G.R. No.

L-23825 December 24, 1965

EMMANUEL PELAEZ, petitioner,

Zulueta, Gonzales, Paculdo and Associates for petitioner.

CONCEPCION, J.:

During the period from September 4 to October 29, 1964 the President of the Philippines,
purporting to act pursuant to Section 68 of the Revised Administrative Code, issued Executive
Orders Nos. 93 to 121, 124 and 126 to 129; creating thirty-three (33) municipalities
enumerated in the margin.1 Soon after the date last mentioned, or on November 10, 1964
petitioner Emmanuel Pelaez, as Vice President of the Philippines and as taxpayer, instituted
the present special civil action, for a writ of prohibition with preliminary injunction, against the
Auditor General, to restrain him, as well as his representatives and agents, from passing in
audit any expenditure of public funds in implementation of said executive orders and/or any
disbursement by said municipalities.

Petitioner alleges that said executive orders are null and void, upon the ground that said
Section 68 has been impliedly repealed by Republic Act No. 2370 and constitutes an undue
delegation of legislative power. Respondent maintains the contrary view and avers that the
present action is premature and that not all proper parties — referring to the officials of the
new political subdivisions in question — have been impleaded. Subsequently, the mayors of
several municipalities adversely affected by the aforementioned executive orders — because
the latter have taken away from the former the barrios composing the new political
subdivisions — intervened in the case. Moreover, Attorneys Enrique M. Fernando and Emma
Quisumbing-Fernando were allowed to and did appear as amici curiae.

The third paragraph of Section 3 of Republic Act No. 2370, reads:

Barrios shall not be created or their boundaries altered nor their names changed except under
the provisions of this Act or by Act of Congress.

Pursuant to the first two (2) paragraphs of the same Section 3:

All barrios existing at the time of the passage of this Act shall come under the provisions
hereof.

Upon petition of a majority of the voters in the areas affected, a new barrio may be created or
the name of an existing one may be changed by the provincial board of the province, upon
recommendation of the council of the municipality or municipalities in which the proposed
barrio is stipulated. The recommendation of the municipal council shall be embodied in a
resolution approved by at least two-thirds of the entire membership of the said council:
Provided, however, That no new barrio may be created if its population is less than five
hundred persons.

Hence, since January 1, 1960, when Republic Act No. 2370 became effective, barrios may
"not be created or their boundaries altered nor their names changed" except by Act of
Congress or of the corresponding provincial board "upon petition of a majority of the voters in
the areas affected" and the "recommendation of the council of the municipality or
municipalities in which the proposed barrio is situated." Petitioner argues, accordingly: "If the
President, under this new law, cannot even create a barrio, can he create a municipality
which is composed of several barrios, since barrios are units of municipalities?"
Respondent answers in the affirmative, upon the theory that a new municipality can be
created without creating new barrios, such as, by placing old barrios under the jurisdiction of
the new municipality. This theory overlooks, however, the main import of the petitioner's
argument, which is that the statutory denial of the presidential authority to create a new barrio
implies a negation of the bigger power to create municipalities, each of which consists of
several barrios. The cogency and force of this argument is too obvious to be denied or even
questioned. Founded upon logic and experience, it cannot be offset except by a clear
manifestation of the intent of Congress to the contrary, and no such manifestation,
subsequent to the passage of Republic Act No. 2379, has been brought to our attention.

Moreover, section 68 of the Revised Administrative Code, upon which the disputed executive
orders are based, provides:

The (Governor-General) President of the Philippines may by executive order define the
boundary, or boundaries, of any province, subprovince, municipality, [township] municipal
district, or other political subdivision, and increase or diminish the territory comprised therein,
may divide any province into one or more subprovinces, separate any political division other
than a province, into such portions as may be required, merge any of such subdivisions or
portions with another, name any new subdivision so created, and may change the seat of
government within any subdivision to such place therein as the public welfare may require:
Provided, That the authorization of the (Philippine Legislature) Congress of the Philippines
shall first be obtained whenever the boundary of any province or subprovince is to be defined
or any province is to be divided into one or more subprovinces. When action by the
(Governor-General) President of the Philippines in accordance herewith makes necessary a
change of the territory under the jurisdiction of any administrative officer or any judicial officer,
the (Governor-General) President of the Philippines, with the recommendation and advice of
the head of the Department having executive control of such officer, shall redistrict the
territory of the several officers affected and assign such officers to the new districts so
formed.

Upon the changing of the limits of political divisions in pursuance of the foregoing authority,
an equitable distribution of the funds and obligations of the divisions thereby affected shall be
made in such manner as may be recommended by the (Insular Auditor) Auditor General and
approved by the (Governor-General) President of the Philippines.

Respondent alleges that the power of the President to create municipalities under this section
does not amount to an undue delegation of legislative power, relying upon Municipality of
Cardona vs. Municipality of Binañgonan (36 Phil. 547), which, he claims, has settled it. Such
claim is untenable, for said case involved, not the creation of a new municipality, but a
mere transfer of territory — from an already existing municipality (Cardona) to another
municipality (Binañgonan), likewise, existing at the time of and prior to said transfer (See
Gov't of the P.I. ex rel. Municipality of Cardona vs. Municipality, of Binañgonan [34 Phil. 518,
519-5201) — in consequence of the fixing and definition, pursuant to Act No. 1748, of the
common boundaries of two municipalities.

It is obvious, however, that, whereas the power to fix such common boundary, in order to
avoid or settle conflicts of jurisdiction between adjoining municipalities, may partake of
an administrative nature — involving, as it does, the adoption of means and ways to carry into
effect the law creating said municipalities — the authority to create municipal corporations is
essentially legislative in nature. In the language of other courts, it is "strictly a legislative
function" (State ex rel. Higgins vs. Aicklen, 119 S. 425, January 2, 1959) or "solely
and exclusively the exercise of legislative power" (Udall vs. Severn, May 29, 1938, 79 P. 2d
347-349). As the Supreme Court of Washington has put it (Territory ex rel. Kelly vs. Stewart,
February 13, 1890, 23 Pac. 405, 409), "municipal corporations are purely the creatures of
statutes."

Although1a Congress may delegate to another branch of the Government the power to fill in
the details in the execution, enforcement or administration of a law, it is essential, to forestall
a violation of the principle of separation of powers, that said law: (a) be complete in itself — it
must set forth therein the policy to be executed, carried out or implemented by the
delegate2 — and (b) fix a standard — the limits of which are sufficiently determinate or
determinable — to which the delegate must conform in the performance of his
functions.2a Indeed, without a statutory declaration of policy, the delegate would in effect,
make or formulate such policy, which is the essence of every law; and, without the
aforementioned standard, there would be no means to determine, with reasonable certainty,
whether the delegate has acted within or beyond the scope of his authority. 2b Hence, he could
thereby arrogate upon himself the power, not only to make the law, but, also — and this is
worse — to unmake it, by adopting measures inconsistent with the end sought to be attained
by the Act of Congress, thus nullifying the principle of separation of powers and the system of
checks and balances, and, consequently, undermining the very foundation of our Republican
system.

Section 68 of the Revised Administrative Code does not meet these well settled requirements
for a valid delegation of the power to fix the details in the enforcement of a law. It does not
enunciate any policy to be carried out or implemented by the President. Neither does it give a
standard sufficiently precise to avoid the evil effects above referred to. In this connection, we
do not overlook the fact that, under the last clause of the first sentence of Section 68, the
President:

... may change the seat of the government within any subdivision to such place therein as the
public welfare may require.

It is apparent, however, from the language of this clause, that the phrase "as the public
welfare may require" qualified, not the clauses preceding the one just quoted,
but only the place to which the seat of the government may be transferred. This fact becomes
more apparent when we consider that said Section 68 was originally Section 1 of Act No.
1748,3 which provided that, "whenever in the judgment of the Governor-General the public
welfare requires, he may, by executive order," effect the changes enumerated therein (as in
said section 68), including the change of the seat of the government "to such place ... as
the public interest requires." The opening statement of said Section 1 of Act No. 1748 —
which was not included in Section 68 of the Revised Administrative Code — governed the
time at which, or the conditions under which, the powers therein conferred could be
exercised; whereas the last part of the first sentence of said section referred exclusively to
the place to which the seat of the government was to be transferred.

At any rate, the conclusion would be the same, insofar as the case at bar is concerned, even
if we assumed that the phrase "as the public welfare may require," in said Section 68,
qualifies all other clauses thereof. It is true that in Calalang vs. Williams (70 Phil. 726)
and People vs. Rosenthal (68 Phil. 328), this Court had upheld "public welfare" and "public
interest," respectively, as sufficient standards for a valid delegation of the authority to execute
the law. But, the doctrine laid down in these cases — as all judicial pronouncements — must
be construed in relation to the specific facts and issues involved therein, outside of which they
do not constitute precedents and have no binding effect. 4 The law construed in the Calalang
case conferred upon the Director of Public Works, with the approval of the Secretary of Public
Works and Communications, the power to issue rules and regulations to promote safe
transit upon national roads and streets. Upon the other hand, the Rosenthal case referred to
the authority of the Insular Treasurer, under Act No. 2581, to issue and cancel certificates or
permits for the sale of speculative securities. Both cases involved grants
to administrative officers of powers related to the exercise of their administrative functions,
calling for the determination of questions of fact.

Such is not the nature of the powers dealt with in section 68. As above indicated, the creation
of municipalities, is not an administrative function, but one which is essentially and eminently
legislative in character. The question of whether or not "public interest" demands the exercise
of such power is not one of fact. it is "purely a legislative question "(Carolina-Virginia Coastal
Highway vs. Coastal Turnpike Authority, 74 S.E. 2d. 310-313, 315-318), or a political question
(Udall vs. Severn, 79 P. 2d. 347-349). As the Supreme Court of Wisconsin has aptly
characterized it, "the question as to whether incorporation is for the best interest of the
community in any case is emphatically a question of public policy and statecraft" (In re Village
of North Milwaukee, 67 N.W. 1033, 1035-1037).

For this reason, courts of justice have annulled, as constituting undue delegation of legislative
powers, state laws granting the judicial department, the power to determine whether certain
territories should be annexed to a particular municipality (Udall vs. Severn, supra, 258-359);
or vesting in a Commission the right to determine the plan and frame of government of
proposed villages and what functions shall be exercised by the same, although the powers
and functions of the village are specifically limited by statute (In re Municipal Charters, 86 Atl.
307-308); or conferring upon courts the authority to declare a given town or village
incorporated, and designate its metes and bounds, upon petition of a majority of the taxable
inhabitants thereof, setting forth the area desired to be included in such village (Territory ex
rel Kelly vs. Stewart, 23 Pac. 405-409); or authorizing the territory of a town, containing a
given area and population, to be incorporated as a town, on certain steps being taken by the
inhabitants thereof and on certain determination by a court and subsequent vote of the
inhabitants in favor thereof, insofar as the court is allowed to determine whether the lands
embraced in the petition "ought justly" to be included in the village, and whether the interest of
the inhabitants will be promoted by such incorporation, and to enlarge and diminish the
boundaries of the proposed village "as justice may require" (In re Villages of North Milwaukee,
67 N.W. 1035-1037); or creating a Municipal Board of Control which shall determine whether
or not the laying out, construction or operation of a toll road is in the "public interest" and
whether the requirements of the law had been complied with, in which case the board shall
enter an order creating a municipal corporation and fixing the name of the same (Carolina-
Virginia Coastal Highway vs. Coastal Turnpike Authority, 74 S.E. 2d. 310).

Insofar as the validity of a delegation of power by Congress to the President is concerned, the
case of Schechter Poultry Corporation vs. U.S. (79 L. Ed. 1570) is quite relevant to the one at
bar. The Schechter case involved the constitutionality of Section 3 of the National Industrial
Recovery Act authorizing the President of the United States to approve "codes of fair
competition" submitted to him by one or more trade or industrial associations or corporations
which "impose no inequitable restrictions on admission to membership therein and are truly
representative," provided that such codes are not designed "to promote monopolies or to
eliminate or oppress small enterprises and will not operate to discriminate against them, and
will tend to effectuate the policy" of said Act. The Federal Supreme Court held:

To summarize and conclude upon this point: Sec. 3 of the Recovery Act is without precedent.
It supplies no standards for any trade, industry or activity. It does not undertake to prescribe
rules of conduct to be applied to particular states of fact determined by appropriate
administrative procedure. Instead of prescribing rules of conduct, it authorizes the making of
codes to prescribe them. For that legislative undertaking, Sec. 3 sets up no standards, aside
from the statement of the general aims of rehabilitation, correction and expansion described
in Sec. 1. In view of the scope of that broad declaration, and of the nature of the few
restrictions that are imposed, the discretion of the President in approving or prescribing
codes, and thus enacting laws for the government of trade and industry throughout the
country, is virtually unfettered. We think that the code making authority thus conferred is an
unconstitutional delegation of legislative power.

If the term "unfair competition" is so broad as to vest in the President a discretion that is
"virtually unfettered." and, consequently, tantamount to a delegation of legislative power, it is
obvious that "public welfare," which has even a broader connotation, leads to the same result.
In fact, if the validity of the delegation of powers made in Section 68 were upheld, there would
no longer be any legal impediment to a statutory grant of authority to the President to do
anything which, in his opinion, may be required by public welfare or public interest. Such grant
of authority would be a virtual abdication of the powers of Congress in favor of the Executive,
and would bring about a total collapse of the democratic system established by our
Constitution, which it is the special duty and privilege of this Court to uphold.

It may not be amiss to note that the executive orders in question were issued after the
legislative bills for the creation of the municipalities involved in this case had failed to pass
Congress. A better proof of the fact that the issuance of said executive orders entails the
exercise of purely legislative functions can hardly be given.

Again, Section 10 (1) of Article VII of our fundamental law ordains:

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.

The power of control under this provision implies the right of the President to interfere in the
exercise of such discretion as may be vested by law in the officers of the executive
departments, bureaus, or offices of the national government, as well as to act in lieu of such
officers. This power is denied by the Constitution to the Executive, insofar as local
governments are concerned. With respect to the latter, the fundamental law permits him to
wield no more authority than that of checking whether said local governments or the officers
thereof perform their duties as provided by statutory enactments. Hence, the President cannot
interfere with local governments, so long as the same or its officers act Within the scope of
their authority. He may not enact an ordinance which the municipal council has failed or
refused to pass, even if it had thereby violated a duty imposed thereto by law, although he
may see to it that the corresponding provincial officials take appropriate disciplinary action
therefor. Neither may he vote, set aside or annul an ordinance passed by said council within
the scope of its jurisdiction, no matter how patently unwise it may be. He may not even
suspend an elective official of a regular municipality or take any disciplinary action against
him, except on appeal from a decision of the corresponding provincial board.5

Upon the other hand if the President could create a municipality, he could, in effect, remove
any of its officials, by creating a new municipality and including therein the barrio in which the
official concerned resides, for his office would thereby become vacant. 6 Thus, by merely
brandishing the power to create a new municipality (if he had it), without actually creating it,
he could compel local officials to submit to his dictation, thereby, in effect, exercising over
them the power of control denied to him by the Constitution.

Then, also, the power of control of the President over executive departments, bureaus or
offices implies no more than the authority to assume directly the functions thereof or to
interfere in the exercise of discretion by its officials. Manifestly, such control does not include
the authority either to abolish an executive department or bureau, or to create a new one. As
a consequence, the alleged power of the President to create municipal corporations would
necessarily connote the exercise by him of an authority even greater than that of control
which he has over the executive departments, bureaus or offices. In other words, Section 68
of the Revised Administrative Code does not merely fail to comply with the constitutional
mandate above quoted. Instead of giving the President less power over local governments
than that vested in him over the executive departments, bureaus or offices, it reverses the
process and does the exact opposite, by conferring upon him more power over municipal
corporations than that which he has over said executive departments, bureaus or offices.

In short, even if it did entail an undue delegation of legislative powers, as it certainly does,
said Section 68, as part of the Revised Administrative Code, approved on March 10, 1917,
must be deemed repealed by the subsequent adoption of the Constitution, in 1935, which is
utterly incompatible and inconsistent with said statutory enactment.7

There are only two (2) other points left for consideration, namely, respondent's claim (a) that
"not all the proper parties" — referring to the officers of the newly created municipalities —
"have been impleaded in this case," and (b) that "the present petition is premature."

As regards the first point, suffice it to say that the records do not show, and the parties do not
claim, that the officers of any of said municipalities have been appointed or elected and
assumed office. At any rate, the Solicitor General, who has appeared on behalf of respondent
Auditor General, is the officer authorized by law "to act and represent the Government of the
Philippines, its offices and agents, in any official investigation, proceeding or matter requiring
the services of a lawyer" (Section 1661, Revised Administrative Code), and, in connection
with the creation of the aforementioned municipalities, which involves a political, not
proprietary, function, said local officials, if any, are mere agents or representatives of the
national government. Their interest in the case at bar has, accordingly, been, in effect, duly
represented.8

With respect to the second point, respondent alleges that he has not as yet acted on any of
the executive order & in question and has not intimated how he would act in connection
therewith. It is, however, a matter of common, public knowledge, subject to judicial
cognizance, that the President has, for many years, issued executive orders creating
municipal corporations and that the same have been organized and in actual operation, thus
indicating, without peradventure of doubt, that the expenditures incidental thereto have been
sanctioned, approved or passed in audit by the General Auditing Office and its officials. There
is no reason to believe, therefore, that respondent would adopt a different policy as regards
the new municipalities involved in this case, in the absence of an allegation to such effect,
and none has been made by him.

WHEREFORE, the Executive Orders in question are hereby declared null and void ab
initio and the respondent permanently restrained from passing in audit any expenditure of
public funds in implementation of said Executive Orders or any disbursement by the
municipalities above referred to. It is so ordered.

Bengzon, C.J., Bautista Angelo, Reyes, J.B.L., Barrera and Dizon, JJ., concur.

Zaldivar, J., took no part.