local government code_full cases.docx

8/13/2019 Local Government Code_full cases.docx

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ATTORNEYS HUMBERTO BASCO, EDILBERTO BALCE, SOCRATES MARANAN AND LORENZO SANCHEZ,petitioners,vs.PHILIPPINE AMUSEMENTS AND GAMING CORPORATION (PAGCOR), respondent.

A TV ad proudly announces:

"The new PAGCOR responding through responsible gaming."

But the petitioners think otherwise, that is why, they filed the instant petition seeking to annul the Philippine Amusement and Gaming Corporation(PAGCOR) Charter PD 1869, because it is allegedly contrary to morals, public policy and order, and because

A. It constitutes a waiver of a right prejudicial to a third person with a right recognized by law. It waived the Manila City government's right toimpose taxes and license fees, which is recognized by law;

B. For the same reason stated in the immediately preceding paragraph, the law has intruded into the local government's right to impose local taxesand license fees. This, in contravention of the constitutionally enshrined principle of local autonomy;

C. It violates the equal protection clause of the constitution in that it legalizes PAGCOR conducted gambling, while most other forms of gamblingare outlawed, together with prostitution, drug trafficking and other vices;

D. It violates the avowed trend of the Cory government away from monopolistic and crony economy, and toward free enterprise and privatization.(p. 2, Amended Petition; p. 7, Rollo)

In their Second Amended Petition, petitioners also claim that PD 1869 is contrary to the declared national policy of the "new restored democracy"and the people's will as expressed in the 1987 Constitution. The decree is said to have a "gambling objective" and therefore is contrary to Sections11, 12 and 13 of Article II, Sec. 1 of Article VIII and Section 3 (2) of Article XIV, of the present Constitution (p. 3, Second Amended Petition; p.21, Rollo).

The procedural issue is whether petitioners, as taxpayers and practicing lawyers (petitioner Basco being also the Chairman of the Committee onLaws of the City Council of Manila), can question and seek the annulment of PD 1869 on the alleged grounds mentioned above.

The Philippine Amusements and Gaming Corporation (PAGCOR) was created by virtue of P.D. 1067-A dated January 1, 1977 and was granted afranchise under P.D. 1067-B also dated January 1, 1977 "to establish, operate and maintain gambling casinos on land or water within the territorialjurisdiction of the Philippines." Its operation was originally conducted in the well known floating casino "Philippine Tourist." The operation wasconsidered a success for it proved to be a potential source of revenue to fund infrastructure and socio-economic projects, thus, P.D. 1399 waspassed on June 2, 1978 for PAGCOR to fully attain this objective.

Subsequently, on July 11, 1983, PAGCOR was created under P.D. 1869 to enable the Government to regulate and centralize all games of chanceauthorized by existing franchise or permitted by law, under the following declared policy

Sec. 1. Declaration of Policy. It is hereby declared to be the policy of the State to centralize and integrate all games of chance not heretoforeauthorized by existing franchises or permitted by law in order to attain the following objectives:

(a) To centralize and integrate the right and authority to operate and conduct games of chance into one corporate entity to be controlled,administered and supervised by the Government.

(b) To establish and operate clubs and casinos, for amusement and recreation, including sports gaming pools, (basketball, foo tball, lotteries, etc.)and such other forms of amusement and recreation including games of chance, which may be allowed by law within the territorial jurisdiction ofthe Philippines and which will: (1) generate sources of additional revenue to fund infrastructure and socio-civic projects, such as flood controlprograms, beautification, sewerage and sewage projects, Tulungan ng Bayan Centers, Nutritional Programs, Population Control and such otheressential public services; (2) create recreation and integrated facilities which will expand and improve the country's existing tourist attractions; and(3) minimize, if not totally eradicate, all the evils, malpractices and corruptions that are normally prevalent on the conduct and operation ofgambling clubs and casinos without direct government involvement. (Section 1, P.D. 1869)

To attain these objectives PAGCOR is given territorial jurisdiction all over the Philippines. Under its Charter's repealing clause, all laws, decrees,executive orders, rules and regulations, inconsistent therewith, are accordingly repealed, amended or modified.

It is reported that PAGCOR is the third largest source of government revenue, next to the Bureau of Internal Revenue and the Bureau of Customs.

In 1989 alone, PAGCOR earned P3.43 Billion, and directly remitted to the National Government a total of P2.5 Billion in form of franchise tax,government's income share, the President's Social Fund and Host Cities' share. In addition, PAGCOR sponsored other socio-cultural and charitableprojects on its own or in cooperation with various governmental agencies, and other private associations and organizations. In its 3 1/2 years ofoperation under the present administration, PAGCOR remitted to the government a total of P6.2 Billion. As of December 31, 1989, PAGCOR wasemploying 4,494 employees in its nine (9) casinos nationwide, directly supporting the livelihood of Four Thousand Four Hundred Ninety-Four(4,494) families.

But the petitioners, are questioning the validity of P.D. No. 1869. They allege that the same is "null and void" for being "contrary to morals, publicpolicy and public order," monopolistic and tends toward "crony economy", and is violative of the equal protection clause and local autonomy aswell as for running counter to the state policies enunciated in Sections 11 (Personal Dignity and Human Rights), 12 (Family) and 13 (Role of Youth)of Article II, Section 1 (Social Justice) of Article XIII and Section 2 (Educational Values) of Article XIV of the 1987 Constitution.

This challenge to P.D. No. 1869 deserves a searching and thorough scrutiny and the most deliberate consideration by the Court, involving as it doesthe exercise of what has been described as "the highest and most delicate function which belongs to the judicial department of the government."(State v. Manuel, 20 N.C. 144; Lozano v. Martinez, 146 SCRA 323).

As We enter upon the task of passing on the validity of an act of a co-equal and coordinate branch of the government We need not be reminded ofthe time-honored principle, deeply ingrained in our jurisprudence, that a statute is presumed to be valid. Every presumption must be indulged infavor of its constitutionality. This is not to say that We approach Our task with diffidence or timidity. Where it is clear that the legislature or theexecutive for that matter, has over-stepped the limits of its authority under the constitution, We should not hesitate to wield the axe and let it fallheavily, as fall it must, on the offending statute (Lozano v. Martinez, supra).

In Victoriano v.Elizalde Rope Workers' Union,et al, 59 SCRA 54, the Court thru Mr. Justice Zaldivar underscored the

. . . thoroughly established principle which must be followed in all cases where questions of constitutionality as obtain in the instant cases areinvolved. All presumptions are indulged in favor of constitutionality; one who attacks a statute alleging unconstitutionality must prove its invaliditybeyond a reasonable doubt; that a law may work hardship does not render it unconstitutional; that if any reasonable basis may be conceived whichsupports the statute, it will be upheld and the challenger must negate all possible basis; that the courts are not concerned with the wisdom, justice,


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policy or expediency of a statute and that a liberal interpretation of the constitution in favor of the constitutionality of legislation should beadopted. (Danner v. Hass, 194 N.W. 2nd 534, 539; Spurbeck v. Statton, 106 N.W. 2nd660, 663; 59 SCRA 66; seealsoe.g. Salas v. Jarencio, 46 SCRA734, 739 [1970]; Peralta v. Commission on Elections, 82 SCRA 30, 55 [1978]; and Heirs of Ordona v. Reyes, 125 SCRA 220, 241-242 [1983] cited inCitizens Alliance for Consumer Protection v. Energy Regulatory Board, 162 SCRA 521, 540)

Of course, there is first, the procedural issue. The respondents are questioning the legal personality of petitioners to file the instant petition.

Considering however the importance to the public of the case at bar, and in keeping with the Court's duty, under the 1987 Constitution, todetermine whether or not the other branches of government have kept themselves within the limits of the Constitution and the laws and that theyhave not abused the discretion given to them, the Court has brushed aside technicalities of procedure and has taken cognizance of this petition.(Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas Inc. v. Tan, 163 SCRA 371)

With particular regard to the requirement of proper party as applied in the cases before us, We hold that the same is satisfied by the petitionersand intervenors because each of them has sustained or is in danger of sustaining an immediate injury as a result of the acts or measurescomplained of. And even if, strictly speaking they are not covered by the definition, it is still within the wide discretion of the Court to waive therequirement and so remove the impediment to its addressing and resolving the serious constitutional questions raised.

In the first Emergency Powers Cases, ordinary citizens and taxpayers were allowed to question the constitutionality of several executive ordersissued by President Quirino although they were involving only an indirect and general interest shared in common with the public. The Courtdismissed the objection that they were not proper parties and ruled that "the transcendental importance to the public of these cases demands thatthey be settled promptly and definitely, brushing aside, if we must technicalities of procedure." We have since then applied the exception in manyother cases. (Association of Small Landowners in the Philippines, Inc. v. Sec. of Agrarian Reform, 175 SCRA 343).

Having disposed of the procedural issue, We will now discuss the substantive issues raised.

Gambling in all its forms, unless allowed by law, is generally prohibited. But the prohibition of gambling does not mean that the Government

cannot regulate it in the exercise of its police power.

The concept of police power is well-established in this jurisdiction. It has been defined as the "state authority to enact legislation that may interferewith personal liberty or property in order to promote the general welfare." (Edu v. Ericta, 35 SCRA 481, 487) As defined, it consists of (1) animposition or restraint upon liberty or property, (2) in order to foster the common good. It is not capable of an exact definition but has been,purposely, veiled in general terms to underscore its all-comprehensive embrace. (Philippine Association of Service Exporters, Inc. v. Drilon, 163SCRA 386).

Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future where it could be done, provides enough room for anefficient and flexible response to conditions and circumstances thus assuming the greatest benefits. (Edu v. Ericta, supra)

It finds no specific Constitutional grant for the plain reason that it does not owe its origin to the charter. Along with the taxing power and eminentdomain, it is inborn in the very fact of statehood and sovereignty. It is a fundamental attribute of government that has enabled it to perform themost vital functions of governance. Marshall, to whom the expression has been credited, refers to it succinctly as the plenary power of the state "togovern its citizens". (Tribe, American Constitutional Law, 323, 1978). The police power of the State is a power co-extensive with self-protection and

is most aptly termed the "law of overwhelming necessity." (Rubi v. Provincial Board of Mindoro, 39 Phil. 660, 708) It is "the most essential,insistent, and illimitable of powers." (Smith Bell & Co. v. National, 40 Phil. 136) It is a dynamic force that enables the state to meet the agencies ofthe winds of change.

What was the reason behind the enactment of P.D. 1869?

P.D. 1869 was enacted pursuant to the policy of the government to "regulate and centralize thru an appropriate institution all games of chanceauthorized by existing franchise or permitted by law" (1st whereas clause, PD 1869). As was subsequently proved, regulating and centralizinggambling operations in one corporate entity the PAGCOR, was beneficial not just to the Government but to society in general. It is a reliablesource of much needed revenue for the cash strapped Government. It provided funds for social impact projects and subjected gambling to "closescrutiny, regulation, supervision and control of the Government" (4th Whereas Clause, PD 1869). With the creation of PAGCOR and the directintervention of the Government, the evil practices and corruptions that go with gambling will be minimized if not totally eradicated. Public welfare,then, lies at the bottom of the enactment of PD 1896.

Petitioners contend that P.D. 1869 constitutes a waiver of the right of the City of Manila to impose taxes and legal fees; that the exemption clause

in P.D. 1869 is violative of the principle of local autonomy. They must be referring to Section 13 par. (2) of P.D. 1869 which exempts PAGCOR, as thefranchise holder from paying any "tax of any kind or form, income or otherwise, as well as fees, charges or levies of whatever nature, whetherNational or Local."

(2) Income and other taxes. a) Franchise Holder: No tax of any kind or form, income or otherwise as well as fees, charges or levies of whatevernature, whether National or Local, shall be assessed and collected under this franchise from the Corporation; nor shall any form or tax or chargeattach in any way to the earnings of the Corporation, except a franchise tax of five (5%) percent of the gross revenues or earnings derived by theCorporation from its operations under this franchise. Such tax shall be due and payable quarterly to the National Government and shall be in lieu ofall kinds of taxes, levies, fees or assessments of any kind, nature or description, levied, established or collected by any municipal, provincial ornational government authority (Section 13 [2]).

Their contention stated hereinabove is without merit for the following reasons:

(a) The City of Manila, being a mere Municipal corporation has no inherent right to impose taxes (Icard v. City of Baguio, 83 Phil. 870; City of Iloilo v.Villanueva, 105 Phil. 337; Santos v. Municipality of Caloocan, 7 SCRA 643). Thus, "the Charter or statute must plainly show an intent to confer that

power or the municipality cannot assume it" (Medina v. City of Baguio, 12 SCRA 62). Its "power to tax" therefore must always yield to a legislativeact which is superior having been passed upon by the state itself which has the "inherent power to tax" (Bernas, the Revised [1973] PhilippineConstitution, Vol. 1, 1983 ed. p. 445).

(b) The Charter of the City of Manila is subject to control by Congress. It should be stressed that "municipal corporations are mere creatures ofCongress" (Unson v. Lacson, G.R. No. 7909, January 18, 1957) which has the power to "create and abolish municipal corporations" due to its"general legislative powers" (Asuncion v. Yriantes, 28 Phil. 67; Merdanillo v. Orandia, 5 SCRA 541). Congress, therefore, has the power of controlover Local governments (Hebron v. Reyes, G.R. No. 9124, July 2, 1950). And if Congress can grant the City of Manila the power to tax certainmatters, it can also provide for exemptions or even take back the power.

(c) The City of Manila's power to impose license fees on gambling, has long been revoked. As early as 1975, the power of local governments toregulate gambling thru the grant of "franchise, licenses or permits" was withdrawn by P.D. No. 771 and was vested exclusively on the NationalGovernment, thus:


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Sec. 1. Any provision of law to the contrary notwithstanding, the authority of chartered cities and other local governments to issue license, permitor other form of franchise to operate, maintain and establish horse and dog race tracks, jai-alai and other forms of gambling is hereby revoked.

Sec. 2. Hereafter, all permits or franchises to operate, maintain and establish, horse and dog race tracks, jai-alai and other forms of gambling shallbe issued by the national government upon proper application and verification of the qualification of the applicant . . .

Therefore, only the National Government has the power to issue "licenses or permits" for the operation of gambling. Necessarily, the power todemand or collect license fees which is a consequence of the issuance of "licenses or permits" is no longer vested in the City of Manila.

(d) Local governments have no power to tax instrumentalities of the National Government. PAGCOR is a government owned or controlledcorporation with an original charter, PD 1869. All of its shares of stocks are owned by the National Government. In addition to its corporate powers

(Sec. 3, Title II, PD 1869) it also exercises regulatory powers thus:

Sec. 9. Regulatory Power. The Corporation shall maintain a Registry of the affiliated entities, and shall exercise all the powers, authority and theresponsibilities vested in the Securities and Exchange Commission over such affiliating entities mentioned under the preceding section, including,but not limited to amendments of Articles of Incorporation and By-Laws, changes in corporate term, structure, capitalization and other mattersconcerning the operation of the affiliated entities, the provisions of the Corporation Code of the Philippines to the contrary notwithstanding,except only with respect to original incorporation.

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

The states have no power by taxation or otherwise, to retard, impede, burden or in any manner control the operation of constitutional lawsenacted by Congress to carry into execution the powers vested in the federal government. (MC Culloch v. Marland, 4 Wheat 316, 4 L Ed. 579)

This doctrine emanates from the "supremacy" of the National Government over local governments.

Justice Holmes, speaking for the Supreme Court, made reference to the entire absence of power on the part of the States to touch, in that way(taxation) at least, the instrumentalities of the United States (Johnson v. Maryland, 254 US 51) and it can be agreed that no state or politicalsubdivision can regulate a federal instrumentality in such a way as to prevent it from consummating its federal responsibilities ,or even to seriouslyburden it in the accomplishment of them . (Antieau, Modern Constitutional Law, Vol. 2, p. 140, emphasis supplied)

Otherwise, mere creatures of the State can defeat National policies thru extermination of what local authorities may perceive to be undesirableactivities or enterprise using the power to tax as "a tool for regulation" (U.S. v. Sanchez, 340 US 42).

The power to tax which was called by Justice Marshall as the "power to destroy" (Mc Culloch v. Maryland, supra) cannot be allowed to defeat aninstrumentality or creation of the very entity which has the inherent power to wield it.

(e) Petitioners also argue that the Local Autonomy Clause of the Constitution will be violated by P.D. 1869. This is a pointless argument. Article X ofthe 1987 Constitution (on Local Autonomy) provides:

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

The power of local government to "impose taxes and fees" is always subject to "limitations" which Congress may provide by law. Since PD 1869remains an "operative" law until "amended, repealed or revoked" (Sec. 3, Art. XVIII, 1987 Constitution), its "exemption clause" remains as anexception to the exercise of the power of local governments to impose taxes and fees. It cannot therefore be violative but rather is consistent withthe principle of local autonomy.

Besides, the principle of local autonomy under the 1987 Constitution simply means "decentralization" (III Records of the 1987 ConstitutionalCommission, pp. 435-436, as cited in Bernas, The Constitution of the Republic of the Philippines, Vol. II, First Ed., 1988, p. 374). It does not makelocal governments sovereign within the state or an "imperium in imperio."

Local Government has been described as a political subdivision of a nation or state which is constituted by law and has substantial control of localaffairs. In a unitary system of government, such as the government under the Philippine Constitution, local governments can only be an intra

sovereign subdivision of one sovereign nation, it cannot be an imperium in imperio. Local government in such a system can only mean a measure ofdecentralization of the function of government. (emphasis supplied)

As to what state powers should be "decentralized" and what may be delegated to local government units remains a matter of policy, whichconcerns wisdom. It is therefore a polit ical question. (Citizens Alliance for Consumer Protection v. Energy Regulatory Board, 162 SCRA 539).

What is settled is that the matter of regulating, taxing or otherwise dealing with gambling is a State concern and hence, it is the sole prerogative ofthe State to retain it or delegate it to local governments.

As gamblingis usually an offense against the State, legislative grant or express charter power is generally necessary to empower the localcorporation to deal with the subject. . . . In the absence of express grant of power to enact, ordinance provisions on this subject which areinconsistent with the state laws are void. (Ligan v. Gadsden, Ala App. 107 So. 733 Ex-Parte Solomon, 9, Cals. 440, 27 PAC 757 following in re Ah You,88 Cal. 99, 25 PAC 974, 22 Am St. Rep. 280, 11 LRA 480, as cited in Mc Quinllan Vol. 3 Ibid, p. 548, emphasis supplied)

Petitioners next contend that P.D. 1869 violates the equal protection clause of the Constitution, because "it legalized PAGCOR conducted

gambling, while most gambling are outlawed together with prostitution, drug trafficking and other vices" (p. 82, Rollo).We, likewise, find no valid ground to sustain this contention. The petitioners' posture ignores the well-accepted meaning of the clause "equalprotection of the laws." The clause does not preclude classification of individuals who may be accorded different treatment under the law as longas the classification is not unreasonable or arbitrary (Itchong v. Hernandez, 101 Phil. 1155). A law does not have to operate in equal force on allpersons or things to be conformable to Article III, Section 1 of the Constitution (DECS v. San Diego, G.R. No. 89572, December 21, 1989).

The "equal protection clause" does not prohibit the Legislature from establishing classes of individuals or objects upon which different rules shalloperate (Laurel v. Misa, 43 O.G. 2847). The Constitution does not require situations which are different in fact or opinion to be treated in law asthough they were the same (Gomez v. Palomar, 25 SCRA 827).

Just how P.D. 1869 in legalizing gambling conducted by PAGCOR is violative of the equal protection is not clearly explained in the petition. Themere fact that some gambling activities like cockfighting (P.D 449) horse racing (R.A. 306 as amended by RA 983), sweepstakes, lotteries and races


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(RA 1169 as amended by B.P. 42) are legalized under certain conditions, while others are prohibited, does not render the applicable laws, P.D. 1869for one, unconstitutional.

If the law presumably hits the evil where it is most felt, it is not to be overthrown because there are other instances to which it might have beenapplied. (Gomez v. Palomar, 25 SCRA 827)

The equal protection clause of the 14thAmendment does not mean that all occupations called by the same name must be treated the same way;the state may do what it can to prevent which is deemed as evil and stop short of those cases in which harm to the few concerned is not less thanthe harm to the public that would insure if the rule laid down were made mathematically exact. (Dominican Hotel v. Arizona, 249 US 2651).

Anent petitioners' claim that PD 1869 is contrary to the "avowed trend of the Cory Government away from monopolies and crony economy and

toward free enterprise and privatization" suffice it to state that this is not a ground for this Court to nullify P.D. 1869. If, indeed, PD 1869 runscounter to the government's policies then it is for the Executive Department to recommend to Congress its repeal or amendment.

The judiciary does not settle policy issues. The Court can only declare what the law is and not what the law should be. Under our system ofgovernment, policy issues are within the domain of the political branches of government and of the people themselves as the repository of all statepower. (Valmonte v. Belmonte, Jr., 170 SCRA 256).

On the issue of "monopoly," however, the Constitution provides that:

Sec. 19. The State shall regulate or prohibit monopolies when public interest so requires. No combinations in restraint of trade or unfaircompetition shall be allowed. (Art. XII, National Economy and Patrimony)

It should be noted that, as the provision is worded, monopolies are not necessarily prohibited by the Constitution. The state must still decidewhether public interest demands that monopolies be regulated or prohibited. Again, this is a matter of policy for the Legislature to decide.

On petitioners' allegation that P.D. 1869 violates Sections 11 (Personality Dignity) 12 (Family) and 13 (Role of Youth) of Article II; Section 13 (Social

Justice) of Article XIII and Section 2 (Educational Values) of Article XIV of the 1987 Constitution, suffice it to state also that these are merelystatements of principles and, policies. As such, they are basically not self-executing, meaning a law should be passed by Congress to clearly defineand effectuate such principles.

In general, therefore, the 1935 provisions were not intended to be self-executing principles ready for enforcement through the courts. They wererather directives addressed to the executive and the legislature. If the executive and the legislature failed to heed the directives of the articles theavailable remedy was not judicial or political. The electorate could express their displeasure with the failure of the executive and the legislaturethrough the language of the ballot. (Bernas, Vol. II, p. 2)

Every law has in its favor the presumption of constitutionality (Yu Cong Eng v. Trinidad, 47 Phil. 387; Salas v. Jarencio, 48 SCRA 734; Peralta v.Comelec, 82 SCRA 30; Abbas v. Comelec, 179 SCRA 287). Therefore, for PD 1869 to be nullified, it must be shown that there is a clear andunequivocal breach of the Constitution, not merely a doubtful and equivocal one. In other words, the grounds for nullity must be clear and beyondreasonable doubt. (Peralta v. Comelec, supra) Those who petition this Court to declare a law, or parts thereof, unconstitutional must clearlyestablish the basis for such a declaration. Otherwise, their petition must fail. Based on the grounds raised by petitioners to challenge the

constitutionality of P.D. 1869, the Court finds that petitioners have failed to overcome the presumption. The dismissal of this petition is therefore,inevitable. But as to whether P.D. 1869 remains a wise legislation considering the issues of "morality, monopoly, trend to free enterprise,privatization as well as the state principles on social justice, role of youth and educational values" being raised, is up for Congress to determine.

As this Court held in Citizens' Alliance for Consumer Protection v.Energy Regulatory Board, 162 SCRA 521

Presidential Decree No. 1956, as amended by Executive Order No. 137 has, in any case, in its favor the presumption of validity and constitutionalitywhich petitioners Valmonte and the KMU have not overturned. Petitioners have not undertaken to identify the provisions in the Constitution whichthey claim to have been violated by that statute. This Court, however, is not compelled to speculate and to imagine how the assailed legislationmay possibly offend some provision of the Constitution. The Court notes, further, in this respect that petitioners have in the main put in questionthe wisdom, justice and expediency of the establishment of the OPSF, issues which are not properly addressed to this Court and which this Courtmay not constitutionally pass upon. Those issues should be addressed rather to the political departments of government: the President and theCongress.

Parenthetically, We wish to state that gambling is generally immoral, and this is precisely so when the gambling resorted to is excessive. This

excessiveness necessarily depends not only on the financial resources of the gambler and his family but also on his mental, social, and spiritualoutlook on life. However, the mere fact that some persons may have lost their material fortunes, mental control, physical health, or even their livesdoes not necessarily mean that the same are directly attributable to gambling. Gambling may have been the antecedent,but certainly notnecessarily the cause. For the same consequences could have been preceded by an overdose of food, drink, exercise, work, and even sex.

WHEREFORE, the petition is DISMISSED for lack of merit.

METROPOLITAN MANILA DEVELOPMENT AUTHORITY,petitioner,vs. BEL-AIR VILLAGE ASSOCIATION, INC., respondent.

D E C I S I O N

PUNO,J.:

Not infrequently, the government is tempted to take legal shortcuts to solve urgent problems of the people. But even when government is armedwith the best of intention, we cannot allow it to run roughshod over the rule of law. Again, we let the hammer fall and fall hard on the illegalattempt of the MMDA to open for public use a private road in a private subdivision. While we hold that the general welfare should be promoted,

we stress that it should not be achieved at the expense of the rule of law. h Y

Petitioner MMDA is a government agency tasked with the delivery of basic services in Metro Manila. Respondent Bel-Air Village Association, Inc.(BAVA) is a non-stock, non-profit corporation whose members are homeowners in Bel-Air Village, a private subdivision in Makati City. RespondentBAVA is the registered owner of Neptune Street, a road inside Bel-Air Village.

On December 30, 1995, respondent received from petitioner, through its Chairman, a notice dated December 22, 1995 requesting respondent toopen Neptune Street to public vehicular traffic starting January 2, 1996. The notice reads: Court

"SUBJECT: NOTICE of the Opening of Neptune Street to Traffic

"Dear President Lindo,


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"Please be informed that pursuant to the mandate of the MMDA law or Republic Act No. 7924 which requires the Authority to rationalize the useof roads and/or thoroughfares for the safe and convenient movement of persons, Neptune Street shall be opened to vehicular traff ic effectiveJanuary 2, 1996.

"In view whereof, the undersigned requests you to voluntarily open the points of entry and exit on said street.

"Thank you for your cooperation and whatever assistance that may be extended by your association to the MMDA personnel who will be directingtraffic in the area.

"Finally, we are furnishing you with a copy of the handwritten instruction of the President on the matter.

"Very truly yours,

PROSPERO I. ORETA

Chairman"[1]

On the same day, respondent was apprised that the perimeter wall separating the subdivision from the adjacent Kalayaan Avenue would bedemolished. Sppedsc

On January 2, 1996, respondent instituted against petitioner before the Regional Trial Court, Branch 136, Makati City, Civil Case No. 96-001 forinjunction. Respondent prayed for the issuance of a temporary restraining order and preliminary injunction enjoining the opening of NeptuneStreet and prohibiting the demolition of the perimeter wall. The trial court issued a temporary restraining order the following day.

On January 23, 1996, after due hearing, the trial court denied issuance of a preliminary injunction.[2]Respondent questioned the denial before theCourt of Appeals in CA-G.R. SP No. 39549. The appellate court conducted an ocular inspection of Neptune Street[3]and on February 13, 1996, itissued a writ of preliminary injunction enjoining the implementation of the MMDAs proposed action .

[4]

On January 28, 1997, the appellate court rendered a Decision on the merits of the case finding that the MMDA has no authority to order theopening of Neptune Street, a private subdivision road and cause the demolition of its perimeter walls. It held that the authority is lodged in the CityCouncil of Makati by ordinance. The decision disposed of as follows:Jurissc

"WHEREFORE, the Petition is GRANTED; the challenged Order dated January 23, 1995, in Civil Case No. 96-001, is SET ASIDE and the Writ ofPreliminary Injunction issued on February 13, 1996 is hereby made permanent.

"For want of sustainable substantiation, the Motion to Cite Roberto L. del Rosario in contempt is denied .[5]

"No pronouncement as to costs.

"SO ORDERED."[6]

The Motion for Reconsideration of the decision was denied on September 28, 1998. Hence, this recourse. Jksm

Petitioner MMDA raises the following questions:

"I

HAS THE METROPOLITAN MANILA DEVELOPMENT AUTHORITY (MMDA) THE MANDATE TO OPEN NEPTUNE STREET TO PUBLIC TRAFFIC PURSUANTTO ITS REGULATORY AND POLICE POWERS?

II

IS THE PASSAGE OF AN ORDINANCE A CONDITION PRECEDENT BEFORE THE MMDA MAY ORDER THE OPENING OF SUBDIVISION ROADS TO PUBLICTRAFFIC?

III

IS RESPONDENT BEL-AIR VILLAGE ASSOCIATION, INC. ESTOPPED FROM DENYING OR ASSAILING THE AUTHORITY OF THE MMDA TO OPEN THESUBJECT STREET? Jlexj

V

WAS RESPONDENT DEPRIVED OF DUE PROCESS DESPITE THE SEVERAL MEETINGS HELD BETWEEN MMDA AND THE AFFECTED BEL-AIR RESIDENTSAND BAVA OFFICERS?

V

HAS RESPONDENT COME TO COURT WITH UNCLEAN HANDS?"[7]

Neptune Street is owned by respondent BAVA. It is a private road inside Bel-Air Village, a private residential subdivision in the heart of the financialand commercial district of Makati City. It runs parallel to Kalayaan Avenue, a national road open to the general public. Dividing the two (2) streets isa concrete perimeter wall approximately fifteen (15) feet high. The western end of Neptune Street intersects Nicanor Garcia, formerly ReposoStreet, a subdivision road open to public vehicular traffic, while its eastern end intersects Makati Avenue, a national road. Both ends of NeptuneStreet are guarded by iron gates. Edp mis

Petitioner MMDA claims that it has the authority to open Neptune Street to public traffic because it is an agent of the state endowed with policepower in the delivery of basic services in Metro Manila. One of these basic services is traffic management which involves the regulation of the useof thoroughfares to insure the safety, convenience and welfare of the general public. It is alleged that the police power of MMDA was affirmed bythis Court in the consolidated cases of Sangalang v. Intermediate Appellate Court .

[8]From the premise that it has police power, it is now urged that

there is no need for the City of Makati to enact an ordinance opening Neptune street to the public .[9]

Police power is an inherent attribute of sovereignty. It has been defined as the power vested by the Constitution in the legislature to make, ordain,and establish all manner of wholesome and reasonable laws, statutes and ordinances, either with penalties or without, not repugnant to theConstitution, as they shall judge to be for the good and welfare of the commonwealth, and for the subjects of the same.

[10]The power is plenary

and its scope is vast and pervasive, reaching and justifying measures for public health, public safety, public morals, and the general welfare.[11]

It bears stressing that police power is lodged primarily in the National Legislature.[12]It cannot be exercised by any group or body of individuals notpossessing legislative power.[13]The National Legislature, however, may delegate this power to the President and administrative boards as well as
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the lawmaking bodies of municipal corporations or local government units.[14]Once delegated, the agents can exercise only such legislative powersas are conferred on them by the national lawmaking body.[15]

A local government is a "political subdivision of a nation or state which is constituted by law and has substantial control of local affairs. "[16]

TheLocal Government Code of 1991 defines a local government unit as a "body politic and corporate "[17]-- one endowed with powers as a politicalsubdivision of the National Government and as a corporate entity representing the inhabitants of its territory.

[18]Local government units are the

provinces, cities, municipalities and barangays.[19]They are also the territorial and political subdivisions of the state.[20]

Our Congress delegatedpolice power to the local government units in the Local Government Code of 1991. This delegation is found in Section 16of the same Code, known as the general welfare clause, viz: Chief

"Sec. 16. General Welfare.Every local government unit shall exercise the powers expressly granted, those necessarily implied therefrom, as wellas powers necessary, appropriate, or incidental for its efficient and effective governance, and those which are essential to the promotion of thegeneral welfare. Within their respective territorial jurisdictions, local government units shall ensure and support, among other things, thepreservation and enrichment of culture, promote health and safety, enhance the right of the people to a balanced ecology, encourage and supportthe development of appropriate and self-reliant scientific and technological capabilities, improve public morals, enhance economic prosperity andsocial justice, promote full employment among their residents, maintain peace and order, and preserve the comfort and convenience of theirinhabitants."[21]

Local government units exercise police power through their respective legislative bodies. The legislative body of the provincial government isthesangguniang panlalawigan, that of the city government is the sangguniang panlungsod, that of the municipal government is the sangguniangbayan, and that of the barangay is thesangguniang barangay. The Local Government Code of 1991 empowers the sangguniang panlalawigan,sangguniang panlungsodand sangguniang bayanto "enact ordinances, approve resolutions and appropriate funds for the general welfare of the[province, city or municipality, as the case may be], and its inhabitants pursuant to Section 16 of the Code and in the proper exercise of thecorporate powers of the [province, city municipality] provided under the Code x x x. "

[22]The same Code gives the sangguniang barangaythe power

to "enact ordinances as may be necessary to discharge the responsibilities conferred upon it by law or ordinance and to promote the generalwelfare of the inhabitants thereon."[23]

Metropolitan or Metro Manila is a body composed of several local government units -i.e., twelve (12) cities and five (5) municipalities, namely,the cities of Caloocan, Manila, Mandaluyong, Makati, Pasay, Pasig, Quezon, Muntinlupa, Las Pinas, Marikina, Paranaque and Valenzuela, and themunicipalities of Malabon, , Navotas, , Pateros, San Juan and Taguig. With the passage of Republic Act (R. A.) No. 7924

[24]in 1995, Metropolitan

Manila was declared as a "special development and administrative region" and the Administration of "metro-wide" basic services affecting theregion placed under "a development authority" referred to as the MMDA.

[25]

"Metro-wide services" are those "services which have metro-wide impact and transcend local political boundaries or entail huge expenditures suchthat it would not be viable for said services to be provided by the individual local government units comprising Metro Manila."[26]There are seven(7) basic metro-wide services and the scope of these services cover the following: (1) development planning; (2) transport and traffic management;(3) solid waste disposal and management; (4) flood control and sewerage management; (5) urban renewal, zoning and land use planning, andshelter services; (6) health and sanitation, urban protection and pollution control; and (7) public safety. The basic service of transport and trafficmanagement includes the following: Lexjuris

"(b) Transport and traffic management which include the formulation, coordination, and monitoring of policies, standards, programs andprojects to rationalize the existing transport operations, infrastructure requirements, the use of thoroughfares, and promotion of safe andconvenient movement of persons and goods; provision for the mass transport system and the institution of a system to regulate road users;administration and implementation of all traffic enforcement operations, traffic engineering services and traffic education programs, includingthe institution of a single ticketing system in Metropolitan Manila;"

[27]

In the delivery of the seven (7) basic services, the MMDA has the following powers and functions:Esm

"Sec. 5. Functions and powers of the Metro Manila Development Authority.The MMDA shall:

(a) Formulate, coordinate and regulate the implementation of medium and long-term plans and programs for the delivery of metro-wide services,land use and physical development within Metropolitan Manila, consistent with national development objectives and priorities;

(b) Prepare, coordinate and regulate the implementation of medium-term investment programs for metro-wide services which shall indicatesources and uses of funds for priority programs and projects, and which shall include the packaging of projects and presentation to funding

institutions; Esmsc

(c) Undertake and manage on its own metro-wide programs and projects for the delivery of specific services under its jurisdiction, subject to theapproval of the Council. For this purpose, MMDA can create appropriate project management offices;

(d) Coordinate and monitor the implementation of such plans, programs and projects in Metro Manila; identify bottlenecks and adopt solutions toproblems of implementation;

(e) The MMDA shall set the polic ies concerning traffic in Metro Manila, and shall coordinate and regulate the implementation of all programsand projects concerning traffic management, specifically pertaining to enforcement, engineering and education. Upon request, it shall beextended assistance and cooperation, including but not limited to, assignment of personnel, by all other government agencies and officesconcerned;

(f) Install and administer a single ticketing system, fix, impose and collect fines and penalties for all kinds of violations of traffic rules andregulations, whether moving or non-moving in nature, and confiscate and suspend or revoke drivers licenses in the enforcement of such traffic

laws and regulations, the provisions of RA 4136 and PD 1605 to the contrary notwithstanding. For this purpose, the Authority shall impose alltraffic laws and regulations in Metro Manila, through its traffic operation center, and may deputize members of the PNP, traffic enforcers oflocal government units, duly licensed security guards, or members of non-governmental organizations to whom may be delegated certainauthority, subject to such conditions and requirements as the Authority may impose; and

(g) Perform other related functions required to achieve the objectives of the MMDA, including the undertaking of delivery of basic services to thelocal government units, when deemed necessary subject to prior coordination with and consent of the local government unit concerned." Jurismis

The implementationof the MMDAs plans, programs and projects is undertaken by the local government units, national government agencies,accredited peoples organizations, non-governmental organizations, and the private sector as well as by the MMDA itself. For this purpose, theMMDA has the power to enter into contracts, memoranda of agreement and other cooperative arrangements with these bodies for the delivery ofthe required services within Metro Manila.[28]
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The governing board of the MMDA is the Metro Manila Council. The Council is composed of the mayors of the component 12 cities and 5municipalities, the president of the Metro Manila Vice-Mayors League and the president of the Metro Manila Councilors League.[29]The Council isheaded by a Chairman who is appointed by the President and vested with the rank of cabinet member. As the policy-making body of the MMDA,the Metro Manila Council approves metro-wide plans, programs and projects, and issues the necessary rules and regulations for theimplementation of said plans; it approves the annual budget of the MMDA and promulgates the rules and regulations for the delivery of basicservices, collection of service and regulatory fees, fines and penalties. These functions are particularly enumerated as follows: LEX

"Sec. 6. Functions of the Metro Manila Council.-

(a) The Council shall be the policy-making body of the MMDA;

(b) It shall approve metro-wide plans, programs and projects and issue rules and regulations deemed necessary by the MMDA to carry out thepurposes of this Act;

(c) It may increase the rate of allowances and per diems of the members of the Council to be effective during the term of the succeeding Council. Itshall fix the compensation of the officers and personnel of the MMDA, and approve the annual budget thereof for submission to the Department ofBudget and Management (DBM);

(d) It shall promulgate rules and regulations and set policies and standards for metro-wide application governing the delivery of basic services,prescribe and collect service and regulatory fees, and impose and collect fines and penalties." Jj sc

Clearly, the scope of the MMDAs function is limited to the delivery of the seven (7) basic services. One of these is transport and trafficmanagement which includes the formulation and monitoring of policies, standards and projects to rationalize the existing transport operations,infrastructure requirements, the use of thoroughfares and promotion of the safe movement of persons and goods. It also covers the masstransport system and the institution of a system of road regulation, the administration of all traffic enforcement operations, traffic engineeringservices and traffic education programs, including the institution of a single ticketing system in Metro Manila for traffic violations. Under this

service, the MMDA is expressly authorized "to set the policies concerning traffic" and "coordinate and regulate the implementation of all trafficmanagement programs." In addition, the MMDA may "install and administer a single ticketing system," fix, impose and collect fines and penaltiesfor all traffic violations. Ca-lrsc

It will be noted that the powers of the MMDA are limited to the following acts: formulation, coordination, regulation, implementation, preparation,management, monitoring, setting of policies, installation of a system and administration. There is no syllable in R. A. No. 7924 that grants theMMDA police power, let alone legislative power. Even the Metro Manila Council has not been delegated any legislative power. Unlike thelegislative bodies of the local government units, there is no provision in R. A. No. 7924 that empowers the MMDA or its Council to "enactordinances, approve resolutions and appropriate funds for the general welfare" of the inhabitants of Metro Manila. The MMDA is, as termed in thecharter itself, a "development authority."[30]It is an agency created for the purpose of laying down policies and coordinating with the variousnational government agencies, peoples organizations, non-governmental organizations and the private sector for the efficient and expeditiousdelivery of basic services in the vast metropolitan area. All its functions are administrative in nature and these are actually summed up in thecharter itself, viz:

"Sec. 2. Creation of the Metropolitan Manila Development Authority. --x x x.

The MMDA shall perform planning, monitoring and coordinative functions, and in the process exercise regulatory and supervisory authorityoverthe delivery of metro-wide services within Metro Manila, without diminution of the autonomy of the local government units concerning purelylocal matters."[31]

Petitioner cannot seek refuge in the cases of Sangalang v. Intermediate Appellate Court[32]

where we upheld a zoning ordinance issued by theMetro Manila Commission (MMC), the predecessor of the MMDA, as an exercise of police power. The first Sangalangdecision was on the merits ofthe petition,

[33]while the second decision denied reconsideration of the first case and in addition discussed the case of Yabut v. Court of

Appeals.[34]

Sangalang v. IACinvolved five (5) consolidated petitions filed by respondent BAVA and three residents of Bel-Air Village against other residents ofthe Village and the Ayala Corporation, formerly the Makati Development Corporation, as the developer of the subdivision. The petitioners soughtto enforce certain restrictive easements in the deeds of sale over their respective lots in the subdivision. These were the prohibition on the settingup of commercial and advertising signs on the lots, and the condition that the lots be used only for residential purposes. Petitioners alleged thatrespondents, who were residents along Jupiter Street of the subdivision, converted their residences into commercial establishments in violation of

the "deed restrictions," and that respondent Ayala Corporation ushered in the ful l commercialization" of Jupiter Street by tearing down theperimeter wall that separated the commercial from the residential section of the village.[35]

The petitions were dismissed based on Ordinance No. 81 of the Municipal Council of Makati and Ordinance No. 81-01 of the Metro ManilaCommission (MMC). Municipal Ordinance No. 81 classified Bel-Air Village as a Class A Residential Zone, with its boundary in the south extending tothe center line of Jupiter Street. The Municipal Ordinance was adopted by the MMC under the Comprehensive Zoning Ordinance for the NationalCapital Region and promulgated as MMC Ordinance No. 81-01. Bel-Air Village was indicated therein as bounded by Jupiter Street and the blockadjacent thereto was classified as a High Intensity Commercial Zone.[36]

We ruled that since both Ordinances recognized Jupiter Street as the boundary between Bel-Air Village and the commercial district, Jupiter Streetwas not for the exclusive benefit of Bel-Air residents. We also held that the perimeter wall on said street was constructed not to separate theresidential from the commercial blocks but simply for security reasons, hence, in tearing down said wall, Ayala Corporation did not violate the"deed restrictions" in the deeds of sale. Scc-alr

We upheld the ordinances, specifically MMC Ordinance No. 81-01, as a legitimate exercise of police power .[37]The power of the MMC and theMakati Municipal Council to enact zoning ordinances for the general welfare prevailed over the "deed restrictions".

In the second Sangalang/Yabutdecision, we held that the opening of Jupiter Street was warranted by the demands of the common good in termsof "traffic decongestion and public convenience." Jupiter was opened by the Municipal Mayor to alleviate traffic congestion along the public streetsadjacent to the Village.[38]The same reason was given for the opening to public vehicular traffic of Orbit Street, a road inside the same village. Thedestruction of the gate in Orbit Street was also made under the police power of the municipal government. The gate, like the perimeter wall alongJupiter, was a public nuisance because it hindered and impaired the use of property, hence, its summary abatement by the mayor was proper andlegal.[39]

Contrary to petitioners claim, the twoSangalang cases do not apply to the case at bar. Firstly, both involved zoning ordinances passed by themunicipal council of Makati and the MMC. In the instant case, the basis for the proposed opening of Neptune Street is contained in the notice ofDecember 22, 1995 sent by petitioner to respondent BAVA, through its president. The notice does not cite any ordinance or law, either by theSangguniang Panlungsod of Makati City or by the MMDA, as the legal basis for the proposed opening of Neptune Street. Petitioner MMDA simply
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relied on its authority under its charter "to rationalize the use of roads and/or thoroughfares for the safe and convenient movement of persons."Rationalizing the use of roads and thoroughfares is one of the acts that fall within the scope of transport and traffic management. By no stretch ofthe imagination, however, can this be interpreted as an express or implied grant of ordinance-making power, much less police power. Misjuris

Secondly, the MMDA is not the same entity as the MMC in Sangalang.Although the MMC is the forerunner of the present MMDA, anexamination of Presidential Decree (P. D.) No. 824, the charter of the MMC, shows that the latter possessed greater powers which were notbestowed on the present MMDA.Jjlex

Metropolitan Manila was first created in 1975 by Presidential Decree (P.D.) No. 824. It comprised the Greater Manila Area composed of thecontiguous four (4) cities of Manila, Quezon, Pasay and Caloocan, and the thirteen (13) municipalities of Makati, Mandaluyong, San Juan, Las Pinas,Malabon, Navotas, Pasig, Pateros, Paranaque, Marikina, Muntinlupa and Taguig in the province of Rizal, and Valenzuela in the province of

Bulacan.[40]Metropolitan Manila was created as a response to the finding that the rapid growth of population and the increase of social andeconomic requirements in these areas demand a call for simultaneous and unified development; that the public services rendered by therespective local governments could be administered more efficiently and economically if integrated under a system of central planning; and thiscoordination, "especially in the maintenance of peace and order and the eradication of social and economic ills that fanned the flames of rebellionand discontent [were] part of reform measures under Martial Law essential to the safety and security of the State."[41]

Metropolitan Manila was established as a "public corporation"with the following powers: Calrs-pped

"Section 1. Creation of the Metropolitan Manila.There is hereby created a public corporation, to be known as the Metropolitan Manila, vestedwith powers and attributes of a corporation including the power to make contracts, sue and be sued, acquire, purchase, expropriate, hold,transfer and dispose of property and such other powers as are necessary to carry out its purposes. The Corporation shall be administered by aCommission created under this Decree."

[42]

The administration of Metropolitan Manila was placed under the Metro Manila Commission (MMC) vested with the following powers:

"Sec. 4. Powers and Functions of the Commission. - The Commission shall have the following powers and functions:

1. To act as a central government to establish and administer programs and provide services common to the area;

2. To levy and collect taxes and special assessments, borrow and expend money and issue bonds, revenue certificates, and other obligations ofindebtedness. Existing tax measures should, however, continue to be operative until otherwise modified or repealed by the Commission;

3. To charge and collect fees for the use of public service facilities;

4. To appropriate money for the operation of the metropolitan government and review appropriations for the city and municipal units within itsjurisdiction with authority to disapprove the same if found to be not in accordance with the established policies of the Commission, withoutprejudice to any contractual obligation of the local government units involved existing at the time of approval of this Decree;

5. To review, amend, revise or repeal all ordinances, resolutions and acts of cities and municipalities within Metropolitan Manila;

6. To enact or approve ordinances, resolutions and to fix penalties for any violation thereof which shall not exceed a fine of P10,000.00 or

imprisonment of six years or both such fine and imprisonment for a single offense;

7. To perform general administrative, executive and policy-making functions;

8. To establish a fire control operation center, which shall direct the fire services of the city and municipal governments in the metropolitan area;

9. To establish a garbage disposal operation center, which shall direct garbage collection and disposal in the metropolitan area;

10. To establish and operate a transport and traffic center, which shall direct traffic activities; Jjjuris

11. To coordinate and monitor governmental and private activities pertaining to essential services such as transportation, flood control anddrainage, water supply and sewerage, social, health and environmental services, housing, park development, and others;

12. To insure and monitor the undertaking of a comprehensive social, economic and physical planning and development of the area;

13. To study the feasibility of increasing barangay participation in the affairs of their respective local governments and to propose to the President

of the Philippines definite programs and policies for implementation;14. To submit within thirty (30) days after the close of each fiscal year an annual report to the President of the Philippines and to submit a periodicreport whenever deemed necessary; and

15. To perform such other tasks as may be assigned or directed by the President of the Philippines." Sc jj

The MMC was the "central government" of Metro Manila for the purpose of establishing and administering programs providing services commonto the area. As a "central government" it had the power to levy and collect taxes and special assessments, the power to charge and collect fees; thepower to appropriate money for its operation, and at the same time, review appropriations for the city and municipal units within its jurisdiction. Itwas bestowed the power to enact or approve ordinances, resolutions and fix penalties for violation of such ordinances and resolutions. It also hadthe power to review, amend, revise or repeal all ordinances, resolutions and acts of any of the four (4) cities and thirteen (13) municipalitiescomprising Metro Manila.

P. D. No. 824 further provided:

"Sec. 9. Until otherwise provided, the governments of the four cities and thirteen municipalities in the Metropolitan Manila shall continue to existin their present form except as may be inconsistent with this Decree. The members of the existing city and municipal councils in MetropolitanManila shall, upon promulgation of this Decree, and until December 31, 1975, become members of the Sangguniang Bayan which is herebycreated for every city and municipality of Metropolitan Manila.

In addition, the Sangguniang Bayan shall be composed of as many barangay captains as may be determined and chosen by the Commission, andsuch number of representatives from other sectors of the society as may be appointed by the President upon recommendation of the Commission.

x x x.

The Sangguniang Bayan may recommend to the Commission ordinances, resolutions or such measures as it may adopt; Provided, that no suchordinance, resolution or measure shall become effective, until after its approval by the Commission; and Provided further, that the power to
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impose taxes and other levies, the power to appropriate money and the power to pass ordinances or resolutions with penal sanctions shall bevested exclusively in the Commission."

The creation of the MMC also carried with it the creation of the Sangguniang Bayan. This was composed of the members of the component cityand municipal councils, barangay captains chosen by the MMC and sectoral representatives appointed by the President. The SangguniangBayanhad the power to recommend to the MMC the adoption of ordinances, resolutions or measures. It was the MMC itself, however, thatpossessed legislative powers. All ordinances, resolutions and measures recommended by theSangguniang Bayanwere subject to the MMCsapproval. Moreover, the power to impose taxes and other levies, the power to appropriate money, and the power to pass ordinances orresolutions with penal sanctions were vested exclusively in the MMC. Sce-dp

Thus, Metropolitan Manila had a "central government," i.e., the MMC which fully possessed legislative and police powers. Whatever legislative

powers the component cities and municipalities had were all subject to review and approval by the MMC.

After President Corazon Aquino assumed power, there was a clamor to restore the autonomy of the local government units in Metro Manila.Hence, Sections 1 and 2 of Article X of the 1987 Constitution provided: Sj cj

"Section 1. The territorial and political subdivisions of the Republic of the Philippines are the provinces, cities, municipalities and barangays. Thereshall be autonomous regions in Muslim Mindanao and the Cordilleras as herein provided.

Section 2. The territorial and political subdivisions shall enjoy local autonomy."

The Constitution, however, recognized the necessity of creating metropolitan regions not only in the existing National Capital Region but also inpotential equivalents in the Visayas and Mindanao.[43]Section 11 of the same Article X thus provided:

"Section 11. The Congress may, by law, create special metropolitan political subdivisions, subject to a plebiscite as set forth in Section 10 hereof.The component cities and municipalities shall retain their basic autonomy and shall be entitled to their own local executives and legislativeassemblies. The jurisdiction of the metropolitan authority that will thereby be created shall be limited to basic services requiring coordination."

The Constitution itself expressly provides that Congress may, by law, create "special metropolitan political subdivisions" which shall be subject toapproval by a majority of the votes cast in a plebiscite in the political units directly affected; the jurisdiction of this subdivision shall be limited tobasic services requiring coordination; and the cities and municipalities comprising this subdivision shall retain their basic autonomy and their ownlocal executive and legislative assemblies.[44]Pending enactment of this law, the Transitory Provisions of the Constitution gave the President of thePhilippines the power to constitute the Metropolitan Authority, viz:

"Section 8. Until otherwise provided by Congress, the President may constitute the Metropolitan Authority to be composed of the heads of all localgovernment units comprising the Metropolitan Manila area."[45]

In 1990, President Aquino issued Executive Order (E. O.) No. 392 and constituted the Metropolitan Manila Authority (MMA). The powers andfunctions of the MMC were devolved to the MMA.

[46]It ought to be stressed, however, that not all powers and functions of the MMC werepassed to the MMA. The MMAs power was limited to the "delivery of basic urban services requiring coordination in MetropolitanManila."

[47]The MMAs governing body, the Metropolitan Manila Council, although composed of the mayors of the component cities and

municipalities, was merely given the power of: (1) formulation of policies on the delivery of basic services requiring coordination andconsolidation; and (2) promulgation of resolutions and other issuances, approval of a code of basic services and the exercise of its rule-makingpower.

[48]

Under the 1987 Constitution, the local government units became primarily responsible for the governance of their respective political subdivisions.The MMAs jurisdiction was limitedto addressing common problems involving basic services that transcended local boundaries. It did not havelegislative power. Its power was merely to provide the local government units technical assistance in the preparation of local development plans.Any semblance of legislative power it had was confined to a "review [of] legislation proposed by the local legislative assemblies to ensureconsistency among local governments and with the comprehensive development plan of Metro Manila," and to "advise the local governmentsaccordingly."[49]

When R.A. No. 7924 took effect, Metropolitan Manila became a "special development and administrative region" and the MMDA a "specialdevelopment authority" whose functions were "without prejudice to the autonomy of the affected local government units." The character ofthe MMDA was clearly defined in the legislative debates enacting its charter.

R. A. No. 7924 originated as House Bill No. 14170/ 11116 and was introduced by several legislators led by Dante Tinga, Roilo Golez and FelicianoBelmonte. It was presented to the House of Representatives by the Committee on Local Governments chaired by Congressman Ciriaco R. Alfelor.The bill was a product of Committee consultations with the local government units in the National Capital Region (NCR), with former Chairmen ofthe MMC and MMA,[50]and career officials of said agencies. When the bill was first taken up by the Committee on Local Governments, thefollowing debate took place:

"THE CHAIRMAN [Hon. Ciriaco Alfelor]: Okay, Let me explain. This has been debated a long time ago, you know. Its a special we can create aspecial metropolitan political subdivision. Supreme

Actually, there are only six (6) political subdivisions provided for in the Constitution: barangay, municipality, city, province, and we have theAutonomous Region of Mindanao and we have the Cordillera. So we have 6. Now.

HON. [Elias] LOPEZ: May I interrupt, Mr. Chairman. In the case of the Autonomous Region, that is also specifically mandated by the Constitution.

THE CHAIRMAN: Thats correct. But it is considered to be a political subdivision. What is the meaning of a political subdivision? Meaning to say,that it has its own government, it has its own political personality, it has the power to tax, and all governmental powers: police power andeverything. All right. Authority is different; because it does not have its own government. It is only a council, it is an organization of politicalsubdivision, powers, no, which is not imbued with any political power.Esmmis

If you go over Section 6, where the powers and functions of the Metro Manila Development Authority, it is purely coordinative. And it provideshere that the council is policy-making. All right.

Under the Constitution is a Metropolitan Authority with coordinative power. Meaning to say, it coordinates all of the different basic services whichhave to be delivered to the constituency. All right.

There is now a problem. Each local government unit is given its respective as a political subdivision. Kalookan has its powers, as provided for andprotected and guaranteed by the Constitution. All right, the exercise. However, in the exercise of that power, it might be deleterious anddisadvantageous to other local government units. So, we are forming an authority where all of these will be members and then set up a policy inorder that the basic services can be effectively coordinated. All right. justice
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Of course, we cannot deny that the MMDA has to survive. We have to provide some funds, resources. But it does not possess any politicalpower. We do not elect the Governor. We do not have the power to tax.As a matter of fact, I was trying to intimate to the author that it musthave the power to sue and be sued because it coordinates. All right. It coordinates practically all these basic services so that the flow and thedistribution of the basic services will be continuous. Like traffic, we cannot deny that. Its before our eyes. Sewerage, flood control, water system,peace and order, we cannot deny these. Its right on our face. We have to look for a solution. Whatwould be the right solution? All right, weenvision that there should be a coordinating agency and it is called an authority. All right, if you do not want to call it an authority, its alright. Wemay call it a council or maybe a management agency.

x x x."[51]

Clearly, the MMDA is not a political unit of government.The power delegated to the MMDA is that given to the Metro Manila Council to

promulgate administrative rules and regulations in the implementation of the MMDAs functions.There is no grant of authority to enactordinances and regulations for the general welfare of the inhabitants of the metropolis. This was explicitly stated in the last Committeedeliberations prior to the bills presentation to Congress. Thus:Ed-p

"THE CHAIRMAN: Yeah, but we have to go over the suggested revision. I think this was already approved before, but it was reconsidered in view ofthe proposals, set-up, to make the MMDA stronger. Okay, so if there is no objection to paragraph "f" And then next is paragraph "b," underSection 6."It shall approve metro-wide plans, programs and projects and issue ordinances or resolutions deemed necessary by the MMDA tocarry out the purposes of this Act." Do you have the powers? Does the MMDA because that takes the form of a local government unit, apolitical subdivision.

HON. *Feliciano+ BELMONTE: Yes, I believe so, your Honor. When we say that it has the policies, its very clear that those policies must be followed.Otherwise, whats the use of empowering it to come out with policies. Now, the policies may be in the form of a resolution or it may be in the formof a ordinance. The term "ordinance" in this case really gives it more teeth, your honor. Otherwise, we are going to see a situation where you havethe power to adopt the policy but you cannot really make it stick as in the case now, and I think here is Chairman Bunye. I think he will agree that

that is the case now. Youve got the power to set a policy, the body wants to follow your policy, then we say lets call it an ordinance and see if t heywill not follow it.

THE CHAIRMAN: Thats very nice. I like that.However, there is a constitutional impediment. You are making this MMDA a political subdivision.The creation of the MMDA would be subject to a plebiscite. That is what Im trying to avoid. Ive been trying to avoid this kind of predicament.Under the Constitution it states: if it is a political subdivision, once it is created it has to be subject to a plebiscite. Im trying to make this asadministrative. Thats why we place the Chairman as a cabinet rank.

HON. BELMONTE: All right, Mr. Chairman, okay, what you are saying there is .

THE CHAIRMAN: In setting up ordinances, it is a political exercise. Believe me.

HON. [Elias] LOPEZ: Mr. Chairman, it can be changed into issuances of rules and regulations. That would be it shall also be enforced.Jksm

HON. BELMONTE: Okay, I will .

HON. LOPEZ: And you can also say that violation of such rule, you impose a sanction. But you know, ordinance has a different legal connotation.HON. BELMONTE: All right. I defer to that opinion, your Honor.sc

THE CHAIRMAN: So instead of ordinances, say rules and regulations.

HON. BELMONTE: Or resolutions. Actually, they are actually considering resolutions now.

THE CHAIRMAN: Rules and resolutions.

HON. BELMONTE: Rules, regulations and resolutions."[52]

The draft of H. B. No. 14170/ 11116 was presented by the Committee to the House of Representatives. The explanatory note to the bill stated thatthe proposed MMDA is a "development authority" which is a "national agency, not a political government unit."

[53]The explanatory note was

adopted as the sponsorship speech of the Committee on Local Governments. No interpellations or debates were made on the floor and noamendments introduced. The bill was approved on second reading on the same day it was presented.

[54]

When the bill was forwarded to the Senate, several amendments were made. These amendments, however, did not affect the nature of the MMDAas originally conceived in the House of Representatives.

[55]

It is thus beyond doubt that the MMDA is not a local government unit or a public corporation endowed with legislative power.It is not even a"special metropolitan political subdivision" as contemplated in Section 11, Article X of the Constitution. The creation of a "special metropolitanpolitical subdivision" requires the approval by a majority of the votes cast in a plebiscite in the political units directly affected.[56]R. A. No. 7924 wasnot submitted to the inhabitants of Metro Manila in a plebiscite. The Chairman of the MMDA is not an official elected by the people, but appointedby the President with the rank and privileges of a cabinet member. In fact, part

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