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ATTORNEYS HUMBERTO BASCO, EDILBERTO BALCE, SOCRATES MARANAN ANDLORENZO SANCHEZ, petitioners,
vs.PHILIPPINE AMUSEMENTS AND GAMING CORPORATION (PAGCOR),
respondent.
PARAS, J.:p
A TV ad proudly announces:
"The new PAGCOR — responding through responsible gaming."
But the petitioners think otherwise, that is why, they filed the instant petition
seeking to annul the Philippine Amusement and Gaming Corporation (PAGCOR)Charter — PD 1869, because it is allegedly contrary to morals, public policy and
order, and because —
A. It constitutes a waiver of a right prejudicial to a third person with a
right recognized by law. It waived the Manila City government's right to impose
taxes and license fees, which is recognized by law;
B. For the same reason stated in the immediately preceding paragraph,
the law has intruded into the local government's right to impose local taxes and
icense fees. This, in contravention of the constitutionally enshrined principle of
ocal autonomy;
C. It violates the equal protection clause of the constitution in that it
egalizes 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)
n their Second Amended Petition, petitioners also claim that PD 1869 is contrary
to the declared national policy of the "new restored democracy" and the people's
will as expressed in the 1987 Constitution. The decree is said to have a "gambling
objective" and therefore is contrary to Sections 11, 12 and 13 of Article II, Sec. 1
of Article VIII and Section 3 (2) of Article XIV, of the present Constitution (p. 3,
Second Amended Petition; p. 21, Rollo).
The procedural issue is whether petitioners, as taxpayers and practicing lawyers
(petitioner Basco being also the Chairman of the Committee on Laws of the City
Council of Manila), can question and seek the annulment of PD 1869 on the
alleged grounds mentioned above.
The Philippine Amusements and Gaming Corporation (PAGCOR) was created by
virtue of P.D. 1067-A dated January 1, 1977 and was granted a franchise under
P.D. 1067-B also dated January 1, 1977 "to establish, operate and maintain
gambling casinos on land or water within the territorial jurisdiction of the
Philippines." Its operation was originally conducted in the well known floating
casino "Philippine Tourist." The operation was considered a success for it proved
to be a potential source of revenue to fund infrastructure and socio-economic
projects, thus, P.D. 1399 was passed on June 2, 1978 for PAGCOR to fully attain
this objective.
Subsequently, on July 11, 1983, PAGCOR was created under P.D. 1869 to enable
the Government to regulate and centralize all games of chance authorized by
existing franchise or permitted by law, under the following declared policy —
Sec. 1. Declaration of Policy. — It is hereby declared to be the policy of theState 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 tou
attractions; and (3) minimize, if not totally eradicate, all the evils, malpractice
and corruptions that are normally prevalent on the conduct and operation of
gambling clubs and casinos without direct government involvement. (Section
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 repeale
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 1989alone, 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 inco
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 associati
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. A
December 31, 1989, PAGCOR was employing 4,494 employees in its nine (9)
casinos nationwide, directly supporting the livelihood of Four Thousand Four
Hundred Ninety-Four (4,494) families.
But the petitioners, are questioning the validity of P.D. No. 1869. They allege
the same is "null and void" for being "contrary to morals, public policy and pu
order," monopolistic and tends toward "crony economy", and is violative of t
equal protection clause and local autonomy as well as for running counter to
state policies enunciated in Sections 11 (Personal Dignity and Human Rights),
(Family) and 13 (Role of Youth) of Article II, Section 1 (Social Justice) of Article
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 a
the most deliberate consideration by the Court, involving as it does the exerc
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
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 a
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
timidity. Where it is clear that the legislature or the executive for that matterover-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 th
Mr. Justice Zaldivar underscored the —
. . . thoroughly established principle which must be followed in all cases wher
questions of constitutionality as obtain in the instant cases are involved. All
presumptions are indulged in favor of constitutionality; one who attacks a sta
alleging unconstitutionality must prove its invalidity beyond a reasonable dou
that a law may work hardship does not render it unconstitutional; that if any
reasonable basis may be conceived which supports the statute, it will be uph
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 tha
liberal interpretation of the constitution in favor of the constitutionality oflegislation should be adopted. (Danner v. Hass, 194 N.W. 2nd 534, 539; Spurb
v. Statton, 106 N.W. 2nd 660, 663; 59 SCRA 66; see also e.g. Salas v. Jarencio,
SCRA 734, 739 [1970]; Peralta v. Commission on Elections, 82 SCRA 30, 55 [19
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,
Of course, there is first, the procedural issue. The respondents are questionin
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 with
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 proced
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and has taken cognizance of this petition. (Kapatiran ng mga Naglilingkod sa
Pamahalaan ng Pilipinas Inc. v. Tan, 163 SCRA 371)
With particular regard to the requirement of proper party as applied in the cases
before us, We hold that the same is satisfied by the petitioners and intervenors
because each of them has sustained or is in danger of sustaining an immediate
njury 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.
n 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 generalnterest 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
ssues raised.
Gambling in all its forms, unless allowed by law, is generally prohibited. But the
prohibition of gambling does not mean that the Government cannot regulate it in
the exercise of its police power.
The concept of police power is well-established in this jurisdiction. It has been
defined as the "state authority to enact legislation that may interfere with
personal liberty or property in order to promote the general welfare." (Edu v.
Ericta, 35 SCRA 481, 487) As defined, it consists of (1) an imposition or restraint
upon liberty or property, (2) in order to foster the common good. It is not capable
of an exact definition but has been, purposely, veiled in general terms to
underscore its all-comprehensive embrace. (Philippine Association of Service
Exporters, Inc. v. Drilon, 163 SCRA 386).
ts 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)
t finds no specific Constitutional grant for the plain reason that it does not owe
ts origin to the charter. Along with the taxing power and eminent domain, it is
nborn in the very fact of statehood and sovereignty. It is a fundamental attributeof 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)
t is "the most essential, insistent, and illimitable of powers." (Smith Bell & Co. v.
National, 40 Phil. 136) It is a dynamic force that enables the state to meet the
agencies of the winds of change.
What was the reason behind the enactment of P.D. 1869?
P.D. 1869 was enacted pursuant to the policy of the government to "regulate and
centralize thru an appropriate institution all games of chance authorized by
existing franchise or permitted by law" (1st whereas clause, PD 1869). As was
subsequently proved, regulating and centralizing gambling operations in onecorporate 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,
ies 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
evies of whatever nature, whether National or Local."
(2) Income and other taxes. — a) Franchise Holder: No tax of any kind
form, income or otherwise as well as fees, charges or levies of whatever natu
whether National or Local, shall be assessed and collected under this franchis
from the Corporation; nor shall any form or tax or charge attach in any way t
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 un
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 assessme
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 reason
(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 Ilo
Villanueva, 105 Phil. 337; Santos v. Municipality of Caloocan, 7 SCRA 643). Th
"the Charter or statute must plainly show an intent to confer that power or t
municipality cannot assume it" (Medina v. City of Baguio, 12 SCRA 62). Its "po
to tax" therefore must always yield to a legislative act which is superior havin
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
should be stressed that "municipal corporations are mere creatures of Congr
(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 (Hebro
Reyes, G.R. No. 9124, July 2, 1950). And if Congress can grant the City of Man
the power to tax certain matters, it can also provide for exemptions or even t
back the power.
(c) The City of Manila's power to impose license fees on gambling, ha
long been revoked. As early as 1975, the power of local governments to regu
gambling thru the grant of "franchise, licenses or permits" was withdrawn by
No. 771 and was vested exclusively on the National Government, thus:
Sec. 1. Any provision of law to the contrary notwithstanding, the authorit
chartered cities and other local governments to issue license, permit or other
form of franchise to operate, maintain and establish horse and dog race track
jai-alai and other forms of gambling is hereby revoked.
Sec. 2. Hereafter, all permits or franchises to operate, maintain and estab
horse and dog race tracks, jai-alai and other forms of gambling shall be issuedthe national government upon proper application and verification of the
qualification of the applicant . . .
Therefore, only the National Government has the power to issue "licenses or
permits" for the operation of gambling. Necessarily, the power to demand or
collect license fees which is a consequence of the issuance of "licenses or
permits" is no longer vested in the City of Manila.
(d) Local governments have no power to tax instrumentalities of the
National Government. PAGCOR is a government owned or controlled corpora
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
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 matters concerning the
operation of the affiliated entities, the provisions of the Corporation Code of
Philippines to the contrary notwithstanding, except only with respect to origi
incorporation.
PAGCOR has a dual role, to operate and to regulate gambling casinos. The lat
role is governmental, which places it in the category of an agency or
instrumentality of the Government. Being an instrumentality of the Governm
PAGCOR should be and actually is exempt from local taxes. Otherwise, its
operation might be burdened, impeded or subjected to control by a mere Loc
government.
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The states have no power by taxation or otherwise, to retard, impede, burden or
n 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
ocal 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
east, the instrumentalities of the United States (Johnson v. Maryland, 254 US 51)
and it can be agreed that no state or political subdivision can regulate a federal
nstrumentality in such a way as to prevent it from consummating its federal
responsibilities, or even to seriously burden it in the accomplishment of them.(Antieau, Modern Constitutional Law, Vol. 2, p. 140, emphasis supplied)
Otherwise, mere creatures of the State can defeat National policies thru
extermination of what local authorities may perceive to be undesirable activities
or enterprise using the power to tax as "a tool for regulation" (U.S. v. Sanchez,
340 US 42).
The power to tax which was called by Justice Marshall as the "power to destroy"
(Mc Culloch v. Maryland, supra) cannot be allowed to defeat an instrumentality
or creation of the very entity which has the inherent power to wield it.
(e) Petitioners also argue that the Local Autonomy Clause of the
Constitution will be violated by P.D. 1869. This is a pointless argument. Article X
of the 1987 Constitution (on Local Autonomy) provides:
Sec. 5. Each local government unit shall have the power to create its own
source of revenue and to levy taxes, fees, and other charges subject to such
guidelines and limitation as the congress may provide, consistent with the basic
policy on local autonomy. Such taxes, fees and charges shall accrue exclusively to
the local government. (emphasis supplied)
The power of local government to "impose taxes and fees" is always subject to
"limitations" which Congress may provide by law. Since PD 1869 remains an
"operative" law until "amended, repealed or revoked" (Sec. 3, Art. XVIII, 1987
Constitution), its "exemption clause" remains as an exception to the exercise of
the power of local governments to impose taxes and fees. It cannot therefore be
violative but rather is consistent with the principle of local autonomy.
Besides, the principle of local autonomy under the 1987 Constitution simply
means "decentralization" (III Records of the 1987 Constitutional Commission, pp.
435-436, as cited in Bernas, The Constitution of the Republic of the Philippines,Vol. II, First Ed., 1988, p. 374). It does not make local governments sovereign
within the state or an "imperium in imperio."
Local Government has been described as a political subdivision of a nation or
state which is constituted by law and has substantial control of local affairs. In a
unitary system of government, such as the government under the Philippine
Constitution, local governments can only be an intra sovereign subdivision of one
sovereign nation, it cannot be an imperium in imperio. Local government in such
a system can only mean a measure of decentralization of the function of
government. (emphasis supplied)
As to what state powers should be "decentralized" and what may be delegated to
ocal government units remains a matter of policy, which concerns wisdom. It is
therefore a political question. (Citizens Alliance for Consumer Protection v.
Energy Regulatory Board, 162 SCRA 539).
What is settled is that the matter of regulating, taxing or otherwise dealing with
gambling is a State concern and hence, it is the sole prerogative of the State to
retain it or delegate it to local governments.
As gambling is usually an offense against the State, legislative grant or express
charter power is generally necessary to empower the local corporation to deal
with the subject. . . . In the absence of express grant of power to enact, ordinance
provisions on this subject which are inconsistent with the state laws are void.
(Ligan v. Gadsden, Ala App. 107 So. 733 Ex-Parte Solomon, 9, Cals. 440, 27 PAC
757 following in re Ah You, 88 Cal. 99, 25 PAC 974, 22 Am St. Rep. 280, 11 LRA
480, as cited in Mc Quinllan Vol. 3 Ibid, p. 548, emphasis supplied)
Petitioners next contend that P.D. 1869 violates the equal protection clause of
the Constitution, because "it legalized PAGCOR — conducted gambling, while
most gambling are outlawed together with prostitution, drug trafficking and
other vices" (p. 82, Rollo).
We, likewise, find no valid ground to sustain this contention. The petitioners'
posture ignores the well-accepted meaning of the clause "equal protection o
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
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 establis
classes of individuals or objects upon which different rules shall operate (LauMisa, 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 o
equal protection is not clearly explained in the petition. The mere fact that so
gambling activities like cockfighting (P.D 449) horse racing (R.A. 306 as amen
by RA 983), sweepstakes, lotteries and races (RA 1169 as amended by B.P. 42
legalized under certain conditions, while others are prohibited, does not rend
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 overthr
because there are other instances to which it might have been applied. (Gom
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 sta
may do what it can to prevent which is deemed as evil and stop short of thos
cases in which harm to the few concerned is not less than the harm to the pu
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 fre
enterprise and privatization" suffice it to state that this is not a ground for thi
Court to nullify P.D. 1869. If, indeed, PD 1869 runs counter to the governmen
policies then it is for the Executive Department to recommend to Congress it
repeal or amendment.
The judiciary does not settle policy issues. The Court can only declare what th
law is and not what the law should be. Under our system of government, polissues are within the domain of the political branches of government and of t
people themselves as the repository of all state power. (Valmonte v. Belmont
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 intere
so requires. No combinations in restraint of trade or unfair competition shall
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 whethe
public interest demands that monopolies be regulated or prohibited. Again, t
a matter of policy for the Legislature to decide.
On petitioners' allegation that P.D. 1869 violates Sections 11 (Personality Dig12 (Family) and 13 (Role of Youth) of Article II; Section 13 (Social Justice) of A
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, pol
As such, they are basically not self-executing, meaning a law should be passe
Congress to clearly define and effectuate such principles.
In general, therefore, the 1935 provisions were not intended to be self-execu
principles ready for enforcement through the courts. They were rather direct
addressed to the executive and the legislature. If the executive and the
legislature failed to heed the directives of the articles the available remedy w
not judicial or political. The electorate could express their displeasure with th
failure of the executive and the legislature through the language of the ballot
(Bernas, Vol. II, p. 2)
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Every law has in its favor the presumption of constitutionality (Yu Cong Eng v.
Trinidad, 47 Phil. 387; Salas v. Jarencio, 48 SCRA 734; Peralta v. Comelec, 82 SCRA
30; Abbas v. Comelec, 179 SCRA 287). Therefore, for PD 1869 to be nullified, it
must be shown that there is a clear and unequivocal breach of the Constitution,
not merely a doubtful and equivocal one. In other words, the grounds for nullity
must be clear and beyond reasonable doubt. (Peralta v. Comelec, supra) Those
who petition this Court to declare a law, or parts thereof, unconstitutional must
clearly establish the basis for such a declaration. Otherwise, their petition must
fail. Based on the grounds raised by petitioners to challenge the constitutionality
of P.D. 1869, the Court finds that petitioners have failed to overcome the
presumption. The dismissal of this petition is therefore, inevitable. But as to
whether P.D. 1869 remains a wise legislation considering the issues of "morality,
monopoly, trend to free enterprise, privatization as well as the state principles on
social justice, role of youth and educational values" being raised, is up forCongress to determine.
As this Court held in Citizens' Alliance for Consumer Protection v. Energy
Regulatory Board, 162 SCRA 521 —
Presidential Decree No. 1956, as amended by Executive Order No. 137 has, in any
case, in its favor the presumption of validity and constitutionality which
petitioners Valmonte and the KMU have not overturned. Petitioners have not
undertaken to identify the provisions in the Constitution which they claim to have
been violated by that statute. This Court, however, is not compelled to speculate
and to imagine how the assailed legislation may possibly offend some provision
of the Constitution. The Court notes, further, in this respect that petitioners have
n the main put in question the wisdom, justice and expediency of the
establishment of the OPSF, issues which are not properly addressed to this Court
and which this Court may not constitutionally pass upon. Those issues should be
addressed rather to the political departments of government: the President and
the Congress.
Parenthetically, We wish to state that gambling is generally immoral, and this is
precisely so when the gambling resorted to is excessive. This excessiveness
necessarily depends not only on the financial resources of the gambler and his
family but also on his mental, social, and spiritual outlook on life. However, the
mere fact that some persons may have lost their material fortunes, mental
control, physical health, or even their lives does not necessarily mean that the
same are directly attributable to gambling. Gambling may have been the
antecedent, but certainly not necessarily the cause. For the same consequences
could have been preceded by an overdose of food, drink, exercise, work, and
even sex.
WHEREFORE, the petition is DISMISSED for lack of merit.
AQUILINO Q. PIMENTEL JR., petitioner, vs. Hon. ALEXANDER AGUIRRE in hiscapacity as Executive Secretary, Hon. EMILIA BONCODIN in her capacity as
Secretary of the Department of Budget and Management, respondents.
PANGANIBAN, J.:
The Constitution vests the President with the power of supervision, not control,
over local government units (LGUs). Such power enables him to see to it that
LGUs and their officials execute their tasks in accordance with law. While he may
ssue advisories and seek their cooperation in solving economic difficulties, he
cannot prevent them from performing their tasks and using available resources to
achieve their goals. He may not withhold or alter any authority or power given
them by the law. Thus, the withholding of a portion of internal revenue
allotments legally due them cannot be directed by administrative fiat.
The Case
Before us is an original Petition for Certiorari and Prohibition seeking (1) to annul
Section 1 of Administrative Order (AO) No. 372, insofar as it requires local
government units to reduce their expenditures by 25 percent of their authorized
regular appropriations for non-personal services; and (2) to enjoin respondents
from implementing Section 4 of the Order, which withholds a portion of their
nternal revenue allotments.
On November 17, 1998, Roberto Pagdanganan, through Counsel Alberto C. Agra,
filed a Motion for Intervention/Motion to Admit Petition for Intervention,[1]
attaching thereto his Petition in Intervention[2] joining petitioner in the reliefs
sought. At the time, intervenor was the provincial governor of Bulacan, national
president of the League of Provinces of the Philippines and chairman of the
League of Leagues of Local Governments. In a Resolution dated December 15,
1998, the Court noted said Motion and Petition.
The Facts and the Arguments
On December 27, 1997, the President of the Philippines issued AO 372. Its fu
text, with emphasis on the assailed provisions, is as follows:
"ADMINISTRATIVE ORDER NO. 372
ADOPTION OF ECONOMY MEASURES IN GOVERNMENT FOR FY 1998
WHEREAS, the current economic difficulties brought about by the peso
depreciation requires continued prudence in government f iscal management
maintain economic stability and sustain the country's growth momentum;
WHEREAS, it is imperative that all government agencies adopt cash managem
measures to match expenditures with available resources;
NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the
Philippines, by virtue of the powers vested in me by the Constitution, do here
order and direct:
SECTION 1. All government departments and agencies, including state
universities and colleges, government-owned and controlled corporations an
local governments units will identify and implement measures in FY 1998 tha
reduce total expenditures for the year by at least 25% of authorized regular
appropriations for non-personal services items, along the following suggested
areas:
1. Continued implementation of the streamlining policy on organization and
staffing by deferring action on the following:
a. Operationalization of new agencies;
b. Expansion of organizational units and/or creation of positions;
c. Filling of positions; and
d. Hiring of additional/new consultants, contractual and casual personnel
regardless of funding source.
2. Suspension of the following activities:
a. Implementation of new capital/infrastructure projects, except those wh
have already been contracted out;
b. Acquisition of new equipment and motor vehicles;
c. All foreign travels of government personnel, except those associated w
scholarships and trainings funded by grants;
d. Attendance in conferences abroad where the cost is charged to the
government except those clearly essential to Philippine commitments in the
international field as may be determined by the Cabinet;
e. Conduct of trainings/workshops/seminars, except those conducted by
government training institutions and agencies in the performance of their reg
functions and those that are funded by grants;
f. Conduct of cultural and social celebrations and sports activities, except
those associated with the Philippine Centennial celebration and those involvi
regular competitions/events;
g. Grant of honoraria, except in cases where it constitutes the only source
compensation from government received by the person concerned;
h. Publications, media advertisements and related items, except those
required by law or those already being undertaken on a regular basis;
i. Grant of new/additional benefits to employees, except those expressly
specifically authorized by law; and
j. Donations, contributions, grants and gifts, except those given by institu
to victims of calamities.
3. Suspension of all tax expenditure subsidies to all GOCCs and LGUs
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4. Reduction in the volume of consumption of fuel, water, office supplies,
electricity and other utilities
5. Deferment of projects that are encountering significant implementation
problems
6. Suspension of all realignment of funds and the use of savings and reserves
SECTION 2. Agencies are given the flexibility to identify the specific sources of
cost-savings, provided the 25% minimum savings under Section 1 is complied
with.
SECTION 3. A report on the estimated savings generated from these measures
shall be submitted to the Office of the President, through the Department ofBudget and Management, on a quarterly basis using the attached format.
SECTION 4. Pending the assessment and evaluation by the Development Budget
Coordinating Committee of the emerging fiscal situation, the amount equivalent
to 10% of the internal revenue allotment to local government units shall be
withheld.
SECTION 5. The Development Budget Coordination Committee shall conduct a
monthly review of the fiscal position of the National Government and if
necessary, shall recommend to the President the imposition of additional
reserves or the lifting of previously imposed reserves.
SECTION 6. This Administrative Order shall take effect January 1, 1998 and shall
remain valid for the entire year unless otherwise lifted.
DONE in the City of Manila, this 27th day of December, in the year of our Lord,
nineteen hundred and ninety-seven."
Subsequently, on December 10, 1998, President Joseph E. Estrada issued AO 43,
amending Section 4 of AO 372, by reducing to five percent (5%) the amount of
nternal revenue allotment (IRA) to be withheld from the LGUs.
Petitioner contends that the President, in issuing AO 372, was in effect exercising
the power of control over LGUs. The Constitution vests in the President,
however, only the power of general supervision over LGUs, consistent with the
principle of local autonomy. Petitioner further argues that the directive to
withhold ten percent (10%) of their IRA is in contravention of Section 286 of the
Local Government Code and of Section 6, Article X of the Constitution, providing
for the automatic release to each of these units its share in the national internal
revenue.
The solicitor general, on behalf of the respondents, claims on the other hand that
AO 372 was issued to alleviate the "economic difficulties brought about by the
peso devaluation" and constituted merely an exercise of the President's power of
supervision over LGUs. It allegedly does not violate local fiscal autonomy,
because it merely directs local governments to identify measures that will reduce
their total expenditures for non-personal services by at least 25 percent.
Likewise, the withholding of 10 percent of the LGUs’ IRA does not violate the
statutory prohibition on the imposition of any lien or holdback on their revenue
shares, because such withholding is "temporary in nature pending the
assessment and evaluation by the Development Coordination Committee of the
emerging fiscal situation."
The Issues
The Petition[3] submits the following issues for the Court's resolution:
"A. Whether or not the president committed grave abuse of discretion [in]
ordering all LGUS to adopt a 25% cost reduction program in violation of the
LGU[']S fiscal autonomy
"B. Whether or not the president committed grave abuse of discretion in
ordering the withholding of 10% of the LGU[']S IRA"
n sum, the main issue is whether (a) Section 1 of AO 372, insofar as it "directs"
LGUs to reduce their expenditures by 25 percent; and (b) Section 4 of the same
ssuance, which withholds 10 percent of their internal revenue allotments, are
valid exercises of the President's power of general supervision over local
governments.
Additionally, the Court deliberated on the question whether petitioner had the
ocus standi to bring this suit, despite respondents' failure to raise the issue.[4]
However, the intervention of Roberto Pagdanganan has rendered academic a
further discussion on this matter.
The Court's Ruling
The Petition is partly meritorious.
Main Issue:
Validity of AO 372
Insofar as LGUs Are Concerned
Before resolving the main issue, we deem it important and appropriate to de
certain crucial concepts: (1) the scope of the President's power of general
supervision over local governments and (2) the extent of the local governme
autonomy.
Scope of President's Power of Supervision Over LGUs
Section 4 of Article X of the Constitution confines the President's power over
governments to one of general supervision. It reads as follows:
"Sec. 4. The President of the Philippines shall exercise general supervision o
local governments. x x x"
This provision has been interpreted to exclude the power of control. In Mon
v. Silvosa,[5] the Court contrasted the President's power of supervision over
government officials with that of his power of control over executive officials
the national government. It was emphasized that the two terms -- supervisio
and control -- differed in meaning and extent. The Court distinguished them
follows:
"x x x In administrative law, supervision means overseeing or the power or
authority of an officer to see that subordinate officers perform their duties.
latter fail or neglect to fulfill them, the former may take such action or step a
prescribed by law to make them perform their duties. Control, on the other
hand, means the power of an officer to alter or modify or nullify or set aside
a subordinate officer ha[s] done in the performance of his duties and to
substitute the judgment of the former for that of the latter."[6]
In Taule v. Santos,[7] we further stated that the Chief Executive wielded no m
authority than that of checking whether local governments or their officials w
performing their duties as provided by the fundamental law and by statutes.
cannot interfere with local governments, so long as they act within the scope
their authority. "Supervisory power, when contrasted with control, is the pow
of mere oversight over an inferior body; it does not include any restraining
authority over such body,"[8] we said.
In a more recent case, Drilon v. Lim,[9] the difference between control and
supervision was further delineated. Officers in control lay down the rules in t
performance or accomplishment of an act. If these rules are not followed, th
may, in their discretion, order the act undone or redone by their subordinate
even decide to do it themselves. On the other hand, supervision does not co
such authority. Supervising officials merely see to it that the rules are follow
but they themselves do not lay down such rules, nor do they have the discret
to modify or replace them. If the rules are not observed, they may order the
work done or redone, but only to conform to such rules. They may not presc
their own manner of execution of the act. They have no discretion on this m
except to see to it that the rules are followed.
Under our present system of government, executive power is vested in the
President.[10] The members of the Cabinet and other executive officials are
merely alter egos. As such, they are subject to the power of control of thePresident, at whose will and behest they can be removed from office; or thei
actions and decisions changed, suspended or reversed.[11] In contrast, the h
of political subdivisions are elected by the people. Their sovereign powers
emanate from the electorate, to whom they are directly accountable. By
constitutional fiat, they are subject to the President’s supervision only, not
control, so long as their acts are exercised within the sphere of their legitimat
powers. By the same token, the President may not withhold or alter any
authority or power given them by the Constitution and the law.
Extent of Local Autonomy
Hand in hand with the constitutional restraint on the President's power over
governments is the state policy of ensuring local autonomy.[12]
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n Ganzon v. Court of Appeals,[13] we said that local autonomy signified "a more
responsive and accountable local government structure instituted through a
system of decentralization." The grant of autonomy is intended to "break up the
monopoly of the national government over the affairs of local governments, x x x
not x x x to end the relation of partnership and interdependence between the
central administration and local government units x x x." Paradoxically, local
governments are still subject to regulation, however limited, for the purpose of
enhancing self-government.[14]
Decentralization simply means the devolution of national administration, not
power, to local governments. Local officials remain accountable to the central
government as the law may provide.[15] The difference between decentralization
of administration and that of power was explained in detail in Limbona v.
Mangelin[16] as follows:
"Now, 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,'[17] and 'ensure their fullest
development as self-reliant communities and make them more effective partners
n the pursuit of national development and social progress.'[18] At the same time,
t relieves the central government of the burden of managing local affairs and
enables it to concentrate on national concerns. The President exercises 'general
supervision'[19] over them, but only to 'ensure that local affairs are administered
according to law.'[20] He has no control over their acts in the sense that he can
substitute their judgments with his own.[21]
Decentralization of power, on the other hand, involves an abdication of political
power in the favor of local government units declared 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."[22]
Under the Philippine concept of local autonomy, the national government has not
completely relinquished all its powers over local governments, including
autonomous regions. Only administrative powers over local affairs are delegated
to political subdivisions. The purpose of the delegation is to make governance
more directly responsive and effective at the local levels. In turn, economic,
political and social development at the smaller political units are expected to
propel social and economic growth and development. But to enable the country
to develop as a whole, the programs and policies effected locally must be
ntegrated and coordinated towards a common national goal. Thus, policy-setting for the entire country still lies in the President and Congress. As we stated
n Magtajas v. Pryce Properties Corp., Inc., municipal governments are still agents
of the national government.[23]
The Nature of AO 372
Consistent with the foregoing jurisprudential precepts, let us now look into the
nature of AO 372. As its preambular clauses declare, the Order was a "cash
management measure" adopted by the government "to match expenditures with
available resources," which were presumably depleted at the time due to
"economic difficulties brought about by the peso depreciation." Because of a
ooming financial crisis, the President deemed it necessary to "direct all
government agencies, state universities and colleges, government-owned and
controlled corporations as well as local governments to reduce their total
expenditures by at least 25 percent along suggested areas mentioned in AO 372.
Under existing law, local government units, in addition to having administrative
autonomy in the exercise of their functions, enjoy fiscal autonomy as well. Fiscal
autonomy means that local governments have the power to create their own
sources of revenue in addition to their equitable share in the national taxes
released by the national government, as well as the power to allocate their
resources in accordance with their own priorities. It extends to the preparation
of their budgets, and local officials in turn have to work within the constraints
thereof. They are not formulated at the national level and imposed on local
governments, whether they are relevant to local needs and resources or not.
Hence, the necessity of a balancing of viewpoints and the harmonization of
proposals from both local and national officials,[24] who in any case are partners
n the attainment of national goals.
Local fiscal autonomy does not however rule out any manner of national
government intervention by way of supervision, in order to ensure that local
programs, fiscal and otherwise, are consistent with national goals. Significan
the President, by constitutional fiat, is the head of the economic and planning
agency of the government,[25] primarily responsible for formulating and
implementing continuing, coordinated and integrated social and economic
policies, plans and programs[26] for the entire country. However, under the
Constitution, the formulation and the implementation of such policies and
programs are subject to "consultations with the appropriate public agencies,
various private sectors, and local government units." The President cannot d
unilaterally.
Consequently, the Local Government Code provides:[27]
"x x x [ I]n the event the national government incurs an unmanaged public sec
deficit, the President of the Philippines is hereby authorized, upon therecommendation of [the] Secretary of Finance, Secretary of the Interior and
Government and Secretary of Budget and Management, and subject to
consultation with the presiding officers of both Houses of Congress and the
presidents of the liga, to make the necessary adjustments in the internal reve
allotment of local government units but in no case shall the allotment be less
than thirty percent (30%) of the collection of national internal revenue taxes
the third fiscal year preceding the current fiscal year x x x."
There are therefore several requisites before the President may interfere in l
fiscal matters: (1) an unmanaged public sector deficit of the national
government; (2) consultations with the presiding officers of the Senate and t
House of Representatives and the presidents of the various local leagues; and
the corresponding recommendation of the secretaries of the Department of
Finance, Interior and Local Government, and Budget and Management.
Furthermore, any adjustment in the allotment shall in no case be less than th
percent (30%) of the collection of national internal revenue taxes of the third
fiscal year preceding the current one.
Petitioner points out that respondents failed to comply with these requisites
before the issuance and the implementation of AO 372. At the very least, the
did not even try to show that the national government was suffering from an
unmanageable public sector deficit. Neither did they claim having conducted
consultations with the different leagues of local governments. Without these
requisites, the President has no authority to adjust, much less to reduce,
unilaterally the LGU's internal revenue allotment.
The solicitor general insists, however, that AO 372 is merely directory and ha
been issued by the President consistent with his power of supervision over lo
governments. It is intended only to advise all government agencies and
instrumentalities to undertake cost-reduction measures that will help mainta
economic stability in the country, which is facing economic difficulties. Besiddoes not contain any sanction in case of noncompliance. Being merely an
advisory, therefore, Section 1 of AO 372 is well within the powers of the
President. Since it is not a mandatory imposition, the directive cannot be
characterized as an exercise of the power of control.
While the wordings of Section 1 of AO 372 have a rather commanding tone, a
while we agree with petitioner that the requirements of Section 284 of the Lo
Government Code have not been satisfied, we are prepared to accept the
solicitor general's assurance that the directive to "identify and implement
measures x x x that will reduce total expenditures x x x by at least 25% of
authorized regular appropriation" is merely advisory in character, and does n
constitute a mandatory or binding order that interferes with local autonomy.
language used, while authoritative, does not amount to a command that
emanates from a boss to a subaltern.
Rather, the provision is merely an advisory to prevail upon local executives torecognize the need for fiscal restraint in a period of economic difficulty. Inde
all concerned would do well to heed the President's call to unity, solidarity an
teamwork to help alleviate the crisis. It is understood, however, that no lega
sanction may be imposed upon LGUs and their officials who do not follow suc
advice. It is in this light that we sustain the solicitor general's contention in
regard to Section 1.
Withholding a Part of LGUs' IRA
Section 4 of AO 372 cannot, however, be upheld. A basic feature of local fisc
autonomy is the automatic release of the shares of LGUs in the national inter
revenue. This is mandated by no less than the Constitution.[28] The Local
Government Code[29] specifies further that the release shall be made directl
the LGU concerned within five (5) days after every quarter of the year and "sh
not be subject to any lien or holdback that may be imposed by the national
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government for whatever purpose."[30] As a rule, the term "shall" is a word of
command that must be given a compulsory meaning.[31] The provision is,
therefore, imperative.
Section 4 of AO 372, however, orders the withholding, effective January 1, 1998,
of 10 percent of the LGUs' IRA "pending the assessment and evaluation by the
Development Budget Coordinating Committee of the emerging fiscal situation" in
the country. Such withholding clearly contravenes the Constitution and the law.
Although temporary, it is equivalent to a holdback, which means "something held
back or withheld, often temporarily."[32] Hence, the "temporary" nature of the
retention by the national government does not matter. Any retention is
prohibited.
n sum, while Section 1 of AO 372 may be upheld as an advisory effected in timesof national crisis, Section 4 thereof has no color of validity at all. The latter
provision effectively encroaches on the fiscal autonomy of local governments.
Concededly, the President was well-intentioned in issuing his Order to withhold
the LGUs’ IRA, but the rule of law requires that even the best intentions must be
carried out within the parameters of the Constitution and the law. Verily,
audable purposes must be carried out by legal methods.
Refutation of Justice Kapunan's Dissent
Mr. Justice Santiago M. Kapunan dissents from our Decision on the grounds that,
allegedly, (1) the Petition is premature; (2) AO 372 falls within the powers of the
President as chief fiscal officer; and (3) the withholding of the LGUs’ IRA is implied
n the President's authority to adjust it in case of an unmanageable public sector
deficit.
First, on prematurity. According to the Dissent, when "the conduct has not yet
occurred and the challenged construction has not yet been adopted by the
agency charged with administering the administrative order, the determination of
the scope and constitutionality of the executive action in advance of its
mmediate adverse effect involves too remote and abstract an inquiry for the
proper exercise of judicial function."
This is a rather novel theory - - that people should await the implementing evil to
befall on them before they can question acts that are illegal or unconstitutional.
Be it remembered that the real issue here is whether the Constitution and the
aw are contravened by Section 4 of AO 372, not whether they are violated by the
acts implementing it. In the unanimous en banc case Tañada v. Angara,[33] this
Court held that when an act of the legislative department is seriously alleged to
have infringed the Constitution, settling the controversy becomes the duty of this
Court. By the mere enactment of the questioned law or the approval of the
challenged action, the dispute is said to have ripened into a judicial controversyeven without any other overt act. Indeed, even a singular violation of the
Constitution and/or the law is enough to awaken judicial duty. Said the Court:
"In seeking to nullify an act of the Philippine Senate on the ground that it
contravenes the Constitution, the petition no doubt raises a justiciable
controversy. Where an action of the legislative branch is seriously alleged to
have infringed the Constitution, it becomes not only the right but in fact the duty
of the judiciary to settle the dispute. 'The question thus posed is judicial rather
than political. The duty (to adjudicate) remains to assure that the supremacy of
the Constitution is upheld.'[34] Once a 'controversy as to the application or
nterpretation of a constitutional provision is raised before this Court x x x , it
becomes a legal issue which the Court is bound by constitutional mandate to
decide.'[35]
x x x x x x x x x
"As this Court has repeatedly and firmly emphasized in many cases,[36] it will not
shirk, digress from or abandon its sacred duty and authority to uphold the
Constitution in matters that involve grave abuse of discretion brought before it in
appropriate cases, committed by any officer, agency, instrumentality or
department of the government."
n the same vein, the Court also held in Tatad v. Secretary of the Department of
Energy:[37]
"x x x Judicial power includes not only the duty of the courts to settle actual
controversies involving rights which are legally demandable and enforceable, but
also the duty to determine whether or not there has been grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of any branch or
nstrumentality of government. The courts, as guardians of the Constitution,
have the inherent authority to determine whether a statute enacted by the
legislature transcends the limit imposed by the fundamental law. Where the
statute violates the Constitution, it is not only the right but the duty of the
judiciary to declare such act unconstitutional and void."
By the same token, when an act of the President, who in our constitutional
scheme is a coequal of Congress, is seriously alleged to have infringed the
Constitution and the laws, as in the present case, settling the dispute become
the duty and the responsibility of the courts.
Besides, the issue that the Petition is premature has not been raised by the
parties; hence it is deemed waived. Considerations of due process really pre
its use against a party that has not been given sufficient notice of its
presentation, and thus has not been given the opportunity to refute it.[38]
Second, on the President's power as chief fiscal officer of the country. Justice
Kapunan posits that Section 4 of AO 372 conforms with the President's role a
chief fiscal officer, who allegedly "is clothed by law with certain powers to en
the observance of safeguards and auditing requirements, as well as the legal
prerequisites in the release and use of IRAs, taking into account the constitut
and statutory mandates."[39] He cites instances when the President may law
intervene in the fiscal affairs of LGUs.
Precisely, such powers referred to in the Dissent have specifically been
authorized by law and have not been challenged as violative of the Constituti
On the other hand, Section 4 of AO 372, as explained earlier, contravenes ex
provisions of the Local Government Code (LGC) and the Constitution. In othe
words, the acts alluded to in the Dissent are indeed authorized by law; but, q
the opposite, Section 4 of AO 372 is bereft of any legal or constitutional basis
Third, on the President's authority to adjust the IRA of LGUs in case of an
unmanageable public sector deficit. It must be emphasized that in striking do
Section 4 of AO 372, this Court is not ruling out any form of reduction in the I
of LGUs. Indeed, as the President may make necessary adjustments in case o
unmanageable public sector deficit, as stated in the main part of this Decision
and in line with Section 284 of the LGC, which Justice Kapunan cites. He,
however, merely glances over a specific requirement in the same provision --
such reduction is subject to consultation with the presiding officers of both
Houses of Congress and, more importantly, with the presidents of the league
local governments.
Notably, Justice Kapunan recognizes the need for "interaction between the
national government and the LGUs at the planning level," in order to ensure t
"local development plans x x x hew to national policies and standards." The
problem is that no such interaction or consultation was ever held prior to the
issuance of AO 372. This is why the petitioner and the intervenor (who was aprovincial governor and at the same time president of the League of Province
the Philippines and chairman of the League of Leagues of Local Governments
have protested and instituted this action. Significantly, respondents do not d
the lack of consultation.
In addition, Justice Kapunan cites Section 287[40] of the LGC as impliedly
authorizing the President to withhold the IRA of an LGU, pending its complian
with certain requirements. Even a cursory reading of the provision reveals th
is totally inapplicable to the issue at bar. It directs LGUs to appropriate in the
annual budgets 20 percent of their respective IRAs for development projects
speaks of no positive power granted the President to priorly withhold any
amount. Not at all.
WHEREFORE, the Petition is GRANTED. Respondents and their successors ar
hereby permanently PROHIBITED from implementing Administrative Order N
372 and 43, respectively dated December 27, 1997 and December 10, 1998,insofar as local government units are concerned.
SOCIAL JUSTICE SOCIETY (SJS), VLADIMIR ALARIQUE T. CABIGAO, andBONIFACIO S. TUMBOKON, Petitioners,
vs.HON. JOSE L. ATIENZA, JR., in his capacity as Mayor of the City of Manila
Respondent.
D E C I S I O N
CORONA, J.:
In this original petition for mandamus,1 petitioners Social Justice Society (SJS
Vladimir Alarique T. Cabigao and Bonifacio S. Tumbokon seek to compel
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respondent Hon. Jose L. Atienza, Jr., mayor of the City of Manila, to enforce
Ordinance No. 8027.
The antecedents are as follows.
On November 20, 2001, the Sangguniang Panlungsod of Manila enacted
Ordinance No. 8027.2 Respondent mayor approved the ordinance on November
28, 2001.3 It became effective on December 28, 2001, after its publication.4
Ordinance No. 8027 was enacted pursuant to the police power delegated to local
government units, a principle described as the power inherent in a government
to enact laws, within constitutional limits, to promote the order, safety, health,
morals and general welfare of the society.5 This is evident from Sections 1 and 3
thereof which state:
SECTION 1. For the purpose of promoting sound urban planning and ensuring
health, public safety, and general welfare of the residents of Pandacan and Sta.
Ana as well as its adjoining areas, the land use of [those] portions of land
bounded by the Pasig River in the north, PNR Railroad Track in the east, Beata St.
n the south, Palumpong St. in the southwest, and Estero de Pancacan in the
west[,] PNR Railroad in the northwest area, Estero de Pandacan in the
[n]ortheast, Pasig River in the southeast and Dr. M.L. Carreon in the southwest.
The area of Punta, Sta. Ana bounded by the Pasig River, Marcelino Obrero St.,
Mayo 28 St., and F. Manalo Street, are hereby reclassified from Industrial II to
Commercial I.
xxx xxx xxx
SEC. 3. Owners or operators of industries and other businesses, the operation of
which are no longer permitted under Section 1 hereof, are hereby given a period
of six (6) months from the date of effectivity of this Ordinance within which to
cease and desist from the operation of businesses which are hereby in
consequence, disallowed.
Ordinance No. 8027 reclassified the area described therein from industrial to
commercial and directed the owners and operators of businesses disallowed
under Section 1 to cease and desist from operating their businesses within six
months from the date of effectivity of the ordinance. Among the businesses
situated in the area are the so-called "Pandacan Terminals" of the oil companies
Caltex (Philippines), Inc., Petron Corporation and Pilipinas Shell Petroleum
Corporation.
However, on June 26, 2002, the City of Manila and the Department of Energy
(DOE) entered into a memorandum of understanding (MOU)6 with the oil
companies in which they agreed that "the scaling down of the PandacanTerminals [was] the most viable and practicable option." Under the MOU, the oil
companies agreed to perform the following:
Section 1. - Consistent with the objectives stated above, the OIL COMPANIES
shall, upon signing of this MOU, undertake a program to scale down the
Pandacan Terminals which shall include, among others, the immediate
removal/decommissioning process of TWENTY EIGHT (28) tanks starting with the
LPG spheres and the commencing of works for the creation of safety buffer and
green zones surrounding the Pandacan Terminals. xxx
Section 2. – Consistent with the scale-down program mentioned above, the OIL
COMPANIES shall establish joint operations and management, including the
operation of common, integrated and/or shared facilities, consistent with
nternational and domestic technical, safety, environmental and economic
considerations and standards. Consequently, the joint operations of the OIL
COMPANIES in the Pandacan Terminals shall be limited to the common andntegrated areas/facilities. A separate agreement covering the commercial and
operational terms and conditions of the joint operations, shall be entered into by
the OIL COMPANIES.
Section 3. - The development and maintenance of the safety and green buffer
zones mentioned therein, which shall be taken from the properties of the OIL
COMPANIES and not from the surrounding communities, shall be the sole
responsibility of the OIL COMPANIES.
The City of Manila and the DOE, on the other hand, committed to do the
following:
Section 1. - The City Mayor shall endorse to the City Council this MOU for its
appropriate action with the view of implementing the spirit and intent thereof.
Section 2. - The City Mayor and the DOE shall, consistent with the spirit and
intent of this MOU, enable the OIL COMPANIES to continuously operate in
compliance with legal requirements, within the limited area resulting from th
joint operations and the scale down program.
Section 3. - The DOE and the City Mayor shall monitor the OIL COMPANIES’
compliance with the provisions of this MOU.
Section 4. - The CITY OF MANILA and the national government shall protect t
safety buffer and green zones and shall exert all efforts at preventing future
occupation or encroachment into these areas by illegal settlers and other
unauthorized parties.
The Sangguniang Panlungsod ratified the MOU in Resolution No. 97.7 In the sresolution, the Sanggunian declared that the MOU was effective only for a pe
of six months starting July 25, 2002.8 Thereafter, on January 30, 2003, the
Sanggunian adopted Resolution No. 139 extending the validity of Resolution
97 to April 30, 2003 and authorizing Mayor Atienza to issue special business
permits to the oil companies. Resolution No. 13, s. 2003 also called for a
reassessment of the ordinance.10
Meanwhile, petitioners filed this original action for mandamus on December
2002 praying that Mayor Atienza be compelled to enforce Ordinance No. 802
and order the immediate removal of the terminals of the oil companies.11
The issues raised by petitioners are as follows:
1. whether respondent has the mandatory legal duty to enforce Ordinance N
8027 and order the removal of the Pandacan Terminals, and
2. whether the June 26, 2002 MOU and the resolutions ratifying it can amend
repeal Ordinance No. 8027.12
Petitioners contend that respondent has the mandatory legal duty, under Sec
455 (b) (2) of the Local Government Code (RA 7160),13 to enforce Ordinance
8027 and order the removal of the Pandacan Terminals of the oil companies.
Instead, he has allowed them to stay.
Respondent’s defense is that Ordinance No. 8027 has been superseded by th
MOU and the resolutions.14 However, he also confusingly argues that the
ordinance and MOU are not inconsistent with each other and that the latter
not amended the former. He insists that the ordinance remains valid and in f
force and effect and that the MOU did not in any way prevent him from enfo
and implementing it. He maintains that the MOU should be considered as a m
guideline for its full implementation.15
Under Rule 65, Section 316 of the Rules of Court, a petition for mandamus m
be filed when any tribunal, corporation, board, officer or person unlawfully
neglects the performance of an act which the law specifically enjoins as a dut
resulting from an office, trust or station. Mandamus is an extraordinary writ t
is employed to compel the performance, when refused, of a ministerial duty
is already imposed on the respondent and there is no other plain, speedy and
adequate remedy in the ordinary course of law. The petitioner should have a
well-defined, clear and certain legal right to the performance of the act and i
must be the clear and imperative duty of respondent to do the act required t
done.17
Mandamus will not issue to enforce a right, or to compel compliance with a d
which is questionable or over which a substantial doubt exists. The principal
function of the writ of mandamus is to command and to expedite, not to inqu
and to adjudicate; thus, it is neither the office nor the aim of the writ to seculegal right but to implement that which is already established. Unless the righ
the relief sought is unclouded, mandamus will not issue.18
To support the assertion that petitioners have a clear legal right to the
enforcement of the ordinance, petitioner SJS states that it is a political party
registered with the Commission on Elections and has its offices in Manila. It
claims to have many members who are residents of Manila. The other
petitioners, Cabigao and Tumbokon, are allegedly residents of Manila.
We need not belabor this point. We have ruled in previous cases that when a
mandamus proceeding concerns a public right and its object is to compel a p
duty, the people who are interested in the execution of the laws are regarded
the real parties in interest and they need not show any specific interest.19
Besides, as residents of Manila, petitioners have a direct interest in the
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enforcement of the city’s ordinances. Respondent never questioned the right of
petitioners to institute this proceeding.
On the other hand, the Local Government Code imposes upon respondent the
duty, as city mayor, to "enforce all laws and ordinances relative to the
governance of the city.">20 One of these is Ordinance No. 8027. As the chief
executive of the city, he has the duty to enforce Ordinance No. 8027 as long as it
has not been repealed by the Sanggunian or annulled by the courts.21 He has no
other choice. It is his ministerial duty to do so. In Dimaporo v. Mitra, Jr.,22 we
stated the reason for this:
These officers cannot refuse to perform their duty on the ground of an alleged
nvalidity of the statute imposing the duty. The reason for this is obvious. It might
seriously hinder the transaction of public business if these officers were to bepermitted in all cases to question the constitutionality of statutes and ordinances
mposing duties upon them and which have not judicially been declared
unconstitutional. Officers of the government from the highest to the lowest are
creatures of the law and are bound to obey it.23
The question now is whether the MOU entered into by respondent with the oil
companies and the subsequent resolutions passed by the Sanggunian have made
the respondent’s duty to enforce Ordinance No. 8027 doubtful, unclear or
uncertain. This is also connected to the second issue raised by petitioners, that is,
whether the MOU and Resolution Nos. 97, s. 2002 and 13, s. 2003 of the
Sanggunian can amend or repeal Ordinance No. 8027.
We need not resolve this issue. Assuming that the terms of the MOU were
nconsistent with Ordinance No. 8027, the resolutions which ratified it and made
t binding on the City of Manila expressly gave it full force and effect only until
April 30, 2003. Thus, at present, there is nothing that legally hinders respondent
from enforcing Ordinance No. 8027.24
Ordinance No. 8027 was enacted right after the Philippines, along with the rest of
the world, witnessed the horror of the September 11, 2001 attack on the Twin
Towers of the World Trade Center in New York City. The objective of the
ordinance is to protect the residents of Manila from the catastrophic devastation
that will surely occur in case of a terrorist attack25 on the Pandacan Terminals.
No reason exists why such a protective measure should be delayed.
WHEREFORE, the petition is hereby GRANTED. Respondent Hon. Jose L. Atienza,
Jr., as mayor of the City of Manila, is directed to immediately enforce Ordinance
No. 8027.
Province of Rizal v Exec Sec
The earth belongs in usufruct to the living.[1]
At the height of the garbage crisis plaguing Metro Manila and its environs, parts
of the Marikina Watershed Reservation were set aside by the Office of the
President, through Proclamation No. 635 dated 28 August 1995, for use as a
sanitary landfill and similar waste disposal applications. In fact, this site,
extending to more or less 18 hectares, had already been in operation since 19
February 1990[2] for the solid wastes of Quezon City, Marikina, San Juan,
Mandaluyong, Pateros, Pasig, and Taguig.[3]
This is a petition filed by the Province of Rizal, the municipality of San
Mateo, and various concerned citizens for review on certiorari of the Decision of
the Court of Appeals in CA-G.R. SP No. 41330, denying, for lack of cause of action,
the petition for certiorari, prohibition and mandamus with application for a
temporary restraining order/writ of preliminary injunction assailing the legality
and constitutionality of Proclamation No. 635.
The facts are documented in painstaking detail.
On 17 November 1988, the respondent Secretaries of the Department of Public
Works and Highways (DPWH) and the Department of Environment and Natural
Resources (DENR) and the Governor of the Metropolitan Manila Commission
(MMC) entered into a Memorandum of Agreement (MOA),[4] which provides in
part:
1. The DENR agrees to immediately allow the
utilization by the Metropolitan Manila Commission of its land property located at
Pintong Bocaue in San Mateo, Rizal as a sanitary landfill site, subject to whatever
restrictions that the government impact assessment might require.
2. Upon signing of this Agreement, the DPWH shall
commence the construction/development of said dumpsite.
3. The MMC shall: a) take charge of the relocati
of the families within and around the site; b) oversee the development of the
areas as a sanitary landfill; c) coordinate/monitor the construction of
infrastructure facilities by the DPWH in the said site; and d) ensure that the
necessary civil works are properly undertaken to safeguard against any negat
environmental impact in the area.
On 7, 8 and 10 February 1989, the Sangguniang Bayan of San Mateo wrote G
Elfren Cruz of the MMC, Sec. Fiorello Estuar of the DPWH, the Presidential Ta
Force on Solid Waste Management, Executive Secretary Catalino Macaraig, a
Sec. Fulgencio Factoran, Jr., pointing out that it had recently passed a Resolutbanning the creation of dumpsites for Metro Manila garbage within its
jurisdiction, asking that their side be heard, and that the addressees “suspen
and temporarily hold in abeyance all and any part of your operations with res
to the San Mateo Landfill Dumpsite.” No action was taken on these letters.
It turns out that the land subject of the MOA of 17 November 1988 and owne
the DENR was part of the Marikina Watershed Reservation Area. Thus, on 31
May 1989, forest officers of the Forest Engineering and Infrastructure Unit of
Community Environment and Natural Resource Office, (CENRO) DENR-IV, Riz
Province, submitted a Memorandum[5+ on the “On-going Dumping Site
Operation of the MMC inside (the) Upper Portion of Marikina Watershed
Reservation, located at Barangay Pintong Bocaue, San Mateo, Rizal, and near
localities.” Said Memorandum reads in part:
Observations:
3.1 The subject area is arable and agricultural in nature;
3.2 Soil type and its topography are favorable for agricultural and fore
productions;
. . .
3.5 Said Dumping Site is observed to be confined within the said Watersh
Reservation, bearing in the northeastern part of Lungsod Silangan Townsite
Reservation. Such illegal Dumping Site operation inside (the) Watershed
Reservation is in violation of P.D. 705, otherwise known as the Revised Forest
Code, as amended. . .
Recommendations:
5.1 The MMC Dumping Site Inside Marikina Watershed Reservation, particu
at Brgy. Pintong Bocaue, San Mateo, Rizal and at Bo. Pinugay, Baras/AntipoloRizal which are the present garbage zones must totally be stopped and
discouraged without any political intervention and delay in order to save our
healthy ecosystems found therein, to avoid much destruction, useless efforts
lost (sic) of millions of public funds over the land in question; (Emphasis ours)
On 19 June 1989, the CENRO submitted another Investigation Report[6] to th
Regional Executive Director which states in part that:
1. About two (2) hectares had been excavated by bulldozers and garbage
dumping operations are going on.
2. The dumping site is without the concurrence of the Provincial Governo
Rizal Province and without any permit from DENR who has functional jurisdic
over the Watershed Reservation; and
3. About 1,192 families residing and cultivating areas covered by four (4)
Barangays surrounding the dumping site will adversely be affected by the
dumping operations of MMC including their sources of domestic water suppl
x x x
On 22 January 1990, the CENRO submitted still another Investigation Report[
the Regional Executive Director which states that:
Findings show that the areas used as Dumping Site of the MMC are found to
within the Marikina Watershed which are part of the Integrated Social Forest
Project (ISF) as per recorded inventory of Forest Occupancy of this office.
It also appears that as per record, there was no permit issued to the MMC to
utilize these portions of land for dumping purposes.
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t is further observed that the use of the areas as dumping site greatly affects the
ecological balance and environmental factors in this community.
On 19 February 1990, the DENR Environmental Management Bureau, through
Undersecretary for Environment and Research Celso R. Roque, granted the Metro
Manila Authority (MMA [formerly MMC]) an Environmental Compliance
Certificate (ECC) for the operation of a two-and-a-half-hectare garbage dumpsite.
The ECC was sought and granted to comply with the requirement of Presidential
Decree No. 1586 “Establishing an Environmental Impact Statement System,”
Section 4 of which states in part that, “No persons, partnership or corporationshall undertake or operate any such declared environmentally critical project or
area without first securing an Environmental Compliance Certificate.”
Proclamation No. 2146, passed on 14 December 1981, designates “all areas
declared by law as national parks, watershed reserves, wildlife preserves, and
sanctuaries” as “Environmentally Critical Areas.”
On 09 March 1990, respondent Laguna Lake Development Authority (LLDA),
through its Acting General Manager, sent a letter[8] to the MMA, which reads in
part:
Through this letter we would like to convey our reservation on the choice of the
sites for solid waste disposal inside the watershed of Laguna Lake. As you may
already know, the Metropolitan Waterworks and Sewerage System (MWSS) has
scheduled the abstraction of water from the lake to serve the needs of about 1.2
million residents of Muntinlupa, Paranaque, Las Pinas and Bacoor, Cavite by
1992. Accordingly, the Laguna Lake Development Authority (LLDA) is accelerating
ts environmental management program to upgrade the water quality of the lake
n order to make it suitable as a source of domestic water supply the whole year
round. The said program regards dumpsites as incompatible within the
watershed because of the heavy pollution, including the risk of diseases,
generated by such activities which would negate the government’s efforts to
upgrade the water quality of the lake. Consequently, please consider our
objection to the proposed location of the dumpsites within the watershed.
(Emphasis supplied by petitioners)
On 31 July 1990, less than six months after the issuance of the ECC,
Undersecretary Roque suspended the ECC in a letter[9] addressed to the
respondent Secretary of DPWH, stating in part that:
Upon site investigation conducted by Environmental Management Bureau staff
on development activities at the San Mateo Landfill Site, it was ascertained thatground slumping and erosion have resulted from improper development of the
site. We believe that this will adversely affect the environmental quality in the
area if the proper remedial measures are not instituted in the design of the
andfill site. This is therefore contradictory to statements made in the
Environmental Impact Statement (EIS) submitted that above occurrences will be
properly mitigated.
n view of this, we are forced to suspend the Environmental Compliance
Certificate (ECC) issued until appropriate modified plans are submitted and
approved by this Office for implementation. (Emphasis ours)
On 21 June 1993, the Acting Mayor of San Mateo, Enrique Rodriguez, Jr.,
Barangay Captain Dominador Vergara, and petitioner Rolando E. Villacorte,
Chairman of the Pintong Bocaue Multipurpose Cooperative (PBMC) wrote[10]
then President Fidel V. Ramos expressing their objections to the continuedoperation of the MMA dumpsite for causing “unabated pollution and degradation
of the Marikina Watershed Reservation.”
On 14 July 1993, another Investigation Report[11] submitted by the Regional
Technical Director to the DENR Undersecretary for Environment and Research
contained the following findings and recommendations:
Remarks and Findings:
. . .
5. Interview with Mr. Dayrit, whose lot is now being endangered because soil
erosion have (sic) caused severe siltation and sedimentation of the Dayrit Creek
which water is greatly polluted by the dumping of soil bulldozed to the creek;
6. Also interview with Mrs. Vilma Montajes, the multi-grade teacher of
Pintong Bocaue Primary School which is located only about 100 meters from
landfill site. She disclosed that bad odor have (sic) greatly affected the pupils
who are sometimes sick with respiratory illnesses. These odors show that M
have (sic) not instituted/sprayed any disinfectant chemicals to prevent air
pollution in the area. Besides large flies (Bangaw) are swarming all over the
playground of the school. The teacher also informed the undersigned that p
debris are being blown whenever the wind blows in their direction.
7. As per investigation report … there are now 15 hectares being used as
landfill disposal sites by the MMA. The MMA is intending to expand its opera
within the 50 hectares.
8. Lots occupied within 50 hectares are fully planted with fruit bearing trlike Mangoes, Santol, Jackfruit, Kasoy, Guyabano, Kalamansi and Citrus which
now bearing fruits and being harvested and marketed to nearby San Mateo
Market and Masinag Market in Antipolo.
. . . .
Recommendations:
1. As previously recommended, the undersigned also strongly recommen
that the MMA be made to relocate the landfill site because the area is within
Marikina Watershed Reservation and Lungsod Silangan. The leachate treatm
plant ha(s) been eroded twice already and contaminated the nearby creeks w
is the source of potable water of the residents. The contaminated water also
flows to Wawa Dam and Boso-boso River which also flows to Laguna de Bay.
2. The proposed Integrated Social Forestry Project be pushed through or
approved. ISF project will not only uplift the socio-economic conditions of th
participants but will enhance the rehabilitation of the Watershed considering
fruit bearing trees are vigorously growing in the area. Some timber producin
species are also planted like Mahogany and Gmelina Arboiea. There are also
portions where dipterocarp residuals abound in the area.
3. The sanitary landfill should be relocated to some other area, in order t
avoid any conflict with the local government of San Mateo and the nearby
affected residents who have been in the area for almost 10-20 years.
On 16 November 1993, DENR Secretary Angel C. Alcala sent MMA Chairman
Ismael A. Mathay, Jr. a letter*12+ stating that “after a series of investigations
field officials” of the DENR, the agency realized that the MOA entered into onNovember 1988 “is a very costly error because the are a agreed to be a garba
dumpsite is inside the Marikina Watershed Reservation.” He then strongly
recommended that all facilities and infrastructure in the garbage dumpsite in
Pintong Bocaue be dismantled, and the garbage disposal operations be
transferred to another area outside the Marikina Watershed Reservation to
protect “the health and general welfare of the residents of San Mateo in
particular and the residents of Metro Manila in general.”
On 06 June 1995, petitioner Villacorte, Chairman of the PBMC, wrote[13]
President Ramos, through the Executive Secretary, informing the President o
issues involved, that the dumpsite is located near three public elementary
schools, the closest of which is only fifty meters away, and that its location
“violates the municipal zoning ordinance of San Mateo and, in truth, the Hou
and Land Use Regulatory Board had denied the then MMA chairman’s applica
for a locational clearance on this ground.”
On 21 August 1995, the Sangguniang Bayan of San Mateo issued a Resolution
“expressing a strong objection to the planned expansion of the landfill operat
in Pintong Bocaue and requesting President Ramos to disapprove the draft
Presidential Proclamation segregating 71.6 Hectares from Marikina Watershe
Reservation for the landfill site in Pintong Bocaue, San Mateo, Rizal.”
Despite the various objections and recommendations raised by the governme
agencies aforementioned, the Office of the President, through Executive
Secretary Ruben Torres, signed and issued Proclamation No. 635 on 28 Augus
1995, “Excluding from the Marikina Watershed Reservation Certain Parcels o
Land Embraced Therein for Use as Sanitary Landfill Sites and Similar Waste
Disposal Under the Administration of the Metropolitan Manila Development
Authority.” The pertinent portions thereof state:
WHEREAS, to cope with the requirements of the growing population in Metro
Manila and the adjoining provinces and municipalities, certain developed and
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open portions of the Marikina Watershed Reservation, upon the
recommendation of the Secretary of the Department of Environment and Natural
Resources should now be excluded form the scope of the reservation;
WHEREAS, while the areas delineated as part of the Watershed Reservations are
ntended primarily for use in projects and/or activities designed to contain and
preserve the underground water supply, other peripheral areas had been
ncluded within the scope of the reservation to provide for such space as may be
needed for the construction of the necessary structures, other related facilities,
as well as other priority projects of government as may be eventually
determined;
WHEREAS, there is now an urgent need to provide for, and develop, the
necessary facilities for the disposal of the waste generated by the population ofMetro Manila and the adjoining provinces and municipalities, to ensure their
sanitary and /or hygienic disposal;
WHEREAS, to cope with the requirements for the development of the waste
disposal facilities that may be used, portions of the peripheral areas of the
Marikina Watershed Reservation, after due consideration and study, have now
been identified as suitable sites that may be used for the purpose;
WHEREAS, the Secretary of the Department of Environment and Natural
Resources has recommended the exclusion of these areas that have been so
dentified from the Marikina Watershed Reservation so that they may then be
developed for the purpose;
NOW, THEREFORE, for and in consideration of the aforecited premises, I, Fidel V.
Ramos, President of the Philippines, by virtue of the powers vested in me by law,
do hereby ordain:
Section 1. General – That certain parcels of land, embraced by the Marikina
Watershed Reservation, were found needed for use in the solid waste disposal
program of the government in Metropolitan Manila, are hereby excluded from
that which is held in reserve and are now made available for use as sanitary
andfill and such other related waste disposal applications.
Section 2. Purpose – The areas being excluded from the Marikina Watershed
Reservation are hereby placed under the administration of the Metropolitan
Manila Development Authority, for development as Sanitary Landfill, and/or for
use in the development of such other related waste disposal facilities that may be
used by the cities and municipalities of Metro Manila and the adjoining province
of Rizal and its municipalities.
Section 3. Technical Description – Specifically, the areas being hereby excludedfrom the Marikina Watershed Reservation consist of two (2) parcels, with an
aggregate area of approximately ONE MILLION SIXTY THOUSAND FIVE HUNDRED
TWENTY NINE (1,060,529) square meters more or less, as follows: x x x x
Section 4. Reservations – The development, construction, use and/or operation
of any facility that may be established within the parcel of land herein excluded
from the Marikina Watershed Reservation shall be governed by existing laws,
rules and regulations pertaining to environmental control and management.
When no longer needed for sanitary landfill purposes or the related waste
disposal activities, the parcels of land subject of this proclamation shall revert
back as part of the Marikina Watershed Reservation, unless otherwise
authorized.
On 06 September 1995, Director Wilfrido S. Pollisco of the Protected Areas andWildlife Bureau wrote the DENR Secretary to express the bureau’s stand against
the dumpsite at Pintong Bocaue, and that “it is our view . . . t hat the mere
presence of a garbage dumpsite inside a watershed reservation is definitely not
compatible with the very purpose and objectives for which the reservation was
established.”
On 24 November 1995, the petitioners Municipality of San Mateo and the
residents of Pintong Bocaue, represented by former Senator Jovito Salonga, sent
a letter to President Ramos requesting him to reconsider Proclamation No. 635.
Receiving no reply, they sent another letter on 02 January 1996 reiterating their
previous request.
On 04 March 1996, then chairman of the Metro Manila Development Authority
(MMDA [formerly MMA]) Prospero I. Oreta addressed a letter to Senator Salonga,
stating in part that:
….
2. Considering the circumstances under which we are pursuing the proje
we are certain you will agree that, unless we are prepared with a better
alternative, the project simply has to be pursued in the best interest of the
greater majority of the population, particularly their health and welfare.”
2.1 The San Mateo Sanitary Landfill services, at least, 38% of the waste dis
site requirements of Metro Manila where an estimated 9 million population
reside.
2.2 Metro Manila is presently estimated to be generating, at least, 15,700
meters of household or municipal waste, a 1.57 hectare of land area will be f
in a month’s time with a pile 31 meters high of garbage, or in a year, theaccumulated volume will require 18.2 hectares.
. . . .
4. The sanitary landfill projects are now on their fifth year of implementation
The amount of effort and money already invested in the project by the
government cannot easily be disregarded, much more set aside in favor of th
few settlers/squatters who chose to ignore the earlier notice given to them t
the area would be used precisely for the development of waste disposal sites
and are now attempting to arouse opposition to the project.
4.2 There is no place within the jurisdiction of Metro Manila, with an area big
enough to accommodate at least 3 to 5 years of waste disposal requirements
x x
4.21 The present site at San Mateo was selected because, at the time
consideration was being made, and up to the present, it is found to have the
attributes that positively respond to the criteria established:
4.21.1 The site was a government property and would not require any outlay
it to be acquired.
4.21.2 It is far from any sizeable community/settlements that could be affect
by the development that would be introduced and yet, was within economic
hauling distance from the areas they are designed to serve.
4.21.21 At the time it was originally decided to locate the landfills at the pr
site, there were not more that fifteen (15) settlers in the area and they had h
established themselves. The community settlements were located far from t
site.
4.21.22 The area was hardly accessible, especially to any public transport. T
area was being served by a public utility jeep that usually made only two (2) t
daily. During the rainy season, it could only be reached by equipping the veh
with tire chains to traverse the slippery muddy trail roads.
4.21.3 There was, at least, seventy-three (73) hectares available at the site.
4.3 While the site was within the Marikina Watershed Reservation under the
administration of the DENR, the site was located at the lower periphery of th
buffer zone; was evaluated to be least likely to affect the underground water
supply; and could, in fact, be excluded from the reservation.
4.31 It was determined to be far from the main water containment area for it
pose any immediate danger of contaminating the underground water, in case
failure in any of the mitigating measures that would be installed.
4.32 It was likewise too far f rom the nearest body of water, the Laguna Lake,
the distance, plus the increasing accumulation of water from other tributarie
toward the lake, would serve to dilute and mitigate any contamination it may
emit, in case one happened.
4.33 To resolve the recurring issue regarding its being located within t
Marikina Watershed Reservation, the site had been recommended by the DE
and approved by the President, to already be excluded from the Marikina
Watershed reservation and placed under the administration of MMDA, since
site was deemed to form part of the land resource reserve then commonly
referred to as buffer zone.
5. Contrary to the impression that you had been given, relocating the sit
this point and time would not be easy, if not impracticable, because aside fro
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the investments that had been made in locating the present site, further
nvestments have been incurred in:
5.1 The conduct of the technical studies for the development being implemented.
Through a grant-in-aid from the World Bank, US$600,000 was initially spent for
the conduct of the necessary studies on the area and the design of the landfill.
This was augmented by, at least, another P1.5 million from the government for
the studies to be completed, or a total cost at the time (1990) of approximately
P20 million.
5.2. Additionally, the government has spent approximately P33 million in
mproving on the roadway to make the site accessible from the main
road/highway.
5.3 To achieve the necessary economies in the development of the site, the
utilities had been planned so that their use could be maximized. These include
the access roads, the drainage system, the leacheate collection system, the gas
collection system, and the waste water treatment system. Their construction are
designed so that instead of having to construct independent units for each area,
the use of existing facilities can be maximized through a system of
nterconnection. On the average, the government is spending P14.8 million to
develop a hectare of sanitary landfill area.
6. Despite the preparations and the investments that are now being made on
the project, it is estimated that the total available area, at an accelerated rate of
disposal, assuming that all open dump sites were to be closed, will only last for 39
months.
6.1 We are still hard pressed to achieve advanced development on the sites to
assure against any possible crisis in garbage from again being experienced in
Metro Manila, aside from having to look for the additional sites that may be used
after the capacities shall have been exhausted.
6.2 Faced with the prospects of having the 15,700 cubic meters of garbage
generated daily strewn all over Metro Manila, we are certain you will agree that it
would be futile to even as much as consider a suspension of the waste disposal
operations at the sanitary landfills.
On 22 July 1996, the petitioners filed before the Court of Appeals a civil action for
certiorari, prohibition and mandamus with application for a temporary restraining
order/writ of preliminary injunction. The hearing on the prayer for preliminary
njunction was held on 14 August 1996.
On 13 June 1997, the court a quo rendered a Decision,[15] the dispositive part of
which reads:
WHEREFORE, the petition for certiorari, prohibition and mandamus with
application for a temporary restraining order/writ of preliminary injunction for
ack of cause of action, is hereby DENIED.[16]
Hence, this petition for review on certiorari of the above decision on the
following grounds:
THE COURT OF APPEALS ERRED AND ABUSED ITS DISCRETION IN DELIBERATELY
GNORING THE SIGNIFICANT FACT THAT PRESIDENTIAL PROCLAMATION NO. 635
WAS BASED ON A BRAZEN FORGERY – IT WAS SUPPOSEDLY ISSUED, AS STATED INTHE PROCLAMATION ITSELF AND REPEATEDLY ASSERTED BY RESPONDENTS IN
THEIR COMMENT, ON THE BASIS OF THE ALLEGED RECOMMENDATION OF THE
DENR SECRETARY DATED JUNE 26, 1995 BUT WHICH ASSERTION WAS
DENOUNCED BY THE THEN SECRETARY ANGEL C. ALCALA HIMSELF – IN A SWORN
STATEMENT DATED SEPTEMBER 18, 1996 AND AGAIN DURING THE SPECIAL
HEARING OF THE CASE IN THE COURT OF APPEALS ON NOVEMBER 13, 1996 – AS
A FORGERY SINCE HIS SIGNATURE ON THE ALLEGED RECOMMENDATION HAD
BEEN FALSIFIED, AS NOW ADMITTED BY RESPONDENTS THEMSELVES IN THEIR
COMMENT FILED WITH THE COURT OF APPEALS, THROUGH THE OFFICE OF THE
SOLICITOR GENERAL.
I
THE COURT OF APPEALS ERRED AND ABUSED ITS DISCRETION IN COMPLETEL
IGNORING THE SIGNIFICANT FACT THAT THE RESPONDENTS ARE OPERATING
LANDFILL BASED ON A SPURIOUS ENVIRONMENTAL COMPLIANCE CERTIFICAT
III
THE COURT OF APPEALS ERRED IN RULING THAT THE RESPONDENTS DID NOT
VIOLATE R.A. 7586 WHEN THEY ISSUED AND IMPLEMENTED PROCLAMATION
635 CONSIDERING THAT THE WITHDRAWAL OR DISESTABLISHMENT OF A
PROTECTED AREA OR THE MODIFICATION OF THE MARIKINA WATERSHED CA
ONLY BE DONE BY AN ACT OF CONGRESS.
IV
THE COURT OF APPEALS ERRED AND ABUSED ITS DISCRETION WHEN IT
DELIBERATELY AND WILLFULLY BRUSHED ASIDE THE UNANIMOUS FINDINGS A
ADVERSE RECOMMENDATIONS OF RESPONSIBLE GOVERNMENT AGENCIES A
NON-PARTISAN OFFICIALS CONCERNED WITH ENVIRONMENTAL PROTECTION
FAVOR OF THE SELF-SERVING, GRATUITOUS ASSERTIONS FOUND IN THE
UNSOLICITED, PARTISAN LETTER OF FORMER MALABON MAYOR, NOW
CHAIRMAN PROSPERO ORETA OF THE MMDA WHO IS AN INTERESTED PARTY
THIS CASE.
V
THE COURT OF APPEALS ERRED WHEN IT READILY SWALLOWED RESPONDEN
ASSERTION THAT THE SAN MATEO DUMPSITE “IS LOCATED IN THE ‘BUFFER Z
OF THE RESERVATION” AND IS THEREFORE OUTSIDE OF ITS BOUNDARIES, AN
EVEN DECLARED IN ITS DECISION THAT IT TOOK “SERIOUS NOTE” OF THIS
PARTICULAR ARGUMENT.
VI
THE COURT OF APPEALS ERRED AND ABUSED ITS DISCRETION WHEN IT
ENCROACHED ON THE FUNCTION OF CONGRESS BY EXPRESSING ITS UNJUSTI
FEAR OF MINI-SMOKEY MOUNTAINS PROLIFERATING IN METRO MANILA AND
JUSTIFYING ITS DECISION IN FAVOR OF “AN INTEGRATED SYSTEM OF SOLID
WASTE MANAGEMENT LIKE THE SAN MATEO LANDFILL.
On 05 January 1998, while the appeal was pending, the petitioners filed a Mo
for Temporary Restraining Order,[17] pointing out that the effects of the El N
phenomenon would be aggravated by the relentless destruction of the MarikWatershed Reservation. They noted that respondent MMDA had, in the
meantime, continued to expand the area of the dumpsite inside the Marikina
Watershed Reservation, cutting down thousands of mature fruit trees and fo
trees, and leveling hills and mountains to clear the dumping area. Garbage
disposal operations were also being conducted on a 24-hour basis, with hund
of metric tons of wastes being dumped daily, including toxic and infectious
hospital wastes, intensifying the air, ground and water pollution.[18]
The petitioners reiterated their prayer that respondent MMDA be temporari
enjoined from further dumping waste into the site and from encroaching into
area beyond its existing perimeter fence so as not to render the case moot a
academic.
On 28 January 1999, the petitioners filed a Motion for Early Resolution,[19]
calling attention to the continued expansion of the dumpsite by the MMDA t
caused the people of Antipolo to stage a rally and barricade the Marcos Highto stop the dump trucks from reaching the site for five successive days from 1
January 1999. On the second day of the barricade, all the municipal mayors o
the province of Rizal openly declared their full support for the rally, and notif
the MMDA that they would oppose any further attempt to dump garbage in
province.[20]
As a result, MMDA officials, headed by then Chairman Jejomar Binay, agreed
abandon the dumpsite after six months. Thus, the municipal mayors of Rizal
particularly the mayors of Antipolo and San Mateo, agreed to the use of the
dumpsite until that period, which would end on 20 July 1999.[21]
On 13 July 1999, the petitioners filed an Urgent Second Motion for Early
Resolution[22] in anticipation of violence between the conflicting parties as t
date of the scheduled closure of the dumpsite neared.
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On 19 July 1999, then President Joseph E. Estrada, taking cognizance of the
gravity of the problems in the affected areas and the likelihood that violence
would erupt among the parties involved, issued a Memorandum ordering the
closure of the dumpsite on 31 December 2000.[23] Accordingly, on 20 July 1999,
the Presidential Committee on Flagship Programs and Projects and the MMDA
entered into a MOA with the Provincial Government of Rizal, the Municipality of
San Mateo, and the City of Antipolo, wherein the latter agreed to further extend
the use of the dumpsite until its permanent closure on 31 December 2000.[24]
On 11 January 2001, President Estrada directed Department of Interior and Local
Government Secretary Alfredo Lim and MMDA Chairman Binay to reopen the San
Mateo dumpsite “in view of the emergency situation of uncollected garbage in
Metro Manila, resulting in a critical and imminent health and sanitation
epidemic.”*25+
Claiming the above events constituted a “clear and present danger of violence
erupting in the affected areas,” the petitioners filed an Urgent Petition for
Restraining Order[26] on 19 January 2001.
On 24 January 2001, this Court issued the Temporary Restraining Order prayed
for, “effective immediately and until further orders.”*27+
Meanwhile, on 26 January 2001, Republic Act No. 9003, otherwise known as “The
Ecological Solid Waste Management Act of 2000,” was signed into law by
President Estrada.
Thus, the petitioners raised only two issues in their Memorandum[28] of 08
February 2005: 1) whether or not respondent MMDA agreed to the permanent
closure of the San Mateo Landfill as of December 2000, and 2) whether or not the
permanent closure of the San Mateo landfill is mandated by Rep. Act No. 9003.
We hold that the San Mateo Landfill will remain permanently closed.
Although the petitioners may be deemed to have waived or abandoned the
ssues raised in their previous pleadings but not included in the
memorandum,[29] certain events we shall relate below have inclined us to
address some of the more pertinent issues raised in the petition for the guidance
of the herein respondents, and pursuant to our symbolic function to educate the
bench and bar.[30]
The law and the facts indicate that a mere MOA does not guarantee the
dumpsite’s permanent closure.
The rally and barricade staged by the people of Antipolo on 28 January 1999, with
the full support of all the mayors of Rizal Province caused the MMDA to agree
that it would abandon the dumpsite after six months. In return, the municipalmayors allowed the use of the dumpsite until 20 July 1999.
On 20 July 1999, with much fanfare and rhetoric, the Presidential Committee on
Flagship Programs and Projects and the MMDA entered into a MOA with the
Provincial Government of Rizal, the Municipality of San Mateo, and the City of
Antipolo, whereby the latter agreed to an extension for the use of the dumpsite
until 31 December 2000, at which time it would be permanently closed.
Despite this agreement, President Estrada directed Department of Interior and
Local Government Secretary Alfredo Lim and MMDA Chairman Binay to reopen
the San Mateo dumpsite on 11 January 2001, “in view of the emergency situation
of uncollected garbage in Metro Manila, resulting in a critical and imminent
health and sanitation epidemic;” our issuance of a TRO on 24 January 2001
prevented the dumpsite’s reopening.
Were it not for the TRO, then President Estrada’s instructions would have beenawfully carried out, for as we observed in Oposa v. Factoran, the freedom of
contract is not absolute. Thus:
….. In Abe vs. Foster Wheeler Corp., this Court stated: "The freedom of contract,
under our system of government, is not meant to be absolute. The same is
understood to be subject to reasonable legislative regulation aimed at the
promotion of public health, moral, safety and welfare. In other words, the
constitutional guaranty of non-impairment of obligations of contract is limited by
the exercise of the police power of the State, in the interest of public health,
safety, moral and general welfare." The reason for this is emphatically set forth in
Nebia vs. New York, quoted in Philippine American Life Insurance Co. vs. Auditor
General, to wit: "'Under our form of government the use of property and the
making of contracts are normally matters of private and not of public concern.
The general rule is that both shall be free of governmental interference. But
neither property rights nor contract rights are absolute; for government cannot
exist if the citizen may at will use his property to the detriment of his fellows,
exercise his freedom of contract to work them harm. Equally fundamental w
the private right is that of the public to regulate it in the common interest.'"
short, the non-impairment clause must yield to the police power of the state
(Citations omitted, emphasis supplied)
We thus feel there is also the added need to reassure the residents of the
Province of Rizal that this is indeed a final resolution of this controversy, for a
brief review of the records of this case indicates two self-evident facts. First,
San Mateo site has adversely affected its environs, and second, sources of wa
should always be protected.
As to the first point, the adverse effects of the site were reported as early as
June 1989, when the Investigation Report of the Community Environment anNatural Resources Officer of DENR-IV-1 stated that the sources of domestic w
supply of over one thousand families would be adversely affected by the dum
operations.[31] The succeeding report included the observation that the use
the areas as dumping site greatly affected the ecological balance and
environmental factors of the community.[32] Respondent LLDA in fact inform
the MMA that the heavy pollution and risk of disease generated by dumpsite
rendered the location of a dumpsite within the Marikina Watershed Reservat
incompatible with its program of upgrading the water quality of the Laguna L
[33]
The DENR suspended the site’s ECC after investigations revealed ground slum
and erosion had resulted from improper development of the site.[34] Anoth
Investigation Report[35] submitted by the Regional Technical Director to the
DENR reported respiratory illnesses among pupils of a primary school located
approximately 100 meters from the s ite, as well as the constant presence of
flies and windblown debris all over the school’s playground. It further reitera
reports that the leachate treatment plant had been eroded twice already,
contaminating the nearby creeks that were sources of potable water for the
residents. The contaminated water was also found to flow to the Wawa Dam
Boso-boso River, which in turn empties into Laguna de Bay.
This brings us to the second self-evident point. Water is life, and must be sav
at all costs. In Collado v. Court of Appeals,[36] we had occasion to reaffirm o
previous discussion in Sta. Rosa Realty Development Corporation v. Court of
Appeals,[37+ on the primordial importance of watershed areas, thus: “The m
important product of a watershed is water, which is one of the most importa
human necessities. The protection of watersheds ensures an adequate supp
water for future generations and the control of flashfloods that not only dam
property but also cause loss of lives. Protection of watersheds is an
“intergenerational” responsibility that needs to be answered now.*38+
Three short months before Proclamation No. 635 was passed to avert the
garbage crisis, Congress had enacted the National Water Crisis Act*39+ to “ad
urgent and effective measures to address the nationwide water crisis which
adversely affects the health and well-being of the population, food productio
and industrialization process. One of the issues the law sought to address wa
the “protection and conservation of watersheds.”*40+
In other words, while respondents were blandly declaring that “the rea
for the creation of the Marikina Watershed Reservation, i.e., to protect Marik
River as the source of water supply of the City of Manila, no longer exists,” th
rest of the country was gripped by a shortage of potable water so serious, it
necessitated its own legislation.
Respondents’ actions in the face of such grave environmental consequences
all logic. The petitioners rightly noted that instead of providing solutions, the
have, with unmitigated callousness, worsened the problem. It is this readinewreak irrevocable damage on our natural heritage in pursuit of what is exped
that has compelled us to rule at length on this issue. We ignore the unrelent
depletion of our natural heritage at our peril.
I.
THE REORGANIZATION ACT OF THE DENR DEFINES AND
LIMITS ITS POWERS OVER THE COUNTRY’S NATURAL RESOURCES
The respondents next point out that the Marikina Watershed Reservation, an
thus the San Mateo Site, is located in the public domain. They allege that as
neither the Province of Rizal nor the municipality of San Mateo has the powe
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control or regulate its use since properties of this nature belong to the national,
and not to the local governments.
t is ironic that the respondents should pursue this line of reasoning.
n Cruz v. Secretary of Environment and Natural Resources,[41] we had occasion
to observe that “(o)ne of the fixed and dominating objectives of the 1935
Constitutional Convention was the nationalization and conservation of the
natural resources of the country. There was an overwhelming sentiment in the
convention in favor of the principle of state ownership of natural resources and
the adoption of the Regalian doctrine. State ownership of natural resources was
seen as a necessary starting point to secure recognition of the state’s power to
control their disposition, exploitation, development, or utilization.”*42+
The Regalian doctrine was embodied in the 1935 Constitution, in Section 1 of
Article XIII on “Conservation and Utilization of Natural Resources.” This was
reiterated in the 1973 Constitution under Article XIV on the “National Economy
and the Patrimony of the Nation,” and reaffirmed in the 1987 Constitution in
Section 2 of Article XII on “National Economy and Patrimony,” to wit:
Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and
other mineral oils, all forces of potential energy, fisheries, forests or timber,
wildlife, flora and fauna, and other natural resources are owned by the State.
With the exception of agricultural lands, all other natural resources shall not be
alienated. The exploration, development and utilization of natural resources shall
be under the full control and supervision of the State. The State may directly
undertake such activities or it may enter into co-production, joint venture, or
production-sharing agreements with Filipino citizens, or corporations or
associations at least sixty per centum of whose capital is owned by such citizens.
Such agreements may be for a period not exceeding twenty-five years, renewable
for not more than twenty-five years, and under such terms and conditions as may
be provided by law. In cases of water rights for irrigation, water supply, fisheries,
or industrial uses other than the development of water power, beneficial use may
be the measure and limit of the grant.[43]
Clearly, the state is, and always has been, zealous in preserving as much of our
natural and national heritage as it can, enshrining as it did the obligation to
preserve and protect the same within the text of our fundamental law.
t was with this objective in mind that the respondent DENR was mandated by
then President Corazon C. Aquino, under Section 4 of Executive Order No. 192,
*44+ otherwise known as “The Reorganization Act of the Department of
Environment and Natural Resources,” to be “the primary government agency
responsible for the conservation, management, development and proper use ofthe country’s environment and natural resources, specifically forest and grazing
ands, mineral resources, including those in reservation and watershed areas, and
ands of the public domain. It is also responsible for the licensing and regulation
of all natural resources as may be provided for by law in order to ensure
equitable sharing of the benefits derived therefrom for the welfare of the present
and future generations of Filipinos.”
We expounded on this matter in the landmark case of Oposa v. Factoran,[45]
where we held that the right to a balanced and healthful ecology is a
fundamental legal right that carries with it the correlative duty to refrain from
mpairing the environment. This right implies, among other things, the judicious
management and conservation of the country’s resources, which duty is reposed
n the DENR under the aforequoted Section 4 of Executive Order No. 192.
Moreover:
Section 3 (of E. O. No. 192) makes the following statement of policy:
SEC. 3. Declaration of Policy. - It is hereby declared the policy of the State to
ensure the sustainable use, development, management, renewal, and
conservation of the country's forest, mineral, land, off-shore areas and other
natural resources, including the protection and enhancement of the quality of the
environment, and equitable access of the different segments of the population to
the development and use of the country's natural resources, not only for the
present generation but for future generations as well. It is also the policy of the
state to recognize and apply a true value system including social and
environmental cost implications relative to their utilization; development and
conservation of our natural resources. (Emphasis ours)
This policy declaration is substantially re-stated in Title XIV, Book IV of the
Administrative Code of 1987, specifically in Section 1 thereof which reads:
SEC. 1. Declaration of Policy. - (1) The State shall ensure, for the benefit of th
Filipino people, the full exploration and development as well as the judicious
disposition, utilization, management, renewal and conservation of the count
forest, mineral, land, waters, fisheries, wildlife, off-shore areas and other nat
resources, consistent with the necessity of maintaining a sound ecological
balance and protecting and enhancing the quality of the environment and th
objective of making the exploration, development and utilization of such natu
resources equitably accessible to the different segments of the present as we
future generations.
(2) The State shall likewise recognize and apply a true value system that take
into account social and environmental cost implications relative to the utiliza
development and conservation of our natural resources.
The above provision stresses “the necessity of maintaining a sound ecologica
balance and protecting and enhancing the quality of the environment.”*46+
(Emphasis ours.)
In sum, the Administrative Code of 1987 and Executive Order No. 192 entrust
DENR with the guardianship and safekeeping of the Marikina Watershed
Reservation and our other natural treasures. However, although the DENR, a
agency of the government, owns the Marikina Reserve and has jurisdiction ov
the same, this power is not absolute, but is defined by the declared policies o
state, and is subject to the law and higher authority. Section 2, Title XIV, Boo
of the Administrative Code of 1987, while specifically referring to the mandat
the DENR, makes particular reference to the agency’s being subject to law an
higher authority, thus:
SEC. 2. Mandate. - (1) The Department of Environment and Natural
Resources shall be primarily responsible for the implementation of the forego
policy.
(2) It shall, subject to law and higher authority, be in charge of carrying out t
State's constitutional mandate to control and supervise the exploration,
development, utilization, and conservation of the country's natural resources
With great power comes great responsibility. It is the height of irony that the
public respondents have vigorously arrogated to themselves the power to co
the San Mateo site, but have deftly ignored their corresponding responsibilit
guardians and protectors of this tormented piece of land.
II.
THE LOCAL GOVERNMENT CODE GIVES TO LOCAL GOVERNMENT UNITS ALL T
NECESSARY POWERS TO PROMOTE THE GENERAL WELFARE OF THEIR
INHABITANTS
The circumstances under which Proclamation No. 635 was passed also violate
Rep. Act No. 7160, or the Local Government Code.
Contrary to the averment of the respondents, Proclamation No. 635, which w
passed on 28 August 1995, is subject to the provisions of the Local Governme
Code, which was approved four years earlier, on 10 October 1991.
Section 2(c) of the said law declares that it is the policy of the state “to requirnational agencies and offices to conduct periodic consultations with appropr
local government units, non-governmental and people's organizations, and o
concerned sectors of the community before any project or program is
implemented in their respective jurisdictions.” Likewise, Section 27 requires
consultations before a program shall be implemented by government author
and the prior approval of the sanggunian is obtained.
During the oral arguments at the hearing for the temporary restraining order
Director Uranza of the MMDA Solid Waste Management Task Force declared
before the Court of Appeals that they had conducted the required consultatio
However, he added that “(t)his is the problem, sir, the officials we may have
talking with at the time this was established may no longer be incumbent and
is our difficulty now. That is what we are trying to do now, a continuing
dialogue.”*47+
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The ambivalent reply of Director Uranza was brought to the fore when, at the
height of the protest rally and barricade along Marcos Highway to stop dump
trucks from reaching the site, all the municipal mayors of the province of Rizal
openly declared their full support for the rally and notified the MMDA that they
would oppose any further attempt to dump garbage in their province.[48]
The municipal mayors acted within the scope of their powers, and were in fact
fulfilling their mandate, when they did this. Section 16 allows every local
government unit to “exercise the powers expressly granted, those necessarily
mplied therefrom, as well as powers necessary, appropriate, or incidental for its
efficient and effective governance, and those which are essential to the
promotion of the general welfare,” which involve, among other things,
“promot(ing) health and safety, enhance(ing) the right of the people to a
balanced ecology, and preserv(ing) the comfort and convenience of theirnhabitants.”
n Lina , Jr. v. Paño,[49] we held that Section 2 (c), requiring consultations with
the appropriate local government units, should apply to national government
projects affecting the environmental or ecological balance of the particular
community implementing the project. Rejecting the petitioners’ contention that
Sections 2(c) and 27 of the Local Government Code applied mandatorily in the
setting up of lotto outlets around the country, we held that:
From a careful reading of said provisions, we find that these apply only to
national programs and/or projects which are to be implemented in a particular
ocal community. Lotto is neither a program nor a project of the national
government, but of a charitable institution, the PCSO. Though sanctioned by the
national government, it is far fetched to say that lotto falls within the
contemplation of Sections 2 (c) and 27 of the Local Government Code.
Section 27 of the Code should be read in conjunction with Section 26
thereof. Section 26 reads:
SECTION 26. Duty of National Government Agencies in the Maintenance of
Ecological Balance. It shall be the duty of every national agency or government-
owned or controlled corporation authorizing or involved in the planning and
mplementation of any project or program that may cause pollution, climatic
change, depletion of non-renewable resources, loss of crop land, range-land, or
forest cover, and extinction of animal or plant species, to consult with the local
government units, nongovernmental organizations, and other sectors concerned
and explain the goals and objectives of the project or program, its impact upon
the people and the community in terms of environmental or ecological balance,
and the measures that will be undertaken to prevent or minimize the adverse
effects thereof.
Thus, the projects and programs mentioned in Section 27 should benterpreted to mean projects and programs whose effects are among those
enumerated in Section 26 and 27, to wit, those that: (1) may cause pollution; (2)
may bring about climatic change; (3) may cause the depletion of non-renewable
resources; (4) may result in loss of crop land, range-land, or forest cover; (5) may
eradicate certain animal or plant species from the face of the planet; and (6)
other projects or programs that may call for the eviction of a particular group of
people residing in the locality where these will be implemented. Obviously, none
of these effects will be produced by the introduction of lotto in the province of
Laguna. (emphasis supplied)
We reiterated this doctrine in the recent case of Bangus Fry Fisherfolk v.
Lanzanas,[50] where we held that there was no statutory requirement for the
sangguniang bayan of Puerto Galera to approve the construction of a mooring
facility, as Sections 26 and 27 are inapplicable to projects which are not
environmentally critical.
Moreover, Section 447, which enumerates the powers, duties and functions of
the municipality, grants the sangguniang bayan the power to, among other
things, “enact ordinances, approve resolutions and appropriate funds for the
general welfare of the municipality and its inhabitants pursuant to Section 16 of
th(e) Code.” These include:
(1) Approving ordinances and passing resolutions to protect the environment
and impose appropriate penalties for acts which endanger the environment, such
as dynamite fishing and other forms of destructive fishing, illegal logging and
smuggling of logs, smuggling of natural resources products and of endangered
species of flora and fauna, slash and burn farming, and such other activities which
result in pollution, acceleration of eutrophication of rivers and lakes, or of
ecological imbalance; [Section 447 (1)(vi)]
(2) Prescribing reasonable limits and restraints on the use of property within
the jurisdiction of the municipality, adopting a comprehensive land use plan for
the municipality, reclassifying land within the jurisdiction of the city, subject to
the pertinent provisions of this Code, enacting integrated zoning ordinances
consonance with the approved comprehensive land use plan, subject to exist
laws, rules and regulations; establishing fire limits or zones, particularly in
populous centers; and regulating the construction, repair or modification of
buildings within said fire limits or zones in accordance with the provisions of t
Code; [Section 447 (2)(vi-ix)]
(3) Approving ordinances which shall ensure the efficient and effective
delivery of the basic services and facilities as provided for under Section 17 of
Code, and in addition to said services and facilities, …providing for the
establishment, maintenance, protection, and conservation of communal fore
and watersheds, tree parks, greenbelts, mangroves, and other similar forest
development projects ….and, subject to existing laws, establishing and provid
for the maintenance, repair and operation of an efficient waterworks systemsupply water for the inhabitants and purifying the source of the water supply
regulating the construction, maintenance, repair and use of hydrants, pumps
cisterns and reservoirs; protecting the purity and quantity of the water suppl
the municipality and, for this purpose, extending the coverage of appropriate
ordinances over all territory within the drainage area of said water supply an
within one hundred (100) meters of the reservoir, conduit, canal, aqueduct,
pumping station, or watershed used in connection with the water service; an
regulating the consumption, use or wastage of water.” *Section 447 (5)(i) & (v
Under the Local Government Code, therefore, two requisites must be met be
a national project that affects the environmental and ecological balance of lo
communities can be implemented: prior consultation with the affected local
communities, and prior approval of the project by the appropriate sanggunia
Absent either of these mandatory requirements, the project’s implementatio
illegal.
III.
WASTE DISPOSAL IS REGULATED BY THE ECOLOGICAL
SOLID WASTE MANAGEMENT ACT OF 2000
The respondents would have us overlook all the abovecited laws because the
Mateo site is a very expensive - and necessary - fait accompli. The responden
cite the millions of pesos and hundreds of thousands of dollars the governme
has already expended in its development and construction, and the lack of an
viable alternative sites.
The Court of Appeals agreed, thus:
During the hearing on the injunction, questions were also asked. “What will
happen if the San Mateo Sanitary Landfill is closed? Where will the daily
collections of garbage be disposed of and dumped?” Atty. Mendoza, one of t
lawyers of the petitioners, answered that each city/municipality ‘must take c
of its own.’ Reflecting on that answer, we are troubled: will not the prolifera
of separate open dumpsites be a more serious health hazard (which ha(s) to
addressed) to the residents of the community? What with the galloping
population growth and the constricting available land area in Metro Manila?
There could be a ‘mini-Smokey Mountain’ in each of the ten cities…comprisin
Metro Manila, placing in danger the health and safety of more people. Dama
to the environment could be aggravated by the increase in number of open
dumpsites. An integrated system of solid waste management, like the San M
Sanitary Landfill, appears advisable to a populous metropolis like the Greater
Metro Manila Area absent access to better technology.[51]
We acknowledge that these are valid concerns. Nevertheless, the lower cou
should have been mindful of the legal truism that it is the legislature, by its ve
nature, which is the primary judge of the necessity, adequacy, wisdom,
reasonableness and expediency of any law.[52]
Moreover, these concerns are addressed by Rep. Act No. 9003. Approved on
January 2001, “The Ecological Solid Waste Management Act of 2000” was
enacted pursuant to the declared policy of the state “to adopt a systematic,
comprehensive and ecological solid waste management system which shall
ensure the protection of public health and environment, and utilize
environmentally sound methods that maximize the utilization of valuable
resources and encourage resource conservation and recovery.”*53+ It requir
the adherence to a Local Government Solid Waste Management Plan with re
to the collection and transfer, processing, source reduction, recycling, compo
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and final disposal of solid wastes, the handling and disposal of special wastes,
education and public information, and the funding of solid waste management
projects.
The said law mandates the formulation of a National Solid Waste Management
Framework, which should include, among other things, the method and
procedure for the phaseout and the eventual closure within eighteen months
from effectivity of the Act in case of existing open dumps and/or sanitary landfills
ocated within an aquifer, groundwater reservoir or watershed area.[54] Any
andfills subsequently developed must comply with the minimum requirements
aid down in Section 40, specifically that the site selected must be consistent with
the overall land use plan of the local government unit, and that the site must be
ocated in an area where the landfill’s operation will not detrimentally affect
environmentally sensitive resources such as aquifers, groundwater reservoirs orwatershed areas.[55]
This writes finis to any remaining aspirations respondents may have of reopening
the San Mateo Site. Having declared Proclamation No. 635 illegal, we see no
compelling need to tackle the remaining issues raised in the petition and the
parties’ respective memoranda.
A final word. Laws pertaining to the protection of the environment were
not drafted in a vacuum. Congress passed these laws fully aware of the perilous
state of both our economic and natural wealth. It was precisely to minimize the
adverse impact humanity’s actions on all aspects of the natural world, at the
same time maintaining and ensuring an environment under which man and
nature can thrive in productive and enjoyable harmony with each other, that
these legal safeguards were put in place. They should thus not be so lightly cast
aside in the face of what is easy and expedient.
WHEREFORE, the petition is GRANTED. The Decision of the Court of
Appeals in CA-G.R. SP No. 41330, dated 13 June 1997, is REVERSED and SET
ASIDE. The temporary restraining order issued by the Court on 24 January 2001 is
hereby made permanent.
ALVAREZ V PICOP RESOUCES
On the line are three consolidated Petitions, all arising from the 11 October 2002
Quezon City Regional Trial Court (RTC) Decision1 granting the Petition for
Mandamus filed by Paper Industries Corporation of the Philippines (PICOP). The
Court of Appeals affirmed the 11 October 2002 RTC Decision, with modification,
n a 19 February 2004 Decision.2
n G.R. No. 162243, then Department of Environment and Natural Resources(DENR) Secretary Heherson T. Alvarez, who was later successively substituted by
subsequent DENR Secretaries Elisea G. Gozun and Angelo T. Reyes, assails the 19
February 2004 Decision insofar as it granted the Petition for Mandamus. In G.R.
No. 164516, PICOP assails the same Decision insofar as it deleted the imposition
of damages against then Secretary Alvarez. Secretary Reyes filed a third Petition
docketed as G.R. No. 171875, assailing the 16 December 2004 Amended
Decision3 of the Court of Appeals lifting the Writ of Preliminary Injunction that
enjoined the enforcement of the 11 October 2002 Decision and 10 February 2003
Orders of the RTC.
FACTS
The facts, culled from the records of the three consolidated petitions, are as
follows:
On 24 May 1952, PICOP’s predecessor, Bislig Bay Lumber Co., Inc. (BBLCI) wasgranted Timber License Agreement (TLA) No. 43.4 The TLA was amended on 26
April 1953 and 4 March 1959. As amended, TLA No. 43 covers an area of 75,545
hectares in Surigao del Sur, Agusan del Sur, Compostela Valley, and Davao
Oriental.
Allegedly sometime in 1969, the late President Ferdinand E. Marcos issued a
presidential warranty to BBLCI, confirming that TLA No. 43 "definitely establishes
the boundary lines of *BBLCI’s+ concession area."5
TLA No. 43, as amended, expired on 26 April 1977. It was renewed on 7 October
1977 for another 25 years to "terminate on April 25, 2002."6
On 23 December 1999, then DENR Secretary Antonio H. Cerilles promulgated
DENR Administrative Order (DAO) No. 99-53 which had for its subject, the
"Regulations Governing the Integrated Forest Management Program (IFMP)."7
In a 28 August 2000 letter to the Community Environment and Natural Resou
Office (CENRO), DENR-Region XIII-D4, Bislig, Surigao del Sur, PICOP signified i
intention to convert its TLA No. 43 into an Integrated Forest Management
Agreement (IFMA) invoking the provisions of Section 9, Chapter III of DAO No
53.8
Acting on the said letter, Forester III Trifino M. Peregrino, In-Charge, Office of
CENRO, wrote a letter dated 1 September 2000 to PICOP’s resident manager
Tabon, Bislig, Surigao del Sur, informing PICOP "that we will consider said lett
an advance notice considering that it is yet premature to act on your request
since we are yet in CY 2000."9
In a 24 January 2001 letter, Neolito Frondozo, Group Manager, Forest OperatManager of PICOP, requested for a favorable indorsement of their letter of in
from the CENRO of the DENR, Region XIII-D4 in Bislig City. This was followed
another letter dated 25 January 2001 of Wilfredo D. Fuentes, Vice President a
Resident Manager of PICOP, to the Regional Executive Director (RED), DENR,
Caraga Region XIII in Ambago, Butuan City, likewise, requesting for a favorabl
indorsement of their letter of intent to the DENR Secretary.10
The Officer-In-Charge (OIC), Regional Executive Director Constantino A. Paye
in a 6 March 2001 Memorandum, forwarded PICOP’s letter of intent dated 28
August 2000 to the DENR Secretary informing the latter that the DENR Carag
Region XIII in Ambago, Butuan City, had created a team tasked to conduct a
performance evaluation on PICOP on the said TLA pursuant to DAO No. 99-53
Subsequently, Elias R. Seraspi, Jr., RED, DENR, Caraga Region XIII in Ambago,
Butuan City, submitted a 31 July 2001 Memorandum to the DENR Secretary o
the performance evaluation of PICOP on its TLA No. 43. Paragraph 11 of the s
Memorandum reads:
Hence, it is imperative to chart a good forest policy direction for the
management, development and protection of TLA No. 43 after it expires on A
26, 2002 for the purpose of sustainable forest management of the area in sup
of national development. With this vision, the proper evaluation to consider
request for automatic conversion of TLA No. 43 to IFMA pursuant to Section 9
DENR A.O. No. 99-53, upon its expiration on April 26, 2002 is hereby
recommended.12
Attached to said Memorandum, inter alia, were the 11 July 2001 Report and
July 2001 Supplemental Report of the Performance Evaluation Team created
conduct such performance evaluation indicating violations by PICOP of existi
DENR Rules and Regulations governing TLA No. 43, such as the non-submissio
its five-year forest protection plan and seven-year reforestation plan as requiby the DENR rules and regulations. The said 31 July 2001 Memorandum was
forwarded to the Forest Management Bureau (FMB) for appropriate action a
recommendation.13
Sometime in September 2001, the DENR Secretary was furnished a copy of Fo
Management Specialist II (FMS II) Teofila L. Orlanes’ 24 September 2001
Memorandum concerning alleged unpaid and overdue forest charges of
respondent on TLA No. 43. Attached thereto was a 19 September 2001
Memorandum of Amelia D. Arayan, Bill Collector of the DENR R13-14, Bislig C
likewise indicating purported unpaid and overdue forest charges by PICOP on
TLA No. 43.14
Said Memorandum was referred to FMB Director Romeo T. Acosta, who dire
FMB Senior Forest Management Specialist (SFMS) Ignacio Evangelista to proc
to Region 13 to gather forestry-related data and validate the report containe
the respective Memoranda of Orlanes and Arayan.15 SFMS Evangelista foundthat the 8 May 2001 to 7 July 2001 forest charges adverted to in the Orlanes
Arayan Memoranda was belatedly filed. He also found that PICOP had not pa
regular forest charges covering the period of 22 September 2001 to 26 April 2
in the total amount of P15,056,054.05.16 Moreso, he discovered that from 1
to 30 August 2002, PICOP was late in paying some of its forest charges in 199
and was consistently late in paying all its forestry charges from 1997 onwards
The overdue and unpaid forest charges (including penalties, interests and
surcharges) of PICOP total P150,169,485.02. Its silvicultural fees amount to
P2,366,901.00 from 1996 up to 30 August 2002. In all, PICOP has an outstand
and overdue total obligation on its forest charges in the amount of
P167,592,440.90 as of 30 August 2002.18
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Thus, FMB Director Acosta submitted a 5 October 2001 Memorandum to the
DENR Secretary concerning PICOP’s application for conversion of its TLA No. 43
nto an IFMA, viz:
RECOMMENDATION
The conversion of the TLA into IFMA is primarily aimed at sustaining the raw
materials for the continuous operation of the integrated wood processing plant
of the company. However, the very complex issues presented cannot just be
gnored and have to be fully addressed to before further appropriate action is
taken on the application for conversion. In the absence of categorical comments
and recommendation of the regional office to resolve the issue, it is
recommended that a transition team composed of the following be created: x x
x.19
n lieu of a transition team, the DENR Secretary constituted a negotiating team by
virtue of Special Order No. 2001-698 dated 23 October 2001 composed of
Undersecretary Ramon J.P. Paje as chairman, with the following as members:
Undersecretary Gregorio V. Cabantac and FMB Assistant Director Neria A. Andin.
The team was authorized to negotiate for such terms and conditions as are
advantageous to the Government.20
The DENR Secretary sent a 25 October 2001 letter to PICOP, through its
president, requesting him to designate its representative/s to discuss with the
DENR negotiating team "the conditions and details of the said IFMA including the
production sharing arrangement between PICOP and the government."21
Since PICOP failed to send a representative, and considering that TLA No. 43 was
about to expire, DENR Undersecretary Paje called for a meeting on 21 March
2002. It was only then, or almost five months from the receipt of the 25 October
2001 letter from the DENR Secretary, that PICOP sent its representatives to the
DENR.22
On 9 April 2002, the DENR Negotiating Team issued Resolution No. 1, series of
2002, creating a Technical Working Committee (TWC) to provide technical
assistance to the negotiating team composed of representatives from both DENR
and PICOP.23 On 10 April 2002, the members of the TWC met and discussed the
findings of the Performance Evaluation Team that PICOP has neither submitted
ts Five-Year Forest Protection Plan nor presented its Seven-Year Reforestation
Plan, both being required by DENR rules and regulations. In the same meeting,
PICOP agreed to secure and submit a clearance from the National Commission on
ndigenous Peoples (NCIP) as required by Section 59 of the Indigenous Peoples’
Rights Act (IPRA).24
On 15 April 2002, another TWC meeting was conducted, wherein the proposedvalidation of PICOP’s overall performance "as part of the evaluation process for
the conversion of the TLA into an IFMA" was discussed with PICOP
representatives being given copies of the performance evaluation of PICOP on its
TLA No. 43.25 PICOP’s representatives were subsequently requested to prepare a
map showing by categories the area planted with trees in compliance with
PICOP’s reforestation requirements.26
n the next TWC meeting on 19 April 2002, PICOP’s representatives were asked of
their compliance with their agreement during the 10 April 2002 meeting that they
should have submitted a list of stockholders on 15 April 2002. The PICOP
representatives did not submit such list and instead inquired on the TWC’s
nterpretation of the 25 October 2001 letter of the DENR Secretary to PICOP,
which provides in full, thus:
25 October 2001
MR. TEODORO G. BERNARDINO
President
PICOP Resources Incorporated
2nd Flr, Moredel Building
2280 Pasong Tamo Extension
Makati City
Dear Mr. Bernardino:
Consistent with our attached Memorandum to Her Excellency, the President,
dated 17 October 2001 and in response to your Letter of Intent dated 25
February 2001, we wish to inform you that, pursuant to DENR Administrative
Order No. 99-53, we have cleared the conversion of PICOP’s Timber License
Agreement (TLA) No. 43 to Integrated Forest Management Agreement (IFMA
effective from the expiration of said TLA on April 26, 2002.
In this regard, you are hereby requested to designate PICOP’s representative
discuss with the DENR Team, created under Special Order No. 2001-638, the
conditions and details of the said IFMA, including the production sharing
agreement between PICOP and the government.
For your information and guidance.
Very truly yours,
(sgd)
HEHERSON T. ALVAREZ
Secretary27
It was the position of the DENR members of the TWC that PICOP’s application
the IFMA conversion should undergo the process as provided in DAO No. 99-
PICOP representative Atty. Caingat, however, claimed that "the TLA has been
converted" and suggested the suspension of the meeting as they would subm
written position on the matter the following day.28
On 22 April 2002, the TWC members of the DENR received a letter from PICO
dated 18 April 2002 insisting that "the conversion of TLA No. 43 into IFMA ha
already been completed" and indicated that they had "no choice except to
decline participation in the ongoing meeting and bring our issues to the prop
public and legal forum."29
On 24 April 2002, the TWC submitted a Memorandum dated 22 April 2002 to
Undersecretary for Operations and Undersecretary for Legal, Lands and
International Affairs of the DENR, enumerating the salient points taken up du
the TWC meetings. This includes the performance evaluation report of the DE
Regional Office covering the period from 24 June 1999 to 23 June 2000. The
report states that PICOP has not submitted its 5-Year Forest Protection Plan a
7-Year Reforestation Plan; that it has unpaid and overdue forest charges; and
failure to secure a clearance from the Regional Office of the NCIP considering
presence of Indigenous Peoples (IPs) in the area and Certificate of Ancestral
Domain Claims issued within the area.
The DENR Secretary instructed the RED, Caraga Region, to coordinate with PI
and reiterate the requirements for conversion of TLA No. 43 into IFMA.
Thereafter, the FMB Director received a letter dated 6 August 2002 from NCI
Chairperson Atty. Evelyn S. Dunuan informing him that, based on their record
no certification has been issued to PICOP concerning its application for
conversion of its TLA No. 43 into IFMA, "as there has never been an applicatio
endorsement of such application to our office."30
On 12 August 2002, a meeting was held at the Office of the President of the
Philippines presided by Undersecretary Jose Tale and Undersecretary Jake
Lagonera of the Office of the Executive Secretary. PICOP’s representatives
committed to submit the following, to wit:
1. Certificate of Filing of Amended Articles of Incorporation issued on 12 Aug
2002 that extended PICOP’s corporate term for another fifty (50) years;
2. Proof of Payment of forest charges;
3. Proof of Payment of Reforestation Deposit;
4. Response to social issues, particularly clearance from the NCIP; and
5. Map showing reforestation activities on an annual basis.31
PICOP submitted its purported compliance with aforesaid undertaking throug
letter dated 21 August 2002 to the DENR Secretary. Upon evaluation of the
documents submitted by PICOP, the TWC noted that:
a) PICOP did not submit the required NCIP clearance;
b) The proof of payments for forest charges covers only the production perio
from 1 July 2001 to 21 September 2001;
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c) The proof of payment of reforestation deposits covers only the period from the
first quarter of CY 1999 to the second quarter of CY 2001;
d) The map of the areas planted through supplemental planting and social
forestry is not sufficient compliance per Performance Evaluation Team’s 11 July
2001 report on PICOP’s performance on its TLA No. 43, pursuant to Section 6.6 of
DAO 79-87; and
e) PICOP failed to respond completely to all the social issues raised.32
Accordingly, the Secretary of DENR claims that further processing of PICOP’s
application for the conversion of TLA No. 43 cannot proceed until PICOP complies
with the requirements.
nsisting that the conversion of its TLA No. 43 had been completed, PICOP filed a
Petition for Mandamus against then DENR Secretary Heherson T. Alvarez before
the RTC of Quezon City, which was raffled to Branch 220, presided by Hon. Jose
G. Paneda. The petition was docketed as Civil Case No. Q-02-47764 (hereinafter
referred to as the MANDAMUS CASE).
On 11 October 2002, the RTC rendered a Decision granting PICOP’s Petition for
Mandamus, thus:
WHEREFORE, premises considered, the Petition for Mandamus is hereby
GRANTED.
The Respondent DENR Secretary Hon. Heherson Alvarez is hereby ordered:
1. to sign, execute and deliver the IFMA contract and/or documents to PICOP and
ssue the corresponding IFMA assignment number on the area covered by the
FMA, formerly TLA No. 43, as amended;
2. to issue the necessary permit allowing petitioner to act and harvest timber
from the said area of TLA No. 43, sufficient to meet the raw material
requirements of petitioner’s pulp and paper mills in accordance with the
warranty and agreement of July 29, 1969 between the government and PICOP’s
predecessor-in-interest; and
3. to honor and respect the Government Warranties and contractual obligations
to PICOP strictly in accordance with the warranty and agreement dated July 29,
1999 (sic) between the government and PICOP’s predecessor-in-interest (Exhibits
"H", "H-1" to "H-5", particularly the following:
a) the area coverage of TLA No. 43, which forms part and parcel of thegovernment warranties;
b) PICOP tenure over the said area of TLA No. 43 and exclusive right to cut, collect
and remove sawtimber and pulpwood for the period ending on April 26, 1977;
and said period to be renewable for [an]other 25 years subject to compliance
with constitutional and statutory requirements as well as with existing policy on
timber concessions; and
c) The peaceful and adequate enjoyment by PICOP of the area as described and
specified in the aforesaid amended Timber License Agreement No. 43.
The Respondent Secretary Alvarez is likewise ordered to pay petitioner the sum
of P10 million a month beginning May 2002 until the conversion of TLA No. 43, as
amended, to IFMA is formally effected and the harvesting from the said area is
granted.33
On 25 October 2002, the DENR Secretary filed a Motion for Reconsideration.34
PICOP filed an Urgent Motion for Issuance of Writ of Mandamus and/or Writ of
Mandatory Injunction.35
On 12 November 2002, then DENR Secretary Alvarez filed a Motion to Inhibit
Hon. Jose G. Paneda from further trying the case, attaching to said motion an
administrative complaint against the latter which was filed by the former before
the Office of the Court Administrator.36 The Motion was denied in an Order
dated 10 December 2002.
On 19 December 2002, PICOP filed a Manifestation and Motion to Implead Hon.
Elisea Gozun as respondent,37 which was granted. Elisea Gozun was, thus,
substituted as respondent in her official capacity as the new DENR Secretary.38
On 6 November 2002, then NCIP Chairperson Atty. Evelyn S. Dunuan sent a le
to the DENR (1) informing the DENR Secretary that after validation by the NC
was found out that the area of 47,420 hectares covered by PICOP’s TLA No. 4
conflicts with the ancestral domains of the Manobos; and (2) reiterating the
information that no NCIP certification was sought by PICOP to certify that the
area covered by TLA No. 43, subject of its IFMA conversion, does not overlap
any ancestral domain. Accordingly, she "strongly urge[d] the revocation of th
one-year permit granted to PICOP until the full provisions of [the] IPRA are
followed and the rights of our Indigenous Peoples over their ancestral land cl
are respected."39
On 25 November 2002, President Gloria Macapagal-Arroyo issued Proclamat
No. 297, "EXCLUDING A CERTAIN AREA FROM THE OPERATION OF
PROCLAMATION NO. 369 DATED FEBRUARY 27, 1931, AND DECLARING THE SAS MINERAL RESERVATION AND AS ENVIRONMENTALLY CRITICAL AREA." The
excluded area consists of 8,100 hectares, more or less, which formed part of
PICOP’s expired TLA No. 43, subject of its application for IFMA conversion.40
On 21 January 2003, PICOP filed a Petition for the Declaration of Nullity of th
aforesaid presidential proclamation as well as its implementing DENR
Administrative Order No. 2002-35 (DAO No. 2002-35) which was raffled to Br
78 of the RTC in Quezon City. The Petition was docketed as Special Civil Actio
No. Q-03-48648 (hereinafter referred to as the NULLITY CASE).
In said NULLITY CASE, the RTC issued a Temporary Restraining Order (TRO)
enjoining respondents therein41 from implementing the questioned issuance
The DENR Secretary and her co-respondents in said case filed on 6 February 2
an Omnibus Motion (1) To Dissolve the Temporary Restraining Order dated 3
February 2003; and (2) To Dismiss (With Opposition to the Issuance of a Writ
Preliminary Injunction).42
The trial court issued a Resolution dated 19 February 2003 granting the Motio
Dismiss on the ground that the Petition does not state a cause of action.43 P
filed a Motion for Reconsideration as well as a Motion to Inhibit. On 24 Marc
2003, the presiding judge of Branch 78 inhibited himself from hearing the cas
Accordingly, the NULLITY CASE was re-raffled to Branch 221 of the RTC of Qu
City, which granted PICOP’s Motion for Reconsideration by setting for hearing
PICOP’s application for preliminary injunction.
Meanwhile, in the MANDAMUS CASE, the RTC denied the DENR Secretary’s
Motion for Reconsideration and granted the Motion for the Issuance of Writ
Mandamus and/or Writ of Mandatory Injunction via a 10 February 2003 Orde
The fallo of the 11 October 2002 Decision was practically copied in the 10
February 2003 Order, although there was no mention of the damages impose
against then Secretary Alvarez.46 The DENR Secretary filed a Notice of Appeafrom the 11 October 2002 Decision and the 10 February 2003 Order.
On 28 February 2003, the DENR Secretary filed before the Court of Appeals, a
Petition for Certiorari With a Most Urgent Prayer for the Issuance of a Tempo
Restraining Order and/or Writ of Preliminary Injunction insofar as the trial co
ordered the execution of its 11 October 2002 Decision pending appeal. The
petition (hereinafter referred to as the INJUNCTION CASE) was docketed as C
G.R. SP No. 75698, which was assigned to the Special 13th Division thereof.
On 11 March 2003, the Court of Appeals issued a 60-day TRO48 enjoining the
enforcement of the 11 October 2002 Decision and the 10 February 2003 Ord
the RTC. On 30 April 2003, the Court of Appeals issued a Writ of Preliminary
Injunction.49
On 30 October 2003, the Court of Appeals rendered its Decision50 in the
INJUNCTION CASE granting the Petition and annulling the Writ of Mandamusand/or Writ of Mandatory Injunction issued by the trial court. PICOP filed a
Motion for Reconsideration.51
On 19 February 2004, the Seventh Division of the Court of Appeals rendered
Decision52 on the MANDAMUS CASE, affirming the Decision of the RTC, to w
WHEREFORE, the appealed Decision is AFFIRMED with modification that the
order directing then DENR Secretary Alvarez "to pay petitioner-appellee the s
of P10 million a month beginning May, 2002 until the conversion to IFMA of T
No. 43, as amended, is formally effected and the harvesting from the said are
granted" is hereby deleted. 53
PICOP filed a Motion for Partial Reconsideration54 of this Decision, which wa
denied by the Court of Appeals in a 20 July 2004 Resolution.55
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Meanwhile, in a 22 March 2004 Resolution,56 the Special Thirteenth Division of
the Court of Appeals held in abeyance the ruling on the Motion for
Reconsideration of the INJUNCTION CASE pending the Seventh Division’s
resolution of the Motion for Reconsideration of the 19 February 2004 Decision in
the MANDAMUS CASE.
The DENR Secretary and PICOP filed with this Court separate Petitions for Review
on the 19 February 2004 Court of Appeals Decision in the MANDAMUS CASE.
These Petitions were docketed as G.R. No. 162243 and 164516, respectively.
On 16 December 2004, the Special Thirteenth Division of the Court of Appeals
rendered an Amended Decision57 on the INJUNCTION CASE lifting the Writ of
Preliminary Injunction it had previously issued, to wit:
WHEREFORE, the Resolution dated March 22, 2004 holding in abeyance the
resolution of the motion for reconsideration of Our October 30, 2003 decision is
set aside and the Decision dated October 30, 2003 reconsidered.
The Writ of Preliminary Injunction dated 30 April 2003 is hereby lifted and
dissolved and the Order dated 10 February 2003 allowing execution pending
appeal and authorizing the issuance of the writ of mandamus and/or writ of
mandatory injunction is hereby affirmed. The Petition dated February 27, 2003 is
herewith dismissed.58
Upon denial of its Motion for Reconsideration in a 9 March 2006 Resolution,59
the DENR Secretary filed with this Court, a Petition for Review60 of the
NJUNCTION CASE. The Petition was docketed as G.R. No. 171875.
On 5 July 2006, this Court resolved61 to consolidate G.R. No. 162243, 164516,
and 171875.
SSUES
n G.R. No. 162243, the DENR Secretary brought forth the following issues for our
consideration:
WHETHER THE PRESIDENTIAL WARRANTY IS A CONTRACT WHICH CONSTITUTES A
LEGAL BAR TO THE EXERCISE BY THE STATE OF ITS FULL CONTROL AND
SUPERVISION REGARDING THE EXPLORATION DEVELOPMENT AND UTILIZATION
OF ITS NATURAL RESOURCES.
I
WHETHER [PICOP] HAD ACQUIRED A VESTED RIGHT OVER ITS FOREST
CONCESSION AREA BY VIRTUE OF THE AFORESAID PRESIDENTIAL WARRANTY.
II
WHETHER THE TRIAL COURT HAD JURISDICTION TO TAKE COGNIZANCE OF THIS
CASE BECAUSE THE SUBJECT MATTER THEREOF PERTAINS TO THE EXCLUSIVE
ADMINISTRATIVE DOMAIN OF [THE DENR SECRETARY].
V
WHETHER *PICOP’S+ PETITION FOR MANDAMUS SHOULD HAVE BEEN DISMISSED
(1) FOR LACK OF CAUSE OF ACTION; AND (2) BECAUSE THE SUBJECT MATTER
THEREOF IS NOT CONTROLLABLE BY CERTIORARI.
V
WHETHER [PICOP] HAS FAITHFULLY COMPLIED WITH ALL THE ADMINISTRATIVE
AND OTHER STATUTORY REQUIREMENTS ENTITLING IT TO AN IFMA
CONVERSION.
VI
WHETHER [PRESIDENTIAL DECREE NO. 605]62 HAS BEEN PARTLY REPEALED BY
[REPUBLIC ACT NO. 8975].63
n G.R. No. 164516, PICOP submits the sole issue:
WHETHER THE COURT OF APPEALS PROPERLY DELETED THE AWARD OF
DAMAGES TO PETITIONER BY THE TRIAL COURT.64
Finally, in G.R. No. 171875, the DENR Secretary submits the following argume
A. [PICOP] DID NOT ACTUALLY FILE A MOTION FOR EXECUTION PENDING APP
B. THERE ARE NO GOOD REASONS FOR THE GRANT OF EXECUTION PENDING
APPEAL.65
THIS COURT’S RULING
Whether or not outright dismissal was proper
Since the third, fourth and sixth issues raised by the DENR Secretary, if
determined in favor of the DENR Secretary, would have warranted an outrigh
dismissal of the MANDAMUS CASE as early as the trial court level, it is properresolve these issues first.
The DENR Secretary alleges that the jurisdiction over the subject matter of th
MANDAMUS CASE pertains to the exclusive administrative domain of the DEN
and therefore, the RTC had been in error in taking cognizance thereof. The D
Secretary adds that, assuming arguendo that the RTC properly took cognizan
the MANDAMUS CASE, it committed a reversible error in not dismissing the s
(1) for lack of cause of action; and (2) because the subject matter thereof is n
controllable by mandamus.
The Petition filed before the trial court was one for mandamus with prayer fo
the issuance of a writ of preliminary prohibitory and mandatory injunction w
damages. Specifically, it sought to compel the DENR Secretary to: (1) sign,
execute and deliver the IFMA documents to PICOP; (2) issue the correspondin
IFMA number assignment; and (3) approve the harvesting of timber by PICOP
from the area of TLA No. 43. The DENR Secretary contends that these acts re
to the licensing regulation and management of forest resources, which task
belongs exclusively to the DENR66 as conveyed in its mandate:
SECTION 4. Mandate. – The Department shall be the primary government age
responsible for the conservation, management, development and proper use
the country’s environment and natural resources, specifically forest and graz
lands, mineral resources, including those in reservation and watershed areas
lands of the public domain, as well as the licensing and regulation of all natur
resources as may be provided for by law in order to ensure equitable sharing
the benefits derived therefrom for the welfare of the present and future
generations of Filipinos.67
The Court of Appeals ruled:
The contention does not hold water. In its petition for mandamus, [PICOP]asserted that "DENR Secretary Alvarez acted with grave abuse of discretion o
excess of his jurisdiction in refusing to perform his ministerial duty to sign,
execute and deliver the IFMA contract and to issue the corresponding IFMA
number to it." The cited jurisdiction of the DENR on licencing regulation and
management of our environment and natural resources is not disputed. In fa
the petition seeks to compel it to properly perform its said functions in relati
[PICOP]. What is at stake is not the scope of the DENR jurisdiction but the ma
by which it exercises or refuses to exercise that jurisdiction.
The courts have the duty and power to strike down any official act or omissio
tainted with grave abuse of discretion. The 1987 Constitution is explicit in
providing that judicial power includes not only the duty of the courts of justic
settle actual controversies involving rights which are legally demandable and
enforceable, but also to determine whether or not there has been grave abu
discretion amounting to lack or in excess of jurisdiction on the part of any bra
or instrumentality of the government.68
The Court of Appeals is correct. Since PICOP alleges grave abuse of discretion
the part of the DENR Secretary, it behooves the court to determine the same
outright dismissal of the case would have prevented such determination.
For the same reason, the MANDAMUS CASE could not have been dismissed
outright for lack of cause of action. A motion to dismiss based on lack of caus
action hypothetically admits the truth of the allegations in the complaint.69 I
ruling upon the DENR Secretary’s Motion to Dismiss, PICOP’s allegation that i
a contract with the government should, thus, be hypothetically admitted.
Necessarily, the DENR Secretary’s argument that there was no such contract
should be considered in the trial of the case and should be disregarded at thi
stage of the proceedings.
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The DENR Secretary, however, counters that he/she has not yet exercised his/her
exclusive jurisdiction over the subject matter of the case, i.e., either to approve or
disapprove PICOP’s application for IFMA conversion. Hence, it is argued that
PICOP’s immediate resort to the trial court was precipitate based on the doctrine
of exhaustion of administrative remedies.70
The Court of Appeals ruled that the doctrine of exhaustion of administrative
remedies is disregarded when there are circumstances indicating the urgency of
udicial intervention,71 which are averred to be extant in this case, citing PICOP’s
employment of a sizable number of workers and its payment of millions in taxes
to the government.72 The Court of Appeals appends:
Moreover, contrary to *the DENR Secretary’s+ claim, the approval of an
application for IFMA conversion is not purely discretionary on the part of theDENR Secretary since the approval of an IFMA conversion depends upon
compliance with the requirements provided under DAO No. 99-53.
Of course, as earlier intimated, even assuming, arguendo, that the approval of an
FMA conversion involves the exercise of discretion by the DENR Secretary, the
writ of mandamus may be issued to compel the proper exercise of that discretion
where it is shown that there was grave abuse of discretion, manifest injustice, or
palpable excess of authority.73
While the Court of Appeals is correct in making such rulings, such accuracy
applies only insofar as the RTC assessment that the MANDAMUS CASE should not
have been subjected to outright dismissal. The issue of whether there was indeed
an urgency of judicial intervention (as to warrant the issuance of a writ of
mandamus despite the exclusive jurisdiction of the DENR) is ultimately connected
to the truth of PICOP’s assertions, which were hypothetically admitted in the
motion to dismiss stage. In other words, it all boils down to whether the DENR
Secretary committed grave abuse of discretion in not executing the IFMA
documents and in not approving PICOP’s harvesting of timber from the area of
TLA No. 43. The sixth issue raised by the DENR Secretary concerns Section 1 of
Presidential Decree No. 605 which, according to the Court of Appeals had been
partly repealed by Republic Act No. 8975. Section 1 of Presidential Decree No.
605 provides:
SECTION 1. No court of the Philippines shall have jurisdiction to issue any
restraining order, preliminary injunction or preliminary mandatory injunction in
any case involving or growing out of the issuance, approval or disapproval,
revocation or suspension of, or any action whatsoever by the proper
administrative official or body on concessions, licenses, permits, patents, or
public grants of any kind in connection with the disposition, exploitation,
utilization, exploration and/or development of the natural resources of the
Philippines.
According to the Court of Appeals,
Section 1 of PD 605 has been partly repealed by RA No. 8975, enacted on
November 7, 2002. Section 3 of the said law limits the prohibition on the issuance
of restraining orders and injunctions to the following:
"(a) Acquisition, clearance and development of the right-of-way and/or site of
ocation of any national government project;
"(b) Bidding or awarding of contract/project of the national government as
defined under Section 2 hereof;
"(c) Commencement, prosecution, execution, implementation, operation of any
such contract or project;
"(d) Termination or rescission of any such contract/project; and
"(e) The undertaking or authorization of any other lawful activity necessary for
such contract/project."
Noticeably, the subject coverage on concessions, licenses and the like
contemplated in Section 1 of PD 605 is not reproduced in the foregoing
enumeration under Section 3 of R.A. 8975. The effect of the non-reenactment is a
partial repeal of Section 1 of PD 605. It is a rule of legal hermenuetics (sic) that an
act which purports to set out in full all that it intends to contain operates as a
repeal of anything omitted which was contained in the old act and not included in
the act as revised. As the repealing clause of R.A. 8975 states:
"Sec. 9. Repealing Clause – All laws, decrees including Presidential Decree Nos.
605, 1818 and Republic Act No. 7160, as amended, orders, rules and regulations
or parts thereof inconsistent with this act are hereby repealed or amended
accordingly."74
The DENR Secretary claims that since Republic Act No. 8975 simply declares t
Presidential Decree No. 605 or parts thereof "inconsistent with this Act are
hereby repealed or amended accordingly," then, there should be an inconsist
between Presidential Decree No. 605 and Republic Act No. 8975 before there
be a partial repeal of Presidential Decree No. 605.
We agree with the DENR Secretary. Republic Act No. 8975 was not intended t
set out in full all laws concerning the prohibition against temporary restrainin
orders, preliminary injunctions and preliminary mandatory injunctions. Repu
Act No. 8975 prohibits lower courts from issuing such orders in connection w
the implementation of government infrastructure projects, while PresidentiaDecree No. 605 prohibits the issuance of the same, in any case involving licen
concessions and the like, in connection with the natural resources of the
Philippines. This can be further seen from the respective titles of these two la
which, of course, should express the subjects thereof:75
REPUBLIC ACT NO. 8975
AN ACT TO ENSURE THE EXPEDITIOUS IMPLEMENTATION AND COMPLETION
GOVERNMENT INFRASTRUCTURE PROJECTS BY PROHIBITING LOWER COURTS
FROM ISSUING TEMPORARY RESTRAINING ORDERS, PRELIMINARY INJUNCTIO
OR PRELIMINARY MANDATORY INJUNCTIONS, PROVIDING PENALTIES FOR
VIOLATIONS THEREOF, AND FOR OTHER PURPOSES.
PRESIDENTIAL DECREE NO. 605
BANNING THE ISSUANCE BY COURTS OF PRELIMINARY INJUNCTIONS IN CASE
INVOLVING CONCESSIONS, LICENSES, AND OTHER PERMITS ISSUED BY PUBLIC
ADMINISTRATIVE OFFICIALS OR BODIES FOR THE EXPLOITATION OF NATURAL
RESOURCES.
However, when the licenses, concessions and the like also entail government
infrastructure projects, the provisions of Republic Act No. 8975 should be
deemed to apply,76 and, thus, Presidential Decree No. 605 had been modifie
this sense.
Nevertheless, despite the fact that Presidential Decree No. 605 subsists, the
DENR Secretary must have missed our ruling in Datiles and Co. v. Sucaldito,77
wherein we held that the prohibition in Presidential Decree No. 605 "pertain
the issuance of injunctions or restraining orders by courts against administrat
acts in controversies involving facts or the exercise of discretion in technical
cases, because to allow courts to judge these matters could disturb the smoofunctioning of the administrative machinery. But on issues definitely outside
this dimension and involving questions of law, courts are not prevented by
Presidential Decree No. 605 from exercising their power to restrain or prohib
administrative acts."
While there are indeed questions of facts in the present Petitions, the overrid
controversy involved herein is one of law: whether the Presidential Warranty
issued by former President Marcos are contracts within the purview of the
Constitution’s Non-Impairment Clause. Accordingly, the prohibition in
Presidential Decree No. 605 against the issuance of preliminary injunction in
cases involving permits for the exploitation of natural resources does not app
this case.
Moreover, as we held in Republic v. Nolasco,78 statutes such as Presidential
Decree No. 605, Presidential Decree No. 1818 and Republic Act No. 8975 me
proscribe the issuance of temporary restraining orders and writs of preliminainjunction and preliminary mandatory injunction. They cannot, under pain of
violating the Constitution, deprive the courts of authority to take cognizance
the issues raised in the principal action, as long as such action and the relief
sought are within their jurisdiction. We further held in Nolasco:
However, it must be clarified that Republic Act No. 8975 does not ordinarily
warrant the outright dismissal of any complaint or petition before the lower
courts seeking permanent injunctive relief from the implementation of natio
government infrastructure projects. What is expressly prohibited by the statu
the issuance of the provisional reliefs of temporary restraining orders,
preliminary injunctions, and preliminary mandatory injunctions. It does not
preclude the lower courts from assuming jurisdiction over complaints or peti
that seek as ultimate relief the nullification or implementation of a national
government infrastructure project. A statute such as Republic Act No. 8975
cannot diminish the constitutionally mandated judicial power to determine
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whether or not there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of government.
x x x.79
As the disposition of these consolidated Petitions will be dispositions of the
principal actions, any applicability of the prohibitions in Presidential Decree No.
605 will be mooted.
Whether or not the presidential warranty was a contract
PICOP’s ground for the issuance of a writ of mandamus is the supposed contract
entered into by the government in the form of a Presidential Warranty, dated 29
July 1969 issued by then President Ferdinand E. Marcos to PICOP. The DENR
Secretary refutes this claim, and alleges that the RTC and the Court of Appealserred in declaring the Presidential Warranty a valid and subsisting contract under
the Constitution’s Non-Impairment Clause.
The Court of Appeals has this brief statement concerning the main issue of the
MANDAMUS CASE:
The questioned warranty is a valid contract. It was freely entered into by the
government and [PICOP]. Mutual considerations were taken into account in the
execution of that contract. [PICOP] invested billions of pesos in its concession
areas. In return, the government assured [PICOP] of its tenurial rights over TLA
No. 43, as amended, as well as its exclusive right to cut, collect and saw timber
and pulpwood therein. The DENR must perforce honor and respect the warranty
by maintaining the area alloted (sic) to [PICOP] under TLA No. 43, as amended.80
We are constrained to disagree. In unequivocal terms, we have consistently held
that such licenses concerning the harvesting of timber in the country’s forests
cannot be considered contracts that would bind the Government regardless of
changes in policy and the demands of public interest and welfare.81 Such
unswerving verdict is synthesized in Oposa v. Factoran, Jr.,82 where we held:
n the first place, the respondent Secretary did not, for obvious reasons, even
nvoke in his motion to dismiss the non-impairment clause. If he had done so, he
would have acted with utmost infidelity to the Government by providing undue
and unwarranted benefits and advantages to the timber license holders because
he would have forever bound the Government to strictly respect the said licenses
according to their terms and conditions regardless of changes in policy and the
demands of public interest and welfare. He was aware that as correctly pointed
out by petitioners, into every timber license must be read Section 20 of the
Forestry Reform Code (P.D. No. 705) which provides:
"x x x Provided, that when the national interest so requires, the President mayamend, modify, replace or rescind any contract, concession, permit, licenses or
any other form of privilege granted herein x x x."
Needless to say, all licenses may thus be revoked or rescinded by executive
action. It is not a contract, property or a property right protected by the due
process clause of the constitution. In Tan vs. Director of Forestry, [125 SCRA 302,
325 (1983)] this Court held:
"x x x A timber license is an instrument by which the State regulates the
utilization and disposition of forest resources to the end that public welfare is
promoted. A timber license is not a contract within the purview of the due
process clause; it is only a license or privilege, which can be validly withdrawn
whenever dictated by public interest or public welfare as in this case.
"A license is merely a permit or privilege to do what otherwise would be
unlawful, and is not a contract between the authority, federal, state, ormunicipal, granting it and the person to whom it is granted; neither is it property
or a property right, nor does it create a vested right; nor is it taxation (37 C.J.
168). Thus, this Court held that the granting of license does not create irrevocable
rights, neither is it property or property rights. (People vs. Ong Tin, 54 O.G. 7576).
x x x"
We reiterated this pronouncement in Felipe Ysmael, Jr. & Co., Inc. vs. Deputy
Executive Secretary [190 SCRA 673, 684 (1990)] :
"x x x Timber licenses, permits and license agreements are the principal
nstruments by which the State regulates the utilization and disposition of forest
resources to the end that public welfare is promoted. And it can hardly be
gainsaid that they merely evidence a privilege granted by the State to qualified
entities, and do not vest in the latter a permanent or irrevocable right to the
particular concession area and the forest products therein. They may be validly
amended, modified, replaced or rescinded by the Chief Executive when natio
interests so require. Thus, they are not deemed contracts within the purview
the due process of law clause [See Sections 3(ee) and 20 of Pres. Decree No.
as amended. Also, Tan v. Director of Forestry, G.R. No. L-24548, October 27,
1983, 125 SCRA 302]."
Since timber licenses are not contracts, the non-impairment clause, which re
"SEC. 10. No law impairing, the obligation of contracts shall be passed."
cannot be invoked.
PICOP, however, argues that these rulings laid down in Tan v. Director of
Forestry,83 Felipe Ysmael, Jr. & Co., Inc. v. Deputy Executive Secretary84 andOposa do not find application in the present case allegedly because the issue
is the unlawful refusal of then DENR Secretary Alvarez to issue an IFMA to PIC
and not the matter of a timber license being merely a license or privilege.85
We are not persuaded. PICOP filed the MANDAMUS CASE against then DENR
Secretary Alvarez on the ground that Secretary Alvarez’s refusal to issue an IF
in its favor allegedly violated its vested right over the area covered by its TLA
43 and presidential warranty, and impaired the obligation of contract under s
agreement and warranty.86
The argument that the Presidential Warranty is a contract on the ground that
there were mutual considerations taken into account consisting in investmen
on PICOP’s part is preposterous. All licensees put up investments in pursuing
businesses. To construe these investments as consideration in a contract wou
be to stealthily render ineffective the settled jurisprudence that "a license or
permit is not a contract between the sovereignty and the licensee or permitt
and is not a property in the constitutional sense, as to which the constitution
proscription against the impairment of contracts may extend."87 Neither sha
allow a circumvention of such doctrine by terming such permit as a "warranty
Whether or not there was compliance with the requirements for the convers
of TLA No. 43 as amended into an IFMA
DAO No. 99-53 enumerates the requirements for the grant of the IFMA
conversion:
Sec. 9. Qualifications of Applicants. The applicants for IFMA shall be:
(a) A Filipino citizen of legal age; or
(b) Partnership, cooperative or corporation whether public or private, dulyregistered under Philippine laws.
However, in the case of application for conversion of TLA into IFMA, an autom
conversion after proper evaluation shall be allowed, provided the TLA holder
have signified such intention prior to the expiry of the TLA, PROVIDED furthe
TLA holder has shown satisfactory performance and have complied with the
terms and conditions of the TLA and pertinent rules and regulations.
Therefore, the following are the requisites for the automatic conversion of th
TLA into an IFMA, to wit:
1. The TLA holder had signified its intent to convert its TLA into an IFMA prior
the expiration of its TLA;
2. Proper evaluation was conducted on the application; and
3. The TLA holder has satisfactorily performed and complied with the terms a
conditions of the TLA and the pertinent rules and regulations.
The Court of Appeals held:
From the foregoing provision, it can be gleaned that as long as an applicant-
corporation has signified its intention to convert its TLA into an IFMA prior to
expiration of its TLA, has shown satisfactory performance as a TLA holder and
complied with the terms and conditions of the TLA and pertinent rules and
regulations, conversion follows as a matter of course. It becomes automatic.
[PICOP] has complied with the administrative requirements. In its letter dated
August 28, 2000 to the Community Environment and Natural Resources Offic
(CENRO) for DENR-RXIII-D4, Bislig, Surigao del Sur, it signified its intention to
convert its TLA into an IFMA. It has also shown satisfactory performance as a
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holder as evidenced by the July 31, 2001 Report of Director Elias Seraspi, Jr. The
said report states that [PICOP] was able to hold on its management and
protection of its concession areas.
x x x x
Apparently, [the DENR Secretary] refuses to sign the documents on the grounds
that [PICOP] has not secured and submitted a clearance from the National
Commission on Indigenous Peoples (NCIP) showing that its TLA areas do not
overlap with existing ancestral domains: and that [PICOP] has outstanding and
overdue obligation in forest charges.
The two reasons last cited by the Secretary for refusing to sign and deliver the
FMA documents are not real nor valid.
Section 59 of RA 8371, which requires prior certification from the NCIP that the
areas affected do not overlap with any ancestral domain before any IFMA can be
entered into by the government, should be read in conjunction with Sections 3 (a)
and 56 of the same law.
Section 3 (a) of RA 8371 describes ancestral domains as "areas generally
belonging to ICCs/IPs comprising lands, inland waters, coastal areas, and natural
resources therein, held under a claim of ownership, occupied or possessed by
CCs/IPs, by themselves or through their ancestors, communally or individually
since time immemorial, continuously to the present xxx." On the other hand,
Section 56 of the same law provides:
"Sec. 56. Existing Property Rights Regimes. – Property rights within the ancestral
domains already existing and/or vested upon effectivity of this Act, shall be
recognized and respected."
t can thus be deduced that Section 59 can only be interpreted to refer to
ancestral domains which have been duly established as such (i.e., the concerned
ndigenous people must have been in continuous possession or occupation of the
area concerned since time immemorial up to the present). Too, existing property
rights over the areas sought to be declared as part of an ancestral domain must
be recognized and respected.
[PICOP] has already acquired property rights over its concession areas. It has
been in exclusive, continuous and uninterrupted possession and occupation of
TLA No. 43 areas since 1952 to present. From the time it managed and operated
TLA No. 43, it has made huge investments on its concession areas. These include
the planting of millions of trees and the scientific silvicultural treatment of the
forest to make it more productive. Having acquired property rights over TLA No.
43 areas, [PICOP] need not be required to secure clearance from the NCIPpursuant to Section 59 of RA 8371.
*The DENR Secretary’s+ claim that *PICOP+ failed to settle its outstanding
obligations to the government in the form of unpaid forest charges do not inspire
belief. Under Sec. 3 (3.5) of DENR Memorandum Circular No. 96-04 dated March
14, before an Integrated Annual Operations Plan (IAOP) can be issued, it is a
condition precedent that the licensee has no pending forestry accounts. If it were
true that [PICOP] had unpaid forest charges, why was it issued IAOP for calendar
year 2001-2002 by Secretary Alvarez himself?88
Upon close scrutiny of the records, this Court observes that these findings of
compliance by PICOP are negated by the very evidence on which they are
supposedly moored.
As clearly shown by the 31 July 2001 Memorandum of Regional Executive
Director Elias D. Seraspi, Jr., DENR Caraga Region, RED Seraspi neither made acategorical finding of PICOP’s satisfactory performance on its TLA No. 43 nor
favorably recommended approval of PICOP’s application for IFMA conversion.
Rather, RED Seraspi recommended the proper evaluation of PICOP’s request for
the automatic conversion of TLA No. 43 into an IFMA:
Hence, it is imperative to chart a good forest policy direction for the
management, development and protection of TLA No. 43 after it expires on April
26, 2002 for the purpose of sustainable forest management of the area in support
of national development. With this vision, the proper evaluation to consider the
request for automatic conversion of TLA No. 43 to IFMA pursuant to Section 9,
DENR A.O. No. 99-53, upon its expiration on April 26, 2002 is hereby
recommended.89
Administrative Requirements
There was actually no way by which RED Seraspi could have come up with a
satisfactory performance finding since the very Performance Evaluation Team
tasked to make the evaluation found PICOP to have violated existing DENR ru
and regulations. According to the 11 July 2002 Memorandum Report of the
Performance Evaluation Team, PICOP has not submitted its Five-Year Forest
Protection Plan and its Seven-Year Reforestation Plan.90
Forest charges are, on the other hand, due and payable within 30 days from
removal of the forest products from the cutting area when timber and other
forest products are removed for domestic sales pursuant to Sections 6 and 6
DAO No. 80, series of 1987. Thus:
Section 6. Payment of Forest Charges. – x x x In such a case, the forest charge
shall be due and payable as follows:
6.1 When timber and other forest products are intended for export. – x x x x
6.2 When timber and other forest products are to be removed for domestic s
– The forest charges shall be due and payable within thirty (30) days from
removal thereof at the cutting area, or where the forest products are gathere
Provided, that such date of removal shall in no case be beyond thirty (30) day
when the products are cut, gathered and removed.
As testified to by FMB SFMS Ignacio M. Evangelista, PICOP failed to pay its re
forest charges covering the period from 22 September 2001 to 26 April 2002
the total amount of P15,056,054.05.91 PICOP was also late in paying most of
forest charges from 1996 onwards for which it is liable for a surcharge of 25%
annum on the tax due and interest of 20% per annum which now amounts to
P150,169,485.02.92 Likewise, it has overdue and unpaid silvicultural fees in t
amount of P2,366,901.00 as of 30 August 2002.93 In all, PICOP has unpaid an
overdue forest charges in the sum of P167,592,440.90 as of 10 August 2002.9
PICOP’s failure to pay its regular forest charges, interests, penalties and
surcharges and silvicultural fees amounting to P167,592,440.90 as of 30 Augu
2002 is further evidenced by the collection letters sent to PICOP and the abse
of official receipts in the DENR records in Bislig City evidencing payment of th
overdue amounts stated in the said collection letters.95 As can be gleaned fr
SFMS Evangelista’s tabulation, all the official receipts evidencing payments o
PICOP with their corresponding periods are indicated. However, there are no
similar official receipts for the period covering 22 September 2001 to 26 Apri
2002, which indicate that no payment has been made for the same period.
With the DENR Secretary’s presentation of its positive and categorical eviden
showing PICOP’s failure to pay its forest charges amounting to P167,592,440.
as of 10 August 2002, the burden of evidence has been shifted to PICOP to protherwise. PICOP should have, thus, presented official receipts as proof of th
payment of such forest charges, but failed to do so.
Despite the foregoing evidence, the Court of Appeals declared that if it were
that PICOP has unpaid forest charges, it should not have been issued an IAOP
the year 2001-2002 by Secretary Alvarez himself.96 In doing so, the Court of
Appeals disregarded the part of the very evidence presented by PICOP itself,
which shows that the IAOP was approved subject to several conditions, not t
least of which was the submission of proof of updated payment of forest cha
from April 2001 to June 2001.97
Neither was this the only evidence presented by PICOP which showed that it
unpaid forest charges. PICOP presented the certification of CENRO Calunsag
which refers only to its alleged payment of regular forest charges covering th
period from 14 September 2001 to 15 May 2002.98 The certification does no
mention similar payment of the penalties, surcharges and interests which itincurred in paying late several forest charges, which fact it did not rebut.
The 27 May 2002 Certification by CENRO Calunsag, on the other hand, specifi
only the period covering 14 September 2001 to 15 May 2002 and the amoun
P53,603,719.85 paid by PICOP without indicating the corresponding volume a
date of production of the logs. This is in contrast to the findings of SFMS
Evangelista which cover the period from CY 1996 to 30 August 2002 which
includes penalties, interests, and surcharges for late payment pursuant to DA
80, series of 1987.
Per request of PICOP, a certification dated 21 August 2002 was issued by Bill
Collector Amelia D. Arayan, and attested to by CENRO Calunsag, showing tha
PICOP paid only regular forest charges of its log production covering 1 July 20
to 21 September 2001. However, there being log productions after 21 Septem
2001, PICOP failed to pay the corresponding regular forest charges amountin
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P15,056,054.05.99 The same certification also shows delayed payment of forest
charges, thereby corroborating the testimony of SFMS Evangelista and
substantiating the imposition of penalties and surcharges.
Finally, even if we consider for the sake of argument that the IAOP should not
have been issued if PICOP had existing forestry accounts, the issuance of the IAOP
cannot be considered proof that PICOP has paid the same. Firstly, the best
evidence of payment is the receipt thereof. PICOP has not presented any
evidence that such receipts had been lost or destroyed or cannot be produced in
court.100 Secondly, it is a well known and settled rule in our jurisdiction that the
Republic, or its government, is usually not estopped by mistake or error on the
part of its officials or agents.101 If PICOP had been issued an IAOP in violation of
the law allegedly because it may not be issued if PICOP had existing forestry
accounts, the government cannot be estopped from collecting such amounts andproviding the necessary sanctions therefor, including the withholding of the IFMA
until such amounts are paid.
Statutory Requirements
To recap, the Court of Appeals had relied on RED Seraspi’s certification in
concluding that there was satisfactory performance on the part of PICOP as a TLA
holder, despite said certification showing non-compliance with the required Five-
Year Forest Protection Plan and Seven-Year Reforestation Plan. The Court of
Appeals also declared that PICOP has paid its outstanding obligations based on an
nference that the IAOP would not have been issued if PICOP had unpaid forest
charges, contrary to the conditions laid down in the IAOP itself, and in violation of
the Best Evidence Rule and the doctrine disallowing the estoppel of the
government from the acts of its officers.
On the statutory requirement of procuring a clearance from the NCIP, the Court
of Appeals held that PICOP need not comply with the same at all. As quoted
above, the Court of Appeals held that Section 59 of Republic Act No. 8371, which
requires prior certification from the NCIP that the areas affected do not overlap
with any ancestral domain before any IFMA can be entered into by government,
should be interpreted to refer to ancestral domains which have been duly
established as such by the continuous possession and occupation of the area
concerned by indigenous peoples since time immemorial up to the present.
According to the Court of Appeals, PICOP has acquired property rights over the
TLA No. 43 areas, being in exclusive, continuous and uninterrupted possession
and occupation of TLA No. 43 areas since 1952 up to the present.
This ruling defies the settled jurisprudence we have mentioned earlier, including
that of Oposa and Tan which held that "[a] license is merely a permit or privilege
to do what otherwise would be unlawful, and is not a contract between the
authority, federal, state or municipal, granting it and the person to whom it isgranted; neither is it property or a property right, nor does it create a vested
right; x x x."102
The Court of Appeals’ resort to statutory construction is, in itself, misplaced.
Section 59 of Republic Act No. 8371 is clear and unambiguous:
SEC. 59. Certification Precondition. – All departments and other governmental
agencies shall henceforth be strictly enjoined from issuing, renewing or granting
any concession, license or lease, or entering into any production-sharing
agreement, without prior certification from the NCIP that the area affected does
not overlap with any ancestral domain. Such certification shall only be issued
after a field-based investigation is conducted by the Ancestral Domains Office of
the area concerned: Provided, That no certification shall be issued by the NCIP
without the free and prior informed and written consent of the ICCs/IPs
concerned: Provided, further, That no department, government agency or
government-owned or controlled corporation may issue new concession, license,ease, or production sharing agreement while there is a pending application for a
CADT: Provided, finally, That the ICCs/IPs shall have the right to stop or suspend,
n accordance with this Act, any project that has not satisfied the requirement of
this consultation process.
The court may not construe a statute that is clear and free from doubt. Time and
again, it has been repeatedly declared by this Court that where the law speaks in
clear and categorical language, there is no room for interpretation. There is only
room for application.103 PICOP’s intent to put a cloud of ambiguity in Section 59
of Republic Act No. 8371 by invoking Section 3(a) thereof fails miserably. Section
3(a) of Republic Act No. 8371 defines ancestral domain as follows:
a) Ancestral domains – Subject to Section 56 hereof, refers to all areas generally
belonging to ICCs/IPs comprising lands, inland waters, coastal areas, and natural
resources therein, held under a claim of ownership, occupied or possessed by
ICCs/IPs, by themselves or through their ancestors, communally or individual
since time immemorial, continuously to the present except when interrupted
war, force majeure or displacement by force, deceit, stealth or as a conseque
of government projects or any other voluntary dealings entered into by
government and private individuals/corporations, and which are necessary to
ensure their economic, social and cultural welfare. It shall include ancestral la
forests, pasture, residential, agricultural, and other lands individually owned
whether alienable and disposable or otherwise, hunting grounds, burial grou
worship areas, bodies of water, mineral and other natural resources, and land
which may no longer be exclusively occupied by ICCs/IPs but from which they
traditionally had access to for their subsistence and traditional activities,
particularly the home ranges of ICCs/IPs who are still nomadic and/or shifting
cultivators;
Ancestral domains remain as such even when possession or occupation of the
area has been interrupted by causes provided under the law such as voluntar
dealings entered into by the government and private individuals/corporation
Therefore, the issuance of TLA No. 43 in 1952 did not cause the Indigenous
Cultural Communities or Indigenous Peoples to lose their possession or
occupation over the area covered by TLA No. 43.
The issuance of a Certificate of Ancestral Domain Title is merely a formal
recognition of the ICCs/IPs’ rights of possession and ownership over their
ancestral domain identified and delineated in accordance with the Indigenou
Peoples Rights Act,104 and therefore, cannot be considered a condition
precedent for the need for an NCIP certification. In the first place, it is manife
absurd to claim that the subject lands must first be proven to be part of ance
domains before a certification that they are not part of ancestral domains ca
required. In Cruz v. Secretary of DENR,105 where no single member of the Co
penned a majority opinion (since the petition to declare Republic Act No. 837
unconstitutional was dismissed for the reason that the votes were equally
divided), Mr. Justice Reynato Puno, who voted to dismiss the petition, wrote
his separate opinion:
As its subtitle suggests, [Section 59 of R.A. No. 8371] requires as a preconditi
for the issuance of any concession, license or agreement over natural resourc
that a certification be issued by the NCIP that the area subject of the agreem
does not lie with any ancestral domain. The provision does not vest the NCIP
power over the other agencies of the State as to determine whether to grant
deny any concession or license or agreement. It merely gives the NCIP the
authority to ensure that the ICCs/IPs have been informed of the agreement a
that their consent thereto has been obtained. Note that the certification app
to agreements over natural resources that do not necessarily lie within the
ancestral domains. For those that are found within the said domains, Section
7(b) and 57 of the IPRA apply.
Another requirement determined by the Court of Appeals to have been comp
with by PICOP, albeit impliedly this time by not mentioning it at all, is the
requirement posed by Sections 26 and 27 of the Local Government Code:
SEC. 26. Duty of National Government Agencies in the Maintenance of Ecolog
Balance. – It shall be the duty of every national agency or government-owne
controlled corporation authorizing or involved in the planning and
implementation of any project or program that may cause pollution, climatic
change, depletion of non-renewable resources, loss of crop land, rangeland,
forest cover, and extinction of animal or plant species, to consult with the loc
government units, nongovernmental organizations, and other sectors concer
and explain the goals and objectives of the project or program, its impact upo
the people and the community in terms of environmental or ecological balan
and the measures that will be undertaken to prevent or minimize the advers
effects thereof.
SEC. 27. Prior Consultation Required. – No project or program shall be
implemented by government authorities unless the consultations mentioned
Sections 2 (c) and 26 hereof are complied with, and prior approval of the
sanggunian concerned is obtained: Provided, That occupants in areas where s
projects are to be implemented shall not be evicted unless appropriate reloc
sites have been provided, in accordance with the provisions of the Constitutio
These provisions are clear: the prior approval of local government units affec
by the proposed conversion of a TLA into an IFMA is necessary before any pr
or program can be implemented by the government authorities that may cau
"depletion of non-renewable resources, loss of crop land, rangeland or forest
cover, and extinction of animal or plant species."
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The common evidence of the DENR Secretary and PICOP, namely the 31 July 2001
Memorandum of RED Seraspi, enumerates the local government units and other
groups which had expressed their opposition to PICOP’s application for IFMA
conversion:
7. During the conduct of the performance evaluation of TLA No. 43
ssues/complaints against PRI were submitted thru Resolutions and letters. It is
mportant that these are included in this report for assessment of what are their
worth, viz:
x x x x
7.2 Joint Resolution (unnumbered), dated March 19, 2001 of the Barangay
Council and Barangay Tribal Council of Simulao, Boston, Davao Oriental (ANNEXF) opposing the conversion of TLA No. 43 into IFMA over the 17,112 hectares
allegedly covered with CADC No. 095.
7.3 Resolution Nos. 10, s-2001 and 05, s-2001 (ANNEXES G & H) of the Bunawan
Tribal Council of Elders (BBMTCE) strongly demanding none renewal of PICOP
TLA. They claim to be the rightful owner of the area it being their alleged
ancestral land.
7.4 Resolution No. 4, S-2001 of Sitio Linao, San Jose, Bislig City (ANNEX I)
requesting not to renew TLA 43 over the 900 hectares occupied by them.
7.5 Resolution No. 22, S-2001 (ANNEX J) of the Sanguniang Bayan, Lingig, Surigao
del Sur not to grant the conversion of TLA 43 citing the plight of former
employees of PRI who were forced to enter and farm portion of TLA No. 43, after
they were laid off.
7.6 SP Resolution No. 2001-113 and CDC Resolution Nos. 09-2001 of the
Sanguniang Panglungsod of Bislig City (ANNEXES K & L) requesting to exclude the
area of TLA No. 43 for watershed purposes.
7.7 Resolution No. 2001-164, dated June 01, 2001 (ANNEX M) Sanguniang
Panglungsod of Bislig City opposing the conversion of TLA 43 to IFMA for the
reason that IFMA do not give revenue benefits to the City.106
As stated in RED Seraspi’s 31 July 2001 Memorandum,107 several indigenous
groups and some affected local government units have expressly opposed
PICOP’s application for IFMA conversion of its TLA No. 43.
PICOP merely submitted a purported resolution108 of the Province of Surigao del
Sur indorsing the approval of PICOP’s application for IFMA conversion. But
Surigao del Sur is not the only province affected by the area covered by theproposed IFMA. As even the Court of Appeals found, PICOP’s TLA No. 43 traverses
the length and breadth not only of Surigao del Sur but also Agusan del Sur,
Compostela Valley and Davao Oriental.109 How then can PICOP claim that it
complied with the Local Government Code requirement of obtaining prior
approval of the Sangunian concerned when only one out of the four affected local
government units has purportedly signified its concurrence to the proposed IFMA
conversion?
Finally, the DENR, by withholding the conversion of PICOP’s TLA No. 43 into an
FMA, has made a factual finding that PICOP has not yet complied with the
requirements for such a conversion. Findings of facts of administrative agencies
are generally accorded great respect, if not finality, by the courts because of the
special knowledge and expertise over matters falling under their jurisdiction.110
Such finality of the DENR’s factual finding, supported as it is by substantial
evidence, can only be overcome by grave abuse of discretion amounting to lack
or excess in jurisdiction, which is even more pronounced in a Petition forMandamus.
Whether or not there has already been a conversion of TLA No. 43 into an IFMA
The Court of Appeals declared that there exists no legal impediment to the
conversion of respondent’s TLA No. 43 into an IFMA as evidenced by petitioner’s
etters dated 26 October 2002 and 26 April 2002:
Moreover, *the DENR Secretary’s+ own letters to *PICOP+ confirm that it has
established a clear right to the automatic conversion of TLA No. 43 to IFMA. Thus,
on October 26, 2002, [the DENR Secretary] stated in his letter to [PICOP] "that
pursuant to DAO-99-53, we have cleared the conversion on PICOP’s TLA No. 43 to
FMA effective from the expiration of said TLA on April 26, 2002." Too, in its April
24, 2002 letter to [PICOP], [the DENR Secretary+ granted PICOP’s TDMP
"[p]ending the formal approval of [its] IFMA xxx." It could thus be deduced that
there exists no legal impediment to the conversion of PICOP’s TLA 43 to IFMA
approval remains a formality.
We disagree. Then DENR Secretary Alvarez’s 25 October 2001 letter is
reproduced herein for reference:
Dear Mr. Bernardino:
Consistent with your attached Memorandum to her Excellency, the President
dated 17 October 2001 and in response to your Letter of Intent dated 25 Janu
2001, we wish to inform you that, pursuant to DENR Administrative Order No
53, we have cleared the conversion of PICOP’s Timber License Agreement (TL
No. 43 to Integrated Forest Management Agreement (IFMA) effective from th
expiration of said TLA on April 26, 2002.
In this regard, you are hereby requested to designate PICOP’s representative
discuss with the DENR Team, created under Special Order No. 2001-638, the
conditions and details of the said IFMA, including the production sharing
arrangement between PICOP and the government.111
By giving this clearance for the conversion of PICOP’s TLA into an IFMA, the D
Secretary cannot, by any stretch of imagination, be claimed to have granted t
conversion itself. The letter is clear that the "conversion" could not be final si
its conditions and details still have to be discussed as stated in the second
paragraph of said letter; hence, the same letter could not have reduced to a m
formality the approval of the conversion of PICOP’s TLA No. 43 into an IFMA.
Likewise, then DENR Secretary Alvarez’s 26 April 2002 letter approving PICOP
Transition Development and Management Plan (TDMP) cannot be considered
an approval of PICOP’s application for IFMA conversion. Again, the aforesaid
letter is quoted in full:
April 24, 2002
MR. WILFREDO D. FUENTES
Vice President – Resident Manager
PICOP Resources, Incorporated
2nd Floor, Moredel Building
2280 Pasong Tamo Extension
Makati City
Dear Mr. Fuentes:
This refers to your request for approval of the submitted Two-year Transition
Development and Management Plan of PICOP Resources, Inc. (PRI) for the ar
under TLA No. 43 which expires on April 26, 2002.
Pending the formal approval of your IFMA and consistent with our letter to th
PRI President dated 25 October 2002, we hereby grant your Transition
Development and Management Plan (TDMP) for a period of one (1) year,
effective 26 April 2002.
Within such period we expect PRI to submit/comply with all the necessary
requisites for the final conversion of TLA 43 into IFMA, as provided for under
DENR Administrative Order No. 99-53, including the settlement of certainobligations such as taxes, if any, and submission of plans and programs for
evaluation and approval of item number 1 of your proposal contained in your
letter dated February 4, 2002.
All other proposed activities in your TDMP, particularly items 2 – 7 of your let
dated February 4, 2002, are hereby approved.
For your information and guidance.
Very truly yours,
(sgd)
HEHERSON T. ALVAREZ
Secretary
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Cc: Mr. Teodoro G. Bernardino
President
The Director, FMB
The aforesaid letter speaks for itself. PICOP’s application for IFMA conversion is
still pending approval. Indeed, there could have been no approval of PICOP’s
application for IFMA conversion because DAO No. 99-53 (which governs
application for IFMA conversion) requires full and complete compliance with the
requirements for conversion before it may be approved. As stated in the letter
tself of then DENR Secretary Alvarez, PICOP has yet to "submit/comply with all
the necessary requisites for final conversion of TLA No. 43 into IFMA."
Even assuming, however, that the IFMA has already been converted, this is allpurely academic because of the above-discussed settled jurisprudence that
ogging permits are not contracts within the Non-Impairment Clause and thus,
can be amended, modified, replaced or rescinded when the national interest so
requires. If the DENR Secretary, therefore, finds that the IFMA would be in
violation of statutes, rules and regulations, particularly those protecting the rights
of the local governments and the indigenous peoples within the IFMA area, then
t behooves the DENR Secretary to revoke such IFMA. These same statutes, rules
and regulations are the very same requirements mentioned above for the
conversion of the TLA No. 43 into an IFMA.
Whether or not it is proper to determine the constitutionality of Proclamation
No. 297 in these consolidated petitions
Another reason why the DENR Secretary wishes to further withhold the
conversion of PICOP’s TLA No. 43 into an IFMA is the 25 November 2002
Proclamation No. 297 excluding an area of 8,100 hectares, more or less, from the
coverage of TLA No. 43, as amended, and which declared the same as a mineral
reservation and as an environmentally critical area. The DENR Secretary claims
that said Presidential Proclamation is rendered nugatory by the Court of Appeals’
disposition that the DENR should honor and respect the area allotted to PICOP
under TLA No. 43.112
PICOP claims that Proclamation No. 297 is a new matter which the DENR
Secretary cannot raise before this Court without offending the basic rules of fair
play, justice and due process.113
The DENR Secretary counters that it did not take up the issue of Proclamation No.
297 before the trial court precisely because said proclamation was issued more
than one month after the trial court rendered its 11 October 2002 Decision. The
DENR Secretary claims that PICOP cannot claim a violation of its right to due
process because it raised the issue before the Court of Appeals in itsMemorandum.
While not giving in to the DENR Secretary’s argument, PICOP claims that
Proclamation No. 297 is violative of the Constitution and an encroachment on the
egislative powers of Congress.114
We agree with PICOP that this constitutional issue cannot be decided upon in this
case. This Court will not touch the issue of unconstitutionality unless it is the very
is mota. It is a well-established rule that a court should not pass upon a
constitutional question and decide a law to be unconstitutional or invalid, unless
such question is raised by the parties and that when it is raised, if the record also
presents some other ground upon which the court may raise its judgment, that
course will be adopted and the constitutional question will be left for
consideration until such question will be unavoidable.115
The constitutional question presented by PICOP is not the very lis mota in theseconsolidated cases, as the preceding discussions very well give us adequate
grounds to grant the Petition in G.R. No. 162243, deny the Petition in G.R. No.
164516, and dismiss the Petition in G.R. No. 171875. Moreover, PICOP has filed a
separate petition for the declaration of nullity of Proclamation No. 297, wherein
the issue of the constitutionality of Proclamation No. 297 is properly ventilated.
Consequently, all actions and reliefs sought by either PICOP or the DENR
Secretary which has Proclamation No. 297 as its ground or subject should be
ventilated either in the pending petition for the declaration of its nullity, or in
another proper suit instituted for that matter.
EPILOGUE AND DISPOSITION
n sum, the DENR Secretary has adequately proven that PICOP has, at this time,
failed to comply with the administrative and statutory requirements for the
conversion of TLA No. 43 into an IFMA. The Petition in G.R. No. 162243 shoul
therefore be granted.
On the other hand, as PICOP is not yet entitled to such conversion, then Secre
Alvarez had been correct in withholding the same and thus cannot be held lia
for damages therefor. Thus, the Petition in G.R. No. 164516 should be dismiss
Finally, the DENR Secretary’s Petition in G.R. No. 171875, assailing the lifting
the Court of Appeals of the Preliminary Injunction in its favor, is now mooted
PICOP’s noncompliance with the requirements for the conversion of their TLA
so glaring, that we almost see a reluctance to uphold the law in light of PICOP
sizeable investments in its business, a fact repeatedly stressed by PICOP in its
pleadings. In applying the judicial policy of nurturing prosperity, consideratioshould also be given to the long-term effects of the judicial evaluations involv
particularly to our nation’s greatest wealth, our vast natural resources.1âwph
Our country has been blessed with rich, lush and verdant rain forests in whic
varied, rare and unique species of flora and fauna may be found.116 The
legislative policy has been to preserve and nourish these natural resources as
they are not only for our benefit but more so for the countless future genera
to which we are likewise responsible. It has also been legislative policy to let
citizens of this country reap their benefits, foremost the citizens in close
proximity to such resources, through the local governments and the NCIP.
In working for the legislative policy of environmental preservation, the
requirements of a five-year forest protection plan and seven-year reforestati
plan had been laid down, together with the levy of forest charges for the
regulation of forestry activities. In pursuing, on the other hand, the benefit
distribution policy, the Local Government Code requires prior Sanggunian
approval to ensure that local communities partake in the fruits of their own
backyard, while R.A. No. 8371 provides for the rights of the indigenous peopl
who have been living in, managing, and nourishing these forests since time
immemorial.
PICOP has been fortunate to have been awarded an enormous concession ar
and thus, a huge chunk of the benefits of this country’s natural resources.
Attached to this fortune is the responsibility to comply with the laws and
regulations implementing the stated legislative policies of environmental
preservation and benefit distribution. These laws and regulations should not
ignored, and the courts should not condone such blatant disregard by those w
believe they are above the law because of their sizable investments and
significant number of workers employed. PICOP has only itself to blame for th
withholding of the conversion of its TLA. But while this disposition confers
another chance to comply with the foregoing requirements, the DENR Secretcan rightfully grow weary if the persistence on noncompliance will continue.
judicial policy of nurturing prosperity would be better served by granting suc
concessions to someone who will abide by the law.
WHEREFORE, the Petition in G.R. No. 162243 is GRANTED. The Decision of th
Court of Appeals insofar as it affirmed the RTC Decision granting the Petition
Mandamus filed by Paper Industries Corporation of the Philippines (PICOP) is
hereby REVERSED and SET ASIDE. The Petition in G.R. No. 164516 seeking the
reversal of the same Decision insofar as it nullified the award of damages in f
of PICOP is DENIED for lack of merit. The Petition in G.R. No. 171875, assailin
lifting of the Preliminary Injunction in favor of the Secretary of Environment a
Natural Resources is DISMISSED on the ground of mootness.
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HON. JOSE D. LINA, JR., SANGGUNIANG PANLALAWIGAN OF LAGUNA, and HON.CALIXTO CATAQUIZ, petitioners, vs. HON. FRANCISCO DIZON PAÑO and TONY
CALVENTO, respondents.
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 Panlalawigan of 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. 1995 which was issued on September 18, 1995. The
ordinance reads:
SANG 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;
PINASIYA, 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;
PINASIYA PA RIN na hilingin tulad ng dito ay hinihiling sa Panlalawigang pinuno
ng Philippine National Police (PNP) Col. [illegible] na mahigpit na pag- ibayuhin
ang pagsugpo sa lahat ng uri ng illegal na sugal sa buong lalawigan ng Laguna lalo
na ang “Jueteng”.*3+
As a result of this resolution of denial, respondent Calvento filed a complaint for
declaratory relief with prayer for preliminary injunction and temporary
restraining order. In the said complaint, respondent Calvento asked the Regional
Trial Court of San Pedro Laguna, Branch 93, for the following reliefs: (1) a
preliminary injunction or temporary restraining order, ordering the defendants torefrain from implementing or enforcing Kapasiyahan Blg. 508, T. 1995; (2) an
order requiring Hon. Municipal Mayor Calixto R. Cataquiz to issue a business
permit for the operation of a lotto outlet; and (3) an order annulling or declaring
as invalid Kapasiyahan Blg. 508, T. 1995.
On February 10, 1997, the respondent judge, Francisco Dizon Paño, promulgated
his decision enjoining the petitioners from implementing or enforcing resolution
or Kapasiyahan Blg. 508, T. 1995. The dispositive portion of said decision reads:
WHEREFORE, premises considered, defendants, their agents and representatives
are hereby enjoined from implementing or enforcing resolution or kapasiyahan
blg. 508, T. 1995 of the Sangguniang Panlalawigan ng Laguna prohibiting the
operation of the lotto in the province of Laguna.
SO ORDERED.[4]
Petitioners filed a motion for reconsideration which was subsequently denied in
an Order dated April 21, 1997, which reads:
Acting on the Motion for Reconsideration filed by defendants Jose D. Lina, Jr. and
the Sangguniang Panlalawigan of Laguna, thru counsel, with the opposition filed
by plaintiff’s counsel and the comment thereto filed by counsel for the
defendants which were duly noted, the Court hereby denies the motion for lack
of merit.
SO ORDERED.[5]
On May 23, 1997, petitioners filed this petition alleging that the following errors
were committed by the respondent trial court:
THE TRIAL COURT ERRED IN ENJOINING THE PETITIONERS FROM IMPLEMENT
KAPASIYAHAN BLG. 508, T. 1995 OF THE SANGGUNIANG PANLALAWIGAN OF
LAGUNA PROHIBITING THE OPERATION OF THE LOTTO IN THE PROVINCE OF
LAGUNA.
II
THE TRIAL COURT FAILED TO APPRECIATE THE ARGUMENT POSITED BY THE
PETITIONERS THAT BEFORE ANY GOVERNMENT PROJECT OR PROGRAM MAY
IMPLEMENTED BY THE NATIONAL AGENCIES OR OFFICES, PRIOR CONSULTAT
AND APPROVAL BY THE LOCAL GOVERNMENT UNITS CONCERNED AND OTHE
CONCERNED SECTORS IS REQUIRED.
Petitioners contend that the assailed resolution is a valid policy declaration o
Provincial Government of Laguna of its vehement objection to the operation
lotto and all forms of gambling. It is likewise a valid exercise of the provincia
government’s police power under the General Welfare Clause of Republic Ac
7160, otherwise known as the Local Government Code of 1991.[6] They also
maintain that respondent’s lotto operation is illegal because no prior
consultations and approval by the local government were sought before it wa
implemented contrary to the express provisions of Sections 2 (c) and 27 of R.
7160.[7]
For his part, respondent Calvento argues that the questioned resolution is, in
effect, a curtailment of the power of the state since in this case the national
legislature itself had already declared lotto as legal and permitted its operati
around the country.[8] As for the allegation that no prior consultations and
approval were sought from the sangguniang panlalawigan of Laguna, respond
Calvento contends this is not mandatory since such a requirement is merely
stated as a declaration of policy and not a self-executing provision of the Loca
Government Code of 1991.[9] He also states that his operation of the lotto
system is legal because of the authority given to him by the PCSO, which in tu
had been granted a franchise to operate the lotto by Congress.[10]
The Office of the Solicitor General (OSG), for the State, contends that the
Provincial Government of Laguna has no power to prohibit a form of gamblin
which has been authorized by the national government.[11] He argues that t
based on the principle that ordinances should not contravene statutes as
municipal governments are merely agents of the national government. The l
councils exercise only delegated legislative powers which have been conferre
them by Congress. This being the case, these councils, as delegates, cannot b
superior to the principal or exercise powers higher than those of the latter. T
OSG also adds that the question of whether gambling should be permitted is
Congress to determine, taking into account national and local interests. SincCongress has allowed the PCSO to operate lotteries which PCSO seeks to con
in Laguna, pursuant to its legislative grant of authority, the province’s
Sangguniang Panlalawigan cannot nullify the exercise of said authority by
preventing something already allowed by Congress.
The issues to be resolved now are the following: (1) whether Kapasiyahan Blg
508, T. 1995 of the Sangguniang Panlalawigan of Laguna and the denial of a
mayor’s permit based thereon are valid; and (2) whether prior consultations
approval by the concerned Sanggunian are needed before a lotto system can
operated in a given local government unit.
The entire controversy stemmed from the refusal of Mayor Cataquiz to issue
mayor’s permit for the operation of a lotto outlet in favor of private responde
According to the mayor, he based his decision on an existing ordinance
prohibiting the operation of lotto in the province of Laguna. The ordinance,
however, merely states the “objection” of the council to the said game. It is mere policy statement on the part of the local council, which is not self-
executing. Nor could it serve as a valid ground to prohibit the operation of th
lotto system in the province of Laguna. Even petitioners admit as much whe
they stated in their petition that:
5.7. The terms of the Resolution and the validity thereof are express and cle
The Resolution is a policy declaration of the Provincial Government of Laguna
its vehement opposition and/or objection to the operation of and/or all form
gambling including the Lotto operation in the Province of Laguna.[12]
As a policy statement expressing the local government’s objection to the lott
such resolution is valid. This is part of the local government’s autonomy to a
views which may be contrary to that of the national government’s. However
freedom to exercise contrary views does not mean that local governments m
actually enact ordinances that go against laws duly enacted by Congress. Giv
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this premise, the assailed resolution in this case could not and should not be
nterpreted as a measure or ordinance prohibiting the operation of lotto.
The game of lotto is a game of chance duly authorized by the national
government through an Act of Congress. Republic Act 1169, as amended by
Batas Pambansa Blg. 42, is the law which grants a franchise to the PCSO and
allows it to operate the lotteries. The pertinent provision reads:
Section 1. The Philippine Charity Sweepstakes Office.- The Philippine Charity
Sweepstakes Office, hereinafter designated the Office, shall be the principal
government agency for raising and providing for funds for health programs,
medical assistance and services and charities of national character, and as such
shall have the general powers conferred in section thirteen of Act Numbered One
thousand four hundred fifty-nine, as amended, and shall have the authority:
A. To hold and conduct charity sweepstakes races, lotteries, and other similar
activities, in such frequency and manner, as shall be determined, and subject to
such rules and regulations as shall be promulgated by the Board of Directors.
This statute remains valid today. While lotto is clearly a game of chance, the
national government deems it wise and proper to permit it. Hence, the
Sangguniang Panlalawigan of Laguna, a local government unit, cannot issue a
resolution or an ordinance that would seek to prohibit permits. Stated otherwise,
what the national legislature expressly allows by law, such as lotto, a provincial
board may not disallow by ordinance or resolution.
n our system of government, the power of local government units to legislate
and enact ordinances and resolutions is merely a delegated power coming from
Congress. As held in Tatel vs. Virac,[13] ordinances should not contravene an
existing statute enacted by Congress. The reasons for this is obvious, as
elucidated in Magtajas v. Pryce Properties Corp.[14]
Municipal governments are only agents of the national government. Local
councils exercise only delegated legislative powers conferred upon them by
Congress as the national lawmaking body. The delegate cannot be superior to
the principal or exercise powers higher than those of the latter. It is a heresy to
suggest that the local government units can undo the acts of Congress, from
which they have derived their power in the first place, and negate by mere
ordinance the mandate of the statute.
Municipal corporations owe their origin to, and derive their powers and rights
wholly from the legislature. It breathes into them the breath of life, without
which they cannot exist. As it creates, so it may destroy. As it may destroy, it
may abridge and control. Unless there is some constitutional limitation on the
right, the legislature might, by a single act, and if we can suppose it capable of sogreat a folly and so great a wrong, sweep from existence all of the municipal
corporations in the state, and the corporation could not prevent it. We know of
no limitation on the right so far as the corporation themselves are concerned.
They are, so to phrase it, the mere tenants at will of the legislature (citing Clinton
vs. Ceder Rapids, etc. Railroad Co., 24 Iowa 455).
Nothing in the present constitutional provision enhancing local autonomy
dictates a different conclusion.
The basic relationship between the national legislature and the local government
units has not been enfeebled by the new provisions in the Constitution
strengthening the policy of local autonomy. Without meaning to detract from
that policy, we here confirm that Congress retains control of the local
government units although in significantly reduced degree now than under our
previous Constitutions. The power to create still includes the power to destroy.
The power to grant still includes the power to withhold or recall. True, there arecertain notable innovations in the Constitution, like the direct conferment on the
ocal government units of the power to tax (citing Art. X, Sec. 5, Constitution),
which cannot now be withdrawn by mere statute. By and large, however, the
national legislature is still the principal of the local government units, which
cannot defy its will or modify or violate it.[15]
Ours is still a unitary form of government, not a federal state. Being so, any form
of autonomy granted to local governments will necessarily be limited and
confined within the extent allowed by the central authority. Besides, the
principle of local autonomy under the 1987 Constitution simply means
“decentralization”. It does not make local governments sovereign within the
state or an “imperium in imperio”.*16+
To conclude our resolution of the first issue, respondent mayor of San Pedro,
cannot avail of Kapasiyahan Bilang 508, Taon 1995, of the Provincial Board of
Laguna as justification to prohibit lotto in his municipality. For said resolution
nothing but an expression of the local legislative unit concerned. The Board’
enactment, like spring water, could not rise above its source of power, the
national legislature.
As for the second issue, we hold that petitioners erred in declaring that Secti
(c) and 27 of Republic Act 7160, otherwise known as the Local Government C
of 1991, apply mandatorily in the setting up of lotto outlets around the count
These provisions state:
Section 2. Declaration of Policy. x x x
(c) It is likewise the policy of the State to require all national agencies and off
to conduct periodic consultations with appropriate local government units, ngovernmental and people’s organizations, and other concerned sectors of the
community before any project or program is implemented in their respective
jurisdictions.
Section 27. Prior Consultations Required. No project or program shall be
implemented by government authorities unless the consultations mentioned
Section 2 (c) and 26 hereof are complied with, and prior approval of the
sanggunian concerned is obtained; Provided, that occupants in areas where s
projects are to be implemented shall not be evicted unless appropriate reloc
sites have been provided, in accordance with the provisions of the Constitutio
From a careful reading of said provisions, we find that these apply only to
national programs and/or projects which are to be implemented in a particul
local community. Lotto is neither a program nor a project of the national
government, but of a charitable institution, the PCSO. Though sanctioned by
national government, it is far fetched to say that lotto falls within the
contemplation of Sections 2 (c) and 27 of the Local Government Code.
Section 27 of the Code should be read in conjunction with Section 26 thereof
Section 26 reads:
Section 26. Duty of National Government Agencies in the Maintenance of
Ecological Balance. It shall be the duty of every national agency or governme
owned or controlled corporation authorizing or involved in the planning and
implementation of any project or program that may cause pollution, climatic
change, depletion of non-renewable resources, loss of crop land, range-land,
forest cover, and extinction of animal or plant species, to consult with the loc
government units, nongovernmental organizations, and other sectors concer
and explain the goals and objectives of the project or program, its impact upo
the people and the community in terms of environmental or ecological balan
and the measures that will be undertaken to prevent or minimize the adverseffects thereof.
Thus, the projects and programs mentioned in Section 27 should be interpret
to mean projects and programs whose effects are among those enumerated
Section 26 and 27, to wit, those that: (1) may cause pollution; (2) may bring a
climatic change; (3) may cause the depletion of non-renewable resources; (4
may result in loss of crop land, range-land, or forest cover; (5) may eradicate
certain animal or plant species from the face of the planet; and (6) other proj
or programs that may call for the eviction of a particular group of people resi
in the locality where these will be implemented. Obviously, none of these ef
will be produced by the introduction of lotto in the province of Laguna.
Moreover, the argument regarding lack of consultation raised by petitioners
clearly an afterthought on their part. There is no indication in the letter of M
Cataquiz that this was one of the reasons for his refusal to issue a permit. Th
refusal was predicated solely but erroneously on the provisions of KapasiyahBlg. 508, Taon 1995, of the Sangguniang Panlalawigan of Laguna.
In sum, we find no reversible error in the RTC decision enjoining Mayor Cataq
from enforcing or implementing the Kapasiyahan Blg. 508, T. 1995, of the
Sangguniang Panlalawigan of Laguna. That resolution expresses merely a pol
statement of the Laguna provincial board. It possesses no binding legal force
requires any act of implementation. It provides no sufficient legal basis for
respondent mayor’s refusal to issue the permit sought by private respondent
connection with a legitimate business activity authorized by a law passed by
Congress.
WHEREFORE, the petition is DENIED for lack of merit. The Order of the Regio
Trial Court of San Pedro, Laguna enjoining the petitioners from implementing
enforcing Resolution or Kapasiyahan Blg. 508, T. 1995, of the Provincial Board
Laguna is hereby AFFIRMED. No costs.
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PLAZA II. V CASSIONRepublic Act No. 7160, otherwise known as The Local Government Code of 1991,
aims to transform local government units into self-reliant communities and active
partners of the national government in the attainment of effective services to the
people. As a result of the devolution of concerned personnel from the national
government to the various local government units pursuant to the same Code,
the interest of the service demands that their working relations with the local
employees should be harmonious.
This is a petition for review on certiorari[1] assailing the Decision[2] of the Court
of Appeals dated February 14, 1996 and its Resolution dated December 9, 1998 inCA-G.R. SP No. 55052, “Carolina M. Cassion, et al. vs. Civil Service Commission, et
al.”
Before the passage of Republic Act No. 7160, the task of delivering basic social
services was dispensed by the national government through the Department of
Social Welfare and Development (DSWD). Upon the promulgation and
mplementation of the Local Government Code, some of the functions of the
DSWD were transferred to the local government units.
The City of Butuan, through its Sangguniang Panglungsod (Sanggunian) passed SP
Resolution 427-92,*3+ entitled “Resolution Authorizing the City Mayor, Honorable
Democrito D. Plaza II, to Sign the Memorandum of Agreement for the Devolution
of the DSWD to the City of Butuan.”
Pursuant to the Memorandum of Agreement (MOA)[4] entered into between the
City of Butuan, through then Mayor Democrito Plaza II, petitioner, and the DSWD,
the latter’s services, personnel, assets and liabilities, and technical support
systems were transferred to its city counterpart.
By virtue of the same MOA, Mayor Plaza issued Executive Order (EO) No. 06-92[5]
dated October 5, 1992 reconstituting the City Social Services Development Office
(CSSDO), devolving or adding thereto 19 national DSWD employees headed by
petitioner Virginia Tuazon, Social Welfare Officer V. Mayor Plaza designated her
Officer-in-Charge of the reconstituted CSSDO. Its office was transferred from the
original CSSDO building to the DSWD building.
The CSSDO was originally composed of herein respondents, headed by Carolina
M. Cassion, Social Welfare Officer IV. Aggrieved by such development, they
refused to recognize petitioner Tuazon as their new head and to report at the
DSWD building. They contended that the issuance of EO No. 06-92 by Mayor
Plaza and the designation of petitioner Tuazon as Officer-in-charge of the CSSDOare illegal.
Despite Mayor Plaza’s series of orders to respondents to report for work at the
DSWD building, they failed to do so.
On January 18, 1993, Mayor Plaza issued a memorandum to the City Legal Officer
directing him to conduct an administrative investigation against respondents.
They then submitted their respective explanations. Thereafter, they were
charged administratively for grave misconduct and insubordination and were
preventively suspended for 60 days. This prompted them to file with the Civil
Service Regional Office No. 10 a complaint against Mayor Plaza for violation of
the Civil Service Law. However, their complaint was dismissed for lack of merit.
Upon expiration of their preventive suspension, respondents informed Mayor
Plaza that they are willing to return to work, but to their old office, not to the
DSWD building.
For the last time, or on April 14, 1993, Mayor Plaza notified respondents to report
to petitioner Tuazon at the new office in the DSWD building, but they remained
obstinate.
On February 9, 1994, Mayor Plaza inquired from the Civil Service Commission
(CSC) on what appropriate action could be taken against respondents for their
continued refusal to report for work since April 1993. In turn, the CSC, through
Atty. Lorea, Director II, informed the Mayor that respondents could be dropped
from the rolls pursuant to CSC Memorandum Circular No. 38, Series of 1993.
On February 16, 1994, Mayor Plaza issued an Order dropping respondents from
the rolls pursuant to the said CSC Memorandum Circular.
Forthwith, respondents appealed to the CSC.
On August 22, 1994, the CSC issued Resolution Nos. 94-4626 and 94-6243
dismissing respondents’ appeal. In affirming Mayor Plaza’s Order dropping
respondents from the rolls, the CSC held:
“CSC Memorandum Circular No. 38, series of 1993 dated September 10, 1993
provides as follows:
‘Officers and employees who are absent for at least thirty (30) days without
approved leave are considered on Absence Without Official Leave (AWOL) an
may be dropped from the service without prior notice.
‘A notice or order of the dropping from the rolls of an employee shall be issue
by the appointing authority and submitted to the CSC Office concerned for repurposes.’
“Based on the above-quoted provision, it is undeniable that the appointing
authority has the legal right to drop from the rolls a civil service officer or
employee. Nowhere in the quoted provision is it stated that only the Commi
has the exclusive authority to drop from the rolls civil service officers or
employees. Hence, contrary to the first contention of the appellants, Mayor
Plaza acted in conformity with the law when he ordered the dropping from th
rolls of herein appellants. The records of the case show the fact that appella
did not report for work from April 1993 up to the time they were dropped fro
the rolls. Although they manifested intention to return to work upon expirat
of their preventive suspension, still they adamantly insisted that they would
report only in their old office and not in the new one created by Executive Or
No. 06-92. The legal excuse being given by the appellants is highly untenable
The Executive Order issued by the Mayor is presumed valid until annulled by
proper authorities. The same presumption shall also apply insofar as the
designation of Mrs. Tuazon as OIC is concerned. The proper course of action
the appellants is to comply with the Mayor’s directives and then challenge th
questioned Executive Order before the proper forum, otherwise, the appella
should suffer the consequence of their acts.
“We find without merit the contention of the appellants that they were denie
due process for lack of notice and opportunity to be heard before they were
dropped from the rolls. The separation of an employee who is dropped from
rolls is a non-disciplinary action wherein the respondent is entitled to notice
hearing. In the above-quoted provision, an officer or employee may be drop
from the rolls if he was continuously absent without official leave for a period
at least thirty days. Prior notice is not necessary.
“As to the last contention of the appellants that it was really the intention of t
mayor to systematically remove them, the Commission likewise finds it withomerit. No evidence was submitted by the appellants to support such
contention.”
Respondents then filed with the Court of Appeals a petition for review.
On February 14, 1996, the Appellate Court rendered its Decision setting aside
assailed CSC Resolutions and EO No. 06-92 issued by Mayor Plaza and reinsta
respondents to their former positions without loss of seniority rights and
emoluments with full back wages and other benefits corresponding to the pe
from January 1993 up to actual reinstatement. Petitioners filed a motion for
reconsideration but was denied.
The Court of Appeals ratiocinated as follows:
“The fundamental rule of due process, on the other hand, requires that a per
be accorded notice and opportunity to be heard (Rebuena v. Civil ServiceCommission, G.R. No. 115942, 31 May 1995; Klaveness Maritime Agency, Inc
Palmos, 232 SCRA 448 *1994+). ‘Ample opportunity’ contemplated by law
connotes every kind of assistance which must be accorded to the employee t
enable him to prepare adequately for his defense including legal representat
(Segismundo v. NLRC, G.R. No. 112203, 13 December 1994, 329 SCRA 167, cit
Abiera v. NLRC, 215 SCRA 476 [1992]). Non-compliance with the twin
requirements of notice and hearing is fatal because these requirements are
conditions sine qua non before a dismissal may be validly effected (Maneho v
NLRC, 229 SCRA 240 [1994], citing Tiu v. NLRC, 215 SCRA 540 [1992]). In fact
notice and hearing must be accorded an employee even though the employe
does not affirmatively demand it (Century Textile Mills v. NLRC, 161 SCRA 528
[1988]).
“A circumspect scrutiny of the record leaves Us unconvinced that petitioners
were accorded this opportunity to be heard when they sought relief before
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respondent CSC’s Regional Office No. X which dismissed their complaint,
docketed as ADM. Case No. ND 93-023, against respondents City Mayor and
Virginia V. Tuazon for violation of the Civil Service Law and its implementing rules
and regulations. x x x
x x x
“As regards the validity of the issuance of E.O. No. 06-92, there can be no dispute
over the power of the government to reorganize, whether traditional, progressive
or whatever adjective is appended to it. However, the essence of constitutional
government is adherence to basic rules. The rule of law requires that no
government official should feel free to do as he pleases using only his avowedly
sincere intentions and conscience to guide him. The fundamental standards of
fairness embodied in the bona fide rule can not be disregarded (Mendoza v.Quisumbing, 186 SCRA 108 [1990]; see also Romualdez-Yap v. CSC, 225 SSCRA
285 *1993+.”
n the main, petitioners contend that the Court of Appeals erred in setting aside
the CSC Resolutions dropping respondents from the rolls and EO No. 06-92
directing the devolution of 19 national DSWD employees to the local or city
DSWD to be headed by petitioner Virginia Tuazon.
Private respondents, on the other hand, aver that their refusal to report for work
s justified since EO No. 06-92 is not valid as it was issued without prior approval
by the Sanggunian in violation of Article 164, Rule XXII of the Rules and
Regulations Implementing the Local Government Code.
Section 17 of the Local Government Code authorizes the devolution of personnel,
assets and liabilities, records of basic services, and facilities of a national
government agency to local government units. Under this Code, the term
“devolution” refers to the act by which the national government confers power
and authority upon the various local government units to perform specific
functions and responsibilities.
As a consequence of the devolution of national agencies, Executive Order No. 503
was enacted by then President Corazon C. Aquino to govern and ensure the
efficient transfer of responsibilities to the local government unit concerned.
Section 2 (g) provides:
“The local chief executive shall be responsible for all devolved functions. He may
delegate such powers and functions to his duly authorized representative whose
position shall preferably not be lower than the rank of a local government
department head. In all cases of delegated authority, the local chief executive
shall at all times observe the principle of command responsibility.”
Section 2 (a) states that:
“Except as herein otherwise provided, devolved permanent personnel shall be
automatically reappointed by the local chief executive concerned immediately
upon their transfer which shall not go beyond June 30, 1992.”
Likewise, Section 22 of CSC Memorandum Circular No. 19, Series of 1992,
specifies that:
“The positions absorbed by the local government units from the national
government agencies shall be automatically created upon transfer of their
corresponding budgetary allocation.
“Devolved permanent personnel shall be automatically reappointed by the local
chief executive concerned immediately upon their transfer.
“However, pending the completion of the new organizational structure and
staffing pattern, the local government executives may assign devolved personnel
to divisions/sections/units where their qualifications are best suited or
appropriate.”
t is thus clear that Mayor Plaza is empowered to issue EO No. 06-92 in order to
give effect to the devolution decreed by the Local Government Code. As the local
chief executive of Butuan City, Mayor Plaza has the authority to reappoint
devolved personnel and may designate an employee to take charge of a
department until the appointment of a regular head, as was done by the Mayor
here.
CSC Memorandum Circular No. 19, Series of 1992, provides further that heads of
departments appointed by the local chief executive must have the concurrence of
the majority of all the members of the Sanggunian concerned. While initially, the
Sanggunian rejected petitioner Tuazon’s appointment as the City Governmen
Department Head II of the CSSDO, however, it later confirmed her appointme
The Court Appeals erred in ruling that EO No. 06-92 violated respondents’
security of tenure as they were transferred to another office without their
consent. There was no such transfer. Transfer is a movement from one posi
to another which is of equivalent rank, level or salary without break in service
may be imposed as an administrative penalty.*6+ The change of respondents’
place of work from the original CSSDO office to the DSWD building is not a
transfer. It was only a physical transfer of their office to a new one done in t
interest of public service. There were no new movements or appointments f
one position to another.
Private respondents argue that they were denied due process when they werdropped from the rolls.
CSC Memorandum Circular No. 38, Series of 1993, provides:
“VI. Requirements For Certain Mode of Separation.
Dropping from the Rolls – Non-disciplinary in nature, executory but appealab
the CSC office concerned within fifteen (15) days from receipt of the order or
notice.
Officers and employees who are absent for at least thirty (30) days without
approved leave are considered on Absence Without Leave (AWOL) and may b
dropped from the service without prior notice.
A notice or order of the dropping from the rolls of an employee shall be issue
the appointing authority and submitted to the CSC office concerned for recor
purposes.”
Pursuant to the above provisions and as ruled by the CSC, the dropping from
rolls of private respondents is not disciplinary in nature. Thus, their assertion
they were denied due process is untenable. Since the dropping from the roll
not an administrative sanction, they need not be notified or be heard.
WHEREFORE, the Decision dated February 14, 1996 of the Court of Appeals is
REVERSED. The CSC Resolution No. 94-4626 dated August 22, 1994, and
Resolution No. 94-6243 dated November 17, 1994 dropping private responde
from the rolls are AFFIRMED.
SENATOR HEHERSON T. ALVAREZ vs. HON. TEOFISTO T. GUINGONA, JR., incapacity as Executive Secretary
Of main concern to the petitioners is whether Republic Act No. 7720, just rec
passed by Congress and signed by the President into law, is constitutionally
infirm.
Indeed, in this Petition for Prohibition with prayer for Temporary Restraining
Order and Preliminary Prohibitory Injunction, petitioners assail the validity of
Republic Act No. 7720, entitled, “An Act Converting the Municipality of Santia
Isabela into an Independent Component City to be known as the City of
Santiago,” mainly because the Act allegedly did not originate exclusively in th
House of Representatives as mandated by Section 24, Article VI of the 1987
Constitution.
Also, petitioners claim that the Municipality of Santiago has not met the
minimum average annual income required under Section 450 of the Local
Government Code of 1991 in order to be converted into a component city.
Undisputed is the following chronicle of the metamorphosis of House Bill No.
8817 into Republic Act No. 7720:
On April 18, 1993, HB No. 8817, entitled “An Act Converting the Municipality
Santiago into an Independent Component City to be known as the City of
Santiago,” was filed in the House of Representatives with Representative Ant
Abaya as principal author. Other sponsors included Representatives Ciriaco
Alfelor, Rodolfo Albano, Santiago Respicio and Faustino Dy. The bill was refer
to the House Committee on Local Government and the House Committee on
Appropriations on May 5, 1993.
On May 19, 1993, June 1, 1993, November 28, 1993, and December 1, 1993,
public hearings on HB No. 8817 were conducted by the House Committee on
Local Government. The committee submitted to the House a favorable repor
with amendments, on December 9, 1993.
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On December 13, 1993, HB No. 8817 was passed by the House of Representatives
on Second Reading and was approved on Third Reading on December 17, 1993.
On January 28, 1994, HB No. 8817 was transmitted to the Senate.
Meanwhile, a counterpart of HB No. 8817, Senate Bill No. 1243, entitled, “An Act
Converting the Municipality of Santiago into an Independent] Component City to
be Known as the City of Santiago,” was filed in the Senate. It was introduced by
Senator Vicente Sotto III, as principal sponsor, on May 19, 1993. This was just
after the House of Representatives had conducted its first public hearing on HB
No. 8817.
On February 23, 1994, or a little less than a month after HB No. 8817 was
transmitted to the Senate, the Senate Committee on Local Governmentconducted public hearings on SB No. 1243. On March 1, 1994, the said committee
submitted Committee Report No. 378 on HB No. 8817, with the recommendation
that it be approved without amendment, taking into consideration the reality
that H.B. No. 8817 was on all fours with SB No. 1243. Senator Heherson T.
Alvarez, one of the herein petitioners, indicated his approval thereto by signing
said report as member of the Committee on Local Government.
On March 3, 1994, Committee Report No. 378 was passed by the Senate on
Second Reading and was approved on Third Reading on March 14, 1994. On
March 22, 1994, the House of Representatives, upon being apprised of the action
of the Senate, approved the amendments proposed by the Senate.
The enrolled bill, submitted to the President on April 12, 1994, was signed by the
Chief Executive on May 5, 1994 as Republic Act No. 7720. When a plebiscite on
the Act was held on July 13, 1994, a great majority of the registered voters of
Santiago voted in favor of the conversion of Santiago into a city.
The question as to the validity of Republic Act No. 7720 hinges on the following
twin issues: (I) Whether or not the Internal Revenue Allotments (IRAs) are to be
ncluded in the computation of the average annual income of a municipality for
purposes of its conversion into an independent component city, and (II) Whether
or not, considering that the Senate passed SB No. 1243, its own version of HB No.
8817, Republic Act No. 7720 can be said to have originated in the House of
Representatives.
The annual income of a local
government unit includes the IRAs
-----------------------------------------------------------
Petitioners claim that Santiago could not qualify into a component city because
ts average annual income for the last two (2) consecutive years based on 1991
constant prices falls below the required annual income of Twenty Million Pesos
(P20,000,000.00) for its conversion into a city, petitioners having computed
Santiago’s average annual income in the following manner:
Total income (at 1991 constant prices) for 1991 P20,379,057.07
Total income (at 1991 constant prices) for 1992 P21,570,106.87
Total income for 1991 and 1992 P41,949,163.94
Minus:
RAs for 1991 and 1992 P15,730,043.00
Total income for 1991 and 1992 P26,219,120.94
Average Annual Income P13,109,960.47
By dividing the total income of Santiago for calendar years 1991 and 1992, after
deducting the IRAs, the average annual income arrived at would only be
P13,109,560.47 based on the 1991 constant prices. Thus, petitioners claim that
Santiago’s income is far below the aforesaid Twenty Million Pesos average annual
ncome requirement.
The certification issued by the Bureau of Local Government Finance of the
Department of Finance, which indicates Santiago’s average annual income to be
P20,974,581.97, is allegedly not accurate as the Internal Revenue Allotments
were not excluded from the computation. Petitioners asseverate that the IRAs
are not actually income but transfers and! or budgetary aid from the national
government and that they fluctuate, increase or decrease, depending on fact
like population, land and equal sharing.
In this regard, we hold that petitioners’ asseverations are untenable because
Internal Revenue Allotments form part of the income of Local Government U
It is true that for a municipality to be converted into a component city, it mus
among others, have an average annual income of at least Twenty Million Pes
for the last two (2) consecutive years based on 1991 constant prices.1 Such
income must be duly certified by the Department of Finance.2
Resolution of the controversy regarding compliance by the Municipality of
Santiago with the aforecited income requirement hinges on a correlative and
contextual explication of the meaning of internal revenue allotments (IRAs) vvis the notion of income of a local government unit and the principles of loca
autonomy and decentralization underlying the institutionalization and intens
empowerment of the local government system.
A Local Government Unit is a political subdivision of the State which is
constituted by law and possessed of substantial control over its own affairs.3
Remaining to be an intra sovereign subdivision of one sovereign nation, but n
intended, however, to be an imperium in imperio,4 the local government uni
autonomous in the sense that it is given more powers, authority, responsibili
and resources.5 Power which used to be highly centralized in Manila, is there
deconcentrated, enabling especially the peripheral local government units to
develop not only at their own pace and discretion but also with their oWn
resources and assets.6
The practical side to development through a decentralized local government
system certainly concerns the matter of financial resources. With its broaden
powers and increased responsibilities, a local government unit must now ope
on a much wider scale. More extensive operations, in turn, entail more expen
Understandably, the vesting of duty, responsibility and accountability in ever
local government unit is accompanied with a provision for reasonably adequ
resources to discharge its powers and effectively carry out its functions.7
Availment of such resources is effectuated through the vesting in every local
government unit of (1) the right to create and broaden its own source of reve
(2) the right to be allocated a just share in national taxes, such share being in
form of internal revenue allotments (IRAs); and (3) the right to be given its
equitable share in the proceeds of the utilization and development of the
national wealth, if any, within its territorial boundaries.8.
The funds generated from local taxes, IRAs and national wealth utilization
proceeds accrue to the general fund of the local government and are used to
finance its operations subject to specified modes of spending the same asprovided for in the Local Government Code and its implementing rules and
regulations. For instance, not less than twenty percent (20%) of the IRAs mus
set aside for local development projects.9 As such, for purposes of budget
preparation, which budget should reflect the estimates of the income of the
government unit, among others, the IRAs and the share in the national wealt
utilization proceeds are considered items of income. This is as it should be, si
income is defined in the Local Government Code to be all revenues and recei
collected or received forming the gross accretions of funds of the local
government unit.10
The IRAs are items of income because they form part of the gross accretion o
funds of the local government unit. The IRAs regularly and automatically accr
to the local treasury without need of any further action on the part of the loc
government unit.11 They thus constitute income which the local governmen
invariably rely upon as the source of much needed funds.
For purposes of converting the Municipality of Santiago into a city, the
Department of Finance certified, among others, that the municipality had an
average annual income of at least Twenty Million Pesos for the last two (2)
consecutive years based on 1991 constant prices. This, the Department of
Finance did after including the IRAs in its computation of said average annua
income.
Furthermore, Section 450 (c) of the Local Government Code provides that “th
average annual income shall include the income accruing to the general fund
exclusive of special funds, transfers, and non-recurring income.” To reiterate
IRAs are a regular, recurring item of income; nil is there a basis, too, to classif
the same as a special fund or transfer, since IRAs have a technical definition a
meaning all its own as used in the Local Government Code that unequivocally
makes it distinct from special funds or transfers referred to when the Code
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speaks of “funding support from the national government, its instrumentalities
and government-owned-or-controlled corporations.”12
Thus, Department of Finance Order No. 359313 correctly encapsulizes the full
mport of the above disquisition when it defined ANNUAL INCOME to be
“revenues and receipts realized by provinces, cities and municipalities from
regular sources of the Local General Fund including the internal revenue
allotment and other shares provided for in Sections 284, 290 and 291 of the
Code, but exclusive of non-recurring receipts, such as other national aids, grants,
financial assistance, loan proceeds, sales of fixed assets, and similar others”
(Italics ours).14 Such order, constituting executive or contemporaneous
construction of a statute by an administrative agency charged with the task of
nterpreting and applying the same, is entitled to full respect and should be
accorded great weight by the courts, unless such construction is clearly shown tobe in sharp conflict with the Constitution, the governing statute, or other laws.15
I
n the enactment of RA No. 7720,
there was compliance with Section 24,
Article VI of the 1987 Constitution
-----------------------------------------------------------
Although a bill of local application like HB No. 8817 should, by constitutional
prescription,16 originate exclusively in the House of Representatives, the claim of
petitioners that Republic Act No. 7720 did not originate exclusively in the House
of Representatives because a bill of the same import, SB No. 1243, was passed in
the Senate, is untenable because it cannot be denied that HB No. 8817 was filed
n the House of Representatives first before SB No. 1243 was filed in the Senate.
Petitioners themselves cannot disavow their own admission that HB No. 8817
was filed on April 18, 1993 while SB No. 1243 was filed on May 19, 1993. The
filing of HB No. 8817 was thus precursive not only of the said Act in question but
also of SB No. 1243. Thus, HB No. 8817, was the bill that initiated the legislative
process that culminated in the enactment of Republic Act No. 7720. No violation
of Section 24, Article VI, of the 1987 Constitution is perceptible under the
circumstances attending the instant controversy.
Furthermore, petitioners themselves acknowledge that HB No. 8817 was already
approved on Third Reading and duly transmitted to the Senate when the Senate
Committee on Local Government conducted its public hearing on HB No. 8817.
HB No. 8817 was approved on the Third Reading on December 17, 1993 and
transmitted to the Senate on January 28, 1994; a little less than a month
thereafter, or on February 23, 1994, the Senate Committee on Local Government
conducted public hearings on SB No. 1243. Clearly, the Senate held in abeyance
any action on SB No. 1243 until it received HB No. 8817, already approved on theThird Reading, from the House of Representatives. The filing in the Senate of a
substitute bill in anticipation of its receipt of the bill from the House, does not
contravene the constitutional requirement that a bill of local application should
originate in the House of Representatives, for as long as the Senate does not act
thereupon until it receives the House bill.
We have already addressed this issue in the case of Tolentino vs. Secretary of
Finance.17 There, on the matter of the Expanded Value Added Tax (EVAT) Law,
which, as a revenue bill, is nonetheless constitutionally required to originate
exclusively in the House of Representatives, we explained:
“x x x To begin with, it is not the law-but the revenue bill-which is required by the
Constitution to ‘originate exclusively’ in the House of Representatives. It is
mportant to emphasize this, because a bill originating in the House may undergo
such extensive changes in the Senate that the result may be a rewriting of the
whole. x x x as a result of the Senate action, a distinct bill may be produced. Tonsist that a revenue statute-and not only the bill which initiated the legislative
process culminating in the enactment of the law-must substantially be the same
as the House bill would be to deny the Senate’s power not only to ‘concur with
amendments’ but also to ‘propose amendments.’ It would be to violate the
coequality of legislative power of the two houses of Congress and in fact make
the House superior to the Senate.
xxx xxx xxx
t is insisted, however, that S. No. 1630 was passed not in substitution of H. No.
11197 but of another Senate bill (S. No. 1129) earlier filed and that what the
Senate did was merely to ‘take *H. No. 11197+ into consideration’ in enacting S.
No. 1630. There is really no difference between the Senate preserving H. No.
11197 up to the enacting clause and then writing its own version following the
enacting clause (which, it would seem petitioners admit is an amendment by
substitution), and, on the other hand, separately presenting a bill of its own o
the same subject matter. In either case the result are two bills on the same
subject.
Indeed, what the Constitution simply means is that the initiative for filing
revenue, tariff, or tax bills, bills authorizing an increase of the public debt, pri
bills and bills of local application must come from the House of Representativ
on the theory that, elected as they are from the districts, the members of the
House can be expected to be more sensitive to the local needs and problems
the other hand, the senators, who are elected at large, are expected to appro
the same problems from the national perspective. Both views are thereby ma
to bear on the enactment of such laws.
Nor does the Constitution prohibit the filing in the Senate of a substitute bill anticipation of its receipt of the bill from the House, so long as action by the
Senate as a body is withheld pending receipt of the House bill. x x x”18
III
Every law, including RA No. 7720,
has in its favor the presumption
of constitutionality
--------------------------------------------------------------------
It is a well-entrenched jurisprudential rule that on the side of every law lies th
presumption of constitutionality.19 Consequently, for RA No. 7720 to be null
it must be shown that there is a clear and unequivocal breach of the Constitu
not merely a doubtful and equivocal one; in other words, the grounds for nul
must be clear and beyond reasonable doubt.20 Those who petition this court
declare a law to be unconstitutional must clearly and fully establish the basis
will justify such a declaration; otherwise, their petition must fail. Taking into
consideration the justification of our stand on the immediately preceding gro
raised by petitioners to challenge the constitutionality of RA No. 7720, the Co
stands on the holding that petitioners have failed to overcome the presumpt
The dismissal of this petition is, therefore, inevitable.
WHEREFORE, the instant petition is DISMISSED for lack of merit with costs ag
petitioners.
REYNALDO O. MALONZO, in his capacity as City Mayor of Caloocan vs. HORONALDO B. ZAMORA, in his capacity as Executive Secretary
On March 15, 1999, the Office of the President (OP) through Executive Secre
Ronaldo Zamora, rendered a Decision[1] the dispositive portion of which rea
viz.:
"WHEREFORE, herein respondents Mayor Reynaldo Malonzo, Vice-Mayor Os
G. Malapitan and Councilors Chito Abel, Benjamin Manlapig, Edgar Erice, Den
Padilla, Zaldy Dolatre, Susana Punzalan, Henry Cammayo, and Luis Tito Varela
of Caloocan city are hereby adjudged guilty of misconduct and each is meted
penalty of SUSPENSION from office for a period of three (3) months without
to commence upon receipt of this Decision. This Decision is immediately
executory.
SO ORDERED." Rtcspped
On March 22, 1999, petitioners Mayor Reynaldo Malonzo, Vice-Mayor Oscar
Malapitan and councilors Chito Abel, Benjamin Manlapig, Edgar Erice Dennis
Padilla, Zaldy Dolatre, Luis tito Varela, Susana Punzalan, and Henry Cammayo
of the City of Caloocan, filed a petition assailing the OP decision.
On July 27, 1999, We granted the petition and accordingly annulled and set athe OP decision for having been rendered with grave abuse of discretion and/
excess of jurisdiction. We held:
"x x x [T]he instant petition has been properly brought before us in the light o
the importance of the subject matter and the transcendental nature of the is
raised. Realignment of [items in the annual budget] is a common practice bor
of necessity and sanctioned by law. Just how such a common practice may be
carried out within the bounds of law, considering the fact that public funds a
stake, is, we believe, an issue that is not only one of first impression, but likew
of considerable significance as a guide to local governance . x x x
"x x x The OP found petitioners guilty of misconduct on the ground that x x x
"x x x the P39,352,047.75 appropriated in Ordinance 0254 to fund the
expropriation of Lot 26 of the Maysilo Estate was merely a portion of the P50
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million included and appropriated in the 1998 Annual Budget for expropriation
purpose and x x x the judicial action for expropriation x x x is still pending with the
court. This being so, the amount allocated for the expropriation cannot be
reverted to or be deemed as savings to serve as funds actually available for the
supplemental budget. x x x
"We cannot, however, agree x x x. Xlaw
"The OP’s premise, in our opinion, rests upon an erroneous appreciation of facts
on record. The OP seems to have been confused as to the figures and amounts
actually involved. A meticulous analysis of the records would show that there
really is no basis to support the OP’s contention that the amount of
P39,352,047.75 was appropriated under Ordinance No. 0254, S. 1998, since in
truth and in fact, what was appropriated in said ordinance was the amount ofP39,343,028.00. The allocation of P39,352,047.75 is to be found in the earlier
Ordinance no. 0246,S.1997 which is a separate and distinct ordinance. x x x
"x x x
"Section 322 of the Code upon which the OP anchored its opinion that petitioners
breached a statutory mandate provides: Xsc
"SEC. 322. Reversion of Unexpended Balances of Appropriations, Continuing
Appropriations – Unexpended balances of appropriations authorized in the
annual appropriations ordinance shall revert to the unappropriated surplus of the
general funds at the end of the fiscal year and shall not thereafter be available for
expenditure except by subsequent enactment. However, appropriations for
capital outlays shall continue and remain valid until fully spent, reverted or the
project is completed. Reversions of continuing appropriations shall not be
allowed unless obligations therefor have been fully paid or settled."
"Based on the above provision, the OP reached the determination that Ordinance
No. 0254, S. 1998 could not have lawfully realigned the amount of
P39,352,047.75 which was previously appropriated for the expropriation of Lot
26 of the Maysilo Estate s ince such appropriation was in the nature of a capital
outlay until fully spent, reverted, or the project for which it is earmarked is
completed.
"The question, however, is not whether the appropriation of P39,352,047.75
could fall under the definitions of continuing appropriation and capital outlays,
considering that such amount was not the subject of realignment made by
Ordinance No. 0254, Series of 1998. Rather, the issue is whether petitioners are
iable for their actions in regard to said ordinance which actually realigned a
position of the P50 million which was simply denominated in a general manner as
"Expropriation of Properties" and classified under "Current OperatingExpenditures" in the 1998 Annual Budget of Caloocan City. Clearly, these are two
distinct amounts separate from each other. x x x [T]he P50 million was NOT
appropriated for the purpose of purchasing Lot 26 of the Maysilo Estate but
rather for expenses incidental to expropriation such as relocation of squatters,
appraisal fee, expenses for publication, mobilization fees and expenses for
preliminary studies. x x x The appropriation of P39,352,047.75 under Ordinance
No. 0246, S. 1997 is, we believe, still a subsisting appropriation that has never
been lumped together with other funds to arrive at the sum of P50 million
allocated in the 1998 budget. To be sure, denomination of the P50 million
amount as "Expropriation of Properties left much to be desired and would have
been confused with the appropriation for expropriation under Ordinance No.
0246, S. 1997, but had respondents probed deeper into the actual intention for
which said amount was allocated then they would have reached an accurate
characterization of the P50 million. Misspped
Bearing in mind, therefore, the fact that it is the P50 million which is now beingrealigned, the next logical question to ask is whether such amount is capable of
being lawfully realigned. To this we answer in the affirmative.
"x x x [R]espondents x x x argued x x x that realignment shall not be allowed when
what is involved are continuing appropriations or capital outlays. But this
argument becomes clearly inapplicable in view of our disquisition above x x x. The
realignment x x x pertained to the P50 million which was classified as "Current
Operating Expenditures" x x x
"x x x [W]hat is being realigned is the P50 million appropriation which is classified,
neither as a capital outlay nor a continuing appropriation x x x
As to the alleged violation of Sections 50 and 52 of the Code requiring the
adoption of house rules and the organization of the council, we believe that the
same hardly merits even cursory consideration. We cannot infer x x x that no
other business [like the enactment of the ordinance] may be transacted on th
first regular session except to the take up the matter of adopting or updating
rules. Sc
"The foregoing explanation leads us to the ineluctable conclusion that, indee
respondents committed grave abuse of discretion. Not only [is] their reasoni
flawed bit [it is] likewise lacking in factual and legal support. Misconduct, bei
grave administrative offense for which petitioners stood charged, cannot be
treated cavalierly. There must be clear and convincing proof on record that
petitioners were motivated by wrongful intent, committed unlawful behavio
relation to their offices, or transgressed some established and definite rules o
action. But, as we have stressed above, petitioners were acting within legal
bounds."
The dispositive portion of Our Decision of March 22, 1999, reads, thus:
"WHEREFORE, the instant petition is hereby GRANTED. The assailed decision
the office of the president in O.P. Case No. 98-H-8520 dated March 15, 1999
ANNULLED and SET ASIDE for having been rendered with grave abuse of
discretion amounting to lack and/or excess of jurisdiction. Consequently,
respondents, their subordinates, agents, representatives, and successors-in-
interest are permanently enjoined from enforcing or causing the execution in
manner of the aforesaid decision against petitioners."
On August 12, 1999, the Office of the Solicitor General filed a Motion for
Reconsideration[2] contending that:
I. The OP did not err in its appreciation of facts; Scmis
II. Ordinance No. 0254, Series of 1998 was passed without funds actually
available;
III. Ordinance No. 0254, Series of 1998 was also enacted without sufficient
compliance with Section 50, Chapter 3, Title II of the Local Government Code
1991;
IV. Petitioners’ failure to observe the stricture in the enactment of the
Supplemental Budget Ordinance constitutes misconduct; and
V. Assuming arguendo that the OP did err in its appreciation of the facts on
record, still this does not constitute grave abuse of discretion which can be
reviewed by this Court through a special civil action for certiorari.
On October 20, 1999, petitioners filed their Comment and/or Opposition to
Motion for Reconsideration.[3]
These issues have already been discussed in Our Decision of July 27, 1999. As
respondents persist in their stance, we must also thus restate our position to
dispel any and all doubts on the matter. Missc
First. Respondents aver that in their Consolidated Answer which petitioners f
before the OP[4], petitioners admitted that the sum of P39,352,047.75 under
Ordinance No. 0246, Series of 1997 was included in the P50,000,000.00
denominated in a general manner as "Expropriation of Properties" and classif
under "Current Operating Expenditures" in the 1998 Budget of Caloocan City
Petitioners however allegedly only took a different position in their pleadings
appeal and during the oral argument before the Court as they clarified that th
sum of P39,352,047.75 under Ordinance No. 0246 Series of 1997 is separate
distinct from and not part of the sum of P50,000,000.00 categorized as "Curr
Operating Expenditures" in the 1998 Budget of Caloocan City. Respondents in
that petitioners may not change their theory for the first time on appeal sincetheir admissions before the OP bind them, and to do so would be offensive to
basic rules of fair play and justice.
We disagree.
There is nothing in the records to indicate that the sum of P39,352,047.75
appropriated under Ordinance No. 0246, Series of 1997 is actually part of the
P50,000,000.00 allotted for "Expropriation of Properties," under the "Current
Operating Expenditures" of the 1998 Annual Budget of Caloocan City.
Ordinance No. 0246, Series of 1997[5] appropriated P39,352,047.75 for the
expropriation of Lot 26 of the Maysilo Estate. It is, however, not this but the s
of P39,343,028.00 appropriated under Ordinance No. 0254, Series of 1998[6]
which was sourced from the P50,000,000,00 allotted for "Current Operating
Expenditures". It should be noted that the P50,000,000.00 under "Current
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Operating Expenditures" of the 1998 Annual Budget was denominated as for
"Expropriation of Properties" but the particular properties subject of
expropriation were not specified. In fact, petitioners, in the same consolidated
answer cited by respondents, have unequivocally stated that "as will be noted
from the budget, the expropriation of properties does not refer to any particular
property."[7] Thus, it can be said that petitioners, as early as when the case was
pending before the OP, were already arguing about the character of the
P50,000,000.00 as proper subject of realignment. Spped
The source of confusion lies in the denomination of P50,000,000.00 as money for
"Expropriation of Properties" under "Current Operating Expenditures". As such, it
was to be spent for the expropriation of various properties, including incidental
expenses for expropriation. What was exclusively appropriated for the
expropriation of the Maysilo Lot was the P39, 352,047.75 under Ordinance No.0246, Series of 1997. It is significant to note that this is a 1997 ordinance while
the P39,343,028.00 which was originally intended for incidental expenses for
expropriation of the Maysilo Lot was under a 1998 ordinance.
That what was being realigned was the P50,000,000.00 under "Current Operating
Expenditures" to fund the P39,343,028.00 expense under Ordinance No. 0254,
Series of 1998, and not the P39,352,047.75 under Ordinance No. 0247, Series of
1997, was further clarified by petitioners during their oral argument before this
Court on April 20, 1999.[8] Jospped
Second. Respondents insist that Ordinance No. 0254, Series of 1998 was passed
without funds actually available. In support of their contention, they cite the
dissenting opinion of Justice Kapunan that "there was no "unavoidable
discontinuance" or an "abandonment of the work or activity" as contemplated
under Section 321 of the Local Government Code since the records do not
ndicate that the expropriation case before the Regional Trial Court was actually
withdrawn, suspended, discontinued or abandoned by the City of Caloocan.
This argument however is wrongfully premised as it presupposes the identity,
which does not however exist, between the P39,352,047.75 appropriated under
Ordinance No. 0246, Series of 1997, and the P39,343,028.00 appropriated under
Ordinance No. 0254, Series of 1998. The former which was a 1997 appropriation
was never touched for the expropriation of the Maysilo Lot and did not
materialize, while the latter was sourced from the 1998 Annual Budget under
"Current Operating Expenditures" by realigning the allocation of P50,000,000.00
therefrom to fund the items in Ordinance No. 0254, Series of 1998. Since the
P50,000,000.00 appropriation is classified neither as capital outlay nor as a
continuing appropriation[9] but as "Current Operating Expenditures," it could be
a valid subject of realignment. Sppedjo
Third. Respondents maintain that Ordinance No. 0254, Series of 1998 wasenacted without sufficient compliance with the requirement of Section 50 of the
Local Government Code requiring that house rules be adopted or updated.
The records satisfactorily show, however, that the Sanggunnian took up the
matter of adopting a set of house rules in its general meeting entitled, "Katitikan
ng Karaniwang Pulong ng Sangguniang Panlungsod na ginanap noong ika –2 ng
Hulyo 1998 sa Bagong Gusali ng Pamahalaang Lungsod ng Caloocan."[10] During
said meeting, the Sanggunian created an Ad Hoc Committee composed of seven
(7) members to study the existing house rules. Thereafter, it enacted Ordinance
No. 0254, Series of 1998.
As we have held in our Decision dated July 27, 1999, such succession of events is
egally permissible. The law does not require the completion of the updating or
adoption of the internal rules of procedure before the Sanggunian could act on
any other matter like the enactment of an ordinance. It simply requires that the
matter of adopting or updating the internal rules of procedure be taken up duringthe first day of session. It would be inequitable to read something more into the
requirement of the law and use it as a basis for finding petitioners guilty of
misconduct, especially when the charge is serious enough to warrant a penalty of
suspension from office for three (3) months without pay. Miso
Fourth. Respondents maintain that assuming that the Sanggunian can legally take
up matters pertaining to the supplemental budget even before the adoption or
updating of its existing rules of procedure, the circumstances that preceded the
enactment of the supplemental budget were irregular since there was undue
haste in conducting the three readings of Ordinance No. 0254, Series of 1998, in
the councilors were not given ample time for reflection and circumspection
before the passage of the proposed ordinance by conducting the three readin
in just one day considering that it was a certain Eduardo Tibor, by himself as
taxpayer, and not the councilors themselves, who raised such complaint. It m
not be amiss to point out that the salaries of the city employees were to be
funded by the said ordinance which embodied the supplemental budget for 1
hence, the urgency for its passage. Even the five (5) councilors[11] who absta
from voting for the passage of Ordinance 0254, Series of 1998 took advantag
its benefits by submitting to the office of petitioner Malonzo the names of th
employees assigned to their respective offices for salary and accounting
purposes.[12] Nexold
Finally. Respondents assert that assuming that the OP erred in its appreciatio
the facts on record, no grave abuse of discretion correctible by a special civilaction for certiorari may be attributed thereto.
But there was grave abuse of discretion on the part of the OP. Its findings are
totally devoid of support in the record. Hence, the Decision of respondent
Executive Secretary, suspending the petitioners, on the basis of the said findi
constitutes grave abuse of discretion amounting to an act done in excess of
jurisdiction.
WHEREFORE, the respondents’ motion for reconsideration is DENIED with
FINALITY.