GENERAL PRINCIPLES: Corporation

Liban v. Gordon

G.R. 175352 July 15, 2009

FACTS

Dante V. Liban, together with other petitioners, petitioned in Court to declare Richard J. Gordon as having
forfeited his seat in the Senate. The petitioners were officers of the Board of Directors of the Quezon City
Red Cross Chapter, while respondent is Chairman of the Philippine National Red Cross (PNRC) Board of
Governors. During Gordons incumbency as a member of the Senate of the Philippines, he was elected
Chairman of the PNRC during the February 23, 2006 meeting of the PNRC Board of Governors, in which
the petitioners alleged that by accepting the responsibility, Gordon deemed ceased to be a member of the
Senate as provided in Sec. 13, Article VI of the Constitution: Sec. 13. No Senator or Member of the House
of Representatives may hold any other office or employment in the Government, or any subdivision,
agency, or instrumentality thereof, including government-owned or controlled corporations or their
subsidiaries, during his term without forfeiting his seat. Respondent contested that the petitioners
citation of a constitutional provision had no basis, since PNRC is not a government-owned or controlled
corporation. Thus, prohibition under Sec. 13, Art. VI of the Constitution did not apply to his case.
Furthermore, service rendered in PNRC is a volunteer service to which is neither an office nor an
employment.

ISSUE: By accepting the PNRC Chair, did Gordon forfeit his Senate Seat?

HELD

No. The Philippine National Red Cross is a private organization performing public functions. It does not
have government assets and does not receive any appropriation from the Philippine Congress. The PNRC
is financed primarily by contributions from private individuals and private entities obtained through
solicitation campaigns organized by its Board of Governors. Apart from that, PNRC must not only be, but
must also be seen to be, autonomous, neutral and independent to be able to conduct its activities in accord
to their fundamental principles of humanity, impartiality, neutrality, independence, voluntary service, unity,
and universality. Hence, Article VI, Section 13 could not apply to Gordons case, in accepting the position
in the PNRC. The petition was deemed to have no merit.

Boy Scouts of the Phils. v. Com. on Audit

FACTS:

COA issued Resolution No. 99-0115 on August 19, 1999 with the subject "Defining the Commissions
policy with respect to the audit of the Boy Scouts of the Philippines." In its whereas clauses, the COA
Resolution stated that the BSP was created as a public corporation under CA No. 111, as amended by PD
No. 460 and Republic Act No. 7278; that in Boy Scouts of the Philippines v. NLRC, the Supreme Court
ruled that the BSP, as constituted under its charter, was a "government-controlled corporation within the
meaning of Article IX(B)(2)(1) of the Constitution"; and that "the BSP is appropriately regarded as a
government instrumentality under the 1987 Administrative Code." The COA Resolution also cited its
constitutional mandate under Section 2(1), Article IX (D).

COA General Counsel, Director Sunico wrote BSP that latter have to comply with COA Resolution No.
99-011, among which is to conduct an annual financial audit therein.

Upon the BSPs request, the audit was deferred for thirty (30) days. The BSP then filed a Petition for Review
with Prayer for Preliminary Injunction and/or Temporary Restraining Order before the COA. This was
denied by the COA in its questioned Decision, which held that the BSP is under its audit jurisdiction. The
BSP moved for reconsideration but this was likewise denied under its questioned Resolution.

This led to the filing by the BSP of this petition for prohibition with preliminary injunction and temporary
restraining order against the COA.

ISSUE: Whether the BSP falls under the COAs audit jurisdiction.

HELD:

The BSP is under the COAs audit jurisdiction.

POLITICAL LAW personality of BSP

We believe that the BSP is appropriately regarded as "a government instrumentality" under the 1987
Administrative Code.

It thus appears that the BSP may be regarded as both a "government controlled corporation with an original
charter" and as an "instrumentality" of the Government within the meaning of Article IX (B) (2) (1) of the
Constitution.

The existence of public or government corporate or juridical entities or chartered institutions by legislative
fiat distinct from private corporations and government owned or controlled corporation is best exemplified
by the 1987 Administrative Code cited above, which we quote in part:

Sec. 2. General Terms Defined. Unless the specific words of the text, or the context as a whole, or a
particular statute, shall require a different meaning:

(10) "Instrumentality" refers to any agency of the National Government, not integrated within the
department framework, vested with special functions or jurisdiction by law, endowed with some if not all
corporate powers, administering special funds, and enjoying operational autonomy, usually through a
charter. This term includes regulatory agencies, chartered institutions and government-owned or controlled
corporations.

(12) "Chartered institution" refers to any agency organized or operating under a special charter, and vested
by law with functions relating to specific constitutional policies or objectives. This term includes the state
universities and colleges and the monetary authority of the State.

(13) "Government-owned or controlled corporation" refers to any agency organized as a stock or non-stock
corporation, vested with functions relating to public needs whether governmental or proprietary in nature,
and owned by the Government directly or through its instrumentalities either wholly, or, where applicable
as in the case of stock corporations, to the extent of at least fifty-one (51) per cent of its capital stock:
Provided, That government-owned or controlled corporations may be further categorized by the Department
of the Budget, the Civil Service Commission, and the Commission on Audit for purposes of the exercise
and discharge of their respective powers, functions and responsibilities with respect to such corporations.

Assuming for the sake of argument that the BSP ceases to be owned or controlled by the government
because of reduction of the number of representatives of the government in the BSP Board, it does not
follow that it also ceases to be a government instrumentality as it still retains all the characteristics of the
latter as an attached agency of the DECS under the Administrative Code. Vesting corporate powers to an
attached agency or instrumentality of the government is not constitutionally prohibited and is allowed by
the above-mentioned provisions of the Civil Code and the 1987 Administrative Code.

Historically, therefore, the BSP had been subjected to government audit in so far as public funds had been
infused thereto. However, this practice should not preclude the exercise of the audit jurisdiction of COA,
clearly set forth under the Constitution, which pertinently provides:

Section 2. (1) The Commission on Audit shall have the power, authority, and duty to examine, audit, and
settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property,
owned or held in trust by, or pertaining to, the Government, or any of its subdivisions, agencies, or
instrumentalities, including government-owned and controlled corporations with original charters, and on
a post-audit basis: (a) constitutional bodies, commissions and offices that have been granted fiscal
autonomy under this Constitution; (b) autonomous state colleges and universities; (c) other government-
owned or controlled corporations with original charters and their subsidiaries; and (d) such non-
governmental entities receiving subsidy or equity, directly or indirectly, from or through the Government,
which are required by law of the granting institution to submit to such audit as a condition of subsidy or
equity.

Since the BSP, under its amended charter, continues to be a public corporation or a government
instrumentality, we come to the inevitable conclusion that it is subject to the exercise by the COA of its
audit jurisdiction in the manner consistent with the provisions of the BSP Charter.

The Petition for prohibition is dismissed.

Philippine Society for the Prevention of Cruelty to Animals vs Commission on Audit

Facts:

PSPCA was incorporated as a juridical entity by virtue of Act No. 1285 by the Philippine Commission in
order to enforce laws relating to the cruelty inflicted upon animals and for the protection of and to perform
all things which may tend to alleviate the suffering of animals and promote their welfare.

In order to enhance its powers, PSPCA was initially imbued with (1) power to apprehend violators of animal
welfare laws and (2) share 50% of the fines imposed and collected through its efforts pursuant to the
violations of related laws.
However, Commonwealth Act No. 148 recalled the said powers. President Quezon then issued Executive
Order No. 63 directing the Commission of Public Safety, Provost Marshal General as head of the
Constabulary Division of the Philippine Army, Mayors of chartered cities and every municipal president to
detail and organize special officers to watch, capture, and prosecute offenders of criminal-cruelty laws.

On December 1, 2003, an audit team from the Commission on Audit visited petitioners office to conduct
a survey. PSPCA demurred on the ground that it was a private entity and not under the CoAs jurisdiction,
citing Sec .2(1), Art. IX of the Constitution.

Issues:

WON the PSPCA is subject to CoAs Audit Authority.

Held:

No.

The charter test cannot be applied. It is predicated on the legal regime established by the 1935 Constitution,
Sec.7, Art. XIII. Since the underpinnings of the charter test had been introduced by the 1935 Constitution
and not earlier, the test cannot be applied to PSPCA which was incorporated on January 19, 1905. Laws,
generally, have no retroactive effect unless the contrary is provided. There are a few exceptions: (1) when
expressly provided; (2) remedial statutes; (3) curative statutes; and (4) laws interpreting others.

None of the exceptions apply in the instant case.

The mere fact that a corporation has been created by a special law doesnt necessarily qualify it as a public
corporation. At the time PSPCA was formed, the Philippine Bill of 1902 was the applicable law and no
proscription similar to the charter test can be found therein. There was no restriction on the legislature to
create private corporations in 1903. The amendments introduced by CA 148 made it clear that PSPCA was
a private corporation, not a government agency.

PSPCAs charter shows that it is not subject to control or supervision by any agency of the State. Like all
private corporations, the successors of its members are determined voluntarily and solely by the petitioner,
and may exercise powers generally accorded to private corporations.

PSPCAs employees are registered and covered by the SSS at the latters initiative and not through the
GSIS.

The fact that a private corporation is impressed with public interest does not make the entity a public
corporation. They may be considered quasi-public corporations which are private corporations that render
public service, supply public wants and pursue other exemplary objectives. The true criterion to determine
whether a corporation is public or private is found in the totality of the relation of the corporate to the
State. It is public if it is created by the latters own agency or instrumentality, otherwise, it is private.

GENERAL PRINCIPLES: Principle of Local Autonomy

Basco v PAGCOR

Facts:
In 1977, the Philippine Amusements and Gaming Corporation (PAGCOR) was created by Presidential
Decree 1067-A. PD 1067-B meanwhile granted PAGCOR the power to establish, operate and maintain
gambling casinos on land or water within the territorial jurisdiction of the Philippines. PAGCORs
operation was a success hence in 1978, PD 1399 was passed which expanded PAGCORs power. In 1983,
PAGCORs charter was updated through PD 1869. PAGCORs charter provides that PAGCOR
shall regulate and centralize all games of chance authorized by existing franchise or permitted by law.
Section 1 of PD 1869 provides:

Section 1. Declaration of Policy. It is hereby declared to be the policy of the State to centralize and
integrate all games of chance not heretofore authorized by existing franchises or permitted by law.

Atty. Humberto Basco and several other lawyers assailed the validity of the law creating PAGCOR. They
claim that PD 1869 is unconstitutional because a) it violates the equal protection clause and b) it violates
the local autonomy clause of the constitution.

Basco et al argued that PD 1869 violates the equal protection clause because it legalizes PAGCOR-
conducted gambling, while most other forms of gambling are outlawed, together with prostitution, drug
trafficking and other vices.

Anent the issue of local autonomy, Basco et al contend that P.D. 1869 forced cities like Manila to waive its
right to impose taxes and legal fees as far as PAGCOR is concerned; that Section 13 par. (2) of P.D. 1869
which exempts PAGCOR, as the franchise holder from paying any tax of any kind or form, income or
otherwise, as well as fees, charges or levies of whatever nature, whether National or Local is violative of
the local autonomy principle.

ISSUE:

1. Whether or not PD 1869 violates the equal protection clause.

2. Whether or not PD 1869 violates the local autonomy clause.

HELD:

1. No. Just how PD 1869 in legalizing gambling conducted by PAGCOR is violative of the equal protection
is not clearly explained in Bascos petition. The mere fact that some gambling activities like cockfighting
(PD 449) horse racing (RA 306 as amended by RA 983), sweepstakes, lotteries and races (RA 1169 as
amended by BP 42) are legalized under certain conditions, while others are prohibited, does not render the
applicable laws, PD. 1869 for one, unconstitutional.

Bascos posture ignores the well-accepted meaning of the clause equal protection of the laws. The clause
does not preclude classification of individuals who may be accorded different treatment under the law as
long as the classification is not unreasonable or arbitrary. A law does not have to operate in equal force on
all persons or things to be conformable to Article III, Sec 1 of the Constitution. The equal protection
clause does not prohibit the Legislature from establishing classes of individuals or objects upon which
different rules shall operate. The Constitution does not require situations which are different in fact or
opinion to be treated in law as though they were the same.

2. No. Section 5, Article 10 of the 1987 Constitution provides:

Each local government unit shall have the power to create its own source of revenue and to levy taxes, fees,
and other charges subject to such guidelines and limitation as the congress may provide, consistent with the
basic policy on local autonomy. Such taxes, fees and charges shall accrue exclusively to the local
government.

A close reading of the above provision does not violate local autonomy (particularly on taxing powers) as
it was clearly stated that the taxing power of LGUs are subject to such guidelines and limitation as Congress
may provide.

Further, the City of Manila, being a mere Municipal corporation has no inherent right to impose taxes. The
Charter of the City of Manila is subject to control by Congress. It should be stressed that municipal
corporations are mere creatures of Congress which has the power to create and abolish municipal
corporations due to its general legislative powers. Congress, therefore, has the power of control over
Local governments. And if Congress can grant the City of Manila the power to tax certain matters, it can
also provide for exemptions or even take back the power.

Further still, local governments have no power to tax instrumentalities of the National Government.
PAGCOR is a government owned or controlled corporation with an original charter, PD 1869. All of its
shares of stocks are owned by the National Government. Otherwise, its operation might be burdened,
impeded or subjected to control by a mere Local government.

This doctrine emanates from the supremacy of the National Government over local governments.

Lina v. Pao

Facts

In 1995, the Philippine Charity Sweepstakes Office appointed Tony Calvento as an agent to install a lotto
terminal in San Pedro, Laguna. Calvento, as such, applied for a Mayors Permit to open the lotto outlet.
Mayor Cataquiz, the San Pedro Mayor, denied the application by virtue of the ordinance passed by the
Sangguniang Panlalawigan of Laguna entitled Kapasiyahan Blg. 508, which prohibits gambling in the
province of Laguna. The trial court ruled in favor of Calvento and enjoined the enforcement the said
Kapasiyahan. W/N the Kapasiyahan is valid.

Issue/s

W/N the denial of the Mayors Permit was valid.

Ruling

NO. The Kapasiyahan merely states the objection of the council to the said game. It is but a mere policy
statement on the part of the local council, which is not self-executing. It should not be interpreted as a
measure or ordinance prohibiting the operation of lotto. The game of lotto is a game of chance duly
authorized by the national government through an Act of Congress. While lotto is clearly a game of chance,
the national government deems it wise and proper to permit it. Hence, the Sangguniang Bayan of Laguna,
a local government unit, cannot issue a resolution or an ordinance that would seek to prohibit permits.
YES. As a policy statement expressing the local governments objection to the lotto, such resolution is
valid. This is part of the local governments autonomy to air its views which may be contrary to that of the
national governments. Doctrine/s The freedom to exercise contrary views does not mean that local
governments may actually enact ordinances that go against laws duly enacted by Congress. What the
national legislature expressly allows by law, a provincial board may not disallow by ordinance or resolution.
The power of local government units to legislate and enact ordinances and resolutions is merely a delegated
power coming from Congress. Municipal corporations owe their origin to, and derive their powers and
rights wholly from the legislature. It breathes into them the breath of life, without which they cannot exist.
As it creates, so it may destroy. As it may destroy, it may abridge and control. Obiter: Unless there is some
constitutional limitation on the right, the legislature might, by a single act, and if we can suppose it capable
of so great a folly and so great a wrong, sweep from existence all of the municipal corporations in the state,
and the corporation could not prevent it. Ours is still a unitary form of government, not a federal state.
Being so, any form of autonomy granted to local governments will necessarily be limited and confined
within the extent allowed by the central authority. The principle of local autonomy under the 1987
Constitution simply means decentralization. It does not make local governments sovereign within the
state or an imperium in imperio.

Limbona vs. Mangelin

Facts: Petitioner, Sultan Alimbusar Limbona, was elected Speaker of the Regional Legislative Assembly
or Batasang Pampook of Central Mindanao (Assembly). On October 21, 1987 Congressman Datu Guimid
Matalam, Chairman of the Committee on Muslim Affairs of the House of Representatives, invited petitioner
in his capacity 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. However, on November 2, 1987, the Assembly held a session in defiance of the
Limbona's advice, where he was unseated from his position. Petitioner prays that the session's proceedings
be declared null and void and be it declared that he was still the Speaker of the Assembly. Pending further
proceedings of the case, the SC received a resolution from the Assembly expressly expelling petitioner's
membership therefrom. Respondents argue that petitioner had "filed a case before the Supreme Court
against some members of the Assembly on a question which should have been resolved within the confines
of the Assembly," for which the respondents now submit that the petition had become "moot and academic"
because its resolution.

Issue: Whether or not the courts of law have jurisdiction over the autonomous governments or regions.
What is the extent of self-government given to the autonomous governments of Region XII?

Held:

Autonomy is either decentralization of administration or decentralization of power. There is

decentralization of administration when the central government delegates administrative powers to political
subdivisions in order to broaden the base of government power and in the process to make local
governments "more responsive and accountable". At the same time, it relieves the central government of
the burden of managing local affairs and enables it to concentrate on national concerns. The President
exercises "general supervision" over them, but only to "ensure that local affairs are administered according
to law." He has no control over their acts in the sense that he can substitute their judgments with his own.
Decentralization of power, on the other hand, involves an abdication of political power in the favor of local
governments units declared to be autonomous. In that case, the autonomous government is free to chart its
own destiny and shape its future with minimum intervention from central authorities.

An autonomous government that enjoys autonomy of the latter category [CONST. (1987), Art. X, Sec. 15.]
is subject alone to the decree of the organic act creating it and accepted principles on the effects and limits
of "autonomy." On the other hand, an autonomous government of the former class is, as we noted, under
the supervision of the national government acting through the President (and the Department of Local
Government). If the Sangguniang Pampook (of Region XII), then, is autonomous in the latter sense, its acts
are, debatably beyond the domain of this Court in perhaps the same way that the internal acts, say, of the
Congress of the Philippines are beyond our jurisdiction. But if it is autonomous in the former category only,
it comes unarguably under our jurisdiction. An examination of the very Presidential Decree creating the
autonomous governments of Mindanao persuades us that they were never meant to exercise autonomy in
the second sense (decentralization of power). PD No. 1618, in the first place, mandates that "[t]he President
shall have the power of general supervision and control over Autonomous Regions." Hence, we assume
jurisdiction. And if we can make an inquiry in the validity of the expulsion in question, with more reason
can we review the petitioner's removal as Speaker.

This case involves the application of a most important constitutional policy and principle, that of local
autonomy. We have to obey the clear mandate on local autonomy.

Where a law is capable of two interpretations, one in favor of centralized power in Malacaang and the
other beneficial to local autonomy, the scales must be weighed in favor of autonomy.

Upon the facts presented, we hold that the November 2 and 5, 1987 sessions were invalid. It is true that
under Section 31 of the Region XII Sanggunian Rules, "[s]essions shall not be suspended or adjourned
except by direction of the Sangguniang Pampook". But while this opinion is in accord with the respondents'
own, we still invalidate the twin sessions in question, since at the time the petitioner called the "recess," it
was not a settled matter whether or not he could do so. In the second place, the invitation tendered by the
Committee on Muslim Affairs of the House of Representatives provided a plausible reason for the
intermission sought. Also, assuming that a valid recess could not be called, it does not appear that the
respondents called his attention to this mistake. What appears is that instead, they opened the sessions
themselves behind his back in an apparent act of mutiny. Under the circumstances, we find equity on his
side. For this reason, we uphold the "recess" called on the ground of good faith.

Disomangcop vs DPWH (Datumanong)

Facts:

Disomangcop and Dimalotang were district engineers of the 1st Engineering District of DPWH-ARMM.
They are assailing the validity of RA 8999 & DO 119. RA 8999 created an engineering district in Lanao
and DO 119 created an engineering district in Marawi. Disomangcop and Dimalotang argued that the
creation of those engineering districts undermines the autonomy of ARMM hence the said RA and DO
should be declared inoperative and unconstitutional. Disomangcop and Dimalotang sought to enjoin
Datumanong as well as the Secretary of DBM from enforcing and releasing funds pursuant to the law. The
SolGen argued that the petitioners lack legal standing and that the said RA is constitutional pursuant to the
undiminished power of Congress to enact laws for ARMM. In all, Sol-Gen attacks the institution of the
case.

ISSUE: Whether or not Disomangcop and Dimalotang have legal standing.

HELD:

The SC ruled in favor of Disomangcop and Dimalotang and the SC held the said RA and DO to be
inoperative. The SC noted that Disomangcop and Dimalotang do have the legal standing to initiate the case.
Also, Disomangcop and Dimalotang were able to show the requisites of judicial review in order for a court
of justice to take cognizance of this case. Jurisprudence has laid down the following requisites for the
exercise of judicial power: First, there must be before the Court an actual case calling for the exercise of
judicial review. Second, the question before the Court must be ripe for adjudication. Third, the person
challenging the validity of the act must have standing to challenge. Fourth, the question of constitutionality
must have been raised at the earliest opportunity. Fifth, the issue of constitutionality must be the very lis
mota of the case.

In sum, the following are the requisites for the exercise of judicial power

1. There must be an actual controversy calling for the exercise of judicial power/review.

2. The question before the court must be ripe for judicial adjudication.

3. The constitutional question (question of constitutionality) must be raised by the proper party.
Proper party must have the standing to challenge (locus standi).

4. The constitutional question (question of constitutionality) must be raised at the earliest possible
opportunity.

5. The issue of constitutionality must be the very lis mota (controversy which has begun) of the
case. The decision of the constitutional question must be necessary to the determination of the case
itself.

Batangas CATV, Inc. v Court of Appeals

FACTS:

On July 28, 1986, respondent Sangguniang Panlungsod enacted Resolution No. 210 granting petitioner a
permit to construct, install, and operate a CATV system in Batangas City. Section 8 of the Resolution
provides that petitioner is authorized to charge its subscribers the maximum rates specified therein,
provided, however, that any increase of rates shall be subject to the approval of the Sangguniang
Panlungsod.
Sometime in November 1993, petitioner increased its subscriber rates from P88.00 to P180.00 per month.
As a result, respondent Mayor wrote petitioner a letter threatening to cancel its permit unless it secures the
approval of respondent Sangguniang Panlungsod, pursuant to Resolution No. 210.

Petitioner then filed with the RTC, Branch 7, Batangas City, a petition for injunction alleging that
respondent Sangguniang Panlungsod has no authority to regulate the subscriber rates charged by CATV
operators because under Executive Order No. 205, the National Telecommunications Commission (NTC)
has the sole authority to regulate the CATV operation in the Philippines.

ISSUE: may a local government unit (LGU) regulate the subscriber rates charged by CATV operators
within its territorial jurisdiction?

HELD:

No.

The logical conclusion, therefore, is that in light of the above laws and E.O. No. 436, the NTC exercises
regulatory power over CATV operators to the exclusion of other bodies.

Like any other enterprise, CATV operation maybe regulated by LGUs under the general welfare clause.
This is primarily because the CATV system commits the indiscretion of crossing public properties. (It uses
public properties in order to reach subscribers.) The physical realities of constructing CATV system the
use of public streets, rights of ways, the founding of structures, and the parceling of large regions allow
an LGU a certain degree of regulation over CATV operators.

But, while we recognize the LGUs power under the general welfare clause, we cannot sustain Resolution
No. 210. We are convinced that respondents strayed from the well recognized limits of its power. The flaws
in Resolution No. 210 are: (1) it violates the mandate of existing laws and (2) it violates the States
deregulation policy over the CATV industry.

LGUs must recognize that technical matters concerning CATV operation are within the exclusive
regulatory power of the NTC.

GENERAL PRINCIPLES: Power of the President of LGUs

Judge Dadole et al. vs. COA

Facts:

The petitioners are RTC and MTC judges of Mandaue City which enjoys additional allowance granted by
the local Sanggunian to them of 1,500 pesos in 1991. On March 15, 1994, the Department of Budget and
Management or DBM issued a Local Budget Circular No. 55 which limits the grant of the city or
municipality to national employees up to 1,000 pesos only and to refund the excess to the local government.
The said circular was made effective immediately. The circular was questioned by the petitioner on the
ground that the circular is beyond the authority of the DBM which merely oversees that the disbursement
of fund is in accordance with the law and that the local government enjoys the autonomy to disburse
additional allowance for national government employees in their municipality. Moreover, the circular is
void for lack of proper publication. Treating the action as a motion for reconsideration, it was brought to
the Regional office of COA and denied the same. Hence, this petition.

ISSUE: whether or not the Circular is void?

Held:

the supreme court ruled in affirmative

Ratio: under the constitution, the local government enjoys autonomy; however, this is subject to the power
of control by the congress and supervision by the president. Supervision is different from control. Under
the administrative law, the supervision means the power to oversee or the authority of the officer to see that
his subordinate officers performs his duties and if the latter fails, the former may institute action in
accordance with the law to make the latter perform his duties. Control, on the other hand, means the power
of the officer to alter or modify or nullify or set aside what the subordinate officer has done in the
performance of his duties and to substitute his judgment of the former to the latter. Clearly then that the
President can only interfere with the local government when the latter acted contrary to law. He cannot
interfere with the latter if it acted within the parameters of the law and constitution. The DBM overstep its
power of supervision by imposing prohibition not in accordance with the law. The law is also void for lack
of publication. Citing Tanada vs. Tuvera, publication is required in official gazette or newspaper of general
circulation in the Philippines since the DBM circular is in a nature of administrative circular the purpose of
which is to implement existing laws. The circular is more than a mere interpretation of law. At very least,
before the said circular be permitted to substantially reduce the income of government officials and
employees, they should be appraised or alerted by publication of the subject circular in official gazette or
newspaper of general circulation to the end of giving them ample opportunity to voice whatever
opposition they may have and ventilate their stance on the matter. This approach is more in keeping with
democratic precepts and rudiments of fairness and transparency. Publication is a condition precedent and
subsequent publication does not cure its defect.

PIMENTEL vs. AGUIRRE

FACTS:

President Ramos issued Administrative Order 372 (Adoption of Economic Measures in Government for
Fiscal Year 1998). Section 1 provided that all government departments and agencies, including state
universities and colleges, GOCCs and LGUs will identify and implement measures in FY 1998 that will
replace total expenditures by at least 25% of authorized regular appropriations for non-personal services
items. Section 4 also provided that pending assessment by the Development Budget Coordinating
Committee of the emerging fiscal situation, the amount equivalent to 10% of the IRA to LGUs shall be
withheld. President Estrada issued AO 43, amending Section 4 by reducing to 5% the IRA to be withheld.

ISSUES:

1. WON Section 1 of AO 372, insofar as it "directs" LGUs to reduce their expenditures by 25% is valid

2. WON withholding a part of LGUs IRA is valid

 HELD:

1. Yes. Section 1 of AO 372, insofar as it directs LGUs to reduce expenditures by at least 25% is a valid
exercise of the Presidents power of general supervision over LGUs as it is advisory only. Supervisory
power, when contrasted with control, is the power of mere oversight over an inferior body; it does not
include any restraining authority over such body. Under existing law, LGU, in addition to having
administrative autonomy, enjoy fiscal autonomy as well. Fiscal autonomy means that local governments
have the power to create their own sources of revenue in addition to their equitable share in the national
taxes released by the national government, as well as the power to allocate their resources in accordance
with their own priorities. It extends to the preparation of their budgets, and local officials in turn have to
work within the constraints thereof.

Local fiscal autonomy does not however rule out any manner of national government intervention by way
of supervision, in order to ensure that local programs, fiscal and otherwise, are consistent with national
goals. Significantly, the President, by constitutional fiat, is the head of the economic and planning agency
of the government, primarily responsible for formulating and implementing continuing, coordinated and
integrated social and economic policies, plans and programs for the entire country. However, under the
Constitution, the formulation and the implementation of such policies and programs are subject to
"consultations with the appropriate public agencies, various private sectors, and local government
units." The President cannot do so unilaterally.

Consequently, the Local Government Code provides:

"x x x In the event the national government incurs an unmanaged public sector deficit, the President of the
Philippines is hereby authorized, upon the recommendation of [the] Secretary of Finance, Secretary of the
Interior and Local Government and Secretary of Budget and Management, and subject to consultation with
the presiding officers of both Houses of Congress and the presidents of the liga, to make the necessary
adjustments in the internal revenue allotment of local government units but in no case shall the allotment be
less than thirty percent (30%) of the collection of national internal revenue taxes of the third fiscal year
preceding the current fiscal year x x x."

There are therefore several requisites before the President may interfere in local fiscal matters:

(1) An unmanaged public sector deficit of the national government;

(2) Consultations with the presiding officers of the Senate and the House of Representatives and the presidents
of the various local leagues; and

(3) The corresponding recommendation of the secretaries of the Department of Finance, Interior and Local
Government, and Budget and Management. Furthermore, any adjustment in the allotment shall in no case
be less than thirty percent (30%) of the collection of national internal revenue taxes of the third fiscal year
preceding the current one.

Petitioner points out that respondents failed to comply with these requisites before the issuance and the
implementation of AO 372. At the very least, they did not even try to show that the national government
was suffering from an unmanageable public sector deficit. Neither did they claim having
conductedconsultations with the different leagues of local governments. Without these requisites, the
President has no authority to adjust, much less to reduce, unilaterally the LGU's internal revenue allotment.

The solicitor general insists, however, that AO 372 is merely directory and has been issued by the President
consistent with his power of supervision over local governments. It is intended only to advise all
government agencies and instrumentalities to undertake cost-reduction measures that will
help maintaineconomic stability in the country, which is facing economic difficulties. Besides, it does not
contain any sanction in case of noncompliance. Being merely an advisory, therefore, Section 1 of AO 372
is well within the powers of the President. Since it is not a mandatory imposition, the directive cannot be
characterized as an exercise of the power of control.

While the wordings of Section 1 of AO 372 have a rather commanding tone, and while we agree with
petitioner that the requirements of Section 284 of the Local Government Code have not been satisfied, we
are prepared to accept the solicitor general's assurance that the directive to "identify and implement
measures x x x that will reduce total expenditures x x x by at least 25% of authorized regular
appropriation" is merely advisory in character, and does not constitute a mandatory or binding order that
interferes with local autonomy. The language used, while authoritative, does not amount to a command
that emanates from a boss to a subaltern.

Rather, the provision is merely an advisory to prevail upon local executives to recognize the need for fiscal
restraint in a period of economic difficulty. Indeed, all concerned would do well to heed the President's
call to unity, solidarity and teamwork to help alleviate the crisis. It is understood, however, that no legal
sanction may be imposed upon LGUs and their officials who do not follow such advice. It is in this light
that we sustain the solicitor general's contention in regard to Section 1.

2. No. Section 4 is invalid because it interferes with local autonomy, particularly local fiscal autonomy. A
basic feature of local fiscal autonomy is the automatic release of the shares of LGUs in the national internal
revenue. This is mandated by no less than the Constitution. The Local Government Code specifies further
that the release shall be made directly to the LGU concerned within five (5) days after every quarter of the
year and "shall not be subject to any lien or holdback that may be imposed by the national government for
whatever purpose." As a rule, the term "shall" is a word of command that must be given a compulsory
meaning. The provision is, therefore, imperative.

Section 4 of AO 372, however, orders the withholding, effective January 1, 1998, of 10 percent of the
LGUs' IRA "pending the assessment and evaluation by the Development Budget Coordinating Committee
of the emerging fiscal situation" in the country. Such withholding clearly contravenes the Constitution and
the law. Although temporary, it is equivalent to a holdback, which means "something held back or
withheld, often temporarily." Hence, the "temporary" nature of the retention by the national government
does not matter. Any retention is prohibited.

Scope of President's Power of Supervision Over LGUs

Section 4 of Article X of the Constitution confines the President's power over local
governments to one of general supervision. It reads as follows:

"Sec. 4. The President of the Philippines shall exercise general supervision

over local governments. x x x"

This provision has been interpreted to exclude the power of control. In Mondano v.
Silvosa, the Court contrasted the President's power of supervision over local
government officials with that of his power of control over executive officials of the
national government. It was emphasized that the two terms -- supervision and
control -- differed in meaning and extent. The Court distinguished them as follows:
"x x x In administrative law, supervision means overseeing or the power or authority
of an officer to see that subordinate officers perform their duties. If the latter fail or
neglect to fulfill them, the former may take such action or step as prescribed by law
to make them perform their duties. Control, on the other hand, means the power of
an officer to alter or modify or nullify or set aside what a subordinate officer ha[s]
done in the performance of his duties and to substitute the judgment of the former
for that of the latter."

In Taule v. Santos, we further stated that the Chief Executive wielded no more
authority than that of checking whether local governments or their officials were
performing their duties as provided by the fundamental law and by statutes. He
cannot interfere with local governments, so long as they act within the scope of their
authority. "Supervisory power, when contrasted with control, is the power of mere
oversight over an inferior body; it does not include any restraining authority over
such body," we said.

In a more recent case, Drilon v. Lim, the difference between control and supervision
was further delineated. Officers in control lay down the rules in the performance or
accomplishment of an act. If these rules are not followed, they may, in their
discretion, order the act undone or redone by their subordinates or even decide to
do it themselves. On the other hand, supervision does not cover such
authority. Supervising officials merely see to it that the rules are followed, but they
themselves do not lay down such rules, nor do they have the discretion to modify or
replace them. If the rules are not observed, they may order the work done or redone,
but only to conform to such rules. They may not prescribe their own manner of
execution of the act. They have no discretion on this matter except to see to it that
the rules are followed.

Under our present system of government, executive power is vested in the President.
The members of the Cabinet and other executive officials are merely alter egos. As
such, they are subject to the power of control of the President, at whose will and
behest they can be removed from office; or their actions and decisions changed,
suspended or reversed. In contrast, the heads of political subdivisions are elected by
the people. Their sovereign powers emanate from the electorate, to whom they are
directly accountable. By constitutional fiat, they are subject to the Presidents
supervision only, not control, so long as their acts are exercised within the sphere of
their legitimate powers. By the same token, the President may not withhold or alter
any authority or power given them by the Constitution and the law.

Extent of Local Autonomy

Hand in hand with the constitutional restraint on the President's power over local
governments is the state policy of ensuring local autonomy.

In Ganzon v. Court of Appeals, we said that local autonomy signified "a more
responsive and accountable local government structure instituted through a system
of decentralization." The grant of autonomy is intended to "break up the monopoly
of the national government over the affairs of local governments, x x x not x x x to
end the relation of partnership and interdependence between the central
administration and local government units x x x." Paradoxically, local governments
are still subject to regulation, however limited, for the purpose of enhancing self-
government.

Decentralization simply means the devolution of national administration, not power,

to local governments. Local officials remain accountable to the central government
as the law may provide. The difference between decentralization of administration
and that of power was explained in detail in Limbona v. Mangelin as follows:

"Now, autonomy is either decentralization of administration or decentralization of

power. There is decentralization of administration when the central
government delegates administrative powers to political subdivisions in order to
broaden the base of government power and in the process to make local governments
'more responsive and accountable,' and 'ensure their fullest development as self-
reliant communities and make them more effective partners in the pursuit of national
development and social progress.' At the same time, it relieves the central
government of the burden of managing local affairs and enables it to concentrate on
national concerns. The President exercises 'general supervision' over them, but only
to 'ensure that local affairs are administered according to law.' He has no control over
their acts in the sense that he can substitute their judgments with his own.

Decentralization of power, on the other hand, involves an abdication of political

power in the favor of local government units declared to be autonomous. In that
case, the autonomous government is free to chart its own destiny and shape its future
with minimum intervention from central authorities. According to a constitutional
author, decentralization of power amounts to 'self-immolation,' since in that event,
the autonomous government becomes accountable not to the central authorities but
to its constituency."

Under the Philippine concept of local autonomy, the national government has not
completely relinquished all its powers over local governments, including autonomous
regions. Only administrative powers over local affairs are delegated to political
subdivisions. The purpose of the delegation is to make governance more directly
responsive and effective at the local levels. In turn, economic, political and social
development at the smaller political units are expected to propel social and economic
growth and development. But to enable the country to develop as a whole, the
programs and policies effected locally must be integrated and coordinated towards a
common national goal. Thus, policy-setting for the entire country still lies in the
President and Congress. As we stated in Magtajas v. Pryce Properties Corp., Inc.,
municipal governments are still agents of the national government

Province of Batangas vs. Romulo

FACTS:
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.

Hon. Herminaldo Mandanas, Governor of Batangas, petitioned to declare unconstitutional and void certain
provisos contained in the General Appropriations Acts (GAAs) of 1999, 2000, and 2001, insofar as they
uniformly earmarked for each corresponding year the amount of P5billion for the Internal Revenue
Allotment (IRA) for the Local Government Service Equalization Fund (LGSEF) & imposed conditions for
the release thereof.

ISSUE: Whether the assailed provisos in the GAAs of 1999, 2000, and 2001, and the OCD resolutions
infringe the Constitution and the LGC of 1991.

HELD:

Yes.

The assailed provisos in the GAAs of 1999, 2000, and 2001, and the OCD resolutions constitute a
withholding of a portion of the IRA they effectively encroach on the fiscal autonomy enjoyed by LGUs
and must be struck down.

According to Art. II, Sec.25 of the Constitution, the State shall ensure the local autonomy of local
governments. Consistent with the principle of local autonomy, the Constitution confines the Presidents
power over the LGUs to one of general supervision, which has been interpreted to exclude the power of
control. Drilon v. Lim distinguishes supervision from control: control lays down the rules in the doing of
an act the officer has the discretion to order his subordinate to do or redo the act, or decide to do it himself;
supervision merely sees to it that the rules are followed but has no authority to set down the rules or the
discretion to modify/replace them.

The entire process involving the distribution & release of the LGSEF is constitutionally impermissible. The
LGSEF is part of the IRA or just share of the LGUs in the national taxes. Sec.6, Art.X of the Constitution
mandates that the just share shall be automatically released to the LGUs. Since the release is automatic,
the LGUs arent required to perform any act to receive the just share it shall be released to them without
need of further action. To subject its distribution & release to the vagaries of the implementing rules &
regulations as sanctioned by the assailed provisos in the GAAs of 1999-2001 and the OCD Resolutions
would violate this constitutional mandate.

The only possible exception to the mandatory automatic release of the LGUs IRA is if the national internal
revenue collections for the current fiscal year is less than 40% of the collections of the 3rd preceding fiscal
year. The exception does not apply in this case.
The Oversight Committees authority is limited to the implementation of the LGC of 1991 not to supplant
or subvert the same, and neither can it exercise control over the IRA of the LGUs.

Congress may amend any of the provisions of the LGC but only through a separate law and not through
appropriations laws or GAAs. Congress cannot include in a general appropriations bill matters that should
be more properly enacted in a separate legislation.

A general appropriations bill is a special type of legislation, whose content is limited to specified sums of
money dedicated to a specific purpose or a separate fiscal unit any provision therein which is intended to
amend another law is considered an inappropriate provision. Increasing/decreasing the IRA of LGUs
fixed in the LGC of 1991 are matters of general & substantive law. To permit the Congress to undertake
these amendments through the GAAs would unduly infringe the fiscal autonomy of the LGUs.

The value of LGUs as institutions of democracy is measured by the degree of autonomy they enjoy. Our
national officials should not only comply with the constitutional provisions in local autonomy but should
also appreciate the spirit and liberty upon which these provisions are based.

ACORD vs Zamora

ALTERNATIVE CENTER FOR ORGANIZATIONAL REFORMS AND DEVELOPMENT, INC.,

VS. ZAMORA

Doctrine: Automatic release of IRA

Facts:

Pres. Estrada, pursuant to Sec 22, Art VII mandating the Pres to submit to Congress a budget of expenditures
within 30 days before the opening of every regular session, submitted the National Expenditures program
for FY 2000. The President proposed an IRA of P121,778,000,000. This became RA 8760, AN ACT
APPROPRIATING FUNDS FOR THE OPERATION OF THE GOVERNMENT OF THE REPUBLIC OF
THE PHILIPPINES FROM JANUARY ONE TO DECEMBER THIRTY-ONE, TWO THOUSAND, AND
FOR OTHER PURPOSES also known as General Appropriations Act (GAA) for the Year 2000. It
provides under the heading ALLOCATIONS TO LOCAL GOVERNMENT UNITS that the IRA for
local government units shall amount to P111,778,000,000.

In another part of the GAA, under the heading UNPROGRAMMED FUND, it is provided that an amount
of P10,000,000,000 (P10 Billion), apart from the P111,778,000,000 mentioned above, shall be used to fund
the IRA, which amount shall be released only when the original revenue targets submitted by the President
to Congress can be realized based on a quarterly assessment to be conducted by certain committees which
the GAA specifies, namely, the Development Budget Coordinating Committee, the Committee on Finance
of the Senate, and the Committee on Appropriations of the House of Representatives.

Thus, while the GAA appropriates P111,778,000,000 of IRA as Programmed Fund, it appropriates a
separate amount of P10 Billion of IRA under the classification of Unprogrammed Fund, the latter amount
to be released only upon the occurrence of the condition stated in the GAA.
On August 22, 2000, a number of NGOs and POs, along with 3 barangay officials filed with this Court the
petition at bar, for Certiorari, Prohibition and Mandamus With Application for Temporary Restraining
Order, against respondents then Executive Secretary Ronaldo Zamora, then Secretary of the Department of
Budget and Management Benjamin Diokno, then National Treasurer Leonor Magtolis-Briones, and the
Commission on Audit, challenging the constitutionality of provision XXXVII (ALLOCATIONS TO
LOCAL GOVERNMENT UNITS) referred to by petitioners as Section 1, XXXVII (A), and LIV
(UNPROGRAMMED FUND) Special Provisions 1 and 4 of the GAA (the GAA provisions)

Petitioners contend that the said provisions violates the LGUs autonomy by unlawfully reducing the IRA
allotted by 10B and by withholding its release by placing the same under Unprogrammed funds. Although
the effectivity of the Year 2000 GAA has ceased, this Court shall nonetheless proceed to resolve the issues
raised in the present case, it being impressed with public interest. Petitioners argue that the GAA violated
the constitutional mandate of automatically releasing the IRAs when it made its release contingent on
whether revenue collections could meet the revenue targets originally submitted by the President, rather
than making the release automatic.

ISSUE: WON the subject GAA violates LGUs fiscal autonomy by not automatically releasing the whole
amount of the allotted IRA.

HELD:

Article X, Section 6 of the Constitution provides:

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.

Petitioners argue that the GAA violated this constitutional mandate when it made the release of IRA
contingent on whether revenue collections could meet the revenue targets originally submitted by the
President, rather than making the release automatic. Respondents counterargue that the above constitutional
provision is addressed not to the legislature but to the executive, hence, the same does not prevent the
legislature from imposing conditions upon the release of the IRA.

Respondents thus infer that the subject constitutional provision merely prevents the executive branch of the
government from unilaterally withholding the IRA, but not the legislature from authorizing the executive
branch to withhold the same. In the words of respondents, This essentially means that the President or any
member of the Executive Department cannot unilaterally, i.e., without the backing of statute, withhold the
release of the IRA.

As the Constitution lays upon the executive the duty to automatically release the just share of local
governments in the national taxes, so it enjoins the legislature not to pass laws that might prevent the
executive from performing this duty. To hold that the executive branch may disregard constitutional
provisions which define its duties, provided it has the backing of statute, is virtually to make the
Constitution amendable by statute a proposition which is patently absurd. If indeed the framers intended
to allow the enactment of statutes making the release of IRA conditional instead of automatic, then Article
X, Section 6 of the Constitution would have been worded differently.
Since, under Article X, Section 6 of the Constitution, only the just share of local governments is qualified
by the words as determined by law, and not the release thereof, the plain implication is that Congress is
not authorized by the Constitution to hinder or impede the automatic release of the IRA.

In another case, the Court held that the only possible exception to mandatory automatic release of the IRA
is, as held in Batangas:

if the national internal revenue collections for the current fiscal year is less than 40 percent of the
collections of the preceding third fiscal year, in which case what should be automatically released shall be
a proportionate amount of the collections for the current fiscal year. The adjustment may even be made on
a quarterly basis depending on the actual collections of national internal revenue taxes for the quarter of the
current fiscal year.

This Court recognizes that the passage of the GAA provisions by Congress was motivated by the laudable
intent to lower the budget deficit in line with prudent fiscal management. The pronouncement in Pimentel,
however, must be echoed: [T]he rule of law requires that even the best intentions must be carried out
within the parameters of the Constitution and the law. Verily, laudable purposes must be carried out by
legal methods.

WHEREFORE, the petition is GRANTED. XXXVII and LIV Special Provisions 1 and 4 of the Year 2000
GAA are hereby declared unconstitutional insofar as they set apart a portion of the IRA, in the amount of
P10 Billion, as part of the UNPROGRAMMED FUND.

ABAS KIDA VS SENATE OF THE PHILIPPINES

GR NO. 196271

FACTS: There were several laws pertaining to the Autonomous Region in Muslim Mindanao (ARMM)
were enacted by Congress. RA No. 9333 reset for the third time the ARMM regional elections to the 2nd
Monday of August 2005 and on the same date every 3 years thereafter. Pursuant to RA No. 9333, the next
ARMM regional elections should have been held on August 8, 2011. COMELEC had begun preparations
for these elections and had accepted certificates of candidacies for the various regional offices to be elected.
But on June 30, 2011, RA No. 10153 was enacted, resetting the next ARMM regular elections to May 2013
to coincide with the regular national and local elections of the country.

ISSUE: WON the Presidents power to appoint is constitutional.

HELD:

YES, the grant [to the President] of the power to appoint OICs in the ARMM is constitutional

[During the oral arguments, the Court identified the three options open to Congress in order to resolve the
problem on who should sit as ARMM officials in the interim [in order to achieve synchronization in the
2013 elections]: (1) allow the [incumbent] elective officials in the ARMM to remain in office in a hold over
capacity until those elected in the synchronized elections assume office; (2) hold special elections in the
ARMM, with the terms of those elected to expire when those elected in the [2013] synchronized elections
assume office; or (3) authorize the President to appoint OICs, [their respective terms to last also until those
elected in the 2013 synchronized elections assume office.]
3.1. 1st option: Holdover is unconstitutional since it would extend the terms of office of the incumbent
ARMM officials

We rule out the [hold over] option since it violates Section 8, Article X of the Constitution. This provision
states:

Section 8. The term of office of elective local officials, except barangay officials, which shall be determined
by law, shall be three years and no such official shall serve for more than three consecutive terms. [emphases
ours]

Since elective ARMM officials are local officials, they are covered and bound by the three-year term limit
prescribed by the Constitution; they cannot extend their term through a holdover. xxx.

If it will be claimed that the holdover period is effectively another term mandated by Congress, the net
result is for Congress to create a new term and to appoint the occupant for the new term. This view like
the extension of the elective term is constitutionally infirm because Congress cannot do indirectly what it
cannot do directly, i.e., to act in a way that would effectively extend the term of the incumbents. Indeed, if
acts that cannot be legally done directly can be done indirectly, then all laws would be illusory. Congress
cannot also create a new term and effectively appoint the occupant of the position for the new term. This is
effectively an act of appointment by Congress and an unconstitutional intrusion into the constitutional
appointment power of the President. Hence, holdover whichever way it is viewed is a constitutionally
infirm option that Congress could not have undertaken.

Even assuming that holdover is constitutionally permissible, and there had been statutory basis for it
(namely Section 7, Article VII of RA No. 9054) in the past, we have to remember that the rule of holdover
can only apply as an available option where no express or implied legislative intent to the contrary exists;
it cannot apply where such contrary intent is evident.

Congress, in passing RA No. 10153, made it explicitly clear that it had the intention of suppressing the
holdover rule that prevailed under RA No. 9054 by completely removing this provision. The deletion is a
policy decision that is wholly within the discretion of Congress to make in the exercise of its plenary
legislative powers; this Court cannot pass upon questions of wisdom, justice or expediency of legislation,
except where an attendant unconstitutionality or grave abuse of discretion results.

3.2. 2nd option: Calling special elections is unconstitutional since COMELEC, on its own, has no
authority to order special elections.

The power to fix the date of elections is essentially legislative in nature. [N]o elections may be held on any
other date for the positions of President, Vice President, Members of Congress and local officials, except
when so provided by another Act of Congress, or upon orders of a body or officer to whom Congress may
have delegated either the power or the authority to ascertain or fill in the details in the execution of that
power.

Notably, Congress has acted on the ARMM elections by postponing the scheduled August 2011 elections
and setting another date May 13, 2011 for regional elections synchronized with the presidential,
congressional and other local elections. By so doing, Congress itself has made a policy decision in the
exercise of its legislative wisdom that it shall not call special elections as an adjustment measure in
synchronizing the ARMM elections with the other elections.

After Congress has so acted, neither the Executive nor the Judiciary can act to the contrary by ordering
special elections instead at the call of the COMELEC. This Court, particularly, cannot make this call
without thereby supplanting the legislative decision and effectively legislating. To be sure, the Court is not
without the power to declare an act of Congress null and void for being unconstitutional or for having been
exercised in grave abuse of discretion. But our power rests on very narrow ground and is merely to annul a
contravening act of Congress; it is not to supplant the decision of Congress nor to mandate what Congress
itself should have done in the exercise of its legislative powers.

Thus, in the same way that the term of elective ARMM officials cannot be extended through a holdover,
the term cannot be shortened by putting an expiration date earlier than the three (3) years that the
Constitution itself commands. This is what will happen a term of less than two years if a call for special
elections shall prevail. In sum, while synchronization is achieved, the result is at the cost of a violation of
an express provision of the Constitution.

3.3. 3rd option: Grant to the President of the power to appoint ARMM OICs in the interim is valid.

The above considerations leave only Congress chosen interim measure RA No. 10153 and the
appointment by the President of OICs to govern the ARMM during the pre-synchronization period pursuant
to Sections 3, 4 and 5 of this law as the only measure that Congress can make. This choice itself, however,
should be examined for any attendant constitutional infirmity.

At the outset, the power to appoint is essentially executive in nature, and the limitations on or qualifications
to the exercise of this power should be strictly construed; these limitations or qualifications must be clearly
stated in order to be recognized. The appointing power is embodied in Section 16, Article VII of the
Constitution, which states:

Section 16. The President shall nominate and, with the consent of the Commission on Appointments,
appoint the heads of the executive departments, ambassadors, other public ministers and consuls or officers
of the armed forces from the rank of colonel or naval captain, and other officers whose appointments are
vested in him in this Constitution. He shall also appoint all other officers of the Government whose
appointments are not otherwise provided for by law, and those whom he may be authorized by law to
appoint. The Congress may, by law, vest the appointment of other officers lower in rank in the President
alone, in the courts, or in the heads of departments, agencies, commissions, or boards. [emphasis ours]

This provision classifies into four groups the officers that the President can appoint. These are:

First, the heads of the executive departments; ambassadors; other public ministers and consuls; officers of
the Armed Forces of the Philippines, from the rank of colonel or naval captain; and other officers whose
appointments are vested in the President in this Constitution;

Second, all other officers of the government whose appointments are not otherwise provided for by law;

Third, those whom the President may be authorized by law to appoint; and

Fourth, officers lower in rank whose appointments the Congress may by law vest in the President alone.
Since the Presidents authority to appoint OICs emanates from RA No. 10153, it falls under the third group
of officials that the President can appoint pursuant to Section 16, Article VII of the Constitution. Thus, the
assailed law facially rests on clear constitutional basis.

If at all, the gravest challenge posed by the petitions to the authority to appoint OICs under Section 3 of RA
No. 10153 is the assertion that the Constitution requires that the ARMM executive and legislative officials
to be elective and representative of the constituent political units. This requirement indeed is an express
limitation whose non-observance in the assailed law leaves the appointment of OICs constitutionally
defective.

After fully examining the issue, we hold that this alleged constitutional problem is more apparent than real
and becomes very real only if RA No. 10153 were to be mistakenly read as a law that changes the elective
and representative character of ARMM positions. RA No. 10153, however, does not in any way amend
what the organic law of the ARMM (RA No. 9054) sets outs in terms of structure of governance. What RA
No. 10153 in fact only does is to appoint officers-in-charge for the Office of the Regional Governor,
Regional Vice Governor and Members of the Regional Legislative Assembly who shall perform the
functions pertaining to the said offices until the officials duly elected in the May 2013 elections shall have
qualified and assumed office. This power is far different from appointing elective ARMM officials for
the abbreviated term ending on the assumption to office of the officials elected in the May 2013 elections.

[T]he legal reality is that RA No. 10153 did not amend RA No. 9054. RA No. 10153, in fact, provides only
for synchronization of elections and for the interim measures that must in the meanwhile prevail. And this
is how RA No. 10153 should be read in the manner it was written and based on its unambiguous facial
terms. Aside from its order for synchronization, it is purely and simply an interim measure responding to
the adjustments that the synchronization requires.

28 February 2012 RESOLUTION

Autonomous Region; plebiscite requirement. Section 18, Article X of the Constitution provides
that the creation of the autonomous region shall be effective when approved by majority of the
votes cast by the constituent units in a plebiscite called for the purpose. The Supreme Court
interpreted this to mean that only amendments to, or revisions of, the Organic Act
constitutionally-essential to the creation of autonomous regions i.e., those aspects specifically
mentioned in the Constitution which Congress must provide for in the Organic Act require
ratification through a plebiscite. While it agrees with the petitioners underlying premise that
sovereignty ultimately resides with the people, it disagrees that this legal reality necessitates
compliance with the plebiscite requirement for all amendments to RA No. 9054. For if we were to
go by the petitioners interpretation of Section 18, Article X of the Constitution that all
amendments to the Organic Act have to undergo the plebiscite requirement before becoming
effective, this would lead to impractical and illogical results hampering the ARMMs progress by
impeding Congress from enacting laws that timely address problems as they arise in the region,
as well as weighing down the ARMM government with the costs that unavoidably follow the
holding of a plebiscite. Also, Sec. 3 of R.A. No. 10153 cannot be seen as changing the basic
structure of the ARMM regional government. On the contrary, this provision clearly preserves the
basic structure of the ARMM regional government when it recognizes the offices of the ARMM
regional government and directs the OICs who shall temporarily assume these offices to perform
the functions pertaining to the said offices. Datu Michael Abas Kida, etc., et al. vs. Senate of the
Phil., etc., et al./Basari D. Mapupuno vs. Sixto Brillantes, etc., et al./Rep. Edcel C. Lagman vs. Paquito
N. Ochoa, Jr., etc., et al./Almarin Centi Tillah, et al. vs. The Commission on Elections, etc., et al./Atty.
Romulo B. Macalintal vs. Commission on Elections, et al./Luis Barok Biraogo, G.R. No. 196271,
February 28, 2012.

GOV. LUIS RAYMUND F. VILLAFUERTE, JR. and the Province of Camarines Sur v. Hon. Jesse
M. Robredo, in his capacity as Secretary of DILG December 10,

SUMMARY:

Villafuerte filed a petition assailing the three memorandum circulars issued by Robredo. The circulars
pertain to full disclosure of local budget and finances and other guidelines regarding budget. Villafuerte
argues that the circulars violate the principles of local and fiscal autonomy of the LGU. The Court ruled
that the circulars merely reiterated what was already provided in the law and that the order on public
disclosure is consistent with the policy of promoting good governance through transparency, accountability
and participation.

DOCTRINE:

The Constitution is now replete with numerous provisions directing the adoption of measures to uphold
transparency and accountability in government, with a view of protecting the nation from repeating its
atrocious past. It commands the strict adherence to full disclosure of information on all matters relating to
official transactions and those involving public interest.

FACTS: On February 21, 2011, Villafuerte, then Governor of Camarines Sur, joined by the Provincial
Government of Camarines Sur, filed the instant petition for certiorari, seeking to nullify the three issuances
of Robredo for being unconstitutional and having been issued with grave abuse of discretion: MC No. 2010-
83 entitled Full Disclosure of Local Budget and Finances, and Bids and Public Offerings which aims to
promote good governance through enhanced transparency and accountability of LGUs. Legal and
Administrative Authority: Section 352 of LGC of 1991 requires the posting within 30 days from end of
each fiscal year in at least 3 publicly accessible and conspicuous places in the LGU a summary of all
revenues collected and funds including the appropriations and disbursements of such funds during the
preceding fiscal year. RA No 984 (Government Procurement Reform Act) calles for the posting of the
Invitation to Bid, Notice of Award, Notice to Proceed and Approved Contract in the procuring premises, in
newspapers of general circulation, the Philippine Govt Electronic Procurement System and the website of
procuring entity. Responsibility of Local Chief Executive: All Provincial Governors, City Mayors, and
Municipal Mayors, are directed to faithfully comply with the above cited provisions of laws, and existing
national policy, by posting in conspicuous places within public buildings in the locality, or in print media
of community or general circulation, and in their websites[footnoteRef:1] [1: CY 2010 Annual Budget,
Quarterly Statement of Cash Flows, CY 2009 Statement of Receipts and Expenditures, CY 2010 Trust Fund
(PDAF) Utilization, CY 2010 Special Education Fund Utilization, CY 2010 20% Component of the IRA
Utilization, CY 2010 Gender and Development Fund Utilization, CY 2010 Statement of Debt Service, CY
2010 Annual Procurement Plan or Procurement List, Items to Bid, Bid Results on Civil Works, and Goods
and Services, Abstract of Bids as Calculated] MC No 2010-138 reiterating that 20% component of the IRA
shall be utilized for desirable social, economic, and environmental outcomes essential to the attainment of
the constitutional objective of life for all.[footnoteRef:2] [2: Administrative expenses such as cash gifts,
bonuses, food allowance, medical assistance, uniforms, supplies, meetings, communication, water and
light, petroleum products, and the like;Salaries, wages or overtime pay;Travelling expenses, whether
domestic or foreign;Registration or participation fees in training, seminars, conferences or
conventions;Construction, repair or refinishing of administrative offices;Purchase of administrative office
furniture, fixtures, equipment or appliances; and Purchase, maintenance or repair of motor vehicles or
motorcycles, except ambulances.] MC No 2011-08 directing for the strict adherence to Section 90 of RA
No 10147 of the General Appropriations Act of 2011. Legal and Administrative Authority: Section 90
stipulates that the amount appropriated for the LGUs share in the IRA shall be used in accordance with
Sections 17(g) and 287 of RA No 7160. The annual budgets of LGUs shall be prepared in accordance with
the forms, procedures, and schedules prescribed by the Department of Budget and Management and those
jointly issued with the Commission on Audit. Sanctions: Section 60. Grounds for Disciplinary Actions -
An elective local official may be disciplined, suspended, or removed from office on: (c) Dishonesty,
oppression, misconduct in office, gross negligence, or dereliction of duty.

ISSUE: Whether or not the assailed memorandum circulars violate the principles of local and fiscal
autonomy enshired in the Constitution and the LGC?

RULING: Petition denied.

NO.

Petitioners assailed issuances interfere with the local and fiscal autonomy of LGUs embodied in the
Constitution and the LGC. MC 2010-138 transgressed these constitutionally-protected liberties when it
restricted the meaning of "development" and enumerated activities which the local government must
finance from the 20% development fund component of the IRA and provided sanctions for local authorities
who shall use the said component of the fund for the excluded purposes stated therein. Robredo cannot
substitute his own discretion with that of the local legislative council in enacting its annual budget and
specifying the development projects that the 20% component of its IRA should fund.

Court said that petitioners arguments are untenable. The Constitution has expressly adopted the policy of
ensuring the autonomy of LGUs (Article X of Constitution) It is also pursuant to the mandate of the
Constitution that enhancing local autonomy that the LGC was enacted.[footnoteRef:3] [3: Sec. 2.
Declaration of Policy. (a) It is hereby declared the policy of the State that the territorial and political
subdivisions of the State shall enjoy genuine and meaningful local autonomy to enable them to attain their
fullest development as self-reliant communities and make them more effective partners in the attainment
of national goals. Toward this end, the State shall provide for a more responsive and accountable local
government structure instituted through a system of decentralization whereby local government units shall
be given more powers, authority, responsibilities, and resources. The process of decentralization shall
proceed from the national government to the local government units.] Local autonomy means a more
responsive and accountable local government structure instituted through a system of decentralization.
Autonomy is either decentralization of administration or decentralization of power. There is
decentralization of administration when the central government delegates administrative powers to political
subdivisions in order to broaden the base of government power and in the process to make local
governments more responsive and accountable and ensure their fullest development as self-reliant
communities and make them more effective partners in the pursuit of national development and social
progress. (Limbona v Mangelin) To safeguard the state policy on local autonomy, the Constitution confines
the power of the President over LGUs to mere supervision. The President exercises general supervision
over them, but only to ensure that local affairs are administered according to law. He has no control over
their acts in the sense that he can substitute their judgments with his own. (Section 4, Article X of
Constitution) It is petitioners contention that Robredo went beyond the confined of his supervisory
powers, as alter ego of the President, when he issued MC No 2010-138. They argue that the mandatory
nature of the circular, with the threat of imposition of sanctions for non-compliance, evinces a clear desire
to exercise control over LGUs. However, the Court perceives otherwise. A reading of MC No. 2010-138
shows that it is a mere reiteration of an existing provision in the LGC. It was plainly intended to remind
LGUs to faithfully observe the directive stated in Section 287 of the LGC to utilize the 20% portion of the
IRA for development projects. The assailed circular was issued in response to the report of the COA that a
substantial portion of the 20% development fund of some LGUs was not actually utilized for development
projects but was diverted to expenses more properly categorized as MOOE, in violation of Section 287 of
the LGC. The issuance of MC No. 2010-138 was brought about by the report of the COA that the
development fund was not being utilized accordingly. To curb the alleged misuse of the development fund,
the respondent deemed it proper to remind LGUs of the nature and purpose of the provision for the IRA
through MC No. 2010-138. The enumeration in the circular was not meant to restrict the discretion of the
LGUs in the utilization of their funds. It was incorporated in the assailed circular in order to guide them in
the proper disposition of the IRA and avert further misuse of the fund by citing current practices which
seemed to be incompatible with the purpose of the fund. LGUs remain at liberty to map out their
development plans based on their own discretion and utilize their IRAs accordingly, with the only
restriction that 20% thereof be expended for development projects. The local autonomy granted LGU does
not completely severe them from the national government or turn them into impenetrable states. Thus,
notwithstanding the local fiscal autonomy being enjoyed by LGUs, they are still under the supervision of
the President and maybe held accountable for malfeasance or violations of existing laws. Answering
petitioners claim that the requirement to post other documents in the issuances went beyond the provisions
in LGC and RA No 9184: It is well to remember that fiscal autonomy does not leave LGUs with unbridled
discretion in the disbursement of public funds. They remain accountable to their constituency. The assailed
issuances of the respondent, MC Nos. 2010-83 and 2011-08, are but implementation of this avowed policy
of the State to make public officials accountable to the people. They are amalgamations of existing laws,
rules and regulation designed to give teeth to the constitutional mandate of transparency and accountability.
Public office is a public trust. It must be discharged by its holder not for his own personal gain but for the
benefit of the public for whom he holds it in trust. By demanding accountability and service with
responsibility, integrity, loyalty, efficiency, patriotism and justice, all government officials and employees
have the duty to be responsive to the needs of the people they are called upon to serve. (ABAKADA GURO
Party List v Purisima) The Constitution strongly summoned the State to adopt and implement a policy of
full disclosure of all transactions involving public interest and provide the people with the right to access
public information. Section 352 of the LGC and RA No 9184 are responses to this call for transparency and
both laws establish a system of transparency in procurement process in government agencies. The
publication of budgets, expenditures, contracts and loans and procurement plans of LGUs required in the
assailed issuances could not have infringed on the local fiscal autonomy of LGUs. The issuances do not
interfere with the discretion of the LGUs in the specification of their priority projects and the allocation of
their budgets. The posting requirements are mere transparency measures. Section 352 of the LGC that is
being invoked by the petitioners does not exclude the requirement for the posting of the additional
documents stated in MC Nos. 2010-83 and 2011-08. The additional requirement for the posting of budgets,
expenditures, contracts and loans, and procurement plans are well-within the contemplation of Section 352
of the LGC considering they are documents necessary for an accurate presentation of a summary of
appropriations and disbursements that an LGU is required to publish. The supervisory powers of the
President are broad enough to embrace the power to require the publication of certain documents as a
mechanism of transparency. The President, by constitutional fiat, is the head of the economic and planning
agency of the government, primarily responsible for formulating and implementing continuing, coordinated
and integrated social and economic policies, plans and programs for the entire country. (Pimentel v Aguirre)
The Constitution, which was drafted after long years of dictatorship and abuse of power, is now replete
with numerous provisions directing the adoption of measures to uphold transparency and accountability in
government, with a view of protecting the nation from repeating its atrocious past. It commands the strict
adherence to full disclosure of information on all matters relating to official transactions and those involving
public interest. (Section 28, Article II and Section 7, Article III) The assailed issuances were issued pursuant
to the policy of promoting good governance through transparency, accountability and participation. The
action of the respondent is certainly within the constitutional bounds of his power as alter ego of the
President. The power to govern is a delegated authority from the people who hailed the public official to
office through the democratic process of election. He must not frown upon accountability checks which
aim to show how well he is performing his delegated power. For, it is through these mechanisms of
transparency and accountability that he is able to prove to his constituency that he is worthy of the continued
privilege.