the Court of Appeals in
CA-G.R. SP No. 25840 entitled Ganzon vs. Santos, et al.
On 5 August 1991, the Court's decision in the present case was
promulgated, upholding the validity of the orders of preventive suspension
issued by respondent Secretary Santos, the dispositive part of which
decision reads:
WHEREFORE, premises considered, the petitions are
DISMISSED. The Temporary Restraining Order issued is
LIFTED. The suspensions of the petitioners are
AFFIRMED, provided that the petitioner, Mayor
Rodolfo Ganzon, may not be made to serve future
suspensions on account of any of the remaining
administrative charges pending against him for acts
committed prior to August 11, 1988. The Secretary of
Interior is ORDERED to consolidate all such
administrative cases pending against Mayor Ganzon.
The sixty-day suspension against the petitioner, Mary
Ann Rivera Artieda, is AFFIRMED No costs. 1
A brief summary of the facts that led to this Court's decision of 5 August
1991 ("main decision", for brevity) is as follows:
1. Sometime in 1988, a series of ten (10)
administrative complaints were filed by various city
officials, against petitioner Ganzon, the elected City
Mayor of Iloilo City, on various charges such as abuse
of authority, oppression, grave misconduct and
others.
2. In the course of the hearing of the administrative
cases, respondent Secretary Santos issued against
petitioner Ganzon three (3) separate orders of
preventive suspension dated 11 August 1988, 11
October 1988, and 3 May 1990, each of the orders to
last for a 60-day period.
Petitioner assailed the validity of the said orders by
filing with the Court of Appeals two (2) separate
petitions for prohibition docketed CA-G.R. SP No.
16417 and CA-G.R. SP No. 20736. On 7 September
1988 and 5 July 1990, the appellate court rendered
the decision in CA-G.R. SP Nos. 16417 and 20736
dismissing the petitions for lack of merit. Hence,
petitioner Ganzon filed with this Court two (2)
separate petitions assailing the decision in CA-G.R. SP
No. 16417 (subject of G.R. No. 93252), and that in CA-
G.R. SP No. 20736 (subject of G.R. No. 95245) 2
3. On 26 June 1990, we issued a Temporary
Restraining Order barring the respondent Secretary
from implementing the suspension orders, and
restraining the enforcement of the Court of Appeals'
two (2) decisions.
5
However, it appears that even before the promulgation on 5 August 1991 of
the main decision, respondent Secretary Santos had issued on 3 July 1991
against petitioner Ganzon another order of preventive suspension in
connection with Administrative Case No. 51-90 filed by complainant
Octavius J. Jopson, which order states:
It appearing from a perusal of the complaint as well as
the answer in Administrative Case No 51-
90,entitled Octavius J. Jopson, Complainant, versus,
Mayor Rodolfo T. Ganzon, Respondent, for
Oppression, etc., that there is reasonable ground to
believe that Respondent has committed the act or
acts complained of, as prayed for by Complainant
Jopson, you are hereby preventively suspended from
office for a period of sixty (60) days effective
immediately. (Emphasis supplied)
On 6 July 1991, petitioner Ganzon filed his "extremely urgent motion" (with
supplemental motions later filed) questioning the validity of the said last
mentioned suspension order. This Court issued a resolution dated 9 July
1991, requiring respondents to comment on petitioner's urgent motion.
After the main decision in the present petitions was rendered by the Court
on 5 August 1991, respondents filed motions dated, 9 and 29 August 1991
alleging therein that the issues raised in petitioner's motion (6 July 1991)
were rendered moot and academic by the said decision, and seeking
clarification on whether it was still necessary to comply with this Court's
resolutions requiring respondents to file comment on petitioner's said
motion of 6 July 1991.
Meanwhile, on 29 August 1991, respondent Santos issued a memorandum
addressed to petitioner Ganzon, in connection with the 5 August 1991 main
decision, stating therein that the third order of preventive suspension issued
against petitioner on 3 May 1990 shall be deemed in force and effect. The
memorandum states:
The Supreme Court, in its Decision in the above-
referred cases, which affirmed the authority of the
Secretary of Local Government to discipline local
elective officials, explicitly states that,
We are therefore allowing
Mayor Rodolfo Ganzon to suffer
the duration of his third
suspension and lifting for the
purpose, the Temporary
Restraining Order earlier issued
...
In view thereof, the third preventive suspension
imposed on you, photo copy of which is hereto
attached, is hereby deemed in force.
On 30 August 1991, petitioner Ganzon filed with the Court of Appeals a
petition for mandamus, docketed CA-G.R. SP No. 25480 against
respondents. On the same day, petitioner filed in these petitions his
"manifestation and compliance," alleging that he had already fully served
the suspension orders issued against him, in compliance with the main
decision of 5 August 1991, and that he should be allowed to re-assume his
office starting 4 September 1991.
Meanwhile, in reaction to the memorandum dated 29 August 1991 issued
by respondent Santos, petitioner filed in CA-G.R. SP No. 25840 a motion
praying for the issuance of a temporary restraining order, which motion was
granted by the Court of Appeals, when on 3 September 1991, it (CA) issued
the said TRO. On 4 September 1991, respondents filed with this Court a
motion asking for the issuance of a restraining order addressed to the Court
of Appeals and against the TRO issued in CA-G.R. SP No. 25840. Granting
respondents' motion, this Court on 5 September 1991 issued a temporary
restraining order directing the Court of Appeals to cease and desist from
implementing the TRO it had issued dated 3 September 1991 immediately
suspending the implementation of the order of the Secretary of Interior and
Local Government dated 29 August 1991. On 9 September 1991, petitioner
Ganzon filed a motion to dissolve this Court's restraining order dated 5
September 1991.
The records show that petitioner Ganzon, to this date, remains suspended
from office (as the elected Mayor of Iloilo City) and since the order of
preventive suspension dated 3 July 1991 (the fourth suspension order 3 )
was issued against him by respondent Secretary; in other words, he has

B. Autonomy and Decentralilzation
Atty. Pareja
been serving the said fourth suspension order which is to expire after a
period of 60 days, or on 4 September 1991.
Similar to the argument raised in his petition filed with the Court of Appeals
in CA-G.R. SP No. 25840, petitioner Ganzon, in support of his plea for the
lifting of the TRO dated 5 September 1991 issued by this Court, in re: TRO
dated 3 September 1991, issued by Court of Appeals, contends that
inasmuch as he has already served fully the suspension orders issued against
him, in compliance with the mandate of this Court's decision dated 5 August
1991, coupled with the fact that he had also completely served by 4
September 1991 the fourth order of preventive suspension dated 3 July
1991, he should therefore be allowed to re-assume his office starting 4
September 1991.
On the other hand, respondent Secretary maintains that petitioner Ganzon
can be allowed to return to his office (as Mayor of Iloilo City) only after 19
October 1991, as it is only after such date when petitioner may be said to
have fully served the preventive suspension orders as decreed in the main
decision and in the order dated 3 July 1991 (fourth suspension).
The question then is when petitioner Ganzon may be allowed to re-assume
his position and duties as mayor of Iloilo City. Is it only after 19 October
1991 as claimed by respondents, or at some earlier date? The answer to this
question would depend on how petitioner has served the preventive
suspension orders issued against him.
We note that the main decision refers to three (3) orders of preventive
suspension each to last for 60 days. The first, dated 11 August 1988, was
admittedly fully served by petitioner. The second order dated 11 October
1988 was not served because its enforcement was restrained by an order of
the Regional Trial Court of Iloilo City upon petition of petitioner himself. 4 As
to the third order dated 3 May 1990, the main decision states that petitioner
is allowed to serve the duration of said third suspension order. It would
seem, therefore, that after petitioner has served in full the third suspension
order as decreed in the main decision, he can then return to his official
duties as Iloilo City Mayor.
However, we must also take note of the supervening 3 July 1991 order,
again suspending petitioner from office for another 60 days, which order
was issued even before the main decision of 5 August 1991 was
promulgated. (The records show, however, that petitioner has in fact fully
served the fourth suspension order, as admitted by respondents no less.
This will be discussed shortly; but any issue on its validity is now moot and
academic. 5 Besides, it is clear that this fourth suspension order is not one of
the three orders covered by and subject of the main decision).
Considering, nonetheless, the necessity of serving the third and fourth
orders of suspension, there is need to look into when petitioner started to
serve these orders so as to determine when their service expires.
Petitioner contends that the following are the periods within which
he stayed out of his office as he was serving the orders of preventive
suspension issued against him:
FROM Up to and Including
May 4, 1990 May 18, 1990 6
June 9, 1990 June 26, 1990 7
July 5, 1991 September 3, 1991 8
Petitioner argues that for the periods of 4 May 18 May 1990, and 9 June to
26 June 1990, he was serving the third suspension order; whereas for the
period of 5 July to 3 September 1991, he was then serving the fourth
suspension order.
On the other hand, respondent Secretary contends that as to the third order
of preventive suspension, dated 3 May 1990, petitioner served it only from 4
May 1990 to 19 May 1990. 9 Respondent denies that from 11 June to 30
June 1990 10 petitioner had served again the third suspension order.
As to the fourth suspension order, respondent Secretary confirms that
petitioner served it starting from 5 July 1991 to 3 September 1991.11
As regards the third suspension order, it is noted that though both parties
admit that petitioner started serving it on 4 May 1990, they however differ
as to when the service ended (Petitioner claims he served it even after 18
May 1990, whereas, respondent claims it ended 19 May 1990.) In view of
this divergence, the Court rules that the third order was served by petitioner
from 4 May 1990 up to 18 May 1990 only, the latter date being the date
when the Court of Appeals issued a TRO in CA-G.R. SP No. 20736, 12 and
6
thus, interrupted petitioner's service of the suspension orders and enabled
him re-assume his office as Iloilo City Mayor.
We also do not accept petitioner's contention that from 9 June 1990 up to
26 June 1990 13 he again started to serve the third suspension order,
inasmuch as during the period of 9 June 1990 to 26 June 1990, the records
show that he was then in office discharging the functions of the Mayor of
Iloilo City. 14 In sum, we rule that petitioner served the third suspension
order only from 4 May 1990 up to 18 May 1990.
The period from 4 May 1990 to 18 May 1990 is equivalent to fourteen (14)
days. 15 Hence, as to the third suspension order (3 May 1990), petitioner
having served fourteen (14) days of the 60-day preventive suspension
imposed in the order, 46 days still remained to be served by him as decreed
in the main decision. If we follow the mandate of such main decision which
ordained that the third order be served and that the temporary restraining
order 16 against it be lifted, it would follow that the remaining 46 days
should be served starting 5 August 1991 (date of promulgation of main
decision) until fully served. Another way to serve the 46 days would be to
begin serving it only on 4 September 1991 (the day after 3 September 1991
which was the last day of service for the fourth suspension order), or until
20 October 1991 (the 46th day from 4 September 1990).
However we take note of the fact that petitioner has already fully served the
60-day fourth order of preventive suspension which started 5 July 1991 (that
is, even before the main decision was rendered) and ended on 3 September
1991. Petitioner raises the issue of whether he could or should be allowed to
serve the third and the fourth orders "simultaneously". If we allow his
submission and accept "simultaneous service", it would mean the following:
that from 5 August 1991 (the date the TRO issued by this Court was lifted)
up to 3 September 1991 (the last day for serving the fourth order), twenty-
nine (29) days have elapsed; that these twenty-nine (29) days which form
part of his service for the fourth order can be also credited to his favor by
treating said twenty-nine (29) days as forming part of his service of the third
order; if this were so, he would need to serve only seventeen (17) days more
to complete the service of the third order; said seventeen (17) days from 3
September 1991 will expire on 20 September 1991, which would be the last
day for serving the third suspension order.
Respondents however object to adopting the idea of "simultaneous service,"
of preventive suspensions as, according of them, this is not allowed under
the Local Government Code.
We agree with petitioner that he can be allowed the benefit of simultaneous
service of the third and fourth suspension orders, for the following reasons.
If simultaneous service of two (2) suspension orders is allowed, this would
work in favor of the petitioner (an elective local official) as the balance of his
third preventive suspension would, in effect, be reduced from 46 days to 17
days.
It will be recalled that, in the main decision, noting that successive
suspensions have been inflicted on Mayor Ganzon we stated that what "is
intriguing is that respondent Secretary has been cracking down, so to speak,
on the Mayor piecemeal apparently, to pin him down ten times the pain,
when he, the respondent Secretary could have pursued a consolidated
effort." 17 Surely, allowing petitioner to serve simultaneously the
overlapping third and fourth suspensions will favor him, (and presumably
the local constituency) and certainly lessen if not offset the harsh effects of
whatever motive may be behind the intriguing action of the respondent
Secretary in issuing those successive suspension orders.
Furthermore, we may already take judicial notice of the recently-approved
Local Government Code of 1991 (recently signed into law by the
President) 18 which provides (as to imposition of preventive suspensions) as
follows:
Sec. 63. Preventive Suspension
xxx xxx xxx
b) . . . that, any single preventive suspension of local
elective official shall not extend beyond sixty (60)
days: Provided, further that in the event that several
administrative cases are filed against an elective
official, he cannot be preventively suspended for more
than ninety (90) days within a single year on the same
ground or grounds existing and known at the time of
the first suspension. (emphasis supplied)
 7
B. Autonomy and Decentralilzation
Atty. Pareja
Since we can allow, as we here allow, under the bizarre circumstances of this . . . petitioner, Mayor Rodolfo Ganzon, may not be
case, petitioner to serve the third and fourth orders simultaneously (insofar made to serve future suspensions on account of any
as they overlap), this means that, as explained earlier, petitioner shall serve of the remaining administrative charges pending
only 17 days more (not 46 days) to complete the service of the third order, against him for acts committed prior to August 11,
that is, starting from 3 September 1991 and ending on 20 September 1991. 1988. . . .
Hence, as of this latter date, petitioner has complied with the mandate of
the main decision for he has already fully served the third preventive
SO ORDERED.
suspension which ended on 20 September 1991.

But then another issue is raised by respondents, i.e. that considering that
the main decision refers to the first, second and third orders of preventive
suspension (as far as Mayor Ganzon is concerned), petitioner, apart from
serving the third order (the first one having been fully served), should also
serve the second order (for another 60 days) as the latter has admittedly not
been serve yet due to a restraining order issued by a trial court, 19 and
considering that the dispositive portion of the main decision decreed that
"suspensions of petitioners (including the other petitioner Artieda in G.R.
No. 93746) are affirmed."

We agree with the respondents on this point.

The main decision refers to the three (3) suspension orders the first, the
second and the third. As shown earlier, the first and the third orders have
already been served. It is only the second order which seems to have been
unserved. If we follow the decision which states that the three (3)
suspensions are affirmed, there appears to be no reason why the second
order should not be served for another 60-day period. However, there is no
cogent reason why, under the bizarre circumstances of this case where
the respondent Secretary has chosen to impose preventive suspensions
piecemeal, instead of consolidating the several administrative cases of
similar nature and close vintage we cannot allow the concept of
simultaneous service to apply to the second order (as we did in the third
order). It would follow then that the second order is also fully served to this
date for the service of said second order would have started on 5 August
1991 (when the main decision was rendered as this was the time when this
Court found and affirmed the validity of the three (3) suspension orders,
including the second order). The 60-day period from 5 August 1991 expired
on 4 October 1991.

It appears that as to the second preventive suspension, petitioner

manifested that there is still an existing preliminary injunction issued by the
RTC of Iloilo City, Branch 33 in Special Civil Action No. 18312,
entitled Ganzon vs. Santos, et al. 20

One may ask as to the status of the case pending with the RTC, Iloilo City,
Branch 33 insofar as the said case involves the issue on the validity of the
second preventive suspension order. Under the main decision of this Court,
dated 5 August 1991, second preventive suspension has been affirmed;
under the present resolution, said second preventive suspension has been
served. Consequently, Special Civil Action No. 18312 before the Regional
Trial Court of Iloilo City has been rendered moot and academic, insofar as
the second preventive suspension order is concerned.

As to the petition (docketed CA-G. R. SP No. 25840) filed with the Court of
Appeals, which involves the question of the validity of the fourth order, and
which has clearly been served, petitioner admitted that he filed it, on the
belief that it was the proper remedy for his reinstatement to office; thinking
that his suspensions have been served and ended. 21 As we have ruled that
petitioner has served the suspension orders decreed in the main decision
and in the light of the finding of this Court that the fourth preventive
suspension order has been served, the issues raised in CA-G.R. SP No. 25840;
have also become moot and academic, warranting dismissal thereof.

WHEREFORE, the urgent motion of petitioner, dated 7 September 1991 is

hereby GRANTED. The temporary restraining order dated 5 September 1991
is hereby LIFTED. Respondents are ordered to allow petitioner to re-assume
his office as elected Mayor of Iloilo City effective immediately.

The Court of Appeal is directed to dismiss CA-G.R. SP No. 25840 for having
become moot and academic. The Region Trial Court of Iloilo City, Branch 33
before which petitioner's action for prohibition (Special Civil Action No.
18312) is pending is also ordered to dismiss the said case for having become
moot and academic insofar as petitioner prays therein to enjoin his (second)
preventive suspension.

This resolution is without prejudice to the administrative cases (where the

first, second, third and fourth preventive suspension orders were issued)
proceeding on the merits thereof. Also, as decreed in the main decision of 5
August 1991.

B. Autonomy and Decentralilzation
Atty. Pareja
4.
G.R. No. 91649 May 14, 1991
ATTORNEYS HUMBERTO BASCO, EDILBERTO BALCE, SOCRATES MARANAN
AND LORENZO SANCHEZ,petitioners,
vs.
PHILIPPINE AMUSEMENTS AND GAMING CORPORATION
(PAGCOR), respondent.
PARAS, J.:
A TV ad proudly announces:
"The new PAGCOR responding through responsible gaming."
But the petitioners think otherwise, that is why, they filed the instant
petition seeking to annul the Philippine Amusement and Gaming
Corporation (PAGCOR) Charter PD 1869, because it is allegedly contrary
to morals, public policy and order, and because
A. It constitutes a waiver of a right prejudicial to a third person
with a right recognized by law. It waived the Manila City
government's right to impose taxes and license fees, which is
recognized by law;
B. For the same reason stated in the immediately preceding
paragraph, the law has intruded into the local government's right
to impose local taxes and license fees. This, in contravention of
the constitutionally enshrined principle of local autonomy;
C. It violates the equal protection clause of the constitution in
that it legalizes PAGCOR conducted gambling, while most
other forms of gambling are outlawed, together with
prostitution, drug trafficking and other vices;
D. It violates the avowed trend of the Cory government away
from monopolistic and crony economy, and toward free
enterprise and privatization. (p. 2, Amended Petition; p. 7, Rollo)
In their Second Amended Petition, petitioners also claim that PD 1869 is
contrary to the declared national policy of the "new restored democracy"
and the people's will as expressed in the 1987 Constitution. The decree is
said to have a "gambling objective" and therefore is contrary to Sections 11,
12 and 13 of Article II, Sec. 1 of Article VIII and Section 3 (2) of Article XIV, of
the present Constitution (p. 3, Second Amended Petition; p. 21, Rollo).
The procedural issue is whether petitioners, as taxpayers and practicing
lawyers (petitioner Basco being also the Chairman of the Committee on
Laws of the City Council of Manila), can question and seek the annulment of
PD 1869 on the alleged grounds mentioned above.
The Philippine Amusements and Gaming Corporation (PAGCOR) was created
by virtue of P.D. 1067-A dated January 1, 1977 and was granted a franchise
under P.D. 1067-B also dated January 1, 1977 "to establish, operate and
maintain gambling casinos on land or water within the territorial jurisdiction
of the Philippines." Its operation was originally conducted in the well known
floating casino "Philippine Tourist." The operation was considered a success
for it proved to be a potential source of revenue to fund infrastructure and
socio-economic projects, thus, P.D. 1399 was passed on June 2, 1978 for
PAGCOR to fully attain this objective.
Subsequently, on July 11, 1983, PAGCOR was created under P.D. 1869 to
enable the Government to regulate and centralize all games of chance
authorized by existing franchise or permitted by law, under the following
declared policy
Sec. 1. Declaration of Policy. It is hereby declared to be the
policy of the State to centralize and integrate all games of chance
not heretofore authorized by existing franchises or permitted by
law in order to attain the following objectives:
(a) To centralize and integrate the right and authority to operate
and conduct games of chance into one corporate entity to be
controlled, administered and supervised by the Government.
(b) To establish and operate clubs and casinos, for amusement
and recreation, including sports gaming pools, (basketball,
football, lotteries, etc.) and such other forms of amusement and
recreation including games of chance, which may be allowed by
law within the territorial jurisdiction of the Philippines and which
8
will: (1) generate sources of additional revenue to fund
infrastructure and socio-civic projects, such as flood control
programs, beautification, sewerage and sewage projects,
Tulungan ng Bayan Centers, Nutritional Programs, Population
Control and such other essential public services; (2) create
recreation and integrated facilities which will expand and
improve the country's existing tourist attractions; and (3)
minimize, if not totally eradicate, all the evils, malpractices and
corruptions that are normally prevalent on the conduct and
operation of gambling clubs and casinos without direct
government involvement. (Section 1, P.D. 1869)
To attain these objectives PAGCOR is given territorial jurisdiction all over the
Philippines. Under its Charter's repealing clause, all laws, decrees, executive
orders, rules and regulations, inconsistent therewith, are accordingly
repealed, amended or modified.
It is reported that PAGCOR is the third largest source of government
revenue, next to the Bureau of Internal Revenue and the Bureau of Customs.
In 1989 alone, PAGCOR earned P3.43 Billion, and directly remitted to the
National Government a total of P2.5 Billion in form of franchise tax,
government's income share, the President's Social Fund and Host Cities'
share. In addition, PAGCOR sponsored other socio-cultural and charitable
projects on its own or in cooperation with various governmental agencies,
and other private associations and organizations. In its 3 1/2 years of
operation under the present administration, PAGCOR remitted to the
government a total of P6.2 Billion. As of December 31, 1989, PAGCOR was
employing 4,494 employees in its nine (9) casinos nationwide, directly
supporting the livelihood of Four Thousand Four Hundred Ninety-Four
(4,494) families.
But the petitioners, are questioning the validity of P.D. No. 1869. They allege
that the same is "null and void" for being "contrary to morals, public policy
and public order," monopolistic and tends toward "crony economy", and is
violative of the equal protection clause and local autonomy as well as for
running counter to the state policies enunciated in Sections 11 (Personal
Dignity and Human Rights), 12 (Family) and 13 (Role of Youth) of Article II,
Section 1 (Social Justice) of Article XIII and Section 2 (Educational Values) of
Article XIV of the 1987 Constitution.
This challenge to P.D. No. 1869 deserves a searching and thorough scrutiny
and the most deliberate consideration by the Court, involving as it does the
exercise of what has been described as "the highest and most delicate
function which belongs to the judicial department of the government."
(State v. Manuel, 20 N.C. 144; Lozano v. Martinez, 146 SCRA 323).
As We enter upon the task of passing on the validity of an act of a co-equal
and coordinate branch of the government We need not be reminded of the
time-honored principle, deeply ingrained in our jurisprudence, that a statute
is presumed to be valid. Every presumption must be indulged in favor of its
constitutionality. This is not to say that We approach Our task with
diffidence or timidity. Where it is clear that the legislature or the executive
for that matter, has over-stepped the limits of its authority under the
constitution, We should not hesitate to wield the axe and let it fall heavily,
as fall it must, on the offending statute (Lozano v. Martinez, supra).
In Victoriano v. Elizalde Rope Workers' Union, et al, 59 SCRA 54, the Court
thru Mr. Justice Zaldivar underscored the
. . . thoroughly established principle which must be followed in all
cases where questions of constitutionality as obtain in the instant
cases are involved. All presumptions are indulged in favor of
constitutionality; one who attacks a statute alleging
unconstitutionality must prove its invalidity beyond a reasonable
doubt; that a law may work hardship does not render it
unconstitutional; that if any reasonable basis may be conceived
which supports the statute, it will be upheld and the challenger
must negate all possible basis; that the courts are not concerned
with the wisdom, justice, policy or expediency of a statute and
that a liberal interpretation of the constitution in favor of the
constitutionality of legislation should be adopted. (Danner v.
Hass, 194 N.W. 2nd534, 539; Spurbeck v. Statton, 106
N.W. 2nd 660, 663; 59 SCRA 66; see also e.g. Salas v. Jarencio, 46
SCRA 734, 739 [1970]; Peralta v. Commission on Elections, 82
SCRA 30, 55 [1978]; and Heirs of Ordona v. Reyes, 125 SCRA 220,
241-242 [1983] cited in Citizens Alliance for Consumer Protection
v. Energy Regulatory Board, 162 SCRA 521, 540)
Of course, there is first, the procedural issue. The respondents are
questioning the legal personality of petitioners to file the instant petition.

B. Autonomy and Decentralilzation
Atty. Pareja
Considering however the importance to the public of the case at bar, and in
keeping with the Court's duty, under the 1987 Constitution, to determine
whether or not the other branches of government have kept themselves
within the limits of the Constitution and the laws and that they have not
abused the discretion given to them, the Court has brushed aside
technicalities of procedure and has taken cognizance of this petition.
(Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas Inc. v. Tan, 163
SCRA 371)
With particular regard to the requirement of proper party as
applied in the cases before us, We hold that the same is satisfied
by the petitioners and intervenors because each of them has
sustained or is in danger of sustaining an immediate injury as a
result of the acts or measures complained of. And even if, strictly
speaking they are not covered by the definition, it is still within
the wide discretion of the Court to waive the requirement and so
remove the impediment to its addressing and resolving the
serious constitutional questions raised.
In the first Emergency Powers Cases, ordinary citizens and
taxpayers were allowed to question the constitutionality of
several executive orders issued by President Quirino although
they were involving only an indirect and general interest shared
in common with the public. The Court dismissed the objection
that they were not proper parties and ruled that "the
transcendental importance to the public of these cases demands
that they be settled promptly and definitely, brushing aside, if we
must technicalities of procedure." We have since then applied
the exception in many other cases. (Association of Small
Landowners in the Philippines, Inc. v. Sec. of Agrarian Reform,
175 SCRA 343).
Having disposed of the procedural issue, We will now discuss the
substantive issues raised.
Gambling in all its forms, unless allowed by law, is generally prohibited. But
the prohibition of gambling does not mean that the Government cannot
regulate it in the exercise of its police power.
The concept of police power is well-established in this jurisdiction. It has
been defined as the "state authority to enact legislation that may interfere
with personal liberty or property in order to promote the general welfare."
(Edu v. Ericta, 35 SCRA 481, 487) As defined, it consists of (1) an imposition
or restraint upon liberty or property, (2) in order to foster the common
good. It is not capable of an exact definition but has been, purposely, veiled
in general terms to underscore its all-comprehensive embrace. (Philippine
Association of Service Exporters, Inc. v. Drilon, 163 SCRA 386).
Its scope, ever-expanding to meet the exigencies of the times, even to
anticipate the future where it could be done, provides enough room for an
efficient and flexible response to conditions and circumstances thus
assuming the greatest benefits. (Edu v. Ericta, supra)
It finds no specific Constitutional grant for the plain reason that it does not
owe its origin to the charter. Along with the taxing power and eminent
domain, it is inborn in the very fact of statehood and sovereignty. It is a
fundamental attribute of government that has enabled it to perform the
most vital functions of governance. Marshall, to whom the expression has
been credited, refers to it succinctly as the plenary power of the state "to
govern its citizens". (Tribe, American Constitutional Law, 323, 1978). The
police power of the State is a power co-extensive with self-protection and is
most aptly termed the "law of overwhelming necessity." (Rubi v. Provincial
Board of Mindoro, 39 Phil. 660, 708) It is "the most essential, insistent, and
illimitable of powers." (Smith Bell & Co. v. National, 40 Phil. 136) It is a
dynamic force that enables the state to meet the agencies of the winds of
change.
What was the reason behind the enactment of P.D. 1869?
P.D. 1869 was enacted pursuant to the policy of the government to
"regulate and centralize thru an appropriate institution all games of chance
authorized by existing franchise or permitted by law" (1st whereas clause,
PD 1869). As was subsequently proved, regulating and centralizing gambling
operations in one corporate entity the PAGCOR, was beneficial not just to
the Government but to society in general. It is a reliable source of much
needed revenue for the cash strapped Government. It provided funds for
social impact projects and subjected gambling to "close scrutiny, regulation,
supervision and control of the Government" (4th Whereas Clause, PD 1869).
With the creation of PAGCOR and the direct intervention of the
Government, the evil practices and corruptions that go with gambling will be
9
minimized if not totally eradicated. Public welfare, then, lies at the bottom
of the enactment of PD 1896.
Petitioners contend that P.D. 1869 constitutes a waiver of the right of the
City of Manila to impose taxes and legal fees; that the exemption clause in
P.D. 1869 is violative of the principle of local autonomy. They must be
referring to Section 13 par. (2) of P.D. 1869 which exempts PAGCOR, as the
franchise holder from paying any "tax of any kind or form, income or
otherwise, as well as fees, charges or levies of whatever nature, whether
National or Local."
(2) Income and other taxes. a) Franchise Holder: No tax of any
kind or form, income or otherwise as well as fees, charges or
levies of whatever nature, whether National or Local, shall be
assessed and collected under this franchise from the
Corporation; nor shall any form or tax or charge attach in any
way to the earnings of the Corporation, except a franchise tax of
five (5%) percent of the gross revenues or earnings derived by
the Corporation from its operations under this franchise. Such tax
shall be due and payable quarterly to the National Government
and shall be in lieu of all kinds of taxes, levies, fees or
assessments of any kind, nature or description, levied,
established or collected by any municipal, provincial or national
government authority (Section 13 [2]).
Their contention stated hereinabove is without merit for the following
reasons:
(a) The City of Manila, being a mere Municipal corporation has no inherent
right to impose taxes (Icard v. City of Baguio, 83 Phil. 870; City of Iloilo v.
Villanueva, 105 Phil. 337; Santos v. Municipality of Caloocan, 7 SCRA 643).
Thus, "the Charter or statute must plainly show an intent to confer that
power or the municipality cannot assume it" (Medina v. City of Baguio, 12
SCRA 62). Its "power to tax" therefore must always yield to a legislative act
which is superior having been passed upon by the state itself which has the
"inherent power to tax" (Bernas, the Revised [1973] Philippine Constitution,
Vol. 1, 1983 ed. p. 445).
(b) The Charter of the City of Manila is subject to control by Congress. It
should be stressed that "municipal corporations are mere creatures of
Congress" (Unson v. Lacson, G.R. No. 7909, January 18, 1957) which has the
power to "create and abolish municipal corporations" due to its "general
legislative powers" (Asuncion v. Yriantes, 28 Phil. 67; Merdanillo v. Orandia,
5 SCRA 541). Congress, therefore, has the power of control over Local
governments (Hebron v. Reyes, G.R. No. 9124, July 2, 1950). And if Congress
can grant the City of Manila the power to tax certain matters, it can also
provide for exemptions or even take back the power.
(c) The City of Manila's power to impose license fees on gambling, has long
been revoked. As early as 1975, the power of local governments to regulate
gambling thru the grant of "franchise, licenses or permits" was withdrawn
by P.D. No. 771 and was vested exclusively on the National Government,
thus:
Sec. 1. Any provision of law to the contrary notwithstanding, the
authority of chartered cities and other local governments to issue
license, permit or other form of franchise to operate, maintain
and establish horse and dog race tracks, jai-alai and other forms
of gambling is hereby revoked.
Sec. 2. Hereafter, all permits or franchises to operate, maintain
and establish, horse and dog race tracks, jai-alai and other forms
of gambling shall be issued by the national government upon
proper application and verification of the qualification of the
applicant . . .
Therefore, only the National Government has the power to issue "licenses or
permits" for the operation of gambling. Necessarily, the power to demand
or collect license fees which is a consequence of the issuance of "licenses or
permits" is no longer vested in the City of Manila.
(d) Local governments have no power to tax instrumentalities of the
National Government. PAGCOR is a government owned or controlled
corporation with an original charter, PD 1869. All of its shares of stocks are
owned by the National Government. In addition to its corporate powers
(Sec. 3, Title II, PD 1869) it also exercises regulatory powers thus:
Sec. 9. Regulatory Power. The Corporation shall maintain a
Registry of the affiliated entities, and shall exercise all the
powers, authority and the responsibilities vested in the Securities

B. Autonomy and Decentralilzation
Atty. Pareja
and Exchange Commission over such affiliating entities
mentioned under the preceding section, including, but not
limited to amendments of Articles of Incorporation and By-Laws,
changes in corporate term, structure, capitalization and other
matters concerning the operation of the affiliated entities, the
provisions of the Corporation Code of the Philippines to the
contrary notwithstanding, except only with respect to original
incorporation.
PAGCOR has a dual role, to operate and to regulate gambling casinos. The
latter role is governmental, which places it in the category of an agency or
instrumentality of the Government. Being an instrumentality of the
Government, PAGCOR should be and actually is exempt from local taxes.
Otherwise, its operation might be burdened, impeded or subjected to
control by a mere Local government.
The states have no power by taxation or otherwise, to retard,
impede, burden or in any manner control the operation of
constitutional laws enacted by Congress to carry into execution
the powers vested in the federal government. (MC Culloch v.
Marland, 4 Wheat 316, 4 L Ed. 579)
This doctrine emanates from the "supremacy" of the National Government
over local governments.
Justice Holmes, speaking for the Supreme Court, made reference
to the entire absence of power on the part of the States to touch,
in that way (taxation) at least, the instrumentalities of the United
States (Johnson v. Maryland, 254 US 51) and it can be agreed
that no state or political subdivision can regulate a federal
instrumentality in such a way as to prevent it from consummating
its federal responsibilities, or even to seriously burden it in the
accomplishment of them. (Antieau, Modern Constitutional Law,
Vol. 2, p. 140, emphasis supplied)
Otherwise, mere creatures of the State can defeat National policies thru
extermination of what local authorities may perceive to be undesirable
activities or enterprise using the power to tax as "a tool for regulation" (U.S.
v. Sanchez, 340 US 42).
The power to tax which was called by Justice Marshall as the "power to
destroy" (Mc Culloch v. Maryland, supra) cannot be allowed to defeat an
instrumentality or creation of the very entity which has the inherent power
to wield it.
(e) Petitioners also argue that the Local Autonomy Clause of the
Constitution will be violated by P.D. 1869. This is a pointless argument.
Article X of the 1987 Constitution (on Local Autonomy) provides:
Sec. 5. Each local government unit shall have the power to create
its own source of revenue and to levy taxes, fees, and other
charges subject to such guidelines and limitation as the congress
may provide, consistent with the basic policy on local autonomy.
Such taxes, fees and charges shall accrue exclusively to the local
government. (emphasis supplied)
The power of local government to "impose taxes and fees" is always subject
to "limitations" which Congress may provide by law. Since PD 1869 remains
an "operative" law until "amended, repealed or revoked" (Sec. 3, Art. XVIII,
1987 Constitution), its "exemption clause" remains as an exception to the
exercise of the power of local governments to impose taxes and fees. It
cannot therefore be violative but rather is consistent with the principle of
local autonomy.
Besides, the principle of local autonomy under the 1987 Constitution simply
means "decentralization" (III Records of the 1987 Constitutional
Commission, pp. 435-436, as cited in Bernas, The Constitution of the
Republic of the Philippines, Vol. II, First Ed., 1988, p. 374). It does not make
local governments sovereign within the state or an "imperium in imperio."
Local Government has been described as a political subdivision of
a nation or state which is constituted by law and has substantial
control of local affairs. In a unitary system of government, such
as the government under the Philippine Constitution, local
governments can only be an intra sovereign subdivision of one
sovereign nation, it cannot be an imperium in imperio. Local
government in such a system can only mean a measure of
decentralization of the function of government. (emphasis
supplied)
10
As to what state powers should be "decentralized" and what may be
delegated to local government units remains a matter of policy, which
concerns wisdom. It is therefore a political question. (Citizens Alliance for
Consumer Protection v. Energy Regulatory Board, 162 SCRA 539).
What is settled is that the matter of regulating, taxing or otherwise dealing
with gambling is a State concern and hence, it is the sole prerogative of the
State to retain it or delegate it to local governments.
As gambling is usually an offense against the State, legislative
grant or express charter power is generally necessary to empower
the local corporation to deal with the subject. . . . In the absence
of express grant of power to enact, ordinance provisions on this
subject which are inconsistent with the state laws are void. (Ligan
v. Gadsden, Ala App. 107 So. 733 Ex-Parte Solomon, 9, Cals. 440,
27 PAC 757 following in re Ah You, 88 Cal. 99, 25 PAC 974, 22 Am
St. Rep. 280, 11 LRA 480, as cited in Mc Quinllan Vol. 3 Ibid, p.
548, emphasis supplied)
Petitioners next contend that P.D. 1869 violates the equal protection clause
of the Constitution, because "it legalized PAGCOR conducted gambling,
while most gambling are outlawed together with prostitution, drug
trafficking and other vices" (p. 82, Rollo).
We, likewise, find no valid ground to sustain this contention. The petitioners'
posture ignores the well-accepted meaning of the clause "equal protection
of the laws." The clause does not preclude classification of individuals who
may be accorded different treatment under the law as long as the
classification is not unreasonable or arbitrary (Itchong v. Hernandez, 101
Phil. 1155). A law does not have to operate in equal force on all persons or
things to be conformable to Article III, Section 1 of the Constitution (DECS v.
San Diego, G.R. No. 89572, December 21, 1989).
The "equal protection clause" does not prohibit the Legislature from
establishing classes of individuals or objects upon which different rules shall
operate (Laurel v. Misa, 43 O.G. 2847). The Constitution does not require
situations which are different in fact or opinion to be treated in law as
though they were the same (Gomez v. Palomar, 25 SCRA 827).
Just how P.D. 1869 in legalizing gambling conducted by PAGCOR is violative
of the equal protection is not clearly explained in the petition. The mere fact
that some gambling activities like cockfighting (P.D 449) horse racing (R.A.
306 as amended by RA 983), sweepstakes, lotteries and races (RA 1169 as
amended by B.P. 42) are legalized under certain conditions, while others are
prohibited, does not render the applicable laws, P.D. 1869 for one,
unconstitutional.
If the law presumably hits the evil where it is most felt, it is not to
be overthrown because there are other instances to which it
might have been applied. (Gomez v. Palomar, 25 SCRA 827)
The equal protection clause of the 14th Amendment does not
mean that all occupations called by the same name must be
treated the same way; the state may do what it can to prevent
which is deemed as evil and stop short of those cases in which
harm to the few concerned is not less than the harm to the public
that would insure if the rule laid down were made
mathematically exact. (Dominican Hotel v. Arizona, 249 US 2651).
Anent petitioners' claim that PD 1869 is contrary to the "avowed trend of
the Cory Government away from monopolies and crony economy and
toward free enterprise and privatization" suffice it to state that this is not a
ground for this Court to nullify P.D. 1869. If, indeed, PD 1869 runs counter to
the government's policies then it is for the Executive Department to
recommend to Congress its repeal or amendment.
The judiciary does not settle policy issues. The Court can only
declare what the law is and not what the law should
be.1wphi1 Under our system of government, policy issues are
within the domain of the political branches of government and of
the people themselves as the repository of all state power.
(Valmonte v. Belmonte, Jr., 170 SCRA 256).
On the issue of "monopoly," however, the Constitution provides that:
Sec. 19. The State shall regulate or prohibit monopolies when
public interest so requires. No combinations in restraint of trade
or unfair competition shall be allowed. (Art. XII, National
Economy and Patrimony)
 11
B. Autonomy and Decentralilzation
Atty. Pareja
It should be noted that, as the provision is worded, monopolies are not
necessarily prohibited by the Constitution. The state must still decide
whether public interest demands that monopolies be regulated or
prohibited. Again, this is a matter of policy for the Legislature to decide.

On petitioners' allegation that P.D. 1869 violates Sections 11 (Personality

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

In general, therefore, the 1935 provisions were not intended to

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

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

As this Court held in Citizens' Alliance for Consumer Protection v. Energy

Regulatory Board, 162 SCRA 521

Presidential Decree No. 1956, as amended by Executive Order

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

Parenthetically, We wish to state that gambling is generally immoral, and

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

WHEREFORE, the petition is DISMISSED for lack of merit.

SO ORDERED.

B. Autonomy and Decentralilzation
Atty. Pareja
5.
G.R. No. 111097 July 20, 1994
MAYOR PABLO P. MAGTAJAS & THE CITY OF CAGAYAN DE
ORO, petitioners,
vs.
PRYCE PROPERTIES CORPORATION, INC. & PHILIPPINE AMUSEMENT AND
GAMING CORPORATION, respondents.
CRUZ, J.:
There was instant opposition when PAGCOR announced the opening of a
casino in Cagayan de Oro City. Civic organizations angrily denounced the
project. The religious elements echoed the objection and so did the
women's groups and the youth. Demonstrations were led by the mayor and
the city legislators. The media trumpeted the protest, describing the casino
as an affront to the welfare of the city.
The trouble arose when in 1992, flush with its tremendous success in several
cities, PAGCOR decided to expand its operations to Cagayan de Oro City. To
this end, it leased a portion of a building belonging to Pryce Properties
Corporation, Inc., one of the herein private respondents, renovated and
equipped the same, and prepared to inaugurate its casino there during the
Christmas season.
The reaction of the Sangguniang Panlungsod of Cagayan de Oro City was
swift and hostile. On December 7, 1992, it enacted Ordinance No. 3353
reading as follows:
ORDINANCE NO. 3353
AN ORDINANCE PROHIBITING THE ISSUANCE OF BUSINESS
PERMIT AND CANCELLING EXISTING BUSINESS PERMIT TO ANY
ESTABLISHMENT FOR THE USING AND ALLOWING TO BE USED ITS
PREMISES OR PORTION THEREOF FOR THE OPERATION OF
CASINO.
BE IT ORDAINED by the Sangguniang Panlungsod of the City of
Cagayan de Oro, in session assembled that:
Sec. 1. That pursuant to the policy of the city banning the
operation of casino within its territorial jurisdiction, no business
permit shall be issued to any person, partnership or corporation
for the operation of casino within the city limits.
Sec. 2. That it shall be a violation of existing business permit by
any persons, partnership or corporation to use its business
establishment or portion thereof, or allow the use thereof by
others for casino operation and other gambling activities.
Sec. 3. PENALTIES. Any violation of such existing business
permit as defined in the preceding section shall suffer the
following penalties, to wit:
a) Suspension of the business permit for sixty (60) days for the
first offense and a fine of P1,000.00/day
b) Suspension of the business permit for Six (6) months for the
second offense, and a fine of P3,000.00/day
c) Permanent revocation of the business permit and
imprisonment of One (1) year, for the third and subsequent
offenses.
Sec. 4. This Ordinance shall take effect ten (10) days from
publication thereof.
Nor was this all. On January 4, 1993, it adopted a sterner Ordinance No.
3375-93 reading as follows:
ORDINANCE NO. 3375-93
AN ORDINANCE PROHIBITING THE OPERATION OF CASINO AND
PROVIDING PENALTY FOR VIOLATION THEREFOR.
WHEREAS, the City Council established a policy as early as 1990
against CASINO under its Resolution No. 2295;
12
WHEREAS, on October 14, 1992, the City Council passed another
Resolution No. 2673, reiterating its policy against the
establishment of CASINO;
WHEREAS, subsequently, thereafter, it likewise passed Ordinance
No. 3353, prohibiting the issuance of Business Permit and to
cancel existing Business Permit to any establishment for the using
and allowing to be used its premises or portion thereof for the
operation of CASINO;
WHEREAS, under Art. 3, section 458, No. (4), sub paragraph VI of
the Local Government Code of 1991 (Rep. Act 7160) and under
Art. 99, No. (4), Paragraph VI of the implementing rules of the
Local Government Code, the City Council as the Legislative Body
shall enact measure to suppress any activity inimical to public
morals and general welfare of the people and/or regulate or
prohibit such activity pertaining to amusement or entertainment
in order to protect social and moral welfare of the community;
NOW THEREFORE,
BE IT ORDAINED by the City Council in session duly assembled
that:
Sec. 1. The operation of gambling CASINO in the City of
Cagayan de Oro is hereby prohibited.
Sec. 2. Any violation of this Ordinance shall be subject to the
following penalties:
a) Administrative fine of P5,000.00 shall be imposed against the
proprietor, partnership or corporation undertaking the
operation, conduct, maintenance of gambling CASINO in the City
and closure thereof;
b) Imprisonment of not less than six (6) months nor more than
one (1) year or a fine in the amount of P5,000.00 or both at the
discretion of the court against the manager, supervisor, and/or
any person responsible in the establishment, conduct and
maintenance of gambling CASINO.
Sec. 3. This Ordinance shall take effect ten (10) days after its
publication in a local newspaper of general circulation.
Pryce assailed the ordinances before the Court of Appeals, where it was
joined by PAGCOR as intervenor and supplemental petitioner. Their
challenge succeeded. On March 31, 1993, the Court of Appeals declared the
ordinances invalid and issued the writ prayed for to prohibit their
enforcement. 1 Reconsideration of this decision was denied on July 13,
1993. 2
Cagayan de Oro City and its mayor are now before us in this petition for
review under Rule 45 of the Rules of Court. 3 They aver that the respondent
Court of Appeals erred in holding that:
1. Under existing laws, the Sangguniang Panlungsod of the City of
Cagayan de Oro does not have the power and authority to
prohibit the establishment and operation of a PAGCOR gambling
casino within the City's territorial limits.
2. The phrase "gambling and other prohibited games of chance"
found in Sec. 458, par. (a), sub-par. (1) (v) of R.A. 7160 could
only mean "illegal gambling."
3. The questioned Ordinances in effect annul P.D. 1869 and are
therefore invalid on that point.
4. The questioned Ordinances are discriminatory to casino and
partial to cockfighting and are therefore invalid on that point.
5. The questioned Ordinances are not reasonable, not consonant
with the general powers and purposes of the instrumentality
concerned and inconsistent with the laws or policy of the State.
6. It had no option but to follow the ruling in the case of Basco, et
al. v. PAGCOR, G.R. No. 91649, May 14, 1991, 197 SCRA 53 in
disposing of the issues presented in this present case.
PAGCOR is a corporation created directly by P.D. 1869 to help centralize and
regulate all games of chance, including casinos on land and sea within the
territorial jurisdiction of the Philippines. In Basco v. Philippine Amusements
and Gaming Corporation, 4 this Court sustained the constitutionality of the

B. Autonomy and Decentralilzation
Atty. Pareja
decree and even cited the benefits of the entity to the national economy as
the third highest revenue-earner in the government, next only to the BIR
and the Bureau of Customs.
Cagayan de Oro City, like other local political subdivisions, is empowered to
enact ordinances for the purposes indicated in the Local Government Code.
It is expressly vested with the police power under what is known as the
General Welfare Clause now embodied in Section 16 as follows:
Sec. 16. General Welfare. Every local
government unit shall exercise the powers expressly
granted, those necessarily implied therefrom, as well
as powers necessary, appropriate, or incidental for its
efficient and effective governance, and those which
are essential to the promotion of the general welfare.
Within their respective territorial jurisdictions, local
government units shall ensure and support, among
other things, the preservation and enrichment of
culture, promote health and safety, enhance the right
of the people to a balanced ecology, encourage and
support the development of appropriate and self-
reliant scientific and technological capabilities,
improve public morals, enhance economic prosperity
and social justice, promote full employment among
their residents, maintain peace and order, and
preserve the comfort and convenience of their
inhabitants.
In addition, Section 458 of the said Code specifically declares that:
Sec. 458. Powers, Duties, Functions and Compensation. (a)
The Sangguniang Panlungsod, as the legislative body of the city,
shall enact ordinances, approve resolutions and appropriate
funds for the general welfare of the city and its inhabitants
pursuant to Section 16 of this Code and in the proper exercise of
the corporate powers of the city as provided for under Section 22
of this Code, and shall:
(1) Approve ordinances and pass resolutions necessary for an
efficient and effective city government, and in this connection,
shall:
xxx xxx xxx
(v) Enact ordinances intended to prevent, suppress and impose
appropriate penalties for habitual drunkenness in public places,
vagrancy, mendicancy, prostitution, establishment and
maintenance of houses of ill repute, gamblingand other
prohibited games of chance, fraudulent devices and ways to
obtain money or property, drug addiction, maintenance of drug
dens, drug pushing, juvenile delinquency, the printing,
distribution or exhibition of obscene or pornographic materials or
publications, and such other activities inimical to the welfare and
morals of the inhabitants of the city;
This section also authorizes the local government units to regulate
properties and businesses within their territorial limits in the interest of the
general welfare. 5
The petitioners argue that by virtue of these provisions, the Sangguniang
Panlungsod may prohibit the operation of casinos because they involve
games of chance, which are detrimental to the people. Gambling is not
allowed by general law and even by the Constitution itself. The legislative
power conferred upon local government units may be exercised over all
kinds of gambling and not only over "illegal gambling" as the respondents
erroneously argue. Even if the operation of casinos may have been
permitted under P.D. 1869, the government of Cagayan de Oro City has the
authority to prohibit them within its territory pursuant to the authority
entrusted to it by the Local Government Code.
It is submitted that this interpretation is consonant with the policy of local
autonomy as mandated in Article II, Section 25, and Article X of the
Constitution, as well as various other provisions therein seeking to
strengthen the character of the nation. In giving the local government units
the power to prevent or suppress gambling and other social problems, the
Local Government Code has recognized the competence of such
communities to determine and adopt the measures best expected to
promote the general welfare of their inhabitants in line with the policies of
the State.
13
The petitioners also stress that when the Code expressly authorized the local
government units to prevent and suppress gambling and other prohibited
games of chance, like craps, baccarat, blackjack and roulette, it
meant allforms of gambling without distinction. Ubi lex non distinguit, nec
nos distinguere debemos. 6 Otherwise, it would have expressly excluded
from the scope of their power casinos and other forms of gambling
authorized by special law, as it could have easily done. The fact that it did
not do so simply means that the local government units are permitted to
prohibit all kinds of gambling within their territories, including the operation
of casinos.
The adoption of the Local Government Code, it is pointed out, had the effect
of modifying the charter of the PAGCOR. The Code is not only a later
enactment than P.D. 1869 and so is deemed to prevail in case of
inconsistencies between them. More than this, the powers of the PAGCOR
under the decree are expressly discontinued by the Code insofar as they do
not conform to its philosophy and provisions, pursuant to Par. (f) of its
repealing clause reading as follows:
(f) All general and special laws, acts, city charters,
decrees, executive orders, proclamations and
administrative regulations, or part or parts thereof
which are inconsistent with any of the provisions of
this Code are hereby repealed or modified
accordingly.
It is also maintained that assuming there is doubt regarding the effect of the
Local Government Code on P.D. 1869, the doubt must be resolved in favor
of the petitioners, in accordance with the direction in the Code calling for its
liberal interpretation in favor of the local government units. Section 5 of the
Code specifically provides:
Sec. 5. Rules of Interpretation. In the interpretation
of the provisions of this Code, the following rules shall
apply:
(a) Any provision on a power of a local government
unit shall be liberally interpreted in its favor, and in
case of doubt, any question thereon shall be resolved
in favor of devolution of powers and of the lower local
government unit. Any fair and reasonable doubt as to
the existence of the power shall be interpreted in
favor of the local government unit concerned;
xxx xxx xxx
(c) The general welfare provisions in this Code shall be
liberally interpreted to give more powers to local
government units in accelerating economic
development and upgrading the quality of life for the
people in the community; . . . (Emphasis supplied.)
Finally, the petitioners also attack gambling as intrinsically harmful and cite
various provisions of the Constitution and several decisions of this Court
expressive of the general and official disapprobation of the vice. They invoke
the State policies on the family and the proper upbringing of the youth and,
as might be expected, call attention to the old case of U.S. v.
Salaveria, 7 which sustained a municipal ordinance prohibiting the playing
of panguingue. The petitioners decry the immorality of gambling. They also
impugn the wisdom of P.D. 1869 (which they describe as "a martial law
instrument") in creating PAGCOR and authorizing it to operate casinos "on
land and sea within the territorial jurisdiction of the Philippines."
This is the opportune time to stress an important point.
The morality of gambling is not a justiciable issue. Gambling is not illegal per
se. While it is generally considered inimical to the interests of the people,
there is nothing in the Constitution categorically proscribing or penalizing
gambling or, for that matter, even mentioning it at all. It is left to Congress
to deal with the activity as it sees fit. In the exercise of its own discretion,
the legislature may prohibit gambling altogether or allow it without
limitation or it may prohibit some forms of gambling and allow others for
whatever reasons it may consider sufficient. Thus, it has
prohibited jueteng and monte but permits lotteries, cockfighting and horse-
racing. In making such choices, Congress has consulted its own wisdom,
which this Court has no authority to review, much less reverse. Well has it
been said that courts do not sit to resolve the merits of conflicting
theories. 8 That is the prerogative of the political departments. It is settled
that questions regarding the wisdom, morality, or practicibility of statutes
are not addressed to the judiciary but may be resolved only by the
legislative and executive departments, to which the function belongs in our

B. Autonomy and Decentralilzation
Atty. Pareja
scheme of government. That function is exclusive. Whichever way these
branches decide, they are answerable only to their own conscience and the
constituents who will ultimately judge their acts, and not to the courts of
justice.
The only question we can and shall resolve in this petition is the validity of
Ordinance No. 3355 and Ordinance No. 3375-93 as enacted by the
Sangguniang Panlungsod of Cagayan de Oro City. And we shall do so only by
the criteria laid down by law and not by our own convictions on the
propriety of gambling.
The tests of a valid ordinance are well established. A long line of
decisions 9 has held that to be valid, an ordinance must conform to the
following substantive requirements:
1) It must not contravene the constitution or any statute.
2) It must not be unfair or oppressive.
3) It must not be partial or discriminatory.
4) It must not prohibit but may regulate trade.
5) It must be general and consistent with public policy.
6) It must not be unreasonable.
We begin by observing that under Sec. 458 of the Local Government Code,
local government units are authorized to prevent or suppress, among
others, "gambling and other prohibited games of chance." Obviously, this
provision excludes games of chance which are not prohibited but are in fact
permitted by law. The petitioners are less than accurate in claiming that the
Code could have excluded such games of chance but did not. In fact it does.
The language of the section is clear and unmistakable. Under the rule
of noscitur a sociis, a word or phrase should be interpreted in relation to, or
given the same meaning of, words with which it is associated. Accordingly,
we conclude that since the word "gambling" is associated with
"and other prohibited games of chance," the word should be read as
referring to only illegal gambling which, like the other prohibited games of
chance, must be prevented or suppressed.
We could stop here as this interpretation should settle the problem quite
conclusively. But we will not. The vigorous efforts of the petitioners on
behalf of the inhabitants of Cagayan de Oro City, and the earnestness of
their advocacy, deserve more than short shrift from this Court.
The apparent flaw in the ordinances in question is that they contravene P.D.
1869 and the public policy embodied therein insofar as they prevent
PAGCOR from exercising the power conferred on it to operate a casino in
Cagayan de Oro City. The petitioners have an ingenious answer to this
misgiving. They deny that it is the ordinances that have changed P.D. 1869
for an ordinance admittedly cannot prevail against a statute. Their theory is
that the change has been made by the Local Government Code itself, which
was also enacted by the national lawmaking authority. In their view, the
decree has been, not really repealed by the Code, but merely "modified pro
tanto" in the sense that PAGCOR cannot now operate a casino over the
objection of the local government unit concerned. This modification of P.D.
1869 by the Local Government Code is permissible because one law can
change or repeal another law.
It seems to us that the petitioners are playing with words. While insisting
that the decree has only been "modifiedpro tanto," they are actually arguing
that it is already dead, repealed and useless for all intents and purposes
because the Code has shorn PAGCOR of all power to centralize and regulate
casinos. Strictly speaking, its operations may now be not only prohibited by
the local government unit; in fact, the prohibition is not only discretionary
but mandated by Section 458 of the Code if the word "shall" as used therein
is to be given its accepted meaning. Local government units have now no
choice but to prevent and suppress gambling, which in the petitioners' view
includes both legal and illegal gambling. Under this construction, PAGCOR
will have no more games of chance to regulate or centralize as they must all
be prohibited by the local government units pursuant to the mandatory duty
imposed upon them by the Code. In this situation, PAGCOR cannot continue
to exist except only as a toothless tiger or a white elephant and will no
longer be able to exercise its powers as a prime source of government
revenue through the operation of casinos.
It is noteworthy that the petitioners have cited only Par. (f) of the repealing
clause, conveniently discarding the rest of the provision which painstakingly
mentions the specific laws or the parts thereof which are repealed (or
modified) by the Code. Significantly, P.D. 1869 is not one of them. A reading
of the entire repealing clause, which is reproduced below, will disclose the
omission:
14
Sec. 534. Repealing Clause. (a) Batas Pambansa Blg. 337,
otherwise known as the "Local Government Code," Executive
Order No. 112 (1987), and Executive Order No. 319 (1988) are
hereby repealed.
(b) Presidential Decree Nos. 684, 1191, 1508 and such other
decrees, orders, instructions, memoranda and issuances related to
or concerning the barangay are hereby repealed.
(c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939
regarding hospital fund; Section 3, a (3) and b (2) of Republic Act.
No. 5447 regarding the Special Education Fund; Presidential
Decree No. 144 as amended by Presidential Decree Nos. 559 and
1741; Presidential Decree No. 231 as amended; Presidential
Decree No. 436 as amended by Presidential Decree No. 558; and
Presidential Decree Nos. 381, 436, 464, 477, 526, 632, 752, and
1136 are hereby repealed and rendered of no force and effect.
(d) Presidential Decree No. 1594 is hereby repealed insofar as it
governs locally-funded projects.
(e) The following provisions are hereby repealed or amended
insofar as they are inconsistent with the provisions of this Code:
Sections 2, 16, and 29 of Presidential Decree No. 704; Sections 12
of Presidential Decree No. 87, as amended; Sections 52, 53, 66, 67,
68, 69, 70, 71, 72, 73, and 74 of Presidential Decree No. 463, as
amended; and Section 16 of Presidential Decree No. 972, as
amended, and
(f) All general and special laws, acts, city charters, decrees,
executive orders, proclamations and administrative regulations, or
part or parts thereof which are inconsistent with any of the
provisions of this Code are hereby repealed or modified
accordingly.
Furthermore, it is a familiar rule that implied repeals are not lightly
presumed in the absence of a clear and unmistakable showing of such
intention. In Lichauco & Co. v. Apostol, 10 this Court explained:
The cases relating to the subject of repeal by implication all
proceed on the assumption that if the act of later date clearly
reveals an intention on the part of the lawmaking power to
abrogate the prior law, this intention must be given effect; but
there must always be a sufficient revelation of this intention, and it
has become an unbending rule of statutory construction that the
intention to repeal a former law will not be imputed to the
Legislature when it appears that the two statutes, or provisions,
with reference to which the question arises bear to each other the
relation of general to special.
There is no sufficient indication of an implied repeal of P.D. 1869. On the
contrary, as the private respondent points out, PAGCOR is mentioned as the
source of funding in two later enactments of Congress, to wit, R.A. 7309,
creating a Board of Claims under the Department of Justice for the benefit
of victims of unjust punishment or detention or of violent crimes, and R.A.
7648, providing for measures for the solution of the power crisis. PAGCOR
revenues are tapped by these two statutes. This would show that the
PAGCOR charter has not been repealed by the Local Government Code but
has in fact been improved as it were to make the entity more responsive to
the fiscal problems of the government.
It is a canon of legal hermeneutics that instead of pitting one statute against
another in an inevitably destructive confrontation, courts must exert every
effort to reconcile them, remembering that both laws deserve a becoming
respect as the handiwork of a coordinate branch of the government. On the
assumption of a conflict between P.D. 1869 and the Code, the proper action
is not to uphold one and annul the other but to give effect to both by
harmonizing them if possible. This is possible in the case before us. The
proper resolution of the problem at hand is to hold that under the Local
Government Code, local government units may (and indeed must) prevent
and suppress all kinds of gambling within their territories except only those
allowed by statutes like P.D. 1869. The exception reserved in such laws must
be read into the Code, to make both the Code and such laws equally
effective and mutually complementary.
This approach would also affirm that there are indeed two kinds of
gambling, to wit, the illegal and those authorized by law. Legalized gambling
is not a modern concept; it is probably as old as illegal gambling, if not
indeed more so. The petitioners' suggestion that the Code authorizes them
to prohibit all kinds of gambling would erase the distinction between these
two forms of gambling without a clear indication that this is the will of the
 15
B. Autonomy and Decentralilzation
Atty. Pareja
legislature. Plausibly, following this theory, the City of Manila could, by mere
ordinance, prohibit the Philippine Charity Sweepstakes Office from
conducting a lottery as authorized by R.A. 1169 and B.P. 42 or stop the races
at the San Lazaro Hippodrome as authorized by R.A. 309 and R.A. 983.

In light of all the above considerations, we see no way of arriving at the

conclusion urged on us by the petitioners that the ordinances in question
are valid. On the contrary, we find that the ordinances violate P.D. 1869,
which has the character and force of a statute, as well as the public policy
expressed in the decree allowing the playing of certain games of chance
despite the prohibition of gambling in general.

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

Municipal corporations owe their origin to, and derive

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

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

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

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

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

WHEREFORE, the petition is DENIED and the challenged decision of the

respondent Court of Appeals is AFFIRMED, with costs against the
petitioners. It is so ordered.

B. Autonomy and Decentralilzation
Atty. Pareja
6.
[G.R. No. 129093. August 30, 2001]
HON. JOSE D. LINA, JR., SANGGUNIANG PANLALAWIGAN OF LAGUNA, and
HON. CALIXTO CATAQUIZ, petitioners, vs. HON. FRANCISCO DIZON PAO
and TONY CALVENTO, respondents.
DECISION
QUISUMBING, J.:
For our resolution is a petition for review on certiorari seeking the
reversal of the decision[1] dated February 10, 1997 of the Regional Trial
Court of San Pedro, Laguna, Branch 93, enjoining petitioners from
implementing or enforcing Kapasiyahan Bilang 508, Taon 1995, of
the Sangguniang Panlalawigan of Laguna and its subsequent Order[2] dated
April 21, 1997 denying petitioners motion for reconsideration.
On December 29, 1995, respondent Tony Calvento was appointed
agent by the Philippine Charity Sweepstakes Office (PCSO) to install Terminal
OM 20 for the operation of lotto. He asked Mayor Calixto Cataquiz, Mayor of
San Pedro, Laguna, for a mayors permit to open the lotto outlet. This was
denied by Mayor Cataquiz in a letter dated February 19, 1996. The ground
for said denial was an ordinance passed by the Sangguniang
Panlalawigan of Laguna entitled Kapasiyahan Blg. 508, T. 1995 which was
issued on September 18, 1995. The ordinance reads:
ISANG KAPASIYAHAN TINUTUTULAN ANG MGA ILLEGAL GAMBLING LALO NA
ANG LOTTO SA LALAWIGAN NG LAGUNA
SAPAGKAT, ang sugal dito sa lalawigan ng Laguna ay talamak na;
SAPAGKAT, ang sugal ay nagdudulot ng masasamang impluwensiya lalot
higit sa mga kabataan;
KUNG KAYAT DAHIL DITO, at sa mungkahi nina Kgg. Kgd. Juan M. Unico at
Kgg. Kgd. Gat-Ala A. Alatiit, pinangalawahan ni Kgg. Kgd. Meliton C. Larano
at buong pagkakaisang sinangayunan ng lahat ng dumalo sa pulong;
IPINASIYA, na tutulan gaya ng dito ay mahigpit na TINUTUTULAN ang ano
mang uri ng sugal dito sa lalawigan ng Laguna lalot higit ang Lotto;
IPINASIYA PA RIN na hilingin tulad ng dito ay hinihiling sa Panlalawigang
pinuno ng Philippine National Police (PNP) Col. [illegible] na mahigpit na
pag-ibayuhin ang pagsugpo sa lahat ng uri ng illegal na sugal sa buong
lalawigan ng Laguna lalo na ang Jueteng.[3]
As a result of this resolution of denial, respondent Calvento filed a
complaint for declaratory relief with prayer for preliminary injunction and
temporary restraining order. In the said complaint, respondent Calvento
asked the Regional Trial Court of San Pedro Laguna, Branch 93, for the
following reliefs: (1) a preliminary injunction or temporary restraining order,
ordering the defendants to refrain from implementing or
enforcing Kapasiyahan Blg. 508, T. 1995; (2) an order requiring Hon.
Municipal Mayor Calixto R. Cataquiz to issue a business permit for the
operation of a lotto outlet; and (3) an order annulling or declaring as
invalid Kapasiyahan Blg. 508, T. 1995.
On February 10, 1997, the respondent judge, Francisco Dizon Pao,
promulgated his decision enjoining the petitioners from implementing or
enforcing resolution or Kapasiyahan Blg. 508, T. 1995. The dispositive
portion of said decision reads:
WHEREFORE, premises considered, defendants, their agents and
representatives are hereby enjoined from implementing or enforcing
resolution or kapasiyahan blg. 508, T. 1995 of the Sangguniang Panlalawigan
ng Laguna prohibiting the operation of the lotto in the province of Laguna.
SO ORDERED.[4]
Petitioners filed a motion for reconsideration which was subsequently
denied in an Order dated April 21, 1997, which reads:
Acting on the Motion for Reconsideration filed by defendants Jose D. Lina,
Jr. and the Sangguniang Panlalawigan of Laguna, thru counsel, with the
opposition filed by plaintiffs counsel and the comment thereto filed by
counsel for the defendants which were duly noted, the Court hereby denies
the motion for lack of merit.
SO ORDERED.[5]
16
On May 23, 1997, petitioners filed this petition alleging that the
following errors were committed by the respondent trial court:
I
THE TRIAL COURT ERRED IN ENJOINING THE PETITIONERS FROM
IMPLEMENTING KAPASIYAHAN BLG. 508, T. 1995 OF THE SANGGUNIANG
PANLALAWIGAN OF LAGUNA PROHIBITING THE OPERATION OF THE LOTTO
IN THE PROVINCE OF LAGUNA.
II
THE TRIAL COURT FAILED TO APPRECIATE THE ARGUMENT POSITED BY THE
PETITIONERS THAT BEFORE ANY GOVERNMENT PROJECT OR PROGRAM MAY
BE IMPLEMENTED BY THE NATIONAL AGENCIES OR OFFICES, PRIOR
CONSULTATION AND APPROVAL BY THE LOCAL GOVERNMENT UNITS
CONCERNED AND OTHER CONCERNED SECTORS IS REQUIRED.
Petitioners contend that the assailed resolution is a valid policy
declaration of the Provincial Government of Laguna of its vehement
objection to the operation of lotto and all forms of gambling. It is likewise a
valid exercise of the provincial governments police power under the General
Welfare Clause of Republic Act 7160, otherwise known as the Local
Government Code of 1991.[6] They also maintain that respondents lotto
operation is illegal because no prior consultations and approval by the local
government were sought before it was implemented contrary to the express
provisions of Sections 2 (c) and 27 of R.A. 7160.[7]
For his part, respondent Calvento argues that the questioned
resolution is, in effect, a curtailment of the power of the state since in this
case the national legislature itself had already declared lotto as legal and
permitted its operations around the country.[8] As for the allegation that no
prior consultations and approval were sought from the sangguniang
panlalawigan of Laguna, respondent Calvento contends this is not
mandatory since such a requirement is merely stated as a declaration of
policy and not a self-executing provision of the Local Government Code of
1991.[9] He also states that his operation of the lotto system is legal because
of the authority given to him by the PCSO, which in turn had been granted a
franchise to operate the lotto by Congress.[10]
The Office of the Solicitor General (OSG), for the State, contends that
the Provincial Government of Laguna has no power to prohibit a form of
gambling which has been authorized by the national government.[11] He
argues that this is based on the principle that ordinances should not
contravene statutes as municipal governments are merely agents of the
national government. The local councils exercise only delegated legislative
powers which have been conferred on them by Congress. This being the
case, these councils, as delegates, cannot be superior to the principal or
exercise powers higher than those of the latter. The OSG also adds that the
question of whether gambling should be permitted is for Congress to
determine, taking into account national and local interests. Since Congress
has allowed the PCSO to operate lotteries which PCSO seeks to conduct in
Laguna, pursuant to its legislative grant of authority, the
provinces Sangguniang Panlalawigan cannot nullify the exercise of said
authority by preventing something already allowed by Congress.
The issues to be resolved now are the following: (1)
whether Kapasiyahan Blg. 508, T. 1995 of the Sangguniang Panlalawigan of
Laguna and the denial of a mayors permit based thereon are valid; and (2)
whether prior consultations and approval by the concerned Sanggunian are
needed before a lotto system can be operated in a given local government
unit.
The entire controversy stemmed from the refusal of Mayor Cataquiz
to issue a mayors permit for the operation of a lotto outlet in favor of
private respondent. According to the mayor, he based his decision on an
existing ordinance prohibiting the operation of lotto in the province of
Laguna. The ordinance, however, merely states the objection of the council
to the said game. It is but a mere policy statement on the part of the local
council, which is not self-executing. Nor could it serve as a valid ground to
prohibit the operation of the lotto system in the province of Laguna. Even
petitioners admit as much when they stated in their petition that:
5.7. The terms of the Resolution and the validity thereof are express and
clear. The Resolution is a policy declaration of the Provincial Government of
Laguna of its vehement opposition and/or objection to the operation of
and/or all forms of gambling including the Lotto operation in the Province of
Laguna.[12]
As a policy statement expressing the local governments objection to
the lotto, such resolution is valid. This is part of the local governments
autonomy to air its views which may be contrary to that of the national
governments. However, this freedom to exercise contrary views does not
mean that local governments may actually enact ordinances that go against

B. Autonomy and Decentralilzation
Atty. Pareja
laws duly enacted by Congress. Given this premise, the assailed resolution in
this case could not and should not be interpreted as a measure or ordinance
prohibiting the operation of lotto.
The game of lotto is a game of chance duly authorized by the national
government through an Act of Congress. Republic Act 1169, as amended
by Batas Pambansa Blg. 42, is the law which grants a franchise to the PCSO
and allows it to operate the lotteries. The pertinent provision reads:
Section 1. The Philippine Charity Sweepstakes Office.- The Philippine Charity
Sweepstakes Office, hereinafter designated the Office, shall be the principal
government agency for raising and providing for funds for health programs,
medical assistance and services and charities of national character, and as
such shall have the general powers conferred in section thirteen of Act
Numbered One thousand four hundred fifty-nine, as amended, and shall
have the authority:
A. To hold and conduct charity sweepstakes races, lotteries, and other
similar activities, in such frequency and manner, as shall be determined, and
subject to such rules and regulations as shall be promulgated by the Board
of Directors.
This statute remains valid today. While lotto is clearly a game of
chance, the national government deems it wise and proper to permit
it. Hence, the Sangguniang Panlalawigan of Laguna, a local government
unit, cannot issue a resolution or an ordinance that would seek to prohibit
permits. Stated otherwise, what the national legislature expressly allows by
law, such as lotto, a provincial board may not disallow by ordinance or
resolution.
In our system of government, the power of local government units to
legislate and enact ordinances and resolutions is merely a delegated power
coming from Congress. As held in Tatel vs. Virac,[13] ordinances should not
contravene an existing statute enacted by Congress. The reasons for this is
obvious, as elucidated in Magtajas v. Pryce Properties Corp.[14]
Municipal governments are only agents of the national government. Local
councils exercise only delegated legislative powers conferred upon them by
Congress as the national lawmaking body. The delegate cannot be superior
to the principal or exercise powers higher than those of the latter. It is a
heresy to suggest that the local government units can undo the acts of
Congress, from which they have derived their power in the first place, and
negate by mere ordinance the mandate of the statute.
Municipal corporations owe their origin to, and derive their powers and
rights wholly from the legislature. It breathes into them the breath of life,
without which they cannot exist. As it creates, so it may destroy. As it may
destroy, it may abridge and control. Unless there is some constitutional
limitation on the right, the legislature might, by a single act, and if we can
suppose it capable of so great a folly and so great a wrong, sweep from
existence all of the municipal corporations in the state, and the corporation
could not prevent it. We know of no limitation on the right so far as the
corporation themselves are concerned. They are, so to phrase it, the mere
tenants at will of the legislature (citing Clinton vs. Ceder Rapids, etc. Railroad
Co., 24 Iowa 455).
Nothing in the present constitutional provision enhancing local
autonomy dictates a different conclusion.
The basic relationship between the national legislature and the local
government units has not been enfeebled by the new provisions in the
Constitution strengthening the policy of local autonomy. Without meaning
to detract from that policy, we here confirm that Congress retains control of
the local government units although in significantly reduced degree now
than under our previous Constitutions. The power to create still includes the
power to destroy. The power to grant still includes the power to withhold or
recall. True, there are certain notable innovations in the Constitution, like
the direct conferment on the local government units of the power to tax
(citing Art. X, Sec. 5, Constitution), which cannot now be withdrawn by mere
statute. By and large, however, the national legislature is still the principal of
the local government units, which cannot defy its will or modify or violate
it.[15]
Ours is still a unitary form of government, not a federal state. Being
so, any form of autonomy granted to local governments will necessarily be
limited and confined within the extent allowed by the central
authority. Besides, the principle of local autonomy under the 1987
Constitution simply means decentralization. It does not make local
governments sovereign within the state or an imperium in imperio.[16]
To conclude our resolution of the first issue, respondent mayor of San
Pedro, cannot avail of Kapasiyahan Bilang 508, Taon 1995, of the Provincial
Board of Laguna as justification to prohibit lotto in his municipality. For said
17
resolution is nothing but an expression of the local legislative unit
concerned. The Boards enactment, like spring water, could not rise above its
source of power, the national legislature.
As for the second issue, we hold that petitioners erred in declaring
that Sections 2 (c) and 27 of Republic Act 7160, otherwise known as the
Local Government Code of 1991, apply mandatorily in the setting up of lotto
outlets around the country. These provisions state:
Section 2. Declaration of Policy. x x x
(c) It is likewise the policy of the State to require all national agencies and
offices to conduct periodic consultations with appropriate local government
units, non-governmental and peoples organizations, and other concerned
sectors of the community before any project or program is implemented in
their respective jurisdictions.
Section 27. Prior Consultations Required. No project or program shall be
implemented by government authorities unless the consultations
mentioned in Section 2 (c) and 26 hereof are complied with, and prior
approval of the sanggunian concerned is obtained; Provided, that occupants
in areas where such projects are to be implemented shall not be evicted
unless appropriate relocation sites have been provided, in accordance with
the provisions of the Constitution.
From a careful reading of said provisions, we find that these apply
only to national programs and/or projects which are to be implemented in a
particular local community. Lotto is neither a program nor a project of the
national government, but of a charitable institution, the PCSO. Though
sanctioned by the national government, it is far fetched to say that lotto falls
within the contemplation of Sections 2 (c) and 27 of the Local Government
Code.
Section 27 of the Code should be read in conjunction with Section 26
thereof.[17] Section 26 reads:
Section 26. Duty of National Government Agencies in the Maintenance of
Ecological Balance. It shall be the duty of every national agency or
government-owned or controlled corporation authorizing or involved in the
planning and implementation of any project or program that may cause
pollution, climatic change, depletion of non-renewable resources, loss of
crop land, range-land, or forest cover, and extinction of animal or plant
species, to consult with the local government units, nongovernmental
organizations, and other sectors concerned and explain the goals and
objectives of the project or program, its impact upon the people and the
community in terms of environmental or ecological balance, and the
measures that will be undertaken to prevent or minimize the adverse effects
thereof.
Thus, the projects and programs mentioned in Section 27 should be
interpreted to mean projects and programs whose effects are among those
enumerated in Section 26 and 27, to wit, those that: (1) may cause pollution;
(2) may bring about climatic change; (3) may cause the depletion of non-
renewable resources; (4) may result in loss of crop land, range-land, or
forest cover; (5) may eradicate certain animal or plant species from the face
of the planet; and (6) other projects or programs that may call for the
eviction of a particular group of people residing in the locality where these
will be implemented. Obviously, none of these effects will be produced by
the introduction of lotto in the province of Laguna.
Moreover, the argument regarding lack of consultation raised by
petitioners is clearly an afterthought on their part. There is no indication in
the letter of Mayor Cataquiz that this was one of the reasons for his refusal
to issue a permit. That refusal was predicated solely but erroneously on the
provisions of Kapasiyahan Blg. 508, Taon 1995, of the Sangguniang
Panlalawigan of Laguna.
In sum, we find no reversible error in the RTC decision enjoining
Mayor Cataquiz from enforcing or implementing the Kapasiyahan Blg. 508,
T. 1995, of the Sangguniang Panlalawigan of Laguna. That resolution
expresses merely a policy statement of the Laguna provincial board. It
possesses no binding legal force nor requires any act of implementation. It
provides no sufficient legal basis for respondent mayors refusal to issue the
permit sought by private respondent in connection with a legitimate
business activity authorized by a law passed by Congress.
WHEREFORE, the petition is DENIED for lack of merit. The Order of
the Regional Trial Court of San Pedro, Laguna enjoining the petitioners from
implementing or enforcing Resolution or Kapasiyahan Blg. 508, T. 1995, of
the Provincial Board of Laguna is hereby AFFIRMED. No costs.
SO ORDERED.

B. Autonomy and Decentralilzation
Atty. Pareja
7.
G.R. No. 195770 July 17, 2012
AQUILINO Q. PIMENTEL, JR., SERGIO TADEO and NELSON
ALCANTARA, Petitioners,
vs.
EXECUTIVE SECRETARY PAQUITO N. OCHOA and SECRETARY CORAZON
JULIANO-SOLIMAN OF THE DEPARTMENT OF SOCIAL WELFARE and
DEVELOPMENT (DSWD), Respondents.
DECISION
PERLAS-BERNABE, J.:
The Case
For the Courts consideration in this Petition for Certiorari and Prohibition is
the constitutionality of certain provisions of Republic Act No. 10147 or the
General Appropriations Act (GAA) of 20111 which provides a P21 Billion
budget allocation for the Conditional Cash Transfer Program (CCTP) headed
by the Department of Social Welfare & Development (DSWD). Petitioners
seek to enjoin respondents Executive Secretary Paquito N. Ochoa and DSWD
Secretary Corazon Juliano-Soliman from implementing the said program on
the ground that it amounts to a "recentralization" of government functions
that have already been devolved from the national government to the local
government units.
The Facts
In 2007, the DSWD embarked on a poverty reduction strategy with the
poorest of the poor as target beneficiaries.2Dubbed "Ahon Pamilyang
Pilipino," it was pre-pilot tested in the municipalities of Sibagat and
Esperanza in Agusan del Sur; the municipalities of Lopez Jaena and Bonifacio
in Misamis Occidental, the Caraga Region; and the cities of Pasay and
Caloocan3 upon the release of the amount of P50 Million Pesos under a
Special Allotment Release Order (SARO) issued by the Department of Budget
and Management.4
On July 16, 2008, the DSWD issued Administrative Order No. 16, series of
2008 (A.O. No. 16, s. 2008),5 setting the implementing guidelines for the
project renamed "Pantawid Pamilyang Pilipino Program" (4Ps), upon the
following stated objectives, to wit:
1. To improve preventive health care of pregnant women and
young children
2. To increase enrollment/attendance of children at elementary
level
3. To reduce incidence of child labor
4. To raise consumption of poor households on nutrient dense
foods
5. To encourage parents to invest in their children's (and their
own) future
6. To encourage parent's participation in the growth and
development of young children, as well as involvement in the
community.6
This government intervention scheme, also conveniently referred to as
CCTP, "provides cash grant to extreme poor households to allow the
members of the families to meet certain human development goals."7
Eligible households that are selected from priority target areas consisting of
the poorest provinces classified by the National Statistical Coordination
Board (NCSB)8 are granted a health assistance of P500.00/month, or
P6,000.00/year, and an educational assistance of P300.00/month for 10
months, or a total of P3,000.00/year, for each child but up to a maximum of
three children per family.9 Thus, after an assessment on the appropriate
assistance package, a household beneficiary could receive from the
government an annual subsidy for its basic needs up to an amount of
P15,000.00, under the following conditionalities:
a) Pregnant women must get pre natal care starting from the 1st
trimester, child birth is attended by skilled/trained professional,
get post natal care thereafter
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b) Parents/guardians must attend family planning
sessions/mother's class, Parent Effectiveness Service and others
c) Children 0-5 years of age get regular preventive health check-
ups and vaccines
d) Children 3-5 years old must attend day care program/pre-
school
e) Children 6-14 years of age are enrolled in schools and attend
at least 85% of the time10
Under A.O. No. 16, s. 2008, the DSWD also institutionalized a coordinated
inter-agency network among the Department of Education (DepEd),
Department of Health (DOH), Department of Interior and Local Government
(DILG), the National Anti-Poverty Commission (NAPC) and the local
government units (LGUs), identifying specific roles and functions in order to
ensure effective and efficient implementation of the CCTP. As the DSWD
takes on the role of lead implementing agency that must "oversee and
coordinate the implementation, monitoring and evaluation of the program,"
the concerned LGU as partner agency is particularly tasked to
a. Ensure availability of the supply side on health and education
in the target areas.
b. Provide necessary technical assistance for Program
implementation
c. Coordinate the implementation/operationalization of sectoral
activities at the City/Municipal level to better execute Program
objectives and functions
d. Coordinate with various concerned government agencies at
the local level, sectoral representatives and NGO to ensure
effective Program implementation
e. Prepare reports on issues and concerns regarding Program
implementation and submit to the Regional Advisory Committee,
and
f. Hold monthly committee meetings11
A Memorandum of Agreement (MOA)12 executed by the DSWD with each
participating LGU outlines in detail the obligation of both parties during the
intended five-year implementation of the CCTP.
Congress, for its part, sought to ensure the success of the CCTP by providing
it with funding under the GAA of 2008 in the amount of Two Hundred
Ninety-Eight Million Five Hundred Fifty Thousand Pesos (P298,550,000.00).
This budget allocation increased tremendously to P5 Billion Pesos in 2009,
with the amount doubling to P10 Billion Pesos in 2010. But the biggest
allotment given to the CCTP was in the GAA of 2011 at Twenty One Billion
One Hundred Ninety-Four Million One Hundred Seventeen Thousand Pesos
(P21,194,117,000.00).131wphi1
Petitioner Aquilino Pimentel, Jr., a former Senator, joined by Sergio Tadeo,
incumbent President of the Association of Barangay Captains of Cabanatuan
City, Nueva Ecija, and Nelson Alcantara, incumbent Barangay Captain of
Barangay Sta. Monica, Quezon City, challenges before the Court the
disbursement of public funds and the implementation of the CCTP which are
alleged to have encroached into the local autonomy of the LGUs.
The Issue
THE P21 BILLION CCTP BUDGET ALLOCATION UNDER THE DSWD IN THE GAA
FY 2011 VIOLATES ART. II, SEC. 25 & ART. X, SEC. 3 OF THE 1987
CONSTITUTION IN RELATION TO SEC. 17 OF THE LOCAL GOVERNMENT CODE
OF 1991 BY PROVIDING FOR THE RECENTRALIZATION OF THE NATIONAL
GOVERNMENT IN THE DELIVERY OF BASIC SERVICES ALREADY DEVOLVED TO
THE LGUS.
Petitioners admit that the wisdom of adopting the CCTP as a poverty
reduction strategy for the Philippines is with the legislature. They take
exception, however, to the manner by which it is being implemented, that
is, primarily through a national agency like DSWD instead of the LGUs to
which the responsibility and functions of delivering social welfare,
agriculture and health care services have been devolved pursuant to Section
17 of Republic Act No. 7160, also known as the Local Government Code of

B. Autonomy and Decentralilzation
Atty. Pareja
1991, in relation to Section 25, Article II & Section 3, Article X of the 1987
Constitution.
Petitioners assert that giving the DSWD full control over the identification of
beneficiaries and the manner by which services are to be delivered or
conditionalities are to be complied with, instead of allocating the P21 Billion
CCTP Budget directly to the LGUs that would have enhanced its delivery of
basic services, results in the "recentralization" of basic government
functions, which is contrary to the precepts of local autonomy and the
avowed policy of decentralization.
Our Ruling
The Constitution declares it a policy of the State to ensure the autonomy of
local governments14 and even devotes a full article on the subject of local
governance15 which includes the following pertinent provisions:
Section 3. The Congress shall enact a local government code which shall
provide for a more responsive and accountable local government structure
instituted through a system of decentralization with effective mechanisms
of recall, initiative, and referendum, allocate among the different local
government units their powers, responsibilities, and resources, and provide
for the qualifications, election, appointment and removal, term, salaries,
powers and functions and duties of local officials, and all other matters
relating to the organization and operation of the local units.
xxx
Section 14. The President shall provide for regional development councils or
other similar bodies composed of local government officials, regional heads
of departments and other government offices, and representatives from
non-governmental organizations within the regions for purposes of
administrative decentralization to strengthen the autonomy of the units
therein and to accelerate the economic and social growth and development
of the units in the region. (Underscoring supplied)
In order to fully secure to the LGUs the genuine and meaningful autonomy
that would develop them into self-reliant communities and effective
partners in the attainment of national goals,16 Section 17 of the Local
Government Code vested upon the LGUs the duties and functions pertaining
to the delivery of basic services and facilities, as follows:
SECTION 17. Basic Services and Facilities.
(a) Local government units shall endeavor to be self-reliant and
shall continue exercising the powers and discharging the duties
and functions currently vested upon them. They shall also
discharge the functions and responsibilities of national agencies
and offices devolved to them pursuant to this Code. Local
government units shall likewise exercise such other powers and
discharge such other functions and responsibilities as are
necessary, appropriate, or incidental to efficient and effective
provision of the basic services and facilities enumerated herein.
(b) Such basic services and facilities include, but are not limited
to, x x x.
While the aforementioned provision charges the LGUs to take on
the functions and responsibilities that have already been
devolved upon them from the national agencies on the aspect of
providing for basic services and facilities in their respective
jurisdictions, paragraph (c) of the same provision provides a
categorical exception of cases involving nationally-funded
projects, facilities, programs and services, thus:
(c) Notwithstanding the provisions of subsection (b) hereof,
public works and infrastructure projects and other facilities,
programs and services funded by the National Government under
the annual General Appropriations Act, other special laws,
pertinent executive orders, and those wholly or partially funded
from foreign sources, are not covered under this Section, except
in those cases where the local government unit concerned is duly
designated as the implementing agency for such projects,
facilities, programs and services. (Underscoring supplied)
The essence of this express reservation of power by the national
government is that, unless an LGU is particularly designated as the
implementing agency, it has no power over a program for which funding has
been provided by the national government under the annual general
19
appropriations act, even if the program involves the delivery of basic
services within the jurisdiction of the LGU.
The Court held in Ganzon v. Court of Appeals17 that while it is through a
system of decentralization that the State shall promote a more responsive
and accountable local government structure, the concept of local autonomy
does not imply the conversion of local government units into "mini-
states."18 We explained that, with local autonomy, the Constitution did
nothing more than "to break up the monopoly of the national government
over the affairs of the local government" and, thus, did not intend to sever
"the relation of partnership and interdependence between the central
administration and local government units."19 In Pimentel v. Aguirre,20 the
Court defined the extent of the local government's autonomy in terms of its
partnership with the national government in the pursuit of common national
goals, referring to such key concepts as integration and coordination. Thus:
Under the Philippine concept of local autonomy, the national government
has not completely relinquished all its powers over local governments,
including autonomous regions. Only administrative powers over local affairs
are delegated to political subdivisions. The purpose of the delegation is to
make governance more directly responsive and effective at the local levels.
In turn, economic, political and social development at the smaller political
units are expected to propel social and economic growth and
development. But to enable the country to develop as a whole, the
programs and policies effected locally must be integrated and coordinated
towards a common national goal. Thus, policy-setting for the entire country
still lies in the President and Congress.
Certainly, to yield unreserved power of governance to the local government
unit as to preclude any and all involvement by the national government in
programs implemented in the local level would be to shift the tide of
monopolistic power to the other extreme, which would amount to a
decentralization of power explicated in Limbona v. Mangelin21 as beyond our
constitutional concept of autonomy, thus:
Now, autonomy is either decentralization of administration or
decentralization of power.1wphi1 There is decentralization of
administration when the central government delegates administrative
powers to political subdivisions in order to broaden the base of government
power and in the process to make local governments more responsive and
accountable and ensure their fullest development as self-reliant
communities and make them more effective partners in the pursuit of
national development and social progress. At the same time, it relieves the
central government of the burden of managing local affairs and enables it to
concentrate on national concerns. The President exercises general
supervision over them, but only to ensure that local affairs are
administered according to law. He has no control over their acts in the
sense that he can substitute their judgments with his own.
Decentralization of power, on the other hand, involves an abdication of
political power in the [sic] favor of local governments [sic] units declared to
be autonomous. In that case, the autonomous government is free to chart
its own destiny and shape its future with minimum intervention from central
authorities. According to a constitutional author, decentralization of power
amounts to self-immolation, since in that event, the autonomous
government becomes accountable not to the central authorities but to its
constituency.22
Indeed, a complete relinquishment of central government powers on the
matter of providing basic facilities and services cannot be implied as the
Local Government Code itself weighs against it. The national government is,
thus, not precluded from taking a direct hand in the formulation and
implementation of national development programs especially where it is
implemented locally in coordination with the LGUs concerned.
Every law has in its favor the presumption of constitutionality, and to justify
its nullification, there must be a clear and unequivocal breach of the
Constitution, not a doubtful and argumentative one.23 Petitioners have
failed to discharge the burden of proving the invalidity of the provisions
under the GAA of 2011. The allocation of a P21 billion budget for an
intervention program formulated by the national government itself but
implemented in partnership with the local government units to achieve the
common national goal development and social progress can by no means be
an encroachment upon the autonomy of local governments.
WHEREFORE, premises considered, the petition is hereby DISMISSED.
SO ORDERED.