Republic

SUPREME
Manila

of

the

Philippines
COURT

EN BANC
G.R. No. 202202

approving, among others, the recommendation of the said

department to allow the substitution of private respondent.
The recommendation reads:
STUDY AND OBSERVATION

March 19, 2013

SILVERIO
R.
TAGOLINO, Petitioner,
vs.
HOUSE OF REPRESENTATIVES ELECTORAL
TRIBUNAL
AND
LUCY
MARIE
TORRESGOMEZ, Respondents.

On the same date, this Department received an Opposition

from Mr. Buenaventura O. Juntilla, thru his counsel,
opposing the candidacy of Ms. Lucy Marie Torres Gomez, as
a substitute candidate for Mr. Richard I. Gomez.
The crux of the opposition stemmed from the issue that there
should be no substitution because there is no candidate to
substitute for.

DECISION
PERLAS-BERNABE, J.:
Assailed in this Petition for Certiorari and Prohibition under
Rule 65 of the Rules of Court is the March 22, 2012
Decision1 of the House of Representatives Electoral Tribunal
(HRET) in HRET Case No. 10-031 (QW) which declared the
validity of private respondent Lucy Marie Torres-Gomezs
substitution as the Liberal Partys replacement candidate for
the position of Leyte Representative (Fourth Legislative
District) in lieu of Richard Gomez.
The Facts
On November 30, 2009, Richard Gomez (Richard) filed his
certificate of candidacy2 (CoC) with the Commission on
Elections (COMELEC), seeking congressional office as
Representative for the Fourth Legislative District of Leyte
under the ticket of the Liberal Party. Subsequently, on
December 6, 2009, one of the opposing candidates,
Buenaventura Juntilla (Juntilla), filed a Verified
Petition,3 alleging that Richard, who was actually a resident
of College Street, East Greenhills, San Juan City, Metro
Manila, misrepresented in his CoC that he resided in 910
Carlota Hills, Can-adieng, Ormoc City. In this regard,
Juntilla asserted that Richard failed to meet the one (1) year
residency requirement under Section 6, Article VI 4 of the
1987 Philippine Constitution (Constitution) and thus should
be declared disqualified/ineligible to run for the said office.
In addition, Juntilla prayed that Richards CoC be denied due
course and/or cancelled.5
On February 17, 2010, the COMELEC First Division rendered
a Resolution6 granting Juntillas petition without any
qualification. The dispositive portion of which reads:
WHEREFORE, premises considered, the Commission
RESOLVED, as it hereby RESOLVE, to GRANT the Petition
to Disqualify Candidate for Lack of Qualification filed by
BUENAVENTURA O. JUNTILLA against RICHARD I.
GOMEZ.
Accordingly,
RICHARD
I.
GOMEZ
is
DISQUALIFIED as a candidate for the Office of
Congressman, Fourth District of Leyte, for lack of residency
requirement.

It must be stressed that the resolution of the First Division,

this Commission, in SPA No. 09-059 speaks for
disqualification of candidate Richard I. Gomez and not of
cancellation of his Certificate of Candidacy:
Wherefore, premises considered, the Commission
RESOLVED, as it hereby RESOLVES, to GRANT the Petition
to Disqualify Candidate for Lack of Qualification filed x x x
against RICHARD I. GOMEZ. Accordingly, RICHARD I.
GOMEZ is DISQUALIFIED as a candidate for the Office of
Congressman, Fourth District of Leyte, for lack of residency
requirement.
The said resolution was affirmed by the Commission En
Banc on May 04, 2010.
The disqualification of a candidate does not automatically
cancel ones certificate of candidacy, especially when it is
nominated by a political party. In effect, the political party is
still allowed to substitute the candidate whose candidacy was
declared disqualified. After all, the right to substitute is a
privilege given to a political party to exercise and not
dependent totally to a candidate.
Nonetheless, in case of doubt, the same must always be
resolved to the qualification of a candidate to run in the
public office.
The substitution complied with the requirements provided
under Section 12 in relation to Section 13 of Comelec
Resolution No. 8678 dated October 6, 2009.
xxxx
In view of the foregoing,
RECOMMENDS the following:

the

Law

Department

xxxx
2. TO ALLOW CANDIDATE LUCY MARIE TORRES GOMEZ
AS A SUBSTITUTE CANDIDATE FOR RICHARD GOMEZ:
(Emphasis and underscoring supplied)

SO ORDERED.

xxxx

Aggrieved, Richard moved for reconsideration but the same

was denied by the COMELEC En Banc through a Resolution
dated May 4, 2010.7 Thereafter, in a Manifestation of even
date, Richard accepted the said resolution with finality "in
order to enable his substitute to facilitate the filing of the
necessary documents for substitution."8

The following day, or on May 9, 2010, Juntilla filed an

Extremely Urgent Motion for Reconsideration 12 (May 9, 2010
Motion) of the above-mentioned COMELEC En Banc
resolution

On May 5, 2010, Lucy Marie Torres-Gomez (private

respondent) filed her CoC9 together with a Certificate of
Nomination and Acceptance10 from the Liberal Party
endorsing her as the partys official substitute candidate vice
her husband, Richard, for the same congressional post. In
response to various letter-requests submitted to the
COMELECs Law Department (Law Department), the
COMELEC En Banc, in the exercise of its administrative
functions, issued Resolution No. 8890 11 on May 8, 2010,

Pending resolution of Juntillas May 9, 2010 Motion, the

national and local elections were conducted as scheduled on
May 10, 2010. During the elections, Richards, whose name
remained on the ballots, garnered 101, 250 votes while his
opponents, namely, Eufrocino Codilla, Jr. and herein
petitioner Silverio Tagolino, obtained 76,549 and 493 votes,
respectively.13 In view of the aforementioned substitution,
Richards votes were credited in favor of private respondent
and as a result, she was proclaimed the duly-elected
Representative of the Fourth District of Leyte.

On May 11, 2010, Juntilla filed an Extremely Urgent Motion

to resolve the pending May 9, 2010 Motion relative to
Resolution No. 8890.14 The said motion, however, remained
unacted.
On May 24, 2010, petitioner filed a Petition 15 for quo
warranto before the HRET in order to oust private
respondent from her congressional seat, claiming that: (1)
she failed to comply with the one (1) year residency
requirement under Section 6, Article VI of the Constitution
considering that the transfer of her voter registration from
San Rafael Bulacan16 to the Fourth District of Leyte was only
applied for on July 23, 2009; (2) she did not validly
substitute Richard as his CoC was void ab initio; and (3)
private respondents CoC was void due to her noncompliance with the prescribed notarial requirements i.e.,
she failed to present valid and competent proof of her
identity before the notarizing officer.17

of the formers failure to meet the one (1) year residency

requirement provided under Section 6, Article VI of the
Constitution.
It is petitioners submission that the HRET gravely abused its
discretion when it upheld the validity of private respondents
substitution despite contrary jurisprudence holding that
substitution is impermissible where the substituted
candidates CoC was denied due course to and/or cancelled,
as in the case of Richard. On the other hand, respondents
maintain that Richards CoC was not denied due course to
and/or cancelled by the COMELEC as he was only
"disqualified" and therefore, was properly substituted by
private respondent.
Ruling of the Court
The petition is meritorious.

In her Verified Answer,18 private respondent denied

petitioners allegations and claimed that she validly
substituted her husband in the electoral process. She also
averred that she personally known to the notary public who
notarized her CoC, one Atty. Edgardo Cordeno, and thus, she
was not required to have presented any competent proof of
identity during the notarization of the said document. Lastly,
she asserted that despite her marriage to Richard and
exercise of profession in Metro Manila, she continued to
maintain her residency in Ormoc City which was the place
where she was born and raised.
During the preliminary conference, and as shown in the
Preliminary Conference Order dated September 2, 2010, the
parties agreed on the following issues for resolution:
1.

Whether or not the instant petition for quo

warranto is meritorious;

2.

Whether or not the substitution of respondent is

valid;

3.

Whether or not a petition for quo warranto can be

used as a substitute for failure to file the necessary
petition for disqualification with the COMELEC;

4.

Whether or not respondents COC was duly

subscribed; and

5.

Whether or not respondent is ineligible for the

position of Representative of the Fourth District of
Leyte for lack of residency requirement.19

Ruling of the HRET

After due proceedings, the HRET issued the assailed March
22, 2012 Decision20 which dismissed the quo warranto
petition and declared that private respondent was a qualified
candidate for the position of Leyte Representative (Fourth
Legislative District). It observed that the resolution denying
Richards candidacy i.e., the COMELEC First Divisions
February 17, 2010 Resolution, spoke of disqualification and
not of CoC cancellation. Hence, it held that the substitution
of private respondent in lieu of Richard was legal and
valid.21 Also, it upheld the validity of private respondents
CoC due to petitioners failure to controvert her claim that
she was personally known to the notary public who notarized
her CoC.22 Finally, the HRET ruled that while it had been
admitted that private respondent resides in Colgate Street,
San Juan City and lived in San Rafael, Bulacan, the fact was
she continued to retain her domicile in Ormoc City given that
her absence therefrom was only temporary.
Hence, the instant petition.
Issues Before the Court
The crux of the present controversy is whatever or not the
HRET gravely abused its discretion in finding that Richard
was validly substituted by private respondent as candidate
for Leyte Representative (Fourth Legislative District) in view

A. Distinction between a petition for disqualification and a

petition to deny due course to/cancel a certificate of
candidacy
The Omnibus Election Code23 (OEC) provides for certain
remedies to assail a candidates bid for public office. Among
these which obtain particular significance to this case are: (1)
a petition for disqualification under Section 68; and (2) a
petition to deny due course to and/or cancel a certificate of
candidacy under Section 78. The distinctions between the
two are well-perceived.
Primarily, a disqualification case under Section 68 of the
OEC is hinged on either: (a) a candidates possession of a
permanent resident status in a foreign country; 24 or (b) his or
her commission of certain acts of disqualification. Anent the
latter, the prohibited acts under Section 68 refer to election
offenses under the OEC, and not to violations of other penal
laws.25 In particular, these are: (1) giving money or other
material consideration to influence, induce or corrupt the
voters or public officials performing electoral functions; (2)
committing acts of terrorism to enhance ones candidacy; (3)
spending in ones election campaign an amount in excess of
that allowed by the OEC; (4) soliciting, receiving or making
any contribution prohibited under Sections 89, 95, 96, 97
and 104 of the OEC; and (5) violating Sections
80,26 83,27 85,28 8629 and 261, paragraphs d,30 e,31 k,32 v,33and
cc, sub-paragraph 634 of the OEC. Accordingly, the same
provision (Section 68) states that any candidate who, in an
action or protest in which he or she is a party, is declared by
final decision of a competent court guilty of, or found by the
COMELEC to have committed any of the foregoing acts shall
be disqualified from continuing as a candidate for public
office, or disallowed from holding the same, if he or she had
already been elected.35
It must be stressed that one who is disqualified under
Section 68 is still technically considered to have been a
candidate, albeit proscribed to continue as such only because
of supervening infractions which do not, however, deny his
or her statutory eligibility. In other words, while the
candidates compliance with the eligibility requirements as
prescribed by law, such as age, residency, and citizenship, is
not in question, he or she is, however, ordered to discontinue
such candidacy as a form of penal sanction brought by the
commission of the above-mentioned election offenses.
On the other hand, a denial of due course to and/or
cancellation of a CoC proceeding under Section 78 of the
OEC36 is premised on a persons misrepresentation of any of
the material qualifications required for the elective office
aspired for. It is not enough that a person lacks the relevant
qualification; he or she must have also made a false
representation of the same in the CoC. 37 The nature of a
Section 78 petition was discussed in the case of Fermin v.
COMELEC,38 where the Court illumined:
Let it be misunderstood, the denial of due course to or the
cancellation of the CoC is not based on the lack of
qualifications but on a finding that the candidate made a
material representation that is false, which may relate to the
qualifications required of the public office he/she is running
for. It is noted that the candidates states in his/her CoC that

he/she is eligible for the office he/she seeks. Section 78 of the

OEC, therefore, is to be read in relation to the constitutional
and statutory provisions on qualifications or eligibility for
public office. If the candidate subsequently states a material
representation in the CoC that is false, the COMELEC,
following the law, is empowered to deny due course to or
cancel such certificate. Indeed, the Court has already likened
a proceeding under Section 78 to a quo warranto proceeding
under Section 253 of the OEC since they both deal with the
eligibility or qualification of a candidate, with the distinction
mainly in the fact that a "Section 78" petition is filed before
proclamation, while a petition for quo warranto is filed after
proclamation of the winning candidate. (Emphasis supplied)
Corollary thereto, it must be noted that the deliberateness of
the misrepresentation, much less ones intent to defraud, is
of bare significance in a Section 78 petition as it is enough
that the persons declaration of a material qualification in the
CoC be false. In this relation, jurisprudence holds that an
express finding that the person committed any deliberate
misrepresentation is of little consequence in the
determination of whether ones CoC should be deemed
cancelled or not.39 What remains material is that the petition
essentially seeks to deny due course to and/or cancel the CoC
on the basis of ones ineligibility and that the same be
granted without any qualification.40

declaration to run for office but evidences as well his or her

statutory eligibility to be elected for the said post. In Sinaca
v. Mula,44 the Court has illumined:
A certificate of candidacy is in the nature of a formal
manifestation to the whole world of the candidates political
creed or lack of political creed. It is a statement of a person
seeking to run for a public office certifying that he announces
his candidacy for the office mentioned and the be is eligible
for the office, the name of the political party to which he
belongs, if he belongs to any, and his post-office address for
all election purposes being as well stated. (Emphasis and
underscoring supplied).
In this regard, the CoC is the document which formally
accords upon a person the status of a candidate. In other
words, absent a valid CoC one is not considered a candidate
under legal contemplation. As held in Talaga:45
x x x a persons declaration of his intention to run for public
office and his affirmation that he possesses the eligibility for
the position he seeks to assume, followed by the timely filing
of such declaration, constitute a valid CoC that render the
person making the declaration a valid or official candidate.
(Emphasis supplied)

Pertinently, while a disqualified candidate under Section 68

is still considered to have been a candidate for all intents and
purposes, on the other hand, a person whose CoC had been
denied due course to and/or cancelled under Section 78 is
deemed to have not been a candidate at all. The reason being
is that a cancelled CoC is considered void ab initio and thus,
cannot give rise to a valid candidacy and necessarily, to valid
votes.41 In Talaga v. COMELEC42 (Talaga), the Court ruled
that:

Considering that Section 77 requires that there be a

candidate in order for substitution to take place, as well as
the precept that a person without a valid CoC is not
considered as a candidate at all, it necessarily follows that if a
persons CoC had been denied due course to and/or
cancelled, he or she cannot be validly substituted in the
electoral process. The existence of a valid CoC is therefore a
condition sine qua non for a disqualified candidate to be
validly substituted.46

x x x x While a person who is disqualified under Section 68 is

merely prohibited to continue as a candidate, a person who
certificate is cancelled or denied due course under Section 78
is not treated as a candidate at all, as if he/she never filed a
CoC.

C. Divergent effects of disqualification and denial of due

course to and/or cancellation of CoC cases vis--vis
candidate substitution

The foregoing variance gains utmost importance to the

present case considering its implications on candidate
substitution.
B. Valid CoC as a condition sine qua non for candidate
substitution
Section 77 of the OEC provides that if an official candidate of
a registered or accredited political party dies, withdraws or is
disqualified for any cause, a person belonging to and
certified by the same political party may file a CoC to replace
the candidate who died, withdrew or was disqualified. It
states that:
Sec. 77. Candidates in case of death, disqualification or
withdrawal of another. - If after the last day for the filing of
certificates of candidacy, an official candidate of a registered
or accredited political party dies, withdraws or is disqualified
for any cause, only a person belonging to, and certified by,
the same political party may file a certificate of candidacy to
replace the candidate who died, withdrew or was
disqualified. (Emphasis supplied)
Evidently, Section 77 requires that there be an "official
candidate" before candidate substitution proceeds. Thus,
whether the ground for substitution is death, withdrawal or
disqualification of a candidate, the said section unequivocally
states that only an official candidate of a registered or
accredited party may be substituted.43
As defined under Section 79(a) of the OEC, the term
"candidate" refers to any person aspiring for or seeking an
elective public office who has filed a certificate of candidacy
by himself or through an accredited political party,
aggroupment, or coalition of parties. Clearly, the law
requires that one must have validly filed a CoC in order to be
considered a candidate. The requirement of having a CoC
obtains even greater importance if one considers its nature.
In particular, a CoC formalizes not only a persons public

Proceeding, from the foregoing discourse, it is evident that

there lies a clear-cut distinction between a disqualification
case under Section 68 and denial of due course to and/or
cancellation of COC case under Section 78 vis--vis their
respective effects on candidate substitution under Section
77.1wphi1
As explained in the case of Miranda v. Abaya47 (Miranda), a
candidate who is disqualified under Section 68 can be validly
substituted pursuant to Section 77 because he remains a
candidate until disqualified; but a person whose CoC has
been denied due course to and/or cancelled under Section 78
cannot be substituted because he is not considered a
candidate.48 Stated differently, since there would be no
candidate to speak of under a denial of due course to and/or
cancellation of a CoC case, then there would be no candidate
to be substituted; the same does not obtain, however, in a
disqualification case since there remains to be a candidate to
be substituted, although his or her candidacy is
discontinued.
On this note, it is equally revelatory that Section 77 expressly
enumerates the instances where substitution is permissible,
that is when an official candidate of a registered or
accredited political party "dies, withdraws or is disqualified
for any cause." Noticeably, material misrepresentation cases
are not included in the said section and therefore, cannot be
a valid basis to proceed with candidate substitution.
D. Application to the case at bar
In this case, it is undisputed that Richard was disqualified to
run in the May 10, 2010 elections due to his failure to comply
with the one year residency requirement.49 The confusion,
however, stemmed from the use of the word "disqualified" in
the February 17, 2010 Resolution of the COMELEC First
Division, which was adopted by the COMELEC En Banc in
granting the substitution of private respondent, and even
further perpetuated by the HRET in denying the quo
warranto petition. In short, a finding that Richard was
merely disqualified and not that his CoC was denied due

course to and/or cancelled would mean that he could have

been validly substitute by private respondent, thereby
legitimizing her candidacy.

prayer for denial of due course and cancellation of the

certificate of candidacy.
xxxx

Yet the fact that the COMELEC First Divisions February 17,
2010 Resolution did not explicitly decree the denial of due
course to and/or cancellation of Richards CoC should not
have obviated the COMELEC En Banc from declaring the
invalidity of private respondents substitution. It should be
stressed that the clear and unequivocal basis for Richards
"disqualification" is his failure to comply with the residency
requirement under Section 6, Article VI of the Constitution
which is a ground for the denial of due course to and/or
cancellation a CoC under Section 78 of the OEC,
misrepresentation contemplated under a Section 78 petition
refers to statements affecting ones qualifications for elective
office such as age, residence and citizenship or nonpossession of natural-born Filipino status. 51 There is
therefore no legal basis to support a finding of
disqualification within the ambit of election laws.
Accordingly, given Richards non-compliance with the one
year residency requirement, it cannot be mistaken that the
COMELEC First Divisions unqualified grant of Juntillas
"Verified Petition to Disqualify Candidate for Lack of
Qualification"52 which prayed that the COMELEC declare
Richard "DISQUALIFIED and INELIGIBLE from seeking the
office of Member of the House of Representatives" and "x x x
that his Certificate of Candidacy x x x be DENIED DUE
COURSE and/or CANCELLED"53 carried with it the denial
of due course to and/or cancellation of Richards CoC
pursuant to Section 78.
Case law dictates that if a petition prays for the denial of due
course to and/or cancellation of CoC and the same is granted
by the COMELEC without any qualification, the cancellation
of the candidates CoC in in order. This is precisely the crux
of the Miranda ruling wherein the Court, in upholding the
COMELEC En Bancs nullification of the substitution in that
case, decreed that the COMELEC Divisions unqualified
grant of the petition necessarily included the denial of due
course to and/or cancellation of the candidates CoC,
notwithstanding the use of the term "disqualified" in the
COMELEC Divisions resolution, as the foregoing was prayed
for in the said petition:
The question to settle next is whether or not aside from Joiel
"Pempe" Miranda being disqualified by the COMELEC in its
May 5, 1998 resolution, his certificate of candidacy had
likewise been denied due course and cancelled.
The Court rules that it was.
Private respondents petition in SPA No. 98-019 specifically
prayed for the following:
WHEREFORE, it is respectfully prayed that the Certificate of
Candidacy filed by respondent for the position of Mayor for
the City of Snatiago be not given due course and/or
cancelled.
Other reliefs just and equitable in the premises are likewise
prayed for.
In resolving the petition filed by private respondent
specifying a very particular relief, the COMELEC ruled
favorably in the following manner:
WHEREFORE, in view of the foregoing, the Commission
(FIRST DIVISION) GRANTS the Petition. Respondent JOSE
"Pempe" MIRANDA is hereby DISQUALIFIED from running
for the position of mayor of Santiago City, Isabela, in the
May 11, 1998 national and local elections.

There is no dispute that the complaint or petition filed by

private respondent in SPA No. 98-019 is one to deny due
course and to cancel the certificate of candidacy of Jose
"Pempe" Miranda. There is likewise no question that the said
petition was GRANTED without any qualification
whatsoever. It is rather clear, therefore, that whether or not
the COMELEC granted any further relief in SPA No. 98-019
by disqualifying the candidate, the fact remains that the said
petition was granted and that the certificate of candidacy of
Jose "Pempe" Miranda was denied due course and cancelled.
(Emphasis and underscoring supplied)
The same rule was later discussed in the case of Talaga, viz:
3. Granting without any qualification or petition in SPA No.
09-029(DC) manifested COMELECs intention to declare
Ramon disqualified and to cancel his CoC
xxxx
In Miranda v. Abaya, the specific relief that the petition
prayed for was that the CoC "be not given due course and/or
cancelled". The COMELEC categorically granted "the
petition" and then pronounced in apparent contradiction
that Joel Pempe Miranda was "disqualified." The Court held
that the COMELEC, by granting the petition without any
qualification, disqualified Joel Pempe Miranda and at the
same time cancelled Jose Pempe Mirandas CoC.
xxxx
The crucial point of Miranda v. Abaya was that the
COMELEC actually granted the particular relief of cancelling
or denying due course to the CoC prayed for in the petition
by not subjecting that relief to any qualification. (Emphasis
and underscoring supplied)
In view of the foregoing rulings, the COMELEC En Banc
direly misconstrued the COMELEC First Divisions February
17, 2010 Resolution when it adopted the Law Departments
finding that Richard was only "disqualified" and that his CoC
was not denied due course to and/or cancelled, paving the
way for the approval of private respondents substitution. It
overlooked the fact that the COMELEC First Divisions ruling
encompassed the cancellation of Richards CoC and in
consequence, disallowed the substitution of private
respondent. It was therefore grave and serious error on the
part of the COMELEC En Banc to have approved private
respondents substitution.
Consequently, in perpetuating the COMELEC En Bancs
error as above-discussed, the HRET committed a grave
abuse of discretion, warranting the grant of the instant
petition.
Fundamental is the rule that grave abuse of discretion arises
when a lower court or tribunal patently violates the
Constitution, the law or existing jurisprudence. 54 While it is
well-recognized that the HRET has been empowered by the
Constitution to be the "sole judge" of all contests relating to
the election, returns, and qualifications of the members of
the House, the Court maintains jurisdiction over it to check
"whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction" on the part of the
latter.55 In other words, when the HRET utterly disregards
the law and settled precedents on the matter before it, it
commits a grave abuse of discretion.

SO ORDERED.
From a plain reading of the dispositive portion of the
COMELEC resolution of May 5, 1998 in SPA No. 98-019, it is
sufficiently clear that the prayer specifically and particularly
sought in the petition was GRANTED, there being no
qualification on the matter whatsoever. The disqualification
was simply ruled over and above the granting of the specific

Records clearly show that: (1) Richard was held ineligible as

a congressional candidate for the Fourth District of Leyte due
to his failure to comply with the one year residency
requirement; (2) Juntillas petition prayed for the denial of
due course to and/or cancellation of his CoC; and (3) the
COMELEC First Division granted the foregoing petition
without any qualification. By these undisputed and essential

facts alone, the HRET should not have adopted the

COMELEC En Bancs erroneous finding that the COMELEC
First Divisions February 17, 2010 Resolution "speaks only of
"disqualification and not of cancellation of Richards
CoC"36 and thereby, sanctioned the substitution of private
respondent.
Lest it be misunderstood, the HRET is not bound by previous
COMELEC pronouncements relative to the qualifications of
the Members of the House. Being the sole judge 57 of all
contests relating to the election, returns, and qualifications
of its respective members, the HRET cannot be tied down by
COMELEC resolutions, else its constitutional mandate 58 be
circumvented and rendered nugatory. Instructive on this
point is the Courts disquisition in Fernandez v. HRET, 59 to
wit:
Private respondent concludes from the above that petitioner
had no legal basis to claim that the HRET, when reference to
the qualification/s of Members of the House of
Representatives is concerned, is "co-equal", to the
COMELEC respecting the matter of eligibility and
qualification of a member of the House of Representatives.
The truth is the other way around, because the COMELEC is
subservient to the HRET when the dispute or contest at issue
refers to the eligibility and/or qualification of a Member of
the House of Representatives. A petition for quo warranto is
within the exclusive jurisdiction of the HRET as sole judge,
and cannot be considered forum shopping even if another
body may have passed upon in administrative or quasijudicial proceedings the issue of the Members qualification
while the Member was still a candidate. There is forumshopping only where two cases involve the same parties and
the same cause of action. The two cases here are distinct and
dissimilar in their nature and character. (Emphasis and
underscoring supplied)
Notably, the phrase "election, returns, and qualifications"
should be interpreted in its totality as referring to all matters
affecting the validity of the contestees title. More
particularly, the term "qualifications" refers to matters that
could be raised in a quo warranto proceeding against the
pro-claimed winner, such as his disloyalty or ineligibility, or
the inadequacy of his certificate of candidacy.60 As used in
Section 74 of the OEC, the word "eligible" means having the
right to run for elective public office, that is, having all the
qualifications and none of the ineligibilities to run for the
public office.61 In this relation, private respondents own
qualification to run for public office which was inextricably
linked to her husbands own qualifications due to her
substitution was the proper subject of quo warranto
proceedings falling within the exclusive jurisdiction of the
HRET and independent from any previous proceedings
before the COMELEC, lest the jurisdiction divide between
the two be blurred.
Nonetheless, it must be pointed out that the HRETs
independence is not without limitation. As earlier
mentioned, the Court retains certiorari jurisdiction over the
HRET if only to check whether or not it has gravely abused
its discretion. In this regard, the Court does not endeavor to
denigrate nor undermine the HRETs independence; rather,
it merely fulfills its duty to ensure that the Constitution and
the laws are upheld through the exercise of its power of
judicial review.
In fine, the Court observes that the HRET wantonly
disregarded the law by deliberately adopting the COMELEC
En Bancs flawed findings regarding private respondents
eligibility to run for public office which essentially stemmed
from her substitution. In this light, it cannot be gainsaid that
the HRET gravely abused its discretion.

Representatives Electoral Tribunal in HRET Case No. 10-031

(QW) is hereby REVERSED and SET ASIDE.
SO ORDERED.

Republic
SUPREME
Manila

of

the

Philippines
COURT

EN BANC
G.R No. 187167

August 16, 2011

PROF. MERLIN M. MAGALLONA, AKBAYAN

PARTY-LIST REP. RISA HONTIVEROS, PROF.
HARRY C. ROQUE, JR., AND UNIVERSITY OF THE
PHILIPPINES COLLEGE OF LAW STUDENTS,
ALITHEA BARBARA ACAS, VOLTAIRE ALFERES,
CZARINA MAY ALTEZ, FRANCIS ALVIN ASILO,
SHERYL BALOT, RUBY AMOR BARRACA, JOSE
JAVIER
BAUTISTA,
ROMINA
BERNARDO,
VALERIE PAGASA BUENAVENTURA, EDAN MARRI
CAETE, VANN ALLEN DELA CRUZ, RENE
DELORINO, PAULYN MAY DUMAN, SHARON
ESCOTO, RODRIGO FAJARDO III, GIRLIE FERRER,
RAOULLE OSEN FERRER, CARLA REGINA GREPO,
ANNA MARIE CECILIA GO, IRISH KAY KALAW,
MARY
ANN
JOY
LEE,
MARIA
LUISA
MANALAYSAY,
MIGUEL
RAFAEL
MUSNGI,
MICHAEL OCAMPO, JAKLYN HANNA PINEDA,
WILLIAM RAGAMAT, MARICAR RAMOS, ENRIK
FORT REVILLAS, JAMES MARK TERRY RIDON,
JOHANN FRANTZ RIVERA IV, CHRISTIAN
RIVERO, DIANNE MARIE ROA, NICHOLAS
SANTIZO,
MELISSA
CHRISTINA
SANTOS,
CRISTINE MAE TABING, VANESSA ANNE TORNO,
MARIA ESTER VANGUARDIA, and MARCELINO
VELOSO
III, Petitioners,
vs.
HON. EDUARDO ERMITA, IN HIS CAPACITY AS
EXECUTIVE
SECRETARY,
HON.
ALBERTO
ROMULO, IN HIS CAPACITY AS SECRETARY OF
THE DEPARTMENT OF FOREIGN AFFAIRS, HON.
ROLANDO ANDAYA, IN HIS CAPACITY AS
SECRETARY OF THE DEPARTMENT OF BUDGET
AND MANAGEMENT, HON. DIONY VENTURA, IN
HIS CAPACITY AS ADMINISTRATOR OF THE
NATIONAL
MAPPING
&
RESOURCE
INFORMATION AUTHORITY, and HON. HILARIO
DAVIDE,
JR.,
IN
HIS
CAPACITY
AS
REPRESENTATIVE OF THE PERMANENT MISSION
OF THE REPUBLIC OF THE PHILIPPINES TO THE
UNITED NATIONS,Respondents.
DECISION
CARPIO, J.:
The Case
This original action for the writs of certiorari and prohibition
assails the constitutionality of Republic Act No. 9522 1(RA
9522) adjusting the countrys archipelagic baselines and
classifying the baseline regime of nearby territories.
The Antecedents

Owing to the lack of proper substitution in its case, private

respondent was therefore not a bona fide candidate for the
position of Representative for the Fourth District of Leyte
when she ran for office, which means that she could not have
been elected. Considering this pronouncement, there exists
no cogent reason to further dwell on the other issues
respecting private respondents own qualification to office.
WHEREFORE, the petition is GRANTED. Accordingly, the
March 22, 2012 Decision rendered by the House of

In 1961, Congress passed Republic Act No. 3046 (RA

3046)2 demarcating the maritime baselines of the
Philippines as an archipelagic State. 3 This law followed the
framing of the Convention on the Territorial Sea and the
Contiguous Zone in 1958 (UNCLOS I),4 codifying, among
others, the sovereign right of States parties over their
"territorial sea," the breadth of which, however, was left
undetermined. Attempts to fill this void during the second
round of negotiations in Geneva in 1960 (UNCLOS II)

proved futile. Thus, domestically, RA 3046 remained

unchanged for nearly five decades, save for legislation passed
in 1968 (Republic Act No. 5446 [RA 5446]) correcting
typographical errors and reserving the drawing of baselines
around Sabah in North Borneo.
In March 2009, Congress amended RA 3046 by enacting RA
9522, the statute now under scrutiny. The change was
prompted by the need to make RA 3046 compliant with the
terms of the United Nations Convention on the Law of the
Sea (UNCLOS III),5 which the Philippines ratified on 27
February 1984.6 Among others, UNCLOS III prescribes the
water-land ratio, length, and contour of baselines of
archipelagic States like the Philippines7 and sets the deadline
for the filing of application for the extended continental
shelf.8 Complying with these requirements, RA 9522
shortened one baseline, optimized the location of some
basepoints around the Philippine archipelago and classified
adjacent territories, namely, the Kalayaan Island Group
(KIG) and the Scarborough Shoal, as "regimes of islands"
whose islands generate their own applicable maritime zones.
Petitioners, professors of law, law students and a legislator,
in their respective capacities as "citizens, taxpayers or x x x
legislators,"9 as the case may be, assail the constitutionality
of RA 9522 on two principal grounds, namely: (1) RA 9522
reduces Philippine maritime territory, and logically, the
reach of the Philippine states sovereign power, in violation
of Article 1 of the 1987 Constitution, 10 embodying the terms
of the Treaty of Paris11 and ancillary treaties,12 and (2) RA
9522 opens the countrys waters landward of the baselines to
maritime passage by all vessels and aircrafts, undermining
Philippine sovereignty and national security, contravening
the countrys nuclear-free policy, and damaging marine
resources, in violation of relevant constitutional provisions. 13
In addition, petitioners contend that RA 9522s treatment of
the KIG as "regime of islands" not only results in the loss of a
large maritime area but also prejudices the livelihood of
subsistence fishermen.14 To buttress their argument of
territorial diminution, petitioners facially attack RA 9522 for
what it excluded and included its failure to reference either
the Treaty of Paris or Sabah and its use of UNCLOS IIIs
framework of regime of islands to determine the maritime
zones of the KIG and the Scarborough Shoal.
Commenting on the petition, respondent officials raised
threshold issues questioning (1) the petitions compliance
with the case or controversy requirement for judicial review
grounded on petitioners alleged lack of locus standiand (2)
the propriety of the writs of certiorari and prohibition to
assail the constitutionality of RA 9522. On the merits,
respondents defended RA 9522 as the countrys compliance
with the terms of UNCLOS III, preserving Philippine
territory over the KIG or Scarborough Shoal. Respondents
add that RA 9522 does not undermine the countrys security,
environment and economic interests or relinquish the
Philippines claim over Sabah.
Respondents also question the normative force, under
international law, of petitioners assertion that what Spain
ceded to the United States under the Treaty of Paris were the
islands and all the waters found within the boundaries of the
rectangular area drawn under the Treaty of Paris.
We left unacted petitioners prayer for an injunctive writ.
The Issues
The petition raises the following issues:
1. Preliminarily
1. Whether petitioners possess locus
standi to bring this suit; and
2. Whether the writs of certiorari and
prohibition are the proper remedies to
assail the constitutionality of RA 9522.

2. On the merits,
unconstitutional.

whether

RA

9522

is

The Ruling of the Court

On the threshold issues, we hold that (1) petitioners
possess locus standi to bring this suit as citizens and (2) the
writs of certiorari and prohibition are proper remedies to test
the constitutionality of RA 9522. On the merits, we find no
basis to declare RA 9522 unconstitutional.
On
the
Petitioners
Standi as Citizens

Threshold
Possess

Issues
Locus

Petitioners themselves undermine their assertion of locus

standi as legislators and taxpayers because the petition
alleges neither infringement of legislative prerogative 15 nor
misuse of public funds,16 occasioned by the passage and
implementation of RA 9522. Nonetheless, we recognize
petitioners locus standi as citizens with constitutionally
sufficient interest in the resolution of the merits of the case
which undoubtedly raises issues of national significance
necessitating urgent resolution. Indeed, owing to the peculiar
nature of RA 9522, it is understandably difficult to find other
litigants possessing "a more direct and specific interest" to
bring the suit, thus satisfying one of the requirements for
granting citizenship standing.17
The
Writs
of
Certiorari
and
Are
Proper
Remedies
the Constitutionality of Statutes

Prohibition
to
Test

In praying for the dismissal of the petition on preliminary

grounds, respondents seek a strict observance of the offices
of the writs of certiorari and prohibition, noting that the
writs cannot issue absent any showing of grave abuse of
discretion in the exercise of judicial, quasi-judicial or
ministerial powers on the part of respondents and resulting
prejudice on the part of petitioners.18
Respondents submission holds true in ordinary civil
proceedings. When this Court exercises its constitutional
power of judicial review, however, we have, by tradition,
viewed the writs of certiorari and prohibition as proper
remedial vehicles to test the constitutionality of
statutes,19 and indeed, of acts of other branches of
government.20 Issues of constitutional import are sometimes
crafted out of statutes which, while having no bearing on the
personal interests of the petitioners, carry such relevance in
the life of this nation that the Court inevitably finds itself
constrained to take cognizance of the case and pass upon the
issues raised, non-compliance with the letter of procedural
rules notwithstanding. The statute sought to be reviewed
here is one such law.
RA
9522
is
Not
Unconstitutional
RA
9522
is
a
Statutory
Tool
to
Demarcate
the
Countrys
Maritime
Zones
and
Continental
Shelf
Under
UNCLOS
III,
not
to
Delineate Philippine Territory
Petitioners submit that RA 9522 "dismembers a large portion
of the national territory"21 because it discards the preUNCLOS III demarcation of Philippine territory under the
Treaty of Paris and related treaties, successively encoded in
the definition of national territory under the 1935, 1973 and
1987 Constitutions. Petitioners theorize that this
constitutional definition trumps any treaty or statutory
provision denying the Philippines sovereign control over
waters, beyond the territorial sea recognized at the time of
the Treaty of Paris, that Spain supposedly ceded to the
United States. Petitioners argue that from the Treaty of Paris
technical description, Philippine sovereignty over territorial
waters extends hundreds of nautical miles around the
Philippine archipelago, embracing the rectangular area
delineated in the Treaty of Paris.22
Petitioners theory fails to persuade us.

UNCLOS III has nothing to do with the acquisition (or loss)

of territory. It is a multilateral treaty regulating, among
others, sea-use rights over maritime zones (i.e., the territorial
waters [12 nautical miles from the baselines], contiguous
zone [24 nautical miles from the baselines], exclusive
economic zone [200 nautical miles from the baselines]), and
continental shelves that UNCLOS III delimits. 23 UNCLOS III
was the culmination of decades-long negotiations among
United Nations members to codify norms regulating the
conduct of States in the worlds oceans and submarine areas,
recognizing coastal and archipelagic States graduated
authority over a limited span of waters and submarine lands
along their coasts.
On the other hand, baselines laws such as RA 9522 are
enacted by UNCLOS III States parties to mark-out specific
basepoints along their coasts from which baselines are
drawn, either straight or contoured, to serve as geographic
starting points to measure the breadth of the maritime zones
and continental shelf. Article 48 of UNCLOS III on
archipelagic States like ours could not be any clearer:
Article 48. Measurement of the breadth of the territorial
sea, the contiguous zone, the exclusive economic zone and
the continental shelf. The breadth of the territorial sea, the
contiguous zone, the exclusive economic zone and the
continental shelf shall be measured from archipelagic
baselines drawn in accordance with article 47. (Emphasis
supplied)

of maritime space encompassed by each law, coupled with a

reading of the text of RA 9522 and its congressional
deliberations, vis--vis the Philippines obligations under
UNCLOS III, belie this view.1avvphi1
The configuration of the baselines drawn under RA 3046 and
RA 9522 shows that RA 9522 merely followed the basepoints
mapped by RA 3046, save for at least nine basepoints that
RA 9522 skipped to optimize the location of basepoints and
adjust the length of one baseline (and thus comply with
UNCLOS IIIs limitation on the maximum length of
baselines). Under RA 3046, as under RA 9522, the KIG and
the Scarborough Shoal lie outside of the baselines drawn
around the Philippine archipelago. This undeniable
cartographic fact takes the wind out of petitioners argument
branding RA 9522 as a statutory renunciation of the
Philippines claim over the KIG, assuming that baselines are
relevant for this purpose.
Petitioners assertion of loss of "about 15,000 square nautical
miles of territorial waters" under RA 9522 is similarly
unfounded both in fact and law. On the contrary, RA 9522,
by optimizing the location of basepoints, increased the
Philippines total maritime space (covering its internal
waters, territorial sea and exclusive economic zone) by
145,216 square nautical miles, as shown in the table below:29

Extent
of
maritime
area using
RA 3046, as
amended,
taking into
account the
Treaty
of
Paris
delimitatio
n (in square
nautical
miles)

Thus, baselines laws are nothing but statutory mechanisms

for UNCLOS III States parties to delimit with precision the
extent of their maritime zones and continental shelves. In
turn, this gives notice to the rest of the international
community of the scope of the maritime space and
submarine areas within which States parties exercise treatybased rights, namely, the exercise of sovereignty over
territorial waters (Article 2), the jurisdiction to enforce
customs, fiscal, immigration, and sanitation laws in the
contiguous zone (Article 33), and the right to exploit the
living and non-living resources in the exclusive economic
zone (Article 56) and continental shelf (Article 77).
Even under petitioners theory that the Philippine territory
embraces the islands and all the waters within the
rectangular area delimited in the Treaty of Paris, the
baselines of the Philippines would still have to be drawn in
accordance with RA 9522 because this is the only way to
draw the baselines in conformity with UNCLOS III. The
baselines cannot be drawn from the boundaries or other
portions of the rectangular area delineated in the Treaty of
Paris, but from the "outermost islands and drying reefs of the
archipelago."24
UNCLOS III and its ancillary baselines laws play no role in
the acquisition, enlargement or, as petitioners claim,
diminution of territory. Under traditional international law
typology, States acquire (or conversely, lose) territory
through
occupation,
accretion,
cession
and
prescription,25 not by executing multilateral treaties on the
regulations of sea-use rights or enacting statutes to comply
with the treatys terms to delimit maritime zones and
continental shelves. Territorial claims to land features are
outside UNCLOS III, and are instead governed by the rules
on general international law.26
RA
9522s
Use
of
the
Framework
of Regime of Islands to Determine the
Maritime
Zones
of
the
KIG
and
the
Scarborough
Shoal,
not
Inconsistent
with the Philippines Claim of Sovereignty
Over these Areas
Petitioners next submit that RA 9522s use of UNCLOS IIIs
regime of islands framework to draw the baselines, and to
measure the breadth of the applicable maritime zones of the
KIG, "weakens our territorial claim" over that
area.27 Petitioners add that the KIGs (and Scarborough
Shoals) exclusion from the Philippine archipelagic baselines
results in the loss of "about 15,000 square nautical miles of
territorial waters," prejudicing the livelihood of subsistence
fishermen.28 A comparison of the configuration of the
baselines drawn under RA 3046 and RA 9522 and the extent

Extent of maritime area

using RA 9522, taking into
account UNCLOS III (in
square nautical miles)

Internal or
archipelagic
waters
166,858

171,435

Territorial
Sea

32,106

274,136

Exclusive
Economic
Zone
TOTAL

382,669
440,994

586,210

Thus, as the map below shows, the reach of the exclusive

economic zone drawn under RA 9522 even extends way
beyond the waters covered by the rectangular demarcation
under the Treaty of Paris. Of course, where there are
overlapping exclusive economic zones of opposite or adjacent
States, there will have to be a delineation of maritime
boundaries in accordance with UNCLOS III.30

Although the Philippines has consistently claimed

sovereignty over the KIG32 and the Scarborough Shoal for
several decades, these outlying areas are located at an
appreciable distance from the nearest shoreline of the
Philippine archipelago,33 such that any straight baseline
loped around them from the nearest basepoint will inevitably
"depart to an appreciable extent from the general
configuration of the archipelago."
The principal sponsor of RA 9522 in the Senate, Senator
Miriam Defensor-Santiago, took pains to emphasize the
foregoing during the Senate deliberations:
What we call the Kalayaan Island Group or what the rest of
the world call[] the Spratlys and the Scarborough Shoal are
outside our archipelagic baseline because if we put them
inside our baselines we might be accused of violating the
provision of international law which states: "The drawing
of such baseline shall not depart to any appreciable extent
from the general configuration of the archipelago." So sa
loob ng ating baseline, dapat magkalapit ang mga islands.
Dahil malayo ang Scarborough Shoal, hindi natin
masasabing malapit sila sa atin although we are still
allowed by international law to claim them as our own.
This is called contested islands outside our configuration. We
see that our archipelago is defined by the orange line which
[we] call[] archipelagic baseline. Ngayon, tingnan ninyo ang
maliit na circle doon sa itaas, that is Scarborough Shoal,
itong malaking circle sa ibaba, that is Kalayaan Group or the
Spratlys. Malayo na sila sa ating archipelago kaya kung
ilihis pa natin ang dating archipelagic baselines para
lamang masama itong dalawang circles, hindi na sila
magkalapit at baka hindi na tatanggapin ng United
Nations because of the rule that it should follow the natural
configuration of the archipelago.34 (Emphasis supplied)
Similarly, the length of one baseline that RA 3046 drew
exceeded UNCLOS IIIs limits.1avvphi1 The need to shorten
this baseline, and in addition, to optimize the location of
basepoints using current maps, became imperative as
discussed by respondents:

Further, petitioners argument that the KIG now lies outside

Philippine territory because the baselines that RA 9522
draws do not enclose the KIG is negated by RA 9522 itself.
Section 2 of the law commits to text the Philippines
continued claim of sovereignty and jurisdiction over the KIG
and the Scarborough Shoal:
SEC. 2. The baselines in the following areas over which the
Philippines likewise exercises sovereignty and
jurisdiction shall be determined as "Regime of Islands"
under the Republic of the Philippines consistent with Article
121 of the United Nations Convention on the Law of the Sea
(UNCLOS):
a) The Kalayaan Island Group as constituted under
Presidential Decree No. 1596 and
b) Bajo de Masinloc, also known as Scarborough
Shoal. (Emphasis supplied)
Had Congress in RA 9522 enclosed the KIG and the
Scarborough Shoal as part of the Philippine archipelago,
adverse legal effects would have ensued. The Philippines
would have committed a breach of two provisions of
UNCLOS III. First, Article 47 (3) of UNCLOS III requires
that "[t]he drawing of such baselines shall not depart to any
appreciable extent from the general configuration of the
archipelago." Second, Article 47 (2) of UNCLOS III requires
that "the length of the baselines shall not exceed 100 nautical
miles," save for three per cent (3%) of the total number of
baselines which can reach up to 125 nautical miles.31

[T]he amendment of the baselines law was necessary to

enable the Philippines to draw the outer limits of its
maritime zones including the extended continental shelf in
the manner provided by Article 47 of [UNCLOS III]. As
defined by R.A. 3046, as amended by R.A. 5446, the
baselines suffer from some technical deficiencies, to wit:
1. The length of the baseline across Moro Gulf
(from Middle of 3 Rock Awash to Tongquil Point)
is 140.06 nautical miles x x x. This exceeds the
maximum length allowed under Article 47(2) of
the [UNCLOS III], which states that "The length of
such baselines shall not exceed 100 nautical miles,
except that up to 3 per cent of the total number of
baselines enclosing any archipelago may exceed
that length, up to a maximum length of 125
nautical miles."
2. The selection of basepoints is not optimal. At
least 9 basepoints can be skipped or deleted from
the baselines system. This will enclose an
additional 2,195 nautical miles of water.
3. Finally, the basepoints were drawn from maps
existing in 1968, and not established by geodetic
survey methods. Accordingly, some of the points,
particularly along the west coasts of Luzon down
to Palawan were later found to be located either
inland or on water, not on low-water line and
drying reefs as prescribed by Article 47.35
Hence, far from surrendering the Philippines claim over the
KIG and the Scarborough Shoal, Congress decision to
classify the KIG and the Scarborough Shoal as "Regime[s] of
Islands under the Republic of the Philippines consistent
with Article 121"36 of UNCLOS III manifests the Philippine
States responsible observance of its pacta sunt
servanda obligation under UNCLOS III. Under Article 121 of
UNCLOS III, any "naturally formed area of land, surrounded

by water, which is above water at high tide," such as portions

of the KIG, qualifies under the category of "regime of
islands," whose islands generate their own applicable
maritime zones.37
Statutory
Claim
RA 5446 Retained

Over

Sabah

under

Petitioners argument for the invalidity of RA 9522 for its

failure to textualize the Philippines claim over Sabah in
North Borneo is also untenable. Section 2 of RA 5446, which
RA 9522 did not repeal, keeps open the door for drawing the
baselines of Sabah:
Section 2. The definition of the baselines of the territorial sea
of the Philippine Archipelago as provided in this Actis
without prejudice to the delineation of the baselines
of the territorial sea around the territory of Sabah,
situated in North Borneo, over which the Republic
of the Philippines has acquired dominion and
sovereignty. (Emphasis supplied)
UNCLOS
III
and
RA
Incompatible
with
the
Delineation of Internal Waters

9522
not
Constitutions

As their final argument against the validity of RA 9522,

petitioners contend that the law unconstitutionally
"converts" internal waters into archipelagic waters, hence
subjecting these waters to the right of innocent and sea lanes
passage under UNCLOS III, including overflight. Petitioners
extrapolate that these passage rights indubitably expose
Philippine internal waters to nuclear and maritime pollution
hazards, in violation of the Constitution.38
Whether referred to as Philippine "internal waters" under
Article I of the Constitution39 or as "archipelagic waters"
under UNCLOS III (Article 49 [1]), the Philippines exercises
sovereignty over the body of water lying landward of the
baselines, including the air space over it and the submarine
areas underneath. UNCLOS III affirms this:
Article 49. Legal status of archipelagic waters, of the air
space over archipelagic waters and of their bed and subsoil.

1. The sovereignty of an archipelagic State

extends to the waters enclosed by the
archipelagic baselines drawn in accordance
with article 47, described as archipelagic waters,
regardless of their depth or distance from the
coast.
2. This sovereignty extends to the air space
over the archipelagic waters, as well as to
their bed and subsoil, and the resources
contained therein.
xxxx
4. The regime of archipelagic sea lanes passage
established in this Part shall not in other
respects affect the status of the archipelagic
waters, including the sea lanes, or the exercise
by the archipelagic State of its sovereignty
over such waters and their air space, bed
and subsoil, and the resources contained
therein. (Emphasis supplied)
The fact of sovereignty, however, does not preclude the
operation of municipal and international law norms
subjecting the territorial sea or archipelagic waters to
necessary, if not marginal, burdens in the interest of
maintaining
unimpeded,
expeditious
international
navigation, consistent with the international law principle of
freedom of navigation. Thus, domestically, the political
branches of the Philippine government, in the competent
discharge of their constitutional powers, may pass legislation
designating routes within the archipelagic waters to regulate
innocent and sea lanes passage.40 Indeed, bills drawing

nautical highways for sea lanes passage are now pending in

Congress.41
In the absence of municipal legislation, international law
norms, now codified in UNCLOS III, operate to grant
innocent passage rights over the territorial sea or
archipelagic waters, subject to the treatys limitations and
conditions for their exercise.42 Significantly, the right of
innocent passage is a customary international law, 43 thus
automatically incorporated in the corpus of Philippine
law.44 No modern State can validly invoke its sovereignty to
absolutely forbid innocent passage that is exercised in
accordance with customary international law without risking
retaliatory measures from the international community.
The fact that for archipelagic States, their archipelagic waters
are subject to both the right of innocent passage and sea
lanes passage45 does not place them in lesser footing vis-vis continental coastal States which are subject, in their
territorial sea, to the right of innocent passage and the right
of transit passage through international straits. The
imposition of these passage rights through archipelagic
waters under UNCLOS III was a concession by archipelagic
States, in exchange for their right to claim all the waters
landward of their baselines,regardless of their depth or
distance from the coast, as archipelagic waters subject to
their territorial sovereignty. More importantly, the
recognition of archipelagic States archipelago and the waters
enclosed by their baselines as one cohesive entity prevents
the treatment of their islands as separate islands under
UNCLOS III.46 Separate islands generate their own maritime
zones, placing the waters between islands separated by more
than 24 nautical miles beyond the States territorial
sovereignty, subjecting these waters to the rights of other
States under UNCLOS III.47
Petitioners invocation of non-executory constitutional
provisions in Article II (Declaration of Principles and State
Policies)48 must also fail. Our present state of jurisprudence
considers the provisions in Article II as mere legislative
guides, which, absent enabling legislation, "do not embody
judicially enforceable constitutional rights x x x."49 Article II
provisions serve as guides in formulating and interpreting
implementing legislation, as well as in interpreting executory
provisions of the Constitution. Although Oposa v.
Factoran50 treated the right to a healthful and balanced
ecology under Section 16 of Article II as an exception, the
present petition lacks factual basis to substantiate the
claimed constitutional violation. The other provisions
petitioners cite, relating to the protection of marine wealth
(Article XII, Section 2, paragraph 2 51 ) and subsistence
fishermen (Article XIII, Section 752 ), are not violated by RA
9522.
In fact, the demarcation of the baselines enables the
Philippines to delimit its exclusive economic zone, reserving
solely to the Philippines the exploitation of all living and
non-living resources within such zone. Such a maritime
delineation binds the international community since the
delineation is in strict observance of UNCLOS III. If the
maritime delineation is contrary to UNCLOS III, the
international community will of course reject it and will
refuse to be bound by it.
UNCLOS III favors States with a long coastline like the
Philippines. UNCLOS III creates a sui generis maritime
space the exclusive economic zone in waters previously
part of the high seas. UNCLOS III grants new rights to
coastal States to exclusively exploit the resources found
within this zone up to 200 nautical miles. 53 UNCLOS III,
however, preserves the traditional freedom of navigation of
other States that attached to this zone beyond the territorial
sea before UNCLOS III.
RA 9522 and the Philippines Maritime Zones
Petitioners hold the view that, based on the permissive text
of UNCLOS III, Congress was not bound to pass RA
9522.54 We have looked at the relevant provision of UNCLOS
III55 and we find petitioners reading plausible. Nevertheless,
the prerogative of choosing this option belongs to Congress,
not to this Court. Moreover, the luxury of choosing this
option comes at a very steep price. Absent an UNCLOS III

compliant baselines law, an archipelagic State like the

Philippines will find itself devoid of internationally
acceptable baselines from where the breadth of its maritime
zones and continental shelf is measured. This is recipe for a
two-fronted disaster: first, it sends an open invitation to the
seafaring powers to freely enter and exploit the resources in
the waters and submarine areas around our archipelago;
and second, it weakens the countrys case in any
international dispute over Philippine maritime space. These
are consequences Congress wisely avoided.
The enactment of UNCLOS III compliant baselines law for
the Philippine archipelago and adjacent areas, as embodied
in RA 9522, allows an internationally-recognized
delimitation of the breadth of the Philippines maritime
zones and continental shelf. RA 9522 is therefore a most vital
step on the part of the Philippines in safeguarding its
maritime zones, consistent with the Constitution and our
national interest.

On January 15, 2013, the COMELEC promulgated Resolution

No. 9615, which provided for the rules implementing R.A.
No. 9006 in connection with the May 13, 2013 national and
local elections and subsequent elections. Section 7 thereof,
which enumerates the prohibited forms of election
propaganda, pertinently provides:
SEC. 7. Prohibited Forms of Election Propaganda. During
the campaign period, it is unlawful:

(f) To post, display or exhibit any election

campaign or propaganda material outside of
authorized common poster areas, in public places,
or in private properties without the consent of the
owner thereof.

SO ORDERED.

of

the

Philippines
COURT

(g) Public places referred to in the previous

subsection (f) include any of the following:
xxxx

EN BANC
G.R. No. 206020

Candidates may post any lawful propaganda material in

private places with the consent of the owner thereof, and in
public places or property which shall be allocated equitably
and impartially among the candidates.

xxxx

WHEREFORE, we DISMISS the petition.

Republic
SUPREME
Baguio City

more than ten (10) public places, the size of which shall not
exceed four (4) by six (6) feet or its equivalent.

5. Public utility vehicles such as buses, jeepneys,

trains, taxi cabs, ferries, pedicabs and tricycles,
whether motorized or not;

April 14, 2015

1-UNITED
TRANSPORT
KOALISYON
UTAK), Petitioner,
vs.
COMMISSION ON ELECTIONS, Respondent.

(1-

DECISION
REYES, J.:
The right to participate in electoral processes is a basic and
fundamental right in any democracy. It includes not only the
right to vote, but also the right to urge others to vote for a
particular candidate. The right to express ones preference
for a candidate is likewise part of the fundamental right to
free speech. Thus, any governmental restriction on the right
to convince others to vote for a candidate carries with it a
heavy presumption of invalidity.
This is a petition for certiorari 1 under Rule 64 and Rule 65 of
the Rules of Court filed by 1-United Transport Koalisyon
(petitioner), a party-list organization, assailing Section 7(g)
items (5) and (6), in relation to Section 7(f), of Resolution
No. 96152 of the Commission on Elections (COMELEC).
The Facts
On February 12, 2001, Republic Act (R.A.) No. 9006,
otherwise known as the "Fair Elections Act", was passed.
Section 9 thereof provides:
Sec. 9. Posting of Campaign Materials. The COMELEC may
authorize political parties and party-list groups to erect
common poster areas for their candidates in not more than
ten (10) public places such as plazas, markets, barangay
centers and the like, wherein candidates can post, display or
exhibit election propaganda: Provided that the size of the
poster areas shall not exceed twelve (12) by sixteen (16) feet
or its equivalent.
Independent candidates with no political parties may
likewise be authorized to erect common poster areas in not

6. Within the premises of public transport

terminals, such as bus terminals, airports,
seaports, docks, piers, train stations, and the like.
The violation of items [5 and 6]under subsection
(g) shall be a cause for the revocation of the public
utility franchise and will make the owner and/or
operator of the transportation service and/or
terminal liable for an election offense under
Section 9 of Republic Act No. 9006 as
implemented by Section 18 (n) of these Rules.3
In its letter4 dated January 30, 2013, the petitioner, through
its president, Melencio F. Vargas, sought clarification from
the COMELEC as regards the application of Resolution No.
9615, particularly Section 7(g) items (5) and (6), in relation
to Section 7(f), vis--vis privately owned public utility
vehicles (PUVs) and transport terminals. The petitioner
explained that the prohibition stated in the aforementioned
provisions impedes the right to free speech of the private
owners of PUVs and transport terminals. The petitioner then
requested the COMELEC to reconsider the implementation
of the assailed provisions and allow private owners of PUVs
and transport terminals to post election campaign materials
on their vehicles and transport terminals. On February 5,
2013, the COMELEC en banc issued Minute Resolution No.
13-0214,5 which denied the petitioners request to reconsider
the implementation of Section 7(g) items(5) and (6), in
relation to Section 7(f), of Resolution No. 9615. The
COMELEC en banc, adopting the recommendation of
Commissioner Christian Robert S. Lim, opined that:
From the foregoing, x x x the primary fact in consideration
here is actually whether 1-UTAK or any other [PUV] owners
in the same position do in fact possess a franchise and/or
certificate of public convenience and operate as a public
utility. If it does not, then the ruling in Adiong applies
squarely. If it does, then its operations, pursuant to Section
4, Article IX-C of the Constitution, will be placed directly
under the supervision and regulation of the Commission for
the duration of the election period so as to ensure equality of
opportunity, time, and space for all candidates in the
placement of political advertisements. Having placed their
property for use by the general public and having secured a
license or permit to do so, 1-UTAK and other PUV owners, as

well as transport terminal owners, cannot now complain that

their property is subject to regulation by the State. Securing a
franchise or a certificate of public convenience in their favor
does not exempt them from the burdens imposed by the
Constitution, Republic Act No. 9006 x x x, and other related
statutes. It must be stressed that the Constitution itself,
under Section 6, Article XII, commands that the use of
property bears a social function and all economic agents
shall contribute to the common good; and there is no higher
common good than that as espoused in R.A. No. 9006 the
equalization of opportunities for all candidates for political
office during elections a policy which Res. No. 9615 merely
implements.

The COMELEC further claims that Resolution No. 9615 is a

valid content-neutral regulation and, thus, does not impinge
on the constitutional right to freedom of speech. It avers that
the assailed regulation is within the constitutional power of
the COMELEC pursuant to Section 4, Article IX-C of the
Constitution. The COMELEC alleges that the regulation
simply aims to ensure equal campaign opportunity, time,
and space for all candidates an important and substantial
governmental interest, which is totally unrelated to the
suppression of free expression; that any restriction on free
speech is merely incidental and is no greater than is essential
to the furtherance of the said governmental interest.
The Issue

As required in Adiong, and in compliance with the OBrien

standards, the prohibition furthers two important and
substantial governmental interests equalizing opportunity,
time, and space for all candidates, and putting to a stop
excessive campaign spending. The regulation bears a clear
and reasonable nexus with these Constitutionally- and
statutorily-sanctioned objectives, and the infringement of
freedom is merely incidental and limited as to time. The
Commission has not taken away all avenues of expression
available to PUV and transport terminal owners. They may
express their political preferences elsewhere.
The exact purpose for placing political advertisements on a
PUV or in transport terminals is exactly because it is public
and can be seen by all; and although it is true that private
vehicles ply the same route as public vehicles, the exposure
of a [PUV] servicing the general, riding public is much more
compared to private vehicles. Categorizing PUVs and
transport terminals as public places under Section 7 (f) of
Reso. No. 9615 is therefore logical. The same reasoning for
limiting political advertisements in print media, in radio, and
in television therefore holds true for political advertisements
in PUVs and transport terminals.6
Hence, the instant petition.
Arguments of the Petitioner
The petitioner maintains that Section 7(g) items (5) and (6),
in relation to Section 7(f), of Resolution No. 9615 violate the
right to free speech of the owners of PUVs and transport
terminals; that the prohibition curtails their ideas of who
should be voted by the public. The petitioner also claims that
there is no substantial public interest threatened by the
posting of political advertisements on PUVs and transport
terminals to warrant the prohibition imposed by the
COMELEC. Further, the petitioner posits that the ownership
of the PUVs per se, as well as the transport terminals,
remains private and, hence, the owners thereof could not be
prohibited by the COMELEC from expressing their political
opinion lest their property rights be unduly intruded upon.
Further, assuming that substantial public interest exists in
the said prohibition imposed under Resolution No. 9615, the
petitioner claims that the curtailment of the right to free
speech of the owners of PUVs and transport terminals is
much greater than is necessary to achieve the desired
governmental purpose, i.e., ensuring equality of opportunity
to all candidates in elective office.
Arguments of COMELEC
On the other hand, the COMELEC posits that privatelyowned PUVs and transport terminals are public spaces that
are subject to its regulation. It explains that under the
Constitution, the COMELEC has the power to enforce and
administer all laws and regulations relative to the conduct of
an election, including the power to regulate the enjoyment or
utilization of all franchises and permits for the operation of
transportation utilities.
The COMELEC points out that PUVs and private transport
terminals hold a captive audience the commuters, who
have no choice but be subjected to the blare of political
propaganda. Thus, the COMELEC avers, it is within its
constitutional authority to prevent privately-owned PUVs
and transport terminals from concurrently serving campaign
materials to the captive audience that they transport.

The petitioner presents the following issues for the Courts

resolution:
I.
[WHETHER]
RESOLUTIONNO.
9615
VIOLATES THE RIGHT TO FREE SPEECH OF
THE OWNERS OF [PUVs] AND TRANSPORT
TERMINALS.
II. [WHETHER] RESOLUTION NO. 9615 IS VOID
AS A RESTRAINT TO FREE SPEECH AND
EXPRESSION FOR FAILURE TO SATISFY THE
OBRIEN TEST.
III. [WHETHER] THE CONSTITUTIONAL
OBJECTIVE
TO
GIVE
AN
EQUAL
OPPORTUNITY TO INFORM THE ELECTORATE
IS NOT IMPAIRED BY POSTING POLITICAL
ADVERTISEMENTS ON PUVs AND TRANSPORT
TERMINALS.
IV. [WHETHER] THE OWNERSHIP OF
FACILITIES
IS
DIFFERENT
AND
INDEPENDENT FROM THE FRANCHISE OR
OPERATION OFTHE PUBLIC UTILITY, THE
FORMER BEING BEYOND THE POWER OF
REGULATION BYTHE COMELEC.7
In sum, the issue presented for the Courts resolution is
whether Section 7(g) items (5) and (6), in relation to Section
7(f),of Resolution No. 9615, which prohibits the posting of
any election campaign or propaganda material, inter alia, in
PUVs and public transport terminals are valid regulations.
Ruling of the Court
The petition is meritorious.
Resolution No. 9615, which was promulgated pursuant to
Section 4, Article IX-C of the Constitution and the provisions
of R.A. No. 9006, lays down the administrative rules relative
to the COMELECs exercise of its supervisory and regulatory
powers over all franchises and permits for the operation of
transportation and other public utilities, media of
communication or information, and all grants, special
privileges, or concessions granted by the Government.
Like any other administrative regulations, Resolution No.
9615, or any part thereof, must not run counter to the
Constitution. It is basic that if a law or an administrative rule
violates any norm of the Constitution, that issuance is null
and void and has no effect. The Constitution is the basic law
to which all laws must conform; no act shall be valid if it
conflicts with the Constitution.8 In this regard, an
administrative regulation, even if it purports to advance a
legitimate governmental interest, may not be permitted to
run roughshod over the cherished rights of the people
enshrined in the Constitution.
Section
7(g)
items
(5)
relation
to
Section
Resolution
No.
9615
restraints on speech.

and
7(f),
are

(6),

in
of
prior

Free speech may be identified with the liberty to discuss

publicly and truthfully any matter of public concern without

prior
restraint
or
censorship
and
subsequent
punishment.9 Prior restraint refers to official governmental
restrictions on the press or other forms of expression in
advance of actual publication or dissemination. Freedom
from prior restraint is largely freedom from government
censorship of publications, whatever the form of censorship,
and regardless of whether it is wielded by the executive,
legislative or judicial branch of the government. 10 Any system
of prior restraints of expression comes to this Court bearing
a heavy presumption against its validity.11

the time, place or manner, and under well-defined

standards,16 is constitutionally permissible, even if it restricts
the right to free speech, provided that the following
requisites concur: first, the government regulation is within
the constitutional power of the Government; second, it
furthers an important or substantial governmental interest;
third, the governmental interest is unrelated to the
suppression of free expression; and fourth, the incidental
restriction on freedom of expression is no greater than is
essential to the furtherance of that interest.17

Section 7(g) items (5) and (6), in relation to Section 7(f), of

Resolution No. 9615 unduly infringe on the fundamental
right of the people to freedom of speech. Central to the
prohibition is the freedom of individuals, i.e., the owners of
PUVs and private transport terminals, to express their
preference, through the posting of election campaign
material in their property, and convince others to agree with
them.

Section 7(g) items (5) and (6) of Resolution No. 9615 are
content-neutral regulations since they merely control the
place where election campaign materials may be posted.
However, the prohibition is still repugnant to the free speech
clause as it fails to satisfy all of the requisites for a valid
content-neutral regulation.

Pursuant to the assailed provisions of Resolution No. 9615,

posting an election campaign material during an election
period in PUVs and transport terminals carries with it the
penalty of revocation of the public utility franchise and shall
make the owner thereof liable for an election offense.
The prohibition constitutes a clear prior restraint on the
right to free expression of the owners of PUVs and transport
terminals. As a result of the prohibition, owners of PUVs and
transport terminals are forcefully and effectively inhibited
from expressing their preferences under the pain of
indictment for an election offense and the revocation of their
franchise or permit to operate.
It is now deeply embedded in our jurisprudence that freedom
of speech and of the press enjoys a preferred status in our
hierarchy of rights. The rationale is that the preservation of
other rights depends on how well we protect our freedom of
speech and of the press. 12 It has been our constant holding
that this preferred freedom calls all the more for utmost
respect when what may be curtailed is the dissemination of
information to make more meaningful the equally vital right
of suffrage.13
Thus, in Adiong v. COMELEC, 14 the Court struck down the
COMELECs prohibition against the posting of decals and
stickers on "mobile places." The Court ratiocinated that:
Significantly, the freedom of expression curtailed by the
questioned prohibition is not so much that of the candidate
or the political party. The regulation strikes at the freedom of
an individual to express his preference and, by displaying it
on his car, to convince others to agree with him. A sticker
may be furnished by a candidate but once the car owner
agrees to have it placed on his private vehicle, the expression
becomes a statement by the owner, primarily his own and
not of anybody else. If, in the National Press Club case, the
Court was careful to rule out restrictions on reporting by
newspaper or radio and television stations and
commentators or columnists as long as these are not
correctly paid-for advertisements or purchased opinions with
less reason can we sanction the prohibition against a sincere
manifestation of support and a proclamation of belief by an
individual person who pastes a sticker or decal on his private
property.15 (Emphases ours)
The
assailed
prohibition
on
election
campaign
materials
invalid
content-neutral
repugnant to the free speech clause.

posting
is
an
regulation

The COMELEC claims that while Section 7(g) items (5) and
(6) of Resolution No. 9615 may incidentally restrict the right
to free speech of owners of PUVs and transport terminals,
the same is nevertheless constitutionally permissible since it
is a valid content-neutral regulation.
The Court does not agree.
A content-neutral regulation, i.e., which is merely concerned
with the incidents of the speech, or one that merely controls

It is conceded that Resolution No. 9615, including the herein

assailed provisions, furthers an important and substantial
governmental interest, i.e., ensuring equal opportunity, time
and space among candidates aimed at the holding of free,
orderly, honest, peaceful, and credible elections. It is further
conceded that the governmental interest in imposing the said
prohibition is unrelated to the suppression of free
expression. However, Section 7(g) items (5) and (6), in
relation to Section 7(f), of Resolution No. 9615, are not
within the constitutionally delegated power of the COMELEC
under Section 4, Article IX-C of the Constitution. Also, there
is absolutely no necessity to restrict the right to free speech
of the owners of PUVs and transport terminals.
The
COMELEC
may
only
the
franchise
or
permit
to
and
not
the
ownership
per
PUVs and transport terminals.

regulate
operate
se
of

The prohibition under Section 7(g) items (5) and (6), in

relation to Section 7(f), of Resolution No. 9615is not within
the COMELECs constitutionally delegated power of
supervision or regulation. It is not disputed that the
COMELEC has the power to supervise or regulate the
enjoyment or utilization of all franchises or permits for the
operation of transportation utilities during an election
period. Section 4, Article IX-C of the Constitution, thus
provides:
Section 4. The Commission may, during the election period,
supervise or regulate the enjoyment or utilization of all
franchises or permits for the operation of transportation and
other public utilities, media of communication or
information, all grants, special privileges, or concessions
granted by the Government or any subdivision, agency, or
instrumentality thereof, including any government-owned or
controlled corporation or its subsidiary. Such supervision or
regulation shall aim to ensure equal opportunity, time, and
space, and the right to reply, including reasonable, equal
rates therefor, for public information campaigns and forums
among candidates in connection with the objective of holding
free, orderly, honest, peaceful, and credible elections.
Nevertheless, the constitutional grant of supervisory and
regulatory powers to the COMELEC over franchises and
permits to operate, though seemingly unrestrained, has its
limits. Notwithstanding the ostensibly broad supervisory and
regulatory powers granted to the COMELEC during an
election period under Section 4, Article IX-C of the
Constitution, the Court had previously set out the limitations
thereon. In Adiong, the Court, while recognizing that the
COMELEC has supervisory power vis--vis the conduct and
manner of elections under Section 4, Article IX-C of the
Constitution, nevertheless held that such supervisory power
does not extend to the very freedom of an individual to
express his preference of candidates in an election by placing
election campaign stickers on his vehicle.
In National Press Club v. COMELEC, 18 while the Court
upheld the constitutionality of a prohibition on the selling or
giving free of charge, except to the COMELEC, of advertising
space and commercial time during an election period, it was
emphasized that the grant of supervisory and regulatory
powers to the COMELEC under Section 4, Article IX-C of the
Constitution, is limited to ensuring equal opportunity, time,
space, and the right to reply among candidates. Further, in

Social Weather Stations, Inc. v. COMELEC, 19 the Court,

notwithstanding the grant of supervisory and regulatory
powers to the COMELEC under Section 4, Article IX-C of the
Constitution, declared unconstitutional a regulation
prohibiting the release of election surveys prior to the
election since it "actually suppresses a whole class of
expression, while allowing the expression of opinion
concerning the same subject matter by newspaper
columnists, radio and [television (TV)] commentators,
armchair theorists, and other opinion makers."20
In the instant case, the Court further delineates the
constitutional grant of supervisory and regulatory powers to
the COMELEC during an election period. As worded, Section
4, Article IX-C of the Constitution only grants COMELEC
supervisory and regulatory powers over the enjoyment or
utilization "of all franchises or permits for the operation,"
inter alia, of transportation and other public utilities. The
COMELECs
constitutionally
delegated
powers
of
supervision and regulation do not extend to the ownership
per se of PUVs and transport terminals, but only to the
franchise or permit to operate the same.1wphi1
There is a marked difference between the franchise or permit
to operate transportation for the use of the public and the
ownership per se of the vehicles used for public transport.
Thus, in Tatad v. Garcia, Jr.,21 the Court explained that:
What private respondent owns are the rail tracks, rolling
stocks like the coaches, rail stations, terminals and the power
plant, not a public utility. While a franchise is needed to
operate these facilities to serve the public, they do not by
themselves constitute a public utility. What constitutes a
public utility is not their ownership but their use to serve the
public x x x.
The Constitution, in no uncertain terms, requires a franchise
for the operation of a public utility. However, it does not
require a franchise before one can own the facilities needed
to operate a public utility so long as it does not operate them
to serve the public.
xxxx
In law, there is a clear distinction between the "operation" of
a public utility and the ownership of the facilities and
equipment used to serve the public.
xxxx
The right to operate a public utility may exist independently
and separately from the ownership of the facilities thereof.
One can own said facilities without operating them as a
public utility, or conversely, one may operate a public utility
without owning the facilities used to serve the public. The
devotion of property to serve the public may be done by the
owner or by the person in control thereof who may not
necessarily be the owner thereof.
This dichotomy between the operation of a public utility and
the ownership of the facilities used to serve the public can be
very well appreciated when we consider the transportation
industry. Enfranchised airline and shipping companies may
lease their aircraft and vessels instead of owning them
themselves.22 (Emphases ours)
The franchise or permit to operate transportation utilities is
a privilege granted to certain persons to engage in the
business of transporting people or goods; it does not refer to
the ownership of the vehicle per se. Ownership is a relation
in private law by virtue of which a thing pertaining to one
person is completely subjected to his will in everything not
prohibited by public law or the concurrence with the rights of
another.23 Thus, the owner of a thing has the right to enjoy
and dispose of a thing, without other limitations than those
established by law.24
One such limitation established by law, as regards PUVs, is
the franchise or permit to operate. However, a franchise or
permit to operate a PUV is a limitation only on certain
aspects of the ownership of the vehicle pertinent to the

franchise or permit granted, but not on the totality of the

rights of the owner over the vehicle. Otherwise stated, a
restriction on the franchise or permit to operate
transportation utilities is necessarily a limitation on
ownership, but a limitation on the rights of ownership over
the PUV is not necessarily a regulation on the franchise or
permit to operate the same.
A franchise or permit to operate transportation utilities
pertains to considerations affecting the operation of the PUV
as such, e.g., safety of the passengers, routes or zones of
operation, maintenance of the vehicle, of reasonable fares,
rates, and other charges, or, in certain cases,
nationality.25 Thus, a government issuance, which purports
to regulate a franchise or permit to operate PUVs, must
pertain to the considerations affecting its operation as such.
Otherwise, it becomes a regulation or supervision not on the
franchise or permit to operate, but on the very ownership of
the vehicle used for public transport.
The expression of ideas or opinion of an owner of a PUV,
through the posting of election campaign materials on the
vehicle, does not affect considerations pertinent to the
operation of the PUV. Surely, posting a decal expressing
support for a certain candidate in an election will not in any
manner affect the operation of the PUV as such. Regulating
the expression of ideas or opinion in a PUV, through the
posting of an election campaign material thereon, is not a
regulation of the franchise or permit to operate, but a
regulation on the very ownership of the vehicle.
The dichotomy between the regulation of the franchise or
permit to operate of a PUV and that of the very ownership
thereof is better exemplified in the case of commercial
advertisements posted on the vehicle. A prohibition on the
posting of commercial advertisements on a PUV is
considered a regulation on the ownership of the vehicle per
se; the restriction on the enjoyment of the ownership of the
vehicle does not have any relation to its operation as a PUV.
On the other hand, prohibitions on the posting of
commercial advertisements on windows of buses, because it
hinders police authorities from seeing whether the
passengers inside are safe, is a regulation on the franchise or
permit to operate. It has a direct relation to the operation of
the vehicle as a PUV, i.e., the safety of the passengers.
In the same manner, the COMELEC does not have the
constitutional power to regulate public transport terminals
owned by private persons. The ownership of transport
terminals, even if made available for use by the public
commuters, likewise remains private. Although owners of
public transport terminals may be required by local
governments to obtain permits in order to operate, the
permit only pertains to circumstances affecting the operation
of the transport terminal as such. The regulation of such
permit to operate should similarly be limited to
circumstances affecting the operation of the transport
terminal. A regulation of public transport terminals based on
extraneous circumstances, such as prohibiting the posting of
election campaign materials thereon, amounts to regulating
the ownership of the transport terminal and not merely the
permit to operate the same.
Accordingly, Section 7(g) items (5) and (6) of Resolution No.
9615 are not within the constitutionally delegated power of
the COMELEC to supervise or regulate the franchise or
permit to operate of transportation utilities. The posting of
election campaign material on vehicles used for public
transport or on transport terminals is not only a form of
political expression, but also an act of ownership it has
nothing to do with the franchise or permit to operate the
PUV or transport terminal.
The
rulings
in
and
Osmea
v.
application to this case.

National
Press
COMELEC26 find

Club
no

The COMELEC pointed out that the issue presented in the

instant case is akin to the Courts rulings in National Press
Club and Osmea. It explained that in both cases, the Court
sustained Section 11(b) of R.A. No. 6646 or the Electoral

Reforms Law of1997, which prohibits newspapers, radio

broadcasting or TV stations, and other mass media from
selling or giving print space or airtime for campaign or other
political purposes, except to the COMELEC, during the
election campaign. The COMELEC averred that if the
legislature can empower it to impose an advertising ban on
mass media, it could likewise empower it to impose a similar
ban on PUVs and transport terminals.

minutes of radio advertisement whether by purchase or

donation.
For this purpose, the COMELEC shall require any broadcast
station or entity to submit to the COMELEC a copy of its
broadcast logs and certificates of performance for the review
and verification of the frequency, date, time and duration of
advertisements broadcast for any candidate or political
party.

The Court does not agree.

The restriction imposed under Section 11(b) of R.A. No. 6646
has a direct relation to the enjoyment and utilization of the
franchise or permit to operate of newspapers, radio
broadcasting and TV stations, and other mass media, which
the COMELEC has the power to regulate pursuant to Section
4, Article IX-C of the Constitution. The print space or airtime
is an integral part of the franchise or permit to operate of
mass media utilities. Thus, the restriction under Section
11(b) of R.A. No. 6646 is within the confines of the
constitutionally delegated power of the COMELEC under
Section 4, Article IX-C of the Constitution.
On the other hand, the prohibition on the posting of election
campaign materials under Section 7(g) items (5) and (6) of
Resolution No. 9615, as already explained, does not have any
relation to the franchise or permit of PUVs and transport
terminals to operate as such and, hence, is beyond the power
of the COMELEC under Section 4,Article IX-C of the
Constitution.
The
restriction
on
free
owners
of
PUVs
and
terminals
is
not
necessary
the stated governmental interest.

speech
of
transport
to
further

Section 7(g) items (5) and (6) of Resolution No. 9615 likewise
failed to satisfy the fourth requisite of a valid content-neutral
regulation, i.e., the incidental restriction on freedom of
expression is no greater than is essential to the furtherance
of that interest. There is absolutely no necessity to restrict
the right of the owners of PUVs and transport terminals to
free speech to further the governmental interest. While
ensuring equality of time, space, and opportunity to
candidates is an important and substantial governmental
interest and is essential to the conduct of an orderly election,
this lofty aim may be achieved sans any intrusion on the
fundamental right of expression.
First, while Resolution No. 9615 was promulgated by the
COMELEC to implement the provisions of R.A. No. 9006,
the prohibition on posting of election campaign materials on
PUVs and transport terminals was not provided for therein.
Second, there are more than sufficient provisions in our
present election laws that would ensure equal time, space,
and opportunity to candidates in elections. Section 6 of R.A.
No. 9006 mandates that "all registered parties and bona fide
candidates shall have equal access to media time and space"
and outlines the guidelines to be observed in the
implementation thereof, viz: Section 6. Equal Access to
Media Time and Space. All registered parties and bona fide
candidates shall have equal access to media time and space.
The following guidelines may be amplified on by the
COMELEC:
6.1 Print advertisements shall not exceed one-fourth (1/4)
page in broad sheet and one-half (1/2) page in tabloids thrice
a week per newspaper, magazine or other publications,
during the campaign period.
6.2 a. Each bona fide candidate or registered political party
for a nationally elective office shall be entitled to not more
than one hundred twenty (120) minutes of television
advertisement and one hundred eighty (180) minutes of
radio advertisement whether by purchase or donation.
b. Each bona fide candidate or registered political party for a
locally elective office shall be entitled to not more than sixty
(60) minutes of television advertisement and ninety(90)

6.3 All mass media entities shall furnish the COMELEC with
a copy of all contracts for advertising, promoting or opposing
any political party or the candidacy of any person for public
office within five (5) days after its signing. In every case, it
shall be signed by the donor, the candidate concerned or by
the duly authorized representative of the political party.
6.4 No franchise or permit to operate a radio or television
station shall be granted or issued, suspended or cancelled
during the election period. In all instances, the COMELEC
shall supervise the use and employment of press, radio and
television facilities insofar as the placement of political
advertisements is concerned to ensure that candidates are
given equal opportunities under equal circumstances to
make known their qualifications and their stand on public
issues within the limits set forth in the Omnibus Election
Code and Republic Act No. 7l66 on election spending.
The COMELEC shall ensure that radio or television or cable
television broadcasting entities shall not allow the scheduling
of any program or permit any sponsor to manifestly favor or
oppose any candidate or political party by unduly or
repeatedly referring to or including said candidate and/or
political party in such program respecting, however, in all
instances the right of said broadcast entities to air accounts
of significant news or news worthy events and views on
matters of public interest.
6.5 All members of media, television, radio or print, shall
scrupulously report and interpret the news, taking care not
to suppress essential facts nor to distort the truth by
omission or improper emphasis. They shall recognize the
duty to air the other side and the duty to correct substantive
errors promptly.
6.6 Any mass media columnist, commentator, announcer,
reporter, on-air correspondent or personality who is a
candidate for any elective public office or is a campaign
volunteer for or employed or retained in any capacity by any
candidate or political party shall be deemed resigned, if so
required by their employer, or shall take a leave of absence
from his/her work as such during the campaign period:
Provided, That any media practitioner who is an official of a
political party or a member of the campaign staff of a
candidate or political party shall not use his/her time or
space to favor any candidate or political party.
6.7 No movie, cinematograph or documentary portraying the
life or biography of a candidate shall be publicly exhibited in
a theater, television station or any public forum during the
campaign period.
6.8 No movie, cinematograph or documentary portrayed by
an actor or media personality who is himself a candidate
shall likewise be publicly exhibited in a theater or any public
forum during the campaign period.
Section 9 of R.A. No. 9006 authorizes political parties and
party-list groups and independent candidates to erect
common poster areas and candidates to post lawful election
campaign materials in private places, with the consent of the
owner thereof, and in public places or property, which are
allocated equitably and impartially.
Further, Section 1327 of R.A. No. 716628 provides for the
authorized expenses of registered political parties and
candidates for every voter; it affords candidates equal
opportunity in their election campaign by regulating the
amount that should be spent for each voter.

Likewise, Section 1429 of R.A. No. 7166 requires all

candidates and treasurers of registered political parties to
submit a statement of all contributions and expenditures in
connection with the election. Section 14 is a post-audit
measure that aims to ensure that the candidates did not
overspend in their election campaign, thereby enforcing the
grant of equal opportunity to candidates under Section 13.
A strict implementation of the foregoing provisions of law
would suffice to achieve the governmental interest of
ensuring equal time, space, and opportunity for candidates
in elections. There is thus no necessity of still curtailing the
right to free speech of the owners of PUVs and transport
terminals by prohibiting them from posting election
campaign materials on their properties.
Section
7(g)
items
Resolution
No.
justified
under
doctrine.

(5)
9615
the

and

(6)

of
are
not
captive-audience

The COMELEC further points out that PUVs and transport

terminals hold a "captive audience" commuters who have
no choice but be subjected to the blare of political
propaganda. The COMELEC further claims that while
owners of privately owned PUVs and transport terminals
have a right to express their views to those who wish to
listen, they have no right to force their message upon an
audience incapable of declining to receive it.
The COMELECs claim is untenable.
The captive-audience doctrine states that when a listener
cannot, as a practical matter, escape from intrusive speech,
the speech can be restricted. 30 The "captive-audience"
doctrine recognizes that a listener has a right not to be
exposed to an unwanted message in circumstances in which
the communication cannot be avoided.31
A regulation based on the captive-audience doctrine is in the
guise of censorship, which undertakes selectively to shield
the public from some kinds of speech on the ground that they
are more offensive than others. Such selective restrictions
have been upheld only when the speaker intrudes on the
privacy of the home or the degree of captivity makes it either
impossible or impractical for the unwilling viewer or auditor
to avoid exposure.32
In
Consolidated Edison Co.
v.
Public Service
Commission,33 the Supreme Court of the United States of
America (U.S. Supreme Court) struck down the order of New
York Public Service Commission, which prohibits public
utility companies from including inserts in monthly bills
discussing controversial issues of public policy. The U.S.
Supreme Court held that "[t]he prohibition cannot be
justified as being necessary to avoid forcing appellants views
on a captive audience, since customers may escape exposure
to objectionable material simply by throwing the bill insert
into a wastebasket."34
Similarly, in Erznoznik v. City of Jacksonville, 35 the U.S.
Supreme Court nullified a city ordinance, which made it a
public nuisance and a punishable offense for a drive-in
movie theater to exhibit films containing nudity, when the
screen is visible from a public street or place. The U.S.
Supreme Court opined that the degree of captivity is not so
great as to make it impracticable for an unwilling viewer to
avoid exposure, thus:
The Jacksonville ordinance discriminates among movies
solely on the basis of content. Its effect is to deter drive-in
theaters from showing movies containing any nudity,
however innocent or even educational. This discrimination
cannot be justified as a means of preventing significant
intrusions on privacy. The ordinance seeks only to keep these
films from being seen from public streets and places where
the offended viewer readily can avert his eyes. In short, the
screen of a drive-in theater is not "so obtrusive as to make it
impossible for an unwilling individual to avoid exposure to
it." x x x Thus, we conclude that the limited privacy interest
of persons on the public streets cannot justify this censorship

of otherwise protected speech on the basis of its

content.36 (Emphasis ours)
Thus, a government regulation based on the captiveaudience doctrine may not be justified if the supposed
"captive audience" may avoid exposure to the otherwise
intrusive speech. The prohibition under Section 7(g) items
(5) and (6) of Resolution No. 9615 is not justified under the
captive-audience doctrine; the commuters are not forced or
compelled to read the election campaign materials posted on
PUVs and transport terminals. Nor are they incapable of
declining to receive the messages contained in the posted
election campaign materials since they may simply avert
their eyes if they find the same unbearably intrusive.
The COMELEC, in insisting that it has the right to restrict
the posting of election campaign materials on PUVs and
transport terminals, cites Lehman v. City of Shaker
Heights,37 a case decided by the U.S. Supreme Court. In
Lehman, a policy of the city government, which prohibits
political advertisements on government-run buses, was
upheld by the U.S. Supreme Court. The U.S. Supreme Court
held that the advertising space on the buses was not a public
forum, pointing out that advertisement space on
government-run buses, "although incidental to the provision
of public transportation, is a part of commercial
venture."38 In the same way that other commercial ventures
need not accept every proffer of advertising from the general
public, the citys transit system has the discretion on the type
of advertising that may be displayed on its vehicles.
Concurring in the judgment, Justice Douglas opined that
while Lehman, a candidate for state office who sought to
avail himself of advertising space on government-run buses,
"clearly has a right to express his views to those who wish to
listen, he has no right to force his message upon an audience
incapable of declining to receive it." 39Justice Douglas
concluded: "the right of the commuters to be free from
forced intrusions on their privacy precludes the city from
transforming its vehicles of public transportation into
forums for the dissemination of ideas upon this captive
audience."40
The COMELECs reliance on Lehman is utterly misplaced.
In Lehman, the political advertisement was intended for
PUVs owned by the city government; the city government, as
owner of the buses, had the right to decide which type of
advertisements would be placed on its buses. The U.S.
Supreme Court gave primacy to the city governments
exercise of its managerial decision, viz:
Revenue earned from long-term commercial advertising
could be jeopardized by a requirement that short-term
candidacy or issue-oriented advertisements be displayed on
car cards. Users would be subjected to the blare of political
propaganda. There could be lurking doubts about favoritism,
and sticky administrative problems might arise in parceling
out limited space to eager politicians. In these circumstances,
the managerial decision to limit car card space to innocuous
and less controversial commercial and service-oriented
advertising does not rise to the dignity of First Amendment
violation. Were we to hold to the contrary, display cases in
public hospitals, libraries, office buildings, military
compounds, and other public facilities immediately would
become Hyde Parks open to every would be pamphleteer and
politician.
This
the
Constitution
does
not
require.41 (Emphasis ours)
Lehman actually upholds the freedom of the owner of the
utility vehicles, i.e., the city government, in choosing the
types of advertisements that would be placed on its
properties. In stark contrast, Section 7(g) items (5) and (6) of
Resolution No. 9615 curtail the choice of the owners of PUVs
and transport terminals on the advertisements that may be
posted on their properties.
Also, the city government in Lehman had the right, nay the
duty, to refuse political advertisements on their buses.
Considering that what were involved were facilities owned by
the city government, impartiality, or the appearance thereof,
was a necessity. In the instant case, the ownership of PUVs

and transport terminals remains private; there exists no

valid reason to suppress their political views by proscribing
the posting of election campaign materials on their
properties.
Prohibiting
owners
transport
terminals
election
campaign
the equal protection clause.

of

PUVs
from
materials

and
posting
violates

Section 7(g) items (5) and (6) of Resolution No. 9615 do not
only run afoul of the free speech clause, but also of the equal
protection clause. One of the basic principles on which this
government was founded is that of the equality of right,
which is embodied in Section 1, Article III of the 1987
Constitution.42 "Equal protection requires that all persons or
things similarly situated should be treated alike, both as to
rights conferred and responsibilities imposed. Similar
subjects, in other words, should not be treated differently, so
as to give undue favor to some and unjustly discriminate
against others."43
"The equal protection clause is aimed at all official state
actions, not just those of the legislature. Its inhibitions cover
all the departments of the government including the political
and executive departments, and extend to all actions of a
state denying equal protection of the laws, through whatever
agency or whatever guise is taken."44
Nevertheless, the guaranty of equal protection of the laws is
not a guaranty of equality in the application of the laws to all
citizens of the state. Equality of operation of statutes does
not mean their indiscriminate operation on persons merely
as such, but on persons according to the circumstances
surrounding them. It guarantees equality, not identity of
rights. The Constitution does not require that things, which
are different in fact, be treated in law as though they were the
same. The equal protection clause does not forbid
discrimination as to things that are different.45
In order that there can be valid classification so that a
discriminatory governmental act may pass the constitutional
norm of equal protection, it is necessary that the four
requisites of valid classification be complied with, namely:
(1) it must be based upon substantial distinctions; (2) it must
be germane to the purposes of the law; (3) it must not be
limited to existing conditions only; and (4) it must apply
equally to all members of the class.46
It is conceded that the classification under Section 7(g) items
(5) and (6) of Resolution No. 9615 is not limited to existing
conditions and applies equally to the members of the
purported class. However, the classification remains
constitutionally impermissible since it is not based on
substantial distinction and is not germane to the purpose of
the law.

The fact that PUVs and transport terminals are made

available for use by the public is likewise not substantial
justification to set them apart from private vehicles and other
properties. Admittedly, any election campaign material that
would be posted on PUVs and transport terminals would be
seen by many people. However, election campaign materials
posted on private vehicles and other places frequented by the
public, e.g., commercial establishments, would also be seen
by many people. Thus, there is no reason to single out
owners of PUVs and transport terminals in the prohibition
against posting of election campaign materials.
Further, classifying owners of PUVs and transport terminals
apart from owners of private vehicles and other properties
bears no relation to the stated purpose of Section 7(g)
items(5) and (6) of Resolution No. 9615, i.e., to provide equal
time, space and opportunity to candidates in elections. To
stress, PUVs and transport terminals are private properties.
Indeed, the nexus between the restriction on the freedom of
expression of owners of PUVs and transport terminals and
the governments interest in ensuring equal time, space, and
opportunity for candidates in elections was not established
by the COMELEC.
In sum, Section 7(g) items (5) and (6), in relation to Section
7(f), of Resolution No. 9615 violate the free speech clause;
they are content-neutral regulations, which are not within
the constitutional power of the COMELEC issue and are not
necessary to further the objective of ensuring equal time,
space and opportunity to the candidates. They are not only
repugnant to the free speech clause, but are also violative of
the equal protection clause, as there is no substantial
distinction between owners of PUV s and transport terminals
and owners of private vehicles and other properties.
On a final note, it bears stressing that the freedom to
advertise one's political candidacy is clearly a significant part
of our freedom of expression. A restriction on this freedom
without rhyme or reason is a violation of the most valuable
feature of the democratic way of life.48 WHEREFORE, in
light of the foregoing disquisitions, the instant petition is
hereby GRANTED. Section 7(g) items (5) and (6), in relation
to Section 7(f), of Resolution No. 9615 issued by the
Commission on Elections are hereby declared NULL and
VOID for being repugnant to Sections 1 and 4, Article III of
the 1987 Constitution.
SO ORDERED.

Republic
SUPREME
Manila

A distinction exists between PUVs and transport terminals

and private vehicles and other properties in that the former,
to be considered as such, needs to secure from the
government either a franchise or a permit to operate.
Nevertheless, as pointed out earlier, the prohibition imposed
under Section 7(g) items (5) and (6) of Resolution No. 9615
regulates the ownership per se of the PUV and transport
terminals; the prohibition does not in any manner affect the
franchise or permit to operate of the PUV and transport
terminals.

FIRST DIVISION

As regards ownership, there is no substantial distinction

between owners of PUVs and transport terminals and
owners of private vehicles and other properties. As already
explained, the ownership of PUVs and transport terminals,
though made available for use by the public, remains private.
If owners of private vehicles and other properties are allowed
to express their political ideas and opinion by posting
election campaign materials on their properties, there is no
cogent reason to deny the same preferred right to owners of
PUVs and transport terminals. In terms of ownership, the
distinction between owners of PUVs and transport terminals
and owners of private vehicles and properties is merely
superficial. Superficial differences do not make for a valid
classification.47

DECISION

G.R. No. 181756

of

the

Philippines
COURT

June 15, 2015

MACTAN-CEBU
INTERNATIONAL
AIRPORT
AUTHORITY
(MCIAA), Petitioner,
vs.
CITY
OF
LAPU-LAPU
and
ELENA
T.
PACALDO, Respondents.

LEONARDO-DE CASTRO, J.:

This is a clear opportunity for this Court to clarify the effects
of our two previous decisions, issued a decade apart, on the
power of local government units to collect real property taxes
from airport authorities located within their area, and the
nature or the juridical personality of said airport authorities.
Before us is a Petition for Review on Certiorari under Rule 45
of the 1997 Rules of Civil Procedure seeking to reverse and
set aside the October 8, 2007 Decision 1 of the Court of

Appeals (Cebu City) in CA-G.R. SP No. 01360 and the

February 12, 2008 Resolution2 denying petitioner's motion
for reconsideration.
THE FACTS
Petitioner Mactan-Cebu International Airport Authority
(MCIAA) was created by Congress on July 31, 1990 under
Republic Act No. 69583 to "undertake the economical,
efficient and effective control, management and supervision
of the Mactan International Airport in the Province of Cebu
and the Lahug Airport in Cebu City x x x and such other
airports as may be established in the Province of Cebu." It is
represented in this case by the Office of the Solicitor General.
Respondent City of Lapu-Lapu is a local government unit
and political subdivision, created and existing under its own
charter with capacity to sue and be sued. Respondent Elena
T. Pacaldo was impleaded in her capacity as the City
Treasurer of respondent City.
Upon its creation, petitioner enjoyed exemption from realty
taxes under the following provision of Republic Act No.
6958:
Section 14. Tax Exemptions. The Authority shall be exempt
from realty taxes imposed by the National Government or
any of its political subdivisions, agencies and
instrumentalities: Provided, That no tax exemption herein
granted shall extend to any subsidiary which may be
organized by the Authority.
On September 11, 1996, however, this Court rendered a
decision in Mactan-Cebu International Airport Authority v.
Marcos4 (the 1996 MCIAA case) declaring that upon the
effectivity of Republic Act No. 7160 (The Local Government
Code of 1991), petitioner was no longer exempt from real
estate taxes. The Court held:
Since the last paragraph of Section 234 unequivocally
withdrew, upon the effectivity of the LGC, exemptions from
payment of real property taxes granted to natural or juridical
persons, including government-owned or controlled
corporations, except as provided in the said section, and the
petitioner is, undoubtedly, a government-owned corporation,
it necessarily follows that its exemption from such tax
granted it in Section 14 of its Charter, R.A. No. 6958, has
been withdrawn. x x x.
On January 7, 1997, respondent City issued to petitioner a
Statement of Real Estate Tax assessing the lots comprising
the Mactan International Airport in the amount
of P162,058,959.52. Petitioner complained that there were
discrepancies in said Statement of Real Estate Tax as follows:
(a) [T]he statement included lots and buildings not
found in the inventory of petitioners real
properties;
(b) [S]ome of the lots were covered by two
separate tax declarations which resulted in double
assessment;
(c) [There were] double entries pertaining to the
same lots; and
(d) [T]he statement included lots
exclusively for governmental purposes.5

utilized

Respondent City amended its billing and sent a new

Statement of Real Estate Tax to petitioner in the amount
ofP151,376,134.66. Petitioner averred that this amount
covered real estate taxes on the lots utilized solely and
exclusively for public or governmental purposes such as the
airfield, runway and taxiway, and the lots on which they are
situated.6
Petitioner paid respondent City the amount of four million
pesos (P4,000,000.00) monthly, which was later increased
to six million pesos (P6,000,000.00) monthly. As of

December 2003, petitioner had paid respondent City a total

of P275,728,313.36.7
Upon request of petitioners General Manager, the Secretary
of the Department of Justice (DOJ) issued Opinion No. 50,
Series of 1998,8 and we quote the pertinent portions of said
Opinion below:
You further state that among the real properties deemed
transferred to MCIAA are the airfield, runway, taxiway and
the lots on which the runway and taxiway are situated, the
tax declarations of which were transferred in the name of the
MCIAA. In 1997, the City of Lapu-Lapu imposed real estate
taxes on these properties invoking the provisions of the Local
Government Code.
It is your view that these properties are not subject to real
property tax because they are exclusively used for airport
purposes. You said that the runway and taxiway are not only
used by the commercial airlines but also by the Philippine
Air Force and other government agencies. As such and in
conjunction with the above interpretation of Section 15 of
R.A. No. 6958, you believe that these properties are
considered owned by the Republic of the Philippines. Hence,
this request for opinion.
The query is resolved in the affirmative. The properties used
for airport purposes (i.e. airfield, runway, taxiway and the
lots on which the runway and taxiway are situated) are
owned by the Republic of the Philippines.
xxxx
Under the Law on Public Corporations, the legislature has
complete control over the property which a municipal
corporation has acquired in its public or governmental
capacity and which is devoted to public or governmental use.
The municipality in dealing with said property is subject to
such restrictions and limitations as the legislature may
impose. On the other hand, property which a municipal
corporation acquired in its private or proprietary capacity, is
held by it in the same character as a private individual.
Hence, the legislature in dealing with such property, is
subject to the constitutional restrictions concerning property
(Martin, Public Corporations [1997], p. 30; see also Province
of Zamboanga del [Norte] v. City of Zamboanga [131 Phil.
446]). The same may be said of properties transferred to the
MCIAA and used for airport purposes, such as those involved
herein. Since such properties are of public dominion, they
are deemed held by the MCIAA in trust for the Government
and can be alienated only as may be provided by law.
Based on the foregoing, it is our considered opinion that the
properties used for airport purposes, such as the airfield,
runway and taxiway and the lots on which the runway and
taxiway are located, are owned by the State or by the
Republic of the Philippines and are merely held in trust by
the MCIAA, notwithstanding that certificates of titles thereto
may have been issued in the name of the MCIAA. (Emphases
added.)
Based on the above DOJ Opinion, the Department of Finance
issued a 2nd Indorsement to the City Treasurer of LapuLapu dated August 3, 1998,9 which reads:
The distinction as to which among the MCIAA properties are
still considered "owned by the State or by the Republic of the
Philippines," such as the resolution in the above-cited DOJ
Opinion No. 50, for purposes of real property tax exemption
is hereby deemed tenable considering that the subject
"airfield, runway, taxiway and the lots on which the runway
and taxiway are situated" appears to be the subject of real
property tax assessment and collection of the city
government of Lapu-Lapu, hence, the same are definitely
located within the jurisdiction of Lapu-Lapu City. Moreover,
then Undersecretary Antonio P. Belicena of the Department
of Finance, in his 1st Indorsement dated May 18, 1998,
advanced that "this Department (DOF) interposes no
objection to the request of Mactan Cebu International
Airport Authority for exemption from payment of real
property tax on the property used for airport purposes"
mentioned above.

The City Assessor, therefore, is hereby instructed to transfer

the assessment of the subject airfield, runway, taxiway and
the lots on which the runway and taxiway are situated, from
the "Taxable Roll" to the "Exempt Roll" of real properties.

a rate of one and one-half (1 1/2) [per centum] from owners,

executors or administrators of any real estate lying within
the jurisdiction of the City of Lapu-Lapu, based on the
assessed value as shown in the latest revision.

The City Treasurer thereat should be informed on the action

taken for his immediate appropriate action. (Emphases
added.)

Though this ordinance was enacted prior to the effectivity of

Republic Act No. 7160 (Local Government Code of 1991), to
the mind of the Court this ordinance is still a valid and
effective ordinance in view of Sec. 529 of RA 7160 x x x [and
the] Implementing Rules and Regulations of RA 7160 x x x.

Respondent City Treasurer Elena T. Pacaldo sent petitioner a

Statement of Real Property Tax Balances up to the year 2002
reflecting the amount of P246,395,477.20. Petitioner claimed
that the statement again included the lots utilized solely and
exclusively for public purpose such as the airfield, runway,
and taxiway and the lots on which these are built.
Respondent Pacaldo then issued Notices of Levy on 18 sets of
real properties of petitioner.10
Petitioner filed a petition for prohibition 11 with the Regional
Trial Court (RTC) of Lapu-Lapu City with prayer for the
issuance of a temporary restraining order (TRO) and/or a
writ of preliminary injunction, docketed as SCA No. 6056-L.
Branch 53 of RTC Lapu-Lapu City then issued a 72-hour
TRO. The petition for prohibition sought to enjoin
respondent City from issuing a warrant of levy against
petitioners properties and from selling them at public
auction for delinquency in realty tax obligations. The petition
likewise prayed for a declaration that the airport terminal
building, the airfield, runway, taxiway and the lots on which
they are situated are exempted from real estate taxes after
due hearing. Petitioner based its claim of exemption on DOJ
Opinion No. 50.
The RTC issued an Order denying the motion for extension
of the TRO. Thus, on December10, 2003, respondent City
auctioned 27 of petitioners properties. As there was no
interested bidder who participated in the auction sale,
respondent City forfeited and purchased said properties. The
corresponding Certificates of Sale of Delinquent Property
were issued to respondent City.12
Petitioner claimed before the RTC that it had discovered that
respondent City did not pass any ordinance authorizing the
collection of real property tax, a tax for the special education
fund (SEF), and a penalty interest for its nonpayment.
Petitioner argued that without the corresponding tax
ordinances, respondent City could not impose and collect
real property tax, an additional tax for the SEF, and penalty
interest from petitioner.13
The RTC issued an Order14 on December 28, 2004 granting
petitioners application for a writ of preliminary injunction.
The pertinent portions of the Order are quoted below:
The supervening legal issue has rendered it imperative that
the matter of the consolidation of the ownership of the
auctioned properties be placed on hold. Furthermore, it is
the view of the Court that great prejudice and damage will be
suffered by petitioner if it were to lose its dominion over
these properties now when the most important legal issue
has still to be resolved by the Court. Besides, the respondents
and the intervenor have not sufficiently shown cause why
petitioners application should not be granted.
WHEREFORE, the foregoing considered, petitioners
application for a writ of preliminary injunction is granted.
Consequently, upon the approval of a bond in the amount of
one million pesos (P1,000,000.00), let a writ of preliminary
injunction issue enjoining the respondents, the intervenor,
their agents or persons acting in [their] behalf, to desist from
consolidating and exercising ownership over the properties
of the petitioner.
However, upon motion of respondents, the RTC lifted the
writ of preliminary injunction in an Order 15 dated December
5, 2005. The RTC reasoned as follows:
The respondent City, in the courseof the hearing of its
motion, presented to this Court a certified copy of its
Ordinance No. 44 (Omnibus Tax Ordinance of the City of
Lapu-Lapu), Section 25 whereof authorized the collection of

xxxx
The tax collected under Ordinance No. 44 is within the rates
prescribed by RA 7160, though the 25% penalty collected is
higher than the 2% interest allowed under Sec. 255 of the
said law which provides:
In case of failure to pay the basic real property tax or any
other tax levied under this Title upon the expiration of the
periods as provided in Section 250, or when due, as the case
may be, shall subject the taxpayer to the payment of interest
at the rate of two percent (2%) per month on the unpaid
amount or a fraction thereof, until the delinquent tax shall
have been fully paid: Provided, however, That in no case
shall the total interest on the unpaid tax or portion thereof
exceed thirty-six (36) months.
This difference does not however detract from the essential
enforceability and effectivity of Ordinance No. 44 pursuant
to Section 529 of RA 7160 and Article 278 of the
Implementing Rules and Regulations. The outcome of this
disparity is simply that respondent City can only collect an
interest of 2% per month on the unpaid tax. Consequently,
respondent City [has] to recompute the petitioners tax
liability.
It is also the Courts perception that respondent City can still
collect the additional 1% tax on real property without an
ordinance to this effect. It may be recalled that Republic Act
No. 5447 has created the Special Education Fund which is
constituted from the proceeds of the additional tax on real
property imposed by the law. Respondent City has collected
this tax as mandated by this law without any ordinance for
the purpose, as there is no need for it. Even when RA 5447
was amended by PD 464 (Real Property Tax Code),
respondent City had continued to collect the tax, as it used
to.
It is true that RA 7160 has repealed RA 5447, but what has
been repealed are only Section 3, a(3) and b(2) which
concern the allocation of the additional tax, considering that
under RA 7160, the proceeds of the additional 1% tax on real
property accrue exclusively to the Special Education Fund.
Nevertheless, RA 5447 has not been totally repealed; there is
only a partial repeal.
It may be observed that there is no requirement in RA 7160
that an ordinance be enacted to enable the collection of the
additional 1% tax. This is so since RA 5447 is still in force
and effect, and the declared policy of the government in
enacting the law, which is to contribute to the financial
support of the goals of education as provided in the
Constitution, necessitates the continued and uninterrupted
collection of the tax. Considering that this is a tax of farreaching importance, to require the passage of an ordinance
in order that the tax may be collected would be to place the
collection of the tax at the option of the local legislature. This
would run counter to the declared policy of the government
when the SEF was created and the tax imposed.
As regards the allegation of respondents that this Court has
no jurisdiction to entertain the instant petition, the Court
deems it proper, at this stage of the proceedings, not to treat
this issue, as it involves facts which are yet to be established.
x x x [T]he Courts issuance of a writ of preliminary
injunction may appear to be a futile gesture in the light of
Section 263 of RA 7160. x x x.
xxxx

It would seem from the foregoing provisions, that once the

taxpayer fails to redeem within the one-year period,
ownership fully vests on the local government unit
concerned. Thus, when in the present case petitioner failed
to redeem the parcels of land acquired by respondent City,
the ownership thereof became fully vested on respondent
City without the latter having to perform any other acts to
perfect its ownership. Corollary thereto, ownership on the
part of respondent City has become a fait accompli.
WHEREFORE, in the light of the foregoing considerations,
respondents motion for reconsideration is granted, and the
order of this Court dated December 28, 2004 is hereby
reconsidered. Consequently, the writ of preliminary
injunction issued by this Court is hereby lifted.
Aggrieved, petitioner filed a petition for certiorari 16 with the
Court of Appeals (Cebu City), with urgent prayer for the
issuance of a TRO and/or writ of preliminary injunction,
docketed as CA-G.R. SP No. 01360. The Court of Appeals
(Cebu City) issued a TRO17 on January 5, 2006 and shortly
thereafter, issued a writ of preliminary injunction 18 on
February 17, 2006.
RULING OF THE COURT OF APPEALS
The Court of Appeals (Cebu City) promulgated the
questioned Decision on October 8, 2007, holding that
petitioner is a government-owned or controlled corporation
and its properties are subject to realty tax. The dispositive
portion of the questioned Decision reads:
WHEREFORE, in view of the foregoing, judgment is hereby
rendered by us as follows:

The Court of Appeals followed and applied the precedent

established in the 1996 MCIAA case and refused to apply the
2006 MIAA case. The Court of Appeals wrote in the
questioned Decision: "We find that our position is in line
with the coherent and cohesive interpretation of the relevant
provisions of the Local Government Code on local taxation
enunciated in the [1996 MCIAA] case which to our mind is
more elegant and rational and provides intellectual clarity
than the one provided by the Supreme Court in the [2006]
MIAA case."23
In the questioned Decision, the Court of Appeals held that
petitioners airport terminal building, airfield, runway,
taxiway, and the lots on which they are situated are not
exempt from real estate tax reasoning as follows:
Under the Local Government Code (LGC for brevity),
enacted pursuant to the constitutional mandate of local
autonomy, all natural and juridical persons, including
government-owned or controlled corporations (GOCCs),
instrumentalities and agencies, are no longer exempt from
local taxes even if previously granted an exemption. The only
exemptions from local taxes are those specifically provided
under the Code itself, or those enacted through subsequent
legislation.
Thus, the LGC, enacted pursuant to Section 3, Article X of
the Constitution, provides for the exercise by local
government units of their power to tax, the scope thereof or
its limitations, and the exemptions from local taxation.
Section 133 of the LGC prescribes the common limitations on
the taxing powers of local government units. x x x.
xxxx

a. We DECLARE the airport terminal building, the

airfield, runway, taxiway and the lots on which
they are situated NOT EXEMPT from the real
estate tax imposed by the respondent City of LapuLapu;
b. We DECLARE the imposition and collection of
the real estate tax, the additional levy for the
Special Education Fund and the penalty interest as
VALID and LEGAL. However, pursuant to Section
255 of the Local Government Code, respondent
city can only collect an interest of 2% per month
on the unpaid tax which total interest shall, in no
case, exceed thirty-six (36) months; c. We
DECLARE the sale in public auction of the
aforesaid properties and the eventual forfeiture
and purchase of the subject property by the
respondent City of Lapu-Lapu as NULL and VOID.
However, petitioner MCIAAs property is
encumbered only by a limited lien possessed by
the respondent City of Lapu-Lapu in accord with
Section 257 of the Local Government
Code.19 Petitioner filed a Motion for Partial
Reconsideration20 of the questioned Decision
covering only the portion of said decision declaring
that petitioner is a GOCC and, therefore, not
exempt from the realty tax and special education
fund imposed by respondent City. Petitioner cited
Manila International Airport Authority v. Court of
Appeals21 (the 2006 MIAA case) involving the City
of Paraaque and the Manila International Airport
Authority. Petitioner claimed that it had been
described by this Court as a government
instrumentality, and that it followed "as a logical
consequence that petitioner is exempt from the
taxing powers of respondent City of LapuLapu."22 Petitioner alleged that the 1996 MCIAA
case had been overturned by the Court in the 2006
MIAA case. Petitioner thus prayed that it be
declared exempt from paying the realty tax, special
education fund, and interest being collected by
respondent City.
On February 12, 2008, the Court of Appeals denied
petitioners motion for partial reconsideration in the
questioned Resolution.

The above-stated provision, however, qualified the

exemption of the National Government, its agencies and
instrumentalities from local taxation with the phrase "unless
otherwise provided herein."
Section 232 of the LGC provides for the power of the local
government units (LGUs for brevity) to levy real property
tax. x x x.
xxxx
Section 234 of the LGC provides for the exemptions from
payment of real property taxes and withdraws previous
exemptions granted to natural and juridical persons,
including government-owned and controlled corporations,
except as provided therein. x x x.
xxxx
Section 193 of the LGC is the general provision on
withdrawal of tax exemption privileges. x x x. 24 (Citations
omitted.)
The Court of Appeals went on to state that contrary to the
ruling of the Supreme Court in the 2006 MIAA case, it finds
and rules that:
a) Section 133 of the LGC is not an absolute prohibition on
the power of the LGUs to tax the National Government, its
agencies and instrumentalities as the same is qualified by
Sections 193, 232 and 234 which "otherwise provided"; and
b) Petitioner MCIAA is a GOCC.25 (Emphasis ours.)
The Court of Appeals ratiocinated in the following manner:
Pursuant to the explicit provision of Section 193 of the LGC,
exemptions previously enjoyed by persons, whether natural
or juridical, like the petitioner MCIAA, are deemed
withdrawn upon the effectivity of the Code. Further, the last
paragraph of Section 234 of the Code also unequivocally
withdrew, upon the Codes effectivity, exemptions from

payment of real property taxes previously granted to natural

or juridical persons, including government-owned or
controlled corporations, except as provided in the said
section. Petitioner MCIAA, undoubtedly a juridical person, it
follows that its exemption from such tax granted under
Section 14 of R.A. 6958 has been withdrawn.

We also find to be not meritorious the assertion of petitioner

MCIAA that the respondent city can no longer challenge the
tax-exempt character of the properties since it is estopped
from doing so when respondent City of Lapu-Lapu, through
its former mayor, Ernest H. Weigel, Jr., had long ago
conceded that petitioners properties are exempt from real
property tax.

xxxx
From the [1996 MCIAA] ruling, it is acknowledged that,
under Section 133 of the LGC, instrumentalities were
generally exempt from all forms of local government
taxation, unless otherwise provided in the Code. On the other
hand, Section 232 "otherwise provided" insofar as it allowed
local government units to levy an ad valorem real property
tax, irrespective of who owned the property. At the same
time, the imposition of real property taxes under Section 232
is, in turn, qualified by the phrase "not hereinafter
specifically exempted." The exemptions from real property
taxes are enumerated in Section 234 of the Code which
specifically states that only real properties owned by the
Republic of the Philippines or any of its political subdivisions
are exempted from the payment of the tax. Clearly,
instrumentalities or GOCCs do not fall within the exceptions
under Section 234 of the LGC.
Thus, as ruled in the [1996 MCIAA] case, the prohibition on
taxing the national government, its agencies and
instrumentalities under Section 133 is qualified by Sections
232 and 234, and accordingly, the only relevant exemption
now applicable to these bodies is what is now provided under
Section 234(a) of the Code. It may be noted that the express
withdrawal of previously granted exemptions to persons
from the payment of real property tax by the LGC does not
even make any distinction as to whether the exempt person
is a governmental entity or not. As Sections 193 and 234 of
the Code both state, the withdrawal applies to "all persons,
including GOCCs," thus encompassing the two classes of
persons recognized under our laws, natural persons and
juridical persons.
xxxx
The question of whether or not petitioner MCIAA is an
instrumentality or a GOCC has already been lengthily but
soundly, cogently and lucidly answered in the [1996 MCIAA]
case x x x.
xxxx
Based on the foregoing, the claim of the majority of the
Supreme Court in the [2006 MIAA] case that MIAA (and
also petitioner MCIAA) is not a government-owned or
controlled corporation but an instrumentality based on
Section 2(10) of the Administrative Code of 1987 appears to
be unsound. In the [2006 MIAA] case, the majority justifies
MIAAs purported exemption on Section 133(o)of the Local
Government
Code
which
places
"agencies
and
instrumentalities: as generally exempt from the taxation
powers of the LGUs. It further went on to hold that "By
express mandate of the Local Government Code, local
governments cannot impose any kind of tax on national
government instrumentalities like the MIAA." x x
x.26 (Citations omitted.)
The Court of Appeals further cited Justice Tingas dissent in
the 2006 MIAA case as well as provisions from petitioner
MCIAAs charter to show that petitioner is a GOCC. 27 The
Court of Appeals wrote:
These cited provisions establish the fitness of the petitioner
MCIAA to be the subject of legal relations. Under its charter,
it has the power to acquire, possess and incur obligations. It
also has the power to contract in its own name and to acquire
title to movable or immovable property. More importantly, it
may likewise exercise powers of a corporation under the
Corporation Code. Moreover, based on its own allegation, it
even recognized itself as a GOCC when it alleged in its
petition for prohibition filed before the lower court that it "is
a body corporate organized and existing under Republic Act
No. 6958 x x x."

It is not denied by the respondent city that it considered,

through its former mayor, Ernest H. Weigel, Jr., petitioners
subject properties, specifically the runway and taxiway, as
exempt from taxes. However, as astutely pointed out by the
respondent city it "can never be in estoppel, particularly in
matters involving taxes. It is a well-known rule that
erroneous application and enforcement of the law by public
officers do not preclude subsequent correct application of the
statute, and that the Government is never estopped by
mistake or error on the part of its agents." 28 (Citations
omitted.)
The Court of Appeals established the following:
a) [R]espondent City was able to prove and
establish that it has a valid and existing ordinance
for the imposition of realty tax against petitioner
MCIAA;
b) [T]he imposition and collection of additional
levy of 1% Special Education Fund (SEF) is
authorized by law, Republic Act No. 5447; and
c) [T]he collection of penalty interest for
delinquent taxes is not only authorized by law but
is likewise [sanctioned] by respondent Citys
ordinance.29
The Court of Appeals likewise held that respondent City has
a valid and existing local tax ordinance, Ordinance No. 44, or
the Omnibus Tax Ordinance of Lapu-Lapu City, which
provided for the imposition of real property tax. The relevant
provision reads:
Chapter 5 Tax on Real Property Ownership
Section 25. RATE OF TAX. - A rate of one and one-half (1
1/2) percentum shall be collected from owners, executors or
administrators of any real estate lying within the territorial
jurisdiction of the City of Lapu-Lapu, based on the assessed
value as shown in the latest revision.30
The Court of Appeals found that even if Ordinance No. 44
was enacted prior to the effectivity of the LGC, it remained in
force and effect, citing Section 529 of the LGC and Article
278 of the LGCs Implementing Rules and Regulations.31
As regards the Special Education Fund, the Court of Appeals
held that respondent City can still collect the additional 1%
tax on real property even without an ordinance to this effect,
as this is authorized by Republic Act No. 5447, as amended
by Presidential Decree No. 464 (the Real Property Tax Code),
which does not require an enabling tax ordinance. The Court
of Appeals affirmed the RTCs ruling that Republic Act No.
5447 was still in force and effect notwithstanding the passing
of the LGC, as the latter only partially repealed the former
law. What Section 534 of the LGC repealed was Section 3
a(3) and b(2) of Republic Act No. 5447, and not the entire
law that created the Special Education Fund. 32 The repealed
provisions referred to allocation of taxes on Virginia type
cigarettes and duties on imported leaf tobacco and the
percentage remittances to the taxing authority concerned.
The Court of Appeals, citing The Commission on Audit of the
Province of Cebu v. Province of Cebu, 33 held that "[t]he
failure to add a specific repealing clause particularly
mentioning the statute to be repealed indicates that the
intent was not to repeal any existing law on the matter,
unless an irreconcilable inconsistency and repugnancy exists
in the terms of the new and the old laws." 34 The Court of
Appeals quoted the RTCs discussion on this issue, which we
reproduce below:

It may be observed that there is no requirement in RA 7160

that an ordinance be enacted to enable the collection of the
additional 1% tax. This is so since R.A. 5447 is still in force
and effect, and the declared policy of the government in
enacting the law, which is to contribute to the financial
support of the goals of education as provided in the
Constitution, necessitates the continued and uninterrupted
collection of the tax. Considering that this is a tax of farreaching importance, to require the passage of an ordinance
in order that the tax may be collected would be to place the
collection of the tax at the option of the local legislature. This
would run counter to the declared policy of the government
when the SEF was created and the tax imposed. 35 Regarding
the penalty interest, the Court of Appeals found that Section
30 of Ordinance No. 44 of respondent City provided for a
penalty surcharge of 25% of the tax due for a given year. Said
provision reads:
Section 30. PENALTY FOR FAILURE TO PAY TAX.
Failure to pay the tax provided for under this Chapter within
the time fixed in Section 27, shall subject the taxpayer to a
surcharge of twenty-five percent (25%), without interest. 36
The Court of Appeals however declared that after the
effectivity of the Local Government Code, the respondent
City could only collect penalty surcharge up to the extent of
72%, covering a period of three years or 36 months, for the
entire delinquent property.37 This was lower than the 25%
per annum surcharge imposed by Ordinance No. 44. 38 The
Court of Appeals affirmed
the findings of the RTC in the decision quoted below:
The tax collected under Ordinance No. 44 is within the rates
prescribed by RA 7160, though the 25% penalty collected is
higher than the 2% allowed under Sec. 255 of the said law
which provides:
xxxx
This difference does not however detract from the essential
enforceability and effectivity of Ordinance No. 44 pursuant
to Section 529 of RA No. 7160 and Article 278 of the
Implementing Rules and Regulations. The outcome of this
disparity is simply that respondent City can only collect an
interest of 2% per month on the unpaid tax. Consequently,
respondent city will have to [recompute] the petitioners tax
liability.39
It is worthy to note that the Court of Appeals
nevertheless held that even if it is clear that
respondent City has the power to impose real
property taxes over petitioner, "it is also evident and
categorical that, under Republic Act No. 6958, the
properties of petitioner MCIAA may not be conveyed
or transferred to any person or entity except to the
national government."40 The relevant provisions of the
said law are quoted below:
Section 4. Functions, Powers and Duties. The Authority
shall have the following functions, powers and duties:
xxxx
(e) To acquire, purchase, own, administer, lease, mortgage,
sell or otherwise dispose of any land, building, airport
facility, or property of whatever kind and nature, whether
movable or immovable, or any interest therein: Provided,
That any asset located in the Mactan International Airport
important to national security shall not be subject to
alienation or mortgage by the Authority nor to transfer to
any entity other than the National Government[.]
Section 13. Borrowing Power. The Authority may, in
accordance with Section 21, Article XII of the Constitution
and other existing laws, rules and regulations on local or
foreign borrowing, raise funds, either from local or
international sources, by way of loans, credit or securities,
and other borrowing instruments with the power to create
pledges, mortgages and other voluntary liens or

encumbrances on any of its assets or properties, subject to

the prior approval of the President of the Philippines.
All loans contracted by the Authority under this section,
together with all interests and other sums payable in respect
thereof, shall constitute a charge upon all the revenues and
assets of the Authority and shall rank equally with one
another, but shall have priority over any other claim or
charge on the revenue and assets of the Authority: Provided,
That this provision shall not be construed as a prohibition or
restriction on the power of the Authority to create pledges,
mortgages and other voluntary liens or encumbrances on any
asset or property of the Authority. The payment of the loans
or other indebtedness of the Authority may be guaranteed by
the National Government subject to the approval of the
President of the Philippines.
The Court of Appeals concluded that "it is clear that
petitioner MCIAA is denied by its charter the absolute right
to dispose of its property to any person or entity except to the
national government and it is not empowered to obtain loans
or encumber its property without the approval of the
President."41 The questioned Decision contained the
following conclusion:
With the advent of RA 7160, the Local Government Code, the
power to tax is no longer vested exclusively on Congress.
LGUs, through its local legislative bodies, are now given
direct authority to levy taxes, fees and other charges
pursuant to Article X, Section 5 of the 1987 Constitution. And
one of the most significant provisions of the LGC is the
removal of the blanket inclusion of instrumentalities and
agencies of the national government from the coverage of
local taxation. The express withdrawal by the Code of
previously granted exemptions from realty taxes applied to
instrumentalities and government-owned or controlled
corporations (GOCCs) such as the petitioner Mactan-Cebu
International Airport Authority. Thus, petitioner MCIAA
became a taxable person in view of the withdrawal of the
realty tax exemption that it previously enjoyed under Section
14 of RA No. 6958 of its charter. As expressed and
categorically held in the Mactan case, the removal and
withdrawal of tax exemptions previously enjoyed by persons,
natural or juridical, are consistent with the State policy to
ensure autonomy to local governments and the objective of
the Local Government Code that they enjoy genuine and
meaningful local autonomy to enable them to attain their
fullest development as self-reliant communities and make
them effective partners in the attainment of national goals.
However, in the case at bench, petitioner MCIAAs charter
expressly bars the alienation or mortgage of its property to
any person or entity except to the national government.
Therefore, while petitioner MCIAA is a taxable person for
purposes of real property taxation, respondent City of LapuLapu is prohibited from seizing, selling and owning these
properties by and through a public auction in order to satisfy
petitioner MCIAAs tax liability.42 (Citations omitted.)
In the questioned Resolution that affirmed its questioned
Decision, the Court of Appeals denied petitioners motion for
reconsideration based on the following grounds:
First, the MCIAA case remains the controlling law on the
matter as the same is the established precedent; not the
MIAA case but the MCIAA case since the former, as keenly
pointed out by the respondent City of Lapu-Lapu, has not yet
attained finality as there is still yet a pending motion for
reconsideration filed with the Supreme Court in the aforesaid
case.
Second, and more importantly, the ruling of the Supreme
Court in the MIAA case cannot be similarly invoked in the
case at bench. The said case cannot be considered as the "law
of the case." The "law of the case" doctrine has been defined
as that principle under which determinations of questions of
law will generally be held to govern a case throughout all its
subsequent stages where such determination has already
been made on a prior appeal to a court of last resort. It is
merely a rule of procedure and does not go to the power of
the court, and will not be adhered to where its application
will result in an unjust decision. It relates entirely to
questions of law, and is confined in its operation to

subsequent proceedings in the same case. According to said

doctrine, whatever has been irrevocably established
constitutes the law of the case only as to the same parties in
the same case and not to different parties in an entirely
different case. Besides, pending resolution of the aforesaid
motion for reconsideration in the MIAA case, the latter case
has not irrevocably established anything.
Thus, after a thorough and judicious review of the allegations
in petitioners motion for reconsideration, this Court resolves
to deny the same as the matters raised therein had already
been exhaustively discussed in the decision sought to be
reconsidered, and that no new matters were raised which
would warrant the modification, much less reversal,
thereof.43 (Emphasis added, citations omitted.)
PETITIONERS THEORY
Petitioner is before us now claiming that this Court, in the
2006 MIAA case, had expressly declared that petitioner,
while vested with corporate powers, is not considered a
government-owned or controlled corporation, but is a
government instrumentality like the Manila International
Airport Authority (MIAA), Philippine Ports Authority (PPA),
University of the Philippines, and Bangko Sentral ng
Pilipinas (BSP). Petitioner alleges that as a government
instrumentality, all its airport lands and buildings are
exempt from real estate taxes imposed by respondent
City.44Petitioner alleges that Republic Act No. 6958 placed "a
limitation on petitioners administration of its assets and
properties" as it provides under Section 4(e) that "any asset
in the international airport important to national security
cannot be alienated or mortgaged by petitioner or
transferred to any entity other than the National
Government."45
Thus, petitioner claims that the Court of Appeals (Cebu City)
gravely erred in disregarding the following:

2. MCIAA is a public utility like MIAA;

3. MIAA was organized to operate the
international and domestic airport in Paranaque
City for public use, while MCIAA was organized to
operate the international and domestic airport in
Mactan for public use.
4. Both are attached agencies of the Department of
Transportation and Communications.47
Petitioner compares its charter (Republic Act No. 6958) with
that of MIAA (Executive Order No. 903).
Section 3 of Executive Order No. 903 provides:
Sec. 3. Creation of the Manila International Airport
Authority. There is hereby established a body corporate to be
known as the Manila International Airport Authority which
shall be attached to the Ministry of Transportation and
Communications. The principal office of the Authority shall
be located at the New Manila International Airport. The
Authority may establish such offices, branches, agencies or
subsidiaries as it may deem proper and necessary; x x x.
Section 2 of Republic Act No. 6958 reads:
Section 2. Creation of the Mactan-Cebu International Airport
Authority. There is hereby established a body corporate to
be known as the Mactan-Cebu International Airport
Authority which shall be attached to the Department of
Transportation and Communications. The principal office of
the Authority shall be located at the Mactan International
Airport, Province of Cebu.
The Authority may have such branches, agencies or
subsidiaries as it may deem proper and necessary.

I
PETITIONER IS A GOVERNMENT INSTRUMENTALITY
AS EXPRESSLY DECLARED BY THE HONORABLE COURT
IN THE MIAA CASE. AS SUCH, IT IS EXEMPT FROM
PAYING
REAL
ESTATE
TAXES
IMPOSED
BY
RESPONDENT CITY OF LAPULAPU.
II
THE PROPERTIES OF PETITIONER CONSISTING OF THE
AIRPORT TERMINAL BUILDING, AIRFIELD, RUNWAY,
TAXIWAY, INCLUDING THE LOTS ON WHICH THEY ARE
SITUATED, ARE EXEMPT FROM REAL PROPERTY
TAXES.

As to MIAAs purposes and objectives, Section 4 of Executive

Order No. 903 reads:
Sec. 4. Purposes and Objectives. The Authority shall have the
following purposes and objectives:
(a) To help encourage and promote international
and domestic air traffic in the Philippines as a
means of making the Philippines a center of
international trade and tourism and accelerating
the development of the means of transportation
and communications in the country;

III

(b) To formulate and adopt for application in the

Airport internationally acceptable standards of
airport accommodation and service; and

RESPONDENT CITY OF LAPU-LAPU CANNOT IMPOSE

REAL PROPERTY TAX WITHOUT ANY APPROPRIATE
ORDINANCE.

(c) To upgrade and provide safe, efficient, and

reliable airport facilities for international and
domestic air travel.

IV
RESPONDENT CITY OF LAPU-LAPU CANNOT IMPOSE
AN ADDITIONAL 1% TAX FOR THE SPECIAL EDUCATION
FUND IN THE ABSENCE OF ANY CORRESPONDING
ORDINANCE.
V
RESPONDENT CITY OF LAPU-LAPU CANNOT IMPOSE
ANY INTEREST SANSANY ORDINANCE MANDATING ITS
IMPOSITION.46
Petitioner claims the following similarities with MIAA:
1. MCIAA belongs to the same class and performs
identical functions as MIAA;

Petitioner claims that the above purposes and objectives are

analogous to those enumerated in its charter, specifically
Section 3 of Republic Act No. 6958, which reads:
Section 3. Primary Purposes and Objectives. The Authority
shall principally undertake the economical, efficient and
effective control, management and supervision of the Mactan
International Airport in the Province of Cebu and the Lahug
Airport in Cebu City, hereinafter collectively referred to as
the airports, and such other airports as may be established in
the Province of Cebu. In addition, it shall have the following
objectives:

(a) To encourage, promote and develop

international and domestic air traffic in the central
Visayas and Mindanao regions as a means of
making the regions centers of international trade
and tourism, and accelerating the development of
the means of transportation and communications
in the country; and
(b) To upgrade the services and facilities of the
airports and to formulate internationally
acceptable standards of airport accommodation
and service.
The powers, functions and duties of MIAA under Section 5 of
Executive Order No. 903 are:
Sec. 5. Functions, Powers and Duties. The Authority shall
have the following functions, powers and duties:
(a) To formulate, in coordination with the Bureau
of Air Transportation and other appropriate
government agencies, a comprehensive and
integrated policy and program for the Airport and
to implement, review and update such policy and
program periodically;
(b) To control, supervise, construct, maintain,
operate and provide such facilities or services as
shall be necessary for the efficient functioning of
the Airport;
(c) To promulgate rules and regulations governing
the
planning,
development,
maintenance,
operation and improvement of the Airport, and to
control and/or supervise as may be necessary the
construction of any structure or the rendition of
any services within the Airport;

(1) Aircraft movement and allocation of

parking areas of aircraft on the ground;
(2) Loading or unloading of aircrafts;
(3) Passenger handling and other
services directed towards the care,
convenience and security of passengers,
visitors and other airport users; and
(4) Sorting, weighing, measuring,
warehousing or handling of baggage and
goods.
(n) To perform such other acts and transact such
other business, directly or indirectly necessary,
incidental or conducive to the attainment of the
purposes and objectives of the Authority, including
the adoption of necessary measures to remedy
congestion in the Airport; and
(o) To exercise all the powers of a corporation
under the Corporation Law, insofar as these
powers are not inconsistent with the provisions of
this Executive Order.
Petitioner claims that MCIAA has related functions, powers
and duties under Section 4 of Republic Act No. 6958, as
shown in the provision quoted below:
Section 4. Functions, Powers and Duties. The Authority
shall have the following functions, powers and duties:
(a) To formulate a comprehensive and integrated
development policy and program for the airports
and to implement, review and update such policy
and program periodically;

(d) To sue and be sued in its corporate name;

(e) To adopt and use a corporate seal;

(b) To control, supervise, construct, maintain,

operate and provide such facilities or services as
shall be necessary for the efficient functioning of
the airports;

(f) To succeed by its corporate name;

(g) To adopt its by-laws, and to amend or repeal
the same from time to time;
(h) To execute or enter into contracts of any kind
or nature;
(i) To acquire, purchase, own, administer, lease,
mortgage, sell or otherwise dispose of any land,
building, airport facility, or property of whatever
kind and nature, whether movable or immovable,
or any interest therein;
(j) To exercise the power of eminent domain in the
pursuit of its purposes and objectives;
(k) To levy, and collect dues, charges, fees or
assessments for the use of the Airport premises,
works, appliances, facilities or concessions or for
any service provided by the Authority, subject to
the approval of the Minister of Transportation and
Communications in consultation with the Minister
of Finance, and subject further to the provisions of
Batas Pambansa Blg. 325 where applicable;
(l) To invest its idle funds, as it may deem proper,
in government securities and other evidences of
indebtedness of the government;
(m) To provide services, whether on its own or
otherwise, within the Airport and the approaches
thereof, which shall include but shall not be
limited to, the following:

(c) To promulgate rules and regulations governing

the
planning,
development,
maintenance,
operation and improvement of the airports, and to
control and supervise the construction of any
structure or the rendition of any service within the
airports;
(d) To exercise all the powers of a corporation
under the Corporation Code of the Philippines,
insofar as those powers are not inconsistent with
the provisions of this Act;
(e) To acquire, purchase, own, administer, lease,
mortgage, sell or otherwise dispose of any land,
building, airport facility, or property of whatever
kind and nature, whether movable or immovable,
or any interest therein: Provided, That any asset
located in the Mactan International Airport
important to national security shall not be subject
to alienation or mortgage by the Authority nor to
transfer to any entity other than the National
Government;
(f) To exercise the power of eminent domain in the
pursuit of its purposes and objectives;
(g) To levy and collect dues, charges, fees or
assessments for the use of airport premises, works,
appliances, facilities or concessions, or for any
service provided by the Authority;
(h) To retain and appropriate dues, fees and
charges collected by the Authority relative to the
use of airport premises for such measures as may

be necessary to make the Authority more effective

and efficient in the discharge of its assigned tasks;
(i) To invest its idle funds, as it may deem proper,
in government securities and other evidences of
indebtedness; and
(j) To provide services, whether on its own or
otherwise, within the airports and the approaches
thereof as may be necessary or in connection with
the maintenance and operation of the airports and
their facilities.
Petitioner claims that like MIAA, it has police authority
within its premises, as shown in their respective charters
quoted below:
EO 903, Sec. 6. Police Authority. The Authority shall have
the power to exercise such police authority as may be
necessary within its premises to carry out its functions and
attain its purposes and objectives, without prejudice to the
exercise of functions within the same premises by the
Ministry of National Defense through the Aviation Security
Command (AVSECOM) as provided in LOI 961: Provided,
That the Authority may request the assistance of law
enforcement agencies, including request for deputization as
may be required. x x x.
R.A. No. 6958, Section 5. Police Authority. The Authority
shall have the power to exercise such police authority as may
be necessary within its premises or areas of operation to
carry out its functions and attain its purposes and objectives:
Provided, That the Authority may request the assistance of
law enforcement agencies, including request for deputization
as may be required. x x x.

Government Code, in which case the specific real

property leased becomes subject to real estate tax.
Thus, only portions of the Airport Lands and
Buildings leased to taxable persons like private
parties are subject to real estate tax by the City of
Paraaque.
Under Article 420 of the Civil Code, the Airport
Lands and Buildings of MIAA, being devoted to
public use, are properties of public dominion and
thus owned by the State or the Republic of the
Philippines.Article 420 specifically mentions "ports x x x
constructed by the State," which includes public airports and
seaports, as properties of public dominion and owned by the
Republic. As properties of public dominion owned by
the Republic, there is no doubt whatsoever that the
Airport Lands and Buildings are expressly exempt
from real estate tax under Section 234(a) of the
Local Government Code. This Court has also
repeatedly ruled that properties of public dominion
are not subject to execution or foreclosure
sale.49(Emphases added.)
Petitioner insists that its properties consisting of the airport
terminal building, airfield, runway, taxiway and the lots on
which they are situated are not subject to real property tax
because they are actually, solely and exclusively used for
public purposes.50 They are indispensable to the operation of
the Mactan International Airport and by their very nature,
these properties are exempt from tax. Said properties belong
to the State and are merely held by petitioner in trust. As
earlier mentioned, petitioner claims that these properties are
important to national security and cannot be alienated,
mortgaged, or transferred to any entity except the National
Government.
Petitioner prays that judgment be rendered:

Petitioner pointed out other similarities in the two charters,

such as:

a) Declaring petitioner exempt from paying real

property taxes as it is a government
instrumentality;

1. Both MCIAA and MIAA are covered by the Civil

Service Law, rules and regulations (Section 15,
Executive Order No. 903; Section 12, Republic Act
No. 6958);

b) Declaring respondent City of Lapu-Lapu as

bereft of any authority to levy and collect the basic
real property tax, the additional tax for the SEF
and the penalty interest for its failure to pass the
corresponding tax ordinances; and

2. Both charters contain a proviso on tax

exemptions (Section 21, Executive Order No. 903;
Section 14, Republic Act No. 6958);
3. Both MCIAA and MIAA are required to submit
to the President an annual report generally dealing
with their activities and operations (Section 14,
Executive Order No. 903; Section 11, Republic Act
No. 6958); and
4. Both have borrowing power subject to the
approval of the President (Section 16, Executive
Order No. 903; Section 13, Republic Act No.
6958).48
Petitioner suggests that it is because of its similarity with
MIAA that this Court, in the 2006 MIAA case, placed it in the
same class as MIAA and considered it as a government
instrumentality. Petitioner submits that since it is also a
government instrumentality like MIAA, the following
conclusion arrived by the Court in the 2006 MIAA case is
also applicable to petitioner:
Under Section 2(10) and (13) of the Introductory
Provisions of the Administrative Code, which
governs the legal relation and status of government
units, agencies and offices within the entire
government machinery, MIAA is a government
instrumentality and not a government-owned or
controlled corporation. Under Section 133(o) of the
Local Government Code, MIAA as a government
instrumentality is not a taxable person because it is
not subject to "[t]axes, fees or charges of any kind"
by local governments. The only exception is when
MIAA leases its real property to a "taxable person"
as provided in Section 234(a) of the Local

c) Declaring, in the alternative, the airport lands

and buildings of petitioner as exempt from real
property taxes as they are used solely and
exclusively for public purpose.51
In its Consolidated Reply filed through the OSG, petitioner
claims that the 2006 MIAA ruling has overturned the 1996
MCIAA ruling. Petitioner cites Justice Dante O. Tingas
dissent in the MIAA ruling, as follows:
[The] ineluctable conclusion is that the majority rejects the
rationale and ruling in Mactan. The majority provides for a
wildly different interpretation of Section 133, 193 and 234 of
the Local Government Code than that employed by the Court
in Mactan. Moreover, the parties in Mactan and in this case
are similarly situated, as can be obviously deducted from the
fact that both petitioners are airport authorities operating
under similarly worded charters. And the fact that the
majority cites doctrines contrapuntal to the Local
Government Code as in Basco and Maceda evinces an intent
to go against the Courts jurisprudential trend adopting the
philosophy of expanded local government rule under the
Local Government Code.
x x x The majority is obviously inconsistent with Mactan and
there is no way these two rulings can stand together.
Following basic principles in statutory construction, Mactan
will be deemed as giving way to this new ruling.
xxxx
There is no way the majority can be justified unless Mactan
is overturned. The MCIAA and the MIAA are similarly

situated. They are both, as will be demonstrated, GOCCs,

commonly engaged in the business of operating an airport.
They are the owners of airport properties they respectively
maintain and hold title over these properties in their name.
These entities are both owned by the State, and denied by
their respective charters the absolute right to dispose of their
properties without prior approval elsewhere. Both of them
are not empowered to obtain loans or encumber their
properties without prior approval the prior approval of the
President.52 (Citations omitted.)
Petitioner likewise claims that the enactment of Ordinance
No. 070-2007 is an admission on respondent Citys part that
it must have a tax measure to be able to impose a tax or
special assessment. Petitioner avers that assuming that it is a
non-exempt entity or that its airport lands and buildings are
not exempt, it was only upon the effectivity of Ordinance No.
070-2007 on January 1,2008 that respondent City could
properly impose the basic real property tax, the additional
tax for the SEF, and the interest in case of nonpayment. 53
Petitioner filed its Memorandum54 on June 17, 2009.
RESPONDENTS THEORY
In their Comment,55 respondents point out that petitioner
partially moved for a reconsideration of the questioned
Decision only as to the issue of whether petitioner is a GOCC
or not. Thus, respondents declare that the other portions of
the questioned decision had already attained finality and
ought not to be placed in issue in this petition for certiorari.
Thus, respondents discussed the other issues raised by
petitioner with reservation as to this objection. Respondents
summarized the issues and the grounds relied upon as
follows:
STATEMENT OF THE ISSUES

controlling case on the matter." 57 Respondents further claim

that the 1996 MCIAA case where this Court held that
petitioner is a GOCC is the controlling jurisprudence.
Respondents point out that petitioner and MIAA are two
very different entities. Respondents argue that petitioner is a
GOCC contrary to its assertions, based on its Charter and on
DOJ Opinion No. 50.
Respondents contend that if petitioner is not a GOCC but an
instrumentality of the government, still the following
statement in the 1996 MCIAA case applies:
Besides, nothing can prevent Congress from decreeing that
even instrumentalities or agencies of the Government
performing governmental functions may be subject to tax.
Where it is done precisely to fulfill a constitutional mandate
and
national
policy,
no
one
can
doubt
its
wisdom.58 Respondents argue that MCIAA properties such as
the terminal building, taxiway and runway are not exempt
from real property taxation. As discussed in the 1996 MCIAA
case, Section 234 of the LGC omitted GOCCs such as MCIAA
from entities enjoying tax exemptions. Said decision also
provides that the transfer of ownership of the land to
petitioner was absolute and petitioner cannot evade payment
of taxes.59
Even if the following issues were not raised by petitioner in
its motion for reconsideration of the questioned Decision,
and thus the ruling pertaining to these issues in the
questioned decision had become final, respondents still
discussed its side over its objections as to the propriety of
bringing these up before this Court.
1. Estoppel does not lie against the government.
2. Respondent City can collect realty taxes and
interest.

WHETHER OR NOT PETITIONER IS A GOVERNMENT

INSTRUMENTALITY EXEMPT FROM PAYING REAL
PROPERTY TAXES

a. Based on the Local Government Code

(Sections 232, 233, 255) and its IRR
(Sections 241, 247).

WHETHER OR NOT RESPONDENT CITY CAN [IMPOSE]

REALTY TAX, SPECIAL EDUCATION FUND AND
PENALTY INTEREST

b. The City of Lapu-Lapu passed in1980

Ordinance No. 44, or the Omnibus Tax
Ordinance, wherein the imposition of
real property tax was made. This
Ordinance was in force and effect by
virtue of Article 278 of the IRR of
Republic Act No. 7160.60

WHETHER OR NOT THE AIRPORT TERMINAL

BUILDING, AIRFIELD, RUNWAY, TAXIWAY INCLUDING
THE LOTS ON WHICH THEY ARE SITUATED ARE
EXEMPT FROM REALTY TAXES
GROUNDS RELIED UPON
1. PETITIONER IS A GOCC HENCE
NOT EXEMPT FROM REALTY TAXES

c. Ordinance No. 070-2007, known as

the Revised Lapu-Lapu City Revenue
Code, imposed real property taxes,
special education fund and further
provided for the payment of interest and
surcharges. Thus, the issue is pass and
is moot and academic.

2. TERMINAL BUILDING, RUNWAY,

TAXIWAY ARE NOT EXEMPT FROM
REALTY TAXES

3. Respondent City can collect Special Education

Fund.

3. ESTOPPEL DOES NOT LIE AGAINST

GOVERNMENT

a. The LGC does not require the

enactment of an ordinance for the
collection of the SEF.

4. CITY CAN COLLECT REALTY TAX

AND INTEREST
5. CITY CAN COLLECT SEF
6. MCIAA HAS NOT SHOWN ANY
IRREPARABLE
INJURY
WARRANTING INJUNCTIVE RELIEF

b. Congress did not entirely repeal the

SEF law, hence, its levy, imposition and
collection need not be covered by
ordinance. Besides, the City has enacted
the Revenue Code containing provisions
for the levy and collection of the SEF.61
Furthermore, respondents aver that:

7. MCIAA HAS NOT COMPLIED WITH

PROVISION OF THE LGC56

1. Collection of taxes is beyond the ambit of

injunction.

Respondents claim that "the mere mention of MCIAA in the

MIAA v. [Court of Appeals] case does not make it the

a. Respondents contend that the petition

only questions the denial of the writ of

preliminary injunction by the RTC and

the Court of Appeals. Petitioner failed to
show irreparable injury.
b. Comparing the alleged damage that
may be caused petitioner and the direct
affront and challenge against the power
to tax, which is an attribute of
sovereignty, it is but appropriate that
injunctive relief should be denied.

The petition has merit. The petitioner is an instrumentality

of the government; thus, its properties actually, solely and
exclusively used for public purposes, consisting of the airport
terminal building, airfield, runway, taxiway and the lots on
which they are situated, are not subject to real property tax
and respondent City is not justified in collecting taxes from
petitioner over said properties.
DISCUSSION

2. Petitioner did not comply with LGC provisions

on payment under protest.

The Court of Appeals (Cebu City) erred in declaring that the

1996 MCIAA case still controls and that petitioner is a GOCC.
The 2006 MIAA case governs.

a. Petitioner should have protested the

tax imposition as provided in Article 285
of the IRR of Republic Act No. 7160.
Section 252 of Republic Act No.
716062 requires that the taxpayers
protest can only be entertained if the tax
is first paid under protest.63

The Court of Appeals reliance on the 1996 MCIAA case is

misplaced and its staunch refusal to apply the 2006 MIAA
case is patently erroneous. The Court of Appeals, finding for
respondents, refused to apply the ruling in the 2006 MIAA
case on the premise that the same had not yet reached
finality, and that as far as MCIAA is concerned, the 1996
MCIAA case is still good law.68

Respondents submitted their Memorandum 64 on June 30,

2009, wherein they allege that the 1996 MCIAA case is still
good law, as shown by the following cases wherein it was
quoted:

While it is true, as respondents allege, that the 1996 MCIAA

case was cited in a long line of cases, 69 still, in 2006, the
Court en banc decided a case that in effect reversed the 1996
Mactan ruling. The 2006 MIAA case had, since the
promulgation of the questioned Decision and Resolution,
reached finality and had in fact been either affirmed or cited
in numerous cases by the Court. 70 The decision became final
and executory on November 3, 2006.71Furthermore, the
2006 MIAA case was decided by the Court en banc while the
1996 MCIAA case was decided by a Division. Hence, the 1996
MCIAA case should be read in light of the subsequent and
unequivocal ruling in the 2006 MIAA case.

1. National Power Corporation v. Local Board of

Assessment Appeals of Batangas [545 Phil. 92
(2007)];
2. Mactan-Cebu International Airport Authority v.
Urgello [549 Phil. 302 (2007)];
3. Quezon City v. ABS-CBN Broadcasting
Corporation[588 Phil. 785 (2008)]; and
4. The City of Iloilo v. Smart Communications, Inc.
[599 Phil. 492 (2009)].
Respondents assert that the constant reference to the 1996
MCIAA case "could hardly mean that the doctrine has
breathed its last" and that the 1996 MCIAA case stands as
precedent and is controlling on petitioner MCIAA. 65
Respondents allege that the issue for consideration is
whether it is proper for petitioner to raise the issue of
whether it is not liable to pay real property taxes, special
education
fund
(SEF),
interests
and/or
surcharges.66Respondents argue that the Court of Appeals
was correct in declaring petitioner liable for realty taxes, etc.,
on the terminal building, taxiway, and runway. Respondent
City relies on the following grounds:
1. The case of MCIAA v. Marcos, et al., is
controlling on petitioner MCIAA;

To recall, in the 2006 MIAA case, we held that MIAAs

airport lands and buildings are exempt from real estate tax
imposed by local governments; that it is not a GOCC but an
instrumentality of the national government, with its real
properties being owned by the Republic of the Philippines,
and these are exempt from real estate tax. Specifically
referring to petitioner, we stated as follows:
Many government instrumentalities are vested with
corporate powers but they do not become stock or non-stock
corporations, which is a necessary condition before an
agency or instrumentality is deemed a government-owned or
controlled corporation. Examples are the Mactan
International Airport Authority, the Philippine Ports
Authority, the University of the Philippines and Bangko
Sentral ng Pilipinas. All these government instrumentalities
exercise corporate powers but they are not organized as stock
or non-stock corporations as required by Section 2(13) of the
Introductory Provisions of the Administrative Code. These
government instrumentalities are sometimes loosely called
government corporate entities. However, they are not
government-owned or controlled corporations in the strict
sense as understood under the Administrative Code, which is
the governing law defining the legal relationship and status
of government entities.72 (Emphases ours.)

2. MCIAA is a corporation;
3. Section 133 in relation to Sections 232 and 234
of the Local Government Code of 1991 authorizes
the collection of real property taxes (etc.) from
MCIAA;
4. Terminal Building, Runway & Taxiway are not
of the Public Dominion and are not exempt from
realty taxes, special education fund and interest;
5. Respondent City can collect realty tax,
interest/surcharge, and Special Education Fund
from MCIAA; [and]
6. Estoppel does not lie against the government.
THIS COURTS RULING

67

In the 2006 MIAA case, the issue before the Court was
"whether the Airport Lands and Buildings of MIAA are
exempt from real estate tax under existing laws." 73 We quote
the extensive discussion of the Court that led to its finding
that MIAAs lands and buildings were exempt from real
estate tax imposed by local governments:
First, MIAA is not a government-owned or controlled
corporation but an instrumentality of the National
Government and thus exempt from local taxation. Second,
the real properties of MIAA are owned by the Republic of the
Philippines and thus exempt from real estate tax.
1. MIAA is Not a Government-Owned or Controlled
Corporation
xxxx
There is no dispute that a government-owned or controlled
corporation is not exempt from real estate tax. However,

MIAA is not a government-owned or controlled corporation.

Section 2(13) of the Introductory Provisions of the
Administrative Code of 1987 defines a government-owned or
controlled corporation as follows:
SEC. 2. General Terms Defined. - x x x (13) Governmentowned or controlled corporation refers to any agency
organized as a stock or non-stock corporation, vested with
functions relating to public needs whether governmental or
proprietary in nature, and owned by the Government directly
or through its instrumentalities either wholly, or, where
applicable as in the case of stock corporations, to the extent
of at least fifty-one (51) percent of its capital stock: x x x.
A government-owned or controlled corporation must be
"organized as a stock or non-stock corporation." MIAA is not
organized as a stock or non-stock corporation. MIAA is not a
stock corporation because it has no capital stock divided into
shares. MIAA has no stockholders or voting shares. x x x
xxxx
Clearly, under its Charter, MIAA does not have capital stock
that is divided into shares.
Section 3 of the Corporation Code defines a stock
corporation as one whose "capital stock is divided into shares
and x x x authorized to distribute to the holders of such
shares dividends x x x." MIAA has capital but it is not divided
into shares of stock. MIAA has no stockholders or voting
shares. Hence, MIAA is not a stock corporation.
MIAA is also not a non-stock corporation because it has no
members. Section 87 of the Corporation Code defines a nonstock corporation as "one where no part of its income is
distributable as dividends to its members, trustees or
officers." A non-stock corporation must have members. Even
if we assume that the Government is considered as the sole
member of MIAA, this will not make MIAA a non-stock
corporation. Non-stock corporations cannot distribute any
part of their income to their members. Section 11 of the
MIAA Charter mandates MIAA to remit 20% of its annual
gross operating income to the National Treasury. This
prevents MIAA from qualifying as a non-stock corporation.
Section 88 of the Corporation Code provides that non-stock
corporations are "organized for charitable, religious,
educational, professional, cultural, recreational, fraternal,
literary, scientific, social, civil service, or similar purposes,
like trade, industry, agriculture and like chambers." MIAA is
not organized for any of these purposes. MIAA, a public
utility, is organized to operate an international and domestic
airport for public use.
Since MIAA is neither a stock nor a non-stock corporation,
MIAA does not qualify as a government-owned or controlled
corporation. What then is the legal status of MIAA within the
National Government?
MIAA is a government instrumentality vested with corporate
powers to perform efficiently its governmental functions.
MIAA is like any other government instrumentality, the only
difference is that MIAA is vested with corporate powers.
Section 2(10) of the Introductory Provisions of the
Administrative Code defines a government "instrumentality"
as follows:
SEC. 2. General Terms Defined. - x x x
(10) Instrumentality refers to any agency of the National
Government, not integrated within the department
framework, vested with special functions or jurisdiction by
law, endowed with some if not all corporate powers,
administering special funds, and enjoying operational
autonomy, usually through a charter. x x x.
When the law vests in a government instrumentality
corporate powers, the instrumentality does not become a
corporation. Unless the government instrumentality is
organized as a stock or non-stock corporation, it remains a

government
instrumentality
exercising
not
only
governmental but also corporate powers. Thus, MIAA
exercises the governmental powers of eminent domain,
police authority and the levying of fees and charges. At the
same time, MIAA exercises "all the powers of a corporation
under the Corporation Law, insofar as these powers are not
inconsistent with the provisions of this Executive Order."
Likewise, when the law makes a government instrumentality
operationally autonomous, the instrumentality remains part
of the National Government machinery although not
integrated with the department framework. The MIAA
Charter expressly states that transforming MIAA into a
"separate and autonomous body" will make its operation
more "financially viable."
Many government instrumentalities are vested with
corporate powers but they do not become stock or non-stock
corporations, which is a necessary condition before an
agency or instrumentality is deemed a government-owned or
controlled corporation. Examples are the Mactan
International Airport Authority, the Philippine Ports
Authority, the University of the Philippines and Bangko
Sentral ng Pilipinas. All these government instrumentalities
exercise corporate powers but they are not organized as stock
or non-stock corporations as required by Section 2(13) of the
Introductory Provisions of the Administrative Code. These
government instrumentalities are sometimes loosely called
government corporate entities. However, they are not
government-owned or controlled corporations in the strict
sense as understood under the Administrative Code, which is
the governing law defining the legal relationship and status
of government entities.74 (Emphases ours, citations omitted.)
The Court in the 2006 MIAA case went on to discuss the
limitation on the taxing power of the local governments as
against the national government or its instrumentality:
A government instrumentality like MIAA falls under Section
133(o) of the Local Government Code, which states:
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:
xxxx
(o) Taxes, fees or charges of any kind on the National
Government, its agencies and instrumentalities and local
government units. x x x.
Section 133(o) recognizes the basic principle that local
governments cannot tax the national government, which
historically merely delegated to local governments the power
to tax. While the 1987 Constitution now includes taxation as
one of the powers of local governments, local governments
may only exercise such power "subject to such guidelines and
limitations as the Congress may provide."
When local governments invoke the power to tax on national
government instrumentalities, such power is construed
strictly against local governments. The rule is that a tax is
never presumed and there must be clear language in the law
imposing the tax. Any doubt whether a person, article or
activity is taxable is resolved against taxation. This rule
applies with greater force when local governments seek to tax
national government instrumentalities.
Another rule is that a tax exemption is strictly construed
against the taxpayer claiming the exemption. However, when
Congress grants an exemption to a national government
instrumentality from local taxation, such exemption is
construed liberally in favor of the national government
instrumentality. x x x.
xxxx

There is, moreover, no point in national and local

governments taxing each other, unless a sound and
compelling policy requires such transfer of public funds from
one government pocket to another.

The Civil Code, Article 1271, prescribes that everything which

is not outside the commerce of man may be the object of a
contract, x x x.
xxxx

There is also no reason for local governments to tax national

government instrumentalities for rendering essential public
services to inhabitants of local governments. The only
exception is when the legislature clearly intended to tax
government instrumentalities for the delivery of essential
public services for sound and compelling policy
considerations. There must be express language in the law
empowering local governments to tax national government
instrumentalities. Any doubt whether such power exists is
resolved against local governments.
Thus, Section 133 of the Local Government Code states that
"unless otherwise provided" in the Code, local governments
cannot tax national government instrumentalities. x x
x.75 (Emphases ours, citations omitted.)
The Court emphasized that the airport lands and buildings of
MIAA are owned by the Republic and belong to the public
domain. The Court said:
The Airport Lands and Buildings of MIAA are property of
public dominion and therefore owned by the State or the
Republic of the Philippines. x x x.
xxxx
No one can dispute that properties of public dominion
mentioned in Article 420 of the Civil Code, like "roads,
canals, rivers, torrents, ports and bridges constructed by the
State," are owned by the State. The term "ports" includes
seaports and airports. The MIAA Airport Lands and
Buildings constitute a "port" constructed by the State. Under
Article 420 of the Civil Code, the MIAA Airport Lands and
Buildings are properties of public dominion and thus owned
by the State or the Republic of the Philippines.
The Airport Lands and Buildings are devoted to public use
because they are used by the public for international and
domestic travel and transportation. The fact that the MIAA
collects terminal fees and other charges from the public does
not remove the character of the Airport Lands and Buildings
as properties for public use. x x x.
xxxx
The terminal fees MIAA charges to passengers, as well as the
landing fees MIAA charges to airlines, constitute the bulk of
the income that maintains the operations of MIAA. The
collection of such fees does not change the character of MIAA
as an airport for public use. Such fees are often termed users
tax. This means taxing those among the public who actually
use a public facility instead of taxing all the public including
those who never use the particular public facility. A users tax
is more equitable - a principle of taxation mandated in the
1987 Constitution.
The Airport Lands and Buildings of MIAA x x x are
properties of public dominion because they are intended for
public use. As properties of public dominion, they
indisputably belong to the State or the Republic of the
Philippines.76 (Emphases supplied, citations omitted.)
The Court also held in the 2006 MIAA case that airport lands
and buildings are outside the commerce of man.
As properties of public dominion, the Airport Lands and
Buildings are outside the commerce of man. The Court has
ruled repeatedly that properties of public dominion are
outside the commerce of man. As early as 1915, this Court
already ruled in Municipality of Cavite v. Rojas that
properties devoted to public use are outside the commerce of
man, thus:
xxxx

The Court has also ruled that property of public dominion,

being outside the commerce of man, cannot be the subject of
an auction sale.
Properties of public dominion, being for public use, are not
subject to levy, encumbrance or disposition through public
or private sale. Any encumbrance, levy on execution or
auction sale of any property of public dominion is void for
being contrary to public policy. Essential public services will
stop if properties of public dominion are subject to
encumbrances, foreclosures and auction sale. This will
happen if the City of Paraaque can foreclose and compel the
auction sale of the 600-hectare runway of the MIAA for nonpayment of real estate tax.
Before MIAA can encumber the Airport Lands and Buildings,
the President must first withdraw from public use the
Airport Lands and Buildings. x x x.
xxxx
Thus, unless the President issues a proclamation
withdrawing the Airport Lands and Buildings from public
use, these properties remain properties of public dominion
and are inalienable. Since the Airport Lands and Buildings
are inalienable in their present status as properties of public
dominion, they are not subject to levy on execution or
foreclosure sale. As long as the Airport Lands and Buildings
are reserved for public use, their ownership remains with the
State or the Republic of the Philippines.
The authority of the President to reserve lands of the public
domain for public use, and to withdraw such public use, is
reiterated in Section 14, Chapter 4, Title I, Book III of the
Administrative Code of 1987, which states:
SEC. 14. Power to Reserve Lands of the Public and Private
Domain of the Government. - (1) The President shall have
the power to reserve for settlement or public use, and for
specific public purposes, any of the lands of the public
domain, the use of which is not otherwise directed by law.
The reserved land shall thereafter remain subject to the
specific public purpose indicated until otherwise provided by
law or proclamation;
xxxx
There is no question, therefore, that unless the Airport Lands
and Buildings are withdrawn by law or presidential
proclamation from public use, they are properties of public
dominion, owned by the Republic and outside the commerce
of man.77
Thus, the Court held that MIAA is "merely holding title to the
Airport Lands and Buildings in trust for the Republic.
[Under] Section 48, Chapter 12, Book I of the Administrative
Code [which] allows instrumentalities like MIAA to hold title
to real properties owned by the Republic."78
The Court in the 2006 MIAA case cited Section 234(a) of the
Local Government Code and held that said provision
exempts from real estate tax any "[r]eal property owned by
the Republic of the Philippines."79 The Court emphasized,
however, that "portions of the Airport Lands and Buildings
that MIAA leases to private entities are not exempt from real
estate tax." The Court further held:
This exemption should be read in relation with Section
133(o) of the same Code, which prohibits local governments
from imposing "[t]axes, fees or charges of any kind on the
National Government, its agencies and instrumentalities x x
x." The real properties owned by the Republic are titled
either in the name of the Republic itself or in the name of
agencies or instrumentalities of the National Government.

The Administrative Code allows real property owned by the

Republic to be titled in the name of agencies or
instrumentalities of the national government. Such real
properties remain owned by the Republic and continue to be
exempt from real estate tax.
The Republic may grant the beneficial use of its real property
to an agency or instrumentality of the national government.
This happens when title of the real property is transferred to
an agency or instrumentality even as the Republic remains
the owner of the real property. Such arrangement does not
result in the loss of the tax exemption. Section 234(a) of the
Local Government Code states that real property owned by
the Republic loses its tax exemption only if the "beneficial
use thereof has been granted, for consideration or otherwise,
to a taxable person." MIAA, as a government
instrumentality, is not a taxable person under Section 133(o)
of the Local Government Code. Thus, even if we assume that
the Republic has granted to MIAA the beneficial use of the
Airport Lands and Buildings, such fact does not make these
real properties subject to real estate tax.
However, portions of the Airport Lands and Buildings that
MIAA leases to private entities are not exempt from real
estate tax. For example, the land area occupied by hangars
that MIAA leases to private corporations is subject to real
estate tax. In such a case, MIAA has granted the beneficial
use of such land area for a consideration to a taxable person
and therefore such land area is subject to real estate tax. x x
x.80
Significantly, the Court reiterated the above ruling and
applied the same reasoning in Manila International Airport
Authority v. City of Pasay,81 thus:
The only difference between the 2006 MIAA case and this
case is that the 2006 MIAA case involved airport lands and
buildings located in Paraaque City while this case involved
airport lands and buildings located in Pasay City. The 2006
MIAA case and this case raised the same threshold issue:
whether the local government can impose real property tax
on the airport lands, consisting mostly of the runways, as
well as the airport buildings, of MIAA. x x x.
xxxx
The definition of "instrumentality" under Section 2(10) of the
Introductory Provisions of the Administrative Code of 1987
uses the phrase "includes x x x government-owned or
controlled corporations" which means that a government
"instrumentality" may or may not be a "government-owned
or controlled corporation." Obviously, the term government
"instrumentality" is broader than the term "governmentowned or controlled corporation." x x x.
xxxx
The fact that two terms have separate definitions means that
while a government "instrumentality" may include a
"government-owned or controlled corporation," there may
be a government "instrumentality" that will not qualify as a
"government-owned or controlled corporation."
A close scrutiny of the definition of "government-owned or
controlled corporation" in Section 2(13) will show that MIAA
would not fall under such definition. MIAA is a government
"instrumentality" that does not qualify as a "governmentowned or controlled corporation." x x x.
xxxx
Thus, MIAA is not a government-owned or controlled
corporation but a government instrumentality which is
exempt from any kind of tax from the local governments.
Indeed, the exercise of the taxing power of local government
units is subject to the limitations enumerated in Section 133
of the Local Government Code. Under Section 133(o) of the
Local Government Code, local government units have no
power to tax instrumentalities of the national government
like the MIAA. Hence, MIAA is not liable to pay real property
tax for the NAIA Pasay properties. Furthermore, the airport

lands and buildings of MIAA are properties of public

dominion intended for public use, and as such are exempt
from real property tax under Section 234(a) of the Local
Government Code. However, under the same provision, if
MIAA leases its real property to a taxable person, the specific
property leased becomes subject to real property tax. In this
case, only those portions of the NAIA Pasay properties which
are leased to taxable persons like private parties are subject
to real property tax by the City of Pasay. (Emphases added,
citations omitted.)
The Court not only mentioned petitioner MCIAA as similarly
situated as MIAA. It also mentioned several other
government instrumentalities, among which was the
Philippine Fisheries Development Authority. Thus, applying
the 2006 MIAA ruling, the Court, in Philippine Fisheries
Development Authority v. Court of Appeals,82 held:
On the basis of the parameters set in the MIAA case, the
Authority should be classified as an instrumentality of the
national government. As such, it is generally exempt from
payment of real property tax, except those portions which
have been leased to private entities.
In the MIAA case, petitioner Philippine Fisheries
Development Authority was cited as among the
instrumentalities of the national government. x x x.
xxxx
Indeed, the Authority is not a GOCC but an instrumentality
of the government. The Authority has a capital stock but it is
not divided into shares of stocks. Also, it has no stockholders
or voting shares. Hence, it is not a stock corporation. Neither
[is it] a non-stock corporation because it has no members.
The Authority is actually a national government
instrumentality which is defined as an agency of the national
government, not integrated within the department
framework, vested with special functions or jurisdiction by
law, endowed with some if not all corporate powers,
administering special funds, and enjoying operational
autonomy, usually through a charter. When the law vests in a
government instrumentality corporate powers, the
instrumentality does not become a corporation. Unless the
government instrumentality is organized as a stock or nonstock corporation, it remains a government instrumentality
exercising not only governmental but also corporate powers.
Thus, the Authority which is tasked with the special public
function to carry out the governments policy "to promote the
development of the countrys fishing industry and improve
the efficiency in handling, preserving, marketing, and
distribution of fish and other aquatic products," exercises the
governmental powers of eminent domain, and the power to
levy fees and charges. At the same time, the Authority
exercises "the general corporate powers conferred by laws
upon private and government-owned or controlled
corporations."
xxxx
In light of the foregoing, the Authority should be classified as
an instrumentality of the national government which is liable
to pay taxes only with respect to the portions of the property,
the beneficial use of which were vested in private entities.
When local governments invoke the power to tax on national
government instrumentalities, such power is construed
strictly against local governments. The rule is that a tax is
never presumed and there must be clear language in the law
imposing the tax. Any doubt whether a person, article or
activity is taxable is resolved against taxation. This rule
applies with greater force when local governments seek to tax
national government instrumentalities.
Thus, the real property tax assessments issued by the City of
Iloilo should be upheld only with respect to the portions
leased to private persons.1wphi1 In case the Authority fails
to pay the real property taxes due thereon, said portions
cannot be sold at public auction to satisfy the tax
delinquency. x x x.

xxxx
In sum, the Court finds that the Authority is an
instrumentality of the national government, hence, it is liable
to pay real property taxes assessed by the City of Iloilo on the
IFPC only with respect to those portions which are leased to
private entities. Notwithstanding said tax delinquency on the
leased portions of the IFPC, the latter or any part thereof,
being a property of public domain, cannot be sold at public
auction. This means that the City of Iloilo has to satisfy the
tax delinquency through means other than the sale at public
auction of the IFPC. (Citations omitted.) Another
government instrumentality specifically mentioned in the
2006 MIAA case was the Philippine Ports Authority (PPA).
Hence, in Curata v. Philippine Ports Authority, 83 the Court
held that the PPA is similarly situated as MIAA, and ruled in
this wise:
This Courts disquisition in Manila International Airport
Authority v. Court of Appeals ruling that MIAA is not a
government-owned and/or controlled corporation (GOCC),
but an instrumentality of the National Government and thus
exempt from local taxation, and that its real properties are
owned by the Republic of the Philippines is instructive. x
x x. These findings are squarely applicable to PPA, as it is
similarly situated as MIAA. First, PPA is likewise not a GOCC
for not having shares of stocks or members. Second, the
docks, piers and buildings it administers are likewise owned
by the Republic and, thus, outside the commerce of man.
Third, PPA is a mere trustee of these properties. Hence, like
MIAA, PPA is clearly a government instrumentality, an
agency of the government vested with corporate powers to
perform efficiently its governmental functions.
Therefore, an undeniable conclusion is that the funds of PPA
partake of government funds, and such may not be garnished
absent an allocation by its Board or by statutory grant. If the
PPA funds cannot be garnished and its properties, being
government properties, cannot be levied via a writ of
execution pursuant to a final judgment, then the trial court
likewise cannot grant discretionary execution pending
appeal, as it would run afoul of the established jurisprudence
that government properties are exempt from execution.
What cannot be done directly cannot be done indirectly.
(Citations omitted.)
In Government Service Insurance System v. City Treasurer
and City Assessor of the City of Manila 84 the Court found that
the GSIS was also a government instrumentality and not a
GOCC, applying the 2006 MIAA case even though the GSIS
was not among those specifically mentioned by the Court as
similarly situated as MIAA. The Court said:
GSIS an instrumentality of the National Government
Apart from the foregoing consideration, the Courts fairly
recent ruling in Manila International Airport Authority v.
Court of Appeals, a case likewise involving real estate tax
assessments by a Metro Manila city on the real properties
administered by MIAA, argues for the non-tax liability of
GSIS for real estate taxes. x x x.
xxxx
While perhaps not of governing sway in all fours inasmuch as
what were involved in Manila International Airport
Authority, e.g., airfields and runways, are properties of the
public dominion and, hence, outside the commerce of man,
the rationale underpinning the disposition in that case is
squarely applicable to GSIS, both MIAA and GSIS being
similarly situated. First, while created under CA 186 as a
non-stock corporation, a status that has remained
unchanged even when it operated under PD 1146 and RA
8291, GSIS is not, in the context of the aforequoted Sec. 193
of the LGC, a GOCC following the teaching of Manila
International Airport Authority, for, like MIAA, GSISs
capital is not divided into unit shares. Also, GSIS has no
members to speak of. And by members, the reference is to
those who, under Sec. 87 of the Corporation Code, make up
the non-stock corporation, and not to the compulsory
members of the system who are government employees. Its

management is entrusted to a Board of Trustees whose

members are appointed by the President.
Second, the subject properties under GSISs name are
likewise owned by the Republic. The GSIS is but a mere
trustee of the subject properties which have either been
ceded to it by the Government or acquired for the
enhancement of the system. This particular property
arrangement is clearly shown by the fact that the disposal or
conveyance of said subject properties are either done by or
through the authority of the President of the Philippines. x x
x. (Emphasis added, citations omitted.)
All the more do we find that petitioner MCIAA, with its many
similarities to the MIAA, should be classified as a
government instrumentality, as its properties are being used
for public purposes, and should be exempt from real estate
taxes. This is not to derogate in any way the delegated
authority of local government units to collect realty taxes, but
to uphold the fundamental doctrines of uniformity in
taxation and equal protection of the laws, by applying all the
jurisprudence that have exempted from said taxes similar
authorities, agencies, and instrumentalities, whether covered
by the 2006 MIAA ruling or not.
To reiterate, petitioner MCIAA is vested with corporate
powers but it is not a stock or non-stock corporation, which
is a necessary condition before an agency or
instrumentalityis deemed a government-owned or controlled
corporation. Like MIAA, petitioner MCIAA has capital under
its charter but it is not divided into shares of stock. It also
has no stockholders or voting shares. Republic Act No. 6958
provides:
Section 9. Capital. The [Mactan-Cebu International
Airport] Authority shall have an authorized capital stock
equal to and consisting of:
(a) The value of fixed assets (including airport
facilities, runways and equipment) and such other
properties, movable and immovable, currently
administered by or belonging to the airports as
valued on the date of the effectivity of this Act;
(b) The value of such real estate owned and/or
administered by the airports; and
(c) Government contribution in such amount as
may be deemed an appropriate initial
balance.1wphi1 Such initial amount, as approved
by the President of the Philippines, which shall be
more or less equivalent to six (6) months working
capital requirement of the Authority, is hereby
authorized to be appropriated in the General
Appropriations Act of the year following its
enactment into law. Thereafter, the government
contribution to the capital of the Authority shall be
provided for in the General Appropriations Act.
Like in MIAA, the airport lands and buildings of MCIAA are
properties of public dominion because they are intended for
public use. As properties of public dominion, they
indisputably belong to the State or the Republic of the
Philippines, and are outside the commerce of man. This,
unless petitioner leases its real property to a taxable person,
the specific property leased becomes subject to real property
tax; in which case, only those portions of petitioners
properties which are leased to taxable persons like private
parties are subject to real property tax by the City of LapuLapu.
We hereby adopt and apply to petitioner MCIAA the findings
and conclusions of the Court in the 2006 MIAA case, and we
quote:
To summarize, MIAA is not a government-owned or
controlled corporation under Section 2(13) of the
Introductory Provisions of the Administrative Code because
it is not organized as a stock or non-stock corporation.
Neither is MIAA a government-owned or controlled
corporation under Section 16, Article XII of the 1987

Constitution because MIAA is not required to meet the test

of economic viability. MIAA is a government instrumentality
vested with corporate powers and performing essential
public services pursuant to Section 2(10) of the Introductory
Provisions of the Administrative Code. As a government
instrumentality, MIAA is not subject to any kind of tax by
local governments under Section 133(o) of the Local
Government Code. The exception to the exemption in
Section 234(a) does not apply to MIAA because MIAA is not
a taxable entity under the Local Government Code. Such
exception applies only if the beneficial use of real property
owned by the Republic is given to a taxable entity.
Finally, the Airport Lands and Buildings of MIAA are
properties devoted to public use and thus are properties of
public dominion. Properties of public dominion are owned
by the State or the Republic. x x x.

3. NULL and VOID the sale in public auction of 27

of petitioner's properties and the eventual
forfeiture and purchase of the said properties by
respondent City of Lapu-Lapu. We likewise declare
VOID the corresponding Certificates of Sale of
Delinquent Property issued to respondent City of
Lapu-Lapu.
SO ORDERED.

SECOND DIVISION
G.R. No. 200983, March 18, 2015

xxxx
The term "ports x x x constructed by the State" includes
airports and seaports. The Airport Lands and Buildings of
MIAA are intended for public use, and at the very least
intended for public service. Whether intended for public use
or public service, the Airport Lands and Buildings are
properties of public dominion. As properties of public
dominion, the Airport Lands and Buildings are owned by the
Republic and thus exempt from real estate tax under Section
234(a) of the Local Government Code.
4. Conclusion
Under Section 2(10) and (13) of the Introductory Provisions
of the Administrative Code, which governs the legal relation
and status of government units, agencies and offices within
the entire government machinery, MIAA is a government
instrumentality and not a government-owned or controlled
corporation. Under Section 133(o) of the Local Government
Code, MIAA as a government instrumentality is not a taxable
person because it is not subject to "[t]axes, fees or charges of
any kind" by local governments. The only exception is when
MIAA leases its real property to a "taxable person" as
provided in Section 234(a) of the Local Government Code, in
which case the specific real property leased becomes subject
to real estate tax. Thus, only portions of the Airport Lands
and Buildings leased to taxable persons like private parties
are subject to real estate tax by the City of Paraaque.
Under Article 420 of the Civil Code, the Airport Lands and
Buildings of MIAA, being devoted to public use, are
properties of public dominion and thus owned by the State or
the Republic of the Philippines. Article 420 specifically
mentions "ports x x x constructed by the State," which
includes public airports and seaports, as properties of public
dominion and owned by the Republic. As properties of public
dominion owned by the Republic, there is no doubt
whatsoever that the Airport Lands and Buildings are
expressly exempt from real estate tax under Section 234(a) of
the Local Government Code. This Court has also repeatedly
ruled that properties of public dominion are not subject to
execution or foreclosure sale.85 (Emphases added.)
WHEREFORE, we hereby GRANT the petition. We
REVERSE and SET ASIDE the Decision dated October 8,
2007 and the Resolution dated February 12, 2008 of the
Court of Appeals (Cebu City) in CA-G.R. SP No. 01360.
Accordingly, we DECLARE:
1. Petitioner's properties that are actually, solely
and exclusively used for public purpose, consisting
of the airport terminal building, airfield, runway,
taxiway and the lots on which they are situated,
EXEMPT from real property tax imposed by the
City of Lapu-Lapu.
2. VOID all the real property tax assessments,
including the additional tax for the special
education fund and the penalty interest, as well as
the final notices of real property tax delinquencies,
issued by the City of Lapu-Lapu on petitioner's
properties, except the assessment covering the
portions that petitioner has leased to private
parties.

REPUBLIC
OF
THE
PHILIPPINES, Petitioner, v. HUANG TE FU, A.K.A.
ROBERT UY, Respondent.
DECISION
DEL CASTILLO, J.:
This case reiterates the rule in naturalization cases that when
full and complete compliance with the requirements of the
Revised Naturalization Law, or Commonwealth Act No. 473
(CA 473), is not shown, a petition for naturalization must be
perfunctorily
denied.
This Petition for Review on Certiorari1 seeks to set aside 1)
the November 29, 2011 Decision 2 of the Court of Appeals
(CA) in CA-G.R. CV No. 91213 affirming the September 24,
2007 Order3 of the Regional Trial Court of Quezon City,
Branch 96 in Nat. Case/Spec. Proc. No. Q-05-55251, as well
as 2) the CAs March 7, 2012 Resolution4 denying petitioners
Motion
for
Reconsideration.5cralawred
Factual

Antecedents

On March 19, 2004, respondent Huang Te Fu, a.k.a. Robert

Uy a citizen of the Republic of China (Taiwan) filed a
sworn Declaration of Intent to Become [a] Citizen of the
Philippines6 with the Office of the Solicitor General (OSG).
On April 27, 2005, respondent filed with the Regional Trial
Court of Quezon City (trial court) a Petition for
Naturalization,7 which was docketed as Spec. Proc. No. Q-0555251 and assigned to Branch 96. The Petition states:
I apply for naturalization as citizen of the Philippines and to
the
Court,
respectfully
shows
[sic]:chanRoblesvirtualLawlibrary
First: My full name is HUANG TE FU, also known as
ROBERT UY;ChanRoblesVirtualawlibrary
Second My places of residence were:
:
1982 1 Santiago Street, Malinta, Valenzuela City
1982 toBiak na Bato, San Francisco Del Monte,
1984 Quezon City
1984 to235 C 3rd Street, 10th Avenue, Caloocan City
1994
1994 to64-A Parklane Street, Barangay Sangandaan,
presentProject 8, Quezon City;
Third: My trade or profession is a Businessman engaged in
the manufacture of zipper, in which I have been connected
since 1992; and from which I derive an average monthly
income
of
P15,000.00;ChanRoblesVirtualawlibrary
Fourth: I was born on the 15th day of August 1976 in
Taiwan. I am at present a Citizen or subject of the Republic
of China, under whose laws Filipinos may become
naturalized
citizens
or
subjects
thereof
[sic];ChanRoblesVirtualawlibrary
Fifth: I am married to a Filipino, IRENE D. CHAN, 28 years
of age, having been born on 11 April 1977 at Manila, and with

whom I have two (2) children, namely: ROCHELLE IVY C.

HUANG, 3 years of age, who was born on 26 March 2002 at
[sic] Quezon City; and REYNARD IVAN C. HUANG, 1 year of
age, who was born on 25 February 2004 at [sic] Quezon
City. My wife and two children are presently residing with
me at 64-A Parklane Street, Barangay Sangandaan, Project 8,
Quezon
City;ChanRoblesVirtualawlibrary
Sixth: I arrived in the Philippines via China Airlines on the
13th
of
August
1982;ChanRoblesVirtualawlibrary
Seventh: I have filed my Declaration of Intent to Become a
Citizen of the Philippines with the Office of the Solicitor
General on 4 March 2004, pursuant to and in compliance
with Section 5 of Commonwealth Act No. 473, as
amended;8cralawred
Eighth: I have resided continuously, for the last twenty three
(23) years, in the Philippines since my arrival. I have
received my primary education at Philippine Cultural High
School; secondary education at Philippine Cultural High
School; and finished my college education at Ateneo de
Manila University with the degree of Bachelor of Science in
Computer Science, respectively, which are schools
recognized by the Government and not limited to any race or
nationality;ChanRoblesVirtualawlibrary
Ninth: I am able to speak and write English and
Filipino;ChanRoblesVirtualawlibrary
Tenth: I believe in the principle underlying the Philippine
Constitution. I am of good moral character and have
conducted myself in a proper and irreproachable manner
during the entire period of my residence in the Philippines,
in my relations with the constituted Government as well as
with the community in which I am living. I have mingled
socially with the Filipinos, and have evinced a sincere desire
to learn and embrace the customs, traditions, and ideals of
the Filipinos. I have all the qualifications required under
Section 2, a special qualification under Section 3, by being
married to a Filipino woman, and none of the
disqualifications under Section 4 of Commonwealth Act No.
473;ChanRoblesVirtualawlibrary
I am not opposed to organized government or affiliated with
any association or group of persons who uphold and teach
doctrines opposing all organized governments. I am not
defending or teaching the necessity or propriety of violence,
personal assault, or assassination for the success and
predominance of mens ideas. I am not a polygamist nor a
believer in the practice of polygamy. I have not been
convicted of any crime involving moral turpitude. I am not
suffering from any mental alienation or incurable diseases.
The nation of which I am a citizen or subject of is not at war
with the Philippines. The country of which I am a citizen or
subject of grants Filipinos the right to become naturalized
citizens or subjects thereof;ChanRoblesVirtualawlibrary
Eleventh: It is my intention in good faith to become a citizen
or subject of the Philippines and to renounce absolutely and
forever all allegiance and fidelity to my foreign prince,
potentate, state, or sovereignty, and particularly to the
Republic of China of which at this time I am a citizen or
subject. I will reside continuously in the Philippines from
the date of the filing of my petition up to the time of my
admission
to
the
Philippine
Citizenship;ChanRoblesVirtualawlibrary
Twelfth: I have not heretofore made any petition for
citizenship to any Court;ChanRoblesVirtualawlibrary
Thirteenth: Mr. BENJAMIN A. MORALEDA, JR., of legal
age, married, residing at 82-A Maginoo Street, Barangay
Central, Quezon City, and Ms. BELLA RAMONA A.
ANTONANO, of legal age, single, residing at 1 Ligaya Street,
Mandaluyong City, who are both Filipinos, will appear and
testify as my witnesses at the hearing of my herein petition.
Attached hereto and made an integral part of this petition
are: (a) the Original Certification of Arrival from the Bureau
of Immigration (Annex A); (b) Declaration of Intent to
Become a Citizen of the Philippines (Annex B); (c) Affidavit
of the two witnesses (Annexes C and D); and (d) my two
recent
photographs
(Annexes
E
and
E-1).
WHEREFORE, petitioner prays that he be admitted a citizen
of the Philippines.9cralawlawlibrary

After trial, the trial court issued a September 24, 2007

Order10 granting respondents petition for naturalization,
decreeing thus:chanRoblesvirtualLawlibrary
Petitioner11 thereafter testified that he was born on August
15, 1976 in Taiwan; that his father, Huang Ping-Hsung, and
mother, Huang Wen, Chiu-Yueh are both Chinese nationals;
that he is the holder of Alien Certificate of Registration No.
E062035 and Immigrant Certificate of Residence No.
259804; that he resided at Lin 4, Chienkuo Li, Panchiao City,
Taipei County, Taiwan Province since his birth until he came
to Manila, Philippines on August 13, 1982; that he first
stayed at Santiago Street, Valenzuela City; that they
transferred to Biak-na-Bato Street, San Francisco Del Monte
and they later transferred to 23-C, 3rd Street, 10th Avenue,
Caloocan City; that petitioner presently resides at No. 64-A
Parklane Street, Barangay Sangandaan, Project 8, Quezon
City; that he attended Philippine Cultural High School for his
elementary and secondary education; that he attended
Ateneo de Manila University where he took up Bachelor of
Science
in
Computer
Science.
When petitioner graduated from College in the year 2000, he
worked as General Manager of MIT Zipper, a company
owned by the family of the petitioner; that as a businessman
he conscientiously files Income Tax Returns; that he is
presently married to Irene Chan, a Filipino citizen on
October 01, 2000; that he has two children namely, Rochelle
Ivy C. Huang, 3 years old, and Reynard Ivan C. Huang, 1 year
old and that he and his family are presently residing at 64-A
Parklane Street, Barangay Sangandaan, Project 8, Quezon
City.
Petitioner further alleged that he believes in the principles
underlying the Philippine Constitution. He had conducted
himself in a proper, irreproachable manner during his entire
period of residence in the Philippines in his relations with
the constituted government as well as with the community in
which he is living. These allegations are evinced by the
clearances petitioner was able to secure from the Philippine
National Police, National Bureau of Investigation, Office of
the Clerk of Court Regional Trial Court, Quezon City, and
the Office of the City Prosecutor. He has mingled socially
with the Filipinos, and have [sic] evinced a sincere desire to
learn and embrace the customs, traditions, and ideals of the
Filipinos.
Petitioner further alleged that he is not a polygamist nor a
believer in the practice of polygamy. He has not been
convicted of any crime involving moral turpitude. He is not
suffering from any mental alienation or any incurable or
contagious disease. The nation of which he is presently a
citizen or subject of, is not at war with the Philippines. He is
not opposed to organized government or affiliated with any
association or group of persons who uphold and teach
doctrines opposing all organized governments. He has all
the qualifications required and none of the disqualifications
under Commonwealth Act No. 473, as amended.
Moreover, petitioners intention to become a citizen of the
Philippines is being done in good faith, and to renounce
absolutely and forever all allegiance and fidelity to any
foreign state, prince, potentate or sovereignty and
particularly to the Chinese Government of which at this time
he is a citizen and subject, and that petitioner shall reside
continuously in the Philippines from the date of filing of this
petition up to the time of [his] admission to the Philippine
Citizenship.
Based on the foregoing, the Court believes that the petitioner
was able to establish by sufficient evidence, both testimonial
and documentary, that he has all the qualifications and none
of the disqualifications provided for under the law which will
warrant the granting of the relief being prayed for.
ACCORDINGLY, therefore, the petition for admission as
citizen of the Philippines is hereby GRANTED.
This decision shall become executory after two (2) years from
its promulgation and after the Court, after hearing, with the
attendance of the Solicitor General or his representative, is
satisfied, and so finds that during the intervening time the
applicant has (1) not left the Philippines, (2) dedicated
himself continuously to a lawful calling or profession, (3) not
been convicted of any offense or violation of

government[-]promulgated rules, or (4) committed any act

of [sic] prejudicial to the interest of the nation or contrary to
any
government
renounced
[sic]
policies.
SO ORDERED.12cralawlawlibrary
Ruling

of

the

Court

of

Appeals

Petitioner filed an appeal with the CA, which was docketed as

CA-G.R. CV No. 91213. Petitioner contended in its
Appellants Brief13 that respondent may not become a
naturalized Filipino citizen because: 1) he does not own real
estate in the Philippines; 2) he does not have some known
lucrative trade, profession or lawful occupation; 3) he is not
gainfully employed, as he merely worked in the business
owned by his family and was merely given allowances by his
parents for the daily expenses of his family; 4) in an August
2001 Deed of Sale14 covering a parcel of land in Antipolo City
he and his wife supposedly purchased, respondent falsely
misrepresented himself as a Filipino citizen, thus
exemplifying his lack of good moral character; 5) his income
tax returns for the years 2002, 2003 and 2004 reveal that his
actual monthly income differs from his monthly income as
declared in his petition for naturalization, leading to the
conclusion that either he is evading taxes or concealing the
truth regarding his income; and 6) on cross-examination by
petitioner, he could not cite any of the principles underlying
the Philippine Constitution which he is supposed to believe
in.
In a short Comment/Opposition15 to petitioners brief,
respondent admitted that while he was merely made to sign
the Deed of Sale which falsely represented him as a Filipino
citizen, he had nothing to do with the preparation thereof
and was unaware that his citizenship was even indicated
therein he just signed the document as requested by the
broker so that the property will be registered in the name of
his wife; that the discrepancy between his income
declarations in his tax returns and the declared income in his
petition for naturalization came to light and resulted from
the fact that he does not personally file his income tax
returns and that he merely received salaries in the range of
P15,000.00 per month considering that he is employed in a
family corporation; that most of his expenses are taken
care of by his parents who own the corporation, and this
has been explained during his cross-examination; that while
petitioner claimed that he could not cite any underlying
principles of the Constitution, he was not confronted by the
former about these principles during the proceedings; and
that petitioners opposition is based merely on conjecture
and particular portions of the evidence which do not
represent the whole context of the proceedings.
On November 29, 2011, the CA issued the assailed Decision,
pronouncing thus:chanRoblesvirtualLawlibrary
First off, an examination of the evidence presented during
the proceedings below shows that the petitionerappellee16 has been engaged in some lucrative trade or lawful
occupation. He works as general manager in their familyowned business, Crown Shipper Manufacturer and Trading
Corporation, a zipper manufacturing company employing
workers
mostly
coming
from
the
province.
Prior to his appointment as general manager, petitionerappellee has also been working in the familys business
before his parents turned over the management of its affairs.
This is evidenced by the increase in the declared gross
income of the petitioner-appellee in his Income Tax Returns
filed for the years 2002, 2003, 2004 and 2005. The extent of
the operations of the petitioner-appellees family business
and his involvement in the management thereof are
corroborated by the testimonies of Atty. Benjamin Moraleda
and Atty. Bella Ramona Antonano, both friends of the Huang
family and the petitioner-appellee since 1987 and 1994,
respectively. Both witnesses also testified that the petitionerappellee possessed all the qualifications and none of the
disqualifications to become a naturalized citizen of the
Philippines.
Secondly, the Solicitor General also averred that the
petitioner-appellee failed to conduct himself in a proper and
irreproachable manner during his entire stay or residence in
the Philippines. It noted that the petitioner-appellee stated
in his petition that he earns an average of P15,000.00 per
month but his declared gross income for 2002 and 2003

indicated that he earned P120,000.00 annually while in

2004, his annual gross income was P210,000.00. The
Solicitor General contended that because of the petitionerappellees failure to divulge his true income, his moral
character
has
been
tainted.
We

hold

otherwise.

Absent a clear and unmistakable showing that the petitionerappellee knowingly and deliberately filed a fraudulent return
with intent to evade tax or that he has concealed the truth in
his income tax returns, the presumption that the latter has
regularly filed his return prevails. The petitioner-appellee
has, in fact, explained before the trial court that his salary is
not exactly fixed; sometimes he earns more or sometimes
less than his estimated or average monthly earnings which
could well be between P15,000.00 to P18,000.00. He even
testified that he is not included in the payroll since his
parents own the company and his salaries are handed to him
by
his
parents.
In the case of Republic of the Philippines v. Court of
Appeals and Loh Khuan Fatt, the Supreme Court did not
agree with the argument of the Solicitor General that there
had been a willful failure on the part of the applicant to
disclose the petitioners true income, thereby tainting his
moral character. The discrepancy between the petitioners
estimate of his income in his application and that declared by
him during his direct testimony should not be taken against
him as an indication of intent to evade payment of taxes. x x
x
x

Lastly, the Solicitor General argued that petitioner-appellee

is disqualified from becoming a citizen of the Philippines
because he could not even cite any of the principles
underlying the Constitution during cross-examination x x
x.chanrobleslaw
x

We agree with the observation of the petitioner-appellee that

the oppositors representative during the cross-examination
was actually asking the petitioner-appellee to recite what
these underlying principles of the Constitution are in a
manner which a law professor would normally ask his
Political Law students. Not being able to enumerate the
principles in verbatim does not necessarily mean that one
does not believe in the Constitution. What is important is
that the petitioner-appellee declared under oath that he
believes in the principles underlying the Constitution, and
that he had no derogatory or criminal record which would be
a clear violation of the law of the land. Apparently, during
cross-examination the oppositor-appellant did not confront
the petitioner-appellee of the principles which it thought the
latter
does
not
believe
in.
WHEREFORE, the appeal is DENIED and the Decision
dated September 24, 2007 of the Regional Trial Court of
Quezon City, Branch 96 in Naturalization Case No. Q-0555251
is
AFFIRMED.
SO ORDERED.17cralawlawlibrary
Petitioner moved for reconsideration, but in its March 7,
2012 Resolution, the appellate court stood its
ground.chanroblesvirtuallawlibrary
Issue
Thus, the instant Petition was filed, raising the following
issue:chanRoblesvirtualLawlibrary
WHETHER X X X RESPONDENT X X X HAS DULY
COMPLIED WITH THE RIGID REQUISITES PRESCRIBED
BY COMMONWEALTH ACT NO. 473, OTHERWISE
KNOWN AS THE REVISED NATURALIZATION LAW, AS
TO ENTITLE HIM TO BE ADMITTED AS A CITIZEN OF
THE
PHILIPPINES.18cralawred
cralawlawlibrary
Petitioners Arguments

In its Petition and Reply 19 seeking the reversal of the assailed

CA dispositions as well as the denial of respondents petition
for naturalization, petitioner argues that respondent failed to
prove that he is engaged in a lucrative trade, profession or
lawful occupation; that respondents admission during trial
that he is not even in the payroll of his employer belies his
claim that he is the general manager thereof, as well as his
claim that he is engaged in a lucrative trade; that
respondents declared monthly income is not even sufficient
for his family, much less could it be considered lucrative;
that respondents admission that he received allowances
from his parents to answer for the daily expenses of his
family further proves the point that he does not have a
lucrative trade; that the monthly income declared in
respondents petition for naturalization could not be
reconciled with the incomes stated in his annual tax returns;
that the inconsistencies in respondents testimonial and
documentary evidence point to the fact the he could either be
evading taxes or concealing the truth regarding his income,
and indicates that he does not possess the requisite good
moral character; that respondents act of falsely declaring
himself a Filipino citizen in the August 2001 deed of sale
proves lack of good moral character and defiance of the
constitutional prohibition regarding foreign ownership of
land; and that respondent has exhibited lack of knowledge of
the underlying principles of the Philippine Constitution.
Respondents Arguments
In his Comment,20 respondent reiterates that the
inconsistencies in his income tax returns and declarations
during the naturalization proceedings are explained by the
fact that he does not personally file his income tax returns;
that his monthly salary is not fixed; that most of his expenses
are taken cared of by his parents who own the zipper
manufacturing business which employs him; that the
Antipolo property was not titled in his name, but in the name
of his wife, and the title thereto merely describes and
indicates that the owner his wife is married to him; that
he was merely made to sign the deed of sale, and he had no
hand in its preparation nor was he aware that his
citizenship was indicated therein; and that as he was not a
law student, he could not at the trial be expected to
recite verbatim and specifically the underlying legal
principles of the Constitution, which is what petitioner
expected him to do at the time.chanroblesvirtuallawlibrary
Our Ruling
The

Court

finds

for

petitioner.

In Republic v. Hong,21 it was held in essence that an

applicant for naturalization must show full and complete
compliance with the requirements of the naturalization
law; otherwise, his petition for naturalization will be denied.
This ponente has likewise held that [t]he courts must always
be mindful that naturalization proceedings are imbued with
the highest public interest. Naturalization laws should be
rigidly enforced and strictly construed in favor of the
government and against the applicant. The burden of proof
rests upon the applicant to show full and complete
compliance with the requirements of law. 22cralawred
Section 2 of the Revised Naturalization Law or CA 473
requires, among others, that an applicant for naturalization
must be of good moral character and must have some known
lucrative trade, profession, or lawful occupation. In regard
to the requirement that the applicant must have a known
lucrative trade, this ponente declared:
Based on jurisprudence, the qualification of some known
lucrative trade, profession, or lawful occupation
means not only that the person having the
employment gets enough for his ordinary
necessities in life. It must be shown that the
employment gives one an income such that there is
an appreciable margin of his income over his
expenses as to be able to provide for an adequate
support in the event of unemployment, sickness, or
disability to work and thus avoid ones becoming the
object of charity or a public charge. His income
should permit him and the members of his family
to live with reasonable comfort, in accordance with
the prevailing standard of living, and consistently
with the demands of human dignity, at this stage of
our civilization.

Moreover, it has been held that in determining the existence

of a lucrative income, the courts should consider only the
applicants income; his or her spouses income should not be
included in the assessment. The spouses additional income
is immaterial for under the law the petitioner should be the
one to possess some known lucrative trade, profession or
lawful occupation to qualify him to become a Filipino
citizen. Lastly, the Court has consistently held that the
applicants qualifications must be determined as of the time
of
the
filing
of
his
petition.23 (Emphasis
supplied)cralawlawlibrary
From the above, it may be concluded that there is no basis
for the CA finding that respondent is engaged in a lucrative
trade. Indeed, his supposed income of P15,000.00 to
P18,000.00 per month as found by the CA is not enough for
the support of his family. By his own admission, most of his
familys daily expenses are still shouldered by his parents
who own the zipper manufacturing business which employs
him. This simply means that respondent continues to be a
burden to, and a charge upon, his parents; he lives on the
charity of his parents. He cannot support his own family on
his own.
Indeed, it is even doubtful that respondent is carrying on a
trade at all. He admitted during trial that he was not even
listed or included in the payroll of his familys zipper
business. If this is the case, then he may not be considered
an employee thereof. One of the most effective pieces of
evidence to prove employment aside from the employment
contract itself and other documents such as daily time
records24 is a workers inclusion in the payroll. With this
admitted fact, one may not be faulted for believing that
respondents alleged employment in his familys zipper
business was contrived for the sole purpose of complying
with the legal requirements prior to obtaining Philippine
citizenship.
On the other hand, even assuming that respondent was
indeed employed by his parents, his non-inclusion in the
payroll for all the years he has worked in his parents
business25 suggests as correctly argued by petitioner an
intent to evade taxes or to conceal the true nature of his
employment and the amount of his salary or income. It is
concealment of the truth; an attempt to circumvent with
impunity the tax laws, labor laws relative to the employment
of aliens, and other laws that would otherwise regulate
respondents actions during his stay in this country. Indeed,
without payroll records, it can never be said that respondent
works for his parents zipper business. If such is the case,
then respondent is not required to state in his income tax
return as is the case his employer and what he actually
receives as salary therefrom; he is free to conveniently
declare any amount of income in his tax returns.
Either way, respondents deliberate non-inclusion in the
payroll of his parents business can have only the most
unpleasant connotations. And his consent to be part of such
scheme reflects negatively on his moral character. It shows a
proclivity for untruthfulness and dishonesty, and an
unreserved willingness and readiness to violate Philippine
laws.
The appellate courts reliance upon the case of Republic v.
Court of Appeals26 is misplaced. In that case, there was only
a discrepancy between the applicants estimate of his income
in his application and that declared by him during his direct
testimony. In the present case, respondent is not at all listed
on the payroll of his parents business, where he is supposed
to be its general manager. As a result, there is absolutely no
basis for the correct determination of his income; instead, he
invites Us to conveniently rely on his income tax returns and
his unilateral declarations. As We have earlier said, if We are
to believe them, then still, they are insufficient to generate a
conclusion that respondent is carrying on a lucrative trade;
he cannot support his family from his declared income.
Moreover, respondents admitted false declaration under
oath contained in the August 2001 deed of sale that he is a
Filipino citizen which he did to secure the seamless
registration of the property in the name of his wife is
further proof of respondents lack of good moral character.
It is also a violation of the constitutional prohibition on
ownership of lands by foreign individuals.27 His defense that

he unknowingly signed the deed is unacceptable. First of all,

as a foreigner living in a foreign land, he should conduct
himself accordingly in this country with care, circumspect,
and respect for the laws of the host. Finally, as an educated
and experienced businessman, it must be presumed that he
acted with due care and signed the deed of sale with full
knowledge of its import.28
Having decided in the foregoing manner, We must conclude
the instant case and disregard the other issues and
arguments of the parties; they are deemed irrelevant and will
not alter the conclusion arrived at. As far as this Court is
concerned, respondent has failed to satisfy the law which
renders him completely undeserving of Filipino citizenship.
WHEREFORE, the Petition is GRANTED. The November
29, 2011 Decision and March 7, 2012 Resolution of the Court
of Appeals in CA-G.R. CV No. 91213 are REVERSED AND
SET ASIDE. The September 24, 2007 Order of the
Regional Trial Court of Quezon City, Branch 96 in Nat.
Case/Spec.
Proc.
No.
Q-05-55251
is
likewise ANNULLED and SET
ASIDE, and
the
respondents Petition for Naturalization in said case
is DISMISSED.
SO ORDERED

Republic
SUPREME
Manila

of

the

Philippines
COURT

EN BANC
G.R. No. 195390

units (LGUs) utilized their Internal Revenue Allotment (IRA)

for the calendar years 1993-1994. The examination yielded
an official report,showing that a substantial portion of the
20% development fund of some LGUs was not actually
utilized for development projects but was diverted to
expenses properly chargeable against the Maintenance and
Other Operating Expenses (MOOE), in stark violation of
Section 287 of R.A. No. 7160, otherwise known as the Local
Government Code of 1991 (LGC). Thus, on December 14,
1995, the DILG issued MC No. 95-216, 5 enumerating the
policies and guidelines on the utilization of the development
fund component of the IRA. It likewise carried a reminder to
LGUs of the strict mandate to ensure that public funds, like
the 20% development fund, "shall bespent judiciously and
only for the very purpose or purposes for which such funds
are intended."6
On September 20, 2005, then DILG Secretary Angelo T.
Reyes and Department of Budget and Management Secretary
Romulo L. Neri issued Joint MC No. 1, series of
2005,7 pertaining to the guidelines on the appropriation and
utilization of the 20% of the IRA for development projects,
which aims to enhance accountability of the LGUs in
undertaking development projects. The said memorandum
circular underscored that the 20% of the IRA intended for
development projects should be utilized for social
development, economic development and environmental
management.8
On August 31, 2010, the respondent, in his capacity as DILG
Secretary, issued the assailed MC No. 2010-83, 9entitled "Full
Disclosure of Local Budget and Finances, and Bids and
Public Offerings," which aims to promote good governance
through enhanced transparency and accountability of LGUs.
The pertinent portion of the issuance reads:

December 10, 2014

Legal and Administrative Authority

GOV. LUIS RAYMUND F. VILLAFUERTE, JR., and

the PROVINCE OF CAMARINES SUR, Petitioners,
vs.
HON. JESSE M. ROBREDO, in his capacity as
Secretary of the Department of the Interior and
Local Government, Respondent.
DECISION
REYES, J.:
This is a petition for certiorari and prohibition 1 under Rule
65 of the 1997 Revised Rules of Court filed by former
Governor Luis Raymund F. Villafuerte, Jr. (Villafuerte) and
the Province of Camarines Sur (petitioners), seeking to annul
and set aside the following issuances of the late Honorable
Jesse M. Robredo (respondent), in his capacity as then
Secretary of the Department of the Interior and Local
Government (DILG), to wit:
(a) Memorandum Circular (MC) No. 2010-83dated
August 31, 2010, pertaining to the full disclosure of
local budget and finances, and bids and public
offerings;2
(b) MC No. 2010-138 dated December 2, 2010,
pertaining to the use of the 20% component of the
annual internal revenue allotment shares;3 and
(c) MC No. 2011-08 dated January 13, 2011,
pertaining to the strict adherence to Section 90 of
Republic Act (R.A.) No. 10147 or the General
Appropriations Act of 2011.4
The petitioners seek the nullification of the foregoing
issuances on the ground of unconstitutionality and for
having been issued with grave abuse of discretion amounting
to lack orexcess of jurisdiction.
The Facts
In 1995, the Commission on Audit (COA) conducted an
examination and audit on the manner the local government

Section 352 of the Local Government Code of 1991 requires

the posting within 30 days from the end of eachfiscal year in
at least three (3) publicly accessible and conspicuous places
in the local government unit a summary of all revenues
collected and funds received including the appropriations
and disbursements of such funds during the preceding fiscal
year.
On the other hand, Republic Act No. 9184, known as the
Government Procurement Reform Act, calls for the posting
of the Invitation to Bid, Notice of Award, Notice to Proceed
and Approved Contract in the procuring entitys premises, in
newspapers of general circulation, the Philippine
Government Electronic Procurement System (PhilGEPS) and
the website of the procuring entity. The declared policy of the
State to promote good local governance also calls for the
posting of budgets, expenditures, contracts and loans, and
procurement plans of local government units in conspicuous
places within public buildings in the locality, inthe web, and
in print media of community or general circulation.
Furthermore, the President, in his first State of the Nation
Address, directed all government agencies and entities to
bring to an end luxurious spending and misappropriation
ofpublic funds and to expunge mendacious and erroneous
projects, and adhere to the zero-based approach budgetary
principle.
Responsibility of the Local Chief Executive
All Provincial Governors, City Mayors and Municipal
Mayors, are directed to faithfully comply with the above cited
[sic] provisions of laws, and existing national policy, by
posting in conspicuous places within public buildings in the
locality, or inprint media of community or general
circulation, and in their websites, the following:
1. CY 2010 Annual Budget, information detail to
the level of particulars of personal services,
maintenance and other operating expenses and
capital outlay per individual offices (Source
Document - Local Budget Preparation Form No. 3,
titled, Program Appropriation and Obligation by
Object of Expenditure, limited to PS, MOOE and

CO.
For
sample
www.naga.gov.ph);

form,

please

visit

2. Quarterly Statement of Cash Flows, information

detail to the level of particulars of cash flows from
operating activities (e.g. cash inflows, total cash
inflows, total cash outflows), cash flows from
investing activities (e.g. cash outflows), net
increase in cash and cash at the beginning of the
period (Source Document - Statement of Cash
Flows Form);
3. CY 2009 Statement of Receipts and
Expenditures, information detail to the level of
particulars of beginning cash balance, receipts or
income on local sources (e.g., tax revenue, non-tax
revenue), external sources, and receipts from loans
and borrowings, surplus of prior years,
expenditures on general services, economic
services, social services and debt services, and total
expenditures (Source Document - Local Budget
Preparation Form No. 2, titled, Statement of
Receipts and Expenditures);
4. CY 2010 Trust Fund (PDAF) Utilization,
information detail to the level of particulars of
object expenditures (Source Document - Local
Budget Preparation Form No. 3, titled, Program
Appropriation and Obligation by Object of
Expenditure, limited to PDAF Utilization);
5. CY 2010 Special Education Fund Utilization,
information detail to the level of particulars of
object expenditures (Source Document - Local
Budget Preparation Form No. 3, titled, Program
Appropriation and Obligation by Object of
Expenditure, limited to Special Education Fund);
6. CY 2010 20% Component of the IRA Utilization,
information detail to the level of particulars of
objects of expenditure on social development,
economic development and environmental
management (Source Document - Local Budget
Preparation Form No. 3, titled, Program
Appropriation and Obligation by Object of
Expenditure, limited to 20% Component of the
Internal Revenue Allotment);
7. CY 2010 Gender and Development Fund
Utilization, information detail to the level of
particulars of object expenditures (Source
Document - Local Budget Preparation Form No. 3,
titled, Program Appropriation and Obligation by
Object of Expenditure, limited to Gender and
Development Fund);
8. CY 2010 Statement of Debt Service, information
detail to the level of name of creditor, purpose of
loan, date contracted, term, principal amount,
previous payment made on the principal and
interest, amount due for the budget year and
balance of the principal (Source Document - Local
Budget Preparation Form No. 6, titled, Statement
of Debt Service);

Eligibility and to Bid, as prescribed in Section 21.1

of R.A. No. 9184. For sample form, please visit
www.naga.gov.ph);
11. Bid Results on Civil Works, and Goods and
Services, information detail to the level of project
reference number, name and location of project,
name (company and proprietor) and address of
winning bidder, bid amount, approved budget for
the contract, bidding date, and contract duration,
to be updated quarterly (Source Document
Infrastructure Projects/Goods and Services BidOut (2010), Naga City. For sample form, please
visit www.naga.gov.ph); and
12. Abstract of Bids as Calculated, information
detail to the level of project name, location,
implementing office, approved budget for the
contract, quantity and items subject for bidding,
and bids of competing bidders, to be updated
quarterly (Source Document - Standard Form No.
SF-GOOD-40, Revised May 24, 2004, Naga City.
For sample form, please visit www.naga.gov.ph).
The foregoing circular also statesthat non-compliance will be
meted sanctions in accordance with pertinent laws, rules and
regulations.10
On December 2, 2010, the respondent issued MC No. 2010138,11 reiterating that 20% component of the IRA shall be
utilized for desirable social, economic and environmental
outcomes essential to the attainment of the constitutional
objective of a quality oflife for all. It also listed the following
enumeration of expenses for which the fund must not be
utilized, viz:
1. Administrative expenses such ascash gifts,
bonuses, food allowance, medical assistance,
uniforms, supplies, meetings, communication,
water and light, petroleum products, and the like;
2. Salaries, wages or overtime pay;
3. Travelling expenses, whether domestic or
foreign;
4. Registration or participation feesin training,
seminars, conferences or conventions;
5.
Construction,
repairor
administrative offices;

refinishing

of

6. Purchase of administrative office furniture,

fixtures, equipment or appliances; and
7. Purchase, maintenance or repair of motor
vehicles or motorcycles, except ambulances. 12 On
January 13, 2011, the respondent issued MC No.
2011-08,13 directing for the strict adherence
toSection 90 of R.A. No. 10147 or the General
Appropriations Act of 2011. The pertinent portion
of the issuance reads as follows:
Legal and Administrative Authority

9. CY 2010 Annual Procurement Plan or

Procurement List, information detail to the level
ofname of project, individual item or article and
specification or description of goods and services,
procurement method, procuring office or fund
source, unit price or estimated cost or approved
budget for the contract and procurement schedule
(Source Document - LGU Form No. 02, Makati
City.
For
sample
form,
please
visit
www.makati.gov.ph.)[;]
10. Items to Bid, information detail to the level of
individual
Invitation
to
Bid,
containing
information as prescribed in Section 21.1 of
Republic Act No. 9184, or The Government
Procurement Reform Act, to be updated quarterly
(Source Document - Invitation to Apply for

Section 90 of Republic Act No. 10147 (General

Appropriations Act) FY 2011 re "Use and Disbursement of
Internal Revenue Allotment of LGUs", [sic] stipulates: The
amount appropriated for the LGUs share in the Internal
Revenue Allotment shall be used in accordance with Sections
17 (g) and 287 of R.A. No 7160. The annual budgets of LGUs
shall be prepared in accordance with the forms, procedures,
and schedules prescribed by the Department of Budget and
Management and those jointly issued with the Commission
on Audit. Strict compliance with Sections 288 and 354 of
R.A. No. 7160 and DILG Memorandum Circular No. 201083, entitled "Full Disclosure of Local Budget and Finances,
and Bids and Public offering" is hereby mandated;
PROVIDED, That in addition to the publication or posting
requirement under Section 352 of R.A. No. 7160 in three (3)
publicly accessible and conspicuous places in the local

government unit, the LGUs shall also post the detailed

information on the use and disbursement, and status of
programs and projects in the LGUS websites. Failure to
comply with these requirements shall subject the responsible
officials to disciplinary actions in accordance with existing
laws. x x x14

instant case. He argues that the petition is premature since

there is yet any actual controversy that is ripe for judicial
determination. He points out the lack of allegation in the
petition that the assailed issuances had been fully
implemented and that the petitioners had already exhausted
administrative remedies under Section 25 of the Revised
Administrative Code before filing the same in court. 22

xxxx
Sanctions
Non-compliance with the foregoing shall be dealt with in
accordance with pertinent laws, rules and regulations. In
particular, attention is invited to the provision of the Local
Government Code of 1991, quoted as follows:
Section 60. Grounds for Disciplinary Actions - An elective
local official may be disciplined, suspended, or removed from
office on: (c) Dishonesty, oppression, misconduct in office,
gross negligence, or dereliction of duty. x x x 15(Emphasis and
underscoring in the original)
On February 21, 2011, Villafuerte, then Governor of
Camarines Sur, joined by the Provincial Government of
Camarines Sur, filed the instant petition for certiorari,
seeking to nullify the assailed issuances of the respondent for
being unconstitutional and having been issued with grave
abuse of discretion.
On June 2, 2011, the respondent filed his Comment on the
petition.16 Then, on June 22, 2011, the petitioners filed their
Reply (With Urgent Prayer for the Issuance of a Writ of
Preliminary Injunction and/or Temporary Restraining
Order).17 In the Resolution18 dated October 11, 2011, the
Court gave due course to the petition and directed the parties
to file their respective memorandum. In compliance
therewith, the respondent and the petitioners filed their
Memorandum on January 19, 201219 and on February 8,
201220 respectively.
The petitioners raised the following issues:
Issues
I
THE HON. SECRETARY OF THE INTERIOR AND LOCAL
GOVERNMENT COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION WHEN HEISSUED THE ASSAILED
MEMORANDUM CIRCULARS IN VIOLATION OF THE
PRINCIPLES OF LOCAL AUTONOMY AND FISCAL
AUTONOMY ENSHRINED IN THE 1987 CONSTITUTION
AND THE LOCAL GOVERNMENT CODE OF 1991[.]
II
THE HON. SECRETARY OF THE INTERIOR AND LOCAL
GOVERNMENT COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION
WHEN
HEINVALIDLY
ASSUMED
LEGISLATIVE POWERS IN PROMULGATING THE
ASSAILED MEMORANDUM CIRCULARS WHICH WENT
BEYOND THE CLEAR AND MANIFEST INTENT OF THE
1987 CONSTITUTION AND THE LOCAL GOVERNMENT
CODE OF 1991[.]21
Ruling of the Court
The present petition revolves around the main issue:
Whether or not the assailed memorandum circulars violate
the principles of local and fiscal autonomy enshrined in the
Constitution and the LGC.
The present petition is ripe for judicial review.
At the outset, the respondent is questioning the propriety of
the exercise of the Courts power of judicial review over the

It is well-settled that the Courts exercise of the power of

judicial review requires the concurrence of the following
elements: (1) there must be an actual case or controversy
calling for the exercise of judicial power; (2) the person
challenging the act must have the standing to question the
validity of the subject act or issuance; otherwise stated, he
must have a personal and substantial interest in the case
such that he has sustained, or will sustain, direct injury as a
result of its enforcement; (3) the question of constitutionality
must be raised at the earliest opportunity; and (4) the issue
of constitutionality must be the very lis motaof the case. 23
The respondent claims that there isyet any actual case or
controversy that calls for the exercise of judicial review. He
contends that the mere expectation of an administrative
sanction does not give rise to a justiciable controversy
especially, in this case, that the petitioners have yet to
exhaust administrative remedies available.24
The Court disagrees.
In La Bugal-Blaan Tribal Association, Inc. v. Ramos, 25 the
Court characterized an actual case or controversy, viz:
An actual case or controversy means an existing case or
controversy that is appropriate or ripe for determination, not
conjectural or anticipatory, lest the decision of the court
would amount to an advisory opinion. The power does not
extend to hypothetical questions since any attempt at
abstraction could only lead to dialectics and barren legal
questions and to sterile conclusions unrelated to
actualities.26 (Citations omitted)
The existence of an actual controversy in the instant case
cannot be overemphasized. At the time of filing of the instant
petition, the respondent had already implemented the
assailed memorandum circulars. In fact, on May 26, 2011,
Villafuerte received Audit Observation Memorandum (AOM)
No. 2011-009 dated May 10, 201127 from the Office of the
Provincial Auditor of Camarines Sur, requiring him to
comment on the observation of the audit team, which states:
The Province failed to post the transactions and documents
required under Department of Interior and Local
Government (DILG) Memorandum Circular No. 2010-83,
thereby violating the mandate of full disclosure of Local
Budget and Finances, and Bids and Public Offering.
xxxx
The local officials concerned are reminded of the sanctions
mentioned in the circular which is quoted hereunder, thus:
"Non compliance with the foregoing shall be dealt with in
accordance with pertinent laws, rules and regulations. In
particular, attention is invited to the provision of Local
Government Code of 1991, quoted as follows:
Section 60. Grounds for Disciplinary Actions An elective
local official may be disciplined, suspended or removed from
office on: (c) Dishonesty, oppression, misconduct in office,
gross negligence or dereliction of duty."28
The issuance of AOM No. 2011-009 to Villafuerte is a clear
indication that the assailed issuances of the respondent are
already in the full course of implementation. The audit
memorandum specifically mentioned of Villafuertes alleged
non-compliance with MCNo. 2010-83 regarding the posting
requirements stated in the circular and reiterated the
sanctions that may be imposed for the omission. The fact
that Villafuerte is being required to comment on the contents
of AOM No. 2011-009 signifies that the process of

investigation for his alleged violation has already begun.

Ultimately, the investigation is expected to end in a
resolution on whether a violation has indeed been
committed, together with the appropriate sanctions that
come with it. Clearly, Villafuertes apprehension is real and
well-founded as he stands to be sanctioned for noncompliance with the issuances.
There is likewise no merit in the respondents claim that the
petitioners failure to exhaust administrative remedies
warrants the dismissal of the petition. It bears emphasizing
that the assailed issuances were issued pursuant to the rulemaking or quasi-legislative power of the DILG. This pertains
to "the power to make rules and regulations which results in
delegated legislation that is within the confines of the
granting statute."29 Not to be confused with the quasilegislative or rule-making power of an administrative agency
is its quasi-judicial or administrative adjudicatory power.
This is the power to hear and determine questions of fact to
which the legislative policy is to apply and to decide in
accordance with the standards laid down by the law itself in
enforcing and administering the same law. 30 In challenging
the validity of anadministrative issuance carried out
pursuant to the agencys rule-making power, the doctrine of
exhaustion of administrative remedies does not stand as a
bar in promptly resorting to the filing of a case in court. This
was made clear by the Court in Smart Communications, Inc.
(SMART) v. National Telecommunications Commission
(NTC),31 where it was ruled, thus:
In questioning the validity or constitutionality of a rule or
regulation issued by an administrative agency, a party need
not exhaust administrative remedies before going to court.
This principle applies only where the act of the
administrative agency concerned was performed pursuant to
its quasi-judicial function, and not when the assailed act
pertained to its rule-making orquasi-legislative power. x x
x.32
Considering the foregoing clarification, there is thus no bar
for the Court to resolve the substantive issues raised in the
petition.
The
circulars
and
LGUs.

do
fiscal

assailed
memorandum
not
transgress
the
local
autonomy
granted
to

The petitioners argue that the assailed issuances of the

respondent interfere with the local and fiscal autonomy of
LGUs embodied in the Constitution and the LGC. In
particular, they claim that MC No. 2010-138 transgressed
these constitutionally-protected liberties when it restricted
the meaning of "development" and enumerated activities
which the local government must finance from the 20%
development fund component of the IRA and provided
sanctions for local authorities who shall use the said
component of the fund for the excluded purposes stated
therein.33 They argue that the respondent cannot substitute
his own discretion with that of the local legislative council in
enacting its annual budget and specifying the development
projects that the 20% component of its IRA should fund. 34
The argument fails to persuade.
The Constitution has expressly adopted the policy of
ensuring the autonomy of LGUs.35 To highlight its
significance, the entire Article X of the Constitution was
devoted to laying down the bedrock upon which this policy is
anchored.

responsive and accountable local government structure

instituted through a system of decentralization whereby local
government units shall be given more powers, authority,
responsibilities,
and
resources.
The
process
of
decentralization shall proceed from the national government
to the local government units.
Verily, local autonomy means a more responsive and
accountable local government structure instituted through a
system of decentralization.36 In Limbona v. Mangelin,37 the
Court elaborated on the concept of decentralization, thus:
[A]utonomy is either decentralization of administration
ordecentralization of power. There is decentralization of
administration when the central government delegates
administrative powers to political subdivisions in order to
broaden the base of government power and in the process to
make local governments "more responsive and accountable,"
and "ensure their fullest development as self-reliant
communities and make them more effective partners in the
pursuit of national development and social progress." At the
same time, it relieves the central government of the burden
of managing local affairs and enables it to concentrate on
national concerns. x x x. Decentralization of power, on the
other hand, involves an abdication of political power in the
favor of local governments [sic] units declared to be
autonomous. In thatcase, the autonomous government is
free to chart its own destiny and shape its future with
minimum intervention from central authorities. x x
x.38 (Citations omitted)
To safeguard the state policy on local autonomy, the
Constitution confines the power of the President over LGUs
to mere supervision.39 "The President exercises general
supervision over them, but only to ensure that local affairs
are administered according to law. He has no control over
their acts in the sense that he can substitute their judgments
with his own."40 Thus, Section 4, Article X of the
Constitution, states:
Section 4. The President of the Philippines shall exercise
general supervision over local governments. Provinces with
respect to component cities and municipalities, and cities
and municipalities with respect to component barangays,
shall ensure that the acts of their component units are within
the scope of their prescribed powers and functions.
In Province of Negros Occidental v. Commissioners,
Commission on Audit,41 the Court distinguished general
supervision from executive control in the following manner:
The Presidents power of general supervision means the
power of a superior officer to see to it that subordinates
perform their functions according to law. This is
distinguished from the Presidents power of control which is
the power to alter or modify or set aside what a subordinate
officer had done in the performance of his duties and to
substitute the judgment of the President over that of the
subordinate officer. The power of control gives the President
the power to revise or reverse the acts or decisions of a
subordinate
officer
involving
the
exercise
of
discretion.42 (Citations omitted)
It is the petitioners contention that the respondent went
beyond the confines of his supervisory powers, asalter ego of
the President, when he issued MC No. 2010-138. They
arguethat the mandatory nature of the circular, with the
threat of imposition of sanctions for non-compliance, evinces
a clear desire to exercise control over LGUs.43
The Court, however, perceives otherwise.

It is also pursuant to the mandate of the Constitution of

enhancing local autonomy that the LGC was enacted. Section
2 thereof was a reiteration of the state policy. It reads, thus:
Sec. 2. Declaration of Policy. (a) It is hereby declared the
policy of the State that the territorial and political
subdivisions of the State shall enjoy genuine and meaningful
local autonomy to enable them to attain their fullest
development as self-reliant communities and make them
more effective partners in the attainment ofnational goals.
Toward this end, the State shall provide for a more

A reading of MC No. 2010-138 shows that it is a mere

reiteration of an existing provision in the LGC. It was plainly
intended to remind LGUs to faithfully observe the directive
stated in Section 287 of the LGC to utilize the 20% portion of
the IRA for development projects. It was, at best, an advisory
to LGUs to examine themselves if they have been complying
with the law. It must be recalled that the assailed circular
was issued in response to the report of the COA that a
substantial portion of the 20% development fund of some
LGUs was not actually utilized for development projects but

was diverted to expenses more properly categorized as

MOOE, in violation of Section 287 of the LGC. This intention
was highlighted in the very first paragraph of MC No. 2010138, which reads:
Section 287 of the Local Government Code mandates every
local government to appropriate in its annual budget no less
than 20% of its annual revenue allotment for development
projects. In common understanding, development means the
realization of desirable social, economic and environmental
outcomes essential in the attainment of the constitutional
objective of a desired quality of life for all. 44 (Underscoring in
the original)
That the term developmentwas characterized asthe
"realization of desirable social, economic and environmental
outcome" does not operate as a restriction of the term so as
to exclude some other activities that may bring about the
same result. The definition was a plain characterization of
the concept of development as it is commonly understood.
The statement of a general definition was only necessary to
illustrate among LGUs the nature of expenses that are
properly chargeable against the development fund
component of the IRA. It is expected to guide them and aid
them in rethinking their ways so that they may be able to
rectify lapses in judgment, should there be any, or it may
simply stand as a reaffirmation of an already proper
administration of expenses.
The same clarification may be said of the enumeration of
expenses in MC No. 2010-138. To begin with, it is erroneous
to call them exclusions because such a term signifies
compulsory disallowance of a particular item or activity. This
is not the contemplation of the enumeration. Again, it is
helpful to retrace the very reason for the issuance of the
assailed circular for a better understanding. The petitioners
should be reminded that the issuance of MC No. 2010-138
was brought about by the report of the COA that the
development fund was not being utilized accordingly. To
curb the alleged misuse of the development fund, the
respondent deemed it proper to remind LGUs of the nature
and purpose of the provision for the IRA through MC No.
2010-138. To illustrate his point, heincluded the contested
enumeration of the items for which the development fund
must generallynot be used. The enumerated items comprised
the expenses which the COA perceived to have been
improperly earmarked or charged against the development
fund based on the audit it conducted.
Contrary to the petitioners posturing, however, the
enumeration was not meant to restrict the discretion of the
LGUs in the utilization of their funds. It was meant to
enlighten LGUs as to the nature of the development fund by
delineating it from other types of expenses. It was
incorporated in the assailed circular in order to guide them
in the proper disposition of the IRA and avert further misuse
of the fund by citing current practices which seemed to be
incompatible with the purpose of the fund. Even then, LGUs
remain at liberty to map out their respective development
plans solely on the basis of their own judgment and utilize
their IRAs accordingly, with the only restriction that 20%
thereof be expended for development projects. They may
even spend their IRAs for some of the enumerated items
should they partake of indirect costs of undertaking
development projects. In such case, however, the concerned
LGU must ascertain that applicable rules and regulations on
budgetary allocation have been observed lest it be inviting an
administrative probe.
The petitioners likewise misread the issuance by claiming
that the provision of sanctions therein is a clear indication of
the Presidents interference in the fiscalautonomy of LGUs.
The relevant portion of the assailed issuance reads, thus:
All local authorities are further reminded that utilizing the
20% component of the Internal Revenue Allotment, whether
willfully or through negligence, for any purpose beyond those
expressly prescribed by law or public policy shall be subject
to the sanctions provided under the Local Government Code
and under such other applicable laws.45
Significantly, the issuance itself did not provide for
sanctions. It did not particularly establish a new set ofacts or

omissions which are deemed violations and provide the

corresponding penalties therefor. It simply stated a reminder
to LGUs that there are existing rules to consider in the
disbursement of the 20% development fund and that noncompliance therewith may render them liable to sanctions
which are provided in the LGC and other applicable laws.
Nonetheless, this warning for possible imposition of
sanctions did not alter the advisory nature of the issuance. At
any rate, LGUs must be reminded that the local autonomy
granted to them does not completely severe them from the
national government or turn them into impenetrable states.
Autonomy does not make local governments sovereign
within the state.46 InGanzon v. Court of Appeals,47 the Court
reiterated:
Autonomy, however, is not meant to end the relation of
partnership and interdependence between the central
administration and local government units, or otherwise, to
usher in a regime of federalism. The Charter has not taken
such a radical step.1avvphi1 Local governments, under the
Constitution, are subject to regulation, however limited, and
for no other purpose than precisely, albeit paradoxically, to
enhance self-government.48
Thus, notwithstanding the local fiscal autonomy being
enjoyed by LGUs, they are still under the supervision of the
President and maybe held accountable for malfeasance or
violations of existing laws. "Supervision is not incompatible
with discipline. And the power to discipline and ensure that
the laws be faithfully executed must be construed to
authorize the President to order an investigation of the act or
conduct of local officials when in his opinion the good of the
public service so requires."49
Clearly then, the Presidents power of supervision is not
antithetical to investigation and imposition of sanctions. In
Hon. Joson v. Exec. Sec. Torres, 50 the Court pointed out,
thus: "Independently of any statutory provision authorizing
the President to conduct an investigation of the nature
involved in this proceeding, and in view of the nature and
character of the executive authority with which the President
of the Philippines is invested, the constitutional grant to him
of power to exercise general supervision over all local
governments and to take care that the laws be faithfully
executed must be construed to authorize him to order an
investigation of the act or conduct of the petitioner herein.
Supervision is not a meaningless thing. It is an active power.
It is certainly not without limitation, but it at least implies
authority to inquire into facts and conditions in order to
render the power real and effective. x x x." 51 (Emphasis ours
and italics in the original)
As in MC No. 2010-138, the Court finds nothing in two other
questioned issuances of the respondent, i.e., MC Nos. 201083 and 2011-08, that can be construed as infringing onthe
fiscal autonomy of LGUs. The petitioners claim that the
requirement to post other documents in the mentioned
issuances went beyond the letter and spirit of Section 352 of
the LGC and R.A. No. 9184, otherwise known as the
Government Procurement Reform Act, by requiring that
budgets, expenditures, contracts and loans, and procurement
plans of LGUs be publicly posted as well.52
Pertinently, Section 352 of the LGC reads:
Section 352. Posting of the Summary of Income and
Expenditures. Local treasurers, accountants, budget
officers, and other accountable officers shall, within thirty
(30) days from the end of the fiscal year, post in at least three
(3) publicly accessible and conspicuous places in the local
government unit a summary of all revenues collected and
funds received including the appropriations and
disbursements of such funds during the preceding fiscal year.
R.A. No. 9184, on the other hand, requires the posting of the
invitation to bid, notice of award, notice to proceed, and
approved contract in the procuring entitys premises, in
newspapers of general circulation, and the website of the
procuring entity.53
It is well to remember that fiscal autonomy does not leave
LGUs with unbridled discretion in the disbursement of

public funds. They remain accountable to their constituency.

For, public office was created for the benefit of the people
and not the person who holds office.
The Court strongly enunciated in ABAKADA GURO Party
List (formerly AASJS), et al. v.Hon. Purisima, et al., 54thus:
Public office is a public trust. It must be discharged by its
holder not for his own personal gain but for the benefit of the
public for whom he holds it in trust. By demanding
accountability and service with responsibility, integrity,
loyalty, efficiency, patriotism and justice, all government
officials and employees havethe duty to be responsive to the
needs of the people they are called upon to serve. 55
Thus, the Constitution strongly summoned the State to adopt
and implement a policy of full disclosure of all transactions
involving public interest and provide the people with the
right to access public information.56 Section 352 of the LGC is
a response to this call for transparency. It is a mechanism of
transparency and accountability of local government officials
and is in fact incorporated under Chapter IV of the LGC
which deals with "Expenditures, Disbursements, Accounting
and Accountability."
In the same manner, R.A. No. 9184 established a system of
transparency in the procurement process and in the
implementation of procurement contracts in government
agencies.57 It is the public monitoring of the procurement
process and the implementation of awarded contracts with
the end in view of guaranteeing that these contracts are
awarded pursuant to the provisions of the law and its
implementing rules and regulations, and that all these
contracts are performed strictly according to specifications. 58
The assailed issuances of the respondent, MC Nos. 2010-83
and 2011-08, are but implementation of this avowed policy
of the State to make public officials accountable to the
people. They are amalgamations of existing laws, rules and
regulation designed to give teeth to the constitutional
mandate of transparency and accountability.
A scrutiny of the contents of the mentioned issuances shows
that they do not, in any manner, violate the fiscal autonomy
of LGUs. To be clear, "[f]iscal autonomy means that local
governments have the power to create their own sources of
revenue in addition to their equitable share in the national
taxes released by the national government, as well as the
power to allocate their resources in accordance withtheir
own priorities.It extends to the preparation of their budgets,
and local officials in turn have to work within the constraints
thereof."59

expenditures, contracts and loans, and procurement plans

are well-within the contemplation of Section 352 of the LGC
considering they are documents necessary for an accurate
presentation of a summary of appropriations and
disbursements that an LGU is required to publish.
Finally, the Court believes that the supervisory powers of the
President are broad enough to embrace the power to require
the publication of certain documents as a mechanism of
transparency. In Pimentel,Jr. v. Hon. Aguirre, 60the Court
reminded that localfiscal autonomy does not rule out any
manner of national government intervention by way of
supervision, in order to ensure that local programs, fiscal
and otherwise, are consistent with national goals. The
President, by constitutional fiat, is the head of the economic
and planning agency of the government, primarily
responsible for formulating and implementing continuing,
coordinated and integrated social and economic policies,
plans and programs for the entire country. 61 Moreover, the
Constitution, which was drafted after long years of
dictatorship and abuse of power, is now replete with
numerous provisions directing the adoption of measures to
uphold transparency and accountability in government, with
a view of protecting the nation from repeating its atrocious
past. In particular, the Constitution commands the strict
adherence to full disclosure of information onall matters
relating to official transactions and those involving public
interest. Pertinently, Section 28, Article II and Section 7,
Article III of the Constitution, provide: Article II
Declaration of Principles and State Policies Principles
Section 28. Subject to reasonable conditions prescribed by
law, the State adopts and implements a policy of full public
disclosure of all its transactions involving public interest.
Article
Bill of Rights

III

Section 7. The right of the people to information on matters

of public concern shall be recognized. Access to official
records, and to documents and papers pertaining to official
acts, transactions, or decisions, as well as to government
research data used as basis for policy development, shall be
afforded the citizen, subject to such limitations as may be
provided by law.
In the instant case, the assailed issuances were issued
pursuant to the policy of promoting good governance
through transparency, accountability and participation. The
action of the respondent is certainly within the constitutional
bounds of his power as alter ego of the President.

It is inconceivable, however, how the publication of budgets,

expenditures, contracts and loans and procurement plans of
LGUs required in the assailed issuances could have infringed
on the local fiscal autonomy of LGUs. Firstly, the issuances
do not interfere with the discretion of the LGUs in the
specification of their priority projects and the allocation of
their budgets. The posting requirements are mere
transparency measures which do not at all hurt the manner
by which LGUs decide the utilization and allocation of their
funds.

It is needless to say that the power to govern is a delegated

authority from the people who hailed the public official to
office through the democratic process of election. His stay in
office remains a privilege which may be withdrawn by the
people should he betray his oath of office. Thus, he must not
frown upon accountability checks which aim to show how
well he is performing his delegated power. For, it is through
these mechanisms of transparency and accountability that he
is able to prove to his constituency that he is worthy of the
continued privilege.

Secondly, it appears that even Section 352 of the LGC that is

being invoked by the petitioners does not exclude the
requirement for the posting of the additional documents
stated in MC Nos. 2010-83 and 2011-08. Apparently, the
mentioned provision requires the publication of "a summary
of revenues collected and funds received, including the
appropriations and disbursements of such funds." The
additional requirement for the posting of budgets,

WHEREFORE, in view of the foregoing considerations, the

petition is DISMISSED for lack of merit.
SO ORDERED.