Ganzon v. CA G. R. No. 93252 November 8, 1991 PADILLA, J.

implementing the suspension orders, and restraining the enforcement of the Court of Appeals' two [2] decisions. However, it appears that even before the promulgation on 5 August 1991 of the main decision, respondent Secretary Santos had issued on 3 July 1991 against petitioner Ganzon another order of preventive suspension in connection with Administrative Case No. 51-90 filed by complainant Octavius J. Jopson, which order states: It appearing from a perusal of the complaint as well as the answer in Administrative Case No 51-90, entitled Octavius J. Jopson, Complainant, versus, Mayor Rodolfo T. Ganzon, Respondent, for Oppression, etc., that there is reasonable ground to believe that Respondent has committed the act or acts complained of, as prayed for by Complainant Jopson, you are hereby preventively suspended from office for a period of sixty [60] days effective immediately. [Emphasis supplied].

Before the Court for resolution are the various issues raised by Rodolfo T. Ganzon's urgent motion, dated 7 September 1991, wherein he asks the Court to dissolve the temporary restraining order [TRO] it had issued, dated 5 September 1991, against the TRO earlier issued by the Court of Appeals in CAG. R. SP No. 25840 entitled Ganzon vs. Santos, et al.

On 5 August 1991, the Court's decision in the present case was promulgated, upholding the validity of the orders of preventive suspension issued by respondent Secretary Santos, the dispositive part of which decision reads: WHEREFORE, premises considered, the petitions are dismissed. The Temporary Restraining Order issued is lifted. The suspensions of the petitioners are affirmed; Provided, that the petitioner, Mayor Rodolfo Ganzon, may not be made to serve future suspensions on account of any of the remaining administrative charges pending against him for acts committed prior to August 11, 1988. The Secretary of Interior is ordered to consolidate all such administrative cases pending against Mayor Ganzon. The sixty-day suspension against the petitioner, Mary Ann Rivera Artieda, is affirmed. No costs.[1]

On 6 July 1991, petitioner Ganzon filed his "extremely urgent motion" (with supplemental motions later filed) questioning the validity of the said last mentioned suspension order. This Court issued a resolution dated 9 July 1991, requiring respondents to comment on petitioner's urgent motion. After the main decision in the present petitions was rendered by the Court on 5 August 1991, respondents filed motions dated, 9 and 29 August 1991 alleging therein that the issues raised in petitioner's motion [6 July 1991] were rendered moot and academic by the said decision, and seeking clarification on whether it was still necessary to comply with this Court's Resolutions requiring respondents to file comment on petitioner's said motion of 6 July 1991. Meanwhile, on 29 August 1991, respondent Santos issued a memorandum addressed to petitioner Ganzon, in connection with the 5 August 1991 main decision, stating therein that the third order of preventive suspension issued against petitioner on 3 May 1990 shall be deemed in force and effect. The memorandum states: The Supreme Court, in its Decision in the above-referred cases, which affirmed the authority of the Secretary of Local Government to discipline local elective officials, explicitly states that: We are, therefore, allowing Mayor Rodolfo Ganzon to suffer the duration of his third suspension and lifting for the purpose, the Temporary Restraining Order earlier issued . . . In view thereof, the third preventive suspension imposed on you, photocopy of which is hereto attached, is hereby deemed in force.

A brief summary of the facts that led to this Court's decision of 5 August 1991 ["main decision", for brevity] is as follows:

1. Sometime in 1988, a series of ten [10] administrative complaints were filed by various city officials, against petitioner Ganzon, the elected City Mayor of Iloilo City, on various charges such as abuse of authority, oppression, grave misconduct and others. 2. In the course of the hearing of the administrative cases, respondent Secretary Santos issued against petitioner Ganzon three [3] separate orders of preventive suspension dated 11 August 1988, 11 October 1988, and 3 May 1990, each of the orders to last for a 60-day period. Petitioner assailed the validity of the said orders by filing with the Court of Appeals two [2] separate petitions for prohibition docketed CA-G. R. SP No. 16417 and CA-G. R. SP No. 20736. On 7 September 1988 and 5 July 1990, the appellate court rendered the decision in CA-G. R. SP Nos. 16417 and 20736 dismissing the petitions for lack of merit. Hence, petitioner Ganzon filed with this Court two [2] separate petitions assailing the decision in CA-G. R. SP No. 16417 [subject of G. R. No. 93252], and that in CA-G. R. SP No. 20736 [subject of G. R. No. 95245].[2] 3. On 26 June 1990, we issued a temporary restraining order barring the respondent Secretary from

On 30 August 1991, petitioner Ganzon filed with the Court of Appeals a petition for mandamus, docketed CA-G. R. SP No. 25480 against respondents. On the same day, petitioner filed in these petitions his "manifestation and compliance," alleging that he had already fully served the suspension orders issued against him, in compliance with the main decision of 5 August 1991, and that he should be allowed to re-assume his office starting 4 September 1991.

one of the three orders covered by and subject of the main decision]. Meanwhile, in reaction to the Memorandum dated 29 August 1991 issued by respondent Santos, petitioner filed in CA-G. R. SP No. 25840 a motion praying for the issuance of a temporary restraining order, which motion was granted by the Court of Appeals, when on 3 September 1991, it [CA] issued the said TRO. On 4 September 1991, respondents filed with this Court a motion asking for the issuance of a restraining order addressed to the Court of Appeals and against the TRO issued in CA-G. R. SP No. 25840. Granting respondents' motion, this Court on 5 September 1991, issued a temporary restraining order directing the Court of Appeals to cease and desist from implementing the TRO it had issued dated 3 September 1991, immediately suspending the implementation of the order of the Secretary of Interior and Local Government dated 29 August 1991. On 9 September 1991, petitioner Ganzon filed a motion to dissolve this Court's restraining order dated 5 September 1991. The records show that petitioner Ganzon, to this date, remains suspended from office [as the elected Mayor of Iloilo City] and since the order of preventive suspension dated 3 July 1991 [the fourth suspension order][3] was issued against him by respondent Secretary; in other words, he has been serving the said fourth suspension order which is to expire after a period of 60 days, or on 4 September 1991. Similar to the argument raised in his petition filed with the Court of Appeals in CA-G.R. SP No. 25840, petitioner Ganzon, in support of his plea for the lifting of the TRO dated 5 September 1991 issued by this Court, In Re: TRO dated 3 September 1991, issued by Court of Appeals, contends that inasmuch as he has already served fully the suspension orders issued against him, in compliance with the mandate of this Court's decision dated 5 August 1991, coupled with the fact that he had also completely served by 4 September 1991 the fourth order of preventive suspension dated 3 July 1991, he should, therefore, be allowed to re-assume his office starting 4 September 1991. On the other hand, respondent Secretary maintains that petitioner Ganzon can be allowed to return to his office [as Mayor of Iloilo City] only after 19 October 1991, as it is only after such date when petitioner may be said to have fully served the preventive suspension orders as decreed in the main decision and in the order dated 3 July 1991 [fourth suspension]. The question then is when petitioner Ganzon may be allowed to re-assume his position and duties as mayor of Iloilo City. Is it only after 19 October 1991 as claimed by respondents, or at some earlier date? The answer to this question would depend on how petitioner has served the preventive suspension orders issued against him. We note that the main decision refers to three [3] orders of preventive suspension each to last for 60 days. The first dated 11 August 1988, was admittedly fully served by petitioner. The second order dated 11 October 1988 was not served because its enforcement was restrained by an order of the Regional Trial Court of Iloilo City upon petition of petitioner himself.[4] As to the third order dated 3 May 1990, the main decision states that petitioner is allowed to serve the duration of said third suspension order. It would seem, therefore, that after petitioner has served in full the third suspension order as decreed in the main decision, he can then return to his official duties as Iloilo City Mayor. However, We must also take note of the supervening 3 July 1991 order, again suspending petitioner from office for another 60 days, which order was issued even before the main decision of 5 August 1991 was promulgated. [The records show, however, that petitioner has in fact fully served the fourth suspension order, as admitted by respondents no less. This will be discussed shortly; but any issue on its validity is now moot and academic.[5] Besides, it is clear that this fourth suspension order is not Considering, nonetheless, the necessity of serving the third and fourth orders of suspension, there is need to look into when petitioner started to serve these orders so as to determine when their service expires. Petitioner contends that the following are the periods within which he stayed out of his office as he was serving the orders of preventive suspension issued against him: From Up to and Including May 4, 1990 May 18, 1990[6] June 9, 1990 June 26, 1990[7] July 5, 1991 September 3, 1991[8]

Petitioner argues that for the periods of 4 May to 18 May 1990, and 9 June to 26 June 1990, he was serving the third suspension order; whereas for the period of 5 July to 3 September 1991, he was then serving the fourth suspension order. On the other hand, respondent Secretary contends that as to the third order of preventive suspension, dated 3 May 1990, petitioner served it only from 4 May 1990 to 19 May 1990.[9] Respondent denies that from 11 June to 30 June 1990,[10] petitioner had served again the third suspension order. As to the fourth suspension order, respondent Secretary confirms that petitioner served it starting from 5 July 1991 to 3 September 1991.[11] As regards the third suspension order, it is noted that though both parties admit that petitioner started serving it on 4 May 1990, they however differ as to when the service ended [petitioner claims he served it even after 18 May 1990, whereas, respondent claims it ended 19 May 1990]. In view of this divergence, the Court rules that the third order was served by petitioner from 4 May 1990 up to 18 May 1990 only, the latter date being the date when the Court of Appeals issued a TRO in CA-G. R. SP No. 20736,[12] and thus, interrupted petitioner's service of the suspension orders and enabled him reassume his office as Iloilo City Mayor. We also do not accept petitioner's contention that from 9 June 1990 up to 26 June 1990[13] he again started to serve the third suspension order, inasmuch as during the period of 9 June 1990 to 26 June 1990, the records show that he was then in office discharging the functions of the Mayor of Iloilo City. [14] In sum, we rule that petitioner served the third suspension order only from 4 May 1990 up to 18 May 1990. The period from 4 May 1990 to 18 May 1990 is equivalent to fourteen [14] days.[15] Hence, as to the third suspension order [3 May 1990], petitioner having served fourteen [14] days of the 60-day preventive suspension imposed in the order, 46 days still remained to be served by him as decreed in the main decision. If we follow the mandate of such main decision which ordained that the third order be served and that the temporary restraining order[16] against it be lifted, it would follow that the

remaining 46 days should be served starting 5 August 1991 (date of promulgation of main decision) until fully served. Another way to serve the 46 days would be to begin serving it only on 4 September 1991 [the day after 3 September 1991 which was the last day of service for the fourth suspension order] or until 20 October 1991 [the 46th day from 4 September 1990]. However, We take note of the fact that petitioner has already fully served the 60-day fourth order of preventive suspension which started 5 July 1991 [that is, even before the main decision was rendered] and ended on 3 September 1991. Petitioner raises the issue of whether he could or should be allowed to serve the third and the fourth orders "simultaneously". If We allow his submission and accept "simultaneous service", it would mean the following: that from 5 August 1991 [the date the TRO issued by this Court was lifted] up to 3 September 1991 [the last day for serving the fourth order], twenty-nine [29] days have elapsed; that these twenty-nine [29] days which form part of his service for the fourth order can be also credited to his favor by treating said twenty-nine [29] days as forming part of his service of the third order; if this were so, he would need to serve only seventeen [17] days more to complete the service of the third order; said seventeen [17] days from 3 September 1991 will expire on 20 September 1991, which would be the last day for serving the third suspension order. Respondents however object to adopting the idea of "simultaneous service," of preventive suspensions as, according of them, this is not allowed under the Local Government Code. We agree with petitioner that he can be allowed the benefit of simultaneous service of the third and fourth suspension orders, for the following reasons. If simultaneous service of two [2] suspension orders is allowed, this would work in favor of the petitioner [an elective local official] as the balance of his third preventive suspension would, in effect, be reduced from 46 days to 17 days. It will be recalled that, in the main decision, noting that successive suspensions have been inflicted on Mayor Ganzon we stated that what "is intriguing is that respondent Secretary has been cracking down, so to speak, on the Mayor piecemeal apparently, to pin him down ten times the pain, when he, the respondent Secretary could have pursued a consolidated effort."[17] Surely, allowing petitioner to serve simultaneously the overlapping third and fourth suspensions will favor him, [and presumably the local constituency] and certainly lessen if not offset the harsh effects of whatever motive may be behind the intriguing action of the respondent Secretary in issuing those successive suspension orders. Furthermore, We may already take judicial notice of the recently-approved Local Government Code of 1991 [recently signed into law by the President][18] which provides [as to imposition of preventive suspensions] as follows: Sec. 63. Preventive Suspension.- xxx xxx xxx (b) that, any single preventive suspension of local elective official shall not extend beyond sixty [60] days: Provided, further that in the event that several administrative cases are filed against an elective official, he cannot be preventively suspended for more than ninety [90] days within a single year on the same ground or grounds existing and known at the time of the first suspension. [Emphasis supplied]. Since we can allow, as we here allow, under the bizarre circumstances of this case, petitioner to serve the third and fourth orders simultaneously [insofar as they overlap], this means that, as explained

earlier, petitioner shall serve only 17 days more [not 46 days] to complete the service of the third order, that is, starting from 3 September 1991 and ending on 20 September 1991. Hence, as of this latter date, petitioner has complied with the mandate of the main decision for he has already fully served the third preventive suspension which ended on 20 September 1991. But then another issue is raised by respondents, i.e. that considering that the main decision refers to the first, second and third orders of preventive suspension [as far as Mayor Ganzon is concerned], petitioner, apart from serving the third order [the first one having been fully served], should also serve the second order [for another 60 days] as the latter has admittedly not been serve yet due to a restraining order issued by a trial court,[19] and considering that the dispositive portion of the main decision decreed that "suspensions of petitioners [including the other petitioner Artieda in G.R. No. 93746] are affirmed." We agree with the respondents on this point. The main decision refers to the three [3] suspension orders: the first, the second and the third. As shown earlier, the first and the third orders have already been served. It is only the second order which seems to have been unserved. If we follow the decision which states that the three [3] suspensions are affirmed, there appears to be no reason why the second order should not be served for another 60-day period. However, there is no cogent reason why, under the bizarre circumstances of this case where the respondent Secretary has chosen to impose preventive suspensions piecemeal, instead of consolidating the several administrative cases of similar nature and close vintage We cannot allow the concept of simultaneous service to apply to the second order [as we did in the third order]. It would follow then that the second order is also fully served to this date for the service of said second order would have started on 5 August 1991 when the main decision was rendered as this was the time when this Court found and affirmed the validity of the three [3] suspension orders, including the second order. The 60-day period from 5 August 1991 expired on 4 October 1991. It appears that, as to the second preventive suspension, petitioner manifested that there is still an existing preliminary injunction issued by the RTC of Iloilo City, Branch 33 in Special Civil Action No. 18312, entitled Ganzon vs. Santos, et al.[20] One may ask as to the status of the case pending with the RTC, Iloilo City, Branch 33 insofar as the said case involves the issue on the validity of the second preventive suspension order. Under the main decision of this Court, dated 5 August 1991, second preventive suspension has been affirmed; under the present resolution, said second preventive suspension has been served. Consequently, Special Civil Action No. 18312 before the Regional Trial Court of Iloilo City has been rendered moot and academic, insofar as the second preventive suspension order is concerned. As to the petition [docketed CA-G. R. SP No. 25840] filed with the Court of Appeals, which involves the question of the validity of the fourth order, and which has clearly been served, petitioner admitted that he filed it, on the belief that it was the proper remedy for his reinstatement to office; thinking that his suspensions have been served and ended.[21] As we have ruled that petitioner has served the suspension orders decreed in the main decision and in the light of the finding of this Court that the fourth preventive suspension order has been served, the issues raised in CA-G. R. SP No. 25840; have also become moot and academic, warranting dismissal thereof. WHEREFORE, the urgent motion of petitioner dated 7 September 1991 is hereby granted. The

temporary restraining order dated 5 September 1991 is hereby lifted. Respondents are ordered to allow petitioner to re-assume his office as elected Mayor of Iloilo City effective immediately. The Court of Appeals is directed to dismiss CA-G. R. SP No. 25840 for having become moot and academic. The Regional Trial Court of Iloilo City, Branch 33, before which petitioner's action for prohibition [Special Civil Action No. 18312] is pending is also ordered to dismiss the said case for having become moot and academic insofar as petitioner prays therein to enjoin his [second] preventive suspension.

This resolution is without prejudice to the administrative cases [where the first, second, third and fourth preventive suspension orders were issued] proceeding on the merits thereof. Also, as decreed in the main decision of 5 August 1991, petitioner, Mayor Rodolfo Ganzon, may not be made to serve future suspensions on account of any of the remaining administrative charges pending against him for acts committed prior to August 11, 1988.

G.R. No. 92299 April 19, 1991 REYNALDO R. SAN JUAN, petitioner, vs.CIVIL SERVICE COMMISSION, DEPARTMENT OF BUDGET AND MANAGEMENT and CECILIA ALMAJOSE, respondents. Legal Services Division for petitioner. Sumulong, Sumulong, Paras & Abano Law Offices for private respondent.

On August 31, 1988, DBM Regional Director Agripino G. Galvez wrote the petitioner that Dalisay Santos and his other recommendees did not meet the minimum requirements under Local Budget Circular No. 31 for the position of a local budget officer. Director Galvez whether or not through oversight further required the petitioner to submit at least three other qualified nominees who are qualified for the position of PBO of Rizal for evaluation and processing. On November 2, 1988, the petitioner after having been informed of the private respondent's appointment wrote Secretary Carague protesting against the said appointment on the grounds that Cabuquit as DBM Undersecretary is not legally authorized to appoint the PBO; that the private respondent lacks the required three years work experience as provided in Local Budget Circular No. 31; and that under Executive Order No. 112, it is the Provincial Governor, not the Regional Director or a Congressman, who has the power to recommend nominees for the position of PBO. On January 9, 1989 respondent DBM, through its Director of the Bureau of Legal & Legislative Affairs (BLLA) Virgilio A. Afurung, issued a Memorandum ruling that the petitioner's letter-protest is not meritorious considering that public respondent DBM validly exercised its prerogative in filling-up the contested position since none of the petitioner's nominees met the prescribed requirements. On January 27, 1989, the petitioner moved for a reconsideration of the BLLA ruling. On February 28, 1989, the DBM Secretary denied the petitioner's motion for reconsideration. On March 27, 1989, the petitioner wrote public respondent CSC protesting against the appointment of the private respondent and reiterating his position regarding the matter. Subsequently, public respondent CSC issued the questioned resolutions which prompted the petitioner to submit before us the following assignment of errors: A. THE CSC ERRED IN UPHOLDING THE APPOINTMENT BY DBM ASSISTANT SECRETARY CABUQUIT OF CECILIA ALMAJOSE AS PBO OF RIZAL. B. THE CSC ERRED IN HOLDING THAT CECILIA ALMA JOSE POSSESSES ALL THE REQUIRED QUALIFICATIONS. C. THE CSC ERRED IN DECLARING THAT PETITIONER'S NOMINEES ARE NOT QUALIFIED TO THE SUBJECT POSITION. D. THE CSC AND THE DBM GRAVELY ABUSED THEIR DISCRETION IN NOT ALLOWING PETITIONER TO SUBMIT NEW NOMINEES WHO COULD MEET THE REQUIRED QUALIFICATION (Petition, pp. 7-8, Rollo, pp. 15-16) All the assigned errors relate to the issue of whether or not the private respondent is lawfully entitled to discharge the functions of PBO of Rizal pursuant to the appointment made by public respondent DBM's Undersecretary upon the recommendation of then Director Abella of DBM Region IV. The petitioner's arguments rest on his contention that he has the sole right and privilege to recommend the nominees to the position of PBO and that the appointee should come only from

GUTIERREZ, JR., J.:p In this petition for certiorari pursuant to Section 7, Article IX (A) of the present Constitution, the petitioner Governor of the Province of Rizal, prays for the nullification of Resolution No. 89-868 of the Civil Service Commission (CSC) dated November 21, 1989 and its Resolution No. 90-150 dated February 9, 1990. The dispositive portion of the questioned Resolution reads: WHEREFORE, foregoing premises considered, the Commission resolved to dismiss, as it hereby dismisses the appeal of Governor Reynaldo San Juan of Rizal. Accordingly, the approved appointment of Ms. Cecilia Almajose as Provincial Budget Officer of Rizal, is upheld. (Rollo, p. 32) The subsequent Resolution No. 90-150 reiterates CSC's position upholding the private respondent's appointment by denying the petitioner's motion for reconsideration for lack of merit. The antecedent facts of the case are as follows: On March 22, 1988, the position of Provincial Budget Officer (PBO) for the province of Rizal was left vacant by its former holder, a certain Henedima del Rosario. In a letter dated April 18, 1988, the petitioner informed Director Reynaldo Abella of the Department of Budget and Management (DBM) Region IV that Ms. Dalisay Santos assumed office as Acting PBO since March 22, 1988 pursuant to a Memorandum issued by the petitioner who further requested Director Abella to endorse the appointment of the said Ms. Dalisay Santos to the contested position of PBO of Rizal. Ms. Dalisay Santos was then Municipal Budget Officer of Taytay, Rizal before she discharged the functions of acting PBO. In a Memorandum dated July 26, 1988 addressed to the DBM Secretary, then Director Abella of Region IV recommended the appointment of the private respondent as PBO of Rizal on the basis of a comparative study of all Municipal Budget Officers of the said province which included three nominees of the petitioner. According to Abella, the private respondent was the most qualified since she was the only Certified Public Accountant among the contenders. On August 1, 1988, DBM Undersecretary Nazario S. Cabuquit, Jr. signed the appointment papers of the private respondent as PBO of Rizal upon the aforestated recommendation of Abella. In a letter dated August 3, 1988 addressed to Secretary Carague, the petitioner reiterated his request for the appointment of Dalisay Santos to the contested position unaware of the earlier appointment made by Undersecretary Cabuquit.

his nominees. In support thereof, he invokes Section 1 of Executive Order No. 112 which provides that: Sec. 1. All budget officers of provinces, cities and municipalities shall be appointed henceforth by the Minister of Budget and Management upon recommendation of the local chief executive concerned, subject to civil service law, rules and regulations, and they shall be placed under the administrative control and technical supervision of the Ministry of Budget and Management. The petitioner maintains that the appointment of the private respondent to the contested position was made in derogation of the provision so that both the public respondents committed grave abuse of discretion in upholding Almajose's appointment. There is no question that under Section 1 of Executive Order No. 112 the petitioner's power to recommend is subject to the qualifications prescribed by existing laws for the position of PBO. Consequently, in the event that the recommendations made by the petitioner fall short of the required standards, the appointing authority, the Minister (now Secretary) of public respondent DBM is expected to reject the same. In the event that the Governor recommends an unqualified person, is the Department Head free to appoint anyone he fancies ? This is the issue before us. Before the promulgation of Executive Order No. 112 on December 24, 1986, Batas Pambansa Blg. 337, otherwise known as the Local Government Code vested upon the Governor, subject to civil service rules and regulations, the power to appoint the PBO (Sec. 216, subparagraph (1), BP 337). The Code further enumerated the qualifications for the position of PBO. Thus, Section 216, subparagraph (2) of the same code states that: (2) No person shall be appointed provincial budget officer unless he is a citizen of the Philippines, of good moral character, a holder of a degree preferably in law, commerce, public administration or any related course from a recognized college or university, a first grade civil service eligibility or its equivalent, and has acquired at least five years experience in budgeting or in any related field. The petitioner contends that since the appointing authority with respect to the Provincial Budget Officer of Rizal was vested in him before, then, the real intent behind Executive Order No. 112 in empowering him to recommend nominees to the position of Provincial Budget Officer is to make his recommendation part and parcel of the appointment process. He states that the phrase "upon recommendation of the local chief executive concerned" must be given mandatory application in consonance with the state policy of local autonomy as guaranteed by the 1987 Constitution under Art. II, Sec. 25 and Art. X, Sec. 2 thereof. He further argues that his power to recommend cannot validly be defeated by a mere administrative issuance of public respondent DBM reserving to itself the right to fill-up any existing vacancy in case the petitioner's nominees do not meet the qualification requirements as embodied in public respondent DBM's Local Budget Circular No. 31 dated February 9, 1988. The questioned ruling is justified by the public respondent CSC as follows: As required by said E.O. No. 112, the DBM Secretary may choose from among the recommendees of the Provincial Governor who are thus qualified and eligible for appointment to the position of

the PBO of Rizal. Notwithstanding, the recommendation of the local chief executive is merely directory and not a condition sine qua non to the exercise by the Secretary of DBM of his appointing prerogative. To rule otherwise would in effect give the law or E.O. No. 112 a different interpretation or construction not intended therein, taking into consideration that said officer has been nationalized and is directly under the control and supervision of the DBM Secretary or through his duly authorized representative. It cannot be gainsaid that said national officer has a similar role in the local government unit, only on another area or concern, to that of a Commission on Audit resident auditor. Hence, to preserve and maintain the independence of said officer from the local government unit, he must be primarily the choice of the national appointing official, and the exercise thereof must not be unduly hampered or interfered with, provided the appointee finally selected meets the requirements for the position in accordance with prescribed Civil Service Law, Rules and Regulations. In other words, the appointing official is not restricted or circumscribed to the list submitted or recommended by the local chief executive in the final selection of an appointee for the position. He may consider other nominees for the position vis a vis the nominees of the local chief executive. (CSC Resolution No. 89-868, p. 2; Rollo, p. 31) The issue before the Court is not limited to the validity of the appointment of one Provincial Budget Officer. The tug of war between the Secretary of Budget and Management and the Governor of the premier province of Rizal over a seemingly innocuous position 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. The exercise by local governments of meaningful power has been a national goal since the turn of the century. And yet, inspite of constitutional provisions and, as in this case, legislation mandating greater autonomy for local officials, national officers cannot seem to let go of centralized powers. They deny or water down what little grants of autonomy have so far been given to municipal corporations. President McKinley's Instructions dated April 7, 1900 to the Second Philippine Commission ordered the new Government "to devote their attention in the first instance to the establishment of municipal governments in which natives of the Islands, both in the cities and rural communities, shall be afforded the opportunity to manage their own local officers to the fullest extent of which they are capable and subject to the least degree of supervision and control which a careful study of their capacities and observation of the workings of native control show to be consistent with the maintenance of law, order and loyalty. In this initial organic act for the Philippines, the Commission which combined both executive and legislative powers was directed to give top priority to making local autonomy effective. The 1935 Constitution had no specific article on local autonomy. However, in distinguishing between presidential control and supervision as follows: The President shall have control of all the executive departments, bureaus, or offices, exercise general supervision over all local governments as may be provided by law, and take care that the laws be faithfully executed. (Sec. 11, Article VII, 1935 Constitution)

the Constitution clearly limited the executive power over local governments to "general supervision . . . as may be provided by law." The President controls the executive departments. He has no such power over local governments. He has only supervision and that supervision is both general and circumscribed by statute. In Tecson v. Salas, 34 SCRA 275, 282 (1970), this Court stated: . . . Hebron v. Reyes, (104 Phil. 175 [1958]) with the then Justice, now Chief Justice, Concepcion as the ponente, clarified matters. As was pointed out, the presidential competence is not even supervision in general, but general supervision as may be provided by law. He could not thus go beyond the applicable statutory provisions, which bind and fetter his discretion on the matter. Moreover, as had been earlier ruled in an opinion penned by Justice Padilla in Mondano V. Silvosa, (97 Phil. 143 [1955]) referred to by the present Chief Justice in his opinion in the Hebron case, supervision goes no further than "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." (Ibid, pp. 147148) Control, on the other hand, "means the power of an officer to alter or modify or nullify or set aside what a subordinate had done in the performance of their duties and to substitute the judgment of the former for that of the latter." It would follow then, according to the present Chief Justice, to go back to the Hebron opinion, that the President had to abide by the then provisions of the Revised Administrative Code on suspension and removal of municipal officials, there being no power of control that he could rightfully exercise, the law clearly specifying the procedure by which such disciplinary action would be taken. Pursuant to this principle under the 1935 Constitution, legislation implementing local autonomy was enacted. In 1959, Republic Act No. 2264, "An Act Amending the Law Governing Local Governments by Increasing Their Autonomy and Reorganizing Local Governments" was passed. It was followed in 1967 when Republic Act No. 5185, the Decentralization Law was enacted, giving "further autonomous powers to local governments governments." The provisions of the 1973 Constitution moved the country further, at least insofar as legal provisions are concerned, towards greater autonomy. It provided under Article II as a basic principle of government: Sec. 10. The State shall guarantee and promote the autonomy of local government units, especially the barangay to ensure their fullest development as self-reliant communities. An entire article on Local Government was incorporated into the Constitution. It called for a local government code defining more responsive and accountable local government structures. Any creation, merger, abolition, or substantial boundary alteration cannot be done except in accordance with the local government code and upon approval by a plebiscite. The power to create sources of revenue and to levy taxes was specifically settled upon local governments. The exercise of greater local autonomy is even more marked in the present Constitution. Article II, Section 25 on State Policies provides: Sec. 25. The State shall ensure the autonomy of local governments The 14 sections in Article X on Local Government not only reiterate earlier doctrines but give in

greater detail the provisions making local autonomy more meaningful. Thus, Sections 2 and 3 of Article X provide: Sec. 2. The territorial and political subdivisions shall enjoy local autonomy. Sec. 3. The Congress shall enact a local government code which shall provide for a more responsive and accountable local government structure instituted through a system of decentralization with effective mechanisms of recall, initiative, and referendum, allocate among the different local government units their powers, responsibilities, and resources, and provide for the qualifications, election, appointment and removal, term, salaries, powers and functions and duties of local officials, and all other matters relating to the organization and operation of the local units. When the Civil Service Commission interpreted the recommending power of the Provincial Governor as purely directory, it went against the letter and spirit of the constitutional provisions on local autonomy. If the DBM Secretary jealously hoards the entirety of budgetary powers and ignores the right of local governments to develop self-reliance and resoluteness in the handling of their own funds, the goal of meaningful local autonomy is frustrated and set back. The right given by Local Budget Circular No. 31 which states: Sec. 6.0 The DBM reserves the right to fill up any existing vacancy where none of the nominees of the local chief executive meet the prescribed requirements. is ultra vires and is, accordingly, set aside. The DBM may appoint only from the list of qualified recommendees nominated by the Governor. If none is qualified, he must return the list of nominees to the Governor explaining why no one meets the legal requirements and ask for new recommendees who have the necessary eligibilities and qualifications. The PBO is expected to synchronize his work with DBM. More important, however, is the proper administration of fiscal affairs at the local level. Provincial and municipal budgets are prepared at the local level and after completion are forwarded to the national officials for review. They are prepared by the local officials who must work within the constraints of those budgets. They are not formulated in the inner sanctums of an all-knowing DBM and unilaterally imposed on local governments whether or not they are relevant to local needs and resources. It is for this reason that there should be a genuine interplay, a balancing of viewpoints, and a harmonization of proposals from both the local and national officials. It is for this reason that the nomination and appointment process involves a sharing of power between the two levels of government. It may not be amiss to give by way of analogy the procedure followed in the appointments of Justices and Judges. Under Article VIII of the Constitution, nominations for judicial positions are made by the Judicial and Bar Council. The President makes the appointments from the list of nominees submitted to her by the Council. She cannot apply the DBM procedure, reject all the Council nominees, and appoint another person whom she feels is better qualified. There can be no reservation of the right to fill up a position with a person of the appointing power's personal choice. The public respondent's grave abuse of discretion is aggravated by the fact that Director Galvez required the Provincial Governor to submit at least three other names of nominees better

qualified than his earlier recommendation. It was a meaningless exercise. The appointment of the private respondent was formalized before the Governor was extended the courtesy of being informed that his nominee had been rejected. The complete disregard of the local government's prerogative and the smug belief that the DBM has absolute wisdom, authority, and discretion are manifest. In his classic work "Philippine Political Law" Dean Vicente G. Sinco stated that the value of local governments as institutions of democracy is measured by the degree of autonomy that they enjoy. Citing Tocqueville, he stated that "local assemblies of citizens constitute the strength of free nations. . . . A people may establish a system of free government but without the spirit of municipal institutions, it cannot have the spirit of liberty." (Sinco, Philippine Political Law, Eleventh Edition, pp. 705-706). Our national officials should not only comply with the constitutional provisions on local autonomy but should also appreciate the spirit of liberty upon which these provisions are based. WHEREFORE, the petition is hereby GRANTED. The questioned resolutions of the Civil Service Commission are SET ASIDE. The appointment of respondent Cecilia Almajose is nullified. The Department of Budget and Management is ordered to appoint the Provincial Budget Officer of Rizal from among qualified nominees submitted by the Provincial Governor. SO ORDERED.

HON. JOSE D. LINA, JR., SANGGUNIANG PANLALAWIGAN OF LAGUNA, and HON. CALIXTO CATAQUIZ, petitioners, vs. HON. FRANCISCO DIZON PAO and TONY CALVENTO, respondents. DECISION

QUISUMBING, J.: For our resolution is a petition for review on certiorari seeking the reversal of the decision[1] dated February 10, 1997 of the Regional Trial Court of San Pedro, Laguna, Branch 93, enjoining petitioners from implementing or enforcing Kapasiyahan Bilang 508, Taon 1995, of the Sangguniang Panlalawigan of Laguna and its subsequent Order[2] dated April 21, 1997 denying petitioners motion for reconsideration. On December 29, 1995, respondent Tony Calvento was appointed agent by the Philippine Charity Sweepstakes Office (PCSO) to install Terminal OM 20 for the operation of lotto. He asked Mayor Calixto Cataquiz, Mayor of San Pedro, Laguna, for a mayors permit to open the lotto outlet. This was denied by Mayor Cataquiz in a letter dated February 19, 1996. The ground for said denial was an ordinance passed by the Sangguniang Panlalawigan of Laguna entitled Kapasiyahan Blg. 508, T. 1995 which was issued on September 18, 1995. The ordinance reads: ISANG KAPASIYAHAN TINUTUTULAN ANG MGA ILLEGAL GAMBLING LALO NA ANG LOTTO SA LALAWIGAN NG LAGUNA SAPAGKAT, ang sugal dito sa lalawigan ng Laguna ay talamak na; SAPAGKAT, ang sugal ay nagdudulot ng masasamang impluwensiya lalot higit sa mga kabataan; KUNG KAYAT DAHIL DITO, at sa mungkahi nina Kgg. Kgd. Juan M. Unico at Kgg. Kgd. Gat-Ala A. Alatiit, pinangalawahan ni Kgg. Kgd. Meliton C. Larano at buong pagkakaisang sinangayunan ng lahat ng dumalo sa pulong; IPINASIYA, na tutulan gaya ng dito ay mahigpit na TINUTUTULAN ang ano mang uri ng sugal dito sa lalawigan ng Laguna lalot higit ang Lotto; IPINASIYA PA RIN na hilingin tulad ng dito ay hinihiling sa Panlalawigang pinuno ng Philippine National Police (PNP) Col. [illegible] na mahigpit na pag-ibayuhin ang pagsugpo sa lahat ng uri ng illegal na sugal sa buong lalawigan ng Laguna lalo na ang Jueteng.[3] As a result of this resolution of denial, respondent Calvento filed a complaint for declaratory relief with prayer for preliminary injunction and temporary restraining order. In the said complaint, respondent Calvento asked the Regional Trial Court of San Pedro Laguna, Branch 93, for the following reliefs: (1) a preliminary injunction or temporary restraining order, ordering the defendants to refrain from implementing or enforcing Kapasiyahan Blg. 508, T. 1995; (2) an order requiring Hon. Municipal Mayor Calixto R. Cataquiz to issue a business permit for the operation of a lotto outlet; and (3) an order annulling or declaring as invalid Kapasiyahan Blg. 508, T. 1995. On February 10, 1997, the respondent judge, Francisco Dizon Pao, promulgated his decision enjoining the petitioners from implementing or enforcing resolution or Kapasiyahan Blg. 508, T. 1995. The dispositive portion of said decision reads: WHEREFORE, premises considered, defendants, their agents and representatives are hereby enjoined from implementing or enforcing resolution or kapasiyahan blg. 508, T. 1995 of the Sangguniang Panlalawigan ng Laguna prohibiting the operation of the lotto in the province of Laguna.

SO ORDERED.[4] Petitioners filed a motion for reconsideration which was subsequently denied in an Order dated April 21, 1997, which reads: Acting on the Motion for Reconsideration filed by defendants Jose D. Lina, Jr. and the Sangguniang Panlalawigan of Laguna, thru counsel, with the opposition filed by plaintiffs counsel and the comment thereto filed by counsel for the defendants which were duly noted, the Court hereby denies the motion for lack of merit. SO ORDERED.[5] On May 23, 1997, petitioners filed this petition alleging that the following errors were committed by the respondent trial court: I THE TRIAL COURT ERRED IN ENJOINING THE PETITIONERS FROM IMPLEMENTING KAPASIYAHAN BLG. 508, T. 1995 OF THE SANGGUNIANG PANLALAWIGAN OF LAGUNA PROHIBITING THE OPERATION OF THE LOTTO IN THE PROVINCE OF LAGUNA. II THE TRIAL COURT FAILED TO APPRECIATE THE ARGUMENT POSITED BY THE PETITIONERS THAT BEFORE ANY GOVERNMENT PROJECT OR PROGRAM MAY BE IMPLEMENTED BY THE NATIONAL AGENCIES OR OFFICES, PRIOR CONSULTATION AND APPROVAL BY THE LOCAL GOVERNMENT UNITS CONCERNED AND OTHER CONCERNED SECTORS IS REQUIRED. Petitioners contend that the assailed resolution is a valid policy declaration of the Provincial Government of Laguna of its vehement objection to the operation of lotto and all forms of gambling. It is likewise a valid exercise of the provincial governments police power under the General Welfare Clause of Republic Act 7160, otherwise known as the Local Government Code of 1991.[6] They also maintain that respondents lotto operation is illegal because no prior consultations and approval by the local government were sought before it was implemented contrary to the express provisions of Sections 2 (c) and 27 of R.A. 7160.[7] For his part, respondent Calvento argues that the questioned resolution is, in effect, a curtailment of the power of the state since in this case the national legislature itself had already declared lotto as legal and permitted its operations around the country.[8] As for the allegation that no prior consultations and approval were sought from the sangguniang panlalawigan of Laguna, respondent Calvento contends this is not mandatory since such a requirement is merely stated as a declaration of policy and not a self-executing provision of the Local Government Code of 1991.[9] He also states that his operation of the lotto system is legal because of the authority given to him by the PCSO, which in turn had been granted a franchise to operate the lotto by Congress.[10] The Office of the Solicitor General (OSG), for the State, contends that the Provincial Government of Laguna has no power to prohibit a form of gambling which has been authorized by the national government.[11] He argues that this is based on the principle that ordinances should not contravene statutes as municipal governments are merely agents of the national

government. The local councils exercise only delegated legislative powers which have been conferred on them by Congress. This being the case, these councils, as delegates, cannot be superior to the principal or exercise powers higher than those of the latter. The OSG also adds that the question of whether gambling should be permitted is for Congress to determine, taking into account national and local interests. Since Congress has allowed the PCSO to operate lotteries which PCSO seeks to conduct in Laguna, pursuant to its legislative grant of authority, the provinces Sangguniang Panlalawigan cannot nullify the exercise of said authority by preventing something already allowed by Congress. The issues to be resolved now are the following: (1) whether Kapasiyahan Blg. 508, T. 1995 of the Sangguniang Panlalawigan of Laguna and the denial of a mayors permit based thereon are valid; and (2) whether prior consultations and approval by the concerned Sanggunian are needed before a lotto system can be operated in a given local government unit. The entire controversy stemmed from the refusal of Mayor Cataquiz to issue a mayors permit for the operation of a lotto outlet in favor of private respondent. According to the mayor, he based his decision on an existing ordinance prohibiting the operation of lotto in the province of Laguna. The ordinance, however, 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. Nor could it serve as a valid ground to prohibit the operation of the lotto system in the province of Laguna. Even petitioners admit as much when they stated in their petition that: 5.7. The terms of the Resolution and the validity thereof are express and clear. The Resolution is a policy declaration of the Provincial Government of Laguna of its vehement opposition and/or objection to the operation of and/or all forms of gambling including the Lotto operation in the Province of Laguna.[12] 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. However, this freedom to exercise contrary views does not mean that local governments may actually enact ordinances that go against laws duly enacted by Congress. Given this premise, the assailed resolution in this case could not and 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. Republic Act 1169, as amended by Batas Pambansa Blg. 42, is the law which grants a franchise to the PCSO and allows it to operate the lotteries. The pertinent provision reads: Section 1. The Philippine Charity Sweepstakes Office.- The Philippine Charity Sweepstakes Office, hereinafter designated the Office, shall be the principal government agency for raising and providing for funds for health programs, medical assistance and services and charities of national character, and as such shall have the general powers conferred in section thirteen of Act Numbered One thousand four hundred fifty-nine, as amended, and shall have the authority: A. To hold and conduct charity sweepstakes races, lotteries, and other similar activities, in such frequency and manner, as shall be determined, and subject to such rules and regulations as shall be promulgated by the Board of Directors.

This statute remains valid today. While lotto is clearly a game of chance, the national government deems it wise and proper to permit it. Hence, the Sangguniang Panlalawigan of Laguna, a local government unit, cannot issue a resolution or an ordinance that would seek to prohibit permits. Stated otherwise, what the national legislature expressly allows by law, such as lotto, a provincial board may not disallow by ordinance or resolution. In our system of government, the power of local government units to legislate and enact ordinances and resolutions is merely a delegated power coming from Congress. As held in Tatel vs. Virac,[13] ordinances should not contravene an existing statute enacted by Congress. The reasons for this is obvious, as elucidated in Magtajas v. Pryce Properties Corp.[14] Municipal governments are only agents of the national government. Local councils exercise only delegated legislative powers conferred upon them by Congress as the national lawmaking body. The delegate cannot be superior to the principal or exercise powers higher than those of the latter. It is a heresy to suggest that the local government units can undo the acts of Congress, from which they have derived their power in the first place, and negate by mere ordinance the mandate of the statute. 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. 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. We know of no limitation on the right so far as the corporation themselves are concerned. They are, so to phrase it, the mere tenants at will of the legislature (citing Clinton vs. Ceder Rapids, etc. Railroad Co., 24 Iowa 455). Nothing in the present constitutional provision enhancing local autonomy dictates a different conclusion. The basic relationship between the national legislature and the local government units has not been enfeebled by the new provisions in the Constitution strengthening the policy of local autonomy. Without meaning to detract from that policy, we here confirm that Congress retains control of the local government units although in significantly reduced degree now than under our previous Constitutions. The power to create still includes the power to destroy. The power to grant still includes the power to withhold or recall. True, there are certain notable innovations in the Constitution, like the direct conferment on the local government units of the power to tax (citing Art. X, Sec. 5, Constitution), which cannot now be withdrawn by mere statute. By and large, however, the national legislature is still the principal of the local government units, which cannot defy its will or modify or violate it.[15] 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. Besides, 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.[16] To conclude our resolution of the first issue, respondent mayor of San Pedro, cannot avail

of Kapasiyahan Bilang 508, Taon 1995, of the Provincial Board of Laguna as justification to prohibit lotto in his municipality. For said resolution is nothing but an expression of the local legislative unit concerned. The Boards enactment, like spring water, could not rise above its source of power, the national legislature. As for the second issue, we hold that petitioners erred in declaring that Sections 2 (c) and 27 of Republic Act 7160, otherwise known as the Local Government Code of 1991, apply mandatorily in the setting up of lotto outlets around the country. These provisions state: Section 2. Declaration of Policy. x x x (c) It is likewise the policy of the State to require all national agencies and offices to conduct periodic consultations with appropriate local government units, non-governmental and peoples organizations, and other concerned sectors of the community before any project or program is implemented in their respective jurisdictions. Section 27. Prior Consultations Required. No project or program shall be implemented by government authorities unless the consultations mentioned in Section 2 (c) and 26 hereof are complied with, and prior approval of the sanggunian concerned is obtained; Provided, that occupants in areas where such projects are to be implemented shall not be evicted unless appropriate relocation sites have been provided, in accordance with the provisions of the Constitution. From a careful reading of said provisions, we find that these apply only to national programs and/or projects which are to be implemented in a particular local community. Lotto is neither a program nor a project of the national government, but of a charitable institution, the PCSO. Though sanctioned by the national government, it is far fetched to say that lotto falls within the contemplation of Sections 2 (c) and 27 of the Local Government Code. Section 27 of the Code should be read in conjunction with Section 26 thereof.[17] Section 26 reads: Section 26. Duty of National Government Agencies in the Maintenance of Ecological Balance. It shall be the duty of every national agency or government-owned or controlled corporation authorizing or involved in the planning and implementation of any project or program that may cause pollution, climatic change, depletion of non-renewable resources, loss of crop land, rangeland, or forest cover, and extinction of animal or plant species, to consult with the local government units, nongovernmental organizations, and other sectors concerned and explain the goals and objectives of the project or program, its impact upon the people and the community in terms of environmental or ecological balance, and the measures that will be undertaken to prevent or minimize the adverse effects thereof. Thus, the projects and programs mentioned in Section 27 should be interpreted to mean projects and programs whose effects are among those enumerated in Section 26 and 27, to wit, those that: (1) may cause pollution; (2) may bring about climatic change; (3) may cause the depletion of non-renewable resources; (4) may result in loss of crop land, range-land, or forest cover; (5) may eradicate certain animal or plant species from the face of the planet; and (6) other projects or programs that may call for the eviction of a particular group of people residing in the locality where these will be implemented. Obviously, none of these effects will be produced by

the introduction of lotto in the province of Laguna. Moreover, the argument regarding lack of consultation raised by petitioners is clearly an afterthought on their part. There is no indication in the letter of Mayor Cataquiz that this was one of the reasons for his refusal to issue a permit. That refusal was predicated solely but erroneously on the provisions of Kapasiyahan Blg. 508, Taon 1995, of the Sangguniang Panlalawigan of Laguna. In sum, we find no reversible error in the RTC decision enjoining Mayor Cataquiz from enforcing or implementing the Kapasiyahan Blg. 508, T. 1995, of the Sangguniang Panlalawigan of Laguna. That resolution expresses merely a policy statement of the Laguna provincial board. It possesses no binding legal force nor requires any act of implementation. It provides no sufficient legal basis for respondent mayors refusal to issue the permit sought by private respondent in connection with a legitimate business activity authorized by a law passed by Congress. WHEREFORE, the petition is DENIED for lack of merit. The Order of the Regional Trial Court of San Pedro, Laguna enjoining the petitioners from implementing or enforcing Resolution or Kapasiyahan Blg. 508, T. 1995, of the Provincial Board of Laguna is hereby AFFIRMED. No costs. SO ORDERED.

G.R. No. L-7708

May 30, 1955

JOSE MONDANO, petitioner, vs.FERNANDO SILVOSA, Provincial Governor of Surigao, JOSE ARREZA and OLIMPIO EPIS, Members of the Provincial Board, respondents. PADILLA, J.: The petitioner is the duly elected and qualified mayor of the municipality of Mainit, province of Surigao. On 27 February 1954 Consolacion Vda. de Mosende filed a sworn complaint with the Presidential Complaints and Action Committee accusing him of (1) rape committed on her daughter Caridad Mosende; and (2) concubinage for cohabiting with her daughter in a place other

than the conjugal dwelling. On 6 March the Assistant Executive Secretary indorsed the complaint to the respondent provincial governor for immediate investigation, appropriate action and report. On 10 April the petitioner appeared before the provincial governor in obedience to his summons and was served with a copy of the complaint filed by the provincial governor with provincial board. On the same day, the provincial governor issued Administrative Order No. 8 suspending the petitioner from office. Thereafter, the Provincial Board proceeded to hear the charges preferred against the petitioner over his objection. The petitioner prays for a writ of prohibition with preliminary injunction to enjoin the respondents from further proceeding with the hearing of the administrative case against him and for a declaration that the order of suspension issued by the respondent provincial governor is illegal and without legal effect. On 4 May 1954 the writ of preliminary injunction prayed for was issued after filing and approval of a bond for P500. The answer of the respondents admits the facts alleged in the petition except those that are inferences and conclusions of law and invokes the provisions of section 79 (c)of the Revised Administrative Code which clothes the department head with "direct control, direction, and supervision over all bureaus and offices under his jurisdiction . . ." and to that end "may order the investigation of any act or conduct of any person in the service of any bureau or office under his Department and in connection therewith may appoint a committee or designate an official or person who shall conduct such investigations; . . ."and the rule in the case of Villena vs. Secretary of Interior, 67 Phil. 452, which upheld "the power of the Secretary of Interior to conduct at its own initiative investigation of charges against local elective municipal officials and to suspend them preventively," on the board proposition "that under the presidential type of government which we have adopted and considering the departmental organization established and continued in force by paragraph 1, section 11, Article VII, of our Constitution, all executive and administrative organizations are adjuncts of the Executive Departments, the heads of the various executive departments are assistants and agents of the Chief Executive." The executive departments of the Government of the Philippines created and organized before the approval of the Constitution continued to exist as "authorized by law until the Congress shall provide otherwise."1 Section 10, paragraph 1, Article VII, of the Constitution provides: "The President shall have control of all the executive departments, bureaus, or offices, exercise general supervision over all local governments as may be provided by law, and take care that the laws be faithfully executed." Under this constitutional provision the President has been invested with the power of control of all the executive departments, bureaus, or offices, but not of all local governments over which he has been granted only the power of general supervision as may be provided by law. The Department head as agent of the President has direct control and supervision over all bureaus and offices under his jurisdiction as provided for in section 79 (c) of the Revised Administrative Code, but he does not have the same control of local governments as that exercised by him over bureaus and offices under his jurisdiction. Likewise, his authority to order the investigation of any act or conduct of any person in the service of any bureau or office under his department is confined to bureaus or offices under his jurisdiction and does not extend to local governments over which, as already stated, the President exercises only general supervision as may be provided by law. If the provisions of section 79 (c) of the Revised

Administrative Code are to be construed as conferring upon the corresponding department head direct control, direction, and supervision over all local governments and that for the reason he may order the investigation of an official of a local government for malfeasance in office, such interpretation would be contrary to the provisions of paragraph 1, section 10, Article VII, of the Constitution. If "general supervision over all local governments" is to be construedas the same power granted to the Department Head in section 79 (c) of the Revised Administrative Code, then there would no longer be a distinction or difference between the power of control and that of supervision. 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 had done in the performance of his duties and to substitute the judgment of the former for that of the latter. Such is the import of the provisions of section 79 (c) of the Revised Administrative Code and 37 of Act No. 4007. The Congress has expressly and specifically lodged the provincial supervision over municipal officials in the provincial governor who is authorized to "receive and investigate complaints made under oath against municipal officers for neglect of duty, oppression, corruption or other form of maladministration of office, and conviction by final judgment of any crime involving moral turpitude."2 And if the charges are serious, "he shall submit written charges touching the matter to the provincial board, furnishing a copy of such charges to the accused either personally or by registered mail, and he may in such case suspend the officer (not being the municipal treasurer) pending action by the board, if in his opinion the charge be one affecting the official integrity of the officer in question." 3 Section 86 of the Revised Administrative Code adds nothing to the power of supervision to be exercised by the Department Head over the administration of . . . municipalities . . .. If it be construed that it does and such additional power is the same authority as that vested in the Department Head by section 79 (c) of the Revised Administrative Code, then such additional power must be deemed to have been abrogated by section 10 (1), Article VII, of the Constitution. In Lacson vs. Roque, 49 Off. Gaz. 93, this Court held that the power of the President to remove officials from office as provided for in section 64 (b) of the Revised Administrative Code must be done "conformably to law;" and only for disloyalty to the Republic of the Philippines he "may at any time remove a person from any position of trust or authority under the Government of the (Philippine Islands) Philippines." Again, this power of removal must be exercised conformably to law. In the indorsement to the provincial governor the Assistant Executive Secretary requested immediate investigation, appropriate action and report on the complaint indorsed to him, and called his attention to section 2193 of the Revised Administrative Code which provides for the institution of judicial proceedings by the provincial fiscal upon direction of the provincial governor. If the indorsement of the Assistant Executive Secretary be taken as a designation of the provincial governor to investigate the petitioner, then he would only be acting as agent of the Executive, but the investigation to be conducted by him would not be that which is provided for in sections 2188, 2189 and 2190 of the Revised Administrative Code. The charges preferred against the respondent are not malfeasances or any of those enumerated or specified in section 2188 of the Revised Administrative Code, because rape and concubinage have nothing to do with the performance of his duties as mayor nor do they constitute or involve" neglect of duty, oppression, corruption or any other form of maladministration of office." True, they may involve moral turpitude, but before

the provincial governor and board may act and proceed in accordance with the provisions of the Revised Administrative Code referred to, a conviction by final judgment must precede the filing by the provincial governor of charges and trial by the provincial board. Even the provincial fiscal cannot file an information for rape without a sworn complaint of the offended party who is 28 years of age and the crime of concubinage cannot be prosecuted but upon sworn complaint of the offended spouse.4 The charges preferred against the petitioner, municipal mayor of Mainit, province of Surigao, not being those or any of those specified in section 2188 of the Revised Administrative Code, the investigation of such charges by the provincial board is unauthorized and illegal. The suspension of the petitioner as mayor of the municipality of Mainit is, consequently, unlawful and without authority of law.

G.R. No. 112497 August 4, 1994 HON. FRANKLIN M. DRILON, in his capacity as SECRETARY OF JUSTICE, Petitioner, vs. MAYOR ALFREDO S. LIM, VICE-MAYOR JOSE L. ATIENZA, CITY TREASURER ANTHONY ACEVEDO, SANGGUNIANG PANGLUNSOD AND THE CITY OF MANILA, Respondents. CRUZ, J.: The principal issue in this case is the constitutionality of Section 187 of the Local Government Code reading as follows: Procedure For Approval And Effectivity Of Tax Ordinances And Revenue Measures; Mandatory Public Hearings. - The procedure for approval of local tax ordinances and revenue measures shall be in accordance with the provisions of this Code: Provided, That public hearings shall be conducted for the purpose prior to the enactment thereof; Provided, further, That any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal

within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the date of receipt of the appeal: Provided, however, That such appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax, fee, or charge levied therein: Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings with a court of competent jurisdiction. Pursuant thereto, the Secretary of Justice had, on appeal to him of four oil companies and a taxpayer, declared Ordinance No. 7794, otherwise known as the Manila Revenue Code, null and void for non-compliance with the prescribed procedure in the enactment of tax ordinances and for containing certain provisions contrary to law and public policy. 1 virtual law library In a petition for certiorari filed by the City of Manila, the Regional Trial Court of Manila revoked the Secretary's resolution and sustained the ordinance, holding inter alia that the procedural requirements had been observed. More importantly, it declared Section 187 of the Local Government Code as unconstitutional because of its vesture in the Secretary of Justice of the power of control over local governments in violation of the policy of local autonomy mandated in the Constitution and of the specific provision therein conferring on the President of the Philippines only the power of supervision over local governments. 2 virtual law library The present petition would have us reverse that decision. The Secretary argues that the annulled Section 187 is constitutional and that the procedural requirements for the enactment of tax ordinances as specified in the Local Government Code had indeed not been observed.virtualawlibrary virtual law library Parenthetically, this petition was originally dismissed by the Court for non-compliance with Circular 1-88, the Solicitor General having failed to submit a certified true copy of the challenged decision. 3 However, on motion for reconsideration with the required certified true copy of the decision attached, the petition was reinstated in view of the importance of the issues raised therein.virtualawlibrary virtual law library We stress at the outset that the lower court had jurisdiction to consider the constitutionality of Section 187, this authority being embraced in the general definition of the judicial power to determine what are the valid and binding laws by the criterion of their conformity to the fundamental law. Specifically, BP 129 vests in the regional trial courts jurisdiction over all civil cases in which the subject of the litigation is incapable of pecuniary estimation, 4 even as the accused in a criminal action has the right to question in his defense the constitutionality of a law he is charged with violating and of the proceedings taken against him, particularly as they contravene the Bill of Rights. Moreover, Article X, Section 5(2), of the Constitution vests in the Supreme Court appellate jurisdiction over final judgments and orders of lower courts in all cases in which the constitutionality or validity of any treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in question.virtualawlibrary virtual law library In the exercise of this jurisdiction, lower courts are advised to act with the utmost circumspection, bearing in mind the consequences of a declaration of unconstitutionality upon the stability of laws, no less than on the doctrine of separation of powers. As the questioned act is usually the

handiwork of the legislative or the executive departments, or both, it will be prudent for such courts, if only out of a becoming modesty, to defer to the higher judgment of this Court in the consideration of its validity, which is better determined after a thorough deliberation by a collegiate body and with the concurrence of the majority of those who participated in its discussion. 5 virtual law library It is also emphasized that every court, including this Court, is charged with the duty of a purposeful hesitation before declaring a law unconstitutional, on the theory that the measure was first carefully studied by the executive and the legislative departments and determined by them to be in accordance with the fundamental law before it was finally approved. To doubt is to sustain. The presumption of constitutionality can be overcome only by the clearest showing that there was indeed an infraction of the Constitution, and only when such a conclusion is reached by the required majority may the Court pronounce, in the discharge of the duty it cannot escape, that the challenged act must be struck down.virtualawlibrary virtual law library In the case before us, Judge Rodolfo C. Palattao declared Section 187 of the Local Government Code unconstitutional insofar as it empowered the Secretary of Justice to review tax ordinances and, inferentially, to annul them. He cited the familiar distinction between control and supervision, the first being "the power of an officer to alter or modify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former for the latter," while the second is "the power of a superior officer to see to it that lower officers perform their functions in accordance with law." 6 His conclusion was that the challenged section gave to the Secretary the power of control and not of supervision only as vested by the Constitution in the President of the Philippines. This was, in his view, a violation not only of Article X, specifically Section 4 thereof, 7 and of Section 5 on the taxing powers of local governments, 8 and the policy of local autonomy in general.virtualawlibrary virtual law library We do not share that view. The lower provision.virtualawlibrary virtual law library court was rather hasty in invalidating the

Section 187 authorizes the Secretary of Justice to review only the constitutionality or legality of the tax ordinance and, if warranted, to revoke it on either or both of these grounds. When he alters or modifies or sets aside a tax ordinance, he is not also permitted to substitute his own judgment for the judgment of the local government that enacted the measure. Secretary Drilon did set aside the Manila Revenue Code, but he did not replace it with his own version of what the Code should be. He did not pronounce the ordinance unwise or unreasonable as a basis for its annulment. He did not say that in his judgment it was a bad law. What he found only was that it was illegal. All he did in reviewing the said measure was determine if the petitioners were performing their functions in accordance with law, that is, with the prescribed procedure for the enactment of tax ordinances and the grant of powers to the city government under the Local Government Code. As we see it, that was an act not of control but of mere supervision.virtualawlibrary virtual law library An officer in control lays down the rules in the doing of an act. If they are not followed, he may, in his discretion, order the act undone or re-done by his subordinate or he may even decide to do it himself. Supervision does not cover such authority. The supervisor or superintendent merely sees to it that the rules are followed, but he himself does not lay down such rules, nor does he have the discretion to modify or replace them. If the rules are not observed, he may order the work

done or re-done but only to conform to the prescribed rules. He may not prescribe his own manner for the doing of the act. He has no judgment on this matter except to see to it that the rules are followed. In the opinion of the Court, Secretary Drilon did precisely this, and no more nor less than this, and so performed an act not of control but of mere supervision.virtualawlibrary virtual law library The case of Taule v. Santos 9 cited in the decision has no application here because the jurisdiction claimed by the Secretary of Local Governments over election contests in the Katipunan ng Mga Barangay was held to belong to the Commission on Elections by constitutional provision. The conflict was over jurisdiction, not supervision or control.virtualawlibrary virtual law library Significantly, a rule similar to Section 187 appeared in the Local Autonomy Act, which provided in its Section 2 as follows: A tax ordinance shall go into effect on the fifteenth day after its passage, unless the ordinance shall provide otherwise: Provided, however, That the Secretary of Finance shall have authority to suspend the effectivity of any ordinance within one hundred and twenty days after receipt by him of a copy thereof, if, in his opinion, the tax or fee therein levied or imposed is unjust, excessive, oppressive, or confiscatory, or when it is contrary to declared national economy policy, and when the said Secretary exercises this authority the effectivity of such ordinance shall be suspended, either in part or as a whole, for a period of thirty days within which period the local legislative body may either modify the tax ordinance to meet the objections thereto, or file an appeal with a court of competent jurisdiction; otherwise, the tax ordinance or the part or parts thereof declared suspended, shall be considered as revoked. Thereafter, the local legislative body may not reimpose the same tax or fee until such time as the grounds for the suspension thereof shall have ceased to exist. That section allowed the Secretary of Finance to suspend the effectivity of a tax ordinance if, in his opinion, the tax or fee levied was unjust, excessive, oppressive or confiscatory. Determination of these flaws would involve the exercise of judgment or discretion and not merely an examination of whether or not the requirements or limitations of the law had been observed; hence, it would smack of control rather than mere supervision. That power was never questioned before this Court but, at any rate, the Secretary of Justice is not given the same latitude under Section 187. All he is permitted to do is ascertain the constitutionality or legality of the tax measure, without the right to declare that, in his opinion, it is unjust, excessive, oppressive or confiscatory. He has no discretion on this matter. In fact, Secretary Drilon set aside the Manila Revenue Code only on two grounds, to with, the inclusion therein of certain ultra vires provisions and non-compliance with the prescribed procedure in its enactment. These grounds affected the legality, not the wisdom or reasonableness, of the tax measure.virtualawlibrary virtual law library The issue of non-compliance with the prescribed procedure in the enactment of the Manila Revenue Code is another matter.virtualawlibrary virtual law library In his resolution, Secretary Drilon declared that there were no written notices of public hearings on the proposed Manila Revenue Code that were sent to interested parties as required by Art. 276(b) of the Implementing Rules of the Local Government Code nor were copies of the proposed ordinance published in three successive issues of a newspaper of general circulation pursuant to Art. 276(a). No minutes were submitted to show that the obligatory public hearings had been

held. Neither were copies of the measure as approved posted in prominent places in the city in accordance with Sec. 511(a) of the Local Government Code. Finally, the Manila Revenue Code was not translated into Pilipino or Tagalog and disseminated among the people for their information and guidance, conformably to Sec. 59(b) of the Code.virtualawlibrary virtual law library Judge Palattao found otherwise. He declared that all the procedural requirements had been observed in the enactment of the Manila Revenue Code and that the City of Manila had not been able to prove such compliance before the Secretary only because he had given it only five days within which to gather and present to him all the evidence (consisting of 25 exhibits) later submitted to the trial court.virtualawlibrary virtual law library To get to the bottom of this question, the Court acceded to the motion of the respondents and called for the elevation to it of the said exhibits. We have carefully examined every one of these exhibits and agree with the trial court that the procedural requirements have indeed been observed. Notices of the public hearings were sent to interested parties as evidenced by Exhibits G-1 to 17. The minutes of the hearings are found in Exhibits M, M-1, M-2, and M-3. Exhibits B and C show that the proposed ordinances were published in the Balita and the Manila Standard on April 21 and 25, 1993, respectively, and the approved ordinance was published in the July 3, 4, 5, 1993 issues of the Manila Standard and in the July 6, 1993 issue of Balita, as shown by Exhibits Q, Q-1, Q-2, and Q-3.virtualawlibrary virtual law library The only exceptions are the posting of the ordinance as approved but this omission does not affect its validity, considering that its publication in three successive issues of a newspaper of general circulation will satisfy due process. It has also not been shown that the text of the ordinance has been translated and disseminated, but this requirement applies to the approval of local development plans and public investment programs of the local government unit and not to tax ordinances.virtualawlibrary virtual law library We make no ruling on the substantive provisions of the Manila Revenue Code as their validity has not been raised in issue in the present petition.virtualawlibrary virtual law library WHEREFORE, the judgment is hereby rendered REVERSING the challenged decision of the Regional Trial Court insofar as it declared Section 187 of the Local Government Code unconstitutional but AFFIRMING its finding that the procedural requirements in the enactment of the Manila Revenue Code have been observed. No pronouncement as to costs.virtualawlibrary virtual law library SO ORDERED.

[G.R. No. 152774. May 27, 2004] THE PROVINCE OF BATANGAS, represented by its Governor, HERMILANDO I. MANDANAS, petitioner, vs. HON. ALBERTO G. ROMULO, Executive Secretary and Chairman of the Oversight Committee on Devolution; HON. EMILIA BONCODIN, Secretary, Department of Budget and Management; HON. JOSE D. LINA, JR., Secretary, Department of Interior and Local Government, respondents.

DECISION CALLEJO, SR., J.: The Province of Batangas, represented by its Governor, Hermilando I. Mandanas, filed the present petition for certiorari, prohibition and mandamus under Rule 65 of the Rules of Court, as amended, to declare as unconstitutional and void certain provisos contained in the General Appropriations Acts (GAA) of 1999, 2000 and 2001, insofar as they uniformly earmarked for each corresponding year the amount of five billion pesos (P5,000,000,000.00) of the Internal Revenue Allotment (IRA) for the Local Government Service Equalization Fund (LGSEF) and imposed

conditions for the release thereof. Named as respondents are Executive Secretary Alberto G. Romulo, in his capacity as Chairman of the Oversight Committee on Devolution, Secretary Emilia Boncodin of the Department of Budget and Management (DBM) and Secretary Jose Lina of the Department of Interior and Local Government (DILG). Background On December 7, 1998, then President Joseph Ejercito Estrada issued Executive Order (E.O.) No. 48 entitled ESTABLISHING A PROGRAM FOR DEVOLUTION ADJUSTMENT AND EQUALIZATION. The program was established to facilitate the process of enhancing the capacities of local government units (LGUs) in the discharge of the functions and services devolved to them by the National Government Agencies concerned pursuant to the Local Government Code.[1] The Oversight Committee (referred to as the Devolution Committee in E.O. No. 48) constituted under Section 533(b) of Republic Act No. 7160 (The Local Government Code of 1991) has been tasked to formulate and issue the appropriate rules and regulations necessary for its effective implementation.[2] Further, to address the funding shortfalls of functions and services devolved to the LGUs and other funding requirements of the program, the Devolution Adjustment and Equalization Fund was created.[3] For 1998, the DBM was directed to set aside an amount to be determined by the Oversight Committee based on the devolution status appraisal surveys undertaken by the DILG.[4] The initial fund was to be sourced from the available savings of the national government for CY 1998.[5] For 1999 and the succeeding years, the corresponding amount required to sustain the program was to be incorporated in the annual GAA.[6] The Oversight Committee has been authorized to issue the implementing rules and regulations governing the equitable allocation and distribution of said fund to the LGUs.[7] The LGSEF in the GAA of 1999 In Republic Act No. 8745, otherwise known as the GAA of 1999, the program was renamed as the LOCAL GOVERNMENT SERVICE EQUALIZATION FUND (LGSEF). Under said appropriations law, the amount of P96,780,000,000 was allotted as the share of the LGUs in the internal revenue taxes. Item No. 1, Special Provisions, Title XXXVI A. Internal Revenue Allotment of Rep. Act No. 8745 contained the following proviso: ... PROVIDED, That the amount of FIVE BILLION PESOS (P5,000,000,000) shall be earmarked for the Local Government Service Equalization Fund for the funding requirements of projects and activities arising from the full and efficient implementation of devolved functions and services of local government units pursuant to R.A. No. 7160, otherwise known as the Local Government Code of 1991: PROVIDED, FURTHER, That such amount shall be released to the local government units subject to the implementing rules and regulations, including such mechanisms and guidelines for the equitable allocations and distribution of said fund among local government units subject to the guidelines that may be prescribed by the Oversight Committee on Devolution as constituted pursuant to Book IV, Title III, Section 533(b) of R.A. No. 7160. The Internal Revenue Allotment shall be released directly by the Department of Budget and Management to the Local Government Units concerned. On July 28, 1999, the Oversight Committee (with then Executive Secretary Ronaldo B.

Zamora as Chairman) passed Resolution Nos. OCD-99-003, OCD-99-005 and OCD-99-006 entitled as follows: OCD-99-005 RESOLUTION ADOPTING THE ALLOCATION SCHEME FOR THE PhP5 BILLION CY 1999 LOCAL GOVERNMENT SERVICE EQUALIZATION FUND (LGSEF) AND REQUESTING HIS EXCELLENCY PRESIDENT JOSEPH EJERCITO ESTRADA TO APPROVE SAID ALLOCATION SCHEME. OCD-99-006 RESOLUTION ADOPTING THE ALLOCATION SCHEME FOR THE PhP4.0 BILLION OF THE 1999 LOCAL GOVERNMENT SERVICE EQUALIZATION FUND AND ITS CONCOMITANT GENERAL FRAMEWORK, IMPLEMENTING GUIDELINES AND MECHANICS FOR ITS IMPLEMENTATION AND RELEASE, AS PROMULGATED BY THE OVERSIGHT COMMITTEE ON DEVOLUTION. OCD-99-003 RESOLUTION REQUESTING HIS EXCELLENCY PRESIDENT JOSEPH EJERCITO ESTRADA TO APPROVE THE REQUEST OF THE OVERSIGHT COMMITTEE ON DEVOLUTION TO SET ASIDE TWENTY PERCENT (20%) OF THE LOCAL GOVERNMENT SERVICE EQUALIZATION FUND (LGSEF) FOR LOCAL AFFIRMATIVE ACTION PROJECTS AND OTHER PRIORITY INITIATIVES FOR LGUs INSTITUTIONAL AND CAPABILITY BUILDING IN ACCORDANCE WITH THE IMPLEMENTING GUIDELINES AND MECHANICS AS PROMULGATED BY THE COMMITTEE. These OCD resolutions were approved by then President Estrada on October 6, 1999. Under the allocation scheme adopted pursuant to Resolution No. OCD-99-005, the five billion pesos LGSEF was to be allocated as follows: 1. The PhP4 Billion of the LGSEF shall be allocated in accordance with the allocation scheme and implementing guidelines and mechanics promulgated and adopted by the OCD. To wit: a. The first PhP2 Billion of the LGSEF shall be allocated in accordance with the codal formula sharing scheme as prescribed under the 1991 Local Government Code; b. The second PhP2 Billion of the LGSEF shall be allocated in accordance with a modified 1992 cost of devolution fund (CODEF) sharing scheme, as recommended by the respective leagues of provinces, cities and municipalities to the OCD. The modified CODEF sharing formula is as follows: Province : 40% : 20%

Cities

Municipalities

40%

g. peace and order and public safety; h. construction, repair and maintenance of public works and infrastructure, including public buildings and facilities for public use, especially those destroyed or damaged by manmade or natural calamities and disaster as well as facilities for water supply, flood control and river dikes;

This is applied to the P2 Billion after the approved amounts granted to individual provinces, cities and municipalities as assistance to cover decrease in 1999 IRA share due to reduction in land area have been taken out. 2. The remaining PhP1 Billion of the LGSEF shall be earmarked to support local affirmative action projects and other priority initiatives submitted by LGUs to the Oversight Committee on Devolution for approval in accordance with its prescribed guidelines as promulgated and adopted by the OCD.

i. provision of local electrification facilities; j. livelihood and food production services, facilities and equipment; k. other projects that may be authorized by the OCD consistent with the aforementioned objectives and guidelines; 4. Except on extremely meritorious cases, as may be determined by the Oversight Committee on Devolution, this portion of the LGSEF shall not be used in expenditures for personal costs or benefits under existing laws applicable to governments. Generally, this fund shall cover the following objects of expenditures for programs, projects and activities arising from the implementation of devolved and regular functions and services: a. acquisition/procurement of supplies and materials critical to the full and effective implementation of devolved programs, projects and activities; b. repair and/or improvement of facilities; c. repair and/or upgrading of equipment; d. acquisition of basic equipment; e. construction of additional or new facilities; f. counterpart contribution to joint arrangements or collective projects among groups of municipalities, cities and/or provinces related to devolution and delivery of basic services. 5. To be eligible for funding, an LGU or group of LGU shall submit to the Oversight Committee on Devolution through the Department of Interior and Local Governments, within the prescribed schedule and timeframe, a Letter Request for Funding Support from the Affirmative Action Program under the LGSEF, duly signed by the concerned LGU(s) and endorsed by cooperators and/or beneficiaries, as well as the duly signed Resolution of Endorsement by the respective Sanggunian(s) of the LGUs concerned. The LGU-proponent shall also be required to submit the Project Request (PR), using OCD Project Request Form No. 99-02, that details the following: (a) general description or brief of the project;

In Resolution No. OCD-99-003, the Oversight Committee set aside the one billion pesos or 20% of the LGSEF to support Local Affirmative Action Projects (LAAPs) of LGUs. This remaining amount was intended to respond to the urgent need for additional funds assistance, otherwise not available within the parameters of other existing fund sources. For LGUs to be eligible for funding under the one-billion-peso portion of the LGSEF, the OCD promulgated the following: III. CRITERIA FOR ELIGIBILITY: 1. LGUs (province, city, municipality, or barangay), individually or by group or multi-LGUs or leagues of LGUs, especially those belonging to the 5th and 6th class, may access the fund to support any projects or activities that satisfy any of the aforecited purposes. A barangay may also access this fund directly or through their respective municipality or city. 2. The proposed project/activity should be need-based, a local priority, with high development impact and are congruent with the socio-cultural, economic and development agenda of the Estrada Administration, such as food security, poverty alleviation, electrification, and peace and order, among others. 3. Eligible for funding under this fund are projects arising from, but not limited to, the following areas of concern: a. delivery of local health and sanitation services, hospital services and other tertiary services; b. delivery of social welfare services; c. provision of socio-cultural services and facilities for youth and community development; d. provision of agricultural and on-site related research; e. improvement of community-based forestry projects and other local projects on environment and natural resources protection and conservation; f. improvement of tourism facilities and promotion of tourism;

(b) objectives and justifications for undertaking the project, which should highlight the benefits to the locality and the expected impact to the local program/project arising from the full and efficient implementation of social services and facilities, at the local levels; (c) target outputs or key result areas; (d) schedule of activities and details of requirements; (e) total cost requirement of the project; (f) proponents counterpart funding share, if any, and identified source(s) of counterpart funds for the full implementation of the project; (g) requested amount of project cost to be covered by the LGSEF. Further, under the guidelines formulated by the Oversight Committee as contained in Attachment - Resolution No. OCD-99-003, the LGUs were required to identify the projects eligible for funding under the one-billion-peso portion of the LGSEF and submit the project proposals thereof and other documentary requirements to the DILG for appraisal. The project proposals that passed the DILGs appraisal would then be submitted to the Oversight Committee for review, evaluation and approval. Upon its approval, the Oversight Committee would then serve notice to the DBM for the preparation of the Special Allotment Release Order (SARO) and Notice of Cash Allocation (NCA) to effect the release of funds to the said LGUs. The LGSEF in the GAA of 2000 Under Rep. Act No. 8760, otherwise known as the GAA of 2000, the amount of P111,778,000,000 was allotted as the share of the LGUs in the internal revenue taxes. As in the GAA of 1999, the GAA of 2000 contained a proviso earmarking five billion pesos of the IRA for the LGSEF. This proviso, found in Item No. 1, Special Provisions, Title XXXVII A. Internal Revenue Allotment, was similarly worded as that contained in the GAA of 1999. The Oversight Committee, in its Resolution No. OCD-2000-023 dated June 22, 2000, adopted the following allocation scheme governing the five billion pesos LGSEF for 2000: 1. The PhP3.5 Billion of the CY 2000 LGSEF shall be allocated to and shared by the four levels of LGUs, i.e., provinces, cities, municipalities, and barangays, using the following percentage-sharing formula agreed upon and jointly endorsed by the various Leagues of LGUs: For 910,000,000 Provinces 26% or P

Provided that the respective Leagues representing the provinces, cities, municipalities and barangays shall draw up and adopt the horizontal distribution/sharing schemes among the member LGUs whereby the Leagues concerned may opt to adopt direct financial assistance or project-based arrangement, such that the LGSEF allocation for individual LGU shall be released directly to the LGU concerned; Provided further that the individual LGSEF shares to LGUs are used in accordance with the general purposes and guidelines promulgated by the OCD for the implementation of the LGSEF at the local levels pursuant to Res. No. OCD-99-006 dated October 7, 1999 and pursuant to the Leagues guidelines and mechanism as approved by the OCD; Provided further that each of the Leagues shall submit to the OCD for its approval their respective allocation scheme, the list of LGUs with the corresponding LGSEF shares and the corresponding project categories if project-based; Provided further that upon approval by the OCD, the lists of LGUs shall be endorsed to the DBM as the basis for the preparation of the corresponding NCAs, SAROs, and related budget/release documents. 2. The remaining P1,500,000,000 of the CY 2000 LGSEF shall be earmarked to support the following initiatives and local affirmative action projects, to be endorsed to and approved by the Oversight Committee on Devolution in accordance with the OCD agreements, guidelines, procedures and documentary requirements: On July 5, 2000, then President Estrada issued a Memorandum authorizing then Executive Secretary Zamora and the DBM to implement and release the 2.5 billion pesos LGSEF for 2000 in accordance with Resolution No. OCD-2000-023. Thereafter, the Oversight Committee, now under the administration of President Gloria Macapagal-Arroyo, promulgated Resolution No. OCD-2001-29 entitled ADOPTING RESOLUTION NO. OCD-2000-023 IN THE ALLOCATION, IMPLEMENTATION AND RELEASE OF THE REMAINING P2.5 BILLION LGSEF FOR CY 2000. Under this resolution, the amount of one billion pesos of the LGSEF was to be released in accordance with paragraph 1 of Resolution No. OCD-2000-23, to complete the 3.5 billion pesos allocated to the LGUs, while the amount of 1.5 billion pesos was allocated for the LAAP. However, out of the latter amount, P400,000,000 was to be allocated and released as follows: P50,000,000 as financial assistance to the LAAPs of LGUs; P275,360,227 as financial assistance to cover the decrease in the IRA of LGUs concerned due to reduction in land area; and P74,639,773 for the LGSEF Capability-Building Fund. The LGSEF in the GAA of 2001 In view of the failure of Congress to enact the general appropriations law for 2001, the GAA of 2000 was deemed re-enacted, together with the IRA of the LGUs therein and the proviso earmarking five billion pesos thereof for the LGSEF.

For Cities 23% or 805,000,000 For Municipalities 35% or 1,225,000,000 For Barangays 16% or 560,000,000

On January 9, 2002, the Oversight Committee adopted Resolution No. OCD-2002-001 allocating the five billion pesos LGSEF for 2001 as follows: Modified Codal Formula Priority Projects Capability Building Fund P 5.000 billion RESOLVED FURTHER, that the P3.0 B of the CY 2001 LGSEF which is to be allocated according to the modified codal formula shall be released to the four levels of LGUs, i.e., provinces, cities, municipalities and barangays, as follows: LGUs Provinces Cities 25 35 15 100 Percentage 25 Amount P 0.750 billion 0.750 1.050 0.450 P 3.000 billion P 3.000 billion 1.900 billion .100 billion

billion pesos of the IRA of the LGUs for 1999, 2000 and 2001 for the LGSEF and imposed conditions for the release thereof, violate the Constitution and the Local Government Code of 1991. Section 6, Article X of the Constitution is invoked as it mandates that the just share of the LGUs shall be automatically released to them. Sections 18 and 286 of the Local Government Code of 1991, which enjoin that the just share of the LGUs shall be automatically and directly released to them without need of further action are, likewise, cited. The petitioner posits that to subject the distribution and release of the five-billion-peso portion of the IRA, classified as the LGSEF, to compliance by the LGUs with the implementing rules and regulations, including the mechanisms and guidelines prescribed by the Oversight Committee, contravenes the explicit directive of the Constitution that the LGUs share in the national taxes shall be automatically released to them. The petitioner maintains that the use of the word shall must be given a compulsory meaning. To further buttress this argument, the petitioner contends that to vest the Oversight Committee with the authority to determine the distribution and release of the LGSEF, which is a part of the IRA of the LGUs, is an anathema to the principle of local autonomy as embodied in the Constitution and the Local Government Code of 1991. The petitioner cites as an example the experience in 2001 when the release of the LGSEF was long delayed because the Oversight Committee was not able to convene that year and no guidelines were issued therefor. Further, the possible disapproval by the Oversight Committee of the project proposals of the LGUs would result in the diminution of the latters share in the IRA. Another infringement alleged to be occasioned by the assailed OCD resolutions is the improper amendment to Section 285 of the Local Government Code of 1991 on the percentage sharing of the IRA among the LGUs. Said provision allocates the IRA as follows: Provinces 23%; Cities 23%; Municipalities 34%; and Barangays 20%.[8] This formula has been improperly amended or modified, with respect to the five-billion-peso portion of the IRA allotted for the LGSEF, by the assailed OCD resolutions as they invariably provided for a different sharing scheme. The modifications allegedly constitute an illegal amendment by the executive branch of a substantive law. Moreover, the petitioner mentions that in the Letter dated December 5, 2001 of respondent Executive Secretary Romulo addressed to respondent Secretary Boncodin, the former endorsed to the latter the release of funds to certain LGUs from the LGSEF in accordance with the handwritten instructions of President Arroyo. Thus, the LGUs are at a loss as to how a portion of the LGSEF is actually allocated. Further, there are still portions of the LGSEF that, to date, have not been received by the petitioner; hence, resulting in damage and injury to the petitioner. The petitioner prays that the Court declare as unconstitutional and void the assailed provisos relating to the LGSEF in the GAAs of 1999, 2000 and 2001 and the assailed OCD resolutions (Resolutions Nos. OCD-99-003, OCD-99-005, OCD-99-006, OCD-2000-023, OCD-2001029 and OCD-2002-001) issued by the Oversight Committee pursuant thereto. The petitioner, likewise, prays that the Court direct the respondents to rectify the unlawful and illegal distribution and releases of the LGSEF for the aforementioned years and release the same in accordance with the sharing formula under Section 285 of the Local Government Code of 1991. Finally, the

Municipalities Barangays

RESOLVED FURTHER, that the P1.9 B earmarked for priority projects shall be distributed according to the following criteria: 1.0 For projects of the 4 , 5 and 6 class LGUs; or
th th th

2.0 Projects in consonance with the Presidents State of the Nation Address (SONA)/summit commitments. RESOLVED FURTHER, that the remaining P100 million LGSEF capability building fund shall be distributed in accordance with the recommendation of the Leagues of Provinces, Cities, Municipalities and Barangays, and approved by the OCD. Upon receipt of a copy of the above resolution, Gov. Mandanas wrote to the individual members of the Oversight Committee seeking the reconsideration of Resolution No. OCD-2002001. He also wrote to Pres. Macapagal-Arroyo urging her to disapprove said resolution as it violates the Constitution and the Local Government Code of 1991. On January 25, 2002, Pres. Macapagal-Arroyo approved Resolution No. OCD-2002-001. The Petitioners Case The petitioner now comes to this Court assailing as unconstitutional and void the provisos in the GAAs of 1999, 2000 and 2001, relating to the LGSEF. Similarly assailed are the Oversight Committees Resolutions Nos. OCD-99-003, OCD-99-005, OCD-99-006, OCD-2000-023, OCD-2001029 and OCD-2002-001 issued pursuant thereto. The petitioner submits that the assailed provisos in the GAAs and the OCD resolutions, insofar as they earmarked the amount of five

petitioner urges the Court to declare that the entire IRA should be released automatically without further action by the LGUs as required by the Constitution and the Local Government Code of 1991. The Respondents Arguments The respondents, through the Office of the Solicitor General, urge the Court to dismiss the petition on procedural and substantive grounds. On the latter, the respondents contend that the assailed provisos in the GAAs of 1999, 2000 and 2001 and the assailed resolutions issued by the Oversight Committee are not constitutionally infirm. The respondents advance the view that Section 6, Article X of the Constitution does not specify that the just share of the LGUs shall be determined solely by the Local Government Code of 1991. Moreover, the phrase as determined by law in the same constitutional provision means that there exists no limitation on the power of Congress to determine what is the just share of the LGUs in the national taxes. In other words, Congress is the arbiter of what should be the just share of the LGUs in the national taxes. The respondents further theorize that Section 285 of the Local Government Code of 1991, which provides for the percentage sharing of the IRA among the LGUs, was not intended to be a fixed determination of their just share in the national taxes. Congress may enact other laws, including appropriations laws such as the GAAs of 1999, 2000 and 2001, providing for a different sharing formula. Section 285 of the Local Government Code of 1991 was merely intended to be the default share of the LGUs to do away with the need to determine annually by law their just share. However, the LGUs have no vested right in a permanent or fixed percentage as Congress may increase or decrease the just share of the LGUs in accordance with what it believes is appropriate for their operation. There is nothing in the Constitution which prohibits Congress from making such determination through the appropriations laws. If the provisions of a particular statute, the GAA in this case, are within the constitutional power of the legislature to enact, they should be sustained whether the courts agree or not in the wisdom of their enactment. On procedural grounds, the respondents urge the Court to dismiss the petition outright as the same is defective. The petition allegedly raises factual issues which should be properly threshed out in the lower courts, not this Court, not being a trier of facts. Specifically, the petitioners allegation that there are portions of the LGSEF that it has not, to date, received, thereby causing it (the petitioner) injury and damage, is subject to proof and must be substantiated in the proper venue, i.e., the lower courts. Further, according to the respondents, the petition has already been rendered moot and academic as it no longer presents a justiciable controversy. The IRAs for the years 1999, 2000 and 2001, have already been released and the government is now operating under the 2003 budget. In support of this, the respondents submitted certifications issued by officers of the DBM attesting to the release of the allocation or shares of the petitioner in the LGSEF for 1999, 2000 and 2001. There is, therefore, nothing more to prohibit. Finally, the petitioner allegedly has no legal standing to bring the suit because it has not suffered any injury. In fact, the petitioners just share has even increased. Pursuant to Section 285 of the Local Government Code of 1991, the share of the provinces is 23%. OCD Nos. 99-005, 99-006 and 99-003 gave the provinces 40% of P2 billion of the LGSEF. OCD Nos. 2000-023 and 2001-029 apportioned 26% of P3.5 billion to the provinces. On the other hand, OCD No. 2001-001

allocated 25% of P3 billion to the provinces. Thus, the petitioner has not suffered any injury in the implementation of the assailed provisos in the GAAs of 1999, 2000 and 2001 and the OCD resolutions. The Ruling of the Court Procedural Issues Before resolving the petition on its merits, the Court shall first rule on the following procedural issues raised by the respondents: (1) whether the petitioner has legal standing or locus standi to file the present suit; (2) whether the petition involves factual questions that are properly cognizable by the lower courts; and (3) whether the issue had been rendered moot and academic. The petitioner has locus standi to maintain the present suit The gist of the question of standing is whether a party has alleged such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court so largely depends for illumination of difficult constitutional questions.[9] Accordingly, it has been held that the interest of a party assailing the constitutionality of a statute must be direct and personal. Such party must be able to show, not only that the law or any government act is invalid, but also that he has sustained or is in imminent danger of sustaining some direct injury as a result of its enforcement, and not merely that he suffers thereby in some indefinite way. It must appear that the person complaining has been or is about to be denied some right or privilege to which he is lawfully entitled or that he is about to be subjected to some burdens or penalties by reason of the statute or act complained of. [10] The Court holds that the petitioner possesses the requisite standing to maintain the present suit. The petitioner, a local government unit, seeks relief in order to protect or vindicate an interest of its own, and of the other LGUs. This interest pertains to the LGUs share in the national taxes or the IRA. The petitioners constitutional claim is, in substance, that the assailed provisos in the GAAs of 1999, 2000 and 2001, and the OCD resolutions contravene Section 6, Article X of the Constitution, mandating the automatic release to the LGUs of their share in the national taxes. Further, the injury that the petitioner claims to suffer is the diminution of its share in the IRA, as provided under Section 285 of the Local Government Code of 1991, occasioned by the implementation of the assailed measures. These allegations are sufficient to grant the petitioner standing to question the validity of the assailed provisos in the GAAs of 1999, 2000 and 2001, and the OCD resolutions as the petitioner clearly has a plain, direct and adequate interest in the manner and distribution of the IRA among the LGUs. The petition involves a significant legal issue The crux of the instant controversy is whether the assailed provisos contained in the GAAs of 1999, 2000 and 2001, and the OCD resolutions infringe the Constitution and the Local Government Code of 1991. This is undoubtedly a legal question. On the other hand, the

following facts are not disputed: 1. 2. The earmarking of five billion pesos of the IRA for the LGSEF in the assailed provisos in the GAAs of 1999, 2000 and re-enacted budget for 2001; The promulgation of the assailed OCD resolutions providing for the allocation schemes covering the said five billion pesos and the implementing rules and regulations therefor; and The release of the LGSEF to the LGUs only upon their compliance with the implementing rules and regulations, including the guidelines and mechanisms, prescribed by the Oversight Committee.

application of a most important constitutional policy and principle, that of local autonomy.[16] In Article II of the Constitution, the State has expressly adopted as a policy that: Section 25. The State shall ensure the autonomy of local governments. An entire article (Article X) of the Constitution has been devoted to guaranteeing and promoting the autonomy of LGUs. Section 2 thereof reiterates the State policy in this wise: Section 2. The territorial and political subdivisions shall enjoy local autonomy. Consistent with the principle of local autonomy, the Constitution confines the Presidents power over the LGUs to one of general supervision.[17] This provision has been interpreted to exclude the power of control. The distinction between the two powers was enunciated in Drilon v. Lim:[18] An officer in control lays down the rules in the doing of an act. If they are not followed, he may, in his discretion, order the act undone or re-done by his subordinate or he may even decide to do it himself. Supervision does not cover such authority. The supervisor or superintendent merely sees to it that the rules are followed, but he himself does not lay down such rules, nor does he have the discretion to modify or replace them. If the rules are not observed, he may order the work done or re-done but only to conform to the prescribed rules. He may not prescribe his own manner for doing the act. He has no judgment on this matter except to see to it that the rules are followed.[19] The Local Government Code of 1991[20] was enacted to flesh out the mandate of the Constitution.[21] The State policy on local autonomy is amplified in Section 2 thereof: 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. Guided by these precepts, the Court shall now determine whether the assailed provisos in the GAAs of 1999, 2000 and 2001, earmarking for each corresponding year the amount of five billion pesos of the IRA for the LGSEF and the OCD resolutions promulgated pursuant thereto, transgress the Constitution and the Local Government Code of 1991. The assailed provisos in the GAAs of 1999, 2000 and 2001 and the OCD resolutions violate the constitutional precept on local autonomy Section 6, Article X of the Constitution reads: Sec. 6. Local government units shall have a just share, as determined by law, in the national taxes which shall be automatically released to them.

3.

Considering that these facts, which are necessary to resolve the legal question now before this Court, are no longer in issue, the same need not be determined by a trial court.[11] In any case, the rule on hierarchy of courts will not prevent this Court from assuming jurisdiction over the petition. The said rule may be relaxed when the redress desired cannot be obtained in the appropriate courts or where exceptional and compelling circumstances justify availment of a remedy within and calling for the exercise of this Courts primary jurisdiction.[12] The crucial legal issue submitted for resolution of this Court entails the proper legal interpretation of constitutional and statutory provisions. Moreover, the transcendental importance of the case, as it necessarily involves the application of the constitutional principle on local autonomy, cannot be gainsaid. The nature of the present controversy, therefore, warrants the relaxation by this Court of procedural rules in order to resolve the case forthwith. The substantive issue needs to be resolved notwithstanding the supervening events Granting arguendo that, as contended by the respondents, the resolution of the case had already been overtaken by supervening events as the IRA, including the LGSEF, for 1999, 2000 and 2001, had already been released and the government is now operating under a new appropriations law, still, there is compelling reason for this Court to resolve the substantive issue raised by the instant petition. Supervening events, whether intended or accidental, cannot prevent the Court from rendering a decision if there is a grave violation of the Constitution.[13] Even in cases where supervening events had made the cases moot, the Court did not hesitate to resolve the legal or constitutional issues raised to formulate controlling principles to guide the bench, bar and public.[14] Another reason justifying the resolution by this Court of the substantive issue now before it is the rule that courts will decide a question otherwise moot and academic if it is capable of repetition, yet evading review.[15] For the GAAs in the coming years may contain provisos similar to those now being sought to be invalidated, and yet, the question may not be decided before another GAA is enacted. It, thus, behooves this Court to make a categorical ruling on the substantive issue now. Substantive Issue As earlier intimated, the resolution of the substantive legal issue in this case calls for the

When parsed, it would be readily seen that this provision mandates that (1) the LGUs shall have a just share in the national taxes; (2) the just share shall be determined by law; and (3) the just share shall be automatically released to the LGUs. The Local Government Code of 1991, among its salient provisions, underscores the automatic release of the LGUs just share in this wise: Sec. 18. Power to Generate and Apply Resources. Local government units shall have the power and authority to establish an organization that shall be responsible for the efficient and effective implementation of their development plans, program objectives and priorities; to create their own sources of revenue and to levy taxes, fees, and charges which shall accrue exclusively for their use and disposition and which shall be retained by them; to have a just share in national taxes which shall be automatically and directly released to them without need of further action; ... Sec. 286. Automatic Release of Shares. (a) The share of each local government unit shall be released, without need of any further action, directly to the provincial, city, municipal or barangay treasurer, as the case may be, on a quarterly basis within five (5) days after the end of each quarter, and which shall not be subject to any lien or holdback that may be imposed by the national government for whatever purpose. (b) Nothing in this Chapter shall be understood to diminish the share of local government units under existing laws. Websters Third New International Dictionary defines automatic as involuntary either wholly or to a major extent so that any activity of the will is largely negligible; of a reflex nature; without volition; mechanical; like or suggestive of an automaton. Further, the word automatically is defined as in an automatic manner: without thought or conscious intention. Being automatic, thus, connotes something mechanical, spontaneous and perfunctory. As such, the LGUs are not required to perform any act to receive the just share accruing to them from the national coffers. As emphasized by the Local Government Code of 1991, the just share of the LGUs shall be released to them without need of further action. Construing Section 286 of the LGC, we held in Pimentel, Jr. v. Aguirre,[22] viz: Section 4 of AO 372 cannot, however, be upheld. 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.

In sum, while Section 1 of AO 372 may be upheld as an advisory effected in times of national crisis, Section 4 thereof has no color of validity at all. The latter provision effectively encroaches on the fiscal autonomy of local governments. Concededly, the President was well-intentioned in issuing his Order to withhold the LGUs IRA, but the 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.[23] The just share of the LGUs is incorporated as the IRA in the appropriations law or GAA enacted by Congress annually. Under the assailed provisos in the GAAs of 1999, 2000 and 2001, a portion of the IRA in the amount of five billion pesos was earmarked for the LGSEF, and these provisos imposed the condition that such amount shall be released to the local government units subject to the implementing rules and regulations, including such mechanisms and guidelines for the equitable allocations and distribution of said fund among local government units subject to the guidelines that may be prescribed by the Oversight Committee on Devolution. Pursuant thereto, the Oversight Committee, through the assailed OCD resolutions, apportioned the five billion pesos LGSEF such that: For 1999 P2 billion - allocated according to Sec. 285 LGC P2 billion - Modified Sharing Formula (Provinces 40%; Cities 20%; Municipalities 40%) P1 billion projects (LAAP) approved by OCD.[24] For 2000 P3.5 billion Modified Sharing Formula (Provinces 26%; Cities 23%; Municipalities 35%; Barangays 16%); P1.5 billion projects (LAAP) approved by the OCD.[25] For 2001 P3 billion Modified Sharing Formula (Provinces 25%; Cities 25%; Municipalities 35%; Barangays 15%) P1.9 billion priority projects P100 million capability building fund.[26] Significantly, the LGSEF could not be released to the LGUs without the Oversight Committees prior approval. Further, with respect to the portion of the LGSEF allocated for various projects of the LGUs (P1 billion for 1999; P1.5 billion for 2000 and P2 billion for 2001), the Oversight Committee, through the assailed OCD resolutions, laid down guidelines and mechanisms that the LGUs had to comply with before they could avail of funds from this portion of the LGSEF. The guidelines required (a) the LGUs to identify the projects eligible for funding based on the criteria laid down by the Oversight Committee; (b) the LGUs to submit their project

proposals to the DILG for appraisal; (c) the project proposals that passed the appraisal of the DILG to be submitted to the Oversight Committee for review, evaluation and approval. It was only upon approval thereof that the Oversight Committee would direct the DBM to release the funds for the projects. To the Courts mind, the entire process involving the distribution and release of the LGSEF is constitutionally impermissible. The LGSEF is part of the IRA or just share of the LGUs in the national taxes. To subject its distribution and release to the vagaries of the implementing rules and regulations, including the guidelines and mechanisms unilaterally prescribed by the Oversight Committee from time to time, as sanctioned by the assailed provisos in the GAAs of 1999, 2000 and 2001 and the OCD resolutions, makes the release not automatic, a flagrant violation of the constitutional and statutory mandate that the just share of the LGUs shall be automatically released to them. The LGUs are, thus, placed at the mercy of the Oversight Committee. Where the law, the Constitution in this case, is clear and unambiguous, it must be taken to mean exactly what it says, and courts have no choice but to see to it that the mandate is obeyed. [27] Moreover, as correctly posited by the petitioner, the use of the word shall connotes a mandatory order. Its use in a statute denotes an imperative obligation and is inconsistent with the idea of discretion.[28] Indeed, the Oversight Committee exercising discretion, even control, over the distribution and release of a portion of the IRA, the LGSEF, is an anathema to and subversive of the principle of local autonomy as embodied in the Constitution. Moreover, it finds no statutory basis at all as the Oversight Committee was created merely to formulate the rules and regulations for the efficient and effective implementation of the Local Government Code of 1991 to ensure compliance with the principles of local autonomy as defined under the Constitution.[29] In fact, its creation was placed under the title of Transitory Provisions, signifying its ad hoc character. According to Senator Aquilino Q. Pimentel, the principal author and sponsor of the bill that eventually became Rep. Act No. 7160, the Committees work was supposed to be done a year from the approval of the Code, or on October 10, 1992.[30] The Oversight Committees authority is undoubtedly limited to the implementation of the Local Government Code of 1991, not to supplant or subvert the same. Neither can it exercise control over the IRA, or even a portion thereof, of the LGUs. That the automatic release of the IRA was precisely intended to guarantee and promote local autonomy can be gleaned from the discussion below between Messrs. Jose N. Nolledo and Regalado M. Maambong, then members of the 1986 Constitutional Commission, to wit: MR. MAAMBONG. Unfortunately, under Section 198 of the Local Government Code, the existence of subprovinces is still acknowledged by the law, but the statement of the Gentleman on this point will have to be taken up probably by the Committee on Legislation. A second point, Mr. Presiding Officer, is that under Article 2, Section 10 of the 1973 Constitution, we have a provision which states: The State shall guarantee and promote the autonomy of local government units, especially the barrio, to insure their fullest development as self-reliant communities.

This provision no longer appears in the present configuration; does this mean that the concept of giving local autonomy to local governments is no longer adopted as far as this Article is concerned? MR. NOLLEDO. No. In the report of the Committee on Preamble, National Territory, and Declaration of Principles, that concept is included and widened upon the initiative of Commissioner Bennagen. MR. MAAMBONG. Thank you for that. With regard to Section 6, sources of revenue, the creation of sources as provided by previous law was subject to limitations as may be provided by law, but now, we are using the term subject to such guidelines as may be fixed by law. In Section 7, mention is made about the unique, distinct and exclusive charges and contributions, and in Section 8, we talk about exclusivity of local taxes and the share in the national wealth. Incidentally, I was one of the authors of this provision, and I am very thankful. Does this indicate local autonomy, or was the wording of the law changed to give more autonomy to the local government units?[31] MR. NOLLEDO. Yes. In effect, those words indicate also decentralization because local political units can collect taxes, fees and charges subject merely to guidelines, as recommended by the league of governors and city mayors, with whom I had a dialogue for almost two hours. They told me that limitations may be questionable in the sense that Congress may limit and in effect deny the right later on. MR. MAAMBONG. Also, this provision on automatic release of national tax share points to more local autonomy. Is this the intention? MR. NOLLEDO. Yes, the Commissioner is perfectly right.[32] wise: The concept of local autonomy was explained in Ganzon v. Court of Appeals[33] in this

As the Constitution itself declares, local autonomy means a more responsive and accountable local government structure instituted through a system of decentralization. The Constitution, as we observed, does nothing more than to break up the monopoly of the national government over the affairs of local governments and as put by political adherents, to liberate the local governments from the imperialism of Manila. Autonomy, however, is not meant to end the relation of partnership and interdependence between the central administration and local government units, or otherwise, to usher in a regime of federalism. The Charter has not taken such a radical step. Local governments, under the Constitution, are subject to regulation, however limited, and for no other purpose than precisely, albeit paradoxically, to enhance selfgovernment. As we observed in one case, decentralization means devolution of national administration but not power to the local levels. Thus: 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 [sic] favor of local governments [sic] 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.[34] Local autonomy includes both administrative and fiscal autonomy. The fairly recent case of Pimentel v. Aguirre[35] is particularly instructive. The Court declared therein that local fiscal autonomy includes the power of the LGUs to, inter alia, allocate their resources in accordance with their own priorities: Under existing law, local government units, in addition to having administrative autonomy in the exercise of their functions, 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. They are not formulated at the national level and imposed on local governments, whether they are relevant to local needs and resources or not ...[36] Further, a basic feature of local fiscal autonomy is the constitutionally mandated automatic release of the shares of LGUs in the national internal revenue.[37] Following this ratiocination, the Court in Pimentel struck down as unconstitutional Section 4 of Administrative Order (A.O.) No. 372 which ordered the withholding, effective January 1, 1998, of ten percent of the LGUs IRA pending the assessment and evaluation by the Development Budget Coordinating Committee of the emerging fiscal situation. In like manner, 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 put on hold the distribution and release of the five billion pesos LGSEF and subject the same to the implementing rules and regulations, including the guidelines and mechanisms prescribed by the Oversight Committee from time to time. Like Section 4 of A.O. 372, the assailed provisos in the GAAs of 1999, 2000 and 2001 and the OCD resolutions effectively encroach on the fiscal autonomy enjoyed by the LGUs and must be struck down. They cannot, therefore, be upheld. The assailed provisos in the GAAs of 1999, 2000 and 2001 and the OCD resolutions cannot amend Section 285 of the Local Government Code of 1991

Section 284[38] of the Local Government Code provides that, beginning the third year of its effectivity, the LGUs share in the national internal revenue taxes shall be 40%. This percentage is fixed and may not be reduced except in the event the national government incurs an unmanageable public sector deficit" and only upon compliance with stringent requirements set forth in the same section: Sec. 284. ...

Provided, That in the event that the national government incurs an unmanageable public sector deficit, the President of the Philippines is hereby authorized, upon recommendation of Secretary of Finance, Secretary of 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 the national internal revenue taxes of the third fiscal year preceding the current fiscal year; Provided, further That in the first year of the effectivity of this Code, the local government units shall, in addition to the thirty percent (30%) internal revenue allotment which shall include the cost of devolved functions for essential public services, be entitled to receive the amount equivalent to the cost of devolved personnel services. Thus, from the above provision, 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 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. In the instant case, however, there is no allegation that the national internal revenue tax collections for the fiscal years 1999, 2000 and 2001 have fallen compared to the preceding three fiscal years. Section 285 then specifies how the IRA shall be allocated among the LGUs: Sec. 285. Allocation to Local Government Units. The share of local government units in the internal revenue allotment shall be allocated in the following manner: (a) Provinces Twenty-three (23%) (b) (c) (d) Cities Twenty-three percent (23%); Municipalities Thirty-four (34%); and

Barangays Twenty percent (20%).

However, this percentage sharing is not followed with respect to the five billion pesos LGSEF as the assailed OCD resolutions, implementing the assailed provisos in the GAAs of 1999, 2000 and 2001, provided for a different sharing scheme. For example, for 1999, P2 billion of the LGSEF was allocated as follows: Provinces 40%; Cities 20%; Municipalities 40%.[39] For 2000, P3.5 billion of the LGSEF was allocated in this manner: Provinces 26%; Cities 23%; Municipalities 35%; Barangays 26%.[40] For 2001, P3 billion of the LGSEF was allocated, thus: Provinces 25%; Cities 25%; Municipalities 35%; Barangays 15%.[41]

The respondents argue that this modification is allowed since the Constitution does not specify that the just share of the LGUs shall only be determined by the Local Government Code of 1991. That it is within the power of Congress to enact other laws, including the GAAs, to increase or decrease the just share of the LGUs. This contention is untenable. The Local Government Code of 1991 is a substantive law. And while it is conceded that Congress may amend any of the provisions therein, it may not do so through appropriations laws or GAAs. Any amendment to the Local Government Code of 1991 should be done in a separate law, not in the appropriations law, because Congress cannot include in a general appropriation bill matters that should be more properly enacted in a separate legislation.[42] 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.[43] Any provision therein which is intended to amend another law is considered an inappropriate provision. The category of inappropriate provisions includes unconstitutional provisions and provisions which are intended to amend other laws, because clearly these kinds of laws have no place in an appropriations bill.[44] Increasing or decreasing the IRA of the LGUs or modifying their percentage sharing therein, which are fixed in the Local Government Code of 1991, are matters of general and substantive law. To permit Congress to undertake these amendments through the GAAs, as the respondents contend, would be to give Congress the unbridled authority to unduly infringe the fiscal autonomy of the LGUs, and thus put the same in jeopardy every year. This, the Court cannot sanction. It is relevant to point out at this juncture that, unlike those of 1999, 2000 and 2001, the GAAs of 2002 and 2003 do not contain provisos similar to the herein assailed provisos. In other words, the GAAs of 2002 and 2003 have not earmarked any amount of the IRA for the LGSEF. Congress had perhaps seen fit to discontinue the practice as it recognizes its infirmity. Nonetheless, as earlier mentioned, this Court has deemed it necessary to make a definitive ruling on the matter in order to prevent its recurrence in future appropriations laws and that the principles enunciated herein would serve to guide the bench, bar and public. Conclusion In closing, it is well to note that the principle of local autonomy, while concededly expounded in greater detail in the present Constitution, dates back to the turn of the century when President William McKinley, in his Instructions to the Second Philippine Commission dated April 7, 1900, ordered the new Government to devote their attention in the first instance to the establishment of municipal governments in which the natives of the Islands, both in the cities and in the rural communities, shall be afforded the opportunity to manage their own affairs to the fullest extent of which they are capable, and subject to the least degree of supervision and control in which a careful study of their capacities and observation of the workings of native control show to be consistent with the maintenance of law, order and loyalty.[45] While the 1935 Constitution had no specific article on local autonomy, nonetheless, it limited the executive power over local governments to general supervision ... as may be provided by law.[46] Subsequently, the 1973 Constitution explicitly stated that [t]he State shall guarantee and promote the autonomy of local government units, especially the barangay to ensure their fullest development as self-reliant communities.[47] An entire article on Local Government was incorporated therein.

The present Constitution, as earlier opined, has broadened the principle of local autonomy. The 14 sections in Article X thereof markedly increased the powers of the local governments in order to accomplish the goal of a more meaningful local autonomy. Indeed, the value of local governments as institutions of democracy is measured by the degree of autonomy that they enjoy.[48] As eloquently put by M. De Tocqueville, a distinguished French political writer, [l]ocal assemblies of citizens constitute the strength of free nations. Township meetings are to liberty what primary schools are to science; they bring it within the peoples reach; they teach men how to use and enjoy it. A nation may establish a system of free governments but without the spirit of municipal institutions, it cannot have the spirit of liberty.[49] Our national officials should not only comply with the constitutional provisions on local autonomy but should also appreciate the spirit and liberty upon which these provisions are based. [50] WHEREFORE, the petition is GRANTED. The assailed provisos in the General Appropriations Acts of 1999, 2000 and 2001, and the assailed OCD Resolutions, are declared UNCONSTITUTIONAL. [G.R. No. 132988. July 19, 2000] AQUILINO Q. PIMENTEL JR., petitioner, vs. Hon. ALEXANDER AGUIRRE in his capacity as Executive Secretary, Hon. EMILIA BONCODIN in her capacity as Secretary of the Department of Budget and Management, respondents. ROBERTO PAGDANGANAN, intervenor. DECISION PANGANIBAN, J.: The Constitution vests the President with the power of supervision, not control, over local government units (LGUs). Such power enables him to see to it that LGUs and their officials execute their tasks in accordance with law. While he may issue advisories and seek their cooperation in solving economic difficulties, he cannot prevent them from performing their tasks and using available resources to achieve their goals. He may not withhold or alter any authority or power given them by the law. Thus, the withholding of a portion of internal revenue allotments legally due them cannot be directed by administrative fiat. The Case Before us is an original Petition for Certiorari and Prohibition seeking (1) to annul Section 1 of Administrative Order (AO) No. 372, insofar as it requires local government units to reduce their expenditures by 25 percent of their authorized regular appropriations for non-personal services; and (2) to enjoin respondents from implementing Section 4 of the Order, which withholds a portion of their internal revenue allotments. On November 17, 1998, Roberto Pagdanganan, through Counsel Alberto C. Agra, filed a Motion for Intervention/Motion to Admit Petition for Intervention,[1] attaching thereto his Petition

in Intervention[2] joining petitioner in the reliefs sought. At the time, intervenor was the provincial governor of Bulacan, national president of the League of Provinces of the Philippines and chairman of the League of Leagues of Local Governments. In a Resolution dated December 15, 1998, the Court noted said Motion and Petition. The Facts and the Arguments On December 27, 1997, the President of the Philippines issued AO 372. Its full text, with emphasis on the assailed provisions, is as follows: "ADMINISTRATIVE ORDER NO. 372 ADOPTION OF ECONOMY MEASURES IN GOVERNMENT FOR FY 1998 WHEREAS, the current economic difficulties brought about by the peso depreciation requires continued prudence in government fiscal management to maintain economic stability and sustain the country's growth momentum; WHEREAS, it is imperative that all government agencies adopt cash management measures to match expenditures with available resources; NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby order and direct: SECTION 1. All government departments and agencies, including state universities and colleges, government-owned and controlled corporations and local governments units will identify and implement measures in FY 1998 that will reduce total expenditures for the year by at least 25% of authorized regular appropriations for nonpersonal services items, along the following suggested areas: 1. a. b. c. Continued implementation of the streamlining policy on organization and staffing by deferring action on the following:

d.

Attendance in conferences abroad where the cost is charged to the government except those clearly essential to Philippine commitments in the international field as may be determined by the Cabinet; Conduct of trainings/workshops/seminars, except those conducted by government training institutions and agencies in the performance of their regular functions and those that are funded by grants; Conduct of cultural and social celebrations and sports activities, except those associated with the Philippine Centennial celebration and those involving regular competitions/events; Grant of honoraria, except in cases where it constitutes the only source of compensation from government received by the person concerned; Publications, media advertisements and related items, except those required by law or those already being undertaken on a regular basis; Grant of new/additional benefits to employees, except those expressly and specifically authorized by law; and Donations, contributions, grants and gifts, except those given by institutions to victims of calamities.

e.

f.

g. h. i. j.

3. Suspension of all tax expenditure subsidies to all GOCCs and LGUs 4. Reduction in the volume of consumption of fuel, water, office supplies, electricity and other utilities 5. Deferment of projects that are encountering significant implementation problems

Operationalization of new agencies; Expansion of organizational units and/or creation of positions; Filling of positions; and

6. Suspension of all realignment of funds and the use of savings and reserves SECTION 2. Agencies are given the flexibility to identify the specific sources of cost-savings, provided the 25% minimum savings under Section 1 is complied with. SECTION 3. A report on the estimated savings generated from these measures shall be submitted to the Office of the President, through the Department of Budget and Management, on a quarterly basis using the attached format. SECTION 4. Pending the assessment and evaluation by the Development Budget Coordinating Committee of the emerging fiscal situation, the amount equivalent to 10% of the internal revenue allotment to local government units shall be withheld. SECTION 5. The Development Budget Coordination Committee shall conduct a monthly review of the fiscal position of the National Government and if necessary, shall recommend to the President the imposition of additional reserves or the lifting of previously imposed reserves.

d. Hiring of additional/new consultants, contractual and casual personnel, regardless of funding source. 2. Suspension of the following activities: a. b. c. Implementation of new capital/infrastructure projects, except those which have already been contracted out; Acquisition of new equipment and motor vehicles; All foreign travels of government personnel, except those associated with scholarships and trainings funded by grants;

SECTION 6. This Administrative Order shall take effect January 1, 1998 and shall remain valid for the entire year unless otherwise lifted. DONE in the City of Manila, this 27th day of December, in the year of our Lord, nineteen hundred and ninety-seven." Subsequently, on December 10, 1998, President Joseph E. Estrada issued AO 43, amending Section 4 of AO 372, by reducing to five percent (5%) the amount of internal revenue allotment (IRA) to be withheld from the LGUs. Petitioner contends that the President, in issuing AO 372, was in effect exercising the power of control over LGUs. The Constitution vests in the President, however, only the power of general supervision over LGUs, consistent with the principle of local autonomy. Petitioner further argues that the directive to withhold ten percent (10%) of their IRA is in contravention of Section 286 of the Local Government Code and of Section 6, Article X of the Constitution, providing for the automatic release to each of these units its share in the national internal revenue. The solicitor general, on behalf of the respondents, claims on the other hand that AO 372 was issued to alleviate the "economic difficulties brought about by the peso devaluation" and constituted merely an exercise of the President's power of supervision over LGUs. It allegedly does not violate local fiscal autonomy, because it merely directs local governments to identify measures that will reduce their total expenditures for non-personal services by at least 25 percent. Likewise, the withholding of 10 percent of the LGUs IRA does not violate the statutory prohibition on the imposition of any lien or holdback on their revenue shares, because such withholding is "temporary in nature pending the assessment and evaluation by the Development Coordination Committee of the emerging fiscal situation." The Issues The Petition[3] submits the following issues for the Court's resolution: "A. Whether or not the president committed grave abuse of discretion [in] ordering all LGUS to adopt a 25% cost reduction program in violation of the LGU[']S fiscal autonomy "B. Whether or not the president committed grave abuse of discretion in ordering the withholding of 10% of the LGU[']S IRA" In sum, the main issue is whether (a) Section 1 of AO 372, insofar as it "directs" LGUs to reduce their expenditures by 25 percent; and (b) Section 4 of the same issuance, which withholds 10 percent of their internal revenue allotments, are valid exercises of the President's power of general supervision over local governments. Additionally, the Court deliberated on the question whether petitioner had the locus standi to bring this suit, despite respondents' failure to raise the issue.[4] However, the intervention of Roberto Pagdanganan has rendered academic any further discussion on this matter. The Court's Ruling The Petition is partly meritorious. Main Issue:

Validity of AO 372 Insofar as LGUs Are Concerned Before resolving the main issue, we deem it important and appropriate to define certain crucial concepts: (1) the scope of the President's power of general supervision over local governments and (2) the extent of the local governments' autonomy. 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, [5] 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."[6] In Taule v. Santos,[7] 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,"[8] we said. In a more recent case, Drilon v. Lim,[9] 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.[10] 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.[11] 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.[12] In Ganzon v. Court of Appeals,[13] 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.[14] 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.[15] The difference between decentralization of administration and that of power was explained in detail in Limbona v. Mangelin[16] 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,'[17] and 'ensure their fullest development as self-reliant communities and make them more effective partners in the pursuit of national development and social progress.'[18] 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'[19] over them, but only to 'ensure that local affairs are administered according to law.'[20] He has no control over their acts in the sense that he can substitute their judgments with his own.[21] 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 'selfimmolation,' since in that event, the autonomous government becomes accountable not to the central authorities but to its constituency."[22] 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.[23] The Nature of AO 372 Consistent with the foregoing jurisprudential precepts, let us now look into the nature of AO 372. As its preambular clauses declare, the Order was a "cash management measure" adopted by the government "to match expenditures with available resources," which were presumably depleted at the time due to "economic difficulties brought about by the peso depreciation." Because of a looming financial crisis, the President deemed it necessary to "direct all government agencies, state universities and colleges, government-owned and controlled corporations as well as local governments to reduce their total expenditures by at least 25 percent along suggested areas mentioned in AO 372. Under existing law, local government units, in addition to having administrative autonomy in the exercise of their functions, 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. They are not formulated at the national level and imposed on local governments, whether they are relevant to local needs and resources or not. Hence, the necessity of a balancing of viewpoints and the harmonization of proposals from both local and national officials,[24] who in any case are partners in the attainment of national goals. 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,[25] primarily responsible for formulating and implementing continuing, coordinated and integrated social and economic policies, plans and programs[26] 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:[27] "x x x [I]n 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 conducted consultations 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 maintain economic 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. Withholding a Part of LGUs' IRA Section 4 of AO 372 cannot, however, be upheld. 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.[28] The Local Government Code[29] 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."[30] As a rule, the term "shall" is a word of command that must be given a compulsory meaning.[31] 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."[32] Hence, the "temporary" nature of the retention by the national government does not matter. Any retention is prohibited. In sum, while Section 1 of AO 372 may be upheld as an advisory effected in times of national crisis, Section 4 thereof has no color of validity at all. The latter provision effectively encroaches on the fiscal autonomy of local governments. Concededly, the President was wellintentioned in issuing his Order to withhold the LGUs IRA, but the 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. Refutation of Justice Kapunan's Dissent Mr. Justice Santiago M. Kapunan dissents from our Decision on the grounds that, allegedly, (1) the Petition is premature; (2) AO 372 falls within the powers of the President as chief fiscal officer; and (3) the withholding of the LGUs IRA is implied in the President's authority to adjust it in case of an unmanageable public sector deficit. First, on prematurity. According to the Dissent, when "the conduct has not yet occurred and the challenged construction has not yet been adopted by the agency charged with administering the administrative order, the determination of the scope and constitutionality of the executive action in advance of its immediate adverse effect involves too remote and abstract an inquiry for the proper exercise of judicial function." This is a rather novel theory -- that people should await the implementing evil to befall on them before they can question acts that are illegal or unconstitutional. Be it remembered that the real issue here is whether the Constitution and the law are contravened by Section 4 of AO 372, not whether they are violated by the acts implementing it. In the unanimous en banc case Taada v. Angara,[33] this Court held that when an act of the legislative department is seriously alleged to have infringed the Constitution, settling the controversy becomes the duty of this Court. By the mere enactment of the questioned law or the approval of the challenged action, the dispute is said to have ripened into a judicial controversy even without any other overt act. Indeed, even a singular violation of the Constitution and/or the law is enough to awaken judicial duty. Said the Court: "In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the Constitution, the petition no doubt raises a justiciable controversy. Where an action of the legislative branch is seriously alleged to have infringed the Constitution, it becomes not only the right but in fact the duty of the judiciary to settle the dispute. 'The question thus posed is judicial rather than political. The duty (to adjudicate) remains to assure that the supremacy of the Constitution is upheld.'[34] Once a 'controversy as to the application or interpretation of a constitutional provision is raised before this Court x x x , it becomes a legal issue which the Court is bound by constitutional mandate to decide.'[35] xxx xxx xxx

"As this Court has repeatedly and firmly emphasized in many cases,[36] it will not shirk, digress from or abandon its sacred duty and authority to uphold the Constitution in matters that involve grave abuse of discretion brought before it in appropriate cases, committed by any officer, agency, instrumentality or department of the government." [37] In the same vein, the Court also held in Tatad v. Secretary of the Department of Energy:

government and the LGUs at the planning level," in order to ensure that "local development plans x x x hew to national policies and standards." The problem is that no such interaction or consultation was ever held prior to the issuance of AO 372. This is why the petitioner and the intervenor (who was a provincial governor and at the same time president of the League of Provinces of the Philippines and chairman of the League of Leagues of Local Governments) have protested and instituted this action. Significantly, respondents do not deny the lack of consultation. In addition, Justice Kapunan cites Section 287[40] of the LGC as impliedly authorizing the President to withhold the IRA of an LGU, pending its compliance with certain requirements. Even a cursory reading of the provision reveals that it is totally inapplicable to the issue at bar. It directs LGUs to appropriate in their annual budgets 20 percent of their respective IRAs for development projects. It speaks of no positive power granted the President to priorly withhold any amount. Not at all. WHEREFORE, the Petition is GRANTED. Respondents and their successors are hereby permanently PROHIBITED from implementing Administrative Order Nos. 372 and 43, respectively dated December 27, 1997 and December 10, 1998, insofar as local government units are concerned. SO ORDERED.

"x x x Judicial power includes not only the duty of the courts to settle actual controversies involving rights which are legally demandable and enforceable, but also the duty to determine whether or not there has been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of government. The courts, as guardians of the Constitution, have the inherent authority to determine whether a statute enacted by the legislature transcends the limit imposed by the fundamental law. Where the statute violates the Constitution, it is not only the right but the duty of the judiciary to declare such act unconstitutional and void." By the same token, when an act of the President, who in our constitutional scheme is a coequal of Congress, is seriously alleged to have infringed the Constitution and the laws, as in the present case, settling the dispute becomes the duty and the responsibility of the courts. Besides, the issue that the Petition is premature has not been raised by the parties; hence it is deemed waived. Considerations of due process really prevents its use against a party that has not been given sufficient notice of its presentation, and thus has not been given the opportunity to refute it.[38] Second, on the President's power as chief fiscal officer of the country. Justice Kapunan posits that Section 4 of AO 372 conforms with the President's role as chief fiscal officer, who allegedly "is clothed by law with certain powers to ensure the observance of safeguards and auditing requirements, as well as the legal prerequisites in the release and use of IRAs, taking into account the constitutional and statutory mandates."[39] He cites instances when the President may lawfully intervene in the fiscal affairs of LGUs. Precisely, such powers referred to in the Dissent have specifically been authorized by law and have not been challenged as violative of the Constitution. On the other hand, Section 4 of AO 372, as explained earlier, contravenes explicit provisions of the Local Government Code (LGC) and the Constitution. In other words, the acts alluded to in the Dissent are indeed authorized by law; but, quite the opposite, Section 4 of AO 372 is bereft of any legal or constitutional basis. Third, on the President's authority to adjust the IRA of LGUs in case of an unmanageable public sector deficit. It must be emphasized that in striking down Section 4 of AO 372, this Court is not ruling out any form of reduction in the IRAs of LGUs. Indeed, as the President may make necessary adjustments in case of an unmanageable public sector deficit, as stated in the main part of this Decision, and in line with Section 284 of the LGC, which Justice Kapunan cites. He, however, merely glances over a specific requirement in the same provision -- that such reduction is subject to consultation with the presiding officers of both Houses of Congress and, more importantly, with the presidents of the leagues of local governments. Notably, Justice Kapunan recognizes the need for "interaction between the national

SENATOR HEHERSON T. ALVAREZ, SENATOR JOSE D. LINA, JR., MR. NICASIO B. BAUTISTA, MR. JESUS P. GONZAGA, MR. SOLOMON D. MAYLEM, LEONORA C. MEDINA, CASIANO S. ALIPON, petitioners, vs. HON. TEOFISTO T. GUINGONA, JR., in his capacity as Executive Secretary, HON. RAFAEL ALUNAN, in his capacity as Secretary of Local Government, HON. SALVADOR ENRIQUEZ, in his capacity as Secretary of Budget, THE COMMISSION ON AUDIT, HON. JOSE MIRANDA, in his capacity as Municipal Mayor of Santiago and HON. CHARITO MANUBAY, HON. VICTORINO MIRANDA, JR., HON. ARTEMIO ALVAREZ, HON. DANILO VERGARA, HON. PETER DE JESUS, HON. NELIA NATIVIDAD, HON. CELSO CALEON and HON. ABEL MUSNGI, in their capacity as SANGGUNIANG BAYAN MEMBERS, MR. RODRIGO L. SANTOS, in his capacity as Municipal Treasurer, and ATTY. ALFREDO S. DIRIGE, in his capacity as Municipal Administrator, respondents. DECISION HERMOSISIMA, JR., J.: Of main concern to the petitioners is whether Republic Act No. 7720, just recently passed by Congress and signed by the President into law, is constitutionally infirm. Indeed, in this Petition for Prohibition with prayer for Temporary Restraining Order and Preliminary Prohibitory Injunction, petitioners assail the validity of Republic Act No. 7720, entitled, An Act Converting the Municipality of Santiago, Isabela into an Independent Component City to be known as the City of Santiago, mainly because the Act allegedly did not originate exclusively in the House of Representatives as mandated by Section 24, Article VI of the 1987 Constitution. Also, petitioners claim that the Municipality of Santiago has not met the minimum average annual income required under Section 450 of the Local Government Code of 1991 in order to be converted into a component city. Undisputed is the following chronicle of the metamorphosis of House Bill No. 8817 into Republic Act No. 7720: On April 18, 1993, HB No. 8817, entitled An Act Converting the Municipality of Santiago into an Independent Component City to be known as the City of Santiago, was filed in the House of Representatives with Representative Antonio Abaya as principal author. Other sponsors included Representatives Ciriaco Alfelor, Rodolfo Albano, Santiago Respicio and Faustino Dy. The bill was referred to the House Committee on Local Government and the House Committee on Appropriations on May 5, 1993. On May 19, 1993, June 1, 1993, November 28, 1993, and December 1, 1993, public

hearings on HB No. 8817 were conducted by the House Committee on Local Government. The committee submitted to the House a favorable report, with amendments, on December 9, 1993. On December 13, 1993, HB No. 8817 was passed by the House of Representatives on Second Reading and was approved on Third Reading on December 17, 1993. On January 28, 1994, HB No. 8817 was transmitted to the Senate. Meanwhile, a counterpart of HB No. 8817, Senate Bill No. 1243, entitled, An Act Converting the Municipality of Santiago into an Independent] Component City to be Known as the City of Santiago, was filed in the Senate. It was introduced by Senator Vicente Sotto III, as principal sponsor, on May 19, 1993. This was just after the House of Representatives had conducted its first public hearing on HB No. 8817. On February 23, 1994, or a little less than a month after HB No. 8817 was transmitted to the Senate, the Senate Committee on Local Government conducted public hearings on SB No. 1243. On March 1, 1994, the said committee submitted Committee Report No. 378 on HB No. 8817, with the recommendation that it be approved without amendment, taking into consideration the reality that H.B. No. 8817 was on all fours with SB No. 1243. Senator Heherson T. Alvarez, one of the herein petitioners, indicated his approval thereto by signing said report as member of the Committee on Local Government. On March 3, 1994, Committee Report No. 378 was passed by the Senate on Second Reading and was approved on Third Reading on March 14, 1994. On March 22, 1994, the House of Representatives, upon being apprised of the action of the Senate, approved the amendments proposed by the Senate. The enrolled bill, submitted to the President on April 12, 1994, was signed by the Chief Executive on May 5, 1994 as Republic Act No. 7720. When a plebiscite on the Act was held on July 13, 1994, a great majority of the registered voters of Santiago voted in favor of the conversion of Santiago into a city. The question as to the validity of Republic Act No. 7720 hinges on the following twin issues: (I) Whether or not the Internal Revenue Allotments (IRAs) are to be included in the computation of the average annual income of a municipality for purposes of its conversion into an independent component city, and (II) Whether or not, considering that the Senate passed SB No. 1243, its own version of HB No. 8817, Republic Act No. 7720 can be said to have originated in the House of Representatives. I The annual income of a localgovernment unit includes the IRAs Petitioners claim that Santiago could not qualify into a component city because its average annual income for the last two (2) consecutive years based on 1991 constant prices falls below the required annual income of Twenty Million Pesos (P20,000,000.00) for its conversion into a city, petitioners having computed Santiagos average annual income in the following manner: Total income (at 1991 constant prices) for 1991 Total income (at 1991 constant prices) for 1992 P20,379,057.07 P21,570,106.87

Total income for 1991 and 1992 Minus: IRAs for 1991 and 1992 Total income for 1991 and 1992 Average Annual Income

P41,949,163.94

P15,730,043.00 P26,219,120.94 P13,109,960.47

By dividing the total income of Santiago for calendar years 1991 and 1992, after deducting the IRAs, the average annual income arrived at would only be P13,109,560.47 based on the 1991 constant prices. Thus, petitioners claim that Santiagos income is far below the aforesaid Twenty Million Pesos average annual income requirement. The certification issued by the Bureau of Local Government Finance of the Department of Finance, which indicates Santiagos average annual income to be P20,974,581.97, is allegedly not accurate as the Internal Revenue Allotments were not excluded from the computation. Petitioners asseverate that the IRAs are not actually income but transfers and! or budgetary aid from the national government and that they fluctuate, increase or decrease, depending on factors like population, land and equal sharing. In this regard, we hold that petitioners asseverations are untenable because Internal Revenue Allotments form part of the income of Local Government Units. It is true that for a municipality to be converted into a component city, it must, among others, have an average annual income of at least Twenty Million Pesos for the last two (2) consecutive years based on 1991 constant prices.1 Such income must be duly certified by the Department of Finance.2 Resolution of the controversy regarding compliance by the Municipality of Santiago with the aforecited income requirement hinges on a correlative and contextual explication of the meaning of internal revenue allotments (IRAs) vis-a-vis the notion of income of a local government unit and the principles of local autonomy and decentralization underlying the institutionalization and intensified empowerment of the local government system. A Local Government Unit is a political subdivision of the State which is constituted by law and possessed of substantial control over its own affairs.3 Remaining to be an intra sovereign subdivision of one sovereign nation, but not intended, however, to be an imperium in imperio,4 the local government unit is autonomous in the sense that it is given more powers, authority, responsibilities and resources.5 Power which used to be highly centralized in Manila, is thereby deconcentrated, enabling especially the peripheral local government units to develop not only at their own pace and discretion but also with their oWn resources and assets.6 The practical side to development through a decentralized local government system certainly concerns the matter of financial resources. With its broadened powers and increased responsibilities, a local government unit must now operate on a much wider scale. More extensive operations, in turn, entail more expenses. Understandably, the vesting of duty, responsibility and accountability in every local government unit is accompanied with a provision for reasonably adequate resources to discharge its powers and effectively carry out its functions.7 Availment of

such resources is effectuated through the vesting in every local government unit of (1) the right to create and broaden its own source of revenue; (2) the right to be allocated a just share in national taxes, such share being in the form of internal revenue allotments (IRAs); and (3) the right to be given its equitable share in the proceeds of the utilization and development of the national wealth, if any, within its territorial boundaries.8. The funds generated from local taxes, IRAs and national wealth utilization proceeds accrue to the general fund of the local government and are used to finance its operations subject to specified modes of spending the same as provided for in the Local Government Code and its implementing rules and regulations. For instance, not less than twenty percent (20%) of the IRAs must be set aside for local development projects.9 As such, for purposes of budget preparation, which budget should reflect the estimates of the income of the local government unit, among others, the IRAs and the share in the national wealth utilization proceeds are considered items of income. This is as it should be, since income is defined in the Local Government Code to be all revenues and receipts collected or received forming the gross accretions of funds of the local government unit.10 The IRAs are items of income because they form part of the gross accretion of the funds of the local government unit. The IRAs regularly and automatically accrue to the local treasury without need of any further action on the part of the local government unit.11 They thus constitute income which the local government can invariably rely upon as the source of much needed funds. For purposes of converting the Municipality of Santiago into a city, the Department of Finance certified, among others, that the municipality had an average annual income of at least Twenty Million Pesos for the last two (2) consecutive years based on 1991 constant prices. This, the Department of Finance did after including the IRAs in its computation of said average annual income. Furthermore, Section 450 (c) of the Local Government Code provides that the average annual income shall include the income accruing to the general fund, exclusive of special funds, transfers, and non-recurring income. To reiterate, IRAs are a regular, recurring item of income; nil is there a basis, too, to classify the same as a special fund or transfer, since IRAs have a technical definition and meaning all its own as used in the Local Government Code that unequivocally makes it distinct from special funds or transfers referred to when the Code speaks of funding support from the national government, its instrumentalities and government-ownedor-controlled corporations.12 Thus, Department of Finance Order No. 359313 correctly encapsulizes the full import of the above disquisition when it defined ANNUAL INCOME to be revenues and receipts realized by provinces, cities and municipalities from regular sources of the Local General Fund including the internal revenue allotment and other shares provided for in Sections 284, 290 and 291 of the Code, but exclusive of non-recurring receipts, such as other national aids, grants, financial assistance, loan proceeds, sales of fixed assets, and similar others (Italics ours).14 Such order, constituting executive or contemporaneous construction of a statute by an administrative agency charged with the task of interpreting and applying the same, is entitled to full respect and should be accorded great weight by the courts, unless such construction is clearly shown to be in sharp conflict with the Constitution, the governing statute, or other laws.15

II In the enactment of RA No. 7720, there was compliance with Section 24,Article VI of the 1987 Constitution Although a bill of local application like HB No. 8817 should, by constitutional prescription,16 originate exclusively in the House of Representatives, the claim of petitioners that Republic Act No. 7720 did not originate exclusively in the House of Representatives because a bill of the same import, SB No. 1243, was passed in the Senate, is untenable because it cannot be denied that HB No. 8817 was filed in the House of Representatives first before SB No. 1243 was filed in the Senate. Petitioners themselves cannot disavow their own admission that HB No. 8817 was filed on April 18, 1993 while SB No. 1243 was filed on May 19, 1993. The filing of HB No. 8817 was thus precursive not only of the said Act in question but also of SB No. 1243. Thus, HB No. 8817, was the bill that initiated the legislative process that culminated in the enactment of Republic Act No. 7720. No violation of Section 24, Article VI, of the 1987 Constitution is perceptible under the circumstances attending the instant controversy. Furthermore, petitioners themselves acknowledge that HB No. 8817 was already approved on Third Reading and duly transmitted to the Senate when the Senate Committee on Local Government conducted its public hearing on HB No. 8817. HB No. 8817 was approved on the Third Reading on December 17, 1993 and transmitted to the Senate on January 28, 1994; a little less than a month thereafter, or on February 23, 1994, the Senate Committee on Local Government conducted public hearings on SB No. 1243. Clearly, the Senate held in abeyance any action on SB No. 1243 until it received HB No. 8817, already approved on the Third Reading, from the House of Representatives. The filing in the Senate of a substitute bill in anticipation of its receipt of the bill from the House, does not contravene the constitutional requirement that a bill of local application should originate in the House of Representatives, for as long as the Senate does not act thereupon until it receives the House bill. We have already addressed this issue in the case of Tolentino vs. Secretary of Finance.17 There, on the matter of the Expanded Value Added Tax (EVAT) Law, which, as a revenue bill, is nonetheless constitutionally required to originate exclusively in the House of Representatives, we explained: x x x To begin with, it is not the law-but the revenue bill-which is required by the Constitution to originate exclusively in the House of Representatives. It is important to emphasize this, because a bill originating in the House may undergo such extensive changes in the Senate that the result may be a rewriting of the whole. x x x as a result of the Senate action, a distinct bill may be produced. To insist that a revenue statute-and not only the bill which initiated the legislative process culminating in the enactment of the law-must substantially be the same as the House bill would be to deny the Senates power not only to concur with amendments but also to propose amendments. It would be to violate the coequality of legislative power of the two houses of Congress and in fact make the House superior to the Senate. xxx xxx xxx

It is insisted, however, that S. No. 1630 was passed not in substitution of H. No. 11197 but of another Senate bill (S. No. 1129) earlier filed and that what the Senate did was merely to take [H.

No. 11197] into consideration in enacting S. No. 1630. There is really no difference between the Senate preserving H. No. 11197 up to the enacting clause and then writing its own version following the enacting clause (which, it would seem petitioners admit is an amendment by substitution), and, on the other hand, separately presenting a bill of its own on the same subject matter. In either case the result are two bills on the same subject. Indeed, what the Constitution simply means is that the initiative for filing revenue, tariff, or tax bills, bills authorizing an increase of the public debt, private bills and bills of local application must come from the House of Representatives on the theory that, elected as they are from the districts, the members of the House can be expected to be more sensitive to the local needs and problems. On the other hand, the senators, who are elected at large, are expected to approach the same problems from the national perspective. Both views are thereby made to bear on the enactment of such laws. Nor does the Constitution prohibit the filing in the Senate of a substitute bill in anticipation of its receipt of the bill from the House, so long as action by the Senate as a body is withheld pending receipt of the House bill. x x x18 III Every law, including RA No. 7720,has in its favor the presumptionof constitutionality It is a well-entrenched jurisprudential rule that on the side of every law lies the presumption of constitutionality.19 Consequently, for RA No. 7720 to be nullified, it must be shown that there is a clear and unequivocal breach of the Constitution, not merely a doubtful and equivocal one; in other words, the grounds for nullity must be clear and beyond reasonable doubt.20 Those who petition this court to declare a law to be unconstitutional must clearly and fully establish the basis that will justify such a declaration; otherwise, their petition must fail. Taking into consideration the justification of our stand on the immediately preceding ground raised by petitioners to challenge the constitutionality of RA No. 7720, the Court stands on the holding that petitioners have failed to overcome the presumption. The dismissal of this petition is, therefore, inevitable. WHEREFORE, the instant petition is DISMISSED for lack of merit with costs against petitioners. SO ORDERED.

The 1987 Constitution of the Republic of the Philippines: Article 2 - Declaration of Principles and State Policies, Section 26 states that: see codal. This provision clearly prohibits the existence of political dynasties in the country to preclude equal access to public service and the right for people to choose in the local election. However, it is not self-executory, meaning the provision needs an implementing law before it can be applied. Unfortunately, no such law has been approved in twenty years, mainly because of disagreements on the definition of a political dynasty, thus it continues to exert a pervasive influence on Philippine politics. Furthermore, the democratic character of the government, allows such groups to justify their existence and thrive under the mantle of legitimacy. It is true that no political family should exercise monopoly of leadership but they have all the economic resources and political clout to do so. In section 115 of the Election Code of the Constitution, there is a proposed definition of political dynasty that was included but was not approved. The proposal prohibits persons having the same civil degree of relationship to run in any elective position in the same political unit in the same election. It also does not allow any persons with the same civil relationship, including legal or common-law partners, to succee an incumbent position of the latter. Former Sen. Juan M. Flavier has authored SB 12 that defines and prohibits political dynasties. It refers political dynasty as the concentration, consolidation, or perpetuation, of public office and political powers by persons related to one another. Persons holding office and related within the third civil degree of consanguinity or affinity including their spouses and the spouses of their brother-in-law and sister-in-law will already be deemed to be in a political dynasty relationship. There is a related piece of legislation that was filed in the House of Representatives, authored by Rep.Emilio C. Macias II HB 44, that seeks to ban local officials from occupying the next higher position which they had previously occupied and for which they had served for three consecutive terms. The bill is currently pending in the House Committee on Local Government. If enacted into law, the bill will effectively prohibit an elected local official from filling a permanent vacancy by way of succession in the offices of the governor, vice governor, mayor or vice mayor during the prohibitive term or the term of office immediately after the third consecutive term. While there is still no enacted law for these provisions, the Constitution has provided that all elective officials, from congressmen to municipal councilors, be limited to three consecutive terms. The idea was to limit the power of political clans. Unwittingly, the opposite has happened as the three-term limit gave the opportunity for political dynasties to perpetuate themselves in power. After their three-term is over they would either put thier spouses or their children or any relative to replace them for the post that they would leave and they would run for another post as there is no law saying that they cannot do so. Now, the Constitution passed the enactment of these provisions to the Congress but the reality is that the dominant members of the House belong to political dynasties, which cannot be expected

to legislate their own demise as a political entity. However, the politicians think that if people do not like you, they would not vote for you.