Landbank vs. Cacayuran

Requisites of Taxpayer’s Suit. — For a taxpayer’s suit to prosper, two requisites must be met namely, (1) public funds derived from taxation are disbursed by a political subdivision or instrumentality and in doing so, a law is violated or some irregularity is committed; and (2) the petitioner is directly affected by the alleged act.

Land Bank claims that Cacayuran did not have any standing to contest the construction of the APC as it was funded through the proceeds coming from the Subject Loans and not from public funds. Besides, Cacayuran was not even a party to any of the Subject Loans and is thus, precluded from questioning the same.

It is hornbook principle that a taxpayer is allowed to sue where there is a claim that public funds are illegally disbursed, or that public money is being deflected to any improper purpose, or that there is wastage of public funds through the enforcement of an invalid or unconstitutional law. A person suing as a taxpayer, however, must show that the act complained of directly involves the illegal disbursement of public funds derived from taxation. I

Although the construction of the APC would be primarily sourced from the proceeds of the Subject Loans, which Land Bank insists are not taxpayer’s money, there is no denying that public funds derived from taxation are bound to be expended as the Municipality assigned a portion of its IRA as a security for the foregoing loans. Needless to state, the Municipality’s IRA, which serves as the local government unit’s just share in the national taxes is in the nature of public funds derived from taxation. It is observed that the proceeds from the Subject Loans had already been converted into public funds by the Municipality’s receipt thereof. Funds coming from private sources become impressed with the characteristics of public funds when they are under official custody. As a resident-taxpayer of the Municipality, Cacayuran is directly affected by the conversion of the Agoo Plaza which was funded by the proceeds of the Subject Loans. It is well-settled that public plazas are properties for public use and therefore, belongs to the public dominion.