REYES V COMELEC

FACTS: Petitioner Renato U. Reyes was the incumbent mayor of the municipality of Bongabong, Oriental Mindoro, having been elected to that office on May 11, 1992. On October 26, 1994, an administrative complaint was filed against him with the Sangguniang Panlalawigan by Dr. Ernesto Manalo. It was alleged, among other things, that petitioner exacted and collected P50,000,00 from each market stall holder in the Bongabong Public Market; that certain checks issued to him by the National Reconciliation and Development Program of the Department of Interior and Local Government were never received by the Municipal Treasurer nor reflected in the books of accounts of the same officer; and that he took twenty-seven (27) heads of cattle from beneficiaries of a cattle dispersal program after the latter had reared and fattened the cattle for seven months.

In its decision, dated February 6, 1995, the Sangguniang Panlalawigan found petitioner guilty of the charges and ordered his removal from office.

As a result, the decision of the Sangguniang Panlalawigan could not be served upon Reyes. But on March 3, 1995, following the expiration of the temporary restraining order and without any injunction being issued by the Regional Trial Court, an attempt was made to serve the decision upon petitioner's counsel in Manila. However, the latter refused to accept the decision. Subsequent attempts to serve the decision upon petitioner himself also failed, as he also refused to accept the decision.

Meanwhile, on March 20, 1995, petitioner filed a certificate of candidacy

On March 24, 1995, private respondent Rogelio de Castro, as registered voter of Bongabong, sought the disqualification of petitioner as candidate for mayor, citing the Local Government Code of 1991 (R.A. No .7160) which states:

§40. Disqualification. — The following persons are disqualified from running for any elective local position:

. . . .

(b) Those removed from office as a result of an administrative case.

Nonetheless, because of the absence of any contrary order from the COMELEC, petitioner Reyes was voted for in the elections held on May 8, 1995.

ISSUE: Whether or not Reyes was “removed from office as a result of an administrative case” even if the decision was not received by him

HELD: Yes

RATIO: It appears that the failure of the Sangguniang Panlalawigan to deliver a copy of its decision was due to the refusal of petitioner and his counsel to receive the decision. As the secretary to the Sangguniang Panlalawigan, Mario Manzo, stated in his certification, repeated attempts had been made to serve the decision on Reyes personally and by registered mail, but Reyes refused to receive the decision.

Personal service is completed upon actual or constructive delivery, which may be made by delivering a copy personally to the party or his attorney, or by leaving it in his office with a person having charge thereof, or at his residence, if his office is not known. 4 Hence service was completed when the decision was served upon petitioner's counsel in his office in Manila on March 3, 1995. In addition, as the secretary of the Sangguniang Panlalawigan certified, service by registered mail was also made on petitioner Reyes. Although the mail containing the decision was not claimed by him, service was deemed completed five days after the last notice to him on March 27, 1995. 5

If a judgment or decision is not delivered to a party for reasons attributable to him, service is deemed completed and the judgment or decision will be considered validly served as long as it can be shown that the attempt to deliver it to him would be valid were it not for his or his counsel's refusal to receive it.

His refusal to receive the decision may, therefore, be construed as a waiver on his part to have a copy of the decision.

RODRIGUEZ V COMELEC

FACTS: Eduardo T. Rodriguez and Bienvenido O. Marquez were protagonists for the gubernatorial post of Quezon Province. Rodriguez won and was proclaimed duly-elected governor. Marquez challenged Rodriguez' victory

Marquez revealed that Rodriguez left the United States where a charge, filed on November 12, 1985, is pending against the latter before the Los Angeles Municipal Court for fraudulent insurance claims, grand theft and attempted grand theft of personal property. Rodriguez is therefore a "fugitive from justice" which is a ground for his disqualification/ineligibility under Section 40(e) of the Local Government Code (R.A. 7160), so argued Marquez.

ISSUE: Whether Rodriguez, is a "fugitive from justice" as contemplated by Section 40 (e) of the Local Government Code based on the alleged pendency of a criminal charge against him

HELD: No

RATIO: The definition thus indicates that the intent to evade is the compelling factor that animates one's flight from a particular jurisdiction. And obviously, there can only be an intent to evade prosecution or punishment when there is knowledge by the fleeing subject of an already instituted indictment, or of a promulgated judgment of conviction.

Rodriguez' case just cannot fit in this concept. There is no dispute that his arrival in the Philippines from the US on June 25, 1985, as per certifications issued by the Bureau of Immigrations dated April 27 3 and June 26 of 1995, 4 preceded the filing of the felony complaint in the Los Angeles Court on November 12, 1985 and of the issuance on even date of the arrest warrant by the same foreign court, by almost five (5) months. It was clearly impossible for Rodriguez to have known about such felony complaint and arrest warrant at the time he left the US, as there was in fact no complaint and arrest warrant — much less conviction — to speak of yet at such time. What prosecution or punishment then was Rodriguez deliberately running away from with his departure from the US? The very essence of being a "fugitive from justice" under the MARQUEZ Decision definition, is just nowhere to be found in the circumstances of Rodriguez.

To summarize, the term "fugitive from justice" as a ground for the disqualification or ineligibility of a person seeking to run for any elective local petition under Section 40(e) of the Local Government Code, should be understood according to the definition given in the MARQUEZ Decision, to wit:

A "fugitive from justice" includes not only those who flee after conviction to avoid punishment but likewise those who, after being charged, flee to avoid prosecution. (Emphasis ours.)

Intent to evade on the part of a candidate must therefore be established by proof that there has already been a conviction or at least, a charge has already been filed, at the time of flight. Not being a "fugitive from justice" under this definition, Rodriguez cannot be denied the Quezon Province gubernatorial post.

SALALIMA V GUINGONA

FACTS: Petitioners seek to annul and set aside Administrative Order No. 153, signed on 7 October 1994 by the President and by public respondent Executive Secretary Teofisto T. Guingona, Jr., approving the findings of fact and recommendations of the Ad Hoc Committee and holding the petitioners administratively liable for the following acts or omissions: (a) wanton disregard of law amounting to abuse of authority in O.P. Case No. 5470; (b) grave abuse of authority under Section 60 (e) of the Local Government Code of 1991 (R.A. No. 7160) in O.P. Case No. 5469; (c) oppression and abuse of authority under Section 60 (c) and (e) of R.A. No. 7160 in O.P. Case No. 5471; and (d) abuse of authority and negligence in O.P. Case No. 5450. The said order meted out on each of the petitioners penalties of suspension of different durations, to be served successively but not to go beyond their respective unexpired terms in accordance with Section 66 (b) of R.A. No. 7160.

ISSUE: Did the Office of the President act with grave abuse of discretion amounting to lack or excess of jurisdiction in suspending the petitioners for periods ranging from twelve to twenty months?

HELD: Yes

RATIO: Section 66(b, of R.A. No. 7160 expressly provides:

Sec. 66. Form and Notice of Decision. — . . .

(b) The penalty of suspension shall not exceed the unexpired term of the respondent or a period of six (6) months for every administrative offense, nor shall said penalty be a bar to the candidacy of the respondent so suspended as long as he meet the qualifications for the office.

This provision sets the limits to the penalty of suspension , viz., it should not exceed six months or the unexpired portion of the term of office of the respondent for every administrative offense. An administrative offense means every act or conduct or omission which amounts to, or constitutes, every of the grounds or disciplinary action. The offenses for which suspension may be imposed are enumerated in Section 60 of the Code, which reads:

Sec. 60. Grounds for Disciplinary Action. — An elective local official may be disciplined, suspended, or removed from office on any of the following grounds:

(a) Disloyalty to the Republic of the Philippines;

(b) Culpable violation of the Constitution;

(c) Dishonesty, oppression, misconduct in office, gross negligence, or dereliction of duty;

(d) Commission of any offense involving moral turpitude or an offense punishable by at Least prision mayor;

(e) Abuse of authority;

(f) Unauthorized absence for fifteen (15) consecutive working days, except in the case of members of the sangguniang panlalawigan, sangguniang panlungsod, sangguniang bayan, and sangguniang barangay;

g) Acquisition for, or acquisition of, foreign citizenship or residence or the status ,e an immigrant of another country; and

(h) Such other grounds as may be provided in this Code and other laws.

An elective local official may be removed from office on the grounds enumerated above by order of the proper court

The fact remains that the suspension imposed for each administrative offense did not exceed six months and there was an express provision that the successive service of the suspension should not exceed the unexpired portion of the term of office of the petitioners. Their term of office expired at noon of 30 June 1995.

MORENO V COMELEC

FACTS: Norma L. Mejes (Mejes) filed a petition to disqualify Moreno from running for Punong Barangay on the ground that the latter was convicted by final judgment of the crime of Arbitrary Detention and was sentenced to suffer imprisonment of Four (4) Months and One (1) Day to Two (2) Years and Four (4) Months by the Regional Trial Court, Branch 28 of Catbalogan, Samar on August 27, 1998.

Moreno filed an answer averring that the petition states no cause of action because he was already granted probation.

Moreno also argued that under Sec. 16 of the Probation Law of 1976 (Probation Law), the final discharge of the probation shall operate to restore to him all civil rights lost or suspended as a result of his conviction and to fully discharge his liability for any fine imposed.

ISSUE: Whether or not the probation shall operate to restore to him all civil rights lost or suspended as a result of his conviction and to fully discharge his liability for any fine imposed.

HELD: Yes

RATIO: It appears then that during the period of probation, the probationer is not even disqualified from running for a public office because the accessory penalty of suspension from public office is put on hold for the duration of the probation.

Clearly, the period within which a person is under probation cannot be equated with service of the sentence adjudged. Sec. 4 of the Probation Law specifically provides that the grant of probation suspends the execution of the sentence. During the period of probation,[12] the probationer does not serve the penalty imposed upon him by the court but is merely required to comply with all the conditions prescribed in the probation order.[13]

The fact that the trial court already issued an order finally discharging Moreno fortifies his position. Sec. 16 of the Probation Law provides that [t]he final discharge of the probationer shall operate to restore to him all civil rights lost or suspended as a result of his conviction and to fully discharge his liability for any fine imposed as to the offense for which probation was granted.

JALOSJOS V COMELEC

FACTS: Both Jalosjos and Cardino were candidates for Mayor of Dapitan City, Zamboanga del Norte in the May 2010 elections.

Cardino asserted that Jalosjos made a false material representation in his certificate of candidacy when he declared under oath that he was eligible for the Office of Mayor.

Cardino claimed that long before Jalosjos filed his certificate of candidacy, Jalosjos had already been convicted by final judgment for robbery and sentenced to prisión mayor by the Regional Trial Court, Branch 18 (RTC) of Cebu City, in Criminal Case No. CCC-XIV-140-CEBU. Cardino asserted that Jalosjos has not yet served his sentence. Jalosjos admitted his conviction but stated that he had already been granted probation. Cardino countered that the RTC revoked Jalosjos’ probation in an Order dated 19 March 1987. Jalosjos refuted Cardino and stated that the RTC issued an Order dated 5 February 2004 declaring that Jalosjos had duly complied with the order of probation.

Surprisingly, on December 19, 2003, Parole and Probation Administrator Gregorio F. Bacolod issued a Certification attesting that respondent Jalosjos, Jr., had already fulfilled the terms and conditions of his probation.

This prompted Cardino to call the attention of the Commission on the decision of the Sandiganbayan dated September 29, 2008 finding Gregorio F. Bacolod, former Administrator of the Parole and Probation Administration, guilty of violating Section 3(e) of R.A. 3019 for issuing a falsified Certification on December 19, 2003 attesting to the fact that respondent Jalosjos had fully complied with the terms and conditions of his probation.

ISSUE: Whether or not COMELEC committed grave abuse of discretion amounting to lack or excess of jurisdiction when it (1) ruled that Jalosjos’ probation was revoked

HELD: No

RATIO: Jalosjos’ certificate of candidacy was void from the start since he was not eligible to run for any public office at the time he filed his certificate of candidacy. Jalosjos was never a candidate at any time, and all votes for Jalosjos were stray votes. As a result of Jalosjos’ certificate of candidacy being void ab initio, Cardino, as the only qualified candidate, actually garnered the highest number of votes for the position of Mayor.

A false statement in a certificate of candidacy that a candidate is eligible to run for public office is a false material representation which is a ground for a petition under Section 78 of the same Code.

The penalty of prisión mayor automatically carries with it, by operation of law,15 the accessory penalties of temporary absolute disqualification and perpetual special disqualification. Under Article 30 of the Revised Penal Code, temporary absolute disqualification produces the effect of "deprivation of the right to vote in any election for any popular elective office or to be elected to such office." The duration of the temporary absolute disqualification is the same as that of the principal penalty. On the other hand, under Article 32 of the Revised Penal Code perpetual special disqualification means that "the offender shall not be permitted to hold any public office during the period of his disqualification," which is perpetually. Both temporary absolute disqualification and perpetual special disqualification constitute ineligibilities to hold elective public office. A person suffering from these ineligibilities is ineligible to run for elective public office, and commits a false material representation if he states in his certificate of candidacy that he is eligible to so run.

The accessory penalty of temporary absolute disqualification disqualifies the convict for public office and for the right to vote, such disqualification to last only during the term of the sentence

Art. 32. Effects of the penalties of perpetual or temporary special disqualification for the exercise of the right of suffrage. — The perpetual or temporary special disqualification for the exercise of the right of suffrage shall deprive the offender perpetually or during the term of the sentence, according to the nature of said penalty, of the right to vote in any popular election for any public office or to be elected to such office. Moreover, the offender shall not be permitted to hold any public office during the period of disqualification.

The word "perpetually" and the phrase "during the term of the sentence" should be applied distributively to their respective antecedents; thus, the word "perpetually" refers to the perpetual kind of special disqualification, while the phrase "during the term of the sentence" refers to the temporary special disqualification. The duration between the perpetual and the temporary (both special) are necessarily different because the provision, instead of merging their durations into one period, states that such duration is "according

to the nature of said penalty" — which means according to whether the penalty is the perpetual or the temporary special disqualification.

The accessory penalty of perpetual special disqualification "deprives the convict of the right to vote or to be elected to or hold public office perpetually."

The accessory penalty of perpetual special disqualification takes effect immediately once the judgment of conviction becomes final. The effectivity of this accessory penalty does not depend on the duration of the principal penalty, or on whether the convict serves his jail sentence or not.

In the case of Jalosjos, he became ineligible perpetually to hold, or to run for, any elective public office from the time his judgment of conviction became final.

Perpetual special disqualification is a ground for a petition under Section 78 of the Omnibus Election Code because this accessory penalty is an ineligibility, which means that the convict is not eligible to run for public office, contrary to the statement that Section 74 requires him to state under oath.

If a person suffering from perpetual special disqualification files a certificate of candidacy stating under oath that "he is eligible to run for (public) office," as expressly required under Section 74, then he clearly makes a false material representation that is a ground for a petition under Section 78.

Lest it be misunderstood, the denial of due course to or the cancellation of the CoC is not based on the lack of qualifications but on a finding that the candidate made a material representation that is false, which may relate to the qualifications required of the public office he/she is running for.

If the candidate subsequently states a material representation in the CoC that is false, the COMELEC, following the law, is empowered to deny due course to or cancel such certificate. Indeed, the Court has already likened a proceeding under Section 78 to a quo warranto proceeding under Section 253 of the OEC since they both deal with the eligibility or qualification of a candidate, with the distinction mainly in the fact that a "Section 78" petition is filed before proclamation, while a petition for quo warranto is filed after proclamation of the winning candidate.

The COMELEC properly cancelled Jalosjos’ certificate of candidacy. A void certificate of candidacy on the ground of ineligibility that existed at the time of the filing of the certificate of candidacy can never give rise to a valid candidacy, and much less to valid votes.21 Jalosjos’ certificate of candidacy was cancelled because he was ineligible from the start to run for Mayor. Whether his certificate of candidacy is cancelled before or after the elections is immaterial because the cancellation on such ground means he was never a valid candidate from the very beginning, his certificate of candidacy being void ab initio. Jalosjos’ ineligibility existed on the day he filed his certificate of candidacy, and the cancellation of his certificate of candidacy retroacted to the day he filed it.

MAQUILING V COMELEC

FACTS: Arnado is a natural born Filipino citizen.3 However, as a consequence of his subsequent naturalization as a citizen of the United States of America, he lost his Filipino citizenship. Arnado applied for repatriation under Republic Act (R.A.) No. 9225 before the Consulate General of the Philippines in San Franciso, USA and took the Oath of Allegiance to the Republic of the Philippines on 10 July 2008.

On 30 November 2009, Arnado filed his Certificate of Candidacy for Mayor of Kauswagan, Lanao del Norte

On 28 April 2010, respondent Linog C. Balua (Balua), another mayoralty candidate, filed a petition to disqualify Arnado and/or to cancel his certificate of candidacy for municipal mayor of Kauswagan, Lanao del Norte in connection with the 10 May 2010 local and national elections.

Respondent Balua contended that Arnado is not a resident of Kauswagan, Lanao del Norte and that he is a foreigner, attaching thereto a certification issued by the Bureau of Immigration dated 23 April 2010 indicating the nationality of Arnado as "USA-American."10To further bolster his claim of Arnado’s US citizenship, Balua presented in his Memorandum a computer-generated travel record dated 03 December 2009 indicating that Arnado has been using his US Passport No. 057782700 in entering and departing the Philippines.

Neither motion was acted upon, having been overtaken by the 2010 elections where Arnado garnered the highest number of votes and was subsequently proclaimed as the winning candidate for Mayor of Kauswagan, Lanao del Norte.

ISSUE: Whether or not the use of a foreign passport after renouncing foreign citizenship amounts to undoing a renunciation earlier made

HELD: YES

RATIO: Rommel Arnado took all the necessary steps to qualify to run for a public office. He took the Oath of Allegiance and renounced his foreign citizenship. There is no question that after performing these twin requirements required under Section 5(2) of R.A. No. 9225 or the Citizenship Retention and Re-acquisition Act of 2003, he became eligible to run for public office.

By taking the Oath of Allegiance to the Republic, Arnado re-acquired his Philippine citizenship

After reacquiring his Philippine citizenship, Arnado renounced his American citizenship by executing an Affidavit of Renunciation, thus completing the requirements for eligibility to run for public office.

By renouncing his foreign citizenship, he was deemed to be solely a Filipino citizen, regardless of the effect of such renunciation under the laws of the foreign country.

However, this legal presumption does not operate permanently and is open to attack when, after renouncing the foreign citizenship, the citizen performs positive acts showing his continued possession of a foreign citizenship.33

Arnado himself subjected the issue of his citizenship to attack when, after renouncing his foreign citizenship, he continued to use his US passport to travel in and out of the country before filing his certificate of candidacy on 30 November 2009.

. By using his foreign passport, Arnado positively and voluntarily represented himself as an American, in effect declaring before immigration authorities of both countries that he is an American citizen, with all attendant rights and privileges granted by the United States of America.

The renunciation of foreign citizenship is not a hollow oath that can simply be professed at any time, only to be violated the next day. It requires an absolute and perpetual renunciation of the foreign citizenship and a full divestment of all civil and political rights granted by the foreign country which granted the citizenship.

A similar sanction can be taken against anyone who, in electing Philippine citizenship, renounces his foreign nationality, but subsequently does some act constituting renunciation of his Philippine citizenship.

While the act of using a foreign passport is not one of the acts enumerated in Commonwealth Act No. 63 constituting renunciation and loss of Philippine citizenship,35 it is nevertheless an act which repudiates the very oath of renunciation required for a former Filipino citizen who is also a citizen of another country to be qualified to run for a local elective position.

When Arnado used his US passport on 14 April 2009, or just eleven days after he renounced his American citizenship, he recanted his Oath of Renunciation36 that he "absolutely and perpetually renounce(s) all allegiance and fidelity to the UNITED STATES OF AMERICA"37 and that he "divest(s) himself of full employment of all civil and political rights and privileges of the United States of America."38

However, by representing himself as an American citizen, Arnado voluntarily and effectively reverted to his earlier status as a dual citizen. Such reversion was not retroactive; it took place the instant Arnado represented himself as an American citizen by using his US passport.

FERMO V COMELEC

FACTS: "Manuel Laxina, Sr. and Roque Fermo were both candidates for the position of Punong Barangay, Barangay Batasan Hills, District II, Quezon City, during the May 12, 1997 elections. The canvassed results showed Laxina obtaining 1,957 votes and Fermo getting 1,712 votes. With a plurality of 245 votes, Laxina was proclaimed duly elected to the post. Subsequently, Fermo filed an election protest questioning the results in four (4) clustered precincts of Capitol Bliss and twenty four (24) COA precincts on the ground that the elections therein was attended by massive fraud and serious irregularities.

After all the proceedings were terminated, the Court a quo rendered its decision holding that Fermo won the contested post. The Courts decision was promulgated on January 8, 1999.

Not satisfied with the decision of the MTC, respondent Manuel D. Laxina (LAXINA) appealed to the COMELEC, which reversed the order of the MTC granting herein petitioners motion for execution pending appeal. In reversing the MTC, the COMELEC found that the possibility that the term of the contested seat might expire by the time the appeal is decided was not a "good reason" to warrant execution pending appeal.

ISSUE: The issue to be resolved in this petition is whether the COMELEC acted with grave abuse of discretion amounting to lack of or excess of jurisdiction in annulling the order of the MTC granting herein petitioners motion for execution pending appeal on the ground that there were no "good reasons" for the issuance therefor.

HELD: We rule in the negative.

RATIO: Execution of judgments pending appeal in election cases is governed by Section 2, Rule 39[6] of the Rules of Court which reads:

"Sec. 2. Discretionary execution.

(a) Execution of a judgment or final order pending appeal. - On motion of the prevailing party with notice to the adverse party filed in the trial court while it has jurisdiction over the case and is in possession of either the original record or the record on appeal, as the case may be, at the time of the filing of such motion, said court may, in its discretion, order execution of a judgment or final order even before the expiration of the period to appeal.

After the trial court has lost jurisdiction, the motion for execution pending appeal may be filed in the appellate court.

Discretionary execution may only issue upon good reasons to be stated in a special order after due hearing."

A valid exercise of the discretion to allow execution pending appeal requires that it should be based "upon good reasons to be stated in a special order." The following constitute "good reasons" and a combination of two or more of them will suffice to grant execution pending appeal: (1.) public interest involved or will of the electorate; (2.) the shortness of the remaining portion of the term of the contested office; and (3.) the length of time that the election contest has been pending

In the present case, the petitioner relies solely on one ground to support his petition i.e. "shortness of term". We find that the COMELEC committed no reversible error in ruling that:

"Shortness of term, alone and by itself cannot justify premature execution. It must be manifest in the decision sought to be executed that the defeat of the protestee and the victory of the protestant has been clearly established."

When the COMELEC nullified the writ of execution pending appeal in favor of FERMO, the decision of the MTC proclaiming FERMO as the winner of the election was stayed[14] and the "status quo" or the last actual peaceful uncontested situation preceding the controversy[15] was restored.

PECSON V COMELEC

FACTS: Pecson and Cunanan were candidates for the mayoralty position in the Municipality of Magalang, Province of Pampanga in the May 2007 elections. On May 17, 2007, Cunanan was proclaimed the winning candidate, garnering a total of 12,592 votes as against Pecsons 12,531, or a margin of 61 votes. Cunanan took his oath and assumed the position of Mayor of Magalang. Soon thereafter, Pecson filed an election protest, docketed as EPE No. 07-51, with the RTC.

On November 23, 2007, the RTC rendered a Decision in Pecsons favor. The RTC ruled that Pecson received a total of 14,897 votes as against Cunanans 13,758 a vote margin of 1,139.

ISSUE: Whether or not the Execution Pending Appeal was valid

HELD: Yes

RATIO: The remedy of executing court decisions pending appeal in election contests is provided under the Rules as follows:

SEC. 11. Execution pending appeal . On motion of the prevailing party with notice to the adverse party, the court, while still in possession of the original records, may, at its discretion, order the execution of the decision in an election contest before the expiration of the period to appeal, subject to the following rules:

(a) There must be a motion by the prevailing party with three-day notice to the adverse party. Execution pending appeal shall not issue without prior notice and hearing. There must be good reasons for the execution pending appeal. The court, in a special order, must state the good or special reasons justifying the execution pending appeal. Such reasons must:

(1) constitute superior circumstances demanding urgency that will outweigh the injury or damage should the losing party secure a reversal of the judgment on appeal; and

(2) be manifest, in the decision sought to be executed, that the defeat of the protestee or the victory of the protestant has been clearly established.

(b) If the court grants execution pending appeal, an aggrieved party shall have twenty working days from notice of the special order within which to secure a restraining order orstatus quo order from the Supreme Court of the Commission on Elections. The corresponding writ of execution shall issue after twenty days, if no restraining order or status quo order is issued.During such period, the writ of execution pending appeal shall be stayed. [3]

At the heart of the present controversy is the question of whether there has been compliance with the standards required for an execution pending appeal in an election contest. As heretofore cited, the RTC found all these requisites present.

We see no merit in Cunanans argument. The writ of execution issued by the RTC is a mere administrative enforcement medium of the Special Order the main order supporting Pecsons motion for the issuance of a writ of execution. The writ itself cannot and does not assume a life of its own independent from the Special Order on which it is based. Certainly, its nullification does not carry with it the nullification of the Special Order. This consequence does not of course hold true in the reverse situation the nullification of the Special Order effectively carries with it the nullification of its implementing writ and removes the basis for the issuance of another implementing writ. In the present case, the reality is that if and when we ultimately affirm the validity of the Special Order, nothing will thereafter prevent the RTC from issuing another writ.

As Pecson correctly argued, this reasoning effectively prevents a winner (at the level of the courts) of an election protest from ever availing of an execution pending appeal; it gives too much emphasis to the COMELECs authority to decide the election contest and the losing partys right to appeal.

Effectively, the two presumptive winners and the balancing act views negate the execution pending appeal that we have categorically and unequivocally recognized in our rulings and in the Rules we issued. To be sure, the COMELEC cannot, on its own, render ineffective a rule of procedure we established by formulating its own ruling requiring a final determination at its level before an RTC decision in a protest case can be implemented.

It merely found that the defect Cunanan noted was actually inconsequential with respect to the results, thus showing Pecsons clear victory under the RTC Decision. In other words, the Second Divisions corrected view of the RTC count confirmed, rather than contradicted or placed in doubt, the conclusion that Pecson won.

Other than the clarity of Pecsons victory under the RTC Decision, the Special Order cited good and special reasons that justified an execution pending appeal, specifically:(1) the need to give as much recognition to the worth of a trial judges decision as that which is initially given by the law to the proclamation by the board of canvassers; (2) public interest and/or respect for and giving meaning to the will of the electorate; and (3) public policy something had to be done to deal a death blow to the pernicious grab-the-proclamation-prolong-the-protest technique often, if not invariably, resorted to by unscrupulous politicians who would render nugatory the peoples verdict against them.

LOZANIDA V COMELEC

FACTS: Petitioner Romeo Lonzanida was duly elected and served two consecutive terms as municipal mayor of San Antonio, Zambales prior to the May 8, 1995 elections. In the May 1995 elections Lonzanida ran for mayor of San Antonio, Zambales and was again proclaimed winner. He assumed office and discharged the duties thereof. His proclamation in 1995 was however contested by his then opponent Juan Alvez who filed an election protest before the Regional Trial Court of Zambales, which in a decision dated January 9, 1997 declared a failure of elections.

In the May 11, 1998 elections Lonzanida again filed his certificate of candidacy for mayor of San Antonio. On April 21, 1998 his opponent Eufemio Muli timely filed a petition to disqualify Lonzanida from running for mayor of San Antonio in the 1998 elections on the ground that he had served three consecutive terms in the same post. On May 13, 1998, petitioner Lonzanida was proclaimed winner. On May 21, 1998 the First Division of the COMELEC issued the questioned resolution granting the petition for disqualification upon a finding that Lonzanida had served three consecutive terms as mayor of San Antonio, Zambales and he is therefore disqualified to run for the same post for the fourth time.

ISSUE: Whether petitioner Lonzanidas assumption of office as mayor of San Antonio Zambales from May 1995 to March 1998 may be considered as service of one full term for the purpose of applying the three-term limit for elective local government officials.

HELD: No

RATIO: Section 8, Art. X of the Constitution provides:

Sec. 8. The term of office of elective local officials, except barangay officials, which shall be determined by law shall be three years and no such officials shall serve for more than three consecutive terms.Voluntary renunciation of the office for any length of time shall not be considered as an interruption in the continuity of his service for the full term for which he was elected.

Section 43 of the Local Government Code (R.A. No. 7160) restates the same rule:

Sec. 43. Term of Office.

(b) No local elective official shall serve for more than three consecutive terms in the same position. Voluntary renunciation of the office for any length of time shall not be considered as an interruption in the continuity of service for the full term for which the elective official concerned was elected.

The first sentence speaks of the term of office of elective local officials and bars such officials from serving for more than three consecutive terms. The second sentence, in explaining when an elective official may be deemed to have served his full term of office, states that voluntary renunciation of the office for any length of time shall not be considered as an interruption in the continuity of his service for the full term for which he was elected. The term served must therefore be one for which the the official concerned was elected.

This Court held that two conditions for the application of the disqualification must concur: 1) that the official concerned has been elected for three consecutive terms in the same local government post and 2) that he has fully served three consecutive terms. It stated:

To recapitulate, the term limit for elective local officials must be taken to refer to the right to be elected as well as the right to serve in the same elective position. Consequently, it is not enough that an individual has served three consecutive terms in an elective local office, he must also have been elected to the same position for the same number of times before the disqualification can apply.

The two requisites for the application of the three term rule are absent. First, the petitioner cannot be considered as having been duly elected to the post in the May 1995 elections, and second, the petitioner did not fully serve the 1995-1998 mayoral term by reason of involuntary relinquishment of office.

Petitioner Lonzanida did not serve a term as mayor of San Antonio, Zambales from May 1995 to March 1998 because he was not duly elected to the post; he merely assumed office as presumptive winner, which presumption was later overturned by the COMELEC when it decided with finality that Lonzanida lost in the May 1995 mayoral elections.

Second, the petitioner cannot be deemed to have served the May 1995 to 1998 term because he was ordered to vacate his post before the expiration of the term.

The respondents contention that the petitioner should be deemed to have served one full term from May 1995-1998 because he served the greater portion of that term has no legal basis to support it; it disregards the second requisite for the application of the disqualification, i.e., that he has fully served three consecutive terms. The second sentence of the constitutional provision under scrutiny states, Voluntary renunciation of office for any length of time shall not

be considered as an interruption in the continuity of service for the full term for which he was elected.

Voluntary renunciation of a term does not cancel the renounced term in the computation of the three term limit; conversely, involuntary severance from office for any length of time short of the full term porvided by law amounts to an interruption of continuity of service.

The petitioner vacated his post a few months before the next mayoral elections, not by voluntary renunciation but in compliance with the legal process of writ of execution issued by the COMELEC to that effect.

In sum, the petitioner was not the duly elected mayor and that he did not hold office for the full term; hence, his assumption of office from May 1995 to March 1998 cannot be counted as a term for purposes of computing the three term limit.

We note that such delay cannot be imputed to the petitioner. There is no specific allegation nor proof that the delay was due to any political maneuvering on his part to prolong his stay in office.

LACEDA V LIMENA

FACTS: The first sentence speaks of the term of office of elective local officials and bars such officials from serving for more than three consecutive terms. The second sentence, in explaining when an elective official may be deemed to have served his full term of office, states that voluntary renunciation of the office for any length of time shall not be considered as an interruption in the continuity of his service for the full term for which he was elected. The term served must therefore be one for which the the official concerned was elected.

This Court held that two conditions for the application of the disqualification must concur: 1) that the official concerned has been elected for three consecutive terms in the same local government post and 2) that he has fully served three consecutive terms. It stated:

To recapitulate, the term limit for elective local officials must be taken to refer to the right to be elected as well as the right to serve in the same elective position. Consequently, it is not enough that an individual has served three consecutive terms in an elective local office, he must also have been elected to the same position for the same number of times before the disqualification can apply.

The two requisites for the application of the three term rule are absent. First, the petitioner cannot be considered as having been duly elected to the post in the May 1995 elections, and second, the petitioner did not fully serve the 1995-1998 mayoral term by reason of involuntary relinquishment of office.

Petitioner Lonzanida did not serve a term as mayor of San Antonio, Zambales from May 1995 to March 1998 because he was not duly elected to the post; he merely assumed office as presumptive winner, which presumption was later overturned by the COMELEC when it decided with finality that Lonzanida lost in the May 1995 mayoral elections.

Second, the petitioner cannot be deemed to have served the May 1995 to 1998 term because he was ordered to vacate his post before the expiration of the term.

The respondents contention that the petitioner should be deemed to have served one full term from May 1995-1998 because he served the greater portion of that term has no legal basis to support it; it disregards the second requisite for the application of the disqualification, i.e., that he has fully served three consecutive terms. The second sentence of the constitutional provision under scrutiny states, Voluntary renunciation of office for any length of time shall not

be considered as an interruption in the continuity of service for the full term for which he was elected.

Voluntary renunciation of a term does not cancel the renounced term in the computation of the three term limit; conversely, involuntary severance from office for any length of time short of the full term porvided by law amounts to an interruption of continuity of service.

The petitioner vacated his post a few months before the next mayoral elections, not by voluntary renunciation but in compliance with the legal process of writ of execution issued by the COMELEC to that effect.

In sum, the petitioner was not the duly elected mayor and that he did not hold office for the full term; hence, his assumption of office from May 1995 to March 1998 cannot be counted as a term for purposes of computing the three term limit.

We note that such delay cannot be imputed to the petitioner. There is no specific allegation nor proof that the delay was due to any political maneuvering on his part to prolong his stay in office.

ISSUE: Whether or not petitioner’s defense it correct

HELD: No

RATIO: This Court has held that for the prohibition to apply, two requisites must concur: (1) that the official concerned has been elected for three consecutive terms in the same local government post and (2) that he or she has fully served three consecutive terms.

In this case, while it is true that under Rep. Act No. 8806 the municipalities of Sorsogon and Bacon were merged and converted into a city thereby abolishing the former and creating Sorsogon City as a new political unit, it cannot be said that for the purpose of applying the prohibition in Section 2 of Rep. Act No. 9164, the office of Punong Barangay of Barangay Panlayaan, Municipality of Sorsogon, would now be construed as a different local government post as that of the office of Punong Barangay of Barangay Panlayaan,Sorsogon City. The territorial jurisdiction of Barangay Panlayaan, Sorsogon City, is the same as before the conversion.

Consequently, the inhabitants of the barangay are the same.They are the same group of voters who elected Laceda to be their Punong Barangay for three consecutive terms and over whom Laceda held power and authority as their PunongBarangay. Moreover, Rep. Act No. 8806 did not interrupt Lacedas term.

RIVERA III V MORALES

FACTS: In the May 2004 Synchronized National and Local Elections, respondent Marino "Boking" Morales ran as candidate for mayor of Mabalacat, Pampanga for the term commencing July 1, 2004 to June 30, 2007. Prior thereto or on January 5, 2004, he filed his Certificate of Candidacy.

In his answer to the petition, respondent Morales admitted that he was elected mayor of Mabalacat for the term commencing July 1, 1995 to June 30, 1998 (first term) and July 1, 2001 to June 30, 2004 (third term), but he served the second term from July 1, 1998 to June 30, 2001 only as a "caretaker of the office" or as a "de facto officer" because of the following reasons:

a. He was not validly elected for the second term 1998 to 2001 since his proclamation as mayor was declared void by the Regional Trial Court (RTC), Branch 57, Angeles City in its Decision dated April 2, 2001 in Election Protest Case (EPC) No. 98-131. The Decision became final and executory on August 6, 2001; and

b. He was preventively suspended by the Ombudsman in an anti-graft case from January 16, 1999 to July 15, 1999.

ISSUE: Whether or not Morales is wrong

HELD: Yes

RATIO: Here, respondent Morales was elected for the term July 1, 1998 to June 30, 2001. He assumed the position. He served as mayor until June 30, 2001. He was mayor for the entire period notwithstanding the Decision of the RTC in the electoral protest case filed by petitioner Dee ousting him (respondent) as mayor.

QUINTO V TOLENTINO

FACTS: Congress amended the law on January 23, 2007 by enacting R.A. No. 9369, entitled AN ACT AMENDING REPUBLIC ACT NO. 8436, ENTITLED AN ACT AUTHORIZING THE COMMISSION ON ELECTIONS TO USE AN AUTOMATED ELECTION SYSTEM IN THE MAY 11, 1998 NATIONAL OR LOCAL ELECTIONS AND IN SUBSEQUENT NATIONAL AND LOCAL ELECTORAL EXERCISES, TO ENCOURAGE TRANSPARENCY, CREDIBILITY, FAIRNESS AND ACCURACY OF ELECTIONS, AMENDING FOR THE PURPOSE BATAS PAMPANSA BLG. 881, AS AMEMDED, REPUBLIC ACT NO. 7166 AND OTHER RELATED ELECTION LAWS, PROVIDING FUNDS THEREFOR AND FOR OTHER PURPOSES. Section 13 of the amendatory law modified Section 11 of R.A. No. 8436, thus:

For this purpose, the Commission shall set the deadline for the filing of certificate of candidacy/petition of registration/manifestation to participate in the election. Any person who files his certificate of candidacy within this period shall only be considered as a candidate at the start of the campaign period for which he filed his certificate of candidacy:Provided, That, unlawful acts or omissions applicable to a candidate shall take effect only upon the start of the aforesaid campaign period: Provided, finally, That any person holding a public appointive office or position, including active members of the armed forces, and officers and employees in government-owned or -controlled corporations, shall be considered ipso facto resigned from his/her office and must vacate the same at the start of the day of the filing of his/her certificate of candidacy.

ISSUE: Whether or not the law violates the equal protection of the appointed officials

HELD: Yes

RATIO: The fact alone that there is substantial distinction between those who hold appointive positions and those occupying elective posts, does not justify such differential treatment.

In order that there can be valid classification so that a discriminatory governmental act may pass the constitutional norm of equal protection, it is necessary that the four (4) requisites of valid classification be complied with, namely:

(1) It must be based upon substantial distinctions;

(2) It must be germane to the purposes of the law;

(3) It must not be limited to existing conditions only; and

(4) It must apply equally to all members of the class.

Applying the four requisites to the instant case, the Court finds that the differential treatment of persons holding appointive offices as opposed to those holding elective ones is not germane to the purposes of the law.

The obvious reason for the challenged provision is to prevent the use of a governmental position to promote ones candidacy, or even to wield a dangerous or coercive influence on the electorate.

PROVINCIAL GOVERNMENT OF CAMARINES NORTE V GONZALES

FACTS: Gonzales was appointed as the provincial administrator of the Province of Camarines Norte by then Governor Roy A. Padilla, Jr. on April 1, 1991. Her appointment was on a permanent capacity. On March 8, 1999, Governor Jess B. Pimentel sent Gonzales a memorandum directing her to explain in writing why no administrative charges should be filed against her for gross insubordination/gross discourtesy in the course of official duties, and conduct grossly prejudicial to the best interest of the service; this was later on captioned as Administrative Case No. 001. After Gonzales submitted her comment, an Ad Hoc Investigation Committee found her guilty of the charges against her, and recommended to Governor Pimentel that she be held administratively liable.4 On September 30, 1999, Governor Pimentel adopted the Ad Hoc Investigation Committee’s recommendation and dismissed Gonzales.5

Proceedings before the Civil Service Commission

Gonzales appealed Governor Pimentel’s decision to the Civil Service Commission (CSC). The CSC issued Resolution No. 0014186 modifying Governor Pimentel’s decision, finding Gonzales guilty of insubordination and suspending her for six months. This decision was appealed by Governor Pimentel, which the CSC denied in its Resolution No. 001952.7

Gonzales then filed a motion for execution and clarification of Resolution No. 001418, in which she claimed that she had already served her six-month suspension and asked to be reinstated. The CSC issued Resolution No. 002245,8 which directed Gonzales’ reinstatement.

Governor Pimentel reinstated Gonzales as provincial administrator on October 12, 2000, but terminated her services the next day for lack of confidence.

ISSUE: 1) Whether Congress has re-classified the provincial administrator position from a career service to a primarily confidential, non-career service position; and

2) Whether Gonzales has security of tenure over her position as provincial administrator of the Province of Camarines Norte.

HELD: YES, NO

RATIO: We find the petition meritorious.

Congress has reclassified the provincial administrator position as a primarily confidential, non-career position

We support the CSC’s conclusion that the provincial administrator position has been classified into a primarily confidential, non-career position when Congress, through RA 7160, made substantial changes to it.

RA 7160 made the position mandatory for every province.

RA 7160 made the provincial administrator position coterminous with its appointing authority, reclassifying it as a non-career service position that is primarily confidential

Section 480(b) of RA 7160 now mandates constant interaction between the provincial administrator and the provincial governor, to wit:

(b) The administrator shall take charge of the office of the administrator and shall:

(1) Develop plans and strategies and upon approval thereof by the governor or mayor, as the case may be, implement the same particularly those which have to do with the management and administration-related programs and projects which the governor or mayor is empowered to implement and which the sanggunian is empowered to provide for under this Code;

(2) In addition to the foregoing duties and functions, the administrator shall:

(i) Assist in the coordination of the work of all the officials of the local government unit, under the supervision, direction, and control of the governor or mayor, and for this purpose, he may convene the chiefs of offices and other officials of the local government unit;

x x x x

(4) Recommend to the sanggunian and advise the governor and mayor, as the case may be, on all other matters relative to the management and administration of the local government unit.

PROV OF BATANGAS V ROMULO

FACTS: President Joseph Ejercito Estrada issued Executive Order (E.O.) No. 48 entitled "ESTABLISHING A PROGRAM FOR DEVOLUTION ADJUSTMENT AND EQUALIZATION." The program was established to "facilitate the process of enhancing the capacities of local government units (LGUs) in the discharge of the functions and services devolved to them by the National Government Agencies concerned pursuant to the Local Government Code.

Further, to address the funding shortfalls of functions and services devolved to the LGUs and other funding requirements of the program, the "Devolution Adjustment and Equalization Fund" was created.3 For 1998, the DBM was directed to set aside an amount to be determined by the Oversight Committee based on the devolution status appraisal surveys undertaken by the DILG.4 The initial fund was to be sourced from the available savings of the national government for CY 1998.5

In Republic Act No. 8745, otherwise known as the GAA of 1999, the program was renamed as the LOCAL GOVERNMENT SERVICE EQUALIZATION FUND (LGSEF). Under said appropriations law, the amount ofP96,780,000,000 was allotted as the share of the LGUs in the internal revenue taxes.

In Resolution No. OCD-99-003, the Oversight Committee set aside the one billion pesos or 20% of the LGSEF to support Local Affirmative Action Projects (LAAPs) of LGUs. This remaining amount was intended to "respond to the urgent need for additional funds assistance, otherwise not available within the parameters of other existing fund sources." For LGUs to be eligible for funding under the one-billion-peso portion of the LGSEF, the OCD promulgated the following: CRITERIA FOR ELIGIBILITY: Further, under the guidelines formulated by the Oversight Committee as contained in Attachment - Resolution No. OCD-99-003, the LGUs were required to identify the projects eligible for funding under the one-billion-peso portion of the LGSEF and submit the project proposals thereof and other documentary requirements to the DILG for appraisal. The project proposals that passed the DILG's appraisal would then be submitted to the Oversight Committee for review, evaluation and approval. Upon its approval, the Oversight Committee would then serve notice to the DBM for the preparation of the Special Allotment Release Order (SARO) and Notice of Cash Allocation (NCA) to effect the release of funds to the said LGUs.

On January 9, 2002, the Oversight Committee adopted Resolution No. OCD-2002-001 allocating the five billion pesos LGSEF for 2001 as follows:

Modified Codal Formula P 3.000 billion

Priority Projects 1.900 billion

Capability Building Fund .100 billion

P 5.000 billion

RESOLVED FURTHER, that the P3.0 B of the CY 2001 LGSEF which is to be allocated according to the modified codal formula shall be released to the four levels of LGUs, i.e., provinces, cities, municipalities and barangays, as follows:

LGUs Percentage Amount

Provinces25 P 0.750 billion

Cities 25 0.750

Municipalities 35 1.050

Barangays 15 0.450

100 P 3.000 billion

RESOLVED FURTHER, that the P1.9 B earmarked for priority projects shall be distributed according to the following criteria:

1.0 For projects of the 4th, 5th and 6th class LGUs; or

2.0 Projects in consonance with the President's State of the Nation Address (SONA)/summit commitments.

RESOLVED FURTHER, that the remaining P100 million LGSEF capability building fund shall be distributed in accordance with the recommendation of the Leagues of Provinces, Cities, Municipalities and Barangays, and approved by the OCD.

ISSUE: Whether the assailed provisos in the GAAs of 1999, 2000 and 2001, earmarking for each corresponding year the amount of five billion pesos of the IRA for the LGSEF and the OCD resolutions promulgated pursuant thereto, transgress the Constitution and the Local Government Code of 1991.

HELD: The assailed provisos in the GAAs of 1999, 2000 and 2001 and the OCD resolutions violate the constitutional precept on local autonomy

RATIO: Sec. 6. Local government units shall have a just share, as determined by law, in the national taxes which shall be automatically released to them.

When parsed, it would be readily seen that this provision mandates that (1) the LGUs shall have a "just share" in the national taxes; (2) the "just share" shall be determined by law; and (3) the "just share" shall be automatically released to the LGUs.

The Local Government Code of 1991, among its salient provisions, underscores the automatic release of the LGUs' "just share" in this wise:

Sec. 18. Power to Generate and Apply Resources. Local government units shall have the power and authority to establish an organization that shall be responsible for the efficient and effective implementation of their development plans, program objectives and priorities; to create their own sources of revenue and to levy taxes, fees, and charges which shall accrue exclusively for their use and disposition and which shall be retained by them; to have a just share in national taxes which shall be automatically and directly released to them without need of further action;

Section 4 of AO 372 cannot, however, be upheld. A basic feature of local fiscal autonomy is the automatic release of the shares of LGUs in the National internal revenue.

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." Hence, the "temporary" nature of the retention by the national government does not matter. Any retention is prohibited.

Significantly, the LGSEF could not be released to the LGUs without the Oversight Committee's prior approval. Further, with respect to the portion of the LGSEF allocated for various projects of the LGUs (P1 billion for 1999;P1.5 billion for 2000 and P2 billion for 2001), the Oversight Committee, through the assailed OCD resolutions, laid down guidelines and mechanisms that the LGUs had to comply with before they could avail of funds from this portion of the LGSEF.

To the Court's mind, the entire process involving the distribution and release of the LGSEF is constitutionally impermissible. The LGSEF is part of the IRA or "just share" of the LGUs in the national taxes. To subject its distribution and release to the vagaries of the implementing rules and regulations, including the guidelines and mechanisms unilaterally prescribed by the Oversight Committee from time to time, as sanctioned by the assailed provisos in the GAAs of 1999, 2000 and 2001 and the OCD resolutions, makes the release not automatic, a flagrant violation of the constitutional and statutory mandate that the "just share" of the LGUs "shall be automatically released to them." The LGUs are, thus, placed at the mercy of the Oversight Committee.

Indeed, the Oversight Committee exercising discretion, even control, over the distribution and release of a portion of the IRA, the LGSEF, is an anathema to and subversive of the principle of local autonomy as embodied in the Constitution. Moreover, it finds no statutory basis at all as the Oversight Committee was created merely to formulate the rules and regulations for the efficient and effective implementation of the Local Government Code of 1991 to ensure "compliance with the principles of local autonomy as defined under the Constitution."

Section 285 of the Local Government Code of 1991

Section 28438 of the Local Government Code provides that, beginning the third year of its effectivity, the LGUs' share in the national internal revenue taxes shall be 40%. This percentage is fixed and may not be reduced except "in the event the national government incurs an unmanageable public sector deficit" and only upon compliance with stringent requirements set forth in the same section:

Sec. 284. ...

Provided, That in the event that the national government incurs an unmanageable public sector deficit, the President of the Philippines is hereby authorized, upon recommendation of Secretary of Finance, Secretary of Interior and Local 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 revenue allotment of local government units but in no case shall the allotment be less than thirty percent (30%) of the collection of the national internal revenue taxes of the third fiscal year preceding the current

fiscal year; Provided, further That in the first year of the effectivity of this Code, the local government units shall, in addition to the thirty percent (30%) internal revenue allotment which shall include the cost of devolved functions for essential public services, be entitled to receive the amount equivalent to the cost of devolved personnel services.

Thus, from the above provision, the only possible exception to the mandatory automatic release of the LGUs' IRA is if the national internal revenue collections for the current fiscal year is less than 40 percent of the collections of the preceding third fiscal year, in which case what should be automatically released shall be a proportionate amount of the collections for the current fiscal year.

. In the instant case, however, there is no allegation that the national internal revenue tax collections for the fiscal years 1999, 2000 and 2001 have fallen compared to the preceding three fiscal years.

Section 285 then specifies how the IRA shall be allocated among the LGUs:

Sec. 285. Allocation to Local Government Units. – The share of local government units in the internal revenue allotment shall be allocated in the following manner:

(a) Provinces – Twenty-three (23%)

(b) Cities – Twenty-three percent (23%);

(c) Municipalities – Thirty-four (34%); and

(d) Barangays – Twenty percent (20%).

However, this percentage sharing is not followed with respect to the five billion pesos LGSEF as the assailed OCD resolutions, implementing the assailed provisos in the GAAs of 1999, 2000 and 2001, provided for a different sharing scheme.

The Local Government Code of 1991 is a substantive law. And while it is conceded that Congress may amend any of the provisions therein, it may not do so through appropriations laws or GAAs. Any amendment to the Local Government Code of 1991 should be done in a separate law, not in the appropriations law, because Congress cannot include in a general appropriation bill matters that should be more properly enacted in a separate legislation.42

Increasing or decreasing the IRA of the LGUs or modifying their percentage sharing therein, which are fixed in the Local Government Code of 1991, are matters of general and substantive law. To permit Congress to undertake these amendments through the GAAs, as the respondents contend, would be to give Congress the unbridled authority to unduly infringe the fiscal autonomy of the LGUs, and thus put the same in jeopardy every year. This, the Court cannot sanction.

ACORD V ZAMORA

FACTS: The act, otherwise known as the General Appropriations Act (GAA) for the Year 2000, provides under the heading "ALLOCATIONS TO LOCAL GOVERNMENT UNITS" that the IRA for local government units shall amount to P111,778,000,000:1avvphi1.zw+

XXXVII. ALLOCATIONS TO LOCAL

GOVERNMENT UNITS

A. INTERNAL REVENUE ALLOTMENT

For apportionment of the shares of local government units in the internal revenue taxes in accordance with the purpose indicated hereunder ………………………………………………………….……….. P111,778,000,000

New Appropriations, by Purpose

Current Operating Expenditures

Maintenance

and Other Personal

Services Operating

Expenses Capital

Outlays Total

A. PURPOSE(S)

a. Internal Revenue

Allotment P111,778,000,000 P111,778,000,000

x x x

TOTAL NEW

APPROPRIATIONS ……… P111,778,000,000

In another part of the GAA, under the heading "UNPROGRAMMED FUND," it is provided that an amount of P10,000,000,000 (P10 Billion), apart from the P111,778,000,000 mentioned above, shall be used to fund the IRA, which amount shall be released only when the original revenue targets submitted by the President to Congress can be realized based on a quarterly assessment to be conducted by certain committees which the GAA specifies, namely, the Development Budget Coordinating Committee, the Committee on Finance of the Senate, and the Committee on Appropriations of the House of Representatives.

LIV. UNPROGRAMMED FUND

For fund requirements in accordance with the purposes indicated hereunder …………… P48,681,831,000

A. PURPOSE(S)

x x x x

6. Additional

Operational

Requirements

and Projects of

Agencies P14,788,764,000

x x x x

Special Provisions

1. Release of the Fund. The amounts herein appropriated shall be released only when the revenue collections exceed the original revenue targets submitted by the President of the Philippines to Congress pursuant to Section 22, Article VII of the Constitution or when the corresponding funding or receipts for the purpose have been realized except in the special cases covered by specific procedures in Special Provision Nos. 2, 3, 4, 5, 7, 8, 9, 13 and 14 herein: PROVIDED, That in cases of foreign-assisted projects, the existence of a perfected loan agreement shall be sufficient compliance for the issuance of a Special Allotment Release Order covering the loan proceeds: PROVIDED, FURTHER, That no amount of the Unprogrammed Fund shall be funded out of the savings generated from programmed items in this Act.

Thus, while the GAA appropriates P111,778,000,000 of IRA as Programmed Fund, it appropriates a separate amount of P10 Billion of IRA under the classification of Unprogrammed Fund, the latter amount to be released only upon the occurrence of the condition stated in the GAA.

ISSUE: whether the questioned provisions violate the constitutional injunction that the just share of local governments in the national taxes or the IRA shall be automatically released.

Respondents contention: Respondents thus infer that the subject constitutional provision merely prevents the executive branch of the government from "unilaterally" withholding the IRA, but not the legislature from authorizing the executive branch to withhold the same. In the words of respondents, "This essentially means that the President or any member of the Executive Department cannot unilaterally, i.e., without the backing of statute, withhold the release of the IRA."

HELD: Respondents' position does not lie.

RATIO: Since, under Article X, Section 6 of the Constitution, only the just share of local governments is qualified by the words "as determined by law," and not the release thereof, the plain implication is that Congress is not authorized by the Constitution to hinder or impede the automatic release of the IRA.

the only possible exception to mandatory automatic release of the IRA is, as held in Batangas:

…if the national internal revenue collections for the current fiscal year is less than 40 percent of the collections of the preceding third fiscal year, in which case what should be automatically released shall be a proportionate amount of the collections for the current fiscal year. The adjustment may even be made on a quarterly basis depending on the actual collections of national internal revenue taxes for the quarter of the current fiscal year. x x x28

VILLANUEVA V OPLE

FACTS: Petitioners alleged that the annual budget for Fiscal Year (FY) 2003 of the Municipality of Hagonoy had been submitted by Mayor Ople -- through Vice-Mayor Contreras -- to the Sangguniang Bayan of Hagonoy, only on June 11, 2003, instead of on October 16 of the preceding year, as mandated by Section 318, paragraph 2 of Book II, Title V, Chapter III of the LGC. They added that Vice-Mayor Contreras had failed to refer the budget to the chief legal counsel of the municipality; and that, together with the other incumbent members of the Sangguniang Bayan, she had instead sought the approval of the alleged Illegal Annual Budget for 2003

Respondents filed their respective Counter-Affidavits, both dated February 27, 2004, and practically identical in form and substance.[15] They stated that the proposed budget had actually been submitted on June 26, 2003, and not June 11, 2003. It was submitted only on that date, because Commission on Audit (COA) Circular No. 2002-2003, otherwise known as the New Government Accounting System, had mandated the revision of accounting procedures.[16] In compliance with that Circular, the municipality had to review and modify almost all of its financial transactions beginning January 1, 2002.

ISSUE: Whether or not the admitted flagrant violation of Respondent Mayor Felix V. Ople of Section 318, LGC, aided and abetted by co-respondent Vice Mayor Josefina R. Contreras, has been and can be validated by Section 323 of the LGC.

HELD: The Petition is bereft of merit.

RATIO: First, the mere failure of the local government to enact a budget did not make all its disbursements illegal. Section 323 of the LGC provides for the automatic reenactment of the budget of the preceding year, in case the Sanggunian fails to enact one within the first 90 days of the fiscal year. Hence, the contention in the present case that money was paid out of the local treasury without any valid appropriation must necessarily fail.

Second, Section 323 states that only the annual appropriations for salaries and wages, statutory and contractual obligations, and essential operating expenses are deemed reenacted. Petitioner failed to identify disbursements that had gone beyond this coverage.

Third, petitioners failed to substantiate their allegations that the government had suffered undue injury. They concluded that there had been undue injury simply on the basis of their unsubstantiated claims of illegal disbursements. Having failed to prove any unlawful expenditure, the claim of undue injury must necessarily fail.

Fourth, petitioners relied solely on Section 318 of the LGC, which allegedly exposed the mayor to criminal liability for delay in submitting a budget proposal.

Under the above LGC provision, criminal liability for delay in submitting the budget is qualified by various circumstances. For instance, the mayor must first receive the necessary financial documents from other city officials in order to be able to prepare the budget. In addition, criminal liability must conform to the provisions of the LGC and other applicable laws. Noteworthy is the fact that petitioners failed to present evidence that would fulfill these qualifications stated in the law.

ALBON V FERNANDO

FACTS: City of Marikina undertook a public works project to widen, clear and repair the existing sidewalks of Marikina Greenheights Subdivision. It was undertaken by the city government pursuant to Ordinance No. 59, s. 1993[3] like other infrastructure projects relating to roads, streets and sidewalks previously undertaken by the city.

ISSUE: May a local government unit (LGU) validly use public funds to undertake the widening, repair and improvement of the sidewalks of a privately-owned subdivision?

HELD:

RATIO: Like all LGUs, the City of Marikina is empowered to enact ordinances for the purposes set forth in the Local Government Code (RA 7160). It is expressly vested with police powers delegated to LGUs under the general welfare clause of RA 7160.[8] With this power, LGUs may prescribe reasonable regulations to protect the lives, health, and property of their constituents and maintain peace and order within their respective territorial jurisdictions.[9]

Cities and municipalities also have the power to exercise such powers and discharge such functions and responsibilities as may be necessary, appropriate or incidental to efficient and effective provisions of the basic services and facilities, including infrastructure facilities intended primarily to service the needs of their residents and which are financed by their own funds.[10] These infrastructure facilities include municipal or city roads and bridges and similar facilities

There is no question about the public nature and use of the sidewalks in the Marikina Greenheights Subdivision. One of the whereas clauses of PD 1216[12] (which amended PD 957[13]) declares that open spaces,[14] roads, alleys and sidewalks in a residential subdivision are for public use and beyond the commerce of man. In conjunction herewith, PD 957, as amended by PD 1216, mandates subdivision owners to set aside open spaces which shall be devoted exclusively for the use of the general public.

Thus, the trial and appellate courts were correct in upholding the validity of Ordinance No. 59, s. 1993. It was enacted in the exercise of the City of Marikinas police powers to regulate the use of sidewalks.

Ownership of the sidewalks in a private subdivision belongs to the subdivision owner/developer until it is either transferred to the government by way of donation or acquired by the government through expropriation.

Section 335 of RA 7160 is clear and specific that no public money or property shall be appropriated or applied for private purposes. This is in consonance with the fundamental principle in local fiscal administration that local government funds and monies shall be spent solely for public purposes.

In Pascual v. Secretary of Public Works,[26] the Court laid down the test of validity of a public expenditure: it is the essential character of the direct object of the expenditure which must determine its validity and not the magnitude of the interests to be affected nor the degree to which the general advantage of the community, and thus the public welfare, may be ultimately benefited by their promotion.[27] Incidental advantage to the public or to the State resulting from the promotion of private interests and the prosperity of private enterprises or business does not justify their aid by the use of public money.

Therefore, the use of LGU funds for the widening and improvement of privately-owned sidewalks is unlawful as it directly contravenes Section 335 of RA 7160. This conclusion finds further support from the language of Section 17 of RA 7160 which mandates LGUs to efficiently and effectively provide basic services and facilities. The law speaks of infrastructure facilities intended primarily to service the needs of the residents of the LGU and which are funded out of municipal funds.[32] It particularly refers to municipal roads and bridges and similar facilities.

ALTRES V EMPLEO

FACTS: Sometime in July 2003, Mayor Quijano sent notices of numerous vacant career positions in the city government to the CSC. The city government and the CSC thereupon proceeded to publicly announce the existence of the vacant positions. Petitioners and other applicants submitted their applications for the different positions where they felt qualified.

Toward the end of his term or on May 27, June 1, and June 24, 2004, Mayor Quijano issued appointments to petitioners.

In the meantime, the Sangguniang Panglungsod issued Resolution No. 04-242[3] addressed to the CSC Iligan City Field Office requesting a suspension of action on the processing of appointments to all vacant positions in the plantilla of the city government as of March 19, 2004 until the enactment of a new budget.

Respondent city accountant Empleo did not thus issue a certification as to availability of funds for the payment of salaries and wages of petitioners, as required by Section 1(e)(ii), Rule V of CSC Memorandum Circular No. 40, Series of 1998 reading:

x x x x

e. LGU Appointment. Appointment in local government units for submission to the Commission shall be accompanied, in addition to the common requirements, by the following:

x x x x

ii. Certification by the Municipal/City Provincial Accountant/Budget Officer that funds are available. (Emphasis and underscoring supplied)

And the other respondents did not sign petitioners position description forms.

The CSC Field Office for Lanao del Norte and Iligan City disapproved the appointments issued to petitioners invariably due to lack of certification of availability of funds.

ISSUE: whether it is Section 474(b)(4) or Section 344 of the Local Government Code of 1991 which applies to the requirement of certification of availability of funds under Section 1(e)(ii), Rule V of CSC Memorandum Circular Number 40, Series of 1998.

HELD:

RATIO: Section 344 of the Local Government Code of 1991 thus applies only when there is already an obligation to pay on the part of the local government unit, precisely because vouchers are issued only when services have been performed or expenses incurred.

The requirement of certification of availability of funds from the city treasurer under Section 344 of the Local Government Code of 1991 is for the purpose of facilitating the approval of vouchers issued for the payment of services already rendered to, and expenses incurred by, the local government unit.

The trial court thus erred in relying on Section 344 of the Local Government Code of 1991 in ruling that the ministerial function to issue a certification as to availability of funds for the payment of the wages and salaries of petitioners pertains to the city treasurer. For at the time material to the required issuance of the certification, the appointments issued to petitioners were not yet approved by the CSC, hence, there were yet no services performed to speak of. In other words, there was yet no due and demandable obligation of the local government to petitioners.

Section 474, subparagraph (b)(4) of the Local Government Code of 1991, on the other hand, requires the city accountant to certify to the availability of budgetary allotment to which expenditures and obligations may be properly charged.[44] By necessary implication, it includes the duty to certify to the availability of funds for the payment of salaries and wages of appointees to positions in the plantilla of the local government unit, as required under Section 1(e)(ii), Rule V of CSC Memorandum Circular Number 40, Series of 1998, a requirement before the CSC considers the approval of the appointments.

In fine, whenever a certification as to availability of funds is required for purposes other than actual payment of an obligation which requires disbursement of money, Section 474(b)(4) of the Local Government Code of 1991 applies, and it is the ministerial duty of the city accountant to issue the certification.

PEPSI-COLA V CITY OF BUTUAN

FACTS: That Ordinance No. 110 as amended, imposes a tax on any person, association, etc., of P0.10 per case of 24 bottles of Pepsi-Cola and the plaintiff paid under protest the amount of P4,926.63 from August 16 to December 31, 1960 and the amount of P9,250.40 from January 1 to July 30, 1961.

ISSUE: Plaintiff maintains that the disputed ordinance is null and void because: (1) it partakes of the nature of an import tax; (2) it amounts to double taxation; (3) it is excessive, oppressive and confiscatory; (4) it is highly unjust and discriminatory; and (5) section 2 of Republic Act No. 2264, upon the authority of which it was enacted, is an unconstitutional delegation of legislative powers.

HELD:

RATIO: (2) it amounts to double taxation (5) section 2 of Republic Act No. 2264, upon the authority of which it was enacted, is an unconstitutional delegation of legislative powers.

Then, again, the general principle against delegation of legislative powers, in consequence of the theory of separation of powers2 is subject to one well-established exception, namely: legislative powers may be delegated to local governments — to which said theory does not apply3 — in respect of matters of local concern.

(3) it is excessive, oppressive and confiscatory

The tax of "P0.10 per case of 24 bottles," of soft drinks or carbonated drinks — in the production and sale of which plaintiff is engaged — or less than P0.0042 per bottle, is manifestly too small to be excessive, oppressive, or confiscatory.

(1) it partakes of the nature of an import tax; (4) it is highly unjust and discriminatory;

The first and the fourth objections merit, however, serious consideration. In this connection, it is noteworthy that the tax prescribed in section 3 of Ordinance No. 110, as originally approved, was imposed upon dealers "engaged in selling" soft drinks or carbonated drinks. Thus, it would seem that the intent was then to levy a tax upon the sale of said merchandise. As amended by Ordinance No. 122, the tax is, however, imposed only upon "any agent and/or consignee of any person, association, partnership, company or corporation engaged in selling ... soft drinks or carbonated drinks." And, pursuant to section 3-A, which was inserted by said Ordinance No. 122:

... — Definition of the Term Consignee or Agent. — For purposes of this Ordinance, a consignee of agent shall mean any person, association, partnership, company or corporation who acts in the place of another by authority from him or one entrusted with the business of another or to whom is consigned or shipped no less than 1,000 cases of hard liquors or soft drinks every month for resale, either retail or wholesale.

As a consequence, merchants engaged in the sale of soft drink or carbonated drinks, are not subject to the tax, unless they are agents and/or consignees of another dealer, who, in the very nature of things, must be one engaged in business outside the City.

Besides, the tax would not be applicable to such agent and/or consignee, if less than 1,000 cases of soft drinks are consigned or shipped to him every month. When we consider, also, that the tax "shall be based and computed from the cargo manifest or bill of lading ... showing the number of cases" — not sold — but "received" by the taxpayer, the intention to limit the application of the ordinance to soft drinks and carbonated drinks brought into the City from outside thereof becomes apparent. Viewed from this angle, the tax partakes of the nature of an import duty, which is beyond defendant's authority to impose by express provision of law.

PHILIPPINE PETROLEUM CORPORATION V PILILLA

FACTS: Philippine Petroleum Corporation (PPC for short) is a business enterprise engaged in the manufacture of lubricated oil

Under Section 142 of the National Internal Revenue Code of 1939, manufactured oils and other fuels are subject to specific tax.

On June 28, 1973, Presidential Decree No. 231, otherwise known as the Local Tax Code was issued by former President Ferdinand E. Marcos governing the exercise by provinces, cities, municipalities and barrios of their taxing and other revenue-raising powers. Sections 19 and 19 (a) thereof, provide among others, that the municipality may impose taxes on business, except on those for which fixed taxes are provided on manufacturers, importers or producers of any article of commerce of whatever kind or nature, including brewers, distillers, rectifiers, repackers, and compounders of liquors, distilled spirits and/or wines in accordance with the schedule listed therein.

The Secretary of Finance issued Provincial Circular No. 26-73 dated December 27, 1973, directed to all provincial, city and municipal treasurers to refrain from collecting any local tax imposed in old or new tax ordinances in the business of manufacturing, wholesaling, retailing, or dealing in petroleum products subject to the specific tax under the National Internal Revenue Code (Rollo, p. 76).

Likewise, Provincial Circular No. 26 A-73 dated January 9, 1973 was issued by the Secretary of Finance instructing all City Treasurers to refrain from collecting any local tax imposed in tax ordinances enacted before or after the effectivity of the Local Tax Code on July 1, 1973, on the businesses of manufacturing, wholesaling, retailing, or dealing in, petroleum products subject to the specific tax under the National Internal Revenue Code (Rollo, p. 79).

Respondent Municipality of Pililla, Rizal, through Municipal Council Resolution No. 25, S-1974 enacted Municipal Tax Ordinance No. 1, S-1974 otherwise known as "The Pililla Tax Code of 1974" on June 14, 1974, which took effect on July 1, 1974 (Rollo, pp. 181-182). Sections 9 and 10 of the said ordinance imposed a tax on business, except for those for which fixed taxes are provided in the Local Tax Code on manufacturers, importers, or producers of any article of commerce of whatever kind or nature, including brewers, distillers, rectifiers, repackers, and compounders of liquors, distilled spirits and/or wines in accordance with the schedule found in the Local Tax Code, as well as mayor's permit, sanitary inspection fee and storage permit fee for flammable, combustible or explosive substances (Rollo, pp. 183-187), while Section 139 of the disputed ordinance imposed surcharges and interests on unpaid taxes, fees or charges (Ibid., p. 193).

On June 3, 1977, P.D. 1158 otherwise known as the National Internal Revenue Code of 1977 was enacted, Section 153 of which specifically imposes specific tax on refined and manufactured mineral oils and motor fuels.

ISSUE: whether or not petitioner PPC whose oil products are subject to specific tax under the NIRC, is still liable to pay (a) tax on business and (b) storage fees, considering Provincial Circular No. 6-77; and mayor's permit and sanitary inspection fee unto the respondent Municipality of Pililla, Rizal, based on Municipal Ordinance No. 1.

HELD:

RATIO: There is no question that Pililla's Municipal Tax Ordinance No. 1 imposing the assailed taxes, fees and charges is valid especially Section 9 (A) which according to the trial court "was lifted in toto and/or is a literal reproduction of Section 19 (a) of the Local Tax Code as amended by P.D. No. 426." It conforms with the mandate of said law.

But P.D. No. 426 amending the Local Tax Code is deemed to have repealed Provincial Circular Nos. 26-73 and 26 A-73 issued by the Secretary of Finance when Sections 19 and 19 (a), were carried over into P.D. No. 426 and no exemptions were given to manufacturers, wholesalers, retailers, or dealers in petroleum products.

Necessarily, there could not be any other logical conclusion than that the framers of P.D. No. 426 really and actually intended to terminate the effectivity and/or enforceability of Provincial Circulars Nos. 26-73 and 26 A-73 inasmuch as clearly these circulars are in contravention with Sec. 19 (a) of P.D. 426-the amendatory law to P.D. No. 231. That intention to terminate is very apparent and in fact it is expressed in clear and unequivocal terms in the effectivity and repealing clause of P.D. 426 . . .

Furthermore, while Section 2 of P.D. 436 prohibits the imposition of local taxes on petroleum products, said decree did not amend Sections 19 and 19 (a) of P.D. 231 as amended by P.D. 426, wherein the municipality is granted the right to levy taxes on business of

manufacturers, importers, producers of any article of commerce of whatever kind or nature. A tax on business is distinct from a tax on the article itself

The exercise by local governments of the power to tax is ordained by the present Constitution.1âwphi1 To allow the continuous effectivity of the prohibition set forth in PC No. 26-73 (1) would be tantamount to restricting their power to tax by mere administrative issuances. Under Section 5, Article X of the 1987 Constitution, only guidelines and limitations that may be established by Congress can define and limit such power of local governments. Thus:

Each local government unit shall have the power to create its own sources of revenues and to levy taxes, fees, and charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy . ..

The storage permit fee being imposed by Pililla's tax ordinance is a fee for the installation and keeping in storage of any flammable, combustible or explosive substances. Inasmuch as said storage makes use of tanks owned not by the municipality of Pililla, but by petitioner PPC, same is obviously not a charge for any service rendered by the municipality as what is envisioned in Section 37 of the same Code.

BASCO V PAGCOR

FACTS: 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."

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 —

(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.

ISSUE: Whether or no PAGCOR should be taxed

HELD: no

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

(a) The City of Manila, being a mere Municipal corporation has no inherent right to impose taxes (Icard v. City of Baguio, 83 Phil. 870; City of Iloilo v. Villanueva, 105 Phil. 337; Santos v. Municipality of Caloocan, 7 SCRA 643). Thus, "the Charter or statute must plainly show an intent to confer that power or the municipality cannot assume it" (Medina v. City of Baguio, 12 SCRA 62). Its "power to tax" therefore must always yield to a legislative act which is superior having been passed upon by the state itself which has the "inherent power to tax" (Bernas, the Revised [1973] Philippine Constitution, Vol. 1, 1983 ed. p. 445).

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

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

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 corporation with an original charter, PD 1869. All of its shares of stocks are owned by the National Government.

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

The states have no power by taxation or otherwise, to retard, impede, burden or in any manner control the operation of constitutional laws enacted by Congress to carry into execution the powers vested in the federal government.

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"

The power of local government to "impose taxes and fees" is always subject to "limitations" which Congress may provide by law.

In the absence of express grant of power to enact, ordinance provisions on this subject which are inconsistent with the state laws are void.

NAPOCOR V CITY OF CABANATUAN

FACTS: Petitioner, whose capital stock was subscribed and paid wholly by the Philippine Government,10 refused to pay the tax assessment. It argued that the respondent has no authority to impose tax on government entities. Petitioner also contended that as a non-profit organization, it is exempted from the payment of all forms of taxes, charges, duties or fees11 in accordance with sec. 13 of Rep. Act No. 6395, as amended,

ISSUE: Whether or not the City of Cabanatuan cannot impose tax on NAPOCOR

HELD:

RATIO: nothing prevents Congress from decreeing that even instrumentalities or agencies of the government performing governmental functions may be subject to tax.46 In enacting the LGC, Congress exercised its prerogative to tax instrumentalities and agencies of government as it sees fit.

"Thus, reading together sections 133, 232, and 234 of the LGC, we conclude that as a general rule, as laid down in section 133, the taxing power of local governments cannot extend to the levy of inter alia, 'taxes, fees and charges of any kind on the national government, its agencies and instrumentalities, and local government units'; however, pursuant to section 232, provinces, cities and municipalities in the Metropolitan Manila Area may impose the real property tax except on, inter alia, 'real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted for consideration or otherwise, to a taxable person as provided in the item (a) of the first paragraph of section 12.'"

In the case at bar, section 151 in relation to section 137 of the LGC clearly authorizes the respondent city government to impose on the petitioner the franchise tax in question.

In its general signification, a franchise is a privilege conferred by government authority, which does not belong to citizens of the country generally as a matter of common right.48 In its specific sense, a franchise may refer to a general or primary franchise, or to a special or secondary franchise. The former relates to the right to exist as a corporation, by virtue of duly approved articles of incorporation, or a charter pursuant to a special law creating the corporation

On the other hand, the latter refers to the right or privileges conferred upon an existing corporation such as the right to use the streets of a municipality to lay pipes of tracks, erect poles or string wires.

a franchise tax is "a tax on the privilege of transacting business in the state and exercising corporate franchises granted by the state."53 It is not levied on the corporation simply for existing as a corporation, upon its property54 or its income,55 but on its exercise of the rights or privileges granted to it by the government. Hence, a corporation need not pay franchise tax from the time it ceased to do business and exercise its franchise.56 It is within this context that the phrase "tax on businesses enjoying a franchise" in section 137 of the LGC should be interpreted and understood. Verily, to determine whether the petitioner is covered by the franchise tax in question, the following requisites should concur: (1) that petitioner has a "franchise" in the sense of a secondary or special franchise; and (2) that it is exercising its rights or privileges under this franchise within the territory of the respondent city government.

These contentions must necessarily fail.

To stress, a franchise tax is imposed based not on the ownership but on the exercise by the corporation of a privilege to do business. The taxable entity is the corporation which exercises the franchise, and not the individual stockholders.

To be sure, the ownership by the National Government of its entire capital stock does not necessarily imply that petitioner is not engaged in business.

proprietary functions are those that are undertaken only by way of advancing the general interest of society, and are merely optional on the government

Certainly, these activities do not partake of the sovereign functions of the government. They are purely private and commercial undertakings, albeit imbued with public interest.

CITY OF IRIGA V CASURECO III

FACTS: CASURECO III is an electric cooperative duly organized and existing by virtue of Presidential Decree (PD) 269,4 as amended, and registered with the National Electrification Administration (NEA). It is engaged in the business of electric power distribution to various end-users and consumers within the City of Iriga and the municipalities of Nabua, Bato, Baao, Buhi, Bula and Balatan of the Province of Camarines Sur, otherwise known as the "Rinconada area."5

Sometime in 2003, petitioner City of Iriga required CASURECO III to submit a report of its gross receipts for the period 1997-2002 to serve as the basis for the computation of franchise taxes, fees and other charges.6 The latter complied7 and was subsequently assessed taxes.

On January 7, 2004, petitioner made a final demand on CASURECO III to pay the franchise taxes due for the period 1998-2003 and real property taxes due for the period 1995-2003.8 CASURECO III, however, refused to pay said taxes on the ground that it is an electric cooperative provisionally registered with the Cooperative Development Authority (CDA),9 and therefore exempt from the payment of local taxes.10

ISSUE: Whether or not CASURECO is correct

HELD: No

RATIO: CASURECO III is not exempt from payment of franchise tax

PD 269, which took effect on August 6, 1973, granted electric cooperatives registered with the NEA, like CASURECO III, several tax privileges, one of which is exemption from the payment of "all national government, local government and municipal taxes and fees, including franchise, filing, recordation, license or permit fees or taxes."22

On March 10, 1990, Congress enacted into law RA 6938,23 otherwise known as the "Cooperative Code of the Philippines," and RA 693924 creating the CDA. The latter law vested the power to register cooperatives solely on the CDA, while the former provides that electric cooperatives registered with the NEA under PD 269 which opt not to register with the CDA shall not be entitled to the benefits and privileges under the said law.

On January 1, 1992, the LGC took effect, and Section 193 thereof withdrew tax exemptions or incentives previously enjoyed by "all persons, whether natural or juridical, including government-owned or controlled corporations, except local water districts, cooperatives duly registered under R.A. No. 6938, non-stock and non-profit hospitals and educational institutions."25

Therefore, CASURECO III can no longer invoke PD 269 to evade payment of local taxes. Moreover, its provisional registration with the CDA which granted it exemption for the payment of local taxes was extended only until May 4, 1992. Thereafter, it can no longer claim any exemption from the payment of local taxes, including the subject franchise tax.1âwphi1

In National Power Corporation v. City of Cabanatuan,29 the Court declared that "a franchise tax is „a tax on the privilege of transacting business in the state and exercising corporate franchises granted by the state."30 It is not levied on the corporation simply for existing as a corporation, upon its property or its income, but on its exercise of the rights or privileges granted to it by the government.31 "It is within this context that the phrase „tax on businesses enjoying a franchise‟ in Section 137 of the LGC should be interpreted and understood

MCIAA V MARCOS

FACTS: Petitioner Mactan Cebu International Airport Authority (MCIAA) was created by virtue of Republic Act No. 6958, mandated to principally undertake the economical, efficient and effective control, management and supervision of the Mactan International Airport in the Province of Cebu and the Lahug Airport in Cebu City

Since the time of its creation, petitioner MCIAA enjoyed the privilege of exemption from payment of realty taxes in accordance with Section 14 of its Charter:

Sec. 14. Tax Exemptions. -- The Authority shall be exempt from realty taxes imposed by the National Government or any of its political subdivisions, agencies and instrumentalities x x x.

On October 11, 1994, however, Mr. Eustaquio B. Cesa, Officer-in-Charge, Office of the Treasurer of the City of Cebu, demanded payment for realty taxes on several parcels of land belonging to the petitioner.

ISSUE: whether or not MCIAA is exempted from local tax

HELD: No.

RATIO: There can be no question that under Section 14 of R.A. No. 6958 the petitioner is exempt from the payment of realty taxes imposed by the National Government or any of its political subdivisions, agencies, and instrumentalities. Nevertheless, since taxation is the rule and exemption therefrom the exception, the exemption may thus be withdrawn at the pleasure of the taxing authority. The only exception to this rule is where the exemption was granted to private parties based on material consideration of a mutual nature, which then becomes contractual and is thus covered by the non-impairment clause of the Constitution.[23]

The LGC, enacted pursuant to Section 3, Article X of the Constitution, provides for the exercise by local government units of their power to tax, the scope thereof or its limitations, and the exemptions from taxation.

Section 133 of the LGC prescribes the common limitations on the taxing powers of local government units as follows:

SEC. 133. Common Limitations on the Taxing Power of Local Government Units. Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following:

(o) TAXES, FEES OR CHARGES OF ANY KIND ON THE NATIONAL GOVERNMENT, ITS AGENCIES AND INSTRUMENTALITIES, AND LOCAL GOVERNMENT UNITS. (emphasis supplied)

Section 193 of the LGC is the general provision on withdrawal of tax exemption privileges. It provides:

SEC. 193. Withdrawal of Tax Exemption Privileges. Unless otherwise provided in this Code, tax exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or juridical, including government-owned or controlled corporations, except local water districts, cooperatives duly registered under R.A. 6938, non-stock and non-profit hospitals and educational institutions, are hereby withdrawn upon the effectivity of this Code.

On the other hand, the LGC authorizes local government units to grant tax exemption privileges. Thus, Section 192 thereof provides:

SEC. 192. Authority to Grant Tax Exemption Privileges.-- Local government units may, through ordinances duly approved, grant tax exemptions, incentives or reliefs under such terms and conditions as they may deem necessary.

The foregoing sections of the LGC speak of: (a) the limitations on the taxing powers of local government units and the exceptions to such limitations; and (b) the rule on tax exemptions and the exceptions thereto. The use of exceptions or provisos in these sections, as shown by the following clauses:

(1) unless otherwise provided herein in the opening paragraph of Section 133;

(2) Unless otherwise provided in this Code in Section 193;

(3) not hereafter specifically exempted in Section 232; and

(4) Except as provided herein in the last paragraph of Section 234

As to tax exemptions or incentives granted to or presently enjoyed by natural or juridical persons, including government-owned and controlled corporations, Section 193 of the LGC prescribes the general rule, viz., they are withdrawn upon the effectivity of the LGC, except those granted to local water districts, cooperatives duly registered under R.A. No. 6938, non-stock and non-profit hospitals and educational institutions, and unless otherwise provided in the LGC. The latter proviso could refer to Section 234 which enumerates the properties exempt from real property tax. But the last paragraph of Section 234 further qualifies the retention of the exemption insofar as real property taxes are concerned by limiting the retention only to those enumerated therein; all others not included in the enumeration lost the privilege upon the effectivity of the LGC. Moreover, even as to real property owned by the Republic of the Philippines or any of its political subdivisions covered by item (a) of the first paragraph of Section 234, the exemption is withdrawn if the beneficial use of such property has been granted to a taxable person for consideration or otherwise.

Since the last paragraph of Section 234 unequivocally withdrew, upon the effectivity of the LGC, exemptions from payment of real property taxes granted to natural or juridical persons, including government-owned or controlled corporations, except as provided in the said section, and the petitioner is, undoubtedly, a government-owned corporation, it necessarily follows that its exemption from such tax granted it in Section 14 of its Charter, R.A. No. 6958, has been withdrawn.

The terms Republic of the Philippines and National Government are not interchangeable. The former is broader and synonymous with Government of the Republic of the Philippines which the Administrative Code of 1987 defines as the corporate governmental entity through which the functions of government are exercised throughout the Philippines, including, save as the contrary appears from the context, the various arms through which political authority is made affective in the Philippines, whether pertaining to the autonomous regions, the provincial, city, municipal or barangay subdivisions or other forms of local government.[27] These autonomous regions, provincial, city, municipal or barangay subdivisions are the political subdivisions.[28]

On the other hand, National Government refers to the entire machinery of the central government, as distinguished from the different forms of local governments.[29] The National Government then is composed of the three great departments: the executive, the legislative and the judicial.[30]

An agency of the Government refers to any of the various units of the Government, including a department, bureau, office, instrumentality, or government-owned or controlled corporation, or a local government or a distinct unit therein;[31] while an instrumentality refers to any agency of the National Government, not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy, usually through a charter. This term includes regulatory agencies, chartered institutions and government-owned and controlled corporations.[32]

If Section 234(a) intended to extend the exception therein to the withdrawal of the exemption from payment of real property taxes under the last sentence of the said section to the agencies and instrumentalities of the National Government mentioned in Section 133(o), then it should have restated the wording of the latter.

CALLANTA V OMBUDSMAN

FACTS: It is alleged that a general revision of assessment was conducted by the Office of the City Assessor in 1988 and sometime thereafter. Notices of assessment together with the new tax declarations were subsequently sent to the property owners. Thereafter, respondents, without the authority of the Local Board of Assessment Appeals, reassessed the values of certain properties, in contravention of Sec. 30 of P.D. 464. The said assessment resulted in the reduction of assessed values of the properties x x x.

ISSUE: Whether or not the City Assessor may reconsider real property assessment

HELD: NO

RATIO: Sec. 22, PD 464[14](now Sec. 220 of RA 7160), which reads:

Sec. 22. Valuation of Real Property. Upon the discovery of real property or during the general revision of property assessments as provided in Section twenty-one of this Code or at any time when requested by the person in whose name the property is declared, the provincial or city assessor or his authorized deputy shall make an appraisal and assessment in accordance with Section five hereof of the real property listed and described in the declaration irrespective of any previous assessment or taxpayers valuation thereon: Provided, however, That the assessment of real property shall not be increased oftener once every five years in the absence of new improvements increasing the value of said property or of any change in its use, except as otherwise provided in this Code.

The instances referred to [under Sec. 22] are as follows:

1.) upon the discovery of real property;

2.) during the general revision of property assessments as provided in Section 21 of the Code; and

3.) at anytime [sic] when requested by the person in whose name the property is declared.

It is not disputed that the assessment/valuation involved herein were conducted by virtue of the 1988 general revision of property assessments under No. 2 instance above.

After an assessment has been conducted, the assessor shall within thirty days issue a written notice of such new or revised assessment to the persUnder the aforecited procedure, the issuance of a notice of assessment by the local assessor shall be his last action on a particular assessment. On the side of the property owner, it is this last action which gives him [the] right to appeal to the Local Board of Assessment Appeals. The above procedure also, does not grant the property owner the remedy of filing a motion for reconsideration before the local assessor.

The act of herein petitioners in providing the corresponding notices of assessment the chance for the property owners concerned to file a motion for reconsideration and for acting on the motions filed is not in accordance with law and in excess of their authority and therefore constitutes ultra vires acts.[16]

In the case at bar, the second instance gave rise to the revised assessed values for which the property owners subsequently sought reconsideration. Sec. 30 of the same Code is equally clear that the aggrieved owners should have brought their appeals before the LBAA. Unfortunately, despite the advice to this effect contained in their respective notices of assessment, the owners chose to bring their requests for a review/readjustment before the city assessor, a remedy not sanctioned by the law. To allow this procedure would indeed invite corruption in the system of appraisal and assessment. on in whose name the property is declared.

While Sec. 23 requires the local assessor to certify to the finance secretary that the general revision has been finished, such certification is, however, not the operative act for the effectivity of the new assessments. This interpretation is bolstered by the fact that under the Local Government Code of 1991,[20] Title Two, Book II of which has replaced the Real Property Tax Code, there is no longer any provision requiring such certification.

In the same vein, we have said that the assessment is deemed made when the notice to this effect is released, mailed or sent to the taxpayer for the purpose of giving effect to said assessment.[22]

PHILRECA V SEC. OF DILG

FACTS: Under P.D. No. 269, as amended, or the National Electrification Administration Decree, it is the declared policy of the State to provide the total electrification of the Philippines on an area coverage basis the same being vital to the people and the sound development of the nation.[1] Pursuant to this policy, P.D. No. 269 aims to promote, encourage and assist all public service entities engaged in supplying electric service, particularly electric cooperatives by giving every tenable support and assistance to the electric cooperatives coming within the purview of the law.[2] Accordingly, Section 39 of P.D. No. 269 provides for the following tax incentives to electric cooperatives:

SECTION 39. Assistance to Cooperatives; Exemption from Taxes, Imposts, Duties, Fees; Assistance from the National Power Corporation. Pursuant to the national policy declared in Section 2, the Congress hereby finds and declares that the following assistance to cooperative is necessary and appropriate:

(a) Provided that it operates in conformity with the purposes and provisions of this Decree, cooperatives (1) shall be permanently exempt from paying income taxes, and (2) for a period ending on December 31 of the thirtieth full calendar year after the date of a cooperative's organization or conversion hereunder, or until it shall become completely free of indebtedness incurred by borrowing, whichever event first occurs, shall be exempt from the payment (a) of all National Government, local government and municipal taxes and fees, including franchise, filing, recordation, license or permit fees or taxes and any fees, charges, or costs involved in any court or administrative proceeding in which it may be a party, and (b) of all duties or imposts on foreign goods acquired for its operations, the period of such exemption for a new cooperative formed by consolidation, as provided for in Section 29, to begin from as of the date of the beginning of such period for the constituent consolidating cooperative which was most recently organized or converted under this Decree: Provided, That the Board of Administrators shall, after consultation with the Bureau of Internal Revenue, promulgate rules and regulations for the proper implementation of the tax exemptions provided for in this Decree.

.[3]

From 1971 to 1978, in order to finance the electrification projects envisioned by P.D. No. 269, as amended, the Philippine Government, acting through the National Economic Council (now National Economic Development Authority) and the NEA, entered into six (6) loan agreements with the government of the United States of America through the United States Agency for International Development (USAID) with electric cooperatives, including petitioners ANECO, ILECO I and ISELCO I, as beneficiaries. The six (6) loan agreements involved a total amount of approximately US$86,000,000.00. These loan agreements are existing until today.

ISSUE: Whether or not there is a violation of the Equal Protection Clause

HELD: No

RATIO: A cooperative under R.A. No. 6938 is defined as:

[A] duly registered association of persons with a common bond of interest, who have voluntarily joined together to achieve a lawful common or social economic end, making equitable contributions to the capital required and accepting a fair share of the risks and benefits of the undertaking in accordance with universally accepted cooperative principles.[10]

Nowhere in P.D. No. 269, as amended, does it require cooperatives to make equitable contributions to capital. Petitioners themselves admit that to qualify as a member of an electric cooperative under P.D. No. 269, only the payment of a P5.00 membership fee is required which is even refundable the moment the member is no longer interested in getting electric service from the cooperative or will transfer to another place outside the area covered by the cooperative.[13]

Another principle adhered to by the Cooperative Code is the principle of subsidiarity. Pursuant to this principle, the government may only engage in development activities where cooperatives do not posses the capability nor the resources to do so and only upon the request of such cooperatives.[15]

Thus, Article 2 of the Cooperative Code provides:

Art. 2. Declaration of Policy. It is the declared policy of the State to foster the creation and growth of cooperatives as a practical vehicle for prompting self-reliance and harnessing people power towards the attainment of economic development and social justice. The State shall encourage the private sector to undertake the actual formation and organization to cooperatives and shall create an atmosphere that is conducive to the growth and development of these cooperatives.

Towards this end, the Government and all its branches, subdivisions, instrumentalities and agencies shall ensure the provision of technical guidance, financial assistance and other services to enable said cooperatives to develop into viable and responsive economic enterprises and thereby bring about a strong cooperative movement that is free from any conditions that might infringe upon the autonomy or organizational integrity of cooperatives.

Further, the State recognizes the principle of subsidiarity under which the cooperative sector will initiate and regulate within its own ranks the promotion and organization, training and research, audit and support services relating to cooperatives with government assistance where necessary.[16]

Accordingly, under the charter of the CDA, or the primary government agency tasked to promote and regulate the institutional development of cooperatives, it is the declared policy of the State that:

[g]overnment assistance to cooperatives shall be free from any restriction and conditionality that may in any manner infringe upon the objectives and character of cooperatives as provided in this Act.The State shall, except as provided in this Act, maintain the policy of noninterference in the management and operation of cooperatives.[17]

In contrast, P.D. No. 269, as amended by P.D. No. 1645, is replete with provisions which grant the NEA, upon the happening of certain events, the power to control and take over the management and operations of cooperatives registered under it.

The extent of government control over electric cooperatives covered by P.D. No. 269, as amended, is largely a function of the role of the NEA as a primary source of funds of these electric cooperatives. It is crystal clear that NEA incurred loans from various sources to finance the development and operations of the electric cooperatives.

In contrast, cooperatives under R.A. No. 6938 are envisioned to be self-sufficient and independent organizations with minimal government intervention or regulation.

Article 128 of the Cooperative Code provides that all cooperatives registered under previous laws shall be deemed registered with the CDA upon submission of certain requirements within one year. However, cooperatives created under P.D. No. 269, as amended, are given three years within which to qualify and register with the CDA, after which, provisions of P.D. No. 1645 which expand the powers of the NEA over electric cooperatives, would no longer apply.[22]

Second, the classification of tax-exempt entities in the Local Government Code is germane to the purpose of the law.

Thus, while each government unit is granted the power to create its own sources of revenue, Congress, in light of its broad power to tax, has the discretion to determine the extent of the taxing powers of local government units consistent with the policy of local autonomy.

PHIL. PORTS AUTHORITY V CITY OF ILOILO

FACTS: City of Iloilo sent a Notice of Sale of Delinquent Real Properties to petitioner Philippine Ports Authority (PPA) for non-payment of real property taxes covering its facilities and edifices at the Iloilo port

The respondent city was the only winning bidder at the public auction conducted by the City Treasurer and the Assessor.

The petitioner contends that the subject properties are owned by the Republic of the Philippines. It avers that while under Section 30 of P.D. No. 857, the said properties were transferred to the petitioner, the Republic of the Philippines retained ownership over the same. It claims that while it administers and operates the port of Iloilo, it does so for the benefit of the general public and not for taxable persons. As such, the said properties are exempt from realty taxes under Section 40 of P.D. No. 464. The petitioner further asserts that P.D. No. 1931 and E.O. No. 93 have no application to properties owned by the Republic of the Philippines.

ISSUE: Whether or not the properties are taxable

HELD: No

RATIO: Under the last paragraph of Section 234 of Republic Act No. 7160, otherwise known as the Local Government Code (LGC), the petitioners exemptions from the real property tax were withdrawn upon the effectivity of the law.

The justification for this restricted exemption in Section 234(a) seems obvious: to limit further tax exemption privileges, especially in light of the general provision on withdrawal of tax exemption privileges in Section 193 and the special provision on withdrawal of exemption from payment of real property taxes in the last paragraph of Section 234.

The power to tax is the most effective instrument to raise needed revenues to finance and support myriad activities of local government units for the delivery of basic services essential to the promotion of the general welfare and the enhancement of peace, progress, and prosperity of the people.

. It must be stressed that the said port facilities and appurtenances are the petitioners corporate patrimonial properties, not for public use, and that the operation of the port and its facilities and the administration of its buildings are in the nature of ordinary business. The petitioner is clothed, under P.D. No. 857, with corporate status and corporate powers in the furtherance of its proprietary interests

Clearly then, the petitioner is a profit-earning corporation; hence, its patrimonial properties are subject to tax.[13]

We reject the petitioners claim that it is exempt from the payment of real property taxes, considering that it does not use the port facilities and buildings. This Court overruled a similar submission as follows:

Under the Real Property Tax Code, real property is classified for assessment purposes on the basis of actual use, which is defined as the purpose for which the property is principally or predominantly utilized by the person in possession of the property.

CITY ASSESSOR OF CEBU V ASSN. OF BENEVOLA DE CEBU

FACTS: Respondent Association of Benevola de Cebu, Inc. is a non-stock, non-profit organization organized under the laws of the Republic of the Philippines and is the owner of Chong Hua Hospital (CHH) in Cebu City. In the late 1990s, respondent constructed the CHH Medical Arts Center (CHHMAC). Thereafter, an April 17, 1998 Certificate of Occupancy[7] was issued to the center with a classification of Commercial [Clinic].

Petitioner City Assessor of Cebu City assessed the CHHMAC building under Tax Declaration (TD) No. 97 GR-04-024-02529 as commercial with a market value of PhP 28,060,520 and an assessed value of PhP 9,821,180 at the assessment level of 35% for commercial buildings, and not at the 10% special assessment currently imposed for CHH and its other separate buildingsthe CHHs Dietary and Records Departments.

ISSUE: Whether or not CCHMAC is an integral part of CHH

HELD: yes

RATIO: It is undisputed that the doctors and medical specialists holding clinics in CHHMAC are those duly accredited by CHH, that is, they are consultants of the hospital and the ones who can treat CHHs patients confined in it. This fact alone takes away CHHMAC from being categorized as commercial since a tertiary hospital like CHH is required by law to have a pool of physicians who comprises the required medical departments in various medical fields.

Based on these provisions, these physicians holding offices or clinics in CHHMAC, duly appointed or accredited by CHH, precisely fulfill and carry out their roles in the hospitals services for its patients through the CHHMAC. The fact that they are holding office in a separate building, like at CHHMAC, does not take away the essence and nature of their services vis--vis the over-all operation of the hospital and the benefits to the hospitals patients. Given what the law requires, it is clear that CHHMAC is an integral part of CHH.

Moreover, the exemption in favor of property used exclusively for charitable or educational purposes is not limited to property actually indispensable therefore (Cooley on Taxation, Vol. 2, p. 1430), but extends to facilities which are incidental to and reasonably necessary for the accomplishment of said purposes, such as, in the case of hospitals, a school for training nurses, a nurses home, property use to provide housing facilities for interns, resident doctors, superintendents, and other members of the hospital staff, and recreational facilities for student nurses, interns and residents (84 C.J.S., 621), such as athletic fields, including a farm used for the inmates of the institution (Cooley on Taxation, Vol. 2, p. 1430).[25]

Verily, being an integral part of CHH, CHHMAC should be under the same special assessment level of as that of the former.

Finally, respondents charge of rentals for the offices and clinics its accredited physicians occupy cannot be equated to a commercial venture, which is mainly for profit.

Respondents explanation on this point is well taken. First, CHHMAC is only for its consultants or accredited doctors and medical specialists. Second, the charging of rentals is a practical necessity: (1) to recoup the investment cost of the building, (2) to cover the rentals for the lot CHHMAC is built on, and (3) to maintain the CHHMAC building and its facilities. Third, as correctly pointed out by respondent, it pays the proper taxes for its rental income. And, fourth, if there is indeed any net income from the lease income of CHHMAC, such does not inure to any private or individual person as it will be used for respondents other charitable projects.

CITY OF PASIGE V RP

FACTS: Mid-Pasig Land Development Corporation (MPLDC) owned two parcels of land, Portions of the properties are leased to different business establishments.

In 1986, the registered owner of MPLDC, Jose Y. Campos (Campos), voluntarily surrendered MPLDC to the Republic of the Philippines.

On 30 September 2002, the Pasig City Assessors Office sent MPLDC two notices of tax delinquency for its failure to pay real property tax on the properties for the period 1979 to 2001totaling P256,858,555.

ISSUE: Whether or not the protions of the properties leased to different business estabilishments are tax exempted

HELD: No

RATIO: Section 234(a) of Republic Act No. 7160 states that properties owned by the Republic of the Philippines are exempt from real property tax except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person. Thus, the portions of the properties not leased to taxable entities are exempt from real estate tax while the portions of the properties leased to taxable entities are subject to real estate tax.

In the present case, the parcels of land are not properties of public dominion because they are not intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads. Neither are they intended for some public service or for the development of the national wealth. MPLDC leases portions of the properties to different business establishments. Thus, the portions of the properties leased to taxable entities are not only subject to real estate tax, they can also be sold at public auction to satisfy the tax delinquency.

In sum, only those portions of the properties leased to taxable entities are subject to real estate tax for the period of such leases.

RURAL BANK OF MAKATI V MUN. OF MAKATI

FACTS: On November 19, 1990, the municipality lodged a complaint with the Prosecutors Office, charging petitioners Esteban S. Silva, president and general manager of the bank and Magdalena V. Landicho for violation of Section 21(a), Chapter II, Article 3 in relation to Sections 105 and 169 of the Metropolitan Tax Code.

ISSUE: Whether or not the closure of petitioner bank is valid;

HELD: NO

RATIO: On the issue of the closure of the bank, we find that the bank was not engaged in any illegal or immoral activities to warrant its outright closure. The appropriate remedies to enforce payment of delinquent taxes or fees are provided for in Section 62 of the Local Tax Code, to wit:

SEC. 62. Civil Remedies. The civil remedies available to enforce payment of delinquent taxes shall be by distraint of personal property, and by legal action. Either of these remedies or both simultaneously may be pursued at the discretion of the proper authority.

The payment of other revenues accruing to local governments shall be enforced by legal action.[28]

Said Section 62 did not provide for closure. Moreover, the order of closure violated petitioners right to due process, considering that the records show that the bank exercised good faith and presented what it thought was a valid and legal justification for not paying the required taxes and fees. The violation of a municipal ordinance does not empower a municipal mayor to avail of extrajudicial remedies.[29] It should have observed due process before ordering the banks closure.

SPS WONG V CITY OF ILOILO

FACTS: the respective estates of the Hodges spouses sold the property to Vicente Chan. For some reason, however, Chan was not able to register the property in his name.

Subsequently, Chan passed away and his estate sold the same property to petitioners Francisco and Joaquin Wong on September 29, 1967. Because the estate of Chan was unable to produce the estate tax clearance and the owners duplicate of title, petitioners were only allowed to annotate a notice of adverse claim on TCT No. T-7373

On January 3, 1991, respondent Iloilo City Treasurer Romeo Manikan issued a general notice of delinquency in the payment of real estate taxes.

Because no one contested the said notice or settled the tax delinquency of the subject property, the City Treasurer sent the notice of sale to the last known judicial administrator of the estates of the Hodges.

On September 26, 1991, the property was sold at public auction wherein respondent Melanie Uy was the highest bidder.

They asserted that the tax sale was void since the City Treasurer failed to inform them of the tax sale as required by Section 73 of PD[8] 464[9] which provided:

Section 73. Advertisement of sale of real property at public auction.

ISSUE: Whether or not the auction was valid

HELD: Yes

RATIO: Section 83 of PD 464 states that the RTC shall not entertain any complaint assailing the validity of a tax sale of real property unless the complainant deposits with the court the amount for which the said property was sold plus interest equivalent to 20% per annum from the date of sale until the institution of the complaint. This provision was adopted in Section 267 of the Local Government Code, albeit the increase in the prescribed rate of interest to 2% per month.[18]

ANGELES CITY VS AEC

FACTS: On June 18, 1964, AEC was granted a legislative franchise under Republic Act No. (RA) 4079[2] to construct, maintain and operate an electric light, heat, and power system for the purpose of generating and distributing electric light, heat and power for sale in Angeles City, Pampanga. Pursuant to Section 3-A thereof,[3] AECs payment of franchise tax for gross earnings from electric current sold was in lieu of all taxes, fees and assessments.

On September 11, 1974, Presidential Decree No. (PD) 551 reduced the franchise tax of electric franchise holders. Section 1 of PD 551

On January 1, 1992, RA 7160 or the Local Government Code (LGC) of 1991 was passed into law, conferring upon provinces and cities the power, among others, to impose tax on businesses enjoying franchise.[4] In accordance with the LGC, the Sangguniang Panlungsod of Angeles City enacted on December 23, 1993 Tax Ordinance No. 33, S-93, otherwise known as the Revised Revenue Code of Angeles City (RRCAC).

ISSUE: Being a special civil action for certiorari, the issue in the instant case is limited to the determination of whether the RTC gravely abused its discretion in issuing the writ of preliminary injunction enjoining Angeles City and its City Treasurer from levying, selling, and disposing the properties of AEC. All other matters pertaining to the validity of the tax assessment and AECs tax exemption must therefore be left for the determination of the RTC where the main case is pending decision.

HELD: We find the petition bereft of merit.

The LGC does not specifically prohibit an injunction enjoining the collection of taxes

RATIO: A principle deeply embedded in our jurisprudence is that taxes being the lifeblood of the government should be collected promptly,[26] without unnecessary hindrance[27] or delay.[28]In line with this principle, the National Internal Revenue Code of 1997 (NIRC) expressly provides that no court shall have the authority to grant an injunction to restrain the collection of any national internal revenue tax, fee or charge imposed by the code.[29] An exception to this rule obtains only when in the opinion of the Court of Tax Appeals (CTA) the collection thereof may jeopardize the interest of the government and/or the taxpayer.[30]

The situation, however, is different in the case of the collection of local taxes as there is no express provision in the LGC prohibiting courts from issuing an injunction to restrain local governments from collecting taxes. Thus, in the case of Valley Trading Co., Inc. v. Court of First Instance of Isabela, Branch II, cited by the petitioner, we ruled that:

Unlike the National Internal Revenue Code, the Local Tax Code[31] does not contain any specific provision prohibiting courts from enjoining the collection of local taxes. Such statutory lapse or intent, however it may be viewed, may have allowed preliminary injunction where local taxes are involved but cannot negate the procedural rules and requirements under Rule 58.[32]

As a rule, the issuance of a preliminary injunction rests entirely within the discretion of the court taking cognizance of the case and will not be interfered with, except where there is grave abuse of discretion committed by the court.[36]