Republic of the Philippines vs. Association of Barangay Councils

Barangays may conduct fund-raising activities, including bingo games, without securing permits from PAGCOR or any national or local government office or agency, pursuant to Section 391(a)(11) of the Local Government Code, and such activities fall outside PAGCOR's licensing authority and regulatory powers by virtue of the express exception in Section 1 of Republic Act No. 9487 for games of chance "authorized, licensed and regulated by local government units."

The Association of Barangay Councils (ABC), represented by its president Rufino M. Panagan, is the umbrella organization of barangay councils in Baguio City. The Republic of the Philippines, through the Philippine Amusement and Gaming Corporation (PAGCOR), claims exclusive authority to regulate all games of chance, including bingo, nationwide under Presidential Decree No. 1869, as amended. The barangay councils of Trancoville, Outlook Drive, and Military Cut-off in Baguio City had adopted "Bingo sa Barangay" as a fund-raising activity for barangay projects, drawing their claimed authority from Section 391(a)(11) of the Local Government Code of 1991, which allows barangays to hold fund-raising activities without the need of securing permits from any national or local office or agency.

The Association of Barangay Councils (ABC), represented by its president Rufino M. Panagan, is the respondent in this case, while the Republic of the Philippines and the City of Baguio are the petitioners. The barangay councils of Trancoville, Outlook Drive, and Military Cut-off in Baguio City had passed respective resolutions adopting "Bingo sa Barangay" as a lawful means to raise money for their projects. The game of bingo is a socially accepted undertaking recognized by the government, church, non-governmental organizations, and individuals for leisure and as a pastime activity. The barangays successfully operated the "Bingo sa Barangay" and desired to continue the same as a fund-raising activity.

Sometime in November 2005, personnel of ABC operating the "Bingo sa Barangay" were apprehended by the Baguio City Police for alleged violation of Presidential Decree No. 1602, or the Anti-Gambling Law. The Office of the City Prosecutor subsequently issued a Resolution dismissing the cases against the persons apprehended, based on Resolution No. 08, series of 2005 dated October 20, 2005, issued by ABC, which endorsed the conduct of bingo socials in the different barangays in Baguio City as a fund-raising activity for barangay projects for the year 2005.

On February 13, 2006, ABC filed a Special Civil Action for Declaratory Relief before the RTC, alleging that it is directly interested and affected by Section 391 of the Local Government Code, particularly the provision allowing barangays to hold fund-raising activities without the need of securing permits from any national or local office or agency. ABC sought a declaration that "Bingo sa Barangay" is a valid exercise of the powers granted to local government units. On March 3, 2006, ABC filed an Urgent Motion for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction, alleging that the PNP, NBI, and other agencies had threatened to close down the operation of the "Bingo sa Barangay" and had arrested employees of ABC in their legitimate endeavor. The RTC issued a temporary restraining order on April 18, 2006, and on May 5, 2006, noted the parties' agreement to maintain the status quo.

After trial, the RTC rendered its November 30, 2006 Decision in favor of ABC, declaring that the barangay councils of Baguio City are vested with authority under Section 391, paragraph 11 of the Local Government Code to adopt, hold, and authorize the operation of "Bingo sa Barangay" without need of securing permits from any national or local government office or agency. On appeal, the CA affirmed the RTC Decision in toto on May 18, 2012, holding that the bingo penalized under PD 1602 is the illegal or unauthorized activities or games of bingo, and that the "Bingo sa Barangay" adopted by the concerned barangay councils is a legitimate fund-raising activity drawing authority from Section 391 of the Local Government Code. The CA likewise found that PAGCOR's authority under RA 9487 does not extend to games of chance authorized, licensed, and regulated by local government units. The CA denied the petitioners' motions for reconsideration on April 22, 2013.

• Propriety of Declaratory Relief: Petitioner Republic argued that a petition for declaratory relief is not proper when there is a prior breach or violation, and that it cannot be converted into an ordinary action. The Republic contended that a prior breach had already been committed by the operatives of ABC, as ABC judicially admitted that its personnel were apprehended for violation of PD 1602. Conversion, according to the Republic, is only proper when the breach or violation takes place after the filing of the action for declaratory relief.
• PAGCOR's Exclusive Regulatory Authority: Petitioner maintained that PD 1869, as amended, vests PAGCOR with the sole power and authority to regulate and supervise all games of chance and gambling, including bingo. The Republic contended that there is nothing in Section 391 of the Local Government Code that expressly grants local government units the authority to operate "Bingo sa Barangay."
• Statutory Construction of Section 391 with Section 458: Petitioner argued that Section 391 of the Local Government Code must be read together with Section 458, which authorizes the sangguniang panlungsod to prevent or suppress gambling and other prohibited games of chance. Fund-raising activities under Section 391 must comply with national policy standards and regulations on morals, health, and safety of participating individuals.

• Local Autonomy and Statutory Grant: Respondent ABC argued that under the Constitution and the Local Government Code, barangays have the power and authority to raise funds without securing permits from either local or national offices. ABC maintained that there is a presumption of validity granted to its activities, as the Local Government Code is specific in the grant of the power to raise funds and revenues.
• Doubt Resolved in Favor of LGUs: Respondent argued that, assuming doubt exists regarding the authority of barangays to conduct fund-raising activities, Section 5 of the Local Government Code provides that such doubt must be resolved in favor of local government units.
• Prejudice of Prohibition: Respondent contended that allowing the state or its instrumentalities to stop ABC from conducting their lawful activity would cause prejudice and damage to efforts to raise funds for much-needed projects, as the government cannot sustain funding for each and every barangay across the country.

• Propriety of Remedy: Whether an action for declaratory relief was the proper remedy in this case.
• Barangay Authority to Conduct Bingo sa Barangay: Whether the CA erred in affirming the RTC's Decision upholding the right of the barangay councils of Trancoville, Outlook Drive, and Military Cut-off, Baguio City, to adopt, hold, and authorize the operation of "Bingo sa Barangay" to raise funds for barangay projects without need of securing permits from any national or local government office or agency.

• Propriety of Remedy: Yes. The action for declaratory relief was proper, as there was no breach of Section 391 of the Local Government Code at the time the petition was filed; the prior arrest of ABC personnel was for an alleged violation of PD 1602, not of the provision whose construction was sought.
• Barangay Authority to Conduct Bingo sa Barangay: No, the CA did not err. Barangays are expressly authorized under Section 391(a)(11) of the Local Government Code to hold fund-raising activities without permits from any national or local office, and such games fall outside PAGCOR's licensing authority under the express exception in Section 1 of RA 9487 for games authorized, licensed, and regulated by local government units.

• Propriety of Remedy: A petition for declaratory relief presupposes that there has been no actual breach of the instruments or rights involved. Its purpose is to secure an authoritative statement of rights and obligations under a statute for guidance, not to settle issues arising from an alleged breach. ABC filed the petition precisely to secure an authoritative statement of its rights and obligations under Section 391 of the Local Government Code. The arrest of ABC's personnel in November 2005 was based on a purported violation of the Anti-Gambling Law (PD 1602), not Section 391 of the Local Government Code. Neither the validity nor the effects of the arrest were issues under the petition. Accordingly, there was no breach of Section 391 at the time of filing, and the CA correctly upheld the propriety of the remedy.

• Barangay Authority to Conduct Bingo sa Barangay: Section 391(a)(11) of the Local Government Code is clear: the sangguniang barangay shall "[h]old fund-raising activities for barangay projects without the need of securing permits from any national or local office or agency." The proviso requires compliance with national policy standards and regulations on morals, health, and safety, but does not require prior approval from PAGCOR or any national agency. The barangays of Trancoville, Outlook Drive, and Military Cut-off themselves passed resolutions adopting "Bingo sa Barangay" as a fund-raising activity; it is the barangay itself which "authorized, licensed, and regulated" the game. Under Section 1 of RA 9487, which amended Section 10 of PD 1869, PAGCOR's authority "shall not extend to" games of chance "authorized, licensed and regulated by local government units." The qualifying clause in the last sentence of Section 1 — referring to games "covered by existing franchises, regulatory bodies or special laws, to the extent of the jurisdiction and powers granted under such franchises and special laws" — applies only to exemptions in paragraphs (1) and (2), not to paragraph (3) covering local government units. By the principle of expressio unius est exclusio alterius, the express mention of franchises, regulatory bodies, and special laws as requiring an implementing law, and the omission of any such requirement for local government units, means no implementing law is needed for the LGU exception. PD 1602 penalizes only illegal or unauthorized activities or games of bingo and does not include the "Bingo sa Barangay" adopted by the barangay councils, which is a legitimate fund-raising endeavor under Section 391. Section 458(l)(v) of the LGC, which empowers the sangguniang panlungsod to prevent or suppress "gambling and other prohibited games of chance," refers only to illegal gambling, as the word "gambling" is associated with "prohibited games of chance" under the rule of noscitur a sociis. Bingo games are not illegal per se; they become illegal only if conducted without the requisite license or authority from the appropriate agency. Any doubt as to the powers of the barangay must be resolved in its favor under Section 5(a) of the Local Government Code, which mandates that any provision on a power of a local government unit shall be liberally interpreted in its favor.

• Local Autonomy of Barangays — The 1987 Constitution recognizes the barangay as a territorial and political subdivision entitled to local autonomy, mandating that the State shall ensure the autonomy of local governments. This principle is operationalized through the Local Government Code of 1991, which defines the barangay as the basic political unit and expressly grants it the power to hold fund-raising activities without securing permits from any national or local office or agency. The Court applied this doctrine to uphold the barangays' authority to conduct "Bingo sa Barangay" as a fund-raising activity, breathing life into the constitutional mandate of local autonomy.

• Expressio Unius Est Exclusio Alterius — The express mention of one thing implies the exclusion of another. When a list is mentioned, other things not mentioned are excluded. The Court applied this principle to Section 1 of RA 9487, where the qualifying clause requiring an implementing law or special law applies only to exemptions under paragraphs (1) and (2) — games under franchises, regulatory bodies, or special laws — but not to paragraph (3), covering games regulated by local government units. The absence of any reference to an implementing law for the LGU exemption means none is required.

• Noscitur a Sociis — A word or phrase should be interpreted in relation to, or given the same meaning of, words with which it is associated. The Court applied this rule to Section 458(l)(v) of the Local Government Code, holding that since "gambling" is associated with "and other prohibited games of chance," the word should be read as referring only to illegal gambling, which, like other prohibited games of chance, must be prevented or suppressed.

• Liberal Interpretation in Favor of Local Government Units — Under Section 5(a) of the Local Government Code, any provision on a power of a local government unit shall be liberally interpreted in its favor, and in case of doubt, any question shall be resolved in favor of devolution of powers and of the lower local government unit. Any fair and reasonable doubt as to the existence of the power shall be interpreted in favor of the local government unit concerned. The Court relied on this rule to resolve any doubt regarding the authority of barangays to conduct "Bingo sa Barangay."

• "When the law is clear, there is no need for interpretation, only application." — This passage encapsulates the Court's approach to Section 391(a)(11) of the Local Government Code and Section 1 of RA 9487, both of which were found to be plain and unambiguous in granting barangays the power to conduct fund-raising activities without permits and in excluding LGU-authorized games from PAGCOR's authority.

• "There being no reference to an implementing law or special law for those regulated by the local government units, unlike those covered by franchises, regulatory bodies or special laws, we should not put any. Expressio unius est exclusio alterius. The express mention of one thing implies the exclusion of another." — This passage articulates the Court's application of the expressio unius doctrine to reject the dissent's position that an implementing law is needed for the LGU exception under RA 9487, and is the ratio decidendi on why PAGCOR's authority does not extend to barangay-authorized bingo.

• "To allow barangays to conduct 'Bingo sa Barangay' as a fund-raising activity for barangay projects without the need to secure permits from PAGCOR or any national or local office or agency is to breathe life to the constitutional mandate of the State to ensure the local autonomy of barangays. This is the duty of this Court." — This passage states the Court's ultimate rationale connecting the statutory grant of power to the constitutional principle of local autonomy, framing the decision as a duty of the judiciary to uphold constitutional mandates.

• David vs. COMELEC, 337 Phil. 534 (1997) — Cited for the historical background of the barangay as a unit of government, tracing its origins from pre-Spanish times through the Barrio Charter Acts and into the 1987 Constitution's recognition of local autonomy. The Court used this historical account to establish the longstanding constitutional and statutory tradition of barangay autonomy.

• Magtajas vs. Pryce Properties Corp., Inc., 304 Phil. 428 (1994) — Cited as controlling precedent for the interpretation of Section 458(l)(v) of the Local Government Code. The Court relied on Magtajas to hold that "gambling and other prohibited games of chance" refers only to illegal gambling, excluding games permitted by law, applying the rule of noscitur a sociis.

• Evangelista vs. Philippine Amusement and Gaming Corp., 941 Phil. 342 (2023) — Cited through the Concurring Opinion of SAJ Leonen for the proposition that the exceptions under RA 9487 are expressly mandated to be outside PAGCOR's licensing authority and regulatory powers, supporting the majority's reading that LGU-authorized games fall outside PAGCOR's jurisdiction.

• Department of Trade and Industry vs. Steelasia Manufacturing Corp., 890 Phil. 238 (2020) — Cited for the principle that an action for declaratory relief presupposes no actual breach of the instruments or rights involved, and may be entertained before the breach or violation of the statute, deed, or contract to which it refers. The Court applied this principle to uphold the propriety of ABC's petition for declaratory relief.

• Ang Nars Party List vs. Executive Secretary, 864 Phil. 607 — Cited for the Latin maxim expressio unius est exclusio alterius, which the Court applied to Section 1 of RA 9487 to hold that the absence of a qualifying clause for the LGU exemption means no implementing law is required.

• Section 391(a)(11), Republic Act No. 7160 (Local Government Code of 1991) — Grants the sangguniang barangay the power to "[h]old fund-raising activities for barangay projects without the need of securing permits from any national or local office or agency," with proceeds tax-exempt and accruing to the general fund of the barangay, subject to the proviso that fund-raising activities comply with national policy standards and regulations on morals, health, and safety. The Court found this provision to be clear and applied it directly to authorize the barangays' conduct of "Bingo sa Barangay" without PAGCOR permits.

• Section 1, Republic Act No. 9487 (2007), amending Section 10 of Presidential Decree No. 1869 (PAGCOR Charter) — Provides that PAGCOR's authority to authorize, license, and regulate games of chance, games of cards, and games of numbers "shall not extend to" games "authorized, licensed and regulated by local government units." The Court held that this express exception removes barangay-authorized bingo from PAGCOR's regulatory powers, and that no implementing law is needed for the LGU exemption, unlike the exemptions for franchises, regulatory bodies, and special laws.

• Section 458(l)(v), Republic Act No. 7160 (Local Government Code of 1991) — Empowers the sangguniang panlungsod to enact ordinances to prevent, suppress, and impose penalties for "gambling and other prohibited games of chance." The Court interpreted this provision, applying noscitur a sociis, as referring only to illegal gambling, not to games permitted by law such as the "Bingo sa Barangay" authorized under Section 391(a)(11).

• Section 5, Republic Act No. 7160 (Local Government Code of 1991) — Mandates that any provision on a power of a local government unit shall be liberally interpreted in its favor, and in case of doubt, any question shall be resolved in favor of devolution of powers and of the lower local government unit. The Court relied on this rule of interpretation to resolve any doubt in favor of the barangays' authority.

• Section 16, Republic Act No. 7160 (Local Government Code of 1991) — The General Welfare Clause, requiring every local government unit to exercise powers necessary for efficient and effective governance, including the promotion of health and safety, improvement of public morals, and preservation of peace and order. The Court cited this provision to note that LGUs, by exercising their powers, ensure that activities within their jurisdiction adhere to national standards protecting public well-being.

• Section 1, Presidential Decree No. 1602 (Anti-Gambling Law) — Prescribes stiffer penalties on illegal gambling, listing bingo among gambling activities. The Court held that PD 1602 penalizes only illegal or unauthorized activities or games of bingo and does not include the "Bingo sa Barangay" adopted by the barangay councils, which is a legitimate fund-raising endeavor under Section 391 of the LGC.

• Section 2, Executive Order No. 13 (2017) — Defines "illegal gambling" as participation in any game scheme wherein wagers are at stake when such game scheme is not authorized or licensed by the government agency duly empowered by law or its charter. The Court used this provision to support the conclusion that bingo games are not illegal per se but become illegal only when conducted without requisite license or authority.

• Article X, Sections 1 and 2, 1987 Constitution — Recognize the barangay as a territorial and political subdivision and guarantee local autonomy. The Court anchored its decision on the constitutional mandate that the State shall ensure the autonomy of local governments.

• Article II, Section 25, 1987 Constitution — Provides that the State shall ensure the autonomy of local governments. The Court invoked this provision as the constitutional foundation for upholding the barangays' authority to conduct fund-raising activities without national government permits.

Gesmundo, C.J., Hernando, Zalameda, M. Lopez, Gaerlan, Rosario, J. Lopez, Dimaampao, and Kho, Jr., JJ., concurred. Leonen, SAJ, concurred with a separate opinion in which he emphasized that the exceptions under RA 9487 are expressly mandated to be outside PAGCOR's licensing authority and regulatory powers, citing Evangelista vs. Philippine Amusement and Gaming Corp.