EN BANC

BOY SCOUTS OF THE PHILIPPINES,

Petitioner,









- versus -









COMMISSION ON AUDIT,
Respondent.
G.R. No. 177131

Present:

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.


Promulgated:

June 7, 2011
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - x


D E C I S I O N


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,
2002Decision,
[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]


Antec
edent
Facts
and
Backg
round
of the
Case

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 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 1987 Administrative Code.
[7]
The COA
Resolution also cited its constitutional mandate under
Section 2(1), Article IX (D). Finally, the COA Resolution
reads:

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.

x x x x

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.

x x x x

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 Resolution.
[17]


This led to the filing by the BSP of this petition
for prohibition with preliminary injunction and temporary
restraining order against the COA.

The Issue

As stated earlier, the sole issue to be resolved in
this case is whether the BSP falls under the COAs audit
jurisdiction.




The
Parties
Respecti
ve
Argume
nts

The BSP contends that Boy Scouts of the
Philippines v. National Labor Relations Commission is
inapplicable for purposes of determining the audit
jurisdiction of the COA as the issue therein was the
jurisdiction of the National Labor Relations Commission
over a case for illegal dismissal and unfair labor practice
filed by certain BSP employees.
[18]


While the BSP concedes that its functions do
relate to those that the government might otherwise
completely assume on its own, it avers that this alone was
not determinative of the COAs audit jurisdiction over
it. The BSP further avers that the Court in Boy Scouts of
the Philippines v. National Labor Relations
Commission simply stated x x x that in respect of
functions, the BSP is akin to a public corporation but this
was not synonymous to holding that the BSP is a
government corporation or 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 had categorically found that its
assets were acquired from the Boy Scouts of America and
not from the Philippine government, and that its
operations are financed chiefly from membership dues of
the Boy Scouts themselves as well as from property
rentals; and that the BSP may correctly be characterized
as non-governmental, and hence, beyond the audit
jurisdiction of the COA. It further claims that the
designation by the Court of the BSP as a government
agency or instrumentality is mere obiter dictum.
[20]


The BSP maintains that the provisions of
Republic Act No. 7278 suggest that governance of BSP has
come to be overwhelmingly a private affair or nature, with
government participation restricted to the seat of the
Secretary of Education, Culture and Sports.
[21]
It
cites Philippine Airlines Inc. v. Commission on
Audit
[22]
wherein the Court declared that, PAL, having
ceased to be a government-owned or controlled
corporation is no longer under the audit jurisdiction of the
COA.
[23]
Claiming that the amendments introduced by
Republic Act No. 7278 constituted a supervening event
that changed the BSPs corporate identity in the same way
that the governments privatization program changed
PALs, the BSP makes the case that the government no
longer has control over it; thus, the COA cannot use the
Boy Scouts of the Philippines v. National Labor Relations
Commission as its basis for the exercise of its jurisdiction
and the issuance of COA Resolution No. 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.

x x x x

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]



To summarize its other arguments, the BSP
contends that it is not a government-owned or controlled
corporation; neither is it an instrumentality, agency, or
subdivision of the government.

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 controlled
corporation and government
instrumentality.
[27]



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 controlled
corporation; that as an attached agency of the
Department of Education, Culture and Sports (DECS), the
BSP is an agency of the government; and that the BSP is a
chartered institution under Section 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.


x x x x

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 COA points out that the government is not
precluded by law from extending financial support to the
BSP and adding to its funds, and that as a government
instrumentality which continues to perform a vital
function imbued with public interest and reflective of the
governments policy to stimulate patriotic sentiments and
love of country, the BSPs funds from whatever source are
public funds, and can be used solely for public purpose in
pursuance of the provisions of Republic Act No. *7278+.
[32]


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.

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 determinative of the
resolution of the present controversy on the COAs audit
jurisdiction over petitioner, and in fact, the controversy
may be resolved on other grounds; thus, the requisites
before a judicial inquiry may be made, as set forth
in Commissioner of Internal Revenue v. Court of Tax
Appeals,
[36]
have not been fully met.
[37]
Moreover, the
COA maintains that behind every law lies the presumption
of constitutionality.
[38]
The COA likewise argues that
contrary to the BSPs position, repeal of a law by
implication is not favored.
[39]
Lastly, the COA 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:

x x x x

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 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
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.


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.

x x x x

"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
Corporati
on 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:

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.)


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
Classif
icatio
n
Under
the
Admin
istrati
ve
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 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:

x x x x

(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:

x x x x

(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 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 characteristic does not make the
attached chartered agency a private corporation covered
by the constitutional proscription in question.

Art. XII,
Sec. 16 of
the
Constitut
ion refers
to
private
corporati
ons
created
by
governm
ent for
proprieta
ry or
economi
c/busine
ss
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.

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 which pertains
tonational economy and patrimony and the interests of
the people in economic development.

Section 16, Article XII deals with the formation,
organization, or regulation of private
corporations,
[52]
which should be done through a general
law enacted by Congress, provides for an exception, that
is: if the corporation is government owned or controlled;
its creation is in the interest of the common good; and it
meets the test of economic viability. The rationale behind
Article XII, Section 16 of the 1987 Constitution was
explained in Feliciano v. Commission on Audit,
[53]
in 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
corporations by special law. The said constitutional
provision should not be construed so as to prohibit the
creation of public corporations or a corporate agency or
instrumentality of the government intended to serve a
public interest or purpose, which should not be measured
on the basis of economic viability, but according to the
public interest or purpose it serves as envisioned
by paragraph (2), of Article 44 of the Civil Code and the
pertinent provisions of the Administrative Code of 1987.

The BSP
is a
Public
Corporati
on Not
Subject
to the
Test of
Governm
ent
Ownershi
p or
Control
and
Economic
Viability

The BSP is a public corporation or a government
agency or instrumentality with juridical personality, which
does not fall within the constitutional prohibition in Article
XII, Section 16, notwithstanding the amendments to its
charter. Not all corporations, which are not government
owned or controlled, are ipso facto to be considered
private corporations as there exists another distinct class
of corporations or chartered institutions which are
otherwise known as public corporations. These
corporations are treated by law as agencies or
instrumentalities of the government which are not subject
to the tests 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.

Classifica
tion of
Corporati
ons
Under
Section
16,
Article
XII of the
Constitut
ion on
National
Economy
and
Patrimon
y


The dissenting opinion of Associate Justice Antonio
T. Carpio, citing a line of cases, insists that the Constitution
recognizes only two classes of
corporations: privatecorporations under a general law,
and government-owned or controlled corporations created
by special charters.

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:

Instrume
ntality - 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 a
"chartered institution" in the following
terms:

Chartere
d 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:

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:

x x x x

(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.

x x x x

(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.

(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 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 owned or controlled by the government
because of reduction of the 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
Ownershi
p and
Control
Tests
Inapplica
ble to
Public
Corporati
ons


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

x x x x

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.

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.

x x x x

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.

x x x x

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.

x x x x

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?

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 corporations dealing with governmental
functions, to which category the BSP belongs. The
discussion above conveys the constitutional intent not to
apply this constitutional ban on the creation of public
corporations where the economic viability test would be
irrelevant. The said test would only apply if the
corporation is engaged in some economic activity or
business function for the government.

It is undisputed that the BSP performs functions that
are impressed with public interest. In fact, during the
consideration of the Senate Bill that eventually became
Republic Act No. 7278, which amended the BSP Charter,
one of the bills sponsors, Senator Joey Lina, described the
BSP as follows:

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.

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 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]



Furthermore, this Court cannot agree with the
dissenting opinion which equates the changes introduced
by Republic Act No. 7278 to the BSP Charter as clear
manifestation of the intent of Congress to return the BSP
to the private sector. It was not the intent of Congress in
enacting Republic Act No. 7278 to give up all interests in
this basic youth organization, which has been its partner in
forming responsible citizens for decades.

In fact, as may be seen in the deliberation of the
House Bills that eventually resulted to Republic Act No.
7278, Congress worked closely with the BSP to rejuvenate
the organization, to bring it back to its former 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 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.

x x x x

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
franchise of that movement?

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.)


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.

Requisite
s for
Declarati
on of
Unconsti
tutionalit
y 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 parties were asked to
Comment on the validity of the BSP charter by 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.)


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

Regarding the COAs jurisdiction over the BSP,
Section 8 of its 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 instrumentalities shall be
expended by the Executive Board in
pursuance of this Act.


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]



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

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.

x x x x

HON. AMATONG: Mr. Chairman,
in connection with that.

THE CHAIRMAN: Yeah, Gentleman
from Zamboanga.

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.


Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-28089 October 25, 1967
BARA LIDASAN, petitioner,
vs.
COMMISSION ON ELECTIONS, respondent.
Suntay for petitioner.
Barrios and Fule for respondent.
SANCHEZ, J.:
The question initially presented to the Commission on
Elections,
1
is this: Is Republic Act 4790, which is entitled
"An Act Creating the Municipality of Dianaton in the
Province of Lanao del Sur", but which includes barrios
located in another province Cotabato to be spared
from attack planted upon the constitutional mandate that
"No bill which may be enacted into law shall embrace
more than one subject which shall be expressed in the title
of the bill"? Comelec's answer is in the affirmative.
Offshoot is the present original petition for certiorari and
prohibition.
On June 18, 1966, the Chief Executive signed into law
House Bill 1247, known as Republic Act 4790, now in
dispute. The body of the statute, reproduced in haec
verba, reads:
Sec. 1. Barrios Togaig, Madalum, Bayanga,
Langkong, Sarakan, Kat-bo, Digakapan, Magabo,
Tabangao, Tiongko, Colodan, Kabamakawan,
Kapatagan, Bongabong, Aipang, Dagowan,
Bakikis, Bungabung, Losain, Matimos and
Magolatung, in the Municipalities of Butig and
Balabagan, Province of Lanao del Sur, are
separated from said municipalities and
constituted into a distinct and independent
municipality of the same province to be known
as the Municipality of Dianaton, Province of
Lanao del Sur. The seat of government of the
municipality shall be in Togaig.
Sec. 2. The first mayor, vice-mayor and
councilors of the new municipality shall be
elected in the nineteen hundred sixty-seven
general elections for local officials.
Sec. 3. This Act shall take effect upon its
approval.
It came to light later that barrios Togaig and Madalum just
mentioned are within the municipality of Buldon,Province
of Cotabato, and that Bayanga, Langkong, Sarakan, Kat-bo,
Digakapan, Magabo, Tabangao, Tiongko, Colodan and
Kabamakawan are parts and parcel of another
municipality, the municipality of Parang, also in
theProvince of Cotabato and not of Lanao del Sur.
Prompted by the coming elections, Comelec adopted its
resolution of August 15, 1967, the pertinent portions of
which are:
For purposes of establishment of precincts,
registration of voters and for other election
purposes, the Commission RESOLVED that
pursuant to RA 4790, the new municipality of
Dianaton, Lanao del Sur shall comprise the
barrios of Kapatagan, Bongabong, Aipang,
Dagowan, Bakikis, Bungabung, Losain, Matimos,
and Magolatung situated in the municipality of
Balabagan, Lanao del Sur, the barrios of Togaig
and Madalum situated in the municipality of
Buldon, Cotabato, the barrios of Bayanga,
Langkong, Sarakan, Kat-bo, Digakapan, Magabo,
Tabangao, Tiongko, Colodan and Kabamakawan
situated in the municipality of Parang, also of
Cotabato.
Doubtless, as the statute stands, twelve barrios in two
municipalities in the province of Cotabato are
transferred to the province of Lanao del Sur. This brought
about a change in the boundaries of the two provinces.
Apprised of this development, on September 7, 1967, the
Office of the President, through the Assistant Executive
Secretary, recommended to Comelec that the operation of
the statute be suspended until "clarified by correcting
legislation."
Comelec, by resolution of September 20, 1967, stood by
its own interpretation, declared that the statute "should
be implemented unless declared unconstitutional by the
Supreme Court."
This triggered the present original action for certiorari and
prohibition by Bara Lidasan, a resident and taxpayer of the
detached portion of Parang, Cotabato, and a qualified
voter for the 1967 elections. He prays that Republic Act
4790 be declared unconstitutional; and that Comelec's
resolutions of August 15, 1967 and September 20, 1967
implementing the same for electoral purposes, be
nullified.
1. Petitioner relies upon the constitutional requirement
aforestated, that "[n]o bill which may be enacted into law
shall embrace more than one subject which shall be
expressed in the title of the bill."
2

It may be well to state, right at the outset, that the
constitutional provision contains dual limitations upon
legislative power. First. Congress is to refrain from
conglomeration, under one statute, of heterogeneous
subjects. Second. The title of the bill is to be couched in a
language sufficient to notify the legislators and the public
and those concerned of the import of the single subject
thereof.
Of relevance here is the second directive. The subject of
the statute must be "expressed in the title" of the bill. This
constitutional requirement "breathes the spirit of
command."
3
Compliance is imperative, given the fact that
the Constitution does not exact of Congress the obligation
to read during its deliberations the entire text of the bill. In
fact, in the case of House Bill 1247, which became Republic
Act 4790, only its title was read from its introduction to its
final approval in the House of Representatives
4
where the
bill, being of local application, originated.
5

Of course, the Constitution does not require Congress to
employ in the title of an enactment, language of such
precision as to mirror, fully index or catalogue all the
contents and the minute details therein. It suffices if the
title should serve the purpose of the constitutional
demand that it inform the legislators, the persons
interested in the subject of the bill, and the public, of the
nature, scope and consequences of the proposed law and
its operation. And this, to lead them to inquire into the
body of the bill, study and discuss the same, take
appropriate action thereon, and, thus, prevent surprise or
fraud upon the legislators.
6

In our task of ascertaining whether or not the title of a
statute conforms with the constitutional requirement, the
following, we believe, may be taken as guidelines:
The test of the sufficiency of a title is whether or
not it is misleading; and, which technical
accuracy is not essential, and the subject need
not be stated in express terms where it is clearly
inferable from the details set forth, a title which
is so uncertain that the average person reading it
would not be informed of the purpose of the
enactment or put on inquiry as to its contents, or
which is misleading, either in referring to or
indicating one subject where another or different
one is really embraced in the act, or in omitting
any expression or indication of the real subject or
scope of the act, is bad.
xxx xxx xxx
In determining sufficiency of particular title its
substance rather than its form should be
considered, and the purpose of the constitutional
requirement, of giving notice to all persons
interested, should be kept in mind by the court.
7

With the foregoing principles at hand, we take a hard look
at the disputed statute. The title "An Act Creating the
Municipality of Dianaton, in the Province of Lanao del
Sur"
8
projects the impression that solely the province of
Lanao del Sur is affected by the creation of Dianaton. Not
the slightest intimation is there that communities in the
adjacent province of Cotabato are incorporated in this
new Lanao del Sur town. The phrase "in the Province of
Lanao del Sur," read without subtlety or contortion, makes
the title misleading, deceptive. For, the known fact is that
the legislation has a two-pronged purpose combined in
one statute: (1) it creates the municipality of Dianaton
purportedly from twenty-one barrios in the towns of Butig
and Balabagan, both in the province of Lanao del Sur; and
(2) it also dismembers two municipalities in Cotabato, a
province different from Lanao del Sur.
The baneful effect of the defective title here presented is
not so difficult to perceive. Such title did not inform the
members of Congress as to the full impact of the law; it did
not apprise the people in the towns of Buldon and Parang
in Cotabato and in the province of Cotabato itself that part
of their territory is being taken away from their towns and
province and added to the adjacent Province of Lanao del
Sur; it kept the public in the dark as to what towns and
provinces were actually affected by the bill. These are the
pressures which heavily weigh against the constitutionality
of Republic Act 4790.
Respondent's stance is that the change in boundaries of
the two provinces resulting in "the substantial diminution
of territorial limits" of Cotabato province is "merely the
incidental legal results of the definition of the boundary"
of the municipality of Dianaton and that, therefore,
reference to the fact that portions in Cotabato are taken
away "need not be expressed in the title of the law." This
posture we must say but emphasizes the error of
constitutional dimensions in writing down the title of the
bill. Transfer of a sizeable portion of territory from one
province to another of necessity involves reduction of
area, population and income of the first and the
corresponding increase of those of the other. This is as
important as the creation of a municipality. And yet, the
title did not reflect this fact.
Respondent asks us to read Felwa vs. Salas, L-16511,
October 29, 1966, as controlling here. The Felwa case is
not in focus. For there, the title of the Act (Republic Act
4695) reads: "An Act Creating the Provinces of Benguet,
Mountain Province, Ifugao, and Kalinga-Apayao." That title
was assailed as unconstitutional upon the averment that
the provisions of the law (Section, 8 thereof) in reference
to the elective officials of the provinces thus created, were
not set forth in the title of the bill. We there ruled that this
pretense is devoid of merit "for, surely, an Act creating
said provinces must be expected to provide for the officers
who shall run the affairs thereof" which is "manifestly
germane to the subject" of the legislation, as set forth in
its title. The statute now before us stands altogether on a
different footing. The lumping together of barrios in
adjacent but separate provinces under one statute is
neither a natural nor logical consequence of the creation
of the new municipality of Dianaton. A change of
boundaries of the two provinces may be made without
necessarily creating a new municipality and vice versa.
As we canvass the authorities on this point, our attention
is drawn to Hume vs. Village of Fruitport, 219 NW 648,
649. There, the statute in controversy bears the title "An
Act to Incorporate the Village of Fruitport, in the County of
Muskegon." The statute, however, in its section 1 reads:
"The people of the state of Michigan enact, that the
following described territory in the counties of Muskegon
and Ottawa Michigan, to wit: . . . be, and the same is
hereby constituted a village corporate, by the name of the
Village of Fruitport." This statute was challenged as void by
plaintiff, a resident of Ottawa county, in an action to
restraint the Village from exercising jurisdiction and
control, including taxing his lands. Plaintiff based his claim
on Section 20, Article IV of the Michigan State
Constitution, which reads: "No law shall embrace more
than one object, which shall be expressed in its title." The
Circuit Court decree voided the statute and defendant
appealed. The Supreme Court of Michigan voted to uphold
the decree of nullity. The following, said in Hume, may well
apply to this case:
It may be that words, "An act to incorporate the
village of Fruitport," would have been a
sufficient title, and that the words, "in the
county of Muskegon" were unnecessary; but we
do not agree with appellant that the words last
quoted may, for that reason, be disregarded as
surplusage.
. . . Under the guise of discarding surplusage, a
court cannot reject a part of the title of an act
for the purpose of saving the act. Schmalz vs.
Woody, 56 N.J. Eq. 649, 39 A. 539.
A purpose of the provision of the Constitution is
to "challenge the attention of those affected by
the act to its provisions." Savings Bank vs. State
of Michigan, 228 Mich. 316, 200 NW 262.
The title here is restrictive. It restricts the
operation of the act of Muskegon county. The act
goes beyond the restriction. As was said in
Schmalz vs. Wooly, supra: "The title is erroneous
in the worst degree, for it is misleading."
9

Similar statutes aimed at changing boundaries of political
subdivisions, which legislative purpose is not expressed in
the title, were likewise declared unconstitutional."
10

We rule that Republic Act 4790 is null and void.
2. Suggestion was made that Republic Act 4790 may still
be salvaged with reference to the nine barrios in the
municipalities of Butig and Balabagan in Lanao del Sur,
with the mere nullification of the portion thereof which
took away the twelve barrios in the municipalities of
Buldon and Parang in the other province of Cotabato. The
reasoning advocated is that the limited title of the Act still
covers those barrios actually in the province of Lanao del
Sur.
We are not unmindful of the rule, buttressed on reason
and of long standing, that where a portion of a statute is
rendered unconstitutional and the remainder valid, the
parts will be separated, and the constitutional portion
upheld. Black, however, gives the exception to this rule,
thus:
. . . But when the parts of the statute are so
mutually dependent and connected, as
conditions, considerations, inducements, or
compensations for each other, as to warrant a
belief that the legislature intended them as a
whole, and that if all could not be carried into
effect, the legislature would not pass the residue
independently, then, if some parts are
unconstitutional, all the provisions which are
thus dependent, conditional, or connected, must
fall with them,
11

In substantially similar language, the same exception is
recognized in the jurisprudence of this Court, thus:
The general rule is that where part of a statute is
void, as repugnant to the Organic Law, while
another part is valid, the valid portion if
separable from the invalid, may stand and be
enforced. But in order to do this, the valid
portion must be so far independent of the
invalid portion that it is fair to presume that the
Legislature would have enacted it by itself if they
had supposed that they could not
constitutionally enact the other. . . Enough must
remain to make a complete, intelligible, and
valid statute, which carries out the legislative
intent. . . . The language used in the invalid part
of the statute can have no legal force or efficacy
for any purpose whatever, and what remains
must express the legislative will independently of
the void part, since the court has no power to
legislate, . . . .
12

Could we indulge in the assumption that Congress still
intended, by the Act, to create the restricted area of nine
barrios in the towns of Butig and Balabagan in Lanao del
Sur into the town of Dianaton, if the twelve barrios in the
towns of Buldon and Parang, Cotabato were to be
excluded therefrom? The answer must be in the negative.
Municipal corporations perform twin functions. Firstly.
They serve as an instrumentality of the State in carrying
out the functions of government. Secondly. They act as an
agency of the community in the administration of local
affairs. It is in the latter character that they are a separate
entity acting for their own purposes and not a subdivision
of the State.
13

Consequently, several factors come to the fore in the
consideration of whether a group of barrios is capable of
maintaining itself as an independent municipality.
Amongst these are population, territory, and income. It
was apparently these same factors which induced the
writing out of House Bill 1247 creating the town of
Dianaton. Speaking of the original twenty-one
barrios which comprise the new municipality, the
explanatory note to House Bill 1247, now Republic Act
4790, reads:
The territory is now a progressive community;
the aggregate population is large; and the
collective income is sufficient to maintain an
independent municipality.
This bill, if enacted into law, will enable the
inhabitants concerned to govern themselves and
enjoy the blessings of municipal autonomy.
When the foregoing bill was presented in Congress,
unquestionably, the totality of the twenty-one barrios
not nine barrios was in the mind of the proponent
thereof. That this is so, is plainly evident by the fact that
the bill itself, thereafter enacted into law, states that the
seat of the government is in Togaig, which is a barrio in the
municipality of Buldon in Cotabato. And then the reduced
area poses a number of questions, thus: Could the
observations as to progressive community, large aggregate
population, collective income sufficient to maintain an
independent municipality, still apply to a motley group of
only nine barrios out of the twenty-one? Is it fair to
assume that the inhabitants of the said remaining barrios
would have agreed that they be formed into a
municipality, what with the consequent duties and
liabilities of an independent municipal corporation? Could
they stand on their own feet with the income to be
derived in their community? How about the peace and
order, sanitation, and other corporate obligations? This
Court may not supply the answer to any of these
disturbing questions. And yet, to remain deaf to these
problems, or to answer them in the negative and still cling
to the rule on separability, we are afraid, is to impute to
Congress an undeclared will. With the known premise that
Dianaton was created upon the basic considerations of
progressive community, large aggregate population and
sufficient income, we may not now say that Congress
intended to create Dianaton with only nine of the
original twenty-one barrios, with a seat of government
still left to be conjectured. For, this unduly stretches
judicial interpretation of congressional intent beyond
credibility point. To do so, indeed, is to pass the line which
circumscribes the judiciary and tread on legislative
premises. Paying due respect to the traditional separation
of powers, we may not now melt and recast Republic Act
4790 to read a Dianaton town of nine instead of the
originally intended twenty-one barrios. Really, if these
nine barrios are to constitute a town at all, it is the
function of Congress, not of this Court, to spell out that
congressional will.
Republic Act 4790 is thus indivisible, and it is accordingly
null and void in its totality.
14

3. There remains for consideration the issue raised by
respondent, namely, that petitioner has no substantial
legal interest adversely affected by the implementation of
Republic Act 4790. Stated differently, respondent's pose is
that petitioner is not the real party in interest.
Here the validity of a statute is challenged on the ground
that it violates the constitutional requirement that the
subject of the bill be expressed in its title. Capacity to sue,
therefore, hinges on whether petitioner's substantial
rights or interests are impaired by lack of notification in
the title that the barrio in Parang, Cotabato, where he is
residing has been transferred to a different provincial
hegemony.
The right of every citizen, taxpayer and voter of a
community affected by legislation creating a town to
ascertain that the law so created is not dismembering his
place of residence "in accordance with the Constitution" is
recognized in this jurisdiction.
15

Petitioner is a qualified voter. He expects to vote in the
1967 elections. His right to vote in his own barrio before it
was annexed to a new town is affected. He may not want,
as is the case here, to vote in a town different from his
actual residence. He may not desire to be considered a
part of hitherto different communities which are fanned
into the new town; he may prefer to remain in the place
where he is and as it was constituted, and continue to
enjoy the rights and benefits he acquired therein. He may
not even know the candidates of the new town; he may
express a lack of desire to vote for anyone of them; he
may feel that his vote should be cast for the officials in the
town before dismemberment. Since by constitutional
direction the purpose of a bill must be shown in its title for
the benefit, amongst others, of the community affected
thereby,
16
it stands to reason to say that when the
constitutional right to vote on the part of any citizen of
that community is affected, he may become a suitor to
challenge the constitutionality of the Act as passed by
Congress.
For the reasons given, we vote to declare Republic Act
4790 null and void, and to prohibit respondent
Commission from implementing the same for electoral
purposes.
No costs allowed. So ordered.

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-22766 August 30, 1968
SURIGAO ELECTRIC, CO., INC. and ARTURO LUMANLAN,
SR., petitioners,
vs.
MUNICIPALITY OF SURIGAO and HON. PUBLIC SERVICE
COMMISSION, respondents.
David G. Nitafan for petitioners.
Provincial Fiscal Bernardo Ll. Salas for respondent
Municipality of Surigao.
Office of the Solicitor General for respondent Public Service
Commission.
FERNANDO, J.:
On June 18, 1960, Congress further amended the Public
Service Act, one of the changes introduced doing away
with the requirement of a certificate of public convenience
and necessity from the Public Service Commission for
"public services owned or operated by government
entities or government-owned or controlled
corporations," but at the same time affirming its power of
regulation,
1
more specifically as set forth in the next
section of the law, which while exempting public services
owned or operated by any instrumentality of the
government or any government-owned or controlled
corporations from its supervision, jurisdiction and control
stops short of including "the fixing of rates."
2

In this petition for review, a case of first impression,
petitioner Surigao Electric Co., Inc., a legislative franchise
holder, and petitioner Arturo Lumanlan to whom, on
February 16, 1962, the rights and privileges of the former
as well as its plant and facilities were transferred,
challenge the validity of the order of respondent Public
Service Commission, dated July 11, 1963, wherein it held
that it had "no other alternative but to approve as [it did
approve] the tentative schedule of rates submitted by the
applicant," the other respondent herein, the Municipality
of Surigao.
3

In the above order, the issue, according to respondent
Commission, "boils down to whether or not a municipal
government can directly maintain and operate an electric
plant without obtaining a specific franchise for the
purpose and without a certificate of public convenience
and necessity duly issued by the Public Service
Commission."
4
Citing the above amendments introduced
by Republic Act No. 2677, respondent Commission
answered the question thus: "A municipal government or
a municipal corporation such as the Municipality of
Surigao is a government entity recognized, supported and
utilized by the National Government as a part of its
government machinery and functions; a municipal
government actually functions as an extension of the
national government and, therefore, it is
an instrumentality of the latter; and by express provisions
of Section 14(e) of Act 2677, an instrumentality of the
national government is exempted from the jurisdiction of
the PSC except with respect to the fixing of rates. This
exemption is even clearer in Section 13(a)."
5

The above formulation of respondent Commission could
be worded differently. There is need for greater precision
as well as further elaboration. Its conclusion, however, can
stand the test of scrutiny. We sustain the Public Service
Commission.
The question involved is one of statutory interpretation.
We have to ascertain the intent of Congress in introducing
the above amendments, more specifically, in eliminating
the requirement of the certificate of public convenience
and necessity being obtained by government entities, or
by government-owned or controlled corporations
operating public services. Here, the Municipality of Surigao
is not a government-owned or controlled corporation. It
cannot be said, however, that it is not a government
entity.
As early as 1916, in Mendoza v. de Leon,
6
there has been a
recognition by this Court of the dual character of a
municipal corporation, one as governmental, being a
branch of the general administration of the state, and the
other as quasi-private and corporate. A well-known
authority, Dillon, was referred to by us to stress the
undeniable fact that "legislative and governmental
powers" are "conferred upon a municipality, the better to
enable it to aid a state in properly governing that portion
of its people residing within its municipality, such powers
[being] in their nature public, ..."
7
As was emphasized by
us in the Mendoza decision: "Governmental affairs do not
lose their governmental character by being delegated to
the municipal governments. Nor does the fact that such
duties are performed by officers of the municipality which,
for convenience, the state allows the municipality to
select, change their character. To preserve the peace,
protect the morals and health of the community and so on
is to administer government, whether it be done by the
central government itself or is shifted to a local
organization."
8

It would, therefore, be to erode the term "government
entities" of its meaning if we are to reverse the Public
Service Commission and to hold that a municipality is to be
considered outside its scope. It may be admitted that
there would be no ambiguity at all had the term
"municipal corporations" been employed. Our function,
however, is to put meaning to legislative words, not to
denude them of their contents. They may be at times, as
Cohen pointed out, frail vessels in which to embark
legislative hopes, but we do not, just because of that,
allow them to disappear perpetually from sight to find
eternal slumber in the deep. It would be far from
manifesting fidelity to the judicial task of construing
statutes if we were to consider the order under review as
a failure to abide by what the law commands.
The above construction gives significance to every word of
the statute. It makes the entire scheme harmonious.
Moreover, the conclusion to which we are thus led is
reinforced by a manifestation of public policy as expressed
in a legislative act of well-nigh contemporaneous vintage.
We refer to the Local Autonomy Act,
9
approved a year
earlier. It would be to impute to Congress a desire not to
extend further but to cut short what the year before it
considered a laudatory scheme to enlarge the scope of
municipal power, if the amendatory act now under
scrutiny were to be so restrictively construed. Municipal
corporations should not be excluded from the operation
thereof.
There would be no warrant for such a view. Logic and
common sense would be affronted by such a conclusion,
let alone the sense of esteem which under the theory of
separation of powers is owed a coordinate branch. Again,
this is one instance where assuming the ambiguity of the
words employed in a statute, its overriding principle, to
paraphrase Holmes, fixes the reach of statutory language.
With the view we thus take of the amendatory statute, the
errors assigned by petitioner, which would seek to fasten,
mistakenly to our mind, an unwarranted restriction to the
amendatory language of Republic Act No. 2677, need not
be passed upon.
An alleged error imputed to respondent Commission,
however, needs further discussion. Petitioners seek refuge
in the legislative franchise granted them.
10
Whatever
privilege may be claimed by petitioners cannot override
the specific constitutional restriction that no franchise or
right shall be granted to any individual or corporation
except under a condition that it shall be subject to
amendment, alteration or repeal by Congress.
11
Such
amendment or alteration need not be express; it may be
implied from a latter act of general applicability, such as
the one now under consideration.
Moreover, under a well-settled principle of American
origin, one which upon the establishment of the Philippine
Government under American tutelage was adopted here
and continued under our Constitution, no such franchise
or right can be availed of to defeat the proper exercise of
the police power. An early expression of this view is found
in the leading American case of Charles River Bridge v.
Warren Bridge,
12
an 1837 decision, the opinion being
penned by Chief Justice Taney: "The continued existence
of a government would be of no great value, if by
implications and presumptions it was disarmed of the
powers necessary to accomplish the ends of its creation;
and the functions it was designed to perform, transferred
to the hands of privileged Corporations. .. While the rights
of private property are sacredly guarded, we must not
forget that the community also have rights, and that the
happiness and well-being of every citizen depend on their
faithful preservation."
13

Reference by petitioners to the statute providing the
procedure for the taking over and operation by the
government of public utilities,
14
in their view "to further
strengthen [their] contention", as to the commission of
this alleged error is unavailing, even if such statute were
applicable, which it is not. In the language of their own
brief: "This Act provides for the procedure to be followed
whenever the Government or any political subdivision
thereof decides to acquire and operate a public utility
owned and operated by any individual or private
corporation."
15
What is to be regulated, therefore, by this
enactment is the exercise of eminent domain, which is a
taking of private property for public use upon the payment
of just compensation. There is here no taking. There is
here no appropriation. What was owned before by
petitioners continue to remain theirs. There is to be no
transfer of ownership.
Rather, a municipal corporation, by virtue of
Commonwealth Act No. 2677, may further promote
community welfare by itself engaging in supplying public
services, without the need of a certificate of public
convenience. If at all then, the exercise of this
governmental prerogative comes within the broad, well-
nigh, undefined scope of the police power. It is not here,
of course, the ordinary case of restraint on property or
liberty, by the imposition of a regulation. What the
amendatory act in effect accomplishes is to lend
encouragement and support for the municipal corporation
itself undertaking an activity as a result of which, profits of
a competing private firm would be adversely affected.
Clearly, then, the relevancy of the statute providing for the
taking or operation of the government of public utilities,
appears, to put it at its mildest, far from clear. Petitioners'
contention as to this alleged error being committed,
therefore, far from being strengthened by such a
reference, suffers from a fate less auspicious.
No other alleged error committed need be considered.
WHEREFORE, the order of respondent Public Service
Commission of July 11, 1963, as well as the order of
February 7, 1964, denying the motion for reconsideration,
are affirmed. Costs against petitioners.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar,
Sanchez, Castro and Angeles, JJ., concur. 1wph1.t

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

G.R. No. L-52179 April 8, 1991
MUNICIPALITY OF SAN FERNANDO, LA UNION, petitioner
vs.
HON. JUDGE ROMEO N. FIRME, JUANA RIMANDO-
BANIA, IAUREANO BANIA, JR., SOR MARIETA BANIA,
MONTANO BANIA, ORJA BANIA, AND LYDIA R.
BANIA, respondents.
Mauro C. Cabading, Jr. for petitioner.
Simeon G. Hipol for private respondent.

MEDIALDEA, J.:p
This is a petition for certiorari with prayer for the issuance
of a writ of preliminary mandatory injunction seeking the
nullification or modification of the proceedings and the
orders issued by the respondent Judge Romeo N. Firme, in
his capacity as the presiding judge of the Court of First
Instance of La Union, Second Judicial District, Branch IV,
Bauang, La Union in Civil Case No. 107-BG, entitled "Juana
Rimando Bania, et al. vs. Macario Nieveras, et al." dated
November 4, 1975; July 13, 1976; August 23,1976;
February 23, 1977; March 16, 1977; July 26, 1979;
September 7, 1979; November 7, 1979 and December 3,
1979 and the decision dated October 10, 1979 ordering
defendants Municipality of San Fernando, La Union and
Alfredo Bislig to pay, jointly and severally, the plaintiffs for
funeral expenses, actual damages consisting of the loss of
earning capacity of the deceased, attorney's fees and costs
of suit and dismissing the complaint against the Estate of
Macario Nieveras and Bernardo Balagot.
The antecedent facts are as follows:
Petitioner Municipality of San Fernando, La Union is a
municipal corporation existing under and in accordance
with the laws of the Republic of the Philippines.
Respondent Honorable Judge Romeo N. Firme is
impleaded in his official capacity as the presiding judge of
the Court of First Instance of La Union, Branch IV, Bauang,
La Union. While private respondents Juana Rimando-
Bania, Laureano Bania, Jr., Sor Marietta Bania,
Montano Bania, Orja Bania and Lydia R. Bania are heirs
of the deceased Laureano Bania Sr. and plaintiffs in Civil
Case No. 107-Bg before the aforesaid court.
At about 7 o'clock in the morning of December 16, 1965, a
collision occurred involving a passenger jeepney driven by
Bernardo Balagot and owned by the Estate of Macario
Nieveras, a gravel and sand truck driven by Jose Manandeg
and owned by Tanquilino Velasquez and a dump truck of
the Municipality of San Fernando, La Union and driven by
Alfredo Bislig. Due to the impact, several passengers of the
jeepney including Laureano Bania Sr. died as a result of
the injuries they sustained and four (4) others suffered
varying degrees of physical injuries.
On December 11, 1966, the private respondents instituted
a compliant for damages against the Estate of Macario
Nieveras and Bernardo Balagot, owner and driver,
respectively, of the passenger jeepney, which was
docketed Civil Case No. 2183 in the Court of First Instance
of La Union, Branch I, San Fernando, La Union. However,
the aforesaid defendants filed a Third Party Complaint
against the petitioner and the driver of a dump truck of
petitioner.
Thereafter, the case was subsequently transferred to
Branch IV, presided over by respondent judge and was
subsequently docketed as Civil Case No. 107-Bg. By virtue
of a court order dated May 7, 1975, the private
respondents amended the complaint wherein the
petitioner and its regular employee, Alfredo Bislig were
impleaded for the first time as defendants. Petitioner filed
its answer and raised affirmative defenses such as lack of
cause of action, non-suability of the State, prescription of
cause of action and the negligence of the owner and driver
of the passenger jeepney as the proximate cause of the
collision.
In the course of the proceedings, the respondent judge
issued the following questioned orders, to wit:
(1) Order dated November 4, 1975
dismissing the cross-claim against
Bernardo Balagot;
(2) Order dated July 13, 1976 admitting
the Amended Answer of the
Municipality of San Fernando, La Union
and Bislig and setting the hearing on
the affirmative defenses only with
respect to the supposed lack of
jurisdiction;
(3) Order dated August 23, 1976
deferring there resolution of the
grounds for the Motion to Dismiss until
the trial;
(4) Order dated February 23, 1977
denying the motion for
reconsideration of the order of July 13,
1976 filed by the Municipality and
Bislig for having been filed out of time;
(5) Order dated March 16, 1977
reiterating the denial of the motion for
reconsideration of the order of July 13,
1976;
(6) Order dated July 26, 1979 declaring
the case deemed submitted for
decision it appearing that parties have
not yet submitted their respective
memoranda despite the court's
direction; and
(7) Order dated September 7, 1979
denying the petitioner's motion for
reconsideration and/or order to recall
prosecution witnesses for cross
examination.
On October 10, 1979 the trial court rendered a decision,
the dispositive portion is hereunder quoted as follows:
IN VIEW OF ALL OF (sic) THE
FOREGOING, judgment is hereby
rendered for the plaintiffs, and
defendants Municipality of San
Fernando, La Union and Alfredo Bislig
are ordered to pay jointly and
severally, plaintiffs Juana Rimando-
Bania, Mrs. Priscilla B. Surell,
Laureano Bania Jr., Sor Marietta
Bania, Mrs. Fe B. Soriano, Montano
Bania, Orja Bania and Lydia B.
Bania the sums of P1,500.00 as
funeral expenses and P24,744.24 as
the lost expected earnings of the late
Laureano Bania Sr., P30,000.00 as
moral damages, and P2,500.00 as
attorney's fees. Costs against said
defendants.
The Complaint is dismissed as to
defendants Estate of Macario Nieveras
and Bernardo Balagot.
SO ORDERED. (Rollo, p. 30)
Petitioner filed a motion for reconsideration and for a new
trial without prejudice to another motion which was then
pending. However, respondent judge issued another order
dated November 7, 1979 denying the motion for
reconsideration of the order of September 7, 1979 for
having been filed out of time.
Finally, the respondent judge issued an order dated
December 3, 1979 providing that if defendants
municipality and Bislig further wish to pursue the matter
disposed of in the order of July 26, 1979, such should be
elevated to a higher court in accordance with the Rules of
Court. Hence, this petition.
Petitioner maintains that the respondent judge committed
grave abuse of discretion amounting to excess of
jurisdiction in issuing the aforesaid orders and in rendering
a decision. Furthermore, petitioner asserts that while
appeal of the decision maybe available, the same is not
the speedy and adequate remedy in the ordinary course of
law.
On the other hand, private respondents controvert the
position of the petitioner and allege that the petition is
devoid of merit, utterly lacking the good faith which is
indispensable in a petition for certiorari and prohibition.
(Rollo,
p. 42.) In addition, the private respondents stress that
petitioner has not considered that every court, including
respondent court, has the inherent power to amend and
control its process and orders so as to make them
conformable to law and justice. (Rollo, p. 43.)
The controversy boils down to the main issue of whether
or not the respondent court committed grave abuse of
discretion when it deferred and failed to resolve the
defense of non-suability of the State amounting to lack of
jurisdiction in a motion to dismiss.
In the case at bar, the respondent judge deferred the
resolution of the defense of non-suability of the State
amounting to lack of jurisdiction until trial. However, said
respondent judge failed to resolve such defense,
proceeded with the trial and thereafter rendered a
decision against the municipality and its driver.
The respondent judge did not commit grave abuse of
discretion when in the exercise of its judgment it
arbitrarily failed to resolve the vital issue of non-suability
of the State in the guise of the municipality. However, said
judge acted in excess of his jurisdiction when in his
decision dated October 10, 1979 he held the municipality
liable for the quasi-delict committed by its regular
employee.
The doctrine of non-suability of the State is expressly
provided for in Article XVI, Section 3 of the Constitution, to
wit: "the State may not be sued without its consent."
Stated in simple parlance, the general rule is that the State
may not be sued except when it gives consent to be sued.
Consent takes the form of express or implied consent.
Express consent may be embodied in a general law or a
special law. The standing consent of the State to be sued
in case of money claims involving liability arising from
contracts is found in Act No. 3083. A special law may be
passed to enable a person to sue the government for an
alleged quasi-delict, as in Merritt v. Government of the
Philippine Islands (34 Phil 311). (see United States of
America v. Guinto, G.R. No. 76607, February 26, 1990, 182
SCRA 644, 654.)
Consent is implied when the government enters into
business contracts, thereby descending to the level of the
other contracting party, and also when the State files a
complaint, thus opening itself to a counterclaim. (Ibid)
Municipal corporations, for example, like provinces and
cities, are agencies of the State when they are engaged in
governmental functions and therefore should enjoy the
sovereign immunity from suit. Nevertheless, they are
subject to suit even in the performance of such functions
because their charter provided that they can sue and be
sued. (Cruz, Philippine Political Law, 1987 Edition, p. 39)
A distinction should first be made between suability and
liability. "Suability depends on the consent of the state to
be sued, liability on the applicable law and the established
facts. The circumstance that a state is suable does not
necessarily mean that it is liable; on the other hand, it can
never be held liable if it does not first consent to be sued.
Liability is not conceded by the mere fact that the state
has allowed itself to be sued. When the state does waive
its sovereign immunity, it is only giving the plaintiff the
chance to prove, if it can, that the defendant is liable."
(United States of America vs. Guinto, supra, p. 659-660)
Anent the issue of whether or not the municipality is liable
for the torts committed by its employee, the test of
liability of the municipality depends on whether or not the
driver, acting in behalf of the municipality, is performing
governmental or proprietary functions. As emphasized in
the case of Torio vs. Fontanilla (G. R. No. L-29993, October
23, 1978. 85 SCRA 599, 606), the distinction of powers
becomes important for purposes of determining the
liability of the municipality for the acts of its agents which
result in an injury to third persons.
Another statement of the test is given in City of Kokomo
vs. Loy, decided by the Supreme Court of Indiana in 1916,
thus:
Municipal corporations exist in a dual
capacity, and their functions are
twofold. In one they exercise the right
springing from sovereignty, and while
in the performance of the duties
pertaining thereto, their acts are
political and governmental. Their
officers and agents in such capacity,
though elected or appointed by them,
are nevertheless public functionaries
performing a public service, and as
such they are officers, agents, and
servants of the state. In the other
capacity the municipalities exercise a
private, proprietary or corporate right,
arising from their existence as legal
persons and not as public agencies.
Their officers and agents in the
performance of such functions act in
behalf of the municipalities in their
corporate or individual capacity, and
not for the state or sovereign power."
(112 N.E., 994-995) (Ibid, pp. 605-606.)
It has already been remarked that municipal corporations
are suable because their charters grant them the
competence to sue and be sued. Nevertheless, they are
generally not liable for torts committed by them in the
discharge of governmental functions and can be held
answerable only if it can be shown that they were acting in
a proprietary capacity. In permitting such entities to be
sued, the State merely gives the claimant the right to show
that the defendant was not acting in its governmental
capacity when the injury was committed or that the case
comes under the exceptions recognized by law. Failing
this, the claimant cannot recover. (Cruz, supra, p. 44.)
In the case at bar, the driver of the dump truck of the
municipality insists that "he was on his way to the
Naguilian river to get a load of sand and gravel for the
repair of San Fernando's municipal streets." (Rollo, p. 29.)
In the absence of any evidence to the contrary, the
regularity of the performance of official duty is presumed
pursuant to Section 3(m) of Rule 131 of the Revised Rules
of Court. Hence, We rule that the driver of the dump truck
was performing duties or tasks pertaining to his office.
We already stressed in the case of Palafox,
et. al. vs. Province of Ilocos Norte, the District Engineer,
and the Provincial Treasurer (102 Phil 1186) that "the
construction or maintenance of roads in which the truck
and the driver worked at the time of the accident are
admittedly governmental activities."
After a careful examination of existing laws and
jurisprudence, We arrive at the conclusion that the
municipality cannot be held liable for the torts committed
by its regular employee, who was then engaged in the
discharge of governmental functions. Hence, the death of
the passenger tragic and deplorable though it may be
imposed on the municipality no duty to pay monetary
compensation.
All premises considered, the Court is convinced that the
respondent judge's dereliction in failing to resolve the
issue of non-suability did not amount to grave abuse of
discretion. But said judge exceeded his jurisdiction when it
ruled on the issue of liability.
ACCORDINGLY, the petition is GRANTED and the decision
of the respondent court is hereby modified, absolving the
petitioner municipality of any liability in favor of private
respondents.
SO ORDERED.

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-23825 December 24, 1965
EMMANUEL PELAEZ, petitioner,
vs.
THE AUDITOR GENERAL, respondent.
Zulueta, Gonzales, Paculdo and Associates for petitioner.
Office of the Solicitor General for respondent.
CONCEPCION, J.:
During the period from September 4 to October 29, 1964
the President of the Philippines, purporting to act
pursuant to Section 68 of the Revised Administrative Code,
issued Executive Orders Nos. 93 to 121, 124 and 126 to
129; creating thirty-three (33) municipalities enumerated
in the margin.
1
Soon after the date last mentioned, or on
November 10, 1964 petitioner Emmanuel Pelaez, as Vice
President of the Philippines and as taxpayer, instituted the
present special civil action, for a writ of prohibition with
preliminary injunction, against the Auditor General, to
restrain him, as well as his representatives and agents,
from passing in audit any expenditure of public funds in
implementation of said executive orders and/or any
disbursement by said municipalities.
Petitioner alleges that said executive orders are null and
void, upon the ground that said Section 68 has been
impliedly repealed by Republic Act No. 2370 and
constitutes an undue delegation of legislative power.
Respondent maintains the contrary view and avers that
the present action is premature and that not all proper
parties referring to the officials of the new political
subdivisions in question have been impleaded.
Subsequently, the mayors of several municipalities
adversely affected by the aforementioned executive
orders because the latter have taken away from the
former the barrios composing the new political
subdivisions intervened in the case. Moreover,
Attorneys Enrique M. Fernando and Emma Quisumbing-
Fernando were allowed to and did appear asamici curiae.
The third paragraph of Section 3 of Republic Act No. 2370,
reads:
Barrios shall not be created or their boundaries
altered nor their names changed except under
the provisions of this Act or by Act of Congress.
Pursuant to the first two (2) paragraphs of the same
Section 3:
All barrios existing at the time of the passage of
this Act shall come under the provisions hereof.
Upon petition of a majority of the voters in the
areas affected, a new barrio may be created or
the name of an existing one may be changed by
the provincial board of the province, upon
recommendation of the council of the
municipality or municipalities in which the
proposed barrio is stipulated. The
recommendation of the municipal council shall
be embodied in a resolution approved by at least
two-thirds of the entire membership of the said
council: Provided, however, That no new barrio
may be created if its population is less than five
hundred persons.
Hence, since January 1, 1960, when Republic Act No. 2370
became effective, barrios may "not be created or their
boundaries altered nor their names changed" except by
Act of Congress or of the corresponding provincial board
"upon petition of a majority of the voters in the areas
affected" and the "recommendation of the council of the
municipality or municipalities in which the proposed barrio
is situated." Petitioner argues, accordingly: "If the
President, under this new law, cannot even create a
barrio, can he create a municipality which is composed of
several barrios, since barrios are units of municipalities?"
Respondent answers in the affirmative, upon the theory
that a new municipality can be created without creating
new barrios, such as, by placing old barrios under the
jurisdiction of the new municipality. This theory overlooks,
however, the main import of the petitioner's argument,
which is that the statutory denial of the presidential
authority to create a new barrio implies a negation of the
bigger power to create municipalities, each of which
consists of several barrios. The cogency and force of this
argument is too obvious to be denied or even questioned.
Founded upon logic and experience, it cannot be offset
except by a clear manifestation of the intent of Congress
to the contrary, and no such manifestation, subsequent to
the passage of Republic Act No. 2379, has been brought to
our attention.
Moreover, section 68 of the Revised Administrative Code,
upon which the disputed executive orders are based,
provides:
The (Governor-General) President of the
Philippines may by executive order define the
boundary, or boundaries, of any province,
subprovince, municipality, [township] municipal
district, or other political subdivision, and
increase or diminish the territory comprised
therein, may divide any province into one or
more subprovinces, separate any political
division other than a province, into such portions
as may be required, merge any of such
subdivisions or portions with another, name any
new subdivision so created, and may change the
seat of government within any subdivision to
such place therein as the public welfare may
require: Provided, That the authorization of the
(Philippine Legislature) Congress of the
Philippines shall first be obtained whenever the
boundary of any province or subprovince is to be
defined or any province is to be divided into one
or more subprovinces. When action by the
(Governor-General) President of the Philippines
in accordance herewith makes necessary a
change of the territory under the jurisdiction of
any administrative officer or any judicial officer,
the (Governor-General) President of the
Philippines, with the recommendation and
advice of the head of the Department having
executive control of such officer, shall redistrict
the territory of the several officers affected and
assign such officers to the new districts so
formed.
Upon the changing of the limits of political
divisions in pursuance of the foregoing authority,
an equitable distribution of the funds and
obligations of the divisions thereby affected shall
be made in such manner as may be
recommended by the (Insular Auditor) Auditor
General and approved by the (Governor-
General) President of the Philippines.
Respondent alleges that the power of the President to
create municipalities under this section does not amount
to an undue delegation of legislative power, relying
upon Municipality of Cardona vs. Municipality of
Binagonan (36 Phil. 547), which, he claims, has settled it.
Such claim is untenable, for said case involved, not the
creation of a new municipality, but a mere transfer of
territory from an already existing municipality
(Cardona) to another municipality (Binagonan), likewise,
existing at the time of and prior to said transfer (See Gov't
of the P.I. ex rel. Municipality of Cardona vs. Municipality,
of Binagonan [34 Phil. 518, 519-5201) in consequence
of the fixing and definition, pursuant to Act No. 1748, of
the common boundaries of two municipalities.
It is obvious, however, that, whereas the power to fix such
common boundary, in order to avoid or settle conflicts of
jurisdiction between adjoining municipalities, may partake
of an administrative nature involving, as it does, the
adoption of means and ways to carry into effect the law
creating said municipalities the authority to create
municipal corporations is essentially legislative in nature.
In the language of other courts, it is "strictly a legislative
function" (State ex rel. Higgins vs. Aicklen, 119 S. 425,
January 2, 1959) or "solely and exclusively the exercise
oflegislative power" (Udall vs. Severn, May 29, 1938, 79 P.
2d 347-349). As the Supreme Court of Washington has put
it (Territory ex rel. Kelly vs. Stewart, February 13, 1890, 23
Pac. 405, 409), "municipal corporations are purely the
creatures of statutes."
Although
1a
Congress may delegate to another branch of
the Government the power to fill in the details in the
execution, enforcement or administration of a law, it is
essential, to forestall a violation of the principle of
separation of powers, that said law: (a) be complete in
itself it must set forth therein the policy to be executed,
carried out or implemented by the delegate
2
and (b) fix
a standard the limits of which are sufficiently
determinate or determinable to which the delegate
must conform in the performance of his
functions.
2a
Indeed, without a statutory declaration of
policy, the delegate would in effect, make or formulate
such policy, which is the essence of every law; and,
without the aforementioned standard, there would be no
means to determine, with reasonable certainty, whether
the delegate has acted within or beyond the scope of his
authority.
2b
Hence, he could thereby arrogate upon
himself the power, not only to make the law, but, also
and this is worse to unmake it, by adopting measures
inconsistent with the end sought to be attained by the Act
of Congress, thus nullifying the principle of separation of
powers and the system of checks and balances, and,
consequently, undermining the very foundation of our
Republican system.
Section 68 of the Revised Administrative Code does not
meet these well settled requirements for a valid
delegation of the power to fix the details in the
enforcement of a law. It does not enunciate any policy to
be carried out or implemented by the President. Neither
does it give a standard sufficiently precise to avoid the evil
effects above referred to. In this connection, we do not
overlook the fact that, under the last clause of the first
sentence of Section 68, the President:
... may change the seat of the government
within any subdivision to such place therein as
the public welfare may require.
It is apparent, however, from the language of this clause,
that the phrase "as the public welfare may require"
qualified, not the clauses preceding the one just quoted,
but only the place to which the seat of the government
may be transferred. This fact becomes more apparent
when we consider that said Section 68 was originally
Section 1 of Act No. 1748,
3
which provided that,
"whenever in the judgment of the Governor-General
the public welfare requires, he may, by executive order,"
effect the changes enumerated therein (as in said section
68), including the change of the seat of the government
"to such place ... as the public interest requires." The
opening statement of said Section 1 of Act No. 1748
which was not included in Section 68 of the Revised
Administrative Code governed the time at which, or the
conditions under which, the powers therein conferred
could be exercised; whereas the last part of the first
sentence of said section referred exclusively to
the place to which the seat of the government was to be
transferred.
At any rate, the conclusion would be the same, insofar as
the case at bar is concerned, even if we assumed that the
phrase "as the public welfare may require," in said Section
68, qualifies all other clauses thereof. It is true that
in Calalang vs. Williams (70 Phil. 726) and People vs.
Rosenthal (68 Phil. 328), this Court had upheld "public
welfare" and "public interest," respectively, as sufficient
standards for a valid delegation of the authority to execute
the law. But, the doctrine laid down in these cases as all
judicial pronouncements must be construed in relation
to the specific facts and issues involved therein, outside of
which they do not constitute precedents and have no
binding effect.
4
The law construed in the Calalang case
conferred upon the Director of Public Works, with the
approval of the Secretary of Public Works and
Communications, the power to issue rules and regulations
topromote safe transit upon national roads and streets.
Upon the other hand, the Rosenthal case referred to the
authority of the Insular Treasurer, under Act No. 2581, to
issue and cancel certificates or permits for the
sale ofspeculative securities. Both cases involved grants
to administrative officers of powers related to the exercise
of their administrative functions, calling for the
determination of questions of fact.
Such is not the nature of the powers dealt with in section
68. As above indicated, the creation of municipalities, is
not an administrative function, but one which is essentially
and eminently legislative in character. The question of
whether or not "public interest" demands the exercise of
such power is not one of fact. it is "purely a
legislativequestion "(Carolina-Virginia Coastal Highway vs.
Coastal Turnpike Authority, 74 S.E. 2d. 310-313, 315-318),
or apolitical question (Udall vs. Severn, 79 P. 2d. 347-349).
As the Supreme Court of Wisconsin has aptly characterized
it, "the question as to whether incorporation is for the best
interest of the community in any case is emphatically
a question of public policy and statecraft" (In re Village of
North Milwaukee, 67 N.W. 1033, 1035-1037).
For this reason, courts of justice have annulled, as
constituting undue delegation of legislative powers, state
laws granting the judicial department, the power to
determine whether certain territories should be annexed
to a particular municipality (Udall vs. Severn, supra, 258-
359); or vesting in a Commission the right to determine
the plan and frame of government of proposed villages
and what functions shall be exercised by the same,
although the powers and functions of the village are
specifically limited by statute (In re Municipal Charters, 86
Atl. 307-308); or conferring upon courts the authority to
declare a given town or village incorporated, and
designate its metes and bounds, upon petition of a
majority of the taxable inhabitants thereof, setting forth
the area desired to be included in such village (Territory ex
rel Kelly vs. Stewart, 23 Pac. 405-409); or authorizing the
territory of a town, containing a given area and
population, to be incorporated as a town, on certain steps
being taken by the inhabitants thereof and on certain
determination by a court and subsequent vote of the
inhabitants in favor thereof, insofar as the court is allowed
to determine whether the lands embraced in the petition
"ought justly" to be included in the village, and whether
the interest of the inhabitants will be promoted by such
incorporation, and to enlarge and diminish the boundaries
of the proposed village "as justice may require" (In re
Villages of North Milwaukee, 67 N.W. 1035-1037); or
creating a Municipal Board of Control which shall
determine whether or not the laying out, construction or
operation of a toll road is in the "public interest" and
whether the requirements of the law had been complied
with, in which case the board shall enter an order creating
a municipal corporation and fixing the name of the same
(Carolina-Virginia Coastal Highway vs. Coastal Turnpike
Authority, 74 S.E. 2d. 310).
Insofar as the validity of a delegation of power by Congress
to the President is concerned, the case of Schechter
Poultry Corporation vs. U.S. (79 L. Ed. 1570) is quite
relevant to the one at bar. The Schechter case involved the
constitutionality of Section 3 of the National Industrial
Recovery Act authorizing the President of the United
States to approve "codes of fair competition" submitted to
him by one or more trade or industrial associations or
corporations which "impose no inequitable restrictions on
admission to membership therein and are truly
representative," provided that such codes are not
designed "to promote monopolies or to eliminate or
oppress small enterprises and will not operate to
discriminate against them, and will tend to effectuate the
policy" of said Act. The Federal Supreme Court held:
To summarize and conclude upon this point: Sec.
3 of the Recovery Act is without precedent. It
supplies no standards for any trade, industry or
activity. It does not undertake to prescribe rules
of conduct to be applied to particular states of
fact determined by appropriate administrative
procedure. Instead of prescribing rules of
conduct, it authorizes the making of codes to
prescribe them. For that legislative undertaking,
Sec. 3 sets up no standards, aside from the
statement of the general aims of rehabilitation,
correction and expansion described in Sec. 1. In
view of the scope of that broad declaration, and
of the nature of the few restrictions that are
imposed, the discretion of the President in
approving or prescribing codes, and thus
enacting laws for the government of trade and
industry throughout the country, is virtually
unfettered. We think that the code making
authority thus conferred is an unconstitutional
delegation of legislative power.
If the term "unfair competition" is so broad as to vest in
the President a discretion that is "virtually unfettered."
and, consequently, tantamount to a delegation of
legislative power, it is obvious that "public welfare," which
has even a broader connotation, leads to the same result.
In fact, if the validity of the delegation of powers made in
Section 68 were upheld, there would no longer be any
legal impediment to a statutory grant of authority to the
President to do anything which, in his opinion, may be
required by public welfare or public interest. Such grant of
authority would be a virtual abdication of the powers of
Congress in favor of the Executive, and would bring about
a total collapse of the democratic system established by
our Constitution, which it is the special duty and privilege
of this Court to uphold.
It may not be amiss to note that the executive orders in
question were issued after the legislative bills for the
creation of the municipalities involved in this case had
failed to pass Congress. A better proof of the fact that the
issuance of said executive orders entails the exercise of
purely legislative functions can hardly be given.
Again, Section 10 (1) of Article VII of our fundamental law
ordains:
The President shall have control of all the
executive departments, bureaus, or offices,
exercise general supervision over all local
governments as may be provided by law, and
take care that the laws be faithfully executed.
The power of control under this provision implies the right
of the President to interfere in the exercise of such
discretion as may be vested by law in the officers of the
executive departments, bureaus, or offices of the national
government, as well as to act in lieu of such officers. This
power is denied by the Constitution to the Executive,
insofar as local governments are concerned. With respect
to the latter, the fundamental law permits him to wield no
more authority than that of checking whether said local
governments or the officers thereof perform their duties
as provided by statutory enactments. Hence, the President
cannot interfere with local governments, so long as the
same or its officers act Within the scope of their authority.
He may not enact an ordinance which the municipal
council has failed or refused to pass, even if it had thereby
violated a duty imposed thereto by law, although he may
see to it that the corresponding provincial officials take
appropriate disciplinary action therefor. Neither may he
vote, set aside or annul an ordinance passed by said
council within the scope of its jurisdiction, no matter how
patently unwise it may be. He may not even suspend an
elective official of a regular municipality or take any
disciplinary action against him, except on appeal from a
decision of the corresponding provincial board.
5

Upon the other hand if the President could create a
municipality, he could, in effect, remove any of its officials,
by creating a new municipality and including therein
the barrio in which the official concerned resides, for his
office would thereby become vacant.
6
Thus, by merely
brandishing the power to create a new municipality (if he
had it), without actually creating it, he could compel local
officials to submit to his dictation, thereby, in effect,
exercising over them the power of control denied to him
by the Constitution.
Then, also, the power of control of the President over
executive departments, bureaus or offices implies no
morethan the authority to assume directly the functions
thereof or to interfere in the exercise of discretion by its
officials. Manifestly, such control does not include the
authority either to abolish an executive department or
bureau, or to create a new one. As a consequence, the
alleged power of the President to create municipal
corporations would necessarily connote the exercise by
him of an authority even greater than that of control
which he has over the executive departments, bureaus or
offices. In other words, Section 68 of the Revised
Administrative Code does not merely fail to comply with
the constitutional mandate above quoted. Instead of
giving the President less power over local governments
than that vested in him over the executive departments,
bureaus or offices, it reverses the process and does
the exact opposite, by conferring upon him more power
over municipal corporations than that which he has over
said executive departments, bureaus or offices.
In short, even if it did entail an undue delegation of
legislative powers, as it certainly does, said Section 68, as
part of the Revised Administrative Code, approved on
March 10, 1917, must be deemed repealed by the
subsequent adoption of the Constitution, in 1935, which is
utterly incompatible and inconsistent with said statutory
enactment.
7

There are only two (2) other points left for consideration,
namely, respondent's claim (a) that "not all the proper
parties" referring to the officers of the newly created
municipalities "have been impleaded in this case," and
(b) that "the present petition is premature."
As regards the first point, suffice it to say that the records
do not show, and the parties do not claim, that the officers
of any of said municipalities have been appointed or
elected and assumed office. At any rate, the Solicitor
General, who has appeared on behalf of respondent
Auditor General, is the officer authorized by law "to act
and represent the Government of the Philippines, its
offices and agents, in any official investigation, proceeding
or matter requiring the services of a lawyer" (Section
1661, Revised Administrative Code), and, in connection
with the creation of the aforementioned municipalities,
which involves a political, not proprietary, function, said
local officials, if any, are mere agents or representatives of
the national government. Their interest in the case at bar
has, accordingly, been, in effect, duly represented.
8

With respect to the second point, respondent alleges that
he has not as yet acted on any of the executive order & in
question and has not intimated how he would act in
connection therewith. It is, however, a matter of common,
public knowledge, subject to judicial cognizance, that the
President has, for many years, issued executive orders
creating municipal corporations and that the same have
been organized and in actual operation, thus indicating,
without peradventure of doubt, that the expenditures
incidental thereto have been sanctioned, approved or
passed in audit by the General Auditing Office and its
officials. There is no reason to believe, therefore, that
respondent would adopt a different policy as regards the
new municipalities involved in this case, in the absence of
an allegation to such effect, and none has been made by
him.
WHEREFORE, the Executive Orders in question are hereby
declared null and void ab initio and the respondent
permanently restrained from passing in audit any
expenditure of public funds in implementation of said
Executive Orders or any disbursement by the
municipalities above referred to. It is so ordered.

EN BANC
[G.R. No. 105746. December 2, 1996]
MUNICIPALITY OF JIMENEZ, through its MAYOR
ELEUTERIO A. QUIMBO, VICE MAYOR
ROBINSON B. LOMO, COUNCILORS TEOFILO
GALORIO, CASIANO ADORABLE, MARIO APAO,
ANTONIO BIENES, VEDE SULLANO, MARIETO
TAN, SR., HERMINIO SERINO, BENJAMIN DANO,
and CRISPULO MUNAR, and ELEUTERIO A.
QUIMBO, ROBINSON B. LOMO, TEOFILI
GALORIO, CASIANO ADORABLE, MARIO APAO,
ANTONIO BIENES, VEDE SULLANO, MARIETO
TAN SR., HERMINI SERINO, BENJAMIN DANO,
and CRISPULO MUNAR, in their private
capacities as taxpayer in the Province of
Misamis Occidental and the Municipality of
Jimenez, Misamis Occidental, and BENJAMIN C.
GALINDO and BENHUR B. BAUTISTA, in their
private capacities as taxpayers in the Province
of Misamis Occidental and the Municipality of
Jimenez, Misamis Occidental, petitioners, vs.,
HON. VICENTE T. BAZ, JR., Presiding Judge
REGIONAL TRIAL COURT, BRANCH 14,
10
th
JUDICIAL REGION, OROQUIETA CITY, and
MUNICIPALITY OF SINACABAN through its
MAYOR EUFRACIO D. LOOD, VICE MAYOR
BASILIO M. BANAAG, COUNCILORS
CONCEPCION E. LAGA-AC, MIGUEL F. ABCEDE,
JUANITO B. TIU, CLAUDIO T. REGIL, ANCIETO S.
MEJARES NAZIANCINO B. MARIQUIT, and
FEDERICO QUINIMON, and THE PROVINCE OF
MISAMIS OCCIDENTAL through the PROVINCIAL
BOARD OF MISAMIS OCCIDENTAL and its
members, VICE-GOVERNOR FLORENCIO L.
GARCIA, BOARD MEMBERS MARIVIC S.
CHIONG, PACITA M. YAP, ALEGRIA V. CARINO,
JULIO L. TIU, LEONARDO R. REGALADO II,
CONSTACIO C. BALAIS and ERNESTO P. IRA, and
THE COMMISSION ON AUDIT, through its
Chairman, HON. EUFEMIO DOMINGO, and THE
DEPARTMENT OF LOCAL GOVERNMENT through
its Secretary, HON. LUIS SANTOS (now HON.
CESAR SARINO), and THE DEPARTMENT OF
BUDGET AND MANAGEMENT, through its
Secretary, HON. GUILLERMO CARAGUE (now
HON. SALVADOR ENRIQUEZ), and The Hon.
CATALINO MACARAOG (now HON. FRAKLIN
DRILON), EXECUTIVE SECRETARY, OFFICE OF
THE PRESIDENT, respondents.
D E C I S I O N
MENDOZA, J.:
This is a petition for review of the decision dated
March 4, 1992 of the Regional Trial Court, Branch 14 of
Oroquieta City,
[1]
affirming the legal existence of the
Municipality of Sinacaban in Misamis Occidental and
ordering the relocation of its boundary for the purpose of
determining whether certain areas claimed by it belong to
it.
The antecedent facts are as follows:
The Municipality of Sinacaban was created by
Executive Order No. 258 of then President Elpidio Quirino,
pursuant to 68 of the Revised Administrative Code of
1917. The full text of the Order reads:
EXECUTIVE ORDER NO. 258
CREATING THE MUNICIPALITY OF SINACABAN,
IN THE PROVINCE OF MISAMIS OCCIDENTAL
Upon the recommendation of the Secretary of the Interior,
and pursuant to the provisions of Section 68 of the Revised
Administrative Code, there is hereby created, in the
Province of Misamis Occidental, a municipality to be
known as the municipality of Sinacaban, which shall
consist of the southern portion of the municipality of
Jimenez, Misamis Occidental, more particularly described
and bounded as follows:
On the north by a line starting from point 1, the center of
the lighthouse on the Tabo-o point S. 84
0
30W., 7,250
meters to point 2 which is on the bank of Palilan River
branch; thence following Palilan River branch 2,400 meters
southwesterly 'to point 3, thence a straight line S 87
0
00
W, 22,550 meters to point 4, where this intersects the
Misamis Occidental-Zamboanga boundary; on the west, by
the present Misamis Occidental-Zamboanga boundary;
and on the south by the present Jimenez-Tudela boundary;
and on the east, by the limits of the municipal waters
which the municipality of Sinacaban shall have pursuant to
section 2321 of the Revised Administrative Code,
(Description based on data shown in Enlarged Map of
Poblacion of Jimenez, Scale 1:8:000).
The municipality of Sinacabn contains the barrios of
Sinacaban, which shall be the seat of the municipal
government, Sinonoc, Libertad, the southern portion of
the barrio of Macabayao, and the sitios of Tipan,
Katipunan, Estrella, Flores, Senior, Adorable, San Isidro,
Cagayanon, Kamanse, Kulupan and Libertad Alto.
The municipality of Jimenez shall have its present territory,
minus the portion thereof included in the municipality of
Sinacaban.
The municipality of Sinacaban shall begin to exist upon the
appointment and qualification of the mayor, vice-mayor,
and a majority of the councilors thereof. The new
municipality shall, however, assume payment of a
proportionate share of the loan of the municipality of
Jimenez with the Rehabilitation Finance Corporation as
may be outstanding on the date of its organization, the
proportion of such payment to be determined by the
Department of Finance.
Done in the City of Manila, this 30
th
day of August, in the
year of Our Lord, nineteen hundred and forty-nine, and of
the Independence of the Philippines, the fourth.
(SGD.) ELPIDIO QUIRINO
President of the Philippines
By the President:
(SGD.) TEODORO EVANGELISTA
Executive Secretary
By virtue of Municipal Council Resolution No.
171,
[2]
dated November 22, 1988, Sinacaban laid claim to a
portion of Barrio Tabo-o and to Barrios Macabayao,
Adorable, Sinara Baja, and Sinara Alto,
[3]
based on the
technical description in E.O. No. 258. The claim was filed
with the Provincial Board of Misamis Occidental against
the Municipality of Jimenez.
In its answer, the Municipality of Jimenez, while
conceding that under E.O. No. 258 the disputed area is
part of Sinacaban, nonetheless asserted jurisdiction on the
basis of an agreement it had with the Municipality of
Sinacaban. This agreement was approved by the
Provincial Board of Misamis Occidental, in its Resolution
No. 77, dated February 18, 1950, which fixed the common
boundary of Sinacaban and Jimenez as follows:
[4]

From a point at Cagayanon Beach follow Macabayao Road
until it intersects Tabangag Creek at the back of the
Macabayao Elementary school. Follow the Tabangag
Creek until it intersect the Macabayao River at upper
Adorable. Follow the Macabayao River such that the
barrio of Macabayao, Sitio Adorable and site will be a part
of the Jimenez down and the sitios of San Vicente, Donan,
Estrella, Mapula will be a part of Sinacaban. (Emphasis
added)
In its decision dated October 11, 1989,
[5]
the
Provincial Board declared the disputed area to be part of
Sinacaban. It held that the previous resolution approving
the agreement between the municipalities was void
because the Board had no power to alter the boundaries
of Sinacaban as fixed in E.O. No. 258, that power being
vested in Congress pursuant to the Constitution and the
Local Government Code of 1983 (B.P. Blg. 337),
134.
[6]
The Provincial Board denied in its Resolution No.
13-90 dated January 30, 1990 the motion of Jimenez
seeking reconsideration.
[7]

On March 20, 1990, Jimenez filed a petition
for certiorari, prohibition, and mandamus in the Regional
Trial Court of Oroquieta City, Branch 14. The suit was filed
against Sinacaban, the Province of Misamis Occidental and
its Provincial Board, the Commission on Audit, the
Departments of Local Government, Budget and
Management, and the Executive Secretary. Jimenez
alleged that, in accordance with the decision in Pelaez v.
Auditor General,
[8]
the power to create municipalities is
essentially legislative and consequently Sinacaban, which
was created by an executive order, had no legal
personality and no right to assert a territorial claim vis--
vis Jimenez, of which it remains part. Jimenez prayed that
Sinacaban be enjoined from assuming control and
supervision over the disputed barrios; that the Provincial
Board be enjoined from assuming jurisdiction over the
claim of Sinacaban; that E.O. No. 258 be declared null and
void; that the decision dated October 11, 1989 and
Resolution No. 13-90 of the Provincial Board be set aside
for having been rendered without jurisdiction; that the
Commission on Audit be enjoined from passing in audit
any expenditure of public funds by Sinacaban; that the
Department of Budget and Management be enjoined from
allotting public funds to Sinacaban; and that the Executive
Secretary be enjoined from exercising control and
supervision over said municipality.
During pre-trial, the parties agreed to limit the issues
to the following:
A. Whether the Municipality of Sinacaban is a
legal juridical entity, duly created in
accordance with law;
B. If not, whether it is a de facto juridical
entity;
C. Whether the validity of the existence of the
Municipality can be properly questioned in
this action on certiorari;
D. Whether the Municipality of Jimenez which
had recognized the existence of the
municipality for more than 40 years is
estopped to question its existence;
E. Whether the existence of the municipality
has been recognized by the laws of the
land; and
F. Whether the decision of the Provincial
Board had acquired finality.
On February 10, 1992, the RTC rendered its decision,
the dispositive portion of which reads:
WHEREFORE, premises considered, it is the finding of this
Court that the petition must be denied and judgment is
hereby rendered declaring a STATUS QUO, that is, the
municipality of Sinacaban shall continue to exist and
operate as a regular municipality; declaring the decision
dated October 11, 1989 rendered by the Sangguniang
Panlalawigan fixing the boundaries between Sinacaban
and Jimenez, Missamis Occi. as null and void, the same not
being in accordance with the boundaries provided for in
Executive order No. 258 creating
the municipality of Sinacaban; dismissing the petition for
lack of merit, without pronouncement as to cost and
damages. With respect to the counterclaim, the same is
hereby ordered dismissed.
The Commissioners are hereby ordered to conduct the
relocation survey of the boundary of Sinacaban within 60
days from the time the decision shall have become final
and executory and another 60 days within which to submit
their report from the completion of the said relocation
survey.
SO ORDERED.
The RTC, inter alia, held that Sinacaban is a de
facto corporation since it had completely organized itself
even prior to the Pelaez case and exercised corporate
powers for forty years before the existence was
questioned; that Jimenez did not have the legal standing
to question the existence of Sinacaban, the same being
reserved to he State as represented by the Office of the
Solicitor General in a quo warranto proceeding; that
Jimenez was estopped from questioning the legal
existence of Sinacaban by entering into an agreement with
it concerning their common boundary; and that any
question as to the legal existence of Sinacaban had been
rendered moot by 442 (d) of the Local Government Code
of 1991 (R.A. No. 7160), which provides:
Municipalities existing as of the date of the
effectivity of this Code shall continue to exist and
operate as such. Existing municipal districts
organized pursuant to presidential issuances or
executive orders and which have their respective set
of elective municipal officials holding office at the
time of the effectivity of this Code shall henceforth
be considered as regular municipalities.
On March 17, 1990, petitioner moved for a
reconsideration of the decision but its motion was denied
by the RTC. Hence this petition raising the following
issues: (1) whether Sinacaban has legal personality to file a
claim, and (2) if it has, whether it is the boundary provided
for in E.O. No. 258 or in resolution No. 77 of the Provincial
Board of Misamis Occidental which should be used as the
basis for adjudicating Sinacabans territorial claim.
First. The preliminary issue concerns the legal
existence of Sinacaban. If Sinacaban legally exist, then it
has standing to bring a claim in the Provincial
Board. Otherwise, it cannot.
The principal basis for the view that Sinacaban was
not validly created as a municipal corporation is the ruling
in Pelaez v. Auditor General that the creation of municipal
corporations is essentially a legislative matter and
therefore the President was without power to create by
executive order the Municipality of Sinacaban. The ruling
in this case has been reiterated in a number of
cases
[9]
later decided. However, we have since held that
where a municipality created as such by executive order is
later impliedly recognized and its acts are accorded legal
validity, its creation can no longer be questioned. In
Municipality of San Narciso, Quezon v. Mendez, Sr.,
[10]
this
Court considered the following factors as having validated
the creation of a municipal corporation, which, like the
Municipallity of Sinacaban, was created by executive order
of the President before the ruling in Pelaez v. Auditor
general: (1) the fact that for nearly 30 years the validity of
the creation of the municipality had never been
challenged; (2) the fact that following the ruling in Pelaez
no quo warranto suit was filed to question the validity of
the executive order creating such municipality; and (3) the
fact that the municipality was later classified as a fifth class
municipality, organized as part of a municipal circuit court
and considered part of a legislative district in the
Constitution apportioning the seats in the House of
Representatives. Above all, it was held that whatever
doubt there might be as to the de jure character of the
municipality must be deemed to have been put to rest by
the local Government Code of 1991 (R.A. no. 7160), 442
(d) of which provides that municipal districts organized
pursuant to presidential issuances or executive orders and
which have their respective sets of elective officials
holding office at the time of the effectivity of this Code
shall henceforth be considered as regular municipalities.
Here, the same factors are present so as to confer on
Sinacaban the status of at least a de facto municipal
corporation in the sense that its legal existence has been
recognized and acquiesced publicly and
officially. Sinacaban had been in existence for sixteen
years when Pelaez v. Auditor General was decided on
December 24, 1965. Yet the validity of E.O. No. 258
creating it had never been questioned. Created in 1949, it
was only 40 years later that its existence was questioned
and only because it had laid claim to an area that
apparently is desired for its revenue. This fact must be
underscored because under Rule 66, 16 of the Rules of
Court, a quo warranto suit against a corporation for
forfeiture of its charter must be commenced within five (5)
years from the time the act complained of was done or
committed. On the contrary, the State and even the
municipality of Jimenez itself have recognized Sinacabans
corporate existence. Under Administrative order no. 33
dated June 13, 1978 of this Court, as reiterated by 31 of
the judiciary Reorganization Act of 1980 (B.P. Blg. 129),
Sinacaban is constituted part of municipal circuit for
purposes of the establishment of Municipal Circuit Trial
Courts in the country. For its part, Jimenez had earlier
recognized Sinacaban in 1950 by entering into an
agreement with it regarding their common boundary. The
agreement was embodied in Resolution no. 77 of the
Provincial Board of Misamis Occidental.
Indeed Sinacaban has attained de jure status by
virtue of the Ordinance appended to the 1987
Constitution, apportioning legislative districts throughout
the country, which considered Sinacaban part of the
Second District of Misamis Occidental. Moreover
following the ruling in Municipality of san Narciso, Quezon
v. Mendez, Sr., 442(d) of the Local Government Code of
1991 must be deemed to have cured any defect in the
creation of Sinacaban. This provision states:
Municipalities existing as of the date of the
effectivity of this Code shall continue to exist and
operate as such. Existing municipal district
organized pursuant to presidential issuances or
executive orders and which have their respective set
of elective municipal officials holding office at the
time of the effectivity of the Code shall henceforth
be considered as regular municipalities.
Second. Jimenez claims, however, that R.A. No.
7160, 442(d) is invalid, since it does not conform to the
constitutional and statutory requirements for the holding
of plebiscites in the creation of new municipalities.
[11]

This contention will not bear analysis. Since, as
previously explained, Sinacaban had attained de
facto status at the time the 1987 Constitution took effect
on February 2, 1987, it is not subject to the plebiscite
requirement. This requirement applies only to new
municipalities created for the first time under the
Constitution. Actually, the requirement of plebiscite was
originally contained in Art. XI, 3 of the previous
Constitution which took effect on January 17, 1973. It
cannot, therefore, be applied to municipal corporations
created before, such as the municipality of Sinacaban in
the case at bar.
Third. Finally Jimenez argues that the RTC erred in
ordering a relocation survey of the boundary of Sinacaban
because the barangays which Sinacaban are claiming are
not enumerated in E.O. No. 258 and that in any event in
1950 the parties entered into an agreement whereby the
barangays in question were considered part of the
territory of Jimenez.
E.O. no. 258 does not say that
Sinacaban comprises only the barrios (now called
Barangays) therein mentioned. What it say is that
Sinacaban contains those barrios, without saying they
are the only ones comprising it. The reason for this is that
the technical description, containing the metes and
bounds of its territory, is controlling. The trial court
correctly ordered a relocation and consequently the
question to which the municipality the barangays in
question belong.
Now, as already stated, in 1950 the two
municipalities agreed that certain barrios bellonged to
Jimenez, while certain other ones belonged to
Sinacaban. This agreement was subsequently approved by
the Provincial board of Misamis Occidental. Whether this
agreement conforms to E.O. no. 258 will be determined by
the result of the survey. Jimenez contends however, that
regardless of its conformity to E.O. No, 258, the agreement
as embodied in resolution No, 77 of the Provincial Board,
is binding on Sinacaban. This raises the question whether
the provincial board had authority to approve the
agreement or, to put it in another way, whether it had the
power to declare certain barrios part of the one or the
other municipality. We hold it did not if effect would be to
amend the area as described in E.O no. 258 creating the
Municipality of Sinacaban.
At the time the Provincial Board passed Resolution
No. 77 on February 18, 1950, the applicable law was 2167
of the Revised Administrative Code of 1917 which
provided:
SEC. 2167. Municipal boundary disputes. How settled.
Disputes as to jurisdiction of municipal governments over
places or barrios shall be decided by the provincial boards
of the provinces in which such municipalities are situated,
after an investigation at which the municipalities
concerned shall be duly heard. From the decision of the
provincial board appeal may be taken by the municipality
aggrieved to the Secretary of the Interior [now the Office
of the Executive Secretary], whose decision shall be
final. Where the places or barrios in dispute are claimed
by municipalities situated in different provinces, the
provincial boards of the provinces concerned shall come to
an agreement if possible, but, in the event of their failing
to agree, an appeal shall be had to the Secretary of Interior
[Executive Secretary], whose decision shall be final.
As held in Pelaez v. Auditor General,
[12]
the power of
provincial boards to settle boundary disputes is of an
administrative nature involving as it does, the adoption
of means and ways to carry into effect the law creating
said municipalities. It is a power to fix common
boundary, in order to avoid or settle conflicts of
jurisdiction between adjoining municipalities. It is thus
limited to implementing the law creating a municipality. It
is obvious that any alteration of boundaries that is not in
accordance with the law creating a municipality is not the
carrying into effect of that law but its amendment.
[13]
If,
therefore, Resolution No. 77 of the Provincial Board of
Misamis Occidental is contrary to the technical description
of the territory of Sinacaban, it cannot be used by Jimenez
as basis for opposing the claim of Sinacaban.
Jimenez properly brought to the RTC for review the
decision of October 11, 1989 and Resolution No. 13-90 of
the Provincial Board. Its action is in accordance with the
local Government Code of 1983, 79 of which provides
that I case no settlement of boundary disputes is made the
dispute should be elevated to the RTC of the province. In
1989, when the action was brought by Jimenez, this Code
was the governing law. The governing law is now the Local
Government Code of 1991 (R.A. No. 7160), 118-119.
Jimenezs contention that the RTC failed to decide
the case within one year form the start of proceeding as
required by 79 of the Local Government Code of 1983
and the 90-day period provided for in the Article VIII, 15
of the Constitution does not affect the validity of the
decision rendered. For even granting that the court failed
to decide within the period prescribed by law, its failure
did not divest it of its jurisdiction to decide the case but
only makes the judge thereof liable for possible
administrative sanction.
[14]

WHEREFORE, the petition is DENIED and the
decision of the Regional Trial Court of Oroquieta City,
Branch 14 is AFFIRMED.
SO ORDERED

Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. 103702 December 6, 1994
MUNICIPALITY OF SAN NARCISO, QUEZON; MAYOR JUAN
K. UY; COUNCILORS: DEOGRACIAS R. ARGOSINO III,
BENITO T. CAPIO, EMMANUEL R. CORTEZ, NORMANDO
MONTILLA, LEONARDO C. UY, FIDEL C. AURELLANA,
PEDRO C. CARABIT, LEONARDO D. AURELLANA, FABIAN
M. MEDENILLA, TRINIDAD F. CORTEZ, SALVADOR M.
MEDENILLA, CERELITO B. AUREADA and FRANCISCA A.
BAMBA, petitioners,
vs.
HON. ANTONIO V. MENDEZ, SR., Presiding Judge,
Regional Trial Court, Branch 62, 4th Judicial Region,
Gumaca, Quezon; MUNICIPALITY OF SAN ANDRES,
QUEZON; MAYOR FRANCISCO DE LEON; COUNCILORS: FE
LUPINAC, TOMAS AVERIA, MANUEL O. OSAS, WILFREDO
O. FONTANIL, ENRICO U. NADRES, RODELITO LUZOIR,
LENAC, JOSE L. CARABOT, DOMING AUSA, VIDAL
BANQUELES and CORAZON M. MAXIMO, respondents.
Manuel Laserna, Jr. for petitioners.
Florante Pamfilo for private respondents.

VITUG, J.:
On 20 August 1959, President Carlos P. Garcia, issued,
pursuant to the then Sections 68 and 2630 of the Revised
Administrative Code, as amended, Executive Order No.
353 creating the municipal district of San Andres, Quezon,
by segregating from the municipality of San Narciso of the
same province, the barrios of San Andres, Mangero,
Alibijaban, Pansoy, Camflora and Tala along with their
respective sitios.
Executive Order No. 353 was issued upon the request,
addressed to the President and coursed through the
Provincial Board of Quezon, of the municipal council of San
Narciso, Quezon, in its Resolution No. 8 of 24 May 1959.
1

By virtue of Executive Order No. 174, dated 05 October
1965, issued by President Diosdado Macapagal, the
municipal district of San Andres was later officially
recognized to have gained the status of a fifth class
municipality beginning 01 July 1963 by operation of
Section 2 of Republic Act No. 1515.
2
The executive order
added that "(t)he conversion of this municipal district into
(a) municipality as proposed in House Bill No. 4864 was
approved by the House of Representatives."
On 05 June 1989, the Municipality of San Narciso filed a
petition for quo warranto with the Regional Trial Court,
Branch 62, in Gumaca, Quezon, against the officials of the
Municipality of San Andres. Docketed Special Civil Action
No. 2014-G, the petition sought the declaration of nullity
of Executive Order No. 353 and prayed that the
respondent local officials of the Municipality of San Andres
be permanently ordered to refrain from performing the
duties and functions of their respective offices.
3
Invoking
the ruling of this Court in Pelaez v. Auditor General,
4
the
petitioning municipality contended that Executive Order
No. 353, a presidential act, was a clear usurpation of the
inherent powers of the legislature and in violation of the
constitutional principle of separation of powers. Hence,
petitioner municipality argued, the officials of the
Municipality or Municipal District of San Andres had no
right to exercise the duties and functions of their
respective offices that righfully belonged to the
corresponding officials of the Municipality of San Narciso.
In their answer, respondents asked for the dismissal of the
petition, averring, by way of affirmative and special
defenses, that since it was at the instance of petitioner
municipality that the Municipality of San Andres was given
life with the issuance of Executive Order No. 353, it
(petitioner municipality) should be deemed estopped from
questioning the creation of the new municipality;
5
that
because the Municipality of San Andred had been in
existence since 1959, its corporate personality could no
longer be assailed; and that, considering the petition to be
one for quo warranto, petitioner municipality was not the
proper party to bring the action, that prerogative being
reserved to the State acting through the Solicitor
General.
6

On 18 July 1991, after the parties had submitted their
respective pre-trial briefs, the trial court resolved to defer
action on the motion to dismiss and to deny a judgment
on the pleadings.
On 27 November 1991, the Municipality of San Andres
filed anew a motion to dismiss alleging that the case had
become moot and academic with the enactment of
Republic Act No. 7160, otherwise known as the Local
Government Code of 1991, which took effect on 01
January 1991. The movant municipality cited Section
442(d) of the law, reading thusly:
Sec. 442. Requisites for Creation. . . .
(d) Municipalities existing as of the
date of the effectivity of this Code shall
continue to exist and operate as such.
Existing municipal districts organized
pursuant to presidential issuances or
executive orders and which have their
respective set of elective municipal
officials holding office at the time of
the effectivity of this Code shall
henceforth be considered as regular
municipalities.
The motion was opposed by petitioner
municipality, contending that the above
provision of law was inapplicable to the
Municipality of San Andres since the enactment
referred to legally existing municipalities and not
to those whose mode of creation had been
void ab initio.
7

In its Order of 02 December 1991, the lower court
8
finally
dismissed the petition
9
for lack of cause of action on what
it felt was a matter that belonged to the State, adding that
"whatever defects (were) present in the creation of
municipal districts by the President pursuant to
presidential issuances and executive orders, (were) cured
by the enactment of R.A. 7160, otherwise known as Local
Government Code of 1991." In an order, dated 17 January
1992, the same court denied petitioner municipality's
motion for reconsideration.
Hence, this petition "for review on certiorari."
Petitioners
10
argue that in issuing the orders of 02
December 1991 and 17 January 1992, the lower court has
"acted with grave abuse of discretion amounting to lack of
or in excess of jurisdiction." Petitioners assert that the
existence of a municipality created by a null and void
presidential order may be attacked either directly or even
collaterally by anyone whose interests or rights are
affected, and that an unconstitutional act is not a law,
creates no office and is inoperative such as though its has
never been passed.
11

Petitioners consider the instant petition to be one for
"review on certiorari" under Rules 42 and 45 of the Rules
of Court; at the same time, however, they question the
orders of the lower court for having been issued with
"grave abuse of discretion amounting to lack of or in
excess of jurisdiction, and that there is no other plain,
speedy and adequate remedy in the ordinary course of law
available to petitioners to correct said Orders, to protect
their rights and to secure a final and definitive
interpretation of the legal issues involved."
12
Evidently,
then, the petitioners intend to submit their case in this
instance under Rule 65. We shall disregard the procedural
incongruence.
The special civil action of quo warranto is a "prerogative
writ by which the Government can call upon any person to
show by what warrant he holds a public office or exercises
a public franchise."
13
When the inquiry is focused on the
legal existence of a body politic, the action is reserved to
the State in a proceeding for quo warranto or any other
credit proceeding.
14
It must be brought "in the name of
the Republic of the Philippines"
15
and commenced by the
Solicitor General or the fiscal "when directed by the
President of the Philippines . . . ."
16
Such officers may,
under certain circumstances, bring such an action "at the
request and upon the relation of another person" with the
permission of the court.
17
The Rules of Court also allows
an individual to commence an action for quo warranto in
his own name but this initiative can be done when he
claims to be "entitled to a public office or position usurped
or unlawfully held or exercised by another."
18
While
the quo warranto proceedings filed below by petitioner
municipality has so named only the officials of the
Municipality of San Andres as respondents, it is virtually,
however, a denunciation of the authority of the
Municipality or Municipal District of San Andres to exist
and to act in that capacity.
At any rate, in the interest of resolving any further doubt
on the legal status of the Municipality of San Andres, the
Court shall delve into the merits of the petition.
While petitioners would grant that the enactment of
Republic Act
No. 7160 may have converted the Municipality of San
Andres into a de facto municipality, they, however,
contend that since the petition for quo warranto had been
filed prior to the passage of said law, petitioner
municipality had acquired a vested right to seek the
nullification of Executive Order No. 353, and any attempt
to apply Section 442 of Republic Act 7160 to the petition
would perforce be violative of due process and the equal
protection clause of the Constitution.
Petitioners' theory might perhaps be a point to consider
had the case been seasonably brought. Executive Order
No. 353 creating the municipal district of San Andres was
issued on 20 August 1959 but it was only after almost
thirty (30) years, or on 05 June 1989, that the municipality
of San Narciso finally decided to challenge the legality of
the executive order. In the meantime, the Municipal
District, and later the Municipality, of San Andres, began
and continued to exercise the powers and authority of a
duly created local government unit. In the same manner
that the failure of a public officer to question his ouster or
the right of another to hold a position within a one-year
period can abrogate an action belatedly filed,
19
so also, if
not indeed with greatest imperativeness, must a quo
warrantoproceeding assailing the lawful authority of a
political subdivision be timely raised.
20
Public interest
demands it.
Granting the Executive Order No. 353 was a complete
nullity for being the result of an unconstitutional
delegation of legislative power, the peculiar circumstances
obtaining in this case hardly could offer a choice other
than to consider the Municipality of San Andres to have at
least attained a status uniquely of its own closely
approximating, if not in fact attaining, that of a de
facto municipal corporation. Conventional wisdom cannot
allow it to be otherwise. Created in 1959 by virtue of
Executive Order No. 353, the Municipality of San Andres
had been in existence for more than six years when, on 24
December 1965, Pelaez v. Auditor General was
promulgated. The ruling could have sounded the call for a
similar declaration of the unconstitutionality of Executive
Order No. 353 but it was not to be the case. On the
contrary, certain governmental acts all pointed to the
State's recognition of the continued existence of the
Municipality of San Andres. Thus, after more than five
years as a municipal district, Executive Order No. 174
classified the Municipality of San Andres as a fifth class
municipality after having surpassed the income
requirement laid out in Republic Act No. 1515. Section 31
of Batas Pambansa Blg. 129, otherwise known as the
Judiciary Reorganization Act of 1980, constituted as
municipal circuits, in the establishment of Municipal
Circuit Trial Courts in the country, certain municipalities
that comprised the municipal circuits organized under
Administrative Order No. 33, dated 13 June 1978, issued
by this Court pursuant to Presidential Decree No. 537.
Under this administrative order, the Municipality of San
Andres had been covered by the 10th Municipal Circuit
Court of San Francisco-San Andres for the province of
Quezon.
At the present time, all doubts on the de jure standing of
the municipality must be dispelled. Under the Ordinance
(adopted on 15 October 1986) apportioning the seats of
the House of Representatives, appended to the 1987
Constitution, the Municipality of San Andres has been
considered to be one of the twelve (12) municipalities
composing the Third District of the province of Quezon.
Equally significant is Section 442(d) of the Local
Government Code to the effect that municipal districts
"organized pursuant to presidential issuances or executive
orders and which have their respective sets of elective
municipal officials holding office at the time of the
effectivity of (the) Code shall henceforth be considered as
regular municipalities." No pretension of
unconstitutionality per seof Section 442(d) of the Local
Government Code is proferred. It is doubtful whether such
a pretext, even if made, would succeed. The power to
create political subdivisions is a function of the legislature.
Congress did just that when it has incorporated Section
442(d) in the Code. Curative laws, which in essence are
retrospective,
21
and aimed at giving "validity to acts done
that would have been invalid under existing laws, as if
existing laws have been complied with," are validly
accepted in this jurisdiction, subject to the usual
qualification against impairment of vested rights.
22

All considered, the de jure status of the Municipality of San
Andres in the province of Quezon must now be conceded.
WHEREFORE, the instant petition for certiorari is hereby
DISMISSED. Costs against petitioners.
SO ORDERED.

Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 116702 December 28, 1995
THE MUNICIPALITY OF CANDIJAY, BOHOL, acting through
its Sanguniang Bayan and Mayor, petitioner,
vs.
COURT OF APPEALS and THE MUNICIPALITY OF ALICIA,
BOHOL, respondents.
R E S O L U T I O N

PANGANIBAN, J.:
This is a petition for review on certiorari of the Decision of
the Court of Appeals
1
promulgated on June 28,
1994,reversing the judgment
2
of the Regional Trial Court
(Branch I) of the City of Tagbilaran, Bohol.
The lower court's decision, among other things, declared
"barrio/barangay Pagahat as within the territorial
jurisdiction of the plaintiff municipality of Candijay, Bohol,
therefore, said barrio forms part and parcel of its territory,
therefore, belonging to said plaintiff municipality", and
further permanently enjoined defendant municipality of
Alicia "to respect plaintiff's control, possession and
political supervision of barangay Pagahat and never to
molest, disturb, harass its possession and ownership over
the same barrio" (RTC decision, p. 4; Rollo, p. 86).
On appeal, the respondent Court stated that "(S)crutiny of
the conflicting claims and the respective evidence of the
parties lead to the conclusion that the trial court
committed an error in declaring that Barrio Pagahat is
within the territorial jurisdiction of plaintiff-appellee
(municipality of Candijay)." Said Court rejected the
boundary line being claimed by petitioner based on certain
exhibits, since it would in effect place "practically all of
Barrio Pagahat . . . , part of Barrio Cagongcagong and
portions of Barrio Putlongcam and La Hacienda and all of
Barrio Mahayag and Barrio del Monte within the territorial
jurisdiction of plaintiff-appellee Candijay." Added the
respondent Court, "As aptly pointed out by defendant-
appellant in its appeal brief, 'the plaintiff municipality will
not only engulf the entire barrio of Pagahat, but also of the
barrios of Putlongcam, Mahayag, Del Monte,
Cagongcagong, and a part of the Municipality of Mabini.
Candijay will eat up a big chunk of territories far exceeding
her territorial jurisdiction under the law creating her. Her
claim opens the floodgate of controversies over
boundaries, including with Mabini.'" (Decision p. 4; rollo, p.
35.) The respondent Court concluded that "the trial court
erred in relying on Exh. X-Commissioner [exhibit for
petitioner], because, in effect, it included portions of
Barrios Putlongcam and La Hacienda within the jurisdiction
of appellee Candijay when said barrios are undisputedly
part of appellant's (Alicia) territory under Executive Order
No. 265 creating the latter" (Decision, p. 6, rollo, p. 37).
The respondent Court also found, after an examination of
the respective survey plans of petitioner and respondent
submitted as exhibits, that "both plans are inadequate
insofar as identifying the monuments of the boundary line
between [petitioner] and the Municipality of Mabini
(which is not a party to this case) as declared by the
Provincial Board of Bohol. Neither plan shows where Looc-
Tabasan, Lomislis Island, Tagtang Canlirong, mentioned in
the aforequoted boundary line declared by the Provincial
Board of Bohol, are actually located." (Decision, p. 4; rollo,
p. 35.) The respondent Court, after weighing and
considering the import of certain official acts, including
Executive Order No. 265 dated September 16, 1949 (which
created the municipality of Alicia from out of certain
barrios of the municipality of Mabini), and Act No. 968 of
the Philippine Commission dated October 31, 1903 (which
set forth the respective component territories of the
municipalities of Mabini and Candijay), concluded that
"Barrio Bulawan from where barrio Pagahat originated is
not mentioned as one of the barrios constituted as part of
defendant-appellant Municipality of Alicia. Neither do they
show that Barrio Pagahat forms part of plaintiff-appellant
Municipality of Candijay."
On that basis, the respondent Court held that:
Clearly, from the foregoing, there is
equiponderance of evidence. The
Supreme Court has ruled:
Equiponderance of
evidence rule
states:
When the scale
shall stand upon an
equipoise and
there is nothing in
the evidence which
shall incline it to
one side or the
other, the court
will find for the
defendant.
Under said
principle, the
plaintiff must rely
on the strength of
his evidence and
not on the
weakness of
defendant's claim.
Even if the
evidence of the
plaintiff may be
stronger than that
of the defendant,
there is no
preponderance of
evidence on his
side if such
evidence is
insufficient in itself
to establish his
cause of action.
(Sapu-an, et al. v.
Court of Appeals,
Oct. 19, 1992, 214
SCRA 701, 705-
706.)
WHEREFORE, the appealed judgment is
reversed and set aside. Another
judgment is hereby entered dismissing
the complaint in Civil Case No. 2402.
No costs. (Decision, p. 6, rollo, p. 37.)
Petitioner's motion for reconsideration having been
rejected by the respondent Court, petitioner came to this
Court, alleging (i) improper application by the respondent
Court of Appeals of the so-called principle of
"equiponderance of evidence", for having based its ruling
against petitioner on documentary evidence which,
petitioner claims, are void, (ii) the respondent
municipality's purported lack of juridical personality, as a
result of having been created under a void executive
order, and (iii) that the challenged Decision "does not
solve the problem of both towns but throws them back
again to their controversy." (Petition, p. 6, rollo, p. 21.)
After deliberating on the petition, comment and reply, this
Court is not persuaded to grant due course to the petition.
With respect to the first and third grounds, we find that
the issues of fact in this case had been adequately passed
upon by respondent Court in its Decision, which is well-
supported by the evidence on record. The determination
of equiponderance of evidence by the respondent Court
involves the appreciation of evidence by the latter
tribunal, which will not be reviewed by this Court unless
shown to be whimsical or capricious; here, there has been
no such showing.
In connection with the foregoing, that the assailed
Decision, in dismissing the complaint in Civil Case No.
2402, may leave the parties where they are or may not
resolve their problem one way or the other, is of no
moment. The fact remains that, as correctly evaluated by
the respondent Court, neither party was able to make out
a case; neither side could establish its cause of action and
prevail with the evidence it had. They are thus no better
off than before they proceeded to litigate, and, as a
consequence thereof, the courts can only leave them as
they are. In such cases, courts have no choice but to
dismiss the complaints/petitions.
On the second issue, we noted that petitioner commenced
its collateral attack on the juridical personality of
respondent municipality on 19 January 1984 (or some
thirty five years after respondent municipality first came
into existence in 1949) during the proceedings in the
court a quo. It appears that, after presentation of its
evidence, herein petitioner asked the trial court to bar
respondent municipality from presenting its evidence on
the ground that it had no juridical personality. Petitioner
contended that Exec. Order No. 265 issued by President
Quirino on September 16, 1949 creating respondent
municipality is null and void ab initio, inasmuch as Section
68 of the Revised Administrative Code, on which said
Executive Order was based, constituted an undue
delegation of legislative powers to the President of the
Philippines, and was therefore declared unconstitutional,
per this Court's ruling in Pelaez vs. Auditor General.
3

In this regard, we call to mind the ruling of this Court
in Municipality of San Narciso, Quezon vs. Mendez, Sr.
4
,
which will be found very instructive in the case at bench.
Therein we stated:
While petitioners would grant that the
enactment of Republic Act No. 7160
[Local Government Code of 1991] may
have converted the Municipality of San
Andres into a de facto municipality,
they, however, contend that since the
petition for quo warranto had been
filed prior to the passage of said law,
petitioner municipality had acquired a
vested right to seek the nullification of
Executive Order No. 353, and any
attempt to apply Section 442 of
Republic Act 7160 to the petition
would perforce be violative of due
process and the equal protection
clause of the Constitution.
Petitioner's theory might perhaps be a
point to consider had the case been
seasonably brought. Executive Order
No. 353 creating the municipal district
of San Andres was issued on 20 August
1959 but it was only after almost thirty
(30) years, or on 05 June 1989, that the
municipality of San Narciso finally
decided to challenge the legality of the
executive order. In the meantime, the
Municipal district, and later the
Municipality of San Andres, began and
continued to exercise the powers and
authority of a duly created local
government unit. In the same manner
that the failure of a public officer to
question his ouster or the right of
another to hold a position within a
one-year period can abrogate an
action belatedly file, so also, if not
indeed with greatest imperativeness,
must a quo warrantoproceeding
assailing the lawful authority of a
political subdivision be timely raised.
Public interest demands it.
Granting that Executive Order No. 353
was a complete nullity for being the
result of an unconstitutional
delegation of legislative power, the
peculiar circumstances obtaining in
this case hardly could offer a choice
other than to consider the Municipality
of San Andres to have at least attained
a status uniquely of its own closely
approximating, if not in fact attaining,
that of a de factomunicipal
corporation. Conventional wisdom
cannot allow it to be otherwise.
Created in 1959 by virtue of Executive
Order No. 353, the Municipality of San
Andres had been in existence for more
than six years when, on 24 December
1965, Pelaez vs. Auditor General was
promulgated. The ruling could have
sounded the call for a similar
declaration of the unconstitutionality
of Executive Order No. 353 but it was
not to be the case. On the contrary,
certain governmental acts all pointed
to the State's recognition of the
continued existence of the
Municipality of San Andres. Thus, after
more than five years as a municipal
district, Executive Order No. 174
classified the Municipality of San
Andres as a fifth class municipality
after having surpassed the income
requirement laid out in Republic Act
No. 1515. Section 31 of Batas
Pambansa Blg. 129, otherwise known
as the Judiciary Reorganization Act of
1980, constituted as municipal circuits,
in the establishment of Municipal
Circuit Trial Courts in the country,
certain municipalities that comprised
the municipal circuits organized under
Administrative Order No. 33, dated 13
June 1978, issued by this court
pursuant to Presidential Decree No.
537. Under this administrative order,
the Municipality of San Andres had
been covered by the 10th Municipal
Circuit Court of San Francisco-San
Andres for the province of Quezon.
At the present time, all doubts on
the de jure standing of the municipality
must be dispelled. Under the
Ordinance (adopted on 15 October
1986) apportioning the seats of the
House of Representatives, appended
to the 1987 Constitution, the
Municipality of San Andres has been
considered to be one of the twelve
(12) municipalities composing the
Third District of the province of
Quezon. Equally significant is Section
442 (d) of the Local Government Code
to the effect that municipal districts
"organized pursuant to presidential
issuances or executive orders and
which have their respective sets of
elective municipal officials holding
office at the time of the effectivity of
(the) Code shall henceforth be
considered as regular municipalities."
No pretension of
unconstitutionality per se of Section
442 (d) of the Local Government Code
is proffered. It is doubtful whether
such a pretext, even if made, would
succeed. The power to create political
subdivisions is a function of the
legislature. Congress did just that
when it has incorporated Section 442
(d) in the Code. Curativelaws, which in
essence are retrospective, and aimed
at giving "validity to acts done that
would have been invalid under existing
laws, as if existing laws have been
complied with," are validly accepted in
this jurisdiction, subject to the usual
qualification against impairment of
vested rights.
All considered, the de jure status of the
Municipality of San Andres in the
province of Quezon must now be
conceded.
Respondent municipality's situation in the instant case is
strikingly similar to that of the municipality of San Andres.
Respondent municipality of Alicia was created by virtue of
Executive Order No. 265 in 1949, or ten years ahead of the
municipality of San Andres, and therefore had been in
existence for all of sixteen years when Pelaez vs.Auditor
General was promulgated. And various governmental acts
throughout the years all indicate the State's recognition
and acknowledgment of the existence thereof. For
instance, under Administrative Order No. 33 above-
mentioned, the Municipality of Alicia was covered by the
7th Municipal Circuit Court of Alicia-Mabini for the
province of Bohol. Likewise, under the Ordinance
appended to the 1987 Constitution, the Municipality of
Alicia is one of twenty municipalities comprising the Third
District of Bohol.
Inasmuch as respondent municipality of Alicia is similarly
situated as the municipality of San Andres, it should
likewise benefit from the effects of Section 442 (d) of the
Local Government Code, and should henceforth be
considered as a regular, de jure municipality.
WHEREFORE, the instant petition for review on certiorari is
hereby DENIED, with costs against petitioner.
SO ORDERED.

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 161414 January 17, 2005
SULTAN OSOP B. CAMID, petitioner,
vs.
THE OFFICE OF THE PRESIDENT, DEPARTMENT OF THE
INTERIOR AND LOCAL GOVERNMENT, AUTONOMOUS
REGION IN MUSLIM MINDANAO, DEPARTMENT of
FINANCE, DEPARTMENT of BUDGET AND MANAGEMENT,
COMMISSION ON AUDIT, and the CONGRESS OF THE
PHILIPPINES (HOUSE of REPRESENTATIVES AND
SENATE), respondents.
D E C I S I O N
TINGA, J.:
This Petition for Certiorari presents this Court with the
prospect of our own Brigadoon
1
the municipality of
Andong, Lanao del Surwhich like its counterpart in
filmdom, is a town that is not supposed to exist yet is
anyway insisted by some as actually alive and thriving. Yet
unlike in the movies, there is nothing mystical, ghostly or
anything even remotely charming about the purported
existence of Andong. The creation of the putative
municipality was declared void ab initio by this Court four
decades ago, but the present petition insists that in spite
of this insurmountable obstacle Andong thrives on, and
hence, its legal personality should be given judicial
affirmation. We disagree.
The factual antecedents derive from the promulgation of
our ruling in Pelaez v. Auditor General
2
in 1965. As
discussed therein, then President Diosdado Macapagal
issued several Executive Orders
3
creating thirty-three (33)
municipalities in Mindanao. Among them was Andong in
Lanao del Sur which was created by virtue of Executive
Order No. 107.
4

These executive orders were issued after legislative bills
for the creation of municipalities involved in that case had
failed to pass Congress.
5
President Diosdado Macapagal
justified the creation of these municipalities citing his
powers under Section 68 of the Revised Administrative
Code. Then Vice-President Emmanuel Pelaez filed a special
civil action for a writ of prohibition, alleging in main that
the Executive Orders were null and void, Section 68 having
been repealed by Republic Act No. 2370,
6
and said orders
constituting an undue delegation of legislative power.
7

After due deliberation, the Court unanimously held that
the challenged Executive Orders were null and void. A
majority of five justices, led by the ponente, Justice (later
Chief Justice) Roberto Concepcion, ruled that Section 68 of
the Revised Administrative Code did not meet the well-
settled requirements for a valid delegation of legislative
power to the executive branch,
8
while three justices
opined that the nullity of the issuances was the
consequence of the enactment of the 1935 Constitution,
which reduced the power of the Chief Executive over local
governments.
9
Pelaez was disposed in this wise:
WHEREFORE, the Executive Orders in question are
declared null and void ab initio and the respondent
permanently restrained from passing in audit any
expenditure of public funds in implementation of said
Executive Orders or any disbursement by the
municipalities above referred to. It is so ordered.
10

Among the Executive Orders annulled was Executive Order
No. 107 which created the Municipality of Andong.
Nevertheless, the core issue presented in the present
petition is the continued efficacy of the judicial annulment
of the Municipality of Andong.
Petitioner Sultan Osop B. Camid (Camid) represents
himself as a current resident of Andong,
11
suing as a
private citizen and taxpayer whose locus standi "is of
public and paramount interest especially to the people of
the Municipality of Andong, Province of Lanao del
Sur."
12
He alleges that Andong "has metamorphosed into a
full-blown municipality with a complete set of officials
appointed to handle essential services for the municipality
and its constituents,"
13
even though he concedes that
since 1968, no person has been appointed, elected or
qualified to serve any of the elective local government
positions of Andong.
14
Nonetheless, the municipality of
Andong has its own high school, Bureau of Posts, a
Department of Education, Culture and Sports office, and at
least seventeen (17) "barangay units" with their own
respective chairmen.
15
From 1964 until 1972, according to
Camid, the public officials of Andong "have been serving
their constituents through the minimal means and
resources with least (sic) honorarium and recognition from
the Office of the then former President Diosdado
Macapagal." Since the time of Martial Law in 1972,
Andong has allegedly been getting by despite the absence
of public funds, with the "Interim Officials" serving their
constituents "in their own little ways and means."
16

In support of his claim that Andong remains in existence,
Camid presents to this Court a Certification issued by the
Office of the Community Environment and Natural
Resources (CENRO) of the Department of Environment and
Natural Resources (DENR) certifying the total land area of
the Municipality of Andong, "created under Executive
Order No. 107 issued [last] October 1, 1964."
17
He also
submits a Certification issued by the Provincial Statistics
Office of Marawi City concerning the population of
Andong, which is pegged at fourteen thousand fifty nine
(14,059) strong. Camid also enumerates a list of
governmental agencies and private groups that allegedly
recognize Andong, and notes that other municipalities
have recommended to the Speaker of the Regional
Legislative Assembly for the immediate implementation of
the revival or re-establishment of Andong.
18

The petition assails a Certification dated 21 November
2003, issued by the Bureau of Local Government
Supervision of the Department of Interior and Local
Government (DILG).
19
The Certification enumerates
eighteen (18) municipalities certified as "existing," per
DILG records. Notably, these eighteen (18) municipalities
are among the thirty-three (33), along with Andong, whose
creations were voided by this Court in Pelaez. These
municipalities are Midaslip, Pitogo, Naga, and Bayog in
Zamboanga del Sur; Siayan and Pres. Manuel A. Roxas in
Zamboanga del Norte; Magsaysay, Sta. Maria and New
Corella in Davao; Badiangan and Mina in Iloilo; Maguing in
Lanao del Sur; Gloria in Oriental Mindoro; Maasim in
Sarangani; Kalilangan and Lantapan in Bukidnon; and
Maco in Compostela Valley.
20

Camid imputes grave abuse of discretion on the part of the
DILG "in not classifying [Andong] as a regular existing
municipality and in not including said municipality in its
records and official database as [an] existing regular
municipality."
21
He characterizes such non-classification as
unequal treatment to the detriment of Andong, especially
in light of the current recognition given to the eighteen
(18) municipalities similarly annulled by reason ofPelaez.
As appropriate relief, Camid prays that the Court annul the
DILG Certification dated 21 November 2003; direct the
DILG to classify Andong as a "regular existing
municipality;" all public respondents, to extend full
recognition and support to Andong; the Department of
Finance and the Department of Budget and Management,
to immediately release the internal revenue allotments of
Andong; and the public respondents, particularly the DILG,
to recognize the "Interim Local Officials" of Andong.
22

Moreover, Camid insists on the continuing validity of
Executive Order No. 107. He argues that Pelaez has
already been modified by supervening events consisting of
subsequent laws and jurisprudence. Particularly cited is
ourDecision in Municipality of San Narciso v. Hon.
Mendez,
23
wherein the Court affirmed the unique status of
the municipality of San Andres in Quezon as a
"de facto municipal corporation."
24
Similar to Andong, the
municipality of San Andres was created by way of
executive order, precisely the manner which the Court in
Pelaez had declared as unconstitutional.
Moreover, San Narciso cited, as Camid does, Section
442(d) of the Local Government Code of 1991 as basis for
the current recognition of the impugned municipality. The
provision reads:
Section 442. Requisites for Creation. - xxx
(d) Municipalities existing as of the date of the effectivity
of this Code shall continue to exist and operate as such.
Existing municipal districts organized pursuant to
presidential issuances or executive orders and which have
their respective sets of elective municipal officials holding
office at the time of the effectivity of (the) Code shall
henceforth be considered as regular municipalities.
25

There are several reasons why the petition must be
dismissed. These can be better discerned upon
examination of the proper scope and application of
Section 442(d), which does not sanction the recognition of
just any municipality. This point shall be further explained
further on.
Notably, as pointed out by the public respondents,
through the Office of the Solicitor General (OSG), the case
is not a fit subject for the special civil actions of certiorari
and mandamus, as it pertains to the de novo appreciation
of factual questions. There is indeed no way to confirm
several of Camids astonishing factual allegations
pertaining to the purported continuing operation of
Andong in the decades since it was annulled by this Court.
No trial court has had the opportunity to ascertain the
validity of these factual claims, the appreciation of which is
beyond the function of this Court since it is not a trier of
facts.
The importance of proper factual ascertainment cannot be
gainsaid, especially in light of the legal principles governing
the recognition of de facto municipal corporations. It has
been opined that municipal corporations may exist by
prescription where it is shown that the community has
claimed and exercised corporate functions, with the
knowledge and acquiescence of the legislature, and
without interruption or objection for period long enough
to afford title by prescription.
26
These municipal
corporations have exercised their powers for a long period
without objection on the part of the government that
although no charter is in existence, it is presumed that
they were duly incorporated in the first place and that
their charters had been lost.
27
They are especially common
in England, which, as well-worth noting, has existed as a
state for over a thousand years. The reason for the
development of that rule in England is understandable,
since that country was settled long before the Roman
conquest by nomadic Celtic tribes, which could have
hardly been expected to obtain a municipal charter in the
absence of a national legal authority.
In the United States, municipal corporations by
prescription are less common, but it has been held that
when no charter or act of incorporation of a town can be
found, it may be shown to have claimed and exercised the
powers of a town with the knowledge and assent of the
legislature, and without objection or interruption for so
long a period as to furnish evidence of a prescriptive
right.
28

What is clearly essential is a factual demonstration of the
continuous exercise by the municipal corporation of its
corporate powers, as well as the acquiescence thereto by
the other instrumentalities of the state. Camid does not
have the opportunity to make an initial factual
demonstration of those circumstances before this Court.
Indeed, the factual deficiencies aside, Camids plaint
should have undergone the usual administrative gauntlet
and, once that was done, should have been filed first with
the Court of Appeals, which at least would have had the
power to make the necessary factual determinations.
Camids seeming ignorance of the principles of exhaustion
of administrative remedies and hierarchy of courts, as well
as the concomitant prematurity of the present petition,
cannot be countenanced.
It is also difficult to capture the sense and viability of
Camids present action. The assailed issuance is
theCertification issued by the DILG. But
such Certification does not pretend to bear the authority
to create or revalidate a municipality. Certainly, the
annulment of the Certification will really do nothing to
serve Camids ultimate cause- the recognition of Andong.
Neither does the Certification even expressly refute the
claim that Andong still exists, as there is nothing in the
document that comments on the present status of
Andong. Perhaps the Certification is assailed before this
Court if only to present an actual issuance, rather than a
long-standing habit or pattern of action that can be
annulled through the special civil action of certiorari. Still,
the relation of theCertification to Camids central
argument is forlornly strained.
These disquisitions aside, the central issue remains
whether a municipality whose creation by executive fiat
was previously voided by this Court may attain recognition
in the absence of any curative or reimplementing statute.
Apparently, the question has never been decided
before, San Narciso and its kindred cases pertaining as
they did to municipalities whose bases of creation were
dubious yet were never judicially nullified. The effect of
Section 442(d) of the Local Government Code on
municipalities such as Andong warrants explanation.
Besides, the residents of Andong who belabor under the
impression that their town still exists, much less those who
may comport themselves as the municipalitys "Interim
Government," would be well served by a rude awakening.
The Court can employ a simplistic approach in resolving
the substantive aspect of the petition, merely by pointing
out that the Municipality of Andong never
existed.
29
Executive Order No. 107, which established
Andong, was declared "null and void ab initio" in 1965 by
this Court in Pelaez, along with thirty-three (33) other
executive orders. The phrase "ab initio" means "from the
beginning,"
30
"at first,"
31
"from the
inception."
32
Pelaez was never reversed by this Court but
rather it was expressly affirmed in the cases
of Municipality of San Joaquin v. Siva,
33
Municipality of
Malabang v. Benito,
34
and Municipality of Kapalong v.
Moya.
35
No subsequent ruling by this Court declared
Pelaez as overturned or inoperative. No subsequent
legislation has been passed since 1965 creating a
Municipality of Andong. Given these facts, there is hardly
any reason to elaborate why Andong does not exist as a
duly constituted municipality.
This ratiocination does not admit to patent legal errors
and has the additional virtue of blessed austerity. Still, its
sweeping adoption may not be advisedly appropriate in
light of Section 442(d) of the Local Government Code and
our ruling in Municipality of San Narciso, both of which
admit to the possibility of de facto municipal corporations.
To understand the applicability of Municipality of San
Narciso and Section 442(b) of the Local Government Code
to the situation of Andong, it is necessary again to consider
the ramifications of our decision in Pelaez.
The eminent legal doctrine enunciated in Pelaez was that
the President was then, and still is, not empowered to
create municipalities through executive issuances. The
Court therein recognized "that the President has, for many
years, issued executive orders creating municipal
corporations, and that the same have been organized and
in actual operation . . . ."
36
However, the Court ultimately
nullified only those thirty-three (33) municipalities,
including Andong, created during the period from 4
September to 29 October 1964 whose existence petitioner
Vice-President Pelaez had specifically assailed before this
Court. No pronouncement was made as to the other
municipalities which had been previously created by the
President in the exercise of power the Court deemed
unlawful.
Two years after Pelaez was decided, the issue again came
to fore in Municipality of San Joaquin v. Siva.
37
The
Municipality of Lawigan was created by virtue of Executive
Order No. 436 in 1961. Lawigan was not one of the
municipalities ordered annulled in Pelaez. A petition for
prohibition was filed contesting the legality of the
executive order, again on the ground that Section 68 of
the Revised Administrative Code was unconstitutional. The
trial court dismissed the petition, but the Supreme Court
reversed the ruling and entered a new decision declaring
Executive Order No. 436 void ab initio. The Court reasoned
without elaboration that the issue had already been
squarely taken up and settled in Pelaez which agreed with
the argument posed by the challengers to Lawigans
validity.
38

In the 1969 case of Municipality of Malabang v.
Benito,
39
what was challenged is the validity of the
constitution of the Municipality of Balabagan in Lanao del
Sur, also created by an executive order,
40
and which,
similar to Lawigan, was not one of the municipalities
annulled in Pelaez. This time, the officials of Balabagan
invoked de facto status as a municipal corporation in order
to dissuade the Court from nullifying action. They alleged
that its status as a de facto corporation cannot be
collaterally attacked but should be inquired into directly in
an action forquo warranto at the instance of the State, and
not by a private individual as it was in that case. In
response, the Court conceded that an inquiry into the legal
existence of a municipality is reserved to the State in a
proceeding for quo warranto, but only if the municipal
corporation is a de facto corporation.
41

Ultimately, the Court refused to acknowledge Balabagan
as a de facto corporation, even though it had been
organized prior to the Courts decision in Pelaez. The Court
declared void the executive order creating Balabagan and
restrained its municipal officials from performing their
official duties and functions.
42
It cited conflicting American
authorities on whether a de facto corporation can exist
where the statute or charter creating it is
unconstitutional.
43
But the Courts final conclusion was
unequivocal that Balabagan was not a de
factocorporation.1awphi1.nt
In the cases where a de facto municipal corporation was
recognized as such despite the fact that the statute
creating it was later invalidated, the decisions could fairly
be made to rest on the consideration that there was some
other valid law giving corporate vitality to the
organization. Hence, in the case at bar, the mere fact that
Balabagan was organized at a time when the statute had
not been invalidated cannot conceivably make it a de
facto corporation, as, independently of the Administrative
Code provision in question, there is no other valid statute
to give color of authority to its creation.
44

The Court did clarify in Malabang that the previous acts
done by the municipality in the exercise of its corporate
powers were not necessarily a nullity.
45
Camid devotes
several pages of his petition in citing this point,
46
yet the
relevance of the citation is unclear considering that Camid
does not assert the validity of any corporate act of Andong
prior to its judicial dissolution. Notwithstanding, the Court
in Malabang retained an emphatic attitude as to the
unconstitutionality of the power of the President to create
municipal corporations by way of presidential
promulgations, as authorized under Section 68 of the
Revised Administrative Code.
This principle was most recently affirmed in 1988,
in Municipality of Kapalong v. Moya.
47
The municipality of
Santo Tomas, created by President Carlos P. Garcia, filed a
complaint against another municipality, who challenged
Santo Tomass legal personality to institute suit. Again,
Santo Tomas had not been expressly nullified by prior
judicial action, yet the Court refused to recognize its legal
existence. The blunt but simple ruling: "Now then, as ruled
in the Pelaez case supra, the President has no power to
create a municipality. Since [Santo Tomas] has no legal
personality, it can not be a party to any civil action."
48

Nevertheless, when the Court decided Municipality of San
Narciso
49
in 1995, it indicated a shift in the jurisprudential
treatment of municipalities created through presidential
issuances. The questioned municipality of San Andres,
Quezon was created on 20 August 1959 by Executive
Order No. 353 issued by President Carlos P. Garcia.
Executive Order No. 353 was not one of the thirty-three
issuances annulled by Pelaez in 1965. The legal status of
the Municipality of San Andres was first challenged only in
1989, through a petition for quo warranto filed with the
Regional Trial Court of Gumaca, Quezon, which did
cite Pelaez as authority.
50
The RTC dismissed the petition
for lack of cause of action, and the petitioners therein
elevated the matter to this Court.
In dismissing the petition, the Court delved in the merits of
the petition, if only to resolve further doubt on the legal
status of San Andres. It noted a circumstance which is not
present in the case at barthat San Andres was in
existence for nearly thirty (30) years before its legality was
challenged. The Court did not declare the executive order
creating San Andres null and void. Still, acting on the
premise that the said executive order was a complete
nullity, the Court noted "peculiar circumstances" that led
to the conclusion that San Andres had attained the unique
status of a "de facto municipal corporation."
51
It noted
that Pelaez limited its nullificatory effect only to those
executive orders specifically challenged therein, despite
the fact that the Court then could have very well extended
the decision to invalidate San Andres as well.
52
This
statement squarely contradicts Camids reading ofSan
Narciso that the creation of San Andres, just like Andong,
had been declared a complete nullity on the same ground
of unconstitutional delegation of legislative power found
in Pelaez.
53

The Court also considered the applicability of Section
442(d)
54
of the Local Government Code of 1991. It clarified
the implication of the provision as follows:
Equally significant is Section 442(d) of the Local
Government Code to the effect that municipal districts
"organized pursuant to presidential issuances or executive
orders and which have their respective sets of elective
municipal officials holding office at the time of the
effectivity of (the) Code shall henceforth be considered as
regular municipalities." No pretension of
unconstitutionality per se of Section 442(d) of the Local
Government Code is preferred. It is doubtful whether such
a pretext, even if made, would succeed. The power to
create political subdivisions is a function of the
legislature. Congress did just that when it has
incorporated Section 442(d) in the Code. Curative laws,
which in essence are retrospective, and aimed at giving
"validity to acts done that would have been invalid under
existing laws, as if existing laws have been complied with,"
are validly accepted in this jurisdiction, subject to the usual
qualification against impairment of vested rights.
(Emphasis supplied)
55

The holding in San Narciso was subsequently affirmed
in Municipality of Candijay v. Court of Appeals
56
and
Municipality of Jimenez v. Baz
57
In Candijay, the juridical
personality of the Municipality of Alicia, created in a 1949
executive order, was attacked only beginning in
1984. Pelaez was again invoked in support of the
challenge, but the Court refused to invalidate the
municipality, citing San Narciso at length. The Court noted
that the situation of the Municipality of Alicia was
strikingly similar to that in San Narciso; hence, the town
should likewise "benefit from the effects of Section 442(d)
of the Local Government Code, and should [be] considered
as a regular, de juremunicipality."
58

The valid existence of Municipality of Sinacaban, created
in a 1949 executive order, was among the issues raised
in Jimenez. The Court, through Justice Mendoza, provided
an expert summation of the evolution of the rule.
The principal basis for the view that Sinacaban was not
validly created as a municipal corporation is the ruling
inPelaez v. Auditor General that the creation of municipal
corporations is essentially a legislative matter and
therefore the President was without power to create by
executive order the Municipality of Sinacaban. The ruling
in this case has been reiterated in a number of cases later
decided. However, we have since held that where a
municipality created as such by executive order is later
impliedly recognized and its acts are accorded legal
validity, its creation can no longer be questioned.
In Municipality of San Narciso, Quezon v. Mendez, Sr., this
Court considered the following factors as having validated
the creation of a municipal corporation, which, like the
Municipality of Sinacaban, was created by executive order
of the President before the ruling in Pelaez v. Auditor
General: (1) the fact that for nearly 30 years the validity of
the creation of the municipality had never been
challenged; (2) the fact that following the ruling in Pelaez
no quo warranto suit was filed to question the validity of
the executive order creating such municipality; and (3) the
fact that the municipality was later classified as a fifth class
municipality, organized as part of a municipal circuit court
and considered part of a legislative district in the
Constitution apportioning the seats in the House of
Representatives. Above all, it was held that whatever
doubt there might be as to the de jure character of the
municipality must be deemed to have been put to rest by
the Local Government Code of 1991 (R. A. No. 7160),
442(d) of which provides that "municipal districts
organized pursuant to presidential issuances or executive
orders and which have their respective sets of elective
officials holding office at the time of the effectivity of this
Code shall henceforth be considered as regular
municipalities."
Here, the same factors are present so as to confer on
Sinacaban the status of at least a de facto municipal
corporation in the sense that its legal existence has been
recognized and acquiesced publicly and officially.
Sinacaban had been in existence for sixteen years
when Pelaez v. Auditor General was decided on December
24, 1965. Yet the validity of E.O. No. 258 creating it had
never been questioned. Created in 1949, it was only 40
years later that its existence was questioned and only
because it had laid claim to an area that apparently is
desired for its revenue. This fact must be underscored
because under Rule 66, 16 of the Rules of Court, a quo
warranto suit against a corporation for forfeiture of its
charter must be commenced within five (5) years from the
time the act complained of was done or committed. On
the contrary, the State and even the Municipality of
Jimenez itself have recognized Sinacaban's corporate
existence. Under Administrative Order No. 33 dated June
13, 1978 of this Court, as reiterated by 31 of the Judiciary
Reorganization Act of 1980 (B. P. Blg. 129), Sinacaban is
constituted part of a municipal circuit for purposes of the
establishment of Municipal Circuit Trial Courts in the
country. For its part, Jimenez had earlier recognized
Sinacaban in 1950 by entering into an agreement with it
regarding their common boundary. The agreement was
embodied in Resolution No. 77 of the Provincial Board of
Misamis Occidental.
Indeed Sinacaban has attained de jure status by virtue of
the Ordinance appended to the 1987 Constitution,
apportioning legislative districts throughout the country,
which considered Sinacaban part of the Second District of
Misamis Occidental. Moreover, following the ruling
in Municipality of San Narciso, Quezon v. Mendez, Sr.,
442(d) of the Local Government Code of 1991 must be
deemed to have cured any defect in the creation of
Sinacaban.
59
1awphi1.nt
From this survey of relevant jurisprudence, we can gather
the applicable rules. Pelaez and its offspring cases ruled
that the President has no power to create municipalities,
yet limited its nullificatory effects to the particular
municipalities challenged in actual cases before this Court.
However, with the promulgation of the Local Government
Code in 1991, the legal cloud was lifted over the
municipalities similarly created by executive order but not
judicially annulled. The de facto status of such
municipalities as San Andres, Alicia and Sinacaban was
recognized by this Court, and Section 442(b) of the Local
Government Code deemed curative whatever legal defects
to title these municipalities had labored under.
Is Andong similarly entitled to recognition as a de
facto municipal corporation? It is not. There are eminent
differences between Andong and municipalities such as
San Andres, Alicia and Sinacaban. Most prominent is the
fact that the executive order creating Andong was
expressly annulled by order of this Court in 1965. If we
were to affirm Andongs de facto status by reason of its
alleged continued existence despite its nullification, we
would in effect be condoning defiance of a valid order of
this Court.l^vvphi1.net Court decisions cannot obviously
lose their efficacy due to the sheer defiance by the parties
aggrieved.
It bears noting that based on Camids own admissions,
Andong does not meet the requisites set forth by Section
442(d) of the Local Government Code. Section 442(d)
requires that in order that the municipality created by
executive order may receive recognition, they must "have
their respective set of elective municipal officials holding
office at the time of the effectivity of [the Local
Government] Code." Camid admits that Andong has never
elected its municipal officers at all.
60
This incapacity ties in
with the fact that Andong was judicially annulled in 1965.
Out of obeisance to our ruling in Pelaez, the national
government ceased to recognize the existence of Andong,
depriving it of its share of the public funds, and refusing to
conduct municipal elections for the void municipality.
The failure to appropriate funds for Andong and the
absence of elections in the municipality in the last four
decades are eloquent indicia of the non-recognition by the
State of the existence of the town. The certifications relied
upon by Camid, issued by the DENR-CENRO and the
National Statistics Office, can hardly serve the purpose of
attesting to Andongs legal efficacy. In fact, both these
certifications qualify that they were issued upon the
request of Camid, "to support the restoration or re-
operation of the Municipality of Andong, Lanao del
Sur,"
61
thus obviously conceding that the municipality is at
present inoperative.1awphi1.nt
We may likewise pay attention to the Ordinance appended
to the 1987 Constitution, which had also been relied upon
in Jimenez and San Narciso. This Ordinance, which
apportioned the seats of the House of Representatives to
the different legislative districts in the Philippines,
enumerates the various municipalities that are
encompassed by the various legislative districts. Andong is
not listed therein as among the municipalities of Lanao del
Sur, or of any other province for that matter.
62
On the
other hand, the municipalities of San Andres, Alicia and
Sinacaban are mentioned in the Ordinance as part of
Quezon,
63
Bohol,
64
and Misamis Occidental
65
respectively.
How about the eighteen (18) municipalities similarly
nullified in Pelaez but certified as existing in the
DILGCertification presented by Camid? The petition fails to
mention that subsequent to the ruling in Pelaez, legislation
was enacted to reconstitute these municipalities.
66
It is
thus not surprising that the DILG certified the existence of
these eighteen (18) municipalities, or that these towns are
among the municipalities enumerated in the Ordinance
appended to the Constitution. Andong has not been
similarly reestablished through statute. Clearly then, the
fact that there are valid organic statutes passed by
legislation recreating these eighteen (18) municipalities is
sufficient legal basis to accord a different legal treatment
to Andong as against these eighteen (18) other
municipalities.
We thus assert the proper purview to Section 442(d) of the
Local Government Codethat it does not serve to affirm
or reconstitute the judicially dissolved municipalities such
as Andong, which had been previously created by
presidential issuances or executive orders. The provision
affirms the legal personalities only of those municipalities
such as San Narciso, Alicia, and Sinacaban, which may have
been created using the same infirm legal basis, yet were
fortunate enough not to have been judicially annulled. On
the other hand, the municipalities judicially dissolved in
cases such as Pelaez, San Joaquin, and Malabang, remain
inexistent, unless recreated through specific legislative
enactments, as done with the eighteen (18) municipalities
certified by the DILG. Those municipalities derive their
legal personality not from the presidential issuances or
executive orders which originally created them or from
Section 442(d), but from the respective legislative statutes
which were enacted to revive them.1a\^/phi1.net
And what now of Andong and its residents? Certainly,
neither Pelaez or this decision has obliterated Andong into
a hole on the ground. The legal effect of the nullification of
Andong in Pelaez was to revert the constituent barrios of
the voided town back into their original municipalities,
namely the municipalities of Lumbatan, Butig and
Tubaran.
67
These three municipalities subsist to this day as
part of Lanao del Sur,
68
and presumably continue to
exercise corporate powers over the barrios which once
belonged to Andong.
If there is truly a strong impulse calling for the
reconstitution of Andong, the solution is through the
legislature and not judicial confirmation of void title. If
indeed the residents of Andong have, all these years, been
governed not by their proper municipal governments but
by a ragtag "Interim Government," then an expedient
political and legislative solution is perhaps necessary. Yet
we can hardly sanction the retention of Andongs legal
personality solely on the basis of collective amnesia that
may have allowed Andong to somehow pretend itself into
existence despite its judicial dissolution. Maybe those who
insist Andong still exists prefer to remain unperturbed in
their blissful ignorance, like the inhabitants of the cave in
Platos famed allegory. But the time has come for the light
to seep in, and for the petitioner and like-minded persons
to awaken to legal reality.
WHEREFORE, the Petition is DISMISSED for lack of merit.
Costs against petitioner.
SO ORDERED.

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-28113 March 28, 1969
THE MUNICIPALITY OF MALABANG, LANAO DEL SUR, and
AMER MACAORAO BALINDONG, petitioners,
vs.
PANGANDAPUN BENITO, HADJI NOPODIN
MACAPUNUNG, HADJI HASAN MACARAMPAD,
FREDERICK V. DUJERTE MONDACO ONTAL, MARONSONG
ANDOY, MACALABA INDAR LAO. respondents.
L. Amores and R. Gonzales for petitioners.
Jose W. Diokno for respondents.
CASTRO, J.:
The petitioner Amer Macaorao Balindong is the mayor of
Malabang, Lanao del Sur, while the respondent
Pangandapun Bonito is the mayor, and the rest of the
respondents are the councilors, of the municipality of
Balabagan of the same province. Balabagan was formerly a
part of the municipality of Malabang, having been created
on March 15, 1960, by Executive Order 386 of the then
President Carlos P. Garcia, out of barrios and sitios
1
of the
latter municipality.
The petitioners brought this action for prohibition to
nullify Executive Order 386 and to restrain the respondent
municipal officials from performing the functions of their
respective office relying on the ruling of this Court inPelaez
v. Auditor General
2
and Municipality of San Joaquin v.
Siva.
3

In Pelaez this Court, through Mr. Justice (now Chief
Justice) Concepcion, ruled: (1) that section 23 of Republic
Act 2370 [Barrio Charter Act, approved January 1, 1960],
by vesting the power to create barrios in the provincial
board, is a "statutory denial of the presidential authority
to create a new barrio [and] implies a negation of
thebigger power to create municipalities," and (2) that
section 68 of the Administrative Code, insofar as it gives
the President the power to create municipalities, is
unconstitutional (a) because it constitutes an undue
delegation of legislative power and (b) because it offends
against section 10 (1) of article VII of the Constitution,
which limits the President's power over local governments
to mere supervision. As this Court summed up its
discussion: "In short, even if it did not entail an undue
delegation of legislative powers, as it certainly does, said
section 68, as part of the Revised Administrative Code,
approved on March 10, 1917, must be deemed repealed
by the subsequent adoption of the Constitution, in 1935,
which is utterly incompatible and inconsistent with said
statutory enactment."
On the other hand, the respondents, while admitting the
facts alleged in the petition, nevertheless argue that the
rule announced in Pelaez can have no application in this
case because unlike the municipalities involved inPelaez,
the municipality of Balabagan is at least a de
facto corporation, having been organized under color of a
statute before this was declared unconstitutional, its
officers having been either elected or appointed, and the
municipality itself having discharged its corporate
functions for the past five years preceding the institution
of this action. It is contended that as a de
facto corporation, its existence cannot be collaterally
attacked, although it may be inquired into directly in an
action for quo warranto at the instance of the State and
not of an individual like the petitioner Balindong.
It is indeed true that, generally, an inquiry into the legal
existence of a municipality is reserved to the State in a
proceeding for quo warranto or other direct proceeding,
and that only in a few exceptions may a private person
exercise this function of government.
4
But the rule
disallowing collateral attacks applies only where the
municipal corporation is at least a de
facto corporations.
5
For where it is neither a
corporation de jure nor de facto, but a nullity, the rule is
that its existence may be, questioned collaterally or
directly in any action or proceeding by any one whose
rights or interests ate affected thereby, including the
citizens of the territory incorporated unless they are
estopped by their conduct from doing so.
6

And so the threshold question is whether the
municipality of Balabagan is a de facto corporation. As
earlier stated, the claim that it is rests on the fact that it
was organized before the promulgation of this Court's
decision inPelaez.
7

Accordingly, we address ourselves to the question
whether a statute can lend color of validity to an
attempted organization of a municipality despite the fact
that such statute is subsequently declared
unconstitutional.lawphi1.et
This has been a litigiously prolific question, sharply
dividing courts in the United States. Thus, some hold that
ade facto corporation cannot exist where the statute or
charter creating it is unconstitutional because there can be
no de facto corporation where there can be no de
jure one,
8
while others hold otherwise on the theory that a
statute is binding until it is condemned as
unconstitutional.
9

An early article in the Yale Law Journal offers the
following analysis:
It appears that the true basis for denying to the
corporation a de facto status lay in the absence
of any legislative act to give vitality to its
creation. An examination of the cases holding,
some of them unreservedly, that a de
facto office or municipal corporation can exist
under color of an unconstitutional statute will
reveal that in no instance did the invalid act give
life to the corporation, but that either in other
valid acts or in the constitution itself the office or
the corporation was potentially created....
The principle that color of title under an
unconstitutional statute can exist only where
there is some other valid law under which the
organization may be effected, or at least an
authority in potentia by the state constitution,
has its counterpart in the negative propositions
that there can be no color of authority in an
unconstitutional statute that plainly so appears
on its face or that attempts to authorize the
ousting of a de jure or de facto municipal
corporation upon the same territory; in the one
case the fact would imply the imputation of bad
faith, in the other the new organization must be
regarded as a mere usurper....
As a result of this analysis of the cases the
following principles may be deduced which seem
to reconcile the apparently conflicting decisions:
I. The color of authority requisite to
the organization of a de
facto municipal corporation may be:
1. A valid law enacted by the
legislature.
2. An unconstitutional law,
valid on its face, which has
either (a) been upheld for a
time by the courts or (b) not
yet been declared
void; provided that a warrant
for its creation can be found
in some other valid law or in
the recognition of its
potential existence by the
general laws or constitution
of the state.
II. There can be no de facto municipal
corporation unless either directly or
potentially, such a de jurecorporation
is authorized by some legislative fiat.
III. There can be no color of authority
in an unconstitutional statute alone,
the invalidity of which is apparent on
its face.
IV. There can be no de facto corporation
created to take the place of an existing de
jure corporation, as such organization would
clearly be a usurper.
10

In the cases where a de facto municipal corporation was
recognized as such despite the fact that the statute
creating it was later invalidated, the decisions could fairly
be made to rest on the consideration that there was some
other valid law giving corporate vitality to the
organization. Hence, in the case at bar, the mere fact that
Balabagan was organized at a time when the statute had
not been invalidated cannot conceivably make it a de
facto corporation, as, independently of the Administrative
Code provision in question, there is no other valid statute
to give color of authority to its creation. Indeed,
in Municipality of San Joaquin v. Siva,
11
this Court granted
a similar petition for prohibition and nullified an executive
order creating the municipality of Lawigan in Iloilo on the
basis of the Pelaez ruling, despite the fact that the
municipality was created in 1961, before section 68 of the
Administrative Code, under which the President had acted,
was invalidated. 'Of course the issue of de factomunicipal
corporation did not arise in that case.
In Norton v. Shelby Count,
12
Mr. Justice Field said: "An
unconstitutional act is not a law; it confers no rights; it
imposes no duties; it affords no protection; it creates no
office; it is, in legal contemplation, as inoperative as
though it had never been passed." Accordingly, he held
that bonds issued by a board of commissioners created
under an invalid statute were unenforceable.
Executive Order 386 "created no office." This is not to
say, however, that the acts done by the municipality of
Balabagan in the exercise of its corporate powers are a
nullity because the executive order "is, in legal
contemplation, as inoperative as though it had never been
passed." For the existence of Executive, Order 386 is "an
operative fact which cannot justly be ignored." As Chief
Justice Hughes explained in Chicot County Drainage
District v. Baxter State Bank:
13

The courts below have proceeded on the
theory that the Act of Congress, having been
found to be unconstitutional, was not a law; that
it was inoperative, conferring no rights and
imposing no duties, and hence affording no basis
for the challenged decree. Norton v. Shelby
County, 118 U.S. 425, 442; Chicago, I. & L. Ry. Co.
v. Hackett, 228 U.S. 559, 566. It is quite clear,
however, that such broad statements as to the
effect of a determination of unconstitutionality
must be taken with qualifications. The actual
existence of a statute, prior to such a
determination, is an operative fact and may have
consequences which cannot justly be ignored.
The past cannot always be erased by a new
judicial declaration. The effect of the subsequent
ruling as to invalidity may have to be considered
in various aspects with respect to particular
relations, individual and corporate, and
particular conduct, private and official.
Questions of rights claimed to have become
vested, of status of prior determinations deemed
to have finality and acted upon accordingly, of
public policy in the light of the nature both of
the statute and of its previous application,
demand examination. These questions are
among the most difficult of those which have
engaged the attention of courts, state and
federal, and it is manifest from numerous
decisions that an all-inclusive statement of a
principle of absolute retroactive invalidity cannot
be justified.
There is then no basis for the respondents' apprehension
that the invalidation of the executive order creating
Balabagan would have the effect of unsettling many an act
done in reliance upon the validity of the creation of that
municipality.
14

ACCORDINGLY, the petition is granted, Executive Order
386 is declared void, and the respondents are hereby
permanently restrained from performing the duties and
functions of their respective offices. No pronouncement as
to costs.
Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez and
Capistrano, JJ., concur.
Teehankee and Barredo, JJ., took no part.