Pub-corp-cases.docx

BOY SCOUTS PHILIPPINES, Petitioner,

OF

THE

G.R. No. 177131 Present:

This case arose when the COA issued Resolution No. 99-011[5] on August 19, 1999 (the COA Resolution), with the subject Defining the Commissions policy with respect to the audit of the

- versus -

CORONA, C.J., CARPIO, CARPIO MORALES, VELASCO, JR., NACHURA, LEONARDO-DE CASTRO, BRION, PERALTA, BERSAMIN, DEL CASTILLO, ABAD, VILLARAMA, JR., PEREZ, MENDOZA, and SERENO, JJ.

Boy Scouts of the Philippines. In its whereas clauses, the COA Resolution stated that the BSP was created as a public corporation under Commonwealth Act No. 111, as amended by Presidential Decree No. 460 and Republic Act No. 7278; that in Boy Scouts of the Philippines v. National Labor Relations Commission,[6] the Supreme Court ruled that the BSP, as constituted under its charter, was a government-controlled corporation within the meaning of Article IX(B)(2)(1) of the Constitution; and that the BSP is appropriately regarded

as

a

government

instrumentality

under

the

Administrative Code. The COA Resolution also cited its constitutional mandate under Section 2(1), Article IX (D). Finally, the COA Resolution reads:

Promulgated: COMMISSION ON AUDIT, Respondent.

June 7, 2011 DECISION LEONARDO-DE CASTRO, J.: The jurisdiction of the Commission on Audit (COA) over the Boy Scouts of the Philippines (BSP) is the subject matter of this controversy that reached us via petition for prohibition[1] filed by the BSP under Rule 65 of the 1997 Rules of Court. In this petition, the BSP seeks that the COA be prohibited from implementing its June 18, 2002 Decision,[2] its February 21, 2007 Resolution,[3] as well as all other issuances arising therefrom, and that all of the foregoing be rendered null and void. [4] Antecedent Facts and Background of the Case

1987

[7]

NOW THEREFORE, in consideration of the foregoing premises, the COMMISSION PROPER HAS RESOLVED, AS IT DOES HEREBY RESOLVE, to conduct an annual financial audit of the Boy Scouts of the Philippines in accordance with generally accepted auditing standards, and express an opinion on whether the financial statements which include the Balance Sheet, the Income Statement and the Statement of Cash Flows present fairly its financial position and results of operations. xxxx BE IT RESOLVED FURTHERMORE, that for purposes of audit supervision, the Boy Scouts of the Philippines shall be classified among the government corporations belonging to the Educational, Social, Scientific, Civic and Research Sector under the Corporate Audit Office I, to be audited, similar to the subsidiary corporations, by employing the team audit approach.[8] (Emphases supplied.)

The BSP sought reconsideration of the COA Resolution in a letter[9] dated November 26, 1999 signed by the BSP National President Jejomar C. Binay, who is now the Vice President of the Republic, wherein he wrote: It is the position of the BSP, with all due respect, that it is not subject to the Commissions jurisdiction on the following grounds: 1. We reckon that the ruling in the case of Boy Scouts of the Philippines vs. National Labor Relations Commission, et al. (G.R. No. 80767) classifying the BSP as a government-controlled corporation is anchored on the substantial Government participation in the National Executive Board of the BSP. It is to be noted that the case was decided when the BSP Charter is defined by Commonwealth Act No. 111 as amended by Presidential Decree 460. However, may we humbly refer you to Republic Act No. 7278 which amended the BSPs charter after the cited case was decided. The most salient of all amendments in RA No. 7278 is the alteration of the composition of the National Executive Board of the BSP. The said RA virtually eliminated the substantial government participation in the National Executive Board by removing: (i) the President of the Philippines and executive secretaries, with the exception of the Secretary of Education, as members thereof; and (ii) the appointment and confirmation power of the President of the Philippines, as Chief Scout, over the members of the said Board. The BSP believes that the cited case has been superseded by RA 7278. Thereby weakening the cases conclusion that the BSP is a government-controlled corporation (sic). The 1987 Administrative Code itself, of which the BSP vs. NLRC relied on for some terms,

defines government-owned and controlled corporations as agencies organized as stock or non-stock corporations which the BSP, under its present charter, is not. Also, the Government, like in other GOCCs, does not have funds invested in the BSP. What RA 7278 only provides is that the Government or any of its subdivisions, branches, offices, agencies and instrumentalities can from time to time donate and contribute funds to the BSP. Also the BSP respectfully believes that the BSP is not appropriately regarded as a government instrumentality under the 1987 Administrative Code as stated in the COA resolution. As defined by Section 2(10) of the said code, instrumentality refers to any agency of the National Government, not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy, usually through a charter. The BSP is not an entity administering special funds. It is not even included in the DECS National Budget. x x x It may be argued also that the BSP is not an agency of the Government. The 1987 Administrative Code, merely referred the BSP as an attached agency of the DECS as distinguished from an actual line agency of departments that are included in the National Budget. The BSP believes that an attached agency is different from an agency. Agency, as defined in Section 2(4) of the Administrative Code, is defined as any of the various units of the Government including a department, bureau, office, instrumentality, government-owned or controlled corporation or local government or distinct unit therein.

Under the above definition, the BSP is neither a unit of the Government; a department which refers to an executive department as created by law (Section 2[7] of the Administrative Code); nor a bureau which refers to any principal subdivision or unit of any department (Section 2[8], Administrative Code).[10] Subsequently,

requests

for

reconsideration

of

the

COA

Resolution were also made separately by Robert P. Valdellon, Regional Scout Director, Western Visayas Region, Iloilo City and Eugenio F. Capreso, Council Scout Executive of Calbayog City.[11] In a letter[12] dated July 3, 2000, Director Crescencio S. Sunico, Corporate Audit Officer (CAO) I of the COA, furnished the BSP with a copy of the Memorandum[13] dated June 20, 2000 of Atty. Santos M. Alquizalas, the COA General Counsel. In said Memorandum, the COA General Counsel opined that Republic Act No. 7278 did not supersede the Courts ruling in Boy Scouts of the Philippines v. National Labor Relations Commission, even though said law eliminated the substantial government participation in the selection of members of the National Executive Board of the BSP. The Memorandum further provides: Analysis of the said case disclosed that the substantial government participation is only one (1) of the three (3) grounds relied upon by the Court in the resolution of the case. Other considerations include the character of the BSPs purposes and functions which has a public aspect and the statutory designation of the BSP as a public corporation. These grounds have not been deleted by R.A. No. 7278. On the contrary, these were strengthened as evidenced by the amendment made relative to BSPs purposes stated in Section 3 of R.A. No. 7278. On the argument that BSP is not appropriately regarded as a government instrumentality and agency of the government, such has already been answered and clarified. The Supreme Court has elucidated this matter in the BSP case when it declared that BSP is regarded

as, both a government-controlled corporation with an original charter and as an instrumentality of the Government. Likewise, it is not disputed that the Administrative Code of 1987 designated the BSP as one of the attached agencies of DECS. Being an attached agency, however, it does not change its nature as a government-controlled corporation with original charter and, necessarily, subject to COA audit jurisdiction. Besides, Section 2(1), Article IX-D of the Constitution provides that COA shall have the power, authority, and duty to examine, audit and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property, owned or held in trust by, or pertaining to, the Government, or any of its subdivisions, agencies or instrumentalities, including government-owned or controlled corporations with original charters.[14] Based on the Memorandum of the COA General Counsel, Director Sunico wrote: In view of the points clarified by said Memorandum upholding COA Resolution No. 99-011, we have to comply with the provisions of the latter, among which is to conduct an annual financial audit of the Boy Scouts of the Philippines.[15] In a letter dated November 20, 2000 signed by Director Amorsonia B. Escarda, CAO I, the COA informed the BSP that a preliminary survey of its organizational structure, operations and accounting system/records shall be conducted on November 21 to 22, 2000.[16] Upon the BSPs request, the audit was deferred for thirty (30) days. The BSP then filed a Petition for Review with Prayer for Preliminary Injunction and/or Temporary Restraining Order before the COA. This was denied by the COA in its questioned Decision, which held that the BSP is under its audit jurisdiction. The BSP moved for

reconsideration but this was likewise denied under its questioned

had categorically found that its assets were acquired from the Boy

Resolution.[17]

Scouts of America and not from the Philippine government, and that its

This led to the filing by the BSP of this petition for prohibition with

operations are financed chiefly from membership dues of the Boy

preliminary injunction and temporary restraining order against the COA.

Scouts themselves as well as from property rentals; and that the BSP

The Issue

may correctly be characterized as non-governmental, and hence,

As stated earlier, the sole issue to be resolved in this case is

beyond the audit jurisdiction of the COA. It further claims that the

whether the BSP falls under the COAs audit jurisdiction.

designation by the Court of the BSP as a government agency or

The

instrumentality is mere obiter dictum.[20]

Parties

Respective

Arguments

The BSP maintains that the provisions of Republic Act No. 7278

The BSP contends that Boy Scouts of the Philippines v. National

suggest that governance of BSP has come to be overwhelmingly a

Labor Relations Commission is inapplicable for purposes of determining

private affair or nature, with government participation restricted to the

the audit jurisdiction of the COA as the issue therein was the jurisdiction

seat of the Secretary of Education, Culture and Sports.[21] It

of the National Labor Relations Commission over a case for illegal

cites Philippine Airlines Inc. v. Commission on Audit[22] wherein the

dismissal and unfair labor practice filed by certain BSP employees.[18]

Court declared that, PAL, having ceased to be a government-owned or controlled corporation is no longer under the audit jurisdiction of the

While the BSP concedes that its functions do relate to those that

COA.[23] Claiming that the amendments introduced by Republic Act No.

the government might otherwise completely assume on its own, it avers

7278 constituted a supervening event that changed the BSPs corporate

that this alone was not determinative of the COAs audit jurisdiction over

identity in the same way that the governments privatization program

it. The BSP further avers that the Court in Boy Scouts of the Philippines

changed PALs, the BSP makes the case that the government no longer

v. National Labor Relations Commission simply stated x x x that in

has control over it; thus, the COA cannot use the Boy Scouts of the

respect of functions, the BSP is akin to a public corporation but this was

Philippines v. National Labor Relations Commission as its basis for the

not synonymous to holding that the BSP is a government corporation or

exercise of its jurisdiction and the issuance of COA Resolution No.

entity subject to audit by the COA.

[19]

The BSP contends that Republic Act No. 7278 introduced crucial amendments to its charter; hence, the findings of the Court in Boy Scouts of the Philippines v. National Labor Relations Commission are no longer valid as the government has ceased to play a controlling influence in it. The BSP claims that the pronouncements of the Court therein must be taken only within the context of that case; that the Court

99-011.[24] The BSP further claims as follows: It is not far-fetched, in fact, to concede that BSPs funds and assets are private in character. Unlike ordinary public corporations, such as provinces, cities, and municipalities, or government-owned and controlled corporations, such as Land Bank of the Philippines and the Development Bank of the Philippines, the assets and funds of BSP are not derived from any government grant. For its operations, BSP is not dependent in any way on any government appropriation; as a matter of fact, it has not

even been included in any appropriations for the government. To be sure, COA has not alleged, in its Resolution No. 99-011 or in the Memorandum of its General Counsel, that BSP received, receives or continues to receive assets and funds from any agency of the government. The foregoing simply point to the private nature of the funds and assets of petitioner BSP. xxxx As stated in petitioners third argument, BSPs assets and funds were never acquired from the government. Its operations are not in any way financed by the government, as BSP has never been included in any appropriations act for the government. Neither has the government invested funds with BSP. BSP, has not been, at any time, a user of government property or funds; nor have properties of the government been held in trust by BSP. This is precisely the reason why, until this time, the COA has not attempted to subject BSP to its audit jurisdiction. x x x.[25]

controlled corporation instrumentality.[27]

and

government

The COA maintains that the functions of the BSP that include, among others, the teaching to the youth of patriotism, courage, self-reliance, and kindred virtues, are undeniably sovereign functions enshrined under the Constitution and discussed by the Court in Boy Scouts of the Philippines v. National Labor Relations Commission. The COA contends that any attempt to classify the BSP as a private corporation would be incomprehensible since no less than the law which created it had designated it as a public corporation and its statutory mandate embraces performance of sovereign functions.[28] The COA claims that the only reason why the BSP employees fell within the scope of the Civil Service Commission even before the 1987 Constitution was the fact that it was a government-owned or

To summarize its other arguments, the BSP contends that it is

controlled corporation; that as an attached agency of the Department of

not a government-owned or controlled corporation; neither is it an

Education, Culture and Sports (DECS), the BSP is an agency of the

instrumentality, agency, or subdivision of the government.

government; and that the BSP is a chartered institution under Section

In its Comment,[26] the COA argues as follows: 1. The BSP is a public corporation created under Commonwealth Act No. 111 dated October 31, 1936, and whose functions relate to the fostering of public virtues of citizenship and patriotism and the general improvement of the moral spirit and fiber of the youth. The manner of creation and the purpose for which the BSP was created indubitably prove that it is a government agency. 2. Being a government agency, the funds and property owned or held in trust by the BSP are subject to the audit authority of respondent Commission on Audit pursuant to Section 2 (1), Article IX-D of the 1987 Constitution. 3. Republic Act No. 7278 did not change the character of the BSP as a government-owned or

1(12) of the Revised Administrative Code of 1987, embraced under the term government instrumentality.[29] The COA concludes that being a government agency, the funds and property owned or held by the BSP are subject to the audit authority of the COA pursuant to Section 2(1), Article IX (D) of the 1987 Constitution. In support of its arguments, the COA cites The Veterans Federation of the Philippines (VFP) v. Reyes,[30] wherein the Court held that among the reasons why the VFP is a public corporation is that its charter, Republic Act No. 2640, designates it as one. Furthermore, the COA quotes the Court as saying in that case:

In several cases, we have dealt with the issue of whether certain specific activities can be classified as sovereign functions. These cases, which deal with activities not immediately apparent to be sovereign functions, upheld the public sovereign nature of operations needed either to promote social justice or to stimulate patriotic sentiments and love of country. xxxx Petitioner claims that its funds are not public funds because no budgetary appropriations or government funds have been released to the VFP directly or indirectly from the DBM, and because VFP funds come from membership dues and lease rentals earned from administering government lands reserved for the VFP. The fact that no budgetary appropriations have been released to the VFP does not prove that it is a private corporation. The DBM indeed did not see it fit to propose budgetary appropriations to the VFP, having itself believed that the VFP is a private corporation. If the DBM, however, is mistaken as to its conclusion regarding the nature of VFP's incorporation, its previous assertions will not prevent future budgetary appropriations to the VFP. The erroneous application of the law by public officers does not bar a subsequent correct application of the law.[31] (Citations omitted.)

The BSP filed its Reply[33] on August 29, 2007 maintaining that its statutory designation as a public corporation and the public character of its purpose and functions are not determinative of the COAs audit jurisdiction; reiterating its stand that Boy Scouts of the Philippines v. National Labor Relations Commission is not applicable anymore because the aspect of government ownership and control has been removed by Republic Act No. 7278; and concluding that the funds and property that it either owned or held in trust are not public funds and are not subject to the COAs audit jurisdiction. Thereafter, considering the BSPs claim that it is a private corporation, this Court, in a Resolution[34] dated July 20, 2010, required the parties to file, within a period of twenty (20) days from receipt of said Resolution, their respective comments on the issue of whether Commonwealth Act No. 111, as amended by Republic Act No. 7278, is constitutional. In compliance with the Courts resolution, the parties filed their respective Comments. In its Comment[35] dated October 22, 2010, the COA argues that the constitutionality of Commonwealth Act No. 111, as amended, is not

The COA points out that the government is not precluded by law

determinative of the resolution of the present controversy on the COAs

from extending financial support to the BSP and adding to its funds, and

audit jurisdiction over petitioner, and in fact, the controversy may be

that as a government instrumentality which continues to perform a vital

resolved on other grounds; thus, the requisites before a judicial inquiry

function imbued with public interest and reflective of the governments

may be made, as set forth in Commissioner of Internal Revenue v.

policy to stimulate patriotic sentiments and love of country, the BSPs

Court of Tax Appeals,[36] have not been fully met.[37] Moreover, the COA

funds from whatever source are public funds, and can be used solely for

maintains

public purpose in pursuance of the provisions of Republic Act No.

constitutionality.[38] The COA likewise argues that contrary to the BSPs

[7278].[32]

position, repeal of a law by implication is not favored.[39] Lastly, the COA

The COA claims that the fact that it has not yet audited the BSPs funds may not bar the subsequent exercise of its audit jurisdiction.

that

behind

every

law

lies

the

presumption

of

claims that there was no violation of Section 16, Article XII of the 1987 Constitution with the creation or declaration of the BSP as a government

corporation. Citing Philippine Society for the Prevention of Cruelty to Animals v. Commission on Audit,[40] the COA further alleges: The true criterion, therefore, to determine whether a corporation is public or private is found in the totality of the relation of the corporation to the State. If the corporation is created by the State as the latters own agency or instrumentality to help it in carrying out its governmental functions, then that corporation is considered public; otherwise, it is private. x x x.[41] For its part, in its Comment[42] filed on December 3, 2010, the BSP submits that its charter, Commonwealth Act No. 111, as amended by Republic Act No. 7278, is constitutional as it does not violate Section 16, Article XII of the Constitution. The BSP alleges that while [it] is not a public corporation within the purview of COAs audit jurisdiction, neither is it a private corporation created by special law falling within the ambit of the constitutional prohibition x x x.[43] The BSP further alleges: Petitioners purpose is embodied in Section 3 of C.A. No. 111, as amended by Section 1 of R.A. No. 7278, thus: xxxx A reading of the foregoing provision shows that petitioner was created to advance the interest of the youth, specifically of young boys, and to mold them into becoming good citizens. Ultimately, the creation of petitioner redounds to the benefit, not only of those boys, but of the public good or welfare. Hence, it can be said that petitioners purpose and functions are more of a public rather than a private character. Petitioner caters to all boys who wish to join the organization without any distinction. It does not limit its membership to a particular class of boys. Petitioners members are trained in scoutcraft and taught patriotism, civic consciousness and responsibility, courage, self-reliance, discipline and kindred virtues, and moral values, preparing them to become model citizens and outstanding leaders of the country.[44]

The BSP reiterates its stand that the public character of its purpose and functions do not place it within the ambit of the audit jurisdiction of the COA as it lacks the government ownership or control that the Constitution requires before an entity may be subject of said jurisdiction.[45] It avers that it merely stated in its Reply that the withdrawal of government control is akin to privatization, but it does not necessarily mean that petitioner is a private corporation.[46] The BSP claims that it has a unique characteristic which neither classifies it as a purely public nor a purely private corporation;[47] that it is not a quasi-public corporation; and that it may belong to a different class altogether.[48] The BSP claims that assuming arguendo that it is a private corporation, its creation is not contrary to the purpose of Section 16, Article XII of the Constitution; and that the evil sought to be avoided by said provision is inexistent in the enactment of the BSPs charter,[49] as, (i) it was not created for any pecuniary purpose; (ii) those who will primarily benefit from its creation are not its officers but its entire membership consisting of boys being trained in scoutcraft all over the country; (iii) it caters to all boys who wish to join the organization without any distinction; and (iv) it does not limit its membership to a particular class or group of boys. Thus, the enactment of its charter confers no special privilege to particular individuals, families, or groups; nor does it bring about the danger of granting undue favors to certain groups to the prejudice of others or of the interest of the country, which are the evils sought to be prevented by the constitutional provision involved.[50] Finally, the BSP states that the presumption of constitutionality of a legislative enactment prevails absent any clear showing of its repugnancy to the Constitution.[51]

The Ruling of the Court After looking at the legislative history of its amended charter and carefully studying the applicable laws and the arguments of both parties, we find that the BSP is a public corporation and its funds are subject to the COAs audit jurisdiction. The BSP Charter (Commonwealth Act No. 111, approved on October 31, 1936), entitled An Act to Create a Public Corporation to be Known as the Boy Scouts of the Philippines, and to Define its Powers and Purposes created the BSP as a public corporation to serve the following public interest or purpose: Sec. 3. The purpose of this corporation shall be to promote through organization and cooperation with other agencies, the ability of boys to do useful things for themselves and others, to train them in scoutcraft, and to inculcate in them patriotism, civic consciousness and responsibility, courage, self-reliance, discipline and kindred virtues, and moral values, using the method which are in common use by boy scouts. Presidential Decree No. 460, approved on May 17, 1974, amended Commonwealth Act No. 111 and provided substantial

Secretary of Youth and Sports, and the Secretary of Local Government and Community Development; (f) an equal number of individuals from the private sector; (g) the National President of the Girl Scouts of the Philippines; (h) one Scout of Senior age from each Scout Region to represent the boy membership; and (i) three representatives of the cultural minorities. Except for the Regional Chairman who shall be elected by the Regional Scout Councils during their annual meetings, and the Scouts of their respective regions, all members of the National Executive Board shall be either by appointment or cooption, subject to ratification and confirmation by the Chief Scout, who shall be the Head of State. Vacancies in the Executive Board shall be filled by a majority vote of the remaining members, subject to ratification and confirmation by the Chief Scout. The by-laws may prescribe the number of members of the National Executive Board necessary to constitute a quorum of the board, which number may be less than a majority of the whole number of the board. The National Executive Board shall have power to make and to amend the by-laws, and, by a two-thirds vote of the whole board at a meeting called for this purpose, may authorize and cause to be executed mortgages and liens upon the property of the corporation.

changes in the BSP organizational structure. Pertinent provisions are quoted below: Section II. Section 5 of the said Act is also amended to read as follows: The governing body of the said corporation shall consist of a National Executive Board composed of (a) the President of the Philippines or his representative; (b) the charter and life members of the Boy Scouts of the Philippines; (c) the Chairman of the Board of Trustees of the Philippine Scouting Foundation; (d) the Regional Chairman of the Scout Regions of the Philippines; (e) the Secretary of Education and Culture, the Secretary of Social Welfare, the Secretary of National Defense, the Secretary of Labor, the Secretary of Finance, the

Subsequently, on March 24, 1992, Republic Act No. 7278 further amended Commonwealth Act No. 111 by strengthening the volunteer and democratic character of the BSP and reducing government representation in its governing body, as follows: Section 1. Sections 2 and 3 of Commonwealth Act. No. 111, as amended, is hereby amended to read as follows: "Sec. 2. The said corporation shall have the powers of perpetual succession, to sue and be sued; to enter into contracts; to acquire, own, lease, convey and dispose of such real and personal estate, land grants, rights and choses in action as shall be necessary for

corporate purposes, and to accept and receive funds, real and personal property by gift, devise, bequest or other means, to conduct fund-raising activities; to adopt and use a seal, and the same to alter and destroy; to have offices and conduct its business and affairs in Metropolitan Manila and in the regions, provinces, cities, municipalities, and barangays of the Philippines, to make and adopt by-laws, rules and regulations not inconsistent with this Act and the laws of the Philippines, and generally to do all such acts and things, including the establishment of regulations for the election of associates and successors, as may be necessary to carry into effect the provisions of this Act and promote the purposes of said corporation: Provided, That said corporation shall have no power to issue certificates of stock or to declare or pay dividends, its objectives and purposes being solely of benevolent character and not for pecuniary profit of its members. "Sec. 3. The purpose of this corporation shall be to promote through organization and cooperation with other agencies, the ability of boys to do useful things for themselves and others, to train them in scoutcraft, and to inculcate in them patriotism, civic consciousness and responsibility, courage, self-reliance, discipline and kindred virtues, and moral values, using the method which are in common use by boy scouts." Sec. 2. Section 4 of Commonwealth Act No. 111, as amended, is hereby repealed and in lieu thereof, Section 4 shall read as follows: "Sec. 4. The President of the Philippines shall be the Chief Scout of the Boy Scouts of the Philippines." Sec. 3. Sections 5, 6, 7 and 8 of Commonwealth Act No. 111, as amended, are hereby amended to read as follows: "Sec. 5. The governing body of the said corporation shall consist of a National Executive Board, the members of which shall be Filipino citizens of

good moral character. The Board shall be composed of the following: "(a) One (1) charter member of the Boy Scouts of the Philippines who shall be elected by the members of the National Council at its meeting called for this purpose; "(b) The regional chairmen of the scout regions who shall be elected by the representatives of all the local scout councils of the region during its meeting called for this purpose: Provided, That a candidate for regional chairman need not be the chairman of a local scout council; "(c) The Secretary of Education, Culture and Sports; "(d) The National President of the Girl Scouts of the Philippines; "(e) One (1) senior scout, each from Luzon, Visayas and Mindanao areas, to be elected by the senior scout delegates of the local scout councils to the scout youth forums in their respective areas, in its meeting called for this purpose, to represent the boy scout membership; "(f) Twelve (12) regular members to be elected by the members of the National Council in its meeting called for this purpose; "(g) At least ten (10) but not more than fifteen (15) additional members from the private sector who shall be elected by the members of the National Executive Board referred to in the immediately preceding paragraphs (a), (b), (c), (d), (e) and (f) at the organizational meeting of the newly reconstituted National Executive Board which shall be held immediately after the meeting of the National Council wherein the twelve (12) regular members and the one (1) charter member were elected. xxxx "Sec. 8. Any donation or contribution which from time to time may be made to the Boy Scouts of the Philippines by the Government or any of its subdivisions, branches, offices, agencies or instrumentalities or by a

foreign government or by private, entities and individuals shall be expended by the National Executive Board in pursuance of this Act. The BSP as a Public Corporation under Par. 2, Art. 2 of the Civil Code There are three classes of juridical persons under Article 44 of the Civil Code and the BSP, as presently constituted under Republic Act No. 7278, falls under the second classification. Article 44 reads: Art. 44. The following are juridical persons: (1) The State and its political subdivisions; (2) Other corporations, institutions and entities for public interest or purpose created by law; their personality begins as soon as they have been constituted according to law; (3) Corporations, partnerships and associations for private interest or purpose to which the law grants a juridical personality, separate and distinct from that of each shareholder, partner or member. (Emphases supplied.) The BSP, which is a corporation created for a public interest or purpose, is subject to the law creating it under Article 45 of the Civil Code, which provides:

The purpose of the BSP as stated in its amended charter shows that it was created in order to implement a State policy declared in Article II, Section 13 of the Constitution, which reads: ARTICLE II - DECLARATION OF PRINCIPLES AND STATE POLICIES Section 13. The State recognizes the vital role of the youth in nation-building and shall promote and protect their physical, moral, spiritual, intellectual, and social well-being. It shall inculcate in the youth patriotism and nationalism, and encourage their involvement in public and civic affairs. Evidently, the BSP, which was created by a special law to serve a public purpose in pursuit of a constitutional mandate, comes within the class of public corporations defined by paragraph 2, Article 44 of the Civil Code and governed by the law which creates it, pursuant to Article 45 of the same Code. The BSPs Classification Under the Administrative Code of 1987 The public, rather than private, character of the BSP is recognized by the fact that, along with the Girl Scouts of the Philippines, it is classified as an attached agency of the DECS under Executive

Art. 45. Juridical persons mentioned in Nos. 1 and 2 of the preceding article are governed by the laws creating or recognizing them. Private corporations are regulated by laws of general application on the subject. Partnerships and associations for private interest or purpose are governed by the provisions of this Code concerning partnerships. (Emphasis and underscoring supplied.)

Order No. 292, or the Administrative Code of 1987, which states: TITLE VI EDUCATION, CULTURE AND SPORTS Chapter 8 Attached Agencies SEC. 20. Attached Agencies. The following agencies are hereby attached to the Department: xxxx (12) Boy Scouts of the Philippines; (13) Girl Scouts of the Philippines.

The administrative relationship of an attached agency to the department is defined in the Administrative Code of 1987 as follows: BOOK IV THE EXECUTIVE BRANCH Chapter 7 ADMINISTRATIVE RELATIONSHIP SEC. 38. Definition of Administrative Relationship. Unless otherwise expressly stated in the Code or in other laws defining the special relationships of particular agencies, administrative relationships shall be categorized and defined as follows: xxxx (3) Attachment. (a) This refers to the lateral relationship between the department or its equivalent and the attached agency or corporation for purposes of policy and program coordination. The coordination may be accomplished by having the department represented in the governing board of the attached agency or corporation, either as chairman or as a member, with or without voting rights, if this is permitted by the charter; having the attached corporation or agency comply with a system of periodic reporting which shall reflect the progress of programs and projects; and having the department or its equivalent provide general policies through its representative in the board, which shall serve as the framework for the internal policies of the attached corporation or agency. (Emphasis ours.) As an attached agency, the BSP enjoys operational autonomy, as long

characteristic does not make the attached chartered agency a private corporation covered by the constitutional proscription in question. Art. XII, Sec. 16 of the Constitution refers to private corporations created by government for proprietary or economic/business purposes

At the outset, it should be noted that the provision of Section 16 in issue is found in Article XII of the Constitution, entitled National Economy and Patrimony. Section 1 of Article XII is quoted as follows: SECTION 1. The goals of the national economy are a more equitable distribution of opportunities, income, and wealth; a sustained increase in the amount of goods and services produced by the nation for the benefit of the people; and an expanding productivity as the key to raising the quality of life for all, especially the underprivileged. The State shall promote industrialization and full employment based on sound agricultural development and agrarian reform, through industries that make full and efficient use of human and natural resources, and which are competitive in both domestic and foreign markets. However, the State shall protect Filipino enterprises against unfair foreign competition and trade practices.

as policy and program coordination is achieved by having at least one representative of government in its governing board, which in the case of the BSP is the DECS Secretary. In this sense, the BSP is not under government control or supervision and control. Still this

In the pursuit of these goals, all sectors of the economy and all regions of the country shall be given optimum opportunity to develop. Private enterprises, including corporations, cooperatives, and similar collective organizations, shall be encouraged to broaden the base of their ownership.

The scope and coverage of Section 16, Article XII of the Constitution can be seen from the aforementioned declaration of state policies

and

goals

economy and patrimony and

which

pertains

the interests

of

The BSP is a Public Corporation Not Subject to the Test of Government Ownership or Control and Economic Viability

to national

the

people

in

economic development.

The BSP is a public corporation or a government agency or instrumentality with juridical personality, which does not fall within the

Section 16, Article XII deals with the formation, organization,

constitutional prohibition in Article XII, Section 16, notwithstanding the

or regulation of private corporations,[52] which should be done

amendments

through a general law enacted by Congress, provides for an exception,

are notgovernment owned or controlled, are ipso facto to be considered

that is: if the corporation is government owned or controlled; its creation

private corporations as there exists another distinct class of

is in the interest of the common good; and it meets the test of economic

corporations or chartered institutions which are otherwise known as

viability. The rationale behind Article XII, Section 16 of the 1987

public corporations. These corporations are treated by law as agencies

Constitution was explained in Feliciano v. Commission on Audit,[53] in

or instrumentalities of the government which are not subject to the tests

the following manner: The Constitution emphatically prohibits the creation of private corporations except by a general law applicable to all citizens. The purpose of this constitutional provision is to ban private corporations created by special charters, which historically gave certain individuals, families or groups special privileges denied to other citizens.[54] (Emphasis added.) It may be gleaned from the above discussion that Article XII, Section

16

bans

the

creation

of private

to

its

charter. Not

all

corporations,

which

of ownership or control and economic viability but to different criteria relating to their public purposes/interests or constitutional policies and objectives and their administrative relationship to the government or any of its Departments or Offices. Classification of Corporations Under Section 16, Article XII of the Constitution on National Economy and Patrimony

corporations by

special law. The said constitutional provision should not be construed

The dissenting opinion of Associate Justice Antonio T. Carpio, citing a

so as to prohibit the creation of public corporations or a corporate

line of cases, insists that the Constitution recognizes only two classes of

agency or instrumentality of the government intended to serve a public

corporations: private corporations

interest or purpose, which should not be measured on the basis of

and government-owned

economic viability, but according to the public interest or purpose it

by special charters.

or

under controlled

a general law, corporations created

serves as envisioned by paragraph (2), of Article 44 of the Civil Code and the pertinent provisions of the Administrative Code of 1987.

We strongly disagree. Section 16, Article XII should not be construed

so

as

to

prohibit

Congress

from

creating

public

corporations. In fact, Congress has enacted numerous laws creating public corporations or government agencies or instrumentalities vested with corporate powers. Moreover, Section 16, Article XII, which relates to National Economy and Patrimony, could not have tied the hands of Congress in creating public corporations to serve any of the constitutional policies or objectives. In

his

dissent,

Justice

Carpio

contends

that

this ponente introduces a totally different species of corporation, which is neither a private corporation nor a government owned or controlled corporation and, in so doing, is missing the fact that the BSP, which was created as a non-stock, non-profit corporation, can only be either a private corporation or a government owned or controlled corporation. Note that in Boy Scouts of the Philippines v. National Labor Relations Commission, the BSP, under its former charter, was regarded as both a government owned or controlled corporation with original charter and a public corporation. The said case pertinently stated: While the BSP may be seen to be a mixed type of entity, combining aspects of both public and private entities, we believe that considering the character of its purposes and its functions, the statutory designation of the BSP as "a public corporation" and the substantial participation of the Government in the selection of members of the National Executive Board of the BSP, the BSP, as presently constituted under its charter, is a government-controlled corporation within the meaning of Article IX (B) (2) (1) of the Constitution. We are fortified in this conclusion when we note that the Administrative Code of 1987 designates the BSP as one of the attached agencies of the Department of Education, Culture and Sports ("DECS"). An "agency of the Government" is defined as referring to any of the various units of the Government including a department,

bureau, office, instrumentality, government-owned or -controlled corporation, or local government or distinct unit therein. "Government instrumentality" is in turn defined in the 1987 Administrative Code in the following manner: Instrumentality - refers to any agency of the National Government, not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy usually through a charter. This term includes regulatory agencies, chartered institutions and government-owned or controlled corporations. The same Code describes institution" in the following terms:

a

"chartered

Chartered institution - refers to any agency organized or operating under a special charter, and vested by law with functions relating to specific constitutional policies or objectives. This term includes the state universities and colleges, and the monetary authority of the State. We believe that the BSP is appropriately regarded as "a government instrumentality" under the 1987 Administrative Code. It thus appears that the BSP may be regarded as both a "government controlled corporation with an original charter" and as an "instrumentality" of the Government within the meaning of Article IX (B)

(2) (1) of the Constitution. x x x.[55] (Emphases supplied.) The existence of public or government corporate or juridical entities or chartered institutions by legislative fiat distinct from private corporations and government owned or controlled corporation is best exemplified by the 1987 Administrative Code cited above, which we quote in part:

extent of at least fifty-one (51) per cent of its capital stock: Provided, That government-owned or controlled corporations may be further categorized by the Department of the Budget, the Civil Service Commission, and the Commission on Audit for purposes of the exercise and discharge of their respective powers, functions and responsibilities with respect to such corporations. Assuming for the sake of argument that the BSP ceases to be

Sec. 2. General Terms Defined. Unless the specific words of the text, or the context as a whole, or a particular statute, shall require a different meaning: xxxx (10) "Instrumentality" refers to any agency of the National Government, not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy, usually through a charter. This term includes regulatory agencies, chartered institutions and government-owned or controlled corporations. 
 xxxx (12) "Chartered institution" refers to any agency organized or operating under a special charter, and vested by law with functions relating to specific constitutional policies or objectives. This term includes the state universities and colleges and the monetary authority of the State.

owned or controlled by the government because of reduction of the

(13) "Government-owned or controlled corporation" refers to any agency organized as a stock or non-stock corporation, vested with functions relating to public needs whether governmental or proprietary in nature, and owned by the Government directly or through its instrumentalities either wholly, or, where applicable as in the case of stock corporations, to the

its Charter and the Administrative Code of 1987. It is not a private

number of representatives of the government in the BSP Board, it does not follow that it also ceases to be a government instrumentality as it still retains all the characteristics of the latter as an attached agency of the DECS under the Administrative Code. Vesting corporate powers to an attached agency or instrumentality of the government is not constitutionally prohibited and is allowed by the above-mentioned provisions of the Civil Code and the 1987 Administrative Code. Economic Viability and Ownership and Control Tests Inapplicable to Public Corporations As

presently

constituted,

the

BSP

still

remains

an instrumentality of the national government. It is a public corporation created by law for a public purpose, attached to the DECS pursuant to corporation which is required to be owned or controlled by the government and be economically viable to justify its existence under a special law.

The dissent of Justice Carpio also submits that by recognizing a new class of public corporation(s) created by special charter that will not be subject to the test of economic viability, the constitutional provision will be circumvented. However, a review of the Record of the 1986 Constitutional Convention reveals the intent of the framers of the highest law of our land to distinguish between government corporations performing governmental functions and corporations involved in business or

MR. MONSOD. Economic viability normally is determined by cost-benefit ratio that takes into consideration all benefits, including economic external as well as internal benefits. These are what they call externalities in economics, so that these are not strictly financial criteria. Economic viability involves what we call economic returns or benefits of the country that are not quantifiable in financial terms. x x x. xxxx

proprietary functions: THE PRESIDENT. Commissioner Foz is recognized. MR. FOZ. Madam President, I support the proposal to insert ECONOMIC VIABILITY as one of the grounds for organizing government corporations. x x x. MR. OPLE. Madam President, the reason for this concern is really that when the government creates a corporation, there is a sense in which this corporation becomes exempt from the test of economic performance. We know what happened in the past. If a government corporation loses, then it makes its claim upon the taxpayers money through new equity infusions from the government and what is always invoked is the common good. x x Therefore, when we insert the phrase ECONOMIC VIABILITY together with the common good, this becomes a restraint on future enthusiasts for state capitalism to excuse themselves from the responsibility of meeting the market test so that they become viable. x x x. xxxx THE PRESIDENT. Commissioner Quesada is recognized. MS. QUESADA. Madam President, may we be clarified by the committee on what is meant by economic viability? THE PRESIDENT. Please proceed.

MS. QUESADA. So, would this particular formulation now really limit the entry of government corporations into activities engaged in by corporations? MR. MONSOD. Yes, because it is also consistent with the economic philosophy that this Commission approved that there should be minimum government participation and intervention in the economy. MS. QUESDA. Sometimes this Commission would just refer to Congress to provide the particular requirements when the government would get into corporations. But this time around, we specifically mentioned economic viability. x x x. MR. VILLEGAS. Commissioner Ople will restate the reason for his introducing that amendment. MR. OPLE. I am obliged to repeat what I said earlier in moving for this particular amendment jointly with Commissioner Foz. During the past three decades, there had been a proliferation of government corporations, very few of which have succeeded, and many of which are now earmarked by the Presidential Reorganization Commission for liquidation because they failed the economic test. x x x.

xxxx MS. QUESADA. But would not the Commissioner say that the reason why many of the government-owned or controlled corporations failed to come up with the economic test is due to the management of these corporations, and not the idea itself of government corporations? It is a problem of efficiency and effectiveness of management of these corporations which could be remedied, not by eliminating government corporations or the idea of getting into state-owned corporations, but improving management which our technocrats should be able to do, given the training and the experience. MR. OPLE. That is part of the economic viability, Madam President. MS. QUESADA. So, is the Commissioner saying then that the Filipinos will benefit more if these government-controlled corporations were given to private hands, and that there will be more goods and services that will be affordable and within the reach of the ordinary citizens? MR. OPLE. Yes. There is nothing here, Madam President, that will prevent the formation of a government corporation in accordance with a special charter given by Congress. However, we are raising the standard a little bit so that, in the future, corporations established by the government will meet the test of the common good but within that framework we should also build a certain standard of economic viability.

THE PRESIDENT. Commissioner Padilla is recognized. MR. PADILLA. This is an inquiry to the committee. With regard to corporations created by a special charter for government-owned or controlled corporations, will these be in the pioneer fields or in places where the private enterprise does not or cannot enter? Or is this so general that these government corporations can compete with private corporations organized under a general law? MR. MONSOD. Madam President, x x x. There are two types of government corporations those that are involved in performing governmental functions, like garbage disposal, Manila waterworks, and so on; and those government corporations that are involved in business functions. As we said earlier, there are two criteria that should be followed for corporations that want to go into business. First is for government corporations to first prove that they can be efficient in the areas of their proper functions. This is one of the problems now because they go into all kinds of activities but are not even efficient in their proper functions. Secondly, they should not go into activities that the private sector can do better. MR. PADILLA. There is no question about corporations performing governmental functions or functions that are impressed with public interest. But the question is with regard to matters that are covered, perhaps not exhaustively, by private enterprise. It seems that under this provision the only qualification is economic viability and common good, but shall government, through government-controlled corporations, compete with private enterprise?

xxxx MR. MONSOD. No, Madam President. As we said, the government should not engage in activities that

private enterprise is engaged in and can do better. x x x.[56] (Emphases supplied.)

Thus, the test of economic viability clearly does not apply to public

in the development of the country producing good citizens, I believe that we can make an exception of the Boy Scouting movement of the Philippines from this general prohibition against providing tax exemption and privileges.[57]

corporations dealing with governmental functions, to which category the BSP belongs. The discussion above conveys the constitutional intent

Furthermore, this Court cannot agree with the dissenting opinion which

not to apply this constitutional ban on the creation of public corporations

equates the changes introduced by Republic Act No. 7278 to the BSP

where the economic viability test would be irrelevant. The said test

Charter as clear manifestation of the intent of Congress to return the

would only apply if the corporation is engaged in some economic activity

BSP to the private sector. It was not the intent of Congress in enacting

or business function for the government.

Republic Act No. 7278 to give up all interests in this basic youth organization, which has been its partner in forming responsible citizens

It is undisputed that the BSP performs functions that are impressed with

for decades.

public interest. In fact, during the consideration of the Senate Bill that eventually became Republic Act No. 7278, which amended the BSP

In fact, as may be seen in the deliberation of the House Bills that

Charter, one of the bills sponsors, Senator Joey Lina, described the

eventually resulted to Republic Act No. 7278, Congress worked closely

BSP as follows:

with the BSP to rejuvenate the organization, to bring it back to its former

Senator Lina. Yes, I can only think of two organizations involving the masses of our youth, Mr. President, that should be given this kind of a privilege the Boy Scouts of the Philippines and the Girl Scouts of the Philippines. Outside of these two groups, I do not think there are other groups similarly situated.

glory reached under its original charter, Commonwealth Act No. 111, and to correct the perceived ills introduced by the amendments to its Charter under Presidential Decree No. 460. The BSP suffered from low morale and decrease in number because the Secretaries of the different departments in government who were too busy to attend the meetings of the BSPs National Executive Board (the Board) sent representatives

The Boy Scouts of the Philippines has a long history of providing value formation to our young, and considering how huge the population of the young people is, at this point in time, and also considering the importance of having an organization such as this that will inculcate moral uprightness among the young people, and further considering that the development of these young people at that tender age of seven to sixteen is vital

who, as it turned out, changed from meeting to meeting. Thus, the Scouting Councils established in the provinces and cities were not in touch with what was happening on the national level, but they were left to implement what was decided by the Board.[58] A portion of the legislators discussion is quoted below to clearly show their intent:

HON. DEL MAR. x x x I need not mention to you the value and the tremendous good that the Boy Scout Movement has done not only for the youth in particular but for the country in general. And that is why, if we look around, our past and present national leaders, prominent men in the various fields of endeavor, public servants in government offices, and civic leaders in the communities all over the land, and not only in our country but all over the world many if not most of them have at one time or another been beneficiaries of the Scouting Movement. And so, it is along this line, Mr. Chairman, that we would like to have the early approval of this measure if only to pay back what we owe much to the Scouting Movement. Now, going to the meat of the matter, Mr. Chairman, if I may just the Scouting Movement was enacted into law in October 31, 1936 under Commonwealth Act No. 111. x x x [W]e were acknowledged as the third biggest scouting organization in the world x x x. And to our mind, Mr. Chairman, this erratic growth and this decrease in membership [number] is because of the bad policy measures that were enunciated with the enactment or promulgation by the President before of Presidential Decree No. 460 which we feel is the culprit of the ills that is flagging the Boy Scout Movement today. And so, this is specifically what we are attacking, Mr. Chairman, the disenfranchisement of the National Council in the election of the national board. x x x. And so, this is what we would like to be appraised of by the officers of the Boy [Scouts] of the Philippines whom we are also confident, have the best interest of the Boy Scout Movement at heart and it is in this spirit, Mr. Chairman, that we see no impediment towards working together, the Boy Scout of the Philippines officers working together with the House of Representatives in coming out with a measure that will put back the vigor and enthusiasm of the Boy Scout Movement. x x x.[59] (Emphasis ours.)

The following is another excerpt from the discussion on the House version of the bill, in the Committee on Government Enterprises: HON. AQUINO: x x x Well, obviously, the two bills as well as the previous laws that have created the Boy Scouts of the Philippines did not provide for any direct government support by way of appropriation from the national budget to support the activities of this organization. The point here is, and at the same time they have been subjected to a governmental intervention, which to their mind has been inimical to the objectives and to the institution per se, that is why they are seeking legislative fiat to restore back the original mandate that they had under Commonwealth Act 111.Such having been the experience in the hands of government, meaning, there has been negative interference on their part and inasmuch as their mandate is coming from a legislative fiat, then shouldnt it be, this rhetorical question, shouldnt it be better for this organization to seek a mandate from, lets say, the government the Corporation Code of the Philippines and register with the SEC as non-profit non-stock corporation so that government intervention could be very very minimal. Maybe thats a rhetorical question, they may or they may not answer, ano. I dont know what would be the benefit of a charter or a mandate being provided for by way of legislation versus a registration with the SEC under the Corporation Code of the Philippines inasmuch as they dont get anything from the government anyway insofar as direct funding. In fact, the only thing that they got from government was intervention in their affairs. Maybe we can solicit some commentary comments from the resource persons.Incidentally, dont take that as an objection, Im not objecting. Im all for the objectives of these two bills. It just occurred to me that since you have had very bad experience in the hands of government and you will

always be open to such possible intervention even in the future as long as you have a legislative mandate or your mandate or your charter coming from legislative action.

MR. ESCUDERO: Yes. HON. AQUINO: Well, thats very well taken so I will proceed with other issues, Mr. Chairman. x x x.[60] (Emphases added.)

xxxx MR. ESCUDERO: Mr. Chairman, there may be a disadvantage if the Boy Scouts of the Philippines will be required to register with the SEC. If we are registered with the SEC, there could be a danger of proliferation of scout organization. Anybody can organize and then register with the SEC. If there will be a proliferation of this, then the organization will lose control of the entire organization. Another disadvantage, Mr. Chairman, anybody can file a complaint in the SEC against the Boy Scouts of the Philippines and the SEC may suspend the operation or freeze the assets of the organization and hamper the operation of the organization. I dont know, Mr. Chairman, how you look at it but there could be a danger for anybody filing a complaint against the organization in the SEC and the SEC might suspend the registration permit of the organization and we will not be able to operate. HON. AQUINO: Well, that I think would be a problem that will not be exclusive to corporations registered with the SEC because even if you are government corporation, court action may be taken against you in other judicial bodies because the SEC is simply another quasi-judicial body. But, I think, the first point would be very interesting, the first point that you raised. In effect, what you are saying is that with the legislative mandate creating your charter, in effect, you have been given some sort of a franchise with this movement. MR. ESCUDERO: Yes. HON. AQUINO: Exclusive movement?

Therefore, even though the amended BSP charter did away with most of the governmental presence in the BSP Board, this was done to more strongly promote the BSPs objectives, which were not supported under Presidential Decree No. 460. The BSP objectives, as pointed out earlier, are consistent with the public purpose of the promotion of the well-being of the youth, the future leaders of the country. The amendments were not done with the view of changing the character of the BSP into a privatized corporation. The BSP remains an agency attached to a department of the government, the DECS, and it was not at all stripped of its public character. The ownership and control test is likewise irrelevant for a public corporation like the BSP. To reiterate, the relationship of the BSP, an attached agency, to the government, through the DECS, is defined in the Revised Administrative Code of 1987. The BSP meets the minimum statutory requirement of an attached government agency as the DECS Secretary sits at the BSP Board ex officio, thus facilitating the policy and program coordination between the BSP and the DECS. Requisites for Declaration of Unconstitutionality Not Met in this Case The dissenting opinion of Justice Carpio improperly raised the issue of unconstitutionality of certain provisions of the BSP Charter. Even if the

franchise

of

that

parties were asked to Comment on the validity of the BSP charter by

instrumentalities shall be expended by the Executive Board in pursuance of this Act.

the Court, this alone does not comply with the requisites for judicial review, which were clearly set forth in a recent case: When questions of constitutional significance are raised, the Court can exercise its power of judicial review only if the following requisites are present: (1) the existence of an actual and appropriate case; (2) the existence of personal and substantial interest on the part of the party raising the constitutional question; (3) recourse to judicial review is made at the earliest opportunity; and (4) the constitutional question is the lis mota of the case.[61] (Emphasis added.)

The sources of funds to maintain the BSP were identified before the House Committee on Government Enterprises while the bill was being deliberated, and the pertinent portion of the discussion is quoted below: MR. ESCUDERO. Yes, Mr. Chairman. The question is the sources of funds of the organization. First, Mr. Chairman, the Boy Scouts of the Philippines do not receive annual allotment from the government. The organization has to raise its own funds through fund drives and fund campaigns or fund raising activities. Aside from this, we have some revenue producing projects in the organization that gives us funds to support the operation. x x x From time to time, Mr. Chairman, when we have special activities we request for assistance or financial assistance from government agencies, from private business and corporations, but this is only during special activities that the Boy Scouts of the Philippines would conduct during the year. Otherwise, we have to raise our own funds to support the organization.[62]

Thus, when it comes to the exercise of the power of judicial review, the constitutional issue should be the very lis mota, or threshold issue, of the case, and that it should be raised by either of the parties. These requirements would be ignored under the dissents rather overreaching view of how this case should have been decided. True, it was the Court that asked the parties to comment, but the Court cannot be the one to raise a constitutional issue. Thus, the Court chooses to once more exhibit restraint in the exercise of its power to pass upon the validity of a law. Re: the COAs Jurisdiction

The nature of the funds of the BSP and the COAs audit jurisdiction were likewise brought up in said congressional deliberations,

Regarding the COAs jurisdiction over the BSP, Section 8 of its

to wit:

amended charter allows the BSP to receive contributions or donations from the government. Section 8 reads: Section 8. Any donation or contribution which from time to time may be made to the Boy Scouts of the Philippines by the Government or any of its subdivisions, branches, offices, agencies or

HON. AQUINO: x x x Insofar as this organization being a government created organization, in fact, a government corporation classified as such, are your funds or your finances subjected to the COA audit?

MR. ESCUDERO: Mr. Chairman, we are not. Our funds is not subjected. We dont fall under the jurisdiction of the COA. HON. AQUINO: All right, but before were you? MR. ESCUDERO: No, Mr. Chairman. MR. JESUS: May I? As historical backgrounder, Commonwealth Act 111 was written by then Secretary Jorge Vargas and before and up to the middle of the Martial Law years, the BSP was receiving a subsidy in the form of an annual a one draw from the Sweepstakes. And, this was the case also with the Girl Scouts at the Anti-TB, but then this was and the Boy Scouts then because of this funding partly from government was being subjected to audit in the contributions being made in the part of the Sweepstakes. But this was removed later during the Martial Law years with the creation of the Human Settlements Commission. So the situation right now is that the Boy Scouts does not receive any funding from government, but then in the case of the local councils and this legislative charter, so to speak, enables the local councils even the national headquarters in view of the provisions in the existing law to receive donations from the government or any of its instrumentalities, which would be difficult if the Boy Scouts is registered as a private corporation with the Securities and Exchange Commission. Government bodies would be estopped from making donations to the Boy Scouts, which at present is not the case because there is the Boy Scouts charter, this Commonwealth Act 111 as amended by PD 463. xxxx HON. AMATONG: Mr. Chairman, in connection with that. THE CHAIRMAN: Zamboanga.

Yeah,

Gentleman

from

HON. AMATONG: There is no auditing being made because theres no money put in the organization, but how about donated funds to this organization? What are the remedies of the donors of how will they know how their money are being spent? MR. ESCUDERO: May I answer, Mr. Chairman? THE CHAIRMAN: Yes, gentleman. MR. ESCUDERO: The Boy Scouts of the Philippines has an external auditor and by the charter we are required to submit a financial report at the end of each year to the National Executive Board. So all the funds donated or otherwise is accounted for at the end of the year by our external auditor. In this case the SGV.[63]

Historically, therefore, the BSP had been subjected to government audit in so far as public funds had been infused thereto. However, this practice should not preclude the exercise of the audit jurisdiction of COA, clearly set forth under the Constitution, which pertinently provides:

Section 2. (1) The Commission on Audit shall have the power, authority, and duty to examine, audit, and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property, owned or held in trust by, or pertaining to, the Government, or any of its subdivisions, agencies, or instrumentalities, including government-owned and controlled corporations with original charters, and on a post-audit basis: (a) constitutional bodies, commissions and offices that have been granted fiscal autonomy under this Constitution; (b) autonomous state colleges and universities; (c) other

government-owned or controlled corporations with original charters and their subsidiaries; and (d) such non-governmental entities receiving subsidy or equity, directly or indirectly, from or through the Government, which are required by law of the granting institution to submit to such audit as a condition of subsidy or equity. x x x. [64]

Since the BSP, under its amended charter, continues to be a public corporation or a government instrumentality, we come to the inevitable conclusion that it is subject to the exercise by the COA of its audit jurisdiction in the manner consistent with the provisions of the BSP Charter. WHEREFORE, premises considered, the instant petition for prohibition is DISMISSED. SO ORDERED. G.R. No. 80391 February 28, 1989 SULTAN ALIMBUSAR P. LIMBONA, petitioner, vs. CONTE MANGELIN, SALIC ALI, SALINDATO ALI, PILIMPINAS CONDING, ACMAD TOMAWIS, GERRY TOMAWIS, JESUS ORTIZ, ANTONIO DELA FUENTE, DIEGO PALOMARES, JR., RAUL DAGALANGIT, and BIMBO SINSUAT, respondents. Ambrosio Padilla, Mempin & Reyes Law Offices for petitioner petitioner.

The acts of the Sangguniang Pampook of Region XII are assailed in this petition. The antecedent facts are as follows: 1. On September 24, 1986, petitioner Sultan Alimbusar Limbona was appointed as a member of the Sangguniang Pampook, Regional Autonomous Government, Region XII, representing Lanao del Sur. 2. On March 12, 1987 petitioner was elected Speaker of the Regional Legislative Assembly or Batasang Pampook of Central Mindanao (Assembly for brevity). 3. Said Assembly is composed of eighteen (18) members. Two of said members, respondents Acmad Tomawis and Pakil Dagalangit, filed on March 23, 1987 with the Commission on Elections their respective certificates of candidacy in the May 11, 1987 congressional elections for the district of Lanao del Sur but they later withdrew from the aforesaid election and thereafter resumed again their positions as members of the Assembly. 4. On October 21, 1987 Congressman Datu Guimid Matalam, Chairman of the Committee on Muslim Affairs of the House of Representatives, invited Mr. Xavier Razul, Pampook Speaker of Region XI, Zamboanga City and the petitioner in his capacity as Speaker of the Assembly, Region XII, in a letter which reads: The Committee on Muslim Affairs well undertake consultations and dialogues with local government officials, civic, religious organizations and traditional leaders on the recent and present political developments and other issues affecting Regions IX and XII. The result of the conference, consultations and dialogues would hopefully chart the autonomous governments of the two regions as envisioned and may prod the President to constitute immediately the Regional Consultative Commission as mandated by the Commission.

Makabangkit B. Lanto for respondents.

SARMIENTO, J.:

You are requested to invite some members of the Pampook Assembly of your respective assembly on November 1 to 15, 1987, with venue at the Congress of the Philippines. Your presence, unstinted support and cooperation is (sic) indispensable.

5. Consistent with the said invitation, petitioner sent a telegram to Acting Secretary Johnny Alimbuyao of the Assembly to wire all Assemblymen that there shall be no session in November as "our presence in the house committee hearing of Congress take (sic) precedence over any pending business in batasang pampook ... ."

8. Sinsuat, Bimbo

6. In compliance with the aforesaid instruction of the petitioner, Acting Secretary Alimbuyao sent to the members of the Assembly the following telegram:

After declaring the presence of a quorum, the Speaker Pro-Tempore was authorized to preside in the session. On Motion to declare the seat of the Speaker vacant, all Assemblymen in attendance voted in the affirmative, hence, the chair declared said seat of the Speaker vacant. 8. On November 5, 1987, the session of the Assembly resumed with the following Assemblymen present:

TRANSMITTING FOR YOUR INFORMATION AND GUIDANCE TELEGRAM RECEIVED FROM SPEAKER LIMBONA QUOTE CONGRESSMAN JIMMY MATALAM CHAIRMAN OF THE HOUSE COMMITTEE ON MUSLIM AFFAIRS REQUESTED ME TO ASSIST SAID COMMITTEE IN THE DISCUSSION OF THE PROPOSED AUTONOMY ORGANIC NOV. 1ST TO 15. HENCE WERE ALL ASSEMBLYMEN THAT THERE SHALL BE NO SESSION IN NOVEMBER AS OUR PRESENCE IN THE HOUSE COMMITTEE HEARING OF CONGRESS TAKE PRECEDENCE OVER ANY PENDING BUSINESS IN BATASANG PAMPOOK OF MATALAM FOLLOWS UNQUOTE REGARDS.

9. Tomawis, Acmad 10. Tomawis, Jerry

1. Mangelen Conte-Presiding Officer 2. Ali Salic 3. Ali Salindatu 4. Aratuc, Malik 5. Cajelo, Rene

7. On November 2, 1987, the Assembly held session in defiance of petitioner's advice, with the following assemblymen present:

6. Conding, Pilipinas (sic)

1. Sali, Salic

7. Dagalangit, Rakil

2. Conding, Pilipinas (sic)

8. Dela Fuente, Antonio

3. Dagalangit, Rakil

9. Ortiz, Jesus

4. Dela Fuente, Antonio

10 Palomares, Diego

5. Mangelen, Conte

11. Quijano, Jesus

6. Ortiz, Jesus

12. Sinsuat, Bimbo

7. Palomares, Diego

13. Tomawis, Acmad

14. Tomawis, Jerry

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

An excerpt from the debates and proceeding of said session reads: HON. DAGALANGIT: Mr. Speaker, Honorable Members of the House, with the presence of our colleagues who have come to attend the session today, I move to call the names of the new comers in order for them to cast their votes on the previous motion to declare the position of the Speaker vacant. But before doing so, I move also that the designation of the Speaker Pro Tempore as the Presiding Officer and Mr. Johnny Evangelists as Acting Secretary in the session last November 2, 1987 be reconfirmed in today's session. HON. SALIC ALI: I second the motions. PRESIDING OFFICER: Any comment or objections on the two motions presented? Me chair hears none and the said motions are approved. ... Twelve (12) members voted in favor of the motion to declare the seat of the Speaker vacant; one abstained and none voted against. 1 Accordingly, the petitioner prays for judgment as follows:

Pending further proceedings, this Court, on January 19, 1988, received a resolution filed by the Sangguniang Pampook, "EXPECTING ALIMBUSAR P. LIMBONA FROM MEMBERSHIP OF THE SANGGUNIANG PAMPOOK AUTONOMOUS REGION XII," 3 on the grounds, among other things, that the petitioner "had caused to be prepared and signed by him paying [sic] the salaries and emoluments of Odin Abdula, who was considered resigned after filing his Certificate of Candidacy for Congressmen for the First District of Maguindanao in the last May 11, elections. . . and nothing in the record of the Assembly will show that any request for reinstatement by Abdula was ever made . . ." 4 and that "such action of Mr. Lim bona in paying Abdula his salaries and emoluments without authority from the Assembly . . . constituted a usurpation of the power of the Assembly," 5 that the petitioner "had recently caused withdrawal of so much amount of cash from the Assembly resulting to the non-payment of the salaries and emoluments of some Assembly [sic]," 6 and that he had "filed a case before the Supreme Court against some members of the Assembly on question which should have been resolved within the confines of the Assembly," 7 for which the respondents now submit that the petition had become "moot and academic". 8

WHEREFORE, petitioner respectfully prays that(a) This Petition be given due course; (b) Pending hearing, a restraining order or writ of preliminary injunction be issued enjoining respondents from proceeding with their session to be held on November 5, 1987, and on any day thereafter; (c) After hearing, judgment be rendered declaring the proceedings held by respondents of their session on November 2, 1987 as null and void; (d) Holding the election of petitioner as Speaker of said Legislative Assembly or Batasan Pampook, Region XII held on March 12, 1987 valid and subsisting, and (e) Making the injunction permanent.

The first question, evidently, is whether or not the expulsion of the petitioner (pending litigation) has made the case moot and academic. We do not agree that the case has been rendered moot and academic by reason simply of the expulsion resolution so issued. For, if the petitioner's expulsion was done purposely to make this petition moot and academic, and to preempt the Court, it will not make it academic. On the ground of the immutable principle of due process alone, we hold that the expulsion in question is of no force and effect. In the first place, there is no showing that the Sanggunian had conducted an investigation, and whether or not the petitioner had been heard in his defense, assuming that there was an investigation, or otherwise given the opportunity to do so. On the other hand, what appears in the records is an admission by the Assembly (at least, the respondents) that "since

November, 1987 up to this writing, the petitioner has not set foot at the Sangguniang Pampook." 9 "To be sure, the private respondents aver that "[t]he Assemblymen, in a conciliatory gesture, wanted him to come to Cotabato City," 10 but that was "so that their differences could be threshed out and settled." 11Certainly, that avowed wanting or desire to thresh out and settle, no matter how conciliatory it may be cannot be a substitute for the notice and hearing contemplated by law.

It is, to be sure, said that precisely because the Sangguniang Pampook(s) are "autonomous," the courts may not rightfully intervene in their affairs, much less strike down their acts. We come, therefore, to the second issue: Are the so-called autonomous governments of Mindanao, as they are now constituted, subject to the jurisdiction of the national courts? In other words, what is the extent of self-government given to the two autonomous governments of Region IX and XII?

While we have held that due process, as the term is known in administrative law, does not absolutely require notice and that a party need only be given the opportunity to be heard, 12 it does not appear herein that the petitioner had, to begin with, been made aware that he had in fact stood charged of graft and corruption before his collegues. It cannot be said therefore that he was accorded any opportunity to rebut their accusations. As it stands, then, the charges now levelled amount to mere accusations that cannot warrant expulsion.

The autonomous governments of Mindanao were organized in Regions IX and XII by Presidential Decree No. 1618 15 promulgated on July 25, 1979. Among other things, the Decree established "internal autonomy" 16 in the two regions "[w]ithin the framework of the national sovereignty and territorial integrity of the Republic of the Philippines and its Constitution," 17 with legislative and executive machinery to exercise the powers and responsibilities 18specified therein.

In the second place, (the resolution) appears strongly to be a bare act of vendetta by the other Assemblymen against the petitioner arising from what the former perceive to be abduracy on the part of the latter. Indeed, it (the resolution) speaks of "a case [having been filed] [by the petitioner] before the Supreme Court . . . on question which should have been resolved within the confines of the Assemblyman act which some members claimed unnecessarily and unduly assails their integrity and character as representative of the people" 13 an act that cannot possibly justify expulsion. Access to judicial remedies is guaranteed by the Constitution, 14 and, unless the recourse amounts to malicious prosecution, no one may be punished for seeking redress in the courts. We therefore order reinstatement, with the caution that should the past acts of the petitioner indeed warrant his removal, the Assembly is enjoined, should it still be so minded, to commence proper proceedings therefor in line with the most elementary requirements of due process. And while it is within the discretion of the members of the Sanggunian to punish their erring colleagues, their acts are nonetheless subject to the moderating band of this Court in the event that such discretion is exercised with grave abuse.

It requires the autonomous regional governments to "undertake all internal administrative matters for the respective regions," 19 except to "act on matters which are within the jurisdiction and competence of the National Government," 20 "which include, but are not limited to, the following: (1) National defense and security; (2) Foreign relations; (3) Foreign trade; (4) Currency, monetary affairs, foreign exchange, banking and quasi-banking, and external borrowing, (5) Disposition, exploration, development, exploitation or utilization of all natural resources; (6) Air and sea transport (7) Postal matters and telecommunications; (8) Customs and quarantine;

(9) Immigration and deportation; (10) Citizenship and naturalization; (11) National economic, social and educational planning; and (12) General auditing. 21 In relation to the central government, it provides that "[t]he President shall have the power of general supervision and control over the Autonomous Regions ..." 22 Now, autonomy is either decentralization of administration or decentralization of power. There is decentralization of administration when the central government delegates administrative powers to political subdivisions in order to broaden the base of government power and in the process to make local governments "more responsive and accountable," 23 "and ensure their fullest development as self-reliant communities and make them more effective partners in the pursuit of national development and social progress." 24 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" 25 over them, but only to "ensure that local affairs are administered according to law." 26 He has no control over their acts in the sense that he can substitute their judgments with his own. 27 Decentralization of power, on the other hand, involves an abdication of political power in the favor of local governments units declare to be autonomous . In that case, the autonomous government is free to chart its own destiny and shape its future with minimum intervention from central authorities. According to a constitutional author, decentralization of power amounts to "self-immolation," since in that event, the autonomous government becomes accountable not to the central authorities but to its constituency. 28 But the question of whether or not the grant of autonomy Muslim Mindanao under the 1987 Constitution involves, truly, an effort to decentralize power rather than mere administration is a question foreign

to this petition, since what is involved herein is a local government unit constituted prior to the ratification of the present Constitution. Hence, the Court will not resolve that controversy now, in this case, since no controversy in fact exists. We will resolve it at the proper time and in the proper case. Under the 1987 Constitution, local government units enjoy autonomy in these two senses, thus: Section 1. The territorial and political subdivisions of the Republic of the Philippines are the provinces, cities, municipalities, and barangays. Here shall be autonomous regions in Muslim Mindanao ,and the Cordilleras as hereinafter provided. 29 Sec. 2. The territorial and political subdivisions shall enjoy local autonomy. 30 xxx xxx xxx See. 15. Mere shall be created autonomous regions in Muslim Mindanao and in the Cordilleras consisting of provinces, cities, municipalities, and geographical areas sharing common and distinctive historical and cultural heritage, economic and social structures, and other relevant characteristics within the framework of this Constitution and the national sovereignty as well as territorial integrity of the Republic of the Philippines. 31 An autonomous government that enjoys autonomy of the latter category [CONST. (1987), art. X, sec. 15.] is subject alone to the decree of the organic act creating it and accepted principles on the effects and limits of "autonomy." On the other hand, an autonomous government of the former class is, as we noted, under the supervision of the national government acting through the President (and the Department of Local Government). 32 If the Sangguniang Pampook (of Region XII), then, is autonomous in the latter sense, its acts are, debatably beyond the domain of this Court in perhaps the same way that the internal acts, say, of the Congress of the Philippines are beyond our jurisdiction. But if it is autonomous in the former category only, it comes unarguably under our jurisdiction. An examination of the very Presidential Decree creating the

autonomous governments of Mindanao persuades us that they were never meant to exercise autonomy in the second sense, that is, in which the central government commits an act of self-immolation. Presidential Decree No. 1618, in the first place, mandates that "[t]he President shall have the power of general supervision and control over Autonomous Regions."33 In the second place, the Sangguniang Pampook, their legislative arm, is made to discharge chiefly administrative services, thus:

(10) Such other matters as may be authorized by law,including the enactment of such measures as may be necessary for the promotion of the general welfare of the people in the Autonomous Region.

SEC. 7. Powers of the Sangguniang Pampook. The Sangguniang Pampook shall exercise local legislative powers over regional affairs within the framework of national development plans, policies and goals, in the following areas:

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

(1) Organization of regional administrative system; (2) Economic, social and cultural development of the Autonomous Region; (3) Agricultural, commercial and industrial programs for the Autonomous Region;

The President shall exercise such powers as may be necessary to assure that enactment and acts of the Sangguniang Pampook and the Lupong Tagapagpaganap ng Pook are in compliance with this Decree, national legislation, policies, plans and programs.

Hence, we assume jurisdiction. And if we can make an inquiry in the validity of the expulsion in question, with more reason can we review the petitioner's removal as Speaker. Briefly, the petitioner assails the legality of his ouster as Speaker on the grounds that: (1) the Sanggunian, in convening on November 2 and 5, 1987 (for the sole purpose of declaring the office of the Speaker vacant), did so in violation of the Rules of the Sangguniang Pampook since the Assembly was then on recess; and (2) assuming that it was valid, his ouster was ineffective nevertheless for lack of quorum.

(4) Infrastructure development for the Autonomous Region; (5) Urban and rural planning for the Autonomous Region; (6) Taxation and other revenue-raising measures as provided for in this Decree; (7) Maintenance, operation and administration of schools established by the Autonomous Region; (8) Establishment, operation and maintenance of health, welfare and other social services, programs and facilities; (9) Preservation and development of customs, traditions, languages and culture indigenous to the Autonomous Region; and

Upon the facts presented, we hold that the November 2 and 5, 1987 sessions were invalid. It is true that under Section 31 of the Region XII Sanggunian Rules, "[s]essions shall not be suspended or adjourned except by direction of the Sangguniang Pampook," 35 but it provides likewise that "the Speaker may, on [sic] his discretion, declare a recess of "short intervals." 36 Of course, there is disagreement between the protagonists as to whether or not the recess called by the petitioner effective November 1 through 15, 1987 is the "recess of short intervals" referred to; the petitioner says that it is while the respondents insist that, to all intents and purposes, it was an adjournment and that "recess" as used by their Rules only refers to "a recess when arguments get heated up so that protagonists in a debate can talk things out informally and obviate dissenssion [sic] and disunity. 37 The Court agrees with the respondents on this regard, since clearly, the Rules speak of "short intervals." Secondly, the Court likewise agrees that the Speaker could not have validly called a recess since the Assembly had yet to convene

on November 1, the date session opens under the same Rules. 38 Hence, there can be no recess to speak of that could possibly interrupt any session. But while this opinion is in accord with the respondents' own, we still invalidate the twin sessions in question, since at the time the petitioner called the "recess," it was not a settled matter whether or not he could. do so. In the second place, the invitation tendered by the Committee on Muslim Affairs of the House of Representatives provided a plausible reason for the intermission sought. Thirdly, assuming that a valid recess could not be called, it does not appear that the respondents called his attention to this mistake. What appears is that instead, they opened the sessions themselves behind his back in an apparent act of mutiny. Under the circumstances, we find equity on his side. For this reason, we uphold the "recess" called on the ground of good faith. It does not appear to us, moreover, that the petitioner had resorted to the aforesaid "recess" in order to forestall the Assembly from bringing about his ouster. This is not apparent from the pleadings before us. We are convinced that the invitation was what precipitated it.

SO ORDERED. 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. H.B. Basco & Associates for petitioners. Valmonte Law Offices collaborating counsel for petitioners. Aguirre, Laborte and Capule for respondent PAGCOR.

PARAS, J.: A TV ad proudly announces:

In holding that the "recess" in question is valid, we are not to be taken as establishing a precedent, since, as we said, a recess can not be validly declared without a session having been first opened. In upholding the petitioner herein, we are not giving him a carte blanche to order recesses in the future in violation of the Rules, or otherwise to prevent the lawful meetings thereof.

"The new PAGCOR — responding through responsible gaming."

Neither are we, by this disposition, discouraging the Sanggunian from reorganizing itself pursuant to its lawful prerogatives. Certainly, it can do so at the proper time. In the event that be petitioner should initiate obstructive moves, the Court is certain that it is armed with enough coercive remedies to thwart them. 39

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;

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 —

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

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;

WHEREFORE, premises considered, the petition is GRANTED. The Sangguniang Pampook, Region XII, is ENJOINED to (1) REINSTATE the petitioner as Member, Sangguniang Pampook, Region XII; and (2) REINSTATE him as Speaker thereof. No costs.

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;

authorized by existing franchises or permitted by law in order to attain the following objectives:

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)

(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.

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).

(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 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)

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

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. 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 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:

gambling shall be issued by the national government upon proper application and verification of the qualification of the applicant . . .

(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).

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.

(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

(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 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.

impose taxes and fees. It cannot therefore be violative but rather is consistent with the principle of local autonomy.

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)

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."

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

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) 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.1âwphi1 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) 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.

[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:

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:

ISANG KAPASIYAHAN TINUTUTULAN ANG MGA ILLEGAL GAMBLING LALO NA ANG LOTTO SA LALAWIGAN NG LAGUNA

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.

SAPAGKAT, ang sugal dito sa lalawigan ng Laguna ay talamak na;

SO ORDERED.[4]

SAPAGKAT, ang sugal ay nagdudulot ng masasamang impluwensiya lalot higit sa mga kabataan;

Petitioners filed a motion for reconsideration which was subsequently denied in an Order dated April 21, 1997, which reads:

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;

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.

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.

SO ORDERED.[5] 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 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 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. G.R. No. 79956

January 29, 1990

CORDILLERA BROAD COALITION, petitioner, vs. COMMISSION ON AUDIT, respondent. G.R. No. 82217

AUTONOMOUS REGIONS Sec. 15. There shall be created autonomous regions in Muslim Mindanao and in the Cordilleras consisting of provinces, cities, municipalities, and geographical areas sharing common and distinctive historical and cultural heritage, economic and social structures, and other relevant characteristics within the framework of this Constitution and the national sovereignty as well as territorial integrity of the Republic of the Philippines. SEC. 16. The President shall exercise general supervision over autonomous regions to ensure that laws are faithfully executed. Sec. 17. All powers, functions, and responsibilities not granted Constitution or by law to the autonomous regions shall be vested in the National Government.

January 29, 1990

LILIA YARANON and BONA BAUTISTA, assisted by their spouses, BRAULIO D. YARANON and DEMETRIO D. BAUTISTA, JR., respectively; JAMES BRETT and SINAI C. HAMADA, petitioners, vs. THE COMMISSION ON AUDIT, HON. CATALINO MACARAIG, Executive Secretary, HON. VICENTE JAYME, Secretary of Finance, HON. GUILLERMO N. CARAGUE, Secretary of Budget and Management, and HON. ROSALINA S. CAJUCOM, OIC National Treasurer, respondents. CORTES, J.: In these consolidated petitions, the constitutionality of Executive Order No. 220, dated July 15, 1987, which created the (Cordillera Administrative Region, is assailed on the primary ground that it pre-empts the enactment of an organic act by the Congress and the creation of' the autonomous region in the Cordilleras conditional on the approval of the act through a plebiscite. Relative to the creation of autonomous regions, the constitution, in Article X, provides:

Sec. 18. The Congress shall enact an organic act for each autonomous region with the assistance and participation of the regional consultative commission composed of representatives appointed by the President from a list of nominees from multi-sectoral bodies. The organic act shall define the basic structure of government for the region consisting of the executive department and legislative assembly, both of which shall be elective and representative of the constituent political units. The organic acts shall likewise provide for special courts with personal, family and property law jurisdiction consistent with the provisions of this Constitution and national laws. The creation of the autonomous region shall be effective when approved by majority of the votes cast by the constituent units in a plebiscite called for the purpose, provided that only provinces, cities, and geographic areas voting favorably in such plebiscite shall be included in the autonomous region. Sec. 19. The first Congress elected under this Constitution shall, within eighteen months from the time of organization of both Houses, pass the organic acts for the autonomous regions in Muslim Mindanao and the Cordilleras.

Sec. 20. Within its territorial jurisdiction and subject to the provisions of this Constitution and national laws, the organic act of autonomous regions shall provide for legislative powers over: (1) Administrative organization; (2) Creation of sources of revenues;

revolutionary forces to a peace dialogue. The CPLA heeded this call of the President. After the preliminary negotiations, President Aquino and some members of her Cabinet flew to Mt. Data in the Mountain Province on September 13, 1986 and signed with Fr. Conrado M. Balweg (As Commander of the CPLA and Ama Mario Yag-ao (as President of Cordillera Bodong Administration, the civil government of the CPLA a ceasefire agreement that signified the cessation of hostilities (WHEREAS No. 7, E.O. 220).

(3) Ancestral domain and natural resources; (4) Personal, family and property relations; (5) Regional urban and rural planning development;

The parties arrived at an agreement in principle: the Cordillera people shall not undertake their demands through armed and violent struggle but by peaceful means, such as political negotiations. The negotiations shall be a continuing process until the demands of the Cordillera people shall have been substantially granted.

(6) Economic, social and tourism development ; (7) Educational policies; (8) Preservation and development of the cultural heritage; and (9) Such other matters as may be authorized by law for the promotion of the general welfare of the people of the region. Sec. 21. The preservation of peace and order within the regions shall be the responsibility of the local police agencies which shall be organized, maintained, supervised, and utilized in accordance with applicable laws. The defense and security of the regions shall be the responsibility of the National Government.

On March 27, 1987, Ambassador Pelaez [Acting as Chief Negotiator of the government], in pursuance of the September 13, 1986 agreement, flew to the Mansion House, Baguio City, and signed with Fr. Balweg (as Chairman of the Cordillera panel) a joint agreement, paragraphs 2 and 3 of which state: Par. 2- Work together in drafting an Executive Order to create a preparatory body that could perform policy-making and administrative functions and undertake consultations and studies leading to a draft organic act for the Cordilleras. Par. 3- Have representatives from the Cordillera panel join the study group of the R.P. Panel in drafting the Executive Order.

A study of E.O. No. 220 would be incomplete Without reference to its historical background.

Pursuant to the above joint agreement, E.O. 220 was drafted by a panel of the Philippine government and of the representatives of the Cordillera people.

In April 1986, just after the EDSA Revolution, Fr. Conrado M. Balweg, S.V.D., broke off on ideological grounds from the Communist Party of the Philippines (CPP) and its military arm the New People's Army. (NPA).

On July 15, 1987, President Corazon C. Aquino signed the joint draft into law, known now as E.O. 220. [Rejoinder G.R. No. 82217, pp. 2-3].

After President Aquino was installed into office by People Power, she advocated a policy of national reconciliation. She called on all

Executive Order No. 220, issued by the President in the exercise of her legislative powers under Art. XVIII, sec. 6 of the 1987 Constitution, created the Cordillera Administrative Region (CAR) , which covers the

provinces of Abra, Benguet, Ifugao, Kalinga-Apayao and Mountain Province and the City of Baguio [secs. 1 and 2]. It was created to accelerate economic and social growth in the region and to prepare for the establishment of the autonomous region in the Cordilleras [sec. 3]. Its main function is to coordinate the planning and implementation of programs and services in the region, particularly, to coordinate with the local government units as well as with the executive departments of the National Government in the supervision of field offices and in identifying, planning, monitoring, and accepting projects and activities in the region [sec. 5]. It shall also monitor the implementation of all ongoing national and local government projects in the region [sec. 20]. The CAR shall have a Cordillera Regional Assembly as a policy-formulating body and a Cordillera Executive Board as an implementing arm [secs. 7, 8 and 10]. The CAR and the Assembly and Executive Board shall exist until such time as the autonomous regional government is established and organized [sec. 17]. Explaining the rationale for the issuance of E.O. No. 220, its last "Whereas" clause provides: WHEREAS, pending the convening of the first Congress and the enactment of the organic act for a Cordillera autonomous region, there is an urgent need, in the interest of national security and public order, for the President to reorganize immediately the existing administrative structure in the Cordilleras to suit it to the existing political realities therein and the Government's legitimate concerns in the areas, without attempting to pre-empt the constitutional duty of the first Congress to undertake the creation of an autonomous region on a permanent basis. During the pendency of this case, Republic Act No. 6766 entitled "An Act Providing for an Organic Act for the Cordillera Autonomous Region," was enacted and signed into law. The Act recognizes the CAR and the offices and agencies created under E.O. No. 220 and its transitory nature is reinforced in Art. XXI of R.A. No. 6766, to wit: SEC. 3. The Cordillera Executive Board, the Cordillera Region Assembly as well as all offices and agencies created under Execute Order No. 220 shall cease to exist immediately upon the ratification of this Organic Act.

All funds, properties and assets of the Cordillera Executive Board and the Cordillera Regional Assembly shall automatically be transferred to the Cordillera Autonomous Government. I It is well-settled in our jurisprudence that respect for the inherent and stated powers and prerogatives of the law-making body, as well as faithful adherence to the principle of separation of powers, require that its enactment be accorded the presumption of constitutionality. Thus, in any challenge to the constitutionality of a statute, the burden of clearly and unequivocally proving its unconstitutionality always rests upon the challenger. Conversely, failure to so prove will necessarily defeat the challenge. We shall be guided by these principles in considering these consolidated petitions. In these cases, petitioners principally argue that by issuing E.O. No. 220 the President, in the exercise of her legislative powers prior to the convening of the first Congress under the 1987 Constitution, has virtually pre-empted Congress from its mandated task of enacting an organic act and created an autonomous region in the Cordilleras. We have carefully studied the Constitution and E.O. No. 220 and we have come to the conclusion that petitioners' assertions are unfounded. Events subsequent to the issuance of E.O. No. 220 also bear out this conclusion. 1. A reading of E.O. No. 220 will easily reveal that what it actually envisions is the consolidation and coordination of the delivery of services of line departments and agencies of the National Government in the areas covered by the administrative region as a step preparatory to the grant of autonomy to the Cordilleras. It does not create the autonomous region contemplated in the Constitution. It merely provides for transitory measures in anticipation of the enactment of an organic act and the creation of an autonomous region. In short, it prepares the ground for autonomy. This does not necessarily conflict with the provisions of the Constitution on autonomous regions, as we shall show later.

The Constitution outlines a complex procedure for the creation of an autonomous region in the Cordilleras. A regional consultative commission shall first be created. The President shall then appoint the members of a regional consultative commission from a list of nominees from multi-sectoral bodies. The commission shall assist the Congress in preparing the organic act for the autonomous region. The organic act shall be passed by the first Congress under the 1987 Constitution within eighteen months from the time of its organization and enacted into law. Thereafter there shall be held a plebiscite for the approval of the organic act [Art. X, sec. 18]. Only then, after its approval in the plebiscite, shall the autonomous region be created. Undoubtedly, all of these will take time. The President, in 1987 still exercising legislative powers, as the first Congress had not yet convened, saw it fit to provide for some measures to address the urgent needs of the Cordilleras in the meantime that the organic act had not yet been passed and the autonomous region created. These measures we find in E.O. No. 220. The steps taken by the President are obviously perceived by petitioners, particularly petitioner Yaranon who views E.O. No. 220 as capitulation to the Cordillera People's Liberation Army (CPLA) of Balweg, as unsound, but the Court cannot inquire into the wisdom of the measures taken by the President, We can only inquire into whether or not the measures violate the Constitution. But as we have seen earlier, they do not. 2. Moreover, the transitory nature of the CAR does not necessarily mean that it is, as petitioner Cordillera Broad Coalition asserts, "the interim autonomous region in the Cordilleras" [Petition, G.R. No. 79956, p. 25]. The Constitution provides for a basic structure of government in the autonomous region composed of an elective executive and legislature and special courts with personal, family and property law jurisdiction [Art. X, sec. 18]. Using this as a guide, we find that E.O. No. 220 did not establish an autonomous regional government. It created a region, covering a specified area, for administrative purposes with the main objective of coordinating the planning and implementation of programs and services [secs. 2 and 5]. To determine policy, it created a representative assembly, to convene yearly only for a five-day regular

session, tasked with, among others, identifying priority projects and development programs [sec. 9]. To serve as an implementing body, it created the Cordillera Executive Board composed of the Mayor of Baguio City, provincial governors and representatives of the Cordillera Bodong Administration, ethno-linguistic groups and non-governmental organizations as regular members and all regional directors of the line departments of the National Government as ex-officio members and headed by an Executive Director [secs. 10 and 11]. The bodies created by E.O. No. 220 do not supplant the existing local governmental structure, nor are they autonomous government agencies. They merely constitute the mechanism for an "umbrella" that brings together the existing local governments, the agencies of the National Government, the ethno-linguistic groups or tribes, and non-governmental organizations in a concerted effort to spur development in the Cordilleras. The creation of the CAR for purposes of administrative coordination is underscored by the mandate of E.O. No. 220 for the President and appropriate national departments and agencies to make available sources of funds for priority development programs and projects recommended by the CAR [sec. 21] and the power given to the President to call upon the appropriate executive departments and agencies of the National Government to assist the CAR [sec. 24]. 3. Subsequent to the issuance of E.O. No. 220, the Congress, after it was convened, enacted Republic Act No. 6658 which created the Cordillera Regional Consultative Commission. The President then appointed its members. The commission prepared a draft organic act which became the basis for the deliberations of the Senate and the House of Representatives. The result was Republic Act No. 6766, the organic act for the Cordillera autonomous region, which was signed into law on October 23, 1989. A plebiscite for the approval of the organic act, to be conducted shortly, shall complete the process outlined in the Constitution. In the meantime, E.O. No. 220 had been in force and effect for more than two years and we find that, despite E.O. No. 220, the autonomous region in the Cordilleras is still to be created, showing the lack of basis of petitioners' assertion. Events have shown that petitioners' fear that

E.O. No. 220 was a "shortcut" for the creation of the autonomous region in the Cordilleras was totally unfounded.

created primarily to coordinate the planning and implementation of programs and services in the covered areas.

Clearly, petitioners' principal challenge has failed.

The creation of administrative regions for the purpose of expediting the delivery of services is nothing new.1âwphi1 The Integrated Reorganization Plan of 1972, which was made as part of the law of the land by virtue of Presidential Decree No. 1, established eleven (11) regions, later increased to twelve (12), with definite regional centers and required departments and agencies of the Executive Branch of the National Government to set up field offices therein. The functions of the regional offices to be established pursuant to the Reorganization Plan are: (1) to implement laws, policies, plans, programs, rules and regulations of the department or agency in the regional areas; (2) to provide economical, efficient and effective service to the people in the area; (3) to coordinate with regional offices of other departments, bureaus and agencies in the area; (4) to coordinate with local government units in the area; and (5) to perform such other functions as may be provided by law. [See Part II, chap. III, art. 1, of the Reorganization Plan].

II A collateral issue raised by petitioners is the nature of the CAR: whether or not it is a territorial and political subdivision. The Constitution provides in Article X: Section 1. The territorial and political subdivisions of the Republic of the Philippines are the provinces, cities, municipalities, and barangays. There shall be autonomous regions in Muslim Mindanao and the Cordilleras as hereinafter provided. xxx

xxx

xxx

Sec. 10. No province, city, municipality, or barangay may be created, divided, merged, abolished, or its boundary substantially altered, except in accordance with the criteria established in the local government code and subject to approval by a majority of the votes cast in a plebiscite in the political units directly affected. We have seen earlier that the CAR is not the autonomous region in the Cordilleras contemplated by the Constitution, Thus, we now address petitioners' assertion that E. 0. No. 220 contravenes the Constitution by creating a new territorial and political subdivision. After carefully considering the provisions of E.O. No. 220, we find that it did not create a new territorial and political subdivision or merge existing ones into a larger subdivision. 1. Firstly, the CAR is not a public corporation or a territorial and political subdivision. It does not have a separate juridical personality, unlike provinces, cities and municipalities. Neither is it vested with the powers that are normally granted to public corporations, e.g. the power to sue and be sued, the power to own and dispose of property, the power to create its own sources of revenue, etc. As stated earlier, the CAR was

We can readily see that the CAR is in the same genre as the administrative regions created under the Reorganization Plan, albeit under E.O. No. 220 the operation of the CAR requires the participation not only of the line departments and agencies of the National Government but also the local governments, ethno-linguistic groups and non-governmental organizations in bringing about the desired objectives and the appropriation of funds solely for that purpose. 2. Then, considering the control and supervision exercised by the President over the CAR and the offices created under E.O. No. 220, and considering further the indispensable participation of the line departments of the National Government, the CAR may be considered more than anything else as a regional coordinating agency of the National Government, similar to the regional development councils which the President may create under the Constitution [Art. X, sec. 14]. These councils are "composed of local government officials, regional heads of departments and other government offices, and representatives from non-governmental organizations within the region 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." [Ibid.] In this wise, the CAR may be considered as a more sophisticated version of the regional development council. III Finally, petitioners incidentally argue that the creation of the CAR contravened the constitutional guarantee of the local autonomy for the provinces (Abra, Benguet, Ifugao, Kalinga-Apayao and Mountain Province) and city (Baguio City) which compose the CAR. We find first a need to clear up petitioners' apparent misconception of the concept of local autonomy.

group of adjacent territorial and political subdivisions already enjoying local or administrative autonomy into an autonomous region vested with political autonomy. Anent petitioners' objection, we note the obvious failure to show how the creation of the CAR has actually diminished the local autonomy of the covered provinces and city. It cannot be over-emphasized that pure speculation and a resort to probabilities are insufficient to cause the invalidation of E.O. No. 220. WHEREFORE, the petitions are DISMISSED for lack of merit. SO ORDERED. G.R. No. 195770

It must be clarified that the constitutional guarantee of local autonomy in the Constitution [Art. X, sec. 2] refers to the administrative autonomy of local government units or, cast in more technical language, the decentralization of government authority [Villegas v. Subido, G.R. No. L-31004, January 8, 1971, 37 SCRA 1]. Local autonomy is not unique to the 1987 Constitution, it being guaranteed also under the 1973 Constitution [Art. II, sec. 10]. And while there was no express guarantee under the 1935 Constitution, the Congress enacted the Local Autonomy Act (R.A. No. 2264) and the Decentralization Act (R.A. No. 5185), which ushered the irreversible march towards further enlargement of local autonomy in the country [Villegas v. Subido, supra.] On the other hand, the creation of autonomous regions in Muslim Mindanao and the Cordilleras, which is peculiar to the 1987 Constitution contemplates the grant of political autonomy and not just administrative autonomy these regions. Thus, the provision in the Constitution for an autonomous regional government with a basic structure consisting of an executive department and a legislative assembly and special courts with personal, family and property law jurisdiction in each of the autonomous regions [Art. X, sec. 18]. As we have said earlier, the CAR is a mere transitory coordinating agency that would prepare the stage for political autonomy for the Cordilleras. It fills in the resulting gap in the process of transforming a

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 Court’s 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

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 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

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

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).13 1âwphi1 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 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.

the same provision provides a categorical exception of cases involving nationally-funded projects, facilities, programs and services, thus:

xxx

(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)

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.

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 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:

(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

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.1âwphi1 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, DISMISSED.

premises

considered,

the

petition

is

hereby

SO ORDERED. G.R. Nos. 120865-71 December 7, 1995 LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner, vs. COURT OF APPEALS; HON. JUDGE HERCULANO TECH, PRESIDING JUDGE, BRANCH 70, REGIONAL TRIAL COURT OF BINANGONAN RIZAL; FLEET DEVELOPMENT, INC. and CARLITO ARROYO; THE MUNICIPALITY OF BINANGONAN and/or MAYOR ISIDRO B. PACIS, respondents. LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner, vs. COURT OF APPEALS; HON. JUDGE AURELIO C. TRAMPE, PRESIDING JUDGE, BRANCH 163, REGIONAL TRIAL COURT OF PASIG; MANILA MARINE LIFE BUSINESS RESOURCES, INC. represented by, MR. TOBIAS REYNALD M. TIANGCO;

MUNICIPALITY OF TAGUIG, METRO MANILA and/or MAYOR RICARDO D. PAPA, JR., respondents. LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner, vs. COURT OF APPEALS; HON. JUDGE ALEJANDRO A. MARQUEZ, PRESIDING JUDGE, BRANCH 79, REGIONAL TRIAL COURT OF MORONG, RIZAL; GREENFIELD VENTURES INDUSTRIAL DEVELOPMENT CORPORATION and R. J. ORION DEVELOPMENT CORPORATION; MUNICIPALITY OF JALA-JALA and/or MAYOR WALFREDO M. DE LA VEGA, respondents. LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner, vs. COURT OF APPEALS; HON. JUDGE MANUEL S. PADOLINA, PRESIDING JUDGE, BRANCH 162, REGIONAL TRIAL COURT OF PASIG, METRO MANILA; IRMA FISHING & TRADING CORP.; ARTM FISHING CORP.; BDR CORPORATION, MIRT CORPORATION and TRIM CORPORATION; MUNICIPALITY OF BINANGONAN and/or MAYOR ISIDRO B. PACIS, respondents. LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner, vs. COURT OF APPEALS; HON. JUDGE ARTURO A. MARAVE, PRESIDING JUDGE, BRANCH 78, REGIONAL TRIAL COURT OF MORONG, RIZAL; BLUE LAGOON FISHING CORP. and ALCRIS CHICKEN GROWERS, INC.; MUNICIPALITY OF JALA-JALA and/or MAYOR WALFREDO M. DE LA VEGA, respondents. LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner, vs. COURT OF APPEALS; HON. JUDGE ARTURO A. MARAVE, PRESIDING JUDGE, BRANCH 78, REGIONAL TRIAL COURT OF MORONG, RIZAL; AGP FISH VENTURES, INC., represented by its PRESIDENT ALFONSO PUYAT; MUNICIPALITY OF JALA-JALA and/or MAYOR WALFREDO M. DE LA VEGA, respondents. LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner, vs.

COURT OF APPEALS; HON. JUDGE EUGENIO S. LABITORIA, PRESIDING JUDGE, BRANCH 161, REGIONAL TRIAL COURT OF PASIG, METRO MANILA; SEA MAR TRADING CO. INC.; EASTERN LAGOON FISHING CORP.; MINAMAR FISHING CORP.; MUNICIPALITY OF BINANGONAN and/or MAYOR ISIDRO B. PACIS, respondents. HERMOSISIMA, JR., J.: It is difficult for a man, scavenging on the garbage dump created by affluence and profligate consumption and extravagance of the rich or fishing in the murky waters of the Pasig River and the Laguna Lake or making a clearing in the forest so that he can produce food for his family, to understand why protecting birds, fish, and trees is more important than protecting him and keeping his family alive. How do we strike a balance between environmental protection, on the one hand, and the individual personal interests of people, on the other? Towards environmental protection and ecology, navigational safety, and sustainable development, Republic Act No. 4850 created the "Laguna Lake Development Authority." This Government Agency is supposed to carry out and effectuate the aforesaid declared policy, so as to accelerate the development and balanced growth of the Laguna Lake area and the surrounding provinces, cities and towns, in the act clearly named, within the context of the national and regional plans and policies for social and economic development. Presidential Decree No. 813 of former President Ferdinand E. Marcos amended certain sections of Republic Act No. 4850 because of the concern for the rapid expansion of Metropolitan Manila, the suburbs and the lakeshore towns of Laguna de Bay, combined with current and prospective uses of the lake for municipal-industrial water supply, irrigation, fisheries, and the like. Concern on the part of the Government and the general public over: — the environment impact of development on the water quality and ecology of the lake and its related river systems; the inflow of polluted water from the Pasig River, industrial, domestic and agricultural wastes from developed areas around the lake; the increasing urbanization which induced the deterioration of the lake,

since water quality studies have shown that the lake will deteriorate further if steps are not taken to check the same; and the floods in Metropolitan Manila area and the lakeshore towns which will influence the hydraulic system of Laguna de Bay, since any scheme of controlling the floods will necessarily involve the lake and its river systems, — likewise gave impetus to the creation of the Authority. Section 1 of Republic Act No. 4850 was amended to read as follows: Sec. 1. Declaration of Policy. It is hereby declared to be the national policy to promote, and accelerate the development and balanced growth of the Laguna Lake area and the surrounding provinces, cities and towns hereinafter referred to as the region, within the context of the national and regional plans and policies for social and economic development and to carry out the development of the Laguna Lake region with due regard and adequate provisions for environmental management and control, preservation of the quality of human life and ecological systems, and the prevention of undue ecological disturbances, deterioration and pollution.1 Special powers of the Authority, pertinent to the issues in this case, include: Sec. 3. Section 4 of the same Act is hereby further amended by adding thereto seven new paragraphs to be known as paragraphs (j), (k), (l), (m), (n), (o), and (p) which shall read as follows: xxx xxx xxx (j) The provisions of existing laws to the contrary notwithstanding, to engage in fish production and other aqua-culture projects in Laguna de Bay and other bodies of water within its jurisdiction and in pursuance thereof to conduct studies and make experiments, whenever necessary, with the collaboration and assistance of the Bureau of Fisheries and Aquatic Resources, with the end in view of improving present techniques and practices. Provided, that until modified, altered or amended by the procedure provided in the following sub-paragraph, the present laws, rules and permits or authorizations remain in force;

(k) For the purpose of effectively regulating and monitoring activities in Laguna de Bay, the Authority shall have exclusive jurisdiction to issue new permit for the use of the lake waters for any projects or activities in or affecting the said lake including navigation, construction, and operation of fishpens, fish enclosures, fish corrals and the like, and to impose necessary safeguards for lake quality control and management and to collect necessary fees for said activities and projects: Provided, That the fees collected for fisheries may be shared between the Authority and other government agencies and political sub-divisions in such proportion as may be determined by the President of the Philippines upon recommendation of the Authority's Board: Provided, further, That the Authority's Board may determine new areas of fishery development or activities which it may place under the supervision of the Bureau of Fisheries and Aquatic Resources taking into account the overall development plans and programs for Laguna de Bay and related bodies of water: Provided, finally, That the Authority shall subject to the approval of the President of the Philippines promulgate such rules and regulations which shall govern fisheries development activities in Laguna de Bay which shall take into consideration among others the following: socio-economic amelioration of bonafide resident fishermen whether individually or collectively in the form of cooperatives, lakeshore town development, a master plan for fishpen construction and operation, communal fishing ground for lake shore town residents, and preference to lake shore town residents in hiring laborer for fishery projects; (l) To require the cities and municipalities embraced within the region to pass appropriate zoning ordinances and other regulatory measures necessary to carry out the objectives of the Authority and enforce the same with the assistance of the Authority; (m) The provisions of existing laws to the contrary notwithstanding, to exercise water rights over public waters within the Laguna de Bay region whenever necessary to carry out the Authority's projects; (n) To act in coordination with existing governmental agencies in establishing water quality standards for industrial, agricultural and municipal waste discharges into the lake and to cooperate with said existing agencies of the government of the Philippines in enforcing such standards, or to separately pursue enforcement and penalty actions as

provided for in Section 4 (d) and Section 39-A of this Act: Provided, That in case of conflict on the appropriate water quality standard to be enforced such conflict shall be resolved thru the NEDA Board.2 To more effectively perform the role of the Authority under Republic Act No. 4850, as though Presidential Decree No. 813 were not thought to be completely effective, the Chief Executive, feeling that the land and waters of the Laguna Lake Region are limited natural resources requiring judicious management to their optimal utilization to insure renewability and to preserve the ecological balance, the competing options for the use of such resources and conflicting jurisdictions over such uses having created undue constraints on the institutional capabilities of the Authority in the light of the limited powers vested in it by its charter, Executive Order No. 927 further defined and enlarged the functions and powers of the Authority and named and enumerated the towns, cities and provinces encompassed by the term "Laguna de Bay Region".

industrial, agricultural, navigation, irrigation, and waste disposal purpose; Provided, that the rates of the fees to be collected, and the sharing with other government agencies and political subdivisions, if necessary, shall be subject to the approval of the President of the Philippines upon recommendation of the Authority's Board, except fishpen fee, which will be shared in the following manner; 20 percent of the fee shall go to the lakeshore local governments, 5 percent shall go to the Project Development Fund which shall be administered by a Council and the remaining 75 percent shall constitute the share of LLDA. However, after the implementation within the three-year period of the Laguna Lake Fishery Zoning and Management Plan, the sharing will be modified as follows: 35 percent of the fishpen fee goes to the lakeshore local governments, 5 percent goes to the Project Development Fund and the remaining 60 percent shall be retained by LLDA; Provided, however, that the share of LLDA shall form part of its corporate funds and shall not be remitted to the National Treasury as an exception to the provisions of Presidential Decree No. 1234. (Emphasis supplied)

Also, pertinent to the issues in this case are the following provisions of Executive Order No. 927 which include in particular the sharing of fees:

It is important to note that Section 29 of Presidential Decree No. 813 defined the term "Laguna Lake" in this manner:

Sec 2. Water Rights Over Laguna de Bay and Other Bodies of Water within the Lake Region: To effectively regulate and monitor activities in the Laguna de Bay region, the Authority shall have exclusive jurisdiction to issue permit for the use of all surface water for any projects or activities in or affecting the said region including navigation, construction, and operation of fishpens, fish enclosures, fish corrals and the like.

Sec 41. Definition of Terms.

For the purpose of this Executive Order, the term "Laguna de Bay Region" shall refer to the Provinces of Rizal and Laguna; the Cities of San Pablo, Pasay, Caloocan, Quezon, Manila and Tagaytay; the towns of Tanauan, Sto. Tomas and Malvar in Batangas Province; the towns of Silang and Carmona in Cavite Province; the town of Lucban in Quezon Province; and the towns of Marikina, Pasig, Taguig, Muntinlupa, and Pateros in Metro Manila. Sec 3. Collection of Fees. The Authority is hereby empowered to collect fees for the use of the lake water and its tributaries for all beneficial purposes including but not limited to fisheries, recreation, municipal,

(11) Laguna Lake or Lake. Whenever Laguna Lake or lake is used in this Act, the same shall refer to Laguna de Bay which is that area covered by the lake water when it is at the average annual maximum lake level of elevation 12.50 meters, as referred to a datum 10.00 meters below mean lower low water (M.L.L.W). Lands located at and below such elevation are public lands which form part of the bed of said lake. Then came Republic Act No. 7160, the Local Government Code of 1991. The municipalities in the Laguna Lake Region interpreted the provisions of this law to mean that the newly passed law gave municipal governments the exclusive jurisdiction to issue fishing privileges within their municipal waters because R.A. 7160 provides: Sec. 149. Fishery Rentals, Fees and Charges.

(a) Municipalities shall have the exclusive authority to grant fishery privileges in the municipal waters and impose rental fees or charges therefor in accordance with the provisions of this Section. (b) The Sangguniang Bayan may: (1) Grant fishing privileges to erect fish corrals, oyster, mussel or other aquatic beds or bangus fry areas, within a definite zone of the municipal waters, as determined by it; . . . . (2) Grant privilege to gather, take or catch bangus fry, prawn fry or kawag-kawag or fry of other species and fish from the municipal waters by nets, traps or other fishing gears to marginal fishermen free from any rental fee, charges or any other imposition whatsoever. xxx xxx xxx Sec. 447. Power, Duties, Functions and Compensation. . . . . xxx xxx xxx (XI) Subject to the provisions of Book II of this Code, grant exclusive privileges of constructing fish corrals or fishpens, or the taking or catching of bangus fry, prawn fry or kawag-kawag or fry of any species or fish within the municipal waters.

To be sure, the implementation by the lakeshore municipalities of separate independent policies in the operation of fishpens and fishcages within their claimed territorial municipal waters in the lake and their indiscriminate grant of fishpen permits have already saturated the lake area with fishpens, thereby aggravating the current environmental problems and ecological stress of Laguna Lake. In view of the foregoing circumstances, the Authority served notice to the general public that: In compliance with the instructions of His Excellency PRESIDENT FIDEL V. RAMOS given on June 23, 1993 at Pila, Laguna pursuant to Republic Act 4850 as amended by Presidential Decree 813 and Executive Order 927 series of 1983 and in line with the policies and programs of the Presidential Task Force on Illegal Fishpens and Illegal Fishing, the general public is hereby notified that: 1. All fishpens, fishcages and other aqua-culture structures in the Laguna de Bay Region, which were not registered or to which no application for registration and/or permit has been filed with Laguna Lake Development Authority as of March 31, 1993 are hereby declared outrightly as illegal. 2. All fishpens, fishcages and other aqua-culture structures so declared as illegal shall be subject to demolition which shall be undertaken by the Presidential Task Force for Illegal Fishpen and Illegal Fishing.

xxx xxx xxx Municipal governments thereupon assumed the authority to issue fishing privileges and fishpen permits. Big fishpen operators took advantage of the occasion to establish fishpens and fishcages to the consternation of the Authority. Unregulated fishpens and fishcages, as of July, 1995, occupied almost one-third of the entire lake water surface area, increasing the occupation drastically from 7,000 hectares in 1990 to almost 21,000 hectares in 1995. The Mayor's permit to construct fishpens and fishcages were all undertaken in violation of the policies adopted by the Authority on fishpen zoning and the Laguna Lake carrying capacity.

3. Owners of fishpens, fishcages and other aqua-culture structures declared as illegal shall, without prejudice to demolition of their structures be criminally charged in accordance with Section 39-A of Republic Act 4850 as amended by P.D. 813 for violation of the same laws. Violations of these laws carries a penalty of imprisonment of not exceeding 3 years or a fine not exceeding Five Thousand Pesos or both at the discretion of the court. All operators of fishpens, fishcages and other aqua-culture structures declared as illegal in accordance with the foregoing Notice shall have one (1) month on or before 27 October 1993 to show cause before the

LLDA why their said fishpens, fishcages and other aqua-culture structures should not be demolished/dismantled. One month, thereafter, the Authority sent notices to the owners of the illegally constructed fishpens, fishcages aqua-culture structures advising them to dismantle their structures within 10 days from receipt thereof, otherwise, shall be effected.

concerned and other respective demolition

Reacting thereto, the affected fishpen owners filed injunction cases against the Authority before various regional trial courts, to wit: (a) Civil Case No. 759-B, for Prohibition, Injunction and Damages, Regional Trial Court, Branch 70, Binangonan, Rizal, filed by Fleet Development, Inc. and Carlito Arroyo; (b) Civil Case No. 64049, for Injunction, Regional Trial Court, Branch 162, Pasig, filed by IRMA Fishing and Trading Corp., ARTM Fishing Corp., BDR Corp., MIRT Corp. and TRIM Corp.; (c) Civil Case No. 566, for Declaratory Relief and Injunction, Regional Trial Court, Branch 163, Pasig, filed by Manila Marine Life Business Resources, Inc. and Tobias Reynaldo M. Tianco; (d) Civil Case No. 556-M, for Prohibition, Injunction and Damages, Regional Trial Court, Branch 78, Morong, Rizal, filed by AGP Fishing Ventures, Inc.; (e) Civil Case No. 522-M, for Prohibition, Injunction and Damages, Regional Trial Court, Branch 78, Morong, Rizal, filed by Blue Lagoon and Alcris Chicken Growers, Inc.; (f) Civil Case No. 554-, for Certiorari and Prohibition, Regional Trial Court, Branch 79, Morong, Rizal, filed by Greenfields Ventures Industrial Corp. and R.J. Orion Development Corp.; and (g) Civil Case No. 64124, for Injunction, Regional Trial Court, Branch 15, Pasig, filed by SEA-MAR Trading Co., Inc. and Eastern Lagoon Fishing Corp. and Minamar Fishing Corporation. The Authority filed motions to dismiss the cases against it on jurisdictional grounds. The motions to dismiss were invariably denied. Meanwhile, temporary restraining order/writs of preliminary mandatory injunction were issued in Civil Cases Nos. 64124, 759 and 566 enjoining the Authority from demolishing the fishpens and similar structures in question. Hence, the herein petition for certiorari, prohibition and injunction, G.R. Nos. 120865-71, were filed by the Authority with this court. Impleaded

as parties-respondents are concerned regional trial courts and respective private parties, and the municipalities and/or respective Mayors of Binangonan, Taguig and Jala-jala, who issued permits for the construction and operation of fishpens in Laguna de Bay. The Authority sought the following reliefs, viz.: (A) Nullification of the temporary restraining order/writs of preliminary injunction issued in Civil Cases Nos. 64125, 759 and 566; (B) Permanent prohibition against the regional trial courts from exercising jurisdiction over cases involving the Authority which is a co-equal body; (C) Judicial pronouncement that R.A. 7610 (Local Government Code of 1991) did not repeal, alter or modify the provisions of R.A. 4850, as amended, empowering the Authority to issue permits for fishpens, fishcages and other aqua-culture structures in Laguna de Bay and that, the Authority the government agency vested with exclusive authority to issue said permits. By this Court's resolution of May 2, 1994, the Authority's consolidated petitions were referred to the Court of Appeals. In a Decision, dated June 29, 1995, the Court of Appeals dismissed the Authority's consolidated petitions, the Court of Appeals holding that: (A) LLDA is not among those quasi-judicial agencies of government whose decision or order are appealable only to the Court of Appeals; (B) the LLDA charter does vest LLDA with quasi-judicial functions insofar as fishpens are concerned; (C) the provisions of the LLDA charter insofar as fishing privileges in Laguna de Bay are concerned had been repealed by the Local Government Code of 1991; (D) in view of the aforesaid repeal, the power to grant permits devolved to and is now vested with their respective local government units concerned. Not satisfied with the Court of Appeals decision, the Authority has returned to this Court charging the following errors: 1. THE HONORABLE COURT OF APPEALS PROBABLY COMMITTED AN ERROR WHEN IT RULED THAT THE LAGUNA

LAKE DEVELOPMENT AUTHORITY IS NOT A QUASI-JUDICIAL AGENCY.

Authority and granting the latter water rights authority over Laguna de Bay and the lake region.

2. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT RULED THAT R.A. 4850 AS AMENDED BY P.D. 813 AND E.O. 927 SERIES OF 1983 HAS BEEN REPEALED BY REPUBLIC ACT 7160. THE SAID RULING IS CONTRARY TO ESTABLISHED PRINCIPLES AND JURISPRUDENCE OF STATUTORY CONSTRUCTION.

The Local Government Code of 1991 does not contain any express provision which categorically expressly repeal the charter of the Authority. It has to be conceded that there was no intent on the part of the legislature to repeal Republic Act No. 4850 and its amendments. The repeal of laws should be made clear and expressed.

3. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT RULED THAT THE POWER TO ISSUE FISHPEN PERMITS IN LAGUNA DE BAY HAS BEEN DEVOLVED TO CONCERNED (LAKESHORE) LOCAL GOVERNMENT UNITS. We take a simplistic view of the controversy. Actually, the main and only issue posed is: Which agency of the Government — the Laguna Lake Development Authority or the towns and municipalities comprising the region — should exercise jurisdiction over the Laguna Lake and its environs insofar as the issuance of permits for fishery privileges is concerned? Section 4 (k) of the charter of the Laguna Lake Development Authority, Republic Act No. 4850, the provisions of Presidential Decree No. 813, and Section 2 of Executive Order No. 927, cited above, specifically provide that the Laguna Lake Development Authority shall have exclusive jurisdiction to issue permits for the use of all surface water for any projects or activities in or affecting the said region, including navigation, construction, and operation of fishpens, fish enclosures, fish corrals and the like. On the other hand, Republic Act No. 7160, the Local Government Code of 1991, has granted to the municipalities the exclusive authority to grant fishery privileges in municipal waters. The Sangguniang Bayan may grant fishery privileges to erect fish corrals, oyster, mussels or other aquatic beds or bangus fry area within a definite zone of the municipal waters. We hold that the provisions of Republic Act No. 7160 do not necessarily repeal the aforementioned laws creating the Laguna Lake Development

It has to be conceded that the charter of the Laguna Lake Development Authority constitutes a special law. Republic Act No. 7160, the Local Government Code of 1991, is a general law. It is basic in statutory construction that the enactment of a later legislation which is a general law cannot be construed to have repealed a special law. It is a well-settled rule in this jurisdiction that "a special statute, provided for a particular case or class of cases, is not repealed by a subsequent statute, general in its terms, provisions and application, unless the intent to repeal or alter is manifest, although the terms of the general law are broad enough to include the cases embraced in the special law."3 Where there is a conflict between a general law and a special statute, the special statute should prevail since it evinces the legislative intent more clearly than the general statute. The special law is to be taken as an exception to the general law in the absence of special circumstances forcing a contrary conclusion. This is because implied repeals are not favored and as much as possible, effect must be given to all enactments of the legislature. A special law cannot be repealed, amended or altered by a subsequent general law by mere implication.4 Thus, it has to be concluded that the charter of the Authority should prevail over the Local Government Code of 1991. Considering the reasons behind the establishment of the Authority, which are environmental protection, navigational safety, and sustainable development, there is every indication that the legislative intent is for the Authority to proceed with its mission. We are on all fours with the manifestation of petitioner Laguna Lake Development Authority that "Laguna de Bay, like any other single body

of water has its own unique natural ecosystem. The 900 km² lake surface water, the eight (8) major river tributaries and several other smaller rivers that drain into the lake, the 2,920 km² basin or watershed transcending the boundaries of Laguna and Rizal provinces, greater portion of Metro Manila, parts of Cavite, Batangas, and Quezon provinces, constitute one integrated delicate natural ecosystem that needs to be protected with uniform set of policies; if we are to be serious in our aims of attaining sustainable development. This is an exhaustible natural resource — a very limited one — which requires judicious management and optimal utilization to ensure renewability and preserve its ecological integrity and balance." "Managing the lake resources would mean the implementation of a national policy geared towards the protection, conservation, balanced growth and sustainable development of the region with due regard to the inter-generational use of its resources by the inhabitants in this part of the earth. The authors of Republic Act 4850 have foreseen this need when they passed this LLDA law — the special law designed to govern the management of our Laguna de Bay lake resources." "Laguna de Bay therefore cannot be subjected to fragmented concepts of management policies where lakeshore local government units exercise exclusive dominion over specific portions of the lake water. The garbage thrown or sewage discharged into the lake, abstraction of water therefrom or construction of fishpens by enclosing its certain area, affect not only that specific portion but the entire 900 km² of lake water. The implementation of a cohesive and integrated lake water resource management policy, therefore, is necessary to conserve, protect and sustainably develop Laguna de Bay."5 The power of the local government units to issue fishing privileges was clearly granted for revenue purposes. This is evident from the fact that Section 149 of the New Local Government Code empowering local governments to issue fishing permits is embodied in Chapter 2, Book II, of Republic Act No. 7160 under the heading, "Specific Provisions On The Taxing And Other Revenue Raising Power Of Local Government Units."

On the other hand, the power of the Authority to grant permits for fishpens, fishcages and other aqua-culture structures is for the purpose of effectively regulating and monitoring activities in the Laguna de Bay region (Section 2, Executive Order No. 927) and for lake quality control and management.6 It does partake of the nature of police power which is the most pervasive, the least limitable and the most demanding of all State powers including the power of taxation. Accordingly, the charter of the Authority which embodies a valid exercise of police power should prevail over the Local Government Code of 1991 on matters affecting Laguna de Bay. There should be no quarrel over permit fees for fishpens, fishcages and other aqua-culture structures in the Laguna de Bay area. Section 3 of Executive Order No. 927 provides for the proper sharing of fees collected. In respect to the question as to whether the Authority is a quasi-judicial agency or not, it is our holding that, considering the provisions of Section 4 of Republic Act No. 4850 and Section 4 of Executive Order No. 927, series of 1983, and the ruling of this Court in Laguna Lake Development Authority vs. Court of Appeals, 231 SCRA 304, 306, which we quote: xxx xxx xxx As a general rule, the adjudication of pollution cases generally pertains to the Pollution Adjudication Board (PAB), except in cases where the special law provides for another forum. It must be recognized in this regard that the LLDA, as a specialized administrative agency, is specifically mandated under Republic Act No. 4850 and its amendatory laws to carry out and make effective the declared national policy of promoting and accelerating the development and balanced growth of the Laguna Lake area and the surrounding provinces of Rizal and Laguna and the cities of San Pablo, Manila, Pasay, Quezon and Caloocan with due regard and adequate provisions for environmental management and control, preservation of the quality of human life and ecological systems, and the prevention of undue ecological disturbances, deterioration and pollution. Under such a broad grant of power and authority, the LLDA, by virtue of its special charter, obviously

has the responsibility to protect the inhabitants of the Laguna Lake region from the deleterious effects of pollutants emanating from the discharge of wastes from the surrounding areas. In carrying out the aforementioned declared policy, the LLDA is mandated, among others, to pass upon and approve or disapprove all plans, programs, and projects proposed by local government offices/agencies within the region, public corporations, and private persons or enterprises where such plans, programs and/or projects are related to those of the LLDA for the development of the region.

municipalities situated therein and the authority to exercise such powers as are by its charter vested on it.

xxx xxx xxx

WHEREFORE, the petitions for prohibition, certiorari and injunction are hereby granted, insofar as they relate to the authority of the Laguna Lake Development Authority to grant fishing privileges within the Laguna Lake Region.

. . . . While it is a fundamental rule that an administrative agency has only such powers as are expressly granted to it by law, it is likewise a settled rule that an administrative agency has also such powers as are necessarily implied in the exercise of its express powers. In the exercise, therefore, of its express powers under its charter, as a regulatory and quasi-judicial body with respect to pollution cases in the Laguna Lake region, the authority of the LLDA to issue a "cease and desist order" is, perforce, implied. Otherwise, it may well be reduced to a "toothless" paper agency. there is no question that the Authority has express powers as a regulatory and quasi-judicial body in respect to pollution cases with authority to issue a "cease and desist order" and on matters affecting the construction of illegal fishpens, fishcages and other aqua-culture structures in Laguna de Bay. The Authority's pretense, however, that it is co-equal to the Regional Trial Courts such that all actions against it may only be instituted before the Court of Appeals cannot be sustained. On actions necessitating the resolution of legal questions affecting the powers of the Authority as provided for in its charter, the Regional Trial Courts have jurisdiction. In view of the foregoing, this Court holds that Section 149 of Republic Act No. 7160, otherwise known as the Local Government Code of 1991, has not repealed the provisions of the charter of the Laguna Lake Development Authority, Republic Act No. 4850, as amended. Thus, the Authority has the exclusive jurisdiction to issue permits for the enjoyment of fishery privileges in Laguna de Bay to the exclusion of

Removal from the Authority of the aforesaid licensing authority will render nugatory its avowed purpose of protecting and developing the Laguna Lake Region. Otherwise stated, the abrogation of this power would render useless its reason for being and will in effect denigrate, if not abolish, the Laguna Lake Development Authority. This, the Local Government Code of 1991 had never intended to do.

The restraining orders and/or writs of injunction issued by Judge Arturo Marave, RTC, Branch 78, Morong, Rizal; Judge Herculano Tech, RTC, Branch 70, Binangonan, Rizal; and Judge Aurelio Trampe, RTC, Branch 163, Pasig, Metro Manila, are hereby declared null and void and ordered set aside for having been issued with grave abuse of discretion. The Municipal Mayors of the Laguna Lake Region are hereby prohibited from issuing permits to construct and operate fishpens, fishcages and other aqua-culture structures within the Laguna Lake Region, their previous issuances being declared null and void. Thus, the fishing permits issued by Mayors Isidro B. Pacis, Municipality of Binangonan; Ricardo D. Papa, Municipality of Taguig; and Walfredo M. de la Vega, Municipality of Jala-jala, specifically, are likewise declared null and void and ordered cancelled. The fishpens, fishcages and other aqua-culture structures put up by operators by virtue of permits issued by Municipal Mayors within the Laguna Lake Region, specifically, permits issued to Fleet Development, Inc. and Carlito Arroyo; Manila Marine Life Business Resources, Inc., represented by, Mr. Tobias Reynald M. Tiangco; Greenfield Ventures Industrial Development Corporation and R.J. Orion Development Corporation; IRMA Fishing And Trading Corporation, ARTM Fishing Corporation, BDR Corporation, Mirt Corporation and Trim Corporation; Blue Lagoon Fishing Corporation and ALCRIS Chicken Growers, Inc.;

AGP Fish Ventures, Inc., represented by its President Alfonso Puyat; SEA MAR Trading Co., Inc., Eastern Lagoon Fishing Corporation, and MINAMAR Fishing Corporation, are hereby declared illegal structures subject to demolition by the Laguna Lake Development Authority.

"SUBJECT: NOTICE of the Opening of Neptune Street to Traffic

SO ORDERED.

"Please be informed that pursuant to the mandate of the MMDA law or Republic Act No. 7924 which requires the Authority to rationalize the use of roads and/or thoroughfares for the safe and convenient movement of persons, Neptune Street shall be opened to vehicular traffic effective January 2, 1996.

[G.R. No. 135962. March 27, 2000] METROPOLITAN MANILA DEVELOPMENT AUTHORITY, petitioner, vs. BEL-AIR VILLAGE ASSOCIATION, INC., respondent. DECISION

"Dear President Lindo,

"In view whereof, the undersigned requests you to voluntarily open the points of entry and exit on said street.

PUNO, J.: Not infrequently, the government is tempted to take legal shortcuts to solve urgent problems of the people. But even when government is armed with the best of intention, we cannot allow it to run roughshod over the rule of law. Again, we let the hammer fall and fall hard on the illegal attempt of the MMDA to open for public use a private road in a private subdivision. While we hold that the general welfare should be promoted, we stress that it should not be achieved at the expense of the rule of law. h Y Petitioner MMDA is a government agency tasked with the delivery of basic services in Metro Manila. Respondent Bel-Air Village Association, Inc. (BAVA) is a non-stock, non-profit corporation whose members are homeowners in Bel-Air Village, a private subdivision in Makati City. Respondent BAVA is the registered owner of Neptune Street, a road inside Bel-Air Village. On December 30, 1995, respondent received from petitioner, through its Chairman, a notice dated December 22, 1995 requesting respondent to open Neptune Street to public vehicular traffic starting January 2, 1996. The notice reads: Court

"Thank you for your cooperation and whatever assistance that may be extended by your association to the MMDA personnel who will be directing traffic in the area. "Finally, we are furnishing you with a copy of the handwritten instruction of the President on the matter. "Very truly yours, PROSPERO I. ORETA Chairman"[1] On the same day, respondent was apprised that the perimeter wall separating the subdivision from the adjacent Kalayaan Avenue would be demolished. Sppedsc On January 2, 1996, respondent instituted against petitioner before the Regional Trial Court, Branch 136, Makati City, Civil Case No. 96-001 for injunction. Respondent prayed for the issuance of a temporary restraining order and preliminary injunction enjoining the opening of

Neptune Street and prohibiting the demolition of the perimeter wall. The trial court issued a temporary restraining order the following day.

NEPTUNE STREET TO PUBLIC TRAFFIC PURSUANT TO ITS REGULATORY AND POLICE POWERS?

On January 23, 1996, after due hearing, the trial court denied issuance of a preliminary injunction.[2] Respondent questioned the denial before the Court of Appeals in CA-G.R. SP No. 39549. The appellate court conducted an ocular inspection of Neptune Street[3] and on February 13, 1996, it issued a writ of preliminary injunction enjoining the implementation of the MMDAs proposed action.[4]

II

On January 28, 1997, the appellate court rendered a Decision on the merits of the case finding that the MMDA has no authority to order the opening of Neptune Street, a private subdivision road and cause the demolition of its perimeter walls. It held that the authority is lodged in the City Council of Makati by ordinance. The decision disposed of as follows: Jurissc "WHEREFORE, the Petition is GRANTED; the challenged Order dated January 23, 1995, in Civil Case No. 96-001, is SET ASIDE and the Writ of Preliminary Injunction issued on February 13, 1996 is hereby made permanent. "For want of sustainable substantiation, the Motion to Cite Roberto L. del Rosario in contempt is denied.[5] "No pronouncement as to costs.

IS THE PASSAGE OF AN ORDINANCE A CONDITION PRECEDENT BEFORE THE MMDA MAY ORDER THE OPENING OF SUBDIVISION ROADS TO PUBLIC TRAFFIC? III IS RESPONDENT BEL-AIR VILLAGE ASSOCIATION, INC. ESTOPPED FROM DENYING OR ASSAILING THE AUTHORITY OF THE MMDA TO OPEN THE SUBJECT STREET? Jlexj V WAS RESPONDENT DEPRIVED OF DUE PROCESS DESPITE THE SEVERAL MEETINGS HELD BETWEEN MMDA AND THE AFFECTED BEL-AIR RESIDENTS AND BAVA OFFICERS? V HAS RESPONDENT COME TO COURT WITH UNCLEAN HANDS?"[7]

"SO ORDERED."[6] The Motion for Reconsideration of the decision was denied on September 28, 1998. Hence, this recourse. Jksm Petitioner MMDA raises the following questions: "I HAS THE METROPOLITAN MANILA DEVELOPMENT AUTHORITY (MMDA) THE MANDATE TO OPEN

Neptune Street is owned by respondent BAVA. It is a private road inside Bel-Air Village, a private residential subdivision in the heart of the financial and commercial district of Makati City. It runs parallel to Kalayaan Avenue, a national road open to the general public. Dividing the two (2) streets is a concrete perimeter wall approximately fifteen (15) feet high. The western end of Neptune Street intersects Nicanor Garcia, formerly Reposo Street, a subdivision road open to public vehicular traffic, while its eastern end intersects Makati Avenue, a national road. Both ends of Neptune Street are guarded by iron gates. Edp mis

Petitioner MMDA claims that it has the authority to open Neptune Street to public traffic because it is an agent of the state endowed with police power in the delivery of basic services in Metro Manila. One of these basic services is traffic management which involves the regulation of the use of thoroughfares to insure the safety, convenience and welfare of the general public. It is alleged that the police power of MMDA was affirmed by this Court in the consolidated cases of Sangalang v. Intermediate Appellate Court.[8] From the premise that it has police power, it is now urged that there is no need for the City of Makati to enact an ordinance opening Neptune street to the public.[9] Police power is an inherent attribute of sovereignty. It has been defined as the power vested by the Constitution in the legislature to make, ordain, and establish all manner of wholesome and reasonable laws, statutes and ordinances, either with penalties or without, not repugnant to the Constitution, as they shall judge to be for the good and welfare of the commonwealth, and for the subjects of the same.[10] The power is plenary and its scope is vast and pervasive, reaching and justifying measures for public health, public safety, public morals, and the general welfare.[11] It bears stressing that police power is lodged primarily in the National Legislature.[12] It cannot be exercised by any group or body of individuals not possessing legislative power.[13] The National Legislature, however, may delegate this power to the President and administrative boards as well as the lawmaking bodies of municipal corporations or local government units.[14] Once delegated, the agents can exercise only such legislative powers as are conferred on them by the national lawmaking body.[15] A local government is a "political subdivision of a nation or state which is constituted by law and has substantial control of local affairs."[16] The Local Government Code of 1991 defines a local government unit as a "body politic and corporate"[17]-- one endowed with powers as a political subdivision of the National Government and as a corporate entity representing the inhabitants of its territory.[18] Local government units are the provinces, cities, municipalities and barangays.[19] They are also the territorial and political subdivisions of the state.[20]

Our Congress delegated police power to the local government units in the Local Government Code of 1991. This delegation is found in Section 16 of the same Code, known as the general welfare clause, viz: Chief "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."[21] Local government units exercise police power through their respective legislative bodies. The legislative body of the provincial government is the sangguniang panlalawigan, that of the city government is the sangguniang panlungsod, that of the municipal government is the sangguniang bayan, and that of the barangay is the sangguniang barangay. The Local Government Code of 1991 empowers the sangguniang panlalawigan, sangguniang panlungsod and sangguniang bayan to "enact ordinances, approve resolutions and appropriate funds for the general welfare of the [province, city or municipality, as the case may be], and its inhabitants pursuant to Section 16 of the Code and in the proper exercise of the corporate powers of the [province, city municipality] provided under the Code x x x."[22] The same Code gives the sangguniang barangay the power to "enact ordinances as may be necessary to discharge the responsibilities conferred upon it by law or ordinance and to promote the general welfare of the inhabitants thereon."[23]

Metropolitan or Metro Manila is a body composed of several local government units - i.e., twelve (12) cities and five (5) municipalities, namely, the cities of Caloocan, Manila, Mandaluyong, Makati, Pasay, Pasig, Quezon, Muntinlupa, Las Pinas, Marikina, Paranaque and Valenzuela, and the municipalities of Malabon, , Navotas, , Pateros, San Juan and Taguig. With the passage of Republic Act (R. A.) No. 7924[24] in 1995, Metropolitan Manila was declared as a "special development and administrative region" and the Administration of "metro-wide" basic services affecting the region placed under "a development authority" referred to as the MMDA.[25] "Metro-wide services" are those "services which have metro-wide impact and transcend local political boundaries or entail huge expenditures such that it would not be viable for said services to be provided by the individual local government units comprising Metro Manila."[26] There are seven (7) basic metro-wide services and the scope of these services cover the following: (1) development planning; (2) transport and traffic management; (3) solid waste disposal and management; (4) flood control and sewerage management; (5) urban renewal, zoning and land use planning, and shelter services; (6) health and sanitation, urban protection and pollution control; and (7) public safety. The basic service of transport and traffic management includes the following: Lexjuris "(b) Transport and traffic management which include the formulation, coordination, and monitoring of policies, standards, programs and projects to rationalize the existing transport operations, infrastructure requirements, the use of thoroughfares, and promotion of safe and convenient movement of persons and goods; provision for the mass transport system and the institution of a system to regulate road users; administration and implementation of all traffic enforcement operations, traffic engineering services and traffic education programs, including the institution of a single ticketing system in Metropolitan Manila;"[27]

In the delivery of the seven (7) basic services, the MMDA has the following powers and functions: Esm "Sec. 5. Functions and powers of the Metro Manila Development Authority.The MMDA shall: (a) Formulate, coordinate and regulate the implementation of medium and long-term plans and programs for the delivery of metro-wide services, land use and physical development within Metropolitan Manila, consistent with national development objectives and priorities; (b) Prepare, coordinate and regulate the implementation of medium-term investment programs for metro-wide services which shall indicate sources and uses of funds for priority programs and projects, and which shall include the packaging of projects and presentation to funding institutions; Esmsc (c) Undertake and manage on its own metro-wide programs and projects for the delivery of specific services under its jurisdiction, subject to the approval of the Council. For this purpose, MMDA can create appropriate project management offices; (d) Coordinate and monitor the implementation of such plans, programs and projects in Metro Manila; identify bottlenecks and adopt solutions to problems of implementation; (e) The MMDA shall set the policies concerning traffic in Metro Manila, and shall coordinate and regulate the implementation of all programs and projects concerning traffic management, specifically pertaining to enforcement, engineering and education. Upon request, it shall be extended assistance and cooperation, including but not

limited to, assignment of personnel, by all other government agencies and offices concerned; (f) Install and administer a single ticketing system, fix, impose and collect fines and penalties for all kinds of violations of traffic rules and regulations, whether moving or non-moving in nature, and confiscate and suspend or revoke drivers licenses in the enforcement of such traffic laws and regulations, the provisions of RA 4136 and PD 1605 to the contrary notwithstanding. For this purpose, the Authority shall impose all traffic laws and regulations in Metro Manila, through its traffic operation center, and may deputize members of the PNP, traffic enforcers of local government units, duly licensed security guards, or members of non-governmental organizations to whom may be delegated certain authority, subject to such conditions and requirements as the Authority may impose; and (g) Perform other related functions required to achieve the objectives of the MMDA, including the undertaking of delivery of basic services to the local government units, when deemed necessary subject to prior coordination with and consent of the local government unit concerned." Jurismis The implementation of the MMDAs plans, programs and projects is undertaken by the local government units, national government agencies, accredited peoples organizations, non-governmental organizations, and the private sector as well as by the MMDA itself. For this purpose, the MMDA has the power to enter into contracts, memoranda of agreement and other cooperative arrangements with these bodies for the delivery of the required services within Metro Manila.[28] The governing board of the MMDA is the Metro Manila Council. The Council is composed of the mayors of the component 12 cities and 5

municipalities, the president of the Metro Manila Vice-Mayors League and the president of the Metro Manila Councilors League.[29] The Council is headed by a Chairman who is appointed by the President and vested with the rank of cabinet member. As the policy-making body of the MMDA, the Metro Manila Council approves metro-wide plans, programs and projects, and issues the necessary rules and regulations for the implementation of said plans; it approves the annual budget of the MMDA and promulgates the rules and regulations for the delivery of basic services, collection of service and regulatory fees, fines and penalties. These functions are particularly enumerated as follows: LEX "Sec. 6. Functions of the Metro Manila Council. (a) The Council shall be the policy-making body of the MMDA; (b) It shall approve metro-wide plans, programs and projects and issue rules and regulations deemed necessary by the MMDA to carry out the purposes of this Act; (c) It may increase the rate of allowances and per diems of the members of the Council to be effective during the term of the succeeding Council. It shall fix the compensation of the officers and personnel of the MMDA, and approve the annual budget thereof for submission to the Department of Budget and Management (DBM); (d) It shall promulgate rules and regulations and set policies and standards for metro-wide application governing the delivery of basic services, prescribe and collect service and regulatory fees, and impose and collect fines and penalties." Jj sc Clearly, the scope of the MMDAs function is limited to the delivery of the seven (7) basic services. One of these is transport and traffic management which includes the formulation and monitoring of policies, standards and projects to rationalize the existing transport operations, infrastructure requirements, the use of thoroughfares and promotion of

the safe movement of persons and goods. It also covers the mass transport system and the institution of a system of road regulation, the administration of all traffic enforcement operations, traffic engineering services and traffic education programs, including the institution of a single ticketing system in Metro Manila for traffic violations. Under this service, the MMDA is expressly authorized "to set the policies concerning traffic" and "coordinate and regulate the implementation of all traffic management programs." In addition, the MMDA may "install and administer a single ticketing system," fix, impose and collect fines and penalties for all traffic violations. Ca-lrsc It will be noted that the powers of the MMDA are limited to the following acts: formulation, coordination, regulation, implementation, preparation, management, monitoring, setting of policies, installation of a system and administration. There is no syllable in R. A. No. 7924 that grants the MMDA police power, let alone legislative power. Even the Metro Manila Council has not been delegated any legislative power. Unlike the legislative bodies of the local government units, there is no provision in R. A. No. 7924 that empowers the MMDA or its Council to "enact ordinances, approve resolutions and appropriate funds for the general welfare" of the inhabitants of Metro Manila. The MMDA is, as termed in the charter itself, a "development authority."[30] It is an agency created for the purpose of laying down policies and coordinating with the various national government agencies, peoples organizations, non-governmental organizations and the private sector for the efficient and expeditious delivery of basic services in the vast metropolitan area. All its functions are administrative in nature and these are actually summed up in the charter itself, viz: "Sec. 2. Creation of the Metropolitan Manila Development Authority. -- x x x. The MMDA shall perform planning, monitoring and coordinative functions, and in the process exercise regulatory and supervisory authority over the delivery of metro-wide services within Metro Manila, without diminution of the autonomy of the local government units concerning purely local matters."[31]

Petitioner cannot seek refuge in the cases of Sangalang v. Intermediate Appellate Court[32] where we upheld a zoning ordinance issued by the Metro Manila Commission (MMC), the predecessor of the MMDA, as an exercise of police power. The first Sangalang decision was on the merits of the petition,[33] while the second decision denied reconsideration of the first case and in addition discussed the case of Yabut v. Court of Appeals.[34] Sangalang v. IAC involved five (5) consolidated petitions filed by respondent BAVA and three residents of Bel-Air Village against other residents of the Village and the Ayala Corporation, formerly the Makati Development Corporation, as the developer of the subdivision. The petitioners sought to enforce certain restrictive easements in the deeds of sale over their respective lots in the subdivision. These were the prohibition on the setting up of commercial and advertising signs on the lots, and the condition that the lots be used only for residential purposes. Petitioners alleged that respondents, who were residents along Jupiter Street of the subdivision, converted their residences into commercial establishments in violation of the "deed restrictions," and that respondent Ayala Corporation ushered in the full commercialization" of Jupiter Street by tearing down the perimeter wall that separated the commercial from the residential section of the village.[35] The petitions were dismissed based on Ordinance No. 81 of the Municipal Council of Makati and Ordinance No. 81-01 of the Metro Manila Commission (MMC). Municipal Ordinance No. 81 classified Bel-Air Village as a Class A Residential Zone, with its boundary in the south extending to the center line of Jupiter Street. The Municipal Ordinance was adopted by the MMC under the Comprehensive Zoning Ordinance for the National Capital Region and promulgated as MMC Ordinance No. 81-01. Bel-Air Village was indicated therein as bounded by Jupiter Street and the block adjacent thereto was classified as a High Intensity Commercial Zone.[36] We ruled that since both Ordinances recognized Jupiter Street as the boundary between Bel-Air Village and the commercial district, Jupiter Street was not for the exclusive benefit of Bel-Air residents. We also held that the perimeter wall on said street was constructed not to separate the residential from the commercial blocks but simply for

security reasons, hence, in tearing down said wall, Ayala Corporation did not violate the "deed restrictions" in the deeds of sale. Scc-alr

charter of the MMC, shows that the latter possessed greater powers which were not bestowed on the present MMDA. Jjlex

We upheld the ordinances, specifically MMC Ordinance No. 81-01, as a legitimate exercise of police power.[37] The power of the MMC and the Makati Municipal Council to enact zoning ordinances for the general welfare prevailed over the "deed restrictions".

Metropolitan Manila was first created in 1975 by Presidential Decree (P.D.) No. 824. It comprised the Greater Manila Area composed of the contiguous four (4) cities of Manila, Quezon, Pasay and Caloocan, and the thirteen (13) municipalities of Makati, Mandaluyong, San Juan, Las Pinas, Malabon, Navotas, Pasig, Pateros, Paranaque, Marikina, Muntinlupa and Taguig in the province of Rizal, and Valenzuela in the province of Bulacan.[40]Metropolitan Manila was created as a response to the finding that the rapid growth of population and the increase of social and economic requirements in these areas demand a call for simultaneous and unified development; that the public services rendered by the respective local governments could be administered more efficiently and economically if integrated under a system of central planning; and this coordination, "especially in the maintenance of peace and order and the eradication of social and economic ills that fanned the flames of rebellion and discontent [were] part of reform measures under Martial Law essential to the safety and security of the State."[41]

In the second Sangalang/Yabut decision, we held that the opening of Jupiter Street was warranted by the demands of the common good in terms of "traffic decongestion and public convenience." Jupiter was opened by the Municipal Mayor to alleviate traffic congestion along the public streets adjacent to the Village.[38] The same reason was given for the opening to public vehicular traffic of Orbit Street, a road inside the same village. The destruction of the gate in Orbit Street was also made under the police power of the municipal government. The gate, like the perimeter wall along Jupiter, was a public nuisance because it hindered and impaired the use of property, hence, its summary abatement by the mayor was proper and legal.[39] Contrary to petitioners claim, the two Sangalang cases do not apply to the case at bar. Firstly, both involved zoning ordinances passed by the municipal council of Makati and the MMC. In the instant case, the basis for the proposed opening of Neptune Street is contained in the notice of December 22, 1995 sent by petitioner to respondent BAVA, through its president. The notice does not cite any ordinance or law, either by the Sangguniang Panlungsod of Makati City or by the MMDA, as the legal basis for the proposed opening of Neptune Street. Petitioner MMDA simply relied on its authority under its charter "to rationalize the use of roads and/or thoroughfares for the safe and convenient movement of persons." Rationalizing the use of roads and thoroughfares is one of the acts that fall within the scope of transport and traffic management. By no stretch of the imagination, however, can this be interpreted as an express or implied grant of ordinance-making power, much less police power. Misjuris Secondly, the MMDA is not the same entity as the MMC in Sangalang. Although the MMC is the forerunner of the present MMDA, an examination of Presidential Decree (P. D.) No. 824, the

Metropolitan Manila was established as a "public corporation" with the following powers: Calrs-pped "Section 1. Creation of the Metropolitan Manila.There is hereby created a public corporation, to be known as the Metropolitan Manila, vested with powers and attributes of a corporation including the power to make contracts, sue and be sued, acquire, purchase, expropriate, hold, transfer and dispose of property and such other powers as are necessary to carry out its purposes. The Corporation shall be administered by a Commission created under this Decree."[42] The administration of Metropolitan Manila was placed under the Metro Manila Commission (MMC) vested with the following powers: "Sec. 4. Powers and Functions of the Commission. - The Commission shall have the following powers and functions:

1. To act as a central government to establish and administer programs and provide services common to the area;

9. To establish a garbage disposal operation center, which shall direct garbage collection and disposal in the metropolitan area;

2. To levy and collect taxes and special assessments, borrow and expend money and issue bonds, revenue certificates, and other obligations of indebtedness. Existing tax measures should, however, continue to be operative until otherwise modified or repealed by the Commission;

10. To establish and operate a transport and traffic center, which shall direct traffic activities; Jjjuris

3. To charge and collect fees for the use of public service facilities; 4. To appropriate money for the operation of the metropolitan government and review appropriations for the city and municipal units within its jurisdiction with authority to disapprove the same if found to be not in accordance with the established policies of the Commission, without prejudice to any contractual obligation of the local government units involved existing at the time of approval of this Decree; 5. To review, amend, revise or repeal all ordinances, resolutions and acts of cities and municipalities within Metropolitan Manila; 6. To enact or approve ordinances, resolutions and to fix penalties for any violation thereof which shall not exceed a fine of P10,000.00 or imprisonment of six years or both such fine and imprisonment for a single offense; 7. To perform general administrative, executive and policy-making functions; 8. To establish a fire control operation center, which shall direct the fire services of the city and municipal governments in the metropolitan area;

11. To coordinate and monitor governmental and private activities pertaining to essential services such as transportation, flood control and drainage, water supply and sewerage, social, health and environmental services, housing, park development, and others; 12. To insure and monitor the undertaking of a comprehensive social, economic and physical planning and development of the area; 13. To study the feasibility of increasing barangay participation in the affairs of their respective local governments and to propose to the President of the Philippines definite programs and policies for implementation; 14. To submit within thirty (30) days after the close of each fiscal year an annual report to the President of the Philippines and to submit a periodic report whenever deemed necessary; and 15. To perform such other tasks as may be assigned or directed by the President of the Philippines." Sc jj The MMC was the "central government" of Metro Manila for the purpose of establishing and administering programs providing services common to the area. As a "central government" it had the power to levy and collect taxes and special assessments, the power to charge and collect fees; the power to appropriate money for its operation, and at the same time, review appropriations for the city and municipal units within its jurisdiction. It was bestowed the power to enact or approve ordinances, resolutions and fix penalties for violation of such ordinances

and resolutions. It also had the power to review, amend, revise or repeal all ordinances, resolutions and acts of any of the four (4) cities and thirteen (13) municipalities comprising Metro Manila. P. D. No. 824 further provided: "Sec. 9. Until otherwise provided, the governments of the four cities and thirteen municipalities in the Metropolitan Manila shall continue to exist in their present form except as may be inconsistent with this Decree. The members of the existing city and municipal councils in Metropolitan Manila shall, upon promulgation of this Decree, and until December 31, 1975, become members of the Sangguniang Bayan which is hereby created for every city and municipality of Metropolitan Manila. In addition, the Sangguniang Bayan shall be composed of as many barangay captains as may be determined and chosen by the Commission, and such number of representatives from other sectors of the society as may be appointed by the President upon recommendation of the Commission. x x x. The Sangguniang Bayan may recommend to the Commission ordinances, resolutions or such measures as it may adopt; Provided, that no such ordinance, resolution or measure shall become effective, until after its approval by the Commission; and Provided further, that the power to impose taxes and other levies, the power to appropriate money and the power to pass ordinances or resolutions with penal sanctions shall be vested exclusively in the Commission." The creation of the MMC also carried with it the creation of the Sangguniang Bayan. This was composed of the members of the

component city and municipal councils, barangay captains chosen by the MMC and sectoral representatives appointed by the President. The Sangguniang Bayanhad the power to recommend to the MMC the adoption of ordinances, resolutions or measures. It was the MMC itself, however, that possessed legislative powers. All ordinances, resolutions and measures recommended by the Sangguniang Bayan were subject to the MMCs approval. Moreover, the power to impose taxes and other levies, the power to appropriate money, and the power to pass ordinances or resolutions with penal sanctions were vested exclusively in the MMC. Sce-dp Thus, Metropolitan Manila had a "central government," i.e., the MMC which fully possessed legislative and police powers. Whatever legislative powers the component cities and municipalities had were all subject to review and approval by the MMC. After President Corazon Aquino assumed power, there was a clamor to restore the autonomy of the local government units in Metro Manila. Hence, Sections 1 and 2 of Article X of the 1987 Constitution provided: Sj cj "Section 1. The territorial and political subdivisions of the Republic of the Philippines are the provinces, cities, municipalities and barangays. There shall be autonomous regions in Muslim Mindanao and the Cordilleras as herein provided. Section 2. The territorial and political subdivisions shall enjoy local autonomy." The Constitution, however, recognized the necessity of creating metropolitan regions not only in the existing National Capital Region but also in potential equivalents in the Visayas and Mindanao.[43] Section 11 of the same Article X thus provided: "Section 11. The Congress may, by law, create special metropolitan political subdivisions, subject to a plebiscite as set forth in Section 10 hereof. The component cities

and municipalities shall retain their basic autonomy and shall be entitled to their own local executives and legislative assemblies. The jurisdiction of the metropolitan authority that will thereby be created shall be limited to basic services requiring coordination." The Constitution itself expressly provides that Congress may, by law, create "special metropolitan political subdivisions" which shall be subject to approval by a majority of the votes cast in a plebiscite in the political units directly affected; the jurisdiction of this subdivision shall be limited to basic services requiring coordination; and the cities and municipalities comprising this subdivision shall retain their basic autonomy and their own local executive and legislative assemblies.[44] Pending enactment of this law, the Transitory Provisions of the Constitution gave the President of the Philippines the power to constitute the Metropolitan Authority, viz: "Section 8. Until otherwise provided by Congress, the President may constitute the Metropolitan Authority to be composed of the heads of all local government units comprising the Metropolitan Manila area."[45] In 1990, President Aquino issued Executive Order (E. O.) No. 392 and constituted the Metropolitan Manila Authority (MMA). The powers and functions of the MMC were devolved to the MMA.[46] It ought to be stressed, however, that not all powers and functions of the MMC were passed to the MMA. The MMAs power was limited to the "delivery of basic urban services requiring coordination in Metropolitan Manila."[47]The MMAs governing body, the Metropolitan Manila Council, although composed of the mayors of the component cities and municipalities, was merely given the power of: (1) formulation of policies on the delivery of basic services requiring coordination and consolidation; and (2) promulgation of resolutions and other issuances, approval of a code of basic services and the exercise of its rule-making power.[48] Under the 1987 Constitution, the local government units became primarily responsible for the governance of their respective political subdivisions. The MMAs jurisdiction was limited to addressing

common problems involving basic services that transcended local boundaries. It did not have legislative power. Its power was merely to provide the local government units technical assistance in the preparation of local development plans. Any semblance of legislative power it had was confined to a "review [of] legislation proposed by the local legislative assemblies to ensure consistency among local governments and with the comprehensive development plan of Metro Manila," and to "advise the local governments accordingly."[49] When R.A. No. 7924 took effect, Metropolitan Manila became a "special development and administrative region" and the MMDA a "special development authority" whose functions were "without prejudice to the autonomy of the affected local government units." The character of the MMDA was clearly defined in the legislative debates enacting its charter. R. A. No. 7924 originated as House Bill No. 14170/ 11116 and was introduced by several legislators led by Dante Tinga, Roilo Golez and Feliciano Belmonte. It was presented to the House of Representatives by the Committee on Local Governments chaired by Congressman Ciriaco R. Alfelor. The bill was a product of Committee consultations with the local government units in the National Capital Region (NCR), with former Chairmen of the MMC and MMA,[50] and career officials of said agencies. When the bill was first taken up by the Committee on Local Governments, the following debate took place: "THE CHAIRMAN [Hon. Ciriaco Alfelor]: Okay, Let me explain. This has been debated a long time ago, you know. Its a special we can create a special metropolitan political subdivision. Supreme Actually, there are only six (6) political subdivisions provided for in the Constitution: barangay, municipality, city, province, and we have the Autonomous Region of Mindanao and we have the Cordillera. So we have 6. Now.

HON. [Elias] LOPEZ: May I interrupt, Mr. Chairman. In the case of the Autonomous Region, that is also specifically mandated by the Constitution. THE CHAIRMAN: Thats correct. But it is considered to be a political subdivision. What is the meaning of a political subdivision? Meaning to say, that it has its own government, it has its own political personality, it has the power to tax, and all governmental powers: police power and everything. All right. Authority is different; because it does not have its own government. It is only a council, it is an organization of political subdivision, powers, no, which is not imbued with any political power. Esmmis If you go over Section 6, where the powers and functions of the Metro Manila Development Authority, it is purely coordinative. And it provides here that the council is policy-making. All right. Under the Constitution is a Metropolitan Authority with coordinative power. Meaning to say, it coordinates all of the different basic services which have to be delivered to the constituency. All right. There is now a problem. Each local government unit is given its respective as a political subdivision. Kalookan has its powers, as provided for and protected and guaranteed by the Constitution. All right, the exercise. However, in the exercise of that power, it might be deleterious and disadvantageous to other local government units. So, we are forming an authority where all of these will be members and then set up a policy in order that the basic services can be effectively coordinated. All right. justice Of course, we cannot deny that the MMDA has to survive. We have to provide some funds, resources. But it does not possess any political power. We do not elect the Governor. We do not have the power to tax. As a matter of fact, I was trying to intimate to the

author that it must have the power to sue and be sued because it coordinates. All right. It coordinates practically all these basic services so that the flow and the distribution of the basic services will be continuous. Like traffic, we cannot deny that. Its before our eyes. Sewerage, flood control, water system, peace and order, we cannot deny these. Its right on our face. We have to look for a solution. What would be the right solution? All right, we envision that there should be a coordinating agency and it is called an authority. All right, if you do not want to call it an authority, its alright. We may call it a council or maybe a management agency. x x x."[51] Clearly, the MMDA is not a political unit of government. The power delegated to the MMDA is that given to the Metro Manila Council to promulgate administrative rules and regulations in the implementation of the MMDAs functions. There is no grant of authority to enact ordinances and regulations for the general welfare of the inhabitants of the metropolis. This was explicitly stated in the last Committee deliberations prior to the bills presentation to Congress. Thus: Ed-p "THE CHAIRMAN: Yeah, but we have to go over the suggested revision. I think this was already approved before, but it was reconsidered in view of the proposals, set-up, to make the MMDA stronger. Okay, so if there is no objection to paragraph "f" And then next is paragraph "b," under Section 6. "It shall approve metro-wide plans, programs and projects and issue ordinances or resolutions deemed necessary by the MMDA to carry out the purposes of this Act." Do you have the powers? Does the MMDA because that takes the form of a local government unit, a political subdivision. HON. [Feliciano] BELMONTE: Yes, I believe so, your Honor. When we say that it has the policies, its very clear

that those policies must be followed. Otherwise, whats the use of empowering it to come out with policies. Now, the policies may be in the form of a resolution or it may be in the form of a ordinance. The term "ordinance" in this case really gives it more teeth, your honor. Otherwise, we are going to see a situation where you have the power to adopt the policy but you cannot really make it stick as in the case now, and I think here is Chairman Bunye. I think he will agree that that is the case now. Youve got the power to set a policy, the body wants to follow your policy, then we say lets call it an ordinance and see if they will not follow it.

HON. BELMONTE: All right. I defer to that opinion, your Honor. sc THE CHAIRMAN: So instead of ordinances, say rules and regulations. HON. BELMONTE: Or resolutions. Actually, they are actually considering resolutions now. THE CHAIRMAN: Rules and resolutions. HON. BELMONTE: Rules, regulations and resolutions."[52]

THE CHAIRMAN: Thats very nice. I like that. However, there is a constitutional impediment. You are making this MMDA a political subdivision. The creation of the MMDA would be subject to a plebiscite. That is what Im trying to avoid. Ive been trying to avoid this kind of predicament. Under the Constitution it states: if it is a political subdivision, once it is created it has to be subject to a plebiscite. Im trying to make this as administrative. Thats why we place the Chairman as a cabinet rank.

The draft of H. B. No. 14170/ 11116 was presented by the Committee to the House of Representatives. The explanatory note to the bill stated that the proposed MMDA is a "development authority" which is a "national agency, not a political government unit."[53] The explanatory note was adopted as the sponsorship speech of the Committee on Local Governments. No interpellations or debates were made on the floor and no amendments introduced. The bill was approved on second reading on the same day it was presented.[54]

HON. BELMONTE: All right, Mr. Chairman, okay, what you are saying there is .

When the bill was forwarded to the Senate, several amendments were made. These amendments, however, did not affect the nature of the MMDA as originally conceived in the House of Representatives.[55]

THE CHAIRMAN: In setting up ordinances, it is a political exercise. Believe me. HON. [Elias] LOPEZ: Mr. Chairman, it can be changed into issuances of rules and regulations. That would be it shall also be enforced. Jksm HON. BELMONTE: Okay, I will . HON. LOPEZ: And you can also say that violation of such rule, you impose a sanction. But you know, ordinance has a different legal connotation.

It is thus beyond doubt that the MMDA is not a local government unit or a public corporation endowed with legislative power. It is not even a "special metropolitan political subdivision" as contemplated in Section 11, Article X of the Constitution. The creation of a "special metropolitan political subdivision" requires the approval by a majority of the votes cast in a plebiscite in the political units directly affected.[56] R. A. No. 7924 was not submitted to the inhabitants of Metro Manila in a plebiscite. The Chairman of the MMDA is not an official elected by the people, but appointed by the President with the rank and privileges of a cabinet member. In fact, part of his function is to perform such other duties as may be assigned to him by the President,[57] whereas in local

government units, the President merely exercises supervisory authority. This emphasizes the administrative character of the MMDA. Newmiso Clearly then, the MMC under P. D. No. 824 is not the same entity as the MMDA under R. A. No. 7924. Unlike the MMC, the MMDA has no power to enact ordinances for the welfare of the community. It is the local government units, acting through their respective legislative councils, that possess legislative power and police power. In the case at bar, the Sangguniang Panlungsod of Makati City did not pass any ordinance or resolution ordering the opening of Neptune Street, hence, its proposed opening by petitioner MMDA is illegal and the respondent Court of Appeals did not err in so ruling. We desist from ruling on the other issues as they are unnecessary. Esmso We stress that this decision does not make light of the MMDAs noble efforts to solve the chaotic traffic condition in Metro Manila. Everyday, traffic jams and traffic bottlenecks plague the metropolis. Even our once sprawling boulevards and avenues are now crammed with cars while city streets are clogged with motorists and pedestrians. Traffic has become a social malaise affecting our peoples productivity and the efficient delivery of goods and services in the country. The MMDA was created to put some order in the metropolitan transportation system but unfortunately the powers granted by its charter are limited. Its good intentions cannot justify the opening for public use of a private street in a private subdivision without any legal warrant. The promotion of the general welfare is not antithetical to the preservation of the rule of law. Sdjad IN VIEW WHEREOF, the petition is denied. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 39549 are affirmed. Sppedsc SO ORDERED.