Pelaez vs. Auditor General

The Court held that Section 68 of the Revised Administrative Code constitutes an undue delegation of legislative power because it authorizes the President to create municipalities—a function strictly legislative and not merely administrative—without providing a sufficiently determinate standard to guide the exercise of such discretion. The Court further held that the 1935 Constitution, Article VII, Section 10(1), which grants the President only "general supervision" (and not "control") over local governments, impliedly repealed Section 68; because the power to create implies the power to control and abolish, the President cannot possess the greater power to create municipal corporations when the Constitution denies him the lesser power of control over them.

From September 4 to October 29, 1964, the President of the Philippines issued Executive Orders Nos. 93 to 121, 124, and 126 to 129, creating thirty-three municipalities in various provinces. These executive orders were promulgated pursuant to Section 68 of the Revised Administrative Code after legislative bills for the creation of these same municipalities had failed to pass Congress. The petitioner, who was the Vice President of the Philippines and a taxpayer, instituted a special civil action to restrain the Auditor General from passing in audit any public funds appropriated for these municipalities, alleging that the President lacked constitutional and statutory authority to create them.

• From September 4 to October 29, 1964, the President issued Executive Orders Nos. 93 through 121, 124, and 126 through 129, creating thirty-three municipalities in various provinces, all pursuant to Section 68 of the Revised Administrative Code.
• Petitioner Emmanuel Pelaez, in his capacity as Vice President of the Philippines and as a taxpayer, filed a special civil action for prohibition with preliminary injunction on November 10, 1964, against the Auditor General to restrain the disbursement of public funds for the implementation of said executive orders.
• Petitioner alleged that the executive orders were null and void because Section 68 had been impliedly repealed by Republic Act No. 2370 (the Barrio Charter) and constituted an undue delegation of legislative power.
• Respondent Auditor General maintained that Section 68 remained valid, that the petition was premature, and that the officers of the newly created municipalities were indispensable parties who had not been impleaded.
• Mayors of several municipalities whose barrios were detached to form the new municipalities intervened in the case.
• Republic Act No. 2370, which took effect on January 1, 1960, provides in Section 3 that barrios shall not be created or their boundaries altered except by Act of Congress or by the provincial board upon petition of a majority of voters and recommendation of the municipal council.
• Section 68 of the Revised Administrative Code authorizes the President to "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."
• The executive orders were issued after legislative bills for the creation of the municipalities involved had failed to pass Congress.

• Petitioner maintained that Section 68 of the Revised Administrative Code was impliedly repealed by Republic Act No. 2370, which requires Congressional approval to create barrios; since municipalities are composed of barrios, the President's inability to create barrios under the new law implies the inability to create municipalities.
• Petitioner argued that Section 68 constitutes an undue delegation of legislative power because the creation of municipal corporations is essentially and exclusively a legislative function, not an administrative one involving merely the determination of questions of fact.
• Petitioner contended that Section 68 provides no policy to be implemented and fixes no sufficiently determinate standard to guide the President's discretion in creating municipalities, rendering the delegation unconstitutional.
• Petitioner asserted that the phrase "as the public welfare may require" in Section 68 applies only to the change of the seat of government, not to the creation of municipalities, and that even if it applied, "public welfare" is too broad a standard to validate the delegation of such a fundamental legislative power.

• Respondent countered that the power to create municipalities under Section 68 does not amount to an undue delegation of legislative power, relying upon Municipality of Cardona v. Municipality of Binañgonan (36 Phil. 547) as controlling precedent.
• Respondent argued that a new municipality can be created without creating new barrios, such as by placing old barrios under the jurisdiction of the new municipality, thus distinguishing the effect of Republic Act No. 2370.
• Respondent alleged that the petition was premature because he had not yet acted on any of the executive orders in question and had not indicated how he would act.
• Respondent contended that not all proper parties had been impleaded, specifically referring to the officers of the newly created municipalities who would be affected by the decision.

• Procedural Issues:
  • Whether the petition for prohibition is premature.
  • Whether the petition fails to join indispensable parties, specifically the officers of the newly created municipalities.
• Substantive Issues:
  • Whether Section 68 of the Revised Administrative Code constitutes an undue delegation of legislative power.
  • Whether Section 68 was impliedly repealed by Republic Act No. 2370.
  • Whether Section 68 was impliedly repealed by the 1935 Constitution.
  • Whether the President has constitutional authority to create municipalities by executive order.

• Procedural:
  • The Court ruled that the petition was not premature because it is a matter of common and public knowledge that the Auditor General passes in audit expenditures for municipalities created by executive order, and respondent made no allegation that he would adopt a different policy in this case.
  • The Court held that the failure to implead the officers of the new municipalities was not fatal because the Solicitor General, appearing for the Auditor General, adequately represented the Government and its agents; moreover, said local officials, if any, are mere agents of the national government in matters involving political functions, and their interests were effectively represented.
• Substantive:
  • The Court ruled that Section 68 constitutes an undue delegation of legislative power. The creation of municipalities is a legislative function, not merely administrative. The provision lacks a sufficiently determinate standard—the phrase "as the public welfare may require" applies only to changing the seat of government, and even if it applied to creation, it is too broad to validate the delegation of such a fundamental legislative power.
  • The Court further ruled that Section 68 was impliedly repealed by the 1935 Constitution. Article VII, Section 10(1) of the Constitution grants the President only "general supervision" over local governments, withholding the power of "control." Since the power to create implies the power to control (and abolish), and the President lacks control over local governments, the President cannot possess the greater power to create them.
  • The executive orders were declared null and void ab initio, and the respondent was permanently restrained from passing in audit any expenditures pursuant thereto.

• Delegation of Legislative Power — Congress may delegate the power to fill in details in the execution of a law provided that: (a) the law is complete in itself and sets forth the policy to be executed; and (b) it fixes a standard sufficiently determinate to guide the delegate. The Court applied this doctrine to invalidate Section 68, finding it failed both requirements regarding the creation of municipalities.
• Nature of Legislative Power — The creation of municipal corporations is strictly and exclusively a legislative function; it is not an administrative function involving merely the determination of questions of fact, but rather involves questions of public policy and statecraft.
• Implied Repeal by Constitution — A constitutional provision impliedly repeals prior statutory enactments that are inconsistent with it. The 1935 Constitution's limitation of the President's power over local governments to "general supervision" (as opposed to "control" under the Jones Law) was held to have repealed Section 68 of the Revised Administrative Code to the extent it authorized the President to create municipalities.
• Supervision versus Control — "Control" implies the power to interfere in the exercise of discretion and to act in lieu of subordinate officers, whereas "general supervision" is limited to ensuring that local governments and their officers perform their duties as provided by law. The President has only supervision, not control, over local governments.

• "municipal corporations are purely the creatures of statutes." — The Court cited this principle to emphasize that because municipalities are created by statute, their creation is a legislative function that cannot be delegated.
• "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?" — The Court found this argument founded upon logic and experience, noting that the statutory denial of authority to create a barrio implies a negation of the greater power to create municipalities.
• "the creation of municipalities, is not an administrative function, but one which is essentially and eminently legislative in character." — The Court's characterization of the power to create municipalities as legislative, not administrative, forming the basis for the finding of undue delegation.
• "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." — The Court noted this fact as proof that the issuance of the executive orders entailed the exercise of purely legislative functions, usurping the legislative prerogative.

• Municipality of Cardona v. Municipality of Binañgonan (36 Phil. 547) — Distinguished by the Court; it involved merely the transfer of territory between existing municipalities (fixing common boundaries), not the creation of a new municipality, and thus did not support the validity of creating new municipalities under Section 68.
• Calalang v. Williams (70 Phil. 726) — Distinguished; upheld "public welfare" as a sufficient standard for delegating authority to administrative officers regarding traffic safety (an administrative function), but held inapplicable to the legislative function of creating municipalities.
• People v. Rosenthal (68 Phil. 328) — Distinguished; upheld "public interest" as a standard for delegating authority to the Insular Treasurer regarding speculative securities (an administrative function), but held inapplicable to the creation of municipalities.
• Schechter Poultry Corp. v. U.S. (295 U.S. 495) — Cited for the principle that a statute supplying no standards for trade or industry and authorizing the executive to make codes prescribing rules of conduct constitutes an unconstitutional delegation of legislative power; applied to Section 68.
• Hebron v. Reyes — Cited to distinguish between the President's power of "control" over executive departments and "general supervision" over local governments, and to establish that the power to control is an incident of the power to create.
• De los Santos v. Mallare (87 Phil. 289) — Cited for the principle that constitutional provisions impliedly repeal prior statutes inconsistent with them.

• Section 68, Revised Administrative Code — The statutory provision authorizing the President to create municipalities, declared unconstitutional as an undue delegation and impliedly repealed.
• Republic Act No. 2370 (The Barrio Charter), Section 3 — Cited to demonstrate that Congress reserved to itself (or to provincial boards under specific conditions) the power to create barrios, implying that the greater power to create municipalities (composed of barrios) was not delegated to the President.
• 1935 Constitution, Article VII, Section 10(1) — Provides that the President shall "exercise general supervision over all local governments as may be provided by law," construed by the Court to withhold the power of "control" and thus impliedly repeal Section 68 of the Revised Administrative Code.

• J.P. Bengzon, J. — Concurred in the result (declaring the executive orders null and void) but on different grounds. Justice Bengzon argued that Section 68 was not repealed by Republic Act No. 2370, disagreeing with the majority's a fortiori reasoning that the inability to create barrios necessarily precludes the ability to create municipalities. Instead, he posited that Section 68 was impliedly repealed by the 1935 Constitution itself, which removed the President's power of "control" over local governments (limiting it to "general supervision"), and since the power to create implies the power to control, the President could no longer exercise the former. He also noted that Section 68 originated under the Jones Law when no strict separation of powers existed, but became unconstitutional with the adoption of the 1935 Constitution.