G.R. No.

80796 November 8, 1989

PROVINCE OF CAMARINES NORTE, Represented by HONORABLE ROY PADILLA, as Acting Provincial Governor,
petitioner,
vs.
PROVINCE OF QUEZON, Represented by HONORABLE HJALMAR QUINTANA, as Acting Provincial Governor,
respondent.

FELICIANO, J.:
The instant Petition for mandamus and Prohibition with Preliminary Injunction or Restraining Order brought by
petitioner Province of Camarines Norte against respondent Province of Quezon, formerly known as Province of
Tayabas, involves a land boundary dispute, which has raged between these two (2) provinces since the second
decade of this century.
Historical records disclose that the Camarines region in the Island of Luzon had been divided originally into the two
(2) separate provinces of Camarines Norte and Camarines Sur, which division was maintained until 19 May 1893,
when the two (2) provinces were consolidated by the Spanish colonial administration to constitute a single entity,
the Province of Ambos Camarines. Adjacent to Camarines Norte in the northeast (i.e., the northern portion of
Ambos Camarines), upon the other hand, lay the Province of Tayabas. At the time of arrival of the United States
flag in the Philippines, there was thus existing the Province of Ambos Camarines.
The boundary between Ambos Camarines and Tayabas was defined and written into law in 1916, by Section 47 of
Act No. 2657 (the Administrative Code). Although Act No. 2657 was repealed the following year by Act No. 2711
(the Revised Administrative Code),
1
the provisions pertaining to said boundary remained unaltered. In this
respect, Act No. 2711 provided:
Chapter 3. BOUNDARIES DEFINED
Article I. Undefined boundaries
Sec. 41. Undefined boundaries recognized. Boundaries which are not defined in the next
succeeding article of this chapter shall, until expressly changed by law or executive order, be
taken to be as heretofore determined by decree, statute, executive order, or other resolution
having the force of law, and in the absence of such, by custom recognized by the administrative
authorities.
Article II. Defined boundaries
Sec. 42. Ambos Camarines and Tayabas boundary. The boundary separating the Province of
Ambos Camarines from the Province of Tayabas begins at a point on the eastern shore of Basiad
Bay and extends to a peak known as Mount Cadig in such manner as to bring the territory of the
barrio of Basiad entirely within the municipality of Capalonga, in Ambos Camarines, and to
exclude the same from the territory of Calauag, in Tayabas. From Mount Cadig it extends along
the crest of a mountain range, a distance of 50 kilometers, more or less, to a peak known as
Mount Labo; thence in a southwesterly direction, a distance of 25 kilometers, more or less, to a
prominent stone monument at the source or headwaters of the Pasay River, thence along the
meandering course of said river in a southerly direction, a distance of 1-1/2 kilometers, more or
less, to the Gulf of Ragay. (Emphasis supplied)
Section 68 of the same Act also authorized the Governor-General of the Philippine Islands, among others, "to
define the boundary, or boundaries, of any province, sub-province, municipality, township or other political
subdivision, and increase or diminish the territory comprised therein," subject to what "the public welfare may
require." As amended by Act No. 2929, which took effect on 30 March 1920, Section 68 provided, in full:
Sec. 68. General authority of Governor-General to fix boundaries and make new subdivisions.
The Governor-General may by executive order define the boundary or boundaries, of any
province, subprovince municipality, township, of other political subdivision, and increase or
diminish the territory comprised therein, may divide any province into one or more sub-
provinces, separate any political division other than a province, into such portions as may be
required, merge any of such subdivisions or portions with another, name any new subdivision so
created, and may change the seat of Government within any subdivision to such place therein as
the public welfare may require: Provided, That the authorization of the Philippine Legislature
shall first be obtained whenever the boundary of any province or sub-province is to be defined or
or any provinces is to be divided into one or more subprovinces. When any action by the
Governor- General in accordance herewith makes necessary a change of the territory under the
jurisdiction of any administrative officer or any judicial officer, the Governor-General, with the
recommendation and advice of the head of the Department having executive control of such
officer, shall redistrict the territory of the several officers affected and assign such officers to the
new districts so formed.
Upon the changing of the limits of political divisions in pursuance of the foregoing authority, an
equitable distribution of the funds and obligations of the divisions thereby affected shall be
made in such manner as may be recommended by the Insular Auditor and approved by the
Governor-General. (Emphasis supplied)
In the meantime, on 3 March 1919, the Philippine Legislature approved Act No. 2809, which authorized once again
the partition of Ambos Camarines into two (2) separate provinces: the Province of Camarines Norte and the
Province of Camarines Sur. The pertinent provisions of Act No. 2809 read:
Section 1. The Governor-General is hereby authorized whenever the public interest may require
it, and subject to such conditions as he may desire to impose, to re-establish as an independent
province the former Province of Camarines Norte, consolidated with the Province of Camarines
Sur.
Sec. 2. The Province of Camarines Norte so re-established shall have the same territory as before
its consolidation with Camarines Sur the organization of the present Province of Ambos
Camarines and its capital shall be the municipality of Daet, on the Island of Luzon. The provisions
of the Administrative Code in so far as they are applicable to a regularly organized province shall
apply to the government and operation of said province and to the election and appointment of
the officers thereof. The remaining territory of the Province of Ambos Camarines shall be
denominated the Province of Camarines Sur. (Emphasis supplied)
On 30 March 1920, Governor-General Francis Burton Harrison issued Executive Order No. 22, implementing Act
No. 2809 and formally re-establishing Camarines Norte as a province separate and distinct from Camarines Sur,
effective 15 April 1920.
2

It is not clear from the records before the Court exactly how and when the present boundary dispute-involving a
land area of approximately 8,762 hectares-between Camarines Norte and Tayabas first emerged. The dispute
probably evolved when Section 47 of the Administrative Code of 1916 and later Section 42 of the Revised
Administrative Code of (1917) were enacted.
In any event, the then Chief of the Executive Bureau, acting upon the authority of the Secretary of the Interior,
rendered on 16 June 1922 a decision (First Indorsement) delineating that portion of the boundary between the
provinces of Camarines Norte and Tayabas which is here involved.
3
That part of the boundary line was described
in the following terms:
Starting from the peak of Mt. Labo as a common corner between the provinces of Tayabas,
Camarines Sur and Camarines Norte thence a straight line is drawn to the peak of Mt. Cadig;
thence a straight line is drawn to the point of intersection of the inter-provincial road between
Camarines Norte and Tayabas with the Tabugon River; thence, following the course of the river to
its mouth at the to Basiad Bay.
4

To date, however, the aforementioned decision of 16 June 1922 has remained unimplemented and unenforced,
despite several official directives from the then Secretary of the Interior and repeated efforts on the part of
petitioner Camarines Norte, over the years, to enforce the same. All efforts at amicable resolution of the boundary
dispute (the last such effort having been made sometime in 1987) have failed. Respondent Province of Quezon
(then Tayabas), now as in the past, has simply refused to recognize as valid, and has frustrated all attempts to
locate on the ground, survey and monument the segment of the Ambos Camarines [later Camarines Norte]-
Tayabas boundary line delineated in the 1922 decision.
In the instant Petition for mandamus and Prohibition, petitioner Camarines Norte Province asks the Court, firstly,
to order respondent Quezon Province "to respect and abide [by] the decision of the Chief of [the] Executive Bureau
dated June 16, 1922 and immediately comply therewith by yielding the whole territory described and defined
therein to the petitioner;" secondly, to prohibit respondent Quezon Province from exercising power and authority
over the area [so] embraced in the territory of petitioner; "and thirdly, to restrain respondent Province "from
collecting all kinds of taxes from the inhabitants of [the territory of petitioner.]"
The Court gave due course to the Petition on 30 June 1988 and required the filing of memoranda by the parties.
5

Petitioner filed its Memorandum
6
on 2 September 1988. For its part, respondent Quezon Province moved that the
Solicitor General's Comment
7
on and Rejoinder
8
to the Petition and Reply, respectively, be considered as its
Memorandum. We granted the respondent's request.
9

The opposition of respondent Quezon Province to the, boundary line claimed and sought to be enforced here by
petitioner Camarines Norte Province is, in the main, anchored on two (2) arguments. First, it is contended by
Quezon Province that the boundary separating the old Province of Ambos Camarines from Quezon Province had
already been established and defined in Section 42 of the Revised Administrative Code. Second, Quezon Province
argues that the Chief of the Executive Bureau had no authority to alter or re-define that statutorily-defined
boundary through his decision of 16 June 1922.
Two (2) issues are thus posed for reconsideration and resolution by the court. The first issues relates to the
character of the boundary between Ambos Camarines and Quezon province as set out in Section 42 of the revised
Administrative code. Was that boundary already "defined" and, therefore, in no need of further definition? The
second issue relates to the action of the Chief of the Executive Bureau: Was there legal authority for the 16 June
1922 decision of the Chief Executive Bureau? The two (2) issues are, of course related to one to the other. Should
the entirety of the boundary line between Ambos Camarines and Quezon province be regarded as already
"defined" by Section 42, then any "alteration" or "re-definition" by the Executive Department would, under Section
68 of the Revised Administrative Code, require the prior authorization of the then Philippine Legislature and a third
issue would arise: Was such prior legislative authorization given?
1. Turning to the first issue, we note that Section 42 does set out a definition or description of the boundary line
between Ambos Camarines and Quezon province. We note, however, that Section 42 does not describe or define
the entirety of that line is such a manner as to permit the whole boundary line to be located on the ground by a
surveyor. Close examination os Section 42 will show that is not the whole boundary line that is disputed but only a
segment thereof. the boundary line from the peak of Mt. Cadig eastward to the peak of Mt. Labo and from there
to a stone monument at the head-waters of the Pasay River and thence along the course of that river to the gulf of
Ragay, is described in terms which are sufficiently precise to permit a surveyor to locate that boundary line on the
surface of the earth. it is the western portion of the boundary line from the peak of mt. Cadig westward to a
point on the eastern shore of Basiad Bay which is the subject of the boundary dispute.
It is pointed out by petitioner Camarines Norte, firstly, that the particular point on Basiad bay that is the terminus
of the boundary line is not specificaly Identified in Section 42, considering that the eastern shore of Basiad Bay is
25 kilometersd in length, more or less, such that that terminal point could in theory be located anywhere along the
25-kilometer shore line. Secondly, the specific direction or directions and the varying lengths (the "metes and
bounds") of the various segments of the boundary line to be projected from the terminus point on Basiad Bay onto
Mt. Cadig's peak, are similarly not specified in Section 42, Thus, again, a surveyor on the ground would be unable
to locate and monument the boundary line from Basiad Bay to Mt. Cadig if all he had was the languange found in
Section 42 of the Revised Administrative Code.
We agree with petitioner Camarines Norte's argument. We consider that to that limited extent, the Ambos
Camarines-Quezon boundary line was "undefined" and that there was thus necessity for the 16 June 1922 decision
of the Chief of the Executive Bureau to provide more specific guidance that would permit actual Identification or
location of the Basiad Bay-Mt. Cadig portion of the boundary line between Ambos Camarines and Quezon
Province:
[from the peak of Mt. Cadig] thence a straight line is drawn to the point of intersection of the
inter provincial road between Camarines Norte and Tayabas with the Tabugon River, thence
following the course of the river to its mouth at the Basiad Bay. (Emphasis supplied)
10

2. We consider next the second issue relating to the authority of the Chief of the Executive Bureau to render his
decision. It is important to stress that the Chief of the Executive Bureau, in rendering that decision, did not, as he
could not, purport to act with unlimited discretion. For Section 42 itself established certain requirements which the
disputed portion of the Ambos Camarines Tayabas boundary line must satisfy;
1 the western) terminus point must be on the eastern shore line of Basiad Bay; and
2 the line to be projected from that terminus point must proceed (eastward) to the peak of Mt.
Cadig in such a manner as to bring the territory of the barrio of Basiad entirely within the
municipality. of Capalonga in Ambos Camarines, and to exclude the same from the territory of
the Municipality of Calauag in Tayabas.
It is not disputed by respondent Quezon Province that the line delineated by the Chief of the Executive Bureau in
his decision in fact complied with both the above general directions or descriptions prescribed in Section 42. The
Chief of the Executive Bureau did not, therefore, "alter" or "re-define" or "amend an existing provincial
boundary.." the boundary line between Ambos Camarines and Tayabas. All that the Chief of the Executive Bureau
did was to implement upon the authority of the Secretary of Interior, Section 42 of Act No. 2711.
He was, in addition, acting in accordance with the provisions of Act No. 2809, enacted on 3 March 1919, Section 2
of which (quoted supra) provided that petitioner Camarines Norte, upon its re- establishment as a distinct and
separate province, "shall have the same territory as before its consolidation with Camarines Sur for the
organization of the present Ambos Camarines in a letter dated 5 May 1960 to the Provincial Boards of Camarines
Norte and Quezon Province,
11
former Assistant Executive Secretary Enrique C. Quema stated, among other things
that the Basiad Bay Mt. Cadig segment of the Camarines Norte Quezon boundary line so spelled out under
the 1922 decision of the Chief of the Executive Bureau, "according to the Bureau of Coast and Geodetic Survey,
was the same boundary enforced between Camarines Norte and Tayabas when the former province was
consolidated with Camarines Sur on May 19, 1893."
12
The Court notes that respondent Quezon Province has not
controverted the correctness of this statement of Assistant Executive Secretary Quema. The Court notes also that,
so far as the records before us show, respondent Quezon Province has not attempted to indicate any other
"surveyable" line between Basiad Bay and Mt. Cadig which, like that marked out in the 16 June 1922 decision,
complies with both the requirements established in Section 42 of Act No. 2711 and the requirement prescribed in
Section 2 of Act No. 2809.
Should it be assumed, finally, that prior legislative authority was nonetheless necessary for the legal effectivity and
enforceability of the 16 June 1922 decision of the Chief of the executive Bureau, we believe and so hold that that
prior legislative authority was supplied by Act No. 2809. The spelling out of a "survey-able" and "monumentable"
Basiad Bay-Mt. Cadig segment of the Ambos Camarines-Tayabas boundary line, was necessary and incidental to
the authority of the Governor-General to re-establish as an independent province the former Province of
Camarines Norte and to ensure that it would have the same territory which it had prior to its consolidation into the
then Province of Ambos Camarines.
In sum, we hold that the decision of the Chief of the Executive Bureau dated 16 June 1922 was lawfully issued and
is binding upon the parties. We hold further that prohibition and mandamus will lie for the enforcement of that
decision, an enforcement unjustifiably resisted and delayed for sixty-seven (67) years.
WHEREFORE, the Petition for Mandamus and Prohibition is hereby GRANTED Respondent Quezon Province is
hereby ORDERED immediately to cease and desist, and perpetually to refrain, from exercising or performing any
and all acts of jurisdiction or political authority over all or any part of the area here held to be part of the territory
of the Province of Camarines Norte and forthwith to relinquish the same to petitioner Province of Camarines
Norte.
Let a copy of this decision be furnished to the Secretary of Local Governments and the Office of the President with
the request that surveyors from the Bureau of Lands or other appropriate government agency be forthwith
designated to survey and locate, by latitude and longtitude and by metes and bounds, and to monument the
Basiad Bay Mt. Cadig line described in the 16 June 1922 decision of the Chief of the Executive Bureau. Costs
against respondent.
SO ORDERED.

ATTORNEYS HUMBERTO BASCO, EDILBERTO BALCE, SOCRATES MARANAN AND LORENZO SANCHEZ, petitioners,
vs.
PHILIPPINE AMUSEMENTS AND GAMING CORPORATION (PAGCOR), respondent.
H.B. Basco & Associates for petitioners.
Valmonte Law Offices collaborating counsel for petitioners.
Aguirre, Laborte and Capule for respondent PAGCOR.

PARAS, J.:p
A TV ad proudly announces:
"The new PAGCOR responding through responsible gaming."
But the petitioners think otherwise, that is why, they filed the instant petition seeking to annul the Philippine
Amusement and Gaming Corporation (PAGCOR) Charter PD 1869, because it is allegedly contrary to morals,
public policy and order, and because
A. It constitutes a waiver of a right prejudicial to a third person with a right recognized by law. It
waived the Manila City government's right to impose taxes and license fees, which is recognized
by law;
B. For the same reason stated in the immediately preceding paragraph, the law has intruded into
the local government's right to impose local taxes and license fees. This, in contravention of the
constitutionally enshrined principle of local autonomy;
C. It violates the equal protection clause of the constitution in that it legalizes PAGCOR
conducted gambling, while most other forms of gambling are outlawed, together with
prostitution, drug trafficking and other vices;
D. It violates the avowed trend of the Cory government away from monopolistic and crony
economy, and toward free enterprise and privatization. (p. 2, Amended Petition; p. 7, Rollo)
In their Second Amended Petition, petitioners also claim that PD 1869 is contrary to the declared national policy of
the "new restored democracy" and the people's will as expressed in the 1987 Constitution. The decree is said to
have a "gambling objective" and therefore is contrary to Sections 11, 12 and 13 of Article II, Sec. 1 of Article VIII
and Section 3 (2) of Article XIV, of the present Constitution (p. 3, Second Amended Petition; p. 21, Rollo).
The procedural issue is whether petitioners, as taxpayers and practicing lawyers (petitioner Basco being also the
Chairman of the Committee on Laws of the City Council of Manila), can question and seek the annulment of PD
1869 on the alleged grounds mentioned above.
The Philippine Amusements and Gaming Corporation (PAGCOR) was created by virtue of P.D. 1067-A dated
January 1, 1977 and was granted a franchise under P.D. 1067-B also dated January 1, 1977 "to establish, operate
and maintain gambling casinos on land or water within the territorial jurisdiction of the Philippines." Its operation
was originally conducted in the well known floating casino "Philippine Tourist." 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 this objective.
Subsequently, on July 11, 1983, PAGCOR was created under P.D. 1869 to enable the Government to regulate and
centralize all games of chance authorized by existing franchise or permitted by law, under the following declared
policy
Sec. 1. Declaration of Policy. It is hereby declared to be the policy of the State to centralize and
integrate all games of chance not heretofore authorized by existing franchises or permitted by
law in order to attain the following objectives:
(a) To centralize and integrate the right and authority to operate and conduct games of chance
into one corporate entity to be controlled, administered and supervised by the Government.
(b) To establish and operate clubs and casinos, for amusement and recreation, including sports
gaming pools, (basketball, football, lotteries, etc.) and such other forms of amusement and
recreation including games of chance, which may be allowed by law within the territorial
jurisdiction of the Philippines and which will: (1) generate sources of additional revenue to fund
infrastructure and socio-civic projects, such as flood control programs, beautification, sewerage
and sewage projects, Tulungan ng Bayan Centers, Nutritional Programs, Population Control and
such other essential public services; (2) create recreation and integrated facilities which will
expand and improve the country's existing tourist attractions; and (3) minimize, if not totally
eradicate, all the evils, malpractices and corruptions that are normally prevalent on the conduct
and operation of gambling clubs and casinos without direct government involvement. (Section 1,
P.D. 1869)
To attain these objectives PAGCOR is given territorial jurisdiction all over the Philippines. Under its Charter's
repealing clause, all laws, decrees, executive orders, rules and regulations, inconsistent therewith, are accordingly
repealed, amended or modified.
It is reported that PAGCOR is the third largest source of government revenue, next to the Bureau of Internal
Revenue and the Bureau of Customs. In 1989 alone, PAGCOR earned P3.43 Billion, and directly remitted to the
National Government a total of P2.5 Billion in form of franchise tax, government's income share, the President's
Social Fund and Host Cities' share. In addition, PAGCOR sponsored other socio-cultural and charitable projects on
its own or in cooperation with various governmental agencies, and other private associations and organizations. In
its 3 1/2 years of operation under the present administration, PAGCOR remitted to the government a total of P6.2
Billion. As of December 31, 1989, PAGCOR was employing 4,494 employees in its nine (9) casinos nationwide,
directly supporting the livelihood of Four Thousand Four Hundred Ninety-Four (4,494) families.
But the petitioners, are questioning the validity of P.D. No. 1869. They allege that the same is "null and void" for
being "contrary to morals, public policy and public order," monopolistic and tends toward "crony economy", and is
violative of the equal protection clause and local autonomy as well as for running counter to the state policies
enunciated in Sections 11 (Personal Dignity and Human Rights), 12 (Family) and 13 (Role of Youth) of Article II,
Section 1 (Social Justice) of Article XIII and Section 2 (Educational Values) of Article XIV of the 1987 Constitution.
This challenge to P.D. No. 1869 deserves a searching and thorough scrutiny and the most deliberate consideration
by the Court, involving as it does the exercise of what has been described as "the highest and most delicate
function which belongs to the judicial department of the government." (State v. Manuel, 20 N.C. 144; Lozano v.
Martinez, 146 SCRA 323).
As We enter upon the task of passing on the validity of an act of a co-equal and coordinate branch of the
government We need not be reminded of the time-honored principle, deeply ingrained in our jurisprudence, that a
statute is presumed to be valid. Every presumption must be indulged in favor of its constitutionality. This is not to
say that We approach Our task with diffidence or timidity. Where it is clear that the legislature or the executive for
that matter, has over-stepped the limits of its authority under the constitution, We should not hesitate to wield
the axe and let it fall heavily, as fall it must, on the offending statute (Lozano v. Martinez, supra).
In Victoriano v. Elizalde Rope Workers' Union, et al, 59 SCRA 54, the Court thru Mr. Justice Zaldivar underscored
the
. . . thoroughly established principle which must be followed in all cases where questions of
constitutionality as obtain in the instant cases are involved. All presumptions are indulged in
favor of constitutionality; one who attacks a statute alleging unconstitutionality must prove its
invalidity beyond a reasonable doubt; that a law may work hardship does not render it
unconstitutional; that if any reasonable basis may be conceived which supports the statute, it will
be upheld and the challenger must negate all possible basis; that the courts are not concerned
with the wisdom, justice, policy or expediency of a statute and that a liberal interpretation of the
constitution in favor of the constitutionality of legislation should be adopted. (Danner v. Hass,
194 N.W. 2nd 534, 539; Spurbeck v. Statton, 106 N.W. 2nd 660, 663; 59 SCRA 66; see also e.g.
Salas v. Jarencio, 46 SCRA 734, 739 [1970]; Peralta v. Commission on Elections, 82 SCRA 30, 55
[1978]; and Heirs of Ordona v. Reyes, 125 SCRA 220, 241-242 [1983] cited in Citizens Alliance for
Consumer Protection v. Energy Regulatory Board, 162 SCRA 521, 540)
Of course, there is first, the procedural issue. The respondents are questioning the legal personality of petitioners
to file the instant petition.
Considering however the importance to the public of the case at bar, and in keeping with the Court's duty, under
the 1987 Constitution, to determine whether or not the other branches of government have kept themselves
within the limits of the Constitution and the laws and that they have not abused the discretion given to them, the
Court has brushed aside technicalities of procedure and has taken cognizance of this petition. (Kapatiran ng mga
Naglilingkod sa Pamahalaan ng Pilipinas Inc. v. Tan, 163 SCRA 371)
With particular regard to the requirement of proper party as applied in the cases before us, We
hold that the same is satisfied by the petitioners and intervenors because each of them has
sustained or is in danger of sustaining an immediate injury as a result of the acts or measures
complained of. And even if, strictly speaking they are not covered by the definition, it is still
within the wide discretion of the Court to waive the requirement and so remove the impediment
to its addressing and resolving the serious constitutional questions raised.
In the first Emergency Powers Cases, ordinary citizens and taxpayers were allowed to question
the constitutionality of several executive orders issued by President Quirino although they were
involving only an indirect and general interest shared in common with the public. The Court
dismissed the objection that they were not proper parties and ruled that "the transcendental
importance to the public of these cases demands that they be settled promptly and definitely,
brushing aside, if we must technicalities of procedure." We have since then applied the exception
in many other cases. (Association of Small Landowners in the Philippines, Inc. v. Sec. of Agrarian
Reform, 175 SCRA 343).
Having disposed of the procedural issue, We will now discuss the substantive issues raised.
Gambling in all its forms, unless allowed by law, is generally prohibited. But the prohibition of gambling does not
mean that the Government cannot regulate it in the exercise of its police power.
The concept of police power is well-established in this jurisdiction. It has been defined as the "state authority to
enact legislation that may interfere with personal liberty or property in order to promote the general welfare."
(Edu v. Ericta, 35 SCRA 481, 487) As defined, it consists of (1) an imposition or restraint upon liberty or property,
(2) in order to foster the common good. It is not capable of an exact definition but has been, purposely, veiled in
general terms to underscore its all-comprehensive embrace. (Philippine Association of Service Exporters, Inc. v.
Drilon, 163 SCRA 386).
Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future where it could be
done, provides enough room for an efficient and flexible response to conditions and circumstances thus assuming
the greatest benefits. (Edu v. Ericta, supra)
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 inborn in the very fact of statehood and sovereignty. It is a
fundamental attribute of government that has enabled it to perform the most vital functions of governance.
Marshall, to whom the expression has been credited, refers to it succinctly as the plenary power of the state "to
govern its citizens". (Tribe, American Constitutional Law, 323, 1978). The police power of the State is a power co-
extensive with self-protection and is most aptly termed the "law of overwhelming necessity." (Rubi v. Provincial
Board of Mindoro, 39 Phil. 660, 708) It is "the most essential, insistent, and illimitable of powers." (Smith Bell & Co.
v. National, 40 Phil. 136) It is a dynamic force that enables the state to meet the agencies of the winds of change.
What was the reason behind the enactment of P.D. 1869?
P.D. 1869 was enacted 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" (1st whereas clause, PD 1869).
As was subsequently proved, regulating and centralizing gambling operations in one corporate entity the
PAGCOR, was beneficial not just to the Government but to society in general. It is a reliable source of much needed
revenue for the cash strapped Government. It provided funds for social impact projects and subjected gambling to
"close scrutiny, regulation, supervision and control of the Government" (4th Whereas Clause, PD 1869). With the
creation of PAGCOR and the direct intervention of the Government, the evil practices and corruptions that go with
gambling will be minimized if not totally eradicated. Public welfare, then, lies at the bottom of the enactment of
PD 1896.
Petitioners contend that P.D. 1869 constitutes a waiver of the right of the City of Manila to impose taxes and legal
fees; that the exemption clause in P.D. 1869 is violative of the principle of local autonomy. They must be referring
to Section 13 par. (2) of P.D. 1869 which exempts PAGCOR, as the franchise holder from paying any "tax of any
kind or form, income or otherwise, as well as fees, charges or levies of whatever nature, whether National or
Local."
(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 or 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
(Section 13 [2]).
Their contention stated hereinabove is without merit for the following reasons:
(a) The City of Manila, being a mere Municipal corporation has no inherent right to impose taxes (Icard v. City of
Baguio, 83 Phil. 870; City of Iloilo v. Villanueva, 105 Phil. 337; Santos v. Municipality of Caloocan, 7 SCRA 643).
Thus, "the Charter or statute must plainly show an intent to confer that power or the municipality cannot assume
it" (Medina v. City of Baguio, 12 SCRA 62). Its "power to tax" therefore must always yield to a legislative act which
is superior having been passed upon by the state itself which has the "inherent power to tax" (Bernas, the Revised
[1973] Philippine Constitution, Vol. 1, 1983 ed. p. 445).
(b) The Charter of the City of Manila is subject to control by Congress. It should be stressed that "municipal
corporations are mere creatures of Congress" (Unson v. Lacson, G.R. No. 7909, January 18, 1957) which has the
power to "create and abolish municipal corporations" due to its "general legislative powers" (Asuncion v. Yriantes,
28 Phil. 67; Merdanillo v. Orandia, 5 SCRA 541). Congress, therefore, has the power of control over Local
governments (Hebron v. Reyes, G.R. No. 9124, July 2, 1950). And if Congress can grant the City of Manila the power
to tax certain matters, it can also provide for exemptions or even take back the power.
(c) The City of Manila's power to impose license fees on gambling, has long been revoked. As early as 1975, the
power of local governments to regulate gambling thru the grant of "franchise, licenses or permits" was withdrawn
by P.D. No. 771 and was vested exclusively on the National Government, thus:
Sec. 1. Any provision of law to the contrary notwithstanding, the authority of chartered cities and
other local governments to issue license, permit or other form of franchise to operate, maintain
and establish horse and dog race tracks, jai-alai and other forms of gambling is hereby revoked.
Sec. 2. Hereafter, all permits or franchises to operate, maintain and establish, horse and dog race
tracks, jai-alai and other forms of gambling shall be issued by the national government upon
proper application and verification of the qualification of the applicant . . .
Therefore, only the National Government has the power to issue "licenses or permits" for the operation of
gambling. Necessarily, the power to demand or collect license fees which is a consequence of the issuance of
"licenses or permits" is no longer vested in the City of Manila.
(d) Local governments have no power to tax instrumentalities of the National Government. PAGCOR is a
government owned or controlled corporation with an original charter, PD 1869. All of its shares of stocks are
owned by the National Government. In addition to its corporate powers (Sec. 3, Title II, PD 1869) it also exercises
regulatory powers thus:
Sec. 9. Regulatory Power. The Corporation shall maintain a Registry of the affiliated entities,
and shall exercise all the powers, authority and the responsibilities vested in the Securities and
Exchange Commission over such affiliating entities mentioned under the preceding section,
including, but not limited to amendments of Articles of Incorporation and By-Laws, changes in
corporate term, structure, capitalization and other matters concerning the operation of the
affiliated entities, the provisions of the Corporation Code of the Philippines to the contrary
notwithstanding, except only with respect to original incorporation.
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 an instrumentality of the Government,
PAGCOR should be and actually is exempt from local taxes. Otherwise, its operation might be burdened, impeded
or subjected to control by a mere Local government.
The states have no power by taxation or otherwise, to retard, impede, burden or in any manner
control the operation of constitutional laws enacted by Congress to carry into execution the
powers vested in the federal government. (MC Culloch v. Marland, 4 Wheat 316, 4 L Ed. 579)
This doctrine emanates from the "supremacy" of the National Government over local governments.
Justice Holmes, speaking for the Supreme Court, made reference to the entire absence of power
on the part of the States to touch, in that way (taxation) at least, the instrumentalities of the
United States (Johnson v. Maryland, 254 US 51) and it can be agreed that no state or political
subdivision can regulate a federal instrumentality in such a way as to prevent it from
consummating its federal responsibilities, or even to seriously burden it in the accomplishment of
them. (Antieau, Modern Constitutional Law, Vol. 2, p. 140, emphasis supplied)
Otherwise, mere creatures of the State can defeat National policies thru extermination of what local authorities
may perceive to be undesirable activities or enterprise using the power to tax as "a tool for regulation" (U.S. v.
Sanchez, 340 US 42).
The power to tax which was called by Justice Marshall as the "power to destroy" (Mc Culloch v. Maryland, supra)
cannot be allowed to defeat an instrumentality or creation of the very entity which has the inherent power to
wield it.
(e) Petitioners also argue that the Local Autonomy Clause of the Constitution will be violated by P.D. 1869. This is a
pointless argument. Article X of the 1987 Constitution (on Local Autonomy) provides:
Sec. 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. (emphasis supplied)
The power of local government to "impose taxes and fees" is always subject to "limitations" which Congress may
provide by law. Since PD 1869 remains an "operative" law until "amended, repealed or revoked" (Sec. 3, Art. XVIII,
1987 Constitution), its "exemption clause" remains as an exception to the exercise of the power of local
governments to impose taxes and fees. It cannot therefore 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" (III Records
of the 1987 Constitutional Commission, pp. 435-436, as cited in Bernas, The Constitution of the Republic of the
Philippines, Vol. II, First Ed., 1988, p. 374). It does not 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
constituted by law and has substantial control of local affairs. In a unitary system of government,
such as the government under the Philippine Constitution, local governments can only be an
intra sovereign subdivision 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. (emphasis supplied)
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. (Citizens Alliance for Consumer
Protection v. Energy Regulatory Board, 162 SCRA 539).
What is settled is that the matter of regulating, taxing or otherwise dealing with gambling is a State concern and
hence, it is the sole prerogative of the State to retain it or delegate it to local governments.
As gambling is usually an offense against the State, legislative grant or express charter power is
generally necessary to empower the local corporation to deal with the subject. . . . In the absence
of express grant of power to enact, ordinance provisions on this subject which are inconsistent
with the state laws are void. (Ligan v. Gadsden, Ala App. 107 So. 733 Ex-Parte Solomon, 9, Cals.
440, 27 PAC 757 following in re Ah You, 88 Cal. 99, 25 PAC 974, 22 Am St. Rep. 280, 11 LRA 480,
as cited in Mc Quinllan Vol. 3 Ibid, p. 548, emphasis supplied)
Petitioners next contend that P.D. 1869 violates the equal protection clause of the Constitution, because "it
legalized PAGCOR conducted gambling, while most gambling are outlawed together with prostitution, drug
trafficking and other vices" (p. 82, Rollo).
We, likewise, find no valid ground to sustain this contention. The petitioners' posture ignores the well -accepted
meaning of the clause "equal protection of the laws." The clause does not preclude classification of individuals who
may be accorded different treatment under the law as long as the classification is not unreasonable or arbitrary
(Itchong v. Hernandez, 101 Phil. 1155). A law does not have to operate in equal force on all persons or things to be
conformable to Article III, Section 1 of the Constitution (DECS v. San Diego, G.R. No. 89572, December 21, 1989).
The "equal protection clause" does not prohibit the Legislature from establishing classes of individuals or objects
upon which different rules shall operate (Laurel v. Misa, 43 O.G. 2847). The Constitution does not require
situations which are different in fact or opinion to be treated in law as though they were the same (Gomez v.
Palomar, 25 SCRA 827).
Just how P.D. 1869 in legalizing gambling conducted by PAGCOR is violative of the equal protection is not clearly
explained in the petition. The mere fact that some gambling activities like cockfighting (P.D 449) horse racing (R.A.
306 as amended by RA 983), sweepstakes, lotteries and races (RA 1169 as amended by B.P. 42) are legalized under
certain conditions, while others are prohibited, does not render the applicable laws, P.D. 1869 for one,
unconstitutional.
If the law presumably hits the evil where it is most felt, it is not to be overthrown because there
are other instances to which it might have been applied. (Gomez v. Palomar, 25 SCRA 827)
The equal protection clause of the 14th Amendment does not mean that all occupations called
by the same name must be treated the same way; the state may do what it can to prevent which
is deemed as evil and stop short of those cases in which harm to the few concerned is not less
than the harm to the public that would insure if the rule laid down were made mathematically
exact. (Dominican Hotel v. Arizona, 249 US 2651).
Anent petitioners' claim that PD 1869 is contrary to the "avowed trend of the Cory Government away from
monopolies and crony economy and toward free enterprise and privatization" suffice it to state that this is not a
ground for this Court to nullify P.D. 1869. If, indeed, PD 1869 runs counter to the government's policies then it is
for the Executive Department to recommend to Congress its repeal or amendment.
The judiciary does not settle policy issues. The Court can only declare what the law is and not
what the law should be. Under our system of government, policy issues are within the domain of
the political branches of government and of the people themselves as the repository of all state
power. (Valmonte v. Belmonte, Jr., 170 SCRA 256).
On the issue of "monopoly," however, the Constitution provides that:
Sec. 19. The State shall regulate or prohibit monopolies when public interest so requires. No
combinations in restraint of trade or unfair competition shall be allowed. (Art. XII, National
Economy and Patrimony)
It should be noted that, as the provision is worded, monopolies are not necessarily prohibited by the Constitution.
The state must still decide whether public interest demands that monopolies be regulated or prohibited. Again,
this is a matter of policy for the Legislature to decide.
On petitioners' allegation that P.D. 1869 violates 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, suffice it to state also that these are merely statements of principles and, policies. As such, they
are basically not self-executing, meaning a law should be passed by Congress to clearly define and effectuate such
principles.
In general, therefore, the 1935 provisions were not intended to be self-executing principles ready
for enforcement through the courts. They were rather directives addressed to the executive and
the legislature. If the executive and the legislature failed to heed the directives of the articles the
available remedy was not judicial or political. The electorate could express their displeasure with
the failure of the executive and the legislature through the language of the ballot. (Bernas, Vol. II,
p. 2)
Every law has in its favor the presumption of constitutionality (Yu Cong Eng v. Trinidad, 47 Phil. 387; Salas v.
Jarencio, 48 SCRA 734; Peralta v. Comelec, 82 SCRA 30; Abbas v. Comelec, 179 SCRA 287). Therefore, for PD 1869
to be nullified, it must be shown that there is a clear and unequivocal breach of the Constitution, not merely a
doubtful and equivocal one. In other words, the grounds for nullity must be clear and beyond reasonable doubt.
(Peralta v. Comelec, supra) Those who petition this Court to declare a law, or parts thereof, unconstitutional must
clearly establish the basis for such a declaration. Otherwise, their petition must fail. Based on the grounds raised
by petitioners to challenge the constitutionality of P.D. 1869, the Court finds that petitioners have failed to
overcome the presumption. The dismissal of this petition is therefore, inevitable. But as to whether P.D. 1869
remains a wise legislation considering the issues of "morality, monopoly, trend to free enterprise, privatization as
well as the state principles on social justice, role of youth and educational values" being raised, is up for Congress
to determine.
As this Court held in Citizens' Alliance for Consumer Protection v. Energy Regulatory Board, 162 SCRA 521
Presidential Decree No. 1956, as amended by Executive Order No. 137 has, in any case, in its
favor the presumption of validity and constitutionality which petitioners Valmonte and the KMU
have not overturned. Petitioners have not undertaken to identify the provisions in the
Constitution which they claim to have been violated by that statute. This Court, however, is not
compelled to speculate and to imagine how the assailed legislation may possibly offend some
provision of the Constitution. The Court notes, further, in this respect that petitioners have in the
main put in question the wisdom, justice and expediency of the establishment of the OPSF,
issues which are not properly addressed to this Court and which this Court may not
constitutionally pass upon. Those issues should be addressed rather to the political departments
of government: the President and the Congress.
Parenthetically, We wish to state that gambling is generally immoral, and this is precisely so when the gambling
resorted to is excessive. This excessiveness necessarily depends not only on the financial resources of the gambler
and his family but also on his mental, social, and spiritual outlook on life. However, the mere fact that some
persons may have lost their material fortunes, mental control, physical health, or even their lives does not
necessarily mean that the same are directly attributable to gambling. Gambling may have been the antecedent, but
certainly not necessarily the cause. For the same consequences could have been preceded by an overdose of food,
drink, exercise, work, and even sex.
WHEREFORE, the petition is DISMISSED for lack of merit.
SO ORDERED.

JESUS C. ESTANISLAO, in his capacity as the Secretary of Finance, petitioner,
vs.
HONORABLE AMADO COSTALES, as Presiding Judge of the Regional Trial Court, Branch 14, at Zamboanga City,
and CITY OF ZAMBOANGA, represented by the Honorable City Mayor, respondents.

GANCAYCO, J.:p
The validity of Ordinance No. 44 of Zamboanga City, dated January 13, 1982 imposing a P0.01 tax per liter of
softdrinks produced, manufactured, and/or bottled within the territorial jurisdiction of the City of Zamboanga is
the issue addressed by this petition.
This Ordinance was passed by the Sangguniang Panglungsod of Zamboanga City.
1
On February 16, 1982, the
Sanggunian sent a copy of the Ordinance to the then Minister of Finance by registered mail for his review pursuant
to P.D. No. 231, otherwise known as the Local Tax Code.
On December 3, 1982, the Minister of Finance through Deputy Minister Antonino P. Roman, Jr., sent the letter
addressed to the Sanggunian, suspending the effectivity of Ordinance No. 44 on the ground that it contravenes
Section 19(a) of the Local Tax Code.
2

On January 31, 1983, the City of Zamboanga, represented by its City Mayor, appealed said decision of the Minister
of Finance to the Regional Trial Court, Branch 14, at Zamboanga City.
On December 5, 1990, the lower court rendered a decision finding that the tax levied under said Ordinance is not
among those that the Sanggunian may impose under the Local Tax Code, but nonetheless, it upheld its validity on
the ground that the Minister of Finance did not take appropriate action on the matter within the prescribed period
of 120 days after receipt of a copy thereof.
3

Hence, this petition for review on certiorari filed by the incumbent Secretary of Finance, represented by the
Solicitor General, alleging that the trial court erred when it held that the failure of the Minister of Finance to
suspend the effectivity of Ordinance No. 44 within 120 days from receipt of a copy thereof rendered said
Ordinance valid.
The petition is impressed with merit.
Section 19 (a) of the Local Tax Code provides as follows:
Sec. 19. Tax on business.The municipality may impose a tax on businesses as follows:
(a) Tax on the business of manufacturing, importing, exporting, producing,
wholesaling or retailing of, or dealing in, any article of commerce of whatever
kind or nature, except those for which fixed taxes are provided herein:
With gross annual sales Amount of tax
for the preceding calendar per
year in the amount of annum
Less than P1,000.00 P 10.00
P1,000.00 or more but
less than P2,000.00 20.00
P2,000.00 or more but
less than P3,000.00 30.00
P3,000.00 or more but
less than P4,000.00 45.00
P4,000.00 or more but
less than P5,000.00 65.00
P5,000.00 or more but
less than P6,000.00 80.00
P6,000.00 or more but
less than P7,000.00 100.00
P7,000.00 or more but
less than P8,000.00 120.00
P8,000.00 or more but
less than P10,000.00 160.00
P10,000.00 or more but
less than P15,000.00 240.00
P15,000.00 or more but
less than P20,000.00 360.00
P20,000.00 or more but
less than P30,000.00 520.00
P30,000.00 or more but
less than P40,000.00 750.00
P40,000.00 or more but
less than P50,000.00 1,000.00
P50,000.00 or more but
less than P75,000.00 1,500.00
P75,000.00 or more but
less than P100,000.00 2,200.00
P100,000.00 or more but
less than P150,000.00 3,200.00
P150,000.00 or more but
less than P300,000.00 3,900.00
P300,000.00 or more but
less than P500,000.00 7,000.00
P500,000.00 or more but
less than P750,000.00 11,250.00
P750,000.00 to P 1,000.000.00 16,000.00
For every P50,000.00 or fraction
thereof in excess of
P1,000,000.00 200.00
In the case of newly started business, the tax shall be at the rate of not exceeding one-tenth of
one per cent of the capital investment but in no case shall it be less than the minimum of P10.00
fixed above.
The tax on the business of manufacturing, producing or importing agricultural implements,
fertilizers, medicinal drugs, and dairy products shall be one-half of the rates above prescribed.
For purposes of collection of this tax, manufacturers and producers maintaining or operating
branch or sales offices elsewhere shall record the sales in the branch or sales office making the
sale and the tax thereon shall accrue to the local government where the branch or sales office is
located. In cases where there is no such branch or sales office in the locality where the sale is
effected, the sale shall be duly recorded in the principal office and the tax shall accrue to the
local government where said principal office is located.
In relation thereto Section 23 thereof also provides:
Sec. 23. Scope of power.Except as otherwise provided in this Code, the city may levy and
collect, among others, any of the taxes, fees and other impositions that the province or the
municipality may levy and collect. The exercise of the taxing powers of the city extends to the
taxes, fees and other impositions mentioned in Sections 12, 13, 14, 15 and 16 of this Code which
the city shall also impose and collect, to the exclusion of the national and municipal
governments.
The rates of the taxes, fees, or other impositions that the city shall fix may exceed the maximum
rates allowed for the province or municipality by not more than fifty per cent, except the rates of
the taxes and fees provided in Sections 12, 13 and 14 in Chapter II of this Code which shall be
uniform for the province and the city.
In lieu of the graduated fixed tax prescribed under Section 19 of this Code as read in relation with
this Section, the city may impose a percentage tax on the sales of non-essential commodities at
the rate of not exceeding two per cent and on the sales of essential commodities at the rate of
not exceeding one per cent. In no case, however, shall the city impose both the graduated fixed
tax and the percentage tax on the same subject.
For purposes of this tax, the following shall be considered essential commodities:
(a) Rice, corn, wheat flour, meat, milk, fish, sugar, salt and other agricultural, marine and fresh
water products;
(b) Laundry soap medicine and household remedies;
(c) Locally manufactured ordinary fabrics and canned foodstuffs;
(d) Commodities covered by the Price Control Law; and
(e) Such other related and similar products necessary to human life and well-being.
The city may levy any tax, fee or other imposition not specifically enumerated or otherwise
provided for in this Code, subject to the provisions of Sections 49 and 50 of this Code. (Emphasis
supplied.)
From the foregoing, it is clear that a city, like public respondent Zamboanga City may impose, in lieu of the
graduated fixed tax prescribed under Section 19 of the Local Tax Code, a percentage tax on the gross sales for the
preceding calendar year of non-essential commodities at the rate of not exceeding two per cent and on the gross
sales of essential commodities at the rate of not exceeding one per cent.
Ordinance No. 44 of the respondent Zamboanga City imposes P0.01 per liter of softdrinks produced,
manufactured, and/or bottled within the territorial jurisdiction of the City of Zamboanga. No doubt this Ordinance
is ultra vires as it is not within the authority of the City to impose said tax. The authority of the City is limited to the
imposition of a percentage tax on the gross sales or receipts of said product which, being non-essential, shall be at
the rate of not exceeding 2% of the gross sales or receipts of the softdrinks for the preceding calendar year. The
tax being imposed under said Ordinance is based on the output or production and not on the gross sales or receipts
as authorized under the Local Tax Code.
Public respondent Zamboanga City, however, invokes the ruling of this Court in Pepsi-Cola Bottling Company vs.
Municipality of Tanauan, Leyte
4
whereby this Court upheld the validity of Municipal Ordinance No. 27 enacted by
the Municipality of Tanauan, Leyte imposing a tax of P0.01 for every gallon of softdrinks produced in the
municipality as follows:
That brings Us to the question of whether the remaining Ordinance No. 27 imposes a percentage
or a specific tax. undoubtedly, the taxing authority conferred on local governments under Section
2, Republic Act No. 2264, is broad enough as to extend to almost "everything, excepting those
which are mentioned therein." As long as the tax levied under the authority of a city or municipal
ordinance is not within the exceptions and limitations in the law, the same comes within the
ambit of the general rule, pursuant to the rules of expresio unius est exclusio alterious, and
exceptio firmat regulum in casibus non excepti. The limitation applies, particularly, to the
prohibition against municipalities and municipal districts to impose "any percentage tax on sales
or other taxes in any form based thereon nor impose taxes on articles subject to specific tax,
except gasoline, under the provisions of the National Internal Revenue Code." For purposes of
this particular limitation, a municipal ordinance which prescribes a set ratio between the amount
of the tax and the volume of sale of the taxpayer imposes a sales tax and is nun and void for
being outside the power of the municipality to enact. But, the imposition of "a tax of one centavo
(P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity" on all soft drinks produced or
manufactured under Ordinance No. 27 does not partake of the nature of a percentage tax on
sales, or other taxes in any form based thereon. The tax is levied on the produce (whether sold or
not) and not on the sales. The volume capacity of the taxpayer's production of soft drinks is
considered solely for purposes of determining the tax rate on the products, but there is no set
ratio between the volume of sales and the amount of the tax.
5

Said case was decided by this Court on the basis of the provisions of the Local Autonomy Act (Republic Act No.
2264, as amended, which took effect on June 19, 1959), particularly Section 2 thereof, which gives the cities or
municipalities ample taxing authority covering almost "everything, excepting those mentioned herein."
However, the Local Autonomy Act has been superseded by the Local Tax Code insofar as the taxing authority in the
provinces, cities or municipalities is concerned. By express language of Section 64(a) of the Local Tax Code, "all
existing tax ordinances of provinces, cities, municipalities and barrios shall be deemed ipso facto nullified on June
30, 1974."
6

The applicable law, therefore, to the present case is the Local Tax Code and not the Local Autonomy Act.
Section 5, Article X of the 1987 Constitution provides "Each local government unit shall have the power to create
its own sources of revenues, and to levy taxes, fees, and charges subject to such guidelines and limitations as the
Congress may provide, consistent with the basic policy of local autonomy."
7
Ordinance No. 44 of public
respondent Zamboanga City traverses the limitations set by the Local Tax Code.
Section 44 of the Local Tax Code provides as follows:
Sec. 44. Review and suspension of tax ordinance.Within fifteen days after its approval, a
certified true copy of a tax ordinance shall be furnished: the Secretary of Finance by the
provincial board or city council; the provincial treasurer, by the municipal or barrio council; or the
city treasurer by the barrio council in the city's jurisdiction. If , within one hundred and twenty
days after receipt of a copy thereof, the Secretary of Finance or the provincial or city treasurer,
as the case may be, takes no action as authorized in this section, the tax ordinance shall remain
in force.
The Secretary of Finance, the provincial treasurer, or the city treasurer, as the case may be, shall
review and have the authority to suspend the effectivity of any tax ordinance within one hundred
and twenty days after receipt of a copy thereof, if, in his opinion, the tax or fee therein levied or
imposed is unjust, excessive, oppressive, confiscatory, or not among those that the particular
local government may impose in the exercise of its power in accordance with this Code; or when
the tax ordinance is, in whole or in part, contrary to declared national economic policy; or when
the ordinance is discriminatory in nature on the conduct of business or calling or in restraint of
trade.
When the Secretary of Finance, the provincial treasurer or city treasurer, as the case may be,
exercises this authority, the effectivity of such ordinance shall be suspended, either in part or, if
necessary, in toto. The local legislative body, within thirty days after receipt of the notice of
suspension, may either modify the tax ordinance to meet the objections thereto or file an appeal
with the proper court, otherwise, the tax ordinance or the part or parts thereof declared
suspended shall be considered as revoked.
An appeal shall not stay the order of suspension nor does it authorize the local legislative body to
reimpose the same tax or fee levied under a suspended ordinance until such time as the grounds
for the suspension thereof shall have ceased to exist or the appeal has been resolved in its favor.
Any tax or fee paid pursuant to the ordinance involved shall be considered as having been paid
under protest.
In case the appeal is resolved in favor of the local government, the tax or fee that would have
been collected if there were no order of suspension shall immediately be collected without
interest and surcharge. In case the order of suspension is upheld, the court shall forthwith order
the refund of the tax or fee paid under protest to the taxpayer.
8

In accordance with the foregoing provision, the Sanggunian Panglungsod sent a copy of Ordinance No. 44 by
registered mail to the then Minister of Finance on February 16, 1982. Apparently, said official failed to act within
120 days after receipt of a copy thereof. It was only on December 6, 1982 when the Minister of Finance, through
his deputy, wrote the Sanggunian informing it of the suspension of the effectivity of Ordinance No. 44 as it
contravenes Section 19(a) of the Local Tax Code, as amended, without prejudice to the Sanggunian filing an appeal
within thirty (30) days from receipt thereof; otherwise the same shall be deemed revoked. Public respondent
Zamboanga City concurs in the position of the respondent judge that since the Minister of Finance failed to act or
otherwise suspend the effectivity of the tax ordinance within 120 days from receipt of a copy thereof, said
Ordinance is valid and remains in force.
There is no authority under Section 44 of the Local Tax Code for this conclusion. All that is provided therein is that
if the Secretary of Finance "takes no action as authorized in this section, the tax ordinance shall remain in force."
Even if the Secretary of Finance failed to review or act on the Ordinance within the prescribed period of 120 days it
does not follow as a legal consequence thereof that an otherwise invalid ordinance is thereby validated.
Much less can it be interpreted to mean that the Secretary of Finance can no longer act by suspending and/or
revoking an invalid ordinance even after the lapse of the 120-day period. All that the law says is that after said
period the tax ordinance shall remain in force. The prescribed period for review is only directory and the Secretary
of Finance may still review the ordinance and act accordingly even after the lapse of the said period provided he
acts within a reasonable time.
Consequently even after the prescribed period has lapsed, should the Secretary of Finance, upon review, find that
the tax or fee levied or imposed is unjust, excessive, oppressive, confiscatory, or not among those that the
particular local government may impose in the exercise of its power in accordance with this Code; or when the tax
ordinance is, in whole or in part, contrary to the declared national economic policy; or when the ordinance is
discriminatory in nature on the conduct of business or calling or in restraint of trade,
9
the Secretary of Finance
may certainly suspend the effectivity of such ordinance and revoke the same, without prejudice to the right to
appeal to the courts within 30 days after receipt of the notice of suspension. The same rule should apply to the
provincial and city treasurers, as the case may be, under Section 44 of the Local Tax Code.
WHEREFORE, the petition is hereby GRANTED. City Ordinance No. 44 dated January 13, 1982 enacted by the
Sangguniang Panglunsod of public respondent Zamboanga City is hereby declared null and void. Any taxes paid
under protest thereunder should be accordingly refunded to the taxpayers concerned.
10
No pronouncement as to
costs.
SO ORDERED.


FIRST PHILIPPINE INDUSTRIAL CORPORATION, petitioner,
vs.
COURT OF APPEALS, HONORABLE PATERNO V. TAC-AN, BATANGAS CITY and ADORACION C. ARELLANO, in her
official capacity as City Treasurer of Batangas, respondents.
This petition for review on certiorari assails the Decision of the Court of Appeals dated November 29, 1995, in
CA-G.R. SP No. 36801, affirming the decision of the Regional Trial Court of Batangas City, Branch 84, in Civil Case
No. 4293, which dismissed petitioners' complaint for a business tax refund imposed by the City of Batangas.
Petitioner is a grantee of a pipeline concession under Republic Act No. 387, as amended, to contract, install and
operate oil pipelines. The original pipeline concession was granted in 1967
1
and renewed by the Energy
Regulatory Board in 1992.
2

Sometime in January 1995, petitioner applied for a mayor's permit with the Office of the Mayor of Batangas
City. However, before the mayor's permit could be issued, the respondent City Treasurer required petitioner to
pay a local tax based on its gross receipts for the fiscal year 1993 pursuant to the Local Government Code
3
. The
respondent City Treasurer assessed a business tax on the petitioner amounting to P956,076.04 payable in four
installments based on the gross receipts for products pumped at GPS-1 for the fiscal year 1993 which amounted
to P181,681,151.00. In order not to hamper its operations, petitioner paid the tax under protest in the amount
of P239,019.01 for the first quarter of 1993.
On January 20, 1994, petitioner filed a letter-protest addressed to the respondent City Treasurer, the pertinent
portion of which reads:
Please note that our Company (FPIC) is a pipeline operator with a government concession
granted under the Petroleum Act. It is engaged in the business of transporting petroleum
products from the Batangas refineries, via pipeline, to Sucat and JTF Pandacan Terminals. As
such, our Company is exempt from paying tax on gross receipts under Section 133 of the Local
Government Code of 1991 . . . .
Moreover, Transportation contractors are not included in the enumeration of contractors
under Section 131, Paragraph (h) of the Local Government Code. Therefore, the authority to
impose tax "on contractors and other independent contractors" under Section 143, Paragraph
(e) of the Local Government Code does not include the power to levy on transportation
contractors.
The imposition and assessment cannot be categorized as a mere fee authorized under Section
147 of the Local Government Code. The said section limits the imposition of fees and charges
on business to such amounts as may be commensurate to the cost of regulation, inspection,
and licensing. Hence, assuming arguendo that FPIC is liable for the license fee, the imposition
thereof based on gross receipts is violative of the aforecited provision. The amount of
P956,076.04 (P239,019.01 per quarter) is not commensurate to the cost of regulation,
inspection and licensing. The fee is already a revenue raising measure, and not a mere
regulatory imposition.
4

On March 8, 1994, the respondent City Treasurer denied the protest contending that petitioner cannot be
considered engaged in transportation business, thus it cannot claim exemption under Section 133 (j) of the Local
Government Code.
5

On June 15, 1994, petitioner filed with the Regional Trial Court of Batangas City a complaint
6
for tax refund with
prayer for writ of preliminary injunction against respondents City of Batangas and Adoracion Arellano in her
capacity as City Treasurer. In its complaint, petitioner alleged, inter alia, that: (1) the imposition and collection
of the business tax on its gross receipts violates Section 133 of the Local Government Code; (2) the authority of
cities to impose and collect a tax on the gross receipts of "contractors and independent contractors" under Sec.
141 (e) and 151 does not include the authority to collect such taxes on transportation contractors for, as defined
under Sec. 131 (h), the term "contractors" excludes transportation contractors; and, (3) the City Treasurer
illegally and erroneously imposed and collected the said tax, thus meriting the immediate refund of the tax paid.

7

Traversing the complaint, the respondents argued that petitioner cannot be exempt from taxes under Section
133 (j) of the Local Government Code as said exemption applies only to "transportation contractors and persons
engaged in the transportation by hire and common carriers by air, land and water." Respondents assert that
pipelines are not included in the term "common carrier" which refers solely to ordinary carriers such as trucks,
trains, ships and the like. Respondents further posit that the term "common carrier" under the said code
pertains to the mode or manner by which a product is delivered to its destination.
8

On October 3, 1994, the trial court rendered a decision dismissing the complaint, ruling in this wise:
. . . Plaintiff is either a contractor or other independent contractor.
. . . the exemption to tax claimed by the plaintiff has become unclear. It is a rule that tax
exemptions are to be strictly construed against the taxpayer, taxes being the lifeblood of the
government. Exemption may therefore be granted only by clear and unequivocal provisions of
law.
Plaintiff claims that it is a grantee of a pipeline concession under Republic Act 387. (Exhibit A)
whose concession was lately renewed by the Energy Regulatory Board (Exhibit B). Yet neither
said law nor the deed of concession grant any tax exemption upon the plaintiff.
Even the Local Government Code imposes a tax on franchise holders under Sec. 137 of the
Local Tax Code. Such being the situation obtained in this case (exemption being unclear and
equivocal) resort to distinctions or other considerations may be of help:
1. That the exemption granted under Sec. 133 (j)
encompasses only common carriers so as not to overburden
the riding public or commuters with taxes. Plaintiff is not a
common carrier, but a special carrier extending its services
and facilities to a single specific or "special customer" under
a "special contract."
2. The Local Tax Code of 1992 was basically enacted to give
more and effective local autonomy to local governments
than the previous enactments, to make them economically
and financially viable to serve the people and discharge
their functions with a concomitant obligation to accept
certain devolution of powers, . . . So, consistent with this
policy even franchise grantees are taxed (Sec. 137) and
contractors are also taxed under Sec. 143 (e) and 151 of the
Code.
9

Petitioner assailed the aforesaid decision before this Court via a petition for review. On February 27, 1995, we
referred the case to the respondent Court of Appeals for consideration and adjudication.
10
On November 29,
1995, the respondent court rendered a decision
11
affirming the trial court's dismissal of petitioner's complaint.
Petitioner's motion for reconsideration was denied on July 18, 1996.
12

Hence, this petition. At first, the petition was denied due course in a Resolution dated November 11, 1996.
13

Petitioner moved for a reconsideration which was granted by this Court in a Resolution
14
of January 22, 1997.
Thus, the petition was reinstated.
Petitioner claims that the respondent Court of Appeals erred in holding that (1) the petitioner is not a common
carrier or a transportation contractor, and (2) the exemption sought for by petitioner is not clear under the law.
There is merit in the petition.
A "common carrier" may be defined, broadly, as one who holds himself out to the public as engaged in the
business of transporting persons or property from place to place, for compensation, offering his services to the
public generally.
Art. 1732 of the Civil Code defines a "common carrier" as "any person, corporation, firm or association engaged
in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation,
offering their services to the public."
The test for determining whether a party is a common carrier of goods is:
1. He must be engaged in the business of carrying goods for
others as a public employment, and must hold himself out
as ready to engage in the transportation of goods for person
generally as a business and not as a casual occupation;
2. He must undertake to carry goods of the kind to which his
business is confined;
3. He must undertake to carry by the method by which his
business is conducted and over his established roads; and
4. The transportation must be for hire.
15

Based on the above definitions and requirements, there is no doubt that petitioner is a common carrier. It is
engaged in the business of transporting or carrying goods, i.e. petroleum products, for hire as a public
employment. It undertakes to carry for all persons indifferently, that is, to all persons who choose to employ its
services, and transports the goods by land and for compensation. The fact that petitioner has a limited clientele
does not exclude it from the definition of a common carrier. In De Guzman vs. Court of Appeals
16
we ruled that:
The above article (Art. 1732, Civil Code) makes no distinction between one
whose principal business activity is the carrying of persons or goods or both,
and one who does such carrying only as an ancillary activity (in local idiom, as
a "sideline"). Article 1732 . . . avoids making any distinction between a person
or enterprise offering transportation service on a regular or scheduled basis
and one offering such service on an occasional, episodic or unscheduled basis.
Neither does Article 1732 distinguish between a carrier offering its services to
the "general public," i.e., the general community or population, and one who
offers services or solicits business only from a narrow segment of the general
population. We think that Article 1877 deliberately refrained from making
such distinctions.
So understood, the concept of "common carrier" under Article 1732 may be
seen to coincide neatly with the notion of "public service," under the Public
Service Act (Commonwealth Act No. 1416, as amended) which at least
partially supplements the law on common carriers set forth in the Civil Code.
Under Section 13, paragraph (b) of the Public Service Act, "public service"
includes:
every person that now or hereafter may own, operate.
manage, or control in the Philippines, for hire or
compensation, with general or limited clientele, whether
permanent, occasional or accidental, and done for general
business purposes, any common carrier, railroad, street
railway, traction railway, subway motor vehicle, either for
freight or passenger, or both, with or without fixed route
and whatever may be its classification, freight or carrier
service of any class, express service, steamboat, or
steamship line, pontines, ferries and water craft, engaged in
the transportation of passengers or freight or both,
shipyard, marine repair shop, wharf or dock, ice plant, ice-
refrigeration plant, canal, irrigation system gas, electric light
heat and power, water supply and power petroleum,
sewerage system, wire or wireless communications systems,
wire or wireless broadcasting stations and other similar
public services. (Emphasis Supplied)
Also, respondent's argument that the term "common carrier" as used in Section 133 (j) of the Local Government
Code refers only to common carriers transporting goods and passengers through moving vehicles or vessels
either by land, sea or water, is erroneous.
As correctly pointed out by petitioner, the definition of "common carriers" in the Civil Code makes no distinction
as to the means of transporting, as long as it is by land, water or air. It does not provide that the transportation
of the passengers or goods should be by motor vehicle. In fact, in the United States, oil pipe line operators are
considered common carriers.
17

Under the Petroleum Act of the Philippines (Republic Act 387), petitioner is considered a "common carrier."
Thus, Article 86 thereof provides that:
Art. 86. Pipe line concessionaire as common carrier. A pipe line shall have
the preferential right to utilize installations for the transportation of
petroleum owned by him, but is obligated to utilize the remaining
transportation capacity pro rata for the transportation of such other
petroleum as may be offered by others for transport, and to charge without
discrimination such rates as may have been approved by the Secretary of
Agriculture and Natural Resources.
Republic Act 387 also regards petroleum operation as a public utility. Pertinent portion of Article 7 thereof
provides:
that everything relating to the exploration for and exploitation of petroleum .
. . and everything relating to the manufacture, refining, storage, or
transportation by special methods of petroleum, is hereby declared to be a
public utility. (Emphasis Supplied)
The Bureau of Internal Revenue likewise considers the petitioner a "common carrier." In BIR Ruling No. 069-83,
it declared:
. . . since [petitioner] is a pipeline concessionaire that is engaged only in
transporting petroleum products, it is considered a common carrier under
Republic Act No. 387 . . . . Such being the case, it is not subject to withholding
tax prescribed by Revenue Regulations No. 13-78, as amended.
From the foregoing disquisition, there is no doubt that petitioner is a "common carrier" and, therefore, exempt
from the business tax as provided for in Section 133 (j), of the Local Government Code, to wit:
Sec. 133. Common Limitations on the Taxing Powers of Local Government
Units. Unless 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 xxx xxx
(j) Taxes on the gross receipts of
transportation contractors and persons
engaged in the transportation of
passengers or freight by hire and common
carriers by air, land or water, except as
provided in this Code.
The deliberations conducted in the House of Representatives on the Local Government Code of 1991 are
illuminating:
MR. AQUINO (A). Thank you, Mr. Speaker.
Mr. Speaker, we would like to proceed to page 95, line
1. It states: "SEC. 121 [now Sec. 131]. Common Limitations on the Taxing
Powers of Local Government Units." . . .
MR. AQUINO (A.). Thank you Mr. Speaker.
Still on page 95, subparagraph 5, on taxes on the business of transportation.
This appears to be one of those being deemed to be exempted from the
taxing powers of the local government units. May we know the reason why
the transportation business is being excluded from the taxing powers of the
local government units?
MR. JAVIER (E.). Mr. Speaker, there is an exception contained in Section 121
(now Sec. 131), line 16, paragraph 5. It states that local government units may
not impose taxes on the business of transportation, except as otherwise
provided in this code.
Now, Mr. Speaker, if the Gentleman would care to go to page 98 of Book II,
one can see there that provinces have the power to impose a tax on business
enjoying a franchise at the rate of not more than one-half of 1 percent of the
gross annual receipts. So, transportation contractors who are enjoying a
franchise would be subject to tax by the province. That is the exception, Mr.
Speaker.
What we want to guard against here, Mr. Speaker, is the imposition of taxes
by local government units on the carrier business. Local government units
may impose taxes on top of what is already being imposed by the National
Internal Revenue Code which is the so-called "common carriers tax." We do
not want a duplication of this tax, so we just provided for an exception under
Section 125 [now Sec. 137] that a province may impose this tax at a specific
rate.
MR. AQUINO (A.). Thank you for that clarification, Mr. Speaker. . . .
18

It is clear that the legislative intent in excluding from the taxing power of the local government unit the
imposition of business tax against common carriers is to prevent a duplication of the so-called "common
carrier's tax."
Petitioner is already paying three (3%) percent common carrier's tax on its gross sales/earnings under the
National Internal Revenue Code.
19
To tax petitioner again on its gross receipts in its transportation of petroleum
business would defeat the purpose of the Local Government Code.
WHEREFORE, the petition is hereby GRANTED. The decision of the respondent Court of Appeals dated November
29, 1995 in CA-G.R. SP No. 36801 is REVERSED and SET ASIDE.
SO ORDERED.

THE PROVINCE OF BULACAN, ROBERTO M. PAGDANGANAN, FLORENCE CHAVES, and MANUEL DJ SIAYNGCO in
their capacity as PROVINCIAL GOVERNOR, PROVINCIAL TREASURER, PROVINCIAL LEGAL ADVISER, respectively,
petitioners,
vs.
THE HONORABLE COURT OF APPEALS (FORMER SPECIAL 12TH DIVISION), REPUBLIC CEMENT CORPORATION,
respondents.
Before us is a petition for certiorari seeking the reversal of the decision of the Court of Appeals dated September
27, 1995 declaring petitioner without authority to levy taxes on stones, sand, gravel, earth and other quarry
resources extracted from private lands, as well as the August 26, 1996 resolution of the appellate court denying its
motion for reconsideration.
The facts are as follows:
On June 26, 1992, the Sangguniang Panlalawigan of Bulacan passed Provincial Ordinance No. 3, known as "An
Ordinance Enacting the Revenue Code of the Bulacan Province." which was to take effect on July 1, 1992. Section
21 of the ordinance provides as follows:
Sec. 21 Imposition of Tax. There is hereby levied and collected a tax of 10% of the fair market
value in the locality per cubic meter of ordinary stones, sand, gravel, earth and other quarry
resources, such, but not limited to marble, granite, volcanic cinders, basalt, tuff and rock
phosphate, extracted from public lands or from beds of seas, lakes, rivers, streams, creeks and
other public waters within its territorial jurisdiction (Emphasis ours)
Pursuant thereto, the Provincial Treasurer of Bulacan, in a letter dated November 11, 1993, assessed private
respondent Republic Cement Corporation (hereafter Republic Cement) P2,524,692.13 for extracting limestone,
shale and silica from several parcels of private land in the province during the third quarter of 1992 until the
second quarter of 1993. Believing that the province, on the basis of above-said ordinance, had no authority to
impose taxes on quarry resources extracted from private lands, Republic Cement formally contested the same on
December 23, 1993. The same was, however, denied by the Provincial Treasurer on January 17, 1994. Republic
Cement, consequently filed a petition for declaratory relief with the Regional Trial Court of Bulacan on February
14, 1994. The province filed a motion to dismiss Republic Cement's petition, which was granted by the trial court
on May 13, 1993, which ruled that declaratory relief was improper, allegedly because a breach of the ordinance
had been committed by Republic Cement.
On July 11, 1994, Republic Cement filed a petition for certiorari with the Supreme Court seeking to reverse the trial
court's dismissal of their petition. The Court, in a resolution dated July 27, 1994, referred the same to the Court of
Appeals, where it was docketed as CA G.R. SP No. 34915. The appellate court required petitioners to file a
comment, which they did on September 7, 1994.
In the interim, the Province of Bulacan issued a warrant of levy against Republic Cement, allegedly because of its
unpaid tax liabilities. Negotiations between Republic Cement and petitioners resulted in an agreement and modus
vivendi on December 12, 1994, whereby Republic Cement agreed to pay under protest P1,262,346.00, 50% of the
tax assessed by petitioner, in exchange for the lifting of the warrant of levy. Furthermore, Republic Cement and
petitioners agreed to limit the issue for resolution by the Court of Appeals to the question as to whether or not the
provincial government could impose and/or assess taxes on quarry resources extracted by Republic Cement from
private lands pursuant to Section 21 of Provincial Ordinance No. 3. This agreement and modus vivendi were
embodied in a joint manifestation and motion signed by Governor Roberto Pagdanganan, on behalf of the Province
of Bulacan, by Provincial Treasurer Florence Chavez, and by Provincial Legal Officer Manuel Siayngco, as
petitioners' counsel and filed with the Court of Appeals on December 13, 1994. In a resolution dated December 29,
1994, the appellate court approved the same and limited the issue to be resolved to the question of whether or
not the provincial government could impose taxes on stones, sand, gravel, earth and other quarry resources
extracted from private lands.
After due trial, the Court of Appeals, on September 27, 1995, rendered the following judgment:
WHEREFORE, judgment is hereby rendered declaring the Province of Bulacan under its Provincial
Ordinance No. 3 entitled "An Ordinance Enacting The Revenue Code of Bulacan Province" to be
without legal authority to impose and assess taxes on quarry resources extracted by RCC from
private lands, hence the interpretation of Respondent Treasurer of Chapter II, Article D, Section
21 of the Ordinance, and the assessment made by the Province of Bulacan against RCC is null and
void.
Petitioners' motion for reconsideration, as well as their supplemental motion for reconsideration, was denied by
the appellate court on August 26, 1996, hence this appeal.
Petitioners claim that the Court of Appeals erred in:
1. NOT HAVING OUTRIGHTLY DISMISSED THE SUBJECT PETITION ON THE
GROUND THAT THE SAME IS NOT THE APPROPRIATE REMEDY FROM THE TRIAL
COURT'S GRANT OF THE PRIVATE RESPONDENTS' (HEREIN PETITIONER)
MOTION TO DISMISS;
2. NOT DISMISSING THE SUBJECT PETITION FOR BEING VIOLATIVE OF CIRCULAR
2-90 ISSUED BY THE SUPREME COURT;
3. NOT DISMISSING THE PETITION FOR REVIEW ON THE GROUND THAT THE
TRIAL COURT'S ORDER OF MAY 13, 1994 HAD LONG BECOME FINAL AND
EXECUTORY;
4. GOING BEYOND THE PARAMETERS OF ITS APPELLATE JURISDICTION IN
RENDERING THE SEPTEMBER 27, 1995 DECISION;
5. HOLDING THAT PRIVATE RESPONDENT (HEREIN PETITIONER) ARE ESTOPPED
FROM RAISING THE PROCEDURAL ISSUE IN THE MOTION FOR
RECONSIDERATION;
6. THE INTERPRETATION OF SECTION 134 OF THE LOCAL GOVERNMENT CODE
AS STATED IN THE SECOND TO THE LAST PARAGRAPH OF PAGE 5 OF ITS
SEPTEMBER 27, 1995 DECISION;
7. SUSTAINING THE ALLEGATIONS OF HEREIN RESPONDENT WHICH UNJUSTLY
DEPRIVED PETITIONER THE POWER TO CREATE ITS OWN SOURCES OF
REVENUE;
8. DECLARING THAT THE ASSESSMENT MADE BY THE PROVINCE OF BULACAN
AGAINST RCC AS NULL AND VOID WHICH IN EFFECT IS A COLLATERAL ATTACK
ON PROVINCIAL ORDINANCE NO. 3; AND
9. FAILING TO CONSIDER THE REGALIAN DOCTRINE IN FAVOR OF THE LOCAL
GOVERNMENT.
The issues raised by petitioners are devoid of merit. The number and diversity of errors raised by appellants impel
us, however, to discuss the points raised seriatim.
In their first assignment of error, petitioners contend that instead of filing a petition for certiorari with the
Supreme Court, Republic Cement should have appealed from the order of the trial court dismissing their petition.
Citing Martinez vs. CA,
1
they allege that a motion to dismiss is a final order, the remedy against which is not a
petition for certiorari, but an appeal, regardless of the questions sought to be raised on appeal, whether of fact or
of law, whether involving jurisdiction or grave abuse of discretion of the trial court.
Petitioners' argument is misleading. While it is true that the remedy against a final order is an appeal, and not a
petition for certiorari, the petition referred to is a petition for certiorari under Rule 65. As stated in Martinez, the
party aggrieved does not have the option to substitute the special civil action of certiorari under Rule 65 for the
remedy of appeal. The existence and availability of the right of appeal are antithetical to the availment of the
special civil action of certiorari.
Republic Cement did not, however, file a petition for certiorari under Rule 65, but an appeal by certiorari under
Rule 45. Even law students know that certiorari under Rule 45 is a mode of appeal, an appeal from the Regional
Trial Court being taken in either of two ways (a) by writ of error (involving questions of fact and law) and (b) by
certiorari (limited only to issues of law), with an appeal by certiorari being brought to the Supreme Court, there
being no provision of law for taking appeals by certiorari to the Court of Appeals.
2
It is thus clearly apparent that
Republic Cement correctly contested the trial court's order of dismissal by filing an appeal by certiorari under Rule
45. In fact, petitioners, in their second assignment of error, admit that a petition for review on certiorari under
Rule 45 is available to a party aggrieved by an order granting a motion to dismiss.
3
They claim, however, that
Republic Cement could not avail of the same allegedly because the latter raised issues of fact, which is prohibited,
Rule 45 providing that "(t)he petition shall raise only questions of law which must be distinctly set forth."
4
In this
respect, petitioners claim that Republic Cement's petition should have been dismissed by the appellate court,
Circular 2-90 providing:
4. Erroneous Appeals. An appeal taken to either the Supreme Court or the Court of Appeals by
the wrong or inappropriate mode shall be dismissed.
xxx xxx xxx
d) No transfer of appeals erroneously taken. No transfers of appeals erroneously taken to the
Supreme Court or to the Court of Appeals to whichever of these Tribunals has appropriate
appellate jurisdiction will be allowed; continued ignorance or wilful disregard of the law on
appeals will not be tolerated.
Petitioners even fault the Court for referring Republic Cement's petition to the Court of Appeals, claiming that the
same should have been dismissed pursuant to Circular 2-90. Petitioners conveniently overlook the other provisions
of Circular 2-90, specifically 4b) thereof, which provides:
b) Raising factual issues in appeal by certiorari. Although submission of issues of fact in an
appeal by certiorari taken to the Supreme Court from the regional trial court is ordinarily
proscribed, the Supreme Court nonetheless retains the option, in the exercise of its sound
discretion and considering the attendant circumstances, either itself to take cognizance of and
decide such issues or to refer them to the Court of Appeals for determination.
As can be clearly adduced from the foregoing, when an appeal by certiorari under Rule 45 erroneously raises
factual issues, the Court has the option to refer the petition to the Court of Appeals. The exercise by the Court of
this option may not now be questioned by petitioners.
As the trial court's order was properly appealed by Republic Cement, the trial court's May 13, 1994 order never
became final and executory, rendering petitioner's third assignment of error moot and academic.
Petitioners' fourth and fifth assignment of errors are likewise without merit. Petitioners assert that the Court of
Appeals could only rule on the propriety of the trial court's dismissal of Republic Cement's petition for declaratory
relief, allegedly because that was the sole relief sought by the latter in its petition for certiorari. Petitioners claim
that the appellate court overstepped its jurisdiction when it declared null and void the assessment made by the
Province of Bulacan against Republic Cement.
Petitioners gloss over the fact that, during the proceedings before the Court of Appeals, they entered into an
agreement and modus vivendi whereby they limited the issue for resolution to the question as to whether or not
the provincial government could impose and/or assess taxes on stones, sand, gravel, earth and other quarry
resources extracted by Republic Cement from private lands. This agreement and modus vivendi were approved by
the appellate court on December 29, 1994. All throughout the proceedings, petitioners never questioned the
authority of the Court of Appeals to decide this issue, an issue which it brought itself within the purview of the
appellate court. Only when an adverse decision was rendered by the Court of Appeals did petitioners question the
jurisdiction of the former.
Petitioners are barred by the doctrine of estoppel from contesting the authority of the Court of Appeals to decide
the instant case, as this Court has consistently held that "(a) party cannot invoke the jurisdiction of a court to
secure affirmative relief against his opponent and after obtaining or failing to obtain such relief, repudiate or
question that same jurisdiction."
5
The Supreme Court frowns upon the undesirable practice of a party submitting
his case for decision and then accepting the judgment, only if favorable, and attacking it for lack of jurisdiction
when adverse.
6

In a desperate attempt to ward off defeat, petitioners now repudiate the above-mentioned agreement and modus
vivendi, claiming that the same was not binding on the Province of Bulacan, not having been authorized by the
Sangguniang Panlalawigan of Bulacan. While it is true that the Provincial Governor can enter into contract and
obligate the province only upon authority of the sangguniang panlalawigan,
7
the same is inapplicable to the case
at bar. The agreement and modus vivendi may have been signed by petitioner Roberto Pagdanganan, as Governor
of the Province of Bulacan, without authorization from the sangguniang panlalawigan, but it was also signed by
Manuel Siayngco, the Provincial Legal Officer, in his capacity as such, and as counsel of petitioners.
It is a well-settled rule that all proceedings in court to enforce a remedy, to bring a claim, demand, cause of action
or subject matter of a suit to hearing, trial, determination, judgment and execution are within the exclusive control
of the attorney.
8
With respect to such matters of ordinary judicial procedure, the attorney needs no special
authority to bind his client.
9
Such questions as what action or pleading to file, where and when to file it, what are
its formal requirements, what should be the theory of the case, what defenses to raise, how may the claim or
defense be proved, when to rest the case, as well as those affecting the competency of a witness, the sufficiency,
relevancy, materiality or immateriality of certain evidence and the burden of proof are within the authority of the
attorney to decide.
10
Whatever decision an attorney makes on any of these procedural questions, even if it
adversely affects a client's case, will generally bind a client. The agreement and modus vivendi signed by
petitioners' counsel is binding upon petitioners, even if the Sanggunian had not authorized the same, limitation of
issues being a procedural question falling within the exclusive authority of the attorney to decide.
In any case, the remaining issues raised by petitioner are likewise devoid of merit, a province having no authority
to impose taxes on stones, sand, gravel, earth and other quarry resources extracted from private lands. The
pertinent provisions of the Local Government Code are as follows:
Sec. 134. Scope of Taxing Powers. Except as otherwise provided in this Code, the province may
levy only the taxes, fees, and charges as provided in this Article.
Sec. 158. Tax on Sand, Gravel and Other Quarry Resources. The province may levy and collect
not more than ten percent (10%) of fair market value in the locality per cubic meter of ordinary
stones, sand, gravel, earth, and other quarry resources, as defined under the National Internal
Revenue Code, as amended, extracted from public lands or from the beds of seas, lakes, rivers,
streams, creeks, and other public waters within its territorial jurisdiction.
xxx xxx xxx (Emphasis supplied)
The appellate court, on the basis of Section 134, ruled that a province was empowered to impose taxes only on
sand, gravel, and other quarry resources extracted from public lands, its authority to tax being limited by said
provision only to those taxes, fees and charges provided in Article One, Chapter 2, Title One of Book II of the Local
Government Code.
11
On the other hand, petitioners claim that Sections 129
12
and 186
13
of the Local Government
Code authorizes the province to impose taxes other than those specifically enumerated under the Local
Government Code.
The Court of Appeals erred in ruling that a province can impose only the taxes specifically mentioned under the
Local Government Code. As correctly pointed out by petitioners, Section 186 allows a province to levy taxes other
than those specifically enumerated under the Code, subject to the conditions specified therein.
This finding, nevertheless, affords cold comfort to petitioners as they are still prohibited from imposing taxes on
stones, sand, gravel, earth and other quarry resources extracted from private lands. The tax imposed by the
Province of Bulacan is an excise tax, being a tax upon the performance, carrying on, or exercise of an activity.
14

The Local Government Code provides:
Sec. 133. Common Limitations on the Taxing Powers of Local Government Units. Unless
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 xxx xxx
(h) Excise taxes on articles enumerated under the National Internal Revenue Code, as amended,
and taxes, fees or charges on petroleum products;
xxx xxx xxx
A province may not, therefore, levy excise taxes on articles already taxed by the National Internal Revenue Code.
Unfortunately for petitioners, the National Internal Revenue Code provides:
Sec. 151. Mineral Products.
(A) Rates of Tax. There shall be levied, assessed and collected on minerals, mineral products
and quarry resources, excise tax as follows:
xxx xxx xxx
(2) On all nonmetallic minerals and quarry resources, a tax of two percent (2%)
based on the actual market value of the gross output thereof at the time of
removal, in case of those locally extracted or produced; or the values used by
the Bureau of Customs in determining tariff and customs duties, net of excise
tax and value-added tax, in the case of importation.
xxx xxx xxx
(B) [Definition of Terms]. for purposes of this Section, the term-
xxx xxx xxx
(4) Quarry resources shall mean any common stone or other common mineral
substances as the Director of the Bureau of Mines and Geo-Sciences may
declare to be quarry resources such as, but not restricted to, marl, marble,
granite, volcanic cinders, basalt, tuff and rock phosphate; Provided, That they
contain no metal or metals or other valuable minerals in economically
workable quantities.
It is clearly apparent from the above provision that the National Internal Revenue Code levies a tax on all quarry
resources, regardless of origin, whether extracted from public or private land. Thus, a province may not ordinarily
impose taxes on stones, sand, gravel, earth and other quarry resources, as the same are already taxed under the
National Internal Revenue Code. The province can, however, impose a tax on stones, sand, gravel, earth and other
quarry resources extracted from public land because it is expressly empowered to do so under the Local
Government Code. As to stones, sand, gravel, earth and other quarry resources extracted from private land,
however, it may not do so, because of the limitation provided by Section 133 of the Code in relation to Section 151
of the National Internal Revenue Code.
Given the above disquisition, petitioners cannot claim that the appellate court unjustly deprived them of the
power to create their sources of revenue, their assessment of taxes against Republic Cement being ultra vires,
traversing as it does the limitations set by the Local Government Code.
Petitioners likewise aver that the appellate court' s declaration of nullity of its assessment against Republic Cement
is a collateral attack on Provincial Ordinance No. 3, which is prohibited by public policy.
15
Contrary to petitioners'
claim, the legality of the ordinance was never questioned by the Court of Appeals. Rather, what the appellate court
questioned was petitioners' assessment of taxes on Republic Cement on the basis of Provincial Ordinance No. 3,
not the ordinance itself.
Furthermore, Section 21 of Provincial Ordinance No. 3 is practically only a reproduction of Section 138 of the Local
Government Code. A cursory reading of both would show that both refer to ordinary sand, stone, gravel, earth and
other quarry resources extracted from public lands. Even if we disregard the limitation set by Section 133 of the
Local Government Code, petitioners may not, impose taxes on stones, sand, gravel, earth and other quarry
resources extracted from private lands on the basis of Section 21 of Provincial Ordinance No. 3 as the latter clearly
applies only to quarry resources extracted from public lands. Petitioners may not invoke the Regalian doctrine to
extend the coverage of their ordinance to quarry resources extracted from private lands, for taxes, being burdens,
are not to be presumed beyond what the applicable statute expressly and clearly declares, tax statutes being
construed strictissimi juris against the government.
16

WHEREFORE, premises considered, the instant petition is DISMISSED for lack of merit and the decision of the Court
of Appeals is hereby AFFIRMED in toto. Costs against petitioner.
SO ORDERED.

RODOLFO E. AGUINALDO, petitioner,
vs.
HON. LUIS SANTOS, as Secretary of the Department of Local Government, and MELVIN VARGAS, as Acting
Governor of Cagayan, respondents.
Victor I. Padilla for petitioner.
Doroteo B. Laguna and Manuel T. Molina for private respondent.

NOCON, J.:
In this petition for certiorari and prohibition with preliminary mandatory injunction and/or restraining order,
petitioner Rodolfo E. Aguinaldo assails the decision of respondent Secretary of Local Government dated March
19,1990 in Adm. Case No. P-10437-89 dismissing him as Governor of Cagayan on the ground that the power of the
Secretary of Local Government to dismiss local government official under Section 14, Article I, Chapter 3 and
Sections 60 to 67, Chapter 4 of Batas Pambansa Blg. 337, otherwise known as the Local Government Code, was
repealed by the effectivity of the 1987 Constitution.
The pertinent facts are as follows: Petitioner was the duly elected Governor of the province of Cagayan, having
been elected to said position during the local elections held on January 17, 1988, to serve a term of four (4) years
therefrom. He took his oath sometimes around March 1988.
Shortly after December 1989 coup d'etat was crushed, respondent Secretary of Local Government sent a telegram
and a letter, both dated December 4, 1989, to petitioner requiring him to show cause why should not be
suspended or remove from office for disloyalty to the Republic, within forty-eight (48) hours from receipt thereof.
On December 7, 1989, a sworn complaint for disloyalty to the Republic and culpable violation of the Constitution
was filed by Veronico Agatep, Manuel Mamba and Orlino Agatep, respectively the mayors of the municipalities of
Gattaran, Tuao and Lasam, all in Cagayan, against petitioner for acts the latter committed during the coup.
Petitioner was required to file a verified answer to the complaint.
On January 5, 1990, the Department of Local Government received a letter from petitioner dated December 29,
1989 in reply to respondent Secretary's December 4, 1989 letter requiring him to explain why should not be
suspended or removed from office for disloyalty. In his letter, petitioner denied being privy to the planning of the
coup or actively participating in its execution, though he admitted that he was sympathetic to the cause of the
rebel soldiers.
1

Respondent Secretary considered petitioner's reply letter as his answer to the complaint of Mayor Veronico
Agatep and others.
2
On the basis thereof, respondent Secretary suspended petitioner from office for sixty (60)
days from notice, pending the outcome of the formal investigation into the charges against him.
During the hearing conducted on the charges against petitioner, complainants presented testimonial and
documentary evidence to prove the charges. Petitioner neither presented evidence nor even cross-examined the
complainant's witnesses, choosing instead to move that respondent Secretary inhibit himself from deciding the
case, which motion was denied.
Thereafter, respondent Secretary rendered the questioned decision finding petitioner guilty as charged and
ordering his removal from office. Installed as Governor of Cagayan in the process was respondent Melvin Vargas,
who was then the Vice-Governor of Cagayan.
Petitioner relies on three grounds for the allowance of the petition, namely: (1) that the power of respondent
Secretary to suspend or remove local government official under Section 60, Chapter IV of B.P. Blg. 337 was
repealed by the 1987 Constitution; (2) that since respondent Secretary no longer has power to suspend or remove
petitioner, the former could not appoint respondent Melvin Vargas as Governor of Cagayan; and (3) the alleged act
of disloyalty committed by petitioner should be proved by proof beyond reasonable doubt, and not be a mere
preponderance of evidence, because it is an act punishable as rebellion under the Revised Penal Code.
While this case was pending before this Court, petitioner filed his certificate of candidacy for the position of
Governor of Cagayan for the May 11, 1992 elections. Three separate petitions for his disqualification were then
filed against him, all based on the ground that he had been removed from office by virtue of the March 19, 1990
resolution of respondent Secretary. The commission on Elections granted the petitions by way of a resolution
dated May 9, 1992. On the same day, acting upon a "Motion to Clarify" filed by petitioner, the Commission ruled
that inasmuch as the resolutions of the Commission becomes final and executory only after five (5) days from
promulgation, petitioner may still be voted upon as a candidate for governor pending the final outcome of the
disqualification cases with his Court.
Consequently, on May 13, 1992, petitioner filed a petition for certiorari with this Court, G.R. Nos. 105128-30,
entitled Rodolfo E. Aguinaldo v. Commission on Elections, et al., seeking to nullify the resolution of the Commission
ordering his disqualification. The Court, in a resolution dated May 14, 1992, issued a temporary restraining order
against the Commission to cease and desist from enforcing its May 9, 1992 resolution pending the outcome of the
disqualification case, thereby allowing the canvassing of the votes and returns in Cagayan to proceed. However,
the Commission was ordered not to proclaim a winner until this Court has decided the case.
On June 9, 1992, a resolution was issued in the aforementioned case granting petition and annulling the May 9,
1992 resolution of the Commission on the ground that the decision of respondent Secretary has not yet attained
finality and is still pending review with this Court. As petitioner won by a landslide margin in the elections, the
resolution paved the way for his eventual proclamation as Governor of Cagayan.
Under the environmental circumstances of the case, We find the petition meritorious.
Petitioner's re-election to the position of Governor of Cagayan has rendered the administration case pending
before Us moot and academic. It appears that after the canvassing of votes, petitioner garnered the most number
of votes among the candidates for governor of Cagayan province. As held by this Court in Aguinaldo v. Comelec et
al., supra,:
. . . [T]he certified true xerox copy of the "CERTITICATE OF VOTES OF CANDIDATES", attached to
the "VERY URGENT MOTION FOR THE MODIFICATION OF THE RESOLUTION DATED MAY 14,
1992["] filed by petitioner shows that he received 170,382 votes while the other candidates for
the same position received the following total number of votes: (1) Patricio T. Antonio 54,412,
(2) Paquito F. Castillo 2,198; and (3) Florencio L. Vargas 48,129.
xxx xxx xxx
Considering the fact narrated, the expiration of petitioner's term of office
during which the acts charged were allegedly committed, and his subsequent
reelection, the petitioner must be dismissed for the reason that the issue has
become academic. In Pascual v. Provincial Board of Nueva Ecija, L-11959,
October 31, 1959, this Court has ruled:
The weight of authority, however, seems to incline to the
ruled denying the right to remove from office because of
misconduct during a prior term to which we fully subscribe.
Offenses committed, or acts done, during a previous term are generally held not to furnish cause
for removal and this is especially true were the Constitution provides that the penalty in
proceeding for removal shall not extend beyond the removal from office, and disqualification
from holding office for a term for which the officer was elected or appointed. (6 C.J.S. p. 248,
citing Rice v. State, 161 S.W. 2nd 4011; Montgomery v. Newell, 40 S.W. 23rd 418; People ex rel
Bashaw v. Thompson, 130 P. 2nd 237; Board of Com'rs Kingfisher County v. Shutler, 281 P. 222;
State v. Blake, 280 P. 388; In re Fedula, 147 A 67; State v. Wald, 43 S.W. 217)
The underlying theory is that each term is separate from other terms, and that
the reelection to office operates as a condonation of the officer's misconduct
to the extent of cutting off the right to remove him therefor. (43 Am. Jur. p. 45,
citing Atty. Gen. v. Kasty, 184 Ala. 121, 63 Sec. 599, 50 L.R.A. [NS] 553). As held
in Comant v. Bregan [ 1887] 6 N.Y.S.R. 332, cited in 17 A.L.R. 63 Sec. 559, 50
[NE] 553.
The Court should ever remove a public officer for acts done prior to his present term of office. To
do otherwise would be to deprive the people of their right to elect their officers. When a people
have elected a man to office, it must be assumed that they did this with knowledge of his life and
character, and that they disregarded or forgave his fault or misconduct, if he had been guilty of
any. It is not for the court, by reason of such fault or misconduct, to practically overrule the will
of the people. (Lizares v. Hechanova, et al., 17 SCRA 58, 59-60 [1966]) (See also Oliveros v.
Villaluz, 57 SCRA 163 [1974])
3

Clear then, the rule is that a public official can not be removed for administrative misconduct committed during a
prior term, since his re-election to office operates as a condonation of the officer's previous misconduct to the
extent of cutting off the right to remove him therefor. The foregoing rule, however, finds no application to criminal
cases pending against petitioner for acts he may have committed during the failed coup.
The other grounds raised by petitioner deserve scant consideration. Petitioner contends that the power of
respondent Secretary to suspend or remove local government officials as alter ego of the President, and as
embodied in B.P. Blg. 337 has been repealed by the 1987 Constitution and which is now vested in the courts.
We do not agree. The power of respondent Secretary to remove local government officials is anchored on both the
Constitution and a statutory grant from the legislative branch. The constitutional basis is provided by Articles VII
(17) and X (4) of the 1987 Constitution which vest in the President the power of control over all executive
departments, bureaus and offices and the power of general supervision over local governments, and by the
doctrine that the acts of the department head are presumptively the acts of the President unless expressly
rejected by him.
4
The statutory grant found in B.P. Blg. 337 itself has constitutional roots, having been enacted by
the then Batasan Pambansa pursuant to Article XI of the 1973 Constitution, Section 2 of which specifically provided
as follows
Sec. 2. The National Assembly shall enact a local government code which may not thereafter be
amended except by a majority vote of all its Members, defining a more responsive and
accountable local government structure with an effective system of recall, allocating among the
different local government units their powers, responsibilities, and resources, and providing for
the qualifications, election and removal, term, salaries, power, functions, and duties of local
government officials, and all other matters relating to the organization and operation of the local
units. However, any change in the existing form of local government shall not take effect until
ratified by a majority of the votes cast in the plebiscite called for the purpose.
5

A similar provision is found in Section 3, Article X of the 1987 Constitution, which reads:
Sec. 3. The Congress shall enact a local government code which shall provided for a more
responsive and accountable local government structure instituted through a system of
decentralization with effective mechanisms 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 and salaries, powers and functions
and duties of local officials, and all other matters relating to the organization and operation of
the local units.
6

Inasmuch as the power and authority of the legislature to enact a local government code, which provides for the
manner of removal of local government officials, is found in the 1973 Constitution as well as in the 1987
Constitution, then it can not be said that BP Blg. 337 was repealed by the effective of the present Constitution.
Moreover, in Bagabuyo et al. vs. Davide, Jr., et al.,
7
this court had the occasion to state that B.P. Blg. 337 remained
in force despite the effectivity of the present Constitution, until such time as the proposed Local Government Code
of 1991 is approved.
The power of respondent Secretary of the Department of Local Government to remove local elective government
officials is found in Secs. 60 and 61 of B.P. Blg. 337. 8
As to petitioner's argument of the want of authority of respondent Secretary to appoint respondent Melvin Vargas
as Governor of Cagayan, We need but point to Section 48 (1) of B.P. Blg 337 to show the fallacy of the same, to
writ
In case a permanent vacancy arises when a governor . . . refuses to assume office, fails to quality,
dies or is removed from office, voluntarily resigns, or is otherwise permanently incapacitated to
discharge the functions of his office, the vice-governor . . . shall assume the office for the
unexpired term of the former.
9

Equally without merit is petitioner's claim that before he could be suspended or removed from office, proof
beyond reasonable doubt is required inasmuch as he is charged with a penal offense of disloyalty to the Republic
which is defined and penalized under Article 137 of the Revised Penal Code. Petitioner is not being prosecuted
criminally under the provisions of the Revised Penal Code, but administratively with the end in view of removing
petitioner as the duly elected Governor of Cagayan Province for acts of disloyalty to the Republic where the
quantum of proof required is only substantial evidence.
10

WHEREFORE, petitioner is hereby GRANTED and the decision of public respondent Secretary of Local Government
dated March 19, 1990 in Adm. Case No. P-10437-89, dismissing petitioner as Governor of Cagayan, is hereby
REVERSED.
SO ORDERED.

RAMIR R. PABLICO, petitioner,
vs.
ALEJANDRO A. VILLAPANDO, respondent.
YNARES-SANTIAGO, J.:
May local legislative bodies and/or the Office of the President, on appeal, validly impose the penalty of dismissal
from service on erring elective local officials?
This purely legal issue was posed in connection with a dispute over the mayoralty seat of San Vicente, Palawan.
Considering that the term of the contested office expired on June 30, 2001,
1
the present case may be dismissed for
having become moot and academic.
2
Nonetheless, we resolved to pass upon the above-stated issue concerning
the application of certain provisions of the Local Government Code of 1991.
The undisputed facts are as follows:
On August 5, 1999, Solomon B. Maagad, and Renato M. Fernandez, both members of the Sangguniang Bayan of
San Vicente, Palawan, filed with the Sangguniang Panlalawigan of Palawan an administrative complaint against
respondent Alejandro A. Villapando, then Mayor of San Vicente, Palawan, for abuse of authority and culpable
violation of the Constitution.
3
Complainants alleged that respondent, on behalf of the municipality, entered into a
consultancy agreement with Orlando M. Tiape, a defeated mayoralty candidate in the May 1998 elections. They
argue that the consultancy agreement amounted to an appointment to a government position within the
prohibited one-year period under Article IX-B, Section 6, of the 1987 Constitution.
In his answer, respondent countered that he did not appoint Tiape, rather, he merely hired him. He invoked
Opinion No. 106, s. 1992, of the Department of Justice dated August 21, 1992, stating that the appointment of a
defeated candidate within one year from the election as a consultant does not constitute an appointment to a
government office or position as prohibited by the Constitution.
On February 1, 2000, the Sangguniang Panlalawigan of Palawan found respondent guilty of the administrative
charge and imposed on him the penalty of dismissal from service.
4
Respondent appealed to the Office of the
President which, on May 29, 2000, affirmed the decision of the Sangguniang Panlalawigan of Palawan.
5

Pending respondents motion for reconsideration of the decision of the Office of the President, or on June 16,
2000, petitioner Ramir R. Pablico, then Vice-mayor of San Vicente, Palawan, took his oath of office as Municipal
Mayor. Consequently, respondent filed with the Regional Trial Court of Palawan a petition for certiorari and
prohibition with preliminary injunction and prayer for a temporary restraining order, docketed as SPL Proc. No.
3462.
6
The petition, seeks to annul, inter alia, the oath administered to petitioner. The Executive Judge granted a
Temporary Restraining Order effective for 72 hours, as a result of which petitioner ceased from discharging the
functions of mayor. Meanwhile, the case was raffled to Branch 95 which, on June 23, 2000, denied respondents
motion for extension of the 72-hour temporary restraining order.
7
Hence, petitioner resumed his assumption of
the functions of Mayor of San Vicente, Palawan.
On July 4, 2000, respondent instituted a petition for certiorari and prohibition before the Court of Appeals seeking
to annul: (1) the May 29, 2000 decision of the Office of the President; (2) the February 1, 2000, decision of the
Sangguniang Panlalawigan of Palawan; and (3) the June 23, 2000 order of the Regional Trial Court of Palawan,
Branch 95.
On March 16, 2001, the Court of Appeals
8
declared void the assailed decisions of the Office of the President and
the Sangguniang Panlalawigan of Palawan, and ordered petitioner to vacate the Office of Mayor of San Vicente,
Palawan.
9
A motion for reconsideration was denied on April 23, 2001.
10
Hence, the instant petition for review.
The pertinent portion of Section 60 of the Local Government Code of 1991 provides:
Section 60. Grounds for Disciplinary Actions. An elective local official may be disciplined, suspended, or
removed from office on any of the following grounds:
x x x x x x x x x
An elective local official may be removed from office on the grounds enumerated above by order of the
proper court. (Emphasis supplied)
It is clear from the last paragraph of the aforecited provision that the penalty of dismissal from service upon an
erring elective local official may be decreed only by a court of law. Thus, in Salalima, et al. v. Guingona, et al.,
11
we
held that "[t]he Office of the President is without any power to remove elected officials, since such power is
exclusively vested in the proper courts as expressly provided for in the last paragraph of the aforequoted Section
60."
Article 124 (b), Rule XIX of the Rules and Regulations Implementing the Local Government Code, however, adds
that "(b) An elective local official may be removed from office on the grounds enumerated in paragraph (a) of
this Article [The grounds enumerated in Section 60, Local Government Code of 1991] by order of the proper court
or the disciplining authority whichever first acquires jurisdiction to the exclusion of the other." The disciplining
authority referred to pertains to the Sangguniang Panlalawigan/Panlungsod/Bayan and the Office of the
President.
12

As held in Salalima,
13
this grant to the "disciplining authority" of the power to remove elective local officials is
clearly beyond the authority of the Oversight Committee that prepared the Rules and Regulations. No rule or
regulation may alter, amend, or contravene a provision of law, such as the Local Government Code. Implementing
rules should conform, not clash, with the law that they implement, for a regulation which operates to create a rule
out of harmony with the statute is a nullity. Even Senator Aquilino Q. Pimentel, Jr., the principal author of the Local
Government Code of 1991, expressed doubt as to the validity of Article 124 (b), Rule XIX of the implementing
rules.
14

Verily, the clear legislative intent to make the subject power of removal a judicial prerogative is patent from the
deliberations in the Senate quoted as follows:
x x x x x x x x x
Senator Pimentel. This has been reserved, Mr. President, including the issue of whether or not the
Department Secretary or the Office of the President can suspend or remove an elective official.
Senator Saguisag. For as long as that is open for some later disposition, may I just add the following
thought: It seems to me that instead of identifying only the proper regional trial court or the
Sandiganbayan, and since we know that in the case of a regional trial court, particularly, a case may be
appealed or may be the subject of an injunction, in the framing of this later on, I would like to suggest that
we consider replacing the phrase "PROPER REGIONAL TRIAL COURT OR THE SANDIGANBAYAN" simply by
"COURTS". Kasi po, maaaring sabihin nila na mali iyong regional trial court o ang Sandiganbayan.
Senator Pimentel. "OR THE PROPER COURT."
Senator Saguisag. "OR THE PROPER COURT."
Senator Pimentel. Thank you. We are willing to accept that now, Mr. President.
Senator Saguisag. It is to be incorporated in the phraseology that will craft to capture the other ideas that
have been elevated.
x x x x x x x x x.
15

It is beyond cavil, therefore, that the power to remove erring elective local officials from service is lodged
exclusively with the courts. Hence, Article 124 (b), Rule XIX, of the Rules and Regulations Implementing the Local
Government Code, insofar as it vests power on the "disciplining authority" to remove from office erring elective
local officials, is void for being repugnant to the last paragraph of Section 60 of the Local Government Code of
1991. The law on suspension or removal of elective public officials must be strictly construed and applied, and the
authority in whom such power of suspension or removal is vested must exercise it with utmost good faith, for
what is involved is not just an ordinary public official but one chosen by the people through the exercise of their
constitutional right of suffrage. Their will must not be put to naught by the caprice or partisanship of the
disciplining authority. Where the disciplining authority is given only the power to suspend and not the power to
remove, it should not be permitted to manipulate the law by usurping the power to remove.
16
As explained by the
Court in Lacson v. Roque:
17

"the abridgment of the power to remove or suspend an elective mayor is not without its own
justification, and was, we think, deliberately intended by the lawmakers. The evils resulting from a
restricted authority to suspend or remove must have been weighed against the injustices and harms to
the public interests which would be likely to emerge from an unrestrained discretionary power to suspend
and remove."
WHEREFORE, in view of the foregoing, the instant petition for review is DENIED.
SO ORDERED.

EDWIN B. JAVELLANA, petitioner,
vs.
DEPARTMENT OF INTERIOR AND LOCAL GOVERNMENT AND LUIS T. SANTOS, SECRETARY, respondents.
Reyes, Lozada and Sabado for petitioner.

GRIO-AQUINO, J.:
This petition for review on certiorari involves the right of a public official to engage in the practice of his profession
while employed in the Government.
Attorney Erwin B. Javellana was an elected City Councilor of Bago City, Negros Occidental. On October 5, 1989, City
Engineer Ernesto C. Divinagracia filed Administrative Case No. C-10-90 against Javellana for: (1) violation of
Department of Local Government (DLG) Memorandum Circular No. 80-38 dated June 10, 1980 in relation to DLG
Memorandum Circular No. 74-58 and of Section 7, paragraph b, No. 2 of Republic Act No. 6713, otherwise known
as the "Code of Conduct and Ethical Standards for Public Officials and Employees," and (2) for oppression,
misconduct and abuse of authority.
Divinagracia's complaint alleged that Javellana, an incumbent member of the City Council or Sanggunian
Panglungsod of Bago City, and a lawyer by profession, has continuously engaged in the practice of law without
securing authority for that purpose from the Regional Director, Department of Local Government, as required by
DLG Memorandum Circular No. 80-38 in relation to DLG Memorandum Circular No. 74-58 of the same department;
that on July 8, 1989, Javellana, as counsel for Antonio Javiero and Rolando Catapang, filed a case against City
Engineer Ernesto C. Divinagracia of Bago City for "Illegal Dismissal and Reinstatement with Damages" putting him
in public ridicule; that Javellana also appeared as counsel in several criminal and civil cases in the city, without
prior authority of the DLG Regional Director, in violation of DLG Memorandum Circular No. 80-38 which provides:
MEMORANDUM CIRCULAR NO. 80-38
TO ALL: PROVINCIAL GOVERNORS, CITY AND MUNICIPALITY MAYORS, KLGCD REGIONAL
DIRECTORS AND ALL CONCERNED
SUBJECT: AMENDING MEMORANDUM CIRCULAR NO. 80-18 ON SANGGUNIAN
SESSIONS, PER DIEMS, ALLOWANCES, STAFFING AND OTHER RELATED MATTERS
In view of the issuance or Circular No. 5-A by the Joint Commission on Local Government
Personnel Administration which affects certain provisions of MC 80-18, there is a need to amend
said Memorandum Circular to substantially conform to the pertinent provisions of Circular No. 9-
A.
xxx xxx xxx
C. Practice of Profession
The Secretary (now Minister) of Justice in an Opinion No. 46 Series of 1973 stated inter alia that
"members of local legislative bodies, other than the provincial governors or the mayors, do not
keep regular office hours." "They merely attend meetings or sessions of the provincial board or
the city or municipal council" and that provincial board members are not even required "to have
an office in the provincial building." Consequently, they are not therefore to required to report
daily as other regular government employees do, except when they are delegated to perform
certain administrative functions in the interest of public service by the Governor or Mayor as the
case may be. For this reason, they may, therefore, be allowed to practice their professions
provided that in so doing an authority . . . first be secured from the Regional Directors pursuant to
Memorandum Circular No. 74-58, provided, however, that no government personnel, property,
equipment or supplies shall be utilized in the practice of their professions. While being
authorized to practice their professions, they should as much as possible attend regularly any
and all sessions, which are not very often, of their Sanggunians for which they were elected as
members by their constituents except in very extreme cases, e.g., doctors who are called upon to
save a life. For this purpose it is desired that they always keep a calendar of the dates of the
sessions, regular or special of their Sanggunians so that conflicts of attending court cases in the
case of lawyers and Sanggunian sessions can be avoided.
As to members of the bar the authority given for them to practice their profession shall always
be subject to the restrictions provided for in Section 6 of Republic Act 5185. In all cases, the
practice of any profession should be favorably recommended by the Sanggunian concerned as a
body and by the provincial governors, city or municipal mayors, as the case may be. (Emphasis
ours, pp. 28-30, Rollo.)
On August 13, 1990, a formal hearing of the complaint was held in Iloilo City in which the complainant, Engineer
Divinagracia, and the respondent, Councilor Javellana, presented their respective evidence.
Meanwhile, on September 10, 1990, Javellana requested the DLG for a permit to continue his practice of law for
the reasons stated in his letter-request. On the same date, Secretary Santos replied as follows:
1st Indorsement
September 10, 1990
Respectfully returned to Councilor Erwin B. Javellana, Bago City, his within letter dated
September 10, 1990, requesting for a permit to continue his practice of law for reasons therein
stated, with this information that, as represented and consistent with law, we interpose no
objection thereto, provided that such practice will not conflict or tend to conflict with his official
functions.
L
U
I
S

T
.

S
A
N
T
O
S

S
e
c
r
e
t
a
r
y
.
(p. 60, Rollo.)
On September 21, 1991, Secretary Luis T. Santos issued Memorandum Circular No. 90-81 setting forth guidelines
for the practice of professions by local elective officials as follows:
TO: All Provincial Governors, City and Municipal Mayors, Regional Directors and
All Concerned.
SUBJECT: Practice of Profession and Private Employment of Local Elective
Officials
Section 7 of Republic Act No. 6713 (Code of Conduct and Ethical Standards for Public Officials and
Employees), states, in part, that "In addition to acts and omission of public officials . . . now
prescribed in the Constitution and existing laws, the following shall constitute prohibited acts
and transactions of any public officials . . . and are hereby declared to be unlawful: . . . (b) Public
Officials . . . during their incumbency shall not: (1) . . . accept employment as officer, employee,
consultant, counsel, broker, agent, trustee or nominee in any private enterprise regulated,
supervised or licensed by their office unless expressly allowed by law; (2) Engage in the private
practice of their profession unless authorized by the Constitution or law, provided that such
practice will not conflict or tend to conflict with their official functions: . . .
xxx xxx xxx
Under Memorandum Circular No. 17 of the Office of the President dated September 4, 1986, the
authority to grant any permission, to accept private employment in any capacity and to exercise
profession, to any government official shall be granted by the head of the Ministry (Department)
or agency in accordance with Section 12, Rule XVIII of the Revised Civil Service Rules, which
provides, in part, that:
No officer shall engage directly in any . . . vocation or profession . . . without a
written permission from the head of the Department: Provided, that this
prohibition will be absolute in the case of those officers . . . whose duties and
responsibilities require that their entire time be at the disposal of the
Government: Provided, further, That if an employee is granted permission to
engage in outside activities, the time so devoted outside of office should be
fixed by the Chief of the agency to the end that it will not impair in anyway the
efficiency of the officer or employee . . . subject to any additional conditions
which the head of the office deems necessary in each particular case in the
interest of the service, as expressed in the various issuances of the Civil Service
Commission.
Conformably with the foregoing, the following guidelines are to be observed in the grant of
permission to the practice of profession and to the acceptance of private employment of local
elective officials, to wit:
1) The permission shall be granted by the Secretary of Local Government;
2) Provincial Governors, City and Municipal Mayors whose duties and
responsibilities require that their entire time be at the disposal of the
government in conformity with Sections 141, 171 and 203 of the Local
Government Code (BP 337), are prohibited to engage in the practice of their
profession and to accept private employment during their incumbency:
3) Other local elective officials may be allowed to practice their profession or
engage in private employment on a limited basis at the discretion of the
Secretary of Local Government, subject to existing laws and to the following
conditions:
a) That the time so devoted outside of office hours should be
fixed by the local chief executive concerned to the end that it
will not impair in any way the efficiency of the officials
concerned;
b) That no government time, personnel, funds or supplies
shall be utilized in the pursuit of one's profession or private
employment;
c) That no conflict of interests between the practice of
profession or engagement in private employment and the
official duties of the concerned official shall arise thereby;
d) Such other conditions that the Secretary deems necessary
to impose on each particular case, in the interest of public
service. (Emphasis supplied, pp. 31-32, Rollo.)
On March 25, 1991, Javellana filed a Motion to Dismiss the administrative case against him on the ground mainly
that DLG Memorandum Circulars Nos. 80-38 and 90-81 are unconstitutional because the Supreme Court has the
sole and exclusive authority to regulate the practice of law.
In an order dated May 2, 1991, Javellana's motion to dismiss was denied by the public respondents. His motion for
reconsideration was likewise denied on June 20, 1991.
Five months later or on October 10, 1991, the Local Government Code of 1991 (RA 7160) was signed into law,
Section 90 of which provides:
Sec. 90. Practice of Profession. (a) All governors, city and municipal mayors are prohibited
from practicing their profession or engaging in any occupation other than the exercise of their
functions as local chief executives.
(b) Sanggunian members may practice their professions, engage in any occupation, or teach in
schools except during session hours: Provided, That sanggunian members who are members of
the Bar shall not:
(1) Appear as counsel before any court in any civil case wherein a local
government unit or any office, agency, or instrumentality of the government is
the adverse party;
(2) Appear as counsel in any criminal case wherein an officer or employee of
the national or local government is accused of an offense committed in relation
to his office;
(3) Collect any fee for their appearance in administrative proceedings involving
the local government unit of which he is an official; and
(4) Use property and personnel of the Government except when the
sanggunian member concerned is defending the interest of the Government.
(c) Doctors of medicine may practice their profession even during official hours of work only on
occasions of emergency: Provided, That the officials concerned do not derive monetary
compensation therefrom. (Emphasis ours.)
Administrative Case No. C-10-90 was again set for hearing on November 26, 1991. Javellana thereupon filed this
petition for certiorari praying that DLG Memorandum Circulars Nos. 80-38 and 90-81 and Section 90 of the new
Local Government Code (RA 7160) be declared unconstitutional and null void because:
(1) they violate Article VIII, Section 5 of the 1987 Constitution, which provides:
Sec. 5. The Supreme Court shall have the following powers:
xxx xxx xxx
(5) Promulgate rules concerning the protection and enforcement of constitutional rights,
pleading, practice, and procedure in all courts, the admission to the practice of law, the
Integrated Bar, and legal assistance to the underprivileged. Such rules shall provide a simplified
and inexpensive procedure for the speedy disposition of cases, shall be uniform for all courts of
the same grade, and shall not diminish, increase, or modify substantive rights. Rules of procedure
of special courts and quasi-judicial bodies shall remain effective unless disapproved by the
Supreme Court.
(2) They constitute class legislation, being discriminatory against the legal and medical professions for only
sanggunian members who are lawyers and doctors are restricted in the exercise of their profession while dentists,
engineers, architects, teachers, opticians, morticians and others are not so restricted (RA 7160, Sec. 90 [b-1]).
In due time, the Solicitor General filed his Comment on the petition and the petitioner submitted a Reply. After
deliberating on the pleadings of the parties, the Court resolved to dismiss the petition for lack of merit.
As a matter of policy, this Court accords great respect to the decisions and/or actions of administrative authorities
not only because of the doctrine of separation of powers but also for their presumed knowledgeability and
expertise in the enforcement of laws and regulations entrusted to their jurisdiction (Santiago vs. Deputy Executive
Secretary, 192 SCRA 199, citing Cuerdo vs. COA, 166 SCRA 657). With respect to the present case, we find no grave
abuse of discretion on the part of the respondent, Department of Interior and Local Government (DILG), in issuing
the questioned DLG Circulars Nos. 80-30 and 90-81 and in denying petitioner's motion to dismiss the
administrative charge against him.
In the first place, complaints against public officers and employees relating or incidental to the performance of
their duties are necessarily impressed with public interest for by express constitutional mandate, a public office is a
public trust. The complaint for illegal dismissal filed by Javiero and Catapang against City Engineer Divinagracia is in
effect a complaint against the City Government of Bago City, their real employer, of which petitioner Javellana is a
councilman. Hence, judgment against City Engineer Divinagracia would actually be a judgment against the City
Government. By serving as counsel for the complaining employees and assisting them to prosecute their claims
against City Engineer Divinagracia, the petitioner violated Memorandum Circular No. 74-58 (in relation to Section
7[b-2] of RA 6713) prohibiting a government official from engaging in the private practice of his profession, if such
practice would represent interests adverse to the government.
Petitioner's contention that Section 90 of the Local Government Code of 1991 and DLG Memorandum Circular No.
90-81 violate Article VIII, Section 5 of the Constitution is completely off tangent. Neither the statute nor the
circular trenches upon the Supreme Court's power and authority to prescribe rules on the practice of law. The
Local Government Code and DLG Memorandum Circular No. 90-81 simply prescribe rules of conduct for public
officials to avoid conflicts of interest between the discharge of their public duties and the private practice of their
profession, in those instances where the law allows it.
Section 90 of the Local Government Code does not discriminate against lawyers and doctors. It applies to all
provincial and municipal officials in the professions or engaged in any occupation. Section 90 explicitly provides
that sanggunian members "may practice their professions, engage in any occupation, or teach in schools expect
during session hours." If there are some prohibitions that apply particularly to lawyers, it is because of all the
professions, the practice of law is more likely than others to relate to, or affect, the area of public service.
WHEREFORE, the petition is DENIED for lack of merit. Costs against the petitioner.
SO ORDERED.