Basco vs. PAGCOR (G.R. No.

91649) - Digest

In 1977, the Philippine Amusements and Gaming Corporation (PAGCOR) was created by Presidential Decree 1067-
A. PD 1067-B meanwhile granted PAGCOR the power to establish, operate and maintain gambling casinos on
land or water within the territorial jurisdiction of the Philippines. PAGCORs operation was a success hence in
1978, PD 1399 was passed which expanded PAGCORs power. In 1983, PAGCORs charter was updated through PD
1869. PAGCORs charter provides that PAGCOR shall regulate and centralize all games of chance authorized by
existing franchise or permitted by law. Section 1 of PD 1869 provides:
Section 1. Declaration of Policy. It is hereby declared to be the policy of the State to centralize and integrate
all games of chance not heretofore authorized by existing franchises or permitted by law.
Atty. Humberto Basco and several other lawyers assailed the validity of the law creating PAGCOR. They claim that
PD 1869 is unconstitutional because a) it violates the equal protection clause and b) it violates the local autonomy
clause of the constitution.
Basco et al argued that PD 1869 violates the equal protection clause because it legalizes PAGCOR-conducted
gambling, while most other forms of gambling are outlawed, together with prostitution, drug trafficking and other
vices.
Anent the issue of local autonomy, Basco et al contend that P.D. 1869 forced cities like Manila to waive its right to
impose taxes and legal fees as far as PAGCOR is concerned; that Section 13 par. (2) of P.D. 1869 which exempts
PAGCOR, as the franchise holder from paying any tax of any kind or form, income or otherwise, as well as fees,
charges or levies of whatever nature, whether National or Local is violative of the local autonomy principle.
ISSUE:
1. Whether or not PD 1869 violates the equal protection clause.
2. Whether or not PD 1869 violates the local autonomy clause.
HELD:
1. No. Just how PD 1869 in legalizing gambling conducted by PAGCOR is violative of the equal protection is not
clearly explained in Bascos petition. The mere fact that some gambling activities like cockfighting (PD 449) horse
racing (RA 306 as amended by RA 983), sweepstakes, lotteries and races (RA 1169 as amended by BP 42) are
legalized under certain conditions, while others are prohibited, does not render the applicable laws, PD. 1869 for
one, unconstitutional.
Bascos posture ignores the well-accepted meaning of the clause equal protection of the laws. The clause does not
preclude classification of individuals who may be accorded different treatment under the law as long as the
classification is not unreasonable or arbitrary. A law does not have to operate in equal force on all persons or
things to be conformable to Article III, Sec 1 of the Constitution. The equal protection clause does not prohibit
the Legislature from establishing classes of individuals or objects upon which different rules shall operate. The
Constitution does not require situations which are different in fact or opinion to be treated in law as though they
were the same.
2. No. Section 5, Article 10 of the 1987 Constitution provides:
Each local government unit shall have the power to create its own source of revenue and to levy taxes, fees, and
other charges subject to such guidelines and limitation as the congress may provide, consistent with the basic
policy on local autonomy. Such taxes, fees and charges shall accrue exclusively to the local government.
A close reading of the above provision does not violate local autonomy (particularly on taxing powers) as it was
clearly stated that the taxing power of LGUs are subject to such guidelines and limitation as Congress may provide.
Further, the City of Manila, being a mere Municipal corporation has no inherent right to impose taxes. The Charter
of the City of Manila is subject to control by Congress. It should be stressed that municipal corporations are mere
creatures of Congress which has the power to create and abolish municipal corporations due to its general
legislative powers. Congress, therefore, has the power of control over Local governments. And if Congress can
grant the City of Manila the power to tax certain matters, it can also provide for exemptions or even take back the
power.
Further still, local governments have no power to tax instrumentalities of the National Government. PAGCOR is a
government owned or controlled corporation with an original charter, PD 1869. All of its shares of stocks are
owned by the National Government. Otherwise, its operation might be burdened, impeded or subjected to control
by a mere Local government.
This doctrine emanates from the supremacy of the National Government over local governments.

1
G.R. No. 73155, July 11, 1986

NOTA BENE: This case is relevant to the current buzz regarding the "Sugbuak." The issue in this case, however,
is a bit on the technical side.

- when the boundaries of a LGU is substantially altered, there are necessarily more than one unit affected -- the
parent LGU and the new LGU that was created as a result of the alteration

FACTS:

This case was prompted by the enactment of Batas Pambansa Blg. 885, An Act Creating a New Province in the
Island of Negros to be known as the Province of Negros del Norte, effective Dec. 3, 1985. (Cities of Silay, Cadiz and
San Carlos and the municipalities of Calatrava, Taboso, Escalante, Sagay, Manapla, Victorias, E.R. Magalona, and
Salvador Benedicto.

Pursuant to and in implementation of this law, the COMELEC scheduled a plebiscite for January 3, 1986.
Petitioners opposed, filing a case for Prohibition and contending that the B.P. 885 is unconstitutional and not in
complete accord with the Local Government Code because:

(1) The voters of the parent province of Negros Occidental, other than those living within the territory of the new
province of Negros del Norte, were not included in the plebiscite
(2) The area which would comprise the new provinc of Negros del Norte would only be about 2,856.56 sq. km.,
which is lesser than the minimum area prescribed by the governing statute

The Supreme Court was in recess at the time so the petition was not timely considered. Consequently, petitioners
filed a supplemental pleading on January 4, 1986, after the plebiscite sought to be restrained was held the previous
day, January 3.

ISSUE:

W/N the plebiscite was legal and complied with the constitutional requisites under Article XI, Sec. 3 of the
Consititution, which states that --

"Sec. 3. No province, city, municipality or barrio may be created, divided, merged, abolished, or its boundary
substantially altered except in accordance with the criteria established in the Local Government Code, and subject
to the approval by a majority of the votes in a plebiscite in the unit or units affected."

HELD:

In interpreting the above provision, the Supreme Court held that whenever a province is created, divided or
merged and there is substantial alteration of the boundaries, "the approval of a majority of votes in the plebiscite in
the unit or units affected" must first be obtained.

The creation of the proposed new province of Negros del Norte will necessarily result in the division and alteration
of the existing boundaries of Negros Occidental.

"Plain and simple logic will demonstrate that two political units would be affected. The first would be the parent
province of Negros Occidental because its boundaries would be substantially altered. The other affected entity
would be composed of those in the area subtracted from the mother province to constitute the proposed province
of Negros del Norte."

The Supreme Court further held that the case of Governor Zosimo Paredes versus the Honorable Executive
Secretary to the President, et al., G.R. No. 55628, March 2, 1984 (128 SCRA 6), which the respondents used to
support their case, should not be taken as a doctrinal or compelling precedent. Rather, it held that the dissenting
view of Justice Vicente Abad Santos in the aforementioned case is the forerunner of the applicable ruling, quoting
that:

"...when the Constitution speaks of "the unit or units affected" it means all of the people of the municipality if the
municipality is to be divided such as in the case at bar or of the people of two or more municipalities if there be a
merger. I see no ambiguity in the Constitutional provision."

It appeared that when Parliamentary Bill NO. 3644 which proposed the creation of the new province of Negros del

2
Norte was passed for approval, it recited therein that "the plebiscite shall be conducted in the areas affected within
a period of one hundred and twenty days from the approval of this Act." However, when the bill was enacted into
B.P. 885, tehre was an unexplained change from "areas affecte" to "the proposed new province, which are the areas
affected." The Supreme Court held that it was a self-serving phrase to state that the new province constitutes the
area affected.

"Such additional statement serves no useful purpose for the same is misleading, erroneous, and far from truth. The
remaining portion of the parent province is as much an area affected. The substantial alteration of the boundaries
of the parent province, not to mention the adverse economic effects it might suffer, eloquently argue the points
raised by the petitioners."

Consequently, the Supreme Court pronounced that the plebscite held on January 3, 1986 has no legal effect for
being a patent nullity.

"WHEREFORE, Batas Pambansa Blg. 885 is hereby declared unconstitutional. The proclamation of the new
province of Negros del Norte, as well as the appointment of the officials thereof are also declared null and void.

SO ORDERED."

3
Padilla vs. COMELEC

Summary: A plebiscite for a newly created

municipality was conducted and the voters rejected its creation. The governor questioned the result and challenged
the inclusion of the voters of the mother municipality in the plebiscite.

Rule of Law: No province, city, municipality, or barangay may be created, divided, merged, abolished or its
boundary substantially altered, except in accordance with the criteria established in the local government code and
subject to the approval by the majority of the votes cast in a plebiscite in the political units directly affected
Section 10, Article X, 1987 Constitution.

Facts: Republic Act No. 7155 created the new municipality of Tulay-Na-Lupa in the Province of Camarines Norte
and pursuant to this law, the COMELEC (D) conducted a plebiscite for its approval. In its resolution for the
conduct of the plebiscite, the COMELEC (D) included all the voters of the Municipality of Labothe parent unit of
the new municipality.

The result of the plebiscite showed that the majority rejected the creation of the new Municipality of Tulay-Na-
Lupa. The governor, Hon. Roy Padilla, Jr. (P), petitioned the court to set aside the result arguing that the
phrase "political units directly affected" in Section 10, Article X of the 1987 Constitution does not include the
parent political unitthe Municipality of Labo.

Issues: Is the result of the plebiscite valid?

Ruling: Yes. When the law states that the plebiscite shall be conducted "in the political units directly affected," it
means that residents of the political entity who would be economically dislocated by the separation thereof have a
right to vote in said plebiscite. What is contemplated by the phrase "political units directly affected," is the plurality
of political units which would participate in the plebiscite. Logically, those to be included in such political areas are
the inhabitants of the proposed Municipality of Tulay-Na-Lupa as well as those living in the the parent
Municipality of Labo, Camarines Norte.

4
TATEL VS. MUNICIPALITY OF VIRAC [207 SCRA 157; G.R. No. 40243; 11 Mar 1992]
Friday, January 30, 2009 Posted by Coffeeholic Writes
Labels: Case Digests, Political Law

Facts: Petitioner Celestino Tatel owns a warehouse in barrio Sta. Elena, Municipality of Virac. Complaints were
received by the municipality concerning the disturbance caused by the operation of the abaca bailing machine
inside petitioners warehouse. A committee was then appointed by the municipal council, and it noted from its
investigation on the matter that an accidental fire within the warehouse of the petitioner created a danger tothe
lives and properties of the people in the neighborhood. Resolution No. 29 was then passed by the Municipal
council declaring said warehouse as a public nuisance within a purview of Article 694 of the New Civil Code.
According to respondent municipal officials, petitioners warehouse was constructed in violation of Ordinance No.
13, series of 1952, prohibiting the construction of warehouses near a block of houses either in the poblacion or
barrios without maintaining the necessary distance of 200 meters from said block of houses to avoid loss of lives
and properties by accidental fire. On the other hand, petitioner contends that Ordinance No. 13 is unconstitutional.

Issues:

(1) Whether or not petitioners warehouse is a nuisance within the meaningArticle 694 of the Civil Code

(2) Whether or not Ordinance No. 13, series of 1952 of the Municipality of Virac is unconstitutional and void.

Held: The storage of abaca and copra in petitioners warehouse is a nuisance under the provisions of Article 694
of the Civil Code. At the same time, Ordinance No. 13 was passed by the Municipal Council of Virac in the
exercise of its police power. It is valid because it meets the criteria for a valid municipal ordinance: 1) must not
contravene the Constitution or any statute, 2) must not be unfair or oppressive, 3) must not be partial or
discriminatory, 4) must not prohibit but may regulate trade, 5) must be general and consistent with public policy,
and 6) must not be unreasonable. The purpose of the said ordinance is to avoid the loss of property and life in case
of fire which is one of the primordial obligation of government. The lower court did not err in its decision.

5
 Solicitor General v Metro Manila Authority
Cruz, 1991

FACTS:
In Metropolitan Traffic Command, West Traffic District vs. Hon. Arsenio M. Gonong, the SC ruled that (1) the
confiscation of the license plates of motor vehicles for traffic violations was not among the sanctions that could be
imposed by the Metro Manila Commission under PD 1605; and, that (2) even the confiscation of driver's licenses
for traffic violations was not directly prescribed by the decree nor was it allowed by the decree to be imposed by the
Commission.
Several complaints were filed in the SC against the confiscation by police authorities of driver's licenses and
removal of license plates for alleged traffic violations. These sanctions were not among those that may be imposed
under PD 1605.
The Metropolitan Manila Authority issued Ordinance No. 11, Series of 1991, authorizing itself "to detach the license
plate/tow and impound attended/ unattended/ abandoned motor vehicles illegally parked or obstructing the flow
of traffic in Metro Manila."
o The Metropolitan Manila Authority defended the said ordinance on the ground that it was adopted pursuant to the
powers conferred upon it by EO 392. There was no conflict between the decision and the ordinance because the
latter was meant to supplement and not supplant the latter.
o The Solicitor General expressed the view that the ordinance was null and void because it represented an invalid
exercise of a delegated legislative power. It violated PD 1605 which does not permit, and so impliedly prohibits, the
removal of license plates and the confiscation of driver's licenses for traffic violations in Metropolitan Manila.

ISSUE & HELD: WON Ordinance No. 11 is valid (NO)

RATIO:
The problem before the Court is not the validity of the delegation of legislative power. The question the SC must
resolve is the validity of the exercise of such delegated power.
o A municipal ordinance, to be valid: 1) must not contravene the Constitution or any statute; 2) must not be unfair or
oppressive; 3) must not be partial or discriminatory; 4) must not prohibit but may regulate trade; 5) must not be
unreasonable; and 6) must be general and consistent with public policy.
PD 1605 does not allow either the removal of license plates or the confiscation of driver's licenses for traffic
violations committed in Metropolitan Manila. There is nothing in the decree authorizing the Metropolitan Manila
Commission, now the Metropolitan Manila Authority, to impose such sanctions.
Local political subdivisions are able to legislate only by virtue of a valid delegation of legislative power from the
national legislature (except only that the power to create their own sources of revenue and to levy taxes is
conferred by the Constitution itself). They are mere agents vested with what is called the power of subordinate
legislation. As delegates of the Congress, the local government unit cannot contravene but must obey at all times
the will of their principal. Here, the enactments in question, which are merely local in origin, cannot prevail against
the decree, which has the force and effect of a statute.
The measures in question do not merely add to the requirement of PD 1605 but, worse, impose sanctions the
decree does not allow and in fact actually prohibits.
There is no statutory authority for and indeed there is a statutory prohibition against the imposition of such
penalties in the Metropolitan Manila area. Hence, regardless of their merits, they cannot be imposed by the
challenged enactments by virtue only of the delegated legislative powers.

NOTE: SC emphasized that the ruling in the Gonong case that PD 1605 applies only to the Metropolitan Manila
area. It is an exception to the general authority conferred by RA 413 on the Commissioner of Land Transportation
to punish violations of traffic rules elsewhere in the country with the sanction therein prescribed, including those
here questioned.

6
Magtajas v. Pryce Properties Corp. (G.R. No. 111097)
Facts:
PAGCOR decided to expand its operations to Cagayan de Oro City. It leased a portion of a building belonging to
Pryce Properties Corporations, Inc., renovated & equipped the same, and prepared to inaugurate its casino during
the Christmas season.

Civil organizations angrily denounced the project. Petitioners opposed the casinos opening and enacted Ordinance
No. 3353, prohibiting the issuance of business permit and canceling existing business permit to the establishment
for the operation of the casino, and Ordinance No. 3375-93, prohibiting the operation of the casino and providing a
penalty for its violation.

Respondents assailed the validity of the ordinances on the ground that they both violated Presidential Decree No.
1869. Petitioners contend that, pursuant to the Local Government Code, they have the police power authority to
prohibit the operation of casino for the general welfare.

Issue:
Whether the Ordinances are valid.

Ruling:
No. Cagayan de Oro City, like other local political subdivisions, is empowered to enact ordinances for the purposes
indicated in the Local Government Code. It is expressly vested with the police power under what is known as the
General Welfare Clause now embodied in Section 16 as follows:Sec. 16.

General Welfare. Every local government unit shall exercise the powers expressly granted, those necessarily
implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and effective governance,
and those which are essential to the promotion of the general welfare. Within their respective territorial
jurisdictions, local government units shall ensure and support, among other things, the preservation and
enrichment of culture, promote health and safety, enhance the right of the people to a balanced ecology, encourage
and support the development of appropriate and self-reliant scientific and technological capabilities, improve
public morals, enhance economic prosperity and social justice, promote full employment among their residents,
maintain peace and order, and preserve the comfort and convenience of their inhabitants.

Local Government Code, local government units are authorized to prevent or suppress, among others, "gambling
and other prohibited games of chance." Obviously, this provision excludes games of chance which are not
prohibited but are in fact permitted by law.

The tests of a valid ordinance are well established. A long line of decisions has held that to be valid, an ordinance
must conform to the following substantive requirements:
1) It must not contravene the constitution or any statute.
2) It must not be unfair or oppressive.
3) It must not be partial or discriminatory.
4) It must not prohibit but may regulate trade.
5) It must be general and consistent with public policy.
6) It must not be unreasonable.

The rationale of the requirement that the ordinances should not contravene a statute is obvious.Casino gambling is
authorized by P.D. 1869. This decree has the status of a statute that cannot be amended or nullified by a mere
ordinance. Local councils exercise only delegated legislative powers conferred on them by Congress as the national
lawmaking body. The delegate cannot be superior to the principal or exercise powers higher than those of the
latter. It is a heresy to suggest that the local government units can undo the acts of Congress, from which they have
derived their power in the first place, and negate by mere ordinance the mandate of the statute.Hence, it was not
competent for the Sangguniang Panlungsod of Cagayan de Oro City to enact Ordinance No. 3353 prohibiting the
use of buildings for the operation of a casino and Ordinance No. 3375-93 prohibiting the operation of casinos. For
all their praiseworthy motives, these ordinances are contrary to P.D. 1869 and the public policy announced therein
and are therefore ultra vires and void.

Wherefore, the petition is denied.

7
 LIM V PACQUING

FACTS:
The Charter of the City of Manila was enacted by Congress on 18 June 1949 (R.A. No. 409).

On 1 January 1951, Executive Order No. 392 was issued transferring the authority to regulate jai-alais from local
government to the Games and Amusements Board (GAB).
On 07 September 1971, however, the Municipal Board of Manila nonetheless passed Ordinance No. 7065 entitled
An Ordinance Authorizing the Mayor To Allow And Permit The Associated Development Corporation To
Establish, Maintain And Operate A Jai-Alai In The City Of Manila, Under Certain Terms And Conditions And For
Other Purposes.
On 20 August 1975, Presidential Decree No. 771 was issued by then President Marcos. The decree, entitled
Revoking All Powers and Authority of Local Government(s) To Grant Franchise, License or Permit And Regulate
Wagers Or Betting By The Public On Horse And Dog Races, Jai-Alai Or Basque Pelota, And Other Forms Of
Gambling, in Section 3 thereof, expressly revoked all existing franchises and permits issued by local
governments.
In May 1988, Associated Development Corporation (ADC) tried to operate a Jai-Alai. The government through
Games and Amusement Board intervened and invoked Presidential Decree No. 771 which expressly revoked all
existing franchises and permits to operate all forms of gambling facilities (including Jai-Alai) by local
governments. ADC assails the constitutionality of P.D. No. 771.

ISSUE:
Whether or not P.D. No. 771 is violative of the equal protection and non-impairment clauses of the Constitution.

HELD:
NO. P.D. No. 771 is valid and constitutional.

RATIO:
Presumption against unconstitutionality. There is nothing on record to show or even suggest that PD No.
771 has been repealed, altered or amended by any subsequent law or presidential issuance (when the executive still
exercised legislative powers).
Neither can it be tenably stated that the issue of the continued existence of ADCs franchise by reason of the
unconstitutionality of PD No. 771 was settled in G.R. No. 115044, for the decision of the Courts First Division in
said case, aside from not being final, cannot have the effect of nullifying PD No. 771 as unconstitutional, since only
the Court En Banc has that power under Article VIII, Section 4(2) of the Constitution.
And on the question of whether or not the government is estopped from contesting ADCs possession of a valid
franchise, the well-settled rule is that the State cannot be put in estoppel by the mistakes or errors, if any, of its
officials or agents. (Republic v. Intermediate Appellate Court, 209 SCRA 90)

8
Laguna Lake Development Authority vs CA

GR No. 120865-71; Dec. 7 1995

FACTS:
The Laguna Lake Development Authority (LLDA) was created through Republic Act No. 4850. It was granted, inter
alia, exclusive jurisdiction to issue permits for the use of all surface water for any project or activity in or affecting
the said region including navigation, construction, and operation of fishpens, fish enclosures, fish corrals and the
like.
Then came RA 7160, the Local Government Code of 1991. The municipalities in the Laguna Lake region interpreted
its provisions to mean that the newly passed law gave municipal governments the exclusive jurisdiction to issue
fishing privileges within their municipal waters.

ISSUE:
Who should exercise jurisdiction over the Laguna Lake and its environs insofar as the issuance of permits for
fishing privileges is concerned, the LLDA or the towns and municipalities comprising the region?

HELD:
LLDA has jurisdiction over such matters because the charter of the LLDA prevails over the Local Government Code
of 1991. The said charter constitutes a special law, while the latter is a general law. It is basic in statutory
construction that the enactment of a later legislation which is a general law, cannot be construed to have repealed a
special law. The special law is to be taken as an exception to the general law in the absence of special circumstances
forcing a contrary conclusion.
In addition, the charter of the LLDA embodies a valid exercise of police power for the purpose of protecting and
developing the Laguna Lake region, as opposed to the Local Government Code, which grants powers to
municipalities to issue fishing permits for revenue purposes.

Thus it has to be concluded that the charter of the LLDA should prevail over the Local Government Code of 1991 on
matters affecting Laguna de Bay.

9
SALVADOR VILLACORTA vs. GREGORIO BERNARDO

FACTS: Ordinance 22 entitled AN ORDINANCE REGULATING SUBDIVISION PLANS OVER PARCELS OF

LAND IN THE CITY OF DAGUPAN was enacted by the municipal board of Dagupan City. The said ordinance was
imposing additional requirements to that of the national law Act 496. Ordinance 22 was annulled by the Court of
First Instance of Pangasinan and was affirmed by the Court of Appeals whose decision reads as follows:

Section 1 of said ordinance clearly conflicts with Section 44 of Act 496, because the latter law does not require
subdivision plans to be submitted to the City Engineer before the same is submitted for approval to and
verification by the General Land Registration Office or by the Director of Lands as provided for in Section 58 of
said Act. Section 2 of the same ordinance also contravenes the provisions of Section 44 of Act 496, the latter being
silent on a service fee of PO.03 per square meter of every lot subject of such subdivision application; Section 3 of
the ordinance in question also conflicts with Section 44 of Act 496, because the latter law does not mention of a
certification to be made by the City Engineer before the Register of Deeds allows registration of the subdivision
plan; and the last section of said ordinance imposes a penalty for its violation, which Section 44 of Act 496 does not
impose. In other words, Ordinance 22 of the City of Dagupan imposes upon a subdivision owner additional
conditions.

ISSUE: Were the decisions of the CFI and CA to annul the said ordinance was correct?

HELD: Yes. To sustain the ordinance would be to open the floodgates to other ordinances amending and so
violating national laws in the guise of implementing them. Thus, ordinances could be passed imposing additional
requirements for the issuance of marriage licenses, to prevent bigamy; the registration of vehicles, to minimize
carnaping; the execution of contracts, to forestall fraud; the validation of passports, to deter imposture; the
exercise of freedom of speech, to reduce disorder; and so on.

This advice is especially addressed to the local governments which exercise the police power only by virtue of a
valid delegation from the national legislature under the general welfare clause. In the instant case, Ordinance No.
22 suffers from the additional defect of violating this authority for legislation in contravention of the national law
by adding to its requirements.

ADMINISTRATIVE LAW; DELEGATION OF POWERS; MUNICIPAL BOARD; ORDINANCE NO. 22, NOT VALID
FOR IMPOSING ADDITIONAL REQUIREMENTS OTHER THAN THAT PROVIDED FOR BY THE NATIONAL
LAW. To sustain the ordinance No. 22, "An Ordinance Regulating Subdivision Plans over Parcels of Land in
Dagupan City" would be to open the floodgates to other ordinances amending and so violating national laws in the
guise of implementing them. Thus, ordinances could be passed imposing additional requirements for the issuance
of marriage licenses, to prevent bigamy; the registration of vehicles, to minimize carnapping; the execution of
contracts, to forestall fraud; the validation of passports, to deter imposture; the exercise of freedom of speech, to
reduce disorder; and so on. The list is endless, but the means, even if the end be valid, would be ultra vires.
Ordinance No. 22 suffers from the additional defect of violating this authority for legislating in contravention of
the national law by adding to its requirements.

2. CONSTITUTIONAL LAW; POLICE POWER; PROTECTION OF RIGHTS OF INDIVIDUAL, IMPORTANT AS

PROTECTION OF RIGHT OF PUBLIC. We urge that proper care attend the exercise of the police power lest it
deteriorate into an unreasonable intrusion into the purely private affairs of the individual. The so-called "general
welfare" is too amorphous and convenient an excuse for official arbitrariness. Let it always be remembered that in
the truly democratic state, protecting the rights of the individual is as important as, if not more so than, protecting
the rights of the public. This advice is especially addressed to the local governments which exercise the police
power only by virtue of a valid delegation from the national legislature under the general welfare clause.

10
(Binay vs Domingo, G.R. No. 92389, September 11, 1991)

Facts:

Petitioner Municipality of Makati, through its Council, approved Resolution No. 60 which extends P500 burial
assistance to bereaved families whose gross family income does not exceed P2,000.00 a month. The funds are to
be taken out of the unappropriated available funds in the municipal treasury. The Metro Manila Commission
approved the resolution. Thereafter, the municipal secretary certified a disbursement of P400,000.00 for the
implementation of the program. However, the Commission on Audit disapproved said resolution and the
disbursement of funds for the implementation thereof for the following reasons: (1) the resolution has no
connection to alleged public safety, general welfare, safety, etc. of the inhabitants of Makati; (2) government funds
must be disbursed for public purposes only; and, (3) it violates the equal protection clause since it will only benefit
a few individuals.

Issues:

1. Whether Resolution No. 60 is a valid exercise of the police power under the general welfare clause
2. Whether the questioned resolution is for a public purpose
3. Whether the resolution violates the equal protection clause

Held:

1. The police power is a governmental function, an inherent attribute of sovereignty, which was born with civilized
government. It is founded largely on the maxims, "Sic utere tuo et ahenum non laedas and "Salus populi est
suprema lex. Its fundamental purpose is securing the general welfare, comfort and convenience of the people.

Police power is inherent in the state but not in municipal corporations. Before a municipal corporation may
exercise such power, there must be a valid delegation of such power by the legislature which is the repository of the
inherent powers of the State.

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

2. Police power is not capable of an exact definition but has been, purposely, veiled in general terms to underscore
its all comprehensiveness. Its scope, over-expanding to meet the exigencies of the times, even to anticipate the
future where it could be done, provides enough room for an efficient and flexible response to conditions and
circumstances thus assuring the greatest benefits.

The police power of a municipal corporation is broad, and has been said to be commensurate with, but not to
exceed, the duty to provide for the real needs of the people in their health, safety, comfort, and convenience as
consistently as may be with private rights. It extends to all the great public needs, and, in a broad sense includes all
legislation and almost every function of the municipal government. It covers a wide scope of subjects, and, while it
is especially occupied with whatever affects the peace, security, health, morals, and general welfare of the
community, it is not limited thereto, but is broadened to deal with conditions which exists so as to bring out of
them the greatest welfare of the people by promoting public convenience or general prosperity, and to everything
worthwhile for the preservation of comfort of the inhabitants of the corporation. Thus, it is deemed inadvisable to
attempt to frame any definition which shall absolutely indicate the limits of police power.

Public purpose is not unconstitutional merely because it incidentally benefits a limited number of persons. As
correctly pointed out by the Office of the Solicitor General, "the drift is towards social welfare legislation geared
towards state policies to provide adequate social services, the promotion of the general welfare, social justice as
well as human dignity and respect for human rights." The care for the poor is generally recognized as a public duty.
The support for the poor has long been an accepted exercise of police power in the promotion of the common good.

3. There is no violation of the equal protection clause. Paupers may be reasonably classified. Different groups may
receive varying treatment. Precious to the hearts of our legislators, down to our local councilors, is the welfare of
the paupers. Thus, statutes have been passed giving rights and benefits to the disabled, emancipating the tenant-
farmer from the bondage of the soil, housing the urban poor, etc. Resolution No. 60, re-enacted under Resolution

11
No. 243, of the Municipality of Makati is a paragon of the continuing program of our government towards social
justice. The Burial Assistance Program is a relief of pauperism, though not complete. The loss of a member of a
family is a painful experience, and it is more painful for the poor to be financially burdened by such death.
Resolution No. 60 vivifies the very words of the late President Ramon Magsaysay 'those who have less in life,
should have more in law." This decision, however must not be taken as a precedent, or as an official go-signal for
municipal governments to embark on a philanthropic orgy of inordinate dole-outs for motives political or
otherwise.

12
Dela Cruz v Paras
G.R. No. L-42571-72 July 25, 1983
Fernando, CJ:

Facts:
Assailed was the validity of an ordinance which prohibit the operation of night clubs. Petitioners contended that
the ordinance is invalid, tainted with nullity, the municipality being devoid of power to prohibit a lawful business,
occupation or calling. Petitioners at the same time alleging that their rights to due process and equal protection of
the laws were violated as the licenses previously given to them was in effect withdrawn without judicial hearing.

RA 938, as amended, was originally enacted on June 20, 1953. It is entitled: "An Act Granting Municipal or City
Boards and Councils the Power to Regulate the Establishments, Maintenance and Operation of Certain Places of
Amusement within Their Respective Territorial Jurisdictions.'

The first section reads, "The municipal or city board or council of each chartered city shall have the power to
regulate by ordinance the establishment, maintenance and operation of night clubs, cabarets, dancing schools,
pavilions, cockpits, bars, saloons, bowling alleys, billiard pools, and other similar places of amusement within its
territorial jurisdiction:
On May 21, 1954, the first section was amended to include not merely "the power to regulate, but likewise "Prohibit
... " The title, however, remained the same. It is worded exactly as RA 938.

As thus amended, if only the said portion of the Act was considered, a municipal council may go as far as to
prohibit the operation of night clubs. The title was not in any way altered. It was not changed one bit. The exact
wording was followed. The power granted remains that of regulation, not prohibition.

Petitioners contended that RA 938 which prohibits the operation of night clubs would give rise to a constitutional
question. The lower court upheld the constitutionality and validity of Ordinance No. 84 and dismissed the cases.
Hence this petition for certiorari by way of appeal.

ISSUE: Whether or not the ordinance is valid

NO. It is unconstitutional. It undoubtly involves a measure not embraced within the regulatory power but an
exercise of an assumed power to prohibit.

The Constitution mandates: "Every bill shall embrace only one subject which shall be expressed in the title thereof.
"Since there is no dispute as the title limits the power to regulating, not prohibiting, it would result in the statute
being invalid if, as was done by the Municipality of Bocaue, the operation of a night club was prohibited. There is a
wide gap between the exercise of a regulatory power "to provide for the health and safety, promote the prosperity,
and improve the morals, in the language of the Administrative Code, such competence extending to all "the great
public needs.

In accordance with the well-settled principle of constitutional construction that between two possible
interpretations by one of which it will be free from constitutional infirmity and by the other tainted by such grave
defect, the former is to be preferred. A construction that would save rather than one that would affix the seal of
doom certainly commends itself.

Under the Local Govt Code, it is clear that municipal corporations cannot prohibit the operation of night clubs.
They may be regulated, but not prevented from carrying on their business. It would be, therefore, an exercise in
futility if the decision under review were sustained. All that petitioners would have to do is to apply once more for
licenses to operate night clubs. A refusal to grant licenses, because no such businesses could legally open, would be
subject to judicial correction. That is to comply with the legislative will to allow the operation and continued
existence of night clubs subject to appropriate regulations. In the meanwhile, to compel petitioners to close their
establishments, the necessary result of an affirmance, would amount to no more than a temporary termination of
their business.

Herein what was involved is a measure not embraced within the regulatory power but an exercise of an assumed
power to prohibit.

13
 G.R. No. L-3491 June 24, 1983
CITY GOVERNMENT OF QUEZON CITY
vs.
HON. JUDGE VICENTE G. ERICTA

Police Power Not Validly Exercised

Quezon City enacted an ordinance entitled ORDINANCE REGULATING THE ESTABLISHMENT,
MAINTENANCE AND OPERATION OF PRIVATE MEMORIAL TYPE CEMETERY OR BURIAL GROUND
WITHIN THE JURISDICTION OF QUEZON CITY AND PROVIDING PENALTIES FOR THE VIOLATION
THEREOF. The law basically provides that at least six (6) percent of the total area of the memorial park cemetery
shall be set aside for charity burial of deceased persons who are paupers and have been residents of Quezon City
for at least 5 years prior to their death, to be determined by competent City Authorities. QC justified the law by
invoking police power.
ISSUE: Whether or not the ordinance is valid.
HELD: The SC held the law as an invalid exercise of police power. There is no reasonable relation between the
setting aside of at least six (6) percent of the total area of all private cemeteries for charity burial grounds of
deceased paupers and the promotion of health, morals, good order, safety, or the general welfare of the people. The
ordinance is actually a taking without compensation of a certain area from a private cemetery to benefit paupers
who are charges of the municipal corporation. Instead of building or maintaining a public cemetery for this
purpose, the city passes the burden to private cemeteries.

14
Balacuit v CFI G.R. No. L-38429 June 30, 1988
J. Gancayo

Facts:
Petitioners, theater owners, assailed the constitutionality of Ordinance No. 640 passed by the Municipal Board of
the City of Butuan on April 21, 1969. This called for a reduction to of the ticket price given to minors from 7-12
years old. There was a fine from 200-600 pesos or a 2-6 month imprisonment
The complaint was issued in the trial court. A TRO was then issued to prevent the law from being enforced. The
respondent court entered its decision declaring the law valid.
Petitioners attack the validity and constitutionality of Ordinance No. 640 on the grounds that it is ultra vires and
an invalid exercise of police power. Petitioners contend that Ordinance No. 640 is not within the power of' the
Municipal Board to enact as provided for in Section 15(n) of Republic Act No. 523 where it states that the Muncipal
board can only fix license fees for theaters and not admission rates.
The respondent attempts to justify the enactment of the ordinance by invoking the general welfare clause
embodied in Section 15 (nn) of the cited law.

Issue:
Does this power to regulate include the authority to interfere in the fixing of prices of admission to these places of
exhibition and amusement whether under its general grant of power or under the general welfare clause as invoked
by the City?

Held: The ordinance is under neither and thus unconstitutional. Petition granted.

Ratio:
1. Kwong Sing v. City of Manila- the word "regulate" was interpreted to include the power to control, to govern and
to restrain, it would seem that under its power to regulate places of exhibitions and amusement, the Municipal
Board of the City of Butuan could make proper police regulations as to the mode in which the business shall be
exercised.
In this jurisdiction, it is already settled that the operation of theaters, cinematographs and other places of public
exhibition are subject to regulation by the municipal council in the exercise of delegated police power by the local
government.
People v. Chan- an ordinance of the City of Manila prohibiting first run cinematographs from selling tickets beyond
their seating capacity was upheld as constitutional for being a valid exercise of police power.
The City of Butuan, apparently realizing that it has no authority to enact the ordinance in question under its power
to regulate embodied in Section 15(n), now invokes the police power as delegated to it under the general welfare
clause to justify the enactment of said ordinance
To invoke the exercise of police power, not only must it appear that the interest of the public generally requires an
interference with private rights, but the means adopted must be reasonably necessary for the accomplishment of
the purpose and not unduly oppressive upon individuals.
The legislature may not, under the guise of protecting the public interest, arbitrarily interfere with private
business, or impose unusual and unnecessary restrictions upon lawful occupations. In other words, the
determination as to what is a proper exercise of its police power is not final or conclusive, but is subject to the
supervision of the courts.
Petitioners maintain that Ordinance No. 640 violates the due process clause of the Constitution for being
oppressive, unfair, unjust, confiscatory, and an undue restraint of trade, and violative of the right of persons to
enter into contracts, considering that the theater owners are bound under a contract with the film owners for just
admission prices for general admission, balcony and lodge.
Homeowners Association- the exercise of police power is necessarily subject to a qualification, limitation or
restriction demanded by the regard, the respect and the obedience due to the prescriptions of the fundamental law
The court agreed with petitioners that the ordinance is not justified by any necessity for the public interest. The
police power legislation must be firmly grounded on public interest and welfare, and a reasonable relation must
exist between purposes and means.
The evident purpose of the ordinance is to help ease the burden of cost on the part of parents who have to shell out
the same amount of money for the admission of their children, as they would for themselves. A reduction in the
price of admission would mean corresponding savings for the parents; however, the petitioners are the ones made
to bear the cost of these savings. The ordinance does not only make the petitioners suffer the loss of earnings but it
likewise penalizes them for failure to comply with it. Furthermore, as petitioners point out, there will be difficulty
in its implementation because as already experienced by petitioners since the effectivity of the ordinance, children
over 12 years of age tried to pass off their age as below 12 years in order to avail of the benefit of the ordinance. The
ordinance does not provide a safeguard against this undesirable practice and as such, the respondent City of
Butuan now suggests that birth certificates be exhibited by movie house patrons to prove the age of children. This

15
is, however, not at all practicable. We can see that the ordinance is clearly unreasonable if not unduly oppressive
upon the business of petitioners. Moreover, there is no discernible relation between the ordinance and the
promotion of public health, safety, morals and the general welfare.
Respondent further alleges that by charging the full price, the children are being exploited by movie house
operators. We fail to see how the children are exploited if they pay the full price of admission. They are treated with
the same quality of entertainment as the adults.
Moreover, as a logical consequence of the ordinance, movie house and theater operators will be discouraged from
exhibiting wholesome movies for general patronage, much less children's pictures if only to avoid compliance with
the ordinance and still earn profits for themselves.
A theater ticket has been described to be either a mere license, revocable at the will of the proprietor of the theater
or it may be evidence of a contract whereby, for a valuable consideration, the purchaser has acquired the right to
enter the theater and observe the performance on condition that he behaves properly. Such ticket, therefore,
represents a right, Positive or conditional, as the case may be, according to the terms of the original contract of
sale. This right is clearly a right of property. The ticket which represents that right is also, necessarily, a species of
property. As such, the owner thereof, in the absence of any condition to the contrary in the contract by which he
obtained it, has the clear right to dispose of it, to sell it to whom he pleases and at such price as he
can obtain.
In no sense could theaters be considered public utilities. The State has not found it appropriate as a national policy
to interfere with the admission prices to these performances. This does not mean however, that theaters
and exhibitions are not affected with public interest even to a certain degree. Motion pictures have been considered
important both as a medium for the communication of Ideas and expression of the artistic impulse. Their effects
on the perceptions by our people of issues and public officials or public figures as well as the prevailing cultural
traits are considerable.
While it is true that a business may be regulated, it is equally true that such regulation must be within the bounds
of reason, that is, the regulatory ordinance must be reasonable, and its provisions cannot be oppressive amounting
to an arbitrary interference with the business or calling subject of regulation. A lawful business or calling may not,
under the guise of regulation, be unreasonably interfered with even by the exercise of police power.
A police measure for the regulation of the conduct, control and operation of a business should not encroach upon
the legitimate and lawful exercise by the citizens of their property rights. 34 The right of the owner to fix a price at
which his property shall be sold or used is an inherent attribute of the property itself and, as such, within the
protection of the due process clause.
Although the presumption is always in favor of the validity or reasonableness of the ordinance, such presumption
must nevertheless be set aside when the invalidity or unreasonableness appears on the face of the ordinance itself
or is established by proper evidence

16
SANGALANG V IAC

Facts:

The Mayor of Makati directed Bel-Air Village Association (BAVA) to opening of several streets to the general
public, after a series of developments in zoning regulations. All but Jupiter St. was voluntarily opened. The strong
opposition later gave way when the municipal officials force-opened the gates of said street for public use. The area
ceased to be purely residential. Action for damages was brought against Ayala Corporation and BAVA for alleged
breach of contract, to maintain the purely residential status of the area. Other similarly situated also filed their
respective cases. All were dismissed in the trial court. The Court of Appeals affirmed the said dismissals.

ISSUE:
Whether or not there is a contract between homeowners and Ayala Corporation violated in opening the Jupiter
street for public use.

HELD:
No. There was no contract to speak of in the case, hence nothing was violated.

RATIO:
Petitioners cannot successfully rely on the alleged promise by Ayala Corporation, to build a [f]ence along Jupiter
[street] with gate for entrance and/or exit as evidence of Ayalas alleged continuing obligation to maintain a wall
between the residential and commercial sections. Assuming there was a contract violated, it was still overtaken by
the passage of zoning ordinances which represent a legitimate exercise of police power. The petitioners have not
shown why Courts should hold otherwise other than for the supposed non-impairment guaranty of the
Constitution, which is secondary to the more compelling interests of general welfare. The Ordinance has not been
shown to be capricious or arbitrary or unreasonable to warrant the reversal of the judgments so appealed.

17
Macasiano vs Diokno GR 97764 (August 10, 1992)
Facts:
Respondent Municipality passed Ordinance No. 86 which authorized the closure of J.Gabriel, G.G. Cruz,
Bayanihan, Lt. Garcia Extension and Opena Streets and the establishment of a flea market thereon. This was
passed pursuant to MMC Ordinance No.2 and was approved by the Metropolitan Manila Authority on July 20,
1990.

On August 8, 1990, respondent municipality and Palanyag entered into a contract agreement whereby the latter
shall operate, maintain & manage the flea markets and/or vending areas in the aforementioned streets with the
obligation to remit dues to the treasury of the municipal government of Paraaque.

On September 13, 1990 Brig. Gen. Macasiano ordered the destruction and confiscation of stalls along G.G. Cruz &
Gabriel Street in Baclaran. He also wrote a letter to Palanyag ordering the destruction of the flea market.

Hence, respondent filed a joint petition praying for preliminary injunction. The trial court upheld the assailed
Ordinance and enjoined petitioner from enforcing his letter-order against Palanyag.

Issues:
WON an ordinance/resolution issued by the municipal council of Paraaque authorizing the lease & use of public
streets/thoroughfares as sites for the flea market is valid.

Held:
No.

J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena Streets are local roads used for public service
and are therefore considered public properties of respondent municipality. Properties of the local government
devoted to public service are deemed public and are under the absolute control of Congress. Hence, local
governments have no authority to control/regulate the use of public properties unless specific authority is vested
upon them by Congress.

Sec. 10, Chapter II of the LGC should be read and interpreted in accordance with basic principles already
established by law.

The closure should be for the sole purpose of withdrawing the road or other public property from public use when
circumstances show that such property is no longer intended/necessary for public use/service. Once withdrawn,
the property then becomes patrimonial property of the LGU concerned and only then can said LGU use the
property as an object of an ordinary contract. Roads and streets available to the public and ordinarily used for
vehicular traffic are still considered public property devoted to public use. The LGU has no power to use it for
another purpose or to dispose of or lease it to private persons.

Also, the disputed ordinance cannot be validly implemented because it cant be considered approved by the
Metropolitan Manila Authority due to non-compliance with the conditions it imposed for the approval of said
ordinance.

The powers of an LGU are not absolute, but subject to the limitations laid down by the Constitution and laws such
as the Civil Code. Every LGU has the sworn obligation to enact measures that will enhance the public health, safety
& convenience, maintain peace & order and promiote the general prosperity of the inhanbitants pf the local units.

18
As in the Dacanay case, the general public have the right to demand the demolition of the illegally constructed
stalls in public roads & streets. The officials of the respondent municipality have the corresponding duty arising
from public office to clear the city streets and restore them to their specific public purpose.

The ordinance is void and illegal for lack of basis in authority in laws applicable during its time.

19
MMDA Vs. Bel-Air Village

Facts:
Metropolitan Manila Development Authority (MMDA), petitioner herein, is a Government Agency tasked with
the delivery of basic services in Metro Manila. Bel-Air Village Association (BAVA), respondent herein, received a
letter of request from the petitioner to open Neptune Street of Bel-Air Village for the use of the public. The said
opening of Neptune Street will be for the safe and convenient movement of persons and to regulate the flow of
traffic in Makati City. This was pursuant to MMDA law or Republic Act No. 7924. On the same day, the
respondent was appraised that the perimeter wall separating the subdivision and Kalayaan Avenue would be
demolished.
The respondent, to stop the opening of the said street and demolition of the wall, filed a preliminary injunction
and a temporary restraining order. Respondent claimed that the MMDA had no authority to do so and the lower
court decided in favor of the Respondent. Petitioner appealed the decision of the lower courts and claimed that it
has the authority to open Neptune Street to public traffic because it is an agent of the State that can practice
police power in the delivery of basic services in Metro Manila.

Issue: Whether or not the MMDA has the mandate to open Neptune Street to public traffic pursuant to
its regulatory and police powers.

Held:
The Court held that the MMDA does not have the capacity to exercise police power. Police power is primarily
lodged in the National Legislature. However, police power may be delegated to government units. Petitioner
herein is a development authority and not a political government unit. Therefore, the MMDA cannot exercise
police power because it cannot be delegated to them.

It is not a legislative unit of the government. Republic Act No. 7924 does not empower the MMDA to enact
ordinances, approve resolutions and appropriate funds for the general welfare of the inhabitants of Manila. There
is no syllable in the said act that grants MMDA police power. It is an agency created for the purpose of laying
down policies and coordinating with various national government agencies, peoples organizations, non-
governmental organizations and the private sector for the efficient and expeditious delivery of basic services in
the vast metropolitan area.

20
Municipality of Paraaque vs. VM Realty
292 SCRA 676

FACTS:
Pursuant to a Sanggunian Bayan Resolution of the petitioner municipality, an expropriation complaint against the
property of herein respondent for the purpose of alleviating the living conditions of the underprivileged by
providing homes for the homeless through a socialized housing project. The RTC of Makati authorized petitioner to
take possession of subject property upon deposit to the court an amount of its fair market value. Respondent filed a
counter claim alleging that the complaint failed to state a cause of action because it was filed pursuant to a
resolution and not to an ordinance as required by RA 7160.

ISSUE:
Whether or not the Resolution of the Municipal council is a substantial compliance of the statutory requirement of
Section 19, RA 7160 in the exercise of the power of eminent domain.

RULING:
The power of eminent by LGUs may be affected only by ordinance not by a mere resolution. The following
essential requisites must concur before an LGU can exercise the power of eminent domain.
1. An ordinance is enacted by the local legislative council authorizing the local chief executive, in behalf of the
LGUs to exercise the power of eminent domain to pursue expropriation proceedings over a particular private
property.
2. The power of eminent domain is exercised for public use, purpose or welfare, or for the benefit of the poor and
the landless.
3. There is payment of just compensation, as required under Sec 9, Article III of the Constitution and other
pertment.
4. A valid and definite offer has been previously made to the owner of the property sought to be expropriated, but
said offer was not accepted.

In the case at bar, the first requisite that there must be an ordinance was not complied with by the local chief
executive. A municipal ordinance is different from a resolution. An ordinance is a law, it possesses a general and
permanent character while a resolution is temporary in nature.
The petition is hereby denied without prejudice to petitioners proper exercise of its power of eminent domain over
subject property.

21
It was emphasized that the two terms supervision and control differed in meaning and extent. The Court
distinguished them as follows:

x x x In administrative law, supervision means overseeing or the power or authority of an officer to

see that subordinate officers perform their duties. If the latter fail or neglect to fulfill them, the
former may take such action or step as prescribed by law to make them perform their duties.
Control, on the other hand, means the power of an officer to alter or modify or nullify or set aside
what a subordinate officer ha[s] done in the performance of his duties and to substitute the
judgment of the former for that of the latter.[6]
In Taule v. Santos,[7] we further stated that the Chief Executive wielded no more authority than that of checking
whether local governments or their officials were performing their duties as provided by the fundamental law and
by statutes. He cannot interfere with local governments, so long as they act within the scope of their authority.
Supervisory power, when contrasted with control, is the power of mere oversight over an inferior
body; it does not include any restraining authority over such body,[8] we said.
In a more recent case, Drilon v. Lim,[9] the difference between control and supervision was further delineated.
Officers in control lay down the rules in the performance or accomplishment of an act. If these
rules are not followed, they may, in their discretion, order the act undone or redone by their
subordinates or even decide to do it themselves. On the other hand, supervision does not cover
such authority. Supervising officials merely see to it that the rules are followed, but they
themselves do not lay down such rules, nor do they have the discretion to modify or replace them.
If the rules are not observed, they may order the work done or redone, but only to conform to such
rules. They may not prescribe their own manner of execution of the act. They have no discretion
on this matter except to see to it that the rules are followed.
Under our present system of government, executive power is vested in the President.[10] The members of the
Cabinet and other executive officials are merely alter egos. As such, they are subject to the power of control of the
President, at whose will and behest they can be removed from office; or their actions and decisions changed,
suspended or reversed.[11] In contrast, the heads of political subdivisions are elected by the people. Their
sovereign powers emanate from the electorate, to whom they are directly accountable. By constitutional fiat, they
are subject to the Presidents supervision only, not control, so long as their acts are exercised within the sphere of
their legitimate powers. By the same token, the President may not withhold or alter any authority or power given
them by the Constitution and the law.
Extent of Local Autonomy

Hand in hand with the constitutional restraint on the Presidents power over local governments is the state policy
of ensuring local autonomy.[12]
In Ganzon v. Court of Appeals,[13] we said that local autonomy signified a more responsive and accountable local
government structure instituted through a system of decentralization. The grant of autonomy is intended to
break up the monopoly of the national government over the affairs of local governments, x x x not x x x to end
the relation of partnership and interdependence between the central administration and local government units x
x x. Paradoxically, local governments are still subject to regulation, however limited, for the purpose of enhancing
self-government.[14]
Decentralization simply means the devolution of national administration, not power, to local governments. Local
officials remain accountable to the central government as the law may provide.[15] The difference between
decentralization of administration and that of power was explained in detail in Limbona v. Mangelin[16] as
follows:
Now, autonomy is either decentralization of administration or decentralization of power. There is
decentralization of administration when the central government delegates administrative powers to political
subdivisions in order to broaden the base of government power and in the process to make local governments
more responsive and accountable,[17] and ensure their fullest development as self-reliant communities and make
them more effective partners in the pursuit of national development and social progress.[18] At the same time, it
relieves the central government of the burden of managing local affairs and enables it to concentrate on national
concerns. The President exercises general supervision[19] over them, but only to ensure that local affairs are
administered according to law.[20] He has no control over their acts in the sense that he can substitute their
judgments with his own.[21]
Decentralization of power, on the other hand, involves an abdication of political power in the favor of local
government units declared to be autonomous. In that case, the autonomous government is free to chart its own
destiny and shape its future with minimum intervention from central authorities. According to a constitutional
author, decentralization of power amounts to self-immolation, since in that event, the autonomous government
becomes accountable not to the central authorities but to its constituency.[22]
Under the Philippine concept of local autonomy, the national government has not completely relinquished all its
powers over local governments, including autonomous regions. Only administrative powers over local affairs are
delegated to political subdivisions. The purpose of the delegation is to make governance more directly responsive
and effective at the local levels. In turn, economic, political and social development at the smaller political units

22
are expected to propel social and economic growth and development. But to enable the country to develop as a
whole, the programs and policies effected locally must be integrated and coordinated towards a common national
goal. Thus, policy-setting for the entire country still lies in the President and Congress. As we stated in Magtajas
v. Pryce Properties Corp., Inc., municipal governments are still agents of the national government.[23]
The Nature of AO 372

Consistent with the foregoing jurisprudential precepts, let us now look into the nature of AO 372. As its
preambular clauses declare, the Order was a cash management measure adopted by the government to match
expenditures with available resources, which were presumably depleted at the time due to economic difficulties
brought about by the peso depreciation. Because of a looming financial crisis, the President deemed it necessary
to direct all government agencies, state universities and colleges, government-owned and controlled corporations
as well as local governments to reduce their total expenditures by at least 25 percent along suggested areas
mentioned in AO 372.

Under existing law, local government units, in addition to having administrative autonomy in the exercise of their
functions, enjoy fiscal autonomy as well. Fiscal autonomy means that local governments have the power to create
their own sources of revenue in addition to their equitable share in the national taxes released by the national
government, as well as the power to allocate their resources in accordance with their own priorities. It extends to
the preparation of their budgets, and local officials in turn have to work within the constraints thereof. They are
not formulated at the national level and imposed on local governments, whether they are relevant to local needs
and resources or not. Hence, the necessity of a balancing of viewpoints and the harmonization of proposals from
both local and national officials,[24] who in any case are partners in the attainment of national goals.
Local fiscal autonomy does not however rule out any manner of national government intervention by way of
supervision, in order to ensure that local programs, fiscal and otherwise, are consistent with national goals.
Significantly, the President, by constitutional fiat, is the head of the economic and planning agency of the
government,[25] primarily responsible for formulating and implementing continuing, coordinated and integrated
social and economic policies, plans and programs[26] for the entire country. However, under the Constitution, the
formulation and the implementation of such policies and programs are subject to consultations with the
appropriate public agencies, various private sectors, and local government units. The President cannot do so
unilaterally.
Consequently, the Local Government Code provides:[27]
x x x [I]n the event the national government incurs an unmanaged public sector deficit, the President of the
Philippines is hereby authorized, upon the recommendation of [the] Secretary of Finance, Secretary of the Interior
and Local Government and Secretary of Budget and Management, and subject to consultation with the presiding
officers of both Houses of Congress and the presidents of the liga, to make the necessary adjustments in the
internal revenue allotment of local government units but in no case shall the allotment be less than thirty percent
(30%) of the collection of national internal revenue taxes of the third fiscal year preceding the current fiscal year x
x x.

There are therefore several requisites before the President may interfere in local fiscal matters: (1) an unmanaged
public sector deficit of the national government; (2) consultations with the presiding officers of the Senate and the
House of Representatives and the presidents of the various local leagues; and (3) the corresponding
recommendation of the secretaries of the Department of Finance, Interior and Local Government, and Budget and
Management. Furthermore, any adjustment in the allotment shall in no case be less than thirty percent (30%) of
the collection of national internal revenue taxes of the third fiscal year preceding the current one.
Petitioner points out that respondents failed to comply with these requisites before the issuance and the
implementation of AO 372. At the very least, they did not even try to show that the national government was
suffering from an unmanageable public sector deficit. Neither did they claim having conducted consultations with
the different leagues of local governments. Without these requisites, the President has no authority to adjust,
much less to reduce, unilaterally the LGUs internal revenue allotment.

The solicitor general insists, however, that AO 372 is merely directory and has been issued by the President
consistent with his power of supervision over local governments. It is intended only to advise all government
agencies and instrumentalities to undertake cost-reduction measures that will help maintain economic stability in
the country, which is facing economic difficulties. Besides, it does not contain any sanction in case of
noncompliance. Being merely an advisory, therefore, Section 1 of AO 372 is well within the powers of the
President. Since it is not a mandatory imposition, the directive cannot be characterized as an exercise of the power
of control.
While the wordings of Section 1 of AO 372 have a rather commanding tone, and while we agree with petitioner that
the requirements of Section 284 of the Local Government Code have not been satisfied, we are prepared to accept
the solicitor generals assurance that the directive to identify and implement measures x x x that will reduce
total expenditures x x x by at least 25% of authorized regular appropriation is merely advisory in character, and

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does not constitute a mandatory or binding order that interferes with local autonomy. The language used, while
authoritative, does not amount to a command that emanates from a boss to a subaltern.

Rather, the provision is merely an advisory to prevail upon local executives to recognize the need for fiscal restraint
in a period of economic difficulty. Indeed, all concerned would do well to heed the Presidents call to unity,
solidarity and teamwork to help alleviate the crisis. It is understood, however, that no legal sanction may be
imposed upon LGUs and their officials who do not follow such advice. It is in this light that we sustain the solicitor
generals contention in regard to Section 1.

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