Section 1

The territorial and political subdivisions of the Republic of the

Philippines are the provinces, cities, municipalities, and barangays.
There shall be autonomous regions in Muslim Mindanao and the
Cordilleras as hereinafter provided.
 Cordillera Broad Coalition vs COA
FACTS
Executive No. 220 was issued which created the CAR. The purpose is to accelerate
economic and social growth in the region and to prepare for the establishment of
the autonomous region in the Cordilleras.

ISSUE
W/N EO 220 created a new territorial and political subdivision

RULING
No. CAR is not a public corporation or a territorial and political subdivision. It does
not have a separate juridical personality, unlike provinces, cities and municipalities.
Neither is it vested with the powers that are normally granted to public
corporations
 Section 2
The territorial and political subdivisions shall enjoy local autonomy.
 Limbona vs Conte Mangelin, et al
FACTS
Sultan Limbona, speaker of the Batasang Pampook of Central Mindanao, was invited in October
1987 by Congressman Datu Guimid Matalam as Speaker of the Assembly of Region XII in a
consultation/dialogue with local government officials. Petitioner accepted the invitation and
informed the Assembly members through the Assembly Secretary that there shall be no session in
November as his presence was needed in the house committee hearing of Congress.
On November 2, 1987, the Assembly held a session in defiance of the Limbona's advice, where he
was unseated from his position.
ISSUE
Are the so-called autonomous governments of Mindanao, as they are now constituted, subject to
the jurisdiction of the national courts? What is the extent of self-government given to the two
autonomous governments of Region IX and XII?

RULING
Yes. The Court ruled that they can make an inquiry in the validity of the expulsion in question and
review the petitioner’s removal as Speaker.
 Magtajas vs Pryce Properties
FACTS
PAGCOR decided to expand its operations to Cagayan de Oro City. It leased a portion of a building
belonging to Pryce Properties Corporations, Inc., renovated & equipped the same, and prepared to
inaugurate its casino. Civil organizations angrily denounced the project. Petitioners opposed the casino’s
opening and enacted Ordinance No. 3353, prohibiting the issuance of business permit and cancelling
existing business permit to the establishment for the operation of the casino, and Ordinance No. 3375-
93, prohibiting the operation of the casino and providing a penalty for its violation.
ISSUE
WON the Ordinance Nos. 3353 and 3375-93 are valid.
Ruling
No. CDO is empowered to enact ordinances for the purposes indicated in the LGC. However, ordinances
should not contravene a statute. Municipal governments are merely agents of the National
Government. Local Councils exercise only delegated powers conferred by Congress. The delegate cannot
be superior to the principal powers higher than those of the latter. PD 1869 authorized casino gambling.
As a statute, it cannot be amended/nullified by a mere ordinance.
 San Juan vs Civil Service Commission
FACTS
The Provincial Budget Officer of Rizal (PBO) was left vacant; thereafter Rizal Governor San Juan, nominated
Dalisay Santos for the position and the latter quickly assumed position. However, Director Abella of Region IV
Department of Budget and Management (DBM) did not endorse the nominee, and recommended private
respondent Cecilia Almajose as PBO on the ground that she was the most qualified. This appointment was
subsequently approved by the DBM.

ISSUE
Whether or not DBM is empowered to appoint a PBO who was not expressly nominated by the provincial
governor.

RULING
The DBM may appoint only from the list of qualified recommendees nominated by the Governor. If none is
qualified, he must return the list of nominees to the Governor explaining why no one meets the legal
requirements and ask for new recommendees who have the necessary eligibilities and qualifications.
 Leynes vs COA
FACTS
Petitioner Judge Tomas Leynes, the presiding judge of the RTC of Calapan City, Oriental Mindoro, Branch
40. His salary and representation and transportation allowance (RATA) were drawn from the budget of
the Supreme Court. Besides that, petitioner also received a monthly allowance of P944 from the local
funds of the Municipality of Naujan starting 1984. In May 1993, the Sangguniang Bayan approved a
resolution increasing petitioner judge’s monthly allowance from to P1,600. In February 1994, Provincial
Auditor Salvacion M. Dalisay sent a letter to the Municipal Mayor and the Sangguniang Bayan of Naujan
directing them to stop the payment of the P1,600 monthly allowance to petitioner judge and to require
the immediate refund of the amounts previously paid. She reasoned that
the Municipality of Naujan could not grant RATA to petitioner judge in addition to the RATA the latter was
already receiving from the Supreme Court.
ISSUE
W/N COA may reduce the allowance given to judges by local governments
RULING
No. LGC authorizes Local governments to provide allowances to judges and decide the amount. Local
Autonomy prohibits the COA from interfering with the authority of local government by reducing what
has been decided by the local government
 Section 3
The Congress shall enact a local government code which shall provide
for a more responsive and accountable local government structure
instituted through a system of decentralization with effective
mechanisms of recall, initiative, and referendum, allocate among the
different local government units their powers, responsibilities, and
resources, and provide for the qualifications, election, appointment
and removal, term, salaries, powers and functions and duties of local
officials, and all other matters relating to the organization and
operation of the local units.
 Garcia vs COMELEC
FACTS

In the 1992 elections, Enrique Garcia was elected governor of Bataan. Some mayors, vice-mayors and members of the
Sangguniang Bayan of the 12 municipalities of the province constituted themselves into a Preparatory Recall
Assembly to initiate the recall election of petitioner Garcia. They issued Resolution No. 1 as formal initiation of the
recall proceedings. COMELEC scheduled the recall election for the gubernatorial position of Bataan. Petitioners
filed a petition for certiorari and prohibition with writ of preliminary injunction to annul the Resolution of the
COMELEC because the PRAC failed to comply with the "substantive and procedural requirement" laid down in Section
70 of R.A. 7160. They pointed out the most fatal defect of the proceeding followed by the PRAC in passing the
Resolution which is the deliberate failure to send notices of the meeting to 65 members of the assembly.

ISSUE
W/N the people have the sole and exclusive right to initiate recall proceedings

RULING
No. The mandate given by section 3 of Article X of the Constitution is for Congress to "enact a local government code
which shall provide for a more responsive and accountable local government structure through a system of
decentralization with effective mechanisms of recall, initiative, and referendum . . ." By this constitutional mandate,
Congress was clearly given the power to choose the effective mechanisms of recall as its discernment dictates.
 Section 4
The President of the Philippines shall exercise general supervision over
local governments. Provinces with respect to component cities and
municipalities, and cities and municipalities with respect to component
barangays shall ensure that the acts of their component units are
within the scope of their prescribed powers and functions.
 Ganzon vs Court of Appeals
FACTS
Rodolfo Ganzon was the then mayor of Iloilo City. Complaints were filed against him on grounds of
misconduct and misfeasance of office. The Secretary of Local Government issued several suspension
orders against Ganzon based on the merits of the complaints filed against him hence Ganzon was
facing about 600 days of suspension. Ganzon appealed the issue to the CA and the CA affirmed the
suspension order by the Secretary. Ganzon asserted that the Constitution does not authorize the
President nor any of his alter ego to suspend and remove local officials.

ISSUE
W/N the Secretary of Local Government, as the President’s alter ego, can suspend and or remove
local officials

RULING
Yes. The power of general supervision of the President includes the power to investigate and
remove.
 Province of Negros vs COA
FACTS
On 21 December 1994, the Sangguniang Panlalawigan of Negros Occidental passed Resolution No.
720-A allocating P4,000,000 of its retained earnings for the hospitalization and health care
insurance benefits of 1,949 officials and employees of the province.
Petitioner Province of Negros Occidental, and Philam Care entered into a Group Health Care
Agreement involving a total payment of P3,760,000 representing the insurance premiums of its
officials and employees. Provincial Auditor issued Notice of Suspension suspending the premium
payment because of lack of approval from the Office of the President as provided under AO 103
dated 14 January 1994. The Provincial Auditor explained that the premium payment violated RA
6758 or the Salary Standardization Law.

ISSUE
W/N COA committed a grave abuse of discretion in affirming disallowance of 3.76M PHP for
premium paid for the hospitalization and health care insurance benefits

RULING
Yes. LGU’s are not under the control of the President or any executive offices.
 Section 5
Each local government unit shall have the power to create its own
sources of revenues and to levy taxes, fees, and charges subject to such
guidelines and limitations as the Congress may provide, consistent with
the basic policy of local autonomy. Such taxes, fees, and charges shall
accrue exclusively to the local governments.
 Petron vs Mayor Taingco
FACTS
Petron received a letter from the office of Navotas Mayor, respondent Toby Tiangco, wherein the
corporation was assessed taxes relative to the figures covering sale of diesel, stating the total
amount due of P6,259,087.62, a figure derived from the gross sales of the depot from 1997 to 2001.
ISSUE
W/N a local government unit is empowered under the Local Government Code to impose business
taxes on persons or entities engaged in the sale of petroleum products.

RULING
No. The ability of LGUs to impose business or other local taxes is ultimately rooted in Section 5,
Article X which assures that each local government unit shall have the power to create its own
sources of revenues and to levy taxes, fees and charges, though the power is subject to such
guidelines and limitations as the Congress may provide.
 Yamane vs Lepanto Condominium
FACTS
In 1998, BA Lepanto Condominium Corporation (Lepanto) received a tax assessment in the amount
of P1.6 million from Luz Yamane, the City Treasurer of Makati, for business taxes. Lepanto protested
the assessment as it averred that Lepanto, as a corporation, is not organized for profit; that it
merely exists for the maintenance of the condominium. Yamane denied the protest.

ISSUE
Whether or not a condominium corporation organized solely for the maintenance of a
condominium is liable for local taxation.

RULING
No. Lepanto was not organized for profit. The fees it was collecting from the condominium unit
owners redound to the owners themselves because the fees collected are being used for the
maintenance of the condo. Further, it appears that the assessment issued by Yamane did not state
the legal basis for the tax being imposed on Lepanto – it merely states that Makati is authorized to
collect business taxes under the Local Government Code (LGC) but no other reference specific
reference to specific laws were cited.
Philippine Petroleum Corporation vs Mun. of Pililla
FACTS
Philippine Petroleum Corporation is a business enterprise engaged in the manufacture of a
petroleum product, with its refinery plant situated at Malaya conducting its business activities
within the territorial jurisdiction of the Municipality of Pililla, Rizal. Under Section 142 of the NIRC of
1939, manufactured oils and other fuels are subject to specific tax. Respondent, through Municipal
Council Resolution No. 25, S-1974 enacted Municipal Tax Ordinance No. 1, S-1974 otherwise known
as “The Pililla Tax Code of 1974”. Sections 9 and 10 of the said ordinance imposed a tax on business,
except for those for which fixed taxes are provided in the Local Tax Code. The respondents then filed
a complaint for the collection of business tax, storage permit fees, mayor’s permit and sanitary
inspection fees.

ISSUE
W/N PPC whose oil products are subject to specific tax under the NIRC, is still liable to pay tax on
business unto the respondent Municipality of Pililla, Rizal

RULING
YES, a tax on business is distinct from a tax on the article itself.
 Manila Electric vs Province of Laguna
FACTS
MERALCO was granted franchise by certain municipalities of the Province of Laguna and the Nationa
l Electrification Administration for the supply of electric light, heat and power within their concerne
d areas.Upon enactment of the Local Government Code, the province enacted an ordinance imposi
ng a tax on businesses enjoying a franchise. MERALCO paid under protest and later claimed for refu
nd as it contravened Sec 1 of PD 551 imposing a franchise tax of 2% of gross receipts notwithstandin
g any provision of law or local ordinance to the contrary.

ISSUE
Whether or not the power to tax was validly exercised

RULING
Yes. Local governments do not have the inherent power to tax except to the extent that such power
might be delegated to them either by the basic law or by statute. Presently, under Article X of the
1987 Constitution, a general delegation of that power has been given in favor of local government
units.
 Section 6

Local government units shall have a just share, as determined by law, in

the national taxes which shall be automatically released to them.
 Pimentel vs Aguirre
FACTS
In 1997, President Ramos issued AO 372 which:
Sec 1: required all government departments and agencies, including SUCs, GOCCs and LGUs to
identify and implement measures in FY 1998 that will reduce total expenditures for the year by at
least 25% of authorized regular appropriations for non-personal services items
Sec 4: ordered the withholding of 10% of the IRA to LGUs

ISSUE
Whether or not the president committed grave abuse of discretion in ordering all LGUS to adopt a
25% cost reduction program in violation of the LGU'S fiscal autonomy

RULING
Section 4 of AO 372 cannot be upheld. A basic feature of local fiscal autonomy is the automatic
release of the shares of LGUs in the national internal revenue.
 Batangas vs Executive
FACTS
Secretary
In 1998, then President Estrada issued EO No. 48 establishing the “Program for Devolution
Adjustment and Equalization” to enhance the capabilities of LGUs in the discharge of the functions
and services devolved to them through the LGC.The Oversight Committee under Executive Secretary
Ronaldo Zamora passed Resolutions No. OCD-99-005, OCD-99-006 and OCD-99-003 which were
approved by Pres. Estrada on October 6, 1999. The guidelines formulated by the Oversight
Committee required the LGUs to identify the projects eligible for funding under the portion of
LGSEF and submit the project proposals and other requirements to the DILG for appraisal before the
Committee serves notice to the DBM for the subsequent release of the corresponding funds.

ISSUE
W/N the assailed provisos in the GAAs of 1999, 2000, and 2001, and the OCD resolutions infringe
the Constitution and the LGC of 1991

RULING
Yes. The assailed provisos constitute a “withholding” of a portion of the IRA which effectively
encroach on the fiscal autonomy enjoyed by LGUs and must be struck down
 Section 7
Local governments shall be entitled to an equitable share in the
proceeds of the utilization and development of the national wealth
within their respective areas, in the manner provided by law, including
sharing the same with the inhabitants by way of direct benefits.