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Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No.

127820 July 20, 1998 MUNICIPALITY OF PARAAQUE, petitioner, vs. V.M. REALTY CORPORATION, respondent. PANGANIBAN, J.: A local government unit (LGU), like the Municipality of Paraaque, cannot authorize an expropriation of private property through a mere resolution of its lawmaking body. The Local Government Code expressly and clearly requires an ordinance or a local law for the purpose. A resolution that merely expresses the sentiment or opinion of the Municipal Council will not suffice. On the other hand, the principle of res judicata does not bar subsequent proceedings for the expropriation of the same property when all the legal requirements for its valid exercise are complied with. Statement of the Case These principles are applied by this Court in resolving this petition for review 1 2 on certiorari of the July 22, 1996 Decision of the Court of Appeals in CA GR 3 CV No. 48048, which affirmed in toto the Regional Trial Court's August 9, 4 1994 Resolution. The trial court dismissed the expropriation suit as follows: The right of the plaintiff to exercise the power of eminent domain is not disputed. However, such right may be exercised only pursuant to an Ordinance (Sec. 19, R.A No. 7160). In the instant case, there is no such ordinance passed by the Municipal Council of Paraaque enabling the Municipality, thru its Chief Executive, to exercise the power of eminent domain. The complaint, therefore, states no cause of action. Assuming that plaintiff has a cause of action, the same is barred by a prior judgment. On September 29, 1987, the plaintiff filed a complaint for expropriation involving the same parcels of land which was docketed as Civil Case No. 17939 of this Court (page 26, record). Said case was dismissed with

prejudice on May 18, 1988 (page 39, record). The order of dismissal was not appealed; hence, the same became final. The plaintiff cannot be allowed to pursue the present action without violating the principle of [r]es [j]udicata. While defendant in Civil Case No. 17939 was Limpan Investment Corporation, the doctrine of res judicata still applies because the judgment in said case (C.C. No. 17939) is conclusive between the parties and their successors-in-interest (Vda. de Buncio vs. Estate of the late Anita de Leon). The herein defendant is the successor-in-interest of Limpan Investment Corporation as shown by the "Deed of Assignment Exchange" executed on June 13, 1990. WHEREFORE, defendant's motion for reconsideration is hereby granted. The order dated February 4, 1994 is vacated and set aside. This case is hereby dismissed. No pronouncement as to costs. SO ORDERED.
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Factual Antecedents Pursuant to Sangguniang Bayan Resolution No. 93-95, Series of 1993, the Municipality of Paraaque filed on September 20, 1993, a Complaint for 7 expropriation against Private Respondent V.M. Realty Corporation over two parcels of land (Lots 2-A-2 and 2-B-1 of Subdivision Plan Psd-17917), with a combined area of about 10,000 square meters, located at Wakas, San Dionisio, Paraaque, Metro Manila, and covered by Torrens Certificate of Title No. 48700. Allegedly, the complaint was filed "for the purpose of alleviating the living conditions of the underprivileged by providing homes for the homeless 8 through a socialized housing project." Parenthetically, it was also for this stated purpose that petitioner, pursuant to its Sangguniang Bayan Resolution 9 No. 577, Series of 1991, previously made an offer to enter into a negotiated 10 sale of the property with private respondent, which the latter did not accept. Finding the Complaint sufficient in form and substance, the Regional Trial 11 Court of Makati, Branch 134, issued an Order dated January 10, 1994, giving it due course. Acting on petitioner's motion, said court issued an Order 12 dated February 4, 1994, authorizing petitioner to take possession of the subject property upon deposit with its clerk of court of an amount equivalent to 15 percent of its fair market value based on its current tax declaration. On February 21, 1994, private respondent filed its Answer containing 13 affirmative defenses and a counterclaim, alleging in the main that (a) the
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complaint failed to state a cause of action because it was filed pursuant to a resolution and not to an ordinance as required by RA 7160 (the Local Government Code); and (b) the cause of action, if any, was barred by a prior judgment or res judicata. On private respondent's motion, its Answer was 14 15 treated as a motion to dismiss. On March 24, 1991, petitioner filed its opposition, stressing that the trial court's Order dated February 4, 1994 was in accord with Section 19 of RA 7160, and that the principle of res judicata was not applicable. Thereafter, the trial court issued its August 9, 1994 Resolution nullifying its February 4, 1994 Order and dismissing the case. Petitioner's motions for reconsideration and transfer of venue were denied by the trial court in a 17 Resolution dated December 2, 1994. Petitioner then appealed to Respondent Court, raising the following issues: 1. Whether or not the Resolution of the Paraaque Municipal Council No. 93-95, Series of 1993 is a substantial compliance of the statutory requirement of Section 19, R.A. 7180 [sic] in the exercise of the power of eminent domain by the plaintiff-appellant. 2. Whether or not the complaint in this case states no cause of action. 3. Whether or not the strict adherence to the literal observance to the rule of procedure resulted in technicality standing in the way of substantial justice. 4. Whether or not the principle of res judicata 18 is applicable to the present case. As previously mentioned, the Court of Appeals affirmed in toto the trial court's Decision. Respondent Court, in its assailed Resolution promulgated on 19 January 8, 1997, denied petitioner's Motion for Reconsideration for lack of merit. Hence, this appeal.
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1. A resolution duly approved by the municipal council has the same force and effect of an ordinance and will not deprive an expropriation case of a valid cause of action. 2. The principle of res judicata as a ground for dismissal of case is not applicable when public interest is primarily 21 involved. The Court's Ruling The petition is not meritorious. First Issue: Resolution Different from an Ordinance Petitioner contends that a resolution approved by the municipal council for the purpose of initiating an expropriation case "substantially complies with the 22 requirements of the law" because the terms "ordinance" and "resolution" are synonymous for "the purpose of bestowing authority [on] the local government unit through its chief executive to initiate the expropriation proceedings in court 23 in the exercise of the power of eminent domain." Petitioner seeks to bolster this contention by citing Article 36, Rule VI of the Rules and Regulations Implementing the Local Government Code, which provides. "If the LGU fails to acquire a private property for public use, purpose, or welfare through purchase, the LGU may expropriate said property through a resolution of the Sanggunian authorizing its chief executive to initiate expropriation 24 proceedings." (Emphasis supplied.) The Court disagrees. The power of eminent domain is lodged in the legislative branch of government, which may delegate the exercise thereof to LGUs, 25 other public entities and public utilities. An LGU may therefore exercise the power to expropriate private property only when authorized by Congress and subject to the latter's control and restraints, imposed "through the law 26 conferring the power or in other legislations." In this case, Section 19 of RA 7160, which delegates to LGUs the power of eminent domain, also lays down the parameters for its exercise. It provides as follows: Sec. 19. Eminent Domain. A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose, or welfare for the benefit of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws: Provided, however, That the power of eminent domain may not be exercised unless a valid and definite offer has been previously

The Issues Before this Court, petitioner posits two issues, viz.:

made to the owner, and such offer was not accepted: Provided, further, That the local government unit may immediately take possession of the property upon the filing of the expropriation proceedings and upon making a deposit with the proper court of at least fifteen percent (15%) of the fair market value of the property based on the current tax declaration of the property to be expropriated: Provided, finally, That, the amount to be paid for the expropriated property shall be determined by the proper court, based on the fair market value at the time of the taking of the property. (Emphasis supplied) Thus, the following essential requisites must concur before an LGU can exercise the power of eminent domain: 1. An ordinance is enacted by the local legislative council authorizing the local chief executive, in behalf of the LGU, to exercise the power of eminent domain or pursue expropriation proceedings over a particular private property. 2. The power of eminent domain is exercised for public use, purpose or welfare, or for the benefit of the poor and the landless. 3. There is payment of just compensation, as required under Section 9, Article III of the Constitution, and other pertinent laws. 4. A valid and definite offer has been previously made to the owner of the property sought to be expropriated, but said offer 27 was not accepted. In the case at bar, the local chief executive sought to exercise the power of eminent domain pursuant to a resolution of the municipal council. Thus, there was no compliance with the first requisite that the mayor be authorized through 28 an ordinance. Petitioner cites Camarines Sur vs. Court of Appeals to show that a resolution may suffice to support the exercise of eminent domain by an 29 LGU. This case, however, is not in point because the applicable law at that 30 time was BP 337, the previous Local Government Code, which had provided that a mere resolution would enable an LGU to exercise eminent domain. In 31 contrast, RA 7160, the present Local Government Code which was already in force when the Complaint for expropriation was filed, explicitly required an ordinance for this purpose. We are not convinced by petitioner's insistence that the terms "resolution" and "ordinance" are synonymous. A municipal ordinance is different from a

resolution. An ordinance is a law, but a resolution is merely a declaration of the 32 sentiment or opinion of a lawmaking body on a specific matter. An ordinance possesses a general and permanent character, but a resolution is temporary in nature. Additionally, the two are enacted differently a third reading is necessary for an ordinance, but not for a resolution, unless decided otherwise 33 by a majority of all the Sanggunian members. If Congress intended to allow LGUs to exercise eminent domain through a mere resolution, it would have simply adopted the language of the previous Local Government Code. But Congress did not. In a clear divergence from the previous Local Government Code, Section 19 of RA 7160 categorically requires that the local chief executive act pursuant to an ordinance. Indeed, "[l]egislative intent is determined principally from the language of a statute. Where the language of a statute is clear and unambiguous, the law is applied according to its express terms, and interpretation would be resorted to only where a literal interpretation would be resorted to only where a literal interpretation would be either impossible or absurd or would lead to an 34 injustice." In the instant case, there is no reason to depart from this rule, since the law requiring an ordinance is not at all impossible, absurd, or unjust. Moreover, the power of eminent domain necessarily involves a derogation of a 35 fundamental or private right of the people. Accordingly, the manifest change in the legislative language from "resolution" under BP 337 to "ordinance" under RA 7160 demands a strict construction. "No species of property is held by individuals with greater tenacity, and is guarded by the Constitution and laws more sedulously, than the right to the freehold of inhabitants. When the legislature interferes with that right and, for greater public purposes, appropriates the land of an individual without his consent, the plain meaning of 36 the law should not be enlarged by doubtful interpretation." Petitioner relies on Article 36, Rule VI of the Implementing Rules, which requires only a resolution to authorize an LGU to exercise eminent domain. This is clearly misplaced, because Section 19 of RA 7160, the law itself, surely 37 prevails over said rule which merely seeks to implement it. It is axiomatic that the clear letter of the law is controlling and cannot be amended by a mere administrative rule issued for its implementation. Besides, what the discrepancy seems to indicate is a mere oversight in the wording of the implementing rules, since Article 32, Rule VI thereof, also requires that, in exercising the power of eminent domain, the chief executive of the LGU act pursuant to an ordinance. In this ruling, the Court does not diminish the policy embodied in Section 2, Article X of the Constitution, which provides that "territorial and political subdivisions shall enjoy local autonomy." It merely upholds the law as worded in RA 7160. We stress that an LGU is created by law and all its powers and rights are sourced therefrom. It has therefore no power to amend or act beyond the authority given and the limitations imposed on it by law. Strictly

speaking, the power of eminent domain delegated to an LGU is in reality not eminent but "inferior" domain, since it must conform to the limits imposed by 38 the delegation, and thus partakes only of a share in eminent domain. Indeed, "the national legislature is still the principal of the local government 39 units, which cannot defy its will or modify or violate it." Complaint Does Not State a Cause of Action In its Brief filed before Respondent Court, petitioner argues that its Sangguniang Bayan passed an ordinance on October 11, 1994 which reiterated its Resolution No. 93-35, Series of 1993, and ratified all the acts of 40 its mayor regarding the subject expropriation. This argument is bereft of merit. In the first place, petitioner merely alleged the existence of such an ordinance, but it did not present any certified true copy thereof. In the second place, petitioner did not raise this point before this 41 Court. In fact, it was mentioned by private respondent, and only in passing. In any event, this allegation does not cure the inherent defect of petitioner's Complaint for expropriation filed on September 23, 1993. It is hornbook doctrine that . . . in a motion to dismiss based on the ground that the complaint fails to state a cause of action, the question submitted before the court for determination is the sufficiency of the allegations in the complaint itself. Whether those allegations are true or not is beside the point, for their truth is hypothetically admitted by the motion. The issue rather is: admitting them to be true, may the court render a valid 42 judgment in accordance with the prayer of the complaint? The fact that there is no cause of action is evident from the face of the Complaint for expropriation which was based on a mere resolution. The absence of an ordinance authorizing the same is equivalent to lack of cause of action. Consequently, the Court of Appeals committed no reversible error in affirming the trial court's Decision which dismissed the expropriation suit. Second Issue: Eminent Domain Not Barred by Res Judicata As correctly found by the Court of Appeals and the trial court, all the requisites for the application of res judicata are present in this case. There is a previous final judgment on the merits in a prior expropriation case involving
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identical interests, subject matter and cause of action, which has been rendered by a court having jurisdiction over it. Be that as it may, the Court holds that the principle of res judicata, which finds 45 application in generally all cases and proceedings, cannot bar the right of the State or its agent to expropriate private property. The very nature of eminent domain, as an inherent power of the State, dictates that the right to exercise the power be absolute and unfettered even by a prior judgment or res judicata. The scope of eminent domain is plenary and, like police power, can 46 "reach every form of property which the State might need for public use." "All separate interests of individuals in property are held of the government under this tacit agreement or implied reservation. Notwithstanding the grant to individuals, the eminent domain, the highest and most exact idea of property, remains in the government, or in the aggregate body of the people in their sovereign capacity; and they have the right to resume the possession of the 47 property whenever the public interest requires it." Thus, the State or its authorized agent cannot be forever barred from exercising said right by reason alone of previous non-compliance with any legal requirement. While the principle of res judicata does not denigrate the right of the State to exercise eminent domain, it does apply to specific issues decided in a previous case. For example, a final judgment dismissing an expropriation suit on the ground that there was no prior offer precludes another suit raising the same issue; it cannot, however, bar the State or its agent from thereafter complying with this requirement, as prescribed by law, and subsequently exercising its 48 power of eminent domain over the same property. By the same token, our ruling that petitioner cannot exercise its delegated power of eminent domain through a mere resolution will not bar it from reinstituting similar proceedings, once the said legal requirement and, for that matter, all others are properly complied with. Parenthetically and by parity of reasoning, the same is also true 49 of the principle of "law of the case." In Republic vs. De Knecht, the Court ruled that the power of the State or its agent to exercise eminent domain is not diminished by the mere fact that a prior final judgment over the property to be expropriated has become the law of the case as to the parties. The State or its authorized agent may still subsequently exercise its right to expropriate the same property, once all legal requirements are complied with. To rule otherwise will not only improperly diminish the power of eminent domain, but also clearly defeat social justice. WHEREFORE, the petition is hereby DENIED without prejudice to petitioner's proper exercise of its power of eminent domain over subject property. Costs against petitioner. SO ORDERED. Davide, Jr., Bellosillo, Vitug and Quisumbing, JJ., concur.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 132431 February 13, 2004 ESTATE OR HEIRS OF THE LATE EX-JUSTICE JOSE B. L. REYES represented by their Administratrix and Attorney-In-Fact, Adoracion D. Reyes, and the ESTATE OR HEIRS OF THE LATE DR. EDMUNDO A. REYES, represented by MARIA TERESA P. REYES and CARLOS P. REYES, petitioners vs. CITY OF MANILA, respondent. G.R. No. 137146 February 13, 2004 ESTATE OF HEIRS OF THE LATE EX-JUSTICE JOSE B.L. REYES and ESTATE OR HEIRS OF THE LATE DR. EDMUNDO REYES, petitioners vs. COURT OF APPEALS, DR. ROSARIO ABIOG, ANGELINA MAGLONSO and SAMPAGUITA BISIG NG MAGKAKAPITBAHAY, INC. and the CITY OF MANILA, respondents. DECISION CORONA, J.: Before us are the following consolidated petitions filed by petitioners Heirs of Jose B.L. 1 2 Reyes and Edmundo Reyes: (1) a petition for review of the decision of the Court of Appeals dated January 27, 1998 which ordered the condemnation of petitioners 3 properties and reversed the order of the Regional Trial Court (RTC) of Manila, Branch 9, dated October 3, 1995 dismissing the complaint of respondent City of Manila (City) 4 for expropriation, and (2) a petition for certiorari alleging that the Court of Appeals 5 committed grave abuse of discretion in rendering a resolution dated August 19, 1998 which issued a temporary restraining order against the Municipal Trial Court (MTC) of Manila, Branch 10, not to "(disturb) the occupancy of Dr. Rosario Abiog, one of the members of SBMI, until the Supreme Court has decided the Petition for Review on 6 Certiorari" and a resolution dated December 16, 1998 enjoining petitioners "from disturbing the physical possession of all the properties subject of the expropriation proceedings." The undisputed facts follow. The records show that Jose B. L. Reyes and petitioners Heirs of Edmundo Reyes are the pro-indiviso co-owners in equal proportion of 11 parcels of land with a total area of 13,940 square meters situated at Sta. Cruz District, Manila and covered by Transfer Certificate of Title No. 24359 issued by the Register of Deeds of Manila. These parcels of land are being occupied and leased by different tenants, among whom are respondents Abiog, Maglonso and members of respondent Sampaguita Bisig ng

Magkakapitbahay, Incorporated (SBMI). Petitioners leased to respondent Abiog Lot 2E, Block 3007 of the consolidated subdivision plan (LRC) Psd- 328345, with an area of 7 191 square meters and to respondent Maglonso, Lot 2-R, Block 2996 of the same 8 consolidation plan, with an area of 112 square meters. On November 9, 1993 and May 26, 1994, respectively, Jose B.L. Reyes and petitioners Heirs of Edmundo Reyes filed ejectment complaints against respondents Rosario Abiog and Angelina Maglonso, among others. Upon his death, Jose B.L. Reyes was substituted by his heirs. Petitioners obtained favorable judgments against said respondents. In Civil Case No. 142851-CV, the Metropolitan Trial Court (MTC) of Manila, Branch 10, rendered a decision dated May 9, 1994 against respondent Abiog. In Civil Case No. 144205-CV, the MTC of Manila, Branch 3, issued judgment dated May 4, 1995 against respondent Maglonso. Respondents Abiog and Maglonso appealed the MTC decisions but the same were 9 denied by the RTC of Manila, Branch 28, and the RTC of Manila, Branch 38, 10 respectively. Their appeals to the Court of Appeals were likewise denied. As no appeals were further taken, the judgments of eviction against respondents Abiog and Maglonso became final and executory in 1998. Meanwhile, during the pendency of the two ejectment cases against respondents Abiog and Maglonso, respondent City filed on April 25, 1995 a complaint for eminent domain 11 (expropriation) of the properties of petitioners at the RTC of Manila, Branch 9. The properties sought to be acquired by the City included parcels of land occupied by respondents Abiog, Maglonso and members of respondent SBMI. The complaint was based on Ordinance No. 7818 enacted on November 29, 1993 authorizing the City Mayor of Manila to expropriate certain parcels of land with an aggregate area of 9,930 square meters, more or less, owned by Jose B.L. Reyes and Edmundo Reyes situated along the streets of Rizal Avenue, Tecson, M. Natividad, Sampaguita, Oroquieta, M. Hizon, Felix Huertes, Bulacan, Sulu, Aurora Boulevard, Pedro Guevarra and Kalimbas in the third district of Manila. These parcels of land are more particularly described in the pertinent Cadastral Plan as Lot 3, Block 2995, Lot 2, Block 2996; Lot 2, Block 2999; Lot 5, Block 2999, and Lot 2, Block 3007. According to the ordinance, the said properties were to be distributed to the intended beneficiaries, who were "the occupants of the said parcels of land who (had) been occupying the said 12 lands as lessees or any term thereof for a period of at least 10 years." The complaint alleged that, on March 10, 1995, respondent City thru City Legal Officer Angel Aguirre, Jr. sent the petitioners a written offer to purchase the subject properties for P10,285,293.38 but the same was rejected. Respondent City prayed that an order be issued fixing the provisional value of the property in the amount of P9,684,380 based on the current tax declaration of the real properties and that it be authorized to enter and take possession thereof upon the deposit with the trial court of the amount of P1,452,657 or 15% of the aforesaid value. On May 15, 1995, respondent SBMI, a registered non-stock corporation composed of the residents of the subject properties (including as well as representing herein respondents Abiog and Maglonso), filed a motion for intervention and admission of their attached complaint with prayer for injunction. Respondent SBMI alleged that it had a legal interest over the subject matter of the litigation as its members were the lawful

beneficiaries of the subject matter of the case. It prayed for the issuance of a temporary restraining order to enjoin the petitioners from ousting the occupants of the subject properties. The trial court denied the motion for intervention in an order dated June 2, 1995 on the ground that "the movants interest (was) indirect, contingent, remote, conjectual (sic), consequential (sic) and collateral. At the very least, it (was), if it (existed) at all, purely inchoate, or in sheer expectancy of a right that may or may not 13 be granted." On the day SBMIs motion for intervention was denied, petitioners filed a motion to dismiss the complaint for eminent domain for lack of merit. Among the grounds alleged were the following: xxx that the amount allegedly deposited by the plaintiff is based on an erroneous computation since Sec. 19 of the Local Government Code of 1991 provides that in order for the plaintiff to take possession of the property, the deposit should be at least 15% of the fair market value of the property based on the current tax declaration of the property to be expropriated which is P19,619,520.00, 15% of which is P2,942,928.00; that since the subject property is allegedly being expropriated for socialized housing, the guidelines for their equitable valuation shall be set by the Department of Finance on the basis of the market value reflected in the zonal valuation conformably to Sec. 13 of R.A. No. 7279; that under Department Order No. 33-93 adopted by the Department of Finance, through the Bureau of Internal Revenue, on 26 April 1992, the zonal valuation of the subject property is conservatively estimated at approximately P76M; that the plaintiff has no savings or unappropriated funds to pay for the just compensation; that instead of expropriating the subject property which enjoys the least priority in the acquisition by the City of Manila for socialized housing under Sec. 9(t) of R.A. 7279, the money to be paid should be channeled to the development of 244 sites in Metro Manila designated as area for priority development; that the City Ordinance was not properly adopted since there was no public hearing and neither were the defendants notified; that the tenants occupying the subject property cannot be categorized as "underprivileged and homeless citizens" or those whose income falls within the poverty threshold to be qualified as beneficiaries of the intended socialized housing; and that the plaintiff failed to comply with Art. 34, Rule 6 of the Rules and Regulations Implementing the Local Government Code of 1991 which requires the local government unit to first establish the suitability of the property to be acquired for the use intended and then proceed to obtain from the proper authorities, like the National Housing Authority, the necessary locational clearance and other requirements imposed under 14 existing laws, rules and regulations. On June 6, 1995, the trial court allowed respondent City to take possession of the subject property upon deposit of the amount of P1,542,793, based on the P10,285,293.38 offer by respondent City to petitioners which the trial court fixed as the provisional amount of the subject properties. On June 14, 1995, respondent City filed an opposition to petitioners motion to dismiss. On October 3, 1995, the Citys complaint for eminent domain was dismissed. The trial court held that expropriation was inappropriate because herein petitioners were in fact willing to sell the subject properties under terms acceptable to the purchaser. Moreover, respondent City failed to show that its offer was rejected by petitioners. Respondent Citys motion for reconsideration was denied.
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On January 12, 1996, respondent City appealed the decision of the trial court to the 16 Court of Appeals. Thereafter, several motions seeking the issuance of a temporary restraining order and preliminary injunction were filed by respondent City to prevent petitioners from ejecting the occupants of the subject premises. On March 21, 1996, the 17 Court of Appeals issued a resolution denying the motions for lack of merit. Respondent Citys motion for reconsideration was likewise denied. Meanwhile, on January 27, 1997, in view of the finality of the judgment in the ejectment case against respondent Abiog, the MTC of Manila, Branch 10, issued a writ of execution. On January 31, 1997, respondent SBMI filed in the Court of Appeals a motion for leave to intervene with prayer for injunctive relief praying that the ejectment cases be suspended or that the execution thereof be enjoined in view of the pendency of the expropriation case filed by respondent City over the same parcels of land. As a follow-up, respondent Abiog filed in the appellate court, on August 25, 1997, a reiteratory motion for issuance of temporary restraining order and to stop the execution of the order dated June 27, 1997 of the Hon. Judge Tranquil P. Salvador, MTC of Manila, Branch 10. On August 26, 1997, the Court of Appeals issued a resolution finding prima facie basis to grant SBMIs motions. It issued a temporary restraining order to Judge Salvador, his employees and agents to maintain the status quo. After the hearing on the propriety of the issuance of a writ of preliminary injunction, respondent SBMI filed a reiteratory motion for injunctive relief on December 11, 1997. On January 27, 1998, the Court of Appeals rendered the assailed decision reversing the trial court judgment and upholding as valid respondent Citys exercise of its power of eminent domain over petitioners properties. The dispositive portion of the decision stated: WHEREFORE, the Orders appealed from are hereby REVERSED and SET ASIDE. The case is remanded to the lower court to determine specifically the amount of just compensation. SO ORDERED.
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According to the Court of Appeals: xxx there is no doubt as to the public purpose of the plaintiff-appellant in expropriating the property of the defendants-appellees. Ordinance No. 7818 expressly states that the subject parcels of land are to be distributed to the landless poor residents therein who have been in possession of the said property for at least ten (10) years. xxxxxxxxx xxx In the absence of any law which expressly provides for a period for filing an expropriation proceeding, the lower court erred in dismissing the complaint based on

unsupported accusations and mere speculations, such as political motivation. The fact that the expropriation proceeding was not immediately instituted does not negate the existence of the public purpose for which the ordinance was enacted. Another reason for the lower courts dismissal was its finding that there was no proof that the offer of the plaintiff-appellant, through the City Legal Office, was not accepted. This conclusion by the lower court is belied by the letter of Adoracion D. Reyes, dated 17 March 1995, xxx. xxxxxxxxx There can be no interpretation of the letter of the defendant-appellee other than that the valid and definite offer of the plaintiff-appellant to purchase the subject property was not accepted and, in the words of the defendant-appellee, was totally turned down. The lower court in denying the plaintiff-appellants motion for reconsideration of the order of dismissal held that the defendants-appellees were actually willing to sell, in fact, some of the tenants have already purchased the land that they occupy. However, we agree with the plaintiff-appellant that the contracts entered into by the defendantsappellees with some of the tenants do not affect the offer it made. The plaintiffappellant was not a party in those transactions and as pointed out, its concern is the majority of those who have no means to provide themselves with decent homes to live 20 on. From the aforementioned decision of the Court of Appeals, petitioners filed on March 21 19, 1998 the present petition for review before this Court. Alleging that respondent City cannot expropriate the subject parcels of land, petitioners assigned the following as errors of the Court of Appeals: The Court Appeals committed grave abuse and irreversible errors in holding that respondent City of Manila may expropriate petitioners parcels of land considering that: I. Respondent did not comply with Secs. 9 and 10 of P.D. (sic) No. 7279, otherwise known as the "Urban Development and Housing Act of 1992 and Sec. 34 of the Local Government Code of 1991 (sic)." II. Ordinance No. 7818 enacted by the City of Manila is violative of the equal protection clause. III. There was no valid and definite offer by the respondent City of Manila to purchase subject parcels of land. IV. Assuming there was a valid offer, the amount deposited for the payment of just compensation was insufficient. V. Petitioners are not unwilling to sell the subject parcels of land. VI. There was no pronouncement as to just compensation.
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What followed were incidents leading to the filing of the petition for certiorari against the resolutions of the Court of Appeals which essentially sought to enjoin the petitioners from enforcing the final judgments against respondents Abiog, Maglonso and SBMI (hereinafter, respondent occupants) in the ejectment cases. On August 17, 1998, respondents Abiog and Maglonso filed in the Court of Appeals an urgent motion for protective order. Meanwhile, on September 8, 1998, petitioners were able to secure from the MTC of Manila, Branch 3, a writ of execution of the final judgment in the other ejectment case against respondent Maglonso. On October 19, 1998, respondent SBMI filed in the CA a similar motion for protective order. In essence, the respondents motions for "protective order" sought to stop the execution of the final and executory judgments in the ejectment cases against them. On August 19, 1998, the Court of Appeals promulgated the first assailed resolution, the dispositive portion of which read:
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Considering that this case has been elevated to the Supreme Court, the Municipal Trial Court of Manila, Branch 10 and Sheriff Jess Areola or any other sheriff of the City of Manila, are hereby TEMPORARILY RESTRAINED from disturbing the occupancy of Dr. Rosario Abiog, one of the members of the SBMI until the Supreme Court has decided the Petition for Review on Certiorari. On September 4, 1998, petitioners filed a motion to set aside as ineffective and/or null and void the said August 19, 1998 resolution. But the Court of Appeals denied the 24 same in a resolution dated December 16, 1998, the dispositive portion of which read: WHEREFORE, the Estate or heirs of J.B.L. Reyes and all persons acting in their behalf are hereby ENJOINED from disturbing the physical possession of all the properties (sic) subject of the expropriation proceedings. SO ORDERED. In enjoining the petitioners from evicting respondent occupants and in effect suspending the execution of the MTC judgments, the appellate court held that: We do not agree with the contention of the defendants-appellees that we no longer have any jurisdiction to issue the subject resolution. In spite of having rendered the decision on 27 January 1998, the appellate Court still has the inherent power and discretion to amend whatever order or decision it had made before in order to render substantial justice. xxxxxxxxx There is no doubt that the members of SBMI have a personality to intervene before this Court. The plaintiff-appellant itself, in their Comment to the defendants-appellees motion to set aside this Courts 19 August 1998 resolution, recognized Dr. Rosario

Abiog, as one of the intended beneficiaries of the expropriation case. The plaintiffappellant also enumerated the ejectment cases pending before the lower courts when it filed a motion for the issuance of temporary restraining order and/or writ of preliminary injunction upon appeal to this Court. Moreover, the plaintiff-appellant also furnished this Court with a copy of the THIRD PARTY CLAIM it filed before the City Sheriff Office and Sheriff Dante Lot to enjoin them from implementing and executing the Demolition Order issued by the Metropolitan Trial Court of Manila (Branch 3) against Angelina Maglonso. In their motion to set aside the 19 August 1998 resolution, the defendants-appellees, quoting the Order of the lower court denying the motion for intervention stated that: The petition of the plaintiff to expropriate the property does not ipso facto create any fiat that would give rise to the claim of the movant of "legal interest" in the property. The petition could well be denied leaving any assertion of interest on the part of the movant absolutely untenable. If the petition, on the other hand, is granted, that would be the time for the movant to intervene, to show that they are the intended beneficiaries, and if the plaintiff would distribute the property to other persons, the remedy is to compel the plaintiff to deliver the lot to them. Having established that they are the intended beneficiaries, the intervenors then have the right to seek protection from this Court. On 27 January 1998, we held that the plaintiff-appellant validly exercised its power of eminent domain and consequently may expropriate the subject property upon payment of just compensation. The record before us shows that on 6 June 1995, the lower court allowed the plaintiff-appellant to take possession of the subject property upon filing of P1,542,793.00 deposit. The property to be expropriated includes the same properties subject of the ejectment cases against the intervenors. There is nothing in the record that would show that the order of possession was ever set aside or the deposit returned to the plaintiff-appellant. Based on the foregoing considerations, we find that the intervenors are entitled to the injunction that they prayed for. To allow the demolition of the premises of the intervenors would defeat the very purpose of expropriation which is to distribute the subject property to the intended beneficiaries who are the occupants of the said parcels of land who have been occupying the said lands as lessees or any term thereof for a period of at least ten (10) years. In the case of Lourdes Guardacasa Vda. De Legaspi vs. Hon. Herminion A. Avendano, et al., the Supreme Court ordered the suspension of the enforcement and implementation of the writ of execution and order of demolition issued in the ejectment case until after the final termination of the action for quieting of title because it is more equitable and just and less productive of confusion and disturbance of physical possession with all its concomitant inconvenience and expenses. As held in Wilmon Auto Supply Corp., et al. vs. Hon. Court of Appeals, et al., the exception to the rule in the case of Vda. De Legaspi case, execution of the decision in

the ejectment case would also have meant demolition of the premises, which is the 25 situation in the case at bar. Claiming that the Court of Appeals committed grave abuse of discretion amounting to 26 lack or excess of jurisdiction, petitioners filed the subject petition for certiorari with the following assignments of error: I PUBLIC RESPONDENT COURT OF APPEALS HAS NO JURISDICTION IN ISSUING THE "PROTECTIVE ORDER" ENJOINING THE EXECUTION OF THE FINAL AND EXECUTORY JUDGMENTS IN THE EJECTMENT CASES AGAINST PRIVATE RESPONDENTS BECAUSE THE POWER TO ISSUE SUCH ORDER HAS BEEN LODGED WITH THE HONORABLE COURT IN VIEW OF THE PENDENCY OF G.R. NO. 132431. II ASSUMING ARGUENDO THAT PUBLIC RESPONDENT COURT OF APPEALS COULD ISSUE SUCH ORDER, IT ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN ISSUING THE PROTECTIVE ORDER IN FAVOR OF PRIVATE RESPONDENTS BECAUSE IT HAS LONG BEEN SETTLED THAT THEIR INTERESTS IN THE PROPERTIES SUBJECT OF THE EXPROPRIATION CASE ARE NOT SUFFICIENT FOR THEM TO BE DECLARED AS INTERVENORS. III THE SO-CALLED PROTECTIVE ORDER IS AN INJUNCTIVE RELIEF IN DISGUISE. IV PRIVATE RESPONDENTS ACT OF SEEKING THE PROTECTIVE ORDER FROM THE COURT OF APPEALS, DESPITE THE FINALITY OF THE ORDER BY THE TRIAL COURT DISALLOWING INTERVENTION, CONSTITUTES FORUM SHOPPING. V The assailed resolutions of the Court of Appeals should be set aside, following the ruling in Filstream International, Inc. vs. CA, Judge Tongco and the City of Manila (G.R. No. 125218, January 23, 1998) and Filstream International, Inc. vs. CA, Malit et al. 27 (G.R. No. 128077, January 23, 1998). In G.R. No 132431, petitioners allege: (1) that Ordinance 7818 is unconstitutional for violating the equal protection clause of the 1987 Constitution and for abridging the "contracts" between petitioners and prospective buyers of the subject parcels of land; (2) that, in expropriating the subject properties, respondent Citys act of expropriation is illegal because it did not comply with Sections 9 and 10 of Republic Act No. 7279 (The

Urban Development and Housing Act of 1992); (3) that, prior to the filing of the eminent domain complaint, respondent City did not make a valid and definite offer to purchase the subject properties, and (4) that, assuming the offer as valid, the amount offered was 28 insufficient. On the other hand, in insisting that its offer was valid and that the amount it deposited was sufficient, respondent City reiterates the reasons cited by the Court of Appeals. According to respondent City, there is nothing in the Local Government Code of 1991 which requires the offer to be made before enacting an enabling ordinance. The actual exercise of the power of eminent domain begins only upon the filing of the complaint for eminent domain with the RTC by the Chief Executive and not when an ordinance pursuant thereto has been enacted. It is therefore safe to say that the offer to purchase can be made before the actual filing of the complaint, whether that is before or after the ordinance is enacted. On the sufficiency of the amount deposited, respondent City alleges that the determination of the provisional value of the property was judicially determined by the trial court at P10,285,293.38 in its order dated June 6, 1995. On the basis of this order, respondent City filed its compliance dated June 13, 1995 manifesting the deposit of the additional amount of P1,452,793 (15% of P10,285,293.38). Respondent City also claims that all along petitioners were not willing to sell the subject parcels of land as proved by the tenor of the letter of petitioners agent, Adoracion Reyes, who wrote respondent City that "it is the consensus of the heirs xxx to turn down as we are totally turning down your offer to purchase the parcels of land subject matter of the aforesaid ordinance, or your offer is not acceptable to us in every respect." In G.R. No. 137146 (the petition for certiorari questioning the resolutions of the Court of Appeals which issued a temporary restraining order and ordered the parties to maintain the status quo), petitioners assail the resolutions of the Court of Appeals which in effect enjoined the MTC of Manila, Branches 9 and 10, from enforcing the final judgments in the ejectment cases while the appeal from the decision involving the same parcels of land in the expropriation case remains pending before this Court. Petitioners maintain that, first, only this Court and not the Court of Appeals has jurisdiction to enjoin the execution of the judgments in the ejectment cases considering that the expropriating case is now being reviewed by this Court; second, the orders are void as they protect an alleged right that does not belong to respondent City but to a non-party in the expropriation case; third, said orders deprive petitioners of their property without due process of law because they amount to a second temporary restraining order which is 29 expressly prohibited by Section 5, Rule 58 of the Rules of Court ; last, petitioners brand respondent occupants act of seeking the assailed "protective order," despite the finality of the trial court order disallowing intervention, as forum-shopping. To justify the propriety of their intervention and the legality of the assailed resolutions, respondent occupants aver the following: first, Section 9(1) of BP 129 (The Judiciary Reorganization Act of 1980) is broad enough to include "protective orders." If the Court of Appeals has the power to annul judgments of the RTC, with more reason does it have the power to annul judgments of the MTC.
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second, as the undisputed rightful beneficiaries of the expropriation, they have the right to intervene. third, their right to intervene has never been barred with finality. Due to the dismissal of the complaint for expropriation, their motion for reconsideration of the trial court order denying their motion to intervene was never ruled upon as it became moot and academic. The trial courts silence does not mean a denial of the intervention and injunction that respondent occupants prayed for. fourth, it is more appropriate in the interest of equity and justice to preserve the status quo pending resolution by this Court of petitioners appeal in the expropriation case because they are anyway the beneficiaries of the subject properties. The expropriation case should be considered as a supervening event that necessitated a modification, suspension or abandonment of the MTC decisions. fifth, respondents are not guilty of forum-shopping for the reason that the Court of Appeals never made a ruling or decision on respondents motion to intervene. Moreover, the causes of action in the two cases were different and distinct from each other. In the motion to intervene, respondent occupants sought to be recognized and included as parties to the expropriation case. On the other hand, in the motion for protective order, respondents sought to enjoin the execution of the decisions in the ejectment cases against them. Before proceeding to the discussion of the issues, it would be best to first recapitulate the confusing maze of facts of this case. It is not disputed that the petitioners acquired a favorable judgment of eviction against herein respondents Abiog and Maglonso. In 1998, the said judgments became final and executory. Consequently, writs of execution were issued. During the pendency of the complaints for unlawful detainer, respondent City filed a case for the expropriation of the same properties involved in the ejectment cases. From thereon, numerous motions to intervene and motions for injunction were filed in the expropriation case by respondents. The trial court allowed respondent City to take possession of the property; it denied the motions for intervention and injunction, and, after allowing respondent City to oppose the motion to dismiss, dismissed the complaint for expropriation. On appeal, the Court of Appeals reversed the trial court and found that respondent City properly exercised its right to expropriate the subject properties. Petitioners appealed the CA decision to this Court. Thereafter, on motion of respondent occupants, the Court of Appeals issued protective orders that required the parties to maintain the status quo (prohibiting any ejectment) pending this Courts resolution of the appeal. Petitioner is now before us questioning the legality of the CAs expropriation order and the propriety of its act enjoining the execution of the final judgments in the ejectment cases. With these given facts, it is imperative to first resolve the issue of whether the respondent City may legally expropriate the subject properties, considering that a negative finding will necessarily moot the issue of the propriety of the "protective orders" of the Court of Appeals.

Whether respondent City deprived petitioners of their property without due process of law depends on whether the City complied with the legal requirements for expropriation. Before respondent City can exercise its power of eminent domain, the same must be sanctioned and must not violate any law. Being a mere creation of the legislature, a local government unit can only exercise powers granted to it by the legislature. Such is the nature of the constitutional power of control of Congress over local government 31 units, the latter being mere creations of the former. When it expropriated the subject properties, respondent City relied on its powers 32 granted by Section 19 of the Local Government Code of 1991 and RA 409 (The Revised Charter of the City of Manila). The latter specifically gives respondent City the power to expropriate private property in the pursuit of its urban land reform and housing 33 program. Respondent City, however, is also mandated to follow the conditions and standards prescribed by RA 7279 (the Urban Development and Housing Act of 1992), the law governing the expropriation of property for urban land reform and housing. Sections 9 and 10 of RA 7279 specifically provide that: Sec. 9. Priorities in the acquisition of Land Lands for socialized housing shall be acquired in the following order: (a) Those owned by the Government or any of its sub-divisions, instrumentalities, or agencies, including government-owned or controlled corporations and their subsidiaries; (b) Alienable lands of the public domain; (c) Unregistered or abandoned and idle lands; (d) Those within the declared Areas of Priority Development, Zonal Improvement sites, and Slum Improvement and Resettlement Program sites which have not yet been acquired; (e) Bagong Lipunan Improvement sites and Services or BLISS sites which have not yet been acquired; and (f) Privately-owned lands. Where on-site development is found more practicable and advantageous to the beneficiaries, the priorities mentioned in this section shall not apply. The local government units shall give budgetary priority to on-site development of government lands. Sec. 10. Modes of Land Acquisition. The modes of acquiring lands for purposes of this Act shall include, among others, community mortgage, land swapping, land assembly or consolidation, land banking, donation to the Government, joint venture agreement, negotiated purchase, and expropriation: Provided, however, That expropriation shall be resorted to only when other modes of acquisition have been exhausted: Provided further, That where expropriation is resorted to, parcels of land owned by small property owners shall be exempted for purposes of this Act: Provided, finally, that abandoned property, as herein defined, shall be reverted and escheated to

the State in a proceeding analogous to the procedure laid down in Rule 91 of the Rules of Court. [italics supplied] In Filstream vs. Court of Appeals, we held that the above-quoted provisions are limitations to the exercise of the power of eminent domain, specially with respect to the order of priority in acquiring private lands and in resorting to expropriation proceedings as a means to acquire the same. Private lands rank last in the order of priority for purposes of socialized housing. In the same vein, expropriation proceedings are to be resorted to only after the other modes of acquisition have been exhausted. Compliance with these conditions is mandatory because these are the only safeguards of oftentimes helpless owners of private property against violation of due process when their property is forcibly taken from them for public use. We find that herein respondent City failed to prove strict compliance with the requirements of Sections 9 and 10 of RA 7279. Respondent City neither alleged in its complaint nor proved during the proceedings before the trial court that it complied with said requirements. Even in the Court of Appeals, respondent City in its pleadings failed to show its compliance with the law. The Court of Appeals was likewise silent on this specific jurisdictional issue. This is a clear violation of the right to due process of the petitioners. We also take note of the fact that Filstream is substantially similar in facts and issues to the case at bar. In that case, Filstream acquired a favorable judgment of eviction against the occupants of its properties in Tondo, Manila. But prior thereto, on the strength of Ordinance 7818 (the same ordinance used by herein respondent City as basis to file the complaint for eminent domain), respondent City initiated a complaint for expropriation of Filstreams properties in Tondo, Manila, for the benefit of the residents thereof. Filstream filed a motion to dismiss and the City opposed the same. The trial court denied the motion. When the judgment in the ejectment case became final, Filstream was able to obtain a writ of execution and demolition. It thereafter filed a motion to dismiss the expropriation complaint but the trial court denied the same and ordered the condemnation of the subject properties. On appeal, the Court of Appeals denied Filstreams petition on a technical ground. Thus, the case was elevated to this Court for review of the power of the City to expropriate the Filstreams properties. Meanwhile, the occupants and respondent City filed in separate branches of the RTC of Manila several petitions for certiorari with prayer for injunction to prevent the execution of the judgments in the ejectment cases. After the consolidation of the petitions for certiorari, the designated branch of RTC Manila dismissed the cases on the ground of forum-shopping. The dismissal was appealed to the Court of Appeals which reversed the trial courts dismissal and granted respondents prayer for injunction. Filstream appealed the same to this Court, which appeal was consolidated with the earlier petition for review of the decision of the Court of Appeals in the main expropriation case. Due to the substantial resemblance of the facts and issues of the case at bar to those in Filstream, we find no reason to depart from our ruling in said case. To quote:
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The propriety of the issuance of the restraining order and the writ of preliminary injunction is but a mere incident to the actual controversy which is rooted in the assertion of the conflicting rights of the parties in this case over the disputed premises. In order to determine whether private respondents are entitled to the injunctive reliefs granted by respondent CA, we deemed it proper to extract the source of discord. xxxxxxxxx Proceeding from the parameters laid out in the above disquisitions, we now pose the crucial question: Did the city of Manila comply with the abovementioned conditions when it expropriated petitioner Filstreams properties? We have carefully scrutinized the records of this case and found nothing that would indicate the respondent City of Manila complied with Sec. 9 and Sec. 10 of R.A. 7279. Petitioners Filstreams properties were expropriated and ordered condemned in favor of the City of Manila sans any showing that resort to the acquisition of other lands listed under Sec. 9 of RA 7279 have proved futile. Evidently, there was a violation of petitioner Filstreams right to due process which must accordingly be rectified. Indeed, it must be emphasized that the State has a paramount interest in exercising its power of eminent domain for the general good considering that the right of the State to expropriate private property as long as it is for public use always takes precedence over the interest of private property owners. However we must not lose sight of the fact that the individual rights affected by the exercise of such right are also entitled to protection, bearing in mind that the exercise of this superior right cannot override the guarantee of due process extended by the law to owners of the property to be expropriated. In this 35 regard, vigilance over compliance with the due process requirements is in order. Due to the fatal infirmity in the Citys exercise of the power of eminent domain, its complaint for expropriation must necessarily fail. Considering that the consolidated cases before us can be completely resolved by the application of our Filstream ruling, it is needless to discuss the constitutionality of Ordinance 7818. We herein apply the general precept that constitutional issues will not be passed upon if the case can be 36 decided on other grounds. In view of the dismissal of the complaint for expropriation and the favorable adjudication of petitioners appeal from the decision of the Court of Appeals on the expropriation of the subject properties, the petition for certiorari questioning the validity of the Court of Appeals resolutions (allowing respondent occupants to intervene and granting their motion to enjoin the execution of the executory judgments in the ejectment cases) becomes moot and academic. WHEREFORE, the petitions are hereby GRANTED. In G.R. No. 132431, the decision of the Court of Appeals dated January 27, 1998 is hereby REVERSED and SET ASIDE. In G.R. No. 137146, the resolutions of the Court of Appeals dated August 19, 1998 and December 16, 1998 are hereby REVERSED and SET ASIDE. SO ORDERED. Sandoval-Gutierrez, and Carpio-Morales, JJ., concur. Vitug, (Chairman), J., no part. Did not participate in the deliberation.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 136349 January 23, 2006 LOURDES DE LA PAZ MASIKIP, Petitioner, vs. THE CITY OF PASIG, HON. MARIETTA A. LEGASPI, in her capacity as Presiding Judge of the Regional Trial Court of Pasig City, Branch 165 and THE COURT OF APPEALS, Respondents. DECISION SANDOVAL GUTIERREZ, J.: Where the taking by the State of private property is done for the benefit of a small community which seeks to have its own sports and recreational facility, notwithstanding that there is such a recreational facility only a short distance away, such taking cannot be considered to be for public use. Its expropriation is not valid. In this case, the Court defines what constitutes a genuine necessity for public use. This petition for review on certiorari assails the Decision of the Court of Appeals dated 2 October 31, 1997 in CA-G.R. SP No. 41860 affirming the Order of the Regional Trial Court, Branch 165, Pasig City, dated May 7, 1996 in S.C.A. No. 873. Likewise assailed 3 is the Resolution of the same court dated November 20, 1998 denying petitioners Motion for Reconsideration. The facts of the case are: Petitioner Lourdes Dela Paz Masikip is the registered owner of a parcel of land with an area of 4,521 square meters located at Pag-Asa, Caniogan, Pasig City, Metro Manila. In a letter dated January 6, 1994, the then Municipality of Pasig, now City of Pasig, respondent, notified petitioner of its intention to expropriate a 1,500 square meter portion of her property to be used for the "sports development and recreational activities" of the residents of Barangay Caniogan. This was pursuant to Ordinance No. 42, Series of 1993 enacted by the then Sangguniang Bayan of Pasig. Again, on March 23, 1994, respondent wrote another letter to petitioner, but this time the purpose was allegedly "in line with the program of the Municipal Government to provide land opportunities to deserving poor sectors of our community." On May 2, 1994, petitioner sent a reply to respondent stating that the intended expropriation of her property is unconstitutional, invalid, and oppressive, as the area of her lot is neither sufficient nor suitable to "provide land opportunities to deserving poor sectors of our community."
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In its letter of December 20, 1994, respondent reiterated that the purpose of the expropriation of petitioners property is "to provide sports and recreational facilities to its poor residents." Subsequently, on February 21, 1995, respondent filed with the trial court a complaint for expropriation, docketed as SCA No. 873. Respondent prayed that the trial court, after due notice and hearing, issue an order for the condemnation of the property; that commissioners be appointed for the purpose of determining the just compensation; and that judgment be rendered based on the report of the commissioners. On April 25, 1995, petitioner filed a Motion to Dismiss the complaint on the following grounds: I PLAINTIFF HAS NO CAUSE OF ACTION FOR THE EXERCISE OF THE POWER OF EMINENT DOMAIN, CONSIDERING THAT: (A) THERE IS NO GENUINE NECESSITY FOR THE TAKING OF THE PROPERTY SOUGHT TO BE EXPROPRIATED. (B) PLAINTIFF HAS ARBITRARILY AND CAPRICIOUSLY CHOSEN THE PROPERTY SOUGHT TO BE EXPROPRIATED. (C) EVEN ASSUMING ARGUENDO THAT DEFENDANTS PROPERTY MAY BE EXPROPRIATED BY PLAINTIFF, THE FAIR MARKET VALUE OF THE PROPERTY TO BE EXPROPRIATED FAR EXCEEDS SEVENTY-EIGHT THOUSAND PESOS (P78,000.00) II PLAINTIFFS COMPLAINT CONSIDERING THAT: IS DEFECTIVE IN FORM AND SUBSTANCE,

(A) PLAINTIFF FAILS TO ALLEGE WITH CERTAINTY THE PURPOSE OF THE EXPROPRIATION. (B) PLAINTIFF HAS FAILED TO COMPLY WITH THE PREREQUISITES LAID DOWN IN SECTION 34, RULE VI OF THE RULES AND REGULATIONS IMPLEMENTING THE LOCAL GOVERNMENT CODE; THUS, THE INSTANT EXPROPRIATION PROCEEDING IS PREMATURE. III THE GRANTING OF THE EXPROPRIATION WOULD VIOLATE SECTION 261 (V) OF THE OMNIBUS ELECTION CODE. IV

PLAINTIFF CANNOT TAKE POSSESSION OF THE SUBJECT PROPERTY BY MERELY DEPOSITING AN AMOUNT EQUAL TO FIFTEEN PERCENT (15%) OF THE VALUE OF THE PROPERTY BASED ON THE CURRENT TAX DECLARATION OF 4 THE SUBJECT PROPERTY. On May 7, 1996, the trial court issued an Order denying the Motion to Dismiss, on the ground that there is a genuine necessity to expropriate the property for the sports and recreational activities of the residents of Pasig. As to the issue of just compensation, the trial court held that the same is to be determined in accordance with the Revised Rules of Court. Petitioner filed a motion for reconsideration but it was denied by the trial court in its Order of July 31, 1996. Forthwith, it appointed the City Assessor and City Treasurer of Pasig City as commissioners to ascertain the just compensation. This prompted petitioner to file with the Court of Appeals a special civil action for certiorari, docketed as CA-G.R. SP No. 41860. On October 31, 1997, the Appellate Court dismissed the petition for lack of merit. Petitioners Motion for Reconsideration was denied in a Resolution dated November 20, 1998. Hence, this petition anchored on the following grounds: THE QUESTIONED DECISION DATED 31 OCTOBER 1997 (ATTACHMENT "A") AND RESOLUTION DATED 20 NOVEMBER 1998 (ATTACHMENT "B") ARE CONTRARY TO LAW, THE RULES OF COURT AND JURISPRUDENCE CONSIDERING THAT: I A. THERE IS NO EVIDENCE TO PROVE THAT THERE IS GENUINE NECESSITY FOR THE TAKING OF THE PETITIONERS PROPERTY. B. THERE IS NO EVIDENCE TO PROVE THAT THE PUBLIC USE REQUIREMENT FOR THE EXERCISE OF THE POWER OF EMINENT DOMAIN HAS BEEN COMPLIED WITH. C. THERE IS NO EVIDENCE TO PROVE THAT RESPONDENT CITY OF PASIG HAS COMPLIED WITH ALL CONDITIONS PRECEDENT FOR THE EXERCISE OF THE POWER OF EMINENT DOMAIN. THE COURT A QUOS ORDER DATED 07 MAY 1996 AND 31 JULY 1996, WHICH WERE AFFIRMED BY THE COURT OF APPEALS, EFFECTIVELY AMOUNT TO THE TAKING OF PETITIONERS PROPERTY WITHOUT DUE PROCESS OF LAW: II THE COURT OF APPEALS GRAVELY ERRED IN APPLYING OF RULE ON ACTIONABLE DOCUMENTS TO THE DOCUMENTS ATTACHED TO RESPONDENT CITY OF PASIGS COMPLAINT DATED 07 APRIL 1995 TO JUSTIFY THE COURT A QUOS DENIAL OF PETITIONERS RESPONSIVE PLEADING TO THE COMPLAINT FOR EXPROPRIATION (THE MOTION TO DISMISS DATED 21 APRIL 1995).
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III THE COURT OF APPEALS GRAVELY ERRED IN APPLYING THE RULE ON HYPOTHETICAL ADMISSION OF FACTS ALLEGED IN A COMPLAINT CONSIDERING THAT THE MOTION TO DISMISS FILED BY PETITIONER IN THE EXPROPRIATION CASE BELOW WAS THE RESPONSIVE PLEADING REQUIRED TO BE FILED UNDER THE THEN RULE 67 OF THE RULES OF COURT AND NOT AN ORIDNARY MOTION TO DISMISS UNDER RULE 16 OF THE RULES OF COURT. The foregoing arguments may be synthesized into two main issues one substantive and one procedural. We will first address the procedural issue. Petitioner filed her Motion to Dismiss the complaint for expropriation on April 25, 1995. It was denied by the trial court on May 7, 1996. At that time, the rule on expropriation was governed by Section 3, Rule 67 of the Revised Rules of Court which provides: "SEC. 3. Defenses and objections. Within the time specified in the summons, each defendant, in lieu of an answer, shall present in a single motion to dismiss or for other appropriate relief, all his objections and defenses to the right of the plaintiff to take his property for the use or purpose specified in the complaint. All such objections and defenses not so presented are waived. A copy of the motion shall be served on the plaintiffs attorney of record and filed with the court with proof of service." The motion to dismiss contemplated in the above Rule clearly constitutes the responsive pleading which takes the place of an answer to the complaint for expropriation. Such motion is the pleading that puts in issue the right of the plaintiff to expropriate the defendants property for the use specified in the complaint. All that the law requires is that a copy of the said motion be served on plaintiffs attorney of record. It is the court that at its convenience will set the case for trial after the filing of the said 6 pleading. The Court of Appeals therefore erred in holding that the motion to dismiss filed by petitioner hypothetically admitted the truth of the facts alleged in the complaint, "specifically that there is a genuine necessity to expropriate petitioners property for public use." Pursuant to the above Rule, the motion is a responsive pleading joining the issues. What the trial court should have done was to set the case for the reception of evidence to determine whether there is indeed a genuine necessity for the taking of the property, instead of summarily making a finding that the taking is for public use and appointing commissioners to fix just compensation. This is especially so considering that the purpose of the expropriation was squarely challenged and put in issue by petitioner in her motion to dismiss. Significantly, the above Rule allowing a defendant in an expropriation case to file a motion to dismiss in lieu of an answer was amended by the 1997 Rules of Civil Procedure, which took effect on July 1, 1997. Section 3, Rule 67 now expressly mandates that any objection or defense to the taking of the property of a defendant must be set forth in an answer. The fact that the Court of Appeals rendered its Decision in CA-G.R. SP No. 41860 on October 31, after the 1997 Rules of Civil Procedure took effect, is of no moment. It is

only fair that the Rule at the time petitioner filed her motion to dismiss should govern. The new provision cannot be applied retroactively to her prejudice. We now proceed to address the substantive issue. In the early case of US v. Toribio, this Court defined the power of eminent domain as "the right of a government to take and appropriate private property to public use, whenever the public exigency requires it, which can be done only on condition of providing a reasonable compensation therefor." It has also been described as the power of the State or its instrumentalities to take private property for public use and is 8 inseparable from sovereignty and inherent in government. The power of eminent domain is lodged in the legislative branch of the government. It delegates the exercise thereof to local government units, other public entities and 9 public utility corporations, subject only to Constitutional limitations. Local governments have no inherent power of eminent domain and may exercise it only when expressly 10 authorized by statute. Section 19 of the Local Government Code of 1991 (Republic Act No. 7160) prescribes the delegation by Congress of the power of eminent domain to local government units and lays down the parameters for its exercise, thus: "SEC. 19. Eminent Domain. A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, purpose or welfare for the benefit of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws: Provided, however, That, the power of eminent domain may not be exercised unless a valid and definite offer has been previously made to the owner and such offer was not accepted: Provided, further, That, the local government unit may immediately take possession of the property upon the filing of expropriation proceedings and upon making a deposit with the proper court of at least fifteen percent (15%) of the fair market value of the property based on the current tax declaration of the property to be expropriated: Provided, finally, That, the amount to be paid for expropriated property shall be determined by the proper court, based on the fair market value at the time of the taking of the property." Judicial review of the exercise of eminent domain is limited to the following areas of concern: (a) the adequacy of the compensation, (b) the necessity of the taking, and (c) 11 the public use character of the purpose of the taking. In this case, petitioner contends that respondent City of Pasig failed to establish a genuine necessity which justifies the condemnation of her property. While she does not dispute the intended public purpose, nonetheless, she insists that there must be a genuine necessity for the proposed use and purposes. According to petitioner, there is already an established sports development and recreational activity center at Rainforest Park in Pasig City, fully operational and being utilized by its residents, including those from Barangay Caniogan. Respondent does not dispute this. Evidently, there is no "genuine necessity" to justify the expropriation. The right to take private property for public purposes necessarily originates from "the necessity" and the taking must be limited to such necessity. In City of Manila v. Chinese 12 Community of Manila, we held that the very foundation of the right to exercise eminent domain is a genuine necessity and that necessity must be of a public
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character. Moreover, the ascertainment of the necessity must precede or accompany 13 and not follow, the taking of the land. In City of Manila v. Arellano Law College, we ruled that "necessity within the rule that the particular property to be expropriated must be necessary, does not mean an absolute but only a reasonable or practical necessity, such as would combine the greatest benefit to the public with the least inconvenience and expense to the condemning party and the property owner consistent with such benefit." Applying this standard, we hold that respondent City of Pasig has failed to establish that there is a genuine necessity to expropriate petitioners property. Our scrutiny of the 14 records shows that the Certification issued by the Caniogan Barangay Council dated November 20, 1994, the basis for the passage of Ordinance No. 42 s. 1993 authorizing the expropriation, indicates that the intended beneficiary is the Melendres Compound Homeowners Association, a private, non-profit organization, not the residents of Caniogan. It can be gleaned that the members of the said Association are desirous of having their own private playground and recreational facility. Petitioners lot is the nearest vacant space available. The purpose is, therefore, not clearly and categorically public. The necessity has not been shown, especially considering that there exists an alternative facility for sports development and community recreation in the area, which is the Rainforest Park, available to all residents of Pasig City, including those of Caniogan. The right to own and possess property is one of the most cherished rights of men. It is so fundamental that it has been written into organic law of every nation where the rule of law prevails. Unless the requisite of genuine necessity for the expropriation of ones property is clearly established, it shall be the duty of the courts to protect the rights of individuals to their private property. Important as the power of eminent domain may be, the inviolable sanctity which the Constitution attaches to the property of the individual requires not only that the purpose for the taking of private property be specified. The genuine necessity for the taking, which must be of a public character, must also be shown to exist. WHEREFORE, the petition for review is GRANTED. The challenged Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 41860 are REVERSED. The complaint for expropriation filed before the trial court by respondent City of Pasig, docketed as SCA No. 873, is ordered DISMISSED. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 97764 August 10, 1992 LEVY D. MACASIANO, Brigadier General/PNP Superintendent, Metropolitan Traffic Command, petitioner, vs. HONORABLE ROBERTO C. DIOKNO, Presiding Judge, Branch 62, Regional Trial Court of Makati, Metro Manila, MUNICIPALITY OF PARAAQUE, METRO MANILA, PALANYAG KILUSANG BAYAN FOR SERVICE, respondents. Ceferino, Padua Law Office for Palanyag Kilusang Bayan for service. Manuel de Guia for Municipality of Paraaque. MEDIALDEA, J.: This is a petition for certiorari under Rule 65 of the Rules of Court seeking the annulment of the decision of the Regional Trial Court of Makati, Branch 62, which granted the writ of preliminary injunction applied for by respondents Municipality of Paraaque and Palanyag Kilusang Bayan for Service (Palanyag for brevity) against petitioner herein. The antecedent facts are as follows: On June 13, 1990, the respondent municipality passed Ordinance No. 86, Series of 1990 which authorized the closure of J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena Streets located at Baclaran, Paraaque, Metro Manila and the establishment of a flea market thereon. The said ordinance was approved by the municipal council pursuant to MMC Ordinance No. 2, Series of 1979, authorizing and regulating the use of certain city and/or municipal streets, roads and open spaces within Metropolitan Manila as sites for flea market and/or vending areas, under certain terms and conditions. On July 20, 1990, the Metropolitan Manila Authority approved Ordinance No. 86, s. 1990 of the municipal council of respondent municipality subject to the following conditions: 1. That the aforenamed streets are not used for vehicular traffic, and that the majority of the residents do not oppose the establishment of the flea market/vending areas thereon; 2. That the 2-meter middle road to be used as flea market/vending area shall be marked distinctly, and that the 2 meters on both sides of the road shall be used by pedestrians;

3. That the time during which the vending area is to be used shall be clearly designated; 4. That the use of the vending areas shall be temporary and shall be closed once the reclaimed areas are developed and donated by the Public Estate Authority. On June 20, 1990, the municipal council of Paraaque issued a resolution authorizing Paraaque Mayor Walfrido N. Ferrer to enter into contract with any service cooperative for the establishment, operation, maintenance and management of flea markets and/or vending areas. On August 8, 1990, respondent municipality and respondent Palanyag, a service cooperative, entered into an agreement whereby the latter shall operate, maintain and manage the flea market in the aforementioned streets with the obligation to remit dues to the treasury of the municipal government of Paraaque. Consequently, market stalls were put up by respondent Palanyag on the said streets. On September 13, 1990, petitioner Brig. Gen. Macasiano, PNP Superintendent of the Metropolitan Traffic Command, ordered the destruction and confiscation of stalls along G.G. Cruz and J. Gabriel St. in Baclaran. These stalls were later returned to respondent Palanyag. On October 16, 1990, petitioner Brig. General Macasiano wrote a letter to respondent Palanyag giving the latter ten (10) days to discontinue the flea market; otherwise, the market stalls shall be dismantled. Hence, on October 23, 1990, respondents municipality and Palanyag filed with the trial court a joint petition for prohibition and mandamus with damages and prayer for preliminary injunction, to which the petitioner filed his memorandum/opposition to the issuance of the writ of preliminary injunction. On October 24, 1990, the trial court issued a temporary restraining order to enjoin petitioner from enforcing his letter-order of October 16, 1990 pending the hearing on the motion for writ of preliminary injunction. On December 17, 1990, the trial court issued an order upholding the validity of Ordinance No. 86 s. 1990 of the Municipality' of Paraaque and enjoining petitioner Brig. Gen. Macasiano from enforcing his letter-order against respondent Palanyag. Hence, this petition was filed by the petitioner thru the Office of the Solicitor General alleging grave abuse of discretion tantamount to lack or excess of jurisdiction on the part of the trial judge in issuing the assailed order. The sole issue to be resolved in this case is whether or not an ordinance or resolution issued by the municipal council of Paraaque authorizing the lease and use of public streets or thoroughfares as sites for flea markets is valid.

The Solicitor General, in behalf of petitioner, contends that municipal roads are used for public service and are therefore public properties; that as such, they cannot be subject to private appropriation or private contract by any person, even by the respondent Municipality of Paraaque. Petitioner submits that a property already dedicated to public use cannot be used for another public purpose and that absent a clear showing that the Municipality of Paraaque has been granted by the legislature specific authority to convert a property already in public use to another public use, respondent municipality is, therefore, bereft of any authority to close municipal roads for the establishment of a flea market. Petitioner also submits that assuming that the respondent municipality is authorized to close streets, it failed to comply with the conditions set forth by the Metropolitan Manila Authority for the approval of the ordinance providing for the establishment of flea markets on public streets. Lastly, petitioner contends that by allowing the municipal streets to be used by market vendors the municipal council of respondent municipality violated its duty under the Local Government Code to promote the general welfare of the residents of the municipality. In upholding the legality of the disputed ordinance, the trial court ruled: . . . that Chanter II Section 10 of the Local Government Code is a statutory grant of power given to local government units, the Municipality of Paraaque as such, is empowered under that law to close its roads, streets or alley subject to limitations stated therein (i.e., that it is in accordance with existing laws and the provisions of this code). xxx xxx xxx The actuation of the respondent Brig. Gen. Levi Macasiano, though apparently within its power is in fact an encroachment of power legally vested to the municipality, precisely because when the municipality enacted the ordinance in question the authority of the respondent as Police Superintendent ceases to be operative on the ground that the streets covered by the ordinance ceases to be a public thoroughfare. (pp. 33-34, Rollo) We find the petition meritorious. In resolving the question of whether the disputed municipal ordinance authorizing the flea market on the public streets is valid, it is necessary to examine the laws in force during the time the said ordinance was enacted, namely, Batas Pambansa Blg. 337, otherwise known as Local Government Code, in connection with established principles embodied in the Civil Code an property and settled jurisprudence on the matter. The property of provinces, cities and municipalities is divided into property for public use and patrimonial property (Art. 423, Civil Code). As to what consists of property for public use, Article 424 of Civil Code states: Art. 424. Property for public use, in the provinces, cities and municipalities, consists of the provincial roads, city streets, the squares, fountains, public waters, promenades, and public works for public service paid for by said provinces, cities or municipalities.

All other property possessed by any of them is patrimonial and shall be governed by this Code, without prejudice to the provisions of special laws. Based on the foregoing, J. Gabriel G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena streets are local roads used for public service and are therefore considered public properties of respondent municipality. Properties of the local government which are devoted to public service are deemed public and are under the absolute control of Congress (Province of Zamboanga del Norte v. City of Zamboanga, L-24440, March 28, 1968, 22 SCRA 1334). Hence, local governments have no authority whatsoever to control or regulate the use of public properties unless specific authority is vested upon them by Congress. One such example of this authority given by Congress to the local governments is the power to close roads as provided in Section 10, Chapter II of the Local Government Code, which states: Sec. 10. Closure of roads. A local government unit may likewise, through its head acting pursuant to a resolution of its sangguniang and in accordance with existing law and the provisions of this Code, close any barangay, municipal, city or provincial road, street, alley, park or square. No such way or place or any part of thereof shall be close without indemnifying any person prejudiced thereby. A property thus withdrawn from public use may be used or conveyed for any purpose for which other real property belonging to the local unit concerned might be lawfully used or conveyed. (Emphasis ours). However, the aforestated legal provision which gives authority to local government units to close roads and other similar public places should be read and interpreted in accordance with basic principles already established by law. These basic principles have the effect of limiting such authority of the province, city or municipality to close a public street or thoroughfare. Article 424 of the Civil Code lays down the basic principle that properties of public dominion devoted to public use and made available to the public in general are outside the commerce of man and cannot be disposed of or leased by the local government unit to private persons. Aside from the requirement of due process which should be complied with before closing a road, street or park, the closure should be for the sole purpose of withdrawing the road or other public property from public use when circumstances show that such property is no longer intended or necessary for public use or public service. When it is already withdrawn from public use, the property then becomes patrimonial property of the local government unit concerned (Article 422, Civil Code; Cebu Oxygen, etc. et al. v. Bercilles, et al., G.R. No. L-40474, August 29, 1975, 66 SCRA 481). It is only then that the respondent municipality can "use or convey them for any purpose for which other real property belonging to the local unit concerned might be lawfully used or conveyed" in accordance with the last sentence of Section 10, Chapter II of Blg. 337, known as Local Government Code. In one case, the City Council of Cebu, through a resolution, declared the terminal road of M. Borces Street, Mabolo, Cebu City as an abandoned road, the same not being included in the City Development Plan. Thereafter, the City Council passes another resolution authorizing the sale of the said abandoned road through public bidding. We held therein that the City of Cebu is empowered to close a city street and to vacate or withdraw the same from public use. Such withdrawn portion becomes patrimonial property which can be the object of an ordinary contract (Cebu Oxygen and Acetylene Co., Inc. v. Bercilles, et al., G.R. No. L-40474, August 29, 1975, 66 SCRA 481). However, those roads and streets which are

available to the public in general and ordinarily used for vehicular traffic are still considered public property devoted to public use. In such case, the local government has no power to use it for another purpose or to dispose of or lease it to private persons. This limitation on the authority of the local government over public properties has been discussed and settled by this Court en banc in "Francisco V. Dacanay, petitioner v. Mayor Macaria Asistio, Jr., et al., respondents, G.R. No. 93654, May 6, 1992." This Court ruled: There is no doubt that the disputed areas from which the private respondents' market stalls are sought to be evicted are public streets, as found by the trial court in Civil Case No. C-12921. A public street is property for public use hence outside the commerce of man (Arts. 420, 424, Civil Code). Being outside the commerce of man, it may not be the subject of lease or others contract (Villanueva, et al. v. Castaeda and Macalino, 15 SCRA 142 citing the Municipality of Cavite v. Rojas, 30 SCRA 602; Espiritu v. Municipal Council of Pozorrubio, 102 Phil. 869; And Muyot v. De la Fuente, 48 O.G. 4860). As the stallholders pay fees to the City Government for the right to occupy portions of the public street, the City Government, contrary to law, has been leasing portions of the streets to them. Such leases or licenses are null and void for being contrary to law. The right of the public to use the city streets may not be bargained away through contract. The interests of a few should not prevail over the good of the greater number in the community whose health, peace, safety, good order and general welfare, the respondent city officials are under legal obligation to protect. The Executive Order issued by acting Mayor Robles authorizing the use of Heroes del '96 Street as a vending area for stallholders who were granted licenses by the city government contravenes the general law that reserves city streets and roads for public use. Mayor Robles' Executive Order may not infringe upon the vested right of the public to use city streets for the purpose they were intended to serve: i.e., as arteries of travel for vehicles and pedestrians. Even assuming, in gratia argumenti, that respondent municipality has the authority to pass the disputed ordinance, the same cannot be validly implemented because it cannot be considered approved by the Metropolitan Manila Authority due to noncompliance by respondent municipality of the conditions imposed by the former for the approval of the ordinance, to wit: 1. That the aforenamed streets are not used for vehicular traffic, and that the majority of the residents do(es) not oppose the establishment of the flea market/vending areas thereon; 2. That the 2-meter middle road to be used as flea market/vending area shall be marked distinctly, and that the 2 meters on both sides of the road shall be used by pedestrians;

3. That the time during which the vending area is to be used shall be clearly designated; 4. That the use of the vending areas shall be temporary and shall be closed once the reclaimed areas are developed and donated by the Public Estate Authority. (p. 38, Rollo) Respondent municipality has not shown any iota of proof that it has complied with the foregoing conditions precedent to the approval of the ordinance. The allegations of respondent municipality that the closed streets were not used for vehicular traffic and that the majority of the residents do not oppose the establishment of a flea market on said streets are unsupported by any evidence that will show that this first condition has been met. Likewise, the designation by respondents of a time schedule during which the flea market shall operate is absent. Further, it is of public notice that the streets along Baclaran area are congested with people, houses and traffic brought about by the proliferation of vendors occupying the streets. To license and allow the establishment of a flea market along J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena streets in Baclaran would not help in solving the problem of congestion. We take note of the other observations of the Solicitor General when he said: . . . There have been many instances of emergencies and fires where ambulances and fire engines, instead of using the roads for a more direct access to the fire area, have to maneuver and look for other streets which are not occupied by stalls and vendors thereby losing valuable time which could, otherwise, have been spent in saving properties and lives. Along G.G. Cruz Street is a hospital, the St. Rita Hospital. However, its ambulances and the people rushing their patients to the hospital cannot pass through G.G. Cruz because of the stalls and the vendors. One can only imagine the tragedy of losing a life just because of a few seconds delay brought about by the inaccessibility of the streets leading to the hospital. The children, too, suffer. In view of the occupancy of the roads by stalls and vendors, normal transportation flow is disrupted and school children have to get off at a distance still far from their schools and walk, rain or shine. Indeed one can only imagine the garbage and litter left by vendors on the streets at the end of the day. Needless to say, these cause further pollution, sickness and deterioration of health of the residents therein. (pp. 21-22, Rollo) Respondents do not refute the truth of the foregoing findings and observations of petitioners. Instead, respondents want this Court to focus its attention solely on the argument that the use of public spaces for the establishment of a flea market is well

within the powers granted by law to a local government which should not be interfered with by the courts. Verily, the powers of a local government unit are not absolute. They are subject to limitations laid down by toe Constitution and the laws such as our Civil Code. Moreover, the exercise of such powers should be subservient to paramount considerations of health and well-being of the members of the community. Every local government unit has the sworn obligation to enact measures that will enhance the public health, safety and convenience, maintain peace and order, and promote the general prosperity of the inhabitants of the local units. Based on this objective, the local government should refrain from acting towards that which might prejudice or adversely affect the general welfare. As what we have said in the Dacanay case, the general public have a legal right to demand the demolition of the illegally constructed stalls in public roads and streets and the officials of respondent municipality have the corresponding duty arising from public office to clear the city streets and restore them to their specific public purpose. The instant case as well as the Dacanay case, involves an ordinance which is void and illegal for lack of basis and authority in laws applicable during its time. However, at this point, We find it worthy to note that Batas Pambansa Blg. 337, known as Local Government Lode, has already been repealed by Republic Act No. 7160 known as Local Government Code of 1991 which took effect on January 1, 1992. Section 5(d) of the new Code provides that rights and obligations existing on the date of effectivity of the new Code and arising out of contracts or any other source of prestation involving a local government unit shall be governed by the original terms and conditions of the said contracts or the law in force at the time such rights were vested. ACCORDINGLY, the petition is GRANTED and the decision of the respondent Regional Trial Court dated December 17, 1990 which granted the writ of preliminary injunction enjoining petitioner as PNP Superintendent, Metropolitan Traffic Command from enforcing the demolition of market stalls along J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena streets is hereby RESERVED and SET ASIDE. SO ORDERED. Narvasa, C.J., Gutierrez, Jr., Cruz, Feliciano, Padilla, Bidin, Grio-Aquino, Regalado, Davide, Jr., Romero, Nocon and Bellosillo, JJ., concur.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 122058 May 5, 1999 IGNACIO R. BUNYE, JAIME R. FRESNEDI, CARLOS C. TENSUAN, ROMAN E. NIEFES, ROGER C. SMITH, RUFINO B. JOAQUIN, NOLASCO L. DIAZ, and RUFINO IBE, petitioners, vs. SANDIGANBAYAN (SECOND DIVISION), PEOPLE OF THE PHILIPPINES, and the KILUSANG BAYAN SA PAGLILINGKOD NG MGA MAGTITINDA SA BAGONG PAMILIHANG BAYAN NG MUNTINLUPA, INC., (KBMBPM), respondents. PURISIMA, J.: Docketed as Criminal Case No. 13966 before the Second Division of the Sandiganbayan, the Amended Information charging the herein petitioners with a 2 violation of Section 3, paragraph (e) of R.A. No. 3019, alleges: That on or about August 1988, in the Municipality of Muntinlupa, Metro Manila, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused all public officers being the Mayor (Ignacio R. Bunye), Vice Mayor (Jaime D. Fresnedi), Municipal Attorney (Victor C. Aguinaldo), Municipal Councilors (Carlos C. Tensuan, Alejandro B. Martinez, Epifanio A. Espeleta, Rey E. Bulay, Lucio B. Constantino, Roman E. Niefes, Nemesio Q. Mozo, Rutino J. Joaquin, Nolasco L. Diaz and Roger C. Smith, Barangay Chairman of Putatan (Rufino Ibe) and Barangay Chairman of Alabang (Nestor Santos), all in the municipality of Muntinlupa, Metro Manila, said accused while in the performance of their official functions in conspiracy with one another and taking advantage of their official positions, did then and there wilfully, unlawfully, and feloniously enact Kapasiyahan Bilang 45 on August 1, 1988, and on the basis thereof, forcibly took possession of the New Public Market in Alabang, Muntinlupa, Metro Manila, and thereafter took over the operation and management of the aforesaid public market starting August 14, 1998, despite the fact that, there was a valid and subsisting lease contract executed on September 2, 1985 for a term of 25 years, renewable for another 25 years, between the Municipality of Muntinlupa, Metro Manila, represented by the former Municipal Mayor Santiago Carlos, Jr. and the Kilusang Bayan sa Paglilingkod ng mga Magtitinda sa Bagong Paminlihang Bayan ng Muntinlupa, Inc. (Kilusang Magtitinda, for brevity), a Cooperative, represented by its General Manager then, Amado G. Perez, and despite also the warnings from COA Chairman Domingo and MMC Governor Cruz "that appropriate legal steps be taken by the MMC toward the rescission/annulment of the contract . . . to protect the interest of the Government," and ". . . to evaluate thoroughly and study further the case to preclude possible damages
1

of financial liabilities which the Court may adjudge against that municipality as an off-shoot of the case, which forcible take-over had caused undue injury to the aforesaid Cooperative members, and in effect, the herein accused themselves, unwarranted benefits, advantage or benefits, advantage or preference in the discharge of their official functions as aforesaid through evident bad faith or gross inexcusable negligence, considering that, the Cooperative members had introduced improvements, including the construction of the "KBS" Building, RR Section-Phases I and II, asphalting of the roads surrounding the market place, and for the purpose, the cooperative had invested Thirteen Million Four Hundred Seventy Nine Thousand Nine Hundred Pesos (P13,479,900.00) in connection therewith, which had been deposited in trust to the Municipal Government, and in consideration thereof, the cooperative was extended the above long term lease to manage and operate the public market and to pay a monthly rental of P35,000.00 only said offense having been 3 committed by the accused in their performance of official duties. On July 24, 1992, petitioners interposed a Motion to Dismiss, placing reliance on the 5 6 September 23, 1991 Decision of the Court of Appeals in CA-G.R. SP No. 16930 "that unless and until declared to be unconstitutional and expressly annulled" Resolution No. 7 45 "deserves the presumption of constitutionality and therefore is entitled to obedience 8 and respect." On September 23, 1992, the respondent court denied petitioners' motion to dismiss on the ground that the C.A. Decision by movants did not touch squarely on the 9 constitutionality of the subject Resolution No. 45 . After trial on the merits, the Sandiganbayan came out with its July 26, 1995 Decision, findings petitioners guilty of a violation of the Anti-graft and Corrupt Practices Act and sentencing them, thus:
10 4

WHEREFORE, judgment is hereby rendered finding accused Iganacio Bunye y Rivera, Jaime Fresnedi y de la Rosa, Victor Aguinaldo y Duliabi, Carlos Tensuan y Gutierrez, Roman Niefes y Esporlas, Nemesio Mozo y Rillana, Rufino Joaquin y Bunye, Nolasco Diaz y Lampito, Roger Smith y de la Cruz and Rufino Ibe y Lacanilao GUILTY beyond reasonable doubt as co-principals in the violation of Section 3, paragraph (e) of Republic Act. No. 3019, as amended, otherwise known as the Anti-Graft and Corrupt Practices Act, and each of them are hereby sentenced to suffer the indeterminate penalty of imprisonment ranging from SIX (6) YEARS and ONE (1) MONTH, as the minimum, to TEN (10) YEARS and ONE (1) DAY, as the maximum, to indemnify, jointly and severally, the offended party, the Kilusang Bayan sa Paglilingkod Ng Mga Magtitinda ng Bagong Pamilihang Bayan ng Muntinlupa, Inc. (KBMBPM) in the amount of P13,479,900.00 as actual damages, and to pay their proportionate share of the costs of this action. xxx xxx xxx

SO ORDERED. With the denial of their Motion for Reconsideration, petitioners found their way to this Court via the present Petition for Review on Certiorari anchored on the following submissions: I. WITH ALL DUE RESPECT, THE HONORABLE COURT'S DECISION PROCEEDS FROM THE GRAVELY ERRONEOUS PREMISE THAT A COURT ACTION IS NECESSARY IN REVOKING AND CANCELLING THE LEASE CONTRACT DATED 02 SEPTEMBER 1985 (EXHIBIT "D-5") DESPITE THE FACT THAT IT IS INDUBITABLY A VOID CONTRACT; II. WITH ALL DUE RESPECT, THE HONORABLE COURT SHOULD HAVE RENDERED A JUDGMENT OF ACQUITTAL SINCE KAPASIYAHAN BILANG 45 (EXHIBIT "K" and "K-1") HAS NOT BEEN DECLARED UNCONSTITUTIONAL WHICH IS THEREFORE ENTITLED TO OBEDIENCE AND RESPECT; THUS, ALL OFFICIAL ACTS DONE PURSUANT THERETO, SUCH AS THE CHALLENGED ACTS OF THE ACCUSED-MOVANTS, ARE VALID AND LEGAL. III. WITH ALL DUE RESPECT, THE RECORDS SHOW THAT THE ACCUSED-MOVANTS DID NOT VIOLATE SECTION 3, PARAGRAPH (E) OF REPUBLIC ACTS NO. 3019. AS AMENDED (THE ANTI-GRAFT AND CORRUPT PRACTICES ACT), SINCE ELEMENTS OF THE OFFENSE HAVE NOT BEEN ESTABLISHED. A. THE ACCUSED-MOVANTS DID NOT COMMIT ANY PROHIBITED ACTS. B. NO UNDUE INJURY WAS CAUSED TO ANY PARTY. C. NO UNWARRANTED BENEFITS ADVANTAGE OR PREFERENCE WAS GIVEN TO ANY PARTY. D. THE ACCUSED-MOVANTS DID NOT ACT WITH MANIFEST PARTIALITY, EVIDENT BAD
11

FAITH OR GROSS INEXCUSABLE NEGLIGENCE. E. THE ACCUSED-MOVANTS CLEARLY ACTED IN GOOD FAITH IN REVOKING AND CANCELLING THE LEASE CONTRACT DATED 02 SEPTEMBER 1985 (EXHIBIT "D-5") AND IN IMPLEMENTING KAPASIYAHAN BILANG 45 (EXHIBITS "K" AND "K-1"). IV. WITH ALL DUE RESPECT, THERE IS NO BASIS IN HOLDING THE ACCUSED-MOVANTS LIABLE FOR ACTUAL DAMAGES. To support its verdict of conviction under scrutiny, the Sandiganbayan ratiocinated: Stripped to its barest essentials, the actuation protected by the evidence on record is very much akin to a contract of leasen did with a definite term and fixed consideration, but which the landlord unilaterally decided to revoked and cancel and thereafter physically take over the leased premises. In wanton disregard of existing laws on obligations and contracts, he bypasses the courts wherein the legal issue as to whether or not such revocation or cancellation is justified should be judicially determined. In the case at bar, the situation is very much worse, aggravated by the accused's wilful and deliberate disregard of pertinent legal advice and directives of the Metro Manila Commission and the Commission on Audit to take the necessary legal steps to rescind the contract of lease and which course of action was even prescribed in the grant of authority to accused Bunye in Kapasiyahan Bilang No. 45. Thus, the conspiracy to take over the management and operation of the new public market was initiated by the enactment of Resolution No. 45 on August 1, 1988, followed by the forcible take-over of the leased premises on August 19, 1988. In the implementation of the conspiracy, the accused acted clearly in evident bad faith, if not with gross inexcusable negligence, totally ignoring the rights of the officers and members of the KBMBPM arising out of a valid and subsisting lease contract which had not been bilaterally cancelled or judicially rescinded and which rescinded and which acts caused undue injury 12 to said cooperative and its members. Gleanable from the aforecited ratiocination by respondent court is the crucial factual issue of whether or not the unilateral revocation of subject lease contract was effected with evident bad faith?

On September 2, 1985, a lease contract denominated as Contract To Manage and 13 Operate the New Muntinlupa Public Market was entered into by the Municipal Government of Muntinlupa, represented by the then Mayor Santiago V. Carlos, Jr., and the Kilusang Bayan sa Panglilingkod ng mga Magtitinda ng Bagong Pamilihang Bayan ng Muntinlupa, Inc., (KBMBPM), represented by its former General Manager Amado G. Perez. The said contract stipulated, among others: That the term of this Contract shall before TWENTY FIVE (25) years to commence on September 2, 1985 renewable for another twenty five (25) years unless sooner terminated and/or rescinded by the mutual agreement of the parties; That the GOVERNMENT and the COOPERATIVE have agreed that the latter shall pay unto the former a monthly consideration of THIRTY FIVE THOUSAND (P35,000.00) PESOS, Philippine Currency, payable in advance within the first five (5) days of every month, provided that the consideration herein agreed shall be increased by ten percent (10%) each year during the first five years only; That the GOVERNMENT shall assist the COOPERATIVE in the maintenance of peace and order and in such other facilities as may be necessary and requested by the latter for the effective management and operation of the market; That the COOPERATIVE shall at all times and at its exclusive expense maintain the following: 1. Health and sanitation of the market in accordance with existing laws and rules and regulations and those which the GOVERNMENT shall promulgate from time to time; 2. Payment of electric bills; 3. Security problems and orderliness with the market premises; 4. Payment of monthly dues as herein before mentioned; and 5. As the sole spokesman and representative of the market vendors in the New Muntinlupa Public Market, to adapt such rules and regulations not contrary to existing laws and regulations for the successful operation and management of the market.

Sec. 149, paragraph (3) of Batas Pambansa Blg. 337, the execution of subject contract, provides:

14

the law in force at the time of

When any ferry, market, or slaughterhouse belonging to a municipality is to be leased to a private party, it shall be awarded to the highest bidder for a period of not less than one year but not exceeding five years but not exceeding five years. The lease may be reviewed for a period not exceeding the original lease and under such terms as the sangguniang bayan may impose. Explicit in the aforecited provision of law is the requirement of public bidding before a government contract may be awarded, and the term of the contract is not to exceed five (5) years. The term of twenty-five (25) years of the lease contract involved violates Section 149, 15 paragraph (3) of B.P. Blg. 337. In Spouses Terredo vs. Court of Appeals, the Court held: Neither can be the Municipality grant the exclusive privilege of fishing for a period more than five (5) years, whereas in the instant case, the period granted the Manager-Administrator was for twenty-five (25) years, renewable for another twenty-five (25) years. xxx xxx xxx Since Ordinance No. 8 granted fishery privileges exclusively to the private respondent without the benefit of public bidding and for a period exceeding (5) years, the said ordinance and the contract of management executed in accordance therewith were null and void ab initio . . . . It may be argued that "fishery" is entirely different or distinct from, "market" to warrant the application of the laws regulating the former to the latter. In the case of Municipality 16 of San Luis vs. Ventura, this Court ruled: . . . [W]hen the council grants the exclusive privilege of fishery or the right to conduct a fish-breeding ground to any private property, it should do so through a public auction, letting it to the highest bidder, in the same manner as is being done in exploiting a ferry, a market, or a slaughterhouse belonging to the municipality. In its assailed Resolution, the respondent Sandiganbayan concluded that the absence of public bidding did not render the lease contract in question null and void because "the KBMBPM, being a duly-registered cooperative under P.D. No. 175, [it] is exempted from bidding requirements pursuant to Regulation No. 40 of Letter of Implementation 17 (LOI) No. 23. . . But there is tenability in petitioners' submission that subject lease contract was grossly disadvantageous to the government. For instance, the monthly rental paid thereunder by the KBMBPM to the Municipal government of Muntinlupa amounted to a measly five

percemt (5%) of the total monthly income of KBMBPM. The lease contract stipulated for a monthly rental of Thirty-Five Thousand (P35,000.00) Pesos only although records show that in 1987, the monthly income of the public market contracted for was no less than Seven Hundred Thousand (P700,000.00) Pesos. While the said contract had a provision for a ten (10%) percent increase in the rental each year during the first five (5) years, the same contract was silent on any increase of the rent during its remaining twenty (20) years. The Court not being unmindful of economic realities, such as inflation and the depreciation of the Philippine peso which diminish the purchasing value of the 18 local currency, it perceives that the projected monthly rental of P51,243.50 in 1990 would have been greatly reduced by year 2015, when the lease contract would have ended if not earlier rescinded. Indeed, the rescinded lease contract was grossly disadvantageous to the Municipality of Muntinlupa, which later metamorphosed into a metropolis. What is more, too evident to be overlooked is the failure of KBMBPM to comply with the contractual stipulations under the Health and Sanitation 19 Clause of subject lease contract. In open court, accused Ignacio Bunye (petitioner here) testified: xxx xxx xxx ATTY. ALAMPAY: Q: The other portion of Exhibit 2 that you said upon review, you concluded disadvantageous to the government thereof marked as Exhibit 2-c to the effect that the Perez Cooperative undertook to maintain the health and sanitation facilities of the public market. What specifically did you find to be irregular or compelling of redress against this provision? WITNESS (MAYOR BUNYE): A: One thing, the garbage are not collected on a regular basis and in our several ocular inspection, we found there were maggots under the pile of garbage and we also found out, there was sno (sic) sufficient ventilation in the market so much so that the odor inside the market sticks to the clothes of the persons inside the market and when you smell like fish and also we found that the supply of water was inadequate. There was no running water in the wet section as a result of which, the wet section is always muddy and the remnants of the fish, the scales, the intestines of the fish are found on the floor. There was also no adequate safeguard as far as fire exists are concerned and there was only one toilet and it was . . . In a letter
21

Q: Now, after the municipality took over the management and operation thereof specifically the Interim Market Commission, What did you do interim about these problems in the health and sanitation? A: We took necessary corrective measures as far as water problemis (sic) concerned, the Interim Market Commission directed this over-head water tank, and the IMC provided this over-head water tank and the IMC bought high speed spray so that the wet market floor could be washed on a regular basis and in order to improve the ventilation, the commission installed over-head fans and blowers so the stale could be removed regularly and toilets were constructed so that there was regular water rinsing and we provided regular persons to maintain this. We provided fire . . . [extinguishers] to safeguard safety against fire. We caused the assignment of one municipal fire truck in the immediate vicinity and lastly, we have this parking 20 area which was provided for the market goers. dated March 14, 1988, former COA Chairman Eufemio C. Domingo wrote: . . . [W]e recommend that immediate appropriate legal steps be taken by the Metro Manila Commission (MMC) toward the rescission/annulment of the contract in question to protect the interest of the Government. The response of then Chairman of Metro Manila Commission Elfren S. Cruz was to the 22 following effect: . . . [T]his commission hereby grants the authority to that Municipality to take the necessary legal steps for the cancellation/rescission of above cited and make representation, with KBMBPM for the immediate transfer/take-over of the possession, management and operation of the New Muntinlupa Market to the Municipal Government of Muntinlupa. . . . In finding and concluding that the accused (petitioners here) acted in evident bad faith in the implementation of the aforesaid directives, the respondent court equated "legal steps" to "legal actions" so much so that the failure of petitioners to sue the Cooperative for the rescission of subject contract was adjudged by the Sandiganbayan as noncompliance with the said directives of the Metro Manila Commission (MMC) and Commission on Audit (COA). The aforementioned directives of MMC and COA could not be taken as instruction for the bringing of an action against the KBMBPM for the rescission of subject lease contract. Contrary to the conclusion reached by the respondent court, petitioners did not ignore or disregard the said directives of MMC and COA.

As regards the finding a quo that the revocation or rescission of subject contract was effected sans any notice, suffice it to invite attention that prior to the symbolic and ceremonial take-over of the new public market of Muntinlupa by the petitioners herein, a 23 lot of posters announcing the intention of the Municipality of Muntinlupa to take over the management and operation of the New Muntinlupa Public Market, were posted in the vicinity of the market place, where the officers of KBMBPM were then holding office. Moreover, having actively participated in the public hearing on the enactment and implementation of Resolution No. 45, Mr. Amado Perez, the General Manager of 24 KBMBPM at the time, had actual knowledge of the impending take-over of the Muntinlupa public market by the local government. Undoubtedly, KBMBPM was duly notified of such development and could not validly feign any denial of their right to due process. Sec. 3, paragraph (e) of Republic Act No. 3019, provides: Current Practices of Public Officers In addition to acts or omissions of public officers already penalized by existing law, the following shall constitute corrupt practices of any public officer and are hereby declared to be unlawful: xxx xxx xxx (e) Causing any undue injury to any party, including the Government, or giving any private party any unwarranted benefits, advantage or preference in the discharge of his official administrative or judicial functions through manifest partiality, evident bad faith or cross inexcusable negligence. This provision shall apply to officers or government corporations charged with the grant of licenses or permits or other concessions. In Domingo Ingco, et al. vs. Sandiganbayan, offense charged are as follows:
25

4. That such injury is caused by giving unwarranted benefits, advantage or preference to such parties; and 5. That the public officers have acted with manifest partiality, evident bad faith or gross inexcusable negligence. That conviction must be based on evidence beyond reasonable doubt is a wellentrenched principle and doctrine in this jurisdiction. Pursuant thereto, all elements of the accusation must be proved beyond reasonable doubt. Failure or inability of the prosecution to substantiate any of the elements of the offense charged is fatal to the cause of the People; it renders inevitable the acquittal of the accused. That petitioners are public officers within legal contemplation is beyond cavil. But are the other elements of the offense complained of attendant? As regards the amount of P13,479,000.00 allegedly received by the government of Muntinlupa from the market vendors, there is no clear evidence as to its exact nature. While Mr. Amado Perez, former General Manager of KBMBPM, testified that the said 26 amount of P13,479,000.00 was collected as a trust fund, the said witness failed to produce any documentary evidence on the matter because according to him, no receipt therefor was issued. Then, on the witness stand, Mrs. Nayesda Ponzones, Chair of the Board of Directors of KBMBPM, theorized that subject amount represented "[advanced] 27 payment of the stalls they (vendors) want to get . . . ." Records on hand reveal, however, that the contract for the management and operation of the New Muntinlupa Public Market was awarded to "the same KBMBPM but with a 28 new set of duly elected officers." Thus, as if can gleaned unerringly that the business interest of the stallholders concerned has never been adversely affected, and no market vendor was displaced or prevented from operating in the New Muntinlupa Public Market, as a result of the implementation of the challenged Resolution No. 45, it stands to reason and conclude that no undue injury was caused by the petitioners herein to subject market vendors or to the respondent KBMBPM. In light of the foregoing, there is no therefore sustainable basis or ground for requiring the Municipality (now City) of Muntinlupa to reimburse the aforesaid amount of P13,479.000.00 supposedly collected from the market vendors involved. Consequently, the P13,479,000.00 awarded below for actual damages in favor of respondent KBMBPM cannot be upheld. Absent any undue damage or injury suffered by the KBMBPM by reason of the enactment and implementation of Resolution No. 45, the fourth element of the offense charged is wanting. All things studiedly viewed in proper perspective and it appearing that the inculpatory facts and circumstances are capable of two or more interpretations, one of which is consistent with the innocence of the accused and the other consistent with their guilt, we are of the irresistible finding and conclusion that the evidence cannot hurdle the test of moral certainty required for conviction. (People of the Philippines vs. Danny Godoy, G.R. Nos. 115908-09, December 6, 1995, 250 SCRA 676, 704-705; People of the Philippines vs. Pedro Pagaura y Ticling, G.R. No. 95353, January 28, 1997, 267 SCRA 17, 25)

this court held that the elements of the

1. That the accused are public officers or private persons charged in conspiracy with them; 2. That said public officers commit the prohibited acts during the performance of their official duties or in relation to their public positions; 3. That they cause undue injury to any party, whether the Government or a private party;

To the fore, once again, is what Alfonso El Sabio said long time ago, as quoted by the late Justice Conrado V. Sanchez in People vs. Nicolas Cunanan, et al., No. L-17599, April 24, 1967, 19 SCRA 769, 784: "Mas vale que queden sin castigar diez reos presuntos, que se castigue uno inocente." WHEREFORE, the Petition is GRANTED, the judgment of conviction rendered by the Sandiganbayan in Criminal Case No. 13966 is SET ASIDE and for want of evidence to prove their guilt beyond reasonable doubt, the petitioners, IGNACIO R. BUNYE, JAIME R. FRESNEDI, CARLOS G. TENSUAN, ROMAN E. NIEFES, ROGER C. SMITH, RUFINO B. JOAQUIN, NOLASCO L. DIAZ, and RUFINO IBE, are hereby ACQUITTED of the offense charged. With costs de oficio. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-23052 January 29, 1968 CITY OF MANILA, petitioner, vs. GENARO N. TEOTICO and COURT OF APPEALS, respondents. City Fiscal Manuel T. Reyes for petitioner. Sevilla, Daza and Associates for respondents. CONCEPCION, C.J.: Appeal by certiorari from a decision of the Court of Appeals. On January 27, 1958, at about 8:00 p.m., Genaro N. Teotico was at the corner of the Old Luneta and P. Burgos Avenue, Manila, within a "loading and unloading" zone, waiting for a jeepney to take him down town. After waiting for about five minutes, he managed to hail a jeepney that came along to a stop. As he stepped down from the curb to board the jeepney, and took a few steps, he fell inside an uncovered and unlighted catch basin or manhole on P. Burgos Avenue. Due to the fall, his head hit the rim of the manhole breaking his eyeglasses and causing broken pieces thereof to pierce his left eyelid. As blood flowed therefrom, impairing his vision, several persons came to his assistance and pulled him out of the manhole. One of them brought Teotico to the Philippine General Hospital, where his injuries were treated, after which he was taken home. In addition to the lacerated wound in his left upper eyelid, Teotico suffered contusions on the left thigh, the left upper arm, the right leg and the upper lip apart from an abrasion on the right infra-patella region. These injuries and the allergic eruption caused by anti-tetanus injections administered to him in the hospital, required further medical treatment by a private practitioner who charged therefor P1,400.00. As a consequence of the foregoing occurrence, Teotico filed, with the Court of First Instance of Manila, a complaint which was, subsequently, amended for damages against the City of Manila, its mayor, city engineer, city health officer, city treasurer and chief of police. As stated in the decision of the trial court, and quoted with approval by the Court of Appeals, At the time of the incident, plaintiff was a practicing public accountant, a businessman and a professor at the University of the East. He held responsible positions in various business firms like the Philippine Merchandising Co., the A.U. Valencia and Co., the Silver Swan Manufacturing Company and the Sincere Packing Corporation. He was also associated with several civic organizations such as the Wack Wack Golf Club, the Chamber of Commerce of the Philippines, Y's Men Club of Manila and the Knights of Rizal. As a result of the incident, plaintiff was prevented from engaging in his customary occupation for twenty days. Plaintiff has lost a daily income of

about P50.00 during his incapacity to work. Because of the incident, he was subjected to humiliation and ridicule by his business associates and friends. During the period of his treatment, plaintiff was under constant fear and anxiety for the welfare of his minor children since he was their only support. Due to the filing of this case, plaintiff has obligated himself to pay his counsel the sum of P2,000.00. On the other hand, the defense presented evidence, oral and documentary, to prove that the Storm Drain Section, Office of the City Engineer of Manila, received a report of the uncovered condition of a catchbasin at the corner of P. Burgos and Old Luneta Streets, Manila, on January 24, 1958, but the same was covered on the same day (Exhibit 4); that again the iron cover of the same catch basin was reported missing on January 30, 1958, but the said cover was replaced the next day (Exhibit 5); that the Office of the City Engineer never received any report to the effect that the catchbasin in question was not covered between January 25 and 29, 1968; that it has always been a policy of the said office, which is charged with the duty of installation, repair and care of storm drains in the City of Manila, that whenever a report is received from whatever source of the loss of a catchbasin cover, the matter is immediately attended to, either by immediately replacing the missing cover or covering the catchbasin with steel matting that because of the lucrative scrap iron business then prevailing, stealing of iron catchbasin covers was rampant; that the Office of the City Engineer has filed complaints in court resulting from theft of said iron covers; that in order to prevent such thefts, the city government has changed the position and layout of catchbasins in the City by constructing them under the sidewalks with concrete cement covers and openings on the side of the gutter; and that these changes had been undertaken by the city from time to time whenever funds were available. After appropriate proceedings the Court of First Instance of Manila rendered the aforementioned decision sustaining the theory of the defendants and dismissing the amended complaint, without costs. On appeal taken by plaintiff, this decision was affirmed by the Court of Appeals, except insofar as the City of Manila is concerned, which was sentenced to pay damages in the 1 aggregate sum of P6,750.00. Hence, this appeal by the City of Manila. The first issue raised by the latter is whether the present case is governed by Section 4 of Republic Act No. 409 (Charter of the City of Manila) reading: The city shall not be liable or held for damages or injuries to persons or property arising from the failure of the Mayor, the Municipal Board, or any other city officer, to enforce the provisions of this chapter, or any other law or ordinance, or from negligence of said Mayor, Municipal Board, or other officers while enforcing or attempting to enforce said provisions. or by Article 2189 of the Civil Code of the Philippines which provides: Provinces, cities and municipalities shall be liable for damages for the death of, or injuries suffered by, any person by reason of defective conditions of

road, streets, bridges, public buildings, and other public works under their control or supervision. Manila maintains that the former provision should prevail over the latter, because Republic Act 409, is a special law, intended exclusively for the City of Manila, whereas the Civil Code is a general law, applicable to the entire Philippines. The Court of Appeals, however, applied the Civil Code, and, we think, correctly. It is true that, insofar as its territorial application is concerned, Republic Act No. 409 is a special law and the Civil Code a general legislation; but, as regards the subject-matter of the provisions above quoted, Section 4 of Republic Act 409 establishes a general rule regulating the liability of the City of Manila for: "damages or injury to persons or property arising from the failure of" city officers "to enforce the provisions of" said Act "or any other law or ordinance, or from negligence" of the city "Mayor, Municipal Board, or other officers while enforcing or attempting to enforce said provisions." Upon the other hand, Article 2189 of the Civil Code constitutes a particular prescription making "provinces, cities and municipalities . . . liable for damages for the death of, or injury suffered by any person by reason" specifically "of the defective condition of roads, streets, bridges, public buildings, and other-public works under their control or supervision." In other words, said section 4 refers to liability arising from negligence, in general, regardless of the object thereof, whereas Article 2189 governs liability due to "defective streets," in particular. Since the present action is based upon the alleged defective condition of a road, said Article 2189 is decisive thereon. It is urged that the City of Manila cannot be held liable to Teotico for damages: 1) because the accident involving him took place in a national highway; and 2) because the City of Manila has not been negligent in connection therewith. As regards the first issue, we note that it is based upon an allegation of fact not made in the answer of the City. Moreover, Teotico alleged in his complaint, as well as in his amended complaint, that his injuries were due to the defective condition of a street which is "under the supervision and control" of the City. In its answer to the amended complaint, the City, in turn, alleged that "the streets aforementioned were and have been constantly kept in good condition and regularly inspected and the storm drains and manholes thereof covered by the defendant City and the officers concerned" who "have been ever vigilant and zealous in the performance of their respective functions and duties as imposed upon them by law." Thus, the City had, in effect, admitted that P. Burgos Avenue was and is under its control and supervision. Moreover, the assertion to the effect that said Avenue is a national highway was made, for the first time, in its motion for reconsideration of the decision of the Court of Appeals. Such assertion raised, therefore, a question of fact, which had not been put in issue in the trial court, and cannot be set up, for the first time, on appeal, much less after the rendition of the decision of the appellate court, in a motion for the reconsideration thereof. At any rate, under Article 2189 of the Civil Code, it is not necessary for the liability therein established to attach that the defective roads or streets belong to the province, city or municipality from which responsibility is exacted. What said article requires is that the province, city or municipality have either "control or supervision" over said street or road. Even if P. Burgos Avenue were, therefore, a national highway, this

circumstance would not necessarily detract from its "control or supervision" by the City of Manila, under Republic Act 409. In fact Section 18(x) thereof provides: Sec. 18. Legislative powers. The Municipal Board shall have the following legislative powers: xxxxxxxxx (x) Subject to the provisions of existing law to provide for the laying out, construction and improvement, and to regulate the use of streets, avenues, alleys, sidewalks, wharves, piers, parks, cemeteries, and other public places; to provide for lighting, cleaning, and sprinkling of streets and public places; . . . to provide for the inspection of, fix the license fees for and regulate the openings in the same for the laying of gas, water, sewer and other pipes, the building and repair of tunnels, sewers, and drains, and all structures in and under the same and the erecting of poles and the stringing of wires therein; to provide for and regulate cross-works, curbs, and gutters therein, . . . to regulate traffic and sales upon the streets and other public places; to provide for the abatement of nuisances in the same and punish the authors or owners thereof; to provide for the construction and maintenance, and regulate the use, of bridges, viaducts and culverts; to prohibit and regulate ball playing, kiteflying, hoop rolling, and other amusements which may annoy persons using the streets and public places, or frighten horses or other animals; to regulate the speed of horses and other animals, motor and other vehicles, cars, and locomotives within the limits of the city; to regulate the lights used on all vehicles, cars, and locomotives; . . . to provide for and change the location, grade, and crossing of railroads, and compel any such railroad to raise or lower its tracks to conform to such provisions or changes; and to require railroad companies to fence their property, or any part thereof, to provide suitable protection against injury to persons or property, and to construct and repair ditches, drains, sewers, and culverts along and under their tracks, so that the natural drainage of the streets and adjacent property shall not be obstructed. This authority has been neither withdrawn nor restricted by Republic Act No. 917 and Executive Order No. 113, dated May 2, 1955, upon which the City relies. Said Act governs the disposition or appropriation of the highway funds and the giving of aid to provinces, chartered cities and municipalities in the construction of roads and streets within their respective boundaries, and Executive Order No. 113 merely implements the provisions of said Republic Act No. 917, concerning the disposition and appropriation of the highway funds. Moreover, it provides that "the construction, maintenance and improvement of national primary, national secondary and national aid provincial and city roads shall be accomplished by the Highway District Engineers and Highway City Engineers under the supervision of the Commissioner of Public Highways and shall be financed from such appropriations as may be authorized by the Republic of the Philippines in annual or special appropriation Acts." Then, again, the determination of whether or not P. Burgos Avenue is under the control or supervision of the City of Manila and whether the latter is guilty of negligence, in connection with the maintenance of said road, which were decided by the Court of

Appeals in the affirmative, is one of fact, and the findings of said Court thereon are not subject to our review. WHEREFORE, the decision appealed from should be as it is hereby affirmed, with costs against the City of Manila. It is so ordered.1wph1.t Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur. Footnotes
1

Medical fees P1,400.00; Lost income P350.00; Moral damages P3,000.00; and Attorney's fees P2,000.00.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-29993 October 23, 1978 LAUDENCIO TORIO, GUILLERMO EVANGELISTA, MANUEL DE GUZMAN, ALFONSO R. MAGSANOC, JESUS MACARANAS, MAXIMO MANANGAN, FIDEL MONTEMAYOR, MELCHOR VIRAY, RAMON TULAGAN, all Members of the Municipal Council of Malasiqui in 1959, Malasiqui, Pangasinan, petitioners, vs. ROSALINA, ANGELINA, LEONARDO, EDUARDO, ARTEMIO, ANGELITA, ANITA, ERNESTO, NORMA, VIRGINIA, REMEDIOS and ROBERTO, all surnamed FONTANILLA, and THE HONORABLE COURT OF APPEALS, respondents. G.R. No. L-30183 October 23, 1978 MUNICIPALITY OF MALASIQUI, petitioner, vs. ROSALINA, ANGELINA, LEONARDO, EDUARDO, ARTEMIO, ANGELITA, ANITA, ERNESTO, NORMA, VIRGINIA, REMEDIOS and ROBERTO, all surnamed FONTANILLA, and the Honorable COURT OF APPEALS, respondents. Julian M. Armas, Assistant Provincial Fiscal for petitioners. Isidro L. Padilla for respondents. MUOZ PALMA, J.: These Petitions for review present the issue of whether or not the celebration of a town fiesta authorized by a municipal council under Sec. 2282 of the Municipal Law as embodied in the Revised Administrative Code is a governmental or a corporate or proprietary function of the municipality. A resolution of that issue will lead to another, viz the civil liability for damages of the Municipality of Malasiqui, and the members of the Municipal Council of Malasiqui, province of Pangasinan, for a death which occurred during the celebration of the town fiesta on January 22, 1959, and which was attributed to the negligence of the municipality and its council members. The following facts are not in dispute: On October 21, 1958, the Municipal Council of Malasiqui, Pangasinan, passed Resolution No. 159 whereby "it resolved to manage the 1959 Malasiqui town fiesta celebration on January 21, 22, and 23, 1959." Resolution No. 182 was also passed creating the "1959 Malasiqui 'Town Fiesta Executive Committee" which in turn organized a sub-committee on entertainment and stage, with Jose Macaraeg as

Chairman. the council appropriated the amount of P100.00 for the construction of 2 stages, one for the "zarzuela" and another for the cancionan Jose Macaraeg supervised the construction of the stage and as constructed the stage for the "zarzuela" was "5- meters by 8 meters in size, had a wooden floor high at the rear and was supported by 24 bamboo posts 4 in a row in front, 4 in the rear and 5 on each side 1 with bamboo braces." The "zarzuela" entitled "Midas Extravaganza" was donated by an association of Malasiqui employees of the Manila Railroad Company in Caloocan, Rizal. The troupe arrived in the evening of January 22 for the performance and one of the members of the group was Vicente Fontanilla. The program started at about 10:15 o'clock that evening with some speeches, and many persons went up the stage. The "zarzuela" then began but before the dramatic part of the play was reached, the stage collapsed and Vicente Fontanilla who was at the rear of the stage was pinned underneath. Fontanilia was taken to tile San Carlos General Hospital where he died in the afternoon of the following day. The heirs of Vicente Fontanilia filed a complaint with the Court of First Instance of Manila on September 11, 1959 to recover damages. Named party-defendants were the Municipality of Malasiqui, the Municipal Council of Malasiqui and all the individual members of the Municipal Council in 1959. Answering the complaint defendant municipality invoked inter alia the principal defense that as a legally and duly organized public corporation it performs sovereign functions and the holding of a town fiesta was an exercise of its governmental functions from which no liability can arise to answer for the negligence of any of its agents. The defendant councilors inturn maintained that they merely acted as agents of the municipality in carrying out the municipal ordinance providing for the management of the town fiesta celebration and as such they are likewise not liable for damages as the undertaking was not one for profit; furthermore, they had exercised due care and 2 diligence in implementing the municipal ordinance. After trial, the Presiding Judge, Hon. Gregorio T. Lantin narrowed the issue to whether or not the defendants exercised due diligence 'm the construction of the stage. From his findings he arrived at the conclusion that the Executive Committee appointed by the municipal council had exercised due diligence and care like a good father of the family in selecting a competent man to construct a stage strong enough for the occasion and that if it collapsed that was due to forces beyond the control of the committee on entertainment, consequently, the defendants were not liable for damages for the death of Vicente Fontanilla. The complaint was accordingly dismissed in a decision dated July 3 10, 1962. The Fontanillas appealed to the Court of Appeals. In a decision Promulgated on October 31, 1968, the Court of Appeals through its Fourth Division composed at the time of Justices Salvador V. Esguerra, Nicasio A. Yatco and Eulogio S. Serrano reversed the trial court's decision and ordered all the defendants-appellees to pay jointly and severally the heirs of Vicente Fontanilla the sums of P12,000.00 by way of 4 moral and actual damages: P1200.00 its attorney's fees; and the costs.

The case is now before Us on various assignments of errors all of which center on the proposition stated at the sentence of this Opinion and which We repeat: Is the celebration of a town fiesta an undertaking in the excercise of a municipality's governmental or public function or is it or a private or proprietary character? 1. Under Philippine laws municipalities are political bodies corporate and as such ag endowed with the faculties of municipal corporations to be exercised by and through their respective municipal governments in conformity with law, and in their proper corporate name, they may inter alia sue and be sued, and contract and be contracted 5 with. The powers of a municipality are twofold in character public, governmental or political on the one hand, and corporate, private, or proprietary on the other. Governmental powers are those exercised by the corporation in administering the powers of the state and promoting the public welfare and they include the legislative, judicial public, and political Municipal powers on the other hand are exercised for the special benefit and advantage of the community and include those which are ministerial private and 6 corporate. As to when a certain activity is governmental and when proprietary or private, that is generally a difficult matter to determine. The evolution of the municipal law in American Jurisprudence, for instance, has shown that; none of the tests which have evolved and are stated in textbooks have set down a conclusive principle or rule, so that each case will have to be determined on the basis of attending circumstances. In McQuillin on Municipal Corporations, the rule is stated thus: "A municipal corporation proper has ... a public character as regards the state at large insofar as it is its agent in government, and private (so-called) insofar as it is to promote local necessities and 7 conveniences for its own community. Another statement of the test is given in City of Kokomo v. Loy, decided by the Supreme Court of Indiana in 1916, thus: Municipal corporations exist in a dual capacity, and their functions are two fold. In one they exercise the right springing from sovereignty, and while in the performance of the duties pertaining thereto, their acts are political and governmental Their officers and agents in such capacity, though elected or appointed by the are nevertheless public functionaries performing a public service, and as such they are officers, agents, and servants of the state. In the other capacity the municipalities exercise a private. proprietary or corporate right, arising from their existence as legal persons and not as public agencies. Their officers and agents in the performance of such functions act in behalf of the municipalities in their corporate or in. individual capacity, and not for the state or sovereign power. (112 N. E 994-995) In the early Philippine case of Mendoza v. de Leon 1916, the Supreme Court, through Justice Grant T. Trent, relying mainly on American Jurisprudence classified certain

activities of the municipality as governmental, e.g.: regulations against fire, disease, preservation of public peace, maintenance of municipal prisons, establishment of schools, post-offices, etc. while the following are corporate or proprietary in character, viz: municipal waterwork, slaughter houses, markets, stables, bathing establishments, 8 wharves, ferries, and fisheries. Maintenance of parks, golf courses, cemeteries and airports among others, are also recognized as municipal or city activities of a 9 proprietary character. 2. This distinction of powers becomes important for purposes of determining the liability of the municipality for the acts of its agents which result in an injury to third persons. If the injury is caused in the course of the performance of a governmental function or duty no recovery, as a rule, can be. had from the municipality unless there is an existing 10 statute on the matter, nor from its officers, so long as they performed their duties 11 honestly and in good faith or that they did not act wantonly and maliciously. In Palafox, et al., v. Province of Ilocos Norte, et al., 1958, a truck driver employed by the provincial government of Ilocos Norte ran over Proceto Palafox in the course of his work at the construction of a road. The Supreme Court in affirming the trial court's dismissal of the complaint for damages held that the province could not be made liable because its employee was in the performance of a governmental function the construction and maintenance of roads and however tragic and deplorable it may be, 12 the death of Palafox imposed on the province no duty to pay monetary consideration. With respect to proprietary functions, the settled rule is that a municipal corporation can 13 14 be held liable to third persons ex contract or ex delicto. Municipal corporations are subject to be sued upon contracts and in tort. ... xxx xxx xxx The rule of law is a general one, that the superior or employer must answer civilly for the negligence or want of skill of its agent or servant in the course or fine of his employment, by which another, who is free from contributory fault, is injured. Municipal corporations under the conditions herein stated, fall within the operation of this rule of law, and are liable, accordingly, to civil actions for damages when the requisite elements of liability co-exist. ... (Dillon on Municipal Corporations, 5th ed. Sec. 1610,1647, cited in Mendoza v. de Leon, supra. 514) 3. Coming to the cam before Us, and applying the general tests given above, We hold that the ho of the town fiesta in 1959 by the municipality of Malsiqui Pangasinan was an exercise of a private or proprietary function of the municipality. Section 2282 of the Chatter on Municipal Law of the Revised Administrative Code provides: Section 2282. Celebration of fiesta. fiesta may be held in each municipality not oftener than once a year upon a date fixed by the

municipal council A fiesta s not be held upon any other date than that lawfully fixed therefor, except when, for weighty reasons, such as typhoons, foundations, earthquakes, epidemics, or other public ties, the fiesta cannot be hold in the date fixed in which case it may be held at a later date in the same year, by resolution of the council. This provision simply gives authority to the municipality to accelebrate a yearly fiesta but it does not impose upon it a duty to observe one. Holding a fiesta even if the purpose is to commemorate a religious or historical event of the town is in essence an act for the special benefit of the community and not for the general welfare of the public performed in pursuance of a policy of the state. The mere fact that the celebration, as claimed was not to secure profit or gain but merely to provide entertainment to the town inhabitants is not a conclusive test. For instance, the maintenance of parks is not a source of income for the nonetheless it is private undertaking as distinguished from the maintenance of public schools, jails, and the like which are for public service. As stated earlier, there can be no hard and fast rule for purposes of determining the true nature of an undertaking or function of a municipality; the surrounding circumstances of a particular case are to be considered and will be decisive. The basic element, however beneficial to the public the undertaking may be, is that it is governmental in essence, otherwise. the function becomes private or proprietary in character. Easily, no overnmental or public policy of the state is involved in the 15 celebration of a town fiesta. 4. It follows that under the doctrine of respondent superior, petitioner-municipality is to be held liable for damages for the death of Vicente Fontanilia if that was at- tributable to the negligence of the municipality's officers, employees, or agents. Art. 2176, Civil Code: Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. . . Art. 2180, Civil Code: The obligation imposed by article 2176 is demandable not only for one's own acts or omission, but also for those of persons for whom one is responsible. . . On this point, the Court of Appeals found and held that there was negligence. The trial court gave credence to the testimony of Angel Novado, a witness of the defendants (now petitioners), that a member of the "extravaganza troupe removed two principal braces located on the front portion of the stage and u them to hang the screen or "telon", and that when many people went up the stage the latter collapsed. This testimony was not believed however by respondent appellate court, and rightly so. According to said defendants, those two braces were "mother" or "principal" braces located semi-diagonally from the front ends of the stage to the front posts of the ticket 16 booth located at the rear of the stage and were fastened with a bamboo twine. That being the case, it becomes incredible that any person in his right mind would remove those principal braces and leave the front portion of the stage practically unsuported Moreover, if that did happen, there was indeed negligence as there was lack of suspension over the use of the stage to prevent such an occurrence.

At any rate, the guitarist who was pointed to by Novado as the person who removed the two bamboo braces denied having done go. The Court of Appeals said "Amor by himself alone could not have removed the two braces which must be about ten meters long and fastened them on top of the stags for the curtain. The stage was only five and a half meters wide. Surely, it, would be impractical and unwieldy to use a ten meter 17 bamboo pole, much more two poles for the stage curtain. The appellate court also found that the stage was not strong enough considering that only P100.00 was appropriate for the construction of two stages and while the floor of the "zarzuela" stage was of wooden planks, the Post and braces used were of bamboo material We likewise observe that although the stage was described by the Petitioners as being supported by "24" posts, nevertheless there were only 4 in front, 4 at the rear, and 5 on each side. Where were the rest? The Court of Appeals thus concluded The court a quo itself attributed the collapse of the stage to the great number of onlookers who mounted the stage. The municipality and/or its agents had the necessary means within its command to prevent such an occurrence. Having filed to take the necessary steps to maintain the safety of the stage for the use of the participants in the stage presentation prepared in connection with the celebration of the town fiesta, particularly, in preventing non participants or spectators from mounting and accumulating on the stage which was not constructed to meet the additional weight- the defendant-appellees were negligent and are liable for the death of Vicente Fontanilla . (pp. 30-31, rollo, L-29993) The findings of the respondent appellate court that the facts as presented to it establish negligence as a matter of law and that the Municipality failed to exercise the due diligence of a good father of the family, will not disturbed by Us in the absence of a 18 clear showing of an abuse of discretion or a gross misapprehension of facts." Liability rests on negligence which is "the want of such care as a person of ordinary 19 prudence would exercise under the circumstances of the case." Thus, private respondents argue that the "Midas Extravaganza" which was to be performed during the town fiesta was a "donation" offered by an association of Malasiqui employees of the Manila Railroad Co. in Caloocan, and that when the Municipality of Malasiqui accepted the donation of services and constructed precisely a "zarzuela stage" for the purpose, the participants in the stage show had the right to expect that the Municipality through its "Committee on entertainment and stage" would build or put up a stage or platform strong enough to sustain the weight or burden of the performance and take the necessary measures to insure the personal safety of the 20 participants. We agree. Quite relevant to that argument is the American case of Sanders v. City of Long Beach, 1942, which was an action against the city for injuries sustained from a fall when plaintiff was descending the steps of the city auditorium. The city was conducting a "Know your City Week" and one of the features was the showing of a motion picture in the city auditorium to which the general public was invited and plaintiff Sanders was

one of those who attended. In sustaining the award for Damages in favor of plaintiff, the District Court of Appeal, Second district, California, held inter alia that the "Know your City Week" was a "proprietary activity" and not a "governmental one" of the city, that defendant owed to plaintiff, an invitee the duty of exercising ordinary care for her safety, and plaintiff was entitled to assume that she would not be exposed to a danger (which in this case consisted of lack of sufficient illumination of the premises) that would come 21 to her through a violation of defendant duty. We can say that the deceased Vicente Fontanilla was similarly situated as Sander The Municipality of Malasiqui resolved to celebrate the town fiesta in January of 1959; it created a committee in charge of the entertainment and stage; an association of Malasiqui residents responded to the call for the festivities and volunteered to present a stage show; Vicente Fontanilla was one of the participants who like Sanders had the right to expect that he would be exposed to danger on that occasion. Lastly, petitioner or appellant Municipality cannot evade ability and/or liability under the c that it was Jose Macaraeg who constructed the stage. The municipality acting through its municipal council appointed Macaraeg as chairman of the sub-committee on entertainment and in charge of the construction of the "zarzuela" stage. Macaraeg acted merely as an agent of the Municipality. Under the doctrine of respondent superior mentioned earlier, petitioner is responsible or liable for the negligence of its agent 22 acting within his assigned tasks. ... when it is sought to render a municipal corporation liable for the act of servants or agents, a cardinal inquiry is, whether they are the servants or agents of the corporation. If the corporation appoints or elects them, can control them in the discharge of their duties, can continue or remove the can hold them responsible for the manner in which they discharge their trust, and if those duties relate to the exercise of corporate powers, and are for the benefit of the corporation in its local or special interest, they may justly be regarded as its agents or servants, and the maxim of respondent superior applies." ... (Dillon on Municipal Corporations, 5th Ed., Vol IV, p. 2879) 5. The remaining question to be resolved centers on the liability of the municipal councilors who enacted the ordinance and created the fiesta committee. The Court of Appeals held the councilors jointly and solidarity liable with the municipality for damages under Article 27 of the Civil Code which provides that d any person suffering ing material or moral loss because a public servant or employee refuses or neglects, without just cause to perform his official duty may file an action for 23 damages and other relief at the latter. In their Petition for review the municipal councilors allege that the Court of Appeals erred in ruling that the holding of a town fiesta is not a governmental function and that there was negligence on their part for not maintaining and supervising the safe use of the stage, in applying Article 27 of the Civil Code against them and in not holding Jose Macaraeg liable for the collapse of the stage and the consequent death of Vicente 24 Fontanilla. We agree with petitioners that the Court of Appeals erred in applying Article 27 of the Civil Code against the for this particular article covers a case of nonfeasance or non-

performance by a public officer of his official duty; it does not apply to a case of negligence or misfeasance in carrying out an official duty. If We are led to set aside the decision of the Court of Appeals insofar as these petitioners are concerned, it is because of a plain error committed by respondent court which however is not invoked in petitioners' brief. In Miguel v. The Court of appeal. et al., the Court, through Justice, now Chief Justice, Fred Ruiz Castro, held that the Supreme Court is vested with ample authority to review matters not assigned as errors in an appeal if it finds that their consideration and resolution are indispensable or necessary in arriving at a just decision in a given case, 25 and that tills is author under Sec. 7, Rule 51 of the Rules of Court. We believe that this pronouncement can well be applied in the instant case. The Court of Appeals in its decision now under review held that the celebration of a town fiesta by the Municipality of Malasiqui was not a governmental function. We upheld that ruling. The legal consequence thereof is that the Municipality stands on the same footing as an ordinary private corporation with the municipal council acting as its board of directors. It is an elementary principle that a corporation has a personality, 26 separate and distinct from its officers, directors, or persons composing it and the latter are not as a rule co-responsible in an action for damages for tort or negligence culpa aquilla committed by the corporation's employees or agents unless there is a 27 showing of bad faith or gross or wanton negligence on their part. xxx xxx xxx The ordinary doctrine is that a director, merely by reason of his office, is not personally Stable for the torts of his corporation; he Must be shown to have personally voted for or otherwise participated in them ... Fletcher Encyclopedia Corporations, Vol 3A Chapt 11, p. 207) Officers of a corporation 'are not held liable for the negligence of the corporation merely because of their official relation to it, but because of some wrongful or negligent act by such officer amounting to a breach of duty which resulted in an injury ... To make an officer of a corporation liable for the negligence of the corporation there must have been upon his part such a breach of duty as contributed to, or helped to bring about, the injury; that is to say, he must be a participant in the wrongful act. ... (pp. 207-208, Ibid.) xxx xxx xxx Directors who merely employ one to give a fireworks Ambition on the corporate are not personally liable for the negligent acts of the exhibitor. (p. 211, Ibid.) On these people We absolve Use municipal councilors from any liability for the death of Vicente Fontanilla. The records do not show that said petitioners directly participated in the defective construction of the "zarzuela" stage or that they personally permitted spectators to go up the platform.

6. One last point We have to resolve is on the award of attorney's fees by respondent court. Petitioner-municipality assails the award. Under paragraph 11, Art. 2208 of the Civil Code attorney's fees and expenses of litigation may be granted when the court deems it just and equitable. In this case of Vicente Fontanilla, although respondent appellate court failed to state the grounds for awarding attorney's fees, the records show however that attempts were made by plaintiffs, now private respondents, to secure an extrajudicial compensation from the municipality: that the latter gave prorases and assurances of assistance but failed to comply; and it was only eight month after the incident that the bereaved family of Vicente Fontanilla was compelled to seek relief from the courts to ventilate what was 28 believed to be a just cause. We hold, therefore, that there is no error committed in the grant of attorney's fees which after all is a matter of judicial discretion. The amount of P1,200.00 is fair and reasonable. PREMISES CONSIDERED, We AFFIRM in toto the decision of the Court of Appeals insofar as the Municipality of Malasiqui is concerned (L-30183), and We absolve the municipal councilors from liability and SET ASIDE the judgment against them (L-9993). Without pronouncement as to costs. SO ORDERED, Teehankee (Chairman), Makasiar, Fernandez, and Guerrero, JJ., concur.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-7708 May 30, 1955 JOSE MONDANO, petitioner, vs. FERNANDO SILVOSA, Provincial Governor of Surigao, JOSE ARREZA and OLIMPIO EPIS, Members of the Provincial Board, respondents. D. Avila and C. H. Lozada for petitioner. Olimpio R. Epis in his own behalf and for his co-respondents. PADILLA, J.: The petitioner is the duly elected and qualified mayor of the municipality of Mainit, province of Surigao. On 27 February 1954 Consolacion Vda. de Mosende filed a sworn complaint with the Presidential Complaints and Action Committee accusing him of (1) rape committed on her daughter Caridad Mosende; and (2) concubinage for cohabiting with her daughter in a place other than the conjugal dwelling. On 6 March the Assistant Executive Secretary indorsed the complaint to the respondent provincial governor for immediate investigation, appropriate action and report. On 10 April the petitioner appeared before the provincial governor in obedience to his summons and was served with a copy of the complaint filed by the provincial governor with provincial board. On the same day, the provincial governor issued Administrative Order No. 8 suspending the petitioner from office. Thereafter, the Provincial Board proceeded to hear the charges preferred against the petitioner over his objection. The petitioner prays for a writ of prohibition with preliminary injunction to enjoin the respondents from further proceeding with the hearing of the administrative case against him and for a declaration that the order of suspension issued by the respondent provincial governor is illegal and without legal effect. On 4 May 1954 the writ of preliminary injunction prayed for was issued after filing and approval of a bond for P500. The answer of the respondents admits the facts alleged in the petition except those that are inferences and conclusions of law and invokes the provisions of section 79 (c)of the Revised Administrative Code which clothes the department head with "direct control, direction, and supervision over all bureaus and offices under his jurisdiction . . ." and to that end "may order the investigation of any act or conduct of any person in the service of any bureau or office under his Department and in connection therewith may appoint a committee or designate an official or person who shall conduct such investigations; . . ."and the rule in the case of Villena vs. Secretary of Interior, 67 Phil. 452, which upheld "the power of the Secretary of Interior to conduct at its own initiative investigation of charges against local elective municipal officials and to suspend them preventively," on the board proposition "that under the presidential type of government which we have

adopted and considering the departmental organization established and continued in force by paragraph 1, section 11, Article VII, of our Constitution, all executive and administrative organizations are adjuncts of the Executive Departments, the heads of the various executive departments are assistants and agents of the Chief Executive." The executive departments of the Government of the Philippines created and organized before the approval of the Constitution continued to exist as "authorized by law until the 1 Congress shall provide otherwise." Section 10, paragraph 1, Article VII, of the Constitution provides: "The President shall have control of all the executive departments, bureaus, or offices, exercise general supervision over all local governments as may be provided by law, and take care that the laws be faithfully executed." Under this constitutional provision the President has been invested with the power of control of all the executive departments, bureaus, or offices, but not of all local governments over which he has been granted only the power of general supervision as may be provided by law. The Department head as agent of the President has direct control and supervision over all bureaus and offices under his jurisdiction as provided for in section 79 (c) of the Revised Administrative Code, but he does not have the same control of local governments as that exercised by him over bureaus and offices under his jurisdiction. Likewise, his authority to order the investigation of any act or conduct of any person in the service of any bureau or office under his department is confined to bureaus or offices under his jurisdiction and does not extend to local governments over which, as already stated, the President exercises only general supervision as may be provided by law. If the provisions of section 79 (c) of the Revised Administrative Code are to be construed as conferring upon the corresponding department head direct control, direction, and supervision over all local governments and that for the reason he may order the investigation of an official of a local government for malfeasance in office, such interpretation would be contrary to the provisions of paragraph 1, section 10, Article VII, of the Constitution. If "general supervision over all local governments" is to be construedas the same power granted to the Department Head in section 79 (c) of the Revised Administrative Code, then there would no longer be a distinction or difference between the power of control and that of supervision. In administrative law supervision means overseeing or the power or authority of an officer to see that subordinate officers perform their duties. If the latter fail or neglect to fulfill them the former may take such action or step as prescribed by law to make them perform their duties. Control, on the other hand, means the power of an officer to alter or modify or nullify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former for that of the latter. Such is the import of the provisions of section 79 (c) of the Revised Administrative Code and 37 of Act No. 4007. The Congress has expressly and specifically lodged the provincial supervision over municipal officials in the provincial governor who is authorized to "receive and investigate complaints made under oath against municipal officers for neglect of duty, oppression, corruption or other form of maladministration of office, and conviction by 2 final judgment of any crime involving moral turpitude." And if the charges are serious, "he shall submit written charges touching the matter to the provincial board, furnishing a copy of such charges to the accused either personally or by registered mail, and he may in such case suspend the officer (not being the municipal treasurer) pending action by the board, if in his opinion the charge be one affecting the official integrity of the 3 officer in question." Section 86 of the Revised Administrative Code adds nothing to the power of supervision to be exercised by the Department Head over the administration of . . . municipalities . . .. If it be construed that it does and such additional power is the same authority as that vested in the Department Head by section 79 (c) of the Revised Administrative Code, then such additional power must be deemed to have been abrogated by section 10 (1), Article VII, of the Constitution.

In Lacson vs. Roque, 49 Off. Gaz. 93, this Court held that the power of the President to remove officials from office as provided for in section 64 (b) of the Revised Administrative Code must be done "conformably to law;" and only for disloyalty to the Republic of the Philippines he "may at any time remove a person from any position of trust or authority under the Government of the (Philippine Islands) Philippines." Again, this power of removal must be exercised conformably to law. In the indorsement to the provincial governor the Assistant Executive Secretary requested immediate investigation, appropriate action and report on the complaint indorsed to him, and called his attention to section 2193 of the Revised Administrative Code which provides for the institution of judicial proceedings by the provincial fiscal upon direction of the provincial governor. If the indorsement of the Assistant Executive Secretary be taken as a designation of the provincial governor to investigate the petitioner, then he would only be acting as agent of the Executive, but the investigation to be conducted by him would not be that which is provided for in sections 2188, 2189 and 2190 of the Revised Administrative Code. The charges preferred against the respondent are not malfeasances or any of those enumerated or specified in section 2188 of the Revised Administrative Code, because rape and concubinage have nothing to do with the performance of his duties as mayor nor do they constitute or involve" neglect of duty, oppression, corruption or any other form of maladministration of office." True, they may involve moral turpitude, but before the provincial governor and board may act and proceed in accordance with the provisions of the Revised Administrative Code referred to, a conviction by final judgment must precede the filing by the provincial governor of charges and trial by the provincial board. Even the provincial fiscal cannot file an information for rape without a sworn complaint of the offended party who is 28 years of age and the crime of concubinage cannot be prosecuted but upon sworn 4 complaint of the offended spouse. The charges preferred against the petitioner, municipal mayor of Mainit, province of Surigao, not being those or any of those specified in section 2188 of the Revised Administrative Code, the investigation of such charges by the provincial board is unauthorized and illegal. The suspension of the petitioner as mayor of the municipality of Mainit is, consequently, unlawful and without authority of law. The writ of prohibition prayed for is granted, without pronouncement as to costs. Pablo, Acting C.J., Bengzon, Montemayor, Reyes, A., Bautista Angelo, Labrador, Concepcion and Reyes, J.B.L., JJ., concur.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 78973 January 29, 1988 SULTAN MAMINTA M. RADIA, petitioner, vs. REVIEW COMMITTEE UNDER EXECUTIVE ORDER NO. 17, HADJI ABBAS M. BASMAN, and ENGINEER LACSASA H. PANGADAPUN, respondents. FELICIANO, J.: This is a Petition for certiorari asking this Court: (a) to set aside as null and void: (1) the termination of petitioner as City Engineer of Marawi City by respondent Basman; the designation by respondent Basman of respondent Pangadapun as Officer-in-Charge (OIC) of the Office of the City Engineer of Marawi City; and (2) the Resolution of respondent Review Committee affirming the act of respondent Basman in terminating petitioner's appointment as City Engineer of Marawi City; and (b) to order respondent Basman to pay the back salary which petitioner has failed to receive because of the termination of his appointment. Petitioner was appointed and assumed office as City Engineer of Marawi City on 1 May 1985. On 1 April 1986, upon appointment of respondent Basman as OIC of the Office of the City Mayor of Marawi City, he issued a Memorandum addressed to all Heads of Offices and Personnel directing the immediate transfer and delivery of all office equipment from the PTA Building, Old Capitol Hill, to the New City Hall, Bangon, Marawi City and directing all personnel to hold office at the New City Hall effective 2 April 1986. On 4 April 1986, respondent Basman issued another Memorandum addressed directly to petitioner stating that he Basman had been reliably informed that most of the City Engineering Equipment stored in the City Motor Pool had been intentionally destroyed by some "bad elements" and directing petitioner to transfer immediately all equipment to the present City Public Works and Highway Engineer's Office with the warning that failure to comply would constitute "malfeasance and serious insubordination" and that petitioner would be held responsible for any further loss of or damage to the said City Equipment. On 30 April 1986, respondent Basman issued a Memorandum terminating petitioner from his position as City Engineer. This Memorandum stated: Please be informed that due to your continuous failure to report to office since April 2, 1986 despite orders issued by this Office on April 3, 4 and 14, 1986 which constitutes serious insubordination and abandonment of office on account of your failure to protect the City Government Engineering Equipment which were deliberately destroyed and seriously damaged wile in your custody and by reason

further of the loss of the Road Roller (Pison) equipment of the City Engineer's Office which was also in your custody as City Engineer and which loss is up to now unexplained to this office, a conduct indicative of being notoriously undesirable, your appointment as City Engineer of Marawi City is hereby terminated. You are advised to clear yourself from all accountabilities and to turn over all government properties in your custody to the City Engineer's Office. On the same date, respondent Basman designated respondent Pangadapun as OIC of the Office of the City Engineer of Marawi City. On 28 May 1986, petitioner wrote to the Regional Director, Regional Office No. 12, Civil Service Commission (CSC), Cotabato City, protesting his termination from the service and asking that the designation of respondent Pangadapun be withdrawn. Initially agreeing with petitioner, the CSC Regional Director withdrew his approval of the appointment or designation of respondent Pangadapun. Upon Motion for Reconsideration by respondent Basman, however, the CSC Regional Director on 9 July 1986 reconsidered his initial ruling and approved the appointment of respondent Pangadapun, subject to final resolution of petitioner's protest by the respondent Review Committee under Executive Order No. 17. Petitioner sought reconsideration of the CSC Regional Director's last ruling. This request for reconsideration was forwarded to the Minister of Justice for appropriate action under the provisions of Executive Order No. 17. On 10 October 1986, the Review Committee under Executive Order No. 17 headed by the Acting Minister of Justice, issued a Resolution dismissing petitioner's appeal for lack of merit. Petitioner appealed this Resolution to the Office of the President. The latter dismissed this appeal by a Resolution dated 11 June 1987 stating that decisions of the Review Committee are final and unappealable under Section 8 of Executive Order No. 17. Hence, this Petition for Certiorari. Article III (2) of of the Provisional Constitution, for our present purposes, provided as follows:
1

which was in effect all times relevant

All elective and appointive officials under the 1973 Constitution shall continue in office until otherwise provided by proclamation or executive order or upon the designation or appointment and qualification of their successors, if such is made within a period of one year from February 25, 1986. (Emphasis supplied) It may be noted that the above organic provision did not require the existence of any cause for removal or termination of any of the elective and appointive officials under the 1973 Constitution. This being so, petitioner was lawfully terminated from his position as City Engineer of Marawi City upon the designation or appointment and qualification of respondent Pangadapun as petitioner's successor on 30 April 1986. The authority of

respondent Basman as OIC of the Office of the City Mayor of Marawi City to appoint or designate the City Engineer of Marawi City cannot be seriously questioned in review of the provisions of Section 185 (1) of B.P. Blg. 337 known as the Local Government 2 3 Code which amended the provisions of the City Charter of Marawi City, originally lodging that authority in the President of the Philippines. Although the Provisional Constitution did not require any ground or cause for removal as above pointed out, the Government, in an act of auto-limitation and "to prevent indiscriminate dismissals of personnel in the Career Civil Service whose qualifications and performance meet the standards of public service of the New Government," issued 4 Executive Order No. 17 dated 28 May 1986, which enumerated certain grounds for the separation or replacement of elective and appointive officials authorized under Article III (2) of the Provisional Constitution. These grounds were: 1) Existence of a case for summary dismissal pursuant to Section 40 of the Civil Service Law; 2) Existence of a probable cause for violation of the Anti-Graft and Corrupt Practices Act as determined by the Ministry Head concerned; 3) Gross incompetence or inefficiency in the discharge of functions; 4) Misuse of public office for partisan political purposes; [and]

transfer their office and City Engineering Equipment. Moreover, nowhere in the submissions of the petitioner does any explanation appear why the Petitioner has persistently failed to comply with the directives of the Respondent OIC to hold office and transfer their office equipment to the New City Hall. This amounts to insubordination and disobedience to the respondent OIC Mayor. Considering the important and highly sensitive position which the Petitioner occupied-that of City Engineer of Marawi City, any act of insubordination or act of disobedience on his part will undermine the morale and erode the respect of his subordinates for the lawful and reasonable orders of duly constituted authority. In the proper and orderly functioning of any government unit, it is imperative that the lawful and reasonable orders of the head of that unit must be followed by the subordinate officers and employees. Furthermore, this is necessary for a disciplined society. In the absence of any reasonable and appropriate explanation from the Petitioner for his persistent refusal to comply with the repeated directives of the Respondent OIC, these acts constitute serious grounds which render Petitioner unfit to remain in the service and make his separation or replacement in the interest of the service justified under the provisions of Executive Order No. 17. xxx xxx xxx
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5) Any other analogous ground showing that the incumbent is unfit to remain in the service or his separation/replacement is in the interest of the service. In the instant case, petitioner appealed to the respondent Review Committee established under Section 5 of Executive Order No. 17 precisely to pass upon all petitions for reconsideration filed by any official or employee separated from the service in the course of implementing Article III (2) of the Provisional Constitution. The respondent Review Committee dismissed petitioner's appeal, having found that: Upon assumption in office, Respondent (Basman) issued a Memorandum to all heads of offices, including the Petitioner (Radia) directing the transfer of all offices from the PTA Building, Old Capitol Hill to the New City Hall, Bangon, Marawi City. This Directive was reiterated by subsequent memoranda dated April 2, 1986, April 4, 1986 and April 14, 1986. That notwithstanding these directives, Petitioner has failed to comply with the Respondent's Order to hold office and transfer all their equipment to the New City Hall at Bangon, Marawi City. Further, Respondent claims that Petitioner did not report for work for the period from April 2 to April 30, 1986. Petitioner, however, submitted proof that he was on vacation leave from March 31 to April 4, 1986 and sick leave from April 8 to April 11, 1986 and reported for work from April 14 to 30, 1986. Nevertheless, the certification submitted by the Petitioner did not state where the Petitioner reported for work whether in the Old Capitol Hills or in the New City Hall where the OIC has reportedly directed the Petitioner to

The Review Committee thus held that petitioner's persistent failure to comply with lawful orders of respondent Basman fell within Ground No. 5 of Executive Order No. 17. Petitioner contends that under Section 2 of Executive Order No. 17, it is the "Ministry Head concerned" who is authorized to determine who may be separated from the service, and that respondent Basman is not "Head of a Ministry" and, therefore, without power to terminate the petitioner. This argument does not persuade. The Solicitor General has pointed out that although heads of local governments like provincial governors and municipal mayors may be under the supervision of the Secretary of Local Government. Local Governments are not "attached to" the Department of Local Governments in the same sense that bureaus and offices under, for instance, the Department of Justice are attached to that department. Provinces and municipalities are instrumentalities or units of local government vested with their own legislative and executive powers under the Local Government Code. Accordingly, for the limited purposes of Executive Order No. 17, Section 1 of which states that: Any office, agency, instrumentality or government-owned or controlled corporation, which is not attached to any ministry, including any of a constitutional commissions and state, colleges and universities, shall be considered a ministry for purposes of this Order. heads of local governments may well be considered as Ministry (department) Heads with the meaning of Executive Order No. 17. It is in any event important to recall in this connection that petitioner's removal was reviewed and confirmed by the Review Committee, a body which is certainly of ministerial rank, being composed of "the

Minister of Justice, as Chairman, and the Executive Secretary, the Minister of Budget, the Minister for Government Reorganization, the Chairman of the Civil Service Commission, and the Chairman of the Commission on Audit, or there duly authorized 6 representatives, as Members." Thus, the requirement of Executive Order No. 17, if it is a requirement, that the removal of petitioner be effected by a "Ministry Head" may be regarded as substantially complied with. Petitioner finally contends that Executive Order No. 17 is inapplicable to his case, considering that petitioner's services as City Engineer of Marawi City were terminated on 30 April 1986 while Executive Order No. 17 was issued on 28 May 1986, twenty (20) days after petitioner was removed from his position. Petitioner argues that Executive Order No. 17 cannot be applied retroactively to cover his case. Petitioner's argument here is self- defeating. As pointed out above, Executive Order No.17 is a self-limiting act and its provisions are not only non-penal in nature, but also clearly more favorable to petitioner than those of Article III (2) of the Provisional Constitution. As such, there is no legal nor moral obstacle to the retrospective application of Executive Order No. 17 which expressly envisaged its application to "those already separated from the service on the issuance of this Order, including those whose resignations were accepted or whose successors have been appointed/designated" (Section 6). ACCORDINGLY, the Court Resolved to DISMISS the Petition for certiorari for lack of merit. No pronouncement as to costs. SO ORDERED. Teehankee, C.J., Yap, Fernan, Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Gancayco, Padilla, Bidin, Sarmiento and Cortes, JJ., concur.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 126661 December 3, 1999 JOSE S. ANDAYA and EDGARDO L. INCIONG, petitioners, vs. REGIONAL TRIAL COURT, Cebu City, Branch 20, and THE CITY OF CEBU, respondents. PARDO, J.: The case is an appeal via certiorari from a decision of the Regional Trial Court, Cebu City, Branch 20, commanding petitioner Jose S. Andaya as Regional Police Command No. 7, to include P/Chief Inspector Andres Sarmiento in the list of five (5) recommendees to be submitted to the mayor from which list the mayor shall select the City Director, Cebu City Police Command (chief of police). On January 3, 1996, the position of City Director, Cebu City Police Command (chief of police) became vacant after P/Supt. Antonio Enteria was relieved of command. Sometime in January 1996, petitioner Andaya submitted to the City Mayor, Cebu City a list of five (5) eligibles for the mayor choose one to be appointed as the chief of police of Cebu City. The mayor did not choose anyone from the list of five (5) recommendees because the name of P/Chief Inspector Andres Sarmiento was not included therein. However, petitioner Andaya refused to agree to Mayor Alvin B. Garcia's request to include the name of Major Andres Sarmiento in the list of police officers for appointment by the mayor to the position of City Director (chief of police), Cebu City Police Command. Petitioner Andaya's refusal was based on his contention that Major Andres Sarmiento was not qualified for the position of City Director (chief of police), Cebu City Police Command, under NAPOLCOM Memorandum Circular No. 95-04 dated January 12, 1995, particularly Item No. 8, paragraph D thereof, which provides that the minimum qualification standards for Directors of Provincial/City Police Commands, include completion of the Officers Senior Executive Course (OSEC) and the rank of Police Superintendent. Due to the impasse, on March 22, 1996, the City of Cebu filed with the Regional Trial Court, Branch 20, Cebu City, a complaint for declaratory relief with preliminary prohibitory and mandatory injunction and temporary restraining order against P/Chief Supt. Jose S. Andaya and Edgardo L. Inciong, Regional Director, National Police 2 Commission. On April 10, 1996, petitioners filed with the trial court their respective answer to the complaint. Petitioners stated that the power to designate the chief of police of Cebu City (City Director, Cebu City Police Command) is vested with the Regional Director, Regional Police Command No. 7. However, the mayor is authorized to choose the chief
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of police from a list of five (5) eligibles submitted by the Regional Director. In case of conflict between the Regional Director and the mayor, the issue shall be elevated to the Regional Director, National Police Commission, who shall resolve the issue within five (5) working days from receipt and whose decision on the choice of the chief of police shall be final and executory. Thus, petitioners prayed for dismissal of the complaint for 3 lack of legal basis and failure to exhaust administrative remedies. On April 18, 1996, the trial court issued a writ of preliminary injunction against petitioner Jose S. Andaya enjoining him from replacing C/Insp. Andres Sarmiento as OIC Director or Chief of Police of the Cebu City Police Command by designating another as OIC Chief of Police or appointing a regular replacement for said officer, and, from submitting to the mayor a list of five (5) eligibles which did not include the name of Major Andres 4 Sarmiento. On July 12, 1996, the trial court rendered decision in favor of respondent City of Cebu, the dispositive portion of which reads as follows: WHEREFORE, in view of all the foregoing premises, judgment is hereby rendered in favor of plaintiff as against defendants, declaring that P/CInsp. Andres Sarmiento is qualified under RA 6975 to be appointed as Chief Director or Chief of Police of the Cebu City Police Command and whose name must be included in the list of five (5) eligibles recommended as regular replacement to the position of the Chief of Police of said Cebu City Police Command. The writ of preliminary prohibitory injunction issued in this case against defendants and their agents, or, representatives or any other persons acting for and in their behalf enjoining and preventing them from replacing P/CInsp. Andres Sarmiento as OIC Chief of Police of Cebu City Police Command by designating anyone from the eligibles recommended in the two (2) lists thereof submitted to Mayor Garcia or from any other list of said eligible recommendees for said position is hereby made permanent. Let a permanent writ of preliminary mandatory injunction be issued against defendant Jose S. Andaya or his successor ordering the latter to include Major Andres Sarmiento in the list of five (5) eligible persons recommended for the replacement to the position of Chief of Police of Cebu City Police Command. SO ORDERED. Cebu City, July 12, 1996. (s/t) FERDINAND J. MARCOS

In due time, petitioners filed with the trial court their joint motion for reconsideration on the ground that the decision is contrary to Section 51 of Republic Act 6975 which only empowers the mayor to choose one (1) from the five (5) eligibles recommended by the Regional Police Director to be named chief of police. The mayor cannot superimpose his will on the recommending authority by insisting that his protg be included in the list of five eligibles from which the chief of police is to be chosen. On September 11, 1996, the trial court denied petitioners' motion for reconsideration 7 ruling that no new matters had been raised therein. Hence, this petition review on certiorari on pure question of law. On June 11, 1997, we gave due course to the petition.
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appoints the officer selected by the mayor as the City Director, City Police Command d (chief of police) Cebu City. It is the prerogative of the Regional Police Director to name g the five (5) eligibles from a pool of eligible officers screened by the Senior Officers e Promotion and Selection Board, Headquarters, Philippine National Police, Camp Crame, Quezon City, without interference from local executives. In case of 5 disagreement between the Regional Police Director and the Mayor, the question shall be elevated to the Regional Director, National Police Commission, who shall resolve the issue within five (5) working days from receipt and whose decision on the choice of 13 the Chief of Police shall be final and executory. As deputy of the Commission, the authority of the mayor is very limited. In reality, he has no power of appointment; he has only the limited power of selecting one from among the list of five eligibles to be named the chief of police. Actually, the power to appoint the chief of police of Cebu City is vested in the Regional Director, Regional Police Command No. 7. Much less may the mayor require the Regional Director, Regional Police Command, to include the name of any officer, no matter how qualified, in the list of five to be submitted to the mayor. The purpose is to enhance police professionalism and to isolate the police service from political domination. Consequently, we find that the trial court erred in granting preliminary injunction that effectively restrained the Regional Director, Regional Police Command, Region 7, from performing his statutory function. The writ of preliminary injunction issued on April 18, 1996, is contrary to law and thus void. Similarly, the lower court's decision sustaining the City Mayor's position suffers from the same legal infirmity. WHEREFORE, the Court GRANTS the petition and SETS ASIDE the decision of the Regional Trial Court, Branch 20, Cebu City, dated July 12, 1996, in Civil Case No. CEB-18545. In lieu thereof, the Court renders judgment upholding the sole discretion of the Regional Director, Regional Police Command No. 7, to submit to the mayor of Cebu City a list of five (5) eligibles from which the mayor shall choose the chief of police. In case of the mayor's refusal to make his choice within a given period due to disagreement as to the eligible nominees, the issue shall be submitted to the Regional Director, National Police Commission, whose decision shall be final. No costs.

At issue is whether or not the Mayor of Cebu City may require the Regional Director, Regional Police Command No. 7, to include the mayor's protg in the list of five (5) eligibles to be recommended by the Regional Police Director to the mayor from which the mayor shall choose the City Director, City Police Command (chief of police) City of Cebu. We resolve the issue against the position of the city mayor. Republic Act No. 6975, Section 51, gives authority to the mayor of Cebu City to choose the chief of police from a list of five (5) eligibles recommended by the Regional Director, Regional Police Command No. 7. The National Police Commission has issued Memorandum Circular No. 95-04, dated January 12, 1995, for the implementation of Republic Act No. 6975. It provides that among the qualifications for chief of police of highly urbanized cities are (1) completion of the Officers' Senior Executive Course (OSEC) and (2) holding the rank of Police Superintendent. The mayor of Cebu City submits that Memorandum Circular No. 95-04 of the National Police Commission prescribing such additional qualifications is not valid as it contravenes the law. We do not agree. Under Republic Act No. 6975, Section 51, the mayor of Cebu City shall be deputized as representative of the Commission (National Police Commission) in his territorial jurisdiction and as such the mayor shall have authority to choose the chief of police from a list of five (5) eligibles recommended by the Police Regional Director. The City Police Station of Cebu City is under the direct command and control of the PNP Regional Director, Regional Police Command No. 7, and is equivalent to a 12 provincial office. Then, the Regional Director, Regional Police Command No. 7
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SO ORDERED. Kapunan and Ynares-Santiago, JJ., concur. Davide, Jr., C.J., like Justice Puno, on the ground of non-exhaustion of administrative remedies. Puno, J., I concur but on the ground of non-exhaustion of adm. remedies.

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