Power of LGUs
its personnel.
THE PROVINCE OF NEGROS OCCIDENTAL vs. THE COMMISSIONERS,
COMMISSION ON AUDIT
G.R. No. 182574; September 28, 2010; CARPIO, J.
Facts
21 December 1994 - the Sangguniang Panlalawigan of Negros
Occidental passed Resolution No. 720-A4 allocating P4,000,000 of
its retained earnings for the hospitalization and health care
insurance benefits of 1,949 officials and employees of the province.
Petitioner Province of Negros Occidental and Philam Care entered
into a Group Health Care Agreement involving a total payment of
P3,760,000
23 January 1997 the Provincial Auditor issued Notice of
Suspension No. 97-001-1015 suspending the premium payment
because of lack of approval from the Office of the President (OP) as
provided under Administrative Order No. 1036 (AO 103), and that
the premium payment violated Republic Act No. 6758 (Salary
Standardization Law).
President Joseph E. Estrada directed the COA to lift the suspension
but only in the amount of P100,000.
The Provincial Auditor ignored the directive of the President and
instead issued Notice of Disallowance
Petitioner appealed the disallowance to the COA.
COA affirmed the Provincial Auditors Notice of Disallowance
o COA: under AO 103, no government entity, including a
local government unit, is exempt from securing prior
approval from the President granting additional benefits to
o Further, Section 468(a)(1)(viii)11 of Republic Act No. 7160
(RA 7160) or the Local Government Code of 1991 has to be
harmonized with Section 1212 of RA 6758.
o The insurance benefits from Philam Care, a private
insurance company, was a duplication of the benefits
provided to employees under the Medicare program which
is mandated by law.
Motion for Reconsideration: denied
Issues/Holding/Ratio
WON COA committed grave abuse of discretion in affirming the disallowance of
P3,760,000 for premium paid by the Province of Negros Occidental to its 1,949
officials and employees? YES. COA erred. Court rules in favor of the Petitioners.
Petitioner:
1. The payment of the insurance premium was paid from an allocation
of its retained earnings pursuant to a valid appropriation ordinance.
2. Such enactment was a clear exercise of its express powers under
the principle of local fiscal autonomy which includes the power of
Local Government Units (LGUs) to allocate their resources in
accordance with their own priorities.
3. While it is true that LGUs are only agents of the national
government and local autonomy simply means decentralization, it
is equally true that an LGU has fiscal control over its own revenues
derived solely from its own tax base.
Respondents:
 1. Although LGUs are afforded local fiscal autonomy, LGUs are still bound
by RA 6758 and their actions are subject to the scrutiny of the
Department of Budget and Management (DBM) and applicable auditing
rules and regulations enforced by the COA
2. The grant of additional compensation, like the hospitalization and
health care insurance benefits in the present case, must have prior
Presidential approval to conform with the state policy on salary
standardization for government workers.
3. (Implied) Based on Section 2 of AO 103, 1 the President enjoined all
heads of government offices and agencies from granting productivity
incentive benefits or any and all similar forms of allowances and
benefits without the Presidents prior approval.
Court:
1. From a close reading of the provisions of AO 103, petitioner did not
violate the rule of prior approval from the President since Section
2 states that the prohibition applies only to "government
offices/agencies, including government-owned and/or controlled
corporations, as well as their respective governing boards."
Nowhere is it indicated in Section 2 that the prohibition also
applies to LGUs. The requirement then of prior approval from the
President under AO 103 is applicable only to departments, bureaus,
1 SECTION 2. All heads of government offices/agencies, including
government owned and/or controlled corporations, as well as their respective
governing boards are hereby enjoined and prohibited from authorizing/granting
Productivity Incentive Benefits or any and all forms of allowances/benefits
without prior approval and authorization via Administrative Order by the Office
of the President.
offices and government-owned and controlled corporations under
the Executive branch.
2. (SYLLABUS TOPIC) In other words, AO 103 must be observed by
government offices under the Presidents control as mandated by
Section 17, Article VII of the Constitution which states:
Section 17. The President shall have control of all executive departments,
bureaus and offices. He shall ensure that the laws be faithfully executed.
On the other hand, the President merely exercises general supervision over
LGUs under Section 4, Article X of the Constitution:
Sec. 4. The President of the Philippines shall exercise general supervision over
local governments. Provinces with respect to component cities and
municipalities, and cities and municipalities with respect to component
barangays shall ensure that the acts of their component units are within the
scope of their prescribed powers and functions.
3. The President may only point out that rules have not been followed
but the President cannot lay down the rules, neither does he have
the discretion to modify or replace the rules. Thus, the grant of
additional compensation like hospitalization and health care
insurance benefits in the present case does not need the approval
of the President to be valid.
4. Also, while it is true that LGUs are still bound by RA 6758, the COA
did not clearly establish that the medical care benefits given by the
government at the time under Presidential Decree No. 151917
were sufficient to cover the needs of government employees
especially those employed by LGUs.
 5. Petitioner correctly relied on the Civil Service Commissions (CSC)
Memorandum Circular No. 33 (CSC MC No. 33), wherein all
government offices including LGUs were directed to provide a
health program for government employees, which included
hospitalization services and annual mental, medical-physical
examinations.
6. The CSC, through CSC MC No. 33, as well as the President, through
AO 402 (which expanded protection), recognized the deficiency of
the state of health care and medical services implemented at the
time. Thus, consistent with the state policy of local autonomy as
guaranteed by the 1987 Constitution, under Section 25, Article II20
and Section 2, Article X,21 and the Local Government Code of
1991,22 we declare that the grant and release of the hospitalization
and health care insurance benefits given to petitioners officials and
employees were validly enacted through an ordinance passed by
petitioners Sangguniang Panlalawigan.
LEAGUE OF PROVINCES OF THE PHILIPPINES v. DENR and Secretary
GR. No. 175368
April 11, 2013
Topic: General Supervision of Local Governments & Autonomous Regions - Art. X,
Sec. 4 & 16
NATURE OF THE CASE
Petition for certiorari, prohibition and mandamus, praying that the Court order
the following:
(1) declare as unconstitutional Section 17(b)(3)(iii) of R.A. 7160 (Local
Government Code) and Section 24 of R.A. 7076 (People's Small-Scale Mining Act
of 1991);
(2) prohibit and bar respondents from exercising control over provinces; and
(3) declare as illegal the DENR Secretarys nullification, voiding and cancellation
of the Small-Scale Mining permits issued by the Provincial Governor of Bulacan.
THE PARTIES
Petitioner: League of Provinces - a duly organized league of local governments
incorporated under the Local Government Code; it is composed of 81 provincial
governments, including the Province of Bulacan; it states that its petition is a
collective action of all provinces through the Leauge, as a favorable ruling will
benefit all provinces and all local governments
Respondent: DENR and DENR Secretary Angelo Reyes
Other parties:
Golden Falcon Mineral Exploration Corporation (Golden Falcon) applicant
for a Financial and Technical Assistance Agreement (FTAA); filed before
Mines and Geosciences Bureau, Regional Office No. III (MGB-RO);
application was denied twice
Mercado, Cruz, Cruz and Sembrano (MCCS) applicants for Quarry Permit;
filed before the Provincial Environment and Natural Resources Office
(PENRO) of Bulacan
Atlantic Mines and Trading Corporation (AMTC) applicant for Exploration
Permit; filed before the PENRO of Bulacan
THE FACTS
Golden Falcon applied for FTAA before the MGB-RO
 April 29, 1998 - MGB-RO denied Golden Falcons application for FTAA on for
failure to secure the required area clearances from the Forest Management
Sector and Lands Management Sector of the DENR-RO.
Golden Falcon appealed the denial with the Mines and Geosciences Bureau-
Central Office (MGB-CO)
February 10, 2004 - pending Golden Falcon's appeal to the MGB-CO, MCCS
filed with the PENRO of Bulacan their applications for quarry permit
covering the same area subject of Golden Falcon's FTAA application.
July 16, 2004 MGB-CO finally denied Golden Falcons appeal
September 13, 2004 - AMTC filed with the PENRO of Bulacan an application
for exploration permit covering the same subject area.
Confusion of rights resulted from the overlapping applications of AMTC and
the persons applying for quarry permits the contention was the date the
area of Golden Falcons application became open to other permit
applications from other parties
October 19, 2004 - upon query by MGB-RO Director Cabantog, DENR-MGB
Director Ramos stated that the denial of Golden Falcons application became
final on August 11, 2004, or fifteen days after Golden Falcon received the
order of denial of its application. Hence, the area of Golden Falcons
application became open to permit applications only on that date.
Subsequently, the Provincial Legal Officer of Bulacan issued a legal opinion
on the issue, stating that the subject area became open for new
applications on the date of the first denial on April 29, 1998 (MGB-ROs
order of denial), as MGB-COs order of denial on July 16, 2004 was a mere
reaffirmation of the MGB-ROs April 29 order; hence, the reckoning period
should be April 29.
Based on this legal opinion, MGB-RO Director Cabantog endorsed the
applications for quarry permit, now apparently converted to applications
for small-scale mining permit, to the Governor of Bulacan.
PENRO of Bulacan recommended to the Governor the approval of said
applications.
Eventually, the Governor issued the small-scale mining permits.
AMTC appealed to the DENR Secretary
The DENR Secretary decided in favor of the AMTC and nullified and
cancelled the governors issuance of small-scale mining permits. It agreed
with DENR-MGB Director Ramos that the area was open to mining location
only on August 11, 2004 (15 days after the MGB-CO denial). Hence, the
applications for quarry permit filed on February 10, 2004 were null as these
were filed when the area was still closed to mining location. On the other
hand, AMTC filed its application when the area was already open to other
mining applicants, hence, its application was valid. The small-scale mining
permits were also issued in violation of Section 4 of R.A. No. 7076 and
beyond the authority of the Governor pursuant to Sec. 43 of RA 7942
because the area was never proclaimed to be under the small-scale mining
program.
THE ISSUES
1. Whether DENRs act of nullifying the small-scale mining permits amounts to
executive control, not merely supervision and usurps the devolved powers of all
provinces, as the DENR Secretary substituted the judgment of the Provincial
Governor of Bulacan.
2. Whether or not Section 17, b(3)(III) of the Local Government Code and Section
24 of the Small-Scale Mining Act, which confer upon DENR and the DENR
Secretary the power of control are unconstitutional, as the Constitution states
that the President (and Exec Depts) has the power of supervision only, not
control over acts of LGUs

THE RULING:
DENR Secs act was valid and authorized pursuant to its power of review under
the RA 7076 and its IRR; Assailed statutes did not overcome the presumption of
constitutionality, hence, are not unconstitutional.
Control of the DENR/DENR Secretary over small-scale mining in the
provinces is granted by three statutes: (1) R.A. 7061 or The Local
Government Code of 1991; (2) R.A. 7076 or the People's Small Scale Mining
Act of 1991; and (3) R.A. No. 7942 or the Philippine Mining Act of 1995.
Control - the power of an officer to alter or modify or set aside what a
subordinate officer had done in the performance of his/her duties and to
substitute the judgment of the former for the latter
Supervision - the power of a superior officer to see to it that lower officers
perform their function in accordance with law.
The Constitutional guarantee of local autonomy in the Article X, Sec. 2 of the
Constitution refers to the administrative autonomy of the LGUs or the
decentralization of government authority. It does not make local
governments within the State. Administrative autonomy may involve
devolution of powers, but it is still subject to limitations, like following
national policies or standards and those provided by the Local Government
Code, as the structuring of LGUs and the allocation of
powers/responsibilities/resources among the LGUs and local officials are
placed by the Constitution to Congress under Article X Section 3.
It is the DENR which is in charge of carrying out the States constitutional
mandate to control and supervise the exploration, development and
autilization of the countrrys natural resources, pursuant to the provisions of
Section 17, b(3)(III) of the LGC. Hence, the enforcement of the small-scale
mining law by the provincial government is subject to the supervision,
control and review of the DENR. The LGC did not fully devolve to the
provincial government the enforcement of the small-scale mining law.
RA 7076 or the Peoples Small-Scale Mining program was established to be
implemented by the DENR Secretary in coordination with other government
agencies (Section 4, RA 7076). Section 24 of the law makes the Provincial/
Mining Regulatory Board under the direct supervision and control of the
Secretary, its powers and functions subject to review by the same.
Under Section 123 of DENR AO No. 23, small-scale mining applications
should be filed with the PMRB and the permits shall be issued by the
provincial governor, for applications outside the mineral reservations.
DENR Administrative Order No. 34 (1992) which contains the IRR of RA 7076
likewise provides that the DENR Secretary shall exercise direct supervision
and control over the Peoples Small-Scale Mining Program, and that the
Provincial/City Mining Regulatory Boards (PMRB) powers and functions shall
be subject to review by the DENR Secretary. DENR Administrative Order No.
96-40 or the Revised IRR of the Philippine Mining Act of 1995 provides that
applications for Small-Scale Mining Permits shall be filed with the Provincial
Governor/City Mayor through their respective Mining Regulatory Boards for
areas outside the Mineral Reservations, and further, that the LGUs in
coordination with the Bureau/Regional Offices shall approve applications for
small-scale mining, sand and gravel, quarry xxx and gravel permits not
exceeding 5 hectares.
Petitioners contention that the aforementioned laws and rules did not
confer upon DENR and DENR Secretary the power to reverse, abrogate,
nullify, void, cancel the permits issued by the Provincial Governor or small-
scale mining contracts entered into by the Board are without merit because
the DENR Secretary was granted the power of review in the PMRBs
 resolution of disputes under Sec. 24 of RA 7076 and Section 22 of its IRR.
The decision of the DENR Secretary to nullify and cancel the Governors
issuance of permits emanated from its power of review under RA 7076 ad
its IRR. Its power to review and decide on the validity of the issuance of the
Small-Scale Mining Permits by the Provincial Governor is a quasi-judicial
function which involves the determination of what the law is and what the
legal rights of the contending parties are, with respect to the matter in
controversy and on the basis thereof and the facts obtaining, the
adjudication of their respective rights.
The DENR Secretary exercises quasi-judicial function under RA 7076 and its
IRR to the extent necessary in settling disputes, conflicts, or litigations over
conflicting claims. This quasi-judicial power of the DENR can neither be
equated with substitution of judgment of the Provincial Governor in
issuing Small-Scale Mining Permits nor control over the said act of the
Provincial Governor as it is a determination of the rights of the AMTC over
conflicting claims based on the law.
In Beltran v. Secretary of Health, the Court held that every law has in its
favor the presumption of constitutionality. For a law to be nullified, it must
be shown that there is a clear and unequivocal breach of the Constitution.
The ground for nullity must be clear and beyond reasonable doubt. In this
case, the grounds raised by the petitioner to challenge the constitutionality
of Sec. 17 b(3)(iii) of the LGC and Section 24 of RA 7076 has failed to
overcome the constitutionality of the said provisions of the law.
Hence, the petition was dismissed for lack of merit.
City of General Santos v. Commission on Audit 723 SCRA 77
Doctrine: In order to be able to deliver more effective and efficient
services, the law allows local government units the power to reorganize. In
doing so, they should be given leeway to entice their employees to avail of
severance benefits that the local government can afford. However, local
government units may not provide such when it amounts to a
supplementary retirement benefit scheme.
Facts:
Ordinance No. 08, series of 2009, was enacted by the city of
General Santos on August 13, 2009. It is entitled An Ordinance Establishing the
GenSan Scheme on Early Retirement for Valued Employees Security (GenSan
SERVES).
Ordinance No. 08, series of 2009, was passed together with its
implementing rules and regulations, designed "to entice those employees who
were unproductive due to health reasons to avail of the incentives being offered
therein by way of early retirement package."
The ordinance, as amended, provides that qualified employees
below sixty (60) years of age but not less than fifty (50) years and sickly
employees below fifty (50) years of age but not less than forty (40) years
separation benefits for sickly employees who have not yet reached retirement
age. Below is the contentious provision:
o Section 6. GenSan SERVES Post-Retirement Incentives Upon
availment of early retirement, a qualified employee shall enjoy the following in
addition to the above incentives:
(a) Cash gift of Fifty Thousand Pesos
 (P50,000.00) for the sickly employees;
(b) Lifetime free medical consultation at
General Santos City Hospital;
(c) Annual aid in the maximum amount of Five
Thousand Pesos (P5,000.00), if admitted at
General Santos City Hospital; and
(d) 14 karat gold ring as a token.
COA contested the ordinance saying that it is supplementary retirement
benefit, and therefore invalid.
Issue: Is Ordinance 8 invalid?
Held: Only Sec. 6 of Ordinance 8 is valid.
The text of Sec. 6 of the ordinance indicates its purpose of encouraging
employees, especially those who are unproductive due to health reasons, to avail
of the program even before they reach the compulsory retirement age. Section 6
provides for a form of severance pay to those who availed of GenSan SERVES,
which was executed in good faith.
We should not be misled by the use of the term "retirement" in Section 6 in
determining the nature of the benefits it provides. Labels are not determinative
of substantive content. It is the purpose behind these incentives, as read from
the text of the ordinance and as inferred from the effect of the ordinance as
applied, which must govern.
Furthermore, the benefits under GenSan SERVES were only given to a select
fewthe sickly and unproductive due to health reasons. Certainly, this negates
the position that the benefits provide for supplementary retirement benefits that
augment existing retirement laws.
Almadeo v. City Mayor of Baguio 761 SCRA 272
Note full case title: LEONCIO ALANGDEO, ARTHUR VERCELES, AND
DANNYVERGARA, Petitioners, v. THE CITY MAYOR OF BAGUIO
Doctrine: While respondents make much ado of petitioners lack of building
permits, it should be underscored that under Presidential Decree No. 1096,
otherwise known as the National Building Code of the Philippines (NBCP),
the mere fact that a structure is constructed without a building permit, as
well as non-compliance with work stoppage order, without more, will not
call for a summary demolition
Facts:
Respondent filed a complaint for demolition,before the City
Engineers Office of Baguio City (City Engineers Office), questioning the ongoing
construction of a residential structure and garage extension by petitioners on a
parcel of land.
Upon investigation, the City Engineers Office found out that
the construction had no building permit.
The City Mayor directed the CITY DEMOLITION TEAM to
SUMMARILY DEMOLISH the aforesaid structures of Atty. Leoncio Alangdeo,
Arthur Verceles and/or Danny Vergara in accordance with Section 3[,] par.
2.5(a) of the implementing rules and regulations governing summary eviction
jointly issued by the Department of Interior and Local Government (DILG) and
the Housing and Urban Development Coordinating Council pursuant to Section
44, [A]rticle XII of [Republic Act (RA) No. 7279].
RTC enjoined the citys order. CA reversed RTC.
Issue: Was the summary demolition valid?
Held: NO.
DO No. 532 states on its face that it was issued in accordance with Section 3,
paragraph 2.5 (a) of the Implementing Rules and Regulations (IRR) Governing
Summary Eviction (Summary Eviction IRR), to wit:
SECTION 3. Procedures and Guidelines
2.0 Issuance of Summary Eviction Not
xxxx2.5 In the Issuance of notice, the following shall be strictly
observed:LawlibraryofCRAlaw
a. For on-going construction, no notice shall be served.Dismantling of the
structures shall be immediately enforced by the LGU or the concerned agency to
demolish.
To note, the Summary Eviction IRR was issued pursuant to Section 28, Article VII
of RA 7279, which equally provides for the situations wherein eviction or
demolition is allowed as crafted exceptions to the moratorium on eviction under
Section 44, Article XII33 of the same lawanRoblesVirtualawlibrary
Sec. 28. Eviction and Demolition. Eviction or demolition as a practice shall be
discouraged. Eviction or demolition, however, may be allowed under the
following situations:LawlibraryofCRAlaw
(a) When persons or entities occupy danger areas such as esteros, railroad
tracks, garbage dumps, riverbanks, shorelines, waterways, and other public
places such as sidewalks, roads, parks, and playgrounds;
(b) When government infrastructure projects with available funding are about to
be implemented; or
(c) When there is a court order for eviction and demolition.
xxxx
This Department of the Interior and Local Government and the Housing and
Urban Development Coordinating Council shall jointly promulgate the necessary
rules and regulations to carry out the above provision. (Emphases supplied)
Section 2 of the Summary Eviction IRR provides that only new squatter34
families whose structures were built after the effectivity of RA 7279, otherwise
known as the Urban Development and Housing Act of 1992, and squatter
families identified by the local government unit (LGU) as professional
squatters35or members of squatting syndicates shall be subject of summary
eviction:LawlibraryofCRAlaw
SECTION 2. Coverage The following shall be subject for summary
eviction:LawlibraryofCRAlaw
1.0 New squatter families whose structures were built after the effectivity of
RA7279; and
2.0 Squatter families identified by the LGU in cooperation with the Presidential
Commission of the Urban Poor (PCUP), Philippine National Police (PNP) and
accredited Urban Poor [O]rganization (UPO) as professional squatters or
members of squatting syndicates as defined in the Act.
Under the Summary Eviction IRR, the term summary eviction has been defined
as the immediate dismantling of new illegal structures by the local government
units or government agency authorized to [demolish] in coordination with the
affected urban poor organizations without providing the structure owner(s) any
benefits of the Urban
Development and Housing Program.36 Meanwhile, the terms new squatter,
professional squatters,and squatting syndicates have been respectively
defined as follows:LawlibraryofCRAlaw
New squatter refers to individual groups who occupy land without the express
consent of the landowner after March 28, 1992. Their structures shall be
dismantled and appropriate charges shall be filed against them by the proper
authorities if they refuse to vacate the premises.37
Professional squatters refers to individuals or groups who occupy lands
without the express consent of the landowner and who have sufficient income
for legitimate housing. The term shall also apply to persons who have previously
been awarded homelots or housing units by the Government but who sold,
leased or transferred the same to settle illegally in the same place or in another
urban area, and non-bona fide occupants and intruders of lands reserved for
socialized housing. The term shall not apply to individuals or groups who simply
rent land and housing from professional squatters or squatting syndicates.
Squatting syndicates refers to groups of persons engaged in the business of
squatter housing for profit or gain.39
In this case, petitioners cannot be considered as new squatters, since, although
their structures were built after March 28, 1992, they or their predecessors-in-
interest had occupied, and were claimants of the subject property long before
the said date.Neither have they been identified by the LGU as professional
squatters nor members of a squatting syndicate. Thus, since petitioners do not
fall under the coverage of the said IRR, the issuance of DO No. 05 had no legal
basis at the onset.
More significantly, none of the three (3) situations enumerated under Section 28,
Article VII of RA 7279 as above-cited, when eviction or demolition is allowed,
have been shown to be present in the case at bar. Specifically, it was not shown
that the structures are in danger areas or public areas, such as a sidewalk, road,
park, or playground; that a government infrastructure project is about to be
implemented; and that there is a court order for demolition or eviction.
Therefore, the issuance by the City Mayor of an order for the summary
demolition of petitioners structures finds no basis in the said law permitting
summary demolition or eviction.
While respondents make much ado of petitioners lack of building permits, it
should be underscored that under Presidential Decree No. 1096, otherwise
known as the National Building Code of the Philippines (NBCP), the mere fact
that a structure is constructed without a building permit, as well as non-
compliance with work stoppage order, without more, will not call for a summary
demolition, but subjects the violator to an administrative fine under Section 212,
Chapter II of the NBCP, or a criminal case under Section 213 of the same law.
As a final note, the Court exhorts that absent compliance with the laws allowing
for summary eviction, respondents cannot resort to the procedural shortcut of
ousting petitioners by the simple expedient of a summary demolition order from
the Office of the City Mayor. They have to undergo the appropriate proceeding
as set out in the NBCP and its IRR or avail of the proper judicial process to
recover the subject property from petitioners. In pursuing said recourse, it would
also not be amiss for the parties to await the final resolution of any pending case
involving the subject property between petitioners and Ernesto, before the
appropriate government agencies, in order to avoid any further complication on
the matter.
G.R. No. 171873 July 9, 2010
MUNICIPALITY OF TIWI, represented by Hon. Mayor JAIME C. VILLANUEVA and
the SANGGUNIANG BAYAN of TIWI, Petitioners, vs. ANTONIO B. BETITO,
Respondent.
DEL CASTILLO, J.
Doctrine: Under the Local Government Code, the mayor is required to secure
prior authorization from the local legislative council before entering into a
contract in behalf of the local government.
Facts:
This Petition for Review on Certiorari seeks to reverse and set aside the CAs
October 19, 2005 Decision which affirmed the March 3, 2001 Partial Decision of
the RTC of Quezon City and the March 10, 2006 Resolution denying petitioners
motion for reconsideration.
On June 4, 1990, this Court issued a Decision in the case of National Power
Corporation v. Province of Albay finding, among others, the NPC liable for unpaid
real estate taxes from June 11, 1984 to March 10, 1987 on its properties located
in Albay. These properties consisted of geothermal plants in the Municipality of
Tiwi and substations in the Municipality of Daraga. Previously, the said properties
were sold at an auction sale conducted by Albay to satisfy NPCs tax liabilities. As
the sole bidder at the auction, Albay acquired ownership over said properties.
On July 29, 1992, the NPC, through its then President Pablo Malixi and Albay,
represented by then Governor Romeo R. Salalima, entered into a MOA where
the former agreed to settle its tax liabilities estimated at P214,845,104.76. The
MOA provided, among others, that: (1) the actual amount collectible from NPC
will have to be recomputed/revalidated; (2) NPC shall make an initial payment of
P17,763,000.00 upon signing of the agreement; (3) the balance of the
recomputed/ revalidated amount (less the aforesaid initial payment), shall be
paid in 24 equal monthly installments to commence in September 1992; and (4)
ownership over the auctioned properties shall revert to NPC upon satisfaction of
the tax liabilities.
On August 3, 1992, then Mayor Naomi C. Corral of Tiwi formally requested
Governor Salalima to remit the rightful tax shares of Tiwi and its barangays
where the NPCs properties were located relative to the payments already made
by NPC to Albay. On even date, the Sangguniang Bayan of Tiwi passed Resolution
No. 12-92 requesting the Sangguniang Panlalawigan of Albay to hold a joint
session for the purpose of discussing the distribution of the NPC payments.
On August 10, 1992, Governor Salalima replied that the request cannot be
granted as the initial payment amounting to P17,763,000.00 was only an
earnest money and that the total amount to be collected from the NPC was
still being validated.
Due to the brewing misunderstanding between Tiwi and the concerned
barangays on the one hand, and Albay on the other, and so as not to be caught in
the middle of the controversy, NPC requested a clarification from the Office of
the President as to the scope and extent of the shares of the local government
units in the real estate tax collections.
On August 30, 1992, the Sangguniang Bayan of Tiwi passed Resolution No. 15-92
authorizing Mayor Corral to hire a lawyer to represent Tiwi and its barangays in
the recovery of their rightful share in the aforesaid realty taxes. Thereafter,
Mayor Corral sought the services of respondent Atty. Betito (respondent) and
Atty. Lawenko. As a result, on January 25, 1993, Mayor Corral, representing Tiwi,
and respondent and Atty. Lawenko entered into a Contract of Legal Services
(subject contract). The subject contract provided, among others, that respondent
and Atty. Lawenko would receive a 10% contingent fee on whatever amount of
realty taxes that would be recovered by Tiwi through their efforts.
On December 3, 1992, the Office of the President, through then Chief
Presidential Legal Counsel Antonio T. Carpio, opined that the MOA entered into
by NPC and Albay merely recognized and established NPCs realty taxes. He
further clarified that the sharing scheme and those entitled to the payments to
be made by NPC under the MOA should be that provided under the law, and
since Tiwi is entitled to share in said realty taxes, NPC may remit such share
directly to Tiwi.
Because of this opinion, NPC President Malixi, through a letter dated December
9, 1992, informed Mayor Corral and Governor Salalima that starting with the
January 1993 installment, NPC will directly pay Tiwi its share in the payments
under the MOA. As of December 9, 1992, payments made by NPC to Albay
reached P40,724,471.74.
On December 19, 1992, in an apparent reaction to NPCs Decision to directly
remit to Tiwi its share in the payments made and still to be made pursuant to the
MOA, the Sangguniang Panlalawigan of Albay passed Ordinance No. 09- 92,
which, among others: (1) authorized the Provincial Treasurer upon the direction
of the Provincial Governor to sell the real properties (acquired by Albay at the
auction sale) at a public auction, and to cause the immediate transfer thereof to
the winning bidder; and (2) declared as forfeited in favor of Albay, all the
payments already made by NPC under the MOA.
In this case, the Court held, among others, that the elective officials of Albay are
administratively liable for abuse of authority due to their unjustified refusal to
remit the rightful share of Tiwi in the subject realty taxes.
The present controversy arose when respondent sought to enforce the Contract
of Legal Services after rendering the aforementioned legal services which
allegedly benefited Tiwi. In his Complaint for sum of money against Tiwi,
represented by then Mayor Patricia Gutierrez, Vice Mayor Vicente Tomas Vera
III, Sangguniang Bayan Members Rosana Parcia, Nerissa Cotara, Raul Corral,
Orlando Lew Velasco, Liberato Ulysses Pacis, Lorenzo Carlet, Bernardo Costo,
Jaime Villanueva, Benneth Templado and Municipal Treasurer Emma Cordovales
(collectively petitioners), respondent claims that he handled numerous cases
which resulted to the recovery of Tiwis share in the realty taxes. As a result of
these efforts, Tiwi was able to collect the amount of P110,985,181.83 and
another P35,594,480.00 from the NPC as well as other amounts which will be
proven during the trial. Under the Contract of Legal Services, respondent is
entitled to 10% of whatever amount that would be collected from the NPC.
However, despite repeated demands for the Sangguniang Bayan of Tiwi to pass
an appropriate ordinance for the payment of his attorneys fees, the former
refused to pass the ordinance and to pay what is justly owed him. Respondent
prayed that Tiwi be ordered to pay P11,000,000.00 in attorneys fees and 10% of
the other amounts to be determined during trial plus interest and damages; that
the Sangguniang Bayan be ordered to pass the necessary appropriation
ordinance; that the municipal treasurer surrender all the receipts of payments
made by the NPC to Tiwi from January 1993 to December 1996 for the
examination of the court; and that Tiwi pay P500,000.00 as attorneys fees.
In their Answer, petitioners admitted that the Sangguniang Bayan of Tiwi passed
Resolution No. 15-92 but denied that said resolution authorized then Mayor
Corral to enter into the subject contract. In particular, Mayor Corral exceeded
her authority when she bound Tiwi to a gargantuan amount equivalent to 10% of
the amount of realty taxes recovered from NPC. Further, the legal services under
the subject contract should have been limited to the execution of the decision in
National Power Corporation v. Province of Albay as per Resolution No. 15-92. For
these reasons, the subject contract is void, unenforceable, unconscionable and
unreasonable. Petitioners further claim that they are not aware of the cases
which respondent allegedly handled on behalf of Tiwi since these cases involved
officials of the previous administration; that some of these cases were actually
handled by the Office of the Solicitor General; and that these were personal
cases of said officials. In addition, the Contract of Legal Services was not ratified
by the Sangguniang Bayan of Tiwi in order to become effective. Petitioners also
raise the defense that the realty taxes were recovered by virtue of the opinion
rendered by then Chief Presidential Legal Counsel Antonio T. Carpio and not
through the efforts of respondent.
As to the amount of P110,985,181.83 in realty taxes, the same was received by
Albay and not Tiwi while the amount of P35,594,480.00 is part of the share of
Tiwi in the utilization of the national wealth. Furthermore, in a Commission on
Audit (COA) Memorandum dated January 15, 1996, the COA ruled that the
authority to pass upon the reasonableness of the attorneys fees claimed by
respondent lies with the Sangguniang Bayan of Tiwi. Pursuant to this
memorandum, the Sangguniang Bayan of Tiwi passed Resolution No. 27-98
which declared the subject contract invalid. Petitioners also allege that the
contract is grossly disadvantageous to Tiwi and that respondent is guilty of laches
because he lodged the present complaint long after the death of Mayor Corral;
and that the amount collected from NPC has already been spent by Tiwi.
RTC - rendered a partial judgment on the pleadings in favor of respondent
ordering the defendant Municipality of Tiwi, Albay to pay the plaintiff the sum of
P14,657,966.18 plus interest at the legal rate from the filing of the complaint
until payment is fully delivered to the plaintiff; and, for this purpose, the
defendant Sangguniang Bayan of Tiwi, represented by the co-defendants
officials, shall adopt and approve the necessary appropriation ordinance.
The trial court held that petitioners answer to the complaint failed to tender an
issue, thus, partial judgment on the pleadings is proper. It noted that petitioners
did not specifically deny under oath the actionable documents in this case,
particularly, the Contract of Legal Services and Resolution No. 15- 92.
Consequently, the genuineness and due execution of these documents are
deemed admitted pursuant to Section 8, Rule 8 of the Rules of Court. Thus, the
authority of Mayor Corral to enter into the subject contract was deemed
established.
The authority given to Mayor Corral to hire a lawyer was not only for the
purpose of executing the decision in National Power Corporation v. Province of
Albay but extended to representing the interest of Tiwi in other cases as well.
Further, the said resolution did not impose as a condition precedent the
ratification of the subject contract by the Sangguniang Bayan in order to render it
effective. Lastly, the trial court ruled that the answer admitted, through a
negative pregnant, that Tiwi was paid the amounts of P110,985,181.83 and
P35,594,480.00, hence, respondent is entitled to 10% thereof as attorneys fees
under the terms of the subject contract.
CA - affirmed the Decision of the trial court.
The appellate court agreed with the trial court that the genuineness and due
execution of the Contract of Legal Services and Resolution No. 15-92 was
impliedly admitted by petitioners because of their failure to make a verified
specific denial thereof. Further, the answer filed by the petitioners admitted
the material averments of the complaint concerning Tiwis liability under the
subject contract and its receipt from the NPC of a total of P146,579,661.84 as
realty taxes. Petitioners cannot claim that the subject contract required
ratification because this is not a requisite for the enforceability of a contract
against a local government unit under the express terms of the contract and the
provisions of the Local Government Code (LGC). Also, petitioners are estopped
from questioning the enforceability of the contract after having collected and
enjoyed the benefits derived therefrom.
The appellate court found nothing objectionable in the stipulated contingent fee
of 10% as this was voluntarily agreed upon by the parties and allowed under
existing jurisprudence.
Petitioners Arguments
Petitioners claim that their answer raised factual issues and defenses which
merited a full-blown trial. In their answer, they asserted that the 10% contingent
fee is unreasonable, unconscionable and unfounded considering that respondent
did not render any legal service which accrued to the benefit of Tiwi. The
Contract of Legal Services specifically provided that for the attorneys fees to
accrue, respondents legal services should result to the recovery of Tiwis claims
against Albay and NPC. It is, thus, incumbent upon respondent to prove in a trial
on the merits that his legal efforts resulted to the collection of the realty taxes in
favor of Tiwi. Petitioners belittle as mere messengerial service the legal services
rendered by respondent on the ground that what remained to be done was the
execution of the judgment of this Court in National Power Corporation v.
Province of Albay and the opinion of then Chief Presidential Legal Counsel
Antonio T. Carpio.
In their answer, petitioners also questioned the authority of Mayor Corral to
enter into the subject contract providing for a 10% contingent fee because the
provisions of Resolution No. 15-92 do not grant her such power. In addition,
under the said contract, Tiwi was made liable for legal services outside of those
related to the satisfaction of the judgment in National Power Corporation v.
Province of Albay. These stipulations are void and unenforceable. Hence, any
claim of respondent must be based on quantum meruit which should be
threshed out during a full-blown trial.
Finally, petitioners argue that respondent cannot capitalize on the admission of
the genuineness and due execution of the subject contract because this merely
means that the signature of the party is authentic and the execution of the
contract complied with the formal solemnities. This does not extend to the
documents substantive validity and efficacy.
Respondents Arguments
Respondent counters that the Contract of Legal Services was not limited to the
NPC case but to other services done pursuant to said contract. Thus, the
attorneys fees should cover these services as well. He also stresses that despite
this Courts ruling in National Power Corporation v. Province of Albay and the
opinion of then Chief Presidential Legal Counsel Antonio T. Carpio, Governor
Salalima and the Sangguniang Panlalawigan of Albay stubbornly resisted and
disobeyed the same. Consequently, respondent prosecuted and defended on
behalf of Tiwi several administrative and court cases involving the elective
officials of Albay to compel the latter to comply with the aforesaid issuances. He
also filed a civil case to prevent the NPC from remitting Tiwis share in the realty
taxes directly to Albay.
Respondent adds that he also acted as counsel for Mayor Corral after Governor
Salalima and his allies sought to remove Mayor Corral in retaliation to the
administrative cases that she (Mayor Corral) previously filed against Governor
Salalima for the latters failure to remit Tiwis share in the realty taxes. These
administrative cases reached this Court in Salalima v. Guingona, Jr. where
respondent appears as the counsel of record of Mayor Corral and the other local
officials of Tiwi. The filing and handling of these cases belies petitioners claim
that what respondent did for Tiwi was a mere messengerial service.
Respondent also argues that the Contract of Legal Services is valid and
enforceable due to petitioners failure to specifically deny the same under oath
in their Answer. Moreover, the law does not require that the subject contract be
ratified by the Sangguniang Bayan in order to become enforceable. Instead, the
law merely requires that the Sangguniang Bayan authorize the mayor to enter
into contracts as was done here through Resolution No. 15-92.
Last, the 10% attorneys fees in the subject contract is reasonable, more so
because the fee is contingent in nature. In a long line of cases, it has been ruled
that a 10% attorneys fees of the amount recoverable is reasonable.
Issue:
Whether or not Mayor Corral authorized to enter into the contract of Legal
Services.
Ruling:
Yes. Pursuant to Section 444(b)(1)(vi) of the LGC, the municipal mayor is required
to secure the prior authorization of the Sangguniang Bayan before entering into
a contract on behalf of the municipality. In the instant case, the Sangguniang
Bayan of Tiwi unanimously passed Resolution No. 15-92 authorizing Mayor Corral
to hire a lawyer of her choice to represent the interest of Tiwi in the execution of
this Courts
Decision in National Power Corporation v. Province of Albay. The above- quoted
authority necessarily carried with it the power to negotiate, execute and sign on
behalf of Tiwi the Contract of Legal Services. On its face, and there is no
allegation to the contrary, this prior authorization appears to have been given by
the council in good faith to the end of expeditiously safeguarding the rights of
Tiwi. Under the particular circumstances of this case, there is, thus, nothing
objectionable to this manner of prior authorization. Prescinding therefrom,
petitioners next contention that the subject contract should first be ratified in
order to become enforceable as against Tiwi must necessarily fail. As correctly
held by the CA, the law speaks of prior authorization and not ratification with
respect to the power of the local chief executive to enter into a contract on
behalf of the local government unit.
The petition is meritorious.
It was erroneous for the trial court to rule that the genuineness and due
execution of the Contract of Legal Services was impliedly admitted by petitioners
for failure to make a sworn specific denial thereof as required by Section 8,[17]
Rule 8 of the Rules of Court. This rule is not applicable when the adverse party
does not appear to be a party to the instrument. In the instant case, the subject
contract was executed between respondent and Atty. Lawenko, on the one
hand, and Tiwi, represented by Mayor Corral, on the other. None of the
petitioners, who are the incumbent elective and appointive officials of Tiwi as of
the filing of the Complaint, were parties to said contract. We shall, thus, proceed
from the premise that the genuineness and due execution of the Contract of
Legal Services has already been established.
Mayor Corral was authorized to enter into the Contract of Legal Services
The municipal mayor is required to secure the prior authorization of the
Sangguniang Bayan before entering into a contract on behalf of the municipality.
In the instant case, the Sangguniang Bayan of Tiwi unanimously passed
Resolution No. 15-92 authorizing Mayor Corral to hire a lawyer of her choice to
represent the interest of Tiwi in the execution of this Courts Decision in National
Power Corporation v. Province of Albay.
The above-quoted authority necessarily carried with it the power to negotiate,
execute and sign on behalf of Tiwi the Contract of Legal Services. That the
authorization did not set the terms and conditions of the compensation signifies
that the council empowered Mayor Corral to reach a mutually agreeable
arrangement with the lawyer of her choice subject, of course, to the general
limitation that the contracts stipulations should not be contrary to law, morals,
good customs, public order or public policy, and, considering that this is a
contract of legal services, to the added restriction that the agreed attorneys fees
must not be unreasonable and unconscionable. On its face,
and there is no allegation to the contrary, this prior authorization appears to
have been given by the council in good faith to the end of expeditiously
safeguarding the rights of Tiwi. Under the particular circumstances of this case,
there is, thus, nothing objectionable to this manner of prior authorization.
The Court is thus satisfied that it was in fact the Council's intention, which it
expressed in clear language, to confer on the Mayor ample discretion to execute
a "negotiated contract" with any interested party, without regard to any official
acts of the Council prior to Resolution No. 21.
Prescinding therefrom, petitioners next contention that the subject contract
should first be ratified in order to become enforceable as against Tiwi must
necessarily fail. As correctly held by the CA, the law speaks of prior authorization
and not ratification with respect to the power of the local chief executive to
enter into a contract on behalf of the local government unit. This authority, as
discussed above, was granted by the Sangguniang Bayan to Mayor Corral as per
Resolution No. 15-92.
The scope of the legal services contemplated in Resolution No. 15-92 was limited
to the execution of the decision in National Power Corporation v. Province of
Albay.
The wording of Resolution No. 15-92 is clear. Its title and whereas clauses,
previously quoted above, indicate that the hiring of a lawyer was for the sole
purpose of executing the judgment in National Power Corporation v. Province of
Albay, that is, to allow Tiwi to recover its rightful share in the unpaid realty taxes
of NPC. In his Complaint, respondent admits that he was furnished and read a
copy of the said resolution before he entered into the subject contract. He
cannot now feign ignorance of the limitations of the authority of Mayor Corral to
enter into the subject contract and the purpose for which his services were
employed.
We cannot accept respondents strained reading of Resolution No. 15-92 in that
the phrase to represent the interest of the Municipality of Tiwi and its
Barangays is taken to mean such other matters not related to the execution of
the decision in National Power Corporation v. Province of Albay. It could not
have been the intention of the Sangguniang Bayan of Tiwi to authorize the hiring
of a lawyer to perform general legal services because this duty devolves upon the
municipal legal officer. The council sought the services of a lawyer because the
dispute was between the municipality (Tiwi) and province (Albay) so much so
that it f ell under the exception provided in Section 481(b)(3)(i)[27] of the LGC
which permits a local government unit to employ the services of a special legal
officer. Thus, the provisions of paragraph 4 of the Contract of Legal Services to
the contrary notwithstanding, the basis of respondents compensation should be
limited to the services he rendered
which reasonably contributed to the recovery of Tiwis share in the subject realty
taxes.
In sum, the allegations and admissions in the pleadings are sufficient to rule that
Mayor Corral was duly authorized to enter into the Contract of Legal Services.
However, the legal services contemplated therein, which are properly
compensable, are limited to such services which reasonably contributed to the
recovery of Tiwis rightful share in the unpaid realty taxes of NPC. Paragraph 4 of
the Contract of Legal Services, insofar as it covers legal services outside of this
purpose, is therefore unenforceable.
The issue of the reasonable legal fees due to respondent still needs to be
resolved in a trial on the merits.
The subject contract stipulated that respondents 10% fee shall be based on
whatever amount or payment collected from the National Power Corporation
(NPC) as a result of the legal service rendered by [respondent]. As will be
discussed hereunder, the extent and significance of respondents legal services
that reasonably contributed to the recovery of Tiwis share as well as the amount
of realty taxes recovered by Tiwi arising from these alleged services requires a
full-blown trial.
The main source of respondents claim for attorneys fees lies with respect to
several administrative and court cases that he allegedly prosecuted and
defended on behalf of Tiwi against the elective officials of Albay in order to
compel the latter to remit the rightful share of Tiwi in the unpaid realty taxes.
The Municipalities of Tiwi and Daraga and the National Government eventually
received their respective shares, which were paid directly to them by the NPC
pursuant to the directive of the Office of the President issued after the NPC
requested clarification regarding the right of the municipalities concerned to
share in the realty tax delinquencies. But this fact does not detract from the
administrative liability of the petitioners. Notably, when the NPC advised the
Province of Albay on 9 December 1992 that starting with the January 1993
installment it would pay directly to the Municipality of Tiwi by applying the
sharing scheme provided by law, the petitioners passed on 19 December 1992 an
ordinance declaring as forfeited in favor of the Province all the payments made
by the NPC under the MOA and authorizing the sale of the NPC properties at
public auction. This actuation of the petitioners reveals all the more their
intention to deprive the municipalities concerned of their shares in the NPC
payments.
To recap, the following are deemed resolved based on the allegations and
admissions in the pleadings: (1) then Mayor Corral was authorized to enter into
the Contract of Legal Services, (2) the legal services contemplated in Resolution
No. 15-92 was limited to such services which reasonably
contributed to the recovery of Tiwis rightful share in the unpaid realty taxes of
NPC, and (3) paragraph 4 of the Contract of Legal Services, insofar as it covers
services outside of this purpose, is unenforceable. Upon the other hand, the
issue of the reasonable legal fees due to respondent still needs to be resolved in
a trial on the merits with the following integral sub-issues: (1) the
reasonableness of the 10% contingent fee given that the recovery of Tiwis share
was not solely attributable to the legal services rendered by respondent, (2) the
nature, extent of legal work, and significance of the cases allegedly handled by
respondent which reasonably contributed, directly or indirectly, to the recovery
of Tiwis share, and (3) the relative benefit derived by Tiwi from the services
rendered by respondent. In addition, we should note here that the amount of
reasonable attorneys fees finally determined by the trial court should be
without legal interest in line with well-settled jurisprudence.
As earlier noted, this case was filed with the trial court in 1999, however, we are
constrained to remand this case for further proceedings because the subject
partial judgment on the pleadings was clearly not proper under the premises.
To end, justice and fairness require that the issue of the reasonable attorneys
fees due to respondent be ventilated in a trial on the merits amidst the
contentious assertions by both parties because in the end, neither party must be
allowed to unjustly enrich himself at the expense of the other.
WHEREFORE, the petition is GRANTED. The October 19, 2005 Decision and March
10, 2006 Resolution of the Court of Appeals in CA G.R. CV No. 79057 are
REVERSED and SET ASIDE. This case is REMANDED to the trial court for further
proceedings to determine the reasonable amount of attorneys fees which
respondent is entitled to in accordance with the guidelines set in this Decision.
ARNOLD VICENCIO v. HON. HEYNALOO A. VILLAR, et al. G.R. No. 182069, 3 July
2012, EN BANC (Sereno, J.)
The mandate of the Commission on Audit is to observe the policy that
government funds and property should be fully protected and conserved; and
that irregular, unnecessary, excessive or extravagant expenditures or uses of such
funds and property should be prevented.
The City Council or the Sangguniang Panglungsod ng Malabon (SPM), presided by
Hon. Benjamin Galauran, then acting Vice-Mayor, adopted and approved City
Ordinance No. 15-2003, entitled An Ordinance Granting Authority to the City
Vice-Mayor, Hon. Jay Jay Yambao, to Negotiate and Enter into Contract for
Consultancy Services for Consultants in the Sanggunian Secretariat Tasked to
Function in their Respective Areas of Concern.
Arnold Vicencio was elected City Vice-Mayor of Malabon. By virtue of this of ce,
he also became the Presiding Of cer of the SPM and, at the same time, the head
of the Sanggunian Secretariat. Vicencio, representing the City Government of
Malabon City, entered into Contracts for Consultancy Services. After the signing
of their respective contracts, the three consultants rendered consultancy
services to the SPM. Thereafter, the three consultants were correspondingly paid
for their services pursuant to the contracts therefor. However, an Audit
Observation Memorandum (AOM) was issued disallowing the amount for being
an improper disbursement. Aggrieved by the disallowance, Vicencio appealed it
to the Adjudication and Settlement Board (ASB) of the Commission on Audit
(COA) which subsequently denied it.
ISSUE:
Whether or not the Commission on Audit committed serious errors and grave
abuse of discretion amounting to lack of or excess of jurisdiction when it af rmed
ASBs decision relative to the disallowance of disbursements concerning the
services rendered by hired consultants for the Sangguniang Panlungsod ng
Malabon
HELD:
Under Section 456 of R.A. 7160, or the Local Government Code, there is no
inherent authority on the part of the city vice-mayor to enter into contracts on
behalf of the local government unit, unlike that provided for the city mayor.
Thus, the authority of the vice-mayor to enter into contracts on behalf of the city
was strictly circumscribed by the ordinance granting it. Ordinance No. 15-2003
speci cally authorized Vice-Mayor Yambao to enter into contracts for consultancy
services. As this is not a power or duty given under the law to the Of ce of the
Vice-Mayor, Ordinance No. 15-2003 cannot be construed as a continuing
authority for any person who enters the Of ce of the Vice-Mayor to enter into
subsequent, albeit similar, contracts.
The COAs assailed Decision was made in faithful compliance with its mandate
and in judicious exercise of its general audit power as conferred on it by the
Constitution. The COA was merely ful lling its mandate in observing the policy
that government funds and property should be fully protected and conserved;
and that irregular, unnecessary, excessive or extravagant expenditures or uses of
such funds and property should be prevented. Thus, no grave abuse of discretion
may be imputed to the COA.
WILFREDO MOSQUEDA v. PILIPINO BANANA GROWERS & EXPORTERS
ASSOCIATION, GR No. 189185, 2016-08-16
Facts:
After several committee hearings and consultations with various stakeholders,
the Sangguniang Panlungsod of Davao City enacted Ordinance No. 0309, Series
of 2007, to impose a ban against aerial spraying as an agricultural practice by all
agricultural entities within Davao City
The Pilipino Banana Growers and Exporters Association, Inc. (PBGEA) and two of
its members, namely: Davao Fruits Corporation and Lapanday Agricultural and
Development Corporation (PBGEA, et al.), filed their petition in the RTC to
challenge the constitutionality of the ordinance
They alleged that the ordinance exemplified the unreasonable exercise of police
power; violated the equal protection clause; amounted to the confiscation of
property without due process of law; and lacked publication pursuant] to Section
511[6] of Republic Act No. 7160
On September 22, 2007, after trial, the RTC rendered judgment declaring
Ordinance No. 0309-07 valid and constitutional
The RTC opined that the City of Davao had validly exercised police power[13]
under the General Welfare Clause of the Local Government Code;[14] that the
ordinance, being based on a valid classification, was consistent with the Equal
Protection Clause; that aerial spraying was distinct from other methods of
pesticides application because it exposed the residents to a higher degree of
health risk caused by aerial drift;[15] and that the ordinance enjoyed the
presumption of constitutionality, and could be invalidated only upon a clear
showing that it had violated the Constitution.
On January 9, 2009, the CA promulgated its assailed decision reversing the
judgment of the RTC.[22] It declared Section 5 of Ordinance No. 0309-07 as void
and unconstitutional for being unreasonable and oppressive;
The CA did not see any established relation between the purpose of protecting
the public and the environment against the harmful effects of aerial spraying, on
one hand, and the imposition of the ban against aerial spraying of all forms of
substances, on the other.
Issues:
whether or not Ordinance No. 0309-07 is unconstitutional on due process and
equal protection grounds for being unreasonable and oppressive, and an invalid
exercise of police power: (a) in imposing a ban on aerial spraying as an
agricultural practice in Davao City under Section 5; (b) in decreeing a 3-month
transition-period to shift to other modes of pesticide application under Section 5;
and (c) in requiring the maintenance of the 30-meter buffer zone under Section 6
thereof in all agricultural lands in Davao City.
Ruling:
The Sangguniang Bayan of Davao Cityenacted Ordinance No. 0309-07under its
corporate powers... the right to a balanced and healthful ecology under Section
16 is an issue of transcendental importance with intergenerational implications.
It is under this milieu that the questioned ordinance should be appreciated.
Advancing the interests of the residents who are vulnerable to the alleged health
risks due to their exposure to pesticide drift justifies the motivation behind the
enactment of the ordinance. The City of Davao has the authority to enact pieces
of legislation that will promote the general welfare, specifically the health of its
constituents. Such authority should not be construed, however, as a valid license
for the City of Davao to enact any ordinance it deems fit to discharge its
mandate. A thin but well-defined line separates authority to enact legislations
from the method of accomplishing the same.
Ordinance No. 0309-07 violates the Due Process Clause
A valid ordinance must not only be enacted within the corporate powers of the
local government and passed according to the procedure prescribed by law.[108]
In order to declare it as a valid piece of local legislation, it must also comply with
the following substantive requirements, namely: (1) it must not contravene the
Constitution or any statute; (2) it must be fair, not oppressive; (3) it must not be
partial or discriminatory; (4) it must not prohibit but may regulate trade; (5) it
must be general and consistent with public policy; and (6) it must not be
unreasonable.[109]In the State's exercise of police power, the property rights of
individuals may be subjected to restraints and burdens in order to fulfill the
objectives of the Government.[110] A local government unit is considered to
have properly exercised its police powers only if it satisfies the following
requisites, to wit: (1) the interests of the public generally, as distinguished from
those of a particular class, require the interference of the State; and (2) the
means employed are reasonably necessary for the attainment of the object
sought to be accomplished and not unduly oppressive.[111] The first
requirement refers to the Equal Protection Clause of the Constitution; the
second, to the Due Process Clause of the Constitution.[112]Substantive due
process requires that a valid ordinance must have a sufficient justification for the
Government's action.[113] This means that in exercising police power the local
government unit must not arbitrarily, whimsically or despotically enact the
ordinance regardless of its salutary purpose. So long as the ordinance realistically
serves a legitimate public purpose, and it employs means that are reasonably
necessary to achieve that purpose without unduly oppressing the individuals
regulated, the ordinance must survive a due process challenge.
The required civil works for the conversion to truck-mounted boom spraying
alone will consume considerable time and financial resources given the
topography and geographical features of the plantations.[117] As such, the
conversion could not be completed within the short timeframe of three months.
Requiring the respondents and other affected individuals to comply with the
consequences of the ban within the three-month period under pain of penalty
like fine, imprisonment and even cancellation of business permits would
definitely be oppressive as to constitute abuse of police power.
The respondents posit that the requirement of maintaining a buffer zone under
Section 6 of the ordinance violates due process for being confiscatory; and that
the imposition unduly deprives all agricultural landowners within Davao City of
the beneficial use of their property that amounts to taking without just
compensation.
The position of the respondents is untenable.
In City of Manila v. Laguio, Jr.,[118] we have thoroughly explained that taking
only becomes confiscatory if it substantially divests the owner of the beneficial
use of its property
Ordinance No. 0309-07 violates the Equal Protection Clause
The constitutional right to equal protection requires that all persons or things
similarly situated should be treated alike, both as to rights conferred and
responsibilities imposed. It requires public bodies and institutions to treat
similarly situated individuals in a similar manner. The guaranty equal protection
secures every person within the State's jurisdiction against intentional and
arbitrary discrimination, whether occasioned by the express terms of a statue or
by its improper execution through the State's duly constituted authorities. The
concept of equal justice under the law demands that the State governs
impartially, and not to draw distinctions between individuals solely on
differences that are irrelevant to the legitimate governmental objective.
Equal treatment neither requires universal application of laws to all persons or
things without distinction,[120] nor intends to prohibit legislation by limiting the
object to which it is directed or by the territory in which it is to operate.[121] The
guaranty of equal protection envisions equality among equals determined
according to a valid classification.[122] If the groupings are characterized by
substantial distinctions that make real differences, one class may be treated and
regulated differently from another.[123] In other word, a valid classification must
be: (1) based on substantial distinctions; (2) germane to the purposes of the law;
(3) not limited to existing conditions only; and (4) equally applicable to all
members of the class.
In our view, the petitioners correctly argue that the rational basis approach
appropriately applies herein. Under the rational basis test, we shall: (1) discern
the reasonable relationship between the means and the purpose of the
ordinance; and (2) examine whether the means or the prohibition against aerial
spraying is based on a substantial or reasonable distinction. A reasonable
classification includes all persons or things similarly situated with respect to the
purpose of the law.
Davao City justifies the prohibition against aerial spraying by insisting that the
occurrence of drift causes inconvenience and harm to the residents and
degrades the environment. Given this justification, does the ordinance satisfy the
requirement that the classification must rest on substantial distinction?We
answer in the negative.
The occurrence of pesticide drift is not limited to aerial spraying but results from
the conduct of any mode of pesticide application. Even manual spraying or truck-
mounted boom spraying produces drift that may bring about the same
inconvenience, discomfort and alleged health risks to the community and to the
environment.[141] A ban against aerial spraying does not weed out the harm
that the ordinance seeks to achieve.[142] In the process, the ordinance suffers
from being "underinclusive" because the classification does not include all
individuals tainted with the same mischief that the law seeks to eliminate.[143] A
classification that is drastically underinclusive with respect to the purpose or end
appears as an irrational means to the legislative end because it poorly serves the
intended purpose of the law.
WHEREFORE, the Court DENIES the consolidated petitions for review on
certiorari for their lack of merit; AFFIRMS the decision promulgated on January 9,
2009 in C.A.-G.R. CV No. 01389-MIN. declaring Ordinance No. 0309-07
UNCONSTITUTIONAL;
Principles:
Constitutional Law... the right to a balanced and healthful ecology under Section
16 is an issue of transcendental importance with intergenerational implications.
Political Law... taking only becomes confiscatory if it substantially divests the
owner of the beneficial use of its property
OFFICE OF THE OMBUDSMAN vs. CA and BARRIGA
G.R. No. 172224. January 26, 2011
Facts:
Sometime in 2000, Sonia Q. Pua, a Municipal Councilor of Carmen, Cebu, filed a
complaint with the Office of the Deputy Ombudsman for Visayas, alleging
thatMayorVirgilio E. Villamor, Municipal TreasurerBontia, and respondent
Municipal AccountantBarriga, entered into several irregular and anomalous
transactions in their official capacity.
In a Decision dated 28 August 2002, the Office of the Deputy Ombudsman for
Visayas found Barriga guilty of misconduct and imposed on her the penalty of six
months suspension from the service.
Upon review, petitioner Office of the Ombudsman modified the decision and
found Barriga guilty of conduct prejudicial to the best interest of the service and
imposed on her the penalty of suspension for one year.Barriga filed a motion for
reconsideration which petitioner denied.
Later, in an Order dated 13 November 2002, petitioner directed the municipal
mayor of Carmen, Cebu to implement the decision dated 28 August 2002.
Barriga filed a petition for review with the CA which denied the petition for lack
of merit.Barriga then elevated the case to the Supreme Court which also denied
the petition. MR and second MR was likewise denied.
After a month, petitioner, through the Office of the Deputy Ombudsman for
Visayas, again directed the municipal mayor of Carmen, Cebu to implement the
Order dated 13 November 2002.
Barriga made a request that the implementation of the penalty of one-year
suspension be held in abeyance pending the issuance of the entry of judgment
by this Supreme Court. The request was denied by petitioner.
However, Barriga, in order to delay the implementation of her suspension from
service elevated the case once again to the CA. The CA in rendering a favorable
decision in favor of Barriga nullified the Ombudsmans orders from implementing
its decision. CA said that the immediate implementation of petitioners Order
dated 13 November 2002 was premature pending resolution of the appeal. Since
Republic Act No. 6770 or the Ombudsman Act of 1989 gives parties the right to
appeal then such right also generally carries with it the right to stay these
decisions pending appeal. Thus, the CA concluded that the acts of petitioner
cannot be permitted nor tolerated.
Pursuant to the CAs Resolution dated 16 June 2005, the municipal mayor of
Carmen, Cebu reinstated Barriga as municipal accountant.
Petitioner filed a Motion for Reconsideration and raised the issue of finality of
the Ombudsmans Decision dated 28 August 2002. The motion was denied by the
CA. Hence, this petition.
Issue:
Whether the Court of Appeals gravely abused its discretion in nullifying the
orders of the Office of the Ombudsman to the municipal mayor of Carmen, Cebu
for the immediate implementation of the penalty of suspension from service of
respondent Barriga even though the case was pending on appeal.
Held:
Yes. Section 7, Rule III of Administrative Order No. 7, as amended by
Administrative Order No. 17, states:
Section 7. Finality and execution of decision.- Where the respondent is absolved
of the charge, and in case of conviction where the penalty imposed is public
censure or reprimand, suspension of not more than one month, or a fine
equivalent to one month salary, the decision shall be final, executory and
unappealable. In all other cases, the decision may be appealed to the Court of
Appeals on a verified petition for review under the requirements and conditions
set forth in Rule 43 of the Rules of Court, within fifteen (15) days from receipt of
the written Notice of the Decision or Order denying the Motion for
Reconsideration.
the Ombudsman v. Court of Appeals and Macabulos, we held that decisions of
the Ombudsman are immediately executory even pending appeal in the CA.
Thus, the Ombudsmans order imposing on Barriga the penalty of suspension
from office for one year without pay is immediately executory even pending
appeal in the Court of Appeals.

An appeal shall not stop the decision from being executory. In case the penalty
is suspension or removal and the respondent wins such appeal, he shall be Petition granted. The Resolutions dated 20 February 2006 and 16 June 2005 of
considered as having been under preventive suspension and shall be paid the the Court of Appeals in were set aside. The modified Order dated 28 August 2002
salary and such other emoluments that he did not receive by reason of the of the Office of the Ombudsman suspending Dinah C. Barriga from government
suspension or removal. service for one year without pay was reinstated. Since Dinah C. Barriga already
partially served her suspension from government service, the Municipal Mayor
A decision of the Office of the Ombudsman in administrative cases shall be of Carmen, Cebu wasdirected to implement with dispatch the remaining balance
executed as a matter of course. The Office of the Ombudsman shall ensure that of number of days of suspension from office not yet served by Barriga.
the decision shall be strictly enforced and properly implemented. The refusal or
failure by any officer without just cause to comply with an order of the Office of
the Ombudsman to remove, suspend, demote, fine, or censure shall be a ground
for disciplinary action against said officer.

It is clear from the provision that when a public official has been found guilty of
an administrative charge by the Office of the Ombudsman and the penalty
imposed is suspension for more than a month, an appeal may be made to the
CA. However, such appeal shall not stop the decision from being executory and
the implementation of the decision follows as a matter of course.

The CA is incorrect. The provision in the Rules of Procedure of the Office of the
Ombudsman is clear that an appeal by a public official from a decision meted out
by the Ombudsman shall not stop the decision from being executory. In Office of