pubcorp cases - set1

8/6/2019 PubCorp Cases - Set1

1/58

Republic of the PhilippinesSupreme CourtManila

EN BANC

PHILIPPINE SOCIETY FOR

THE PREVENTION OF

CRUELTY TO ANIMALS,

G.R. No. 169752

Petitioners,

Members:

PUNO, C.J.

QUISUMBING,

YNARES-SANTIAGO,

SANDOVAL-GUTIERREZ,

CARPIO,

AUSTRIA-MARTINEZ,

CORONA,

- versus -

CARPIO-MORALES,

AZCUNA,


2/58

TINGA,

CHICO-NAZARIO,

GARCIA,

VELASCO, JR.,

NACHURA, and

REYES,JJ.

COMMISSION ON AUDIT,

DIR. RODULFO J. ARIESGA

(in his official capacity as Director

of the Commission on Audit), MS.

MERLE M. VALENTIN and MS.

SUSAN GUARDIAN (in their officialcapacities as Team Leader and Team

Member, respectively, of the audit

Team of the Commission on Audit),

Promulgated:

Respondents.

September 25, 2007

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

AUSTRIA-MARTINEZ,J.:

Before the Court is a special civil action for Certiorari andProhibition under Rule

65 of the Rules of Court, in relation to Section 2 of Rule 64, filed by the petitioner assailing

Office Order No. 2005-021[1][1] dated September 14, 2005 issued by the respondents

which constituted the audit team, as well as its September 23, 2005 Letter[2][2] informing

the petitioner that respondents audit team shall conduct an audit survey on the petitioner

for a detailed audit of its accounts, operations, and financial transactions. No temporary

restraining order was issued.

The petitioner was incorporated as a juridical entity over one hundred years ago

by virtue of Act No. 1285, enacted on January 19, 1905, by the Philippine Commission.

The petitioner, at the time it was created, was composed of animal aficionados and animal

propagandists. The objects of the petitioner, as stated in Section 2 of its charter, shall be


3/58

to enforce laws relating to cruelty inflicted upon animals or the protection of animals in

the Philippine Islands, and generally, to do and perform all things which may tend in any

way to alleviate the suffering of animals and promote their welfare.[3][3]

At the time of the enactment of Act No. 1285, the original Corporation Law, Act

No. 1459, was not yet in existence. Act No. 1285 antedated both the Corporation Law and

the constitution of the Securities and Exchange Commission. Important to note is that the

nature of the petitioner as a corporate entity is distinguished from the sociedad

anonimas under the Spanish Code of Commerce.

For the purpose of enhancing its powers in promoting animal welfare and

enforcing laws for the protection of animals, the petitioner was initially imbued under its

charter with the power to apprehend violators of animal welfare laws. In addition, the

petitioner was to share one-half (1/2) of the fines imposed and collected through its

efforts for violations of the laws related thereto. As originally worded, Sections 4 and 5 of

Act No. 1285 provide:

SEC. 4. The said society is authorized to appointnot to exceed five agents in the City of

Manila, and not to exceed two in each of the provinces of the Philippine Islands who shall

have all the power and authority of a police officer to make arrests for violation of the

laws enacted for the prevention of cruelty to animals and the protection of animals, and to

serve any process in connection with the execution of such laws; and in addition thereto,

all the police force of the Philippine Islands, wherever organized, shall, as occasion

requires, assist said society, its members or agents, in the enforcement of all such laws.

SEC. 5. One-half of all the fines imposed and collected through the efforts ofsaidsociety, itsmembers or its agents, for violations of the laws enacted for the prevention of cruelty to

animals and for their protection, shall belong to saidsociety andshall be used to promote its

objects.

(emphasis supplied)

Subsequently, however, the power to make arrests as well as the privilege to

retain a portion of the fines collected for violation of animal-related laws were recalled by

virtue of Commonwealth Act (C.A.) No. 148,[4][4] which reads, in its entirety, thus:

Be it enacted by the National Assembly of the Philippines:

Section 1. Section four of Act Numbered Twelve hundred and eighty-five as

amended by Act Numbered Thirty five hundred and forty-eight, is hereby further

amended so as to read as follows:


4/58

Sec. 4. The said society is authorized to appoint not to exceed ten agents in the

City of Manila, and not to exceed one in each municipality of the Philippines who shall have

the authority to denounce to regular peace officers any violation of the laws enacted for the

prevention of cruelty to animals and the protection of animals and to cooperate with said

peace officers in the prosecution of transgressors of such laws.

Sec. 2. The full amount of the fines collectedfor violation of the laws against

cruelty to animals and for the protection of animals, shall accrue to the general fund of the

Municipalitywhere the offense was committed.

Sec. 3. This Act shall take effect upon its approval.

Approved, November 8, 1936. (Emphasis supplied)

Immediately thereafter, then President Manuel L. Quezon issued Executive Order

(E.O.) No. 63 dated November 12, 1936, portions of which provide:

Whereas, during the first regular session of the National Assembly,

Commonwealth Act Numbered One Hundred Forty Eight was enacted depriving the agents

of the Society for the Prevention of Cruelty to Animals of their power to arrest persons who

have violated the laws prohibiting cruelty to animals thereby correcting a serious defect in

one of the laws existing in ourstatute books.

x x x x

Whereas, the cruel treatment of animals is an offense against the State, penalized

under our statutes, which the Government is duty bound to enforce;

Now, therefore, I, Manuel L. Quezon, President of the Philippines, pursuant to the

authority conferred upon me by the Constitution, hereby decree, order, and direct the

Commissioner of Public Safety, the Provost Marshal General as head of the Constabulary

Division of the Philippine Army, every Mayor of a chartered city, and every municipal

presidentto detail and organize special members of the police force, local, national, and the

Constabulary to watch, capture, and prosecute offendersagainst the laws enacted to prevent

cruelty to animals. (Emphasis supplied)

On December 1, 2003, an audit team from respondent Commission on Audit

(COA) visited the office of the petitioner to conduct an audit survey pursuant to COA Office

Order No. 2003-051 dated November 18, 2003[5][5] addressed to the petitioner. The

petitioner demurred on the ground that it was a private entity not under the jurisdiction


5/58

of COA, citing Section 2(1) of Article IX of the Constitution which specifies the general

jurisdiction of the COA, viz:

Section 1. General Jurisdiction. The Commission on Audit shall have the power,

authority, and duty to examine, audit, andsettle all accounts pertaining to the revenue and

receipts of, and expenditures or uses of funds and property, owned or held in trust by, or

pertaining to the Government, or any of itssubdivisions, agencies, or instrumentalities,

including government-owned and controlled corporations with original charters, and on a

post-audit basis: (a) constitutional bodies, commissions and officers that have been

granted fiscal autonomy under the Constitution; (b) autonomous state colleges and

universities; (c) other government-owned or controlled corporations and theirsubsidiaries;

and(d) such non-governmental entities receiving subsidy or equity, directly or indirectly,

from or through the government, which are required by law or the granting institution to

submit to such audit as a condition ofsubsidy or equity. However, where the internal

control system of the audited agencies is inadequate, the Commission may adopt such

measures, including temporary or special pre-audit, as are necessary and appropriate to

correct the deficiencies. It shall keep the general accounts of the Government, and forsuch period as may be provided by law, preserve the vouchers and other supporting

papers pertaining thereto. (Emphasis supplied)

Petitioner explained thus:

a. Although the petitioner was created by special legislation, this necessarily came

about because in January 1905 there was as yet neither a Corporation Law or any other

general law under which it may be organized and incorporated, nor a Securities and

Exchange Commission which would have passed upon its organization and incorporation.

b. That Executive Order No. 63, issued during the Commonwealth period, effectively

deprived the petitioner of its power to make arrests, and that the petitioner lost its

operational funding, underscore the fact that it exercises no governmental function. In

fine, the government itself, by its overt acts, confirmed petitioners status as a private

juridical entity.

The COA General Counsel issued a Memorandum[6][6] dated May 6, 2004,

asserting that the petitioner was subject to its audit authority. In a letter dated May 17,

2004,[7][7] respondent COA informed the petitioner of the result of the evaluation,

furnishing it with a copy of said Memorandum dated May 6, 2004 of the General Counsel.

Petitioner thereafter filed with the respondent COA a Request for Re-evaluation

dated May 19, 2004,[8][8] insisting that it was a private domestic corporation.

Acting on the said request, the General Counsel of respondent COA, in a

Memorandum dated July 13, 2004,[9][9] affirmed her earlier opinion that the petitioner


6/58

was a government entity that was subject to the audit jurisdiction of respondent COA. In a

letter dated September 14, 2004, the respondent COA informed the petitioner of the result

of the re-evaluation, maintaining its position that the petitioner was subject to its audit

jurisdiction, and requested an initial conference with the respondents.

In a Memorandum dated September 16, 2004, Director Delfin Aguilar reported to

COA Assistant Commissioner Juanito Espino, Corporate Government Sector, that the audit

survey was not conducted due to the refusal of the petitioner because the latter

maintained that it was a private corporation.

Petitioner received on September 27, 2005 the subject COA Office Order 2005-

021 dated September 14, 2005 and the COA Letter dated September 23, 2005.

Hence, herein Petition on the following grounds:

A.

RESPONDENT COMMISSION ON AUDIT COMMITTED GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT RULED THAT PETITIONER

IS SUBJECT TO ITS AUDIT AUTHORITY.

B.

PETITIONER IS ENTITLED TO THE RELIEF SOUGHT, THERE BEING NO APPEAL, NOR ANY

PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY COURSE OF LAWAVAILABLE TO IT.[10][10]

The essential question before this Court is whether the petitioner qualifies as a

government agency that may be subject to audit by respondent COA.

Petitioner argues:first, even though it was created by special legislation in 1905

as there was no general law then existing under which it may be organized or

incorporated, it exercises no governmental functions because these have been revoked by

C.A. No. 148 and E.O. No. 63; second, nowhere in its charter is it indicated that it is a public

corporation, unlike, for instance, C.A. No. 111 which created the Boy Scouts of the

Philippines, defined its powers and purposes, and specifically stated that it was An Act to

Create a Public Corporation in which, even as amended by Presidential Decree No. 460,

the law still adverted to the Boy Scouts of the Philippines as a public corporation, all of

which are not obtaining in the charter of the petitioner; third, if it were a government

body, there would have been no need for the State to grant it tax exemptions under

Republic Act No. 1178, and the fact that it was so exempted strengthens its position that it

is a private institution;fourth, the employees of the petitioner are registered and covered


7/58

by the Social Security System at the latters initiative and not through the Government

Service Insurance System, which should have been the case had the employees been

considered government employees;fifth, the petitioner does not receive any form of

financial assistance from the government, since C.A. No. 148, amending Section 5 of Act

No. 1285, states that the full amount of the fines, collected for violation of the laws

against cruelty to animals and for the protection of animals, shall accrue to the general

fund of the Municipality where the offense was committed; sixth, C.A. No. 148 effectively

deprived the petitioner of its powers to make arrests and serve processes as these

functions were placed in the hands of the police force; seventh, no government appointee

or representative sits on the board of trustees of the petitioner; eighth, a reading of the

provisions of its charter (Act No. 1285) fails to show that any act or decision of the

petitioner is subject to the approval of or control by any government agency, except to the

extent that it is governed by the law on private corporations in general; and finally, ninth,

the Committee on Animal Welfare, under the Animal Welfare Act of 1998, includes

members from both the private and the public sectors.

The respondents contend that since the petitioner is a body politic created byvirtue of a special legislation and endowed with a governmental purpose, then,

indubitably, the COA may audit the financial activities of the latter. Respondents in effect

divide their contentions into six strains:first, the test to determine whether an entity is a

government corporation lies in the manner of its creation, and, since the petitioner was

created by virtue of a special charter, it is thus a government corporation subject to

respondents auditing power; second, the petitioner exercises sovereign powers, that is,

it is tasked to enforce the laws for the protection and welfare of animals which ultimately

redound to the public good and welfare, and, therefore, it is deemed to be a government

instrumentality as defined under the Administrative Code of 1987, the purpose of whichis connected with the administration of government, as purportedly affirmed by American

jurisprudence; third, by virtue of Section 23,[11][11] Title II, Book III of the same Code, the

Office of the President exercises supervision or control over the petitioner;fourth, under

the same Code, the requirement under its special charter for the petitioner to render a

report to the Civil Governor, whose functions have been inherited by the Office of the

President, clearly reflects the nature of the petitioner as a government

instrumentality;fifth, despite the passage of the Corporation Code, the law creating the

petitioner had not been abolished, nor had it been re-incorporated under any general

corporation law; and finally, sixth, Republic Act No. 8485, otherwise known as the Animal

Welfare Act of 1998, designates the petitioner as a member of its Committee on Animal

Welfare which is attached to the Department of Agriculture.

In view of the phrase One-half of all the fines imposed and collected through the

efforts ofsaidsociety, the Court, in a Resolution dated January 30, 2007, required the

Office of the Solicitor General (OSG) and the parties to comment on: a) petitioner's

authority to impose fines and the validity of the provisions of Act No. 1285 and

Commonwealth Act No. 148 considering that there are no standard measures provided for


8/58

in the aforecited laws as to the manner of implementation, the specific violations of the

law, the person/s authorized to impose fine and in what amount; and, b) the effect of the

1935 and 1987 Constitutions on whether petitioner continues to exist or should organize

as a private corporation under the Corporation Code, B.P.Blg.68 as amended.

Petitioner and the OSG filed their respective Comments. Respondents filed a

Manifestation stating that since they were being represented by the OSG which filed its

Comment, they opted to dispense with the filing of a separate one and adopt for the

purpose that of the OSG.

The petitioner avers that it does not have the authority to impose fines for

violation of animal welfare laws; it only enjoyed the privilege of sharing in the fines

imposed and collected from its efforts in the enforcement of animal welfare laws; such

privilege, however, was subsequently abolished by C.A. No. 148; that it continues to exist

as a private corporation since it was created by the Philippine Commission before the

effectivity of the Corporation law, Act No. 1459; and the 1935 and 1987 Constitutions.

The OSG submits that Act No. 1285 and its amendatory laws did not give

petitioner the authority to impose fines for violation of laws[12][12] relating to the

prevention of cruelty to animals and the protection of animals; that even prior to the

amendment of Act No. 1285, petitioner was only entitled to share in the fines imposed;

C.A. No. 148 abolished that privilege to share in the fines collected; that petitioner is a

public corporation and has continued to exist since Act No. 1285; petitioner was not

repealed by the 1935 and 1987 Constitutions which contain transitory provisions

maintaining all laws issued not inconsistent therewith until amended, modified or

repealed.

The petition is impressed with merit.

The arguments of the parties, interlaced as they are, can be disposed of in five

points.

First, the Court agrees with the petitioner that the charter test cannot be

applied.

Essentially, the charter test as it stands today provides:

[T]he test to determine whether a corporation is government owned or controlled, or

private in nature is simple. Is it created by its own charter for the exercise of a public

function, or by incorporation under the general corporation law?Those with special charters

are government corporationssubject to its provisions, and its employees are under the

jurisdiction of the Civil Service Commission, and are compulsory members of the

Government Service Insurance System. xxx (Emphasis supplied)[13][13]


9/58

The petitioner is correct in stating that the charter test is predicated, at best, on

the legal regime established by the 1935 Constitution, Section 7, Article XIII, which states:

Sec. 7. The National Assembly shall not, except by general law, provide for the

formation, organization, or regulation of private corporations, unless such corporations

are owned or controlled by the Government or any subdivision or instrumentality

thereof.[14][14]

The foregoing proscription has been carried over to the 1973 and the 1987

Constitutions. Section 16 of Article XII of the present Constitution provides:

Sec. 16. The Congress shall not, except by general law, provide for the formation,

organization, or regulation of private corporations. Government-owned or controlled

corporations may be created or established by special charters in the interest of the

common good and subject to the test of economic viability.

Section 16 is essentially a re-enactment of Section 7 of Article XVI of the 1935

Constitution and Section 4 of Article XIV of the 1973 Constitution.

During the formulation of the 1935 Constitution, the Committee on Franchises

recommended the foregoing proscription to prevent the pressure of special interests upon

the lawmaking body in the creation of corporations or in the regulation of the same. To

permit the lawmaking body by special law to provide for the organization, formation, or

regulation of private corporations would be in effect to offer to it the temptation in many

cases to favor certain groups, to the prejudice of others or to the prejudice of the interestsof the country.[15][15]

And since the underpinnings of the charter test had been introduced by the 1935

Constitution and not earlier, it follows that the test cannot apply to the petitioner, which

was incorporated by virtue of Act No. 1285, enacted on January 19, 1905. Settled is the

rule that laws in general have no retroactive effect, unless the contrary is

provided.[16][16] All statutes are to be construed as having only a prospective operation,

unless the purpose and intention of the legislature to give them a retrospective effect is

expressly declared or is necessarily implied from the language used. In case of doubt, the

doubt must be resolved against the retrospective effect.[17][17]

There are a few exceptions. Statutes can be given retroactive effect in the

following cases: (1) when the law itself so expressly provides; (2) in case of remedial

statutes; (3) in case of curative statutes; (4) in case of laws interpreting others; and (5) in

case of laws creating new rights.

Republic of the Philippines


10/58

SUPREME COURTManila

EN BANC

G.R. No. 91649 May 14, 1991

ATTORNEYS HUMBERTO BASCO, EDILBERTO BALCE, SOCRATES MARANAN ANDLORENZO SANCHEZ, petitioners,vs.

PHILIPPINE AMUSEMENTS AND GAMING CORPORATION (PAGCOR), respondent.H.B.Basco & Associates for petitioners.

Valmonte LawOffices collaborating counsel for petitioners.

Aguirre, Laborte and Capule for respondent PAGCOR.

PARAS,J.:pA TV ad proudly announces:

"The new PAGCOR responding through responsible gaming."But the petitioners think otherwise, that is why, they filed the instant petition seeking to

annul the Philippine Amusement and Gaming Corporation (PAGCOR) Charter PD 1869,

because it is allegedly contrary to morals, public policy and order, and because

A. It constitutes a waiver of a right prejudicial to a third person with a right recognized by

law. It waived the Manila City government's right to impose taxes and license fees, which

is recognized by law;

B. For the same reason stated in the immediately preceding paragraph, the law has

intruded into the local government's right to impose local taxes and license fees. This, in

contravention of the constitutionally enshrined principle of local autonomy;C. It violates the equal protection clause of the constitution in that it legalizes PAGCOR

conducted gambling, while most other forms of gambling are outlawed, together with

prostitution, drug trafficking and other vices;

D. It violates the avowed trend of the Cory government away from monopolistic and crony

economy, and toward free enterprise and privatization. (p. 2, Amended Petition; p.

7, Rollo)

In their Second Amended Petition, petitioners also claim that PD 1869 is contrary to the

declared national policy of the "new restored democracy" and the people's will as

expressed in the 1987 Constitution. The decree is said to have a "gambling objective" and

therefore is contrary to Sections 11, 12 and 13 of Article II, Sec. 1 of Article VIII and

Section 3 (2) of Article XIV, of the present Constitution (p. 3, Second Amended Petition; p.

21, Rollo).

The procedural issue is whether petitioners, as taxpayers and practicing lawyers

(petitioner Basco being also the Chairman of the Committee on Laws of the City Council of

Manila), can question and seek the annulment of PD 1869 on the alleged grounds

mentioned above.


11/58

The Philippine Amusements and Gaming Corporation (PAGCOR) was created by virtue of

P.D. 1067-A dated January 1, 1977 and was granted a franchise under P.D. 1067-B also

dated January 1, 1977 "to establish, operate and maintain gambling casinos on land or

water within the territorial jurisdiction of the Philippines." Its operation was originally

conducted in the well known floating casino "Philippine Tourist." The operation was

considered a success for it proved to be a potential source of revenue to fund

infrastructure and socio-economic projects, thus, P.D. 1399 was passed on June 2, 1978 for

PAGCOR to fully attain this objective.

Subsequently, on July 11, 1983, PAGCOR was created under P.D. 1869 to enable the

Government to regulate and centralize all games of chance authorized by existing

franchise or permitted by law, under the following declared policy

Sec. 1. Declaration of Policy. It is hereby declared to be the policy of the State to

centralize and integrate all games of chance not heretofore authorized by existing

franchises or permitted by law in order to attain the following objectives:

(a) To centralize and integrate the right and authority to operate and conduct games of

chance into one corporate entity to be controlled, administered and supervised by the

Government.(b) To establish and operate clubs and casinos, for amusement and recreation, including

sports gaming pools, (basketball, football, lotteries, etc.) and such other forms of

amusement and recreation including games of chance, which may be allowed by law

within the territorial jurisdiction of the Philippines and which will: (1) generate sources of

additional revenue to fund infrastructure and socio-civic projects, such as flood control

programs, beautification, sewerage and sewage projects, Tulungan ng Bayan Centers,

Nutritional Programs, Population Control and such other essential public services; (2)

create recreation and integrated facilities which will expand and improve the country's

existing tourist attractions; and (3) minimize, if not totally eradicate, all the evils,malpractices and corruptions that are normally prevalent on the conduct and operation of

gambling clubs and casinos without direct government involvement. (Section 1, P.D. 1869)

To attain these objectives PAGCOR is given territorial jurisdiction all over the Philippines.

Under its Charter's repealing clause, all laws, decrees, executive orders, rules and

regulations, inconsistent therewith, are accordingly repealed, amended or modified.

It is reported that PAGCOR is the third largest source of government revenue, next to the

Bureau of Internal Revenue and the Bureau of Customs. In 1989 alone, PAGCOR earned

P3.43 Billion, and directly remitted to the National Government a total of P2.5 Billion in

form of franchise tax, government's income share, the President's Social Fund and Host

Cities' share. In addition, PAGCOR sponsored other socio-cultural and charitable projects

on its own or in cooperation with various governmental agencies, and other private

associations and organizations. In its 3 1/2 years of operation under the present

administration, PAGCOR remitted to the government a total of P6.2 Billion. As of

December 31, 1989, PAGCOR was employing 4,494 employees in its nine (9) casinos

nationwide, directly supporting the livelihood of Four Thousand Four Hundred Ninety-

Four (4,494) families.


12/58

But the petitioners, are questioning the validity of P.D. No. 1869. They allege that the same

is "null and void" for being "contrary to morals, public policy and public order,"

monopolistic and tends toward "crony economy", and is violative of the equal protection

clause and local autonomy as well as for running counter to the state policies enunciated

in Sections 11 (Personal Dignity and Human Rights), 12 (Family) and 13 (Role of Youth) of

Article II, Section 1 (Social Justice) of Article XIII and Section 2 (Educational Values) of

Article XIV of the 1987 Constitution.

This challenge to P.D. No. 1869 deserves a searching and thorough scrutiny and the most

deliberate consideration by the Court, involving as it does the exercise of what has been

described as "the highest and most delicate function which belongs to the judicial

department of the government." (State v. Manuel, 20 N.C. 144; Lozano v. Martinez, 146

SCRA 323).

As We enter upon the task of passing on the validity of an act of a co-equal and coordinate

branch of the government We need not be reminded of the time-honored principle, deeply

ingrained in our jurisprudence, that a statute is presumed to be valid. Every presumption

must be indulged in favor of its constitutionality. This is not to say that We approach Our

task with diffidence or timidity. Where it is clear that the legislature or the executive forthat matter, has over-stepped the limits of its authority under the constitution, We should

not hesitate to wield the axe and let it fall heavily, as fall it must, on the offending statute

(Lozano v. Martinez, supra).

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

Zaldivar underscored the

. . . thoroughly established principle which must be followed in all cases where questions

of constitutionality as obtain in the instant cases are involved. All presumptions are

indulged in favor of constitutionality; one who attacks a statute alleging

unconstitutionality must prove its invalidity beyond a reasonable doubt; that a law maywork hardship does not render it unconstitutional; that if any reasonable basis may be

conceived which supports the statute, it will be upheld and the challenger must negate all

possible basis; that the courts are not concerned with the wisdom, justice, policy or

expediency of a statute and that a liberal interpretation of the constitution in favor of the

constitutionality of legislation should be adopted. (Danner v. Hass, 194 N.W.2nd534, 539;

Spurbeck v. Statton, 106 N.W.2nd660, 663; 59 SCRA 66; seealso e.g. Salas v. Jarencio, 46

SCRA 734, 739 [1970]; Peralta v. Commission on Elections, 82 SCRA 30, 55 [1978]; and

Heirs of Ordona v. Reyes, 125 SCRA 220, 241-242 [1983] cited in Citizens Alliance for

Consumer Protection v. Energy Regulatory Board, 162 SCRA 521, 540)

Of course, there is first, the procedural issue. The respondents are questioning the legal

personality of petitioners to file the instant petition.

Considering however the importance to the public of the case at bar, and in keeping with

the Court's duty, under the 1987 Constitution, to determine whether or not the other

branches of government have kept themselves within the limits of the Constitution and

the laws and that they have not abused the discretion given to them, the Court has

brushed aside technicalities of procedure and has taken cognizance of this petition.

(Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas Inc. v. Tan, 163 SCRA 371)


13/58

With particular regard to the requirement of proper party as applied in the cases before

us, We hold that the same is satisfied by the petitioners and intervenors because each of

them has sustained or is in danger of sustaining an immediate injury as a result of the acts

or measures complained of. And even if, strictly speaking they are not covered by the

definition, it is still within the wide discretion of the Court to waive the requirement and

so remove the impediment to its addressing and resolving the serious constitutional

questions raised.

In the first Emergency Powers Cases, ordinary citizens and taxpayers were allowed to

question the constitutionality of several executive orders issued by President Quirino

although they were involving only an indirect and general interest shared in common with

the public. The Court dismissed the objection that they were not proper parties and ruled

that "the transcendental importance to the public of these cases demands that they be

settled promptly and definitely, brushing aside, if we must technicalities of procedure."

We have since then applied the exception in many other cases. (Association of Small

Landowners in the Philippines, Inc. v. Sec. of Agrarian Reform, 175 SCRA 343).

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

raised.Gambling in all its forms, unless allowed by law, is generally prohibited. But the

prohibition of gambling does not mean that the Government cannot regulate it in the

exercise of its police power.

The concept of police power is well-established in this jurisdiction. It has been defined as

the "state authority to enact legislation that may interfere with personal liberty or

property in order to promote the general welfare." (Edu v. Ericta, 35 SCRA 481, 487) As

defined, it consists of (1) an imposition or restraint upon liberty or property, (2) in order

to foster the common good. It is not capable of an exact definition but has been, purposely,

veiled in general terms to underscore its all-comprehensive embrace. (PhilippineAssociation of Service Exporters, Inc. v. Drilon, 163 SCRA 386).

Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future

where it could be done, provides enough room for an efficient and flexible response to

conditions and circumstances thus assuming the greatest benefits. (Edu v. Ericta, supra)

It finds no specific Constitutional grant for the plain reason that it does not owe its origin

to the charter. Along with the taxing power and eminent domain, it is inborn in the very

fact of statehood and sovereignty. It is a fundamental attribute of government that has

enabled it to perform the most vital functions of governance. Marshall, to whom the

expression has been credited, refers to it succinctly as the plenary power of the state "to

govern its citizens". (Tribe, American Constitutional Law, 323, 1978). The police power of

the State is a power co-extensive with self-protection and is most aptly termed the "law of

overwhelming necessity." (Rubi v. Provincial Board of Mindoro, 39 Phil. 660, 708) It is

"the most essential, insistent, and illimitable of powers." (Smith Bell & Co. v. National, 40

Phil. 136) It is a dynamic force that enables the state to meet the agencies of the winds of

change.

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


14/58

P.D. 1869 was enacted pursuant to the policy of the government to "regulate and

centralize thru an appropriate institution all games of chance authorized by existing

franchise or permitted by law" (1st whereas clause, PD 1869). As was subsequently

proved, regulating and centralizing gambling operations in one corporate entity the

PAGCOR, was beneficial not just to the Government but to society in general. It is a reliable

source of much needed revenue for the cash strapped Government. It provided funds for

social impact projects and subjected gambling to "close scrutiny, regulation, supervision

and control of the Government" (4th Whereas Clause, PD 1869). With the creation of

PAGCOR and the direct intervention of the Government, the evil practices and corruptions

that go with gambling will be minimized if not totally eradicated. Public welfare, then, lies

at the bottom of the enactment of PD 1896.

Petitioners contend that P.D. 1869 constitutes a waiver of the right of the City of Manila to

impose taxes and legal fees; that the exemption clause in P.D. 1869 is violative of the

principle of local autonomy. They must be referring to Section 13 par. (2) of P.D. 1869

which exempts PAGCOR, as the franchise holder from paying any "tax of any kind or form,

income or otherwise, as well as fees, charges or levies of whatever nature, whether

National or Local."(2) Income and other taxes. a) Franchise Holder: No tax of any kind or form, income or

otherwise as well as fees, charges or levies of whatever nature, whether National or Local,

shall be assessed and collected under this franchise from the Corporation; nor shall any

form or tax or charge attach in any way to the earnings of the Corporation, except a

franchise tax of five (5%) percent of the gross revenues or earnings derived by the

Corporation from its operations under this franchise. Such tax shall be due and payable

quarterly to the National Government and shall be in lieu of all kinds of taxes, levies, fees

or assessments of any kind, nature or description, levied, established or collected by any

municipal, provincial or national government authority (Section 13 [2]).Their contention stated hereinabove is without merit for the following reasons:

(a) The City of Manila, being a mere Municipal corporation has no inherent right to impose

taxes (Icard v. City of Baguio, 83 Phil. 870; City of Iloilo v. Villanueva, 105 Phil. 337; Santos

v. Municipality of Caloocan, 7 SCRA 643). Thus, "the Charter or statute must plainly show

an intent to confer that power or the municipality cannot assume it" (Medina v. City of

Baguio, 12 SCRA 62). Its "power to tax" therefore must always yield to a legislative act

which is superior having been passed upon by the state itself which has the "inherent

power to tax" (Bernas, the Revised [1973] Philippine Constitution, Vol. 1, 1983 ed. p. 445).

(b) The Charter of the City of Manila is subject to control by Congress. It should be

stressed that "municipal corporations are mere creatures of Congress" (Unson v. Lacson,

G.R. No. 7909, January 18, 1957) which has the power to "create and abolish municipal

corporations" due to its "general legislative powers" (Asuncion v. Yriantes, 28 Phil. 67;

Merdanillo v. Orandia, 5 SCRA 541). Congress, therefore, has the power of control over

Local governments (Hebron v. Reyes, G.R. No. 9124, July 2, 1950). And if Congress can

grant the City of Manila the power to tax certain matters, it can also provide for

exemptions or even take back the power.


15/58

(c) The City of Manila's power to impose license fees on gambling, has long been revoked.

As early as 1975, the power of local governments to regulate gambling thru the grant of

"franchise, licenses or permits" was withdrawn by P.D. No. 771 and was vested exclusively

on the National Government, thus:

Sec. 1. Any provision of law to the contrary notwithstanding, the authority of chartered

cities and other local governments to issue license, permit or other form of franchise to

operate, maintain and establish horse and dog race tracks, jai-alai and other forms of

gambling is hereby revoked.

Sec. 2. Hereafter, all permits or franchises to operate, maintain and establish, horse and

dog race tracks, jai-alai and other forms of gambling shall be issued by the national

government upon proper application and verification of the qualification of the applicant .

. .

Therefore, only the National Government has the power to issue "licenses or permits" for

the operation of gambling. Necessarily, the power to demand or collect license fees which

is a consequence of the issuance of "licenses or permits" is no longer vested in the City of

Manila.

(d) Local governments have no power to tax instrumentalities of the NationalGovernment. PAGCOR is a government owned or controlled corporation with an original

charter, PD 1869. All of its shares of stocks are owned by the National Government. In

addition to its corporate powers (Sec. 3, Title II, PD 1869) it also exercises regulatory

powers thus:

Sec. 9. Regulatory Power. The Corporation shall maintain a Registry of the affiliated

entities, and shall exercise all the powers, authority and the responsibilities vested in the

Securities and Exchange Commission over such affiliating entities mentioned under the

preceding section, including, but not limited to amendments of Articles of Incorporation

and By-Laws, changes in corporate term, structure, capitalization and other 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 agency or instrumentality of the

Government. Being an instrumentality of the Government, PAGCOR should be and actually

is exempt from local taxes. Otherwise, its operation might be burdened, impeded or

subjected to control by a mere Local government.

The states have no power by taxation or otherwise, to retard, impede, burden or in any

manner control the operation of constitutional laws enacted by Congress to carry into

execution the powers vested in the federal government. (MC Culloch v. Marland, 4 Wheat

316, 4 L Ed. 579)

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

governments.

Justice Holmes, speaking for the Supreme Court, made reference to the entire absence of

power on the part of the States to touch, in that way (taxation) at least, the

instrumentalities of the United States (Johnson v. Maryland, 254 US 51) and it can be


16/58

agreed thatno state or politicalsubdivision can regulate a federal instrumentality in such a

way as to prevent it from consummating its federal responsibilities, or even to seriously

burden it in the accomplishment of them. (Antieau, Modern Constitutional Law, Vol. 2, p.

140, emphasis supplied)

Otherwise, mere creatures of the State can defeat National policies thru extermination of

what local authorities may perceive to be undesirable activities or enterprise using the

power to tax as "a tool for regulation" (U.S. v. Sanchez, 340 US 42).

The power to tax which was called by Justice Marshall as the "power to destroy" (Mc

Culloch v. Maryland, supra) cannot be allowed to defeat an instrumentality or creation of

the very entity which has the inherent power to wield it.

(e) Petitioners also argue that the Local Autonomy Clause of the Constitution will be

violated by P.D. 1869. This is a pointless argument. Article X of the 1987 Constitution (on

Local Autonomy) provides:

Sec. 5. Each local government unit shall have the power to create its own source of

revenue and to levy taxes, fees, and other charges subject to such guidelines and limitation

as the congress may provide, consistent with the basic policy on local autonomy. Such

taxes, fees and charges shall accrue exclusively to the local government. (emphasissupplied)

The power of local government to "impose taxes and fees" is always subject to

"limitations" which Congress may provide by law. Since PD 1869 remains an "operative"

law until "amended, repealed or revoked" (Sec. 3, Art. XVIII, 1987 Constitution), its

"exemption clause" remains as an exception to the exercise of the power of local

governments to impose taxes and fees. It cannot therefore be violative but rather is

consistent with the principle of local autonomy.

Besides, the principle of local autonomy under the 1987 Constitution simply means

"decentralization" (III Records of the 1987 Constitutional Commission, pp. 435-436, ascited in Bernas, The Constitution of the Republic of the Philippines, Vol. II, First Ed., 1988,

p. 374). It does not make local governments sovereign within the state or an " imperium in

imperio."

Local Government has been described as a political subdivision of a nation or state which

is constituted by law and has substantial control of local affairs. In a unitary system of

government, such as the government under the Philippine Constitution, local governments

can only be an intra sovereign subdivision of one sovereign nation, it cannot be

an imperium in imperio. Local government in such a system can only mean a measure of

decentralization of the function of government. (emphasis supplied)

As to what state powers should be "decentralized" and what may be delegated to local

government units remains a matter of policy, which concerns wisdom. It is therefore a

political question. (Citizens Alliance for Consumer Protection v. Energy Regulatory Board,

162 SCRA 539).

What is settled is that the matter of regulating, taxing or otherwise dealing with gambling

is a State concern and hence, it is the sole prerogative of the State to retain it or delegate it

to local governments.


17/58

Asgambling is usually an offense against the State, legislative grant or express charter

power is generally necessary to empower the local corporation to deal with the subject. . . . In

the absence of express grant of power to enact, ordinance provisions on thissubject which

are inconsistent with the state laws are void. (Ligan v. Gadsden, Ala App. 107 So. 733 Ex-

Parte Solomon, 9, Cals. 440, 27 PAC 757 following in re Ah You, 88 Cal. 99, 25 PAC 974, 22

Am St. Rep. 280, 11 LRA 480, as cited in Mc Quinllan Vol. 3 Ibid, p. 548, emphasis supplied)

Petitioners next contend that P.D. 1869 violates the equal protection clause of the

Constitution, because "it legalized PAGCOR conducted gambling, while most gambling

are outlawed together with prostitution, drug trafficking and other vices" (p. 82, Rollo).

We, likewise, find no valid ground to sustain this contention. The petitioners' posture

ignores the well-accepted meaning of the clause "equal protection of the laws." The clause

does not preclude classification of individuals who may be accorded different treatment

under the law as long as the classification is not unreasonable or arbitrary (Itchong v.

Hernandez, 101 Phil. 1155). A law does not have to operate in equal force on all persons

or things to be conformable to Article III, Section 1 of the Constitution (DECS v. San Diego,

G.R. No. 89572, December 21, 1989).

The "equal protection clause" does not prohibit the Legislature from establishing classesof individuals or objects upon which different rules shall operate (Laurel v. Misa, 43 O.G.

2847). The Constitution does not require situations which are different in fact or opinion

to be treated in law as though they were the same (Gomez v. Palomar, 25 SCRA 827).

Just how P.D. 1869 in legalizing gambling conducted by PAGCOR is violative of the equal

protection is not clearly explained in the petition. The mere fact that some gambling

activities like cockfighting (P.D 449) horse racing (R.A. 306 as amended by RA 983),

sweepstakes, lotteries and races (RA 1169 as amended by B.P. 42) are legalized under

certain conditions, while others are prohibited, does not render the applicable laws, P.D.

1869 for one, unconstitutional.If the law presumably hits the evil where it is most felt, it is not to be overthrown because

there are other instances to which it might have been applied. (Gomez v. Palomar, 25

SCRA 827)

The equal protection clause of the 14th Amendment does not mean that all occupations

called by the same name must be treated the same way; the state may do what it can to

prevent which is deemed as evil and stop short of those cases in which harm to the few

concerned is not less than the harm to the public that would insure if the rule laid down

were made mathematically exact. (Dominican Hotel v. Arizona, 249 US 2651).

Anent petitioners' claim that PD 1869 is contrary to the "avowed trend of the Cory

Government away from monopolies and crony economy and toward free enterprise and

privatization" suffice it to state that this is not a ground for this Court to nullify P.D. 1869.

If, indeed, PD 1869 runs counter to the government's policies then it is for the Executive

Department to recommend to Congress its repeal or amendment.

The judiciary does not settle policy issues. The Court can only declare what the law is and

not what the law should be. Under our system of government, policy issues are within the

domain of the political branches of government and of the people themselves as the

repository of all state power. (Valmonte v. Belmonte, Jr., 170 SCRA 256).


18/58

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

Sec. 19. The State shall regulate or prohibit monopolies when public interest so requires.

No combinations in restraint of trade or unfair competition shall be allowed. (Art. XII,

National Economy and Patrimony)

It should be noted that, as the provision is worded, monopolies are not necessarily

prohibited by the Constitution. The state must still decide whether public interest

demands that monopolies be regulated or prohibited. Again, this is a matter of policy for

the Legislature to decide.

On petitioners' allegation that P.D. 1869 violates Sections 11 (Personality Dignity) 12

(Family) and 13 (Role of Youth) of Article II; Section 13 (Social Justice) of Article XIII and

Section 2 (Educational Values) of Article XIV of the 1987 Constitution, suffice it to state

also that these are merely statements of principles and, policies. As such, they are basically

not self-executing, meaning a law should be passed by Congress to clearly define and

effectuate such principles.

In general, therefore, the 1935 provisions were not intended to be self-executing

principles ready for enforcement through the courts. They were rather directives

addressed to the executive and the legislature. If the executive and the legislature failed toheed the directives of the articles the available remedy was not judicial or political. The

electorate could express their displeasure with the failure of the executive and the

legislature through the language of the ballot. (Bernas, Vol. II, p. 2)

Every law has in its favor the presumption of constitutionality (Yu Cong Eng v. Trinidad,

47 Phil. 387; Salas v. Jarencio, 48 SCRA 734; Peralta v. Comelec, 82 SCRA 30; Abbas v.

Comelec, 179 SCRA 287). Therefore, for PD 1869 to be nullified, it must be shown that

there is a clear and unequivocal breach of the Constitution, not merely a doubtful and

equivocal one. In other words, the grounds for nullity must be clear and beyond

reasonable doubt. (Peralta v. Comelec, supra) Those who petition this Court to declare alaw, or parts thereof, unconstitutional must clearly establish the basis for such a

declaration. Otherwise, their petition must fail. Based on the grounds raised by petitioners

to challenge the constitutionality of P.D. 1869, the Court finds that petitioners have failed

to overcome the presumption. The dismissal of this petition is therefore, inevitable. But as

to whether P.D. 1869 remains a wise legislation considering the issues of "morality,

monopoly, trend to free enterprise, privatization as well as the state principles on social

justice, role of youth and educational values" being raised, is up for Congress to determine.

As this Court held in Citizens'Alliance for Consumer Protection v. EnergyRegulatoryBoard,

162 SCRA 521

Presidential Decree No. 1956, as amended by Executive Order No. 137 has, in any case, in

its favor the presumption of validity and constitutionality which petitioners Valmonte and

the KMU have not overturned. Petitioners have not undertaken to identify the provisions

in the Constitution which they claim to have been violated by that statute. This Court,

however, is not compelled to speculate and to imagine how the assailed legislation may

possibly offend some provision of the Constitution. The Court notes, further, in this

respect that petitioners have in the main put in question the wisdom, justice and

expediency of the establishment of the OPSF, issues which are not properly addressed to


19/58

this Court and which this Court may not constitutionally pass upon. Those issues should

be addressed rather to the political departments of government: the President and the

Congress.

Parenthetically, We wish to state that gambling is generally immoral, and this is precisely

so when the gambling resorted to is excessive. This excessiveness necessarily depends not

only on the financial resources of the gambler and his family but also on his mental, social,

and spiritual outlook on life. However, the mere fact that some persons may have lost

their material fortunes, mental control, physical health, or even their lives does not

necessarily mean that the same are directly attributable to gambling. Gambling may have

been the antecedent, but certainly not necessarily the cause. For the same consequences

could have been preceded by an overdose of food, drink, exercise, work, and even sex.

WHEREFORE, the petition is DISMISSED for lack of merit.

SO ORDERED.

Fernan, C.J., Narvasa, Gutierrez, Jr., Cruz, Feliciano, Gancayco, Bidin, Sarmiento, Grio-

Aquino, Medialdea, Regalado andDavide, Jr., JJ., concur.

Separate Opinions

PADILLA,J., concurring:I concur in the result of the learned decision penned by my brother Mr. Justice Paras. This

means that I agree with the decision insofar as it holds that the prohibition, control, and

regulation of the entire activity known as gambling properly pertain to "state policy." It is,

therefore, the political departments of government, namely, the legislative and the

executive that should decide on what government should do in the entire area ofgambling, and assume full responsibility to the people for such policy.

The courts, as the decision states, cannot inquire into the wisdom, morality or expediency

of policies adopted by the political departments of government in areas which fall within

their authority, except only when such policies pose a clear and present danger to the life,

liberty or property of the individual. This case does not involve such a factual situation.

However, I hasten to make of record that I do not subscribe to gambling in any form. It

demeans the human personality, destroys self-confidence and eviscerates one's self-

respect, which in the long run will corrode whatever is left of the Filipino moral character.

Gambling has wrecked and will continue to wreck families and homes; it is an antithesis to

individual reliance and reliability as well as personal industry which are the touchstones

of real economic progress and national development.

Gambling is reprehensible whether maintained by government or privatized. The

revenues realized by the government out of "legalized" gambling will, in the long run, be

more than offset and negated by the irreparable damage to the people's moral values.

Also, the moral standing of the government in its repeated avowals against "illegal

gambling" is fatally flawed and becomes untenable when it itself engages in the very

activity it seeks to eradicate.


20/58

One can go through the Court's decision today and mentally replace the activity referred

to therein asgambling, which is legal only because it is authorized by law and run by the

government, with the activity known asprostitution. Would prostitution be any less

reprehensible were it to be authorized by law, franchised, and "regulated" by the

government, in return for the substantial revenues it would yield the government to carry

out its laudable projects, such as infrastructure and social amelioration? The question, I

believe, answers itself. I submit that the sooner the legislative department outlaws all

forms of gambling, as a fundamentalstate policy, and the sooner the executive implements

such policy, the better it will be for the nation.

Melencio-Herrera, J., concur.

Separate OpinionsPADILLA,J., concurring:I concur in the result of the learned decision penned by my brother Mr. Justice Paras. This

means that I agree with the decision insofar as it holds that the prohibition, control, and

regulation of the entire activity known as gambling properly pertain to "state policy." It is,

therefore, the political departments of government, namely, the legislative and theexecutive that should decide on what government should do in the entire area of

gambling, and assume full responsibility to the people for such policy.

The courts, as the decision states, cannot inquire into the wisdom, morality or expediency

of policies adopted by the political departments of government in areas which fall within

their authority, except only when such policies pose a clear and present danger to the life,

liberty or property of the individual. This case does not involve such a factual situation.

However, I hasten to make of record that I do not subscribe to gambling in any form. It

demeans the human personality, destroys self-confidence and eviscerates one's self-

respect, which in the long run will corrode whatever is left of the Filipino moral character.Gambling has wrecked and will continue to wreck families and homes; it is an antithesis to

individual reliance and reliability as well as personal industry which are the touchstones

of real economic progress and national development.

Gambling is reprehensible whether maintained by government or privatized. The

revenues realized by the government out of "legalized" gambling will, in the long run, be

more than offset and negated by the irreparable damage to the people's moral values.

Also, the moral standing of the government in its repeated avowals against "illegal

gambling" is fatally flawed and becomes untenable when it itself engages in the very

activity it seeks to eradicate.

One can go through the Court's decision today and mentally replace the activity referred

to therein asgambling, which is legal only because it is authorized by law and run by the

government, with the activity known asprostitution. Would prostitution be any less

reprehensible were it to be authorized by law, franchised, and "regulated" by the

government, in return for the substantial revenues it would yield the government to carry

out its laudable projects, such as infrastructure and social amelioration? The question, I

believe, answers itself. I submit that the sooner the legislative department outlaws all


21/58

forms of gambling, as a fundamentalstate policy, and the sooner the executive implements

such policy, the better it will be for the nation.

Melencio-Herrera, J., concurs.


SUPREME COURTManila

EN BANC

G.R. No. 80391 February 28, 1989

SULTAN ALIMBUSAR P. LIMBONA, petitioner,vs.

CONTE MANGELIN, SALIC ALI, SALINDATO ALI, PILIMPINAS CONDING, ACMADTOMAWIS, GERRY TOMAWIS, JESUS ORTIZ, ANTONIO DELA FUENTE, DIEGOPALOMARES, JR., RAUL DAGALANGIT, and BIMBO SINSUAT, respondents.

Ambrosio Padilla, Mempin & Reyes LawOffices for petitioner petitioner.

MakabangkitB. Lanto for respondents.

SARMIENTO, J.:The acts of the Sangguniang Pampook of Region XII are assailed in this petition. The

antecedent facts are as follows:

1. On September 24, 1986, petitioner Sultan Alimbusar Limbona was appointed as a

member of the Sangguniang Pampook, Regional Autonomous Government, Region XII,

representing Lanao del Sur.

2. On March 12, 1987 petitioner was elected Speaker of the Regional Legislative Assembly

or Batasang Pampook of Central Mindanao (Assembly for brevity).3. Said Assembly is composed of eighteen (18) members. Two of said members,

respondents Acmad Tomawis and Pakil Dagalangit, filed on March 23, 1987 with the

Commission on Elections their respective certificates of candidacy in the May 11, 1987

congressional elections for the district of Lanao del Sur but they later withdrew from the

aforesaid election and thereafter resumed again their positions as members of the

Assembly.

4. On October 21, 1987 Congressman Datu Guimid Matalam, Chairman of the Committee

on Muslim Affairs of the House of Representatives, invited Mr. Xavier Razul, Pampook

Speaker of Region XI, Zamboanga City and the petitioner in his capacity as Speaker of the

Assembly, Region XII, in a letter which reads:

The Committee on Muslim Affairs well undertake consultations and dialogues with local

government officials, civic, religious organizations and traditional leaders on the recent

and present political developments and other issues affecting Regions IX and XII.

The result of the conference, consultations and dialogues would hopefully chart the

autonomous governments of the two regions as envisioned and may prod the President to

constitute immediately the Regional Consultative Commission as mandated by the

Commission.


22/58

You are requested to invite some members of the Pampook Assembly of your respective

assembly on November 1 to 15, 1987, with venue at the Congress of the Philippines. Your

presence, unstinted support and cooperation is (sic) indispensable.

5. Consistent with the said invitation, petitioner sent a telegram to Acting Secretary

Johnny Alimbuyao of the Assembly to wire all Assemblymen that there shall be no session

in November as "our presence in the house committee hearing of Congress take (sic)

precedence over any pending business in batasang pampook ... ."

6. In compliance with the aforesaid instruction of the petitioner, Acting Secretary

Alimbuyao sent to the members of the Assembly the following telegram:

TRANSMITTING FOR YOUR INFORMATION AND GUIDANCE TELEGRAM RECEIVED FROM

SPEAKER LIMBONA QUOTE CONGRESSMAN JIMMY MATALAM CHAIRMAN OF THE

HOUSE COMMITTEE ON MUSLIM AFFAIRS REQUESTED ME TO ASSIST SAID COMMITTEE

IN THE DISCUSSION OF THE PROPOSED AUTONOMY ORGANIC NOV. 1ST TO 15. HENCE

WERE ALL ASSEMBLYMEN THAT THERE SHALL BE NO SESSION IN NOVEMBER AS OUR

PRESENCE IN THE HOUSE COMMITTEE HEARING OF CONGRESS TAKE PRECEDENCE

OVER ANY PENDING BUSINESS IN BATASANG PAMPOOK OF MATALAM FOLLOWS

UNQUOTE REGARDS.7. On November 2, 1987, the Assembly held session in defiance of petitioner's advice, with

the following assemblymen present:

1. Sali, Salic

2. Conding, Pilipinas (sic)

3. Dagalangit, Rakil

4. Dela Fuente, Antonio

5. Mangelen, Conte

6. Ortiz, Jesus

7. Palomares, Diego8. Sinsuat, Bimbo

9. Tomawis, Acmad

10. Tomawis, Jerry

After declaring the presence of a quorum, the Speaker Pro-Tempore was authorized to

preside in the session. On Motion to declare the seat of the Speaker vacant, all

Assemblymen in attendance voted in the affirmative, hence, the chair declared said seat of

the Speaker vacant. 8. On November 5, 1987, the session of the Assembly resumed with

the following Assemblymen present:

1. Mangelen Conte-Presiding Officer

2. Ali Salic

3. Ali Salindatu

4. Aratuc, Malik

5. Cajelo, Rene

6. Conding, Pilipinas (sic)

7. Dagalangit, Rakil

8. Dela Fuente, Antonio

9. Ortiz, Jesus


23/58

10 Palomares, Diego

11. Quijano, Jesus

12. Sinsuat, Bimbo

13. Tomawis, Acmad

14. Tomawis, Jerry

An excerpt from the debates and proceeding of said session reads:

HON. DAGALANGIT: Mr. Speaker, Honorable Members of the House, with the presence of

our colleagues who have come to attend the session today, I move to call the names of the

new comers in order for them to cast their votes on the previous motion to declare the

position of the Speaker vacant. But before doing so, I move also that the designation of

the Speaker Pro Tempore as the Presiding Officer and Mr. Johnny Evangelists as Acting

Secretary in the session last November 2, 1987 be reconfirmed in today's session.

HON. SALIC ALI: I second the motions.

PRESIDING OFFICER: Any comment or objections on the two motions presented? Me chair

hears none and the said motions are approved. ...

Twelve (12) members voted in favor of the motion to declare the seat of the Speaker

vacant; one abstained and none voted against. 1Accordingly, the petitioner prays for judgment as follows:

WHEREFORE, petitioner respectfully prays that-

(a) This Petition be given due course;

(b) Pending hearing, a restraining order or writ of preliminary injunction be issued

enjoining respondents from proceeding with their session to be held on November 5,

1987, and on any day thereafter;

(c) After hearing, judgment be rendered declaring the proceedings held by respondents of

their session on November 2, 1987 as null and void;

(d) Holding the election of petitioner as Speaker of said Legislative Assembly or BatasanPampook, Region XII held on March 12, 1987 valid and subsisting, and

(e) Making the injunction permanent.

Petitioner likewise prays for such other relief as may be just and equitable. 2Pending further proceedings, this Court, on January 19, 1988, received a resolution filed

by the Sangguniang Pampook, "EXPECTING ALIMBUSAR P. LIMBONA FROM

MEMBERSHIP OF THE SANGGUNIANG PAMPOOK AUTONOMOUS REGION XII," 3 on thegrounds, among other things, that the petitioner "had caused to be prepared and signed by

him paying [sic] the salaries and emoluments of Odin Abdula, who was considered

resigned after filing his Certificate of Candidacy for Congressmen for the First District of

Maguindanao in the last May 11, elections. . . and nothing in the record of the Assembly

will show that any request for reinstatement by Abdula was ever made . . ." 4 and that"such action of Mr. Lim bona in paying Abdula his salaries and emoluments without

authority from the Assembly . . . constituted a usurpation of the power of the

Assembly," 5 that the petitioner "had recently caused withdrawal of so much amount ofcash from the Assembly resulting to the non-payment of the salaries and emoluments of

some Assembly [sic]," 6 and that he had "filed a case before the Supreme Court againstsome members of the Assembly on question which should have been resolved within the


24/58

confines of the Assembly," 7 for which the respondents now submit that the petition had

become "moot and academic". 8The first question, evidently, is whether or not the expulsion of the petitioner (pending

litigation) has made the case moot and academic.

We do not agree that the case has been rendered moot and academic by reason simply of

the expulsion resolution so issued. For, if the petitioner's expulsion was done purposely to

make this petition moot and academic, and to preempt the Court, it will not make it

academic.

On the ground of the immutable principle of due process alone, we hold that the expulsion

in question is of no force and effect. In the first place, there is no showing that the

Sanggunian had conducted an investigation, and whether or not the petitioner had been

heard in his defense, assuming that there was an investigation, or otherwise given the

opportunity to do so. On the other hand, what appears in the records is an admission by

the Assembly (at least, the respondents) that "since November, 1987 up to this writing,

the petitioner has not set foot at the Sangguniang Pampook." 9 "To be sure, the privaterespondents aver that "[t]he Assemblymen, in a conciliatory gesture, wanted him to come

to Cotabato City," 10 but that was "so that their differences could be threshed out andsettled." 11Certainly, that avowed wanting or desire to thresh out and settle, no matterhow conciliatory it may be cannot be a substitute for the notice and hearing contemplated

by law.

While we have held that due process, as the term is known in administrative law, does not

absolutely require notice and that a party need only be given the opportunity to be

heard, 12 it does not appear herein that the petitioner had, to begin with, been madeaware that he had in fact stood charged of graft and corruption before his collegues. It

cannot be said therefore that he was accorded any opportunity to rebut their accusations.

As it stands, then, the charges now levelled amount to mere accusations that cannotwarrant expulsion.

In the second place, (the resolution) appears strongly to be a bare act of vendetta by the

other Assemblymen against the petitioner arising from what the former perceive to be

abduracy on the part of the latter. Indeed, it (the resolution) speaks of "a case [having

been filed] [by the petitioner] before the Supreme Court . . . on question which should have

been resolved within the confines of the Assemblyman act which some members claimed

unnecessarily and unduly assails their integrity and character as representative of the

people" 13 an act that cannot possibly justify expulsion. Access to judicial remedies isguaranteed by the Constitution, 14 and, unless the recourse amounts to maliciousprosecution, no one may be punished for seeking redress in the courts.

We therefore order reinstatement, with the caution that should the past acts of the

petitioner indeed warrant his removal, the Assembly is enjoined, should it still be so

minded, to commence proper proceedings therefor in line with the most elementary

requirements of due process. And while it is within the discretion of the members of the

Sanggunian to punish their erring colleagues, their acts are nonetheless subject to the

moderating band of this Court in the event that such discretion is exercised with grave

abuse.


25/58

It is, to be sure, said that precisely because the Sangguniang Pampook(s) are

"autonomous," the courts may not rightfully intervene in their affairs, much less strike

down their acts. We come, therefore, to the second issue: Are the so-called autonomous

governments of Mindanao, as they are now constituted, subject to the jurisdiction of the

national courts? In other words, what is the extent of self-government given to the two

autonomous governments of Region IX and XII?

The autonomous governments of Mindanao were organized in Regions IX and XII by

Presidential Decree No. 1618 15 promulgated on July 25, 1979. Among other things, theDecree established "internal autonomy" 16 in the two regions "[w]ithin the framework ofthe national sovereignty and territorial integrity of the Republic of the Philippines and its

Constitution," 17 with legislative and executive machinery to exercise the powers andresponsibilities 18 specified therein.It requires the autonomous regional governments to "undertake all internal

administrative matters for the respective regions," 19 except to "act on matters which arewithin the jurisdiction and competence of the National Government," 20 "which include,but are not limited to, the following:

(1) National defense and security;(2) Foreign relations;

(3) Foreign trade;

(4) Currency, monetary affairs, foreign exchange, banking and quasi-banking, and external

borrowing,

(5) Disposition, exploration, development, exploitation or utilization of all natural

resources;

(6) Air and sea transport

(7) Postal matters and telecommunications;

(8) Customs and quarantine;(9) Immigration and deportation;

(10) Citizenship and naturalization;

(11) National economic, social and educational planning; and

(12) General auditing. 21In relation to the central government, it provides that "[t]he President shall have the

power of general supervision and control over the Autonomous Regions ..." 22Now, autonomy is either decentralization of administration or decentralization 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," 23 "and ensure their fullest development as self-reliant communities andmake them more effective partners in the pursuit of national development and social

progress." 24 At the same time, it relieves the central government of the burden ofmanaging local affairs and enables it to concentrate on national concerns. The President

exercises "general supervision" 25 over them, but only to "ensure that local affairs areadministered according to law." 26 He has no control over their acts in the sense that hecan substitute their judgments with his own. 27


26/58

Decentralization of power, on the other hand, involves an abdication of political power in

the favor of local governments units declare to be autonomous . In that case, the

autonomous government is free to chart its own destiny and shape its future with

minimum intervention from central authorities. According to a constitutional author,

decentralization of power amounts to "self-immolation," since in that event, the

autonomous government becomes accountable not to the central authorities but to its

constituency. 28But the question of whether or not the grant of autonomy Muslim Mindanao under the

1987 Constitution involves, truly, an effort to decentralize power rather than mere

administration is a question foreign to this petition, since what is involved herein is a local

government unit constituted prior to the ratification of the present Constitution. Hence,

the Court will not resolve that controversy now, in this case, since no controversy in fact

exists. We will resolve it at the proper time and in the proper case.

Under the 1987 Constitution, local government units enjoy autonomy in these two senses,

thus:

Section 1. The territorial and political subdivisions of the Republic of the Philippines are

the provinces, cities, municipalities, and barangays. Here shall be autonomous regions inMuslim Mindanao ,and the Cordilleras as hereinafter provided. 29Sec. 2. The territorial and political subdivisions shall enjoy local autonomy. 30xxx xxx xxx

See. 15. Mere shall be created autonomous regions in Muslim Mindanao and in the

Cordilleras consisting of provinces, cities, municipalities, and geographical areas sharing

common and distinctive historical and cultural heritage, economic and social structures,

and other relevant characteristics within the framework of this Constitution and the

national sovereignty as well as territorial integrity of the Republic of the Philippines. 31

An autonomous government that enjoys autonomy of the latter category [CONST. (1987),art. X, sec. 15.] is subject alone to the decree of the organic act creating it and accepted

principles on the effects and limits of "autonomy." On the other hand, an autonomous

government of the former class is, as we noted, under the supervision of the national

government acting through the President (and the Department of Local

Government). 32 If the Sangguniang Pampook (of Region XII), then, is autonomous in thelatter sense, its acts are, debatably beyond the domain of this Court in perhaps the same

way that the internalacts, say, of the Congress of the Philippines are beyond our

jurisdiction. But if it is autonomous in the former category only, it comes unarguably

under our jurisdiction. An examination of the very Presidential Decree creating the

autonomous governments of Mindanao persuades us that they were never meant to

exercise autonomy in the second sense, that is, in which the central government commits

an act of self-immolation. Presidential Decree No. 1618, in the first place, mandates that

"[t]he President shall have the power of general supervision and control over Autonomous

Regions." 33 In the second place, the Sangguniang Pampook, their legislative arm, is madeto discharge chiefly administrative services, thus:


27/58

SEC. 7. Powers of the Sangguniang Pampook. The Sangguniang Pampook shall exercise

local legislative powers over regional affairs within the framework of national

development plans, policies and goals, in the following areas:

(1) Organization of regional administrative system;

(2) Economic, social and cultural development of the Autonomous Region;

(3) Agricultural, commercial and industrial programs for the Autonomous Region;

(4) Infrastructure development for the Autonomous Region;

(5) Urban and rural planning for the Autonomous Region;

(6) Taxation and other revenue-raising measures as provided for in this Decree;

(7) Maintenance, operation and administration of schools established by the Autonomous

Region;

(8) Establishment, operation and maintenance of health, welfare and other social services,

programs and facilities;

(9) Preservation and development of customs, traditions, languages and culture

indigenous to the Autonomous Region; and

(10) Such other matters as may be authorized by law,including the enactment of such

measures as may be necessary for the promotion of the general welfare of the people inthe Autonomous Region.

The President shall exercise such powers as may be necessary to assure that enactment

and acts of the Sangguniang Pampook and the Lupong Tagapagpaganap ng Pook are in

compliance with this Decree, national legislation, policies, plans and programs.

The Sangguniang Pampook shall maintain liaison with the Batasang Pambansa. 34Hence, we assume jurisdiction. And if we can make an inquiry in the validity of the

expulsion in question, with more reason can we review the petitioner's removal as

Speaker.

Briefly, the petitioner assails the legality of his ouster as Speaker on the grounds that: (1)the Sanggunian, in convening on November 2 and 5, 1987 (for the sole purpose of

declaring the office of the Speaker vacant), did so in violation of the Rules of the

Sangguniang Pampook since the Assembly was then on recess; and (2) assuming that it

was valid, his ouster was ineffective nevertheless for lack of quorum.

Upon the facts presented, we hold that the November 2 and 5, 1987 sessions were invalid.

It is true that under Section 31 of the Region XII Sanggunian Rules, "[s]essions shall not be

suspended or adjourned except by direction of the Sangguniang Pampook," 35 but itprovides likewise that "the Speaker may, on [sic] his discretion, declare a recess of "short

intervals." 36 Of course, there is disagreement between the protagonists as to whether ornot the recess called by the petitioner effective November 1 through 15, 1987 is the

"recess of short intervals" referred to; the petitioner says that it is while the respondents

insist that, to all intents and purposes, it was an adjournment and that "recess" as used by

their Rules only refers to "a recess when arguments get heated up so that protagonists in a

debate can talk things out informally and obviate dissenssion [sic] and disunity. 37TheCourt agrees with the respondents on this regard, since clearly, the Rules speak of "short

intervals." Secondly, the Court likewise agrees that the Speaker could not have validly

called a recess since the Assembly had yet to convene on November 1, the date session


28/58

opens under the same Rules.38 Hence, there can be no recess to speak of that couldpossibly interrupt any session. But while this opinion is in accord with the respondents'

own, we still invalidate the twin sessions in question, since at the time the petitioner

called the "recess," it was not a settled matter whether or not he could. do so. In the

second place, the invitation tendered by the Committee on Muslim Affairs of the House of

Representatives provided a plausible reason for the intermission sought. Thirdly,

assuming that a valid recess could not be called, it does not appear that the respondents

called his attention to this mistake. What appears is that instead, they opened the sessions

themselves behind his back in an apparent act of mutiny. Under the circumstances, we

find equity on his side. For this reason, we uphold the "recess" called on the ground of

good faith.

It does not appear to us, moreover, that the petitioner had resorted to the aforesaid

"recess" in order to forestall the Assembly from bringing about his ouster. This is not

apparent from the pleadings before us. We are convinced that the invitation was what

precipitated it.

In holding that the "recess" in question is valid, we are not to be taken as establishing a

precedent, since, as we said, a recess can not be validly declared without a session havingbeen first opened. In upholding the petitioner herein, we are not giving him a carte

blanche to order recesses in the future in violation of the Rules, or otherwise to prevent

the lawful meetings thereof.

Neither are we, by this disposition, discouraging the Sanggunian from reorganizing itself

pursuant to its lawful prerogatives. Certainly, it can do so at the proper time. In the event

that be petitioner should initiate obstructive moves, the Court is certain that it is armed

with enough coercive remedies to thwart them. 39In view hereof, we find no need in dwelling on the issue of quorum.

WHEREFORE, premises considered, the petition is GRANTED. The Sangguniang Pampook,Region XII, is ENJOINED to (1) REINSTATE the petitioner as Member, Sangguniang

Pampook, Region XII; and (2) REINSTATE him as Speaker thereof. No costs.

SO ORDERED.

Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco,

Bidin, Cortes, Grio-Aquino, Medialdea andRegalado, JJ., concur.

Padilla, J., took no part.

Footnotes1 Rollo, 115-120; emphasis in the original.

2 Id., 6-7.

3 Id., 134-135.

4 Id., 134.

5 Id.

6 Id., 135.

7 Id.

8 Id., 142.

9 Id., 141.


29/58

10 Id.

11 Id.

12 Var-Orient Shipping Co., Inc. v. Achacoso, G.R. No. 81805, May 31, 1988.

13 Id., 135.

14 See CONST. (1987), art. III, sec. 11.

15 IMPLEMENTING THE ORGANIZATION OF THE SANGGUNIANG PAMPOOK AND THE

LUPONG TAGAPAGPAGANAP NG POOK IN REGION IX AND REGION XII AND FOR OTHER

PURPOSES.

16 Pres. Decree No. 1618, sec. 3.

17 Supra.

18 Supra.

19 Supra, sec. 4.

20 Supra.

21 Supra.

22 Supra, sec. 35(a).

23 CONST. (1973), art. XI, sec. 1; also CONST. (1987), supra, art. sec. 3.

24 Batas Blg. 337, sec 2.25 CONST. (1987), supra, art. X, sec. 4; Batas Blg. 337, supra, sec. 14.

26 Batas Blg. 337,supra; Hebron v. Reyes, 104 Phil. 175 (1958).

27 Hebron v. Reyes, supra.

28 Bernas, Joaquin, "Brewing storm over autonomy," The Manila Chronicle, pp. 4-5.

29 CONST. (1987), supra, art. X, sec. 1.

30 Supra, sec. 2.

31 Supra, sec. 15.

32 Batas Blg. 337, supra, sec. 14.

33 Pres. Decree No. 1618, supra, sec. 35 (b). Whether or not it is constitutional for thePresident to exercise control over the Sanggunians is another question.

34 Supra, sec. 7.

35 Rollo, Id., 122.

36 Id.

37 Id., 145-146.

38 Id., 121.

39 See Avelino v. Cuenco, 83 Phil. 17 (1949).


SUPREME COURTManila

SECOND DIVISION

G.R. No. 129093 August 30, 2001

HON. JOSE D. LINA, JR., SANGGUNIANG PANLALAWIGAN OF LAGUNA, and HON.CALIXTO CATAQUIZ, petitioners,vs.


30/58

HON. FRANCISCO DIZON PAO and TONY CALVENTO, respondents.QUISUMBING,J.:For our resolution is a petition for review on certiorari seeking the reversal of the decision

1 dated February 10, 1997 of the Regional Trial Court of San Pedro, Laguna, Branch 93,

enjoining petitioners from implementing or enforcing Kapasiyahan Bilang 508, Taon 1995,

of the Sangguniang Panlalawiganof Laguna and its subsequent Order 2 dated April 21,

1997 denying petitioners' motion for reconsideration.

On December 29, 1995, respondent Tony Calvento was appointed agent by the Philippine

Charity Sweepstakes Office (PCSO) to install Terminal OM 20 for the operation of lotto. He

asked Mayor Calixto Cataquiz, Mayor of San Pedro, Laguna, for a mayor's permit to open

the lotto outlet. This was denied by Mayor Cataquiz in a letter dated February 19, 1996.

The ground for said denial was an ordinance passed by the Sangguniang Panlalawigan of

Laguna entitled Kapasiyahan Blg. 508, T. 1995which was issued on September 18, 1995.

The ordinance reads:

ISANG KAPASIYAHAN TINUTUTULAN ANG MGA "ILLEGAL GAMBLING" LALO NA ANG

LOTTO SA LALAWIGAN NG LAGUNA

SAPAGKA'T, ang sugal dito sa lalawigan ng Laguna ay talamak na;SAPAGKA'T, ang sugal ay nagdudulot ng masasamang impluwensiya lalo't higit sa mga

kabataan;

KUNG KAYA'T DAHIL DITO, at sa mungkahi nina Kgg. Kgd. Juan M. Unico at Kgg. Kgd. Gat-

Ala A. Alatiit, pinangalawahan ni Kgg. Kgd. Meliton C. Larano at buong pagkakaisang

sinangayunan ng lahat ng dumalo sa pulong;

IPINASIYA, na tutulan gaya ng dito ay mahigpit na TINUTUTULAN ang ano mang uri ng

sugal dito sa lalawigan ng Laguna lalo't higit ang Lotto;

IPINASIYA PA RIN na hilingin tulad ng dito ay hinihiling sa Panlalawigang pinuno ng

Philippine National Police (PNP) Col. [illegible] na mahigpit na pag-ibayuhin

pubcorp cases - set1

Documents