Bayalan, Alfierri E.

Law 154 III-C

Digest 1

Alvarez v. Guingona, Jr. Date: 31 January 1996 Ponente: Hermosisima, J. Facts: HB 8817 entitled An Act Converting the Municipality of Santiago into an Independent Component City to be known as the City of Santiago was filed in the HR on 18 April 1993. After public hearings were conducted, it was later passed on Second Reading and approved on the Third Reading. It was then transmitted to the Senate. In the meantime, however, while the HR has just started the public hearing on HB 8817, SB 1243 entitled An Act Converting the Municipality of Santiago into an Independent Component City to be Known as the City of Santiago was filed in the Senate on 19 May 1993. It was only after the transmittal to the Senate of HB 8817 that said body s Committee on Local Government conducted public hearing on SB 1243. What subsequently became Committee Report 378 was passed and approved by the Senate and later, together with the amendments proposed by the Senate, approved by the HR. The enrolled bull was then signed by the Chief Executive as RA 7730. A great majority of the registered voters of Santiago voted in favor of the conversion of their municipality into a city in a plebiscite on RA 7730. Petitioners herein then instituted this action questioning the validity of RA 7730 Issues: (1)WON the IRAs are to be included in computing the average annual income of a municipality for purposes of its conversion into an independent component city. (2) WON RA 7720 could be said to have originated in the HR considering that the Senate passed SB 1243, its own version of HB 8817. Held: (1) Yes, to be included. (2) Yes.

Ratio: (1) In computing the average annual income of the municipality of Santiago for the last 2 consecutive years prior its conversion into the city, contrary to what petitioners did, the IRAs should be included in the total income for said period (Average annual income: sum of income for years 1991 and 1992 divided by 2, without deducting IRAs, at 1991 constant prices). As certified by the Bureau of Local Government Finance of the DOF, Santiago s average annual income for the period in question was P20, 974,581.97, thus meeting the P20 million requirement (in LGC 450). A Local Government Unit is a political subdivision of the State which is constituted by law and possessed of substantial control over its own affairs. Remaining to be an intra sovereign subdivision of one sovereign nation, but not intended, however, to be an imperium in imperio, the local government unit is autonomous in the sense that it is given more powers, authority, responsibilities and resources. Power which used to be highly centralized in Manila, is thereby deconcentrated, enabling especially the peripheral local government units to develop not only at their own pace and discretion but also with their own resources and assets. (Citations omitted) Funds from local taxes, URAs and national wealth utilization proceeds form part of the general fund of the LGU concerned which are used to finance its operations subject to required expenditures provided in the LGC and its IRR. IRAs are items of income as they are part of the gross accretion of funds of an LGU. IRAs regularly and automatically accrue to the LGU s treasury without further action required of the unit. The DOF correctly defined annual income of the LGY as revenues and receipts realized by provinces, cities and municipalities from regular sources of the Local General Fund including the internal revenue allotment and other shares provided for in Sections 284, 290 and 291 of the Code, but exclusive of non-recurring receipts, such as other national aids, grants, financial assistance, loan proceeds, sales of fixed assets, and similar others."

Bayalan, Alfierri E.

Law 154 III-C

Digest 1

(2) RA 7720 originated in the HR and thus was enacted in compliance with Const., Art.VI, 24. HB 8817 was filed in the HR on 18 April 1993 first before SB 1243 was filed in the Senate on 19 May 1993. Hb 8817 was thus the bull that initiated the legislative process that resulted in the enactment of RA 7720. Further, HB 8817 was already approved and transmitted to the Senate when the Senate Committee on Local Government conducted its public hearing on the said HB, showing that Senate held in abeyance any action on SB 1243 until it received HB 8817. Basco v. PAGCOR Date: 14 May 1991 Ponente: Paras, J. Facts: PD 1869, the PAGCOR Charter, was enacted with the objective of regulating and centralizing all games of chance authorized by existing franchise or permitted by law. PAGCOR was given territorial jurisdiction over the Philippines. It became the third largest source of government revenue, next to the BIR and the Bureau of Customs. PAGCOR, as of 31 December 1989 was employing 4,494 employees directly supporting the livelihood of their families. Petitioners herein, however, contends that the PAGCOR Charter, specifically its exemption clause (PD 1869, 13, 21) which exempts PAGCOR from the payment of any tax of any kind of form, income, or otherwise, as well as fees, charges or levies of whatever nature, whether National or Local constitutes a waiver of the right of the City of Manila

to impose taxes and legal fees and that it is violative of the principle of local autonomy. Issue: WON the exemption clause in the PAGCOR Charter constitutes a waiver of the right of the City of Manila to impose taxes and legal fees and is violative of the principle of local autonomy. Held: No. Ratio: First, the City of Manila as a mere municipal corporation has no inherent right to impose taxes. Its charter is subject to the control of Congress it being a mere creature of said body. Next, Manila s power to impose license fees on gambling has already been revoked by PD 771 which vested such power exclusively on the NG. Local governments also do not have the power to tax instrumentalities of the NG, including PAGCOR which is a GOCC with an original charter (PD 1869). All of PAGCOR s shares of stocks are owned by the NG. The Local Autonomy clause in Const. Art.X, 52 is likewise not violated as the power of LGUs to impose taxes and fees is always subject to limitations which Congress may provide by law. As PD 1869 remains an operative law until amended, repealed or revoked, its exemption clause stands as an exemption to the exercise of LGUs of their power to impose taxes and fees. In addition, the principle of local autonomy simply means decentralization which does not make an LGU an imperium in imperio. What state powers are to be decentralized remains a matter of policy concerning wisdom and thus is a political question.
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(2) Income and other taxes. (a) Franchise Holder: No tax of any kind or form, income or otherwise as well as fees, charges or levies of whatever nature, whether National or Local, shall be assessed and collected under this franchise from the Corporation; nor shall any form of tax or charge attach in any way to the earnings of the Corporation, except a franchise tax of five (5%) percent of the gross revenues or earnings derived by the Corporation from its operations under this franchise. Such tax shall be due and payable quarterly to the National Government and shall be in lieu of all kinds of taxes, levies, fees or assessments of any kind, nature or description, levied, established or collected by any municipal, provincial or national government authority

5 Each local government unit shall have the power to create its own source of revenue and to levy taxes, fees, and other charges subject to such guidelines and limitation as the congress may provide, consistent with the basic policy on local autonomy. Such taxes, fees and charges shall accrue exclusively to the local government.

Bayalan, Alfierri E.

Law 154 III-C

Digest 1

Vilas v. City of Manila Date: 3 April 1911 Ponente: Lurton, J. (SCOTUS) Facts: Plaintiffs-in-error Verisimo Vilas, Esperanza Trigas and Ricardo Aguado had different claims against the ayuntamiento of Manila (under the Spanish Crown), which were incurred under its charter which granted it power to incur debts for municipal purposes. The Philippines was later ceded by Spain to the US for $20 million. A new charter of Manila was then enacted but such does not have reference to the obligations or contracts of the old city. The argument in favor of defendant-in-error City of Manila was that the ayuntamiento of Manila ipso facto disappeared for all purposes upon the change of sovereignty from the Spanish Crown to the United States. This was drawn from the analogy to the doctrine in agency that the agency between the principal and the agent is ended upon the death of the principal. SC of the Philippines: dismissed cases of herein plaintiffs. Issue: WON the City of Manila, as ceded by Spain to the US, is liable for the obligations incurred prior to the cession to the US. Held: Yes. Ratio: The argument for defendant-in-error does not consider the dual character of municipal corporations. They exercise powers which are governmental and are of a private or business character. In the former, a municipal corporation is a governmental subdivision exercising a part of the sovereignty of the state delegated to it. In the latter character, it functions for the community in the administration of local affairs not included in the sphere of public purposes.

Given this dual character of municipal corporations, there is no reason to conclude of their total dissolution after the military occupation and territorial cession in this case. There is total abrogation of former political relations of the inhabitants of the ceded regions and that all laws in force in conflict with the political character, constitution or institutions of the substituted sovereign lose their force. Yet, on the other hand, the body of municipal law regulating private and domestic rights continues in force until abrogated or changed by the new sovereign. The obligations incurred by the City of Manila prior the military occupation was not extinguished by the fact that the said city was put under the administration of officials put in place by military order. During such occupation and administration, the city was carried on as usual. Further, the properties ceded to the US were those belonging to the Crown of Spain but not including those in belonging to the City of Manila as a municipal corporation.

Lidasan v. COMELEC Date: 25 October 1967 Ponente: Sanchez, J. Facts: RA 4790 entitled "An Act Creating the Municipality of Dianaton in the Province of Lanao del Sur" was signed into law on 18 June 1966. However, as can be seen in the body of the law, the municipality of Dianaton was to be composed of 21 barrios, 9 of which were from Lanao del Sur and 12 from two municipalities of the neighboring province of Cotabato. The seat of the new municipality was further to be situated in Togaig (a barrio of Cotabato). The Office of the President recommended to the COMELEC the suspension of the operation of the statute until clarified by correcting legislation but the COMELEC insisted that RA 4790 should be implemented unless declared unconstitutional by the Supreme Court."

Bayalan, Alfierri E.

Law 154 III-C

Digest 1

Petitioner Bara Lidasan, a resident and taxpayerof an affected barrio of Cotabato and a qualified voter for the 1967 elections prayed that RA 4790 be declared unconstitutional, as well as the COMELEC resolutions implementing said law be nullified. Issue: WON RA 4790 creating the municipality of Dianaton is constitutional. Held: No. Ratio: The Constitution requires that [n]o bill which may be enacted into law shall embrace more than one subject which shall be expressed in the title of the bill. Under this mandate of the fundamental law, the Congress is enjoined from conglomerating into one statute heterogeneous subjects and also is required to couch the title of the bill in a language sufficient to notify the legislators and the public and those concerned of the import of the single subject of said bill. The Title of the bill herein questioned, "An Act Creating the Municipality of Dianaton in the Province of Lanao del Sur," can hardly be said to intimate the idea that communities from the adjacent province of Cotabato will be incorporated in the new municipality of Dianaton under Lanao del Sur. RA 4790 then had two purposes combined in one statute: (1) it creates the municipality of Dianaton purportedly from twenty-one barrios in the towns of Butig and Balabagan, both in the province of Lanao del Sur; and (2) it also dismembers two municipalities in Cotabato, a province different from Lanao del Sur. The defective title kept the public from knowing what towns and provinces were actually affected by the bill. Transfer of a sizeable portion of territory from one province to another of necessity involves reduction of area, population and income of the first and the corresponding increase of those of the other. This is as important as the creation of a municipality. And yet, the title did not reflect this fact.

The suggestion that to save the law from being entirely declared unconstitutional by not including the 12 barrios of Cotabato in the creation of the new municipality of Dianaton is unavailing. Municipal corporations perform twin functions. Firstly. They serve as an instrumentality of the State in carrying out the functions of government. Secondly. They act as an agency of the community in the administration of local affairs. It is in the latter character that they are a separate entity acting for their own purposes and not a subdivision of the State. Among of the factors considered in the creation of municipal corporations are population, territory and income which apparently are the factors considered by the Congress in creating the municipality of Dianaton. The whole 21 barrios and not only the 9 barrios of Lanao del Sur was surely in the mind of the proponent of the bill when it was presented to the Legislature, as made plain by the fact that the seat of government was to be in Togaig, a barrio in Buldon, Cotabato. The reduction of the area from 21 to 9 barrios then begs the question of, above all, whether the observations of a progressive community, large population and collective income sufficient to maintain an independent municipality would still apply to the 9 barrios after removing the 12 which were to be taken from Cotabato, as well as the question on where will be the seat of government of Dianaton. Fernando, J., dissenting: [T]he challenged legislation Republic Act No. 4790 is not susceptible to the indictment that the constitutional requirement as to legislation having only one subject which should be expressed in his title was not met. The subject was the creation of the municipality of Dianaton. That was embodied in the title. [S]everal barrios of two municipalities outside Lanao del Sur were included in the municipality of Dianaton of that province. That itself would not have given rise to a constitutional question considering the broad, well-high plenary powers possessed by Congress to alter provincial and municipal

Bayalan, Alfierri E.

Law 154 III-C

Digest 1

boundaries. What justified resort to this Court was the congressional failure to make explicit that such barrios in two municipalities located in Cotabato would thereafter form part of the newly created municipality of Dianaton, Lanao del Sur. To avoid any doubt as to that validity of such statute, it must be construed as to exclude from Dianaton all of such barrios mentioned in Republic Act No. 4790 found in municipalities outside Lanao del Sur. As thus interpreted, the statute can meet the test of the most rigid scrutiny. Nor is this to do violence to the legislative intent. What was created was a new municipality from barrios named as found in Lanao del Sur. This construction assures precisely that.

comply with the EIS law. The project was also not within an ECA. Thus, it was mandatory for the EMB RXI to issue the CNC after the City already passed all the requirements for its issuance. Issue: WON the respondent City must first issue an ECC for its Davao City Artica Sports Dome project before a CNC must issue in its favor. Held: No. Ratio: Respondent City, with the supervening change in administration, expressed that indeed it needs to secure an ECC for its proposed project, thus rendering the petition moot and academic. However, the Court still addressed the issue raised in this petition to educate the bench and the bar. As per LGC, 15, a local government unit is a body politic and corporate endowed with powers to be exercised by it in conformity with law. [I]t performs dual functions, governmental and proprietary. Governmental functions are those that concern the health, safety and the advancement of the public good or welfare as affecting the public generally. Proprietary functions are those that seek to obtain special corporate benefits or earn pecuniary profit and intended for private advantage and benefit. When exercising governmental powers and performing governmental duties, an LGU is an agency of the national government. When engaged in corporate activities, it acts as an agent of the community in the administration of local affairs. It is the duty of LGUs to promote the people s right to a balanced ecology (LGC 16) and thus, an LGU, like the City of Davao cannot claim exemption from the coverage of the EIS system. The trial court also erred in holding that LGUs are exempted from the EIS system as PD 1586, 4 states that no person, partnership or corporation shall undertake or operate any such declared environmentally critical project or area without first

Republic v. City of Davao Date: 12 September 2002 Ponente: Ynares-Santiago, J. Facts: The City of Davao applied for a Certificate of NonCoverage (CNC) with the Environmental Management Bureau (EMB) RXI of the DENR for its Davao City Artica Sports Dome. The EMB RXI denied the application after finding that the proposed project was within an environmentally critical area and ruled that the City must undergo an environmental impact assessment (EIA) to secure an Environmental Compliance Certificate (ECC) as per PD 1586 (Environmental Impact Statement (EIS) System), 2 and PD 1151 (Philippine Environment Policy), 4. Consequently, the City of Davao, believing it was entitled to the CNC, filed a petition for mandamus and injunction with the Davao RTC, claiming that its project was neither environmentally critical nor within an environmentally critical area (ECA) and thus outside the EIS system and thus it was the ministerial duty of the DENR through EMB RXI to issue the CNC. TC: for City. LGUs, unlike government agencies and instrumentalities, including GOCCs as well as private corporations, firms and entities, are not required to

Bayalan, Alfierri E.

Law 154 III-C

Digest 1

securing an Environmental Compliance Certificate issued by the President or his duly authorized representative." As per the NCC, the state and its political subdivisions, i.e., the LGUs are juridical persons. Therefore, LGUs are included in the coverage of the EIS system. Last, PD 1586 in its 1 expresses the policy of the state to achieve a balance between socio-economic development and environmental protection, which are the twin goals of sustainable development. In the first paragraph of the said law s Whereas clause, such goals can only be possible if we adopt a comprehensive and integrated environmental protection program where all the sectors of the community are involved, i.e., the government and the private sectors. This further shows that LGUs, as part of the government machinery, is included in the coverage of the EIS system. However, the foregoing presupposes that the project of the LGU requires an ECC or is environmentally critical or within an ECA. In this case, the Artica Sports Dome was shown to not have a significant negative environmental impact for not being environmentally critical or situated in an ECA. It could not be classified as within an area or a type of project environmentally critical as per 3 Proclamation 2146, s.1981. Thus, the DENR has no
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choice but to issue the CNC asked for by the City of Davao.

A. I. a. b. c. and gas d. II. a. b. 1. 2. 3. forests 4. 5. 6. c. 1. III.

Environmentally Critical Projects Heavy Industries Non-ferrous metal industries Iron and steel mills Petroleum and petro-chemical industries including oil Smelting plants Resource Extractive Industries Major mining and quarrying projects Forestry projects Logging Major wood processing projects Introduction of fauna (exotic-animals) in public/private Forest occupancy Extraction of mangrove products Grazing Fishery Projects Dikes for/and fishpond development projects Infrastructure Projects

a. Major dams b. Major power plants (fossil-fueled, nuclear fueled, hydroelectric or geothermal) c. Major reclamation projects d. Major roads and bridges B. Environmentally Critical Areas 1. All areas declared by law as national parks, watershed reserves, wildlife preserves and sanctuaries; 2. Areas set aside as aesthetic potential tourist spots; 3. Areas which constitute the habitat for any endangered or threatened species of indigenous Philippine Wildlife (flora and fauna); 4. Areas of unique historic, archaeological, or scientific interests; 5. Areas which are traditionally occupied by cultural communities or tribes; 6. Areas frequently visited and/or hard-hit by natural calamities (geologic hazards, floods, typhoons, volcanic activity, etc.); 7. Areas with critical slopes; 8. Areas classified as prime agricultural lands; 9. Recharged areas of aquifers; 10. Water bodies characterized by one or any combination of the following conditions; a. tapped for domestic purposes b. within the controlled and/or protected areas declared by appropriate authorities c. which support wildlife and fishery activities 11. Mangrove areas characterized by one or any combination of the following conditions: a. with primary pristine and dense young growth; b. adjoining mouth of major river systems; c. near or adjacent to traditional productive fry or fishing grounds; d. which act as natural buffers against shore erosion, strong winds and storm floods; e. on which people are dependent for their livelihood. 12. Coral reefs, characterized by one or any combinations of the following conditions: a. with 50% and above live coralline cover; b. spawning and nursery grounds for fish; c. which act as natural breakwater of coastlines.