CASE DIGESTS

1. LEONARDO TAN, ROBERT UY and LAMBERTO TE, vs. SOCORRO Y. PEREA,

(G.R. No. 149743. February 18, 2005)

Facts:

In 1974, Presidential Decree (P.D.) No. 449, otherwise known as the Cockfighting
Law of 1974, was enacted. Section 5(b) of the Decree provided for limits on the number
of cockpits that may be established in cities and municipalities in the following manner:

Section 5. Cockpits and Cockfighting in General.

(b) Establishment of Cockpits. Only one cockpit shall be allowed in
each city or municipality, except that in cities or municipalities with a
population of over one hundred thousand, two cockpits may be established,
maintained and operated.

With the enactment of the Local Government Code of 1991, the municipal
sangguniang bayan were empowered, any law to the contrary notwithstanding, to
authorize and license the establishment, operation and maintenance of cockpits, and
regulate cockfighting and commercial breeding of gamecocks.

In 1993, the Sangguniang Bayan of the municipality of Daanbantayan, Cebu

Province, enacted Municipal Ordinance No. 6 (Ordinance No. 6), Series of 1993, which
served as the Revised Omnibus Ordinance prescribing and promulgating the rules and
regulations governing cockpit operations in Daanbantayan. Section 5 thereof, relative to
the number of cockpits allowed in the municipality, stated:

Section 5. There shall be allowed to operate in the Municipality of

Daanbantayan, Province of Cebu, not more than its equal number of
cockpits based upon the population provided for in PD 449, provided
however, that this specific section can be amended for purposes of
establishing additional cockpits, if the Municipal population so warrants.

Shortly thereafter, the Sangguniang Bayan passed an amendatory ordinance,

Municipal Ordinance No. 7 (Ordinance No. 7), Series of 1993, which amended the
aforequoted Section 5 to now read as follows:

Section 5. Establishment of Cockpit. There shall be allowed to operate

in the Municipality of Daanbantayan, Province of Cebu, not more than three
(3) cockpits.

On 8 November 1995, petitioner Leonardo Tan (Tan) applied with the Municipal
Gamefowl Commission for the issuance of a permit/license to establish and operate a
cockpit in Sitio Combado, Bagay, in Daanbantayan. At the time of his application, there
was already another cockpit in operation in Daanbantayan, operated by respondent
Socorro Y. Perea (Perea), who was the duly franchised and licensed cockpit operator in
the municipality since the 1970s. Pereas franchise, per records, was valid until 2002.

The Municipal Gamefowl Commission favorably recommended to the mayor of

Daanbantayan, petitioner Lamberto Te (Te), that a permit be issued to Tan. On 20 January
1996, Te issued a mayors permit allowing Tan to establish/operate/conduct the business
of a cockpit in Combado, Bagay, Daanbantayan, Cebu for the period from 20 January
1996 to 31 December 1996.

This act of the mayor served as cause for Perea to file a Complaint for damages with
a prayer for injunction against Tan, Te, and Roberto Uy, the latter allegedly an agent of
Tan. Perea alleged that there was no lawful basis for the establishment of a second
cockpit. She claimed that Tan conducted his cockpit fights not in Combado, but in
Malingin, at a site less than five kilometers away from her own cockpit. She insisted that
the unlawful operation of Tans cockpit has caused injury to her own legitimate business,
and demanded damages. Perea also prayed that the permit issued by Te in favor of Tan
be declared as null and void, and that a permanent writ of injunction be issued against
Te and Tan preventing Tan from conducting cockfights within the municipality and Te
from issuing any authority for Tan to pursue such activity.

The RTC of Bogo, Cebu dismissed the complaint, observing that Section 5 of
Ordinance No. 6, prior to its amendment, was by specific provision, an implementation
of the Cockfighting Law. Yet according to the RTC, questions could be raised as to the
efficacy of the subsequent amendment under Ordinance No. 7, since under the old
Section 5, an amendment allowing additional cockpits could be had only if the municipal
population so warrants.

Perea filed a Motion for Reconsideration which was likewise denied, because the
RTC categorically stated that Ordinance Nos. 6 and 7 were valid and legal for all intents
and purposes, and noted that while the ordinances seemed to be in conflict with the
Cockfighting Law, any doubt in interpretation should be resolved in favor of the grant of
more power to the local government unit, following the principles of devolution under
the Local Government Code.

The Court of Appeals reversed the decision holding that Ordinance No. 7 should
be held invalid for allowing, in unconditional terms, the operation of not more than three
cockpits in Daan Bantayan, clearly dispensing with the standard set forth in PD 449.
However, this issue appears to have been mooted by the expiration of the Mayors Permit
granted to the defendant which has not been renewed. It also held that the provision
vesting unto the sangguniang bayan the power to authorize and license the establishment

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of cockpits did not do away with the Cockfighting Law, as these two laws are not
necessarily inconsistent with each other. What the provision of the Local Government
Code did, according to the Court of Appeals, was to transfer to the sangguniang bayan
powers that were previously conferred on the Municipal Gamefowl Commission.

Issue: Whether or not the municipal ordinance should prevail over the national
law in determining how many cockpits may be allowed to operate in a city or
municipality

Held: Petition DENIED.

A municipal ordinance must not contravene the Constitution or any statute,

otherwise it is void. Ordinance No. 7 unmistakably contravenes the Cockfighting Law in
allowing three cockpits in Daanbantayan. Thus, no rights can be asserted by the
petitioners arising from the Ordinance.

While, the Local Government Code expressly repealed several laws, the
Cockfighting Law was not among them. Section 534(f) of the Local Government Code
declares that all general and special laws or decrees inconsistent with the Code are hereby
repealed or modified accordingly, but such clause is not an express repealing clause
because it fails to identify or designate the acts that are intended to be repealed. It is a
cardinal rule in statutory construction that implied repeals are disfavored and will not be
so declared unless the intent of the legislators is manifest. As laws are presumed to be
passed with deliberation and with knowledge of all existing ones on the subject, it is
logical to conclude that in passing a statute it is not intended to interfere with or abrogate
a former law relating to the same subject matter, unless the repugnancy between the two
is not only irreconcilable but also clear and convincing as a result of the language used,
or unless the latter Act fully embraces the subject matter of the earlier.

Applying the test of implied repeal, the provision under the Local Government
Code specifically in Section 447(a)(3)(v) vesting upon LGUs the power and authority to
issue franchises and regulate the operation and establishment of cockpits in their
respective municipalities, “any law to the contrary notwithstanding” and Section 5(d) of
the Cockfighting Law can stand together. While the Sanggunian bayan retains the power
to authorize and license the establishment, operation, and maintenance of cockpits, its
discretion is limited in that it cannot authorize more than one cockpit per city or
municipality, unless such cities or municipalities have a population of over one hundred
thousand, in which case two cockpits may be established. Considering that Section
447(a)(3)(v) speaks essentially of the identity of the wielder of the power of control and
supervision over cockpit operation, it is not inconsistent with previous enactments that
impose restrictions on how such power may be exercised.

Perhaps more essential than the fact that the two controverted provisions are not

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inconsistent when put together, the Court recognizes that Section 5(d) of the Cockfighting
Law arises from a valid exercise of police power by the national government.

2. HON. GABRIEL LUIS QUISUMBING, et. al vs. HON. GWENDOLYN

F. GARCIA et. al. (G.R. No. 175527, Dec. 8, 2008)

Facts:

The Commission on Audit (COA) conducted a financial audit on the Province of

Cebu for the period ending December 2004. Its audit team rendered a report, Part II of
which states: "Several contracts in the total amount of P102,092,841.47 were not supported
with a Sangguniang Panlalawigan resolution authorizing the Provincial Governor to
enter into a contract, as required under Section 22 of R.A. No. 7160. The audit team then
recommended that, "Henceforth, the local chief executive must secure a sanggunian
resolution authorizing the former to enter into a contract as provided under Section 22 of
R.A. No. 7160."

Gov. Garcia, in her capacity as the Provincial Governor of Cebu, sought the
reconsideration of the findings and recommendation of the COA. However, without
waiting for the resolution of the reconsideration sought, she instituted an action for
Declaratory Relief before the RTC of Cebu City, Branch 9. Impleaded as respondents were
Delfin P. Aguilar, Helen S. Hilayo and Roy L. Ursal in their official capacities as Cluster
Director IV, Regional Cluster Director and Regional Legal and Adjudication Director of
the COA, respectively. The Sangguniang Panlalawigan of the Province of Cebu,
represented by Vice-Governor Gregorio Sanchez, Jr., was also impleaded as respondent.

Alleging that the infrastructure contracts subject of the audit report complied with
the bidding procedures provided under R.A. No. 9184 and were entered into pursuant to
the general and/or supplemental appropriation ordinances passed by the Sangguniang
Panlalawigan, Gov. Garcia alleged that a separate authority to enter into such contracts
was no longer necessary.

The trial court rendered the assailed Decision dated July 11, 2006, declaring that
Gov. Garcia need not secure prior authorization from the Sangguniang Panlalawigan of
Cebu before entering into the questioned contracts when there is a prior appropriation
ordinance enacted, pursuant to Sections 22 in relation to Sections 306 and 346 of the Local
Government Code and Section 37 of the Government Procurement Reform Act.Insofar as
Respondent Sangguniang Panlalawigan, the case was dismissed.

In the Petition for Review dated November 22, 2006, petitioners insisted that the
RTC committed reversible error in granting due course to Gov. Garcia's petition for
declaratory relief despite a breach of the law subject of the petition having already been

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committed and maintained that prior authorization from the Sangguniang Panlalawigan
should be secured before Gov. Garcia could validly enter into contracts involving
monetary obligations on the part of the province.

Gov. Garcia, in her Comment argues that the questioned contracts were executed
after a public bidding in implementation of specific items in the regular or supplemental
appropriation ordinances passed by the Sangguniang Panlalawigan. These ordinances
allegedly serve as the authorization required under R.A. No. 7160, such that the obtention
of another authorization becomes not only redundant but also detrimental to the speedy
delivery of basic services.

Respondent COA officials maintain that Sections 306 and 346 of R.A. No. 7160
cannot be considered exceptions to Sec. 22(c) of R.A. No. 7160. Sec. 346 allegedly refers to
disbursements which must be made in accordance with an appropriation ordinance
without need of approval from the sanggunian concerned. Sec. 306, on the other hand,
refers to the authorization for the effectivity of the budget and should not be mistaken
for the specific authorization by the Sangguniang Panlalawigan for the local chief
executive to enter into contracts under Sec. 22(c) of R.A. No. 7160.

Issue: Whether or not prior approval by the Sangguniang Panlalawigan was

required before Gov. Garcia could have validly entered into the questioned contracts.

Held: Petition is GRANTED IN PART.

There appear two basic premises from which the Court can proceed to discuss the
question of whether prior approval by the Sangguniang Panlalawigan was required
before Gov. Garcia could have validly entered into the questioned contracts. First, the
Province of Cebu was operating under a reenacted budget in 2004. Second, Gov. Garcia
entered into contracts on behalf of the province while this reenacted budget was in force.
Sec. 22(c) of R.A. No. 7160 provides:

Sec. 22. Corporate Powers.-(a) Every local government unit, as a

corporation, shall have the following powers:

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(c) Unless otherwise provided in this Code, no contract may be entered

into by the local chief executive in behalf of the local government unit
without prior authorization by the sanggunian concerned. A legible copy of
such contract shall be posted at a conspicuous place in the provincial capitol
or the city, municipal or barangay hall.

As it clearly appears from the foregoing provision, prior authorization by the

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sanggunian concerned is required before the local chief executive may enter into
contracts on behalf of the local government unit.

Gov. Garcia posits that Sections 306 and 346 of R.A. No. 7160 are the exceptions to
Sec. 22(c) and operate to allow her to enter into contracts on behalf of the Province of
Cebu without further authority from the Sangguniang Panlalawigan other than that
already granted in the appropriation ordinance for 2003 and the supplemental ordinances
which, however, she did not care to elucidate on.

Sec. 306 of R.A. No. 7160 merely contains a definition of terms. Read in conjunction
with Sec. 346, Sec. 306 authorizes the local chief executive to make disbursements of funds
in accordance with the ordinance authorizing the annual or supplemental
appropriations. The "ordinance" referred to in Sec. 346 pertains to that which enacts the
local government unit's budget, for which reason no further authorization from the local
council is required, the ordinance functioning, as it does, as the legislative authorization
of the budget.

To construe Sections 306 and 346 of R.A. No. 7160 as exceptions to Sec. 22(c) would
render the requirement of prior sanggunian authorization superfluous, useless and
irrelevant. There would be no instance when such prior authorization would be required,
as in contracts involving the disbursement of appropriated funds. Yet, this is obviously
not the effect Congress had in mind when it required, as a condition to the local chief
executive's representation of the local government unit in business transactions, the prior
authorization of the sanggunian concerned. The requirement was deliberately added as
a measure of check and balance, to temper the authority of the local chief executive, and
in recognition of the fact that the corporate powers of the local government unit are
wielded as much by its chief executive as by its council. However, as will be discussed
later, the sanggunian authorization may be in the form of an appropriation ordinance
passed for the year which specifically covers the project, cost or contract to be entered
into by the local government unit.

The fact that the Province of Cebu operated under a reenacted budget in 2004 lent
a complexion to this case which the trial court did not apprehend. Sec. 323 of R.A. No.
7160 provides that in case of a reenacted budget, "only the annual appropriations for
salaries and wages of existing positions, statutory and contractual obligations, and
essential operating expenses authorized in the annual and supplemental budgets for the
preceding year shall be deemed reenacted and disbursement of funds shall be in
accordance therewith."

It should be observed that, as indicated by the word "only" preceding the above
enumeration in Sec. 323, the items for which disbursements may be made under a
reenacted budget are exclusive. Clearly, contractual obligations which were not included
in the previous year's annual and supplemental budgets cannot be disbursed by the local

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government unit. It follows, too, that new contracts entered into by the local chief
executive require the prior approval of the sanggunian.

Elsewhere in R.A. No. 7160 are found provisions which buttress the stand taken
by petitioners against Gov. Garcia's seemingly heedless actions. Sec. 465, Art. 1, Chapter
3 of R.A. No. 7160 states that the provincial governor shall "[r]epresent the province in all
its business transactions and sign in its behalf all bonds, contracts, and obligations, and
such other documents upon authority of the sangguniang panlalawigan or pursuant to
law or ordinances." Sec. 468, Art. 3 of the same chapter also establishes the sanggunian's
power, as the province's legislative body, to authorize the provincial governor to
negotiate and contract loans, lease public buildings held in a proprietary capacity to
private parties, among other things.

The foregoing inexorably confirms the indispensability of the sanggunian's

authorization in the execution of contracts which bind the local government unit to new
obligations. Note should be taken of the fact that R.A. No. 7160 does not expressly state
the form that the authorization by the sanggunian has to take. Such authorization may be
done by resolution enacted in the same manner prescribed by ordinances, except that the
resolution need not go through a third reading for final consideration unless the majority
of all the members of the sanggunian decides otherwise.

As regards the trial court's pronouncement that R.A. No. 9184 does not require the
head of the procuring entity to secure a resolution from the sanggunian concerned before
entering into a contract, attention should be drawn to the very same provision upon
which the trial court based its conclusion. Sec. 37 provides: "The Procuring Entity shall
issue the Notice to Proceed to the winning bidder not later than seven (7) calendar days
from the date of approval of the contract by the appropriate authority x x x."

R.A. No. 9184 establishes the law and procedure for public procurement. Sec. 37
thereof explicitly makes the approval of the appropriate authority which, in the case of
local government units, is the sanggunian, the point of reference for the notice to proceed
to be issued to the winning bidder. This provision, rather than being in conflict with or
providing an exception to Sec. 22(c) of R.A. No. 7160, blends seamlessly with the latter
and even acknowledges that in the exercise of the local government unit's corporate
powers, the chief executive acts merely as an instrumentality of the local council. Read
together, the cited provisions mandate the local chief executive to secure the sanggunian's
approval before entering into procurement contracts and to transmit the notice to proceed
to the winning bidder not later than seven (7) calendar days therefrom.

As things stand, the declaration of the trial court to the effect that no prior
authorization is required when there is a prior appropriation ordinance enacted does not
put the controversy to rest. The question which should have been answered by the trial
court, and which it failed to do was whether, during the period in question, there did

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exist ordinances (authorizing Gov. Garcia to enter into the questioned contracts) which
rendered the obtention of another authorization from the Sangguniang Panlalawigan
superfluous. It should also have determined the character of the questioned contracts,
i.e., whether they were, as Gov. Garcia claims, mere disbursements pursuant to the
ordinances supposedly passed by the sanggunian or, as petitioners claim, new contracts
which obligate the province without the provincial board's authority.

It cannot be overemphasized that the paramount consideration in the present

controversy is the fact that the Province of Cebu was operating under a re-enacted budget
in 2004, resulting in an altogether different set of rules as directed by Sec. 323 of R.A. 7160.
This Decision, however, should not be so construed as to proscribe any and all contracts
entered into by the local chief executive without formal sanggunian authorization. In
cases, for instance, where the local government unit operates under an annual as opposed
to a re-enacted budget, it should be acknowledged that the appropriation passed by the
sanggunian may validly serve as the authorization required under Sec. 22(c) of R.A. No.
7160. After all, an appropriation is an authorization made by ordinance, directing the
payment of goods and services from local government funds under specified conditions
or for specific purposes. The appropriation covers the expenditures which are to be made
by the local government unit, such as current operating expenditures and capital outlays.

The question of whether a sanggunian authorization separate from the

appropriation ordinance is required should be resolved depending on the particular
circumstances of the case. Resort to the appropriation ordinance is necessary in order to
determine if there is a provision therein which specifically covers the expense to be
incurred or the contract to be entered into. Should the appropriation ordinance, for
instance, already contain in sufficient detail the project and cost of a capital outlay such
that all that the local chief executive needs to do after undergoing the requisite public
bidding is to execute the contract, no further authorization is required, the appropriation
ordinance already being sufficient.

On the other hand, should the appropriation ordinance describe the projects in
generic terms such as "infrastructure projects," "inter-municipal waterworks, drainage
and sewerage, flood control, and irrigation systems projects," "reclamation projects" or
"roads and bridges," there is an obvious need for a covering contract for every specific
project that in turn requires approval by the sanggunian. Specific sanggunian approval
may also be required for the purchase of goods and services which are neither specified
in the appropriation ordinance nor encompassed within the regular personal services and
maintenance operating expenses.

In view of the foregoing, the instant case should be treated as an ordinary civil
action requiring for its complete adjudication the confluence of all relevant facts. Guided
by the framework laid out in this Decision, the trial court should receive further evidence
in order to determine the nature of the questioned contracts entered into by Gov. Garcia,

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and the existence of ordinances authorizing her acts.

3. EVELYN ONGSUCO and ANTONIA SALAYA, vs. HON. MARIANO

M. MALONES (G.R. No. 182065, October 27, 2009)

Facts:

Petitioners are stall holders at the Maasin Public Market, which had just been
newly renovated. In a letter dated 6 August 1998, the Office of the Municipal Mayor
informed petitioners of a meeting scheduled on 11 August 1998 concerning the municipal
public market. Revenue measures were discussed during the said meeting, including the
increase in the rentals for the market stalls and the imposition of "goodwill fees" in the
amount of P20,000.00, payable every month.

On 17 August 1998, the Sangguniang Bayan of Maasin approved Municipal

Ordinance No. 98-01, entitled "The Municipal Revised Revenue Code." The Code
contained a provision for increased rentals for the stalls and the imposition of goodwill
fees in the amount of P20,000.00 and P15,000.00 for stalls located on the first and second
floors of the municipal public market, respectively. The same Code authorized
respondent to enter into lease contracts over the said market stalls, and incorporated a
standard contract of lease for the stall holders at the municipal public market.

Only a month later, the Sangguniang Bayan of Maasin approved Resolution No.
68, series of 1998, moving to have the meeting dated 11 August 1998 declared inoperative
as a public hearing, because majority of the persons affected by the imposition of the
goodwill fee failed to agree to the said measure. However, Resolution No. 68, series of
1998, of the Sangguniang Bayan of Maasin was vetoed by respondent on 30 September
1998.

After Municipal Ordinance No. 98-01 was approved on 17 August 1998, another
purported public hearing was held on 22 January 1999. On 9 June 1999, respondent wrote
a letter to petitioners informing them that they were occupying stalls in the newly
renovated municipal public market without any lease contract, as a consequence of
which, the stalls were considered vacant and open for qualified and interested applicants.

This prompted petitioners, together with other similarly situated stall holders at
the municipal public market, to file before the RTC on 25 June 1999 a Petition for

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Prohibition/Mandamus, with Prayer for Issuance of Temporary Restraining Order
and/or Writ of Preliminary Injunction, against respondent, who alleged that they were
bona fide occupants of the stalls at the municipal public market, who had been religiously
paying the monthly rentals for the stalls they occupied.

Petitioners argued that public hearing was mandatory in the imposition of

goodwill fees. Section 186 of the Local Government Code of 1991 provides that an
ordinance levying taxes, fees, or charges shall not be enacted without any prior hearing
conducted for the purpose. Municipal Ordinance No. 98-01, imposing goodwill fees, is
invalid on the ground that the conferences held on 11 August 1998 and 22 January 1999
could not be considered public hearings. According to Article 277(b)(3) of the
Implementing Rules and Regulations of the Local Government Code:

(3) The notice or notices shall specify the date or dates and venue of the public hearing or
hearings. The initial public hearing shall be held not earlier than ten (10) days from the
sending out of the notice or notices, or the last day of publication, or date of posting
thereof, whichever is later.

The letter from the Office of the Municipal Mayor was sent to stall holders on 6
August 1998, informing the latter of the meeting to be held, as was in fact held, on 11
August 1998, only five days after notice.

Respondent, maintained that Municipal Ordinance No. 98-01 is valid. He reasoned

that Municipal Ordinance No. 98-01 imposed goodwill fees to raise income to pay for the
loan obtained by the Municipality of Maasin for the renovation of its public market. Said
ordinance is not per se a tax or revenue measure, but involves the operation and
management of an economic enterprise of the Municipality of Maasin as a local
government unit; thus, there was no mandatory requirement to hold a public hearing for
the enactment thereof. And, even granting that a public hearing was required, respondent
insisted that public hearings take place on 11 August 1998 and 22 January 1999.

Respondent further averred that petitioners were illegally occupying the market
stalls, and the only way petitioners could legitimize their occupancy of said market stalls
would be to execute lease contracts with the Municipality of Maasin. While respondent
admitted that petitioners had been paying rentals for their market stalls in the amount of
P45.00 per month prior to the renovation of the municipal public market, respondent
asserted that no rentals were paid or collected from petitioners ever since the renovation
began.

The RTC rendered a Decision and found that petitioners could not avail
themselves of the remedy of mandamus or prohibition. It reasoned that mandamus
would not lie in this case where petitioners failed to show a clear legal right to the use of
the market stalls without paying the goodwill fees imposed by the municipal

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government. Prohibition likewise would not apply to the present case where
respondent's acts, sought to be enjoined, did not involve the exercise of judicial or quasi-
judicial functions.

The RTC also dismissed the Petition in Civil Case No. 25843 on the ground of non-
exhaustion of administrative remedies. Petitioners' failure to question the legality of
Municipal Ordinance No. 98-01 before the Secretary of Justice, as provided under Section
187 of the Local Government Code, rendered the Petition raising the very same issue
before the RTC premature.

While Civil Case No. 25843 was pending, respondent filed before MCTC of
Cabatuan-Maasin, Iloilo City a case in behalf of the Municipality of Maasin against
petitioner Evelyn Ongsuco, entitled Municipality of Maasin v. Ongsuco, a Complaint for
Unlawful Detainer with Damages. On 18 June 2002, the MCTC decided in favor of the
Municipality of Maasin and ordered petitioner Ongsuco to vacate the market stalls she
occupied, Stall No. 1-03 and Stall No. 1-04, and to pay monthly rentals until she vacates
the said market stalls. On appeal, Branch 36 of the RTC of Maasin, Iloilo City,
promulgated a Decision, affirming the decision of the MCTC. A Writ of Execution was
issued by the MCTC.

Petitioners, appealed before the Court of Appeals, which declared that the
"goodwill fee" was a form of revenue measure, which the Municipality of Maasin was
empowered to impose under Section 186 of the Local Government Code. Petitioners
failed to establish any grave abuse of discretion committed by respondent in enforcing
goodwill fees.

Issue: Whether or not imposition of goodwill fees upon stall holders at the
municipal public market is not a revenue measure that requires a prior public hearing

Held: Petition Granted. Municipal Ordinance No. 98-01 is DECLARED void and
ineffective.

Respondent maintains that the imposition of goodwill fees upon stall holders at the
municipal public market is not a revenue measure that requires a prior public hearing.
Rentals and other consideration for occupancy of the stalls at the municipal public market
are not matters of taxation.

Respondent's argument is specious. Article 219 of the Local Government Code

provides that a local government unit exercising its power to impose taxes, fees and
charges should comply with the requirements set in Rule XXX, entitled "Local
Government Taxation":

Article 219. Power to Create Sources of Revenue.-Consistent with the

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 basic policy of local autonomy, each LGU shall exercise its power to create
its own sources of revenue and to levy taxes, fees, or charges, subject to the
provisions of this Rule. Such taxes, fees, or charges shall accrue exclusively
to the LGU.

Article 221(g) of the Local Government Code of 1991 defines "charges" as:

Article 221. Definition of Terms.

xxxx

(g) Charges refer to pecuniary liability, as rents or fees against

persons or property.

Evidently, the revenues of a local government unit do not consist of taxes alone, but
also other fees and charges. And rentals and goodwill fees, imposed by Municipal
Ordinance No. 98-01 for the occupancy of the stalls at the municipal public market, fall
under the definition of charges.

For the valid enactment of ordinances imposing charges, certain legal requisites
must be met. Section 186 of the Local Government Code identifies such requisites as
follows:

Section 186. Power to Levy Other Taxes, Fees or Charges.-Local government

units may exercise the power to levy taxes, fees or charges on any base or
subject not otherwise specifically enumerated herein or taxed under the
provisions of the National Internal Revenue Code, as amended, or other
applicable laws: Provided, That the taxes, fees or charges shall not be unjust,
excessive, oppressive, confiscatory or contrary to declared national policy:
Provided, further, That the ordinance levying such taxes, fees or charges shall
not be enacted without any prior public hearing conducted for the purpose.

Section 277 of the Implementing Rules and Regulations of the Local Government
Code establishes in detail the procedure for the enactment of such an ordinance, relevant
provisions of which are reproduced below:

Section 277. Publication of Tax Ordinance and Revenue Measures.-x x

x.

xxxx

(b) The conduct of public hearings shall be governed by the following

procedure:

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 xxxx

(2) In addition to the requirement for publication or posting, the

sanggunian concerned shall cause the sending of written notices of the
proposed ordinance, enclosing a copy thereof, to the interested or affected
parties operating or doing business within the territorial jurisdiction of the
LGU concerned.

(3) The notice or notices shall specify the date or dates and venue of
the public hearing or hearings. The initial public hearing shall be held not
earlier than ten (10) days from the sending out of the notice or notices, or
the last day of publication, or date of posting thereof, whichever is later;

xxxx

(c) No tax ordinance or revenue measure shall be enacted or approved

in the absence of a public hearing duly conducted in the manner provided
under this Article. (Emphases ours.)

It is categorical, therefore, that a public hearing be held prior to the enactment of an

ordinance levying taxes, fees, or charges; and that such public hearing be conducted as
provided under Section 277 of the Implementing Rules and Regulations of the Local
Government Code.

There is no dispute herein that the notices sent to petitioners and other stall holders
at the municipal public market were sent out on 6 August 1998, informing them of the
supposed "public hearing" to be held on 11 August 1998. Even assuming that petitioners
received their notice also on 6 August 1998, the "public hearing" was already scheduled,
and actually conducted, only five days later, on 11 August 1998. This contravenes Article
277(b)(3) of the Implementing Rules and Regulations of the Local Government Code
which requires that the public hearing be held no less than ten days from the time the
notices were sent out, posted, or published.

When the Sangguniang Bayan of Maasin sought to correct this procedural defect
through Resolution No. 68, series of 1998, dated 18 September 1998, respondent vetoed
the said resolution. Although the Sangguniang Bayan may have had the power to
override respondent's veto, it no longer did so.

The defect in the enactment of Municipal Ordinance No. 98 was not cured when
another public hearing was held on 22 January 1999, after the questioned ordinance was
passed by the Sangguniang Bayan and approved by respondent on 17 August 1998.
Section 186 of the Local Government Code prescribes that the public hearing be held prior

13
to the enactment by a local government unit of an ordinance levying taxes, fees, and
charges.

Since no public hearing had been duly conducted prior to the enactment of Municipal
Ordinance No. 98-01, said ordinance is void and cannot be given any effect.
Consequently, a void and ineffective ordinance could not have conferred upon
respondent the jurisdiction to order petitioners' stalls at the municipal public market
vacant.

4. ROBLE ARRASTRE, INC., vs. HON. ALTAGRACIA VILLAFLOR and THE

HONORABLE COURT OF APPEALS (G.R. No. 128509, August 22, 2006)

Facts:

Petitioner Roble Arrastre, Inc. is a cargo handling service operator, authorized by

the Philippine Ports Authority (PPA) to provide and render arrastre and stevedoring
services at the Municipal Port of Hilongos, Leyte, and on all vessels berthed thereat, from
7 September 1992 to 15 September 1993. For the years 1992 and 1993, petitioner was
granted Business Permits by respondent Altagracia Villaflor as Municipal Mayor of
Hilongos, Leyte. On 14 December 1993, pending final consideration of petitioner's
application for renewal with the PPA Office, Manila, the PPA through its Port Manager
Salvador L. Reyna of the Tacloban Port Management Office issued a 90-day hold-over
authority to petitioner. Stated therein was the proviso that notwithstanding the 90-day
period aforementioned, the authority shall be deemed ipso facto revoked if an earlier
permit/contract for cargo handling services is granted or sooner withdrawn or cancelled
for cause pursuant to PPA Administrative Order No. 10-81. On 27 January 1994, while
the 90-day hold-over authority was in effect, petitioner filed with respondent mayor an
application for the renewal of its Business Permit No. 276. However, the same was
denied.

Aggrieved by the denial, petitioner filed with the RTC, a Petition for Mandamus
with Preliminary Mandatory Injunction against respondent mayor, raising the primary
ground that the refusal to issue the business license sought for was a neglect to perform
an act which the law enjoins her to do, by virtue of the office she occupies. According to
petitioner, the source of the power of the municipal mayor to issue licenses is Section
444(b)(3)(iv)[6] of Republic Act No. 7160, otherwise known as the Local Government
Code of 1991, which is merely for the purpose of revenue generation and not regulation,
hence, the municipal mayor has no discretion to refuse the issuance of a business license
following the applicant's payment or satisfaction of the proper license fees. Petitioner

14
further alleged that it is the PPA which is vested with the discretion to determine whether
a party can render arrastre service in a particular port area.

In answer thereto, respondent mayor averred, inter alia, that the remedy of
mandamus does not lie as the issuance of the permit sought is not a ministerial function,
but one that requires the exercise of sound judgment and discretion. In denying
petitioner's application, respondent mayor invoked Municipal Resolution No. 93-27,
passed by the Sangguniang Bayan of Hilongos, Leyte, which prohibits any party which
likewise operates shipping lines plying the route of Cebu to Hilongos and vice versa, from
engaging in arrastre and stevedoring services at the port of Hilongos. Respondent mayor
asserted that petitioner is owned and operated by Roble Shipping Lines, a shipping
company that operates along the routes specified in Municipal Resolution No. 93-27;
hence, effectively rendering petitioner disqualified from operating an arrastre service
therein.

On 16 May 1994, petitioner filed a Supplemental Petition, contending that

subsequent to the filing of the Petition for Mandamus with the RTC, it was granted by
the PPA a five-year contract to provide cargo handling and other related services at the
Port of Hilongos, Leyte, effective 1 March 1994. The aforesaid contract was indorsed by
the District Manager for the Visayas to the Port Manager of Tacloban. Moreover,
petitioner sought to incorporate the five-year contract as an integral part of its Petition.
The Supplemental Petition was admitted by the RTC, in the Order dated 19 July 1994.

The RTC opined that the PPA has the sole authority to grant permits in the
operation of cargo handling services in all Philippine ports, whether public or private.
Proceeding therefrom, it ruled that the refusal of respondent mayor to approve
petitioner's application for renewal of the business permit was not based on law nor upon
her discretion. In addition, the RTC held that the PPA is authorized and has the exclusive
jurisdiction over all ports of the Philippines and that they alone can issue cargo handling
contracts.

Upon elevation of the case to the Court of Appeals, the appellate court rendered a
Decisionreversing and setting aside the RTC decision, ruling that the pursuit of the duty
of respondent mayor under Section 444(b)(3)(iv)[24] of the Local Government Code
necessarily entails the exercise of official discretion. Hence, it held that mandamus will
not lie to control or review the exercise of her discretion.

Issue: Whether or not respondent Mayor can be compelled by a writ of

mandamus to grant petitioners application or a renewal of a business permit to operate
an arrastre service at the Municipal Port of Hilongos in Leyte

Held: Petition DENIED.

15
 Central to the resolution of the case at bar is a reading of Section 444(b)(3)(iv) of
the Local Government Code of 1991, which provides, thus:

SEC. 444. The Chief Executive: Powers, Duties, Functions and

Compensation.

(b) For efficient, effective and economical governance the purpose of

which is the general welfare of the municipality and its inhabitants
pursuant to Section 16 of this Code, the Municipal mayor shall:

xxxx

(3) Initiate and maximize the generation of resources and revenues,

and apply the same to the implementation of development plans, program
objectives and priorities as provided for under Section 18 of this Code,
particularly those resources and revenues programmed for agro-industrial
development and country-wide growth and progress, and relative thereto,
shall:

xxxx

(iv) Issue licenses and permits and suspend or revoke the same for any
violation of the conditions upon which said licenses or permits had been
issued, pursuant to law or ordinance.

As Section 444(b)(3)(iv) so states, the power of the municipal mayor to issue licenses
is pursuant to Section 16 of the Local Government Code of 1991, which declares:

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.

Section 16, known as the general welfare clause, encapsulates the delegated police
power to local governments. Local government units exercise police power through their

16
respective legislative bodies. Evidently, the Local Government Code of 1991 is
unequivocal that the municipal mayor has the power to issue licenses and permits and
suspend or revoke the same for any violation of the conditions upon which said licenses
or permits had been issued, pursuant to law or ordinance. On this matter, petitioner
maintains that under the Local Government Code of 1991, a suspension or revocation of
permits shall be premised on a finding of violation of the conditions upon which the
permits were issued pursuant to a law or ordinance, which is independent of the Code
itself. Petitioner asseverates further that there was no law or ordinance that conferred
upon the respondent mayor the power to refuse the issuance of the permit despite
compliance of petitioner with all documentary requirements and payment of all the fees.

First. On petitioner's assertion that the power to issue license should be pursuant to law
other than the Local Government Code of 1991, we so hold that the language of the law
did not find the need to distinguish between other laws and that of the Local Government
Code of 1991 itself. When the law does not distinguish, we must not distinguish.Ubi lex
non distinguit nec nos distinguere debemus. Hence, even the Local Government Code of
1991, specifically Section 16 thereof, can be utilized to determine the bounds of the
exercise of the municipal mayor in issuing licenses and permits.

Second. While we agree with petitioner that there is no ordinance conferring upon
the respondent mayor the power to refuse the issuance of the permit for the operation of
an arrastre service, we are, as yet, unprepared to declare that the power of the municipal
mayor as enunciated under Section 444(b)(3)(iv) is ministerial. What can be deduced from
the aforesaid section is that the limits in the exercise of the power of a municipal mayor
to issue licenses, and permits and suspend or revoke the same can be contained in a law
or an ordinance. Otherwise stated, a law or an ordinance can provide the conditions upon
which the power of the municipal mayor under Section 444(b)(3)(iv) can be exercised.
Section 444(b)(3)(iv) of the Local Government Code of 1991 takes its cue from Section 16
thereof, which is largely an exercise of delegated police power. We said:

The general welfare clause is the delegation in statutory form of the police power
of the State to LGUs. Through this, LGUs may prescribe regulations to protect the lives,
health, and property of their constituents and maintain peace and order within their
respective territorial jurisdictions.

Section 444(b)(3)(iv) of the Local Government Code of 1991, whereby the power of
the respondent mayor to issue license and permits is circumscribed, is a manifestation of
the delegated police power of a municipal corporation. Necessarily, the exercise thereof
cannot be deemed ministerial.

The fact that Resolution No. 93-27 is a "mere" resolution can do nil to support
petitioner's cause. As stated earlier, the proper action is certiorari to determine whether
grave abuse of discretion had been committed on the part of respondent mayor in the

17
refusal to grant petitioner's application. Petitioner's petition for mandamus is
incompetent against respondent mayor's discretionary power. Thus:

"Discretion," when applied to public functionaries, means a power or right conferred

upon them by law or acting officially, under certain circumstances, uncontrolled by the
judgment or conscience of others. A purely ministerial act or duty in contradiction to a
discretional act is one which an officer or tribunal performs in a given state of facts, in a
prescribed manner, in obedience to the mandate of a legal authority, without regard to
or the exercise of his own judgment upon the propriety or impropriety of the act done. If
the law imposes a duty upon a public officer and gives him the right to decide how or
when the duty shall be performed, such duty is discretionary and not ministerial. The
duty is ministerial only when the discharge of the same requires neither the exercise of
official discretion or judgment.

5. RAMON M. ATIENZA, vs. JOSE T. VILLAROSA (G.R. No. 161081, May 10, 2005)

Facts:

Petitioner Atienza and respondent Villarosa were the Vice-Governor and

Governor, respectively, of the Province of Occidental Mindoro. On June 26, 2002, the
petitioner Vice-Governor received the Memorandum dated June 25, 2002 issued by the
respondent Governor concerning the authority to sign purchase orders of supplies,
materials, equipment[s], including fuel, repairs and maintenance of the sangguniang
panlalawigan. The said memorandum reads:

For proper coordination and to ensure efficient and effective local government
administration particularly on matters pertaining to supply and property management,
effective immediately, all Purchase Orders issued in connection with the procurement of
supplies, materials and equipment[s] including fuel, repairs and maintenance needed in
the transaction of public business or in the pursuit of any undertaking, project or activity
of the Sangguniang Panlalawigan, this province, shall be approved by the undersigned
in his capacity as the local chief executive of the province.

The provision of DILG Opinion No. 148-1993 which states that the authority to
sign Purchase Orders of supplies, materials and equipment[s] of the Sanggunian belongs
to the local chief executive, serves as basis of this memorandum.”

In reply to the above memorandum, the petitioner Vice-Governor wrote the respondent
Governor stating that:

18
 We are of the opinion that ... purchase orders for supplies, materials and
equipment are included under those as authorized for signature by the Vice-chief
executive of the Sanggunian on the basis of the DILG Opinion No. 96-1995 as affirmed by
the COA Opinions on June 28, April 11 and February 9, 1994 and coursing it to the
Governor for his approval is no longer necessary, the fact that [Secs.] 466 and 468, RA
7160 already provides for the separation of powers between the executive and legislative.
Such authority even include everything necessary for the legislative research program of
the Sanggunian.

Unimpressed, the respondent Governor issued the Memorandum dated July 1,

2002 relating to the termination of contract of services of casual/job order employees and
reappointment of the respective recommendees, for being unauthorized.

On July 3, 2002, the respondent Governor issued another Memorandum regarding

the enforceability of previous memoranda issued on June 20, 26 and July 1, 2002.

In his Letter dated July 9, 2002, the petitioner Vice-Governor invoked the principle
of separation of powers as applied to the local government units, i.e., the respondent, as
the Governor, the head of the executive branch, and the petitioner, as the Vice-Governor,
the head of the legislative branch, which is the Sangguniang Panlalawigan. The petitioner
Vice-Governor reiterated his request for the respondent to make a "deeper study" on the
matter before implementing his memoranda. The request, however, went unheeded as
the respondent Governor insisted on obliging the department heads of the provincial
government to comply with the memoranda.

The petitioner Vice-Governor thus filed with the Court of Appeals the petition for
prohibition assailing as having been issued with grave abuse of discretion the respondent
Governor's Memoranda dated June 25, 2002 and July 1, 2002. The petitioner Vice-
Governor claimed that these memoranda excluded him from the use and enjoyment of
his office in violation of the pertinent provisions of Republic Act No. 7160, or the Local
Government Code of 1991, and its implementing rules and regulations. It was prayed
that the respondent Governor be enjoined from implementing the assailed memoranda.

The appellate court, dismissed the petition for prohibition. Citing Section 344[6] of
Rep. Act No. 7160, the CA upheld the authority of the respondent Governor to issue the
Memorandum dated June 25, 2002 as it recognized his authority to approve the purchase
orders. The said provision provides in part that "approval of the disbursement voucher
by the local chief executive himself shall be required whenever local funds are
disbursed."

The CA explained that Section 466(a)(1)[7] of the same Code, relied upon by the
petitioner Vice-Governor, speaks of the authority of the Vice-Governor to sign "all
warrants drawn on the public treasury for all expenditures appropriated for the

19
operation of the sangguniang panlalawigan." In declaring this provision inapplicable, the
CA reasoned that the approval of purchase orders is different from the power of the Vice-
Governor to sign warrants drawn against the public treasury.

Section 361[8] was, likewise, held to be inapplicable ratiocinating, thus:

[R]equisitioning, which is provided under Section 361 of RA 7160, is the act of

requiring that something be furnished. In the procurement function, it is the submission
of written requests for supplies and materials and the like. It could be inferred that, in the
scheme of things, approval of purchase requests is different from approval of purchase
orders. Thus, the inapplicability of Section 361.

Anent the Memorandum dated July 1, 2002, the CA ruled that the issue on whether
it could be enjoined had already been rendered moot and academic. The CA pointed out
that the subject of the said memorandum could no longer be enjoined or restrained as the
termination of the employees had already been effected. It opined that where the act
sought to be enjoined in the prohibition proceedings had already been performed and
there is nothing more to restrain, the case is already moot and academic.

Issues:

 Who between the petitioner and the respondent is authorized to approve purchase
orders issued in connection with the procurement of supplies, materials
equipment, including fuel, repairs and maintenance of the Sangguniang
Panlalawigan?

 Does respondent Villarosa, as local chief executive, have the authority to terminate
or cancel the appointments of casual/job order employees of the Sangguniang
Panlalawigan Membres and the Office of the Vice-Governor.

Held: Petition GRANTED. The Memoranda dated June 25, 2002 and July 1, 2002
issued by respondent Governor Jose T. Villarosa are NULL AND VOID.

To resolve the substantive issues presented in the instant case, it is well to recall that
Rep. Act No. 7160 was enacted to give flesh to the constitutional mandate to "provide for
a more responsive and accountable local government structure instituted through a
system of decentralization with effective mechanism of recall, initiative and referendum,
allocate among the different local government units their powers, responsibilities, and
resources, and provide for the qualifications, election, appointment and removal, term,
salaries, powers and functions and duties of local officials, and all matters relating to the
organization and operation of the local units.”

In this connection, the provisions of Rep. Act No. 7160 are anchored on principles

20
that give effect to decentralization. Among these principles are: [t]here shall be an
effective allocation among the different local government units of their respective
powers, functions, responsibilities, and resources; [t]here shall be established in every
local government unit an accountable, efficient, and dynamic organizational structure
and operating mechanism that will meet the priority needs and service requirements of
its communities; [p]rovinces with respect to component cities and municipalities, and
cities and municipalities with respect to component barangays, shall ensure that the acts
of their component units are within the scope of their prescribed powers and functions;
and [e]ffective mechanisms for ensuring the accountability of local government units to
their respective constituents shall be strengthened in order to upgrade continually the
quality of local leadership.

a. The Vice-Governor who has such authority to

approve purchase orders issued in connection with the
procurement of supplies, materials, equipment, including
fuel, repairs and maintenance of the Sangguniang
Panlalawigan.

Under Rep. Act No. 7160, local legislative power for the province is exercised by the
Sangguniang Panlalawigan and the Vice-Governor is its presiding officer. Being vested
with legislative powers, the Sangguniang Panlalawigan enacts ordinances, resolutions
and appropriates funds for the general welfare of the province in accordance with the
provisions of Rep. Act No. 7160. The same statute vests upon the Vice-Governor the
power to:

(1) Be the presiding officer of the sangguniang panlalawigan and sign all warrants drawn
on the provincial treasury for all expenditures appropriated for the operation of the
sangguniang panlalawigan. [16]

Further, Section 344 provides:

Sec. 344. Certification on, and Approval of, Vouchers. - No money shall be disbursed unless
the local budget officer certifies to the existence of appropriation that has been legally
made for the purpose, the local accountant has obligated said appropriation, and the local
treasurer certifies to the availability of funds for the purpose. Vouchers and payrolls shall
be certified to and approved by the head of the department or office who has
administrative control of the fund concerned, as to validity, propriety and legality of the
claim involved. Except in cases of disbursements involving regularly recurring
administrative expenses such as payrolls for regular or permanent employees, expenses
for light, water, telephone and telegraph services, remittances to government creditor
agencies such as the GSIS, SSS, LBP, DBP, National Printing Office, Procurement Service
of the DBM and others, approval of the disbursement voucher by the local chief executive
himself shall be required whenever local funds are disbursed.

21
 In cases of special or trust funds, disbursements shall be approved by the
administrator of the fund.

In case of temporary absence or incapacity of the department head or chief of

office, the officer next-in-rank shall automatically perform his function and he shall be
fully responsible therefor.

Reliance by the CA on the clause "approval of the disbursement voucher by the

local chief executive himself shall be required whenever local funds are disbursed" of the
above section (Section 344) to rule that it is the Governor who has the authority to approve
purchase orders for the supplies, materials or equipment for the operation of the
Sangguniang Panlalawigan is misplaced. This clause cannot prevail over the more specific
clause of the same provision which provides that "vouchers and payrolls shall be certified
to and approved by the head of the department or office who has administrative control
of the fund concerned." The Vice-Governor, as the presiding officer of the Sangguniang
Panlalawigan, has administrative control of the funds of the said body. Accordingly, it is
the Vice-Governor who has the authority to approve disbursement vouchers for
expenditures appropriated for the operation of the Sangguniang Panlalawigan.

On this point, Section 39 of the Manual on the New Government Accounting

System for Local Government Units, prepared by the Commission on Audit (COA), is
instructive:

Sec. 39. Approval of Disbursements. - Approval of disbursements by the Local Chief

Executive (LCE) himself shall be required whenever local funds are disbursed, except for
regularly recurring administrative expenses such as: payrolls for regular or permanent
employees, expenses for light, water, telephone and telegraph services, remittances to
government creditor agencies such as GSIS, BIR, PHILHEALTH, LBP, DBP, NPO, PS of
the DBM and others, where the authority to approve may be delegated. Disbursement
vouchers for expenditures appropriated for the operation of the Sanggunian shall be
approved by the provincial Vice Governor, the city Vice-Mayor or the municipal Vice-
Mayor, as the case may be.

While Rep. Act No. 7160 is silent as to the matter, the authority granted to the Vice-
Governor to sign all warrants drawn on the provincial treasury for all expenditures
appropriated for the operation of the Sangguniang Panlalawigan as well as to approve
disbursement vouchers relating thereto necessarily includes the authority to approve
purchase orders covering the same applying the doctrine of necessary implication.

Since it is the Vice-Governor who approves disbursement vouchers and approves

the payment for the procurement of the supplies, materials and equipment needed for
the operation of the Sangguniang Panlalawigan, then he also has the authority to approve

22
the purchase orders to cause the delivery of the said supplies, materials or equipment.

Indeed, the authority granted to the Vice-Governor to sign all warrants drawn on
the provincial treasury for all expenditures appropriated for the operation of the
Sangguniang Panlalawigan as well as to approve disbursement vouchers relating thereto
is greater and includes the authority to approve purchase orders for the procurement of
the supplies, materials and equipment necessary for the operation of the Sangguniang
Panlalawigan.

b. The Governor, with respect to the

appointment of the officials and employees of the
Sangguniang Panlalawigan, has no authority to terminate
or cancel the appointments of casual/job order employees
of the Sangguniang Panlalawigan Membres and the Office
of the Vice-Governor.

Among the powers granted to the Governor under Section 465 of Rep. Act No. 7160
are:

Sec. 465. The Chief Executive: Powers, Duties, Functions and Compensation.- (a) The provincial
governor, as the chief executive of the provincial government, shall exercise such powers
and perform such duties and functions as provided by this Code and other laws.

(b) For efficient, effective and economical governance the purpose of which is the general
welfare of the province and its inhabitants pursuant to Section 16 of this Code, the
provincial governor shall:

...

(v) Appoint all officials and employees whose salaries and wages are wholly or mainly
paid out of provincial funds and whose appointments are not otherwise provided for in
this Code, as well as those he may be authorized by law to appoint.

On the other hand, Section 466 vests on the Vice-Governor the power to, among others:

(2) Subject to civil service law, rules and regulations, appoint all officials and employees
of the sangguniang panlalawigan, except those whose manner of appointment is
specifically provided in this Code.

Thus, while the Governor has the authority to appoint officials and employees
whose salaries are paid out of the provincial funds, this does not extend to the officials
and employees of the Sangguniang Panlalawigan because such authority is lodged with

23
the Vice-Governor. In the same manner, the authority to appoint casual and job order
employees of the Sangguniang Panlalawigan belongs to the Vice-Governor.

The authority of the Vice-Governor to appoint the officials and employees of the
Sangguniang Panlalawigan is anchored on the fact that the salaries of these employees
are derived from the appropriation specifically for the said local legislative body. Indeed,
the budget source of their salaries is what sets the employees and officials of the
Sangguniang Panlalawigan apart from the other employees and officials of the province.
Accordingly, the appointing power of the Vice-Governor is limited to those employees
of the Sangguniang Panlalawigan, as well as those of the Office of the Vice-Governor,
whose salaries are paid out of the funds appropriated for the Sangguniang Panlalawigan.
As a corollary, if the salary of an employee or official is charged against the provincial
funds, even if this employee reports to the Vice-Governor or is assigned to his office, the
Governor retains the authority to appoint the said employee pursuant to Section 465(b)(v)
of Rep. Act No. 7160.

However, in this case, it does not appear whether the contractual/job order
employees, whose appointments were terminated or cancelled by the Memorandum
dated July 1, 2002 issued by the respondent Governor, were paid out of the provincial
funds or the funds of the Sangguniang Panlalawigan. Nonetheless, the validity of the said
memorandum cannot be upheld because it absolutely prohibited the respondent Vice-
Governor from exercising his authority to appoint the employees, whether regular or
contractual/job order, of the Sangguniang Panlalawigan and restricted such authority to
one of recommendatory nature only.[26] This clearly constituted an encroachment on the
appointment power of the respondent Vice- Governor under Section 466(a)(2) of Rep. Act
No. 7160.

With Rep. Act No. 7160, the union of legislative and executive powers in the office of
the local chief executive under the BP Blg. 337 has been disbanded, so that either
department now comprises different and non-intermingling official personalities with
the end in view of ensuring a better delivery of public service and provide a system of
check and balance between the two.

Senator Aquilino Pimentel, the principal author of Rep. Act No. 7160, explained that
"the Vice-Governor is now the presiding officer of the Sangguniang Panlalawigan. The
City Vice-Mayor presides at meetings of the Sangguniang Panlungsod and the Municipal
Vice-Mayor at the sessions of the Sangguniang Bayan. The idea is to distribute powers
among elective local officials so that the legislative, which is the Sanggunian, can properly
check the executive, which is the Governor or the Mayor and vice versa and exercise their
functions without any undue interference from one by the other."

The avowed intent of Rep. Act. No. 7160, therefore, is to vest on the Sangguniang
Panlalawigan independence in the exercise of its legislative functions vis-a-vis the

24
discharge by the Governor of the executive functions. The Memoranda dated June 25,
2002 and July 1, 2002 of the respondent Governor, which effectively excluded the
petitioner Vice-Governor, the presiding officer of the Sangguniang Panlalawigan, from
signing the purchase orders for the procurement of supplies, materials or equipment
needed for the operation of the Sangguniang Panlalawigan as well as from appointing its
casual and job order employees, constituted undue interference with the latter's
functions. The assailed memoranda are clearly not in keeping with the intent of Rep. Act
No. 7160 and their implementation should thus be permanently enjoined.

6. ROMEO J. GAMBOA, JR., vs. MARCELO AGUIRRE, JR., AND JUAN Y.

ARANETA (GR No. 134213, July 20, 1999)

Facts:

In the 1995 elections, Rafael Coscolluela, petitioner Romeo J. Gamboa, Jr. and
respondents Marcelo Aguirre, Jr., and Juan Y. Araneta were elected Negros Occidental
Governor, Vice-Governor and SP members, respectively. Sometime in August of 1995,
the governor designated petitioner as Acting Governor for the duration of the former's
official trip abroad until his return. When the SP held its regular session on September 6,
1995, respondents questioned the authority of petitioner to preside therein in view of his
designation as Acting Governor and asked him to vacate the Chair. The latter, however,
refused to do so. In another session, seven (7) members of the SP voted to allow petitioner
to continue presiding while four (4) others voted against with one (1) abstention. On
September 22, 1995, respondents filed before the lower court a petition for declaratory
relief and prohibition. In the meantime, on October 2, 1995, the Governor re-assumed his
office. Later, the trial court rendered a decision and declared petitioner as "temporarily
legally incapacitated to preside over the sessions of the SP during the period that he is
the Acting Governor."

25
 Issue: May an incumbent Vice-Governor, while concurrently the Acting
Governor, continue to preside over the sessions of the Sangguniang Panlalawigan?

Held: Petition DENIED.

Sections 49(a) and 466(a)(1) of Republic Act (R.A.) No. 7160 otherwise known as
the Local Government Code of 1991, provide that the Vice-Governor shall be the
presiding officer of the SP. In addition to such function, he "become(s)" the Governor and
"assume(s)" the higher office for the unexpired term of his predecessor, in case of
"permanent vacancy" therein. When the vacancy, however, is merely temporary, the Vice-
Governor "shall automatically exercise the powers (subject to certain limitations) and
perform the duties and functions” of the Governor. It may be noted that the Code
provides only for modes of succession in case of permanent vacancy in the office of the
Governor and the Vice-Governor (whether single or simultaneously) as well as in case of
a temporary vacancy in the office of the Governor. But, no such contingency is provided
in case of temporary vacancy in the office of the Vice-Governor, just like the 1983 Local
Government Code.

It is correct that when the Vice-Governor exercises the "powers and duties" of the
Office of the Governor, he does not assume the latter’s office. He only "acts" as the
Governor but does not "become" the Governor. His assumption of the powers, duties and
functions of the provincial Chief Executive does not create a permanent vacuum or
vacancy in his position as the Vice-Governor. Necessarily, he does not relinquish nor
abandon his position and title as Vice-Governor by merely becoming an Acting
Governor, (not Governor) or by merely exercising the powers and duties of the higher
office. But the problem is, while in such capacity, does he temporarily relinquish the
powers, functions, duties and responsibilities of the Vice-Governor, including the power
to preside over the sessions of the SP?

Sad to say the new Local Government Code is silent on this matter, yet this query
should be answered in the positive. A Vice-Governor who is concurrently an Acting
Governor is actually a quasi-Governor. This means, that for purposes of exercising his
legislative prerogatives and powers, he is deemed as a non-member of the SP for the time
being. By tradition, the offices of the provincial Governor and Vice-Governor are
essentially executive in nature, whereas plain members of the provincial board perform
functions partaking of a legislative character. This is because the authority vested by law
in the provincial boards involves primarily a delegation of some legislative powers of
Congress. Unlike under the old Code, where the Governor is not only the provincial Chief
Executive, but also the presiding officer of the local legislative body, the new Code
delineated the union of the executive-legislative powers in the provincial, city and
municipal levels except in the Barangay. Under R.A. 7160, the Governor was deprived of
the power to preside over the SP and is no longer considered a member thereof. This is

26
clear from the law, when it provides that "local legislative power shall be vested in the
SP," which is "the legislative body of the province," and enumerates therein its
membership consisting of the:

1.) Vice-Governor, as presiding officer,

2.) regular elective SP members,

3.) three elective sectoral representatives, and

4.) those ex-officio members, namely:

a.) president of the provincial chapter of the liga ng mga barangay,

b.) president of the panlalawigang pederasyon ng mga sangguniang kabataan,

c.) president of the provincial federation of sanggunian members of municipalities and

component cities.

Not being included in the enumeration, the Governor is deemed excluded

applying the rule in legal hermeneutics that when the law enumerates, the law
necessarily excludes. On the contrary, local executive power in the province is vested
alone in the Governor.

It has been held that if a Mayor who is out of the country is considered "effectively
absent", the Vice-Mayor should discharge the duties of the mayor during the latter's
absence. This doctrine should equally apply to the Vice-Governor since he is similarly
situated as the Vice-Mayor. Although it is difficult to lay down a definite rule as to what
constitutes absence, yet this term should be reasonably construed to mean "effective"
absence that is, one that renders the officer concerned powerless, for the time being, to
discharge the powers and prerogatives of his office. There is no vacancy whenever the
office is occupied by a legally qualified incumbent. A sensu contrario, there is a vacancy
when there is no person lawfully authorized to assume and exercise at present the duties
of the office. By virtue of the foregoing definition, it can be said that the designation,
appointment or assumption of the Vice-Governor as the Acting Governor creates a
corresponding temporary vacancy in the office of the Vice-Governor during such
contingency. Considering the silence of the law on the matter, the mode of succession
provided for permanent vacancies, under the new Code, in the office of the Vice-
Governor may likewise be observed in the event of temporary vacancy occurring in the
same office.[18] This is so because in the eyes of the law, the office to which he was elected
was left barren of a legally qualified person to exercise the duties of the office of the Vice-
Governor.

27
 Being the Acting Governor, the Vice-Governor cannot continue to simultaneously
exercise the duties of the latter office, since the nature of the duties of the provincial
Governor call for a full-time occupant to discharge them. Such is not only consistent with
but also appears to be the clear rationale of the new Code wherein the policy of
performing dual functions in both offices has already been abandoned. To repeat, the
creation of a temporary vacancy in the office of the Governor creates a corresponding
temporary vacancy in the office of the Vice-Governor whenever the latter acts as
Governor by virtue of such temporary vacancy. This event constitutes an "inability" on
the part of the regular presiding officer (Vice Governor) to preside during the SP sessions,
which thus calls for the operation of the remedy set in Article 49(b) of the Local
Government Code - concerning the election of a temporary presiding officer. The
continuity of the Acting Governor's (Vice-Governor) powers as presiding officer of the
SP is suspended so long as he is in such capacity. Under Section 49(b), "(i)n the event of
the inability of the regular presiding officer to preside at the sanggunian session, the
members present and constituting a quorum shall elect from among themselves a
temporary presiding officer."

7. PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY (PFDA) vs.

CENTRAL BOARD OF ASSESSMENT APPEALS, et al.
(G.R. No. 178030, December 15, 2010)

Facts:

The records show that the Lucena Fishing Port Complex (LFPC) is one of the
fishery infrastructure projects undertaken by the National Government under the
Nationwide Fish Port-Package. Located at Barangay Dalahican, Lucena City, the fish port
was constructed on a reclaimed land with an area of 8.7 hectares more or less, at a total
cost of PHP 296,764,618.77 financed through a loan from the Overseas Economic
Cooperation Fund (OECF) of Japan.

The Philippine Fisheries Development Authority (PFDA) was created by virtue of

P.D. 977 as amended by E.O. 772, with functions and powers to manage, operate, and
develop the Navotas Fishing Port Complex and such other fishing port complexes that

28
may be established by the Authority. Pursuant thereto, Petitioner-Appellant PFDA took
over the management and operation of LFPC in February 1992.

On October 26, 1999, in a letter addressed to PFDA, the City Government of

Lucena demanded payment of realty taxes on the LFPC property for the period from 1993
to 1999 in the total amount of P39,397,880.00. This was received by PFDA on November
24, 1999.

On October 17, 2000 another demand letter was sent by the Government of Lucena
City on the same LFPC property, this time in the amount of P45,660,080.00 covering the
period from 1993 to 2000.

On December 18, 2000 Petitioner-Appellant filed its Appeal before the Local Board
of Assessment Appeals of Lucena City, which was dismissed for lack of merit. On
November 6, 2001 Petitioner-Appellant filed its motion for reconsideration; this was
denied by the Appellee Local Board on December 10, 2001.

PFDA appealed to the CBAA which dismissed the appeal for lack of merit. The
CBAA ruled:

Ownership of LFPC however has, before hand, been handed over to the PFDA, as
provided for under Sec. 11 of P.D. No. 977, as amended, and declared under the Mactan
Cebu International Airport Authority v. Marcos. The allegations therefore that PFDA is not
the beneficial user of LFPC and not a taxable person are rendered moot and academic by
such ownership of PFDA over LFPC.

xxx

PFDA's Charter, P.D. 977, provided for exemption from income tax under Par. 2, Sec. 10
thereof: "(t)he Authority shall be exempted from the payment of income tax". Nothing
was said however about PFDA's exemption from payment of real property tax: PFDA
therefore was not to lay claim for realty tax exemption on its Fishing Port Complexes.
Reading Sec. 40 of P.D. 464 and Sec. 234 of R.A. 7160 however, provided such ground:
LFPC is owned by the Republic of the Philippines, PFDA is only tasked to manage,
operate, and develop the same. Hence, LFPC is exempted from payment of realty tax.

xxx

The ownership of LFPC as passed on by the Republic of the Philippines to PFDA is

bourne by Direct evidence: P.D. 977, as amended (supra). Therefore, Petitioner-
Appellant's claim for realty tax exemption on LFPC is untenable.

PFDA moved for reconsideration, which was likewise denied. On appeal, the

29
Court of Tax Appeals denied PFDA's petition for review holding that PFDA is a
government-owned or controlled corporation, and is therefore subject to the real
property tax imposed by local government units pursuant to Section 232 in relation to
Sections 193 and 234 of the Local Government Code. Furthermore, the Court of Tax
Appeals ruled that PFDA failed to prove that it is exempt from real property tax pursuant
to Section 234 of the Local Government Code or any of its provisions.

Issue: Whether or not petitioner is liable for the real property tax assessed on
the Lucena Fishing Port Complex

Held: Petition GRANTED. The Lucena Fishing Port Complex is EXEMPT from
real property tax imposed by the City of Lucena, and all the real property tax assessments
issued by the City of Lucena on the Lucena Fishing Port Complex managed by Philippine
Fisheries Development Authority is void, EXCEPT for the portions that the Philippine
Fisheries Development Authority has leased to private parties.

The Supreme Court has already ruled that the PFDA is a government
instrumentality and not a government-owned or controlled corporation.

In the 2007 case of Philippine Fisheries Development Authority v. Court of Appeals, the
Court held that PFDA is an instrumentality of the government and is thus exempt from
the payment of real property tax, thus:

The Court rules that the Authority [PFDA] is not a GOCC but an
instrumentality of the national government which is generally exempt
from payment of real property tax. However, said exemption does not
apply to the portions of the IFPC which the Authority leased to private
entities. With respect to these properties, the Authority is liable to pay
property tax. Nonetheless, the IFPC, being a property of public dominion
cannot be sold at public auction to satisfy the tax delinquency.

xxx

Indeed, the Authority is not a GOCC but an instrumentality of the government. The
Authority has a capital stock but it is not divided into shares of stocks. Also, it has no
stockholders or voting shares. Hence it is not a stock corporation. Neither is it a non-stock
corporation because it has no members.

The Authority is actually a national government instrumentality which is defined

as an 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. When the law vests in a government

30
instrumentality corporate powers, the instrumentality does not become a corporation.
Unless the government instrumentality is organized as a stock or non-stock corporation,
it remains a government instrumentality exercising not only governmental but also
corporate powers. (Emphasis supplied)

The exercise of the taxing power of local government units is subject to the
limitations enumerated in Section 133 of the Local Government Code. Under Section
133(o) of the Local Government Code, local government units have no power to tax
instrumentalities of the national government like the PFDA. Thus, PFDA is not liable to
pay real property tax assessed by the Office of the City Treasurer of Lucena City on the
Lucena Fishing Port Complex, except those portions which are leased to private persons
or entities.

Besides, the Lucena Fishing Port Complex is a property of public dominion

intended for public use, and is therefore exempt from real property tax under Section
234(a)11 of the Local Government Code. Properties of public dominion are owned by the
State or the Republic of the Philippines.

The Lucena Fishing Port Complex, which is one of the major infrastructure projects
undertaken by the National Government under the Nationwide Fishing Ports Package,
is devoted for public use and falls within the term "ports." The Lucena Fishing Port
Complex "serves as PFDA's commitment to continuously provide post-harvest
infrastructure support to the fishing industry, especially in areas where productivity
among the various players in the fishing industry need to be enhanced." As property of
public dominion, the Lucena Fishing Port Complex is owned by the Republic of the
Philippines and thus exempt from real estate tax.

8. PETRON CORPORATION, vs. MAYOR TOBIAS M. TIANGCO, and

MUNICIPAL TREASURER MANUEL T. ENRIQUEZ
(G.R. No. 158881, April 16, 2008)

Facts:

Petron Corporation maintains a depot or bulk plant at the Navotas Fishport

Complex in Navotas. Through that depot, it has engaged in the selling of diesel fuels to
vessels used in commercial fishing in and around Manila Bay.

In March 2002, Petron received a letter from the office of Navotas Mayor Toby
Tiangco, wherein the corporation was assessed taxes amounting to P6,259,087.62 "relative

31
to the .. sale of diesel declared by your Navotas Terminal from 1997 to 2001”. The
computation sheets that were attached to the letter made reference to Ordinance 92-03,
or the New Navotas Revenue Code (Navotas Revenue Code), though such enactment
was not cited in the letter itself.

Petron filed a letter-protest to the notice of assessment but the same was denied
by the Navotas Municipal Treasurer. This was followed by a letter from the Mayor
captioned "Final Demand to Pay" with a threat of closure of Petron's operations within
Navotas should there be no payment.

Thus, Petron filed with the Malabon RTC a Complaint for Cancellation of
Assessment for Deficiency Taxes with Prayer for Temporary Restraining Order (TRO).
The quested TRO was not issued by the Malabon RTC upon manifestation of respondents
that they would not proceed with the closure of Petron's Navotas bulk plant until after
the RTC shall have decided the case on the merits. However, while the case was pending
decision, respondents refused to issue a business permit to Petron, thus prompting Petron
to file a Supplemental Complaint with Prayer for Preliminary Mandatory Injunction
against respondents.

The Malabon RTC rendered its Decision dismissing Petron's complaint and
ordering the payment of the assessed amount. The Malabon RTC declared Art. 232(h) of
the IRR void because the LGC purportedly does not contain a provision prohibiting the
imposition of business taxes on petroleum products.

Petron thereafter received a Closure Order from the Mayor, directing Petron to
cease and desist from operating the bulk plant. Petron sought a TRO from the Malabon
RTC, but this was denied.

Issue: Whether or not the local government unit is empowered under the Local
Government Code (the LGC) to impose business taxes on persons or entities engaged
in the sale of petroleum products

Held:

Congress has the constitutional authority to impose limitations on the power to

tax of local government units, and Section 133 of the LGC is one such limitation. Indeed,
the provision is the explicit statutory impediment to the enjoyment of absolute taxing
power by local government units, not to mention the reality that such power is a
delegated power.

Section 133(h) of the LGC reads as follows:

Sec. 133. Common Limitations on the Taxing Powers of Local Government Units. - Unless

32
otherwise provided herein, the exercise of the taxing powers of provinces, cities,
municipalities, and Barangays shall not extend to the levy of the following:
xxx

(h) Excise taxes on articles enumerated under the National Internal Revenue Code,
as amended, and taxes, fees or charges on petroleum products;

Evidently, Section 133 prescribes the limitations on the capacity of local

government units to exercise their taxing powers otherwise granted to them under the
LGC. Apparently, paragraph (h) of the Section mentions two kinds of taxes which cannot
be imposed by local government units, namely:

(i) excise taxes on articles enumerated under the National Internal Revenue Code
[(NIRC)], as amended, and
(ii) taxes, fees or charges on petroleum products."

The power of a municipality to impose business taxes is provided for in Section

143 of the LGC. Under the provision, a municipality is authorized to impose business
taxes on a whole host of business activities. Suffice it to say, unless there is another
provision of law which states otherwise, Section 143, broad in scope as it is, would
undoubtedly cover the business of selling diesel fuels, or any other petroleum product
for that matter.

Nonetheless, Article 232 of the Implementing Rules (IRR) defines with more
particularity the capacity of a municipality to impose taxes on businesses. The
enumeration that follows is generally a positive list of businesses which may be subjected
to business taxes, and paragraph (h) of Article 232 does allow the imposition of local
business taxes "[o]n any business not otherwise specified in the preceding paragraphs
which the sanggunian concerned may deem proper to tax," but subject to this important
qualification, thus: “"xxx provided further, that in line with existing national policy, any
business engaged in the production, manufacture, refining, distribution or sale of oil,
gasoline and other petroleum products shall not be subject to any local tax imposed on
this article.

This ability of local government units to impose business or other local taxes is
ultimately rooted in the 1987 Constitution. Section 5, Article X assures that "[e]ach local
government unit shall have the power to create its own sources of revenues and to levy
taxes, fees and charges," though the power is "subject to such guidelines and limitations
as the Congress may provide."

We can concede that a tax on a business is distinct from a tax on the article itself,
or for that matter, that a business tax is distinct from an excise tax. However, such
distinction is immaterial insofar as the latter part of Section 133(h) is concerned, for the

33
phrase "taxes, fees or charges on petroleum products" does not qualify the kind of taxes,
fees or charges that could withstand the absolute prohibition imposed by the provision.
The absence of such a qualification leads to the conclusion that all sorts of taxes on
petroleum products, including business taxes, are prohibited by Section 133(h). Where
the law does not distinguish, we should not distinguish. Accordingly, the subject tax
assessment is ultra vires and void.

The language of Section 133(h) makes plain that the prohibition with respect to
petroleum products extends not only to excise taxes thereon, but all "taxes, fees and
charges." The earlier reference in paragraph (h) to excise taxes comprehends a wider
range of subjects of taxation: all articles already covered by excise taxation under the
NIRC, such as alcohol products, tobacco products, mineral products, automobiles, and
such non-essential goods as jewelry, goods made of precious metals, perfumes, and
yachts and other vessels intended for pleasure or sports. In contrast, the later reference to
"taxes, fees and charges" pertains only to one class of articles of the many subjects of excise
taxes, specifically, "petroleum products". While local government units are authorized to
burden all such other class of goods with "taxes, fees and charges," excepting excise taxes,
a specific prohibition is imposed barring the levying of any other type of taxes with
respect to petroleum products.

9. REYNALDO O. MALONZO et. Al vs. HON. RONALDO B. ZAMORA et. al

(G.R. No. 137718, July 27, 1999)

Facts:

During the incumbency of then Macario A Asistio, Jr., the Sangguniang

Panlungsod of Caloocan City passed Ordinance No. 0168, S. 1994, authorizing the City
Mayor to initiate proceedings for the expropriation of Lot 26 of the Maysilo Estate
registered in the name of CLT Relaty Development Corporation (CLT). The lot was
intended for low-cost housing and the construction of an integrated bus terminal, parks

34
and playgrounds, and related support facilities and utilities. For this purpose, the said
ordinance appropriated the amount of P35,997,975.00, representing 15% of the fair
market value of Lot 26 that would be required of the city government as a deposit prior
to entry into the premises to be expropriated.

It turned out, however, that the Maysilo Estate straddled the City of Caloocan and
the Municipality of Malabon, prompting CLT to file a special civil action for Interpleader
with Prayer for the Issuance of a Temporary Restraining Order and/or Writ of
Preliminary Injunction on August 6, 1997, before the Caloocan City Regional Trial Court,
branch 124. The complaint specifically sought to restrain the defendants City of Caloocan
and Municipality of Malabon from assessing and collecting real property taxes from CLT
and to interplead and litigate among themselves their conflicting rights to claim such
taxes.

On December 11, 1997, the Caloocan City Sangguniang Panlungsod, under the
stewardship of incumbent Mayor Reynaldo O. Malonzo, enacted Ordinance No. 0246, S.
1997,[5] entitled "AN ORDINANCE AMENDING AND SUPPLEMENTING THE
PROVISIONS OF CITY ORDINANCE NO. 0168, SERIES OF 1994 AND FOR OTHER
RELATED PURPOSES." Under this ordinance, certain amendments were introduced,
foremost of which was the city council's decision to increase the appropriated amount of
P35,997,975.00 in the previous ordinance to P39,352,047.75, taking into account the subject
property's current fair market value.

After failing to conclude a voluntary sale of Lot 26, the city government
commenced on March 23, 1998, a suit for eminent domain against CLT before the
Caloocan City Regional Trial Court, Branch 126, to implement the subject property's
expropriation. Apparently disturbed by this development, the Caloocan City Legal
Officer informed the City Mayor through a letter-memorandum dated April 7, 1998, of
the pending interpleader case covering Lot 26 and that the same was "a 'Prejudicial
Question' which must be resolved first by the proper court in order not to put the
expropriation proceedings in question." He therefore recommended that "pending the
final determination and resolution of the court on the issue (territorial jurisdiction) raised
in Civil Case No. C-18019 before Branch 124 of the Regional Trial Court of Caloocan City,
the expropriation of the subject property be cancelled and/or abandoned."

In the meantime, after the successful re-election bid of Malonzo, Vice-Mayor Oscar
G. Malapitan wrote him a letter dated June 4, 1998, requesting the immediate repair and
renovation of the offices of the incoming councilors, as well as the hiring of additional
personnel and the retention of those currently employed in the offices of the councilors.

Malonzo acted on said letter and endorsed the same to the Office of the City
Treasurer. The latter in turn manifested through a memorandum that "since the
expropriation of CLT Property is discontinued, the appropriation for expropriation of

35
P50 M can be reverted for use in a supplemental budget" stating further that he certifies
"(F)or its reversion since it is not yet obligated, and for its availability for re-appropriation
in a supplemental budget."

Pursuant to the treasurer's certification on the availability of funds to

accommodate Vice-Mayor Malapitan's request, Malonzo subsequently endorsed to the
Sangguniang Panlungsod Supplemental Budget No. 01, Series of 1998, appropriating the
amount of P39,343,028.00. The city council acted favorably on Malonzo's endorsement
and, thus, passed Ordinance No. 0254, S. 1998 entitled "AN ORDINANCE PROVIDING
PAYMENTS FOR APPROVED ITEMS IN THE SUPPLEMENTAL BUDGET NO. 1
CALENDAR YEAR 1998 AND APPROPRIATING CORRESPONDING AMOUNT
WHICH SHALL BE TAKEN FROM THE GENERAL FUND (REVERSION OF
APPROPRIATION-EXPROPRIATION OF PROPERTIES)."

Alleging, however, that petitioners conspired and confederated in willfully

violating certain provisions of the Local Government Code of 1991 (hereinafter the
"Code") through the passage of Ordinance No. 0254, S. 1998, a certain Eduardo Tibor, by
himself and as a taxpayer, filed on July 15, 1998, an administrative complaint for
Dishonesty, Misconduct in Office, and Abuse of Authority against petitioners before the
Office of the President (OP).

After the complaint was given due course, petitioners filed on October 15, 1998
their Consolidated Answer, pointing out, among other things, that said complaint
constituted collateral attack of a validly enacted ordinance whose validity should only be
determined in a judicial forum. They also claimed that the assailed ordinance was enacted
strictly in accordance with Article 417 of the Rules and Regulations Implementing the
Local Government Code of 1991 (hereinafter, the "Rules"), as amended by Administrative
Order No. 47 dated April 12, 1993.

Petitioners, citing Section 326 of the Code and Article 422, Rule XXXIV of the Rules,
filed on February 7, 1999, a Motion to Refer the Case to the Department of Budget and
Management (DBM) on the ground that the DBM has been granted power under the
Code to review ordinances authorizing the annual or supplemental appropriations of,
among other things, highly urbanized cities such as Caloocan City. This motion, however,
remained unresolved.

Two days later, after learning that a certain Teotimo de Guzman Gajudo had filed
an action for the Decalaration of Nullity of Ordinance No. 0254, Series of 1998, before the
Caloocan City Regional Trial Court, petitioners filed with the OP a Manifestation and
Very Urgent Motion to Suspend Proceedings on the ground that the determination of the
validity of said ordinance was a prejudicial question. Likewise, this motion was not acted
upon by the OP.

36
 Thus, without resolving the foregoing motions of petitioners, the OP rendered its
assailed holding respondents Mayor Reynaldo Malonzo, Vice-mayor Oscar G. Malapitan
and Councilors Chito Abel, Benjamin Manlapig, Edgar Erice, Dennis Padilla, Zaldy
Dolatre, Susana Punzalan, Henry Camayo, and Luis Tito Varela, all of Caloocan City,
guilty of misconduct and meted the penalty of SUSPENSION from office.

On even date, the Department of Interior and Local Government (DILG)

administered Macario E. Asistio III's oath of office as Acting Mayor of Caloocan City.

To support their petition, petitioners contend that on account of the filing of an

action for interpleader by CLT, the expropriation proceedings had to be suspended
pending final resolution of the boundary dispute between Malabon and Caloocan City.
Due to his dispute, the P50 million appropriation for the expropriation of properties
under current operating expenses had not been obligated and no security deposit was
forthcoming. It was not at the time a continuing appropriation. This unavoidable
discontinuance of the purpose for which the appropriation was made effectively
converted the earlier expropriation of P39,352,047.75 into savings as defined by law.

They argue further that there is no truth in the allegation that Ordinance No. 0254,
S. 1998 was passed without complying with Sections 50 and 52 of the Local Government
Code requiring that on the first regular session following the election of its members and
within 90 days thereafter, the Sanggunian concerned shall adopt or update its existing
rules of procedure. According to them, the minutes of the session held on July 2, 1998
would reveal that the matter of adoption or updating of the house rules was taken up
and that the council arrived at a decision to create an ad hoc committee to study the
rules.[21] Moreover, even if the Sanggunian failed to approve the new rules of procedure
for the ensuing year, the rules which were applied in the previous year shall be deemed
in force and effect until a new ones are adopted.

With respect to the OP's assumption of jurisdiction, petitioners maintained that

the OP effectively arrogated unto itself judicial power when it entertained a collateral
attack on the validity of Ordinance No. 0254, S. 1998. Furthermore, primary jurisdiction
over the administrative complaint of Tibor should have pertained to the Office of the
Ombudsman, as prescribed by Article XI, Sections 13 and 15 of the Constitution. They
also asserted that the declaration in the OP's decision to the effect that Ordinance No.
0254, S. 1998 was irregularly passed constituted a usurpation of the DBM's power of
review over ordinances authorizing annual or supplemental appropriations of, among
others, highly-urbanized cities like Caloocan City as provided under Section 326 of the
Local Government Code of 1991. In light of said statutory provision, petitioners opined
that respondents should have deferred passing upon the validity of the subject ordinance
until after the DBM shall have made are view thereof.

Finally, petitioners complained that respondents violated the right to equal

37
protection of the laws when Vice-Mayor Oscar Malapitan was placed in the same class as
the rest of the councilors when in truth and in fact, as Presiding Officer of the council, he
did not even vote nor participate in the deliberations. The violation of such right,
according to petitioners, made the OP's decision a nullity. They concluded that the
administrative complaint was anathema to the State's avowed policy of local autonomy
as the threat of harassment suits could become a sword of Damocles hanging over the
heads of local officials.

Contending that the OP decison judiciously applied existing laws and

jurisprudence under the facts obtaining in this case, the Office of the Solicitor General
(OSG)[22] disputed petitioners' claims contending that the appropriation of
P39,352,047.75 contained in an earlier ordinance (Ord. NO. 0246 S. 1997) for the
expropriation of Lot 26 of the Maysilo Estate was a capital outlay as defined under Article
306 (d) of the Code and not current operating expenditures. Since it was a capital outlay,
the same shall continue and remain valid until fully spent or the project is completed, as
provided under Section 322 of the Code.

The OSG asserted further that the filing on August 6, 1997 of an interpleader case
by CLT which owns Lot 26 should not be considered as an unavoidable discontinuance
that automatically converted the appropriated amount into savings which could be used
for supplemental budget. Since the said amount was not transformed into savings and,
hence, no funds were actually available, then the passage of Ordinance No. 0254, S. 1998
which realigned the said amount on a supplemental budget violated Section 321 of the
Code requiring an ordinance providing for a supplemental budget to be supported by
funds actually available as certified by the local treasurer or by new revenue sources.

As regard petitioners' contention that the administrative complaint of Tibor

should have been filed with the Office of the Ombudsman instead of the OP, the OSG
pointed out that under Section 60 and 61 of the Code, the OP is vested with jurisdiction
to discipline, remove or suspend a local elective official for, among other things,
misconduct in office. The Ombudsman has never been vested with original and exclusive
jurisdiction regarding administrative complaints involving government officials.

Issue: Whether or not the Office of the President gravely abused its discretion
when it found petitioners guilty of misconduct for the reason that Ordinance No. 0254,
Series of 1998, was allegedly tainted with irregularity

Held: PETITION GRANTED.

As stated earlier, the OP found petitioners guilty of misconduct on the ground that
they failed to strictly comply with certain provisions of the Code relating to the passage
of the ordinance in question.

38
 It cannot be argued that "the unexpected turn of events" mentioned by the
respondents --- referring to the filing by CLT Realty on August 6, 1997 of a complaint
against the Municipality of Malabon and the City of Caloocan for interpleader amounts
to an unavoidable discontinuance of the expropriation project, and thus effectively
converted the earlier expropriation (sic) of P39,352,047.75 into "SAVINGS". For one, it
was only on March 23, 1998, that the City of Caloocan filed an expropriation case against
CLT Realty (docketed as Special Case No. 548 Regional Trial Court, Caloocan City). If, as
respondents argue, the August 6, 1997 interpleader suit amounted to the unavoidable
discontinuance of the expropriation project, thus effectively turning the earlier
appropriation of P39,352,047.75 into savings, then how explain the March 23, 1998
expropriation case? For another, the records do not indicate --- not even an allegation to
this effect--- that the City of Caloocan has withdrawn the expropriation case
aforementioned which is, ordinarily, the legal route taken in the event of abandonment
of discontinuance of the expropriation project. On the contrary, the city government, as
indicated in its judicial pleadings that now form part of the records, even sought the
issuance of a writ of possession.

this light, it is all too clear that Ordinance No. 0254 was enacted without funds
actually available as required by Section 321 of the Local Government Code of 1991,
which pertinently reads ---

xxxxxxxxx

The words "actually available" are so clear and certain that interpretation is neither
required nor permitted. The application of this legal standard to the facts of this case
compels the conclusion that, there being no reversion, as above-explained, the
supplemental budget was not supported by funds actually available, by funds really in
the custody or possession of the treasurer.

Stated differently, it may be that the City Treasurer of Caloocan, vis-a-vis

Ordinance No. 0254, issued a certificate of availability of funds (Annex "9", answer). The
issuance, however cannot alter the reality that the funds referred to therein are not funds
actually available because they are sourced or are to be sourced from an appropriation
for a capital outlay which cannot be validly reverted or "converted into savings," as
respondents put it, on ground of "unavoidable discontinuance of the expropriation
project."

Adding significance to the conclusion reached herein is the fact that the enactment
by the respondents of the supplemental budget was clearly tainted with undue haste. The
sangguniang panlungsod conducted the three (3) readings (the 1st the 2nd and 3rd) on
the same day, July 2, 1998, its first day of session, adopted it on July 7, 1998, and approved
by respondent mayor on the following day, July 8, 1998, without first having itself
organized and its rules of procedure adopted and without first electing its officers and

39
chairmen and the members of the different committees in accordance with [the]
provisions of the LGC (see Secs. 50 & 52, RA 7162). This undue haste implies willful
failure to respond to or comply with what the law requires which is the essence of bad
faith.

The OP's premise, in our opinion, rests upon an erroneous appreciation of the facts
on record. The OP seems to have been confused as to the figures and amounts actually
involved. A meticulous analysis of the records would show that there is really no basis
to support the OP's contention that the amount of P39,352,047.75 was appropriated under
Ordinance No. 0254, S. 1998, since in truth and in fact, what was appropriated in said
ordinance was the amount of P39,343,028.00. The allocation of P39,352,047.75 is to be
found in the earlier Ordinance No. 0246, S. 1997 which is a separate and distinct
ordinance. This point of clarification is indeed very critical and must be emphasized at
this juncture because any further discussion would have to depend upon the accuracy of
the figures and amounts being discussed. As will be explained below, this faulty
appreciation of the facts by the OP caused it to arrive at the wrong conclusion even if it
would have correctly interpreted and applied the pertinent statutory provisions.

Section 322 of the Code upon which the OP anchored its opinion that petitioners
breached a statutory mandate provides:

SEC 322. Reversion of Unexpended Balances of Appropriations, Continuing

Appropriations.- Unexepended balances of appropriations authorized in the annual
appropriations ordinance shall revert to the unappropriated surplus of the general funds
at the end of the fiscal year and shall not thereafter be available for expenditure except
by subsequent enactment. However, appropriations for capital outlays shall continue and
remain valid until fully spent, reverted or the project is completed. Reversions of
continuing appropriations shall not be allowed unless obligations therefor have been
fully paid or otherwise settled.

Based on the above provision, the OP reached the determination that Ordinance No. 0254,
S. 1998 could not have lawfully realigned the amount of P39,352,047.75 which was
previously appropriated for the expropriation of Lot 26 of the Maysilo Estate since such
appropriation was in the nature of a capital outlay until fully spent, reverted; or the
project for which it is earmarked is completed.

The question, however, is not whether the appropriation of P39,352,047.75 could

fall under the definitions of continuing appropriation and capital outlays, considering
that such amount was not the subject of the realignment made by Ordinance No. 0254,
Series of 1998. Rather, the issue is whether petitioners are liable for their actions in regard
to said ordinance which actually realigned a position of the P50 million which was simply
denominated in a general manner as "Expropriation of Properties" and classified under
"Current Operating Expenditures in the 1998 Annual Budget of Caloocan City. Clearly,

40
these are two distinct amounts separate from each other. Petitioners adequately
explained that the P50 million was NOT appropriated for the purpose of purchasing Lot
26 of the Maysilo Estate but rather for expenses incidental to expropriation such as
relocation of squatters, appraissal fee, expenses for publication, mobilization fees, and
expenses for preliminary studies.This position appears to us more convincing than that
of the interpretation of respondents. The appropriation of P39,352,047.75 under
Ordinance No. 0246, S. 1997 is, we believe, still a subsisting appropriation that has never
been lumped together with other funds to arrive at the sum of P50 million allocated in
the 1998 budget. To be sure, denomination of the P50 million amount as "Expropriation
of Properties" left much to be desired and would have been confused with the
appropriation for expropriation under Ordinance No. 0246, S, 1997, but had respondents
probed deeper into the actual intention for which said amount was allocated, then they
would have reached an accurate characterization of the P50 million.

Bearing in mind, therefore, the fact that it is the P50 million which is now being
realigned, the next logical question to ask is whether such amount is capable of being
lawfully realigned. To this, we answer in the affirmative.

No less than respondents themselves argued, citing Sections 321 and 322 in
relation to Section 306 (d) and (e) of the Code, that realignment shall not be allowed when
what is involved are continuing appropriations or capital outlays. But this argument
becomes clearly inapplicable in view of our disquisition above that the realignment being
complained of had nothing to do with the P39,352,047.75 appropriation for the purchase
of Lot 26 of the Maysilo Estate which is clearly the one that is classifiable as a capital
outlay or a continuing appropriation. The realignment, as we have earlier discussed,
pertained to the P50 million which was classified as "Current Operating Expenditures."
Having been determined as such by the local council upon which legislative discretion is
granted, then the statutory proscription does not, therefore, apply and respondents
cannot insist that it should.

Moreover, in view of the fact that what is being realigned is the P50 million appropriation
which is classified, neither as a capital outlay nor a continuing appropriation, then
respondents' position that Ordinance No. 0254, S. 1998 was enacted without funds
actually available and in violation of Section 321 of the Code likewise falls flat on its face.
This is notwithstanding respondents' assertion that the "unaviodable discontinuance" of
the expropriation proceedings for Lot 26 could not have automatically converted the
appropriated amount therefor into "savings." For one thing, the Code appears silent and
respondents themselves have not shown how unexpected balances of appropriations
revert to the general fund. Likewise, it would be pointless to belabor this matter because
it has been brought out precisely on the assumption that the amount of P39,352,047.75,
has no more leg to stand on, as explained earlier.

The foregoing explanation leads us to the ineluctable conclusion that, indeed,

41
respondents committed grave abuse of discretion. Not only are their reasoning flawed
but are likewise lacking in factual and legal support. Misconduct, being a grave
administrative offense for which petitioners stood charged, cannot be treated cavalierly.
There must be clear and convincing proof on record that petitioners were motivated by
wrongful intent, committed unlawful behavior in relation to their respective offices, or
transgressed some established and definite rules of action. But as we have stressed above,
petitioners were acting within legal bounds. Respondents seem to have turned a blind
eye or simply refused to consider facts that would have enlightened them and exculpated
herein petitioners to such an extent that they arrived at their erroneous conclusion. In
view hereof, this Court is justified in striking down the impugned act of the Office of the
President.

Two motions filed in accordance with procedural rules were ignored by the Office of
the President and left unresolved: first, the February 7, 1999 Motion to Refer the Case to
the DBM and second, the Manifestation and Very Urgent Motion to Suspend Proceedings
on the ground that the determination of the validity of said ordinance was a prejudicial
question. Motions need not necessarily grant what movant is asking for, but they must
be acknowledged and resolved. The Office of the President, being the powerful office that
law and tradition have endowed it, needs no mighty blows on the anvil of authority to
ensure obedience to its pronouncements. It would be more in keeping with its exalted
stature if its actions could safeguard the very freedoms so sedulously nurtured by the
people. Even what it may deem minor lapses, emanating as it does from such an exalted
office, should not be allowed to go unchecked lest our democratic institutions be
gradually eroded.

10. JUDGE TOMAS C. LEYNES vs. THE COMMISSION ON AUDIT et. al.
(G.R. No. 143596, December 11, 2003)

42
Facts:

Petitioner Judge Tomas C. Leynes who, at present, is the presiding judge of the
Regional Trial Court of Calapan City, Oriental Mindoro, was formerly assigned to the
Municipality of Naujan, Oriental Mindoro as the sole presiding judge of the Municipal
Trial Court thereof. As such, his salary and representation and transportation allowance
(RATA) were drawn from the budget of the Supreme Court. In addition, petitioner
received a monthly allowance of P944 from the local funds of the Municipality of Naujan
starting 1984.

On March 15, 1993, the Sangguniang Bayan of Naujan, through Resolution No.
057, sought the opinion of the Provincial Auditor and the Provincial Budget Officer
regarding any budgetary limitation on the grant of a monthly allowance by the
municipality to petitioner judge. On May 7, 1993, the Sangguniang Bayan unanimously
approved Resolution No. 101 increasing petitioner judge's monthly allowance from P944
to P1,600 (an increase of P656) starting May 1993. By virtue of said resolution, the
municipal government (the Municipal Mayor and the Sangguniang Bayan) approved a
supplemental budget which was likewise approved by the Sangguniang Panlalawigan
and the Office of Provincial Budget and Management of Oriental Mindoro. In 1994, the
Municipal Government of Naujan again provided for petitioner judge's P1,600 monthly
allowance in its annual budget which was again approved by the Sangguniang
Panlalawigan and the Office of Provincial Budget and Management of Oriental Mindoro.

On February 17, 1994, Provincial Auditor Salvacion M. Dalisay sent a letter to the
Municipal Mayor and the Sangguniang Bayan of Naujan directing them to stop the
payment of the P1,600 monthly allowance or RATA to petitioner judge and to require the
immediate refund of the amounts previously paid to the latter. She opined that the
Municipality of Naujan could not grant RATA to petitioner judge in addition to the
RATA the latter was already receiving from the Supreme Court. Her directive was based
on the following:

Section 36, RA No. 7645, General Appropriations Act of 1993

Representation and Transportation Allowances. The following officials and those

of equivalent rank as may be determined by the Department of Budget and Management
(DBM) while in the actual performance of their respective functions are hereby granted
monthly commutable representation and transportation allowances payable from the
programmed appropriations provided for their respective offices, not exceeding the rates
indicated below . . .

National Compensation Circular No. 67 dated January 1, 1992, of the Department

of Budget and Management

43
 4. Funding Source: In all cases, commutable and reimbursable RATA
shall be paid from the amount appropriated for the purpose and other
personal services savings of the agency or project from where the officials and
employees covered under this Circular draw their salaries. No one shall be
allowed to collect RATA from more than one source.

Petitioner judge appealed to COA Regional Director Gregoria S. Ong who, however,
upheld the opinion of Provincial Auditor Dalisay and who added that Resolution No.
101, Series of 1993 of the Sangguniang Bayan of Naujan failed to comply with Section 3
of Local Budget Circular No. 53 dated September 1, 1993 outlining the conditions for the
grant of allowances to judges and other national officials or employees by the local
government units (LGUs). Section 3 of the said budget circular provides that:

Sec. 3 Allowances. - LGUs may grant allowances/additional compensation to the

national government officials/employees assigned to their locality at rates authorized by
law, rules and regulations and subject to the following preconditions:

a. That the annual income or finances of the municipality, city or province as

certified by the Accountant concerned will allow the grant of the allowances/additional
compensation without exceeding the general limitations for personal services under
Section 325 of RA 7160;

b. That the budgetary requirements under Section 324 of RA 7160 including the full
requirement of RA 6758 have been satisfied and provided fully in the budget as certified
by the Budget Officer and COA representative in the LGU concerned;

c. That the LGU has fully implemented the devolution of personnel/functions in

accordance with the provisions of RA 7160;

d. That the LGU has already created mandatory positions prescribed in RA 7160;
and

e. That similar allowances/additional compensation are not granted by the national

government to the officials/employees assigned to the LGU.[7]

Petitioner judge appealed the unfavorable resolution of the Regional Director to the
Commission on Audit. In the meantime, a disallowance of the payment of the P1,600
monthly allowance to petitioner was issued. Thus he received his P1,600 monthly
allowance from the Municipality of Naujan only for the period May 1993 to January 1994.

On September 14, 1999, the COA issued its decision affirming the resolution of
Regional Director Gregoria S. Ong:

44
 Issue: Whether or not the Municipality of Naujan, Oriental Mindoro can validly
provide RATA to its Municipal Judge, in addition to that provided by the Supreme
Court.

Held: Petition GRANTED.

Section 447(a)(1)(xi) of RA 7160, the Local Government Code of 1991, provides:

(a) The sangguniang bayan, as the legislative body of the municipality, shall enact
ordinances, approve resolutions and appropriate funds for the general welfare of the
municipality and its inhabitants . . ., and shall:

(1) Approve ordinances and pass resolutions necessary for an efficient and effective
municipal government, and in this connection shall:

xxxxxxxxx

(xi) When the finances of the municipal government allow, provide for additional
allowances and other benefits to judges, prosecutors, public elementary and high school
teachers, and other national government officials stationed in or assigned to the
municipality; (emphasis ours)

Respondent COA, however, contends that the above section has been repealed,
modified or amended by NCC No. 67 dated January 1, 1992, RA 7645 (the General
Appropriations Act of 1993) and LBC No. 53 dated September 1, 1993.[16]

It is elementary in statutory construction that an administrative circular cannot

supersede, abrogate, modify or nullify a statute. A statute is superior to an administrative
circular, thus the latter cannot repeal or amend it. In the present case, NCC No. 67, being
a mere administrative circular, cannot repeal a substantive law like RA 7160.

It is also an elementary principle in statutory construction that repeal of statutes

by implication is not favored, unless it is manifest that the legislature so intended. The
legislature is assumed to know the existing laws on the subject and cannot be presumed
to have enacted inconsistent or conflicting statutes. Respondent COA alleges that Section
36 of RA 7645 (the GAA of 1993) repealed Section 447(a)(l)(xi) of RA 7160 (the LGC of
1991). A review of the two laws, however, shows that this was not so. Section 36 of RA
7645 merely provided for the different rates of RATA payable to national government
officials or employees, depending on their position, and stated that these amounts were
payable from the programmed appropriations of the parent agencies to which the
concerned national officials or employees belonged. Furthermore, there was no other
provision in RA 7645 from which a repeal of Section 447(a) (l)(xi) of RA 7160 could be

45
implied. In the absence, therefore, of any clear repeal of Section 447(a)(l)(xi) of RA 7160,
we cannot presume such intention on the part of the legislature.

Moreover, the presumption against implied repeal becomes stronger when, as in

this case, one law is special and the other is general. The principle is expressed in the
maxim generalia specialibus non derogant, a general law does not nullify a specific or
special law. The reason for this is that the legislature, in passing a law of special character,
considers and makes special provisions for the particular circumstances dealt with by the
special law. This being so, the legislature, by adopting a general law containing
provisions repugnant to those of the special law and without making any mention of its
intention to amend or modify such special law, cannot be deemed to have intended an
amendment, repeal or modification of the latter.

In this case, RA 7160 (the LGC of 1991) is a special law which exclusively deals
with local government units (LGUs), outlining their powers and functions in consonance
with the constitutionally mandated policy of local autonomy. RA 7645 (the GAA of 1993),
on the other hand, was a general law[22] which outlined the share in the national fund of
all branches of the national government. RA 7645 therefore, being a general law, could
not have, by mere implication, repealed RA 7160. Rather, RA 7160 should be taken as the
exception to RA 7645 in the absence of circumstances warranting a contrary conclusion.

The controversy actually centers on the seemingly sweeping provision in NCC No.
67 which states that "no one shall be allowed to collect RATA from more than one source."
Does this mean that judges cannot receive allowances from LGUs in addition to the
RATA from the Supreme Court? For reasons that will hereinafter be discussed, we
answer in the negative.

The pertinent provisions of NCC No. 67 read:

3. Rules and Regulations:

3.1.1 Payment of RATA, whether commutable or reimbursable, shall be in accordance

with the rates prescribed for each of the following officials and employees and those of
equivalent ranks, and the conditions enumerated under the pertinent sections of the
General Provisions of the annual General Appropriations Act (GAA):

xxxxxxxxx

4. Funding Source:

In all cases, commutable and reimbursable RATA shall be paid from the amount
appropriated for the purpose and other personal services savings of the agency or project
from where the officials and employees covered under this Circular draw their salaries.

46
No one shall be allowed to collect RATA from more than one source.

Taking NCC No. 67 as a whole then, what it seeks to prevent is the dual collection
of RATA by a national official from the budgets of "more than one national agency." We
emphasize that the other source referred to in the prohibition is another national agency.
This can be gleaned from the fact that the sentence "no one shall be allowed to collect
RATA from more than one source" (the controversial prohibition) immediately follows
the sentence that RATA shall be paid from the budget of the national agency where the
concerned national officials and employees draw their salaries. The fact that the other
source is another national agency is supported by RA 7645 (the GAA of 1993) invoked by
respondent COA itself and, in fact, by all subsequent GAAs for that matter, because the
GAAs all essentially provide that (1) the RATA of national officials shall be payable from
the budgets of their respective national agencies and (2) those officials on detail with
other national agencies shall be paid their RATA only from the budget of their parent
national agency:

Section 36, RA 7645, General Appropriations Act of 1993:

Representation and Transportation Allowances. The following officials and those of

equivalent rank as may be determined by the Department of Budget and Management
(DBM) while in the actual performance of their respective functions are hereby granted
monthly commutable representation and transportation allowances payable from the
programmed appropriations provided for their respective offices, not exceeding the rates
indicated below, which shall apply to each type of allowance:

xxxxxxxxx

Officials on detail with other offices, including officials of the Commission of

Audit assigned to serve other offices or agencies, shall be paid the allowance herein
authorized from the appropriations of their parent agencies. (emphasis ours)

Clearly therefore, the prohibition in NCC No. 67 is only against the dual or
multiple collection of RATA by a national official from the budgets of two or more
national agencies. Stated otherwise, when a national official is on detail with another
national agency, he should get his RATA only from his parent national agency and not
from the other national agency he is detailed to.

Since the other source referred in the controversial prohibition is another national
agency, said prohibition clearly does not apply to LGUs like the Municipality of Naujan.
National agency of course refers to the different offices, bureaus and departments
comprising the national government. The budgets of these departments or offices are
fixed annually by Congress in the General Appropriations Act.[26] An LGU is obviously
not a national agency. Its annual budget is fixed by its own legislative council

47
(Sangguniang Bayan, Panlungsod or Panlalawigan), not by Congress. Without doubt,
NCC No. 67 does not apply to LGUs.

The prohibition in NCC No. 67 is in fact an administrative tool of the DBM to

prevent the much-abused practice of multiple allowances, thus standardizing the grant
of RATA by national agencies. Thus, the purpose clause of NCC No. 67 reads:

This Circular is being issued to ensure uniformity and consistency of actions on

claims for representation and transportation allowance (RATA) which is primarily
granted by law to national government officials and employees to cover expenses
incurred in the discharge or performance of their duties and responsibilities.

By no stretch of the imagination can NCC No. 67 be construed as nullifying the

power of LGUs to grant allowances to judges under the Local Government Code of 1991.
It was issued primarily to make the grant of RATA to national officials under the national
budget uniform. In other words, it applies only to the national funds administered by the
DBM, not the local funds of LGUs.

To rule against the power of LGUs to grant allowances to judges as what

respondent COA would like us to do will subvert the principle of local autonomy
zealously guaranteed by the Constitution. The Local Government Code of 1991 was
specially promulgated by Congress to ensure the autonomy of local governments as
mandated by the Constitution. By upholding, in the present case, the power of LGUs to
grant allowances to judges and leaving to their discretion the amount of allowances they
may want to grant, depending on the availability of local funds, we ensure the genuine
and meaningful local autonomy of LGUs.

We now discuss the next contention of respondent COA: that the resolution of the
Sangguniang Bayan of Naujan granting the P1,600 monthly allowance to petitioner judge
was null and void because it failed to comply with LBC No. 53 dated September 1, 1993:

Sec. 3 Allowances. - LGUs may grant allowances/additional compensation to the

national government officials/employees assigned to their locality at rates authorized by
law, rules and regulations and subject to the following preconditions:

a. That the annual income or finances of the municipality, city or province as certified by
the Accountant concerned will allow the grant of the allowances/additional
compensation without exceeding the general limitations for personal services under
Section 325 of RA 7160;

b. That the budgetary requirements under Section 324 of RA 7160 including the full
requirement of RA 6758 have been satisfied and provided fully in the budget as certified
by the Budget Officer and COA representative in the LGU concerned;

48
c. That the LGU has fully implemented the devolution of personnel/functions in
accordance with the provisions of RA 7160;

d. That the LGU has already created mandatory positions prescribed in RA 7160.

e. That similar allowances/additional compensation are not granted by the national

government to the officials/employees assigned to the LGU.

Though LBC No. 53 of the DBM may be considered within the ambit of the
President's power of general supervision over LGUs, we rule that Section 3, paragraph
(e) thereof is invalid. RA 7160, the Local Government Code of 1991, clearly provides that
provincial, city and municipal governments may grant allowances to judges as long as
their finances allow. Section 3, paragraph (e) of LBC No. 53, by outrightly prohibiting
LGUs from granting allowances to judges whenever such allowances are (1) also granted
by the national government or (2) similar to the allowances granted by the national
government, violates Section 447(a)(l)(xi) of the Local Government Code of 1991. As
already stated, a circular must conform to the law it seeks to implement and should not
modify or amend it.

Moreover, by prohibiting LGUs from granting allowances similar to the

allowances granted by the national government, Section 3 (e) of LBC No. 53 practically
prohibits LGUs from granting allowances to judges and, in effect, totally nullifies their
statutory power to do so. Being unduly restrictive therefore of the statutory power of
LGUs to grant allowances to judges and being violative of their autonomy guaranteed by
the Constitution, Section 3, paragraph (e) of LBC No. 53 is hereby declared null and void.

Paragraphs (a) to (d) of said circular, however, are valid as they are in accordance
with Sections 324[31] and 325[32] of the Local Government Code of 1991; these
respectively provide for the budgetary requirements and general limitations on the use
of provincial, city and municipal funds. Paragraphs (a) to (d) are proper guidelines for
the condition provided in Sections 447, 458 and 468 of the Local Government Code of
1991 that LGUs may grant allowances to judges if their funds allow.

Guidelines (a) to (d) were met when the Sangguniang Panlalawigan of Oriental
Mindoro approved Resolution No. 101 of the Sangguniang Bayan of Naujan granting the
P1,600 monthly allowance to petitioner judge as well as the corresponding budgets of the
municipality providing for the said monthly allowance to petitioner judge. Under Section
327 of the Local Government Code of 1991, the Sangguniang Panlalawigan was
specifically tasked to review the appropriation ordinances of its component
municipalities to ensure compliance with Sections 324 and 325 of the Code. Considering
said duty of the Sangguniang Panlalawigan, we will assume, in the absence of proof to
the contrary, that the Sangguniang Panlalawigan of Oriental Mindoro performed what

49
the law required it to do, that is, review the resolution and the corresponding budgets of
the Municipality of Naujan to make sure that they complied with Sections 324 and 325 of
the Code. We presume the regularity of the Sangguniang Panlalawigan's official act.

Moreover, it is well-settled that an ordinance must be presumed valid in the absence

of evidence showing that it is not in accordance with the law. Respondent COA had the
burden of proving that Resolution No. 101 of the Sangguniang Bayan of Naujan did not
comply with the condition provided in Section 447 of the Code, the budgetary
requirements and general limitations on the use of municipal funds provided in Sections
324 and 325 of the Code and the implementing guidelines issued by the DBM, i.e.,
paragraphs (a) to (d), Section 3 of LBC No. 53. Respondent COA also had the burden of
showing that the Sangguniang Panlalawigan of Oriental Mindoro erroneously approved
said resolution despite its non-compliance with the requirements of the law. It failed to
discharge such burden. On the contrary, we find that the resolution of the Municipality
of Naujan granting the P1,600 monthly allowance to petitioner judge fully complied with
the law. Thus, we uphold its validity.

In sum, we hereby affirm the power of the Municipality of Naujan to grant the
questioned allowance to petitioner Judge Leynes in accordance with the constitutionally
mandated policy of local autonomy and the provisions of the Local Government Code of
1991. We also sustain the validity of Resolution No. 101, Series of 1993, of the
Sangguniang Bayan of Naujan for being in accordance with the law.

50
 11. CITY OF IRIGA, Petitioner, vs. CAMARINES SUR III ELECTRIC
COOPERATIVE, INC. (CASURECO III)
(G.R. No. 192945, September 5, 2012)

Facts:

The Court reiterates that a franchise tax is a tax levied on the exercise by an entity
of the rights or privileges granted to it by the government. In the absence of a clear and
subsisting legal provision granting it tax exemption, a franchise holder, though non-
profit in nature, may validly be assessed franchise tax by a local government unit.

CASURECO III is an electric cooperative duly organized and existing by virtue of

Presidential Decree (PD) 2694 as amended, and registered with the National
Electrification Administration (NEA). It is engaged in the business of electric power
distribution to various end-users and consumers within the City of Iriga and the
municipalities of Nabua, Bato, Baao, Buhi, Bula and Balatan of the Province of Camarines
Sur, otherwise known as the "Rinconada area."

Sometime in 2003, petitioner City of Iriga required CASURECO III to submit a

report of its gross receipts for the period 1997-2002 to serve as the basis for the
computation of franchise taxes, fees and other charges. The latter complied and was
subsequently assessed taxes.

On January 7, 2004, petitioner made a final demand on CASURECO III to pay the
franchise taxes due for the period 1998-2003 and real property taxes due for the period
1995-2003. CASURECO III, however, refused to pay said taxes on the ground that it is an
electric cooperative provisionally registered with the Cooperative Development
Authority (CDA), and therefore exempt from the payment of local taxes.

On March 15, 2004, petitioner filed a complaint for collection of local taxes against
CASURECO III before the RTC, citing its power to tax under the Local Government Code
(LGC) and the Revenue Code of Iriga City.

It alleged that as of December 31, 2003, CASURECO III's franchise and real
property taxes liability, inclusive of penalties, surcharges and interest, amounted to P
17,037,936.89 and P 916,536.50 respectively.

51
 In its Answer, CASURECO III denied liability for the assessed taxes, asserting that
the computation of the petitioner was erroneous because it included 1) gross receipts
from service areas beyond the latter's territorial jurisdiction; 2) taxes that had already
prescribed; and 3) taxes during the period when it was still exempt from local
government tax by virtue of its then subsisting registration with the CDA.

The RTC ruled that the real property taxes due for the years 1995-1999 had already
prescribed in accordance with Section 194 of the LGC. However, it found CASURECO III
liable for franchise taxes for the years 2000-2003 based on its gross receipts from Iriga City
and the Rinconada area on the ground that the "situs of taxation is the place where the
privilege is exercised."

Only CASURECO III appealed from the RTC Decision, questioning its liability for
franchise taxes.

The CA found CASURECO III to be a non-profit entity, not falling within the
purvie w of "businesses enjoying a franchise" pursuant to Section 137 of the LGC. It
explained that CASURECO III's non-profit nature is diametrically opposed to the concept
of a "business," which, as defined under Section 131 of the LGC, is a "trade or commercial
activity regularly engaged in as a means of livelihood or with a view to profit."
Consequently, it relieved CASURECO III from liability to pay franchise taxes.

Petitioner moved for reconsideration, which the CA denied for being filed a day
late, hence, the instant petition.

Issues:
(1) Whether or not an electric cooperative registered under PD 269 but not under RA
6938 is liable for the payment of local franchise taxes; and

(2) Whether or not the situs of taxation is the place where the franchise holder
exercises its franchise regardless of the place where its services or products are
delivered.

Held: Petition GRANTED.

(1) CASURECO III is not exempt from payment of franchise tax.

PD 269, which took effect on August 6, 1973, granted electric cooperatives registered
with the NEA, like CASURECO III, several tax privileges, one of which is exemption from
the payment of "all national government, local government and municipal taxes and fees,
including franchise, filing, recordation, license or permit fees or taxes."

52
 On March 10, 1990, Congress enacted into law RA 6938, otherwise known as the
"Cooperative Code of the Philippines," and RA 6939 creating the CDA. The latter law
vested the power to register cooperatives solely on the CDA, while the former provides
that electric cooperatives registered with the NEA under PD 269 which opt not to register
with the CDA shall not be entitled to the benefits and privileges under the said law.

On January 1, 1992, the LGC took effect, and Section 193 thereof withdrew tax
exemptions or incentives previously enjoyed by "all persons, whether natural or juridical,
including government-owned or controlled corporations, except local water districts,
cooperatives duly registered under R.A. No. 6938, non-stock and non-profit hospitals and
educational institutions."

In Philippine Rural Electric Cooperatives Association, Inc. (PHILRECA) v. The

Secretary, Department of Interior and Local Government, the Court held that the tax
privileges granted to electric cooperatives registered with NEA under PD 269 were
validly withdrawn and only those registered with the CDA under RA 6938 may continue
to enjoy the tax privileges under the Cooperative Code.

Therefore, CASURECO III can no longer invoke PD 269 to evade payment of local
taxes. Moreover, its provisional registration with the CDA which granted it exemption
for the payment of local taxes was extended only until May 4, 1992. Thereafter, it can no
longer claim any exemption from the payment of local taxes, including the subject
franchise tax.

Indisputably, petitioner has the power to impose local taxes. The power of the local
government units to impose and collect taxes is derived from the Constitution itself
which grants them "the power to create its own sources of revenues and to levy taxes,
fees and charges subject to such guidelines and limitation as the Congress may provide."
This explicit constitutional grant of power to tax is consistent with the basic policy of local
autonomy and decentralization of governance. With this power, local government units
have the fiscal mechanisms to raise the funds needed to deliver basic services to their
constituents and break the culture of dependence on the national government. Thus,
consistent with these objectives, the LGC was enacted granting the local government
units, like petitioner, the power to impose and collect franchise tax, to wit:

SEC. 137. Franchise Tax. - Notwithstanding any exemption granted by any law or
other special law, the province may impose a tax on businesses enjoying a franchise, at a
rate not exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts for
the preceding calendar year based on the incoming receipt, or realized, within its
territorial jurisdiction. xxx

SEC. 151. Scope of Taxing Powers. - Except as otherwise provided in this Code, the
city, may levy the taxes, fees, and charges which the province or municipality may

53
impose: Provided, however, That the taxes, fees and charges levied and collected by
highly urbanized and independent component cities shall accrue to them and distributed
in accordance with the provisions of this Code. The rates of taxes that the city may levy
may exceed the maximum rates allowed for the province or municipality by not more
than fifty percent (50%) except the rates of professional and amusement taxes.

To be liable for local franchise tax, the following requisites should concur: (1) that
one has a "franchise" in the sense of a secondary or special franchise; and (2) that it is
exercising its rights or privileges under this franchise within the territory of the pertinent
local government unit.

There is a confluence of these requirements in the case at bar. By virtue of PD 269,

NEA granted CASURECO III a franchise to operate an electric light and power service
for a period of fifty (50) years from June 6, 1979, and it is undisputed that CASURECO III
operates within Iriga City and the Rinconada area. It is, therefore, liable to pay franchise
tax notwithstanding its non-profit nature.

(2) CASURECO III is liable for franchise tax on gross receipts within Iriga City and
Rinconada area.

It should be stressed that what the petitioner seeks to collect from CASURECO III
is a franchise tax, which as defined, is a tax on the exercise of a privilege. As Section 137
of the LGC provides, franchise tax shall be based on gross receipts precisely because it is
a tax on business, rather than on persons or property. Since it partakes of the nature of an
excise tax the situs of taxation is the place where the privilege is exercised, in this case in
the City of Iriga, where CASURECO III has its principal office and from where it operates,
regardless of the place where its services or products are delivered. Hence, franchise tax
covers all gross receipts from Iriga City and the Rinconada area.

54
 12. ATTY. RUDY M. VILLARENA, vs. THE COMMISSION ON AUDIT
(G.R. Nos. 145383-84, August 6, 2003)

Facts:

Petitioner was found guilty by the Commission on Audit (COA) of neglect of duty,
simple misconduct and violation of reasonable office rules and regulations. To challenge
this decision, he filed the instant consolidated Special Civil Actions for Certiorari and
Prohibition.

Petitioner, Atty. Rudy M. Villareña, is a State Auditor IV of the COA and assumed
the position of Auditor of Marikina on December 1, 1994. He later became City Auditor
when Marikina became a city on December 6, 1996. Pursuant to Republic Act No. 7160,
the Local Government Code of 1991, the legislative body of Marikina passed Ordinance
No. 21, series of 1995; Ordinance No. 9, series of 1996; and Ordinance No. 200, series of
1996, which approved the budget allocations for Marikina for calendar years 1995, 1996
and 1997, respectively. Allotted in each of these were allowances and benefits granted to
COA personnel assigned to Marikina, including petitioner.

In line with COA Assignment Orders No. 97-006 and No. 97-051, a Special Audit
Team was constituted by the COA to conduct an examination of the cash and accounts of
the City Treasurer of Marikina, as well as to audit selected financial transactions of the
city. In the course of the examination and audit, the Special Audit Team learned of the
allowances given to COA personnel by the City of Marikina and it declared these to have
been received in violation of Section 18 of Republic Act No. 6758, An Act Prescribing a
Revised Compensation and Position Classification System in the Government and for
Other Purposes, COA Memorandum 89-584 and COA Chairman's Indorsement dated
March 23, 1995.

Section 18 of Republic Act No. 6758 provides the following:

SECTION 18. Additional Compensation of Commission on Audit Personnel and

of Other Agencies. In order to preserve the independence and integrity of the

55
Commission on Audit (COA), its officials and employees are prohibited from receiving
salaries, honoraria, bonuses, allowances or other emoluments from any government
entity, local government unit, and government-owned and controlled corporations, and
government financial institution, except those compensation paid directly by the COA
out of its appropriations and contributions.

Government entities, including government-owned or controlled corporations

including financial institutions and local government units are hereby prohibited from
assessing or billing other government entities, government-owned or controlled
corporations including financial institutions or local government units for services
rendered by its officials and employees as part of their regular functions for purposes of
paying additional compensation to said officials and employees.

COA Memorandum No. 89-584 states the following:

To ensure the rationality in the payment and receipt of allowances and other forms
of fringe benefits by auditing personnel, it is hereby directed that effective January 2,
1989, the receipt of all forms of additional benefits, honorarium, allowances or other
forms of compensation by auditing personnel of such allowances and other fringe
benefits shall be considered illegal, and shall subject the employee concerned to
administrative disciplinary action.

Lastly, the pertinent portion of COA Chairman's Indorsement of March 23, 1995
reads as follows:

Request of Mr. Arnulf E. Lancin, City Auditor, Cagayan de Oro, for authority to
collect allowances in the form of honoraria chargeable against local funds, which is
denied for want of merit.

Thus, in the Special Audit Team's Confidential Report dated June 19, 1997, it was
recommended that the COA personnel should be ordered to stop receiving additional
fringe benefits, honoraria, allowances and other forms of compensation from the City of
Marikina and to refund all those previously received. The Confidential Report further
stated that under COA Memorandum No. 89-584 the COA may apply appropriate
administrative sanctions to the concerned COA personnel.

On the basis of the Report, on July 15, 1997, a formal charge was initiated against
petitioner for grave misconduct, gross neglect of duty, and conduct grossly prejudicial to
the best interest of the service and/or violation of office rules and regulations.

In his Answer, petitioner averred that he received the benefits fully believing that
Section 18 of Republic Act No. 6758 and COA Memorandum 89-584 have been repealed
and/or superseded by the Local Government Code which authorizes local government

56
units to give additional compensation to national government officials.

On August 4, 1998, COA Decision No. 98-359 was rendered finding petitioner
guilty of neglect of duty, simple misconduct and violation of reasonable office rules and
regulations. Within the reglementary period, petitioner moved for reconsideration of the
decision. The motion was partially granted in that the fine was reduced to one month and
one day's salary, but the decision was affirmed in all other respects.

Issue: Whether or not the petitioner validly received the allowances, honoraria
and benefits by virtue of the ordinances enacted by the legislative council of the City
of Marikina

Held: Petition DENIED. The COA Decision is affirmed finding petitioner guilty
of neglect of duty, simple misconduct and violation of reasonable office rules and
regulations.

It is significant to note that petitioner cited only paragraph (f) of the Local
Government Code's section on repeal and left out the other provisions that meticulously
enumerate specific laws or parts thereof that were repealed or modified. The entire
section reads as follows:

SECTION 534. Repealing Clause. (a) Batas Pambansa Blg. 337, otherwise known
as the Local Government Code, Executive Order No. 112 (1987), and Executive Order No.
319 (1988) are hereby repealed.

(b) Presidential Decree Nos. 684, 1191, 1508 and such other decrees, orders,
instructions, memoranda and issuances related to or concerning the barangay are hereby
repealed.

(c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939 regarding
hospital fund; Section 3, a (3) and b (2) of Republic Act No. 5447 regarding the Special
Education Fund; Presidential Decree No. 144 as amended by Presidential Decree Nos. 559
and 1741; Presidential Decree No. 231 as amended; Presidential Decree No. 436 as
amended by Presidential Decree No. 558; and Presidential Decree Nos. 381, 436, 464, 477,
526, 632, 752, and 1136 are hereby repealed and rendered of no force and effect.

(d) Presidential Decree No. 1594 is hereby repealed insofar as it governs locally-
funded projects.

(e) The following provisions are hereby repealed or amended insofar as they are
inconsistent with the provisions of this Code: Sections 2, 16 and 29 of Presidential Decree
No. 704; Section 12 of Presidential Decree No. 87, as amended; Section 52, 53, 66, 67, 68,
69, 70, 71, 72, 73, and 74 of Presidential Decree No. 463, as amended; and Section 16 of

57
Presidential Decree No. 972, as amended, and

(f) All general and special laws, acts, city charters, decrees, executive orders,
proclamations and administrative regulations, or part or parts thereof which are
inconsistent with any of the provisions of this Code are hereby repealed or modified
accordingly.

Since Republic Act No. 6758 was not expressly repealed by Republic Act No. 7160,
has it been impliedly repealed?

Implied repeals are not lightly presumed. The rule is that instead of placing one
law against another, in a destructive confrontation, courts must exert every effort to
reconcile the statutes.[9] Accordingly, in case of a conflict between Republic Act No. 6758
and the Local Government Code, the proper action is not to uphold one and annul the
other, but, if possible, to give effect to both by harmonizing the two.

In Magtajas v. Pryce,[10] a conflict arose between the Local Government Code and
Presidential Decree No. 1869, the charter of PAGCOR. In that case, the Sanggunian
Panlungsod of Cagayan de Oro passed an ordinance revoking the business permits of
establishments engaged in casino operations in its jurisdiction. It claimed that although
PAGCOR is empowered by its charter to establish and operate casinos, local councils are
permitted by the Local Government Code to prohibit all forms of gambling within their
territories. Its main argument was that the Local Government Code, which is a later
enactment, had the effect of modifying the charter of PAGCOR. The Court, instead of
annulling one law and upholding the other, harmonized both laws by declaring
Presidential Decree No. 1869 as an exception to the Local Government Code.

In the case at bar, the two statutes can easily be harmonized. Under the Local
Government Code, local legislative bodies may provide for additional allowances and
other benefits to national government officials stationed or assigned to their municipality
or city. This authority, however, is not without limitation, as it does not include the grant
of benefits that runs in conflict with other statutes, such as Republic Act No. 6758. The
exception stated in these laws must be read together with the Local Government Code,
so as to make both the Code and these laws equally effective and mutually
complementary.

By allocating a portion of the local budget for financial assistance to the auditing
office of Marikina City, the legislative council of Marikina acted in excess of its powers
under the Local Government Code. Consequently, Ordinance No. 21, series of 1995;
Ordinance No. 9, series of 1996; and Ordinance No. 200, series of 1996, insofar as these
contravene the prohibition contained in Republic Act No. 6758, are declared invalid.

Indeed, there are valid reasons to treat COA officials differently from other

58
national government officials. The primary function of an auditor is to prevent irregular,
unnecessary, excessive or extravagant expenditures of government funds. To be able
properly to perform their constitutional mandate, COA officials need to be insulated from
unwarranted influences, so that they can act with independence and integrity. As
extensively discussed in Tejada v. Domingo, the prohibition under Section 18 of Republic
Act No. 6758 was designed precisely to serve this purpose. The removal of the temptation
and enticement the extra emoluments may provide is designed to be an effective way of
vigorously and aggressively enforcing the Constitutional provision mandating the COA
to prevent or disallow irregular, unnecessary, excessive, extravagant, or unconscionable
expenditures or uses of government funds and properties.

Stated otherwise, the COA personnel who have nothing to look forward to or
expect from their assigned offices in terms of extra benefits, would have no reason to
accord special treatment to the latter by closing their eyes to irregular or unlawful
expenditures or use of funds or property, or conducting a perfunctory audit. The law
realizes that such extra benefits could diminish the personnel's seriousness and
dedication in the pursuit of their assigned tasks, affect their impartiality and provide a
continuing temptation to ingratiate themselves to the government entity, local
government unit, government-owned and controlled corporations and government
financial institutions, as the case may be. In the end then, they would become ineffective
auditors.

Next, petitioner alleges good faith in receiving the amounts from the City of
Marikina. This argument is not relevant, considering that petitioner was found guilty of
neglect of duty, simple misconduct and violation of reasonable office rules and
regulations. These infractions can be committed even if the offender was in good faith.

59