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[LAW 154: LOCAL GOVERNMENT / PROF.GATMAYTAN / 2ND SEM, S.Y. 2013-2014 / D2015] 1DE LEON VS. ESGUERRA

Justice Melencio-Herrera, 31 August 1987

FACTS:In the Barangay elections held on 17 May 1982, Alfredo M. De Leon (petitioner) was elected Barangay

Captain and the other petitioners Salamat, Sta. Ana, Tolentino, de la Rosa and Resurreccion, as BarangayCouncilmen of Barangay Dolores, Taytay, Rizal under BP 222, otherwise known as the Barangay Election Act of1982.

On 9 February 1987, De Leon received a Memorandum antedated December 1, 1986but signed by

OIC Governor Benjamin Esguerra on 8 February 1987 designating Florentino G. Magno as Barangay Captain ofBarangay Dolores, Taytay, Rizal. The designation made by the OIC Governor was "by authority of the Minister ofLocal Government." The OIC Governor also signed a Memorandum designating Tigas, Lacanienta, Medina, Pazand Tolentino as members of the Barangay Council of the same Barangay and Municipality.

De Leon and 5 other then filed an original action for Prohibitionseeking to enjoin respondents fromreplacing them from their respective positions.

Petitioners Arguments:

Prayer: That the subject Memoranda be declared null and void and that respondents be prohibited from takingover their positions of Barangay Captain and Barangay Councilmen, respectively.

Pursuant to Section 3 of the Barangay Election Act of 1982 (BP Blg. 222), their terms of office "shall be six (6)years which shall commence on June 7, 1982 and shall continue until their successors shall have elected andshall have qualified," or up to June 7, 1988.

With the ratification of the 1987 Constitution, the OIC Governor no longer has the authority to replace them andto designate their successors.

Respondents Arguments:

Rely on Section 2, Article III of the Provisional Constitution, promulgated on March 25, 1986, which provided:SECTION 2. All elective and appointive officials and employees under the 1973 Constitution shallcontinue in office until otherwise provided by proclamation or executive order or upon the designationor appointment and qualification of their successors, if such appointment is made with in a period ofone year from February 25,1986.

The terms of office of elective and appointive officials were abolished and that petitioners continued inoffice by virtue of the provision and not because their term of six years had not yet expired

The provision in the Barangay Election Act fixing the term of office of Barangay officials to six (6) years mustbe deemed to have been repealed for being inconsistent with the aforequoted provision of theProvisional Constitution.

ISSUE AND HOLDING: Whether or not the memorandum is null and void. YES

RATIO:THE MEMORANDUM WAS MADE WITHIN THE ONE YEAR PERIOD

Considering the candid Affidavit of OIC Governor, the SC held that 8 February 1977, should beconsidered as the effective date of replacement and not 1 December 1986 to which it was ante dated, in keeping

with the dictates of justiceBUT, PROVISIONAL CONSTITUTION HAS BEEN SUPERSEDED BY THE 1987 CONSTITUTION

While 8 February 1987 is ostensibly still within the one-year deadline, the aforequoted provision in theProvisional Constitution must be deemed to have been overtaken by Section 27, Article XVIII of the 1987Constitutionreading.

SECTION 27. This Constitution shall take effect immediately upon its ratification by a majority ofthe votes cast in a plebiscite held for the purpose and shall supersede all previous Constitutions.The 1987 Constitution was ratified in a plebiscite on 2 February 1987. By that date, therefore, the

Provisional Constitution must be deemed to have been superseded. Having become inoperative, the OICGovernor could no longer rely on Section 2, Article III, thereof to designate respondents to the elective positionsoccupied by petitioners.PETITIONERS HAS ACQUIRED SECURITY OF TENURE

Petitioners must now be held to have acquired security of tenure specially considering that the BarangayElection Act of 1982 declares it "a policy of the State to guarantee and promote the autonomy of the barangays toensure their fullest development as self-reliant communities. Similarly, the 1987 Constitution ensures theautonomy of local governments and of political subdivisions of which the barangays form a part , andlimitsthe President's power to "general supervision" over local governments. Relevantly, Section 8, Article X of the

same 1987 Constitution further provides in part:Sec. 8. The term of office of elective local officials, except barangay officials, which shall bedetermined by law, shall be three years ...Until the term of office of barangay officials has been determined by law, therefore, the term of office of

six (6) years provided for in the Barangay Election Act of 1982 should still govern .The Court finds nothing inconsistent between the term of six (6) years for elective Barangay officials and

the 1987 Constitution, and the same should, therefore, be considered as still operative, pursuant to Section 3,Article XVIII of the 1987 Constitution, reading:

Sec. 3. All existing laws, decrees, executive orders, proclamations letters of instructions, andother executive issuances not inconsistent, with this Constitution shall remain operative untilamended, repealed or revoked.

DISSENT, J. SARMIENTOThe 1987 constitution took effect on 11 February 1987, the date the same was proclaimed ratified

pursuant to Proclamation No. 58 of the President of the Philippines, and not 2 February 1987, plebiscite day.

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[LAW 154: LOCAL GOVERNMENT / PROF.GATMAYTAN / 2ND SEM, S.Y. 2013-2014 / D2015] 2It is my reading that the Constitution takes effect on the date its ratification shall have been

ascertained, and not at the time the people cast their votes to approve or reject it. For it cannot be logically saidthat Constitution was ratified during such a plebiscite, when the will of the people as of that time, had not, and couldnot have been, vet determined.

(Note: Justice Sarmiento enumerated in this dissent several instances where the proclamation of their ratificationwere held to be the date when a Constitution or amendments thereto takes effect. See original for specificexample.)

SAN JUAN V. CSC, DBM, AND ALMAJOSE (1991)Gutierrez, Jr., J.

NATURE: Pursuant to Consti Art. IX (A) Sec 7, Petitioner Governor of Rizal prays for the nullification of Resolution89-868 (1989) & Res. 90-150 (1990) of the Civil Service Commission

The Resolutions resolved to dismiss the appeal of the governor and approved the appointment of CeciliaAlmajose as Provincial Budget Officer of Rizal

The 2ndResolution denied the governors MRFACTS:

In 1988, the position of Rizal Prov. Budget Officer (PBO) was left vacant. Its former holder was a certaindel Rosario.

Gov. Reynaldo San Juan informed the Department of Budget & Management that Dalisay Santosassumed office as Acting PBO, pursuant to a Memo issued by the Governor.

o He requested then DBM Region 4 Dir. Abellato endorse the appointment of Santos as PBOof Rizal. Before being an Acting PBO, Santos was Municipal Budget Officer.

The Director addressed a Memo to the DBM Secretary that based on a comparative study of allMunicipal Budget Officers which included 3 nominees of the Governor, Cecilia Almajose was the mostqualifiedsince she was the only CPA among the contenders.

o Upon this recommendation by the Director, DBM Undersecretary Cabuquit Jr signed theappointmentpapers of Almajose

The Governorwrote to Secretary Carague, reiterating his request for the appointment of Santoso DBM Director Galvezwrote the Governor that Santos and his other recommendees did not

meet the minimum requirements under Local Budget Circular 31.

The Governor, after being informed of Almajoses appointment, wrote to Secretary Carague, protestingagainst the appointment on the grounds:

o That Cabuquit (as DBM USec) is not legally authorizedto appoint the PBOo That Almajose lacks the required 3 yrs experience as provided in Local Budget Circular 31o That under EO 112, it is the Provincial Governor who has the power to recommend

nominees for the position of PBO

The DBM Director of the Bureau of Legal & Legislative Affairs issued a Memo ruling that theGovernors letter-protest is not meritorious because DBM validly exercised its prerogative in filling-up the

position. The Governorwrote the CSC protesting the appointment of Almajose. The CSCthen issued the resolutions (denying the Governors appeal).

ISSUE/HELD: In the event that the Governor recommends an unqualified person, is the Secretary free to appointanyone he fancies? ---- NO

Governors argument:

He, as the Governor, has the sole right and privilege to recommend nominees to the position and that theappointee should come only from his nominees. He invokes EO 112 Sec 1:

o Sec. 1. All budget officers of provinces, cities and municipalities shall be appointed by theMinister of Budget and Management upon recommendation of the local chief executiveconcerned, subject to civil service law, rules and regulations, and they shall be placed underthe administrative control and technical supervision of the Ministry of Budget and Management.

RATIO:

Under EO 112, the governors power to recommend is subject to the qualifications pre scribed by law. Ifthe recommendations fall short of the standard, the Secretary of DBM is expected to reject them.

But if the recommendations are unqualified, can the Secretary appoint anyone he fancies? (SC says no.) Before EO 112, BP 337 (Local Govt Code) vested upon the Governor the power to appoint the PBO. This

Code further enumerated the qualifications for the position:o Citizen of the Philso Of good moral charactero A holder of a degree preferably in law, commerce, public administration or any related course

from a recognized college or universityo A first grade civil service eligibility or its equivalento Has acquired at least 5 yrs experience in budgeting or in any related f ield

The Governor argues:o Since the authority to appoint the PBO was vested in him before, the real intent of EO 112 in

empowering him to recommend is to make such recommendation part and parcel of theappointment process

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[LAW 154: LOCAL GOVERNMENT / PROF.GATMAYTAN / 2ND SEM, S.Y. 2013-2014 / D2015] 3o That the phrase "upon recommendation of the local chief executive concerned" must be given

mandatory application in consonance with the state policy of local autonomy as guaranteed bythe 1987 Constitution under Art. II, Sec. 25 and Art. X, Sec. 2.

o That his power to recommend cannot validly be defeated by a mere administrative issuance ofDBM reserving to itself the right to fill-up any existing vacancy in case the governors nomineesdo not meet the qualification requirements as embodied in public respondent DBM's LocalBudget Circular No. 31

The CSCs justification is this:o As required by EO 112, the DBM Secretary may choose from among the recommendees of the

Governor who are qualified for appointment to the position of PBO. Notwithstanding, therecommendation is merely directoryand not a condition sine qua nonto the exercise by theSecretary of DBM of his appointing prerogative.

o To rule otherwise would in effect give the law or EO 112 a different interpretation orconstruction not intended

o It cannot be said that said national officer (PBO) has a similar role in the LGU, to that of aCommission on Audit resident auditor. Hence, to preserve and maintain the independenceof the PBO from the LGU, he must be primarily the choice of the national appointing official,and the appointment power must not be unduly hampered or interfered with.

o The appointing official is not restricted to the list recommended by the local chief executive. Hemay consider other nominees for the position vis a visthe nominees of the local chiefexecutive.

The tug of war between the Secretary of DBM and the Governor involves the application of a most imptconsti policy: that of local autonomy.

o We have to obey the clear mandate on local autonomy.o Where a law is capable of 2 interpretations, 1 in favor of centralized power in Malacanang, the

other beneficial to local autonomy, the scales must be weighed in favor of autonomy

The exercise by LGUs of meaningful power has been a national goal since the turn of the century. Andyet, inspite of constitutional provisions and legislation mandating greater autonomy, national officerscannot seem to let go of centralized powers.

Pres. McKinleys instructions in 1900 ordered the new govt to devote their attention to the establishmentof municipal govts in which natives of the islands are to be afforded the opportunity to manage their ownlocal offices

o In this initial organic act, the Second Phil Commission, combined both exec and legis powers,was directed to give priority to making local autonomy effective

The 1935 Consti had no specific article on local autonomy. However, in Art VII Sec 11: The Presidentshall have control of all the executive departments, bureaus, or offices, exercise general supervision overall local governments as may be provided by law, and take care that the laws be faithfully executed

o The Consti clearly limited the exec power over local govt to gen. supervision as may beprovided by law

o The Pres controls the exec dept; he has no such power over local govts In the case of Tecson v. Salas, it was said: the presidential competence is not even supervision in

general, but general supervision as may be provided by law.

o He could not go beyond the applicable statutory provso Supervision goes no further than "overseeing or the power or authority of an officer to see that

subordinate officers perform their duties. If they fail to fulfill them, the superior officer may takesuch action as prescribed by law to make them perform their duties

o Control means the power of an officer to alter or modify or nullify or set aside what asubordinate had done in the performance of their duties and to substitute the judgment of theformer for that of the latter.

Pursuant to this principle under the 1935 Consti, legislation implementing local autonomy was enacted.RA 2264 An Act Amending the Law Governing Local Governments by Increasing Their Autonomy andReorganizing Local Governments. It was followed by RA 5185 (the Decentralization Law) was enacted,giving "further autonomous powers to local governments in 1967.

By the 1973 Consti, legal provs moved towards greater economy. In Art II:o Sec. 10. The State shall guarantee and promote the autonomy of local government units,

especially the barangay to ensure their fullest development as self-reliant communities

An entire article on Local Govt was incorporated into the Consti. It called for a local govt code definingmore responsive and accountable local govt structures.

In the present Consti, the exercise of greater local autonomy is even more marked:o Art II. Sec. 25. The State shall ensure the autonomy of local governmentso The 14 sections in Article X on Local Government not only reiterate earlier doctrines but give in

greater detail the provisions making local autonomy more meaningfulo Art X. Sec 2. The territorial and political subdivisions shall enjoy local autonomy.o Art X. Sec. 3. The Congress shall enact a local government code which shall provide for a more

responsive and accountable local government structure instituted through a system ofdecentralization with effective mechanisms of recall, initiative, and referendum, allocate amongthe different local government units their powers, responsibilities, and resources, and providefor the qualifications, election, appointment and removal, term, salaries, powers and functionsand duties of local officials, and all other matters relating to the organization and operation ofthe local units.

When the CSC interpreted the recommending power of the Governor as purely directory, it wentagainst the letter and spirit of the constitutional provisions on local autonomy

The right given by Local Budget Circular 31is ultra vires and is set aside: this one----

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[LAW 154: LOCAL GOVERNMENT / PROF.GATMAYTAN / 2ND SEM, S.Y. 2013-2014 / D2015] 4o Sec. 6 The DBM reserves the right to fill up any existing vacancy where none of the

nominees of the local chief executive meet the prescribed requirements.

The PBO is expected to synchronize his work with DBM . Provincial and municipal budgets areprepared at the local level and after completion are forwarded to the national officials for review.

o It is for this reason that there should be interplay, a balancing of viewpoints, and aharmonizationof proposals from both the local and national officials.

o It is for this reason that the nomination and appointment process involves a sharing ofpowerbetween the two levels of government.

The appointment of the Almajose was formalized before the Governor was extended the courtesy ofbeing informed that his nominee had been rejected. The complete disregard of the local government'sprerogative and the smug belief that the DBM has absolute wisdom, authority, and discretion aremanifest.

In his classic work "Philippine Political Law" Dean Sinco stated that the value of local governments asinstitutions of democracy is measured by the degree of autonomy that they enjoy.

Our national officials should not only comply with the constitutional provisions on local autonomy butshould also appreciate the spirit of libertyupon which these provisions are based.

Petit ion granted . CSC resolution s set aside.

GANZON V. CA05 AUG 1991 | Sarmiento | appeal of a CA decisionPetitioners: Rodolfo Ganzon and Mary ArtiedaRespondents: Court of Appeals, Luis Santos, Nicanor Patricio, Salvador Cabaluna

Facts: This is a consolidation of three petitions for prohibition, two of which were filed by Ganzon. Ganzon is theMayor of Iloilo City while Artieda is a member of its Sangguniang Panglungsod. Ganzons petitions arose from 10administrative complaints filed by different city officials in 1988, where he was charged with abuse of authority,oppression, grave misconduct, disgraceful and immoral conduct, intimidation, culpable violation of the Constitution,and arbitrary detention.

Specifics of the administrative cases:1. Cabaluna was a clerk at the City Health Office of Iloilo City. She supported Ganzons rival mayoral candidateCaram, and because of this, Ganzon pulled Cabaluna out of her office despite being well qualified and assigned herto the work of a non-career service employee. A utility worker from Public Services replaced her. Cabaluna claimedthis was harrassment.2. Dra. Ortigoza was an Assistant City Health Officer. Her office was padlocked without explanation and her salarywas withheld. She filed her vacation leave but Ganzon, in connivance with Dr. Villegas made her run around for itsapproval, and they also engineered a trumped-up administrative complaint against her.3. Malabor was the citys Vice-Mayor. He, along with other members of the Sangguniang Panglungsod filed thecomplaint when Councilor Ongs key to his office was taken without notice by Ganzon. He was forced to hold officeat Plaza Libertad, and the other complainants sympathized and joined him there. Ganzon and armed security forced

them out of the Plaza. Ong denounced Ganzon in the radio station and planned to hold office at the FreedomGrandstand but he and his sympathizers were prevented from entering the area and were dozed with water from afiretruck by Ganzon and his men.4. Erbite was a barangay tanod appointed by former Mayor Caram. On 13 MAR 1988, he was arrested anddetained without charges and without a warrant. He was mauled while he was in jail for an entire day until he wasreleased.

The initial hearings were set at the Regional Office of the Department of Local Government in Iloilo City but Ganzonkept asking for postponement. His motion to postpone was granted once, but his subsequent motions forpostponement were denied. After the hearings for Cabaluna and Ortigozas complaints, probable cause was foundand the Department of Local Government Secretary Luis Santos issued a 60-day preventive suspension order.The other hearings were scheduled and Ganzon kept asking for postponement; some granted, most denied(reasons: witnesses sick, no transportation). His motion to change the venue was denied due to lack of funds. Thehearing officers gave Ganzon until 15 DEC 1988 to present his evidence but he failed to do so, hence, the caseswere considered submitted for resolution.

In Erbites arbitrary detention case, prima facie evidence was found to exist so Sec. Santos issued another 60-day

preventive suspension order. But Ganzon was able to secure a writ of preliminary injuction with the RTCIloilo so the 2

ndsuspension order was not enforced. Aside from his action for prohibition with the RTC, he filed

the same action with the CA.

03 MAY 1990, Sec. Santos issued the third 60-day preventive suspensionand designated Vice Mayor Malaboras acting mayor. Ganzon again filed a petition for prohibition with the CA.

CA dismissed both of Ganzons petitionsand certified Artiedas petition to the SC. Artieda was similarly chargedby Sec. Santos. SC issued TRO to prevent the implementation of the suspension orders and consolidated thecases.

Ganzon claimed that Sec. Santos was biased, prejudiced, and hostile towards him after Ganzon refused to join theLaban ng Demokratikong Pilipino party and to operate a lottery, and also because of their political rivalry in the

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[LAW 154: LOCAL GOVERNMENT / PROF.GATMAYTAN / 2ND SEM, S.Y. 2013-2014 / D2015] 5previous elections. He contended that his motion to change the venue of the cases held in Manila to Iloilo and someof his motions to postpone the hearings were unjustly rejected.

Minor issues (irrelevant to topic):Ganzons claim that Sec. Santos was biased against him because of the issues on the party and the lottery was notsupported by proof other than his mere assertions. Although Sec. Santos did not rebut the allegations, SC cannotaccept Ganzons claims at face value.Ganzons request to defer the hearing on account of the ninety-day ban prescribed by Section 62 of Batas Blg. 337moot due to the SCs TRO.

SC found no compelling evidence to overturn the CAs findings that Sec. Santos was not wrong in denyingGanzons motions for postponement, which is a matter of discretion on Sec. Santos part.

Main Issue: Did Sec. Santos, as the Presidents alter ego, have authority to suspend and remove local officials?YES, but in this case, the rule on the 60-day preventive suspension was violated.

Ratio: Ganzons assertion that the 1987 Constitution no longer allowed the President to exercise the power ofsuspension and/or removal over local officials is unmeritorious. Both Ganzon and Artieda claimed that when thephrase as may be provided by law was removed in the provision, it s tripped the President of the power of controlover local governments.

1987 Constitution 1935 Constitution

Sec. 4. The President of the Philippines shall exercisegeneral supervision over local governments. Provinceswith respect to component cities and municipalities, andcities and municipalities with respect to componentbarangays shall ensure that the acts of their component

units are within the scope of their prescribed powersand functions.

Sec. 10. The President shall have control of all theexecutive departments, bureaus, or offices, exercisegeneral supervision over all Local governments as maybe provided by law, and take care that the laws befaithfully executed.

SC said that notwithstanding the change in the language, the charter did not intend to divest the legislature of itsright or the President of her prerogative as conferred by existing legislation to provide administrative sanctionsagainst local officials. The omission of the phrase signified nothing more than to underscore the localgovernments autonomy and to break Congress control over its affairs , but it did not deprive the legislatureof its authority over them, particularly concerning discipline.

Autonomy, in the constitutional sense, is subject to the guiding star, though not control, of the legislature,albeit the legislative responsibility under the Constitution and as the "supervision clause" itself suggest, is to weanlocal government units from over-dependence on the central government. It is not meant to create mini-states outof local government units. The Constitution does not prescribe federalism.

Under the Charter, "local autonomy" is not instantly self-executing, but subject to, among other things, the passageof a local government code, a local tax law, income distribution legislation, and a national representation law, and

measures designed to realize autonomy at the local level. It is also noteworthy that in spite of autonomy, theConstitution places the local government under the general supervision of the Executive . It is noteworthyfinally, that the Charter allows Congress to include in the local government code provisions for removal oflocal officials

1, which suggest that Congress may exercise removal powers, and as the existing Local

Government Code has done, delegate its exercise to the President.The Constitution contains no prohibition against legislation authorizing the President, through the Secretary of LocalGovernment, to proceed against local officials administratively.

"Supervision" is not incompatible with disciplinary authority. InMondano vs. Silvosa, SC held that supervisionmeans overseeing or the power or authority of an officerto see that subordinate officers perform their duties. Ifthe latter fail or neglect to fulfill them, the former may take such action or step as prescribed by law to make themperform their duties. Control, on the other hand, means the power of an officer to alter or modify or nullify ofset aside what a subordinate officer had donein the performance of his duties and to substitute the judgment ofthe former for that of the latter." But from this pronouncement it cannot be reasonably inferred that the power ofsupervision of the President over local government officials does not include the power of investigation when in his opinion the good of the public service so requires. "Investigating" is not inconsistent with"overseeing" , although it is a lesser power than "altering". Neither Lacsonnor Hebronnor Mondanocategorically

banned the Chief Executive from exercising acts of disciplinary authority because she did not exercise controlpowers, but because back then, no law allowed her to exercise disciplinary authority.

Deliberations of the Constitutional Commission are inconclusive since Nolledo wanted to exclude the power ofremoval from the President, but Ople would not.

1LGC Sec. 3. The Congress shall enact a local government codewhich shallprovide for a more responsive and accountable

local government structure instituted through a system of decentralization with effective mechanisms of recall, initiative, andreferendum, allocate among the different local government units their powers, responsibilities and resources, and provide for thequalifications, election, appointment and removal,term, salaries, powers and functions and duties of local officials, and all othermatters relating to the organization and operation of the local units.

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[LAW 154: LOCAL GOVERNMENT / PROF.GATMAYTAN / 2ND SEM, S.Y. 2013-2014 / D2015] 7 The operation was considered a success for it proved to be a potential source of revenue to fund infrastructure

and socio-economic projects, thus, P.D. 1399 was passed on June 2, 1978 for PAGCOR to fully attain thisobjective.

In 1983, PAGCOR was created under P.D. 1869 to enable the Government to regulate and centralize allgames of chance authorized by existing franchise or permitted by law

It was given territorial jurisdiction all over the Philippines and any laws, decrees, EOs, rules inconsistent to itwere repealed

3rdlargest source of revenue (P6.2B remitted to govt in 3 years)Issue: WoN PD 1869 is constitutionalYES

Ratio:1.) Statute is presumed to be valid (constitutional)2.) Procedural issuebrushed aside technicalities because of importance to the public3.) Police powergovernment can regulate gambling

Gambling is generally prohibited unless allowed by law. Police power is the "state authority to enact legislation that may interfere with personal liberty or property

in order to promote the general welfare." It consists of (1) an imposition or restraint upon liberty orproperty, (2) in order to foster the common good.

It finds no specific Constitutional grant for the plain reason that it does not owe its origin to the charter.Along with the taxing power and eminent domain, it is a fundamental attribute of government. It is theplenary power of the state to govern its citizens.

4.) P.D. 1869 was enacted for PUBLIC WELFARE. It was pursuant to the policy of the government to "regulate and centralize thru an appropriate institution

all games of chance authorized by existing franchise or permitted by law"

It provided funds for social impact projects and subjected gambling to "close scrutiny, regulation,supervision and control of the Government"

Contentions:Petitioners contend that P.D. 1869 constitutes a waiver of the right of the City of Manila to impose taxes andlegal fees.Section 13(2) of P.D. 1869 exempts PAGCOR, as the franchise holder from paying any "tax of any kind or form,income or otherwise, as well as fees, charges or levies of whatever nature, whether National or Local."

(2) Income and other taxes. a) Franchise Holder: No tax of any kind or form, income or otherwise aswell as fees, charges or levies of whatever nature, whether National or Local, shall be assessed andcollected under this franchise from the Corporation; nor shall any form or tax or charge attach in any wayto the earnings of the Corporation, except a franchise tax of five (5%) percent of the gross revenues orearnings derived by the Corporation from its operations under this franchise. Such tax shall be due andpayable quarterly to the National Government and shall be in lieu of all kinds of taxes, levies, fees orassessments of any kind, nature or description, levied, established or collected by any municipal,provincial or national government authority

Their contention stated hereinabove is without meritfor the following reasons:(a) The City of Manila, being a mere Municipal corporation has no inherent right to impose taxes. Thus, "theCharter or statute must plainly show an intent to confer that power or the municipality cannot assume it." Its "powerto tax" must always yield to a legislative act which is superior having been passed upon by the state itself which hasthe "inherent power to tax" (Bernas)(b) The Charter of the City of Manila is subject to control by Congress. It should be stressed that "municipalcorporations are mere creatures of Congress" which has the power to "create and abolish municipal corporations"due to its "general legislative powers." Congress, therefore, has the power of control over Local governments. And ifCongress can grant the City of Manila the power to tax certain matters, it can also provide for exemptions or eventake back the power.(c)The City of Manila's power to impose license fees on gambling, has long been revoked. As early as 1975, thepower of local governments to regulate gambling thru the grant of "franchise, licenses or permits" was withdrawn byP.D. No. 771 and was vested exclusively on the National Government.(d) Local governments have no power to tax instrumentalities of the National Government. PAGCOR is agovernment owned or controlled corporation with an original charter, PD 1869. All of its shares of stocks are ownedby the National Government. In addition to its corporate powers, it also exercises regulatory powers.

PAGCOR has a dual role, to operate and to regulate gambling casinos. The latter role is governmental,which places it in the category of an agency or instrumentality of the Government. Being aninstrumentality, PAGCOR should be and actually is exempt from local taxes. Otherwise, its operationmight be burdened, impeded or subjected to control by a mere Local government.

Supremacy of the National Government over local government The power to tax cannot be allowed to defeat an instrumentality or creation of the very entity having the

inherent power to wield it.

Petitioners also argue that the Local Autonomy Clauseof the Constitution will be violated by P.D. 1869. This is apointless argument. Article X of the 1987 Constitution provides:

Sec. 5. Each local government unit shall have the power to create its own source of revenue and to levytaxes, 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 exclusivelyto the local government.

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[LAW 154: LOCAL GOVERNMENT / PROF.GATMAYTAN / 2ND SEM, S.Y. 2013-2014 / D2015] 8 Since PD 1869 remains an "operative" law until "amended, repealed or revoked," its "exemption clause"

remains as an exception to the exercise of the power of local governments to impose taxes and fees. It cannottherefore be violative but rather is consistent with the principle of local autonomy.

Besides, the principle of local autonomy under the 1987 Constitution simply means "decentralization" It doesnot make local governments sovereign within the state or an "imperium in imperio."

Local Government has been described as a political subdivision of a nation or state which is constitutedby law and has substantial control of local affairs. In a unitary system of government, such as thegovernment under the Philippine Constitution, local governments can only be an intra sovereignsubdivision of one sovereign nation, it cannot be an imperium in imperio. Local government in such a

system can only mean a measure of decentralization of the function of government. As to what state powers should be "decentralized" and what may be delegated to local government units

remains a matter of policy, which concerns wisdom. It is therefore a political question.

The matter of regulating, taxing or otherwise dealing with gambling is a State concern and hence, it is the soleprerogative of the State to retain it or delegate it to local governments. Gambling is an offense against thestate.

Does it violate the equal protection clause? NO.

Equal protection does not preclude classification of individuals who may be accorded different treatment underthe law as long as the classification is not unreasonable or arbitrary. It does not prohibit the Legislature fromestablishing classes of individuals or objects upon which different rules shall operate.

The mere fact that some gambling activities like cockfighting (P.D 449) horse racing (R.A. 306 as amended byRA 983), sweepstakes, lotteries and races (RA 1169 as amended by B.P. 42) are legalized under certainconditions, while others are prohibited, does not render the applicable laws, P.D. 1869 for one,unconstitutional.

Does it violate the avowed trend away from cronyism and monopolies? NO

This is not a reason to annul the statute. If, indeed, PD 1869 runs counter to the government's policies then itis for the Executive Department to recommend to Congress its repeal or amendment.

Monopolies are not necessarily prohibited by the Constitution. The state must still decide whether publicinterest demands that monopolies be regulated or prohibited. Again, this is a matter of policy for theLegislature to decide.

What about the alleged violation of Sections 11 (Personality Dignity) 12 (Family) and 13 (Role of Youth) of Article II;Section 13 (Social Justice) of Article XIII and Section 2 (Educational Values) of Article XIV of the 1987 Constitution?NO

These are statements of principles and policies. They are basically not self-executing, meaning a law shouldbe passed by Congress.

Petitioners failed to overcome the presumption of constitutionality. It must be shown that there is a clear andunequivocal breach of the Constitution, not merely a doubtful and equivocal one.

DISMISSED for lack of merit.

MAGTAJAS V. PRYCE PROPERTIES CORP INCPetitioners: Mayor Pablo Magtajas, City of Cagayan de OroRespondents: Pryce Properties Corp, Philippine Amusement and Gaming Corporation (PAGCOR)Cruz

1992- PAGCOR decided to expand its operations in Cagayan de Oro City. It leased a portion of a buildingbelonging to Pryce Properties Corp (respondent).

Several civic organizations and religious groups opposed. The Sangguniang Panlungsod of CDO Cityenacted 2 ordinances:1. Ordinance No. 3353 prohibits the issuance of a business permit and cancels the existing business

permit of an establishment which allows its premises to be used for the operation of a casino2. Ordinance No. 3375-93prohibits the operation of a casino and provides a penalty for violation

Pryce assailed the ordinances before the CA. It was joined by PAGCOR. CA declared the ordinances invalidand issued a writ of prohibition.

Cagayan de Oro City and Mayor Magtajas filed with the SC a petition for review under Rule 45

Arguments of CDO City and Mayor Magtajas:1. By virtue of the General Welfare Clause (Sec 16) in the LGC, and Section 458, the Sangguniang

Panlungsod may prohibit the operation of casinos which are detrimental to the welfare of the people

Section 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 itsefficient and effective governance, and those which are essential to the promotion of the general welfare.xxx

Section 458. Powers, Dut ies, Funct ions and Compensat ion.(a) The sangguniang panlungsod shall:

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[LAW 154: LOCAL GOVERNMENT / PROF.GATMAYTAN / 2ND SEM, S.Y. 2013-2014 / D2015] 9(1) Approve ordinances and pass resolutions necessary for an efficient and effective citygovernment, and in this connection, shall:

(v) Enact ordinances intended to prevent, suppress and impose appropriate penalties forhabitual drunkenness in public places, vagrancy, mendicancy, prostitution, establishment andmaintenance of houses of ill repute, gambling and other prohibited games of chance andsuch other activities inimical to the welfare and morals of the inhabitants of the city.

2. When the LGC expressly authorized LGUs to prevent and supress gambling and other prohibited gamesof chance, it meant all forms of gambling without distinction. Ubi lex non distinguit, nec nos distinguere(where the law does not distinguish, neither ought we to distinguish)

3. The adoption of the LGC had the effect of modifying the charter of PAGCOR (PD 1869). The LGCsrepealing clause under par (f) states that all general and special laws, acts, city charters, decrees,executive orders, proclamations and admin regulations which inconsistent with the provisions of the LGCare repealed.

4. Doubt must be resolved in favor of the City because the LGC calls for its liberal interpretation in favor ofthe LGUs (Sec 5)

5. Gambling is intrinsically harmful. They cite provisions of the Constitution and SC decisions (case did notshow what these are)

ISSUE: W/N the ordinances enacted by the Sangguinang Panlungsod are validNO

RATIO:

Morality of gambling is NOT a justiciable issue

Nothing in the constitution categorally proscribes gambling. It is not even mentioned at all. In the exercise of its own discretion, the legislature may prohibit gambling altogether or allow it without

limitation or prohibit only some forms.

Thus, the only question to be resolved is the validity of the ordinancesTests of a valid ordinance:

1. It must not contravene the Constitution or any statute2. Must not be unfair or oppressive3. Must not be partial or discriminatory4. Must not prohibit but may regulate trade5. Must be general and consistent with public policy6. Must not be unreasonable

Re gambling and other prohibited games of chance under Sec 458

Noscitur a nociis (a word or phrase should be interpreted in relation to, or given the same meaning of, wordswith which it is associated)

Since gambling is associated with and other prohibited games of chance, the word should be read asreferring to only illegal gambling which, like other prohibited games of chance, must be prevented orsuppressed.

LGC did not modify or repeal PD 1869 (PAGCOR charter)

Petitioners are playing with words they said that the decree has only been modified pro tanto but they arereally arguing that it is dead, repealed and useless because the LGC has prevented PAGCOR from regulatingcasinos (because under Sec 458, the sangguniang panglungsod SHALL enact ordinances to prevent gamblingand other prohibited games of chance)

Noteworthy: petitioners only cited Par (f) of the repealing clause. They discarded the rest of the provision whichmentions specific laws which are repealed. PD 1869 is not one of them.

Implied repeals are not lightly presumed in the absence of clear and unmistakable showing of such intention.In this case, there is no sufficient indication of a repeal of PD 1869. In fact, PAGCOR is mentioned as a sourceof funding in two later laws.

The Local Government Code and PD 1869 must be reconciled

Instead of pitting one statute against another in a destructive confrontation, courts must exert every effort toreconcile them

PROPER RESOLUTION: hold that under the LGC, LGUs may prevent and suppress all kinds ofgambling within their territories except only those allowed by statutes like PD 1869.

Ordinances should not contravene a statute; Congress still retains control of LGUs

Ordinances should not contravene a statute because municipal governments are only agents of thenational government

Local councils exercise only delegated legislative powers conferred on them by Congress as the nationallawmaking body. The delegate cannot be superior to the principal or exercise powers higher than those of the

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[LAW 154: LOCAL GOVERNMENT / PROF.GATMAYTAN / 2ND SEM, S.Y. 2013-2014 / D2015] 10latter. It is a heresy to suggest that the local government units can undo the acts of Congress, from which theyhave derived their power in the first place, and negate by mere ordinance the mandate of the statute.

This basic relationship between the national legislature and the local government units has not beenenfeebled by the new provisions in the Constitution strengthening the policy of local autonomy.

Congress retains control of the local government units although in significantly reduced degree nowthan under our previous Constitutions.The power to create still includes the power to destroy. The powerto grant still includes the power to withhold or recall.

True, there are certain notable innovations in the Constitution, like the direct conferment on the localgovernment units of the power to tax, which cannot now be withdrawn by mere statute.

BUT: the national legislature is still the principal of the local government units, which cannot defy itswill, modify or violate it. The power of PAGCOR to centralize and regulate all games of chance remains unimpaired. The Ordinances

are invalid.

Petition denied. CA affirmed.

Padilla, separate opin ion

Concurs with the majority that the city ordinances cannot modify or repeal PAGCORs authority to establishgambling casinos under PD 1869 (cites his separate opinion in Basco v PAGCOR)

BUT says that gambling runs counter to the governments efforts to reestablish the Filipino moral character. That PAGCOR contributes to the coffers of government is not enough reason to set up more casinos. What is

legal is not always moral. The ends do not always justify the means.

Compared prostitution with gamblinglegalization does make it less reprehensibleDavide Jr., separate opinion Pryce filed with the CA a petition for prohibition, but it should be a petition for declaratory relief. Accordingly,

CA does not have jurisdiction. Petition should have been filed with CDO RTC.

Points out that the Ordinances were enacted 2 years before Pryce and PAGCOR entered into a contract oflease.

Agrees that the ordinances cannot repeal PD 1869 CAs nullification of the ordinances as unconstitutional because it is in contravention to PD 1869 is

unwarranted. A contravention of a law is not necessarily a contravention of the constitution.