G.R. No.

89651 November 10, 1989 The Tripoli Agreement, more specifically, the Agreement Between the government of
the Republic of the Philippines of the Philippines and Moro National Liberation Front
DATU FIRDAUSI I.Y. ABBAS, DATU BLO UMPAR ADIONG, DATU with the Participation of the Quadripartie Ministerial Commission Members of the
MACALIMPOWAC DELANGALEN, CELSO PALMA, ALI MONTANA BABAO, Islamic Conference and the Secretary General of the Organization of Islamic
JULMUNIR JANNARAL, RASHID SABER, and DATU JAMAL ASHLEY ABBAS, Conference" took effect on December 23, 1976. It provided for "[t]he establishment of
representing the other taxpayers of Mindanao, petitioners, Autonomy in the southern Philippines within the realm of the sovereignty and territorial
vs. integrity of the Republic of the Philippines" and enumerated the thirteen (13) provinces
COMMISSION ON ELECTIONS, and HONORABLE GUILLERMO C. CARAGUE, comprising the "areas of autonomy." 2
DEPARTMENT SECRETARY OF BUDGET AND MANAGEMENT, respondents.
In 1987, a new Constitution was ratified, which the for the first time provided for regional
G.R. No. 89965 November 10, 1989 autonomy, Article X, section 15 of the charter provides that "[t]here shall be created
autonomous regions in Muslim Mindanao and in the Cordilleras consisting of provinces,
cities, municipalities, and geographical areas sharing common and distinctive historical
ATTY. ABDULLAH D. MAMA-O, petitioner, and cultural heritage, economic and social structures, and other relevant characteristics
vs. within the framework of this Constitution and the national sovereignty as well as
HON. GUILLERMO CARAGUE, in his capacity as the Secretary of the Budget, and territorial integrity of the Republic of the Philippines."
the COMMISSION ON ELECTIONS, respondents.
To effectuate this mandate, the Constitution further provides:
Abbas, Abbas, Amora, Alejandro-Abbas & Associates for petitioners in G.R. Nos.
89651 and 89965.
Sec. 16. The President shall exercise general supervision over
autonomous regions to ensure that the laws are faithfully executed.
Abdullah D. Mama-o for and in his own behalf in 89965.
Sec. 17. All powers, functions, and responsibilities not granted by
CORTES, J.: this Constitution or by law to the autonomous regions shall be vested
in the National Government.
The present controversy relates to the plebiscite in thirteen (13) provinces and nine (9)
cities in Mindanao and Palawan, 1 scheduled for November 19, 1989, in Sec. 18. The Congress shall enact an organic act for each
implementation of Republic Act No. 6734, entitled "An Act Providing for an Organic Act autonomous region with the assistance and participation of the
for the Autonomous Region in Muslim Mindanao." regional consultative commission composed of representatives
appointed by the President from a list of nominees from multisectoral
These consolidated petitions pray that the Court: (1) enjoin the Commission on bodies. The organic act shall define the basic structure of
Elections (COMELEC) from conducting the plebiscite and the Secretary of Budget and government for the region consisting of the executive and
Management from releasing funds to the COMELEC for that purpose; and (2) declare representative of the constituent political units. The organic acts shall
R.A. No. 6734, or parts thereof, unconstitutional . likewise provide for special courts with personal, family, and property
law jurisdiction consistent with the provisions of this Constitution and
After a consolidated comment was filed by Solicitor General for the respondents, which national laws.
the Court considered as the answer, the case was deemed submitted for decision, the
issues having been joined. Subsequently, petitioner Mama-o filed a "Manifestation with The creation of the autonomous region shall be effective when
Motion for Leave to File Reply on Respondents' Comment and to Open Oral approved by majority of the votes cast by the constituent units in a
Arguments," which the Court noted. plebiscite called for the purpose, provided that only the provinces,
cities, and geographic areas voting favorably in such plebiscite shall
The arguments against R.A. 6734 raised by petitioners may generally be categorized be included in the autonomous region.
into either of the following:
Sec. 19 The first Congress elected under this Constitution shall,
(a) that R.A. 6734, or parts thereof, violates the Constitution, and within eighteen months from the time of organization of both Houses,
pass the organic acts for the autonomous regions in Muslim
Mindanao and the Cordilleras.
(b) that certain provisions of R.A. No. 6734 conflict with the Tripoli Agreement.

1
 Sec. 20. Within its territorial jurisdiction and subject to the provisions We find it neither necessary nor determinative of the case to rule on the nature of the
of this Constitution and national laws, the organic act of autonomous Tripoli Agreement and its binding effect on the Philippine Government whether under
regions shall provide for legislative powers over: public international or internal Philippine law. In the first place, it is now the Constitution
itself that provides for the creation of an autonomous region in Muslim Mindanao. The
(1) Administrative organization; standard for any inquiry into the validity of R.A. No. 6734 would therefore be what is so
provided in the Constitution. Thus, any conflict between the provisions of R.A. No. 6734
and the provisions of the Tripoli Agreement will not have the effect of enjoining the
(2) Creation of sources of revenues; implementation of the Organic Act. Assuming for the sake of argument that the Tripoli
Agreement is a binding treaty or international agreement, it would then constitute part
(3) Ancestral domain and natural resources; of the law of the land. But as internal law it would not be superior to R.A. No. 6734, an
enactment of the Congress of the Philippines, rather it would be in the same class as
(4) Personal, family, and property relations; the latter [SALONGA, PUBLIC INTERNATIONAL LAW 320 (4th ed., 1974), citing Head
Money Cases, 112 U.S. 580 (1884) and Foster v. Nelson, 2 Pet. 253 (1829)]. Thus, if
at all, R.A. No. 6734 would be amendatory of the Tripoli Agreement, being a
(5) Regional urban and rural planning subsequent law. Only a determination by this Court that R.A. No. 6734 contravened the
development; Constitution would result in the granting of the reliefs sought. 3

(6) Economic, social and tourism development; 2. The Court shall therefore only pass upon the constitutional questions which have
been raised by petitioners.
(7) Educational policies;
Petitioner Abbas argues that R.A. No. 6734 unconditionally creates an autonomous
(8) Preservation and development of the cultural region in Mindanao, contrary to the aforequoted provisions of the Constitution on the
heritage; and autonomous region which make the creation of such region dependent upon the
outcome of the plebiscite.
(9) Such other matters as may be authorized by
law for the promotion of the general welfare of the In support of his argument, petitioner cites Article II, section 1(1) of R.A. No. 6734 which
people of the region. declares that "[t]here is hereby created the Autonomous Region in Muslim Mindanao,
to be composed of provinces and cities voting favorably in the plebiscite called for the
purpose, in accordance with Section 18, Article X of the Constitution." Petitioner
Sec. 21. The preservation of peace and order within the regions shall
contends that the tenor of the above provision makes the creation of an autonomous
be the responsibility of the local police agencies which shall be
region absolute, such that even if only two provinces vote in favor of autonomy, an
organized, maintained, supervised, and utilized in accordance with
autonomous region would still be created composed of the two provinces where the
applicable laws. The defense and security of the region shall be the
favorable votes were obtained.
responsibility of the National Government.

The matter of the creation of the autonomous region and its composition needs to be
Pursuant to the constitutional mandate, R.A. No. 6734 was enacted and signed into
clarified.
law on August 1, 1989.

Firs, the questioned provision itself in R.A. No. 6734 refers to Section 18, Article X of
1. The Court shall dispose first of the second category of arguments raised by
the Constitution which sets forth the conditions necessary for the creation of the
petitioners, i.e. that certain provisions of R.A. No. 6734 conflict with the provisions of
autonomous region. The reference to the constitutional provision cannot be glossed
the Tripoli Agreement.
over for it clearly indicates that the creation of the autonomous region shall take place
only in accord with the constitutional requirements. Second, there is a specific provision
Petitioners premise their arguments on the assumption that the Tripoli Agreement is in the Transitory Provisions (Article XIX) of the Organic Act, which incorporates
part of the law of the land, being a binding international agreement . The Solicitor substantially the same requirements embodied in the Constitution and fills in the details,
General asserts that the Tripoli Agreement is neither a binding treaty, not having been thus:
entered into by the Republic of the Philippines with a sovereign state and ratified
according to the provisions of the 1973 or 1987 Constitutions, nor a binding
SEC. 13. The creation of the Autonomous Region in Muslim
international agreement.
Mindanao shall take effect when approved by a majority of the votes

2
 cast by the constituent units provided in paragraph (2) of Sec. 1 of of the Constitution was to get the majority of the totality of the votes cast, they could
Article II of this Act in a plebiscite which shall be held not earlier than have simply adopted the same phraseology as that used for the ratification of the
ninety (90) days or later than one hundred twenty (120) days after Constitution, i.e. "the creation of the autonomous region shall be effective when
the approval of this Act: Provided, That only the provinces and cities approved by a majority of the votes cast in a plebiscite called for the purpose."
voting favorably in such plebiscite shall be included in the
Autonomous Region in Muslim Mindanao. The provinces and cities It is thus clear that what is required by the Constitution is a simple majority of votes
which in the plebiscite do not vote for inclusion in the Autonomous approving the organic Act in individual constituent units and not a double majority of
Region shall remain the existing administrative determination, merge the votes in all constituent units put together, as well as in the individual constituent
the existing regions. units.

Thus, under the Constitution and R.A. No 6734, the creation of the autonomous region More importantly, because of its categorical language, this is also the sense in which
shall take effect only when approved by a majority of the votes cast by the constituent the vote requirement in the plebiscite provided under Article X, section 18 must have
units in a plebiscite, and only those provinces and cities where a majority vote in favor been understood by the people when they ratified the Constitution.
of the Organic Act shall be included in the autonomous region. The provinces and cities
wherein such a majority is not attained shall not be included in the autonomous region.
It may be that even if an autonomous region is created, not all of the thirteen (13) Invoking the earlier cited constitutional provisions, petitioner Mama-o, on the other
provinces and nine (9) cities mentioned in Article II, section 1 (2) of R.A. No. 6734 shall hand, maintains that only those areas which, to his view, share common and distinctive
be included therein. The single plebiscite contemplated by the Constitution and R.A. historical and cultural heritage, economic and social structures, and other relevant
No. 6734 will therefore be determinative of (1) whether there shall be an autonomous characteristics should be properly included within the coverage of the autonomous
region in Muslim Mindanao and (2) which provinces and cities, among those region. He insists that R.A. No. 6734 is unconstitutional because only the provinces of
enumerated in R.A. No. 6734, shall compromise it. [See III RECORD OF THE Basilan, Sulu, Tawi-Tawi, Lanao del Sur, Lanao del Norte and Maguindanao and the
CONSTITUTIONAL COMMISSION 482-492 (1986)]. cities of Marawi and Cotabato, and not all of the thirteen (13) provinces and nine (9)
cities included in the Organic Act, possess such concurrence in historical and cultural
heritage and other relevant characteristics. By including areas which do not strictly
As provided in the Constitution, the creation of the Autonomous region in Muslim share the same characteristics. By including areas which do not strictly share the same
Mindanao is made effective upon the approval "by majority of the votes cast by the characteristic as the others, petitioner claims that Congress has expanded the scope
constituent units in a plebiscite called for the purpose" [Art. X, sec. 18]. The question of the autonomous region which the constitution itself has prescribed to be limited.
has been raised as to what this majority means. Does it refer to a majority of the total
votes cast in the plebiscite in all the constituent units, or a majority in each of the
constituent units, or both? Petitioner's argument is not tenable. The Constitution lays down the standards by which
Congress shall determine which areas should constitute the autonomous region.
Guided by these constitutional criteria, the ascertainment by Congress of the areas that
We need not go beyond the Constitution to resolve this question. share common attributes is within the exclusive realm of the legislature's discretion.
Any review of this ascertainment would have to go into the wisdom of the law. This the
If the framers of the Constitution intended to require approval by a majority of all the Court cannot do without doing violence to the separation of governmental powers.
votes cast in the plebiscite they would have so indicated. Thus, in Article XVIII, section [Angara v. Electoral Commission, 63 Phil 139 (1936); Morfe v. Mutuc, G.R. No. L-
27, it is provided that "[t]his Constitution shall take effect immediately upon its 20387, January 31, 1968, 22 SCRA 424].
ratification by a majority of the votes cast in a plebiscite held for the purpose ...
Comparing this with the provision on the creation of the autonomous region, which After assailing the inclusion of non-Muslim areas in the Organic Act for lack of basis,
reads: petitioner Mama-o would then adopt the extreme view that other non-Muslim areas in
Mindanao should likewise be covered. He argues that since the Organic Act covers
The creation of the autonomous region shall be effective when several non-Muslim areas, its scope should be further broadened to include the rest of
approved by majority of the votes cast by the constituent units in a the non-Muslim areas in Mindanao in order for the other non-Muslim areas denies said
plebiscite called for the purpose, provided that only provinces, cities areas equal protection of the law, and therefore is violative of the Constitution.
and geographic areas voting favorably in such plebiscite shall be
included in the autonomous region. [Art. X, sec, 18, para, 2]. Petitioner's contention runs counter to the very same constitutional provision he had
earlier invoked. Any determination by Congress of what areas in Mindanao should
it will readily be seen that the creation of the autonomous region is made to depend, compromise the autonomous region, taking into account shared historical and cultural
not on the total majority vote in the plebiscite, but on the will of the majority in each of heritage, economic and social structures, and other relevant characteristics, would
the constituent units and the proviso underscores this. for if the intention of the framers necessarily carry with it the exclusion of other areas. As earlier stated, such

3
determination by Congress of which areas should be covered by the organic act for the According to petitioners, said provision grants the President the power to merge
autonomous region constitutes a recognized legislative prerogative, whose wisdom regions, a power which is not conferred by the Constitution upon the President. That
may not be inquired into by this Court. the President may choose to merge existing regions pursuant to the Organic Act is
challenged as being in conflict with Article X, Section 10 of the Constitution which
Moreover, equal protection permits of reasonable classification [People v. Vera, 65 Phil. provides:
56 (1963); Laurel v. Misa, 76 Phil. 372 (1946); J.M. Tuason and Co. v. Land tenure
Administration, G.R. No. L-21064, February 18, 1970, 31 SCRA 413]. In Dumlao v. No province, city, municipality, or barangay may be created, divided,
Commission on Elections G.R. No. 52245, January 22, 1980, 95 SCRA 392], the Court merged, abolished, or its boundary substantially altered, except in
ruled that once class may be treated differently from another where the groupings are accordance with the criteria established in the local government code
based on reasonable and real distinctions. The guarantee of equal protection is thus and subject to approval by a majority of the votes cast in a plebiscite
not infringed in this case, the classification having been made by Congress on the basis in the political units directly affected.
of substantial distinctions as set forth by the Constitution itself.
It must be pointed out that what is referred to in R.A. No. 6734 is the merger of
Both petitions also question the validity of R.A. No. 6734 on the ground that it violates administrative regions, i.e. Regions I to XII and the National Capital Region, which are
the constitutional guarantee on free exercise of religion [Art. III, sec. 5]. The objection mere groupings of contiguous provinces for administrative purposes [Integrated
centers on a provision in the Organic Act which mandates that should there be any Reorganization Plan (1972), which was made as part of the law of the land by Pres.
conflict between the Muslim Code [P.D. No. 1083] and the Tribal Code (still be enacted) dec. No. 1, Pres. Dec. No. 742]. Administrative regions are not territorial and political
on the one had, and the national law on the other hand, the Shari'ah courts created subdivisions like provinces, cities, municipalities and barangays [see Art. X, sec. 1 of
under the same Act should apply national law. Petitioners maintain that the islamic law the Constitution]. While the power to merge administrative regions is not expressly
(Shari'ah) is derived from the Koran, which makes it part of divine law. Thus it may not provided for in the Constitution, it is a power which has traditionally been lodged with
be subjected to any "man-made" national law. Petitioner Abbas supports this objection the President to facilitate the exercise of the power of general supervision over local
by enumerating possible instances of conflict between provisions of the Muslim Code governments [see Art. X, sec. 4 of the Constitution]. There is no conflict between the
and national law, wherein an application of national law might be offensive to a Muslim's power of the President to merge administrative regions with the constitutional provision
religious convictions. requiring a plebiscite in the merger of local government units because the requirement
of a plebiscite in a merger expressly applies only to provinces, cities, municipalities or
As enshrined in the Constitution, judicial power includes the duty to settle actual barangays, not to administrative regions.
controversies involving rights which are legally demandable and enforceable. [Art. VIII,
Sec. 11. As a condition precedent for the power to be exercised, an actual controversy Petitioners likewise question the validity of provisions in the Organic Act which create
between litigants must first exist [Angara v. Electoral Commission, supra; Tan v. an Oversight Committee to supervise the transfer to the autonomous region of the
Macapagal, G.R. No. L-34161, February 29, 1972, 43 SCRA 677]. In the present case, powers, appropriations, and properties vested upon the regional government by the
no actual controversy between real litigants exists. There are no conflicting claims organic Act [Art. XIX, Secs. 3 and 4]. Said provisions mandate that the transfer of
involving the application of national law resulting in an alleged violation of religious certain national government offices and their properties to the regional government
freedom. This being so, the Court in this case may not be called upon to resolve what shall be made pursuant to a schedule prescribed by the Oversight Committee, and that
is merely a perceived potential conflict between the provisions the Muslim Code and such transfer should be accomplished within six (6) years from the organization of the
national law. regional government.

Petitioners also impugn the constitutionality of Article XIX, section 13 of R.A. No. 6734 It is asserted by petitioners that such provisions are unconstitutional because while the
which, among others, states: Constitution states that the creation of the autonomous region shall take effect upon
approval in a plebiscite, the requirement of organizing an Oversight committee tasked
. . . Provided, That only the provinces and cities voting favorably in with supervising the transfer of powers and properties to the regional government would
such plebiscite shall be included in the Autonomous Region in in effect delay the creation of the autonomous region.
Muslim Mindanao. The provinces and cities which in the plebiscite
do not vote for inclusion in the Autonomous Region shall remain in Under the Constitution, the creation of the autonomous region hinges only on the result
the existing administrative regions: Provided, however, that the of the plebiscite. if the Organic Act is approved by majority of the votes cast by
President may, by administrative determination, merge the existing constituent units in the scheduled plebiscite, the creation of the autonomous region
regions. immediately takes effect delay the creation of the autonomous region.

4
Under the constitution, the creation of the autonomous region hinges only on the result
of the plebiscite. if the Organic Act is approved by majority of the votes cast by
constituent units in the scheduled plebiscite, the creation of the autonomous region
immediately takes effect. The questioned provisions in R.A. No. 6734 requiring an
oversight Committee to supervise the transfer do not provide for a different date of
effectivity. Much less would the organization of the Oversight Committee cause an
impediment to the operation of the Organic Act, for such is evidently aimed at effecting
a smooth transition period for the regional government. The constitutional objection on
this point thus cannot be sustained as there is no bases therefor.

Every law has in its favor the presumption of constitutionality [Yu Cong Eng v. Trinidad,
47 Phil. 387 (1925); Salas v. Jarencio, G.R. No. L-29788, August 30, 1979, 46 SCRA
734; Morfe v. Mutuc, supra; Peralta v. COMELEC, G.R. No. L-47771, March 11, 1978,
82 SCRA 30]. Those who petition this Court to declare a law, or parts thereof,
unconstitutional must clearly establish the basis for such a declaration. otherwise, their
petition must fail. Based on the grounds raised by petitioners to challenge the
constitutionality of R.A. No. 6734, the Court finds that petitioners have failed to
overcome the presumption. The dismissal of these two petitions is, therefore,
inevitable.

WHEREFORE, the petitions are DISMISSED for lack of merit.

SO ORDERED.

5
G.R. No. 96754 June 22, 1995 Maguindanao, Sulu and Tawi-Tawi. In accordance with the constitutional provision,
these provinces became the Autonomous Region in Muslim Mindanao.
CONGRESSMAN JAMES L. CHIONGBIAN (Third District, South Cotobato)
ADELBERT W. ANTONINO (First District, South Cotobato), WILFREDO G. On the other hand, with respect to provinces and cities not voting in favor of the
CAINGLET (Third District, Zamboanga del Norte), HILARION RAMIRO, JR. Autonomous Region, Art. XIX, § 13 of R.A. No. 6734 provides,
(Second Division, Misamis Occidental), ERNESTO S. AMATONG (Second
District, Zamboanga del Norte), ALVIN G. DANS (Lone District, Basilan), That only the provinces and cities voting favorably in such plebiscites
ABDULLAH M. DIMAPORO (Second District, Lanao del Norte), and shall be included in the Autonomous Region in Muslim Mindanao.
CONGRESSWOMAN MARIA CLARA A. LOBREGAT (Lone District, Zamboanga The provinces and cities which in the plebiscite do not vote for
City) petitioners, inclusion in the Autonomous Region shall remain in the existing
vs. administrative regions. Provided, however, that the President may,
HON. OSCAR M. ORBOS, Executive Secretary; COMMITTEE CHAIRMAN SEC. by administrative determination, merge the existing regions.
FIDEL V. RAMOS, CABINET OFFICERS FOR REGIONAL DEVELOPMENT FOR
REGIONS X AND XII, CHAIRMAN OF THE REGIONAL DEVELOPMENT COUNCIL
FOR REGION X, CHAIRMAN JESUS V. AYALA, CABINET OFFICERS FOR Pursuant to the authority granted by this provision, then President Corazon C. Aquino
REGIONAL DEVELOPMENT FOR REGIONS XI and XII, DEPARTMENT OF LOCAL issued on October 12, 1990 Executive Order No. 429, "providing for the Reorganization
GOVERNMENT, NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY of the Administrative Regions in Mindanao." Under this Order, as amended by E.O. No.
SECRETARIAT, PRESIDENTIAL MANAGEMENT STAFF, HON. GUILLERMO 439 —
CARAGUE, Secretary of the DEPARTMENT OF BUDGET and MANAGEMENT; and
HON. ROSALINA S. CAJUCUM, OIC National Treasurer, respondents. (1) Misamis Occidental, at present part of Region X, will become part
of Region IX.
IMMANUEL JALDON, petitioner,
vs. (2) Oroquieta City, Tangub City and Ozamiz City, at present parts of
HON. EXECUTIVE SECRETARY OSCAR M. ORBOS, HON. FIDEL RAMOS, HON. Region X will become parts of Region IX.
SECRETARY LUIS SANTOS, AND HON. NATIONAL TREASURER ROSALINA
CAJUCOM, respondents.
(3) South Cotobato, at present a part of Region XI, will become part
of Region XII.
MENDOZA, J.:
(4) General Santos City, at present part of Region XI, will become
These suits challenge the validity of a provision of the Organic Act for the Autonomous part of Region XII.
Region in Muslim Mindanao (R.A. No. 6734), authorizing the President of the
Philippines to "merge" by administrative determination the regions remaining after the (5) Lanao del Norte, at present part of Region XII, will become part
establishment of the Autonomous Region, and the Executive Order issued by the of Region IX.
President pursuant to such authority, "Providing for the Reorganization of
Administrative Regions in Mindanao." A temporary restraining order prayed for by the
petitioners was issued by this Court on January 29, 1991, enjoining the respondents (6) Iligan City and Marawi City, at present part of Region XII, will
from enforcing the Executive Order and statute in question. become part of Region IX.

The facts are as follows: Petitioners in G.R. No. 96754 are, or at least at the time of the filing of their petition,
members of Congress representing various legislative districts in South Cotobato,
Zamboanga del Norte, Basilan, Lanao del Norte and Zamboanga City. On November
Pursuant to Art. X, §18 of the 1987 Constitution, Congress passed R.A. No. 6734, the 12, 1990, they wrote then President Aquino protesting E.O. No. 429. They contended
Organic Act for the Autonomous Region in Muslim Mindanao, calling for a plebiscite to that
be held in the provinces of Basilan, Cotobato, Davao del Sur, Lanao del Norte, Lanao
del Sur, Maguindanao, Palawan, South Cotabato, Sultan Kudarat, Sulu, Tawi-Tawi,
Zamboanga del Norte, and Zamboanga del Sur, and the cities of Cotabato, Dapitan, There is no law which authorizes the President to pick certain
Dipolog, General Santos, Iligan, Marawi, Pagadian, Puerto Princesa and Zamboanga. provinces and cities within the existing regions — some of which did
In the ensuing plebiscite held on November 16, 1989, four provinces voted in favor of not even take part in the plebiscite as in the case of the province of
creating an autonomous region. These are the provinces of Lanao del Sur, Misamis Occidental and the cities of Oroquieta, Tangub and Ozamiz
— and restructure them to new administrative regions. On the other
6
 hand, the law (Sec. 13, Art. XIX, R.A. 6734) is specific to the point, In addition, petitioner in G.R. No. 96673 challenges the validity of E.O. No. 429 on the
that is, that "the provinces and cities which in the plebiscite do not ground that the power granted by Art. XIX, §13 to the President is only to "merge
vote for inclusion in the Autonomous Region shall remain in the regions IX and XII" but not to reorganize the entire administrative regions in Mindanao
existing administrative regions." and certainly not to transfer the regional center of Region IX from Zamboanga City to
Pagadian City.
The transfer of the provinces of Misamis Occidental from Region X
to Region IX; Lanao del Norte from Region XII to Region IX, and The Solicitor General defends the reorganization of regions in Mindanao by E.O. No.
South Cotobato from Region XI to Region XII are alterations of the 429 as merely the exercise of a power "traditionally lodged in the President," as held
existing structures of governmental units, in other in Abbas v. Comelec,2 and as a mere incident of his power of general supervision over
words, reorganization. This can be gleaned from Executive Order local governments and control of executive departments, bureaus and offices under
No. 429, thus Art. X, §16 and Art. VII, §17, respectively, of the Constitution.

Whereas, there is an urgent need to reorganize He contends that there is no undue delegation of legislative power but only a grant of
the administrative regions in Mindanao to the power to "fill up" or provide the details of legislation because Congress did not have
guarantee the effective delivery of field services of the facility to provide for them. He cites by analogy the case of Municipality of Cardona
government agencies taking into consideration the v. Municipality of Binangonan,3 in which the power of the Governor-General to fix
formation of the Autonomous Region in Muslim municipal boundaries was sustained on the ground that —
Mindanao.
[such power] is simply a transference of certain details with respect
With due respect to Her Excellency, we submit that while the to provinces, municipalities, and townships, many of them newly
authority necessarily includes the authority to merge, the authority to created, and all of them subject to a more or less rapid change both
merge does not include the authority to reorganize. Therefore, the in development and centers of population, the proper regulation of
President's authority under RA 6734 to "merge existing regions" which might require not only prompt action but action of such a
cannot be construed to include the authority to reorganize them. To detailed character as not to permit the legislative body, as such, to
do so will violate the rules of statutory construction. take it efficiently.

The transfer of regional centers under Executive Order 429 is The Solicitor General justifies the grant to the President of the power "to merge the
actually a restructuring (reorganization) of administrative regions. existing regions" as something fairly embraced in the title of R.A. No. 6734, to wit, "An
While this reorganization, as in Executive Order 429, does not affect Act Providing for an Organic Act for the Autonomous Region in Muslim Mindanao,"
the apportionment of congressional representatives, the same is not because it is germane to it.
valid under the penultimate paragraph of Sec. 13, Art. XIX of R.A.
6734 and Ordinance appended to the 1986 Constitution apportioning He argues that the power is not limited to the merger of those regions in which the
the seats of the House of Representatives of Congress of the provinces and cities which took part in the plebiscite are located but that it extends to
Philippines to the different legislative districts in provinces and cities. 1 all regions in Mindanao as necessitated by the establishment of the autonomous
region.
As their protest went unheeded, while Inauguration Ceremonies of the New
Administrative Region IX were scheduled on January 26, 1991, petitioners brought this Finally, he invokes P.D. No. 1416, as amended by P.D. No. 1772 which provides:
suit for certiorari and prohibition.
1. The President of the Philippines shall have the continuing authority
On the other hand, the petitioner in G.R. No. 96673, Immanuel Jaldon, is a resident of to reorganize the National Government. In exercising this authority,
Zamboanga City, who is suing in the capacity of taxpayer and citizen of the Republic the President shall be guided by generally acceptable principles of
of the Philippines. good government and responsive national government, including but
not limited to the following guidelines for a more efficient, effective,
Petitioners in both cases contend that Art. XIX, §13 of R.A. No. 6734 is unconstitutional economical and development-oriented governmental framework:
because (1) it unduly delegates legislative power to the President by authorizing him to
"merge [by administrative determination] the existing regions" or at any rate provides (a) More effective planning implementation, and
no standard for the exercise of the power delegated and (2) the power granted is not review functions;
expressed in the title of the law.
7
 (b) Greater decentralization and responsiveness (1) whether the power to "merge" administrative regions is legislative in character, as
in decision-making process; petitioners contend, or whether it is executive in character, as respondents claim it is,
and, in any event, whether Art. XIX, §13 is invalid because it contains no standard to
(c) Further minimization, if not, elimination, of guide the President's discretion;
duplication or overlapping of purposes, functions,
activities, and programs; (2) whether the power given is fairly expressed in the title of the statute; and

(d) Further development of as standardized as (3) whether the power granted authorizes the reorganization even of regions the
possible ministerial, sub-ministerial and corporate provinces and cities in which either did not take part in the plebiscite on the creation of
organizational structures; the Autonomous Region or did not vote in favor of it; and

(e) Further development of the regionalization (4) whether the power granted to the President includes the power to transfer the
process; and regional center of Region IX from Zamboanga City to Pagadian City.

(f) Further rationalization of the functions of and It will be useful to recall first the nature of administrative regions and the basis and
administrative relationships among government purpose for their creation. On September 9, 1968, R.A. No. 5435 was passed
entities. "authorizing the President of the Philippines, with the help of a Commission on
Reorganization, to reorganize the different executive departments, bureaus, offices,
For purposes of this Decree, the coverage of the agencies and instrumentalities of the government, including banking or financial
continuing authority of the President to reorganize institutions and corporations owned or controlled by it." The purpose was to promote
shall be interpreted to encompass all agencies, "simplicity, economy and efficiency in the government."4 The Commission on
entities, instrumentalities, and units of the National Reorganization created under the law was required to submit an integrated
Government, including all government owned or reorganization plan not later than December 31, 1969 to the President who was in turn
controlled corporations as well as the entire range required to submit the plan to Congress within forty days after the opening of its next
of the powers, functions, authorities, regular session. The law provided that any reorganization plan submitted would
administrative relationships, acid related aspects become effective only upon the approval of Congress. 5
pertaining to these agencies, entities,
instrumentalities, and units. Accordingly, the Reorganization Commission prepared an Integrated Reorganization
Plan which divided the country into eleven administrative regions. 6 By P.D. No. 1, the
2. [T]he President may, at his discretion, take the following actions: Plan was approved and made part of the law of the land on September 24, 1972. P.D.
No. 1 was twice amended in 1975, first by P.D. No. 742 which "restructur[ed] the
regional organization of Mindanao, Basilan, Sulu and Tawi-Tawi" and later by P.D. No.
xxx xxx xxx 773 which further "restructur[ed] the regional organization of Mindanao and divid[ed]
Region IX into two sub-regions." In 1978, P.D. No. 1555 transferred the regional center
f. Create, abolish, group, consolidate, merge, or of Region IX from Jolo to Zamboanga City.
integrate entities, agencies, instrumentalities, and
units of the National Government, as well as Thus the creation and subsequent reorganization of administrative regions have been
expand, amend, change, or otherwise modify their by the President pursuant to authority granted to him by law. In conferring on the
powers, functions and authorities, including, with President the power "to merge [by administrative determination] the existing regions"
respect to government-owned or controlled following the establishment of the Autonomous Region in Muslim Mindanao, Congress
corporations, their corporate life, capitalization, merely followed the pattern set in previous legislation dating back to the initial
and other relevant aspects of their charters. organization of administrative regions in 1972. The choice of the President as delegate
is logical because the division of the country into regions is intended to facilitate not
g. Take such other related actions as may be only the administration of local governments but also the direction of executive
necessary to carry out the purposes and departments which the law requires should have regional offices. As this Court
objectives of this Decree. observed in Abbas, "while the power to merge administrative regions is not expressly
provided for in the Constitution, it is a power which has traditionally been lodged with
Considering the arguments of the parties, the issues are: the President to facilitate the exercise of the power of general supervision over local

8
governments [seeArt. X, §4 of the Constitution]." The regions themselves are not legally designated regions. Aggravating this unacceptable or
territorial and political divisions like provinces, cities, municipalities and barangays but untenable situation is EO No. 429's effecting certain movements on
are "mere groupings of contiguous provinces for administrative purposes."7 The power areas which did not even participate in the November 19, 1989
conferred on the President is similar to the power to adjust municipal boundaries 8 which plebiscite. The unauthorized action of the President, as effected by
has been described in Pelaez v. Auditor General9 or as "administrative in nature." and under the questioned EO No. 429, is shown by the following
dispositions: (1) Misamis Occidental, formerly of Region X and which
There is, therefore, no abdication by Congress of its legislative power in conferring on did not even participate in the plebiscite, was moved from said
the President the power to merge administrative regions. The question is whether Region X to Region IX; (2) the cities of Ozamis, Oroquieta, and
Congress has provided a sufficient standard by which the President is to be guided in Tangub, all formerly belonging to Region X, which likewise did not
the exercise of the power granted and whether in any event the grant of power to him participate in the said plebiscite, were transferred to Region IX; (3)
is included in the subject expressed in the title of the law. South Cotobato, from Region XI to Region XII; (4) General Santos
City: from Region XI to Region XII; (5) Lanao del Norte, from Region
XII to Region IX; and (6) the cities of Marawi and Iligan from Region
First, the question of standard. A legislative standard need not be expressed. It may XII to Region IX. All of the said provinces and cities voted "NO", and
simply be gathered or implied. 10 Nor need it be found in the law challenged because it thereby rejected their entry into the Autonomous Region in Muslim
may be embodied in other statutes on the same subject as that of the challenged Mindanao, as provided under RA No. 6734. 15
legislation. 11
The contention has no merit. While Art. XIX, §13 provides that "The provinces and cities
With respect to the power to merge existing administrative regions, the standard is to which do not vote for inclusion in the Autonomous Region shall remain in the existing
be found in the same policy underlying the grant to the President in R.A. No. 5435 of administrative regions," this provision is subject to the qualification that "the President
the power to reorganize the Executive Department, to wit: "to promote simplicity, may by administrative determination merge the existing regions." This means that while
economy and efficiency in the government to enable it to pursue programs consistent non-assenting provinces and cities are to remain in the regions as designated upon the
with national goals for accelerated social and economic development and to improve creation of the Autonomous Region, they may nevertheless be regrouped with
the service in the transaction of the public business." 12 Indeed, as the original eleven contiguous provinces forming other regions as the exigency of administration may
administrative regions were established in accordance with this policy, it is logical to require.
suppose that in authorizing the President to "merge [by administrative determination]
the existing regions" in view of the withdrawal from some of those regions of the
provinces now constituting the Autonomous Region, the purpose of Congress was to The regrouping is done only on paper. It involves no more than are definition or
reconstitute the original basis for the organization of administrative regions. redrawing of the lines separating administrative regions for the purpose of facilitating
the administrative supervision of local government units by the President and insuring
the efficient delivery of essential services. There will be no "transfer" of local
Nor is Art. XIX, §13 susceptible to charge that its subject is not embraced in the title of governments from one region to another except as they may thus be regrouped so that
R.A. No. 6734. The constitutional requirement that "every bill passed by the Congress a province like Lanao del Norte, which is at present part of Region XII, will become part
shall embrace only one subject which shall be expressed in the title thereof" 13 has of Region IX.
always been given a practical rather than a technical construction. The title is not
required to be an index of the content of the bill. It is a sufficient compliance with the
constitutional requirement if the title expresses the general subject and all provisions The regrouping of contiguous provinces is not even analogous to a redistricting or to
of the statute are germane to that subject. 14 Certainly the reorganization of the the division or merger of local governments, which all have political consequences on
remaining administrative regions is germane to the general subject of R.A. No. 6734, the right of people residing in those political units to vote and to be voted for. It cannot
which is the establishment of the Autonomous Region in Muslim Mindanao. be overemphasized that administrative regions are mere groupings of contiguous
provinces for administrative purposes, not for political representation.
Finally, it is contended that the power granted to the President is limited to the
reorganization of administrative regions in which some of the provinces and cities which Petitioners nonetheless insist that only those regions, in which the provinces and cities
voted in favor of regional autonomy are found, because Art. XIX, §13 provides that which voted for inclusion in the Autonomous Region are located, can be "merged" by
those which did not vote for autonomy "shall remain in the existing administrative the President.
regions." More specifically, petitioner in G.R. No. 96673 claims:
To be fundamental reason Art. XIX, §13 is not so limited. But the more fundamental
The questioned Executive Order No. 429 distorted and, in fact, reason is that the President's power cannot be so limited without neglecting the
contravened the clear intent of this provision by moving out or necessities of administration. It is noteworthy that the petitioners do not claim that the
transferring certain political subdivisions (provinces/cities) out of their reorganization of the regions in E.O. No. 429 is irrational. The fact is that, as they
themselves admit, the reorganization of administrative regions in E.O. No. 429 is based
9
on relevant criteria, to wit: (1) contiguity and geographical features; (2) transportation
and communication facilities; (3) cultural and language groupings; (4) land area and
population; (5) existing regional centers adopted by several agencies; (6) socio-
economic development programs in the regions and (7) number of provinces and cities.

What has been said above applies to the change of the regional center from
Zamboanga City to Pagadian City. Petitioners contend that the determination of
provincial capitals has always been by act of Congress. But as, this Court said in
Abbas, 16 administrative regions are mere "groupings of contiguous provinces for
administrative purposes, . . . [They] are not territorial and political subdivisions like
provinces, cities, municipalities and barangays." There is, therefore, no basis for
contending that only Congress can change or determine regional centers. To the
contrary, the examples of P.D. Nos. 1, 742, 773 and 1555 suggest that the power to
reorganize administrative regions carries with it the power to determine the regional
center.

It may be that the transfer of the regional center in Region IX from Zamboanga City to
Pagadian City may entail the expenditure of large sums of money for the construction
of buildings and other infrastructure to house regional offices. That contention is
addressed to the wisdom of the transfer rather than to its legality and it is settled that
courts are not the arbiters of the wisdom or expediency of legislation. In any event this
is a question that we will consider only if fully briefed and upon a more adequate record
than that presented by petitioners.

WHEREFORE, the petitions for certiorari and prohibition are DISMISSED for lack of
merit.

SO ORDERED.

10
DATU MICHAEL ABAS KIDA, G.R. No. 196271 Respondents.
in his personal capacity, and in representation of x----------------------------------------------x
MAGUINDANAO FEDERATION OF AUTONOMOUS Present:
IRRIGATORS ASSOCIATION, INC., HADJI MUHMINA J. ALMARIM CENTI TILLAH, DATU
USMAN, JOHN ANTHONY L. LIM, JAMILON T. ODIN, ASRIN CORONA, C.J., CASAN CONDING CANA, and PARTIDO DEMOKRATIKO
TIMBOL JAIYARI, MUJIB M. KALANG, ALIH AL-SAIDI J. CARPIO, PILIPINO LAKAS NG BAYAN (PDP-LABAN),
SAPI-E, KESSAR DAMSIE ABDIL, and BASSAM ALUH VELASCO, JR., Petitioners,
SAUPI, LEONARDO-DE
Petitioners, CASTRO,
BRION, - versus - G.R. No. 197221
PERALTA,
- versus - BERSAMIN,
DEL CASTILLO, THE COMMISSION ON ELECTIONS, through its Chairman,
ABAD, SIXTO BRILLANTES, JR., HON. PAQUITO N. OCHOA, JR.,
SENATE OF THE PHILIPPINES, represented by its VILLARAMA, in his capacity as Executive Secretary, HON. FLORENCIO
President JUAN PONCE ENRILE, HOUSE OF JR., B. ABAD, JR., in his capacity as Secretary of the
REPRESENTATIVES, thru SPEAKER FELICIANO PEREZ, Department of Budget and Management, and HON.
BELMONTE, COMMISSION ON ELECTIONS, thru its MENDOZA, ROBERTO B. TAN, in his capacity as Treasurer of the
Chairman, SIXTO BRILLANTES, JR., PAQUITO OCHOA, SERENO, Philippines,
JR., Office of the President Executive Secretary, REYES, and Respondents.
FLORENCIO ABAD, JR., Secretary of Budget, and PERLAS- x----------------------------------------------x
ROBERTO TAN, Treasurer of the Philippines, BERNABE, JJ.
Respondents. ATTY. ROMULO B. MACALINTAL,
x----------------------------------------------x Promulgated: Petitioner, G.R. No. 197280
BASARI D. MAPUPUNO,
Petitioner, October 18, 2011
- versus -

- versus -
COMMISSION ON ELECTIONS and THE OFFICE OF THE
PRESIDENT, through EXECUTIVE SECRETARY PAQUITO
SIXTO BRILLANTES, in his capacity as Chairman of the N. OCHOA, JR.,
Commission on Elections, FLORENCIO ABAD, JR. in his Respondents.
capacity as Secretary of the Department of Budget and x----------------------------------------------x
Management, PACQUITO OCHOA, JR., in his capacity as
Executive Secretary, JUAN PONCE ENRILE, in his capacity LUIS BAROK BIRAOGO,
as Senate President, and FELICIANO BELMONTE, in his G.R. No. 196305 Petitioner,
capacity as Speaker of the House of Representatives,
Respondents.
x----------------------------------------------x - versus -

REP. EDCEL C. LAGMAN,

Petitioner, THE COMMISSION ON ELECTIONS and EXECUTIVE
SECRETARY PAQUITO N. OCHOA, JR.,
Respondents.
- versus - x----------------------------------------------x

JACINTO V. PARAS,
PAQUITO N. OCHOA, JR., in his capacity as the Executive Petitioner, G.R. No. 197282
Secretary, and the COMMISSION ON ELECTIONS,

11
 - versus - were challenged in petitions filed with this Court. These petitions multiplied after RA
No. 10153 was passed.

EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR., and the Factual Antecedents

COMMISSION ON ELECTIONS,
Respondents. The State, through Sections 15 to 22, Article X of the 1987 Constitution,
x--------------------------------------------x mandated the creation of autonomous regions in Muslim Mindanao and
the Cordilleras. Section 15 states:
MINORITY RIGHTS FORUM, PHILIPPINES, INC.,
Respondents-Intervenor. Section 15. There shall be created autonomous regions in Muslim
Mindanao and in the Cordilleras consisting of provinces, cities,
municipalities, and geographical areas sharing common and
distinctive historical and cultural heritage, economic and social
structures, and other relevant characteristics within the framework of
G.R. No. 197392 this Constitution and the national sovereignty as well as territorial
integrity of the Republic of the Philippines.

Section 18 of the Article, on the other hand, directed Congress to enact an

organic act for these autonomous regions to concretely carry into effect the granted
autonomy.

Section 18. The Congress shall enact an organic act for each
autonomous region with the assistance and participation of the
regional consultative commission composed of representatives
appointed by the President from a list of nominees from multisectoral
bodies. The organic act shall define the basic structure of
government for the region consisting of the executive department
and legislative assembly, both of which shall be elective and
G.R. No. 197454 representative of the constituent political units. The organic acts shall
likewise provide for special courts with personal, family and property
law jurisdiction consistent with the provisions of this Constitution and
national laws.
x------------------------------------------------------------------------------------x
DECISION The creation of the autonomous region shall be effective
BRION, J.: when approved by a majority of the votes cast by the constituent
units in a plebiscite called for the purpose, provided that only
On June 30, 2011, Republic Act (RA) No. 10153, entitled An Act Providing for provinces, cities, and geographic areas voting favorably in such
the Synchronization of the Elections in the Autonomous Region in Muslim Mindanao plebiscite shall be included in the autonomous region.
(ARMM) with the National and Local Elections and for Other Purposes was enacted.
The law reset the ARMM elections from the 8th of August 2011, to the second Monday On August 1, 1989 or two years after the effectivity of the 1987 Constitution,
of May 2013 and every three (3) years thereafter, to coincide with the countrys regular Congress acted through Republic Act (RA) No. 6734 entitled An Act Providing for an
national and local elections. The law as well granted the President the power to appoint Organic Act for the Autonomous Region in Muslim Mindanao. A plebiscite was held
officers-in-charge (OICs) for the Office of the Regional Governor, the Regional Vice- on November 6, 1990 as required by Section 18(2), Article X of RA No. 6734, thus fully
Governor, and the Members of the Regional Legislative Assembly, who shall perform establishing the Autonomous Region of Muslim Mindanao (ARMM). The initially
the functions pertaining to the said offices until the officials duly elected in the May 2013 assenting provinces were Lanao del Sur, Maguindanao, Sulu and Tawi-tawi. RA No.
elections shall have qualified and assumed office. 6734 scheduled the first regular elections for the regional officials of the ARMM on a
date not earlier than 60 days nor later than 90 days after its ratification.
Even before its formal passage, the bills that became RA No. 10153 already
spawned petitions against their validity; House Bill No. 4146 and Senate Bill No. 2756 RA No. 9054 (entitled An Act to Strengthen and Expand the Organic Act for the
Autonomous Region in Muslim Mindanao, Amending for the Purpose Republic Act No.

12
6734, entitled An Act Providing for the Autonomous Region in Muslim Mindanao, as
Amended) was the next legislative act passed. This law provided further refinement in b) Petition for Mandamus and Prohibition[6] filed by Atty. Romulo Macalintal as a
the basic ARMM structure first defined in the original organic act, and reset the regular taxpayer against the COMELEC, docketed as G.R. No. 197282;
elections for the ARMM regional officials to the second Monday of September 2001.
c) Petition for Certiorari and Mandamus, Injunction and Preliminary
Congress passed the next law affecting ARMM RA No. 9140[1] - on June 22, Injunction[7] filed by Louis Barok Biraogo against the COMELEC and
2001. This law reset the first regular elections originally scheduled under RA No. 9054, Executive Secretary Paquito N. Ochoa, Jr., docketed as G.R. No. 197392;
to November 26, 2001. It likewise set the plebiscite to ratify RA No. 9054 to not later and
than August 15, 2001.
d) Petition for Certiorari and Mandamus[8] filed by Jacinto Paras as a member of
RA No. 9054 was ratified in a plebiscite held on August 14, 2001. the House of Representatives against Executive Secretary Paquito Ochoa, Jr.
The province of Basilan and Marawi City voted to join ARMM on the same date. and the COMELEC, docketed as G.R. No. 197454.

RA No. 9333[2] was subsequently passed by Congress to reset the ARMM Petitioners Alamarim Centi Tillah and Datu Casan Conding Cana as
regional elections to the 2nd Monday of August 2005, and on the same date every 3 registered voters from the ARMM, with the Partido Demokratiko Pilipino Lakas ng
years thereafter. Unlike RA No. 6734 and RA No. 9054, RA No. 9333 was not ratified Bayan (a political party with candidates in the ARMM regional elections scheduled for
in a plebiscite. August 8, 2011), also filed a Petition for Prohibition and Mandamus [9] against the
COMELEC, docketed as G.R. No. 197280, to assail the constitutionality of RA No.
Pursuant to RA No. 9333, the next ARMM regional elections should have been 9140, RA No. 9333 and RA No. 10153.
held on August 8, 2011. COMELEC had begun preparations for these elections and
had accepted certificates of candidacies for the various regional offices to be Subsequently, Anak Mindanao Party-List, Minority Rights Forum Philippines, Inc. and
elected. But on June 30, 2011, RA No. 10153 was enacted, resetting the ARMM Bangsamoro Solidarity Movement filed their own Motion for Leave to Admit their Motion
elections to May 2013, to coincide with the regular national and local elections of the for Intervention and Comment-in-Intervention dated July 18, 2011. On July 26, 2011,
country. the Court granted the motion. In the same Resolution, the Court ordered the
consolidation of all the petitions relating to the constitutionality of HB No. 4146, SB No.
RA No. 10153 originated in the House of Representatives as House Bill (HB) 2756, RA No. 9333, and RA No. 10153.
No. 4146, seeking the postponement of the ARMM elections scheduled on August 8,
2011. On March 22, 2011, the House of Representatives passed HB No. 4146, with Oral arguments were held on August 9, 2011 and August 16, 2011. Thereafter, the
one hundred ninety one (191) Members voting in its favor. parties were instructed to submit their respective memoranda within twenty (20) days.

After the Senate received HB No. 4146, it adopted its own version, Senate Bill On September 13, 2011, the Court issued a temporary restraining order enjoining the
No. 2756 (SB No. 2756), on June 6, 2011. Thirteen (13) Senators voted favorably for implementation of RA No. 10153 and ordering the incumbent elective officials of ARMM
its passage. On June 7, 2011, the House of Representative concurred with the Senate to continue to perform their functions should these cases not be decided by the end of
amendments, and on June 30, 2011, the President signed RA No. 10153 into law. their term on September 30, 2011.

As mentioned, the early challenge to RA No. 10153 came through a petition The Arguments
filed with this Court G.R. No. 196271[3] - assailing the constitutionality of both HB No.
4146 and SB No. 2756, and challenging the validity of RA No. 9333 as well for non- The petitioners assailing RA No. 9140, RA No. 9333 and RA No. 10153 assert that
compliance with the constitutional plebiscite requirement. Thereafter, petitioner Basari these laws amend RA No. 9054 and thus, have to comply with the supermajority vote
Mapupuno in G.R. No. 196305 filed another petition[4] also assailing the validity of RA and plebiscite requirements prescribed under Sections 1 and 3, Article XVII of RA No.
No. 9333. 9094 in order to become effective.

With the enactment into law of RA No. 10153, the COMELEC stopped its The petitions assailing RA No. 10153 further maintain that it is unconstitutional for its
preparations for the ARMM elections. The law gave rise as well to the filing of the failure to comply with the three-reading requirement of Section 26(2), Article VI of the
following petitions against its constitutionality: Constitution. Also cited as grounds are the alleged violations of the right of suffrage of
the people of ARMM, as well as the failure to adhere to the elective and representative
a) Petition for Certiorari and Prohibition[5] filed by Rep. Edcel Lagman as a character of the executive and legislative departments of the ARMM. Lastly, the
member of the House of Representatives against Paquito Ochoa, Jr. (in his petitioners challenged the grant to the President of the power to appoint OICs to
capacity as the Executive Secretary) and the COMELEC, docketed as G.R. undertake the functions of the elective ARMM officials until the officials elected under
No. 197221; the May 2013 regular elections shall have assumed office. Corrolarily, they also argue

13
that the power of appointment also gave the President the power of control over the We resolve to DISMISS the petitions and thereby UPHOLD the
ARMM, in complete violation of Section 16, Article X of the Constitution. constitutionality of RA No. 10153 in toto.
I. Synchronization as a recognized constitutional mandate
The Issues
From the parties submissions, the following issues were recognized and argued by the The respondent Office of the Solicitor General (OSG) argues that the Constitution
parties in the oral arguments of August 9 and 16, 2011: mandates synchronization, and in support of this position, cites Sections 1, 2 and 5,
Article XVIII (Transitory Provisions) of the 1987 Constitution, which provides:
I. Whether the 1987 Constitution mandates the synchronization
of elections
Section 1. The first elections of Members of the Congress under this
Constitution shall be held on the second Monday of May, 1987.
II. Whether the passage of RA No. 10153 violates Section 26(2),
Article VI of the 1987 Constitution The first local elections shall be held on a date to be determined by
the President, which may be simultaneous with the election of the
III. Whether the passage of RA No. 10153 requires a supermajority Members of the Congress. It shall include the election of all Members
vote and plebiscite of the city or municipal councils in the Metropolitan Manila area.
Section 2. The Senators, Members of the House of Representatives
A. Does the postponement of the ARMM regular elections
and the local officials first elected under this Constitution shall serve
constitute an amendment to Section 7, Article XVIII of until noon of June 30, 1992.
RA No. 9054?
Of the Senators elected in the election in 1992, the first twelve
B. Does the requirement of a supermajority vote for obtaining the highest number of votes shall serve for six year and the
amendments or revisions to RA No. 9054 violate remaining twelve for three years.
Section 1 and Section 16(2), Article VI of the 1987 xxx
Constitution and the corollary doctrine on irrepealable
laws? Section 5. The six-year term of the incumbent President and Vice
President elected in the February 7, 1986 election is, for purposes of
C. Does the requirement of a plebiscite apply only in the synchronization of elections, hereby extended to noon of June 30,
creation of autonomous regions under paragraph 2, 1992.
Section 18, Article X of the 1987 Constitution? The first regular elections for President and Vice-President under this
Constitution shall be held on the second Monday of May, 1992.
IV. Whether RA No. 10153 violates the autonomy granted to
the ARMM We agree with this position.

V. Whether the grant of the power to appoint OICs violates: While the Constitution does not expressly state that Congress has to
synchronize national and local elections, the clear intent towards this objective can be
A. Section 15, Article X of the 1987 Constitution gleaned from the Transitory Provisions (Article XVIII) of the Constitution,[10] which show
the extent to which the Constitutional Commission, by deliberately making adjustments
B. Section 16, Article X of the 1987 Constitution to the terms of the incumbent officials, sought to attain synchronization of elections. [11]

C. Section 18, Article X of the 1987 Constitution The objective behind setting a common termination date for all elective
officials, done among others through the shortening the terms of the twelve winning
VI. Whether the proposal to hold special elections is constitutional and senators with the least number of votes, is to synchronize the holding of all future
legal. elections whether national or local to once every three years.[12] This intention finds full
support in the discussions during the Constitutional Commission deliberations. [13]
We shall discuss these issues in the order they are presented above. These Constitutional Commission exchanges, read with the provisions of the
Transitory Provisions of the Constitution, all serve as patent indicators of the
constitutional mandate to hold synchronized national and local elections, starting the
OUR RULING second Monday of May, 1992 and for all the following elections.

14
 This Court was not left behind in recognizing the synchronization of the Section 1. The territorial and political subdivisions of the Republic of
national and local elections as a constitutional mandate. In Osmea v. Commission on the Philippines are the provinces, cities, municipalities, and
Elections,[14]we explained: barangays. There shall be autonomous regions in Muslim Mindanao,
and the Cordilleras as hereinafter provided.
It is clear from the aforequoted provisions of the 1987
Constitution that the terms of office of Senators, Members of the Thus, we find the contention that the synchronization mandated by the
House of Representatives, the local officials, the President and the Constitution does not include the regional elections of the ARMM unmeritorious. We
Vice-President have been synchronized to end on the same hour, shall refer to synchronization in the course of our discussions below, as this concept
date and year noon of June 30, 1992. permeates the consideration of the various issues posed in this case and must be
recalled time and again for its complete resolution.
It is likewise evident from the wording of the above-
mentioned Sections that the term of synchronization is used
synonymously as the phrase holding simultaneously since this is the
II. The Presidents Certification on the Urgency of RA No. 10153
precise intent in terminating their Office Tenure on the same day or
occasion. This common termination date will synchronize future
The petitioners in G.R. No. 197280 also challenge the validity of RA No.
elections to once every three years (Bernas, the Constitution of the
10153 for its alleged failure to comply with Section 26(2), Article VI of the
Republic of the Philippines, Vol. II, p. 605).
Constitution[18]which provides that before bills passed by either the House or the Senate
That the election for Senators, Members of the House of can become laws, they must pass through three readings on separate days. The
Representatives and the local officials (under Sec. 2, Art. XVIII) will exception is when the President certifies to the necessity of the bills immediate
have to be synchronized with the election for President and Vice enactment.
President (under Sec. 5, Art. XVIII) is likewise evident from the x x
x records of the proceedings in the Constitutional Commission. The Court, in Tolentino v. Secretary of Finance,[19] explained the effect of the
[Emphasis supplied.] Presidents certification of necessity in the following manner:

The presidential certification dispensed with the

Although called regional elections, the ARMM elections should be included
requirement not only of printing but also that of reading the bill on
among the elections to be synchronized as it is a local election based on the wording
separate days. The phrase "except when the President certifies to
and structure of the Constitution.
the necessity of its immediate enactment, etc." in Art. VI, Section
26[2] qualifies the two stated conditions before a bill can become a
A basic rule in constitutional construction is that the words used should be
law: [i] the bill has passed three readings on separate days and [ii] it
understood in the sense that they have in common use and given their ordinary
has been printed in its final form and distributed three days before it
meaning, except when technical terms are employed, in which case the significance
thus attached to them prevails.[15] As this Court explained in People v. Derilo,[16] [a]s is finally approved.
the Constitution is not primarily a lawyers document, its language should be understood
xxx
in the sense that it may have in common. Its words should be given their ordinary
meaning except where technical terms are employed. That upon the certification of a bill by the President, the
requirement of three readings on separate days and of printing and
Understood in its ordinary sense, the word local refers to something that primarily distribution can be dispensed with is supported by the weight of
serves the needs of a particular limited district, often a community or minor political legislative practice. For example, the bill defining the certiorari
subdivision.[17] Regional elections in the ARMM for the positions of governor, vice- jurisdiction of this Court which, in consolidation with the Senate
governor and regional assembly representatives obviously fall within this classification, version, became Republic Act No. 5440, was passed on second and
since they pertain to the elected officials who will serve within the limited region of third readings in the House of Representatives on the same day [May
ARMM. 14, 1968] after the bill had been certified by the President as urgent.

From the perspective of the Constitution, autonomous regions are considered

In the present case, the records show that the President wrote to the Speaker
one of the forms of local governments, as evident from Article X of the Constitution
of the House of Representatives to certify the necessity of the immediate enactment of
entitled Local Government. Autonomous regions are established and discussed under
a law synchronizing the ARMM elections with the national and local
Sections 15 to 21 of this Article the article wholly devoted to Local Government. That
elections.[20] Following our Tolentino ruling, the Presidents certification exempted both
an autonomous region is considered a form of local government is also reflected in
the House and the Senate from having to comply with the three separate readings
Section 1, Article X of the Constitution, which provides:
requirement.

15
 On the follow-up contention that no necessity existed for the immediate Philippines upon a vote of two-thirds (2/3) of the Members of the
enactment of these bills since there was no public calamity or emergency that had to House of Representatives and of the Senate voting separately.
be met, again we hark back to our ruling in Tolentino:
Section 3. Any amendment to or revision of this Organic Act shall
The sufficiency of the factual basis of the suspension of the become effective only when approved by a majority of the vote cast
writ of habeas corpus or declaration of martial law Art. VII, Section in a plebiscite called for the purpose, which shall be held not earlier
18, or the existence of a national emergency justifying the delegation than sixty (60) days or later than ninety (90) days after the approval
of extraordinary powers to the President under Art. VI, Section 23(2) of such amendment or revision.
is subject to judicial review because basic rights of individuals may
be of hazard. But the factual basis of presidential certification of We find no merit in this contention.
bills, which involves doing away with procedural requirements
designed to insure that bills are duly considered by members of In the first place, neither RA No. 9333 nor RA No. 10153 amends RA No.
Congress, certainly should elicit a different standard of 9054. As an examination of these laws will show, RA No. 9054 only provides for the
review. [Emphasis supplied.] schedule of the first ARMM elections and does not fix the date of the regular
elections. A need therefore existed for the Congress to fix the date of
the subsequent ARMM regular elections, which it did by enacting RA No. 9333 and
thereafter, RA No. 10153. Obviously, these subsequent laws RA No. 9333 and RA No.
The House of Representatives and the Senate in the exercise of their 10153 cannot be considered amendments to RA No. 9054 as they did not change
legislative discretion gave full recognition to the Presidents certification and promptly or revise any provision in the latter law; they merely filled in a gap in RA No. 9054
enacted RA No. 10153. Under the circumstances, nothing short of grave abuse of or supplemented the law by providing the date of the subsequent regular elections.
discretion on the part of the two houses of Congress can justify our intrusion under our
power of judicial review.[21] This view that Congress thought it best to leave the determination of the date
of succeeding ARMM elections to legislative discretion finds support in ARMMs recent
The petitioners, however, failed to provide us with any cause or justification history.
for this course of action. Hence, while the judicial department and this Court are not
bound by the acceptance of the President's certification by both the House of To recall, RA No. 10153 is not the first law passed that rescheduled the ARMM
Representatives and the Senate, prudent exercise of our powers and respect due our elections. The First Organic Act RA No. 6734 not only did not fix the date of the
co-equal branches of government in matters committed to them by the Constitution, subsequent elections; it did not even fix the specific date of the first ARMM
caution a stay of the judicial hand.[22] elections,[24] leaving the date to be fixed in another legislative enactment.
Consequently, RA No. 7647,[25] RA No. 8176,[26] RA No. 8746,[27] RA No. 8753,[28] and
In any case, despite the Presidents certification, the two-fold purpose that RA No. 9012[29] were all enacted by Congress to fix the dates of the ARMM
underlies the requirement for three readings on separate days of every bill must always elections. Since these laws did not change or modify any part or provision of RA No.
be observed to enable our legislators and other parties interested in pending bills to 6734, they were not amendments to this latter law. Consequently, there was no need
intelligently respond to them. Specifically, the purpose with respect to Members of to submit them to any plebiscite for ratification.
Congress is: (1) to inform the legislators of the matters they shall vote on and (2) to
give them notice that a measure is in progress through the enactment process. [23] The Second Organic Act RA No. 9054 which lapsed into law on March 31,
2001, provided that the first elections would be held on the second Monday of
We find, based on the records of the deliberations on the law, that both September 2001. Thereafter, Congress passed RA No. 9140 [30] to reset the date of the
advocates and the opponents of the proposed measure had sufficient opportunities to ARMM elections. Significantly, while RA No. 9140 also scheduled the plebiscite for the
present their views. In this light, no reason exists to nullify RA No. 10153 on the cited ratification of the Second Organic Act (RA No. 9054), the new date of the ARMM
ground. regional elections fixed in RA No. 9140 was not among the provisions ratified in
the plebiscite held to approve RA No. 9054. Thereafter, Congress passed RA No.
III. A. RA No. 9333 and RA No. 10153 are not amendments to RA No. 9054 9333,[31] which further reset the date of the ARMM regional elections. Again, this law
The effectivity of RA No. 9333 and RA No. 10153 has also been challenged was not ratified through a plebiscite.
because they did not comply with Sections 1 and 3, Article XVII of RA No. 9054 in
amending this law. These provisions require: From these legislative actions, we see the clear intention of Congress to treat
the laws which fix the date of the subsequent ARMM elections as separate and distinct
Section 1. Consistent with the provisions of the Constitution, this from the Organic Acts. Congress only acted consistently with this intent when it passed
Organic Act may be reamended or revised by the Congress of the RA No. 10153 without requiring compliance with the amendment prerequisites
embodied in Section 1 and Section 3, Article XVII of RA No. 9054.

16
 Thus, while a supermajority is not a total ban against a repeal, it is a limitation
III. B. Supermajority voting requirement unconstitutional for giving RA No. 9054 in excess of what the Constitution requires on the passage of bills and is constitutionally
the character of an irrepealable law obnoxious because it significantly constricts the future legislators room for action and
flexibility.
Even assuming that RA No. 9333 and RA No. 10153 did in fact amend RA III. C. Section 3, Article XVII of RA No. 9054 excessively enlarged the plebiscite
No. 9054, the supermajority (2/3) voting requirement required under Section 1, Article requirement found in Section 18, Article X of the Constitution
XVII of RA No. 9054[32] has to be struck down for giving RA No. 9054 the character of
an irrepealable law by requiring more than what the Constitution demands. The requirements of RA No. 9054 not only required an unwarranted
supermajority, but enlarged as well the plebiscite requirement, as embodied in its
Section 16(2), Article VI of the Constitution provides that a majority of each Section 3, Article XVII of that Act. As we did on the supermajority requirement, we find
House shall constitute a quorum to do business. In other words, as long as majority of the enlargement of the plebiscite requirement required under Section 18, Article X of
the members of the House of Representatives or the Senate are present, these bodies the Constitution to be excessive to point of absurdity and, hence, a violation of the
have the quorum needed to conduct business and hold session. Within a quorum, a Constitution.
vote of majority is generally sufficient to enact laws or approve acts.
Section 18, Article X of the Constitution states that the plebiscite is required
In contrast, Section 1, Article XVII of RA No. 9054 requires a vote of no less only for the creation of autonomous regions and for determining which provinces, cities
than two-thirds (2/3) of the Members of the House of Representatives and of the and geographic areas will be included in the autonomous regions. While the settled
Senate, voting separately, in order to effectively amend RA No. 9054. Clearly, this 2/3 rule is that amendments to the Organic Act have to comply with the plebiscite
voting requirement is higher than what the Constitution requires for the passage of bills, requirement in order to become effective,[35] questions on the extent of the matters
and served to restrain the plenary powers of Congress to amend, revise or repeal the requiring ratification may unavoidably arise because of the seemingly general terms of
laws it had passed. The Courts pronouncement in City of Davao v. GSIS[33] on this the Constitution and the obvious absurdity that would result if a plebiscite were to be
subject best explains the basis and reason for the unconstitutionality: required for every statutory amendment.

Moreover, it would be noxious anathema to democratic Section 18, Article X of the Constitution plainly states that The creation of the
principles for a legislative body to have the ability to bind the actions autonomous region shall be effective when approved by the majority of the votes case
of future legislative body, considering that both assemblies are by the constituent units in a plebiscite called for the purpose. With these wordings as
regarded with equal footing, exercising as they do the same plenary standard, we interpret the requirement to mean that only amendments to, or revisions
powers. Perpetual infallibility is not one of the attributes desired in of, the Organic Act constitutionally-essential to the creation of autonomous regions i.e.,
a legislative body, and a legislature which attempts to forestall those aspects specifically mentioned in the Constitution which Congress must provide
future amendments or repeals of its enactments labors under for in the Organic Act require ratification through a plebiscite. These amendments to
delusions of omniscience. the Organic Act are those that relate to: (a) the basic structure of the regional
government; (b) the regions judicial system, i.e., the special courts with personal,
xxx family, and property law jurisdiction; and, (c) the grant and extent of the legislative
powers constitutionally conceded to the regional government under Section 20, Article
A state legislature has a plenary law-making power over all X of the Constitution.[36]
subjects, whether pertaining to persons or things, within its territorial
jurisdiction, either to introduce new laws or repeal the old, unless The date of the ARMM elections does not fall under any of the matters that
prohibited expressly or by implication by the federal constitution or the Constitution specifically mandated Congress to provide for in the Organic Act.
limited or restrained by its own. It cannot bind itself or its successors by Therefore, even assuming that the supermajority votes and the plebiscite requirements
enacting irrepealable laws except when so restrained. Every legislative are valid, any change in the date of elections cannot be construed as a substantial
body may modify or abolish the acts passed by itself or its amendment of the Organic Act that would require compliance with these requirements.
predecessors. This power of repeal may be exercised at the same
session at which the original act was passed; and even while a bill is in IV. The synchronization issue
its progress and before it becomes a law. This legislature cannot bind
a future legislature to a particular mode of repeal. It cannot declare As we discussed above, synchronization of national and local elections is a
in advance the intent of subsequent legislatures or the effect of constitutional mandate that Congress must provide for and this synchronization must
subsequent legislation upon existing statutes.[34] (Emphasis ours.) include the ARMM elections. On this point, an existing law in fact already exists RA No.
7166 as the forerunner of the current RA No. 10153. RA No. 7166 already provides for
the synchronization of local elections with the national and congressional
elections. Thus, what RA No. 10153 provides is an old matter for local governments

17
(with the exception of barangay and Sanggunian Kabataan elections where the terms was in view and the circumstances and historical events which led to the enactment of
are not constitutionally provided) and is technically a reiteration of what is already the particular provision as a part of organic law.[43]
reflected in the law, given that regional elections are in reality local elections by express
constitutional recognition.[37] The constitutional provisions on autonomy specifically, Sections 15 to 21 of
Article X of the Constitution constitute express limitations on legislative power as they
To achieve synchronization, Congress necessarily has to reconcile the define autonomy, its requirements and its parameters, thus limiting what is otherwise
schedule of the ARMMs regular elections (which should have been held in August 2011 the unlimited power of Congress to legislate on the governance of the autonomous
based on RA No. 9333) with the fixed schedule of the national and local elections (fixed region.
by RA No. 7166 to be held in May 2013).
Of particular relevance to the issues of the present case are the limitations
During the oral arguments, the Court identified the three options open to posed by the prescribed basic structure of government i.e., that the government must
Congress in order to resolve this problem. These options are: (1) to allow the elective have an executive department and a legislative assembly, both of which must be
officials in the ARMM to remain in office in a hold over capacity, pursuant to Section elective and representative of the constituent political units; national government, too,
7(1), Article VII of RA No. 9054, until those elected in the synchronized elections must not encroach on the legislative powers granted under Section 20, Article
assume office;[38](2) to hold special elections in the ARMM, with the terms of those X. Conversely and as expressly reflected in Section 17, Article X, all powers and
elected to expire when those elected in the synchronized elections assume office; or functions not granted by this Constitution or by law to the autonomous regions shall be
(3) to authorize the President to appoint OICs, pursuant to Section 3 of RA No. 10153, vested in the National Government.
also until those elected in the synchronized elections assume office. The totality of Sections 15 to 21 of Article X should likewise serve as a
standard that Congress must observe in dealing with legislation touching on the affairs
As will be abundantly clear in the discussion below, Congress, in choosing to of the autonomous regions. The terms of these sections leave no doubt on what the
grant the President the power to appoint OICs, chose the correct option and passed Constitution intends the idea of self-rule or self-government, in particular, the power to
RA No. 10153 as a completely valid law. legislate on a wide array of social, economic and administrative matters. But equally
clear under these provisions are the permeating principles of national sovereignty and
the territorial integrity of the Republic, as expressed in the above-quoted Section 17
and in Section 15.[44] In other words, the Constitution and the supporting jurisprudence,
V. The Constitutionality of RA No. 10153 as they now stand, reject the notion of imperium et imperio[45] in the relationship
between the national and the regional governments.
A. Basic Underlying Premises
In relation with synchronization, both autonomy and the synchronization of
To fully appreciate the available options, certain underlying material premises national and local elections are recognized and established constitutional mandates,
must be fully understood. The first is the extent of the powers of Congress to legislate; with one being as compelling as the other. If their compelling force differs at all, the
the second is the constitutional mandate for the synchronization of elections; and difference is in their coverage; synchronization operates on and affects the whole
the third is on the concept of autonomy as recognized and established under the 1987 country, while regional autonomy as the term suggests directly carries a narrower
Constitution. regional effect although its national effect cannot be discounted.

The grant of legislative power to Congress is broad, general and These underlying basic concepts characterize the powers and limitations of
comprehensive.[39] The legislative body possesses plenary power for all purposes of Congress when it acted on RA No. 10153. To succinctly describe the legal situation
civil government.[40]Any power, deemed to be legislative by usage and tradition, is that faced Congress then, its decision to synchronize the regional elections with the
necessarily possessed by Congress, unless the Constitution has lodged it national, congressional and all other local elections (save
elsewhere.[41] Except as limited by the Constitution, either expressly or impliedly, for barangay and sangguniang kabataan elections) left it with the problem of how to
legislative power embraces all subjects and extends to all matters of general concern provide the ARMM with governance in the intervening period between the
or common interest.[42] expiration of the term of those elected in August 2008 and the assumption to office
twenty-one (21) months away of those who will win in the synchronized elections on
The constitutional limitations on legislative power are either express or May 13, 2013.
implied. The express limitations are generally provided in some provisions of the
Declaration of Principles and State Policies (Article 2) and in the provisions Bill of Rights The problem, in other words, was for interim measures for this period,
(Article 3). Other constitutional provisions (such as the initiative and referendum clause consistent with the terms of the Constitution and its established supporting
of Article 6, Sections 1 and 32, and the autonomy provisions of Article X) provide their jurisprudence, and with the respect due to the concept of autonomy. Interim measures,
own express limitations. The implied limitations are found in the evident purpose which to be sure, is not a strange phenomenon in the Philippine legal landscape. The
Constitutions Transitory Provisions themselves collectively provide measures for

18
transition from the old constitution to the new[46] and for the introduction of new It is not competent for the legislature to extend the term of
concepts.[47] As previously mentioned, the adjustment of elective terms and of elections officers by providing that they shall hold over until their successors
towards the goal of synchronization first transpired under the Transitory Provisions. The are elected and qualified where the constitution has in effect or by
adjustments, however, failed to look far enough or deeply enough, particularly into the clear implication prescribed the term and when the Constitution fixes
problems that synchronizing regional autonomous elections would entail; thus, the the day on which the official term shall begin, there is no legislative
present problem is with us today. authority to continue the office beyond that period, even though the
successors fail to qualify within the time.
The creation of local government units also represents instances when interim
measures are required. In the creation of Quezon del Sur[48] and Dinagat Islands,[49] the In American Jurisprudence it has been stated as
creating statutes authorized the President to appoint an interim governor, vice-governor follows:
and members of the sangguniang panlalawigan although these positions are
essentially elective in character; the appointive officials were to serve until a new set of It has been broadly stated that the
provincial officials shall have been elected and qualified. [50] A similar authority to legislature cannot, by an act postponing the
appoint is provided in the transition of a local government from a sub-province to a election to fill an office the term of which is
province.[51] limited by the Constitution, extend the term of
the incumbent beyond the period as limited by
In all these, the need for interim measures is dictated by necessity; out-of-the- the Constitution. [Emphasis ours.]
way arrangements and approaches were adopted or used in order to adjust to the goal
or objective in sight in a manner that does not do violence to the Constitution and to Independently of the Osmea ruling, the primacy of the Constitution as the
reasonably accepted norms. Under these limitations, the choice of measures was a supreme law of the land dictates that where the Constitution has itself made a
question of wisdom left to congressional discretion. determination or given its mandate, then the matters so determined or mandated
should be respected until the Constitution itself is changed by amendment or repeal
To return to the underlying basic concepts, these concepts shall serve as the through the applicable constitutional process. A necessary corollary is that none of the
guideposts and markers in our discussion of the options available to Congress to three branches of government can deviate from the constitutional mandate except only
address the problems brought about by the synchronization of the ARMM elections, as the Constitution itself may allow.[53] If at all, Congress may only pass legislation filing
properly understood as interim measures that Congress had to provide. The proper in details to fully operationalize the constitutional command or to implement it by
understanding of the options as interim measures assume prime materiality as it is legislation if it is non-self-executing; this Court, on the other hand, may only interpret
under these terms that the passage of RA No. 10153 should be measured, the mandate if an interpretation is appropriate and called for. [54]
i.e., given the constitutional objective of synchronization that cannot legally be
faulted, did Congress gravely abuse its discretion or violate the Constitution In the case of the terms of local officials, their term has been fixed clearly and
when it addressed through RA No. 10153 the concomitant problems that the unequivocally, allowing no room for any implementing legislation with respect to the
adjustment of elections necessarily brought with it? fixed term itself and no vagueness that would allow an interpretation from this Court.
Thus, the term of three years for local officials should stay at three (3) years as fixed
B. Holdover Option is Unconstitutional by the Constitution and cannot be extended by holdover by Congress.

We rule out the first option holdover for those who were elected in executive If it will be claimed that the holdover period is effectively another term mandated by
and legislative positions in the ARMM during the 2008-2011 term as an option that Congress, the net result is for Congress to create a new term and to appoint the
Congress could have chosen because a holdover violates Section 8, Article X of the occupant for the new term. This view like the extension of the elective term is
Constitution. This provision states: constitutionally infirm because Congress cannot do indirectly what it cannot do
directly, i.e., to act in a way that would effectively extend the term of the incumbents.
Section 8. The term of office of elective local officials, Indeed, if acts that cannot be legally done directly can be done indirectly, then all laws
except barangay officials, which shall be determined by law, shall be would be illusory.[55] Congress cannot also create a new term and effectively appoint
three years and no such official shall serve for more than three the occupant of the position for the new term. This is effectively an act of appointment
consecutive terms. [emphases ours] by Congress and an unconstitutional intrusion into the constitutional appointment power
of the President.[56] Hence, holdover whichever way it is viewed is a constitutionally
infirm option that Congress could not have undertaken.
Since elective ARMM officials are local officials, they are covered and
bound by the three-year term limit prescribed by the Constitution; they cannot extend Jurisprudence, of course, is not without examples of cases where the question of
their term through a holdover. As this Court put in Osmea v. COMELEC:[52] holdover was brought before, and given the imprimatur of approval by, this Court. The
present case though differs significantly from past cases with contrary rulings,

19
particularly from Sambarani v. COMELEC,[57] Adap v. Comelec,[58] and Montesclaros while Section 3, Article X, on local government, provides:
v. Comelec,[59]where the Court ruled that the elective officials could hold on to their
positions in a hold over capacity. Section 3. The Congress shall enact a local government
code which shall provide for xxx the qualifications, election,
All these past cases refer to elective barangay or sangguniang appointment and removal, term, salaries, powers and functions and
kabataan officials whose terms of office are not explicitly provided for duties of local officials[.] [Emphases ours]
in the Constitution; the present case, on the other hand, refers to local elective officials
the ARMM Governor, the ARMM Vice-Governor, and the members of the Regional These provisions support the conclusion that no elections may be held on any
Legislative Assembly whose terms fall within the three-year term limit set by Section 8, other date for the positions of President, Vice President, Members of Congress and
Article X of the Constitution. Because of their constitutionally limited term, Congress local officials, except when so provided by another Act of Congress, or upon orders of
cannot legislate an extension beyond the term for which they were originally elected. a body or officer to whom Congress may have delegated either the power or the
authority to ascertain or fill in the details in the execution of that power. [63]
Even assuming that holdover is constitutionally permissible, and there had
been statutory basis for it (namely Section 7, Article VII of RA No. 9054) in the Notably, Congress has acted on the ARMM elections by postponing the
past,[60] we have to remember that the rule of holdover can only apply as an scheduled August 2011 elections and setting another date May 13, 2011 for regional
available option where no express or implied legislative intent to the contrary elections synchronized with the presidential, congressional and other local
exists; it cannot apply where such contrary intent is evident.[61] elections. By so doing, Congress itself has made a policy decision in the exercise of
its legislative wisdom that it shall not call special elections as an adjustment
Congress, in passing RA No. 10153, made it explicitly clear that it had the measure in synchronizing the ARMM elections with the other elections.
intention of suppressing the holdover rule that prevailed under RA No. 9054 by
completely removing this provision. The deletion is a policy decision that is wholly within After Congress has so acted, neither the Executive nor the Judiciary can act
the discretion of Congress to make in the exercise of its plenary legislative powers; this to the contrary by ordering special elections instead at the call of the COMELEC. This
Court cannot pass upon questions of wisdom, justice or expediency of Court, particularly, cannot make this call without thereby supplanting the legislative
legislation,[62] except where an attendant unconstitutionality or grave abuse of decision and effectively legislating. To be sure, the Court is not without the power to
discretion results. declare an act of Congress null and void for being unconstitutional or for having been
exercised in grave abuse of discretion.[64] But our power rests on very narrow
C. The COMELEC has no authority to order special elections ground and is merely to annul a contravening act of Congress; it is not to
supplant the decision of Congress nor to mandate what Congress itself should
Another option proposed by the petitioner in G.R. No. 197282 is for this Court have done in the exercise of its legislative powers. Thus, contrary to what the
to compel COMELEC to immediately conduct special elections pursuant to Section 5 petition in G.R. No. 197282 urges, we cannot compel COMELEC to call for special
and 6 of Batas Pambansa Bilang (BP) 881. elections.
The power to fix the date of elections is essentially legislative in nature, as
evident from, and exemplified by, the following provisions of the Constitution: Furthermore, we have to bear in mind that the constitutional power of the
COMELEC, in contrast with the power of Congress to call for, and to set the date of,
Section 8, Article VI, applicable to the legislature, provides: elections, is limited to enforcing and administering all laws and regulations relative to
the conduct of an election.[65] Statutorily, COMELEC has no power to call for the holding
Section 8. Unless otherwise provided by law, the regular of special elections unless pursuant to a specific statutory grant. True, Congress did
election of the Senators and the Members of the House of grant, via Sections 5 and 6 of BP 881, COMELEC with the power to postpone elections
Representatives shall be held on the second Monday of May. to another date. However, this power is limited to, and can only be exercised within, the
[Emphasis ours] specific terms and circumstances provided for in the law. We quote:

Section 4(3), Article VII, with the same tenor but applicable solely to the President and Section 5. Postponement of election. - When for any
Vice-President, states: serious cause such as violence, terrorism, loss or destruction of
xxxx election paraphernalia or records, force majeure, and other
analogous causes of such a nature that the holding of a free,
Section 4. xxx Unless otherwise provided by law, the orderly and honest election should become impossible in any
regular election for President and Vice-President shall be held on the political subdivision, the Commission, motu proprio or upon a verified
second Monday of May. [Emphasis ours] petition by any interested party, and after due notice and hearing,
whereby all interested parties are afforded equal opportunity to be
heard, shall postpone the election therein to a date which should

20
 be reasonably close to the date of the election not held, the guise of interpretation, nor include situations not provided nor intended by the
suspended or which resulted in a failure to elect but not later than lawmakers.[66] Clearly, neither Section 5 nor Section 6 of BP 881 can apply to the
thirty days after the cessation of the cause for such postponement or present case and this Court has absolutely no legal basis to compel the COMELEC to
suspension of the election or failure to elect. hold special elections.

Section 6. Failure of election. - If, on account of force D. The Court has no power to shorten the terms of elective officials
majeure, violence, terrorism, fraud, or other analogous
causes the election in any polling place has not been held on
the date fixed, or had been suspended before the hour fixed by Even assuming that it is legally permissible for the Court to compel the
law for the closing of the voting, or after the voting and during the COMELEC to hold special elections, no legal basis likewise exists to rule that the newly
preparation and the transmission of the election returns or in the elected ARMM officials shall hold office only until the ARMM officials elected in the
custody or canvass thereof, such election results in a failure to synchronized elections shall have assumed office.
elect, and in any of such cases the failure or suspension of election In the first place, the Court is not empowered to adjust the terms of elective
would affect the result of the election, the Commission shall, on the officials. Based on the Constitution, the power to fix the term of office of elective
basis of a verified petition by any interested party and after due notice officials, which can be exercised only in the case of barangay officials,[67] is specifically
and hearing, call for the holding or continuation of the election not given to Congress. Even Congress itself may be denied such power, as shown when
held, suspended or which resulted in a failure to elect on a date the Constitution shortened the terms of twelve Senators obtaining the least
reasonably close to the date of the election not held, suspended or votes,[68] and extended the terms of the President and the Vice-President[69] in order to
which resulted in a failure to elect but not later than thirty days after synchronize elections; Congress was not granted this same power. The settled rule is
the cessation of the cause of such postponement or suspension of that terms fixed by the Constitution cannot be changed by mere statute. [70] More
the election or failure to elect. [Emphasis ours] particularly, not even Congress and certainly not this Court, has the authority to fix the
terms of elective local officials in the ARMM for less, or more, than the
constitutionally mandated three years[71] as this tinkering would directly contravene
A close reading of Section 5 of BP 881 reveals that it is meant to address Section 8, Article X of the Constitution as we ruled in Osmena.
instances where elections have already been scheduled to take place but have to
be postponedbecause of (a) violence, (b) terrorism, (c) loss or destruction of election Thus, in the same way that the term of elective ARMM officials cannot be
paraphernalia or records, (d) force majeure, and (e) other analogous causes of such a extended through a holdover, the term cannot be shortened by putting an expiration
nature that the holding of a free, orderly and honest election should become impossible date earlier than the three (3) years that the Constitution itself commands. This
in any political subdivision. Under the principle of ejusdem generis, the term analogous is what will happen a term of less than two years if a call for special elections
causes will be restricted to those unforeseen or unexpected events that prevent the shall prevail. In sum, while synchronization is achieved, the result is at the cost of a
holding of the scheduled elections. These analogous causes are further defined by the violation of an express provision of the Constitution.
phrase of such nature that the holding of a free, orderly and honest election should
become impossible. Neither we nor Congress can opt to shorten the tenure of those officials to be
elected in the ARMM elections instead of acting on their term (where the term means
Similarly, Section 6 of BP 881 applies only to those situations where elections the time during which the officer may claim to hold office as of right and fixes the interval
have already been scheduled but do not take place because of (a) force majeure, after which the several incumbents shall succeed one another, while the tenure
(b) violence, (c) terrorism, (d) fraud, or (e) other analogous causes the election in represents the term during which the incumbent actually holds the office). [72] As with
any polling place has not been held on the date fixed, or had been the fixing of the elective term, neither Congress nor the Court has any legal basis to
suspended before the hour fixed by law for the closing of the voting, or after the voting shorten the tenure of elective ARMM officials. They would commit an unconstitutional
and during the preparation and the transmission of the election returns or in the custody act and gravely abuse their discretion if they do so.
or canvass thereof, such election results in a failure to elect. As in Section 5 of BP
881, Section 6 addresses instances where the elections do not occur or had to be E. The Presidents Power to Appoint OICs
suspended because of unexpectedand unforeseen circumstances.
The above considerations leave only Congress chosen interim measure RA
In the present case, the postponement of the ARMM elections is by No. 10153 and the appointment by the President of OICs to govern the ARMM during
law i.e., by congressional policy and is pursuant to the constitutional mandate of the pre-synchronization period pursuant to Sections 3, 4 and 5 of this law as the only
synchronizationof national and local elections. By no stretch of the imagination can measure that Congress can make. This choice itself, however, should be examined for
these reasons be given the same character as the circumstances contemplated by any attendant constitutional infirmity.
Section 5 or Section 6 of BP 881, which all pertain to extralegal causes that obstruct
the holding of elections. Courts, to be sure, cannot enlarge the scope of a statute under

21
 At the outset, the power to appoint is essentially executive in nature, and the be mistakenly read as a law that changes the elective and representative
limitations on or qualifications to the exercise of this power should be strictly construed; character of ARMM positions. RA No. 10153, however, does not in any way amend
these limitations or qualifications must be clearly stated in order to be what the organic law of the ARMM (RA No. 9054) sets outs in terms of structure of
recognized.[73] The appointing power is embodied in Section 16, Article VII of the governance. What RA No. 10153 in fact only does is to appoint officers-in-charge for
Constitution, which states: the Office of the Regional Governor, Regional Vice Governor and Members of the
Regional Legislative Assembly who shall perform the functions pertaining to the said
offices until the officials duly elected in the May 2013 elections shall have qualified and
Section 16. The President shall nominate and, with the
assumed office. This power is far different from appointing elective ARMM officials for
consent of the Commission on Appointments, appoint the heads of
the abbreviated term ending on the assumption to office of the officials elected in the
the executive departments, ambassadors, other public ministers and
May 2013 elections.
consuls or officers of the armed forces from the rank of colonel or
naval captain, and other officers whose appointments are vested in
As we have already established in our discussion of the supermajority and
him in this Constitution. He shall also appoint all other officers of
plebiscite requirements, the legal reality is that RA No. 10153 did not amend RA No.
the Government whose appointments are not otherwise
9054. RA No. 10153, in fact, provides only for synchronization of elections and
provided for by law, and those whom he may be authorized by
for the interim measures that must in the meanwhile prevail. And this is how RA
law to appoint. The Congress may, by law, vest the appointment of
No. 10153 should be read in the manner it was written and based on its unambiguous
other officers lower in rank in the President alone, in the courts, or in
facial terms.[75] Aside from its order for synchronization, it is purely and simply an
the heads of departments, agencies, commissions, or boards.
interim measure responding to the adjustments that the synchronization
[emphasis ours]
requires.

This provision classifies into four groups the officers that the President can Thus, the appropriate question to ask is whether the interim measure is an
appoint. These are: unreasonable move for Congress to adopt, given the legal situation that the
synchronization unavoidably brought with it. In more concrete terms and based on the
First, the heads of the executive departments; ambassadors; other public above considerations, given the plain unconstitutionality of providing for a
ministers and consuls; officers of the Armed Forces of the Philippines, from the rank of holdover and the unavailability of constitutional possibilities for lengthening or
colonel or naval captain; and other officers whose appointments are vested in the shortening the term of the elected ARMM officials, is the choice of the Presidents
President in this Constitution; power to appoint for a fixed and specific period as an interim measure, and as
allowed under Section 16, Article VII of the Constitution an unconstitutional or
Second, all other officers of the government whose appointments are not unreasonable choice for Congress to make?
otherwise provided for by law;
Admittedly, the grant of the power to the President under other
Third, those whom the President may be authorized by law to situations or where the power of appointment would extend beyond the adjustment
appoint; and period for synchronization would be to foster a government that is not democratic and
republican. For then, the peoples right to choose the leaders to govern them may be
Fourth, officers lower in rank whose appointments the Congress may by law said to besystemically withdrawn to the point of fostering an undemocratic
vest in the President alone.[74] regime. This is the grant that would frontally breach the elective and representative
governance requirement of Section 18, Article X of the Constitution.
Since the Presidents authority to appoint OICs emanates from RA No. 10153,
it falls under the third group of officials that the President can appoint pursuant to But this conclusion would not be true under the very limited circumstances
Section 16, Article VII of the Constitution. Thus, the assailed law facially rests on clear contemplated in RA No. 10153 where the period is fixed and, more importantly, the
constitutional basis. terms of governance both under Section 18, Article X of the Constitution and RA No.
9054 will not systemically be touched nor affected at all. To repeat what has
If at all, the gravest challenge posed by the petitions to the authority to appoint previously been said, RA No. 9054 will govern unchanged and continuously, with full
OICs under Section 3 of RA No. 10153 is the assertion that the Constitution requires effect in accordance with the Constitution, save only for the interim and temporary
that the ARMM executive and legislative officials to be elective and representative of measures that synchronization of elections requires.
the constituent political units. This requirement indeed is an express limitation whose
non-observance in the assailed law leaves the appointment of OICs constitutionally Viewed from another perspective, synchronization will temporarily disrupt the
defective. election process in a local community, the ARMM, as well as the communitys choice of
leaders, but this will take place under a situation of necessity and as an interim measure
After fully examining the issue, we hold that this alleged constitutional problem in the manner that interim measures have been adopted and used in the creation of
is more apparent than real and becomes very real only if RA No. 10153 were to
22
local government units[76] and the adjustments of sub-provinces to the status of current teach us, many developments, some of them critical and adverse, can transpire
provinces.[77] These measures, too, are used in light of the wider national demand for in the countrys Muslim areas in this span of time in the way they transpired in the
the synchronization of elections (considered vis--vis the regional interests past.[78] Thus, it would be reckless to assume that the presence of an acting ARMM
involved). The adoption of these measures, in other words, is no different from the Governor, an acting Vice-Governor and a fully functioning Regional Legislative
exercise by Congress of the inherent police power of the State, where one of the Assembly can be done away with even temporarily. To our mind, the appointment of
essential tests is the reasonableness of the interim measure taken in light of the given OICs under the present circumstances is an absolute necessity.
circumstances.
Significantly, the grant to the President of the power to appoint OICs to
Furthermore, the representative character of the chosen leaders need not undertake the functions of the elective members of the Regional Legislative Assembly
necessarily be affected by the appointment of OICs as this requirement is really a is neither novel nor innovative. We hark back to our earlier pronouncement in Menzon
function of the appointment process; only the elective aspect shall be supplanted by v. Petilla, etc., et al.:[79]
the appointment of OICs. In this regard, RA No. 10153 significantly seeks to address
concerns arising from the appointments by providing, under Sections 3, 4 and 5 of the It may be noted that under Commonwealth Act No. 588 and
assailed law, concrete terms in the Appointment of OIC, the Manner and Procedure of the Revised Administrative Code of 1987, the President is
Appointing OICs, and their Qualifications. empowered to make temporary appointments in certain public
offices, in case of any vacancy that may occur. Albeit both laws
Based on these considerations, we hold that RA No. 10153 viewed in its deal only with the filling of vacancies in appointive positions.
proper context is a law that is not violative of the Constitution (specifically, its autonomy However, in the absence of any contrary provision in the Local
provisions), and one that is reasonable as well under the circumstances. Government Code and in the best interest of public service, we
see no cogent reason why the procedure thus outlined by the
VI. Other Constitutional Concerns two laws may not be similarly applied in the present case. The
respondents contend that the provincial board is the correct
Outside of the above concerns, it has been argued during the oral arguments appointing power. This argument has no merit. As between the
that upholding the constitutionality of RA No. 10153 would set a dangerous precedent President who has supervision over local governments as provided
of giving the President the power to cancel elections anywhere in the country, thus by law and the members of the board who are junior to the vice-
allowing him to replace elective officials with OICs. governor, we have no problem ruling in favor of the President, until
This claim apparently misunderstands that an across-the-board cancellation the law provides otherwise.
of elections is a matter for Congress, not for the President, to address. It is a power A vacancy creates an anomalous situation and finds no
that falls within the powers of Congress in the exercise of its legislative powers. Even approbation under the law for it deprives the constituents of their right
Congress, as discussed above, is limited in what it can legislatively undertake with of representation and governance in their own local government.
respect to elections.
In a republican form of government, the majority rules
If RA No. 10153 cancelled the regular August 2011 elections, it was for a very through their chosen few, and if one of them is incapacitated or
specific and limited purpose the synchronization of elections. It was a temporary means absent, etc., the management of governmental affairs is, to that
to a lasting end the synchronization of elections. Thus, RA No. 10153 and the support extent, may be hampered. Necessarily, there will be a consequent
that the Court gives this legislation are likewise clear and specific, and cannot be delay in the delivery of basic services to the people of Leyte if
transferred or applied to any other cause for the cancellation of elections. Any other the Governor or the Vice-Governor is missing.[80](Emphasis
localized cancellation of elections and call for special elections can occur only in ours.)
accordance with the power already delegated by Congress to the COMELEC, as above
discussed. As in Menzon, leaving the positions of ARMM Governor, Vice Governor, and
members of the Regional Legislative Assembly vacant for 21 months, or almost 2
Given that the incumbent ARMM elective officials cannot continue to act in a years, would clearly cause disruptions and delays in the delivery of basic services to
holdover capacity upon the expiration of their terms, and this Court cannot compel the the people, in the proper management of the affairs of the regional government, and in
COMELEC to conduct special elections, the Court now has to deal with the dilemma of responding to critical developments that may arise. When viewed in this context,
a vacuum in governance in the ARMM. allowing the President in the exercise of his constitutionally-recognized appointment
power to appoint OICs is, in our judgment, a reasonable measure to take.
To emphasize the dire situation a vacuum brings, it should not be forgotten
that a period of 21 months or close to 2 years intervenes from the time that the B. Autonomy in the ARMM
incumbent ARMM elective officials terms expired and the time the new ARMM elective
officials begin their terms in 2013. As the lessons of our Mindanao history past and

23
 It is further argued that while synchronization may be constitutionally Mr. Ople. We define it as a measure of self-government
mandated, it cannot be used to defeat or to impede the autonomy that the Constitution within the larger political framework of the nation.[84] [Emphasis
granted to the ARMM. Phrased in this manner, one would presume that there exists a supplied.]
conflict between two recognized Constitutional mandates synchronization and regional
autonomy such that it is necessary to choose one over the other. This exchange of course is fully and expressly reflected in the above-quoted Section
17, Article X of the Constitution, and by the express reservation under Section 1 of the
We find this to be an erroneous approach that violates a basic principle in same Article that autonomy shall be within the framework of this Constitution and the
constitutional construction ut magis valeat quam pereat: that the Constitution is to be national sovereignty as well as the territorial integrity of the Republic of the Philippines.
interpreted as a whole,[81] and one mandate should not be given importance over the
other except where the primacy of one over the other is clear.[82] We refer to the Courts Interestingly, the framers of the Constitution initially proposed to remove
declaration in Ang-Angco v. Castillo, et al.,[83] thus: Section 17 of Article X, believing it to be unnecessary in light of the enumeration of
powers granted to autonomous regions in Section 20, Article X of the Constitution.
A provision of the constitution should not be construed in Upon further reflection, the framers decided to reinstate the provision in order to make
isolation from the rest. Rather, the constitution must be interpreted it clear, once and for all, that these are the limits of the powers of the autonomous
as a whole, and apparently, conflicting provisions should be government. Those not enumerated are actually to be exercised by the national
reconciled and harmonized in a manner that may give to all of government[.][85] Of note is the Courts pronouncement in Pimentel, Jr. v. Hon.
them full force and effect. [Emphasis supplied.] Aguirre[86] which we quote:

Synchronization is an interest that is as constitutionally entrenched as regional Under the Philippine concept of local autonomy, the
autonomy. They are interests that this Court should reconcile and give effect to, in the national government has not completely relinquished all its powers
way that Congress did in RA No. 10153 which provides the measure to transit to over local governments, including autonomous regions. Only
synchronized regional elections with the least disturbance on the interests that must be administrative powers over local affairs are delegated to political
respected.Particularly, regional autonomy will be respected instead of being sidelined, subdivisions. The purpose of the delegation is to make governance
as the law does not in any way alter, change or modify its governing features, except more directly responsive and effective at the local levels. In turn,
in a very temporary manner and only as necessitated by the attendant circumstances. economic, political and social development at the smaller political
units are expected to propel social and economic growth and
Elsewhere, it has also been argued that the ARMM elections should not be development. But to enable the country to develop as a whole,
synchronized with the national and local elections in order to maintain the autonomy of the programs and policies effected locally must be integrated
the ARMM and insulate its own electoral processes from the rough and tumble of and coordinated towards a common national goal. Thus,
nationwide and local elections. This argument leaves us far from convinced of its policy-setting for the entire country still lies in the President and
merits. Congress. [Emphasis ours.]

As heretofore mentioned and discussed, while autonomous regions are In other words, the autonomy granted to the ARMM cannot be invoked to
granted political autonomy, the framers of the Constitution never equated autonomy defeat national policies and concerns. Since the synchronization of elections is not just
with independence. The ARMM as a regional entity thus continues to operate within a regional concern but a national one, the ARMM is subject to it; the regional autonomy
the larger framework of the State and is still subject to the national policies set by the granted to the ARMM cannot be used to exempt the region from having to act in
national government, save only for those specific areas reserved by the Constitution accordance with a national policy mandated by no less than the Constitution.
for regional autonomous determination. As reflected during the constitutional
deliberations of the provisions on autonomous regions:
Conclusion
Mr. Bennagen. xxx We do not see here a complete
separation from the central government, but rather an efficient Congress acted within its powers and pursuant to a constitutional mandate
working relationship between the autonomous region and the central the synchronization of national and local elections when it enacted RA No. 10153. This
government. We see this as an effective partnership, not a Court cannot question the manner by which Congress undertook this task; the Judiciary
separation. does not and cannot pass upon questions of wisdom, justice or expediency of
legislation.[87] As judges, we can only interpret and apply the law and, despite our
Mr. Romulo. Therefore, complete autonomy is not really doubts about its wisdom, cannot repeal or amend it.[88]
thought of as complete independence.
Nor can the Court presume to dictate the means by which Congress should
address what is essentially a legislative problem. It is not within the Courts power to

24
enlarge or abridge laws; otherwise, the Court will be guilty of usurping the exclusive
prerogative of Congress.[89] The petitioners, in asking this Court to compel COMELEC
to hold special elections despite its lack of authority to do so, are essentially asking us
to venture into the realm of judicial legislation, which is abhorrent to one of the most
basic principles of a republican and democratic government the separation of powers.

The petitioners allege, too, that we should act because Congress acted with
grave abuse of discretion in enacting RA No. 10153. Grave abuse of discretion is such DATU MICHAEL ABAS KIDA, G.R. No. 196271
capricious and whimsical exercise of judgment that is patent and gross as to amount in his personal capacity, and in representation of
to an evasion of a positive duty or to a virtual refusal to perform a duty enjoined by law MAGUINDANAO FEDERATION OF AUTONOMOUS
or to act at all in contemplation of the law as where the power is exercised in an arbitrary IRRIGATORS ASSOCIATION, INC., HADJI MUHMINA J.
and despotic manner by reason of passion and hostility. [90] USMAN, JOHN ANTHONY L. LIM, JAMILON T. ODIN,
ASRIN TIMBOL JAIYARI, MUJIB M. KALANG, ALIH AL-
We find that Congress, in passing RA No. 10153, acted strictly within its SAIDI J. SAPI-E, KESSAR DAMSIE ABDIL, and BASSAM
constitutional mandate. Given an array of choices, it acted within due constitutional ALUH SAUPI,
bounds and with marked reasonableness in light of the necessary adjustments that Petitioners,
synchronization demands. Congress, therefore, cannot be accused of any evasion of - versus -
a positive duty or of a refusal to perform its duty. We thus find no reason to accord merit
to the petitioners claims of grave abuse of discretion. SENATE OF THE PHILIPPINES, represented by its
President JUAN PONCE ENRILE, HOUSE OF
On the general claim that RA No. 10153 is unconstitutional, we can only REPRESENTATIVES, thru SPEAKER FELICIANO
reiterate the established rule that every statute is presumed valid. [91] Congress, thus, BELMONTE, COMMISSION ON ELECTIONS, thru its
has in its favor the presumption of constitutionality of its acts, and the party challenging Chairman, SIXTO BRILLANTES, JR., PAQUITO OCHOA,
the validity of a statute has the onerous task of rebutting this presumption. [92] Any JR., Office of the President Executive Secretary,
reasonable doubt about the validity of the law should be resolved in favor of its FLORENCIO ABAD, JR., Secretary of Budget, and
constitutionality.[93] As this Court declared in Garcia v. Executive Secretary:[94] ROBERTO TAN, Treasurer of the Philippines,
Respondents.
The policy of the courts is to avoid ruling on constitutional X----------------------X
questions and to presume that the acts of the political departments BASARI D. MAPUPUNO,
are valid in the absence of a clear and unmistakable showing to the Petitioner,
contrary. To doubt is to sustain. This presumption is based on the - versus -
doctrine of separation of powers which enjoins upon each
department a becoming respect for the acts of the other SIXTO BRILLANTES, in his capacity as Chairman of the
departments. The theory is that as the joint act of Congress and Commission on Elections, FLORENCIO ABAD, JR. in
the President of the Philippines, a law has been carefully his capacity as Secretary of the Department of Budget
studied and determined to be in accordance with the and Management, PAQUITO OCHOA, JR., in his
fundamental law before it was finally enacted.[95] [Emphasis capacity as Executive Secretary, JUAN PONCE ENRILE,
ours.] in his capacity as Senate President, and FELICIANO
BELMONTE, in his capacity as Speaker of the House of
Given the failure of the petitioners to rebut the presumption of constitutionality Representatives,
in favor of RA No. 10153, we must support and confirm its validity. Respondents.
WHEREFORE, premises considered, we DISMISS the consolidated petitions X - - - - - - - - - - - - - - - - - - - - - - XREP. EDCEL C. LAGMAN,
assailing the validity of RA No. 10153 for lack of merit, and UPHOLD the Petitioner, G.R. No. 196305
constitutionality of this law. We likewise LIFT the temporary restraining order we issued - versus -
in our Resolution of September 13, 2011. No costs.
PAQUITO N. OCHOA, JR., in his capacity as the
SO ORDERED. Executive Secretary, and the COMMISSION ON
ELECTIONS,
Respondents.
X - - - - - - - - - - - - - - - - - - - - - - XALMARIM CENTI TILLAH,
DATU
25
CASAN CONDING CANA, and PARTIDO
DEMOKRATIKO PILIPINO LAKAS NG BAYAN (PDP-
LABAN),
Petitioners,
- versus -

THE COMMISSION ON ELECTIONS, through its

Chairman, SIXTO BRILLANTES, JR., HON. PAQUITO N.
OCHOA, JR., in his capacity as Executive Secretary,
HON. FLORENCIO B. ABAD, JR., in his capacity as
Secretary of the Department of Budget and G.R. No. 197392
Management, and HON. ROBERTO B. TAN, in his G.R. No. 197221
capacity as Treasurer of the Philippines,
Respondents.
X - - - - - - - - - - - - - - - - - - - - - - XATTY. ROMULO B.
MACALINTAL,
Petitioner,
- versus -

COMMISSION ON ELECTIONS and THE OFFICE OF THE

PRESIDENT, through EXECUTIVE SECRETARY
PAQUITO N. OCHOA, JR., G.R. No. 197454
Respondents. G.R. No. 197280
X - - - - - - - - - - - - - - - - - - - - - - XLOUIS BAROK C. Present:
BIRAOGO, CORONA, C.J.,
Petitioner, CARPIO,
- versus - VELASCO, JR.,
LEONARDO-DE
THE COMMISSION ON ELECTIONS and EXECUTIVE CASTRO,
SECRETARY PAQUITO N. OCHOA, JR., BRION,
Respondents. PERALTA,
X - - - - - - - - - - - - - - - - - - - - - - XJACINTO V. PARAS, BERSAMIN,
Petitioner, DEL CASTILLO,*
ABAD,
VILLARAMA,
JR.,
PEREZ,
- versus - MENDOZA,
SERENO,**
REYES, and
PERLAS-
BERNABE, JJ.

Promulgated:
EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR., and
the COMMISSION ON ELECTIONS, February 28,
Respondents. 2012
x-----------------------------------------x G.R. No. 197282 x-----------------------------------------------------------------------------------------x
MINORITY RIGHTS FORUM, PHILIPPINES, INC.,
Respondents-Intervenor.

26
RESOLUTION The petitioner in G.R. No. 197221 raises similar grounds, arguing that:

BRION, J.: I. THE ELECTIVE REGIONAL EXECUTIVE AND

LEGISLATIVE OFFICIALS OF ARMM CANNOT BE
CONSIDERED AS OR EQUATED WITH THE
We resolve: (a) the motion for reconsideration filed by petitioners Datu Michael TRADITIONAL LOCAL GOVERNMENT OFFICIALS IN
Abas Kida, et al. in G.R. No. 196271; (b) the motion for reconsideration filed by THE LOCAL GOVERNMENT UNITS (LGUs) BECAUSE
petitioner Rep. Edcel Lagman in G.R. No. 197221; (c) the ex abundante ad (A) THERE IS NO EXPLICIT CONSTITUTIONAL
cautelam motion for reconsideration filed by petitioner Basari Mapupuno in G.R. No. PROVISION ON SUCH PARITY; AND (B) THE ARMM IS
196305; (d) the motion for reconsideration filed by petitioner Atty. Romulo Macalintal in MORE SUPERIOR THAN LGUs IN STRUCTURE,
G.R. No. 197282; (e) the motion for reconsideration filed by petitioners Almarim Centi POWERS AND AUTONOMY, AND CONSEQUENTLY IS A
Tillah, Datu Casan Conding Cana and Partido Demokratiko Pilipino Lakas ng Bayan in CLASS OF ITS OWN APART FROM TRADITIONAL LGUs.
G.R. No. 197280; (f) the manifestation and motion filed by petitioners Almarim Centi
Tillah, et al. in G.R. No. 197280; and (g) the very urgent motion to issue clarificatory II. THE UNMISTAKABLE AND UNEQUIVOCAL
resolution that the temporary restraining order (TRO) is still existing and effective. CONSTITUTIONAL MANDATE FOR AN ELECTIVE AND
REPRESENTATIVE EXECUTIVE DEPARTMENT AND
These motions assail our Decision dated October 18, 2011, where we upheld LEGISLATIVE ASSEMBLY IN ARMM INDUBITABLY
the constitutionality of Republic Act (RA) No. 10153. Pursuant to the constitutional PRECLUDES THE APPOINTMENT BY THE PRESIDENT
mandate of synchronization, RA No. 10153 postponed the regional elections in the OF OFFICERS-IN-CHARGE (OICs), ALBEIT
Autonomous Region in Muslim Mindanao (ARMM) (which were scheduled to be held MOMENTARY OR TEMPORARY, FOR THE POSITIONS
on the second Monday of August 2011) to the second Monday of May 2013 and OF ARMM GOVERNOR, VICE GOVERNOR AND
recognized the Presidents power to appoint officers-in-charge (OICs) to temporarily MEMBERS OF THE REGIONAL ASSEMBLY.
assume these positions upon the expiration of the terms of the elected officials.
The Motions for Reconsideration III. THE PRESIDENTS APPOINTING POWER IS LIMITED
TO APPOINTIVE OFFICIALS AND DOES NOT EXTEND
The petitioners in G.R. No. 196271 raise the following grounds in support of their TO ELECTIVE OFFICIALS EVEN AS THE PRESIDENT IS
motion: ONLY VESTED WITH SUPERVISORY POWERS OVER
THE ARMM, THEREBY NEGATING THE AWESOME
I. THE HONORABLE COURT ERRED IN CONCLUDING POWER TO APPOINT AND REMOVE OICs OCCUPYING
THAT THE ARMM ELECTIONS ARE LOCAL ELECTIONS, ELECTIVE POSITIONS.
CONSIDERING THAT THE CONSTITUTION GIVES THE
ARMM A SPECIAL STATUS AND IS SEPARATE AND IV. THE CONSTITUTION DOES NOT PROSCRIBE THE
DISTINCT FROM ORDINARY LOCAL GOVERNMENT HOLDOVER OF ARMM ELECTED OFFICIALS PENDING
UNITS. THE ELECTION AND QUALIFICATION OF THEIR
SUCCESSORS.
II. R.A. 10153 AND R.A. 9333 AMEND THE ORGANIC
ACT. V. THE RULING IN OSMENA DOES NOT APPLY TO
ARMM ELECTED OFFICIALS WHOSE TERMS OF
III. THE SUPERMAJORITY PROVISIONS OF THE OFFICE ARE NOT PROVIDED FOR BY THE
ORGANIC ACT (R.A. 9054) ARE NOT IRREPEALABLE CONSTITUTION BUT PRESCRIBED BY THE ORGANIC
LAWS. ACTS.

IV. SECTION 3, ARTICLE XVII OF R.A. 9054 DOES NOT VI. THE REQUIREMENT OF A SUPERMAJORITY OF
VIOLATE SECTION 18, ARTICLE X OF THE VOTES IN THE HOUSE OF REPRESENTATIVES AND
CONSTITUTION. THE SENATE FOR THE VALIDITY OF A SUBSTANTIVE
AMENDMENT OR REVISION OF THE ORGANIC ACTS
V. BALANCE OF INTERESTS TILT IN FAVOR OF THE DOES NOT IMPOSE AN IRREPEALABLE LAW.
DEMOCRATIC PRINCIPLE[.][1]
VII. THE REQUIREMENT OF A PLEBISCITE FOR THE
EFFECTIVITY OF A SUBSTANTIVE AMENDMENT OR

27
 REVISION OF THE ORGANIC ACTS DOES NOT
UNDULY EXPAND THE PLEBISCITE REQUIREMENT OF IV. THE HONORABLE COURT MAY HAVE COMMITTED A
THE CONSTITUTION. SERIOUS ERROR IN HOLDING THAT A PLEBISCITE IS
NOT NECESSARY IN AMENDING THE ORGANIC ACT.
VIII. SYNCHRONIZATION OF THE ARMM ELECTION WITH
THE NATIONAL AND LOCAL ELECTIONS IS NOT xxxx
MANDATED BY THE CONSTITUTION.
V. THE HONORABLE COURT COMMITTED A SERIOUS
IX. THE COMELEC HAS THE AUTHORITY TO HOLD AND ERROR IN DECLARING THE HOLD-OVER OF ARMM
CONDUCT SPECIAL ELECTIONS IN ARMM, AND THE ELECTIVE OFFICIALS UNCONSTITUTIONAL.
ENACTMENT OF AN IMPROVIDENT AND
UNCONSTITUTIONAL STATUTE IS AN ANALOGOUS xxxx
CAUSE WARRANTING COMELECS HOLDING OF
SPECIAL ELECTIONS.[2] (italics supplied) VI. THE HONORABLE COURT COMMITTED A SERIOUS
ERROR IN UPHOLDING THE APPOINTMENT OF
OFFICERS-IN-CHARGE.[3] (italics and underscoring
The petitioner in G.R. No. 196305 further asserts that: supplied)

I. BEFORE THE COURT MAY CONSTRUE OR The petitioner in G.R. No. 197282 contends that:
INTERPRET A STATUTE, IT IS A CONDITION SINE QUA
NON THAT THERE BE DOUBT OR AMBIGUITY IN ITS
LANGUAGE. A.

THE TRANSITORY PROVISIONS HOWEVER ARE CLEAR AND ASSUMING WITHOUT CONCEDING THAT THE APPOINTMENT
UNAMBIGUOUS: THEY REFER TO THE 1992 OF OICs FOR THE REGIONAL GOVERNMENT OF THE ARMM IS
ELECTIONS AND TURN-OVER OF ELECTIVE NOT UNCONSTITUTIONAL TO BEGIN WITH, SUCH
OFFICIALS. APPOINTMENT OF OIC REGIONAL OFFICIALS WILL CREATE A
IN THUS RECOGNIZING A SUPPOSED INTENT OF THE FUNDAMENTAL CHANGE IN THE BASIC STRUCTURE OF THE
FRAMERS, AND APPLYING THE SAME TO ELECTIONS REGIONAL GOVERNMENT SUCH THAT R.A. NO. 10153 SHOULD
20 YEARS AFTER, THE HONORABLE SUPREME HAVE BEEN SUBMITTED TO A PLEBISCITE IN THE ARMM FOR
COURT MAY HAVE VIOLATED THE FOREMOST RULE APPROVAL BY ITS PEOPLE, WHICH PLEBISCITE
IN STATUTORY CONSTRUCTION. REQUIREMENT CANNOT BE CIRCUMVENTED BY SIMPLY
CHARACTERIZING THE PROVISIONS OF R.A. NO. 10153 ON
xxxx APPOINTMENT OF OICs AS AN INTERIM MEASURE.

II. THE HONORABLE COURT SHOULD HAVE B.

CONSIDERED THAT RA 9054, AN ORGANIC ACT, WAS
COMPLETE IN ITSELF. HENCE, RA 10153 SHOULD BE THE HONORABLE COURT ERRED IN RULING THAT THE
CONSIDERED TO HAVE BEEN ENACTED PRECISELY APPOINTMENT BY THE PRESIDENT OF OICs FOR THE ARMM
TO AMEND RA 9054. REGIONAL GOVERNMENT IS NOT VIOLATIVE OF THE
CONSTITUTION.
xxxx
C.
III. THE HONORABLE COURT MAY HAVE COMMITTED A
SERIOUS ERROR IN DECLARING THE 2/3 VOTING THE HOLDOVER PRINCIPLE ADOPTED IN R.A. NO. 9054 DOES
REQUIREMENT SET FORTH IN RA 9054 AS NOT VIOLATE THE CONSTITUTION, AND BEFORE THEIR
UNCONSTITUTIONAL. SUCCESSORS ARE ELECTED IN EITHER AN ELECTION TO BE
HELD AT THE SOONEST POSSIBLE TIME OR IN MAY 2013, THE
xxxx SAID INCUMBENT ARMM REGIONAL OFFICIALS MAY VALIDLY

28
CONTINUE FUNCTIONING AS SUCH IN A HOLDOVER (b) Does RA No. 10153 amend RA No. 9054? If so, does RA No.
CAPACITY IN ACCORDANCE WITH SECTION 7, ARTICLE VII OF 10153 have to comply with the supermajority vote and plebiscite
R.A. NO. 9054. requirements?

D. (c) Is the holdover provision in RA No. 9054 constitutional?

WITH THE CANCELLATION OF THE AUGUST 2011 ARMM (d) Does the COMELEC have the power to call for special elections in
ELECTIONS, SPECIAL ELECTIONS MUST IMMEDIATELY BE ARMM?
HELD FOR THE ELECTIVE REGIONAL OFFICIALS OF THE
ARMM WHO SHALL SERVE UNTIL THEIR SUCCESSORS ARE (e) Does granting the President the power to appoint OICs violate the
ELECTED IN THE MAY 2013 SYNCHRONIZED ELECTIONS.[4] elective and representative nature of ARMM regional legislative and
executive offices?

(f) Does the appointment power granted to the President exceed the
Presidents supervisory powers over autonomous regions?
Finally, the petitioners in G.R. No. 197280 argue that:

a) the Constitutional mandate of synchronization does not apply to The Courts Ruling
the ARMM elections;
We deny the motions for lack of merit.
b) RA No. 10153 negates the basic principle of republican
democracy which, by constitutional mandate, guides the governance Synchronization mandate includes ARMM elections
of the Republic;
The Court was unanimous in holding that the Constitution mandates the
c) RA No. 10153 amends the Organic Act (RA No. 9054) and, thus, synchronization of national and local elections. While the Constitution does not
has to comply with the 2/3 vote from the House of Representatives expressly instruct Congress to synchronize the national and local elections, the
and the Senate, voting separately, and be ratified in a plebiscite; intention can be inferred from the following provisions of the Transitory Provisions
(Article XVIII) of the Constitution, which state:
d) if the choice is between elective officials continuing to hold their
offices even after their terms are over and non-elective individuals Section 1. The first elections of Members of the Congress under this
getting into the vacant elective positions by appointment as OICs, Constitution shall be held on the second Monday of May, 1987.
the holdover option is the better choice;
The first local elections shall be held on a date to be determined by
e) the President only has the power of supervision over the President, which may be simultaneous with the election of the
autonomous regions, which does not include the power to appoint Members of the Congress. It shall include the election of all Members
OICs to take the place of ARMM elective officials; and of the city or municipal councils in the Metropolitan Manila area.

f) it would be better to hold the ARMM elections separately from the Section 2. The Senators, Members of the House of Representatives,
national and local elections as this will make it easier for the and the local officials first elected under this Constitution shall serve
authorities to implement election laws. until noon of June 30, 1992.

Of the Senators elected in the elections in 1992, the first twelve

obtaining the highest number of votes shall serve for six years and
In essence, the Court is asked to resolve the following questions: the remaining twelve for three years.

(a) Does the Constitution mandate the synchronization of ARMM xxxx

regional elections with national and local elections?
Section 5. The six-year term of the incumbent President and Vice-
President elected in the February 7, 1986 election is, for purposes of

29
 synchronization of elections, hereby extended to noon of June 30, definitely, thereafter we can never have an election once every three
1992. years, therefore defeating the very purpose of the Commission when
we adopted the term of six years for the President and another six
The first regular elections for the President and Vice-President under years for the Senators with the possibility of staggering with 12 to
this Constitution shall be held on the second Monday of May, 1992. serve for six years and 12 for three years insofar as the first Senators
are concerned. And so my proposal is the only way to effect the
To fully appreciate the constitutional intent behind these provisions, we refer first synchronized election which would mean, necessarily, a
to the discussions of the Constitutional Commission: bonus of two years to the Members of the Lower House and a
bonus of two years to the local elective officials.
MR. MAAMBONG. For purposes of identification, I will now read a
section which we will temporarily indicate as Section 14. It reads: THE PRESIDING OFFICER (Mr. Rodrigo). What does the committee
THE SENATORS, MEMBERS OF THE HOUSE OF say?
REPRESENTATIVES AND THE LOCAL OFFICIALS ELECTED IN
THE FIRST ELECTION SHALL SERVE FOR FIVE YEARS, TO MR. DE CASTRO. Mr. Presiding Officer.
EXPIRE AT NOON OF JUNE 1992.
THE PRESIDING OFFICER (Mr. Rodrigo). Commissioner de Castro
This was presented by Commissioner Davide, so may we ask that is recognized.
Commissioner Davide be recognized.
MR. DE CASTRO. Thank you.
THE PRESIDING OFFICER (Mr. Rodrigo). Commissioner Davide is
recognized. During the discussion on the legislative and the synchronization of
elections, I was the one who proposed that in order to synchronize
MR. DAVIDE. Before going to the proposed amendment, I would only the elections every three years, which the body approved the first
state that in view of the action taken by the Commission on Section national and local officials to be elected in 1987 shall continue in
2 earlier, I am formulating a new proposal. It will read as follows: THE office for five years, the same thing the Honorable Davide is now
SENATORS, MEMBERS OF THE HOUSE OF proposing. That means they will all serve until 1992, assuming that
REPRESENTATIVES AND THE LOCAL OFFICIALS FIRST the term of the President will be for six years and continue beginning
ELECTED UNDER THIS CONSTITUTION SHALL SERVE in 1986. So from 1992, we will again have national, local and
UNTIL NOON OF JUNE 30, 1992. presidential elections. This time, in 1992, the President shall have
a term until 1998 and the first 12 Senators will serve until 1998,
I proposed this because of the proposed section of the Article on while the next 12 shall serve until 1995, and then the local
Transitory Provisions giving a term to the incumbent President and officials elected in 1992 will serve until 1995. From then on, we
Vice-President until 1992. Necessarily then, since the term provided shall have an election every three years.
by the Commission for Members of the Lower House and for local
officials is three years, if there will be an election in 1987, the next So, I will say that the proposition of Commissioner Davide is in order,
election for said officers will be in 1990, and it would be very close to if we have to synchronize our elections every three years which was
1992. We could never attain, subsequently, any synchronization of already approved by the body.
election which is once every three years.
Thank you, Mr. Presiding Officer.
So under my proposal we will be able to begin actual
synchronization in 1992, and consequently, we should not have a xxxx
local election or an election for Members of the Lower House in 1990
for them to be able to complete their term of three years each. And if MR. GUINGONA. What will be synchronized, therefore, is the
we also stagger the Senate, upon the first election it will result in an election of the incumbent President and Vice-President in 1992.
election in 1993 for the Senate alone, and there will be an election
for 12 Senators in 1990. But for the remaining 12 who will be elected MR. DAVIDE. Yes.
in 1987, if their term is for six years, their election will be in 1993. So,
consequently we will have elections in 1990, in 1992 and in 1993. MR. GUINGONA. Not the reverse. Will the committee not
The later election will be limited to only 12 Senators and of course to synchronize the election of the Senators and local officials with the
the local officials and the Members of the Lower House. But, election of the President?

30
 barangays. There shall be autonomous regions in Muslim Mindanao
MR. DAVIDE. It works both ways, Mr. Presiding Officer. The attempt and the Cordilleras as hereinafter provided.
here is on the assumption that the provision of the Transitory
Provisions on the term of the incumbent President and Vice-
President would really end in 1992. The inclusion of autonomous regions in the enumeration of political
subdivisions of the State under the heading Local Government indicates quite clearly
MR. GUINGONA. Yes. the constitutional intent to consider autonomous regions as one of the forms of local
governments.
MR. DAVIDE. In other words, there will be a single election in
1992 for all, from the President up to the municipal That the Constitution mentions only the national government and the local
officials.[5] (emphases and underscoring ours) governments, and does not make a distinction between the local government and the
regional government, is particularly revealing, betraying as it does the intention of the
framers of the Constitution to consider the autonomous regions not as separate forms
The framers of the Constitution could not have expressed their objective more of government, but as political units which, while having more powers and attributes
clearly there was to be a single election in 1992 for all elective officials from the than other local government units, still remain under the category of local governments.
President down to the municipal officials. Significantly, the framers were even willing to Since autonomous regions are classified as local governments, it follows that elections
temporarily lengthen or shorten the terms of elective officials in order to meet this held in autonomous regions are also considered as local elections.
objective, highlighting the importance of this constitutional mandate.
The petitioners further argue that even assuming that the Constitution
We came to the same conclusion in Osmea v. Commission on mandates the synchronization of elections, the ARMM elections are not covered by this
Elections,[6] where we unequivocally stated that the Constitution has mandated mandate since they are regional elections and not local elections.
synchronized national and local elections." [7] Despite the length and verbosity of their
motions, the petitioners have failed to convince us to deviate from this established In construing provisions of the Constitution, the first rule is verba legis, that is,
ruling. wherever possible, the words used in the Constitution must be given their ordinary
meaning except where technical terms are employed. [9] Applying this principle to
Neither do we find any merit in the petitioners contention that the ARMM determine the scope of local elections, we refer to the meaning of the word local, as
elections are not covered by the constitutional mandate of synchronization because the understood in its ordinary sense. As defined in Websters Third New International
ARMM elections were not specifically mentioned in the above-quoted Transitory Dictionary Unabridged, local refers to something that primarily serves the needs of a
Provisions of the Constitution. particular limited district, often a community or minor political subdivision. Obviously,
the ARMM elections, which are held within the confines of the autonomous region of
That the ARMM elections were not expressly mentioned in the Transitory Muslim Mindanao, fall within this definition.
Provisions of the Constitution on synchronization cannot be interpreted to mean that
the ARMM elections are not covered by the constitutional mandate of synchronization. To be sure, the fact that the ARMM possesses more powers than other
We have to consider that the ARMM, as we now know it, had not yet been officially provinces, cities, or municipalities is not enough reason to treat the ARMM regional
organized at the time the Constitution was enacted and ratified by the people. Keeping elections differently from the other local elections. Ubi lex non distinguit nec nos
in mind that a constitution is not intended to provide merely for the exigencies of a few distinguire debemus. When the law does not distinguish, we must not distinguish. [10]
years but is to endure through generations for as long as it remains unaltered by the
people as ultimate sovereign, a constitution should be construed in the light of what RA No. 10153 does not amend RA No. 9054
actually is a continuing instrument to govern not only the present but also the
unfolding events of the indefinite future. Although the principles embodied in a The petitioners are adamant that the provisions of RA No. 10153, in postponing the
constitution remain fixed and unchanged from the time of its adoption, a constitution ARMM elections, amend RA No. 9054.
must be construed as a dynamic process intended to stand for a great length of time, We cannot agree with their position.
to be progressive and not static.[8]
A thorough reading of RA No. 9054 reveals that it fixes the schedule for only
To reiterate, Article X of the Constitution, entitled Local Government, clearly the first ARMM elections;[11] it does not provide the date for the succeeding regular
shows the intention of the Constitution to classify autonomous regions, such as the ARMM elections. In providing for the date of the regular ARMM elections, RA No. 9333
ARMM, as local governments. We refer to Section 1 of this Article, which provides: and RA No. 10153 clearly do not amend RA No. 9054 since these laws do not change
or revise any provision in RA No. 9054. In fixing the date of the ARMM elections
Section 1. The territorial and political subdivisions of the Republic of subsequent to the first election, RA No. 9333 and RA No. 10153 merely filled the gap
the Philippines are the provinces, cities, municipalities, and left in RA No. 9054.

31
 law what they think should be in it or to supply what they think the legislature would
We reiterate our previous observations: have supplied if its attention had been called to the omission. [14] Providing for lapses
within the law falls within the exclusive domain of the legislature, and courts, no matter
This view that Congress thought it best to leave the how well-meaning, have no authority to intrude into this clearly delineated space.
determination of the date of succeeding ARMM elections to
legislative discretion finds support in ARMMs recent history. Since RA No. 10153 does not amend, but merely fills in the gap in RA No.
9054, there is no need for RA No. 10153 to comply with the amendment requirements
To recall, RA No. 10153 is not the first law passed that set forth in Article XVII of RA No. 9054.
rescheduled the ARMM elections. The First Organic Act RA No.
6734 not only did not fix the date of the subsequent elections; it did Supermajority vote requirement makes RA No. 9054 an irrepealable law
not even fix the specific date of the first ARMM elections, leaving the
date to be fixed in another legislative enactment. Consequently, RA Even assuming that RA No. 10153 amends RA No. 9054, however, we have
No. 7647, RA No. 8176, RA No. 8746, RA No. 8753, and RA No. already established that the supermajority vote requirement set forth in Section 1,
9012 were all enacted by Congress to fix the dates of the ARMM Article XVII of RA No. 9054[15] is unconstitutional for violating the principle that
elections. Since these laws did not change or modify any part or Congress cannot pass irrepealable laws.
provision of RA No. 6734, they were not amendments to this latter
law. Consequently, there was no need to submit them to any The power of the legislature to make laws includes the power to amend and repeal
plebiscite for ratification. these laws. Where the legislature, by its own act, attempts to limit its power to amend
or repeal laws, the Court has the duty to strike down such act for interfering with the
The Second Organic Act RA No. 9054 which lapsed into plenary powers of Congress. As we explained in Duarte v. Dade:[16]
law on March 31, 2001, provided that the first elections would be held
on the second Monday of September 2001. Thereafter, Congress A state legislature has a plenary law-making power over all subjects,
passed RA No. 9140 to reset the date of the ARMM whether pertaining to persons or things, within its territorial
elections. Significantly, while RA No. 9140 also scheduled the jurisdiction, either to introduce new laws or repeal the old, unless
plebiscite for the ratification of the Second Organic Act (RA No. prohibited expressly or by implication by the federal constitution or
9054), the new date of the ARMM regional elections fixed in RA limited or restrained by its own. It cannot bind itself or its successors
No. 9140 was not among the provisions ratified in the plebiscite by enacting irrepealable laws except when so restrained. Every
held to approve RA No. 9054. Thereafter, Congress passed RA No. legislative body may modify or abolish the acts passed by itself or its
9333, which further reset the date of the ARMM regional elections. predecessors. This power of repeal may be exercised at the same
Again, this law was not ratified through a plebiscite. session at which the original act was passed; and even while a bill is
in its progress and before it becomes a law. This legislature cannot
From these legislative actions, we see the clear intention of bind a future legislature to a particular mode of repeal. It cannot
Congress to treat the laws which fix the date of the subsequent declare in advance the intent of subsequent legislatures or the
ARMM elections as separate and distinct from the Organic Acts. effect of subsequent legislation upon existing statutes.
Congress only acted consistently with this intent when it passed RA [emphasis ours]
No. 10153 without requiring compliance with the amendment
prerequisites embodied in Section 1 and Section 3, Article XVII of RA
No. 9054.[12] (emphases supplied) Under our Constitution, each House of Congress has the power to approve
bills by a mere majority vote, provided there is quorum.[17] In requiring all laws which
amend RA No. 9054 to comply with a higher voting requirement than the Constitution
The petitioner in G.R. No. 196305 contends, however, that there is no lacuna provides (2/3 vote), Congress, which enacted RA No. 9054, clearly violated the very
in RA No. 9054 as regards the date of the subsequent ARMM elections. In his principle which we sought to establish in Duarte. To reiterate, the act of one legislature
estimation, it can be implied from the provisions of RA No. 9054 that the succeeding is not binding upon, and cannot tie the hands of, future legislatures.[18]
elections are to be held three years after the date of the first ARMM regional elections.
We also highlight an important point raised by Justice Antonio T. Carpio in his
We find this an erroneous assertion. Well-settled is the rule that the court may dissenting opinion, where he stated: Section 1, Article XVII of RA 9054 erects a high
not, in the guise of interpretation, enlarge the scope of a statute and include therein vote threshold for each House of Congress to surmount, effectively and
situations not provided nor intended by the lawmakers. An omission at the time of unconstitutionally, taking RA 9054 beyond the reach of Congress amendatory powers.
enactment, whether careless or calculated, cannot be judicially supplied however later One Congress cannot limit or reduce the plenary legislative power of succeeding
wisdom may recommend the inclusion.[13] Courts are not authorized to insert into the Congresses by requiring a higher vote threshold than what the Constitution requires to

32
enact, amend or repeal laws. No law can be passed fixing such a higher vote We cannot see how the above-quoted provision has changed the basic
threshold because Congress has no power, by ordinary legislation, to amend the structure of the ARMM regional government. On the contrary, this provision clearly
Constitution.[19] preserves the basic structure of the ARMM regional government when it recognizes the
offices of the ARMM regional government and directs the OICs who shall temporarily
Plebiscite requirement in RA No. 9054 overly broad assume these offices to perform the functions pertaining to the said offices.

Similarly, we struck down the petitioners contention that the plebiscite Unconstitutionality of the holdover provision
requirement[20] applies to all amendments of RA No. 9054 for being an unreasonable
enlargement of the plebiscite requirement set forth in the Constitution. The petitioners are one in defending the constitutionality of Section 7(1), Article VII of
RA No. 9054, which allows the regional officials to remain in their positions in a holdover
Section 18, Article X of the Constitution provides that [t]he creation of the capacity. The petitioners essentially argue that the ARMM regional officials should be
autonomous region shall be effective when approved by majority of the votes cast by allowed to remain in their respective positions until the May 2013 elections since there
the constituent units in a plebiscite called for the purpose[.] We interpreted this to mean is no specific provision in the Constitution which prohibits regional elective officials from
that only amendments to, or revisions of, the Organic Act constitutionally-essential to performing their duties in a holdover capacity.
the creation of autonomous regions i.e., those aspects specifically mentioned in the
Constitution which Congress must provide for in the Organic Act [21] require ratification The pertinent provision of the Constitution is Section 8, Article X which provides:
through a plebiscite. We stand by this interpretation.
Section 8. The term of office of elective local officials, except
The petitioners argue that to require all amendments to RA No. 9054 to barangay officials, which shall be determined by law, shall be three
comply with the plebiscite requirement is to recognize that sovereignty resides primarily years and no such official shall serve for more than three
in the people. consecutive terms. [emphases ours]

While we agree with the petitioners underlying premise that sovereignty

ultimately resides with the people, we disagree that this legal reality necessitates On the other hand, Section 7(1), Article VII of RA No. 9054 provides:
compliance with the plebiscite requirement for all amendments to RA No. 9054. For if
we were to go by the petitioners interpretation of Section 18, Article X of the Constitution Section 7. Terms of Office of Elective Regional Officials. (1) Terms
that all amendments to the Organic Act have to undergo the plebiscite requirement of Office. The terms of office of the Regional Governor, Regional Vice
before becoming effective, this would lead to impractical and illogical results hampering Governor and members of the Regional Assembly shall be for a
the ARMMs progress by impeding Congress from enacting laws that timely address period of three (3) years, which shall begin at noon on the 30 th day
problems as they arise in the region, as well as weighing down the ARMM government of September next following the day of the election and shall end at
with the costs that unavoidably follow the holding of a plebiscite. noon of the same date three (3) years thereafter. The incumbent
elective officials of the autonomous region shall continue in effect
Interestingly, the petitioner in G.R. No. 197282 posits that RA No. 10153, in until their successors are elected and qualified.
giving the President the power to appoint OICs to take the place of the elective officials
of the ARMM, creates a fundamental change in the basic structure of the government,
and thus requires compliance with the plebiscite requirement embodied in RA No. The clear wording of Section 8, Article X of the Constitution expresses the
9054. intent of the framers of the Constitution to categorically set a limitation on the period
within which all elective local officials can occupy their offices. We have already
Again, we disagree. established that elective ARMM officials are also local officials; they are, thus, bound
by the three-year term limit prescribed by the Constitution. It, therefore, becomes
The pertinent provision in this regard is Section 3 of RA No. 10153, which irrelevant that the Constitution does not expressly prohibit elective officials from acting
reads: in a holdover capacity. Short of amending the Constitution, Congress has no
authority to extend the three-year term limit by inserting a holdover provision in
Section 3. Appointment of Officers-in-Charge. The President shall RA No. 9054. Thus, the term of three years for local officials should stay at three (3)
appoint officers-in-charge for the Office of the Regional Governor, years, as fixed by the Constitution, and cannot be extended by holdover by Congress.
Regional Vice Governor and Members of the Regional Legislative
Assembly who shall perform the functions pertaining to the said
offices until the officials duly elected in the May 2013 elections shall Admittedly, we have, in the past, recognized the validity of holdover provisions
have qualified and assumed office. in various laws. One significant difference between the present case and these past
cases[22] is that while these past cases all refer to elective barangay or sangguniang

33
kabataan officials whose terms of office are not explicitly provided for preparation and the transmission of the election returns or in the
in the Constitution, the present case refers to local elective officials - the ARMM custody or canvass thereof, such election results in a failure to
Governor, the ARMM Vice Governor, and the members of the Regional Legislative elect, and in any of such cases the failure or suspension of election
Assembly - whose terms fall within the three-year term limit set by Section 8, Article X would affect the result of the election, the Commission shall, on the
of the Constitution. basis of a verified petition by any interested party and after due notice
and hearing, call for the holding or continuation of the election not
Even assuming that a holdover is constitutionally permissible, and there had held, suspended or which resulted in a failure to elect on a date
been statutory basis for it (namely Section 7, Article VII of RA No. 9054), the rule of reasonably close to the date of the election not held, suspended or
holdover can only apply as an available option where no express or implied legislative which resulted in a failure to elect but not later than thirty days after
intent to the contrary exists; it cannot apply where such contrary intent is evident.[23] the cessation of the cause of such postponement or suspension of
the election or failure to elect. [emphases and underscoring ours]
Congress, in passing RA No. 10153 and removing the holdover option, has
made it clear that it wants to suppress the holdover rule expressed in RA No. 9054.
Congress, in the exercise of its plenary legislative powers, has clearly acted within its As we have previously observed in our assailed decision, both Section 5 and
discretion when it deleted the holdover option, and this Court has no authority to Section 6 of BP 881 address instances where elections have already been
question the wisdom of this decision, absent any evidence of unconstitutionality or scheduled to take place but do not occur or had to be suspended because
grave abuse of discretion. It is for the legislature and the executive, and not this Court, of unexpected and unforeseen circumstances, such as violence, fraud, terrorism,
to decide how to fill the vacancies in the ARMM regional government which arise from and other analogous circumstances.
the legislature complying with the constitutional mandate of synchronization.

COMELEC has no authority to hold special elections In contrast, the ARMM elections were postponed by law, in furtherance
of the constitutional mandate of synchronization of national and local elections.
Neither do we find any merit in the contention that the Commission on Elections Obviously, this does not fall under any of the circumstances contemplated by Section
(COMELEC) is sufficiently empowered to set the date of special elections in the ARMM. 5 or Section 6 of BP 881.
To recall, the Constitution has merely empowered the COMELEC to enforce and
administer all laws and regulations relative to the conduct of an election. [24] Although More importantly, RA No. 10153 has already fixed the date for the next ARMM
the legislature, under the Omnibus Election Code (Batas Pambansa Bilang [BP] 881), elections and the COMELEC has no authority to set a different election date.
has granted the COMELEC the power to postpone elections to another date, this power
is confined to the specific terms and circumstances provided for in the law. Specifically, Even assuming that the COMELEC has the authority to hold special elections, and this
this power falls within the narrow confines of the following provisions: Court can compel the COMELEC to do so, there is still the problem of having to shorten
the terms of the newly elected officials in order to synchronize the ARMM elections with
Section 5. Postponement of election. - When for any serious cause the May 2013 national and local elections. Obviously, neither the Court nor the
such as violence, terrorism, loss or destruction of election COMELEC has the authority to do this, amounting as it does to an amendment of
paraphernalia or records, force majeure, and other analogous Section 8, Article X of the Constitution, which limits the term of local officials to three
causes of such a nature that the holding of a free, orderly and honest years.
election should become impossible in any political subdivision, the
Commission, motu proprio or upon a verified petition by any Presidents authority to appoint OICs
interested party, and after due notice and hearing, whereby all
interested parties are afforded equal opportunity to be heard, The petitioner in G.R. No. 197221 argues that the Presidents power to appoint
shall postpone the election therein to a date which should be pertains only to appointive positions and cannot extend to positions held by elective
reasonably close to the date of the election not held, suspended officials.
or which resulted in a failure to elect but not later than thirty days
after the cessation of the cause for such postponement or The power to appoint has traditionally been recognized as executive in
suspension of the election or failure to elect. nature.[25] Section 16, Article VII of the Constitution describes in broad strokes the
extent of this power, thus:
Section 6. Failure of election. - If, on account of force
majeure, violence, terrorism, fraud, or other analogous Section 16. The President shall nominate and, with the consent of
causes the election in any polling place has not been held on the Commission on Appointments, appoint the heads of the
the date fixed, or had been suspended before the hour fixed by executive departments, ambassadors, other public ministers and
law for the closing of the voting, or after the voting and during the consuls, or officers of the armed forces from the rank of colonel or

34
 naval captain, and other officers whose appointments are vested in The second group of officials the President can appoint are all other officers
him in this Constitution. He shall also appoint all other officers of of the Government whose appointments are not otherwise provided for by law, and
the Government whose appointments are not otherwise those whom he may be authorized by law to appoint.[27] The second sentence acts as
provided for by law, and those whom he may be authorized by the catch-all provision for the Presidents appointment power, in recognition of the fact
law to appoint. The Congress may, by law, vest the appointment of that the power to appoint is essentially executive in nature. [28] The wide latitude given
other officers lower in rank in the President alone, in the courts, or in to the President to appoint is further demonstrated by the recognition of the Presidents
the heads of departments, agencies, commissions, or boards. power to appoint officials whose appointments are not even provided for by law. In
[emphasis ours] other words, where there are offices which have to be filled, but the law does not
provide the process for filling them, the Constitution recognizes the power of the
President to fill the office by appointment.
The 1935 Constitution contained a provision similar to the one quoted above.
Section 10(3), Article VII of the 1935 Constitution provides: Any limitation on or qualification to the exercise of the Presidents appointment
power should be strictly construed and must be clearly stated in order to be
(3) The President shall nominate and with the consent of the recognized.[29]Given that the President derives his power to appoint OICs in the ARMM
Commission on Appointments, shall appoint the heads of the regional government from law, it falls under the classification of presidential
executive departments and bureaus, officers of the Army from the appointments covered by the second sentence of Section 16, Article VII of the
rank of colonel, of the Navy and Air Forces from the rank of captain Constitution; the Presidents appointment power thus rests on clear constitutional basis.
or commander, and all other officers of the Government whose
appointments are not herein otherwise provided for, and those The petitioners also jointly assert that RA No. 10153, in granting the President
whom he may be authorized by law to appoint; but the Congress the power to appoint OICs in elective positions, violates Section 16, Article X of the
may by law vest the appointment of inferior officers, in the President Constitution,[30] which merely grants the President the power of supervision over
alone, in the courts, or in the heads of departments. [emphasis ours] autonomous regions.

This is an overly restrictive interpretation of the Presidents appointment

The main distinction between the provision in the 1987 Constitution and its counterpart power. There is no incompatibility between the Presidents power of supervision over
in the 1935 Constitution is the sentence construction; while in the 1935 Constitution, local governments and autonomous regions, and the power granted to the President,
the various appointments the President can make are enumerated in a single sentence, within the specific confines of RA No. 10153, to appoint OICs.
the 1987 Constitution enumerates the various appointments the President is
empowered to make and divides the enumeration in two sentences. The change in The power of supervision is defined as the power of a superior officer to see to it that
style is significant; in providing for this change, the framers of the 1987 Constitution lower officers perform their functions in accordance with law. [31] This is distinguished
clearly sought to make a distinction between the first group of presidential appointments from the power of control or the power of an officer to alter or modify or set aside what
and the second group of presidential appointments, as made evident in the following a subordinate officer had done in the performance of his duties and to substitute the
exchange: judgment of the former for the latter.[32]

MR. FOZ. Madame President x x x I propose to put a period (.) after The petitioners apprehension regarding the Presidents alleged power of
captain and x x x delete and all and substitute it with HE SHALL control over the OICs is rooted in their belief that the Presidents appointment power
ALSO APPOINT ANY. includes the power to remove these officials at will. In this way, the petitioners foresee
that the appointed OICs will be beholden to the President, and act as representatives
MR. REGALADO. Madam President, the Committee accepts the of the President and not of the people.
proposed amendment because it makes it clear that those other Section 3 of RA No. 10153 expressly contradicts the petitioners supposition.
officers mentioned therein do not have to be confirmed by the The provision states:
Commission on Appointments.[26]
Section 3. Appointment of Officers-in-Charge. The President shall
appoint officers-in-charge for the Office of the Regional Governor,
The first group of presidential appointments, specified as the heads of the executive Regional Vice Governor and Members of the Regional Legislative
departments, ambassadors, other public ministers and consuls, or officers of the Armed Assembly who shall perform the functions pertaining to the said
Forces, and other officers whose appointments are vested in the President by the offices until the officials duly elected in the May 2013 elections shall
Constitution, pertains to the appointive officials who have to be confirmed by the have qualified and assumed office.
Commission on Appointments.

35
 The wording of the law is clear. Once the President has appointed the OICs The grant to the President of the power to appoint OICs in place of the elective
for the offices of the Governor, Vice Governor and members of the Regional Legislative members of the Regional Legislative Assembly is neither novel nor innovative. The
Assembly, these same officials will remain in office until they are replaced by the duly power granted to the President, via RA No. 10153, to appoint members of the Regional
elected officials in the May 2013 elections. Nothing in this provision even hints that the Legislative Assembly is comparable to the power granted by BP 881 (the Omnibus
President has the power to recall the appointments he already made. Clearly, the Election Code) to the President to fill any vacancy for any cause in the Regional
petitioners fears in this regard are more apparent than real. Legislative Assembly (then called the Sangguniang Pampook).[34]

RA No. 10153 as an interim measure Executive is not bound by the principle of judicial courtesy

We reiterate once more the importance of considering RA No. 10153 not in a The petitioners in G.R. No. 197280, in their Manifestation and Motion dated December
vacuum, but within the context it was enacted in. In the first place, Congress enacted 21, 2011, question the propriety of the appointment by the President of Mujiv Hataman
RA No. 10153 primarily to heed the constitutional mandate to synchronize the ARMM as acting Governor and Bainon Karon as acting Vice Governor of the ARMM. They
regional elections with the national and local elections. To do this, Congress had to argue that since our previous decision was based on a close vote of 8-7, and given the
postpone the scheduled ARMM elections for another date, leaving it with the problem numerous motions for reconsideration filed by the parties, the President, in recognition
of how to provide the ARMM with governance in the intervening period, between of the principle of judicial courtesy, should have refrained from implementing our
the expiration of the term of those elected in August 2008 and the assumption to office decision until we have ruled with finality on this case.
twenty-one (21) months away of those who will win in the synchronized elections on
May 13, 2013. We find the petitioners reasoning specious.

In our assailed Decision, we already identified the three possible solutions Firstly, the principle of judicial courtesy is based on the hierarchy of courts and applies
open to Congress to address the problem created by synchronization (a) allow the only to lower courts in instances where, even if there is no writ of preliminary injunction
incumbent officials to remain in office after the expiration of their terms in a holdover or TRO issued by a higher court, it would be proper for a lower court to suspend its
capacity; (b) call for special elections to be held, and shorten the terms of those to be proceedings for practical and ethical considerations. [35] In other words, the principle of
elected so the next ARMM regional elections can be held on May 13, 2013; or (c) judicial courtesy applies where there is a strong probability that the issues before the
recognize that the President, in the exercise of his appointment powers and in line with higher court would be rendered moot and moribund as a result of the continuation of
his power of supervision over the ARMM, can appoint interim OICs to hold the vacated the proceedings in the lower court or court of origin. [36] Consequently, this principle
positions in the ARMM regional government upon the expiration of their terms. We have cannot be applied to the President, who represents a co-equal branch of government.
already established the unconstitutionality of the first two options, leaving us to consider To suggest otherwise would be to disregard the principle of separation of powers, on
the last available option. which our whole system of government is founded upon.
Secondly, the fact that our previous decision was based on a slim vote of 8-7 does not,
In this way, RA No. 10153 is in reality an interim measure, enacted to respond and cannot, have the effect of making our ruling any less effective or binding.
to the adjustment that synchronization requires. Given the context, we have to judge Regardless of how close the voting is, so long as there is concurrence of the majority
RA No. 10153 by the standard of reasonableness in responding to the challenges of the members of the en banc who actually took part in the deliberations of the
brought about by synchronizing the ARMM elections with the national and local case,[37] a decision garnering only 8 votes out of 15 members is still a decision of the
elections. In other words, given the plain unconstitutionality of providing for a Supreme Court en banc and must be respected as such. The petitioners are, therefore,
holdover and the unavailability of constitutional possibilities for lengthening or not in any position to speculate that, based on the voting, the probability exists that their
shortening the term of the elected ARMM officials, is the choice of the Presidents motion for reconsideration may be granted.[38]
power to appoint for a fixed and specific period as an interim measure, and as
allowed under Section 16, Article VII of the Constitution an unconstitutional or Similarly, the petitioner in G.R. No. 197282, in his Very Urgent Motion to Issue
unreasonable choice for Congress to make?[33] Clarificatory Resolution, argues that since motions for reconsideration were filed by the
aggrieved parties challenging our October 18, 2011 decision in the present case, the
We admit that synchronization will temporarily disrupt the election process in TRO we initially issued on September 13, 2011 should remain subsisting and effective.
a local community, the ARMM, as well as the communitys choice of leaders. However, He further argues that any attempt by the Executive to implement our October 18, 2011
we have to keep in mind that the adoption of this measure is a matter of necessity in decision pending resolution of the motions for reconsideration borders on disrespect if
order to comply with a mandate that the Constitution itself has set out for us. Moreover, not outright insolence[39] to this Court.
the implementation of the provisions of RA No. 10153 as an interim measure is
comparable to the interim measures traditionally practiced when, for instance, the In support of this theory, the petitioner cites Samad v. COMELEC,[40] where
President appoints officials holding elective offices upon the creation of new local the Court held that while it had already issued a decision lifting the TRO, the lifting of
government units. the TRO is not yet final and executory, and can also be the subject of a motion for
reconsideration. The petitioner also cites the minute resolution issued by the Court

36
in Tolentino v. Secretary of Finance,[41] where the Court reproached the Commissioner For the foregoing reasons, we deny the petitioners motions for reconsideration.
of the Bureau of Internal Revenue for manifesting its intention to implement the decision
of the Court, noting that the Court had not yet lifted the TRO previously issued. [42] WHEREFORE, premises considered, we DENY with FINALITY the motions
We agree with the petitioner that the lifting of a TRO can be included as a subject of a for reconsideration for lack of merit and UPHOLD the constitutionality of RA No. 10153.
motion for reconsideration filed to assail our decision. It does not follow, however, that
the TRO remains effective until after we have issued a final and executory decision, SO ORDERED.
especially considering the clear wording of the dispositive portion of our October 18,
2011 decision, which states:

WHEREFORE, premises considered, we DISMISS the

consolidated petitions assailing the validity of RA No. 10153 for lack
of merit, and UPHOLD the constitutionality of this law. We likewise
LIFT the temporary restraining order we issued in our
Resolution of September 13, 2011. No costs.[43] (emphases ours)

In this regard, we note an important distinction between Tolentino and the

present case. While it may be true that Tolentino and the present case are similar in
that, in both cases, the petitions assailing the challenged laws were dismissed by the
Court, an examination of the dispositive portion of the decision in Tolentino reveals that
the Court did not categorically lift the TRO. In sharp contrast, in the present case, we
expressly lifted the TRO issued on September 13, 2011. There is, therefore, no legal
impediment to prevent the President from exercising his authority to appoint an acting
ARMM Governor and Vice Governor as specifically provided for in RA No. 10153.

Conclusion

As a final point, we wish to address the bleak picture that the petitioner in G.R.
No. 197282 presents in his motion, that our Decision has virtually given the President
the power and authority to appoint 672,416 OICs in the event that the elections
of barangay and Sangguniang Kabataan officials are postponed or cancelled.

We find this speculation nothing short of fear-mongering.

This argument fails to take into consideration the unique factual and legal
circumstances which led to the enactment of RA No. 10153. RA No. 10153 was passed
in order to synchronize the ARMM elections with the national and local elections. In the
course of synchronizing the ARMM elections with the national and local elections,
Congress had to grant the President the power to appoint OICs in the ARMM, in light
of the fact that: (a) holdover by the incumbent ARMM elective officials is legally
impermissible; and (b) Congress cannot call for special elections and shorten the terms
of elective local officials for less than three years.

Unlike local officials, as the Constitution does not prescribe a term limit
for barangay and Sangguniang Kabataan officials, there is no legal proscription which
prevents these specific government officials from continuing in a holdover capacity
should some exigency require the postponement of barangay or Sangguniang
Kabataan elections.Clearly, these fears have neither legal nor factual basis to stand
on.

37
 SEC. 4. Transfer of Functions and Powers of the DECS Regional Offices. The following
functions and powers of DECS Regional offices are hereby transferred to the ARG:
EXECUTIVE ORDER NO. 459
A. General Functions and Powers
DEVOLVING TO THE AUTONOMOUS REGIONAL GOVERNMENT OF THE
AUTONOMOUS REGION IN MUSLIM MINDANAO CERTAIN POWERS AND a.1 Formulate the regional plan of education based on the national plans taking into
FUNCTIONS OF THE DEPARTMENT OF EDUCATION, CULTURE AND SPORTS, account the specific needs and traditions of the region;
THE CONTROL AND SUPERVISION OVER ITS OFFICES IN THE REGION AND
FOR OTHER PURPOSES a.2 Implement laws, rules and regulations, policies, programs and projects of the
Regional Department;
WHEREAS, Section 1, Article XV of Republic Act No. 6734 provides “That the
Autonomous Region shall establish, maintain and support a complete and integrated a.3 Provide economical, efficient, and effective education service to the people;
system of quality education and adopt an educational framework that is meaningful,
relevant and responsive to the needs, ideals and aspirations of the people in the
Region”; a.4 Coordinate with regional offices of other departments, offices and agencies in the
region;
WHEREAS, the Oversight Committee created under the said Act, recognizing the
primacy of education as a necessary pillar for the Autonomous Region in Muslim a.5 Coordinate with local government units; and
Mindanao (ARMM), has recommended the evaluation of certain powers and that the
offices of the Department of Education, Culture and Sports within the ARMM may be a.6 Perform such other functions as may be provided for by law.
transferred to the Autonomous Regional Government to carry out this mandate;
B. Specific Functions and Powers
NOW, THEREFORE, I, CORAZON C. AQUINO, President of the Philippines, by virtue
of the powers vested in me by law, do hereby order: B.1 Administrative Management

SECTION 1. Policy to be Adopted. The Autonomous Regional Government (ARG) shall a. Act on all matters concerning appointment, promotion and transfer; hiring of casual
be responsible for the regional educational framework within the Autonomous Region employees, resignation, filling-up of positions and granting of leaves of absence and
in Muslim Mindanao (ARMM) and shall adopt the policy of the National Government as other personnel transactions;
embodied in Chapter I, Title VI, of the Administrative Code of 1987.

b. Legal and administrative investigation, recommendation, decision on cases,

SEC. 2. General Functions. The powers and functions with regard to the formulation, complaints, and other related matters;
planning, implementation and coordination of policies, plans, programs and projects of
various aspects of education are hereby transferred to the ARG, specifically in the
following areas: c. Act on requests to teach, engage in business, and exercise of professions;

a. Elementary, secondary, physical and international education; d. Act on request to render overtime services;
b. Non-formal and vocational or technical education;
c. Higher education; e. Act on request for authority for domestic/outside travel;
d. Development of culture;
e. Foreign and locally-assisted projects and other activities relative to (a), (b,) (c), and
f. Conferring of incentives or recognition;
(d) above; and
f. Such other functions as may be provided by law.
g. Acceptance of donations such as titled real properties and personal properties;
SEC. 3. Transfer of Control and Supervision. The offices of the Department of
Education, Culture and Sports (DECS) within the ARMM including their functions, h. Act on requests for attendance of personnel to conferences, meetings, seminars and
powers and responsibilities, personnel, equipment, properties, budgets and liabilities the like;
are hereby placed under the control and supervision of the ARG.

38
i. Upkeep of records and records management; b. Grant permits for operation of schools and summer classes;

j. Supply management; c. Approval of classes and teacher programs;

k. Medical and Dental services; and d. Act/decide on problems and disputes arising from private school employment;

l. Delivery of general administrative services. e. Approval of applications of private school teachers for teaching overload;

B.2 Educational Supervision and School Administration f. Approval of requests for temporary enrollment, late enrollment, subject load and
overload of students;
a. Conduct school visitations and teaching supervision;
g. Administer validation placement examinations;
b. Conduct educational statistical researches, experiments, studies, planning and
organizations; and h. Issue special orders for graduation of students;

c. Preparation of data and statistical reports. i. Approval of applications for change of name of private schools;

B.3 Financial Management j. Approval of application for change of text books and other materials;

a. Budget preparation and submission; k. Act on tuition fee increases;

b. Fiscal control, accounting and auditing of expenditures; l. Verification and authentication of student credentials/records;

c. Vouchers and claims processing for payment or disbursement of funds; m. Decide Administrative complaints arising from school decisions, rules and
regulations;
d. Claims processing and payment of retirement pay, hazard pay, allowances, extra
compensation, salary differentials and the like; n. Grant/cancel/withdraw government recognition, or restore cancelled or revoked
government recognition;
e. Implementation of salary standardization/adjustment/merit increases;
o. Decide on appeals regarding decisions on awards of graduation honors;
f. Recommend position classification/readjustment/conversion;
p. Decide administrative complaints of private school personnel;
g. Requisition and procurement of supplies, materials, equipment and others;
q. Investigate and initiate action on cases involving illegal operation;
h. Negotiation of contracts for services and goods;
r. Approval of proposed modifications of schools curriculum; and
i. Signing and countersigning of checks; and
s. Authentication of school records.
j. Preparation and submission of financial reports.
SEC. 5. Administrative Responsibility. The ARG shall be responsible for all outstanding
B.4 Private School Regulations obligations, liabilities and commitments under existing and continuing contracts,
memoranda of agreement, undertakings, and the like, in connection with the operation
of school divisions located in the Autonomous Region: Provided, That the National
a. Grant authority to establish/operate new schools;

39
Government shall continue such levels of expenditure as may be necessary to assure Office buildings including the land where these edifices are built, within the provinces
all obligations and liabilities transferred to the ARG. of ARMM shall immediately be transferred to the ARG in compliance with R.A. No.
6734.
SEC. 6. Board of Higher Education. The functions and powers of the Board of Higher
Education shall be retained by the National DECS: Provided, That the Regional SEC. 12. Personnel/Position. (1) By operation of law, all plantilla positions (filled and
Director of the Regional DECS when established, shall sit as a member of the Board unfilled) of the DECS effectively assigned or within the provinces of ARMM, shall
with the right to vote on matters pertaining to the four provinces within ARMM. immediately be placed under the control and supervision of the ARG.

SEC. 7. DECS Bureaus. The functions and powers of the following DECS Bureaus as (2) All personnel of the National Government shall be absorbed by the ARG and shall
provided for under Chapter 6, Title VI, Book IV of the Administrative Code of 1987 are retain their seniority rights, compensation and other benefits.
hereby transferred to the ARG.
(3) Personnel who decline to transfer to the ARG for any reason whatsoever shall have
a. Bureau of Elementary Education; the following options as outlined by the Civil Service Commission: (a) regular
b. Bureau of Secondary Education; retirement; (b) absorption by their line department in another office or region subject to
c. Bureau of Technical and Vocational Education; the availability of positions and at the discretion of management; (c) transfer to another
d. Bureau of Higher Education; department subject to the availability of positions; or (4) voluntary resignation.
e. Bureau of Non-Formal Education; and
f. Bureau of Physical Education and School Sports. (4) The position and classification plan of the ARG shall conform to national standards
classification/categories set by Republic Act No. 6758, otherwise known as the Salary
SEC. 8. Locally-Funded Programs and Projects. All locally-funded projects of the Standardization Law.
DECS within the four provinces of the ARMM shall be transferred to the ARG.
(5) From the date of transfer and for a period not exceeding twelve (12) months, the
SEC. 9. Foreign-funded Programs. The implementation of foreign-funded projects shall DECS Payroll Servicing Division shall continue to pay the salaries of public elementary
continue to be the responsibility of the DECS Central Office: Provided, That the project school teachers and other DECS personnel within the ARMM covered by the
components situated in the provinces of the ARMM may be implemented by the ARG centralized payroll servicing scheme. The Department of Budget and Management, the
by way of a Memorandum of Agreement with the DECS. DECS and the ARG shall, within the said period, formulate the necessary mechanisms
for the payroll system within the ARMM.
SEC. 10. Regulations and Standards Governing the Educational System. (1) Rules and
regulations promulgated pursuant to the Educational Act of 1982 (Batas Pambansa SEC. 13. Budget. All outstanding budget balances duly appropriated for the operations
Blg. 232) shall be strictly adhered to and considered as minimum standards by the of DECS in the provinces within the ARMM for FY 1991 shall be turned over to the ARG
ARG. as of the date of transfer. Budget balances shall include appropriations for personal
services of public secondary school teachers and other personnel not covered by the
(2) Formulation of regional standards should recognize national standards as minimum DECS-IBM Payroll servicing schedule, maintenance and other operating expenses,
requirements. No regionally-defined standard should be below accepted national and capital outlay.
standards. All DECS circulars on standards will be given to the ARMM for information
and consideration in drafting future regional standards. Similarly, the ARG shall furnish SEC. 14. State Colleges and Universities. Pursuant to Article XV, Sections 5 and 6 of
the DECS with all circulars issued prescribing regional educational standards. R.A. No. 6734, all state colleges and universities in the ARMM shall assist and support
the full development of the people and shall serve as regional centers for tertiary and
SEC. 11. Assets, Equipment, Offices and Land. Assets and equipment including public postgraduate education in their respective areas of competence: Provided, That they
elementary and secondary schools already existing, being utilized or programmed for shall enjoy academic freedom and fiscal autonomy and shall continue to be governed
use in the four (4) provinces covered by the ARMM shall be turned over the by their respective charters: Provided, further, That the DECS Regional Director shall
ARG: Provided, That the National Government shall continue such levels of be a member of the governing boards of state colleges and universities in the ARMM.
expenditures as may be necessary to carry out the functions mandated under R.A. No.
6734. SEC. 15. Control and Supervision of DECS-Attached Agencies and Councils.
Department-attached agencies and councils, including government corporations shall
continue to be controlled and supervised by their respective line departments. The
attached agencies shall extend maximum assistance to the ARG and Regional DECS
in carrying out its programs and projects.
40
SEC. 16. Scholarship Program. Student scholarship programs shall be retained by the
DECS.

SEC. 17. Free Public Secondary Education. In accordance with Republic Act No. 6655,
the ARMM shall give free public secondary education to students enrolled in national
high schools, general comprehensive high schools, state colleges and universities,
specialized schools, trade, technical, vocational, fishery and agricultural schools, and
in schools administered, maintained and funded by local government units, including
city, provincial, municipal and barangay high schools, and those public schools
established by law within the provinces of the ARMM.

SEC. 18. Instructional Materials. The Instructional Materials Council (IMC) shall
continue to be primarily responsible for the formulation of policies and for the selection
and adoption of textbooks, supplementary and reference books for use in public
elementary and secondary schools as well as the approval of textbooks for private
elementary and secondary schools in the ARMM: Provided, That the significance of the
contribution of the different ethnic groups in the Philippines shall be emphasized.

The ARG may develop curricular materials with reference to regional history subject to
the approval of the IMC.

SEC. 19. Effective Date of Transfer. The effective date of transfer on which budget and
assets shall be computed and/or listed shall be 1 May 1991 to allow the schools and
field offices to wind up matters related to Schoolyear 1990–1991 and for the regional
DECS to prepare for Schoolyear 1991–1992.

SEC. 20. Separability Clause. If, for any reason, any part or provision of this Executive
Order shall be held unconstitutional or invalid, other parts or provision thereof which
are not affected thereby shall continue to be in full force and effect.

SEC. 21. Effectivity. This Executive Order shall take effect fifteen (15) days after its
publication in a national newspaper of general circulation and one (1) local newspaper
of general circulation in the ARMM.

DONE in the City of Manila, this 17th day of May, in the year of Our Lord, nineteen
hundred and ninety-one.

41
Republic Act No. 6766 October 23, 1989

AN ACT PROVIDING FOR AN ORGANIC ACT FOR THE CORDILLERA

AUTONOMOUS REGION

Be it enacted by the Senate and House of Representatives of the Philippines in

Congress assembled::

Preamble

The God of peace, love and justice guiding them, the Filipino people of the Cordillera,
faithful to the struggle of their forbears for the protection of their patrimony and the
preservation of their heritage, in order to secure for themselves and their posterity a
region of peace founded on truth, freedom, justice, love and human solidarity, and
establish a Regional Autonomous Government within the framework of the
Constitution and the national sovereignty as well as the territorial integrity of the
Republic of the Philippines that shall ensure their human rights, their human
development, and their participation in the affairs of the Filipino Nation, do proclaim
this Organic Act of the Cordillera Autonomous Region, through the Congress of the
Philippines.

ARTICLE I
The Autonomous Region Name and Area

Section 1. There is hereby created an Autonomous Region in the Cordilleras to be

known as the Cordillera Autonomous Region.

Section 2. (A) The area of the Cordillera Autonomous Region shall consist of the city
and the provinces that shall vote favorably in the plebiscite called for the ratification of
this Organic Act pursuant to Section 18, Article X of the Constitution.

(B) The area of the plebiscite shall be the provinces of Benguet, Mountain
Province, Ifugao, Abra and Kalinga-Apayao, and the chartered City of
Baguio.

42
E. REPUBLIC ACT NO. 7901

REPUBLIC ACT NO. 7901 - AN ACT CREATING REGION XIII TO BE KNOWN AS

THE CARAGA ADMINISTRATIVE REGION, AND FOR OTHER PURPOSES

Section 1. The provinces of Agusan del Norte, Agusan del Sur, Surigao del Norte,
Surigao del Sur, and the cities of Butuan and Surigao are hereby constituted to form
Region XIII to be known as the Caraga Region.

Sec. 2. The regional center of the Caraga Region shall be established in Butuan
City where the national offices shall be located except for the Bureau of Mines and
the Bureau of Fisheries and Aquatic Resources, which shall be situated in Surigao
City, and the Department of Environment and Natural Resources, which shall be
situated in Prosperidad, Agusan del Sur.

Sec. 3. As a result of the transfer of Surigao del Sur to Region XIII, the Province of
Sultan Kudarat shall now form part of Region XI.

Sec. 4. The same privileges under the rules and regulations covering regions shall
remain in force.

Sec. 5. All laws, decrees, orders, rules and regulations or parts thereof
inconsistent herewith are hereby repealed or amended accordingly.

Sec. 6. Should any part of this Act be declared unconstitutional or invalid, such
declaration of unconstitutionality or invalidity shall not affect the other provisions
hereof.

Sec. 7. This Act shall take effect upon its approval.

43
Executive Order No. 103 May 17, 2002
b. Cities
DIVIDING REGION IV INTO REGION IV-A AND REGION IV-B, TRANSFERRING i. Calapan City
THE PROVINCE OF AURORA TO REGION III AND FOR OTHER PURPOSES ii. Puerto Princesa City

WHEREAS, Article X, Section 4 of the Constitution provides that the President shall Section 4. The Province of Aurora is hereby transferred to and shall form part of
exercise general supervision over local government units; Region III.

WHEREAS, the administrative regions were established to promote efficiency in the Section 5. The Department of the Interior and Local Government is hereby directed
Government, accelerate social and economic development and improve public to supervise the division of Region IV into Region IV-A and Region IV-B and the
services; transfer of the Province of Aurora to Region III.

WHEREAS, to further accelerate the social and economic development of the Section 6. All orders, rules, regulations and issuances, or parts thereof, which are
provinces and cities comprising Region IV and improve the delivery of public services, inconsistent with this Executive Order, are hereby repealed or modified accordingly.
there is a need to divide Region IV and transfer the Province of Aurora to Region III.
Section 7. This Executive Order shall take effect immediately upon approval.
NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, President of the Republic City of Manila, May 17, 2002.
of the Philippines, by virtue of the powers vested in me by law, do hereby order:

Section 1. Region IV is hereby divided into Region IV-A and Region IV-B.

Section 2. Region IV-A shall be known as CALABARZON and shall be composed of

the following provinces and cities:
a. Provinces
i. Batangas
ii. Cavite
iii. Laguna
iv. Quezon
v. Rizal
b. Cities
i. Antipolo City
ii. Batangas City
iii. Calamba City
iv. Cavite City
v. Lipa City
vi. Lucena City
vii. San Pablo City
viii. Tagaytay City
ix. Tanauan City
x. Trece Martires City

Section 3. Region IV-B shall be known as MIMAROPA and shall be composed of the
following provinces and cities:

a. Provinces
i. Marinduque
ii. Mindoro Occidental
iii. Mindoro Oriental
iv. Palawan
v. Romblon

44
 F. Federalism and proposed 16 Federal Regions and 2 Asymmetrical  (9) Scarborough Shoal/Bajo de Masinloc shall be part of Central Luzon state
Regions through Zambales;
 (10) the Philippine territories in the Spratly Islands shall be part of Minparom state
Under President Rodrigo Duterte through the municipality of Kalayaan, Palawan;

a. Renewal of Pimentel's proposal  (11) if the bicameral Congress is retained, then the members of the House of
Representatives will voted the same way as its is today;
Federalism advocate, Aquilino Pimentel Jr. renewed his campaign. In May 2016,
 (12) if the bicameral Congress is retained, the members of the Senate shall be
Aquilino 'Nene' Pimentel Jr., stated in an interview with Teodoro Locsin Jr. and Tina
voted, not nationally anymore, but per state, where each state shall have six
Monzon-Palma that a North Mindanao state may be separated into two distinct states,
Senate seats, the Federal Capital (Metro Manila) will have six Senate seats, and
namely, Northwest Mindanao and Northeast Mindanao.
the overseas Filipino population will have nine Senate seats, for a total of at least
While Pimentel Jr.'s earlier proposal for a Federal Philippines was to include the 87 Senate seats, which provides proper representation to all states;
area currently governed by the Cordillera Administrative Region to the Northern Luzon  (13) the Supreme Court shall be mandated to have a decision on a case within 2
state, Pimentel mentioned on August 2017 two possible setups for the Cordilleras years from its filing;
under a federal government at the North Luzon Federalism Summit: An autonomous
 (14) the Court of Appeals, Sandiganbayan, and other appellate courts shall be
Cordillera region within the Northern Luzon state or the region as a separate federal
mandated to have a decision on a case within 1.8 years from its filing;
state from Northern Luzon due to the existence of a long-standing autonomy movement
in the region and a provision in the current Constitution for giving the Cordilleras  (15) the RTC shall be mandated to have a decision on a case within 1.6 years
autonomy. He also made the same pronouncements during a live interview with from its filing;
journalist Karen Davila. After the abolition of the Negros Island Region on August 9,  (16) the City and Municipal courts shall be mandated to have a decision on a case
2017, there have been several regional movements driven by the Negrensesin support within 1 year from its filing;
of the unification of the twin Negros provinces (Negros Occidental and Negros Oriental)  (17) each federal state shall have a Federal Governor and Federal Vice Governor;
under one federal state. (18) each federal state shall have a Federal State Legislature, whose members
members shall be representatives from every province, highly urbanized cities,
In January 2017, under a federalism forum, Pimentel clarified twenty-eight points,
and sectoral groups;
namely:
 (19) warlordism and political dynasties shall be prohibited by the Constitution itself;
 (1) the Cordillera will have its own federal state;  (20) federal states shall have 80% of their respective state's revenues, while the
federal government will only have 20%;
 (2) the boundaries of Northern Luzon state still needs to be clarified as the state
includes two distinct regions;  (21) an Equalization Fund shall be created by the Constitution so that federal
states that are in dire need of additional fund can be helped by the federal
 (3) Masbate will be included in the Central Visayas state;
government;
 (4) the Northern Mindanao state shall include the entire Zamboanga region, the
 (22) there will be a unified educational system, but the indigenous peoples and
entire North Mindanao region including Bukidnon, Agusan del Norte, Butuan City,
Muslims shall be allowed to input certain educational resources into their
Dinagat Islands, and Surigao del Norte;
educational system to better serve their peoples;
 (5) the Southern Mindanao state shall include the entire Soccsksargen region, the
 (23) the Federal Executive Department will hold office in the Federal
entire Davao region, Agusan del Sur, and Surigao del Sur; /(6) Minparom
Administrative Region of Metro Manila;
(Mindoro, Palawan, Romblon, and Marinduque) shall be classified as a Visayan
state and not a Luzon state as it is geographically part of the Visayas, which  (24) the Federal Legislature will hold office in the Federal State of Central Visayas;
Pimentel says is "contrary to the beliefs of Imperial Manila";  (25) the Federal Supreme Court and the Constitutional Court will hold office in the
 (7) the Bangsamoro state is the most important as it is vital to peace in Mindanao Federal State of Northern Mindanao;
and Minparom;  (26) secession will not be enhanced under the federal form of government as it is
 (8) Shariah law can only be applied in the Bangsamoro state if the two parties are a crime under the Constitution;
Muslims, but if one or both parties are non-Muslims, national law will always apply;
45
 (27) the Bangsamoro state shall be divided into two autonomous regions, namely,
mainland Muslim Mindanao and Sulu archipelago, as the two Muslim areas are
Proposed states by House Speaker Pantaleon Alvarez (2017)
distinct from each other in terms of culture; and
 (28) the Philippines will include its claim in Sabah under the federal form of Luzon Visayas Mindanao
government. Pimentel, however, did not clarify that the Philippines can only claim
 Bicol
the eastern half of Sabah.
 Ilocos
In January 2018, Pimentel suggested the inclusion of the Malaysian-administered  Eastern Mindanao
territory of Sabah as a Philippine federal state in itself to assert the Philippine claim Eastern
Metro Manila  Western Mindanao
over the disputed territory in a way "acceptable under international laws" Visayas
 Unnamed Moro State (Sulu Archipelago)
In February 2018, under a new federalism forum, Pimentel noted that new  Mimaropa
Western
 Unnamed Moro State (Maguindanao /
information have been funneled in regarding federalism in the Philippines and the  Central Luzon Visayas
Lanao del Sur)
actual want and need of the people in a federal form of government. In the forum, he  Southern Tagalog  Unnamed I.P. State (Lumads)
clarified and revised six points from his initial forum back in January 2017, namely: (1)
 Unnamed I.P. State
the proposed Northern Mindanao state may be divided into the Northwest Mindanao
(Igorot)
state (the entire Zamboanga region, Misamis Occidental, Lanao del Norte, Iligan City,
Misamis Oriental, Cagayan de Oro city, and Camiguin) and the Northeast Mindanao 2018 House Sub-Committee 1 proposal
state (Bukidnon, Agusan del Norte, Agusan de Sur, Butuan City, Dinagat Islands,
The Sub-Committee 1 of the House of Representatives Committee on
Surigao del Norte, and Surigao del Sur); (2) If the Northern Mindanao state is divided
Constitutional Amendments proposed that a federal Philippines would comprise five
into two states, Agusan del Sur and Surigao del Sur will shift into the Northeast
states. Each states to be led by a premiere as its executive head will have a State
Mindanao state from the initially-proposed Southern Mindanao state; (3) The president
Assembly according to the proposal. The proposal has been hit by massive criticism
and the vice president shall continue to be elected through a nation-wide election, but
due to general lumping and a lack of representation. According to the proposal,
they must be elected in tandem; (4) the qualifications for president, vice president, and
politicians will have 'more than' two consecutive terms, making them eligible to run for
members of Congress shall be the same with the current Constitution, but with the
office with no term limit.
addition that the candidates must at least have a bachelor's degree from a
college/university recognized by the government; (5) the term of the elected president Proposed states and capitals
and vice president shall be six years without reelection; and (6) a former president is House of Representatives Committee on Constitutional Amendments
not eligible to run for the presidency anymore as the new Constitution shall limit the (Sub-Committee-1 proposal)
term of a president into one term only.
Metro Manila
b. Alvarez proposal
Luzon
In 2017, House Speaker Pantaleon Alvarez's vision for a federal Philippines called
for 14 states: 7 in Luzon, 2 in Visayas and 5 in Mindanao. He also proposed that the Visayas
capital of the Philippines under a federal government should be somewhere in Negros Mindanao
island saying that it would be accessible to all people from the three island groups while
he added that the state's territory does not have to be contiguous. Alvarez has hinted Bangsamoro
that the new capital may be established between the towns of Kabankalan, Negros League of Provinces proposal
Occidental and Mabinay, Negros Oriental. Indigenous groups are in favor of the
proposal, but are wary of the possibility of a 'no term limit' for politicians, which is a In February 2018, the League of Provinces of the Philippines (LPP), whose
grave scandal in many Filipino indigenous societies, especially in the Cordilleras. In members are the 81 provincial governors, gave its support to the country's shift to
February 2018, Alvarez reiterated that he shall input an indigenous state in the federalism, but stated that the 81 existing provinces should be converted into
Cordilleras in Luzon and an indigenous state in Mindanao, whatever federal set-up is “independent states”, instead of regional lumping.
approved by the President.

46
 government form into federalism. Under the approved proposed constitution, the
Philippines will be divided into 18 federated regions, where the National Capital Region
Con-Com proposal
(which initially was suppose to be a 'capital region') will now be a federated region as
Consultative Committee 2018 proposed charter well.[
Federated regions (16) Tenure and eligibility for re-election of incumbent officials
National Capital Region (Metro Manila) The draft constitution formulated by the Concom 'allows the president to
Ilocos assume all the necessary powers of government – executive, legislative, and judiciary
– to prevent the breakup' of the proposed federated republic, according to Consultative
Cagayan Valley Committee chairman Reynato Puno. An July 6, 2018, it was revealed by ConCom
Central Luzon member Julio Teehankee that under the proposed federal constitution, Duterte
and Vice President Leni Robredo may run again for president for two consecutive terms
Calabarzon or an additional 8 years in office after 2022, paving the way for a possible 14 years in
Mimaropa office.

Bicol This was met with opposition from some critics, including lawyer and former
Solicitor General Florin Hilbay and Albay province Rep. Edcel Lagman. It was feared
Negros Island that the proposed charter would enable an authoritarian regime similar to that of
Eastern Visayas Ferdinand Marcos during the Martial Law era. Hilbay found it suspicious when a copy
of the draft charter was leaked by an unknown source, which the commission said was
Central Visayas "not final". In a statement, he said that the proposed constitution was “overtly designed
Western Visayas to secure, if not coerce, popular anointment of the Consultative Committee’s handiwork
which was approved without the benefit of prior extensive local consultations.”
Northern Mindanao
Later however, Teehankee stated that he "misspoke" during the interview,
Davao saying that the president and vice president are barred from running, and assured that
Soccksargen their terms will not be extended, referring to Section 16 of the draft charter, which was
not yet available to the public at that time. In contrast, Concom member and former
Caraga senator Aquilino Pimentel Jr. said, “Theoretically it is true (Duterte can seek re-
election), but in Digong’s case, I am convinced that he does not want to run again. He
Zamboanga has been saying that once it is approved, he will resign.”
Asymmetrical regions (2) Rodrigo Duterte has also announced that he had no intention to serve beyond
his term, and that he is willing to step down earlier than 2022, in case the shift to
ARMM (or Bangsamoro)
Federalism pushes through. He then asked the Consultative Committee to include a
Cordillera provision that prevents him from seeking re-election, which was subsequently added
by the Concom.
In April 25, 2018, the consultative committee (Con-Com), created by President
Rodrigo Duterte to propose revisions to the 1987 Constitution, agreed that the starting
point for the federalism discussions will be the establishment of 17 federated regions
and the National Capital Region, the proposed federal capital region. The 17 federated
regions will be Ilocos, Cordillera, Cagayan Valley, Central Luzon, Calabarzon, Bicol,
Mimaropa, Eastern Visayas, Central Visayas, Negros, Panay, Caraga, Northern
Mindanao, Davao, Soccsksargen, Muslim Mindanao, and Zamboanga.
In July 4, 2018, the Consultative Committee (ConCom) tasked to review the
Constitution unanimously approved the draft constitution which would shift the present

47
G.R. No. 118303 January 31, 1996 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
SENATOR HEHERSON T. ALVAREZ, SENATOR JOSE D. LINA, JR., MR. NICASIO
Known as the City of Santiago,” was filed in the Senate. It was introduced by Senator
B. BAUTISTA, MR. JESUS P. GONZAGA, MR. SOLOMON D. MAYLEM, LEONORA
Vicente Sotto III, as principal sponsor, on May 19, 1993. This was just after the House
C. MEDINA, CASIANO S. ALIPON, petitioners,
of Representatives had conducted its first public hearing on HB No. 8817.
vs. On February 23, 1994, or a little less than a month after HB No. 8817 was transmitted
HON. TEOFISTO T. GUINGONA, JR., in his capacity as Executive Secretary, HON. to the Senate, the Senate Committee on Local Government conducted public hearings
RAFAEL ALUNAN, in his capacity as Secretary of Local Government, HON. on SB No. 1243. On March 1, 1994, the said committee submitted Committee Report
SALVADOR ENRIQUEZ, in his capacity as Secretary of Budget, THE No. 378 on HB No. 8817, with the recommendation that it be approved without
COMMISSION ON AUDIT, HON. JOSE MIRANDA, in his capacity as Municipal amendment, taking into consideration the reality that H.B. No. 8817 was on all fours
Mayor of Santiago and HON. CHARITO MANUFAY, HON. VICTORINO MIRANDA, with SB No. 1243. Senator Heherson T. Alvarez, one of the herein petitioners, indicated
JR., HON. ARTEMIO ALVAREZ, HON. DANILO VERGARA, HON. PETER DE his approval thereto by signing said report as member of the Committee on Local
JESUS, HON. NELIA NATIVIDAD, HON. CELSO CALEON and HON. ABEL Government.
MUSNGI, in their capacity as SANGGUNIANG BAYAN MEMBERS, MR. RODRIGO
On March 3, 1994, Committee Report No. 378 was passed by the Senate on Second
L. SANTOS, in his capacity as Municipal Treasurer, and ATTY. ALFREDO S.
Reading and was approved on Third Reading on March 14, 1994. On March 22, 1994,
DIRIGE, in his capacity as Municipal Administrator, respondents.
the House of Representatives, upon being apprised of the action of the Senate,
DECISION approved the amendments proposed by the Senate.
HERMOSISIMA, JR., J.: 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
Of main concern to the petitioners is whether Republic Act No. 7720, just recently held on July 13, 1994, a great majority of the registered voters of Santiago voted in
passed by Congress and signed by the President into law, is constitutionally infirm. favor of the conversion of Santiago into a city.
Indeed, in this Petition for Prohibition with prayer for Temporary Restraining Order and The question as to the validity of Republic Act No. 7720 hinges on the following twin
Preliminary Prohibitory Injunction, petitioners assail the validity of Republic Act No. issues: (I) Whether or not the Internal Revenue Allotments (IRAs) are to be included in
7720, entitled, “An Act Converting the Municipality of Santiago, Isabela into an the computation of the average annual income of a municipality for purposes of its
Independent Component City to be known as the City of Santiago,” mainly because the conversion into an independent component city, and (II) Whether or not, considering
Act allegedly did not originate exclusively in the House of Representatives as mandated that the Senate passed SB No. 1243, its own version of HB No. 8817, Republic Act No.
by Section 24, Article VI of the 1987 Constitution. 7720 can be said to have originated in the House of Representatives.
Also, petitioners claim that the Municipality of Santiago has not met the minimum I
average annual income required under Section 450 of the Local Government Code of
1991 in order to be converted into a component city. The annual income of a local government unit includes the IRAs

Undisputed is the following chronicle of the metamorphosis of House Bill No. 8817 into Petitioners claim that Santiago could not qualify into a component city because its
Republic Act No. 7720: 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
On April 18, 1993, HB No. 8817, entitled “An Act Converting the Municipality of (P20,000,000.00) for its conversion into a city, petitioners having computed Santiago’s
Santiago into an Independent Component City to be known as the City of Santiago,” average annual income in the following manner:
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 Total income (at 1991 constant prices) for P 20,379,057.07
Committee on Local Government and the House Committee on Appropriations on May 1991
5, 1993.
On May 19, 1993, June 1, 1993, November 28, 1993, and December 1, 1993, public
Total income (at 1991 constant prices) for P 21,570,106.87
hearings on HB No. 8817 were conducted by the House Committee on Local
1992
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 Total income for 1991 and 1992 P 41,949,163.94
Second Reading and was approved on Third Reading on December 17, 1993. On
January 28, 1994, HB No. 8817 was transmitted to the Senate.
48
 increased responsibilities, a local government unit must now operate on a much wider
Minus: 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
IRAs for 1991 and 1992 P 15,730,043.00 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
Total income for 1991 and 1992 P 26,219,120.94 (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

Average Annual Income P 13,109,560.47 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
By dividing the total income of Santiago for calendar years 1991 and 1992, after than twenty percent (20%) of the IRAs must be set aside for local development
deducting the IRAs, the average annual income arrived at would only be projects.9 As such, for purposes of budget preparation, which budget should reflect the
P13,109,560.47 based on the 1991 constant prices. Thus, petitioners claim that estimates of the income of the local government unit, among others, the IRAs and the
Santiago’s income is far below the aforesaid Twenty Million Pesos average annual share in the national wealth utilization proceeds are considered items of income. This
income requirement. is as it should be, since income is defined in the Local Government Code to be all
The certification issued by the Bureau of Local Government Finance of the Department revenues and receipts collected or received forming the gross accretions of funds of
of Finance, which indicates Santiago’s average annual income to be P20,974,581.97, the local government unit.10
is allegedly not accurate as the Internal Revenue Allotments were not excluded from The IRAs are items of income because they form part of the gross accretion of the
the computation. Petitioners asseverate that the IRAs are not actually income but funds of the local government unit. The IRAs regularly and automatically accrue to the
transfers and/or budgetary aid from the national government and that they fluctuate, local treasury without need of any further action on the part of the local government
increase or decrease, depending on factors like population, land and equal sharing. unit.11 They thus constitute income which the local government can invariably rely upon
In this regard, we hold that petitioners asseverations are untenable because Internal as the source of much needed funds.
Revenue Allotments form part of the income of Local Government Units. For purposes of converting the Municipality of Santiago into a city, the Department of
It is true that for a municipality to be converted into a component city, it must, among Finance certified, among others, that the municipality had an average annual income
others, have an average annual income of at least Twenty Million Pesos for the last two of at least Twenty Million Pesos for the last two (2) consecutive years based on 1991
(2) consecutive years based on 1991 constant prices. 1 Such income must be duly constant prices. This, the Department of Finance did after including the IRAs in its
certified by the Department of Finance. computation of said average annual income.

Resolution of the controversy regarding compliance by the Municipality of Santiago with Furthermore, Section 450 (c) of the Local Government Code provides that “the average
the aforecited income requirement hinges on a correlative and contextual explication annual income shall include the income accruing to the general fund, exclusive of
of the meaning of internal revenue allotments (IRAs) vis-a-vis the notion of income of special funds, transfers, and non-recurring income.” To reiterate, IRAs are a regular,
a local government unit and the principles of local autonomy and decentralization recurring item of income; nil is there a basis, too, to classify the same as a special fund
underlying the institutionalization and intensified empowerment of the local government or transfer, since IRAs have a technical definition and meaning all its own as used in
system. 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
A Local Government Unit is a political subdivision of the State which is constituted by government, its instrumentalities and government-owned-or-controlled corporations”.12
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 Thus, Department of Finance Order No. 35-9313 correctly encapsulizes the full import
an imperium in imperio,4 the local government unit is autonomous in the sense that it of the above disquisition when it defined ANNUAL INCOME to be “revenues and
is given more powers, authority, responsibilities and resources. 5 Power which used to receipts realized by provinces, cities and municipalities from regular sources of the
Local General Fund including the internal revenue allotment and other shares provided
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 for in Sections 284, 290 and 291 of the Code, but exclusive of non-recurring receipts,
but also with their own resources and assets. such as other national aids, grants, financial assistance, loan proceeds, sales of fixed
assets, and similar others” (Emphasis ours).14 Such order, constituting executive or
The practical side to development through a decentralized local government system contemporaneous construction of a statute by an administrative agency charged with
certainly concerns the matter of financial resources. With its broadened powers and the task of interpreting and applying the same, is entitled to full respect and should be
49
accorded great weight by the courts, unless such construction is clearly shown to be in merely to “take [H. No. 11197] into consideration” in enacting S. No. 1630. There is
sharp conflict with the Constitution, the governing statute, or other laws. 15 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
II seem petitioners admit is an amendment by substitution), and, on the other hand,
In the enactment of RA No. 7720, there was compliance with Section 24, Article VI of separately presenting a bill of its own on the same subject matter. In either case the
the 1987 Constitution result are two bills on the same subject.
Although a bill of local application like HB No. 8817 should, by constitutional Indeed, what the Constitution simply means is that the initiative for filing revenue, tariff,
prescription,16 originate exclusively in the House of Representatives, the claim of or tax bills, bills authorizing an increase of the public debt, private bills and bills of local
petitioners that Republic Act No. 7720 did not originate exclusively in the House of application must come from the House of Representatives on the theory that, elected
Representatives because a bill of the same import, SB No. 1243, was passed in the as they are from the districts, the members of the House can be expected to be more
Senate, is untenable because it cannot be denied that HB No. 8817 was filed in the sensitive to the local needs and problems. On the other hand, the senators, who are
House of Representatives first before SB No. 1243 was filed in the Senate. Petitioners elected at large, are expected to approach the same problems from the national
themselves cannot disavow their own admission that HB No. 8817 was filed on April perspective. Both views are thereby made to bear on the enactment of such laws.
18, 1993 while SB No. 1243 was filed on May 19, 1993. The filing of HB No. 8817 was Nor does the Constitution prohibit the filing in the Senate of a substitute bill in
thus precursive not only of the said Act in question but also of SB No. 1243. Thus, HB anticipation of its receipt of the bill from the House, so long as action by the Senate as
No. 8817, was the bill that initiated the legislative process that culminated in the a body is withheld pending receipt of the House bill. . . .18
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. III
Furthermore, petitioners themselves acknowledge that HB No. 8817 was already Every law, including RA No. 7720, has in its favor the presumption of constitutionality
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. It is a well-entrenched jurisprudential rule that on the side of every law lies the
8817 was approved on the Third Reading on December 17, 1993 and transmitted to presumption of constitutionality.19Consequently, for RA No. 7720 to be nullified, it must
the Senate on January 28, 1994; a little less than a month thereafter, or on February be shown that there is a clear and unequivocal breach of the Constitution, not merely
23, 1994, the Senate Committee on Local Government conducted public hearings on a doubtful and equivocal one; in other words, the grounds for nullity must be clear and
SB No. 1243. Clearly, the Senate held in abeyance any action on SB No. 1243 until it beyond reasonable doubt.20 Those who petition this court to declare a law to be
received HB No. 8817, already approved on the Third Reading, from the House of unconstitutional must clearly and fully establish the basis that will justify such a
Representatives. The filing in the Senate of a substitute bill in anticipation of its receipt declaration; otherwise, their petition must fail. Taking into consideration the justification
of the bill from the House, does not contravene the constitutional requirement that a bill of our stand on the immediately preceding ground raised by petitioners to challenge the
of local application should originate in the House of Representatives, for as long as the constitutionality of RA No. 7720, the Court stands on the holding that petitioners have
Senate does not act thereupon until it receives the House bill. failed to overcome the presumption. The dismissal of this petition is, therefore,
inevitable.
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, WHEREFORE, the instant petition is DISMISSED for lack of merit with costs against
as a revenue bill, is nonetheless constitutionally required to originate exclusively in the petitioners.
House of Representatives, we explained: SO ORDERED.
. . . 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. . . . 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
Senate’s 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
50
EXECUTIVE ORDER NO. 292 On November 17, 1998, Roberto Pagdanganan, through Counsel Alberto C.
Agra, filed a Motion for Intervention/Motion to Admit Petition for
INSTITUTING THE "ADMINISTRATIVE CODE OF 1987" 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
Title XII Leagues of Local Governments. In a Resolution dated December 15, 1998, the Court
noted said Motion and Petition.
LOCAL GOVERNMENT
The Facts and the Arguments
CHAPTER 1 On December 27, 1997, the President of the Philippines issued AO 372. Its full
GENERAL PROVISIONS text, with emphasis on the assailed provisions, is as follows:

Section 1. Declaration of Policy. - The State shall ensure the autonomy of local "ADMINISTRATIVE ORDER NO. 372
governments. For this purpose, it shall provide for a more responsive and accountable
local government structure instituted through a system of decentralization. The ADOPTION OF ECONOMY MEASURES IN GOVERNMENT FOR FY 1998
allocation of powers and resources to local government units shall be promoted, and
inter-local government grouping, consolidation and coordination of resources shall be
encouraged. The State shall guarantee the local government units their just share in WHEREAS, the current economic difficulties brought about by the peso depreciation
national taxes and their equitable share in proceeds from the use of natural resources, requires continued prudence in government fiscal management to maintain economic
and afford them a wider latitude for resources generation.[G.R. No. 132988. July 19, stability and sustain the country's growth momentum;
2000]
WHEREAS, it is imperative that all government agencies adopt cash management
AQUILINO Q. PIMENTEL JR., petitioner, vs. Hon. ALEXANDER AGUIRRE in his measures to match expenditures with available resources;
capacity as Executive Secretary, Hon. EMILIA BONCODIN in her capacity
as Secretary of the Department of Budget and NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the Philippines,
Management, respondents. by virtue of the powers vested in me by the Constitution, do hereby order and direct:
ROBERTO PAGDANGANAN, intervenor.
SECTION 1. All government departments and agencies, including state
universities and colleges, government-owned and controlled corporations and
DECISION local governments units will identify and implement measures in FY 1998 that
PANGANIBAN, J.: will reduce total expenditures for the year by at least 25% of authorized regular
appropriations for non-personal services items, along the following suggested
areas:
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 1. Continued implementation of the streamlining policy on organization and
advisories and seek their cooperation in solving economic difficulties, he cannot staffing by deferring action on the following:
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, a. Operationalization of new agencies;
the withholding of a portion of internal revenue allotments legally due them cannot be
directed by administrative fiat. b. Expansion of organizational units and/or creation of positions;
The Case
c. Filling of positions; and
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 d. Hiring of additional/new consultants, contractual and casual personnel, regardless
appropriations for non-personal services; and (2) to enjoin respondents from of funding source.
implementing Section 4 of the Order, which withholds a portion of their internal revenue
allotments. 2. Suspension of the following activities:
51
 a. Implementation of new capital/infrastructure projects, except those which SECTION 3. A report on the estimated savings generated from these measures shall
have already been contracted out; be submitted to the Office of the President, through the Department of Budget and
Management, on a quarterly basis using the attached format.
b. Acquisition of new equipment and motor vehicles;
SECTION 4. Pending the assessment and evaluation by the
c. All foreign travels of government personnel, except those associated with Development Budget Coordinating Committee of the emerging
scholarships and trainings funded by grants; fiscal situation, the amount equivalent to 10% of the internal
revenue allotment to local government units shall be withheld.
d. Attendance in conferences abroad where the cost is charged to the SECTION 5. The Development Budget Coordination Committee shall
government except those clearly essential to Philippine conduct a monthly review of the fiscal position of the National
commitments in the international field as may be determined by the Government and if necessary, shall recommend to the President the
Cabinet; imposition of additional reserves or the lifting of previously imposed
reserves.
e. Conduct of trainings/workshops/seminars, except those conducted by SECTION 6. This Administrative Order shall take effect January 1, 1998 and
government training institutions and agencies in the performance of shall remain valid for the entire year unless otherwise lifted.
their regular functions and those that are funded by grants;
DONE in the City of Manila, this 27th day of December, in the year of our Lord, nineteen
f. Conduct of cultural and social celebrations and sports activities, except hundred and ninety-seven."
those associated with the Philippine Centennial celebration and
those involving regular competitions/events;
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
g. Grant of honoraria, except in cases where it constitutes the only source internal revenue allotment (IRA) to be withheld from the LGUs.
of compensation from government received by the person
concerned; 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
h. Publications, media advertisements and related items, except those the power of general supervision over LGUs, consistent with the principle of local
required by law or those already being undertaken on a regular basis; 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
i. Grant of new/additional benefits to employees, except those expressly and these units its share in the national internal revenue.
specifically authorized by law; and
The solicitor general, on behalf of the respondents, claims on the other hand that
j. Donations, contributions, grants and gifts, except those given by AO 372 was issued to alleviate the "economic difficulties brought about by the peso
institutions to victims of calamities. 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
3. Suspension of all tax expenditure subsidies to all GOCCs and LGUs expenditures for non-personal services by at least 25 percent. Likewise, the withholding
4. Reduction in the volume of consumption of fuel, water, office supplies, of 10 percent of the LGUs IRA does not violate the statutory prohibition on the
electricity and other utilities 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
5. Deferment of projects that are encountering significant implementation Coordination Committee of the emerging fiscal situation."
problems
The Issues
6. Suspension of all realignment of funds and the use of savings and
reserves The Petition[3] submits the following issues for the Court's resolution:

SECTION 2. Agencies are given the flexibility to identify the specific sources of cost- "A. Whether or not the president committed grave abuse of discretion [in] ordering all
savings, provided the 25% minimum savings under Section 1 is complied with. LGUS to adopt a 25% cost reduction program in violation of the LGU[']S fiscal
autonomy
52
"B. Whether or not the president committed grave abuse of discretion in ordering the performance of his duties and to substitute the judgment of the former for that of the
withholding of 10% of the LGU[']S IRA" latter."[6]

In sum, the main issue is whether (a) Section 1 of AO 372, insofar as it "directs" In Taule v. Santos,[7] we further stated that the Chief Executive wielded no more
LGUs to reduce their expenditures by 25 percent; and (b) Section 4 of the same authority than that of checking whether local governments or their officials were
issuance, which withholds 10 percent of their internal revenue allotments, are valid performing their duties as provided by the fundamental law and by statutes. He cannot
exercises of the President's power of general supervision over local governments. 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
Additionally, the Court deliberated on the question whether petitioner had oversight over an inferior body; it does not include any restraining authority over such
the locus standi to bring this suit, despite respondents' failure to raise the body,"[8] we said.
issue.[4] However, the intervention of Roberto Pagdanganan has rendered academic
any further discussion on this matter. 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
The Court's Ruling 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
The Petition is partly meritorious. 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
Main Issue:
execution of the act. They have no discretion on this matter except to see to it that the
Validity of AO 372
rules are followed.
Insofar as LGUs Are Concerned
Under our present system of government, executive power is vested in the
Before resolving the main issue, we deem it important and appropriate to define
President.[10] The members of the Cabinet and other executive officials are merely alter
certain crucial concepts: (1) the scope of the President's power of general supervision egos. As such, they are subject to the power of control of the President, at whose will
over local governments and (2) the extent of the local governments' autonomy. 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
Scope of President's Power of Supervision Over LGUs 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
Section 4 of Article X of the Constitution confines the President's power over local authority or power given them by the Constitution and the law.
governments to one of general supervision. It reads as follows:

"Sec. 4. The President of the Philippines shall exercise general supervision over local Extent of Local Autonomy
governments. x x x"

This provision has been interpreted to exclude the power of control. In Mondano Hand in hand with the constitutional restraint on the President's power over local
v. Silvosa,[5] the Court contrasted the President's power of supervision over local governments is the state policy of ensuring local autonomy. [12]
government officials with that of his power of control over executive officials of the In Ganzon v. Court of Appeals,[13] we said that local autonomy signified "a more
national government. It was emphasized that the two terms -- supervision and control responsive and accountable local government structure instituted through a system of
-- differed in meaning and extent. The Court distinguished them as follows: 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
"x x x In administrative law, supervision means overseeing or the power or authority of relation of partnership and interdependence between the central administration and
an officer to see that subordinate officers perform their duties. If the latter fail or neglect local government units x x x." Paradoxically, local governments are still subject to
to fulfill them, the former may take such action or step as prescribed by law to make regulation, however limited, for the purpose of enhancing self-government.[14]
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

53
 Decentralization simply means the devolution of national administration, not local governments to reduce their total expenditures by at least 25 percent along
power, to local governments. Local officials remain accountable to the central suggested areas mentioned in AO 372.
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 Under existing law, local government units, in addition to having administrative
follows: 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
"Now, autonomy is either decentralization of administration or decentralization of national government, as well as the power to allocate their resources in accordance
power. There is decentralization of administration when the central government with their own priorities. It extends to the preparation of their budgets, and local officials
delegates administrative powers to political subdivisions in order to broaden the base in turn have to work within the constraints thereof. They are not formulated at the
of government power and in the process to make local governments 'more responsive national level and imposed on local governments, whether they are relevant to local
and accountable,'[17] and 'ensure their fullest development as self-reliant communities needs and resources or not. Hence, the necessity of a balancing of viewpoints and the
and make them more effective partners in the pursuit of national development and harmonization of proposals from both local and national officials,[24] who in any case
social progress.'[18] At the same time, it relieves the central government of the burden are partners in the attainment of national goals.
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 Local fiscal autonomy does not however rule out any manner of national
affairs are administered according to law.'[20] He has no control over their acts in the government intervention by way of supervision, in order to ensure that local programs,
sense that he can substitute their judgments with his own. [21] 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
Decentralization of power, on the other hand, involves an abdication of political power government,[25] primarily responsible for formulating and implementing continuing,
in the favor of local government units declared to be autonomous. In that case, the coordinated and integrated social and economic policies, plans and programs [26] for the
autonomous government is free to chart its own destiny and shape its future with entire country. However, under the Constitution, the formulation and the
minimum intervention from central authorities. According to a constitutional author, implementation of such policies and programs are subject to "consultations with the
decentralization of power amounts to 'self-immolation,' since in that event, the appropriate public agencies, various private sectors, and local government units." The
autonomous government becomes accountable not to the central authorities but to its President cannot do so unilaterally.
constituency."[22] Consequently, the Local Government Code provides:[27]

Under the Philippine concept of local autonomy, the national government has not "x x x [I]n the event the national government incurs an unmanaged public sector deficit,
completely relinquished all its powers over local governments, including autonomous the President of the Philippines is hereby authorized, upon the recommendation of [the]
regions. Only administrative powers over local affairs are delegated to political Secretary of Finance, Secretary of the Interior and Local Government and Secretary of
subdivisions. The purpose of the delegation is to make governance more directly Budget and Management, and subject to consultation with the presiding officers of both
responsive and effective at the local levels. In turn, economic, political and social Houses of Congress and the presidents of the liga, to make the necessary adjustments
development at the smaller political units are expected to propel social and economic in the internal revenue allotment of local government units but in no case shall the
growth and development. But to enable the country to develop as a whole, the allotment be less than thirty percent (30%) of the collection of national internal revenue
programs and policies effected locally must be integrated and coordinated towards a taxes of the third fiscal year preceding the current fiscal year x x x."
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] 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
The Nature of AO 372 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
Consistent with the foregoing jurisprudential precepts, let us now look into the collection of national internal revenue taxes of the third fiscal year preceding the current
nature of AO 372. As its preambular clauses declare, the Order was a "cash one.
management measure" adopted by the government "to match expenditures with
Petitioner points out that respondents failed to comply with these requisites before
available resources," which were presumably depleted at the time due to "economic
difficulties brought about by the peso depreciation." Because of a looming financial 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
crisis, the President deemed it necessary to "direct all government agencies, state
sector deficit. Neither did they claim having conducted consultations with the different
universities and colleges, government-owned and controlled corporations as well as
54
leagues of local governments.Without these requisites, the President has no authority In sum, while Section 1 of AO 372 may be upheld as an advisory effected in times
to adjust, much less to reduce, unilaterally the LGU's internal revenue allotment. 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
The solicitor general insists, however, that AO 372 is merely directory and has President was well-intentioned in issuing his Order to withhold the LGUs IRA, but the
been issued by the President consistent with his power of supervision over local rule of law requires that even the best intentions must be carried out within the
governments. It is intended only to advise all government agencies and parameters of the Constitution and the law. Verily, laudable purposes must be carried
instrumentalities to undertake cost-reduction measures that will help maintain out by legal methods.
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 Refutation of Justice Kapunan's Dissent
power of control.
While the wordings of Section 1 of AO 372 have a rather commanding tone, and
Mr. Justice Santiago M. Kapunan dissents from our Decision on the grounds that,
while we agree with petitioner that the requirements of Section 284 of the Local
allegedly, (1) the Petition is premature; (2) AO 372 falls within the powers of the
Government Code have not been satisfied, we are prepared to accept the solicitor
President as chief fiscal officer; and (3) the withholding of the LGUs IRA is implied in
general's assurance that the directive to "identify and implement measures x x x that
the President's authority to adjust it in case of an unmanageable public sector deficit.
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 First, on prematurity. According to the Dissent, when "the conduct has not yet
that interferes with local autonomy. The language used, while authoritative, does not occurred and the challenged construction has not yet been adopted by the agency
amount to a command that emanates from a boss to a subaltern. charged with administering the administrative order, the determination of the scope and
constitutionality of the executive action in advance of its immediate adverse effect
Rather, the provision is merely an advisory to prevail upon local executives to
involves too remote and abstract an inquiry for the proper exercise of judicial function."
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 This is a rather novel theory -- that people should await the implementing evil to
to help alleviate the crisis. It is understood, however, that no legal sanction may be befall on them before they can question acts that are illegal or unconstitutional. Be it
imposed upon LGUs and their officials who do not follow such advice. It is in this light remembered that the real issue here is whether the Constitution and the law are
that we sustain the solicitor general's contention in regard to Section 1. 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
Withholding a Part of LGUs' IRA 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
Section 4 of AO 372 cannot, however, be upheld. A basic feature of local fiscal awaken judicial duty. Said the Court:
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 "In seeking to nullify an act of the Philippine Senate on the ground that it contravenes
within five (5) days after every quarter of the year and "shall not be subject to any lien the Constitution, the petition no doubt raises a justiciable controversy. Where an action
or holdback that may be imposed by the national government for whatever of the legislative branch is seriously alleged to have infringed the Constitution, it
purpose."[30] As a rule, the term "shall" is a word of command that must be given a becomes not only the right but in fact the duty of the judiciary to settle the dispute. 'The
compulsory meaning.[31] The provision is, therefore, imperative. 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
Section 4 of AO 372, however, orders the withholding, effective January 1, 1998, the application or interpretation of a constitutional provision is raised before this Court x
of 10 percent of the LGUs' IRA "pending the assessment and evaluation by the x x , it becomes a legal issue which the Court is bound by constitutional mandate to
Development Budget Coordinating Committee of the emerging fiscal situation" in the decide.'[35]
country. Such withholding clearly contravenes the Constitution and the law. Although
temporary, it is equivalent to a holdback, which means "something held back or xxxxxxxxx
withheld, often temporarily."[32] Hence, the "temporary" nature of the retention by the
national government does not matter. Any retention is prohibited.
"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

55
matters that involve grave abuse of discretion brought before it in appropriate cases, Notably, Justice Kapunan recognizes the need for "interaction between the
committed by any officer, agency, instrumentality or department of the government." national 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
In the same vein, the Court also held in Tatad v. Secretary of the Department of no such interaction or consultation was ever held prior to the issuance of AO 372. This
Energy:[37] 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
"x x x Judicial power includes not only the duty of the courts to settle actual action. Significantly, respondents do not deny the lack of consultation.
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 In addition, Justice Kapunan cites Section 287 [40] of the LGC as impliedly
amounting to lack or excess of jurisdiction on the part of any branch or instrumentality authorizing the President to withhold the IRA of an LGU, pending its compliance with
of government. The courts, as guardians of the Constitution, have the inherent authority certain requirements.Even a cursory reading of the provision reveals that it is totally
to determine whether a statute enacted by the legislature transcends the limit imposed inapplicable to the issue at bar. It directs LGUs to appropriate in their annual budgets
by the fundamental law. Where the statute violates the Constitution, it is not only the 20 percent of their respective IRAs for development projects. It speaks of no positive
right but the duty of the judiciary to declare such act unconstitutional and void." power granted the President to priorly withhold any amount. Not at all.
WHEREFORE, the Petition is GRANTED. Respondents and their successors are
By the same token, when an act of the President, who in our constitutional hereby permanently PROHIBITED from implementing Administrative Order Nos. 372
scheme is a coequal of Congress, is seriously alleged to have infringed the Constitution and 43, respectively dated December 27, 1997 and December 10, 1998, insofar as
and the laws, as in the present case, settling the dispute becomes the duty and the local government units are concerned.
responsibility of the courts.
SO ORDERED.
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 Davide, Jr., C.J., Bellosillo, Melo, Puno, Vitug, Mendoza, Quisumbing, Pardo,
use against a party that has not been given sufficient notice of its presentation, and Buena, Gonzaga-Reyes, and De Leon, Jr., JJ., concur.
thus has not been given the opportunity to refute it.[38] Kapunan, J., see dissenting opinion.
Purisima, and Ynares-Santiago, JJ., join J. Kapunan in his dissenting opinion.
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.

56
[G.R. No. 152774. May 27, 2004] 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 PROVINCE OF BATANGAS, represented by its Governor, HERMILANDO I.

MANDANAS, petitioner, vs. HON. ALBERTO G. ROMULO, Executive The LGSEF in the GAA of 1999
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 In Republic Act No. 8745, otherwise known as the GAA of 1999, the program was
and Local Government, respondents. renamed as the LOCAL GOVERNMENT SERVICE EQUALIZATION FUND
(LGSEF). Under said appropriations law, the amount of P96,780,000,000 was allotted
DECISION 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
CALLEJO, SR., J.: proviso:

The Province of Batangas, represented by its Governor, Hermilando I. Mandanas, ... PROVIDED, That the amount of FIVE BILLION PESOS (P5,000,000,000) shall be
filed the present petition for certiorari, prohibition and mandamus under Rule 65 of the earmarked for the Local Government Service Equalization Fund for the funding
Rules of Court, as amended, to declare as unconstitutional and void certain provisos requirements of projects and activities arising from the full and efficient implementation
contained in the General Appropriations Acts (GAA) of 1999, 2000 and 2001, insofar of devolved functions and services of local government units pursuant to R.A. No. 7160,
as they uniformly earmarked for each corresponding year the amount of five billion otherwise known as the Local Government Code of 1991: PROVIDED, FURTHER,
pesos (P5,000,000,000.00) of the Internal Revenue Allotment (IRA) for the Local That such amount shall be released to the local government units subject to the
Government Service Equalization Fund (LGSEF) and imposed conditions for the implementing rules and regulations, including such mechanisms and guidelines for the
release thereof. equitable allocations and distribution of said fund among local government units subject
Named as respondents are Executive Secretary Alberto G. Romulo, in his to the guidelines that may be prescribed by the Oversight Committee on Devolution as
capacity as Chairman of the Oversight Committee on Devolution, Secretary Emilia constituted pursuant to Book IV, Title III, Section 533(b) of R.A. No. 7160. The Internal
Boncodin of the Department of Budget and Management (DBM) and Secretary Jose Revenue Allotment shall be released directly by the Department of Budget and
Management to the Local Government Units concerned.
Lina of the Department of Interior and Local Government (DILG).

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
Background and OCD-99-006 entitled as follows:

OCD-99-005
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 RESOLUTION ADOPTING THE ALLOCATION SCHEME FOR THE
process of enhancing the capacities of local government units (LGUs) in the discharge PhP5 BILLION CY 1999 LOCAL GOVERNMENT SERVICE
of the functions and services devolved to them by the National Government Agencies EQUALIZATION FUND (LGSEF) AND REQUESTING HIS
concerned pursuant to the Local Government Code. [1] The Oversight Committee EXCELLENCY PRESIDENT JOSEPH EJERCITO ESTRADA TO
(referred to as the Devolution Committee in E.O. No. 48) constituted under Section APPROVE SAID ALLOCATION SCHEME.
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 OCD-99-006
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
RESOLUTION ADOPTING THE ALLOCATION SCHEME FOR THE
Devolution Adjustment and Equalization Fund was created. [3] For 1998, the DBM was
PhP4.0 BILLION OF THE 1999 LOCAL GOVERNMENT SERVICE
directed to set aside an amount to be determined by the Oversight Committee based
EQUALIZATION FUND AND ITS CONCOMITANT GENERAL
on the devolution status appraisal surveys undertaken by the DILG. [4] The initial fund
FRAMEWORK, IMPLEMENTING GUIDELINES AND MECHANICS
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
57
 FOR ITS IMPLEMENTATION AND RELEASE, AS PROMULGATED BY In Resolution No. OCD-99-003, the Oversight Committee set aside the one billion
THE OVERSIGHT COMMITTEE ON DEVOLUTION. 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
OCD-99-003 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:
RESOLUTION REQUESTING HIS EXCELLENCY PRESIDENT
JOSEPH EJERCITO ESTRADA TO APPROVE THE REQUEST OF
THE OVERSIGHT COMMITTEE ON DEVOLUTION TO SET ASIDE III. CRITERIA FOR ELIGIBILITY:
TWENTY PERCENT (20%) OF THE LOCAL GOVERNMENT SERVICE
EQUALIZATION FUND (LGSEF) FOR LOCAL AFFIRMATIVE ACTION 1. LGUs (province, city, municipality, or barangay), individually or by group
PROJECTS AND OTHER PRIORITY INITIATIVES FOR LGUs or multi-LGUs or leagues of LGUs, especially those belonging to the
INSTITUTIONAL AND CAPABILITY BUILDING IN ACCORDANCE 5th and 6th class, may access the fund to support any projects or
WITH THE IMPLEMENTING GUIDELINES AND MECHANICS AS activities that satisfy any of the aforecited purposes. A barangay may
PROMULGATED BY THE COMMITTEE. also access this fund directly or through their respective municipality
or city.
These OCD resolutions were approved by then President Estrada on October 6,
1999.
2. The proposed project/activity should be need-based, a local priority, with
Under the allocation scheme adopted pursuant to Resolution No. OCD-99-005, high development impact and are congruent with the socio-cultural,
the five billion pesos LGSEF was to be allocated as follows: economic and development agenda of the Estrada Administration,
such as food security, poverty alleviation, electrification, and peace
1. The PhP4 Billion of the LGSEF shall be allocated in accordance with the and order, among others.
allocation scheme and implementing guidelines and mechanics
promulgated and adopted by the OCD. To wit:
3. Eligible for funding under this fund are projects arising from, but not limited
to, the following areas of concern:
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; a. delivery of local health and sanitation services, hospital services
and other tertiary services;

b. The second PhP2 Billion of the LGSEF shall be allocated in accordance

with a modified 1992 cost of devolution fund (CODEF) sharing b. delivery of social welfare services;
scheme, as recommended by the respective leagues of provinces,
cities and municipalities to the OCD. The modified CODEF sharing c. provision of socio-cultural services and facilities for youth and
formula is as follows: community development;

Province : 40% d. provision of agricultural and on-site related research;

Cities : 20%
Municipalities : 40% e. improvement of community-based forestry projects and other local
projects on environment and natural resources protection
This is applied to the P2 Billion after the approved amounts granted to and conservation;
individual provinces, cities and municipalities as assistance to cover
decrease in 1999 IRA share due to reduction in land area have been f. improvement of tourism facilities and promotion of tourism;
taken out.
2. The remaining PhP1 Billion of the LGSEF shall be earmarked to support g. peace and order and public safety;
local affirmative action projects and other priority initiatives submitted by
LGUs to the Oversight Committee on Devolution for approval in h. construction, repair and maintenance of public works and
accordance with its prescribed guidelines as promulgated and adopted infrastructure, including public buildings and facilities for
by the OCD. public use, especially those destroyed or damaged by man-

58
 made or natural calamities and disaster as well as facilities (b) objectives and justifications for undertaking the project, which
for water supply, flood control and river dikes; should highlight the benefits to the locality and the expected
impact to the local program/project arising from the full and
i. provision of local electrification facilities; efficient implementation of social services and facilities, at
the local levels;
j. livelihood and food production services, facilities and equipment;
(c) target outputs or key result areas;
k. other projects that may be authorized by the OCD consistent with
the aforementioned objectives and guidelines; (d) schedule of activities and details of requirements;

4. Except on extremely meritorious cases, as may be determined by the (e) total cost requirement of the project;
Oversight Committee on Devolution, this portion of the LGSEF shall
not be used in expenditures for personal costs or benefits under (f) proponents counterpart funding share, if any, and identified
existing laws applicable to governments. Generally, this fund shall source(s) of counterpart funds for the full implementation of
cover the following objects of expenditures for programs, projects the project;
and activities arising from the implementation of devolved and
regular functions and services: (g) requested amount of project cost to be covered by the LGSEF.

a. acquisition/procurement of supplies and materials critical to the full Further, under the guidelines formulated by the Oversight Committee as
and effective implementation of devolved programs, contained in Attachment - Resolution No. OCD-99-003, the LGUs were required to
projects and activities; 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
b. repair and/or improvement of facilities; 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
c. repair and/or upgrading of equipment; 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.
d. acquisition of basic equipment;

e. construction of additional or new facilities;

The LGSEF in the GAA of 2000
f. counterpart contribution to joint arrangements or collective projects
among groups of municipalities, cities and/or provinces
Under Rep. Act No. 8760, otherwise known as the GAA of 2000, the amount
related to devolution and delivery of basic services.
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
5. To be eligible for funding, an LGU or group of LGU shall submit to the billion pesos of the IRA for the LGSEF. This proviso, found in Item No. 1, Special
Oversight Committee on Devolution through the Department of Provisions, Title XXXVII A. Internal Revenue Allotment, was similarly worded as that
Interior and Local Governments, within the prescribed schedule and contained in the GAA of 1999.
timeframe, a Letter Request for Funding Support from the Affirmative
Action Program under the LGSEF, duly signed by the concerned The Oversight Committee, in its Resolution No. OCD-2000-023 dated June 22,
LGU(s) and endorsed by cooperators and/or beneficiaries, as well as 2000, adopted the following allocation scheme governing the five billion pesos LGSEF
the duly signed Resolution of Endorsement by the respective for 2000:
Sanggunian(s) of the LGUs concerned. The LGU-proponent shall
also be required to submit the Project Request (PR), using OCD 1. The PhP3.5 Billion of the CY 2000 LGSEF shall be allocated to and
Project Request Form No. 99-02, that details the following: shared by the four levels of LGUs, i.e., provinces, cities,
municipalities, and barangays, using the following percentage-
(a) general description or brief of the project;

59
 sharing formula agreed upon and jointly endorsed by the various be released in accordance with paragraph 1 of Resolution No. OCD-2000-23, to
Leagues of LGUs: 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
For Provinces 26% or P 910,000,000 was to be allocated and released as follows: P50,000,000 as financial assistance to the
For Cities 23% or 805,000,000 LAAPs of LGUs; P275,360,227 as financial assistance to cover the decrease in the IRA
For Municipalities 35% or 1,225,000,000 of LGUs concerned due to reduction in land area; and P74,639,773 for the LGSEF
For Barangays 16% or 560,000,000 Capability-Building Fund.

Provided that the respective Leagues representing the provinces,

cities, municipalities and barangays shall draw up and adopt the The LGSEF in the GAA of 2001
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 In view of the failure of Congress to enact the general appropriations law for 2001,
allocation for individual LGU shall be released directly to the LGU the GAA of 2000 was deemed re-enacted, together with the IRA of the LGUs therein
concerned; and the proviso earmarking five billion pesos thereof for the LGSEF.
On January 9, 2002, the Oversight Committee adopted Resolution No. OCD-
Provided further that the individual LGSEF shares to LGUs are used
2002-001 allocating the five billion pesos LGSEF for 2001 as follows:
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 Modified Codal Formula P 3.000 billion
pursuant to the Leagues guidelines and mechanism as approved by Priority Projects 1.900 billion
the OCD; Capability Building Fund .100 billion
P 5.000 billion
Provided further that each of the Leagues shall submit to the OCD
for its approval their respective allocation scheme, the list of LGUs RESOLVED FURTHER, that the P3.0 B of the CY 2001 LGSEF which is to be allocated
with the corresponding LGSEF shares and the corresponding project according to the modified codal formula shall be released to the four levels of LGUs,
categories if project-based; i.e., provinces, cities, municipalities and barangays, as follows:

Provided further that upon approval by the OCD, the lists of LGUs LGUs Percentage Amount
shall be endorsed to the DBM as the basis for the preparation of the
corresponding NCAs, SAROs, and related budget/release Provinces 25 P 0.750 billion
documents.
Cities 25 0.750
2. The remaining P1,500,000,000 of the CY 2000 LGSEF shall be
earmarked to support the following initiatives and local affirmative
Municipalities 35 1.050
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: Barangays 15 0.450

On July 5, 2000, then President Estrada issued a Memorandum authorizing then 100 P 3.000 billion
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. RESOLVED FURTHER, that the P1.9 B earmarked for priority projects shall be
Thereafter, the Oversight Committee, now under the administration of President distributed according to the following criteria:
Gloria Macapagal-Arroyo, promulgated Resolution No. OCD-2001-29 entitled
ADOPTING RESOLUTION NO. OCD-2000-023 IN THE ALLOCATION, 1.0 For projects of the 4th, 5th and 6th class LGUs; or
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

60
 2.0 Projects in consonance with the Presidents State of the Nation Address disapproval by the Oversight Committee of the project proposals of the LGUs would
(SONA)/summit commitments. result in the diminution of the latters share in the IRA.
Another infringement alleged to be occasioned by the assailed OCD resolutions
RESOLVED FURTHER, that the remaining P100 million LGSEF capability building is the improper amendment to Section 285 of the Local Government Code of 1991 on
fund shall be distributed in accordance with the recommendation of the Leagues of the percentage sharing of the IRA among the LGUs. Said provision allocates the IRA
Provinces, Cities, Municipalities and Barangays, and approved by the OCD. 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
Upon receipt of a copy of the above resolution, Gov. Mandanas wrote to the portion of the IRA allotted for the LGSEF, by the assailed OCD resolutions as they
individual members of the Oversight Committee seeking the reconsideration of invariably provided for a different sharing scheme.
Resolution No. OCD-2002-001. He also wrote to Pres. Macapagal-Arroyo urging her to
disapprove said resolution as it violates the Constitution and the Local Government The modifications allegedly constitute an illegal amendment by the executive
Code of 1991. branch of a substantive law. Moreover, the petitioner mentions that in the Letter dated
December 5, 2001 of respondent Executive Secretary Romulo addressed to
On January 25, 2002, Pres. Macapagal-Arroyo approved Resolution No. OCD- respondent Secretary Boncodin, the former endorsed to the latter the release of funds
2002-001. 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 Petitioners Case
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
The petitioner now comes to this Court assailing as unconstitutional and void the assailed OCD resolutions (Resolutions Nos. OCD-99-003, OCD-99-005, OCD-99-006,
provisos in the GAAs of 1999, 2000 and 2001, relating to the LGSEF. Similarly assailed OCD-2000-023, OCD-2001-029 and OCD-2002-001) issued by the Oversight
are the Oversight Committees Resolutions Nos. OCD-99-003, OCD-99-005, OCD-99- Committee pursuant thereto. The petitioner, likewise, prays that the Court direct the
006, OCD-2000-023, OCD-2001-029 and OCD-2002-001 issued pursuant thereto. The respondents to rectify the unlawful and illegal distribution and releases of the LGSEF
petitioner submits that the assailed provisos in the GAAs and the OCD resolutions, for the aforementioned years and release the same in accordance with the sharing
insofar as they earmarked the amount of five billion pesos of the IRA of the LGUs for formula under Section 285 of the Local Government Code of 1991. Finally, the
1999, 2000 and 2001 for the LGSEF and imposed conditions for the release thereof, petitioner urges the Court to declare that the entire IRA should be released
violate the Constitution and the Local Government Code of 1991. automatically without further action by the LGUs as required by 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, The Respondents Arguments
cited.
The petitioner posits that to subject the distribution and release of the five-billion- The respondents, through the Office of the Solicitor General, urge the Court to
peso portion of the IRA, classified as the LGSEF, to compliance by the LGUs with the dismiss the petition on procedural and substantive grounds. On the latter, the
implementing rules and regulations, including the mechanisms and guidelines respondents contend that the assailed provisos in the GAAs of 1999, 2000 and 2001
prescribed by the Oversight Committee, contravenes the explicit directive of the and the assailed resolutions issued by the Oversight Committee are not constitutionally
Constitution that the LGUs share in the national taxes shall be automatically released infirm. The respondents advance the view that Section 6, Article X of the Constitution
to them. The petitioner maintains that the use of the word shall must be given a does not specify that the just share of the LGUs shall be determined solely by the Local
compulsory meaning. Government Code of 1991. Moreover, the phrase as determined by law in the same
To further buttress this argument, the petitioner contends that to vest the constitutional provision means that there exists no limitation on the power of Congress
Oversight Committee with the authority to determine the distribution and release of the to determine what is the just share of the LGUs in the national taxes.In other words,
LGSEF, which is a part of the IRA of the LGUs, is an anathema to the principle of local Congress is the arbiter of what should be the just share of the LGUs in the national
autonomy as embodied in the Constitution and the Local Government Code of taxes.
1991. The petitioner cites as an example the experience in 2001 when the release of The respondents further theorize that Section 285 of the Local Government Code
the LGSEF was long delayed because the Oversight Committee was not able to of 1991, which provides for the percentage sharing of the IRA among the LGUs, was
convene that year and no guidelines were issued therefor. Further, the possible not intended to be a fixed determination of their just share in the national
61
taxes. Congress may enact other laws, including appropriations laws such as the GAAs The petitioner has locus standi
of 1999, 2000 and 2001, providing for a different sharing formula. Section 285 of the to maintain the present suit
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 The gist of the question of standing is whether a party has alleged such a personal
increase or decrease the just share of the LGUs in accordance with what it believes is stake in the outcome of the controversy as to assure that concrete adverseness which
appropriate for their operation. There is nothing in the Constitution which prohibits sharpens the presentation of issues upon which the court so largely depends for
Congress from making such determination through the appropriations laws. If the illumination of difficult constitutional questions.[9] Accordingly, it has been held that the
provisions of a particular statute, the GAA in this case, are within the constitutional interest of a party assailing the constitutionality of a statute must be direct and
power of the legislature to enact, they should be sustained whether the courts agree or personal. Such party must be able to show, not only that the law or any government
not in the wisdom of their enactment. 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
On procedural grounds, the respondents urge the Court to dismiss the petition some indefinite way. It must appear that the person complaining has been or is about
outright as the same is defective. The petition allegedly raises factual issues which to be denied some right or privilege to which he is lawfully entitled or that he is about
should be properly threshed out in the lower courts, not this Court, not being a trier of to be subjected to some burdens or penalties by reason of the statute or act complained
facts. Specifically, the petitioners allegation that there are portions of the LGSEF that it of.[10]
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. 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
Further, according to the respondents, the petition has already been rendered or vindicate an interest of its own, and of the other LGUs. This interest pertains to the
moot and academic as it no longer presents a justiciable controversy. The IRAs for the LGUs share in the national taxes or the IRA. The petitioners constitutional claim is, in
years 1999, 2000 and 2001, have already been released and the government is now substance, that the assailed provisos in the GAAs of 1999, 2000 and 2001, and the
operating under the 2003 budget. In support of this, the respondents submitted OCD resolutions contravene Section 6, Article X of the Constitution, mandating the
certifications issued by officers of the DBM attesting to the release of the allocation or automatic release to the LGUs of their share in the national taxes. Further, the injury
shares of the petitioner in the LGSEF for 1999, 2000 and 2001. There is, therefore, that the petitioner claims to suffer is the diminution of its share in the IRA, as provided
nothing more to prohibit. under Section 285 of the Local Government Code of 1991, occasioned by the
Finally, the petitioner allegedly has no legal standing to bring the suit because it implementation of the assailed measures. These allegations are sufficient to grant the
has not suffered any injury. In fact, the petitioners just share has even petitioner standing to question the validity of the assailed provisos in the GAAs of 1999,
increased. Pursuant to Section 285 of the Local Government Code of 1991, the share 2000 and 2001, and the OCD resolutions as the petitioner clearly has a plain, direct
of the provinces is 23%. OCD Nos. 99-005, 99-006 and 99-003 gave the provinces 40% and adequate interest in the manner and distribution of the IRA among the LGUs.
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
The petition involves a significant
implementation of the assailed provisos in the GAAs of 1999, 2000 and 2001 and the
legal issue
OCD resolutions.

The crux of the instant controversy is whether the assailed provisos contained in
The Ruling of the Court 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:

Procedural Issues 1. 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;
Before resolving the petition on its merits, the Court shall first rule on the following 2. The promulgation of the assailed OCD resolutions providing for the
procedural issues raised by the respondents: (1) whether the petitioner has legal allocation schemes covering the said five billion pesos and the
standing or locus standi to file the present suit; (2) whether the petition involves factual implementing rules and regulations therefor; and
questions that are properly cognizable by the lower courts; and (3) whether the issue
had been rendered moot and academic.

62
 3. The release of the LGSEF to the LGUs only upon their compliance with Section 25. The State shall ensure the autonomy of local governments.
the implementing rules and regulations, including the guidelines and
mechanisms, prescribed by the Oversight Committee. An entire article (Article X) of the Constitution has been devoted to guaranteeing
Considering that these facts, which are necessary to resolve the legal question and promoting the autonomy of LGUs. Section 2 thereof reiterates the State policy in
now before this Court, are no longer in issue, the same need not be determined by a this wise:
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 Section 2. The territorial and political subdivisions shall enjoy local autonomy.
desired cannot be obtained in the appropriate courts or where exceptional and
compelling circumstances justify availment of a remedy within and calling for the Consistent with the principle of local autonomy, the Constitution confines the
exercise of this Courts primary jurisdiction.[12] Presidents power over the LGUs to one of general supervision. [17] This provision has
The crucial legal issue submitted for resolution of this Court entails the proper been interpreted to exclude the power of control. The distinction between the two
legal interpretation of constitutional and statutory provisions. Moreover, the powers was enunciated in Drilon v. Lim:[18]
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 An officer in control lays down the rules in the doing of an act. If they are not followed,
present controversy, therefore, warrants the relaxation by this Court of procedural rules he may, in his discretion, order the act undone or re-done by his subordinate or he may
in order to resolve the case forthwith. 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 substantive issue needs to be resolved the prescribed rules. He may not prescribe his own manner for doing the act. He has
notwithstanding the supervening events 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
Granting arguendo that, as contended by the respondents, the resolution of the
the Constitution.[21] The State policy on local autonomy is amplified in Section 2 thereof:
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 Sec. 2. Declaration of Policy. (a) It is hereby declared the policy of the State that the
Court to resolve the substantive issue raised by the instant petition. Supervening territorial and political subdivisions of the State shall enjoy genuine and meaningful
events, whether intended or accidental, cannot prevent the Court from rendering a local autonomy to enable them to attain their fullest development as self-reliant
decision if there is a grave violation of the Constitution. [13] Even in cases where communities and make them more effective partners in the attainment of national
supervening events had made the cases moot, the Court did not hesitate to resolve the goals. Toward this end, the State shall provide for a more responsive and accountable
legal or constitutional issues raised to formulate controlling principles to guide the local government structure instituted through a system of decentralization whereby
bench, bar and public.[14] local government units shall be given more powers, authority, responsibilities, and
resources. The process of decentralization shall proceed from the National
Another reason justifying the resolution by this Court of the substantive issue now Government to the local government units.
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
Guided by these precepts, the Court shall now determine whether the assailed
contain provisos similar to those now being sought to be invalidated, and yet, the
provisos in the GAAs of 1999, 2000 and 2001, earmarking for each corresponding year
question may not be decided before another GAA is enacted. It, thus, behooves this
the amount of five billion pesos of the IRA for the LGSEF and the OCD resolutions
Court to make a categorical ruling on the substantive issue now.
promulgated pursuant thereto, transgress the Constitution and the Local Government
Code of 1991.

Substantive Issue
The assailed provisos in the GAAs of 1999, 2000
and 2001 and the OCD resolutions violate the
As earlier intimated, the resolution of the substantive legal issue in this case calls constitutional precept on local autonomy
for the 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:
63
 Section 6, Article X of the Constitution reads: a rule, the term SHALL is a word of command that must be given a compulsory
meaning. The provision is, therefore, IMPERATIVE.
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. 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
When parsed, it would be readily seen that this provision mandates that (1) the Budget Coordinating Committee of the emerging fiscal situation in the country. Such
LGUs shall have a just share in the national taxes; (2) the just share shall be determined withholding clearly contravenes the Constitution and the law. Although temporary, it is
by law; and (3) the just share shall be automatically released to the LGUs. equivalent to a holdback, which means something held back or withheld, often
temporarily. Hence, the temporary nature of the retention by the national government
The Local Government Code of 1991, among its salient provisions, underscores does not matter. Any retention is prohibited.
the automatic release of the LGUs just share in this wise:
In sum, while Section 1 of AO 372 may be upheld as an advisory effected in times of
Sec. 18. Power to Generate and Apply Resources. Local government units shall have national crisis, Section 4 thereof has no color of validity at all. The latter provision
the power and authority to establish an organization that shall be responsible for the effectively encroaches on the fiscal autonomy of local governments. Concededly, the
efficient and effective implementation of their development plans, program objectives President was well-intentioned in issuing his Order to withhold the LGUs IRA, but the
and priorities; to create their own sources of revenue and to levy taxes, fees, and rule of law requires that even the best intentions must be carried out within the
charges which shall accrue exclusively for their use and disposition and which shall be parameters of the Constitution and the law. Verily, laudable purposes must be carried
retained by them; to have a just share in national taxes which shall be automatically out by legal methods.[23]
and directly released to them without need of further action;
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
Sec. 286. Automatic Release of Shares. (a) The share of each local government unit earmarked for the LGSEF, and these provisos imposed the condition that such amount
shall be released, without need of any further action, directly to the provincial, city, shall be released to the local government units subject to the implementing rules and
municipal or barangay treasurer, as the case may be, on a quarterly basis within five regulations, including such mechanisms and guidelines for the equitable allocations
(5) days after the end of each quarter, and which shall not be subject to any lien or and distribution of said fund among local government units subject to the guidelines
holdback that may be imposed by the national government for whatever purpose. 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:
(b) Nothing in this Chapter shall be understood to diminish the share of local
government units under existing laws.
For 1999

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 P2 billion - allocated according to Sec. 285 LGC
a reflex nature; without volition; mechanical; like or suggestive of an automaton. P2 billion - Modified Sharing Formula (Provinces 40%;
Further, the word automatically is defined as in an automatic manner: without thought Cities 20%; Municipalities 40%)
or conscious intention. Being automatic, thus, connotes something mechanical, P1 billion projects (LAAP) approved by OCD.[24]
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 For 2000
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 P3.5 billion Modified Sharing Formula (Provinces 26%;
in Pimentel, Jr. v. Aguirre,[22] viz: Cities 23%; Municipalities 35%; Barangays 16%);
P1.5 billion projects (LAAP) approved by the OCD.[25]
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 For 2001
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 P3 billion Modified Sharing Formula (Provinces 25%;
or holdback that may be imposed by the national government for whatever purpose. As Cities 25%; Municipalities 35%; Barangays 15%)

64
 P1.9 billion priority projects Jose N. Nolledo and Regalado M. Maambong, then members of the 1986 Constitutional
P100 million capability building fund.[26] Commission, to wit:

Significantly, the LGSEF could not be released to the LGUs without the Oversight MR. MAAMBONG. Unfortunately, under Section 198 of the Local Government Code,
Committees prior approval. Further, with respect to the portion of the LGSEF allocated the existence of subprovinces is still acknowledged by the law, but the statement of the
for various projects of the LGUs (P1 billion for 1999; P1.5 billion for 2000 and P2 billion Gentleman on this point will have to be taken up probably by the Committee on
for 2001), the Oversight Committee, through the assailed OCD resolutions, laid down Legislation. A second point, Mr. Presiding Officer, is that under Article 2, Section 10 of
guidelines and mechanisms that the LGUs had to comply with before they could avail the 1973 Constitution, we have a provision which states:
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 The State shall guarantee and promote the autonomy of local government
Committee; (b) the LGUs to submit their project proposals to the DILG for appraisal; (c) units, especially the barrio, to insure their fullest development as self-reliant
the project proposals that passed the appraisal of the DILG to be submitted to the communities.
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. This provision no longer appears in the present configuration; does this
mean that the concept of giving local autonomy to local governments is no
To the Courts mind, the entire process involving the distribution and release of longer adopted as far as this Article is concerned?
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 MR. NOLLEDO. No. In the report of the Committee on Preamble, National Territory,
of the implementing rules and regulations, including the guidelines and mechanisms and Declaration of Principles, that concept is included and widened upon the initiative
unilaterally prescribed by the Oversight Committee from time to time, as sanctioned by of Commissioner Bennagen.
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 MR. MAAMBONG. Thank you for that.
LGUs are, thus, placed at the mercy of the Oversight Committee.
With regard to Section 6, sources of revenue, the creation of sources as provided by
Where the law, the Constitution in this case, is clear and unambiguous, it must be previous law was subject to limitations as may be provided by law, but now, we are
taken to mean exactly what it says, and courts have no choice but to see to it that the using the term subject to such guidelines as may be fixed by law. In Section 7, mention
mandate is obeyed.[27] Moreover, as correctly posited by the petitioner, the use of the is made about the unique, distinct and exclusive charges and contributions, and in
word shall connotes a mandatory order. Its use in a statute denotes an imperative Section 8, we talk about exclusivity of local taxes and the share in the national
obligation and is inconsistent with the idea of discretion. [28] wealth. Incidentally, I was one of the authors of this provision, and I am very
Indeed, the Oversight Committee exercising discretion, even control, over the thankful. Does this indicate local autonomy, or was the wording of the law changed to
distribution and release of a portion of the IRA, the LGSEF, is an anathema to and give more autonomy to the local government units? [31]
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 MR. NOLLEDO. Yes. In effect, those words indicate also decentralization because local
merely to formulate the rules and regulations for the efficient and effective political units can collect taxes, fees and charges subject merely to guidelines, as
implementation of the Local Government Code of 1991 to ensure compliance with the recommended by the league of governors and city mayors, with whom I had a dialogue
principles of local autonomy as defined under the Constitution. [29] In fact, its creation for almost two hours. They told me that limitations may be questionable in the sense
was placed under the title of Transitory Provisions, signifying its ad that Congress may limit and in effect deny the right later on.
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 MR. MAAMBONG. Also, this provision on automatic release of national tax share points
was supposed to be done a year from the approval of the Code, or on October 10, to more local autonomy. Is this the intention?
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 MR. NOLLEDO. Yes, the Commissioner is perfectly right.[32]
LGUs.
The concept of local autonomy was explained in Ganzon v. Court of Appeals[33] in
That the automatic release of the IRA was precisely intended to guarantee and this wise:
promote local autonomy can be gleaned from the discussion below between Messrs.

65
As the Constitution itself declares, local autonomy means a more responsive and Further, a basic feature of local fiscal autonomy is the constitutionally
accountable local government structure instituted through a system of decentralization. mandated automatic release of the shares of LGUs in the national internal revenue.[37]
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 Following this ratiocination, the Court in Pimentel struck down as unconstitutional
adherents, to liberate the local governments from the imperialism of Manila. Autonomy, Section 4 of Administrative Order (A.O.) No. 372 which ordered the withholding,
however, is not meant to end the relation of partnership and interdependence between effective January 1, 1998, of ten percent of the LGUs IRA pending the assessment and
the central administration and local government units, or otherwise, to usher in a regime evaluation by the Development Budget Coordinating Committee of the emerging fiscal
of federalism. The Charter has not taken such a radical step. Local governments, under situation.
the Constitution, are subject to regulation, however limited, and for no other purpose In like manner, the assailed provisos in the GAAs of 1999, 2000 and 2001, and
than precisely, albeit paradoxically, to enhance self-government. 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
As we observed in one case, decentralization means devolution of national implementing rules and regulations, including the guidelines and mechanisms
administration but not power to the local levels. Thus: 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
Now, autonomy is either decentralization of administration or decentralization of effectively encroach on the fiscal autonomy enjoyed by the LGUs and must be struck
power. There is decentralization of administration when the central government down. They cannot, therefore, be upheld.
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
The assailed provisos in the GAAs of 1999, 2000
make them more effective partners in the pursuit of national development and social
and 2001 and the OCD resolutions cannot amend
progress. At the same time, it relieves the central government of the burden of
Section 285 of the Local Government Code of 1991
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
Section 284[38] of the Local Government Code provides that, beginning the third
he can substitute their judgments with his own.
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
Decentralization of power, on the other hand, involves an abdication of political power government incurs an unmanageable public sector deficit" and only upon compliance
in the [sic] favor of local governments [sic] units declared to be autonomous. In that with stringent requirements set forth in the same section:
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,
Sec. 284. ...
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] 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
Local autonomy includes both administrative and fiscal autonomy. The fairly
recent case of Pimentel v. Aguirre[35] is particularly instructive. The Court declared and Secretary of Budget and Management, and subject to consultation with the
therein that local fiscal autonomy includes the power of the LGUs to, inter alia, allocate 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
their resources in accordance with their own priorities:
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
Under existing law, local government units, in addition to having administrative year; Provided, further That in the first year of the effectivity of this Code, the local
autonomy in the exercise of their functions, enjoy fiscal autonomy as well. Fiscal government units shall, in addition to the thirty percent (30%) internal revenue allotment
autonomy means that local governments have the power to create their own sources which shall include the cost of devolved functions for essential public services, be
of revenue in addition to their equitable share in the national taxes released by the entitled to receive the amount equivalent to the cost of devolved personnel services.
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
Thus, from the above provision, the only possible exception to the mandatory
in turn have to work within the constraints thereof. They are not formulated at the
automatic release of the LGUs IRA is if the national internal revenue collections for the
national level and imposed on local governments, whether they are relevant to local
current fiscal year is less than 40 percent of the collections of the preceding third fiscal
needs and resources or not ...[36]
year, in which case what should be automatically released shall be a proportionate

66
amount of the collections for the current fiscal year. The adjustment may even be made It is relevant to point out at this juncture that, unlike those of 1999, 2000 and 2001,
on a quarterly basis depending on the actual collections of national internal revenue the GAAs of 2002 and 2003 do not contain provisos similar to the herein assailed
taxes for the quarter of the current fiscal year. In the instant case, however, there is no provisos. In other words, the GAAs of 2002 and 2003 have not earmarked any amount
allegation that the national internal revenue tax collections for the fiscal years 1999, of the IRA for the LGSEF. Congress had perhaps seen fit to discontinue the practice
2000 and 2001 have fallen compared to the preceding three fiscal years. 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
Section 285 then specifies how the IRA shall be allocated among the LGUs: in future appropriations laws and that the principles enunciated herein would serve to
guide the bench, bar and public.
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:

Conclusion
(a) Provinces Twenty-three (23%)
(b) Cities Twenty-three percent (23%);
(c) Municipalities Thirty-four (34%); and
In closing, it is well to note that the principle of local autonomy, while concededly
(d) Barangays Twenty percent (20%).
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
However, this percentage sharing is not followed with respect to the five billion Commission dated April 7, 1900, ordered the new Government to devote their attention
pesos LGSEF as the assailed OCD resolutions, implementing the assailed provisos in in the first instance to the establishment of municipal governments in which the natives
the GAAs of 1999, 2000 and 2001, provided for a different sharing scheme. For of the Islands, both in the cities and in the rural communities, shall be afforded the
example, for 1999, P2 billion of the LGSEF was allocated as follows: Provinces 40%; opportunity to manage their own affairs to the fullest extent of which they are capable,
Cities 20%; Municipalities 40%.[39] For 2000, P3.5 billion of the LGSEF was allocated and subject to the least degree of supervision and control in which a careful study of
in this manner: Provinces 26%; Cities 23%; Municipalities 35%; Barangays 26%. [40] For their capacities and observation of the workings of native control show to be consistent
2001, P3 billion of the LGSEF was allocated, thus: Provinces 25%; Cities 25%; with the maintenance of law, order and loyalty. [45] While the 1935 Constitution had no
Municipalities 35%; Barangays 15%.[41] 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 respondents argue that this modification is allowed since the Constitution the 1973 Constitution explicitly stated that [t]he State shall guarantee and promote the
does not specify that the just share of the LGUs shall only be determined by the Local autonomy of local government units, especially the barangay to ensure their fullest
Government Code of 1991. That it is within the power of Congress to enact other laws, development as self-reliant communities.[47] An entire article on Local Government was
including the GAAs, to increase or decrease the just share of the LGUs. This contention incorporated therein. The present Constitution, as earlier opined, has broadened the
is untenable. The Local Government Code of 1991 is a substantive law. And while it is principle of local autonomy. The 14 sections in Article X thereof markedly increased the
conceded that Congress may amend any of the provisions therein, it may not do so powers of the local governments in order to accomplish the goal of a more meaningful
through appropriations laws or GAAs. Any amendment to the Local Government Code local autonomy.
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 Indeed, the value of local governments as institutions of democracy is measured
properly enacted in a separate legislation.[42] 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
A general appropriations bill is a special type of legislation, whose content is strength of free nations. Township meetings are to liberty what primary schools are to
limited to specified sums of money dedicated to a specific purpose or a separate fiscal science; they bring it within the peoples reach; they teach men how to use and enjoy it.
unit.[43] Any provision therein which is intended to amend another law is considered an A nation may establish a system of free governments but without the spirit of municipal
inappropriate provision. The category of inappropriate provisions includes institutions, it cannot have the spirit of liberty.[49]
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] 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
Increasing or decreasing the IRA of the LGUs or modifying their percentage provisions are based.[50]
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 WHEREFORE, the petition is GRANTED. The assailed provisos in the General
through the GAAs, as the respondents contend, would be to give Congress the Appropriations Acts of 1999, 2000 and 2001, and the assailed OCD Resolutions, are
unbridled authority to unduly infringe the fiscal autonomy of the LGUs, and thus put the declared UNCONSTITUTIONAL.
same in jeopardy every year. This, the Court cannot sanction.
SO ORDERED.

67
 173,[3] entitled Sumulong Sampiano Ogka (Ogka) v. Philippine National Bank(PNB)-
Marawi Branch, represented by its Branch Manager Sandorie T. Disomangcop
MAYOR HADJI AMER R. A.M. No. RTJ-05-1953 (Disomangcop), Atty. Alvin C. Go (Go), Hadji Amer Sampiano and Mamarinta
SAMPIANO, SOMER Macabato (Macabato), for Prohibition and Injunction with Temporary Restraining Order
ABDULLAH, SALIC (TRO) and Preliminary Injunction.
Present:
TAMPUGAO, ANTHONY
ABI, SAGA POLE INOG,
The antecedent facts are as follows:
TORORAC DOMATO, KING
MARONSING, MARGARITA PUNO, C.J., Chairperson,
Prior to the filing of the present administrative case, complainant Sampiano
SOLAIMAN, HADJI ACMAD
MAMENTING and BILLIE CARPIO MORALES, filed before the Commission on Elections (Comelec) a Petition for Annulment of
JAI LAINE T. OGKA, Proclamation with Prayer for Preliminary Injunction/TRO[4] against his rival mayoralty
LEONARDO-DE CASTRO,
Complainants, candidate, his uncle Ogka, and the Municipal Board of Canvassers of Balabagan,
BERSAMIN, and Lanao del Sur composed of Vadria Pungginagina and Zenaida Mante. The case was
- versus docketed as SPC No. 04-285. It appears that the Comelec issued the following: Order
VILLARAMA, JR., JJ. dated August 4, 2004[5] (authorizing the vice-mayor to temporarily assume the duties
JUDGE CADER P. INDAR, and responsibilities as mayor due to the double proclamation of Sampiano and Ogka
Acting Presiding Judge, for the position of mayor), Order dated August 12, 2004[6] (recalling the Order
Regional Trial Court, Branch authorizing the assumption of the vice-mayor as the mayor, and instead maintaining
12, Malabang, Lanao del Sur, the status quo prevailing at the time of the issuance of the said Order), and Order dated
Respondent.
September 9, 2004[7] (clarifying the Order of August 12, 2004). Pursuant to the said
Orders, Sampiano was ordered to act, perform and discharge the duties, functions and
responsibilities as mayor to prevent paralysis to public service pending determination
and final resolution of the controversy involving the mayorship of the Municipality of
Promulgated: Balabagan.

December 21, 2009 Aggrieved, Ogka filed, on September 13, 2004, an Urgent Motion for Reconsideration
x------------------------------------------------------------------------------------------x of the September 9, 2004 Order.[8] He also informed in writing,[9] the Chief Legal

Counsel of PNB, Atty. Alvin C. Go, and asked him not to release the IRA (Internal

Revenue Allotment which is the share of the local government unit in national internal
DECISION
revenue taxes) for the Municipality of Balabagan, Lanao del Sur until the controversy

involving the mayorship of the said municipality now pending with the Comelec shall
LEONARDO-DE CASTRO, J.:
have been finally resolved. He cited Section 2, Rule 19 of the Comelec Rules of
This administrative case against respondent Judge Cader P. Indar of the Procedure which provides that a motion for reconsideration, if not pro-forma, suspends
Regional Trial Court (RTC), Branch 12, Malabang, Lanao del Sur stemmed from a
complaint[1]filed by Hadji Amer R. Sampiano (Sampiano), incumbent Mayor, and the the execution or implementation of the decision, resolution, order or ruling. However,
members of the Sangguniang Bayan of the Municipality of Balabagan, Lanao del Sur, on the basis of the Comelec Order dated September 9, 2004, Go directed PNB-Marawi
charging said judge with gross and wanton ignorance of the law, grave abuse of
authority, manifest partiality and serious acts of impropriety in connection with the to release the July, August, and September 2004 IRA for the Municipality of Balabagan,
issuance of an Order[2]dated October 11, 2004 in Special Civil Action (SCA) No. 12-
68
Lanao del Sur to Sampiano and Macabato (the Municipal Treasurer). In turn, PNB-
(c) respondents Hadji Amer Sampiano and Mamarinta
Marawi acting through its manager, Disomangcop, released on September 14,
Macabato including their agents or persons acting for
2004 the pending IRA for the months of July to September 2004. To temporarily and in their behalves to cease and desist from
withdrawing/releasing the October 2004 IRA for
suspend the release by the PNB-Marawi of the October 2004 IRA while his Urgent Balabagan, Lanao del Sur from the respondent PNB-
Marawi; and
Motion for Reconsideration of the September 9, 2004 Order of the Comelec is pending

resolution, Ogka filed on October 11, 2004, a special civil action for Prohibition and

Injunction with TRO and Preliminary Injunction, [10] docketed as SCA No. 12-173, with (2) After, notice and hearing, a writ of preliminary injunction
(WPI) be issued against the respondents including the persons
the RTC, Branch 12, Malabang, Lanao del Sur presided over by herein respondent acting for and in their behalves under the same terms and conditions
as the TRO for a period lasting until the petition in SPC No. 04-285
Judge. The petition contained the following prayer:
pending before the Comelec shall have been finally decided. [11]

WHEREFORE, all the foregoing premises considered, petitioner thru

counsel, most respectfully prays this Honorable Court that: On the same day, respondent Judge issued an Order setting the hearing of the petition

on October 14, 2004. He likewise directed, pending resolution of the said petition, the

PNB-Marawi (represented by Disomangcop and Go) to hold or defer the release of the
(1) Considering the urgency of the subject matter of the petition, a
temporary restraining order (TRO) be immediately issued upon the IRA for the Municipality of Balabagan unless ordered otherwise by the court, thus:
filing of this petition ORDERING

(a) respondent Atty. Alvin C. Go to cease and desist from xxx xxx xxx
issuing an order ordering the respondent PNB-
Marawi Branch manager Sandorie T. Disomangcop
to release the October 2004 IRA and the months In the meantime, considering that the urgency of the Petitioner (sic)
thereafter to respondents Hadji Amer Sampiano and and while the petition is pending resolution of the Court, the
Mamarinta Macabato or their agents or persons Philippine National Bank represented by its Branch Manager
acting for and in their behalves, Sandorie T. Disomangcop and Atty. Alvic C. Go, are hereby ordered
to hold or defer the release of the Internal Revenue Allotment (IRA)
intended for the Municipal Government of Balabagan unless ordered
(b) respondent PNB-Marawi thru Sandorie T. Disomangcop otherwise by this Court. [12]
to cease and desist from accepting and honoring any
withdrawal check(s) for the October 2004 IRA of Sampiano also alleged that during the October 14, 2004 hearing, his counsel clarified
Balabagan signed by respondents Hadji Amer
Sampiano and Mamarinta Macabato and or releasing with respondent Judge if the October 11, 2004 Order was in the nature of a
the October 2004 IRA for Balabagan, Lanao del Sur TRO.Respondent Judge replied that it was not. His counsel then vigorously prodded
to respondents Mamarinta Macabato and Hadji Amer
Sampiano or their agents or persons acting for and in respondent Judge to immediately lift the said Order so as not to deprive the officials
their behalves, and
and employees of the Municipality of Balabagan from receiving their hard earned

69
salaries, but respondent Judge did not heed the said request.[13] As manifested during By 1st Indorsement of November 8, 2004, then Court Administrator Presbitero
the said hearing, Sampiano and Macabato through counsel filed their Motion to Dismiss
J. Velasco, Jr. (now Supreme Court Associate Justice) required respondent Judge to
the petition (SCA No. 12-173) on October 19, 2004. In the said motion, they prayed not
file his comment and to show cause why no disciplinary action should be taken against
only for the dismissal of the said petition for lack of jurisdiction over the subject matter
him for violation of his professional responsibility as a lawyer. [16]
and for failure to state a cause of action, but also for the lifting of the October 11, 2004
Order.[14]

In his Comment[17] dated December 24, 2004, respondent Judge denied the

charges against him and prayed for the dismissal of the complaint. His explanation as
Sampiano considered the October 11, 2004 Order as a SUPER ORDER because it
summarized by the OCA is as follows:
was not only issued ex-parte but also it directed the PNB-Marawi to hold or defer the

release of the IRA until ordered otherwise by [the] court. He likened the said Order to xxx He believed that he could not be administratively
a TRO and a writ of preliminary injunction, and insisted that in both instances, prior
sanctioned as he did not commit any administrative lapses. His court
notice and hearing are required. He added that a TRO has a limited life of twenty (20)
assumed jurisdiction over [SCA] No. 12-173 as it is a petition for
days while a writ of preliminary injunction is effective only during the pendency of the
prohibition and injunction and not an enforcement of election
case and only after posting the required injunction bond. Sampiano further claimed that

the said Order was issued in violation of Section 286 of the Local Government Code laws. While he considered the said petition as an improper remedy,

(LGC), which provides for the automatic release of the share of the local government hence, the court should not have taken cognizance of the case, he

unit from the national government.[15] Sampiano prayed that respondent Judge be had nevertheless acted on it since the petition prays for the issuance
dismissed from judicial service for gross ignorance of the law, grave abuse of authority, of temporary restraining order and preliminary injunction, both an
manifest partiality and serious acts of impropriety for the following reasons:
auxiliary remedy which concerns the enforcement of legal right or a

matter that partakes of a question of law and not the enforcement of

1. Assumption of jurisdiction over SCA 12-173 the subject matter election laws.
of which concerns the enforcement of election laws by the
Comelec; and

Considering the urgency of the petition and before granting

2. Ex-parte issuance of the October 11, 2004 order freezing the
the prayer for the issuance of the TRO, he immediately issued an
IRA of the Municipality of Balabagan unless ordered otherwise
by the Court. order on October 11, 2004, which defer or hold the release of the

Internal Revenue Allotment (IRA) pending resolution of the petition

70
by the court and thereafter set the hearing of the petition on October Moreover, he was also cautious in his actions to avert the already
growing tension between the warring families newly aroused by the
14, 2004. Respondent emphasized that the October 11, 2004 order result of the May 10, 2004 election. Hence, he has to relax the
application of the rules and harmonize it with the temperament of the
DID NOT FREEZE the IRA but merely HELD or DEFERRED its protagonists who are Maranaos belonging to the same family clan.
release to any person including petitioner Sumulong Sampiano Ogka

(who is the complainants uncle), a party to the election case who also Concerning the alleged violation of the pertinent provision of the
Local Government Code, respondent believes that the provision on
holds [a] COMELEC proclamation as duly elected mayor of the automatic release of IRA is not a shield or immunity to the
authority of the courts to interfere, interrupt or suspend its release
Balabagan. Said proclamation was neither annulled nor invalidated when there is a legal question presented before it in order to
determine the rights of the parties concerned.
by the COMELEC pending resolution of the petitioner Ogkas Motion

for Reconsideration of the above-mentioned three (3) orders. Since

Lastly, respondent was not able to continue handling the subject
petitioner Ogka was left with no alternative to protect his interest in case, particularly the complainants motion to dismiss save the
issuance of an order requiring petitioner Ogka to file his comment to
the IRA and to prevent irreparable injury, he filed the instant petition the said motion considering that he was already relieved of his duties
and responsibilities as presiding judge of RTC, Branch 12, Malabang
with the prayer for the issuance of TRO and preliminary injunction.
pursuant to Administrative Order No. 154-2004 designating and
assigning him on permanent detail in all the branches of the RTC,
Cotabato City. Hence, it was already the new acting judge in the
The main issue in petitioner Ogkas petition is the determination of person of Hon. Rasad G. Balindong who proceeded with the hearing
whether petitioner is entitled to the issuance of TRO and later, a of the subject petition. Upon verification, he learned that Judge
permanent injunction to hold the release of the IRA to Hadji R. Balindong had already issued an order dated 25 November
Sampiano or to any person acting in his behalf considering that 2004 dismissing the subject petition.
petitioner is also a holder of [a] COMELEC proclamation.

Considering all of the foregoing, respondent prays for the immediate

There is no question that the COMELEC is vested under the dismissal of the instant complaint for being preposterous so that he
Constitution with the enforcement of election laws. However, he can concentrate on his judicial tasks more important than the instant
[respondent] did not arrogate upon himself such power as he neither harassment suit.[18]
contracted nor annulled any order of the COMELEC. Under Section
21 of B.P. 129, the RTC has exclusive original jurisdiction in the
issuance of writ of prohibition and injunction.Hence, he simply
applied Rule 58 of the Rules of Court, which is the prevailing rule
applicable in determining the merits of the subject petition. He did not The OCA filed with the Court an Administrative Matter for Agenda with the
require petitioner to post a bond because the 11 October 2004 Order
is a mere initiatory action necessary to determine whether it following recommendation.
warrants the issuance of the TRO and preliminary injunction. It is
only after such determination that the posting of bond is required. His
careful actions are supposed to be considered as an exercise of
judicial function and judicial prerogatives. RECOMMENDATION: Respectfully submitted for the consideration
of the Honorable Court our recommendation that respondent judge
be found guilty of ignorance of the law for violating Section 5 of Rule
71
 58, Revised Rules on Civil Procedure and that he be imposed a
penalty of FINE in the sum of Ten Thousand (P10,000.00) pesos. [19]
SEC 21. Original jurisdiction in other cases. - Regional Trial
Courts shall exercise original jurisdiction:

In a Resolution dated September 7, 2005, the Court resolved to re-docket the

(1) in the issuance of writs of certiorari, prohibition,
case as a regular administrative matter and on December 11, 2006, we required the mandamus, quo warranto, habeas corpus
and injunction which may be enforced in any part of their
parties to manifest, within ten (10) days from notice, whether they were submitting this respective regions; xxx (italics ours)
case for resolution on the basis of the pleadings already filed. Both parties failed to
comply; hence, we considered the case submitted for resolution.

Sampianos claim that the October 11, 2004 Order was in contravention of

Section 286 of the LGC on the automatic release of the share of the local government
We agree with the findings of the OCA that the October 11, 2004 Order is unit is untenable. We agree with respondent Judge that the automatic release of the
essentially a preliminary injunction order, and that the respondent Judge failed to IRA under Section 286 is a mandate to the national government through the
comply with the provisions of Section 5, Rule 58 of the Rules of Court. Department of Budget and Management to effect automatic release of the said funds

from the treasury directly to the local government unit, free from any holdbacks or liens

imposed by the national government. However, this automatic release of the IRA from
We shall first tackle the question of whether the RTC had acquired jurisdiction
the national treasury does not prevent the proper court from deferring or suspending
over the petition. It is settled that jurisdiction over the subject matter on the existence
the release thereof to particular local officials when there is a legal question presented
of the action is determined by the material allegations of the complaint and the law,
in the court pertaining to the rights of the parties to receive the IRA or to the propriety
irrespective of whether or not the plaintiff is entitled to recover all or some of the claims
of the issuance of a TRO or a preliminary injunction while such rights are still being
or relief sought therein. Such jurisdiction cannot be made to depend upon the defenses
determined.
set up in the court or upon a motion to dismiss for, otherwise, the question of jurisdiction

would depend almost entirely on the defendant. Once jurisdiction is vested, the same

is retained up to the end of the litigation.[20] In this case, the petition prayed, among A cursory reading of the said Order reveals that it was in effect a TRO or
others, that Go should cease and desist from ordering PNB-Marawi through its branch preliminary injunction order. The Order directed PNBs Go and Disomangcop to hold or
manager to release the IRA for the month of October 2004 and the succeeding months defer the release of the IRA to Sampiano and Macabato while the petition is pending
to Sampiano and Macabato or their agents. The issue here involves the determination resolution of the trial court and unless ordered otherwise by the court. This Order was
of whether Ogka is entitled to the issuance of a TRO or an injunction and not the merely consistent with the relief prayed for in respondents petition for prohibition and
application or enforcement of election law. Undeniably, the RTC has jurisdiction over injunction.
such action pursuant to Section 21 of BP 129, which provides:
72
 enjoined. However, courts are authorized to issue ex parte a TRO effective only for

seventy-two (72) hours if it should appear from the facts shown by affidavits or by the
Section 5, Rule 58 of the Rules of Court provides:
verified petition that great or irreparable injury would result to the applicant before the

matter could be heard on notice. Within the aforesaid period of time, the Court should
SEC. 5. Preliminary injunction not granted without notice; exception.
No preliminary injunction shall be granted without hearing and prior conduct a summary hearing to determine if a TRO shall be issued. The TRO, however,
notice to the party or person sought to be enjoined. If it shall appear shall be effective only for a period of twenty (20) days from notice to the party or person
from the facts shown by the affidavits or by the verified application
that great or irreparable injury would result to the applicant before the sought to be enjoined. During the 20-day period, the judge must conduct a hearing to
matter can be heard on notice, the court to which the application for
preliminary injunction was made, may issue a temporary restraining consider the propriety of issuing a preliminary injunction. At the end of such period, the
order to be effective only for a period of twenty (20) days from service TRO automatically terminates without need of any judicial declaration to that effect,
on the party or person sought to be enjoined, except as herein
provided. Within the said twenty-day period, the court must order leaving the court no discretion to extend the same. [21]
said party or person to show cause, at a specified time and place,
why the injunction should not be granted, determine within the same
period whether or not the preliminary injunction shall be granted, and
accordingly issue the corresponding order (as amended by En Banc
Here, respondent Judge issued the October 11, 2004 Order on the very same
Resolution of the Supreme Court, Bar Matter No. 803, dated
February 17, 1998). day it was filed, and without any hearing and prior notice to herein complainants. As
discussed above, respondent was allowed by the Rules to issue ex parte a TRO of

However, and subject to the provisions of the preceding sections, if limited effectivity and, in that time, conduct a hearing to determine the propriety of
the matter is of extreme urgency and the applicant will suffer grave
extending the TRO or issuing a writ of preliminary injunction.
injustice and irreparable injury, the executive judge of a multiple-sala
court or the presiding judge of a single-sala court may issue ex
parte a temporary restraining order effective for only seventy-two
(72) hours from issuance but he shall immediately comply with
provisions of the next preceding section as to service of summons Respondent conducted the hearing of the petition on October 14, 2004 or on
and the documents to be served therewith. Thereafter, within the
aforesaid seventy-two (72) hours, the judge before whom the case is the third day of the issuance of a TRO ex parte. Atty. Romaraban Macabantog
pending shall conduct a summary hearing to determine whether the (Macabantog) and Atty. Tingcap Mortaba (Mortaba) counsels for Ogka and Sampiano,
temporary restraining order shall be extended until the application for
preliminary injunction can be heard. In no case shall the total period respectively argued in their clients behalf. Sampiano and Macabato were also
of the effectivity of the temporary restraining order exceed twenty
present. During the said hearing, Atty. Mortaba manifested that his clients would either
(20) days, including the original seventy-two (72) hours provided
therein. file an answer or a motion to dismiss the petition (in SCA No. 12-173), while Atty.

Macabantog opted to file a rejoinder after the latter has submitted their answer or
motion to dismiss.[22] On October 19, 2004, Sampiano and Macabato filed a Motion to

The above-quoted provisions expressly prohibit the grant of preliminary Dismiss the petition, wherein, they prayed, among others, for the recall or lifting of

injunction without hearing and prior notice to the party or person sought to be the October 11, 2004 Order. Respondent Judge pointed out that he was able to make

73
 petitioner Ogka and his Uncle Mayor Sampiano whose family were
an initial action on the Motion to Dismiss the petition by requiring Ogka to already at war with each other.
comment[23] on the said motion before turning the case to the incoming Acting Presiding

Judge, Judge Rosad B. Balindong, on October 22, 2004.[24] The October 11, 2004
Further, respondent judge was cautious in his court actions
Order was lifted in an Order dated October 27, 2004 issued by the latter.[25] Hence, the in this petition in order to avert the already growing tension between
the warring families aroused anew by the result of the May 10,
TRO issued ex parte was effective for eleven (11) days from October 11, 2004 until 2004 elections. xxx [27]
October 22, 2004 in violation of the Rules. Only a TRO issued after a summary hearing
can last for a period of twenty days.

Since there is no showing that respondent Judge was motivated by bad faith

or ill motives in rendering the assailed Order, and this is his first offense, we sustain the
It is worthy to note that the said October 11, 2004 Order was subsequently
penalty recommended by the OCA to be imposed on respondent Judge for violating
lifted by the succeeding judge on the ground that the requisites for issuance of a writ of
Section 5, Rule 58 of the Rules of Court.
preliminary injunction were not present.

WHEREFORE, the penalty of a fine of Ten Thousand Pesos (P10,000.00) is

However, Sampiano adduced no evidence to prove that the issuance of the hereby imposed on respondent Judge for the above-mentioned violation of the Rules
October 11, 2004 Order was motivated by bad faith. Bad faith does not simply connote of Court.
bad judgment or negligence; it imputes a dishonest purpose or some moral obliquity

and conscious doing of a wrong; a breach of a sworn duty through some motive or

intent or ill-will; it partakes of the nature of fraud. It contemplates a state of mind SO ORDERED.
affirmatively operating with furtive design or some motive of self-interest or ill-will for

ulterior purposes.Evident bad faith connotes a manifest deliberate intent on the part of

the accused to do wrong or cause damage.[26] In issuing the assailed Order, respondent

Judge was not at all motivated by bad faith, dishonesty, hatred and some other motive;

rather, he took into account the circumstances obtaining between the parties as can be
gleaned from his Comment, and we quote:

This should be considered an exercise of judicial functions

and judicial prerogatives in the most cautious manner taking into
account the factual and serious circumstances obtaining between

74
PRESIDENTIAL DECREE No. 1741 Section 4. Rate of Change. The annual allotment of any local government unit shall
not increase by more than twenty-five per cent (25%) of, nor shall be less than, its
GOVERNING THE COMPUTATION OF NATIONAL INTERNAL REVENUE actual allocation for the preceding year, except when otherwise approved by the
ALLOTMENTS TO LOCAL GOVERNMENT UNITS President (Prime Minister) upon recommendation of the Ministry of the Budget and the
Minister of Local Government and Community Development.
WHEREAS, internal revenue allotments are apportioned among local government units
on the basis of the Tax Code, P.D. No. 144 (as amended) and various other laws; Section 5. Development Fund. No less than twenty per cent (20%) of the allotments
received by a local government unit under this Act shall be appropriated and used by
the recipient local government unit for development projects, except as may be
WHEREAS, it is necessary to rationalize the system of national revenue allotments to otherwise approved by the Minister of the Budget. The nature and cost of the programs,
local government units, in the light of the termination of P.D. No. 1231 on December projects and activities supported by the Development Fund shall be determined by the
31, 1980 and the various forms in which national assistance is presently extended to local government unit following such policies and guidelines jointly issued by the
local government units; Minister of Local Government and Community Development and the Minister of the
Budget.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by
virtue of the powers vested in me by the Constitution, do hereby Order and Decree: Section 6. Rules and Regulations. The Minister of the Budget shall issue the
necessary rules and regulations for the prompt and effective implementation of this
Section 1. Statement of Policy. It shall be the policy of the State to strengthen the fiscal Decree.
operations of local government units, consistent with the principle of decentralization in
government operations. Part of the collections of the national government obtained Section 7. Repealing Clause. All laws or parts of law inconsistent herewith, particularly
from internal revenue sources shall accrue to local government units, comprising P.D. No. 144 and 1231, are hereby revoked or modified accordingly.
national assistance to the said local government units. The amount of assistance shall
be determined, taking into account local requirements and available national funds,
particularly as determined by the cost of implementing the national development plan. Done in the City of Manila, this 31st day of October, in the year of Our Lord, nineteen
hundred and eighty.
Section 2. Magnitude of Assistance. A maximum of twenty per cent (20%) of national
internal revenue taxes shall be available for national assistance to local government
units: Provided, That the national revenue used as basis in computation shall exclude
receipts accruing to Special or Fiduciary Funds and to Special Accounts in the General
Fund, amounts authorized by law to be used by the collecting agency, and amounts
recorded as income of the General Fund but which are charged to appropriations in the
General or other Appropriations Laws.

The amount of assistance shall be computed on the basis of collections received by

the national government during the third fiscal year preceding the fiscal year during
which the assistance is distributed. Compliance shall be reckoned taking into account
general budgetary assistance and assistance specifically intended for local schools,
reforestation projects, or other priority local activities supported by the national
government.

Section 3. Allocation. The total amount available shall be allocated among local
government units as follows: provinces thirty per cent (30%); municipalities forty-five
per cent (45%); and cities twenty-five per cent (25%).

The share of each local government unit shall be determined on the basis of population
seventy per centum (70%); land area twenty per centum (20%); and equal sharing ten
per centum (10%).

75
 strict mandate to ensure that public funds, like the 20% development fund, "shall
bespent judiciously and only for the very purpose or purposes for which such funds are
G.R. No. 195390 December 10, 2014 intended."6

GOV. LUIS RAYMUND F. VILLAFUERTE, JR., and the PROVINCE OF CAMARINES On September 20, 2005, then DILG Secretary Angelo T. Reyes and Department of
SUR, Petitioners, Budget and Management Secretary Romulo L. Neri issued Joint MC No. 1, series of
vs. 2005,7 pertaining to the guidelines on the appropriation and utilization of the 20% of the
HON. JESSE M. ROBREDO, in his capacity as Secretary of the Department of the IRA for development projects, which aims to enhance accountability of the LGUs in
Interior and Local Government, Respondent. undertaking development projects. The said memorandum circular underscored that
the 20% of the IRA intended for development projects should be utilized for social
development, economic development and environmental management. 8
DECISION
On August 31, 2010, the respondent, in his capacity as DILG Secretary, issued the
REYES, J.: assailed MC No. 2010-83,9entitled "Full Disclosure of Local Budget and Finances, and
Bids and Public Offerings," which aims to promote good governance through enhanced
This is a petition for certiorari and prohibition1 under Rule 65 of the 1997 Revised Rules transparency and accountability of LGUs. The pertinent portion of the issuance reads:
of Court filed by former Governor Luis Raymund F. Villafuerte, Jr. (Villafuerte) and the
Province of Camarines Sur (petitioners), seeking to annul and set aside the following Legal and Administrative Authority
issuances of the late Honorable Jesse M. Robredo (respondent), in his capacity as then
Secretary of the Department of the Interior and Local Government (DILG), to wit:
Section 352 of the Local Government Code of 1991 requires the posting within 30 days
from the end of eachfiscal year in at least three (3) publicly accessible and conspicuous
(a) Memorandum Circular (MC) No. 2010-83dated August 31, 2010, places in the local government unit a summary of all revenues collected and funds
pertaining to the full disclosure of local budget and finances, and bids and received including the appropriations and disbursements of such funds during the
public offerings;2 preceding fiscal year.

(b) MC No. 2010-138 dated December 2, 2010, pertaining to the use of the On the other hand, Republic Act No. 9184, known as the Government Procurement
20% component of the annual internal revenue allotment shares; 3 and Reform Act, calls for the posting of the Invitation to Bid, Notice of Award, Notice to
Proceed and Approved Contract in the procuring entity’s premises, in newspapers of
(c) MC No. 2011-08 dated January 13, 2011, pertaining to the strict adherence general circulation, the Philippine Government Electronic Procurement System
to Section 90 of Republic Act (R.A.) No. 10147 or the General Appropriations (PhilGEPS) and the website of the procuring entity. The declared policy of the State to
Act of 2011.4 promote good local governance also calls for the posting of budgets, expenditures,
contracts and loans, and procurement plans of local government units in conspicuous
The petitioners seek the nullification of the foregoing issuances on the ground of places within public buildings in the locality, inthe web, and in print media of community
unconstitutionality and for having been issued with grave abuse of discretion amounting or general circulation.
to lack orexcess of jurisdiction.
Furthermore, the President, in his first State of the Nation Address, directed all
The Facts government agencies and entities to bring to an end luxurious spending and
misappropriation ofpublic funds and to expunge mendacious and erroneous projects,
and adhere to the zero-based approach budgetary principle.
In 1995, the Commission on Audit (COA) conducted an examination and audit on the
manner the local government units (LGUs) utilized their Internal Revenue Allotment
(IRA) for the calendar years 1993-1994. The examination yielded an official Responsibility of the Local Chief Executive
report,showing that a substantial portion of the 20% development fund of some LGUs
was not actually utilized for development projects but was diverted to expenses All Provincial Governors, City Mayors and Municipal Mayors, are directed to faithfully
properly chargeable against the Maintenance and Other Operating Expenses (MOOE), comply with the above cited [sic] provisions of laws, and existing national policy, by
in stark violation of Section 287 of R.A. No. 7160, otherwise known as the Local posting in conspicuous places within public buildings in the locality, or inprint media of
Government Code of 1991 (LGC). Thus, on December 14, 1995, the DILG issued MC community or general circulation, and in their websites, the following:
No. 95-216,5 enumerating the policies and guidelines on the utilization of the
development fund component of the IRA. It likewise carried a reminder to LGUs of the
76
1. CY 2010 Annual Budget, information detail to the level of particulars of 9. CY 2010 Annual Procurement Plan or Procurement List, information detail
personal services, maintenance and other operating expenses and capital to the level ofname of project, individual item or article and specification or
outlay per individual offices (Source Document - Local Budget Preparation description of goods and services, procurement method, procuring office or
Form No. 3, titled, Program Appropriation and Obligation by Object of fund source, unit price or estimated cost or approved budget for the contract
Expenditure, limited to PS, MOOE and CO. For sample form, please visit and procurement schedule (Source Document - LGU Form No. 02, Makati
www.naga.gov.ph); City. For sample form, please visit www.makati.gov.ph.)[;]

2. Quarterly Statement of Cash Flows, information detail to the level of 10. Items to Bid, information detail to the level of individual Invitation to Bid,
particulars of cash flows from operating activities (e.g. cash inflows, total cash containing information as prescribed in Section 21.1 of Republic Act No. 9184,
inflows, total cash outflows), cash flows from investing activities (e.g. cash or The Government Procurement Reform Act, to be updated quarterly (Source
outflows), net increase in cash and cash at the beginning of the period (Source Document - Invitation to Apply for Eligibility and to Bid, as prescribed in
Document - Statement of Cash Flows Form); Section 21.1 of R.A. No. 9184. For sample form, please visit
www.naga.gov.ph);
3. CY 2009 Statement of Receipts and Expenditures, information detail to the
level of particulars of beginning cash balance, receipts or income on local 11. Bid Results on Civil Works, and Goods and Services, information detail to
sources (e.g., tax revenue, non-tax revenue), external sources, and receipts the level of project reference number, name and location of project, name
from loans and borrowings, surplus of prior years, expenditures on general (company and proprietor) and address of winning bidder, bid amount,
services, economic services, social services and debt services, and total approved budget for the contract, bidding date, and contract duration, to be
expenditures (Source Document - Local Budget Preparation Form No. 2, updated quarterly (Source Document – Infrastructure Projects/Goods and
titled, Statement of Receipts and Expenditures); Services Bid-Out (2010), Naga City. For sample form, please visit
www.naga.gov.ph); and
4. CY 2010 Trust Fund (PDAF) Utilization, information detail to the level of
particulars of object expenditures (Source Document - Local Budget 12. Abstract of Bids as Calculated, information detail to the level of project
Preparation Form No. 3, titled, Program Appropriation and Obligation by name, location, implementing office, approved budget for the contract,
Object of Expenditure, limited to PDAF Utilization); quantity and items subject for bidding, and bids of competing bidders, to be
updated quarterly (Source Document - Standard Form No. SF-GOOD-40,
5. CY 2010 Special Education Fund Utilization, information detail to the level Revised May 24, 2004, Naga City. For sample form, please visit
of particulars of object expenditures (Source Document - Local Budget www.naga.gov.ph).
Preparation Form No. 3, titled, Program Appropriation and Obligation by
Object of Expenditure, limited to Special Education Fund); The foregoing circular also statesthat non-compliance will be meted sanctions in
accordance with pertinent laws, rules and regulations. 10
6. CY 2010 20% Component of the IRA Utilization, information detail to the
level of particulars of objects of expenditure on social development, economic On December 2, 2010, the respondent issued MC No. 2010-138,11 reiterating that 20%
development and environmental management (Source Document - Local component of the IRA shall be utilized for desirable social, economic and environmental
Budget Preparation Form No. 3, titled, Program Appropriation and Obligation outcomes essential to the attainment of the constitutional objective of a quality oflife for
by Object of Expenditure, limited to 20% Component of the Internal Revenue all. It also listed the following enumeration of expenses for which the fund must not be
Allotment); utilized, viz:

7. CY 2010 Gender and Development Fund Utilization, information detail to 1. Administrative expenses such ascash gifts, bonuses, food allowance,
the level of particulars of object expenditures (Source Document - Local medical assistance, uniforms, supplies, meetings, communication, water and
Budget Preparation Form No. 3, titled, Program Appropriation and Obligation light, petroleum products, and the like; 2. Salaries, wages or overtime pay;
by Object of Expenditure, limited to Gender and Development Fund);
3. Travelling expenses, whether domestic or foreign;
8. CY 2010 Statement of Debt Service, information detail to the level of name
of creditor, purpose of loan, date contracted, term, principal amount, previous 4. Registration or participation feesin training, seminars, conferences or
payment made on the principal and interest, amount due for the budget year conventions;
and balance of the principal (Source Document - Local Budget Preparation
Form No. 6, titled, Statement of Debt Service);
77
 5. Construction, repairor refinishing of administrative offices; On June 2, 2011, the respondent filed his Comment on the petition. 16 Then, on June
22, 2011, the petitioners filed their Reply (With Urgent Prayer for the Issuance of a Writ
6. Purchase of administrative office furniture, fixtures, equipment or of Preliminary Injunction and/or Temporary Restraining Order). 17 In the
appliances; and Resolution18 dated October 11, 2011, the Court gave due course to the petition and
directed the parties to file their respective memorandum. In compliance therewith, the
respondent and the petitioners filed their Memorandum on January 19, 2012 19 and on
7. Purchase, maintenance or repair of motor vehicles or motorcycles, except February 8, 201220 respectively.
ambulances.12 On January 13, 2011, the respondent issued MC No. 2011-
08,13 directing for the strict adherence toSection 90 of R.A. No. 10147 or the
General Appropriations Act of 2011. The pertinent portion of the issuance The petitioners raised the following issues:
reads as follows:
Issues
Legal and Administrative Authority
I
● Section 90 of Republic Act No. 10147 (General Appropriations Act) FY 2011 re "Use
and Disbursement of Internal Revenue Allotment of LGUs", [sic] stipulates: The amount THE HON. SECRETARY OF THE INTERIOR AND LOCAL GOVERNMENT
appropriated for the LGU’s share in the Internal Revenue Allotment shall be used in COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
accordance with Sections 17 (g) and 287 of R.A. No 7160. The annual budgets of LGUs EXCESS OF JURISDICTION WHEN HEISSUED THE ASSAILED MEMORANDUM
shall be prepared in accordance with the forms, procedures, and schedules prescribed CIRCULARS IN VIOLATION OF THE PRINCIPLES OF LOCAL AUTONOMY AND
by the Department of Budget and Management and those jointly issued with the FISCAL AUTONOMY ENSHRINED IN THE 1987 CONSTITUTION AND THE LOCAL
Commission on Audit. Strict compliance with Sections 288 and 354 of R.A. No. 7160 GOVERNMENT CODE OF 1991[.]
and DILG Memorandum Circular No. 2010-83, entitled "Full Disclosure of Local Budget
and Finances, and Bids and Public offering" is hereby mandated; PROVIDED, That in II
addition to the publication or posting requirement under Section 352 of R.A. No. 7160
in three (3) publicly accessible and conspicuous places in the local government unit,
the LGUs shall also post the detailed information on the use and disbursement, and THE HON. SECRETARY OF THE INTERIOR AND LOCAL GOVERNMENT
status of programs and projects in the LGUS websites. Failure to comply with these COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
requirements shall subject the responsible officials to disciplinary actions in accordance EXCESS OF JURISDICTION WHEN HEINVALIDLY ASSUMED LEGISLATIVE
with existing laws. x x x14 POWERS IN PROMULGATING THE ASSAILED MEMORANDUM CIRCULARS
WHICH WENT BEYOND THE CLEAR AND MANIFEST INTENT OF THE 1987
CONSTITUTION AND THE LOCAL GOVERNMENT CODE OF 1991[.]21
xxxx
Ruling of the Court
Sanctions
The present petition revolves around the main issue: Whether or not the assailed
Non-compliance with the foregoing shall be dealt with in accordance with pertinent memorandum circulars violate the principles of local and fiscal autonomy enshrined in
laws, rules and regulations. In particular, attention is invited to the provision of the Local the Constitution and the LGC.
Government Code of 1991, quoted as follows:
The present petition is ripe for judicial review.
Section 60. Grounds for Disciplinary Actions - An elective local official may be
disciplined, suspended, or removed from office on: (c) Dishonesty, oppression,
misconduct in office, gross negligence, or dereliction of duty. x x x15(Emphasis and At the outset, the respondent is questioning the propriety of the exercise of the Court’s
underscoring in the original) power of judicial review over the instant case. He argues that the petition is premature
since there is yet any actual controversy that is ripe for judicial determination. He points
out the lack of allegation in the petition that the assailed issuances had been fully
On February 21, 2011, Villafuerte, then Governor of Camarines Sur, joined by the implemented and that the petitioners had already exhausted administrative remedies
Provincial Government of Camarines Sur, filed the instant petition for certiorari, seeking under Section 25 of the Revised Administrative Code before filing the same in court. 22
to nullify the assailed issuances of the respondent for being unconstitutional and having
been issued with grave abuse of discretion.
It is well-settled that the Court’s exercise of the power of judicial review requires the
concurrence of the following elements: (1) there must be an actual case or controversy
78
calling for the exercise of judicial power; (2) the person challenging the act must have The issuance of AOM No. 2011-009 to Villafuerte is a clear indication that the assailed
the standing to question the validity of the subject act or issuance; otherwise stated, he issuances of the respondent are already in the full course of implementation. The audit
must have a personal and substantial interest in the case such that he has sustained, memorandum specifically mentioned of Villafuerte’s alleged non-compliance with
or will sustain, direct injury as a result of its enforcement; (3) the question of MCNo. 2010-83 regarding the posting requirements stated in the circular and reiterated
constitutionality must be raised at the earliest opportunity; and (4) the issue of the sanctions that may be imposed for the omission. The fact that Villafuerte is being
constitutionality must be the very lis motaof the case. 23 required to comment on the contents of AOM No. 2011-009 signifies that the process
of investigation for his alleged violation has already begun. Ultimately, the investigation
The respondent claims that there isyet any actual case or controversy that calls for the is expected to end in a resolution on whether a violation has indeed been committed,
exercise of judicial review. He contends that the mere expectation of an administrative together with the appropriate sanctions that come with it. Clearly, Villafuerte’s
sanction does not give rise to a justiciable controversy especially, in this case, that the apprehension is real and well-founded as he stands to be sanctioned for non-
petitioners have yet to exhaust administrative remedies available.24 compliance with the issuances.

The Court disagrees. There is likewise no merit in the respondent’s claim that the petitioners’ failure to
exhaust administrative remedies warrants the dismissal of the petition. It bears
emphasizing that the assailed issuances were issued pursuant to the rule-making or
In La Bugal-B’laan Tribal Association, Inc. v. Ramos,25 the Court characterized an quasi-legislative power of the DILG. This pertains to "the power to make rules and
actual case or controversy, viz: regulations which results in delegated legislation that is within the confines of the
granting statute."29 Not to be confused with the quasi-legislative or rule-making power
An actual case or controversy means an existing case or controversy that is appropriate of an administrative agency is its quasi-judicial or administrative adjudicatory power.
or ripe for determination, not conjectural or anticipatory, lest the decision of the court This is the power to hear and determine questions of fact to which the legislative policy
would amount to an advisory opinion. The power does not extend to hypothetical is to apply and to decide in accordance with the standards laid down by the law itself in
questions since any attempt at abstraction could only lead to dialectics and barren legal enforcing and administering the same law.30 In challenging the validity of
questions and to sterile conclusions unrelated to actualities. 26 (Citations omitted) anadministrative issuance carried out pursuant to the agency’s rule-making power, the
doctrine of exhaustion of administrative remedies does not stand as a bar in promptly
The existence of an actual controversy in the instant case cannot be overemphasized. resorting to the filing of a case in court. This was made clear by the Court in Smart
At the time of filing of the instant petition, the respondent had already implemented the Communications, Inc. (SMART) v. National Telecommunications Commission
assailed memorandum circulars. In fact, on May 26, 2011, Villafuerte received Audit (NTC),31 where it was ruled, thus:
Observation Memorandum (AOM) No. 2011-009 dated May 10, 201127 from the Office
of the Provincial Auditor of Camarines Sur, requiring him to comment on the In questioning the validity or constitutionality of a rule or regulation issued by an
observation of the audit team, which states: administrative agency, a party need not exhaust administrative remedies before going
to court. This principle applies only where the act of the administrative agency
The Province failed to post the transactions and documents required under Department concerned was performed pursuant to its quasi-judicial function, and not when the
of Interior and Local Government (DILG) Memorandum Circular No. 2010-83, thereby assailed act pertained to its rule-making orquasi-legislative power. x x x.32
violating the mandate of full disclosure of Local Budget and Finances, and Bids and
Public Offering. Considering the foregoing clarification, there is thus no bar for the Court to resolve the
substantive issues raised in the petition.
xxxx
The assailed memorandum
The local officials concerned are reminded of the sanctions mentioned in the circular circulars do not transgress the local
which is quoted hereunder, thus: and fiscal autonomy granted to
LGUs.

"Non compliance with the foregoing shall be dealt with in accordance with pertinent
laws, rules and regulations. In particular, attention is invited to the provision of Local The petitioners argue that the assailed issuances of the respondent interfere with the
Government Code of 1991, quoted as follows: local and fiscal autonomy of LGUs embodied in the Constitution and the LGC. In
particular, they claim that MC No. 2010-138 transgressed these constitutionally-
protected liberties when it restricted the meaning of "development" and enumerated
Section 60. Grounds for Disciplinary Actions – An elective local official may be activities which the local government must finance from the 20% development fund
disciplined, suspended or removed from office on: (c) Dishonesty, oppression, component of the IRA and provided sanctions for local authorities who shall use the
misconduct in office, gross negligence or dereliction of duty."28 said component of the fund for the excluded purposes stated therein.33 They argue that
79
the respondent cannot substitute his own discretion with that of the local legislative Section 4. The President of the Philippines shall exercise general supervision over local
council in enacting its annual budget and specifying the development projects that the governments. Provinces with respect to component cities and municipalities, and cities
20% component of its IRA should fund.34 and municipalities with respect to component barangays, shall ensure that the acts of
their component units are within the scope of their prescribed powers and functions.
The argument fails to persuade.
In Province of Negros Occidental v. Commissioners, Commission on Audit,41 the Court
The Constitution has expressly adopted the policy of ensuring the autonomy of distinguished general supervision from executive control in the following manner:
LGUs.35 To highlight its significance, the entire Article X of the Constitution was devoted
to laying down the bedrock upon which this policy is anchored. The President’s power of general supervision means the power of a superior officer to
see to it that subordinates perform their functions according to law. This is distinguished
It is also pursuant to the mandate of the Constitution of enhancing local autonomy that from the President’s power of control which is the power to alter or modify or set aside
the LGC was enacted. Section 2 thereof was a reiteration of the state policy. It reads, what a subordinate officer had done in the performance of his duties and to substitute
thus: the judgment of the President over that of the subordinate officer. The power of control
gives the President the power to revise or reverse the acts or decisions of a subordinate
officer involving the exercise of discretion.42 (Citations omitted)
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 It is the petitioners’ contention that the respondent went beyond the confines of his
communities and make them more effective partners in the attainment ofnational goals. supervisory powers, asalter ego of the President, when he issued MC No. 2010-138.
Toward this end, the State shall provide for a more responsive and accountable local They arguethat the mandatory nature of the circular, with the threat of imposition of
government structure instituted through a system of decentralization whereby local sanctions for non-compliance, evinces a clear desire to exercise control over LGUs. 43
government units shall be given more powers, authority, responsibilities, and
resources. The process of decentralization shall proceed from the national government The Court, however, perceives otherwise.
to the local government units.
A reading of MC No. 2010-138 shows that it is a mere reiteration of an existing provision
Verily, local autonomy means a more responsive and accountable local government in the LGC. It was plainly intended to remind LGUs to faithfully observe the directive
structure instituted through a system of decentralization. 36 In Limbona v. stated in Section 287 of the LGC to utilize the 20% portion of the IRA for development
Mangelin,37 the Court elaborated on the concept of decentralization, thus: projects. It was, at best, an advisory to LGUs to examine themselves if they have been
complying with the law. It must be recalled that the assailed circular was issued in
[A]utonomy is either decentralization of administration ordecentralization of power. response to the report of the COA that a substantial portion of the 20% development
There is decentralization of administration when the central government delegates fund of some LGUs was not actually utilized for development projects but was diverted
administrative powers to political subdivisions in order to broaden the base of to expenses more properly categorized as MOOE, in violation of Section 287 of the
government power and in the process to make local governments "more responsive LGC. This intention was highlighted in the very first paragraph of MC No. 2010-138,
and accountable," and "ensure their fullest development as self-reliant communities which reads:
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 Section 287 of the Local Government Code mandates every local government to
managing local affairs and enables it to concentrate on national concerns. x x x. appropriate in its annual budget no less than 20% of its annual revenue allotment for
Decentralization of power, on the other hand, involves an abdication of political power development projects. In common understanding, development means the realization
in the favor of local governments [sic] units declared to be autonomous. In thatcase, of desirable social, economic and environmental outcomes essential in the attainment
the autonomous government is free to chart its own destiny and shape its future with of the constitutional objective of a desired quality of life for all. 44 (Underscoring in the
minimum intervention from central authorities. x x x.38 (Citations omitted) original)

To safeguard the state policy on local autonomy, the Constitution confines the power That the term developmentwas characterized asthe "realization of desirable social,
of the President over LGUs to mere supervision.39 "The President exercises ‘general economic and environmental outcome" does not operate as a restriction of the term so
supervision’ over them, but only to ‘ensure that local affairs are administered according as to exclude some other activities that may bring about the same result. The definition
to law.’ He has no control over their acts in the sense that he can substitute their was a plain characterization of the concept of development as it is commonly
judgments with his own."40 Thus, Section 4, Article X of the Constitution, states: understood. The statement of a general definition was only necessary to illustrate
among LGUs the nature of expenses that are properly chargeable against the
development fund component of the IRA. It is expected to guide them and aid them in
80
rethinking their ways so that they may be able to rectify lapses in judgment, should from the national government or turn them into impenetrable states. Autonomy does
there be any, or it may simply stand as a reaffirmation of an already proper not make local governments sovereign within the state. 46 InGanzon v. Court of
administration of expenses. Appeals,47 the Court reiterated:

The same clarification may be said of the enumeration of expenses in MC No. 2010- Autonomy, however, is not meant to end the relation of partnership and
138. To begin with, it is erroneous to call them exclusions because such a term signifies interdependence between the central administration and local government units, or
compulsory disallowance of a particular item or activity. This is not the contemplation otherwise, to usher in a regime of federalism. The Charter has not taken such a radical
of the enumeration. Again, it is helpful to retrace the very reason for the issuance of the step.1avvphi1 Local governments, under the Constitution, are subject to regulation,
assailed circular for a better understanding. The petitioners should be reminded that however limited, and for no other purpose than precisely, albeit paradoxically, to
the issuance of MC No. 2010-138 was brought about by the report of the COA that the enhance self-government.48
development fund was not being utilized accordingly. To curb the alleged misuse of the
development fund, the respondent deemed it proper to remind LGUs of the nature and Thus, notwithstanding the local fiscal autonomy being enjoyed by LGUs, they are still
purpose of the provision for the IRA through MC No. 2010-138. To illustrate his point, under the supervision of the President and maybe held accountable for malfeasance
heincluded the contested enumeration of the items for which the development fund or violations of existing laws. "Supervision is not incompatible with discipline. And the
must generallynot be used. The enumerated items comprised the expenses which the power to discipline and ensure that the laws be faithfully executed must be construed
COA perceived to have been improperly earmarked or charged against the to authorize the President to order an investigation of the act or conduct of local officials
development fund based on the audit it conducted. when in his opinion the good of the public service so requires." 49

Contrary to the petitioners’ posturing, however, the enumeration was not meant to Clearly then, the President’s power of supervision is not antithetical to investigation and
restrict the discretion of the LGUs in the utilization of their funds. It was meant to imposition of sanctions. In Hon. Joson v. Exec. Sec. Torres, 50 the Court pointed out,
enlighten LGUs as to the nature of the development fund by delineating it from other thus: "Independently of any statutory provision authorizing the President to conduct an
types of expenses. It was incorporated in the assailed circular in order to guide them in investigation of the nature involved in this proceeding, and in view of the nature and
the proper disposition of the IRA and avert further misuse of the fund by citing current character of the executive authority with which the President of the Philippines is
practices which seemed to be incompatible with the purpose of the fund. Even then, invested, the constitutional grant to him of power to exercise general supervision over
LGUs remain at liberty to map out their respective development plans solely on the all local governments and to take care that the laws be faithfully executed must be
basis of their own judgment and utilize their IRAs accordingly, with the only restriction construed to authorize him to order an investigation of the act or conduct of the
that 20% thereof be expended for development projects. They may even spend their petitioner herein. Supervision is not a meaningless thing. It is an active power. It is
IRAs for some of the enumerated items should they partake of indirect costs of certainly not without limitation, but it at least implies authority to inquire into facts and
undertaking development projects. In such case, however, the concerned LGU must conditions in order to render the power real and effective. x x x." 51(Emphasis ours and
ascertain that applicable rules and regulations on budgetary allocation have been italics in the original)
observed lest it be inviting an administrative probe.
As in MC No. 2010-138, the Court finds nothing in two other questioned issuances of
The petitioners likewise misread the issuance by claiming that the provision of the respondent, i.e., MC Nos. 2010-83 and 2011-08, that can be construed as infringing
sanctions therein is a clear indication of the President’s interference in the onthe fiscal autonomy of LGUs. The petitioners claim that the requirement to post other
fiscalautonomy of LGUs. The relevant portion of the assailed issuance reads, thus: documents in the mentioned issuances went beyond the letter and spirit of Section 352
of the LGC and R.A. No. 9184, otherwise known as the Government Procurement
All local authorities are further reminded that utilizing the 20% component of the Internal Reform Act, by requiring that budgets, expenditures, contracts and loans, and
Revenue Allotment, whether willfully or through negligence, for any purpose beyond procurement plans of LGUs be publicly posted as well.52
those expressly prescribed by law or public policy shall be subject to the sanctions
provided under the Local Government Code and under such other applicable laws. 45 Pertinently, Section 352 of the LGC reads:

Significantly, the issuance itself did not provide for sanctions. It did not particularly Section 352. Posting of the Summary of Income and Expenditures.– Local treasurers,
establish a new set ofacts or omissions which are deemed violations and provide the accountants, budget officers, and other accountable officers shall, within thirty (30)
corresponding penalties therefor. It simply stated a reminder to LGUs that there are days from the end of the fiscal year, post in at least three (3) publicly accessible and
existing rules to consider in the disbursement of the 20% development fund and that conspicuous places in the local government unit a summary of all revenues collected
non-compliance therewith may render them liable to sanctions which are provided in and funds received including the appropriations and disbursements of such funds
the LGC and other applicable laws. Nonetheless, this warning for possible imposition during the preceding fiscal year.
of sanctions did not alter the advisory nature of the issuance. At any rate, LGUs must
be reminded that the local autonomy granted to them does not completely severe them
81
R.A. No. 9184, on the other hand, requires the posting of the invitation to bid, notice of have infringed on the local fiscal autonomy of LGUs. Firstly, the issuances do not
award, notice to proceed, and approved contract in the procuring entity’s premises, in interfere with the discretion of the LGUs in the specification of their priority projects and
newspapers of general circulation, and the website of the procuring entity. 53 the allocation of their budgets. The posting requirements are mere transparency
measures which do not at all hurt the manner by which LGUs decide the utilization and
It is well to remember that fiscal autonomy does not leave LGUs with unbridled allocation of their funds.
discretion in the disbursement of public funds. They remain accountable to their
constituency. For, public office was created for the benefit of the people and not the Secondly, it appears that even Section 352 of the LGC that is being invoked by the
person who holds office. petitioners does not exclude the requirement for the posting of the additional
documents stated in MC Nos. 2010-83 and 2011-08. Apparently, the mentioned
The Court strongly enunciated in ABAKADA GURO Party List (formerly AASJS), et al. provision requires the publication of "a summary of revenues collected and funds
v.Hon. Purisima, et al.,54 thus: received, including the appropriations and disbursements of such funds." The
additional requirement for the posting of budgets, expenditures, contracts and loans,
and procurement plans are well-within the contemplation of Section 352 of the LGC
Public office is a public trust. It must be discharged by its holder not for his own personal considering they are documents necessary for an accurate presentation of a summary
gain but for the benefit of the public for whom he holds it in trust. By demanding of appropriations and disbursements that an LGU is required to publish.
accountability and service with responsibility, integrity, loyalty, efficiency, patriotism and
justice, all government officials and employees havethe duty to be responsive to the
needs of the people they are called upon to serve.55 Finally, the Court believes that the supervisory powers of the President are broad
enough to embrace the power to require the publication of certain documents as a
mechanism of transparency. In Pimentel,Jr. v. Hon. Aguirre,60 the Court reminded that
Thus, the Constitution strongly summoned the State to adopt and implement a policy localfiscal autonomy does not rule out any manner of national government intervention
of full disclosure of all transactions involving public interest and provide the people with by way of supervision, in order to ensure that local programs, fiscal and otherwise, are
the right to access public information.56 Section 352 of the LGC is a response to this consistent with national goals. The President, by constitutional fiat, is the head of the
call for transparency. It is a mechanism of transparency and accountability of local economic and planning agency of the government, primarily responsible for formulating
government officials and is in fact incorporated under Chapter IV of the LGC which and implementing continuing, coordinated and integrated social and economic policies,
deals with "Expenditures, Disbursements, Accounting and Accountability." plans and programs for the entire country.61 Moreover, the Constitution, which was
drafted after long years of dictatorship and abuse of power, is now replete with
In the same manner, R.A. No. 9184 established a system of transparency in the numerous provisions directing the adoption of measures to uphold transparency and
procurement process and in the implementation of procurement contracts in accountability in government, with a view of protecting the nation from repeating its
government agencies.57 It is the public monitoring of the procurement process and the atrocious past. In particular, the Constitution commands the strict adherence to full
implementation of awarded contracts with the end in view of guaranteeing that these disclosure of information onall matters relating to official transactions and those
contracts are awarded pursuant to the provisions of the law and its implementing rules involving public interest. Pertinently, Section 28, Article II and Section 7, Article III of
and regulations, and that all these contracts are performed strictly according to the Constitution, provide: Article II
specifications.58
Declaration of Principles and State Policies Principles
The assailed issuances of the respondent, MC Nos. 2010-83 and 2011-08, are but
implementation of this avowed policy of the State to make public officials accountable Section 28. Subject to reasonable conditions prescribed by law, the State adopts and
to the people. They are amalgamations of existing laws, rules and regulation designed implements a policy of full public disclosure of all its transactions involving public
to give teeth to the constitutional mandate of transparency and accountability. interest.

A scrutiny of the contents of the mentioned issuances shows that they do not, in any Article III
manner, violate the fiscal autonomy of LGUs. To be clear, "[f]iscal autonomy means Bill of Rights
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 withtheir Section 7. The right of the people to information on matters of public concern shall be
own priorities.It extends to the preparation of their budgets, and local officials in turn recognized. Access to official records, and to documents and papers pertaining to
have to work within the constraints thereof."59 official acts, transactions, or decisions, as well as to government research data used
as basis for policy development, shall be afforded the citizen, subject to such limitations
as may be provided by law.
It is inconceivable, however, how the publication of budgets, expenditures, contracts
and loans and procurement plans of LGUs required in the assailed issuances could
82
In the instant case, the assailed issuances were issued pursuant to the policy of
promoting good governance through transparency, accountability and participation.
The action of the respondent is certainly within the constitutional bounds of his power
as alter ego of the President.

It is needless to say that the power to govern is a delegated authority from the people
who hailed the public official to office through the democratic process of election. His
stay in office remains a privilege which may be withdrawn by the people should he
betray his oath of office. Thus, he must not frown upon accountability checks which aim
to show how well he is performing his delegated power. For, it is through these
mechanisms of transparency and accountability that he is able to prove to his
constituency that he is worthy of the continued privilege.

WHEREFORE, in view of the foregoing considerations, the petition is DISMISSED for

lack of merit.

SO ORDERED.

83
 the RTC of Balanga, Bataan against the Governor and the petitioner. Initially, the
[ GR No. 174964, Oct 05, 2016 ] Board of Trustees of the BPSC was impleaded as an unwilling plaintiff but was
eventually included as co-petitioner in the civil suit pursuant to Resolution No. 14,
Series of 2000 of the BPSC.[6]
SANGGUNIANG PANLALAWIGAN OF BATAAN v. CONGRESSMAN ENRIQUE T.
GARCIA + In their Comment, the Governor and the petitioner took issue with the standing of the
respondents, arguing that they were not the real parties in interest who would be
DECISION benefited or injured by the judgment, or the party entitled to the avails of the suit.
They asserted that the subject properties were owned by the Province of Bataan and
not the State, for them to be simply transferred to the BPSC by virtue of the law. [7]
REYES, J.:
In its Decision dated November 29, 2002, the RTC granted the writ of mandamus.
Before this Court is a Petition for Review on Certiorart[1] of the Decision[2] dated The fallo of the RTC decision reads:
February 7, 2006 of the Court of Appeals (CA) in CA-G.R. SP No. 85902 upholding the
Decision dated November 29, 2002 of the Regional Trial Court (RTC) of Bataan which
granted the petition for a writ of mandamus in Special Civil Action No. 7043. WHEREFORE, a writ of mandamus is hereby issued, ordering respondents to
forthwith:

Antecedent Facts 1. Deliver the owner's duplicate copy of [OCX] No. N-182 to the Register of Deeds of
Bataan, free from any hen or encumbrance;

Lot Nos. 2193 and 2194 of the Bataan Cadastre, containing 1,222 square meters and 2. Execute the corresponding deed of conveyance of the parcels of land in issue in
10,598 sq m, respectively, were registered in the name of the Province of Bataan. favor of the [BPSC]; and
Both lots were embraced in Original Certificate of Title (OCT) No. N-182, and
occupied by the Bataan Community Colleges (BCC) and the Medina Lacson de Leon 3. Cause the transfer and registration of the title to and in the name of the [BPSC].
School of Arts and Trades (MLLSAT), both State-run schools.[3]
SO ORDERED.[8]
On February 26, 1998, the Congress of the Philippines passed Republic Act (R.A.)
No. 8562, authored by Congressman Enrique T. Garcia, Jr. (Cong. Garcia),
converting the MLLSAT into a polytechnic college, to be known as the Bataan
Polytechnic State College (BPSC), and integrating thereto the BCC. [4] Section 24 of The Governor and the petitioner appealed to the CA alleging that the subject lots
R.A. No. 8562 provides that: were the patrimonial properties of the Province of Bataan, and as such they cannot
be taken by the National Government without due process of law and without just
compensation. They also pointed out that certain loan obligations of the Province of
All parcels of land belonging to the government occupied by the Medina Lacson de Bataan to the Land Bank of the Philippines (LBP) were secured with a mortgage on
Leon School of Arts and Trades and the Bataan Community Colleges are hereby the lots; and since the mortgage lien was duly annotated on its title, OCT No. N-182,
declared to be the property of the Bataan Polytechnic State College and shall be titled the writ of mandamus violated the non-impairment clause of the Constitution. The
under that name: Provided, That should the State College cease to exist or be Governor and the petitioner reiterated that the respondents had no legal standing
abolished or should such parcels of land aforementioned be no longer needed by the since they were not the real parties in interest.[9]
State College, the same shall revert to the Province of Bataan.
In the Decision[10] dated February 7, 2006, the CA affirmed the RTC.

The CA rejected the claim that the subject lots were the patrimonial properties of the
On the basis of the above provision, Cong. Garcia wrote to then Governor of Bataan Province of Bataan, declaring that the petitioner failed to provide proof that the
Leonardo Roman, and the Sangguniang Panlalawigan of Bataan (petitioner), Province of Bataan acquired them with its own private or corporate funds, and for this
requesting them to cause the transfer of the title of the aforesaid lots to BPSC. No reason the lots must be presumed to belong to the State, citing Salas, etc., et al. v.
transfer was effected.[5] Hon. Jarencio, etc., et al.[11] Concerning the mortgage to the LBP, the appellate court
agreed with the RTC that the consent of the LBP to the transfer of title to BPSC must
Thus, Cong. Garcia, along with the faculty members and some concerned students of be obtained, and the mortgage lien must be carried over to the new title. The CA also
BPSC (collectively, the respondents) filed a Special Civil Action for Mandamus with held that BPSC is a real party in interest on the basis of Section 24 of R.A. No. 8562,
and was correctly impleaded as a co-petitioner. The subsequent motion for
84
reconsideration was denied in the CA Resolution[12] dated September 20, 2006; ownership of the State.
hence, this petition.
The State's ownership of and control over all lands and resources of the public
domain are beyond dispute. Reproducing almost verbatim from the 1973
Issues Constitution,[20] Section 2, Article XII of the 1987 Constitution provides that "[a]ll lands
of the public domain, waters, minerals, coal, petroleum and other mineral oils, all
I forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and
other natural resources are owned by the State, x x x." In Section 1, Article XIII of the
Amended 1935 Constitution, it was also provided that "[a]ll agricultural timber, and
WHETHER OR NOT THE SUBJECT PARCELS OF LAND ARE PATRIMONIAL mineral lands of the public domain, waters, minerals, coal, petroleum, and other
PROPERTIES OF THE PROVINCE OF BATAAN WHICH CANNOT BE TAKEN mineral oils, all forces of potential energy and other natural resources of the
WITHOUT DUE PROCESS OF LAW AND WITHOUT JUST COMPENSATION. Philippines belong to the State x x x."

Thus, in Cariño v. Insular Government,[21] a case of Philippine origin, the Supreme

II Court of the United States of America acknowledged that "Spain in its earlier decrees
embodied the universal feudal theory that all lands were held from the Crown x x x."
In Hong Hok v. David,[22] citing Cariño, the Court likewise said that the theory is a
WHETHER OR NOT A WRIT OF MANDAMUS MAY BE ISSUED AGAINST THE manifestation of the concept of the Regalian Doctrine, or jura regalia,[23] which is
PETITIONER TO COMPEL THE TRANSFER OF THE SUBJECT PROPERTIES enshrined in our 1935, 1973, and 1987 Constitutions. As adopted in our republican
WITHOUT DUE PROCESS OF LAW AND WITHOUT JUST COMPENSATION.[13] system, this medieval concept is stripped of royal overtones; and ownership of all
lands belonging to the public domain is vested in the State. [24] Under this well-
entrenched and time-honored Regalian Doctrine, all lands of the public domain are
under the absolute control and ownership of the State.
The petitioner insists that the subject lots are not communal lands, or legua
comunal as they were known under the laws of colonial Spain, but are the patrimonial B. Local government property
properties of the Province of Bataan, which were issued a Torrens title by the devoted to governmental purposes,
Cadastral Court on August 11, 1969 in Cadastral Case No. 5; [14] that while such as local administration, public
in Salas,[15] the title of the State over the disputed lot was expressly recognized by the education, and public health, as
City of Manila, this is not so in the case at bar;[16] that in the exercise of its proprietary may be provided under special
rights over the subject lots, the Province of Bataan has used them as collateral for its laws, is classified as public.
loan obligations with the LBP;[17] that in its Manifestation and Motion dated February
24, 2000, the Board of Trustees of BPSC even acknowledged the titles of the In The Province of Zamboanga del Norte v. City of Zamboanga, et al. [25] cited by the
Province of Bataan over the subject properties.[18] CA, the Province of Zamboanga del Norte sought to declare unconstitutional R.A. No.
3039, which ordered the transfer of properties belonging to the Province of
In addition to the above contentions, the petitioner proffers an alleged novel argument Zamboanga located within the territory of the City of Zamboanga to the said City, for
that R.A. No. 8562 infringes on the State's underlying policy of local autonomy for its depriving the province of property without due process and just compensation. In said
territorial and political subdivisions, found in Article X of the 1987 Constitution case, the Court classified properties of local governments as either (a) properties for
(formerly Article XI, 1973 Constitution) and now fleshed out in a landmark legislation, public use, or (b) patrimonial properties, and held that the capacity in which the
R.A. No. 7160, better known as the Local Government Code of 1991 (LGC). Thus, for property is held by a local government is dependent on the use to which it is intended
this Court to still sustain its ruling in Salas would render the State's policy of local and for which it is devoted. If the property is owned by the municipal corporation in its
autonomy purely illusory.[19] public and governmental capacity, it is public and Congress has absolute control over
it; but if the property is owned in its private or proprietary capacity, then it is
patrimonial and Congress has no absolute control, in which case, the municipality
Ruling of the Court cannot be deprived of it without due process and payment of just compensation. [26] In
upholding the validity of R.A. No. 3 039, the Court noted that it affected "lots used as
The decision of the CA is affirmed. capitol site, school sites and its grounds, hospital and leprosarium sites and the high
school playground sites - a total of 24 lots - since these were held by the former
A. Under the well-entrenched and Zamboanga province in its governmental capacity and therefore are subject to the
time-honored Regalian Doctrine, all absolute control of Congress." [27]
lands of the public domain are
under the absolute control and
85
According to the Court, there are two established norms to determine the declared by the Court of First Instance of Manila, Branch 4, acting as a land
classification of the properties: that of the Civil Code, particularly Articles 423 and 424 registration court in Case No. 18, G.L.R.O. Record No. 111, as owned by the City of
thereof, and that obtaining under the law of Municipal Corporations. Articles 423 and Manila in fee simple. On August 21, 1920, OCT No. 4329 was issued in the name of
424 of the Civil Code provide, as follows: the City of Manila over the said lot. On various dates in 1924, the City of Manila sold
portions of Lot No. 1, Block 557 to a certain Pura Villanueva (Villanueva). OCT No.
4329 was cancelled, and transfer certificates of title (TCT) were issued to Villanueva
Art. 423. The property of provinces, cities and municipalities is divided into property for the portions sold to her, while TCT No. 22547 was issued to the City of Manila for
for public use and patrimonial property. the remainder of Lot No. 1 containing 7,490.10 sq m, now designated, as Lot No. 1-B-
2-B of Block 557.[35]
Art. 424. Property for public use, in the provinces, cities, and municipalities, consists
of the provincial roads, city streets, municipal streets, the squares, fountains, public On September 21, 1960, the local board of the City of Manila wrote to the President
waters, promenades, and public works for public service paid for by said provinces, of the Philippines seeking assistance in declaring the aforesaid lot as patrimonial
cities, or municipalities. property of the city for the purpose of reselling the same in small lots to the actual
occupants thereof. R.A. No. 4118 was passed by Congress on June 20, 1964 for this
All other property possessed by any of them is patrimonial and shall be governed by purpose.[36] On February 18, 1965, Manila Mayor Antonio Villegas (Mayor Villegas)
this Code, without prejudice to the provisions of special laws. was furnished a copy of a subdivision plan for TCT No. 22547. He interposed no
objection to the implementation of R.A. No. 4118, and TCT No. 22547 was duly
surrendered to the Land Authority.[37]

In Province of Zamboanga del Norte,[28] properties for the free and indiscriminate use Inexplicably, now claiming that R.A. No. 4118 was unconstitutional, Mayor Villegas
of everyone are classified under the Civil Code norm as for public use, while all other brought on December 20, 1966 an action for injunction and/or prohibition with
properties are patrimonial in nature. In contrast, under the Municipal Corporations preliminary injunction, to restrain, prohibit and enjoin the Land Authority and the
Law norm, to be considered public property, it is 'enough that a property is held and Register of Deeds of Manila from implementing R.A. No. 4118. On September 23,
devoted to a governmental purpose, such as local administration, public education, 1968, the RTC declared the said law unconstitutional for depriving the City of Manila
and public health.[29] Nonetheless, the Court clarified that the classification of of its property without due process and just compensation.[38]
properties in the municipalities, other than those for public use, as patrimonial under
Article 424 of the Civil Code, is "without prejudice to the provisions of special Acting on the petition for review, the Court declared that Lot 1-B-2-B of Block 557 was
laws,"[30]holding that the principles obtaining under the Law of Municipal Corporations a communal property held in trust by the City of Manila for the State, and therefore
can be considered as "special laws"[31] subject to the paramount power of Congress to dispose of. Thus:

Moreover, in the 2009 case of Heirs of Mario Malabanan v. Republic of the

Philippines,[32] the Court reiterated that Article 420(2) of the Civil Code makes clear [T]he City of Manila, although declared by the Cadastral Court as owner in fee
that properties "which belong to the State, without being for public use, and are simple, has not shown by any shred of evidence in what manner it acquired said land
intended for some public service or for the development of the national wealth," are as its private or patrimonial property. It is true that the City of Manila as well as its
public dominion property. For as long as the property belongs to the State, although predecessor, the Ayuntamiento de Manila, could validly acquire property in its
already classified as alienable or disposable, it remains property of the public corporate or private capacity, following the accepted doctrine on the dual character -
dominion when it is "intended for some public service or for the development of the public and private - of a municipal corporation. And when it acquires property in its
national wealth."[33] private capacity, it acts like an ordinary person capable of entering into contracts or
making transactions for the transmission of title or other real rights. When it comes to
C. Property registered in the name acquisition of land, it must have done so under any of the modes established by law
of the municipal corporation but for the acquisition of ownership and other real rights. In the absence of a title deed to
without proof that it was acquired any land claimed by the City of Manila as its own, showing that it was acquired with
with its corporate funds is deemed its private or corporate funds, the presumption is that such land came from the State
held by it in trust for the State. upon the creation of the municipality (Unson vs. Lacson, et al., 100 Phil. 695).
Originally the municipality owned no patrimonial property except those that were
The Court takes instructions from the case, of Salas as to properties belonging to the granted by the State not for its public but for private use. Other properties it owns are
municipal government. In Salas, at issue was the constitutionality of R.A. No. 4118 acquired in the course of the exercise of its corporate powers as a juridical entity to
passed on June 20, 1964,[34] whereby Congress reserved a lot, long titled in the name which category a municipal corporation pertains.
of the City of Manila, as communal property, and converted it into disposable land of
the State for resale in small lots to its bona fide occupants. On February 24, 1919, Lot Communal lands or "legua comunal" came into existence when a town or pueblo was
No. 1, Block 557 of the Cadastre of the City of Manila, containing 9,689.80 sq m, was
86
established in this country under the laws of Spain (Law VII, Title III, Book VI, and alienable lands of the State."[42]
Recopilacion de las Leyes de Indios). The municipalities of the Philippines were not
entitled, as a matter of right, to any part of the public domain for use as communal The Court ruled that, like R.A. No. 4118 in Salas, R.A. No. 3120 was intended to
lands. The Spanish law provided that the usufruct of a portion of the public domain implement the social justice policy of the Constitution and the government's program
adjoining municipal territory might be granted by the Government for communal of land for the landless. Thus, the sale of the subdivided lots to the bona fide
purposes, upon proper petition, but, until granted, no rights therein passed to the occupants by authority of Congress was not an exercise of eminent domain or
municipalities, and, in any event, the ultimate title remained in the sovereign (City of expropriation without just compensation, which would have been in violation of
Manila vs. Insular Government, 10 Phil. 327). Section 1(2),[43] Article III of the 1935 Constitution, but simply a manifestation of its
right and power to deal with State property.[44] "It is established doctrine that the act of
xxxx classifying State property calls for the exercise of wide discretionary legislative power
which will not be interfered with by the courts." [45] In Rabuco, the rule in Salas was
It may, therefore, be laid down as a general rule that regardless of the source or reiterated that property of the public domain, although titled to the local government,
classification of land in the possession of a municipality, excepting those acquired is held by it in trust for the State. It stated:
with its own funds in its private or corporate capacity, such property is held in trust for
the State for the benefit of its inhabitants, whether it be for governmental or
proprietary purposes. It holds such lands subject to the paramount power of the The Court [in Salas] reaffirmed the established general rule that "regardless of the
legislature to dispose of the same, for after all it owes its creation to it as an agent for source or classification of land in the possession of a municipality, excepting those
the performance of a part of its public work, the municipality being but a subdivision or acquired with its own funds in its private or corporate capacity, such property is held
instrumentality thereof for purposes of local administration. Accordingly, the legal in trust for the State for the benefit of its inhabitants, whether it be for governmental or
situation is the same as if the State itself holds the property and puts it to a different proprietary purposes. It holds such lands subject to the paramount power of the
use (2 Mc Quilin, Municipal Corporations, 3rd Ed. p. 197, citing Monagham vs. legislature to dispose of the same, for after all it owes its creation to it as an agent for
Armatage, 218 Minn. 27, 15 N. W. 2nd 241). the performance of a part of its public work, the municipality being but a subdivision or
instrumentality thereof for purposes of local administration. Accordingly, the legal
True it is that the legislative control over a municipal corporation is not absolute even situation is the same as if the State itself holds the property and puts it to a different
when it comes to its property devoted to public use, for such control must not be use" and stressed that "the property, as has been previously shown, was not acquired
exercised to the extent of depriving persons of their property or rights without due by the City of Manila with its own funds in its private or proprietary capacity. That it
process of law, or in a manner impairing the obligations of contracts. Nevertheless, has in its name a registered title is not questioned, but this title should be deemed to
when it comes to property of the municipality which it did not acquire in its private or be held in trust for the State as the land covered thereby was part of the territory of
corporate capacity with its own funds, the legislature can transfer its administration the City of Manila granted by the sovereign upon its creation." [46]
and disposition to an agency of the National Government to be exposed of according
to its discretion. Here it did so in obedience to the constitutional mandate of promoting
social justice to insure the well-being and economic security of the
people.[39] (Underscoring ours) E. The State's policy to promote
local autonomy and to devolve the
powers of the National Government
to its political subdivisions has for
D. R.A. No. 8562 was not intended its purpose to improve the quality
to expropriate the subject lots titled of local governance.
in the name of the Province of
Bataan, but to confirm their Sections 2 and 3, Article X of the 1987 Constitution, relied upon by the petitioner,
character as communal land of the provide:
State and to make them available
for disposition by the National
Government. Sec. 2. The territorial and political subdivisions shall enjoy local autonomy.

The case of Rabuco v. Hon. Villegas,[40] decided in 1974, is a virtual reprise of the Sec. 3. The Congress shall enact a local government code which shall provide for a
1968 case of Salas. In Rabuco, the constitutionality of R.A. No. 3120[41] was more responsive and accountable local government structure instituted through a
challenged, which provided for the subdivision of Lot No. 21-B, Block 610 of the system of decentralization with effective mechanisms of recall, initiative, and
Cadastre of the City of Manila, containing about 10,198 sq m into residential lots, and referendum, allocate among the different local government units their powers,
the sale thereof to the tenants and bona fide occupants. The law declared Lot No. 21- responsibilities, and resources, and provide for the qualifications, election,
B "reserved as communal property" and then ordered it converted into "disposable appointment and removal, term, salaries, powers and functions and duties of local
87
officials, and all other matters relating to the organization and operation of the local proprietary functions and in the management of their economic enterprises, subject to
units. the limitations provided in this Code and other applicable laws.

Pursuant to its mandate, the Congress passed the LGC in 1991 to spell out the In the instant petition, it is essentially the petitioner's assertion that the State's policy
above-declared policy of the State, which is now amplified in Section 2 of R.A. No. of local autonomy and decentralization endows the Province of Bataan with
7160. It states, as follows: patrimonial rights to use or dispose of the subject lots according to its own
development plans, program objectives and priorities.

Sec. 2. Declaration of Policy. - (a) It is hereby declared the policy of the State that the The Court disagrees.
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 Local autonomy and decentralization of State powers to the local political subdivisions
communities and make them more effective partners in the attainment of national are the results of putting restraints upon the exercise by the Presidents of executive
goals. Toward this end, the State shall provide for a more responsive and powers over local governments. Section 4, Article X of the 1987 Constitution reads in
accountable local government structure instituted through a system of part: "The President of the Philippines shall exercise general supervision over local
decentralization whereby local government units shall be given more powers, governments." As with the counterpart provisions of our earlier Constitutions, the
authority, responsibilities, and resources. The process of decentralization shall aforesaid provision has been interpreted to exclude the President's power of control
proceed from the National Government to the local government units. over local governments.[47] The Constitutions of 1935, 1973 and 1987 have uniformly
differentiated the President's power of supervision over local governments and his
xxxx power of control of the executive departments, bureaus and offices. [48] In Pimentel, Jr.
v. Hon. Aguirre,[49] it was held that Section 4 confines the President's power over local
governments to one of general supervision, thus:

Also invoked by the petitioners are Sections 18 and 22 of the LGC, which state as
follows: Under our present system of government, executive power is vested in the President.
The members of the Cabinet and other executive officials are merely alter egos. As
such, they are subject to the power of control of the President, at whose will and
Sec. 18. Power to Generate and Apply Resources. — Local government units shall behest they can be removed from office; or their actions and decisions changed,
have the power and authority to establish an organization that shall be responsible for suspended or reversed. In contrast, the heads of political subdivisions are elected by
the efficient and effective implementation of their development plans, program the people. Their sovereign powers emanate from the electorate, to whom they are
objectives and priorities; to create their own sources of revenues and to levy taxes, directly accountable. By constitutional fiat, they are subject to the President's
fees, and charges which shall accrue exclusively for their use and disposition and supervision only, not control, so long as their acts are exercised within the sphere of
which shall be retained by them; to have a just share in national taxes which shall be their legitimate powers. By the same token, the President may not withhold or alter
automatically and directly released to them without need of any further action; to have any authority or power given them by the Constitution and the law. [50]
an equitable share in the, proceeds from the utilization and development of the
national wealth and resources within their respective territorial jurisdictions including
sharing the same with the inhabitants by way of direct benefits; to acquire, develop,
lease, encumber, alienate, or otherwise dispose of real or personal property held by On the other hand, local autonomy and decentralization of State powers to the local
them in their proprietary capacity and to apply their resources and assets for political subdivisions have for their object to make governance directly responsive at
productive, developmental, or welfare purposes, in the exercise or furtherance of their the local levels by giving them a free hand to chart their own destiny and shape their
governmental or proprietary powers and functions and thereby ensure their future with minimum intervention from central authorities, thereby rendering them
development into self-reliant communities and active participants in the attainment of accountable to their local constituencies.[51] Thus, [h]and in hand with the
national goals. constitutional restraint on the President's power over local governments is the state
policy of ensuring local autonomy"[52] As farther explained in Pimentel, Jr.:
Sec. 22. Corporate Powers. - x x x

xxxx Under the Philippine concept of local autonomy, the national government has not
completely relinquished all its powers over local governments, including autonomous
(d) Local government units shall enjoy full autonomy in the exercise of their regions. Only administrative powers over local affairs are delegated to political
subdivisions. The purpose of the delegation is to make governance more directly
88
responsive and effective at the local levels. In turn, economic, political and social We start with the declared principle of the State guaranteeing and promoting the
development at the smaller political units are expected to propel social and economic autonomy of local government units. We have likewise noted the earnestness of the
growth and development. But to enable the country to develop as a whole, the framers as to the attainment of such declared objective as set forth in the specific
programs and policies effected locally must be integrated and coordinated towards a article on the matter. It is made obligatory on the National Assembly to enact a local
common national goal. Thus, policy-setting for the entire country still lies in the government code. What is more, unlike the general run of statutes, it cannot be
President and Congress. As we stated in Magtajas v. Pryce Properties Corp., amended except by a majority vote of all its members. It is made to include "a more
Inc., municipal governments are still agents of the national government. [53] (Citation responsive and accountable local government structure with an effective system of
omitted) recall," with an expressed reference to "qualifications, election and removal, term,
salaries, powers, functions, and duties of local officials, [as well as] all other matters
relating to the organization and operation of the local units." Mention is likewise made
of the "powers, responsibilities, and resources," items that are identified with local
It is clear, then, that local autonomy and decentralization do not deal directly with autonomy. As if that were not enough, the last sentence of this particular provision
Issues concerning ownership, classification, use or control of properties of the public reads: "However, any change in the existing form of local government shall not take
domain held by local governments. The State retains power over property of the effect until ratified by a majority of the votes cast in a plebiscite called for the
public domain, exercised through Congress. purpose." To the extent that the last section requires that the creation, division,
merger, abolition or alteration of a boundary of a province, city, municipality, or barrio,
F. The grant of autonomy to local must be in accordance with the criteria established in the local government code and
governments, although a radical subject to the approval by a majority of the votes cast in a plebiscite in such unit or
policy change under the 1973 and units, the adherence to the basic principle of local self government is quite clear.
1987 Constitutions, does not affect Equally significant is the stress on the competence of a province, city, municipality or
the settled rule that they possess barrio "to create its own sources of revenue and to levy taxes subject to such
property of the public domain in limitations as may be provided by law." The care and circumspection with which the
trust for the State. framers saw to the enjoyment of real local self-government not only in terms of
administration but also in terms of resources is thus manifest. Their intent is
The 1973 Constitution devoted an entire Article, Article XI, consisting of five sections, unmistakable. Unlike the case under the 1935 Constitution, there is thus a clear
to laying down its policy for the empowerment of the local governments. The 1987 manifestation of the presumption now in favor of a local government unit. It is a well-
Constitution, in turn, fully devotes all 21 sections of its Article X for local government. nigh complete departure from what was. Nor should it be ignored that a highly
It introduces significant new provisions, such as the establishment of autonomous urbanized city "shall be independent" not only of the national government but also of
regions (Section 18) and the guarantee of just share of the local governments in the a province. Would it not follow then that under the present dispensation, the moment
national taxes and equitable share in the proceeds from the utilization of the national property is transferred to it by the national government, its control over the same
wealth (Sections 6 and 7). It was unlike in the 1935 Constitution, which simply should be as extensive and as broad as possible, x x x. [59] (Citations omitted)
provided in Section 10 of Article VII, dealing with the Executive Department, that "[t]he
President shall have control of all executive departments, bureaus or offices, exercise
general provision over all local governments as may be provided by law, and take
care that the laws be faithfully executed." Up to that point, it could almost be presumed that Justice Fernando would dissent
from the lucid ponencia of Justice Claudio Teehankee (Justice Teehankee), borne of
The erudite Justice Enrique Fernando (Justice Fernando), in his highly instructive logical doubts as to whether Province of Zamboanga del Norte and Salas still retained
separate concurring opinion in Rabuco,[54] did at first admit to doubts as to the their unimpaired doctrinal force under the then new 1973 Constitution. But two
continuing authoritativeness of Province of Zamboanga del Norte and Salas, both considerations kept him reined in, so to speak. One was Justice Teehankee's
promulgated before the effectivity of the 1973 Constitution, in view of the significant "reference to the ratio decidendi of [Salas] as to the trust character impressed on
innovations introduced therein pertaining to the autonomy of local governments. He communal property of a municipal corporation, even if already titled," [60] "regardless of
stated that the goal of the 1973 Constitution was "the fullest autonomy to local the source of classification of land in the possession of a municipality, excepting
government units consistent with the basic theory of a unitary, not a federal, those acquired with its own funds in its private or corporate capacity." [61] Justice
polity,"[55] hoping thereby to attain "their fullest development as self-reliant Fernando acknowledged that the local government "holds such [communal property]
communities."[56]According to him, under the 1973 Constitution, "[tjhings have subject to the paramount power of the legislature to dispose of the same, for after all
changed radically,"[57] noting that under the 1935 Constitution, "[i]t could hardly be it owes its creation to it as an agent for the performance of a part of its public work,
assumed x x x that x x x the [local governments] could justifiably lay claim to real the municipality being but a subdivision or instrumentality thereof for purposes of local
autonomy."[58] He observed thus: administration."[62]

Rabuco stressed that the properties in controversy were not acquired by the City of
Manila with its own private funds. Thus, according to Justice Fernando, "That [the City
89
of Manila] has in its name a registered title is not questioned, but this title should be
deemed to be held in trust for the State as the land covered thereby was part of the At issue in this petition is Section 24 of R.A. No. 8562, which directs that "[a]ll parcels
territory of the City of Manila granted by the sovereign upon its creation."[63] This of land belonging to the government occupied by the [MLLSAT] and the [BCC] are
doctrine, according to Justice Fernando, has its basis in the Regalian Doctrine and is hereby declared to be the property of the [BPSC] and shall be titled under that name."
unaffected by the grant of extensive local autonomy under the 1973 Constitution. "It is There is no dispute that the Congress has expressly intended to entrust to BPSC the
my view that under the [1973] Constitution, as was the case under the 1935 charter, titles to the subject lots. Being the sole beneficiary of Section 24 of R.A. No. 8562,
the holding of a municipal corporation as a unit of state does not impair the plenary BPSC is the real party in interest, and is entitled to mandamus to enforce its right
power of the national government exercising dominical rights to dispose of it in a thereunder.[68]
manner it sees fit, subject to applicable constitutional limitations as to the citizenship
of the grantee."[64] WHEREFORE, in view of the foregoing, the petition for review
on certiorari is DENIED. The Decision of the Court of Appeals dated February 7, 2006
The other consideration noted by Justice Fernando in the ponencia of Justice in CA-G.R. SP No. 85902 is AFFIRMED.
Teehankee in Rabuco he found further compelling was "the even more fundamental
principle of social justice, which was given further stress and a wider scope in the SO ORDERED.
present Constitution."[65] He concluded that R.A. No. 3120, like R.A. No. 4118, was
intended to implement the social justice policy of the Constitution and the government
program of land for the landless, and was not "intended to expropriate the property
involved but merely to confirm its character as communal land of the State and to
make it available for disposition by the National Government." [66]

G. The Province of Bataan has the

duty to provide an adequate
security for its loans with the LBP,
without defeating BPSC's right to
hold title to the contested lots.

The RTC ordered the Province of Bataan to deliver the owner's duplicate copy of
OCT No. N-182 to the Register of Deeds of Bataan, free from any lien or
encumbrance, to execute the corresponding deed of conveyance in favor of BPSC,
and to cause the transfer and registration of the title to and in the name of the said
college. The Province of Bataan erroneously believed that it could mortgage the
subject lots, notwithstanding that it held the same in trust for the State and despite the
fact that the said lots were actually being occupied by two government schools. As
the RTC urged, then, the Province of Bataan must address this issue of security for
its loans with LBP. It cannot complain that its compliance with the order of the RTC
might violate the non-impairment clause of the Constitution, since its duty to provide a
replacement security for its loans with LBP is clear.

H. BPSC is entitled to a writ of

mandamus.

Section 3, Rule 65 of the 1997 Rules of Civil Procedure provides that a writ of
mandamus shall issue where a tribunal, corporation, board, officer or person
unlawfully neglects the performance of an act which the law specifically enjoins as a
duty, to command the respondent to do the act required to be done to protect the
rights of the petitioner. Herein petitioner has argued that the mandamus applicants
are not entitled thereto because they are not real parties in interest. It is a rule re-
echoed in a long line of cases that every action must be prosecuted or defended in
the name of the real party in interest, meaning "the party who stands to be benefited
or injured by the judgment in the suit, or the party entitled to the avails of the suit." [67]

90
I. CLASSIFICATION OF CORPORATIONS:

(i) Public – organized for the government of a portion of the

State;

(ii) Private – formed for some private purpose, benefit, aim or end;

(iii) Quasi-public – private corporation that renders public service or

supplies public wants.

I1. ELEMENTS OF MUNICIPAL CORPORATIONS:

1. Legal creation or incorporation – there must be a law creating/authorizing

the creation or incorporation of a municipal corporation];

2. Corporate name – name by which the corporation is known;

3. Inhabitants – people residing in the territory of the corporation;

4. Territory – land mass where the inhabitants reside together with internal
and external waters and air space above the land and waters.

J. DUAL NATURE & FUNCTIONS OF MUNICIPAL CORPORATIONS:

Every local government unit created/organized under the Local Government

Code is a BODY POLITIC and CORPORATE endowed with powers to be exercised by
it in conformity with law. As such it shall exercise powers as a political subdivision of
the National Government and as a corporate entity representing the inhabitants of the
territory (Section 15, RA7160). Accordingly, it has dual functions –

(i) public or governmental – acts as an agent of the State for the

government of the territory and the inhabitants; and

(ii) private or proprietary – acts as an agent of the community in the

administration of local affairs, as such, acts as a separate entity for
its own purposes and not as a subdivision of the State.

91
G. R. No. 155027 February 28, 2006 Please be informed that during the preparation of my briefing before the Cabinet and
the President last March 9, 2002, we came across some legal bases which tended to
THE VETERANS FEDERATION OF THE PHILIPPINES represented by Esmeraldo show that there is an organizational and management relationship between Veterans
R. Acorda, Petitioner, Federation of the Philippines and the Philippine Veterans Bank which for many years
vs. have been inadvertently overlooked.
Hon. ANGELO T. REYES in his capacity as Secretary of National Defense; and
Hon. EDGARDO E. BATENGA in his capacity as Undersecretary for Civil I refer to Republic Act 2640 creating the body corporate known as the VFP and
Relations and Administration of the Department of National Republic Act 3518 creating the Phil. Vets [sic] Bank.
Defense, Respondents.
1. RA 2640 dated 18 June 60 Section 1 ... "hereby created a body corporate,
DECISION under the control and supervision of the Secretary of National Defense."

CHICO-NAZARIO, J.: 2. RA 2640 Section 12 ... "On or before the last day of the month following the
end of each fiscal year, the Federation shall make and transmit to the
This is a Petition for Certiorari with Prohibition under Rule 65 of the 1997 Rules of Civil President of the Philippines or to the Secretary of National Defense, a report
Procedure, with a prayer to declare as void Department Circular No. 04 of the of its proceedings for the past year, including a full, complete and itemized
Department of National Defense (DND), dated 10 June 2002. report of receipts and expenditures of whatever kind."

Petitioner in this case is the Veterans Federation of the Philippines (VFP), a corporate 3. Republic Act 3518 dated 18 June 1963 (An Act Creating the Philippine
body organized under Republic Act No. 2640, dated 18 June 1960, as amended, and Veterans Bank, and for Other Purposes) provides in Section 6 that ... "the
duly registered with the Securities and Exchange Commission. Respondent Angelo T. affairs and business of the Philippine Veterans Bank shall be directed and its
Reyes was the Secretary of National Defense (DND Secretary) who issued the assailed property managed, controlled and preserved, unless otherwise provided in
Department Circular No. 04, dated 10 June 2002. Respondent Edgardo E. Batenga this Act, by a Board of Directors consisting of eleven (11) members to be
was the DND Undersecretary for Civil Relations and Administration who was tasked by composed of three ex officio members to wit: the Philippine Veterans
the respondent DND Secretary to conduct an extensive management audit of the Administrator, the President of the Veteran’s Federation of the Philippines and
records of petitioner. the Secretary of National Defense x x x.

The factual and procedural antecedents of this case are as follows: It is therefore in the context of clarification and rectification of what should have been
done by the DND (Department of National Defense) for and about the VFP and PVB
that I am requesting appropriate information and report about these two corporate
Petitioner VFP was created under Rep. Act No. 2640, 1 a statute approved on 18 June bodies.
1960.
Therefore it may become necessary that a conference with your staffs in these two
On 15 April 2002, petitioner’s incumbent president received a letter dated 13 April 2002 bodies be set.
which reads:
Thank you and anticipating your action on this request.
Col. Emmanuel V. De Ocampo (Ret.)
Very truly yours,
President
(SGD) ANGELO T. REYES
Veterans Federation of the Philippines
[DND] Secretary
Makati, Metro Manila
On 10 June 2002, respondent DND Secretary issued the assailed DND Department
Dear Col. De Ocampo: Circular No. 04 entitled, "Further Implementing the Provisions of Sections 1 2 and 23 of
Republic Act No. 2640," the full text of which appears as follows:

92
Department of National Defense Government Owned and Controlled Corporation (GOCC) – refer to any agency
organized as a stock or non-stock corporation, vested with functions relating to public
Department Circular No. 04 needs whether governmental or proprietary in nature, and owned by the government
directly or through its instrumentalities wholly or, where applicable as in the case of
stock corporations, to the extent of at least 50% of its capital stock.
Subject: Further Implementing the Provisions of Sections 1 & 2 of
Fund – sum of money or other resources set aside for the purpose of carrying out
Republic Act No. 2640 specific activities or attaining certain objectives in accordance with special regulations,
restrictions or limitations and constitutes an independent, fiscal and accounting entity.
Authority: Republic Act No. 2640
Government Fund – includes public monies of every sort and other resources
Executive Order No. 292 dated July 25, 1987 pertaining to any agency of the government.

Section 1 Veteran – any person who rendered military service in the land, sea or air forces of the
Philippines during the revolution against Spain, the Philippine American War, World
These rules shall govern and apply to the management and operations of the Veterans War II, including Filipino citizens who served in Allied Forces in the Philippine territory
Federation of the Philippines (VFP) within the context provided by EO 292 s-1987. and foreign nationals who served in Philippine forces; the Korean campaign, the
Vietnam campaign, the Anti-dissidence campaign, or other wars or military campaigns;
or who rendered military service in the Armed Forces of the Philippines and has been
Section 2 – DEFINITION OF TERMS – for the purpose of these rules, the terms, honorably discharged or separated after at least six (6) years total cumulative active
phrases or words used herein shall, unless the context indicates otherwise, mean or service or sooner separated due to the death or disability arising from a wound or injury
be understood as follows: received or sickness or disease incurred in line of duty while in the active service.

Supervision and Control – it shall include authority to act directly whenever a specific Section 3 – Relationship Between the DND and the VFP
function is entrusted by law or regulation to a subordinate; direct the performance of a
duty; restrain the commission of acts; approve, reverse or modify acts and decisions of
subordinate officials or units; determine priorities in the execution of plans and 3.1 Sec 1 of RA 3140 provides "... the following persons (heads of various veterans
programs; and prescribe standards, guidelines, plans and programs. associations and organizations in the Philippines) and their associates and successors
are hereby created a body corporate, under the control and supervision of the Secretary
of National Defense, under the name, style and title of "Veterans Federation of the
Power of Control – power to alter, modify, nullify or set aside what a subordinate officer Philippines ..."
had done in the performance of his duties and to substitute the judgment of the former
to that of the latter.
The Secretary of National Defense shall be charged with the duty of supervising the
veterans and allied program under the jurisdiction of the Department. It shall also have
Supervision – means overseeing or the power of an officer to see to it that their the responsibility of overseeing and ensuring the judicious and effective implementation
subordinate officers perform their duties; it does not allow the superior to annul the acts of veterans assistance, benefits, and utilization of VFP assets.
of the subordinate.
3.2 To effectively supervise and control the corporate affairs of the Federation and to
Administrative Process – embraces matter concerning the procedure in the disposition safeguard the interests and welfare of the veterans who are also wards of the State
of both routine and contested matters, and the matter in which determinations are entrusted under the protection of the DND, the Secretary may personally or through a
made, enforced or reviewed. designated representative, require the submission of reports, documents and other
papers regarding any or all of the Federation’s business transactions particularly those
Government Agency – as defined under PD 1445, a government agency or agency of relating to the VFP functions under Section 2 of RA 2640.
government or "agency" refers to any department, bureau or office of the national
government, or any of its branches or instrumentalities, of any political subdivision, as The Secretary or his representative may attend conferences of the supreme council of
well as any government owned or controlled corporation, including its subsidiaries, or the VFP and such other activities he may deem relevant.
other self-governing board or commission of the government.

93
3.3 The Secretary shall from time to time issue guidelines, directives and other orders b. Report on the proceedings of each Supreme Council Meeting to be
governing vital government activities including, but not limited to, the conduct of submitted not later than one month after the meeting;
elections; the acquisition, management and dispositions of properties, the accounting
of funds, financial interests, stocks and bonds, corporate investments, etc. and such c. Report of the VFP President as may be required by SND or as may be found
other transactions which may affect the interests of the veterans. necessary by the President of the Federation;

3.4 Financial transactions of the Federation shall follow the provisions of the d. Resolutions passed by the Executive Board and the Supreme Council for
government auditing code (PD 1445) i.e. government funds shall be spent or used for confirmation to be submitted not later than one month after the approval of the
public purposes; trust funds shall be available and may be spent only for the specific resolution;
purpose for which the trust was created or the funds received; fiscal responsibility shall,
to the greatest extent, be shared by all those exercising authority over the financial
affairs, transactions, and operations of the federation; disbursements or dispositions of e. After Operation/Activity Reports to be submitted not later than one month
government funds or property shall invariably bear the approval of the proper officials. after such operation or activity;

Section 4 – Records of the FEDERATION Section 6 – Penal Sanctions

As a corporate body and in accordance with appropriate laws, it shall keep and carefully As an attached agency to a regular department of the government, the VFP and all its
preserve records of all business transactions, minutes of meetings of instrumentalities, officials and personnel shall be subject to the penal provisions of such
stockholders/members of the board of directors reflecting all details about such activity. laws, rules and regulations applicable to the attached agencies of the government.

All such records and minutes shall be open to directors, trustees, stockholders, and In a letter dated 6 August 2002 addressed to the President of petitioner, respondent
other members for inspection and copies of which may be requested. DND Secretary reiterated his instructions in his earlier letter of 13 April 2002.

As a body corporate, it shall submit the following: annual report; proceedings of council Thereafter, petitioner’s President received a letter dated 23 August 2002 from
meetings; report of operations together with financial statement of its assets and respondent Undersecretary, informing him that Department Order No. 129 dated 23
liabilities and fund balance per year; statement of revenues and expenses per year; August 2002 directed "the conduct of a Management Audit of the Veterans Federation
statement of cash flows per year as certified by the accountant; and other of the Philippines."4 The letter went on to state that respondent DND Secretary
documents/reports as may be necessary or required by the SND. "believes that the mandate given by said law can be meaningfully exercised if this
department can better appreciate the functions, responsibilities and situation on the
ground and this can be done by undertaking a thorough study of the organization." 5
Section 5 – Submission of Annual and Periodic Report
Respondent Undersecretary also requested both for a briefing and for documents on
As mandated under appropriate laws, the following reports shall be submitted to the personnel, ongoing projects and petitioner’s financial condition. The letter ended by
SND, to wit: stating that, after the briefing, the support staff of the Audit Committee would begin their
work to meet the one-month target within which to submit a report.
a. Annual Report to be submitted not later than every January 31 of the
following year. Said report shall consist of the following: A letter dated 28 August 2003 informed petitioner’s President that the Management
Audit Group headed by the Undersecretary would be paying petitioner a visit on 30
1. Financial Report of the Federation, signed by the Treasurer August 2002 for an update on VFP’s different affiliates and the financial statement of
General and Auditor General; the Federation.

2. Roster of Members of the Supreme Council; Subsequently, the Secretary General of the VFP sent an undated letter to respondent
DND Secretary, with notice to respondent Undersecretary for Civil Relations and
3. Roster of Members of the Executive Board and National Officers; Administration, complaining about the alleged broadness of the scope of the
and management audit and requesting the suspension thereof until such time that specific
areas of the audit shall have been agreed upon.
4. Current listing of officers and management of VFP.

94
The request was, however, denied by the Undersecretary in a letter dated 4 September civil action for certiorari with the Court of Appeals assailing the RTC order denying his
2002 on the ground that a specific timeframe had been set for the activity. motion to dismiss based on lack of jurisdiction.

Petitioner thus filed this Petition for Certiorari with Prohibition under Rule 65 of the 1997 The petition itself, in this case, does not specifically and sufficiently set forth the special
Rules of Civil Procedure, praying for the following reliefs: and important reasons why the Court should give due course to this petition in the first
instance, hereby failing to fulfill the conditions set forth in Commissioner of Internal
1. For this Court to issue a temporary restraining order and a writ of preliminary Revenue v. Leal.10 While we reiterate the policies set forth in Leal and allied cases and
prohibitory and mandatory injunction to enjoin respondent Secretary and all continue to abhor the propensity of a number of litigants to disregard the principle of
those acting under his discretion and authority from: (a) implementing DND hierarchy of courts in our judicial system, we, however, resolve to take judicial notice
Department Circular No. 04; and (b) continuing with the ongoing management of the fact that the persons who stand to lose in a possible protracted litigation in this
audit of petitioner’s books of account; case are war veterans, many of whom have precious little time left to enjoy the benefits
that can be conferred by petitioner corporation. This bickering for the power over
petitioner corporation, an entity created to represent and defend the interests of Filipino
2. After hearing the issues on notice – veterans, should be resolved as soon as possible in order for it to once and for all direct
its resources to its rightful beneficiaries all over the country. All these said, we hereby
a. Declare DND Department Circular No. 04 as null and void for resolve to give due course to this petition.
being ultra vires;
ISSUES
b. Convert the writ of prohibition, preliminary prohibitory and
mandatory injunction into a permanent one.6 Petitioner mainly alleges that the rules and guidelines laid down in the assailed
Department Circular No. 04 expanded the scope of "control and supervision" beyond
GIVING DUE COURSE TO THE PETITION what has been laid down in Rep. Act No. 2640.11 Petitioner further submits the following
issues to this Court:
Petitioner asserts that, although cases which question the constitutionality or validity of
administrative issuances are ordinarily filed with the lower courts, the urgency and 1. Was the challenged department circular passed in the valid exercise of the
substantive importance of the question on hand and the public interest attendant to the respondent Secretary’s "control and supervision"?
subject matter of the petition justify its being filed with this Court directly as an original
action.7 2. Could the challenged department circular validly lay standards classifying
the VFP, an essentially civilian organization, within the ambit of statutes only
It is settled that the Regional Trial Court and the Court of Appeals also exercise original applying to government entities?
jurisdiction over petitions for certiorari and prohibition. As we have held in numerous
occasions, however, such concurrence of original jurisdiction does not mean that the 3. Does the department circular, which grants respondent direct management
party seeking extraordinary writs has the absolute freedom to file his petition in the control on the VFP, unduly encroach on the prerogatives of VFP’s governing
court of his choice.8 Thus, in Commissioner of Internal Revenue v. Leal,9 we held that: body?

Such concurrence of original jurisdiction among the Regional Trial Court, the Court of At the heart of all these issues and all of petitioner’s prayers and assertions in this case
Appeals and this Court, however, does not mean that the party seeking any of the is petitioner’s claim that it is a private non-government corporation.
extraordinary writs has the absolute freedom to file his petition in the court of his choice.
The hierarchy of courts in our judicial system determines the appropriate forum for
these petitions. Thus, petitions for the issuance of the said writs against the first level CENTRAL ISSUE:
(inferior) courts must be filed with the Regional Trial Court and those against the latter,
with the Court of Appeals. A direct invocation of this Court’s original jurisdiction to issue IS THE VFP A PRIVATE CORPORATION?
these writs should be allowed only where there are special and important reasons
therefor, specifically and sufficiently set forth in the petition. This is the established Petitioner claims that it is not a public nor a governmental entity but a private
policy to prevent inordinate demands upon the Court’s time and attention, which are organization, and advances this claim to prove that the issuance of DND Department
better devoted to matters within its exclusive jurisdiction, and to prevent further over- Circular No. 04 is an invalid exercise of respondent Secretary’s control and
crowding of the Court’s docket. Thus, it was proper for petitioner to institute the special supervision.12

95
This Court has defined the power of control as "the power of an officer to alter or modify 1. The VFP does not possess the elements which would qualify it as a public
or nullify or set aside what a subordinate has done in the performance of his duties and office, particularly the possession/delegation of a portion of sovereign power
to substitute the judgment of the former to that of the latter."13 The power of supervision, of government to be exercised for the benefit of the public;
on the other hand, 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, 2. VFP funds are not public funds because –
the former may take such action or step as prescribed by law to make them perform
their duties."14 These definitions are synonymous with the definitions in the assailed
Department Circular No. 04, while the other provisions of the assailed department a) No budgetary appropriations or government funds have been
circular are mere consequences of control and supervision as defined. released to the VFP directly or indirectly from the Department of
Budget and Management (DBM);
Thus, in order for petitioner’s premise to be able to support its conclusion, petitioners
should be deemed to imply either of the following: (1) that it is b) VFP funds come from membership dues;
unconstitutional/impermissible for the law (Rep. Act No. 2640) to grant control and/or
supervision to the Secretary of National Defense over a private organization, or (2) that c) The lease rentals raised from the use of government lands
the control and/or supervision that can be granted to the Secretary of National Defense reserved for the VFP are private in character and do not belong to
over a private organization is limited, and is not as strong as they are defined above. the government. Said rentals are fruits of VFP’s labor and efforts in
managing and administering the lands for VFP purposes and
The following provision of the 1935 Constitution, the organic act controlling at the time objectives. A close analogy would be any Filipino citizen settling on
of the creation of the VFP in 1960, is relevant: government land and who tills the land for his livelihood and
sustenance. The fruits of his labor belong to him and not to the owner
of the land. Such fruits are not public funds.
Section 7. The Congress shall not, except by general law, provide for the formation,
organization, or regulation of private corporations, unless such corporations are owned
and controlled by the Government or any subdivision or instrumentality thereof. 15 3. Although the juridical personality of the VFP emanates from a statutory
charter, the VFP retains its essential character as a private, civilian federation
of veterans voluntarily formed by the veterans themselves to attain a unity of
On the other hand, its counterparts in the 1973 and 1987 constitutions are the following: effort, purpose and objectives, e.g. –

Section 4. The National Assembly shall not, except by general law, provide for the a. The members of the VFP are individual members and retirees from
formation, organization, or regulation of private corporations, unless such corporations the public and military service;
are owned or controlled by the government or any subdivision or instrumentality
thereof.16
b. Membership in the VFP is voluntary, not compulsory;
Sec. 16. The Congress shall not, except by general law, provide for the formation,
organization, or regulation of private corporations. Government-owned and controlled c. The VFP is governed, not by the Civil Service Law, the Articles of
corporations may be created or established by special charters in the interest of the War nor the GSIS Law, but by the Labor Code and the SSS Law;
common good and subject to the test of economic viability. 17
d. The VFP has its own Constitution and By-Laws and is governed
From the foregoing, it is crystal clear that our constitutions explicitly prohibit the by a Supreme Council who are elected from and by the members
regulation by special laws of private corporations, with the exception of government- themselves;
owned or controlled corporations (GOCCs). Hence, it would be impermissible for the
law to grant control of the VFP to a public official if it were neither a public corporation, 4. The Administrative Code of 1987 does not provide that the VFP is an
an unincorporated governmental entity, nor a GOCC. 18 Said constitutional provisions attached agency, nor does it provide that it is an entity under the control and
can even be read to prohibit the creation itself of the VFP if it were neither of the three supervision of the DND in the context of the provisions of said code.
mentioned above, but we cannot go into that in this case since there is no challenge to
the creation of the VFP in the petition as to permit this Court from considering its nullity. 5. The DBM declared that the VFP is a non-government organization and
issued a certificate that the VFP has not been a direct recipient of any funds
Petitioner vigorously argues that the VFP is a private non-government organization, released by the DBM.
pressing on the following contentions:

96
These arguments of petitioner notwithstanding, we are constrained to rule that or judicial, attaches, for the time being, to be exercised for the public benefit. Unless
petitioner is in fact a public corporation. Before responding to petitioner’s allegations the powers conferred are of this nature, the individual is not a public officer. 24 The issue,
one by one, here are the more evident reasons why the VFP is a public corporation: therefore, is whether the VFA’s officers have been delegated some portion of the
sovereignty of the country, to be exercised for the public benefit.
(1) Rep. Act No. 2640 is entitled "An Act to Create a Public Corporation to be
Known as the Veterans Federation of the Philippines, Defining its Powers, and In several cases, we have dealt with the issue of whether certain specific activities can
for Other Purposes." be classified as sovereign functions. These cases, which deal with activities not
immediately apparent to be sovereign functions, upheld the public sovereign nature of
(2) Any action or decision of the Federation or of the Supreme Council shall operations needed either to promote social justice25 or to stimulate patriotic sentiments
be subject to the approval of the Secretary of Defense.19 and love of country.26

(3) The VFP is required to submit annual reports of its proceedings for the As regards the promotion of social justice as a sovereign function, we held in
past year, including a full, complete and itemized report of receipts and Agricultural Credit and Cooperative Financing Administration (ACCFA) v.
expenditures of whatever kind, to the President of the Philippines or to the Confederation of Unions in Government Corporations and Offices (CUGCO), 27that the
Secretary of National Defense.20 compelling urgency with which the Constitution speaks of social justice does not leave
any doubt that land reform is not an optional but a compulsory function of sovereignty.
The same reason was used in our declaration that socialized housing is likewise a
(4) Under Executive Order No. 37 dated 2 December 1992, the VFP was listed sovereign function.28 Highly significant here is the observation of former Chief Justice
as among the government-owned and controlled corporations that will not be Querube Makalintal:
privatized.
The growing complexities of modern society, however, have rendered this traditional
(5) In Ang Bagong Bayani – OFW Labor Party v. COMELEC,21 this Court held classification of the functions of government [into constituent and ministrant functions]
in a minute resolution that the "VFP [Veterans Federation Party] is an adjunct quite unrealistic, not to say obsolete. The areas which used to be left to private
of the government, as it is merely an incarnation of the Veterans Federation enterprise and initiative and which the government was called upon to enter optionally,
of the Philippines. and only "because it was better equipped to administer for the public welfare than is
any private individual or group of individuals," continue to lose their well-defined
And now to answer petitioner’s reasons for insisting that it is a private corporation: boundaries and to be absorbed within activities that the government must undertake in
its sovereign capacity if it is to meet the increasing social challenges of the times.
1. Petitioner claims that the VFP does not possess the elements which would qualify it Here[,] as almost everywhere else[,] the tendency is undoubtedly towards a greater
as a public office, particularly the possession/delegation of a portion of sovereign power socialization of economic forces. Here, of course, this development was envisioned,
of government to be exercised for the benefit of the public; indeed adopted as a national policy, by the Constitution itself in its declaration of
principle concerning the promotion of social justice. 29 (Emphasis supplied.)

In Laurel v. Desierto,22 we adopted the definition of Mechem of a public office, that it is

"the right, authority and duty, created and conferred by law, by which, for a given period, It was, on the other hand, the fact that the National Centennial Celebrations was
either fixed by law or enduring at the pleasure of the creating power, an individual is calculated to arouse and stimulate patriotic sentiments and love of country that it was
invested with some portion of the sovereign functions of the government, to be considered as a sovereign function in Laurel v. Desierto.30 In Laurel, the Court then
exercised by him for the benefit of the public." took its cue from a similar case in the United States involving a Fourth of July fireworks
display. The holding of the Centennial Celebrations was held to be an executive
function, as it was intended to enforce Article XIV of the Constitution which provides for
In the same case, we went on to adopt Mechem’s view that the delegation to the the conservation, promotion and popularization of the nation’s historical and cultural
individual of some of the sovereign functions of government is "[t]he most important heritage and resources, and artistic relations.
characteristic" in determining whether a position is a public office or not. 23 Such portion
of the sovereignty of the country, either legislative, executive or judicial, must attach to
the office for the time being, to be exercised for the public benefit. Unless the powers In the case at bar, the functions of petitioner corporation enshrined in Section 4 of Rep.
conferred are of this nature, the individual is not a public officer. The most important Act No. 264031 should most certainly fall within the category of sovereign functions. The
characteristic which distinguishes an office from an employment or contract is that the protection of the interests of war veterans is not only meant to promote social justice,
creation and conferring of an office involves a delegation to the individual of some of but is also intended to reward patriotism. All of the functions in Section 4 concern the
the sovereign functions of government, to be exercised by him for the benefit of the well-being of war veterans, our countrymen who risked their lives and lost their limbs in
public; – that some portion of the sovereignty of the country, either legislative, executive fighting for and defending our nation. It would be injustice of catastrophic proportions
to say that it is beyond sovereignty’s power to reward the people who defended her.
97
Like the holding of the National Centennial Celebrations, the functions of the VFP are (6) Section 12 requires the submission of annual reports of VFP proceedings
executive functions, designed to implement not just the provisions of Rep. Act No. for the past year, including a full, complete and itemized report of receipts and
2640, but also, and more importantly, the Constitutional mandate for the State to expenditures of whatever kind, to the President of the Philippines or to the
provide immediate and adequate care, benefits and other forms of assistance to war Secretary of National Defense.
veterans and veterans of military campaigns, their surviving spouses and orphans. 32
It is important to note here that the membership dues collected from the individual
2. Petitioner claims that VFP funds are not public funds. members of VFP’s affiliate organizations do not become public funds while they are still
funds of the affiliate organizations. A close reading of Section 135 of Rep. Act No. 2640
Petitioner claims that its funds are not public funds because no budgetary reveals that what has been created as a body corporate is not the individual
appropriations or government funds have been released to the VFP directly or indirectly membership of the affiliate organizations, but merely the aggregation of the heads of
from the DBM, and because VFP funds come from membership dues and lease rentals the affiliate organizations. Thus, only the money remitted by the affiliate organizations
earned from administering government lands reserved for the VFP. to the VFP partake in the public nature of the VFP funds.

The fact that no budgetary appropriations have been released to the VFP does not In Republic v. COCOFED,36 we held that the Coconut Levy Funds are public funds
prove that it is a private corporation. The DBM indeed did not see it fit to propose because, inter alia, (1) they were meant to be for the benefit of the coconut industry,
budgetary appropriations to the VFP, having itself believed that the VFP is a private one of the major industries supporting the national economy, and its farmers; and (2)
corporation.33 If the DBM, however, is mistaken as to its conclusion regarding the the very laws governing coconut levies recognize their public character. The same is
nature of VFP’s incorporation, its previous assertions will not prevent future budgetary true with regard to the VFP funds. No less public is the use for the VFP funds, as such
appropriations to the VFP. The erroneous application of the law by public officers does use is limited to the purposes of the VFP which we have ruled to be sovereign functions.
not bar a subsequent correct application of the law.34 Likewise, the law governing VFP funds (Rep. Act No. 2640) recognizes the public
character of the funds as shown in the enumerated provisions above.
Nevertheless, funds in the hands of the VFP from whatever source are public funds,
and can be used only for public purposes. This is mandated by the following provisions We also observed in the same COCOFED case that "(e)ven if the money is allocated
of Rep. Act No. 2640: for a special purpose and raised by special means, it is still public in character."37 In the
case at bar, some of the funds were raised by even more special means, as the
contributions from affiliate organizations of the VFP can hardly be regarded as enforced
(1) Section 2 provides that the VFP can only "invest its funds for the exclusive contributions as to be considered taxes. They are more in the nature of donations which
benefit of the Veterans of the Philippines;" have always been recognized as a source of public funding. Affiliate organizations of
the VFP cannot complain of their contributions becoming public funds upon the receipt
(2) Section 2 likewise provides that "(a)ny action or decision of the Federation by the VFP, since they are presumed aware of the provisions of Rep. Act No. 2640
or of the Supreme Council shall be subject to the approval of the Secretary of which not only specifies the exclusive purposes for which VFP funds can be used, but
National Defense." Hence, all activities of the VFP to which the Supreme also provides for the regulation of such funds by the national government through the
Council can apply its funds are subject to the approval of the Secretary of Secretary of National Defense. There is nothing wrong, whether legally or morally, from
National Defense; raising revenues through non-traditional methods. As remarked by Justice Florentino
Feliciano in his concurring opinion in Kilosbayan, Incorporated v. Guingona, Jr.38 where
(3) Section 4 provides that "the Federation shall exist solely for the purposes he explained that the funds raised by the On-line Lottery System were also public in
of a benevolent character, and not for the pecuniary benefit of its nature, thus:
members;"1avvphil.net
x x x [T]he more successful the government is in raising revenues by non-traditional
(4) Section 6 provides that all funds of the VFP in excess of operating methods such as PAGCOR operations and privatization measures, the lesser will be
expenses are "reserved for disbursement, as the Supreme Council may the pressure upon the traditional sources of public revenues, i.e., the pocket books of
authorize, for the purposes stated in Section two of this Act;" individual taxpayers and importers.

(5) Section 10 provides that "(a)ny donation or contribution which from time to Petitioner additionally harps on the inapplicability of the case of Laurel v.
time may be made to the Federation by the Government of the Philippines or Desierto39 which was cited by Respondents. Petitioner claims that among the reasons
any of its subdivisions, branches, offices, agencies or instrumentalities shall National Centennial Commission Chair Salvador Laurel was considered a public officer
be expended by the Supreme Council only for the purposes mentioned in this was the fact that his compensation was derived from public funds. Having ruled that
Act."; and finally, VFP funds from whatever source are public funds, we can safely conclude that the
Supreme Council’s compensation, taken as they are from VFP funds under the term
98
"operating expenses" in Section 6 of Rep. Act No. 2640, are derived from public funds. Respondents claim that the supposed declaration of the DBM that petitioner is a non-
The particular nomenclature of the compensation taken from VFP funds is not even of government organization is not persuasive, since DBM is not a quasi-judicial agency.
relevance here. As we said in Laurel concerning compensation as an element of public They aver that what we have said of the Bureau of Local Government Finance (BLGF)
office: in Philippine Long Distance Telephone Company (PLDT) v. City of Davao 47 can be
applied to DBM:
Under particular circumstances, "compensation" has been held to include allowance
for personal expenses, commissions, expenses, fees, an honorarium, mileage or In any case, it is contended, the ruling of the Bureau of Local Government Finance
traveling expenses, payments for services, restitution or a balancing of accounts, (BLGF) that petitioner’s exemption from local taxes has been restored is a
salary, and wages.40 contemporaneous construction of Section 23 [of R.A. No. 7925 and, as such, is entitled
to great weight.
3. Petitioner argues that it is a civilian federation where membership is voluntary.
The ruling of the BLGF has been considered in this case. But unlike the Court of Tax
Petitioner claims that the Secretary of National Defense "historically did not indulge in Appeals, which is a special court created for the purpose of reviewing tax cases, the
the direct or ‘micromanagement’ of the VFP precisely because it is essentially a civilian BLGF was created merely to provide consultative services and technical assistance to
organization where membership is voluntary."41 This reliance of petitioner on what has local governments and the general public on local taxation and other related matters.
"historically" been done is erroneous, since laws are not repealed by disuse, custom, Thus, the rule that the "Court will not set aside conclusions rendered by the CTA, which
or practice to the contrary.42 Furthermore, as earlier stated, the erroneous application is, by the very nature of its function, dedicated exclusively to the study and
of the law by public officers does not bar a subsequent correct application of the law.43 consideration of tax problems and has necessarily developed an expertise on the
subject, unless there has been an abuse or improvident exercise of authority" cannot
apply in the case of the BLGF.
Neither is the civilian nature of VFP relevant in this case. The Constitution does not
contain any prohibition, express or implied, against the grant of control and/or
supervision to the Secretary of National Defense over a civilian organization. The Office On this score, though, we disagree with respondents and hold that the DBM’s appraisal
of the Secretary of National Defense is itself a civilian office, its occupant being an alter is considered persuasive. Respondents misread the PLDT case in asserting that only
ego of the civilian Commander-in-Chief. This set-up is the manifestation of the quasi-judicial agencies’ determination can be considered persuasive. What the PLDT
constitutional principle that civilian authority is, at all times, supreme over the case points out is that, for an administrative agency’s opinion to be persuasive, the
military.44 There being no such constitutional prohibition, the creation of a civilian public administrative agency involved (whether it has quasi-judicial powers or not) must be an
organization by Rep. Act No. 2640 is not rendered invalid by its being placed under the expert in the field they are giving their opinion on.
control and supervision of the Secretary of National Defense.
The DBM is indeed an expert on determining what the various government agencies
Petitioner’s stand that the VFP is a private corporation because membership thereto is and corporations are. This determination is necessary for the DBM to fulfill its mandate:
voluntary is likewise erroneous. As stated above, the membership of the VFP is not the
individual membership of the affiliate organizations, but merely the aggregation of the Sec. 2. Mandate. - The Department shall be responsible for the formulation and
heads of such affiliate organizations. These heads forming the VFP then elect the implementation of the National Budget with the goal of attaining our national socio-
Supreme Council and the other officers,45 of this public corporation. economic plans and objectives.

4. Petitioner claims that the Administrative Code of 1987 does not provide that the VFP The Department shall be responsible for the efficient and sound utilization of
is an attached agency, and nor does it provide that it is an entity under the control and government funds and revenues to effectively achieve our country's development
supervision of the DND in the context of the provisions of said code. objectives.48

The Administrative Code, by giving definitions of the various entities covered by it, The persuasiveness of the DBM opinion has, however, been overcome by all the
acknowledges that its enumeration is not exclusive. The Administrative Code could not previous explanations we have laid so far. It has also been eclipsed by another similarly
be said to have repealed nor enormously modified Rep. Act No. 2640 by implication, persuasive opinion, that of the Department of National Defense embodied in
as such repeal or enormous modification by implication is not favored in statutory Department Circular No. 04. The DND is clearly more of an expert with respect to the
construction.46 determination of the entities under it, and its Administrative Rules and Regulations are
entitled to great respect and have in their favor the presumption of legality.49
5. Petitioner offers as evidence the DBM opinion that the VFP is a non-government
organization in its certification that the VFP "has not been a direct recipient of any funds The DBM opinion furthermore suffers from its lack of explanation and justification in the
released by the DBM." "certification of non-receipt" where said opinion was given. The DBM has not furnished,
99
in said certification or elsewhere, an explanation for its opinion that VFP is a non- as well as Section 3.3 which allows the Secretary of DND to
government organization.
x x x [F]rom time to time issue guidelines, directives and other orders governing vital
THE FATE OF DEPARTMENT CIRCULAR NO. 04 government activities including, but not limited to, the conduct of elections, the
acquisition, management and dispositions of properties, the accounting of funds,
Our ruling that petitioner is a public corporation is determinative of whether or not we financial interests, stocks and bonds, corporate investments, etc. and such other
should grant petitioner’s prayer to declare Department Circular No. 04 void. transactions which may affect the interests of the veterans.

Petitioner assails Department Circular No. 04 on the ground that it expanded the scope are merely consequences of both the power of control and supervision granted by Rep.
of control and supervision beyond what has been laid down in Rep. Act No. 2640. Act No. 2640. The power to alter or modify or nullify or set aside what a subordinate
Petitioner alleges that "(t)he equation of the meaning of `control’ and `supervision’ of has done in the performance of his duties, or to see to it that subordinate officers
the Administrative Code of 1987 as the same `control and supervision’ under Rep. Act perform their duties in accordance with law, necessarily requires the ability of the
No. 2640, takes out the context of the original legislative intent from the peculiar superior officer to monitor, as closely as it desires, the acts of the subordinate.
surrounding circumstances and conditions that brought about the creation of the
VFP."50 Petitioner claims that the VFP "was intended as a self-governing autonomous The same is true with respect to Sections 4 and 5 of the assailed Department Circular
body with a Supreme Council as governing authority," and that the assailed circular No. 04, which requires the preservation of the records of the Federation and the
"pre-empts VFP’s original self-governance and autonomy (in) representing veterans submission to the Secretary of National Defense of annual and periodic reports.
organizations, and substitutes government discretion and decisions to that of the
veterans’ own determination."51 Petitioner says that the circular’s provisions practically Petitioner likewise claims that the assailed DND Department Circular No. 04 was never
render the Supreme Council inutile, despite its being the statutory governing body of published, and hence void.57 Respondents deny such non-publication.58
the VFP.52
We have put forth both the rule and the exception on the publication of administrative
As previously mentioned, this Court has defined the power of control as "the power of rules and regulations in the case of Tañada v. Tuvera: 59
an officer to alter or modify or nullify or set aside what a subordinate has done in the
performance of his duties and to substitute the judgment of the former to that of the
latter."53 The power of supervision, on the other hand, means "overseeing, or the power x x x Administrative rules and regulations must also be published if their purpose is to
or authority of an officer to see that subordinate officers perform their duties." 54 Under enforce or implement existing law pursuant also to a valid delegation.
the Administrative Code of 1987:55
Interpretative regulations and those merely internal in nature, that is, regulating only
Supervision and control shall include the authority to act directly whenever a specific the personnel of the administrative agency and not the public, need not be published.
function is entrusted by law or regulation to a subordinate; direct the performance of Neither is publication required of the so-called letters of instructions issued by
duty; restrain the commission of acts; review, approve, reverse or modify acts and administrative superiors concerning the rules on guidelines to be followed by their
decisions of subordinate officials or units; determine priorities in the execution of plans subordinates in the performance of their duties.
and programs; and prescribe standards, guidelines, plans and programs. x x x
Even assuming that the assailed circular was not published, its validity is not affected
The definition of the power of control and supervision under Section 2 of the assailed by such non-publication for the reason that its provisions fall under two of the
Department Circular are synonymous with the foregoing definitions. Consequently, and exceptions enumerated in Tañada.
considering that petitioner is a public corporation, the provisions of the assailed
Department Circular No. 04 did not supplant nor modify the provisions of Republic Act Department Circular No. 04 is an internal regulation. As we have ruled, they are meant
No. 2640, thus not violating the settled rule that "all such (administrative) issuances to regulate a public corporation under the control of DND, and not the public in general.
must not override, but must remain consistent and in harmony with the law they seek As likewise discussed above, what has been created as a body corporate by Rep. Act
to apply or implement. Administrative rules and regulations are intended to carry out, No. 2640 is not the individual membership of the affiliate organizations of the VFP, but
neither to supplant nor to modify, the law."56 merely the aggregation of the heads of the affiliate organizations. Consequently, the
individual members of the affiliate organizations, who are not public officers, are beyond
Section 3.2 of the assailed department circular, which authorizes the Secretary of the regulation of the circular.
National Defense to "x x x personally or through a designated representative, require
the submission of reports, documents and other papers regarding any or all of the Sections 2, 3 and 6 of the assailed circular are additionally merely interpretative in
Federation’s business functions, x x x." nature. They add nothing to the law. They do not affect the substantial rights of any
100
person, whether party to the case at bar or not. In Sections 2 and 3, control and SO ORDERED.
supervision are defined, mentioning actions that can be performed as consequences
of such control and supervision, but without specifying the particular actions that shall
be rendered to control and supervise the VFP. Section 6, in the same vein, merely state
what the drafters of the circular perceived to be consequences of being an attached
agency to a regular department of the government, enumerating sanctions and
remedies provided by law that may be availed of whenever desired.

Petitioner then objects to the implementation of Sec. 3.4 of the assailed Department
Circular, which provides that –

3.4 Financial transactions of the Federation shall follow the provisions of the
government auditing code (PD 1445) i.e. government funds shall be spent or used for
public purposes; trust funds shall be available and may be spent only for the specific
purpose for which the trust was created or the funds received; fiscal responsibility shall,
to the greatest extent, be shared by all those exercising authority over the financial
affairs, transactions, and operations of the federation; disbursements or dispositions of
government funds or property shall invariably bear the approval of the proper officials.

Since we have also previously determined that VFP funds are public funds, there is
likewise no reason to declare this provision invalid. Section 3.4 is correct in requiring
the VFP funds to be used for public purposes, but only insofar the term "public
purposes" is construed to mean "public purposes enumerated in Rep. Act No. 2640."

Having in their possession public funds, the officers of the VFP, especially its fiscal
officers, must indeed share in the fiscal responsibility to the greatest extent.

As to petitioner’s allegation that VFP was intended as a self-governing autonomous

body with a Supreme Council as governing authority, we find that the provisions of Rep.
Act No. 2640 concerning the control and supervision of the Secretary of National
Defense clearly withholds from the VFP complete autonomy. To say, however, that
such provisions render the VFP inutile is an exaggeration. An office is not rendered
inutile by the fact that it is placed under the control of a higher office. These subordinate
offices, such as the executive offices under the control of the President, exercise
discretion at the first instance. While their acts can be altered or even set aside by the
superior, these acts are effective and are deemed the acts of the superior until they are
modified. Surely, we cannot say that the offices of all the Department Secretaries are
worthless positions.

In sum, the assailed DND Department Circular No. 04 does not supplant nor modify
and is, on the contrary, perfectly in consonance with Rep. Act No. 2640. Petitioner VFP
is a public corporation. As such, it can be placed under the control and supervision of
the Secretary of National Defense, who consequently has the power to conduct an
extensive management audit of petitioner corporation.

WHEREFORE, the Petition is hereby DISMISSED for lack of merit. The validity of the
Department of National Defense Department Circular No. 04 is AFFIRMED.

101
G.R. No. L-55963 December 1, 1989 First Instance of Nueva Ecija, Branch VIII at San Jose City, for damages in connection
with the death of their son resulting from the aforestated accident.
SPOUSES JOSE FONTANILLA AND VIRGINIA FONTANILLA, petitioners,
vs. After trial, the trial court rendered judgment on March 20, 1980 which directed
HONORABLE INOCENCIO D. MALIAMAN and NATIONAL IRRIGATION respondent National Irrigation Administration to pay damages (death benefits) and
ADMINISTRATION, respondents. actual expenses to petitioners. The dispositive portion of the decision reads thus:

G.R. No. L-61045 December 1, 1989 . . . . . Judgment is here rendered ordering the defendant National
Irrigation Administration to pay to the heirs of the deceased
NATIONAL IRRIGATION ADMINISTRATION, appellant, P12,000.00 for the death of Francisco Fontanilla; P3,389.00 which
vs. the parents of the deceased had spent for the hospitalization and
SPOUSES JOSE FONTANILLA and VIRGINIA FONTANILLA, appellees. burial of the deceased Francisco Fontanilla; and to pay the costs.
(Brief for the petitioners spouses Fontanilla, p. 4; Rollo, p. 132)
Cecilio V. Suarez, Jr. for Spouses Fontanilla.
Respondent National Irrigation Administration filed on April 21, 1980, its motion for
reconsideration of the aforesaid decision which respondent trial court denied in its
Felicisimo C. Villaflor for NIA. Order of June 13, 1980. Respondent National Irrigation Administration thus appealed
said decision to the Court of Appeals (C.A.-G.R. No. 67237- R) where it filed its brief
PARAS, J.: for appellant in support of its position.

In G.R. No. L-55963, the petition for review on certiorari seeks the affirmance of the Instead of filing the required brief in the aforecited Court of Appeals case, petitioners
decision dated March 20, 1980 of the then Court of First Instance of Nueva Ecija, filed the instant petition with this Court.
Branch VIII, at San Jose City and its modification with respect to the denial of
petitioner's claim for moral and exemplary damages and attorneys fees. The sole issue for the resolution of the Court is: Whether or not the award of moral
damages, exemplary damages and attorney's fees is legally proper in a complaint for
In G.R. No. 61045, respondent National Irrigation Administration seeks the reversal of damages based on quasi-delict which resulted in the death of the son of herein
the aforesaid decision of the lower court. The original appeal of this case before the petitioners.
Court of Appeals was certified to this Court and in the resolution of July 7, 1982, it was
docketed with the aforecited number. And in the resolution of April 3, this case was Petitioners allege:
consolidated with G.R. No. 55963.
1. The award of moral damages is specifically allowable. under
It appears that on August 21, 1976 at about 6:30 P.M., a pickup owned and operated paragraph 3 of Article 2206 of the New Civil Code which provides
by respondent National Irrigation Administration, a government agency bearing Plate that the spouse, legitimate and illegitimate descendants and
No. IN-651, then driven officially by Hugo Garcia, an employee of said agency as its ascendants of the deceased may demand moral damages for mental
regular driver, bumped a bicycle ridden by Francisco Fontanilla, son of herein anguish by reason of the death of the deceased. Should moral
petitioners, and Restituto Deligo, at Maasin, San Jose City along the Maharlika damages be granted, the award should be made to each of
Highway. As a result of the impact, Francisco Fontanilla and Restituto Deligo were petitioners-spouses individually and in varying amounts depending
injured and brought to the San Jose City Emergency Hospital for treatment. Fontanilla upon proof of mental and depth of intensity of the same, which should
was later transferred to the Cabanatuan Provincial Hospital where he died. not be less than P50,000.00 for each of them.

Garcia was then a regular driver of respondent National Irrigation Administration who, 2. The decision of the trial court had made an impression that
at the time of the accident, was a licensed professional driver and who qualified for respondent National Irrigation Administration acted with gross
employment as such regular driver of respondent after having passed the written and negligence because of the accident and the subsequent failure of the
oral examinations on traffic rules and maintenance of vehicles given by National National Irrigation Administration personnel including the driver to
Irrigation Administration authorities. stop in order to give assistance to the, victims. Thus, by reason of
the gross negligence of respondent, petitioners become entitled to
The within petition is thus an off-shot of the action (Civil Case No. SJC-56) instituted by exemplary damages under Arts. 2231 and 2229 of the New Civil
petitioners-spouses on April 17, 1978 against respondent NIA before the then Court of Code.
102
 3. Petitioners are entitled to an award of attorney's fees, the amount Irrigation Administration, however, avers that it cannot be held liable
of which (20%) had been sufficiently established in the hearing of for the damages because it is an agency of the State performing
May 23, 1979. governmental functions and driver Hugo Garcia was a regular driver
of the vehicle, not a special agent who was performing a job or act
4. This petition has been filed only for the purpose of reviewing the foreign to his usual duties. Hence, the liability for the tortious act
findings of the lower court upon which the disallowance of moral should. not be borne by respondent government agency but by driver
damages, exemplary damages and attorney's fees was based and Garcia who should answer for the consequences of his act.
not for the purpose of disturbing the other findings of fact and
conclusions of law. 6. Even as the trial court touched on the failure or laxity of respondent
National Irrigation Administration in exercising due diligence in the
The Solicitor General, taking up the cudgels for public respondent National Irrigation selection and supervision of its employee, the matter of due diligence
Administration, contends thus: is not an issue in this case since driver Garcia was not its special
agent but a regular driver of the vehicle.
1. The filing of the instant petition is rot proper in view of the appeal
taken by respondent National Irrigation Administration to the Court The sole legal question on whether or not petitioners may be entitled to an award of
of Appeals against the judgment sought to be reviewed. The focal moral and exemplary damages and attorney's fees can very well be answered with the
issue raised in respondent's appeal to the Court of Appeals involves application of Arts. 2176 and 2180 of theNew Civil Code.
the question as to whether or not the driver of the vehicle that
bumped the victims was negligent in his operation of said vehicle. It Art. 2176 thus provides:
thus becomes necessary that before petitioners' claim for moral and
exemplary damages could be resolved, there should first be a finding Whoever by act omission causes damage to another, there being
of negligence on the part of respondent's employee-driver. In this fault or negligence, is obliged to pay for damage done. Such fault or
regard, the Solicitor General alleges that the trial court decision does negligence, if there is no pre-existing cotractual relation between the
not categorically contain such finding. parties, is called a quasi-delict and is governed by the provisions of
this Chapter
2. The filing of the "Appearance and Urgent Motion For Leave to File
Plaintiff-Appellee's Brief" dated December 28, 1981 by petitioners in Paragraphs 5 and 6 of Art. 21 80 read as follows:
the appeal (CA-G.R. No. 67237-R; and G. R. No.61045) of the
respondent National Irrigation Administration before the Court of
Appeals, is an explicit admission of said petitioners that the herein Employers shall be liable for the damages caused by their
petition, is not proper. Inconsistent procedures are manifest because employees and household helpers acting within the scope of their
while petitioners question the findings of fact in the Court of Appeals, assigned tasks, even the though the former are not engaged in any
they present only the questions of law before this Court which business or industry.
posture confirms their admission of the facts.
The State is responsible in like manner when it acts through a special
3. The fact that the parties failed to agree on whether or not agent.; but not when the damage has been caused by the official to
negligence caused the vehicular accident involves a question of fact whom the task done properly pertains, in which case what is provided
which petitioners should have brought to the Court of Appeals within in Art. 2176 shall be applicable.
the reglementary period. Hence, the decision of the trial court has
become final as to the petitioners and for this reason alone, the The liability of the State has two aspects. namely:
petition should be dismissed.
1. Its public or governmental aspects where it is liable for the tortious
4. Respondent Judge acted within his jurisdiction, sound discretion acts of special agents only.
and in conformity with the law.
2. Its private or business aspects (as when it engages in private
5. Respondents do not assail petitioners' claim to moral and enterprises) where it becomes liable as an ordinary employer. (p.
exemplary damages by reason of the shock and subsequent illness 961, Civil Code of the Philippines; Annotated, Paras; 1986 Ed. ).
they suffered because of the death of their son. Respondent National
103
In this jurisdiction, the State assumes a limited liability for the damage caused by the (d) To do all such other tthings and to transact all such business as
tortious acts or conduct of its special agent. are directly or indirectly necessary, incidental or conducive to the
attainment of the above objectives.
Under the aforequoted paragrah 6 of Art. 2180, the State has voluntarily assumed
liability for acts done through special agents. The State's agent, if a public official, must Indubitably, the NIA is a government corporation with juridical personality and not a
not only be specially commissioned to do a particular task but that such task must be mere agency of the government. Since it is a corporate body performing non-
foreign to said official's usual governmental functions. If the State's agent is not a public governmental functions, it now becomes liable for the damage caused by the accident
official, and is commissioned to perform non-governmental functions, then the State resulting from the tortious act of its driver-employee. In this particular case, the NIA
assumes the role of an ordinary employer and will be held liable as such for its agent's assumes the responsibility of an ordinary employer and as such, it becomes
tort. Where the government commissions a private individual for a special answerable for damages.
governmental task, it is acting through a special agent within the meaning of the
provision. (Torts and Damages, Sangco, p. 347, 1984 Ed.) This assumption of liability, however, is predicated upon the existence of negligence
on the part of respondent NIA. The negligence referred to here is the negligence of
Certain functions and activities, which can be performed only by the government, are supervision.
more or less generally agreed to be "governmental" in character, and so the State is
immune from tort liability. On the other hand, a service which might as well be provided At this juncture, the matter of due diligence on the part of respondent NIA becomes a
by a private corporation, and particularly when it collects revenues from it, the function crucial issue in determining its liability since it has been established that respondent is
is considered a "proprietary" one, as to which there may be liability for the torts of a government agency performing proprietary functions and as such, it assumes the
agents within the scope of their employment. posture of an ordinary employer which, under Par. 5 of Art. 2180, is responsible for the
damages caused by its employees provided that it has failed to observe or exercise
The National Irrigation Administration is an agency of the government exercising due diligence in the selection and supervision of the driver.
proprietary functions, by express provision of Rep. Act No. 3601. Section 1 of said Act
provides: It will be noted from the assailed decision of the trial court that "as a result of the impact,
Francisco Fontanilla was thrown to a distance 50 meters away from the point of
Section 1. Name and domicile.-A body corporate is hereby created impact while Restituto Deligo was thrown a little bit further away. The impact took place
which shall be known as the National Irrigation Administration, almost at the edge of the cemented portion of the road." (Emphasis supplied,) [page
hereinafter called the NIA for short, which shall be organized 26, Rollo]
immediately after the approval of this Act. It shall have its principal
seat of business in the City of Manila and shall have representatives The lower court further declared that "a speeding vehicle coming in contact with a
in all provinces for the proper conduct of its business. person causes force and impact upon the vehicle that anyone in the vehicle cannot fail
to notice. As a matter of fact, the impact was so strong as shown by the fact that
Section 2 of said law spells out some of the NIA's proprietary functions. Thus- the vehicle suffered dents on the right side of the radiator guard, the hood, the fender
and a crack on the radiator as shown by the investigation report (Exhibit "E").
Sec. 2. Powers and objectives.-The NIA shall have the following (Emphasis supplied) [page 29, Rollo]
powers and objectives:
It should be emphasized that the accident happened along the Maharlika National Road
(a) x x x x x x x x x x x x x x x x x x within the city limits of San Jose City, an urban area. Considering the fact that the victim
was thrown 50 meters away from the point of impact, there is a strong indication that
driver Garcia was driving at a high speed. This is confirmed by the fact that the pick-up
(b) x x x x x x x x x x x x x x x x x x suffered substantial and heavy damage as above-described and the fact that the NIA
group was then "in a hurry to reach the campsite as early as possible", as shown by
(c) To collect from the users of each irrigation system constructed by their not stopping to find out what they bumped as would have been their normal and
it such fees as may be necessary to finance the continuous operation initial reaction.
of the system and reimburse within a certain period not less than
twenty-five years cost of construction thereof; and Evidently, there was negligence in the supervision of the driver for the reason that they
were travelling at a high speed within the city limits and yet the supervisor of the group,
Ely Salonga, failed to caution and make the driver observe the proper and allowed
speed limit within the city. Under the situation, such negligence is further aggravated
104
by their desire to reach their destination without even checking whether or not the
vehicle suffered damage from the object it bumped, thus showing imprudence and
reckelessness on the part of both the driver and the supervisor in the group.

Significantly, this Court has ruled that even if the employer can prove the diligence in
the selection and supervision (the latter aspect has not been established herein) of the
employee, still if he ratifies the wrongful acts, or take no step to avert further damage,
the employer would still be liable. (Maxion vs. Manila Railroad Co., 44 Phil. 597).

Thus, too, in the case of Vda. de Bonifacio vs. B.L.T. Bus Co. (L-26810, August 31,
1970, 34 SCRA 618), this Court held that a driver should be especially watchful in
anticipation of others who may be using the highway, and his failure to keep a proper
look out for reasons and objects in the line to be traversed constitutes negligence.

Considering the foregoing, respondent NIA is hereby directed to pay herein petitioners-
spouses the amounts of P12,000.00 for the death of Francisco Fontanilla; P3,389.00
for hospitalization and burial expenses of the aforenamed deceased; P30,000.00 as
moral damages; P8,000.00 as exemplary damages and attorney's fees of 20% of the
total award.

SO ORDERED.

105
 BOY SCOUTS OF THE G.R. No. 177131 Antecedent Facts and Background
PHILIPPINES, of the Case
Petitioner, Present:
This case arose when the COA issued Resolution No. 99-011[5] on August
19, 1999 (the COA Resolution), with the subject Defining the Commissions policy with
CORONA, C.J., respect to the audit of the Boy Scouts of the Philippines. In its whereas clauses, the
CARPIO, COA Resolution stated that the BSP was created as a public corporation under
CARPIO MORALES, Commonwealth Act No. 111, as amended by Presidential Decree No. 460 and Republic
VELASCO, JR., Act No. 7278; that in Boy Scouts of the Philippines v. National Labor Relations
NACHURA, Commission,[6] the Supreme Court ruled that the BSP, as constituted under its charter,
LEONARDO-DE CASTRO, was a government-controlled corporation within the meaning of Article IX(B)(2)(1) of
BRION, the Constitution; and that the BSP is appropriately regarded as a government
- versus - PERALTA, instrumentality under the 1987 Administrative Code. [7] The COA Resolution also cited
BERSAMIN, its constitutional mandate under Section 2(1), Article IX (D). Finally, the COA
DEL CASTILLO, Resolution reads:
ABAD,
VILLARAMA, JR., NOW THEREFORE, in consideration of the foregoing
PEREZ, premises, the COMMISSION PROPER HAS RESOLVED, AS IT
MENDOZA, and DOES HEREBY RESOLVE, to conduct an annual financial audit
SERENO, JJ. of the Boy Scouts of the Philippines in accordance with
generally accepted auditing standards, and express an opinion
on whether the financial statements which include the Balance
COMMISSION ON AUDIT, Sheet, the Income Statement and the Statement of Cash Flows
Respondent. present fairly its financial position and results of operations.
Promulgated:
xxxx

June 7, 2011 BE IT RESOLVED FURTHERMORE, that for purposes of

audit supervision, the Boy Scouts of the Philippines shall be
classified among the government corporations belonging to the
Educational, Social, Scientific, Civic and Research Sector under
the Corporate Audit Office I, to be audited, similar to the subsidiary
x--------------------------------------------------x
corporations, by employing the team audit approach. [8] (Emphases
DECISION supplied.)
LEONARDO-DE CASTRO, J.:

The jurisdiction of the Commission on Audit (COA) over the Boy Scouts of the The BSP sought reconsideration of the COA Resolution in a letter[9] dated
Philippines (BSP) is the subject matter of this controversy that reached us via petition November 26, 1999 signed by the BSP National President Jejomar C. Binay, who is
for prohibition[1] filed by the BSP under Rule 65 of the 1997 Rules of Court. In this now the Vice President of the Republic, wherein he wrote:
petition, the BSP seeks that the COA be prohibited from implementing its June 18,
2002 Decision,[2] its February 21, 2007 Resolution,[3] as well as all other issuances It is the position of the BSP, with all due respect, that it is not subject
arising therefrom, and that all of the foregoing be rendered null and void. [4] to the Commissions jurisdiction on the following grounds:

106
1. We reckon that the ruling in the case of Boy Scouts of the special funds, and enjoying operational autonomy, usually through
Philippines vs. National Labor Relations Commission, et al. (G.R. a charter.
No. 80767) classifying the BSP as a government-controlled
corporation is anchored on the substantial Government The BSP is not an entity administering special funds. It is not even
participation in the National Executive Board of the BSP. It is to be included in the DECS National Budget. x x x
noted that the case was decided when the BSP Charter is defined
by Commonwealth Act No. 111 as amended by Presidential Decree It may be argued also that the BSP is not an agency of the
460. Government. The 1987 Administrative Code, merely referred the
BSP as an attached agency of the DECS as distinguished from an
However, may we humbly refer you to Republic Act No. 7278 which actual line agency of departments that are included in the National
amended the BSPs charter after the cited case was decided. The Budget. The BSP believes that an attached agency is different from
most salient of all amendments in RA No. 7278 is the alteration of an agency. Agency, as defined in Section 2(4) of the Administrative
the composition of the National Executive Board of the BSP. Code, is defined as any of the various units of the Government
including a department, bureau, office, instrumentality,
The said RA virtually eliminated the substantial government government-owned or controlled corporation or local government
participation in the National Executive Board by removing: (i) the or distinct unit therein.
President of the Philippines and executive secretaries, with the
exception of the Secretary of Education, as members thereof; and Under the above definition, the BSP is neither a unit of the
(ii) the appointment and confirmation power of the President of the Government; a department which refers to an executive
Philippines, as Chief Scout, over the members of the said Board. department as created by law (Section 2[7] of the Administrative
Code); nor a bureau which refers to any principal subdivision or unit
The BSP believes that the cited case has been superseded by RA of any department (Section 2[8], Administrative Code).[10]
7278. Thereby weakening the cases conclusion that the BSP is a
government-controlled corporation (sic). The 1987 Administrative Subsequently, requests for reconsideration of the COA Resolution were also
Code itself, of which the BSP vs. NLRC relied on for some terms, made separately by Robert P. Valdellon, Regional Scout Director, Western Visayas
defines government-owned and controlled corporations as Region, Iloilo City and Eugenio F. Capreso, Council Scout Executive of Calbayog
agencies organized as stock or non-stock corporations which the City.[11]
BSP, under its present charter, is not.
In a letter[12] dated July 3, 2000, Director Crescencio S. Sunico, Corporate
Also, the Government, like in other GOCCs, does not have funds Audit Officer (CAO) I of the COA, furnished the BSP with a copy of
invested in the BSP. What RA 7278 only provides is that the the Memorandum[13]dated June 20, 2000 of Atty. Santos M. Alquizalas, the COA
Government or any of its subdivisions, branches, offices, agencies General Counsel. In said Memorandum, the COA General Counsel opined that
and instrumentalities can from time to time donate and contribute Republic Act No. 7278 did not supersede the Courts ruling in Boy Scouts of the
funds to the BSP. Philippines v. National Labor Relations Commission, even though said law eliminated
the substantial government participation in the selection of members of the National
xxxx Executive Board of the BSP. The Memorandum further provides:

Also the BSP respectfully believes that the BSP is not appropriately Analysis of the said case disclosed that the substantial government
regarded as a government instrumentality under the 1987 participation is only one (1) of the three (3) grounds relied upon by
Administrative Code as stated in the COA resolution. As defined by the Court in the resolution of the case. Other considerations
Section 2(10) of the said code, instrumentality refers to any agency include the character of the BSPs purposes and functions which has
of the National Government, not integrated within the department a public aspect and the statutory designation of the BSP as a public
framework, vested with special functions or jurisdiction by law, corporation. These grounds have not been deleted by R.A. No. 7278.
endowed with some if not all corporate powers, administering On the contrary, these were strengthened as evidenced by the
107
 amendment made relative to BSPs purposes stated in Section 3 of This led to the filing by the BSP of this petition for prohibition with preliminary
R.A. No. 7278. injunction and temporary restraining order against the COA.

On the argument that BSP is not appropriately regarded as The Issue

a government instrumentality and agency of the government, such
has already been answered and clarified. The Supreme Court has As stated earlier, the sole issue to be resolved in this case is whether the BSP
elucidated this matter in the BSP case when it declared that BSP is falls under the COAs audit jurisdiction.
regarded as, both a government-controlled corporation with an
original charter and as an instrumentality of the Government. The Parties Respective Arguments
Likewise, it is not disputed that the Administrative Code of 1987
designated the BSP as one of the attached agencies of DECS. Being The BSP contends that Boy Scouts of the Philippines v. National Labor
an attached agency, however, it does not change its nature as a Relations Commission is inapplicable for purposes of determining the audit jurisdiction
government-controlled corporation with original charter and, of the COA as the issue therein was the jurisdiction of the National Labor Relations
necessarily, subject to COA audit jurisdiction. Besides, Section 2(1), Commission over a case for illegal dismissal and unfair labor practice filed by certain
Article IX-D of the Constitution provides that COA shall have the BSP employees.[18]
power, authority, and duty to examine, audit and settle all accounts
pertaining to the revenue and receipts of, and expenditures or uses While the BSP concedes that its functions do relate to those that the
of funds and property, owned or held in trust by, or pertaining to, the government might otherwise completely assume on its own, it avers that this alone was
Government, or any of its subdivisions, agencies or instrumentalities, not determinative of the COAs audit jurisdiction over it. The BSP further avers that the
including government-owned or controlled corporations with original Court in Boy Scouts of the Philippines v. National Labor Relations Commission simply
charters.[14] stated x x x that in respect of functions, the BSP is akin to a public corporation but this
was not synonymous to holding that the BSP is a government corporation or entity
subject to audit by the COA. [19]
Based on the Memorandum of the COA General Counsel, Director Sunico
wrote: The BSP contends that Republic Act No. 7278 introduced crucial amendments
to its charter; hence, the findings of the Court in Boy Scouts of the Philippines v.
In view of the points clarified by said Memorandum National Labor Relations Commission are no longer valid as the government has
upholding COA Resolution No. 99-011, we have to comply with the ceased to play a controlling influence in it. The BSP claims that the pronouncements of
provisions of the latter, among which is to conduct an annual financial the Court therein must be taken only within the context of that case; that the Court had
audit of the Boy Scouts of the Philippines.[15] categorically found that its assets were acquired from the Boy Scouts of America and
not from the Philippine government, and that its operations are financed chiefly from
membership dues of the Boy Scouts themselves as well as from property rentals; and
In a letter dated November 20, 2000 signed by Director Amorsonia B. that the BSP may correctly be characterized as non-governmental, and hence, beyond
Escarda, CAO I, the COA informed the BSP that a preliminary survey of its the audit jurisdiction of the COA. It further claims that the designation by the Court of
organizational structure, operations and accounting system/records shall be conducted the BSP as a government agency or instrumentality is mere obiter dictum.[20]
on November 21 to 22, 2000.[16]
The BSP maintains that the provisions of Republic Act No. 7278 suggest that
Upon the BSPs request, the audit was deferred for thirty (30) days. The BSP governance of BSP has come to be overwhelmingly a private affair or nature, with
then filed a Petition for Review with Prayer for Preliminary Injunction and/or Temporary government participation restricted to the seat of the Secretary of Education, Culture
Restraining Order before the COA. This was denied by the COA in its questioned and Sports.[21] It cites Philippine Airlines Inc. v. Commission on Audit[22] wherein the
Decision, which held that the BSP is under its audit jurisdiction. The BSP moved for Court declared that, PAL, having ceased to be a government-owned or controlled
reconsideration but this was likewise denied under its questioned Resolution. [17] corporation is no longer under the audit jurisdiction of the COA. [23] Claiming that the
amendments introduced by Republic Act No. 7278 constituted a supervening event that
changed the BSPs corporate identity in the same way that the governments
108
privatization program changed PALs, the BSP makes the case that the government no
longer has control over it; thus, the COA cannot use the Boy Scouts of the Philippines 2. Being a government agency, the funds and property owned or
v. National Labor Relations Commission as its basis for the exercise of its jurisdiction held in trust by the BSP are subject to the audit authority of
and the issuance of COA Resolution No. 99-011.[24] The BSP further claims as follows: respondent Commission on Audit pursuant to Section 2 (1),
Article IX-D of the 1987 Constitution.
It is not far-fetched, in fact, to concede that BSPs funds and
assets are private in character. Unlike ordinary public corporations, such 3. Republic Act No. 7278 did not change the character of the BSP
as provinces, cities, and municipalities, or government-owned and as a government-owned or controlled corporation and
controlled corporations, such as Land Bank of the Philippines and the government instrumentality.[27]
Development Bank of the Philippines, the assets and funds of BSP are
not derived from any government grant. For its operations, BSP is not
dependent in any way on any government appropriation; as a matter of The COA maintains that the functions of the BSP that include, among others,
fact, it has not even been included in any appropriations for the the teaching to the youth of patriotism, courage, self-reliance, and kindred virtues, are
government. To be sure, COA has not alleged, in its Resolution No. 99- undeniably sovereign functions enshrined under the Constitution and discussed by the
011 or in the Memorandum of its General Counsel, that BSP received, Court in Boy Scouts of the Philippines v. National Labor Relations Commission. The
receives or continues to receive assets and funds from any agency of COA contends that any attempt to classify the BSP as a private corporation would be
the government. The foregoing simply point to the private nature of the incomprehensible since no less than the law which created it had designated it as a
funds and assets of petitioner BSP. public corporation and its statutory mandate embraces performance of sovereign
functions.[28]
xxxx
The COA claims that the only reason why the BSP employees fell within the
As stated in petitioners third argument, BSPs assets and funds scope of the Civil Service Commission even before the 1987 Constitution was the fact
were never acquired from the government. Its operations are not in any that it was a government-owned or controlled corporation; that as an attached agency
way financed by the government, as BSP has never been included in of the Department of Education, Culture and Sports (DECS), the BSP is an agency of
any appropriations act for the government. Neither has the government the government; and that the BSP is a chartered institution under Section 1(12) of the
invested funds with BSP. BSP, has not been, at any time, a user of Revised Administrative Code of 1987, embraced under the term government
government property or funds; nor have properties of the government instrumentality.[29]
been held in trust by BSP. This is precisely the reason why, until this
time, the COA has not attempted to subject BSP to its audit jurisdiction. The COA concludes that being a government agency, the funds and property
x x x.[25] owned or held by the BSP are subject to the audit authority of the COA pursuant to
Section 2(1), Article IX (D) of the 1987 Constitution.

To summarize its other arguments, the BSP contends that it is not a In support of its arguments, the COA cites The Veterans Federation of the
government-owned or controlled corporation; neither is it an instrumentality, agency, or Philippines (VFP) v. Reyes,[30] wherein the Court held that among the reasons why the
subdivision of the government. VFP is a public corporation is that its charter, Republic Act No. 2640, designates it as
one. Furthermore, the COA quotes the Court as saying in that case:
In its Comment,[26] the COA argues as follows:
In several cases, we have dealt with the issue of whether certain
1. The BSP is a public corporation created under Commonwealth specific activities can be classified as sovereign functions. These cases,
Act No. 111 dated October 31, 1936, and whose functions relate which deal with activities not immediately apparent to be sovereign
to the fostering of public virtues of citizenship and patriotism and functions, upheld the public sovereign nature of operations needed either
the general improvement of the moral spirit and fiber of the youth. to promote social justice or to stimulate patriotic sentiments and love of
The manner of creation and the purpose for which the BSP was country.
created indubitably prove that it is a government agency.
109
 xxxx
In compliance with the Courts resolution, the parties filed their respective
Petitioner claims that its funds are not public funds because no Comments.
budgetary appropriations or government funds have been released to
the VFP directly or indirectly from the DBM, and because VFP funds In its Comment[35] dated October 22, 2010, the COA argues that the
come from membership dues and lease rentals earned from constitutionality of Commonwealth Act No. 111, as amended, is not determinative of
administering government lands reserved for the VFP. the resolution of the present controversy on the COAs audit jurisdiction over petitioner,
and in fact, the controversy may be resolved on other grounds; thus, the requisites
The fact that no budgetary appropriations have been released to before a judicial inquiry may be made, as set forth in Commissioner of Internal Revenue
the VFP does not prove that it is a private corporation. The DBM indeed v. Court of Tax Appeals,[36] have not been fully met.[37] Moreover, the COA maintains
did not see it fit to propose budgetary appropriations to the VFP, having that behind every law lies the presumption of constitutionality.[38] The COA likewise
itself believed that the VFP is a private corporation. If the DBM, however, argues that contrary to the BSPs position, repeal of a law by implication is not
is mistaken as to its conclusion regarding the nature of VFP's favored.[39] Lastly, the COA claims that there was no violation of Section 16, Article XII
incorporation, its previous assertions will not prevent future budgetary of the 1987 Constitution with the creation or declaration of the BSP as a government
appropriations to the VFP. The erroneous application of the law by public corporation. Citing Philippine Society for the Prevention of Cruelty to Animals v.
officers does not bar a subsequent correct application of the Commission on Audit,[40] the COA further alleges:
law.[31] (Citations omitted.)
The true criterion, therefore, to determine whether a corporation
is public or private is found in the totality of the relation of the corporation
The COA points out that the government is not precluded by law from to the State. If the corporation is created by the State as the latters own
extending financial support to the BSP and adding to its funds, and that as a agency or instrumentality to help it in carrying out its governmental
government instrumentality which continues to perform a vital function imbued with functions, then that corporation is considered public; otherwise, it is
public interest and reflective of the governments policy to stimulate patriotic sentiments private. x x x.[41]
and love of country, the BSPs funds from whatever source are public funds, and can
be used solely for public purpose in pursuance of the provisions of Republic Act No.
[7278].[32] For its part, in its Comment[42] filed on December 3, 2010, the BSP submits
that its charter, Commonwealth Act No. 111, as amended by Republic Act No. 7278, is
The COA claims that the fact that it has not yet audited the BSPs funds may constitutional as it does not violate Section 16, Article XII of the Constitution. The BSP
not bar the subsequent exercise of its audit jurisdiction. alleges that while [it] is not a public corporation within the purview of COAs audit
jurisdiction, neither is it a private corporation created by special law falling within the
The BSP filed its Reply[33] on August 29, 2007 maintaining that its statutory ambit of the constitutional prohibition x x x.[43] The BSP further alleges:
designation as a public corporation and the public character of its purpose and
functions are not determinative of the COAs audit jurisdiction; reiterating its stand Petitioners purpose is embodied in Section 3 of C.A. No. 111, as
that Boy Scouts of the Philippines v. National Labor Relations Commission is not amended by Section 1 of R.A. No. 7278, thus:
applicable anymore because the aspect of government ownership and control has been
removed by Republic Act No. 7278; and concluding that the funds and property that it xxxx
either owned or held in trust are not public funds and are not subject to the COAs audit
jurisdiction. A reading of the foregoing provision shows that petitioner was
created to advance the interest of the youth, specifically of young boys,
Thereafter, considering the BSPs claim that it is a private corporation, this and to mold them into becoming good citizens. Ultimately, the creation
Court, in a Resolution[34] dated July 20, 2010, required the parties to file, within a of petitioner redounds to the benefit, not only of those boys, but of the
period of twenty (20) days from receipt of said Resolution, their respective comments public good or welfare. Hence, it can be said that petitioners purpose and
on the issue of whether Commonwealth Act No. 111, as amended by Republic Act No. functions are more of a public rather than a private character. Petitioner
7278, is constitutional. caters to all boys who wish to join the organization without any
110
 distinction. It does not limit its membership to a particular class of boys. Sec. 3. The purpose of this corporation shall be to promote
Petitioners members are trained in scoutcraft and taught patriotism, civic through organization and cooperation with other agencies, the ability
consciousness and responsibility, courage, self-reliance, discipline and of boys to do useful things for themselves and others, to train them
kindred virtues, and moral values, preparing them to become model in scoutcraft, and to inculcate in them patriotism, civic consciousness
citizens and outstanding leaders of the country.[44] and responsibility, courage, self-reliance, discipline and kindred
virtues, and moral values, using the method which are in common
The BSP reiterates its stand that the public character of its purpose and use by boy scouts.
functions do not place it within the ambit of the audit jurisdiction of the COA as it lacks
the government ownership or control that the Constitution requires before an entity may
be subject of said jurisdiction.[45] It avers that it merely stated in its Reply that the Presidential Decree No. 460, approved on May 17, 1974, amended
withdrawal of government control is akin to privatization, but it does not necessarily Commonwealth Act No. 111 and provided substantial changes in the BSP
mean that petitioner is a private corporation. [46] The BSP claims that it has a unique organizational structure. Pertinent provisions are quoted below:
characteristic which neither classifies it as a purely public nor a purely private
corporation;[47] that it is not a quasi-public corporation; and that it may belong to a
different class altogether.[48] Section II. Section 5 of the said Act is also amended to read
as follows:
The BSP claims that assuming arguendo that it is a private corporation, its
creation is not contrary to the purpose of Section 16, Article XII of the Constitution; and
that the evil sought to be avoided by said provision is inexistent in the enactment of the The governing body of the said corporation shall consist of
BSPs charter,[49] as, (i) it was not created for any pecuniary purpose; (ii) those who will a National Executive Board composed of (a) the President of the
primarily benefit from its creation are not its officers but its entire membership consisting Philippines or his representative; (b) the charter and life members of
of boys being trained in scoutcraft all over the country; (iii) it caters to all boys who wish the Boy Scouts of the Philippines; (c) the Chairman of the Board of
to join the organization without any distinction; and (iv) it does not limit its membership Trustees of the Philippine Scouting Foundation; (d) the Regional
to a particular class or group of boys. Thus, the enactment of its charter confers no Chairman of the Scout Regions of the Philippines; (e) the Secretary
special privilege to particular individuals, families, or groups; nor does it bring about the of Education and Culture, the Secretary of Social Welfare, the
danger of granting undue favors to certain groups to the prejudice of others or of the Secretary of National Defense, the Secretary of Labor, the Secretary
interest of the country, which are the evils sought to be prevented by the constitutional of Finance, the Secretary of Youth and Sports, and the Secretary of
provision involved.[50] Local Government and Community Development; (f) an equal
number of individuals from the private sector; (g) the National
Finally, the BSP states that the presumption of constitutionality of a legislative President of the Girl Scouts of the Philippines; (h) one Scout of
enactment prevails absent any clear showing of its repugnancy to the Constitution. [51] Senior age from each Scout Region to represent the boy
membership; and (i) three representatives of the cultural minorities.
The Ruling of the Court Except for the Regional Chairman who shall be elected by the
Regional Scout Councils during their annual meetings, and the
After looking at the legislative history of its amended charter and carefully Scouts of their respective regions, all members of the National
studying the applicable laws and the arguments of both parties, we find that the BSP is Executive Board shall be either by appointment or cooption, subject
a public corporation and its funds are subject to the COAs audit jurisdiction. to ratification and confirmation by the Chief Scout, who shall be the
Head of State. Vacancies in the Executive Board shall be filled by a
majority vote of the remaining members, subject to ratification and
The BSP Charter (Commonwealth Act No. 111, approved on October 31, confirmation by the Chief Scout. The by-laws may prescribe the
1936), entitled An Act to Create a Public Corporation to be Known as the Boy Scouts number of members of the National Executive Board necessary to
of the Philippines, and to Define its Powers and Purposes created the BSP as a public constitute a quorum of the board, which number may be less than a
corporation to serve the following public interest or purpose: majority of the whole number of the board. The National Executive
Board shall have power to make and to amend the by-laws, and, by
111
 a two-thirds vote of the whole board at a meeting called for this self-reliance, discipline and kindred virtues, and moral values,
purpose, may authorize and cause to be executed mortgages and using the method which are in common use by boy scouts."
liens upon the property of the corporation.

Sec. 2. Section 4 of Commonwealth Act No. 111, as

amended, is hereby repealed and in lieu thereof, Section 4 shall read
as follows:
Subsequently, on March 24, 1992, Republic Act No. 7278 further amended
Commonwealth Act No. 111 by strengthening the volunteer and democratic
character of the BSP and reducing government representation in its governing body,
as follows: "Sec. 4. The President of the Philippines shall be the
Chief Scout of the Boy Scouts of the Philippines."

Section 1. Sections 2 and 3 of Commonwealth Act. No. 111,

as amended, is hereby amended to read as follows: Sec. 3. Sections 5, 6, 7 and 8 of Commonwealth Act No.
111, as amended, are hereby amended to read as follows:

"Sec. 2. The said corporation shall have the powers of

perpetual succession, to sue and be sued; to enter into contracts; to "Sec. 5. The governing body of the said corporation
acquire, own, lease, convey and dispose of such real and personal shall consist of a National Executive Board, the members of
estate, land grants, rights and choses in action as shall be necessary which shall be Filipino citizens of good moral character. The Board
for corporate purposes, and to accept and receive funds, real and shall be composed of the following:
personal property by gift, devise, bequest or other means, to conduct
fund-raising activities; to adopt and use a seal, and the same to alter
and destroy; to have offices and conduct its business and affairs in "(a) One (1) charter member of the Boy Scouts of the
Metropolitan Manila and in the regions, provinces, cities, Philippines who shall be elected by the members of the National
municipalities, and barangays of the Philippines, to make and adopt Council at its meeting called for this purpose;
by-laws, rules and regulations not inconsistent with this Act and the
laws of the Philippines, and generally to do all such acts and things,
including the establishment of regulations for the election of "(b) The regional chairmen of the scout regions who shall
associates and successors, as may be necessary to carry into effect be elected by the representatives of all the local scout councils of the
the provisions of this Act and promote the purposes of said region during its meeting called for this purpose: Provided, That a
corporation: Provided, That said corporation shall have no power to candidate for regional chairman need not be the chairman of a local
issue certificates of stock or to declare or pay dividends, its scout council;
objectives and purposes being solely of benevolent character and
not for pecuniary profit of its members.

"(c) The Secretary of Education, Culture and Sports;

"Sec. 3. The purpose of this corporation shall be to

promote through organization and cooperation with other
agencies, the ability of boys to do useful things for themselves "(d) The National President of the Girl Scouts of the
and others, to train them in scoutcraft, and to inculcate in them Philippines;
patriotism, civic consciousness and responsibility, courage,
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 "(e) One (1) senior scout, each from Luzon, Visayas and
Mindanao areas, to be elected by the senior scout delegates of the Art. 44. The following are juridical persons:
local scout councils to the scout youth forums in their respective
areas, in its meeting called for this purpose, to represent the boy
scout membership; (1) The State and its political subdivisions;

(2) Other corporations, institutions and entities for

"(f) Twelve (12) regular members to be elected by the public interest or purpose created by law; their personality
members of the National Council in its meeting called for this begins as soon as they have been constituted according to law;
purpose; (3) Corporations, partnerships and associations for private
interest or purpose to which the law grants a juridical personality,
separate and distinct from that of each shareholder, partner or
"(g) At least ten (10) but not more than fifteen (15) additional member. (Emphases supplied.)
members from the private sector who shall be elected by the
members of the National Executive Board referred to in the
immediately preceding paragraphs (a), (b), (c), (d), (e) and (f) at the
organizational meeting of the newly reconstituted National Executive
Board which shall be held immediately after the meeting of the The BSP, which is a corporation created for a public interest or purpose, is
National Council wherein the twelve (12) regular members and the subject to the law creating it under Article 45 of the Civil Code, which provides:
one (1) charter member were elected.

Art. 45. Juridical persons mentioned in Nos. 1 and 2 of

xxxx the preceding article are governed by the laws creating or
recognizing them.

Private corporations are regulated by laws of general

"Sec. 8. Any donation or contribution which from time to application on the subject.
time may be made to the Boy Scouts of the Philippines by the
Government or any of its subdivisions, branches, offices, agencies Partnerships and associations for private interest or
or instrumentalities or by a foreign government or by private, entities purpose are governed by the provisions of this Code concerning
and individuals shall be expended by the National Executive Board partnerships. (Emphasis and underscoring supplied.)
in pursuance of this Act.

The purpose of the BSP as stated in its amended charter shows that it was
The BSP as a Public Corporation created in order to implement a State policy declared in Article II, Section 13 of the
under Par. 2, Art. 2 of the Civil Code Constitution, which reads:

ARTICLE II - DECLARATION OF PRINCIPLES AND STATE

There are three classes of juridical persons under Article 44 of the Civil Code POLICIES
and the BSP, as presently constituted under Republic Act No. 7278, falls under the
second classification. Article 44 reads:

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 Section 13. The State recognizes the vital role of the SEC. 38. Definition of Administrative Relationship. Unless
youth in nation-building and shall promote and protect their otherwise expressly stated in the Code or in other laws defining the
physical, moral, spiritual, intellectual, and social well-being. It special relationships of particular agencies, administrative
shall inculcate in the youth patriotism and nationalism, and relationships shall be categorized and defined as follows:
encourage their involvement in public and civic affairs.
xxxx

(3) Attachment. (a) This refers to the lateral relationship

Evidently, the BSP, which was created by a special law to serve a public between the department or its equivalent and the attached agency
purpose in pursuit of a constitutional mandate, comes within the class of public or corporation for purposes of policy and program
corporations defined by paragraph 2, Article 44 of the Civil Code and governed by the coordination. The coordination may be accomplished by having
law which creates it, pursuant to Article 45 of the same Code. the department represented in the governing board of the
attached agency or corporation, either as chairman or as a
The BSPs Classification Under the member, with or without voting rights, if this is permitted by the
Administrative Code of 1987 charter; having the attached corporation or agency comply with a
system of periodic reporting which shall reflect the progress of
The public, rather than private, character of the BSP is recognized by the fact programs and projects; and having the department or its equivalent
that, along with the Girl Scouts of the Philippines, it is classified as an attached provide general policies through its representative in the board,
agency of the DECS under Executive Order No. 292, or the Administrative Code of which shall serve as the framework for the internal policies of the
1987, which states: attached corporation or agency. (Emphasis ours.)

TITLE VI EDUCATION, CULTURE AND SPORTS

As an attached agency, the BSP enjoys operational autonomy, as long as policy and
Chapter 8 Attached Agencies program coordination is achieved by having at least one representative of
government in its governing board, which in the case of the BSP is the DECS
SEC. 20. Attached Agencies. The following agencies are Secretary. In this sense, the BSP is not under government control or supervision and
hereby attached to the Department: control. Still this characteristic does not make the attached chartered agency a private
corporation covered by the constitutional proscription in question.
xxxx
Art. XII, Sec. 16 of the Constitution
(12) Boy Scouts of the Philippines; refers to private corporations created
by government for proprietary or
(13) Girl Scouts of the Philippines. economic/business purposes

The administrative relationship of an attached agency to the department is

defined in the Administrative Code of 1987 as follows:
At the outset, it should be noted that the provision of Section 16 in issue is
BOOK IV found in Article XII of the Constitution, entitled National Economy and
Patrimony. Section 1 of Article XII is quoted as follows:
THE EXECUTIVE BRANCH

Chapter 7 ADMINISTRATIVE RELATIONSHIP SECTION 1. The goals of the national economy are a more
equitable distribution of opportunities, income, and wealth; a
114
 sustained increase in the amount of goods and services produced by
the nation for the benefit of the people; and an expanding productivity
as the key to raising the quality of life for all, especially the It may be gleaned from the above discussion that Article XII, Section 16 bans
underprivileged. the creation of private corporations by special law. The said constitutional provision
should not be construed so as to prohibit the creation of public corporations or a
corporate agency or instrumentality of the government intended to serve a public
interest or purpose, which should not be measured on the basis of economic viability,
The State shall promote industrialization and full but according to the public interest or purpose it serves as envisioned by paragraph
employment based on sound agricultural development and agrarian (2), of Article 44 of the Civil Code and the pertinent provisions of the Administrative
reform, through industries that make full and efficient use of human Code of 1987.
and natural resources, and which are competitive in both domestic
and foreign markets. However, the State shall protect Filipino
enterprises against unfair foreign competition and trade practices. The BSP is a Public Corporation Not
Subject to the Test of Government
Ownership or Control and Economic
In the pursuit of these goals, all sectors of the economy and Viability
all regions of the country shall be given optimum opportunity to
develop. Private enterprises, including corporations, cooperatives, The BSP is a public corporation or a government agency or instrumentality
and similar collective organizations, shall be encouraged to broaden with juridical personality, which does not fall within the constitutional prohibition in
the base of their ownership. Article XII, Section 16, notwithstanding the amendments to its charter. Not all
corporations, which are not government owned or controlled, are ipso facto to be
considered private corporations as there exists another distinct class of corporations or
chartered institutions which are otherwise known as public corporations. These
corporations are treated by law as agencies or instrumentalities of the government
The scope and coverage of Section 16, Article XII of the Constitution can be which are not subject to the tests of ownership or control and economic viability but to
seen from the aforementioned declaration of state policies and goals which pertains different criteria relating to their public purposes/interests or constitutional policies and
to national economy and patrimony and the interests of the people in economic objectives and their administrative relationship to the government or any of its
development. Departments or Offices.

Classification of Corporations Under

Section 16, Article XII of the
Section 16, Article XII deals with the formation, organization, or regulation Constitution on National Economy
of private corporations,[52] which should be done through a general law enacted by and Patrimony
Congress, provides for an exception, that is: if the corporation is government owned or
controlled; its creation is in the interest of the common good; and it meets the test of
economic viability. The rationale behind Article XII, Section 16 of the 1987 Constitution The dissenting opinion of Associate Justice Antonio T. Carpio, citing a line of
was explained in Feliciano v. Commission on Audit,[53] in the following manner: cases, insists that the Constitution recognizes only two classes of
corporations: private corporations under a general law, and government-owned or
The Constitution emphatically prohibits the creation of
controlled corporations created by special charters.
private corporations except by a general law applicable to all
citizens. The purpose of this constitutional provision is to ban
private corporations created by special charters, which We strongly disagree. Section 16, Article XII should not be construed so as to
historically gave certain individuals, families or groups special prohibit Congress from creating public corporations. In fact, Congress has enacted
privileges denied to other citizens.[54] (Emphasis added.) numerous laws creating public corporations or government agencies or
instrumentalities vested with corporate powers. Moreover, Section 16, Article XII, which

115
relates to National Economy and Patrimony, could not have tied the hands of Congress regulatory agencies, chartered institutions and
in creating public corporations to serve any of the constitutional policies or objectives. government-owned or controlled corporations.
In his dissent, Justice Carpio contends that this ponente introduces a totally
different species of corporation, which is neither a private corporation nor a government
owned or controlled corporation and, in so doing, is missing the fact that the BSP, which The same Code describes a "chartered institution" in the
was created as a non-stock, non-profit corporation, can only be either a private following terms:
corporation or a government owned or controlled corporation.

Note that in Boy Scouts of the Philippines v. National Labor Relations

Commission, the BSP, under its former charter, was regarded as both a government Chartered institution - refers to
owned or controlled corporation with original charter and a public corporation. The said any agency organized or operating under a
case pertinently stated: special charter, and vested by law with functions
relating to specific constitutional policies or
objectives. This term includes the state
universities and colleges, and the monetary
While the BSP may be seen to be a mixed type of entity, authority of the State.
combining aspects of both public and private entities, we believe
that considering the character of its purposes and its functions, the
statutory designation of the BSP as "a public corporation" and the
substantial participation of the Government in the selection of We believe that the BSP is appropriately regarded as "a
members of the National Executive Board of the BSP, the BSP, as government instrumentality" under the 1987 Administrative Code.
presently constituted under its charter, is a government-controlled
corporation within the meaning of Article IX (B) (2) (1) of the
Constitution. It thus appears that the BSP may be regarded as both a
"government controlled corporation with an original
charter" and as an "instrumentality" of the Government within
We are fortified in this conclusion when we note that the the meaning of Article IX (B) (2) (1) of the Constitution. x x
Administrative Code of 1987 designates the BSP as one of the x.[55] (Emphases supplied.)
attached agencies of the Department of Education, Culture and
Sports ("DECS"). An "agency of the Government" is defined as
referring to any of the various units of the Government including a
department, bureau, office, instrumentality, government-owned or -
controlled corporation, or local government or distinct unit The existence of public or government corporate or juridical entities or
therein. "Government instrumentality" is in turn defined in the 1987 chartered institutions by legislative fiat distinct from private corporations and
Administrative Code in the following manner: government owned or controlled corporation is best exemplified by the 1987
Administrative Code cited above, which we quote in part:

Sec. 2. General Terms Defined. Unless the specific words

Instrumentality - refers to any agency of of the text, or the context as a whole, or a particular statute, shall
the National Government, not integrated within the require a different meaning:
department framework, vested with special
functions or jurisdiction by law, endowed with
xxxx
some if not all corporate powers, administering
special funds, and enjoying operational autonomy (10) "Instrumentality" refers to any agency of the National
usually through a charter. This term includes Government, not integrated within the department framework, vested
116
 with special functions or jurisdiction by law, endowed with some if As presently constituted, the BSP still remains an instrumentality of the
not all corporate powers, administering special funds, national government. It is a public corporation created by law for a public purpose,
and enjoying operational autonomy, usually through a attached to the DECS pursuant to its Charter and the Administrative Code of 1987. It
charter. This term includes regulatory agencies, chartered is not a private corporation which is required to be owned or controlled by the
institutions and government-owned or controlled corporations.
 government and be economically viable to justify its existence under a special law.

xxxx

(12) "Chartered institution" refers to any agency The dissent of Justice Carpio also submits that by recognizing a new class of
public corporation(s) created by special charter that will not be subject to the test of
organized or operating under a special charter, and vested by law
with functions relating to specific constitutional policies or economic viability, the constitutional provision will be circumvented.
objectives. This term includes the state universities and colleges
and the monetary authority of the State.
However, a review of the Record of the 1986 Constitutional Convention
(13) "Government-owned or controlled corporation" reveals the intent of the framers of the highest law of our land to distinguish
refers to any agency organized as a stock or non-stock corporation, between government corporations performing governmental functions and
vested with functions relating to public needs corporations involved in business or proprietary functions:
whether governmental or proprietary in nature, and owned by the
THE PRESIDENT. Commissioner Foz is recognized.
Government directly or through its instrumentalities either wholly, or,
where applicable as in the case of stock corporations, to the extent
of at least fifty-one (51) per cent of its capital stock: Provided, That
government-owned or controlled corporations may be further MR. FOZ. Madam President, I support the proposal to insert
categorized by the Department of the Budget, the Civil Service ECONOMIC VIABILITY as one of the grounds for organizing
Commission, and the Commission on Audit for purposes of the government corporations. x x x.
exercise and discharge of their respective powers, functions
and responsibilities with respect to such corporations.
MR. OPLE. Madam President, the reason for this concern
is really that when the government creates a corporation, there is a
Assuming for the sake of argument that the BSP ceases to be owned or sense in which this corporation becomes exempt from the test of
controlled by the government because of reduction of the number of representatives of economic performance. We know what happened in the past. If a
the government in the BSP Board, it does not follow that it also ceases to be a government corporation loses, then it makes its claim upon the
government instrumentality as it still retains all the characteristics of the latter as an taxpayers money through new equity infusions from the government
attached agency of the DECS under the Administrative Code. Vesting corporate and what is always invoked is the common good. x x x
powers to an attached agency or instrumentality of the government is not
constitutionally prohibited and is allowed by the above-mentioned provisions of the Civil
Code and the 1987 Administrative Code.
Therefore, when we insert the phrase ECONOMIC
VIABILITY together with the common good, this becomes a restraint
Economic Viability and Ownership on future enthusiasts for state capitalism to excuse themselves from
and Control Tests Inapplicable to the responsibility of meeting the market test so that they become
Public Corporations viable. x x x.

xxxx
117
 MR. VILLEGAS. Commissioner Ople will restate the reason
for his introducing that amendment.
THE PRESIDENT. Commissioner Quesada is recognized.

MR. OPLE. I am obliged to repeat what I said earlier in

MS. QUESADA. Madam President, may we be clarified by moving for this particular amendment jointly with Commissioner Foz.
the committee on what is meant by economic viability? During the past three decades, there had been a proliferation of
government corporations, very few of which have succeeded, and
many of which are now earmarked by the Presidential
THE PRESIDENT. Please proceed. Reorganization Commission for liquidation because they failed the
economic test. x x x.

MR. MONSOD. Economic viability normally is determined

by cost-benefit ratio that takes into consideration all benefits, xxxx
including economic external as well as internal benefits. These are
what they call externalities in economics, so that these are not strictly
financial criteria. Economic viability involves what we call economic MS. QUESADA. But would not the Commissioner say that
returns or benefits of the country that are not quantifiable in financial the reason why many of the government-owned or controlled
terms. x x x. corporations failed to come up with the economic test is due to the
management of these corporations, and not the idea itself of
government corporations? It is a problem of efficiency and
xxxx effectiveness of management of these corporations which could be
remedied, not by eliminating government corporations or the idea of
getting into state-owned corporations, but improving management
MS. QUESADA. So, would this particular formulation now which our technocrats should be able to do, given the training and
really limit the entry of government corporations into activities the experience.
engaged in by corporations?

MR. OPLE. That is part of the economic viability, Madam

MR. MONSOD. Yes, because it is also consistent with President.
the economic philosophy that this Commission approved that
there should be minimum government participation and
intervention in the economy. MS. QUESADA. So, is the Commissioner saying then that
the Filipinos will benefit more if these government-controlled
corporations were given to private hands, and that there will be more
MS. QUESDA. Sometimes this Commission would just goods and services that will be affordable and within the reach of the
refer to Congress to provide the particular requirements when the ordinary citizens?
government would get into corporations. But this time around, we
specifically mentioned economic viability. x x x.
MR. OPLE. Yes. There is nothing here, Madam
President, that will prevent the formation of a government
corporation in accordance with a special charter given by
118
Congress. However, we are raising the standard a little bit so
that, in the future, corporations established by the government
will meet the test of the common good but within that framework MR. MONSOD. No, Madam President. As we said, the
we should also build a certain standard of economic viability. government should not engage in activities that private enterprise is
engaged in and can do better. x x x.[56] (Emphases supplied.)

xxxx

Thus, the test of economic viability clearly does not apply to public corporations dealing
THE PRESIDENT. Commissioner Padilla is recognized. with governmental functions, to which category the BSP belongs. The discussion above
conveys the constitutional intent not to apply this constitutional ban on the creation of
public corporations where the economic viability test would be irrelevant. The said test
MR. PADILLA. This is an inquiry to the committee. With would only apply if the corporation is engaged in some economic activity or business
regard to corporations created by a special charter for government- function for the government.
owned or controlled corporations, will these be in the pioneer fields
or in places where the private enterprise does not or cannot enter?
Or is this so general that these government corporations can It is undisputed that the BSP performs functions that are impressed with public
compete with private corporations organized under a general law? interest. In fact, during the consideration of the Senate Bill that eventually became
Republic Act No. 7278, which amended the BSP Charter, one of the bills sponsors,
Senator Joey Lina, described the BSP as follows:
MR. MONSOD. Madam President, x x x. There are two
types of government corporations those that are involved
in performing governmental functions, like garbage disposal, Senator Lina. Yes, I can only think of two organizations
Manila waterworks, and so on; and those government corporations involving the masses of our youth, Mr. President, that should be
that are involved in business functions. As we said earlier, there given this kind of a privilege the Boy Scouts of the Philippines and
are two criteria that should be followed for corporations that the Girl Scouts of the Philippines. Outside of these two groups, I do
want to go into business. First is for government corporations to not think there are other groups similarly situated.
first prove that they can be efficient in the areas of their proper
functions. This is one of the problems now because they go into all
kinds of activities but are not even efficient in their proper The Boy Scouts of the Philippines has a long history of
functions. Secondly, they should not go into activities that the providing value formation to our young, and considering how
private sector can do better. huge the population of the young people is, at this point in time,
and also considering the importance of having an organization
such as this that will inculcate moral uprightness among the
MR. PADILLA. There is no question about corporations young people, and further considering that the development of
performing governmental functions or functions that are these young people at that tender age of seven to sixteen is vital
impressed with public interest. But the question is with regard in the development of the country producing good citizens, I
to matters that are covered, perhaps not exhaustively, by believe that we can make an exception of the Boy Scouting
private enterprise. It seems that under this provision the only movement of the Philippines from this general prohibition against
qualification is economic viability and common good, but shall providing tax exemption and privileges.[57]
government, through government-controlled corporations, compete
with private enterprise?

119
 [number] is because of the bad policy measures that were
enunciated with the enactment or promulgation by the President
Furthermore, this Court cannot agree with the dissenting opinion which equates the before of Presidential Decree No. 460 which we feel is the culprit of
changes introduced by Republic Act No. 7278 to the BSP Charter as clear the ills that is flagging the Boy Scout Movement today. And so, this
manifestation of the intent of Congress to return the BSP to the private sector. It was is specifically what we are attacking, Mr. Chairman, the
not the intent of Congress in enacting Republic Act No. 7278 to give up all interests in disenfranchisement of the National Council in the election of the
this basic youth organization, which has been its partner in forming responsible citizens national board. x x x. And so, this is what we would like to be
for decades. appraised of by the officers of the Boy [Scouts] of the Philippines
whom we are also confident, have the best interest of the Boy Scout
Movement at heart and it is in this spirit, Mr. Chairman, that we see
In fact, as may be seen in the deliberation of the House Bills that eventually resulted to no impediment towards working together, the Boy Scout of the
Republic Act No. 7278, Congress worked closely with the BSP to rejuvenate the Philippines officers working together with the House of
organization, to bring it back to its former glory reached under its original charter, Representatives in coming out with a measure that will put back the
Commonwealth Act No. 111, and to correct the perceived ills introduced by the vigor and enthusiasm of the Boy Scout Movement. x x
amendments to its Charter under Presidential Decree No. 460. The BSP suffered from x.[59] (Emphasis ours.)
low morale and decrease in number because the Secretaries of the different
departments in government who were too busy to attend the meetings of the BSPs
National Executive Board (the Board) sent representatives who, as it turned out, The following is another excerpt from the discussion on the House version of
changed from meeting to meeting. Thus, the Scouting Councils established in the the bill, in the Committee on Government Enterprises:
provinces and cities were not in touch with what was happening on the national level,
but they were left to implement what was decided by the Board. [58]
HON. AQUINO: x x x Well, obviously, the two bills as well
as the previous laws that have created the Boy Scouts of the
A portion of the legislators discussion is quoted below to clearly show their intent: Philippines did not provide for any direct government support by way
of appropriation from the national budget to support the activities of
this organization. The point here is, and at the same time they have
HON. DEL MAR. x x x I need not mention to you the been subjected to a governmental intervention, which to their mind
value and the tremendous good that the Boy Scout Movement has been inimical to the objectives and to the institution per se, that
has done not only for the youth in particular but for the country is why they are seeking legislative fiat to restore back the original
in general. And that is why, if we look around, our past and mandate that they had under Commonwealth Act 111. Such having
present national leaders, prominent men in the various fields of been the experience in the hands of government, meaning,
endeavor, public servants in government offices, and civic there has been negative interference on their part and inasmuch
leaders in the communities all over the land, and not only in our as their mandate is coming from a legislative fiat, then shouldnt
country but all over the world many if not most of them have at it be, this rhetorical question, shouldnt it be better for this
one time or another been beneficiaries of the Scouting organization to seek a mandate from, lets say, the government
Movement. And so, it is along this line, Mr. Chairman, that we would the Corporation Code of the Philippines and register with the
like to have the early approval of this measure if only to pay back SEC as non-profit non-stock corporation so that government
intervention could be very very minimal. Maybe thats a rhetorical
what we owe much to the Scouting Movement. Now, going to the
meat of the matter, Mr. Chairman, if I may just the Scouting question, they may or they may not answer, ano. I dont know what
Movement was enacted into law in October 31, 1936 under would be the benefit of a charter or a mandate being provided for by
Commonwealth Act No. 111. x x x [W]e were acknowledged as the way of legislation versus a registration with the SEC under the
third biggest scouting organization in the world x x x. And to our mind, Corporation Code of the Philippines inasmuch as they dont get
Mr. Chairman, this erratic growth and this decrease in membership anything from the government anyway insofar as direct funding. In
fact, the only thing that they got from government was intervention in
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their affairs. Maybe we can solicit some commentary comments from MR. ESCUDERO: Yes.
the resource persons. Incidentally, dont take that as an objection, Im
not objecting. Im all for the objectives of these two bills. It just HON. AQUINO: Well, thats very well taken so I will proceed with
occurred to me that since you have had very bad experience in the other issues, Mr. Chairman. x x x.[60] (Emphases added.)
hands of government and you will always be open to such possible
intervention even in the future as long as you have a legislative
mandate or your mandate or your charter coming from legislative Therefore, even though the amended BSP charter did away with most of the
action. governmental presence in the BSP Board, this was done to more strongly promote the
BSPs objectives, which were not supported under Presidential Decree No. 460. The
BSP objectives, as pointed out earlier, are consistent with the public purpose of the
promotion of the well-being of the youth, the future leaders of the country. The
xxxx amendments were not done with the view of changing the character of the BSP into a
privatized corporation.The BSP remains an agency attached to a department of the
government, the DECS, and it was not at all stripped of its public character.
MR. ESCUDERO: Mr. Chairman, there may be a
disadvantage if the Boy Scouts of the Philippines will be The ownership and control test is likewise irrelevant for a public corporation like the
required to register with the SEC. If we are registered with the BSP. To reiterate, the relationship of the BSP, an attached agency, to the government,
SEC, there could be a danger of proliferation of scout organization. through the DECS, is defined in the Revised Administrative Code of 1987. The BSP
Anybody can organize and then register with the SEC. If there will be meets the minimum statutory requirement of an attached government agency as the
a proliferation of this, then the organization will lose control of the DECS Secretary sits at the BSP Board ex officio, thus facilitating the policy and
entire organization. Another disadvantage, Mr. Chairman, anybody program coordination between the BSP and the DECS.
can file a complaint in the SEC against the Boy Scouts of the Requisites for Declaration of
Philippines and the SEC may suspend the operation or freeze the Unconstitutionality Not Met in this
assets of the organization and hamper the operation of the Case
organization. I dont know, Mr. Chairman, how you look at it but there
could be a danger for anybody filing a complaint against the The dissenting opinion of Justice Carpio improperly raised the issue of
organization in the SEC and the SEC might suspend the registration unconstitutionality of certain provisions of the BSP Charter. Even if the parties were
permit of the organization and we will not be able to operate. asked to Comment on the validity of the BSP charter by the Court, this alone does not
comply with the requisites for judicial review, which were clearly set forth in a recent
case:
HON. AQUINO: Well, that I think would be a problem that
will not be exclusive to corporations registered with the SEC because When questions of constitutional significance are raised,
even if you are government corporation, court action may be taken the Court can exercise its power of judicial review only if the following
requisites are present: (1) the existence of an actual and
against you in other judicial bodies because the SEC is simply
another quasi-judicial body. But, I think, the first point would be appropriate case; (2) the existence of personal and substantial
very interesting, the first point that you raised. In effect, what interest on the part of the party raising the constitutional
you are saying is that with the legislative mandate creating your question; (3) recourse to judicial review is made at the earliest
charter, in effect, you have been given some sort of a franchise opportunity; and (4) the constitutional question is the lis
with this movement. mota of the case.[61] (Emphasis added.)

Thus, when it comes to the exercise of the power of judicial review, the constitutional
MR. ESCUDERO: Yes. issue should be the very lis mota, or threshold issue, of the case, and that it should be
HON. AQUINO: Exclusive franchise of that movement? raised by either of the parties. These requirements would be ignored under the

121
dissents rather overreaching view of how this case should have been decided. True, it The nature of the funds of the BSP and the COAs audit jurisdiction were
was the Court that asked the parties to comment, but the Court cannot be the one to likewise brought up in said congressional deliberations, to wit:
raise a constitutional issue. Thus, the Court chooses to once more exhibit restraint in
the exercise of its power to pass upon the validity of a law.
HON. AQUINO: x x x Insofar as this organization being a government
Re: the COAs Jurisdiction created organization, in fact, a government corporation classified as
such, are your funds or your finances subjected to the COA audit?

Regarding the COAs jurisdiction over the BSP, Section 8 of its amended
charter allows the BSP to receive contributions or donations from the MR. ESCUDERO: Mr. Chairman, we are not. Our funds is not
government. Section 8 reads: subjected. We dont fall under the jurisdiction of the COA.

Section 8. Any donation or contribution which from time HON. AQUINO: All right, but before were you?
to time may be made to the Boy Scouts of the Philippines by the MR. ESCUDERO: No, Mr. Chairman.
Government or any of its subdivisions, branches, offices,
agencies or instrumentalities shall be expended by the MR. JESUS: May I? As historical backgrounder, Commonwealth Act
Executive Board in pursuance of this Act. 111 was written by then Secretary Jorge Vargas and before and up
to the middle of the Martial Law years, the BSP was receiving a
subsidy in the form of an annual a one draw from the Sweepstakes.
And, this was the case also with the Girl Scouts at the Anti-TB, but
then this was and the Boy Scouts then because of this funding
The sources of funds to maintain the BSP were identified before the House partly from government was being subjected to audit in the
Committee on Government Enterprises while the bill was being deliberated, and the contributions being made in the part of the Sweepstakes. But
pertinent portion of the discussion is quoted below: this was removed later during the Martial Law years with the creation
of the Human Settlements Commission. So the situation right now is
that the Boy Scouts does not receive any funding from government,
MR. ESCUDERO. Yes, Mr. Chairman. The question is the but then in the case of the local councils and this legislative charter,
sources of funds of the organization. First, Mr. Chairman, the Boy so to speak, enables the local councils even the national
Scouts of the Philippines do not receive annual allotment from the headquarters in view of the provisions in the existing law to receive
government. The organization has to raise its own funds through donations from the government or any of its instrumentalities, which
fund drives and fund campaigns or fund raising activities. Aside from would be difficult if the Boy Scouts is registered as a private
this, we have some revenue producing projects in the organization corporation with the Securities and Exchange Commission.
that gives us funds to support the operation. x x x From time to time, Government bodies would be estopped from making donations to the
Mr. Chairman, when we have special activities we request for Boy Scouts, which at present is not the case because there is the
assistance or financial assistance from government agencies, from Boy Scouts charter, this Commonwealth Act 111 as amended by PD
private business and corporations, but this is only during special 463.
activities that the Boy Scouts of the Philippines would conduct during
the year. Otherwise, we have to raise our own funds to support the
organization.[62] xxxx

HON. AMATONG: Mr. Chairman, in connection with that.

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 THE CHAIRMAN: Yeah, Gentleman from Zamboanga. Since the BSP, under its amended charter, continues to be a public
corporation or a government instrumentality, we come to the inevitable conclusion that
it is subject to the exercise by the COA of its audit jurisdiction in the manner consistent
HON. AMATONG: There is no auditing being made because with the provisions of the BSP Charter.
theres no money put in the organization, but how about donated
funds to this organization? What are the remedies of the donors of
how will they know how their money are being spent? WHEREFORE, premises considered, the instant petition for prohibition
is DISMISSED.

MR. ESCUDERO: May I answer, Mr. Chairman?

SO ORDERED.

THE CHAIRMAN: Yes, gentleman.

MR. ESCUDERO: The Boy Scouts of the Philippines has an

external auditor and by the charter we are required to submit a
financial report at the end of each year to the National Executive
Board. So all the funds donated or otherwise is accounted for at the
end of the year by our external auditor. In this case the SGV. [63]

Historically, therefore, the BSP had been subjected to government audit in so

far as public funds had been infused thereto. However, this practice should not
preclude the exercise of the audit jurisdiction of COA, clearly set forth under the
Constitution, which pertinently provides:

Section 2. (1) The Commission on Audit shall have the

power, authority, and duty to examine, audit, and settle all
accounts pertaining to the revenue and receipts of, and
expenditures or uses of funds and property, owned or held in
trust by, or pertaining to, the Government, or any of its
subdivisions, agencies, or instrumentalities, including
government-owned and controlled corporations with original
charters, and on a post-audit basis: (a) constitutional bodies,
commissions and offices that have been granted fiscal autonomy
under this Constitution; (b) autonomous state colleges and
universities; (c) other government-owned or controlled corporations
with original charters and their subsidiaries; and (d) such non-
governmental entities receiving subsidy or equity, directly or
indirectly, from or through the Government, which are required by
law of the granting institution to submit to such audit as a condition
of subsidy or equity. x x x. [64]
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 PHILIPPINE SOCIETY FOR G.R. No. 169752 Section 2 of its charter, shall be to enforce laws relating to cruelty inflicted upon animals
or the protection of animals in the Philippine Islands, and generally, to do and perform
THE PREVENTION OF
all things which may tend in any way to alleviate the suffering of animals and promote
CRUELTY TO ANIMALS, their welfare.[3]

Petitioners, September 25, 2007 At the time of the enactment of Act No. 1285, the original Corporation Law, Act No.
1459, was not yet in existence. Act No. 1285 antedated both the Corporation Law and
- versus - the constitution of the Securities and Exchange Commission. Important to note is that
COMMISSION ON AUDIT, the nature of the petitioner as a corporate entity is distinguished from
the sociedad anonimasunder the Spanish Code of Commerce.
DIR. RODULFO J. ARIESGA
For the purpose of enhancing its powers in promoting animal welfare and enforcing
(in his official capacity as Director laws for the protection of animals, the petitioner was initially imbued under its charter
with the power to apprehend violators of animal welfare laws. In addition, the petitioner
of the Commission on Audit), MS.
was to share one-half (1/2) of the fines imposed and collected through its efforts for
MERLE M. VALENTIN and MS. violations of the laws related thereto. As originally worded, Sections 4 and 5 of Act No.
1285 provide:
SUSAN GUARDIAN (in their official
SEC. 4. The said society is authorized to appoint not to
capacities as Team Leader and Team exceed five agents in the City of Manila, and not to exceed two in
Member, respectively, of the audit each of the provinces of the Philippine Islands who shall have all the
power and authority of a police officer to make arrests for violation of
Team of the Commission on Audit), the laws enacted for the prevention of cruelty to animals and the
protection of animals, and to serve any process in connection with
Respondents.
the execution of such laws; and in addition thereto, all the police force
x-----------------------------------------------------------x of the Philippine Islands, wherever organized, shall, as occasion
requires, assist said society, its members or agents, in the
DECISION enforcement of all such laws.

AUSTRIA-MARTINEZ, J.: SEC. 5. One-half of all the fines imposed and collected
through the efforts of said society, its members or its agents, for
Before the Court is a special civil action for Certiorari and Prohibition under Rule 65 of
violations of the laws enacted for the prevention of cruelty to animals
the Rules of Court, in relation to Section 2 of Rule 64, filed by the petitioner assailing
and for their protection, shall belong to said society and shall be used
Office Order No. 2005-021[1] dated September 14, 2005 issued by the respondents
to promote its objects.
which constituted the audit team, as well as its September 23, 2005 Letter [2] informing
the petitioner that respondents audit team shall conduct an audit survey on the (emphasis supplied)
petitioner for a detailed audit of its accounts, operations, and financial transactions. No
temporary restraining order was issued. Subsequently, however, the power to make arrests as well as the privilege to retain a
portion of the fines collected for violation of animal-related laws were recalled by virtue
of Commonwealth Act (C.A.) No. 148,[4] which reads, in its entirety, thus:
The petitioner was incorporated as a juridical entity over one hundred years ago by Be it enacted by the National Assembly of the Philippines:
virtue of Act No. 1285, enacted on January 19, 1905, by the Philippine
Commission. The petitioner, at the time it was created, was composed of animal
aficionados and animal propagandists. The objects of the petitioner, as stated in
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 Section 1. Section four of Act Numbered Twelve hundred and eighty- Whereas, the cruel treatment of animals is an offense against the
five as amended by Act Numbered Thirty five hundred and forty- State, penalized under our statutes, which the Government is duty
eight, is hereby further amended so as to read as follows: bound to enforce;

Now, therefore, I, Manuel L. Quezon, President of the Philippines,

Sec. 4. The said society is authorized to appoint pursuant to the authority conferred upon me by the Constitution,
not to exceed ten agents in the City of Manila, and hereby decree, order, and direct the Commissioner of Public Safety,
not to exceed one in each municipality of the the Provost Marshal General as head of the Constabulary Division
Philippines who shall have the authority to of the Philippine Army, every Mayor of a chartered city, and every
denounce to regular peace officers any violation of municipal president to detail and organize special members of the
the laws enacted for the prevention of cruelty to police force, local, national, and the Constabulary to watch, capture,
animals and the protection of animals and to and prosecute offenders against the laws enacted to prevent cruelty
cooperate with said peace officers in the to animals. (Emphasis supplied)
prosecution of transgressors of such laws.

On December 1, 2003, an audit team from respondent Commission on Audit (COA)

Sec. 2. The full amount of the fines collected for violation of the laws visited the office of the petitioner to conduct an audit survey pursuant to COA Office
against cruelty to animals and for the protection of animals, shall Order No. 2003-051 dated November 18, 2003[5] addressed to the petitioner. The
accrue to the general fund of the Municipality where the offense was petitioner demurred on the ground that it was a private entity not under the jurisdiction
committed. of COA, citing Section 2(1) of Article IX of the Constitution which specifies the general
jurisdiction of the COA, viz:

Sec. 3. This Act shall take effect upon its approval.

Approved, November 8, 1936. (Emphasis supplied) Section 1. General Jurisdiction. The Commission on Audit shall have
the power, authority, and duty to examine, audit, and settle all
Immediately thereafter, then President Manuel L. Quezon issued Executive Order accounts pertaining to the revenue and receipts of, and expenditures
(E.O.) No. 63 dated November 12, 1936, portions of which provide: or uses of funds and property, owned or held in trust by, or pertaining
to the Government, or any of its subdivisions, agencies, or
instrumentalities, including government-owned and controlled
Whereas, during the first regular session of the National Assembly, corporations with original charters, and on a post-audit basis: (a)
Commonwealth Act Numbered One Hundred Forty Eight constitutional bodies, commissions and officers that have been
was enacted depriving the agents of the Society for the Prevention granted fiscal autonomy under the Constitution; (b) autonomous
of Cruelty to Animals of their power to arrest persons who have state colleges and universities; (c) other government-owned or
violated the laws prohibiting cruelty to animals thereby correcting a controlled corporations and their subsidiaries; and (d) such non-
serious defect in one of the laws existing in our statute books. governmental entities receiving subsidy or equity, directly or
indirectly, from or through the government, which are required by law
or the granting institution to submit to such audit as a condition of
subsidy or equity. However, where the internal control system of the
xxxx audited agencies is inadequate, the Commission may adopt such
measures, including temporary or special pre-audit, as are
necessary and appropriate to correct the deficiencies. It shall keep
the general accounts of the Government, and for such period as may

125
 be provided by law, preserve the vouchers and other supporting survey was not conducted due to the refusal of the petitioner because the latter
papers pertaining thereto.(Emphasis supplied) maintained that it was a private corporation.

Petitioner received on September 27, 2005 the subject COA Office Order 2005-021
dated September 14, 2005 and the COA Letter dated September 23, 2005.
Petitioner explained thus:
Hence, herein Petition on the following grounds:

A.
a. Although the petitioner was created by special legislation, this
necessarily came about because in January 1905 there was as yet
neither a Corporation Law or any other general law under which it may
be organized and incorporated, nor a Securities and Exchange RESPONDENT COMMISSION ON AUDIT COMMITTED GRAVE
Commission which would have passed upon its organization and ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
incorporation. JURISDICTION WHEN IT RULED THAT PETITIONER IS SUBJECT
TO ITS AUDIT AUTHORITY.

b. That Executive Order No. 63, issued during the Commonwealth period,
effectively deprived the petitioner of its power to make arrests, and that B.
the petitioner lost its operational funding, underscore the fact that it
exercises no governmental function. In fine, the government itself, by its
overt acts, confirmed petitioners status as a private juridical entity. PETITIONER IS ENTITLED TO THE RELIEF SOUGHT, THERE
BEING NO APPEAL, NOR ANY PLAIN, SPEEDY AND ADEQUATE
REMEDY IN THE ORDINARY COURSE OF LAW AVAILABLE TO
The COA General Counsel issued a Memorandum [6] dated May 6, 2004, asserting that IT.[10]
the petitioner was subject to its audit authority. In a letter dated May 17, The essential question before this Court is whether the petitioner qualifies as a
2004,[7]respondent COA informed the petitioner of the result of the evaluation, government agency that may be subject to audit by respondent COA.
furnishing it with a copy of said Memorandum dated May 6, 2004 of the General
Counsel.

Petitioner argues: first, even though it was created by special legislation in 1905 as
there was no general law then existing under which it may be organized or incorporated,
Petitioner thereafter filed with the respondent COA a Request for Re-evaluation it exercises no governmental functions because these have been revoked by C.A. No.
dated May 19, 2004,[8] insisting that it was a private domestic corporation. 148 and E.O. No. 63; second, nowhere in its charter is it indicated that it is a public
corporation, unlike, for instance, C.A. No. 111 which created the Boy Scouts of the
Philippines, defined its powers and purposes, and specifically stated that it was An Act
Acting on the said request, the General Counsel of respondent COA, in a Memorandum to Create a Public Corporation in which, even as amended by Presidential Decree No.
dated July 13, 2004,[9] affirmed her earlier opinion that the petitioner was a government 460, the law still adverted to the Boy Scouts of the Philippines as a public corporation,
entity that was subject to the audit jurisdiction of respondent COA. In a letter all of which are not obtaining in the charter of the petitioner; third, if it were a
dated September 14, 2004, the respondent COA informed the petitioner of the result of government body, there would have been no need for the State to grant it tax
the re-evaluation, maintaining its position that the petitioner was subject to its audit exemptions under Republic Act No. 1178, and the fact that it was so exempted
jurisdiction, and requested an initial conference with the respondents. strengthens its position that it is a private institution; fourth, the employees of the
petitioner are registered and covered by the Social Security System at the latters
In a Memorandum dated September 16, 2004, Director Delfin Aguilar reported to COA initiative and not through the Government Service Insurance System, which should
Assistant Commissioner Juanito Espino, Corporate Government Sector, that the audit have been the case had the employees been considered government employees; fifth,
126
the petitioner does not receive any form of financial assistance from the government, the aforecited laws as to the manner of implementation, the specific violations of the
since C.A. No. 148, amending Section 5 of Act No. 1285, states that the full amount of law, the person/s authorized to impose fine and in what amount; and, b) the effect of
the fines, collected for violation of the laws against cruelty to animals and for the the 1935 and 1987 Constitutions on whether petitioner continues to exist or should
protection of animals, shall accrue to the general fund of the Municipality where the organize as a private corporation under the Corporation Code, B.P. Blg. 68 as
offense was committed; sixth, C.A. No. 148 effectively deprived the petitioner of its amended.
powers to make arrests and serve processes as these functions were placed in the
hands of the police force; seventh, no government appointee or representative sits on
the board of trustees of the petitioner; eighth, a reading of the provisions of its charter Petitioner and the OSG filed their respective Comments. Respondents filed a
(Act No. 1285) fails to show that any act or decision of the petitioner is subject to the Manifestation stating that since they were being represented by the OSG which filed its
approval of or control by any government agency, except to the extent that it is Comment, they opted to dispense with the filing of a separate one and adopt for the
governed by the law on private corporations in general; and finally, ninth, the purpose that of the OSG.
Committee on Animal Welfare, under the Animal Welfare Act of 1998, includes
members from both the private and the public sectors.

The petitioner avers that it does not have the authority to impose fines for violation of
animal welfare laws; it only enjoyed the privilege of sharing in the fines imposed and
The respondents contend that since the petitioner is a body politic created by virtue of collected from its efforts in the enforcement of animal welfare laws; such privilege,
a special legislation and endowed with a governmental purpose, then, indubitably, the however, was subsequently abolished by C.A. No. 148; that it continues to exist as a
COA may audit the financial activities of the latter. Respondents in effect divide their private corporation since it was created by the Philippine Commission before
contentions into six strains: first, the test to determine whether an entity is a government the effectivity of the Corporation law, Act No. 1459; and the 1935 and 1987
corporation lies in the manner of its creation, and, since the petitioner was created by Constitutions.
virtue of a special charter, it is thus a government corporation subject to respondents
auditing power; second, the petitioner exercises sovereign powers, that is, it is tasked
to enforce the laws for the protection and welfare of animals which ultimately redound
to the public good and welfare, and, therefore, it is deemed to be a government The OSG submits that Act No. 1285 and its amendatory laws did not give petitioner the
instrumentality as defined under the Administrative Code of 1987, the purpose of which authority to impose fines for violation of laws [12] relating to the prevention of cruelty to
is connected with the administration of government, as purportedly affirmed by animals and the protection of animals; that even prior to the amendment of Act No.
American jurisprudence; third, by virtue of Section 23,[11] Title II, Book III of the same 1285, petitioner was only entitled to share in the fines imposed; C.A. No. 148 abolished
Code, the Office of the President exercises supervision or control over the that privilege to share in the fines collected; that petitioner is a public corporation and
petitioner; fourth, under the same Code, the requirement under its special charter for has continued to exist since Act No. 1285; petitioner was not repealed by the 1935 and
the petitioner to render a report to the Civil Governor, whose functions have been 1987 Constitutions which contain transitory provisions maintaining all laws issued not
inherited by the Office of the President, clearly reflects the nature of the petitioner as a inconsistent therewith until amended, modified or repealed.
government instrumentality; fifth, despite the passage of the Corporation Code, the law
creating the petitioner had not been abolished, nor had it been re-incorporated under
any general corporation law; and finally, sixth, Republic Act No. 8485, otherwise known The petition is impressed with merit.
as the Animal Welfare Act of 1998, designates the petitioner as a member of its
Committee on Animal Welfare which is attached to the Department of Agriculture.
The arguments of the parties, interlaced as they are, can be disposed of in five points.

In view of the phrase One-half of all the fines imposed and collected through the efforts
of said society, the Court, in a Resolution dated January 30, 2007, required the Office First, the Court agrees with the petitioner that the charter test cannot be applied.
of the Solicitor General (OSG) and the parties to comment on: a) petitioner's authority
to impose fines and the validity of the provisions of Act No. 1285 and Commonwealth
Act No. 148 considering that there are no standard measures provided for in
Essentially, the charter test as it stands today provides:
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 And since the underpinnings of the charter test had been introduced by the 1935
Constitution and not earlier, it follows that the test cannot apply to the petitioner, which
[T]he test to determine whether a corporation is government owned was incorporated by virtue of Act No. 1285, enacted on January 19, 1905. Settled is
or controlled, or private in nature is simple. Is it created by its own the rule that laws in general have no retroactive effect, unless the contrary is
charter for the exercise of a public function, or by incorporation under provided.[16] All statutes are to be construed as having only a prospective operation,
the general corporation law? Those with special charters are unless the purpose and intention of the legislature to give them a retrospective effect
government corporations subject to its provisions, and its employees is expressly declared or is necessarily implied from the language used. In case of
are under the jurisdiction of the Civil Service Commission, and are doubt, the doubt must be resolved against the retrospective effect.[17]
compulsory members of the Government Service Insurance System.
xxx (Emphasis supplied)[13]

There are a few exceptions. Statutes can be given retroactive effect in the following
cases: (1) when the law itself so expressly provides; (2) in case of remedial statutes;
The petitioner is correct in stating that the charter test is predicated, at best, on the (3) in case of curative statutes; (4) in case of laws interpreting others; and (5) in case
legal regime established by the 1935 Constitution, Section 7, Article XIII, which states: of laws creating new rights.[18] None of the exceptions is present in the instant case.

Sec. 7. The National Assembly shall not, except by general law,

provide for the formation, organization, or regulation of private
corporations, unless such corporations are owned or controlled by The general principle of prospectivity of the law likewise applies to Act No. 1459,
the Government or any subdivision or instrumentality thereof. [14] otherwise known as the Corporation Law, which had been enacted by virtue of the
plenary powers of the Philippine Commission on March 1, 1906, a little over a year
after January 19, 1905, the time the petitioner emerged as a juridical entity. Even the
The foregoing proscription has been carried over to the 1973 and the 1987 Corporation Law respects the rights and powers of juridical entities organized
Constitutions. Section 16 of Article XII of the present Constitution provides: beforehand, viz:

Sec. 16. The Congress shall not, except by general law,

provide for the formation, organization, or regulation of private SEC. 75. Any corporation or sociedad anonima formed, organized,
corporations. Government-owned or controlled corporations may be and existing under the
created or established by special charters in the interest of the laws of the Philippine Islands and lawfully transacting business in th
common good and subject to the test of economic viability. e Philippine Islands on the date of the passage of this Act, shall be
subject to the provisions hereof so far as such
provisions may be applicable and shall
Section 16 is essentially a re-enactment of Section 7 of Article XVI of the 1935 be entitled at its option either to continue business as such
Constitution and Section 4 of Article XIV of the 1973 Constitution. corporation or to reform and organize under and by virtue of the
provisions of this Act, transferring all corporate interests to the new
corporation which, if a stock corporation, is authorized to issue its
During the formulation of the 1935 Constitution, the Committee on Franchises shares of stock at par to the stockholders or members of the old
recommended the foregoing proscription to prevent the pressure of special interests corporation according to their interests. (Emphasis supplied).
upon the lawmaking body in the creation of corporations or in the regulation of the
same. To permit the lawmaking body by special law to provide for the organization,
formation, or regulation of private corporations would be in effect to offer to it the As pointed out by the OSG, both the 1935 and 1987 Constitutions contain transitory
temptation in many cases to favor certain groups, to the prejudice of others or to the provisions maintaining all laws issued not inconsistent therewith until amended,
prejudice of the interests of the country.[15] modified or repealed.[19]

128
In a legal regime where the charter test doctrine cannot be applied, the mere fact that corporations.No government representative sits on the board of trustees of the
a corporation has been created by virtue of a special law does not necessarily qualify petitioner. Like all private corporations, the successors of its members are determined
it as a public corporation. voluntarily and solely by the petitioner in accordance with its by-laws, and may exercise
those powers generally accorded to private corporations, such as the powers to hold
property, to sue and be sued, to use a common seal, and so forth. It may adopt by-laws
What then is the nature of the petitioner as a corporate entity? What legal regime for its internal operations: the petitioner shall be managed or operated by its officers in
governs its rights, powers, and duties? accordance with its by-laws in force. The pertinent provisions of the charter provide:

As stated, at the time the petitioner was formed, the applicable law was the Philippine
Bill of 1902, and, emphatically, as also stated above, no proscription similar to the
charter test can be found therein. Section 1. Anna L. Ide, Kate S. Wright, John L.
Chamberlain, William F. Tucker, Mary S.
Fergusson, Amasa S. Crossfield, Spencer Cosby, Sealy B. Rossiter,
The textual foundation of the charter test, which placed a limitation on the power of the Richard P. Strong, Jose Robles Lahesa, Josefina R. de Luzuriaga,
legislature, first appeared in the 1935 Constitution. However, the petitioner was and such other persons as may be associated with them in
incorporated in 1905 by virtue of Act No. 1258, a law antedating the Corporation Law conformity with this act, and their successors, are hereby constituted
(Act No. 1459) by a year, and the 1935 Constitution, by thirty years. There being neither and created a body politic and corporate at law, under the name and
a general law on the formation and organization of private corporations nor a restriction style of The Philippines Society for the Prevention of Cruelty to
on the legislature to create private corporations by direct legislation, the Philippine Animals.
Commission at that moment in history was well within its powers in 1905 to constitute
the petitioner as a private juridical entity.
As incorporated by this Act, said society shall have the
power to add to its organization such and as many members as it
Time and again the Court must caution even the most brilliant scholars of the law and desires, to provide for and choose such officers as it may deem
all constitutional historians on the danger of imposing legal concepts of a later date on advisable, and in such manner as it may
facts of an earlier date.[20] wish, and to remove members as it shall provide.

The amendments introduced by C.A. No. 148 made it clear that the petitioner was a It shall have the right to sue and be sued, to use a common
private corporation and not an agency of the government. This was evident in Executive seal, to
Order No. 63, issued by then President of the Philippines Manuel L. Quezon, declaring receive legacies and donations, to conduct social enterprises for th
that the revocation of the powers of the petitioner to appoint agents with powers of e purpose of obtaining funds, to levy dues upon
arrest corrected a serious defect in one of the laws existing in the statute books. itsmembers and provide for their collection to hold real and personal
estate such as may be necessary for the accomplishment of the
purposes of the society, and to adopt such by-laws for its government
As a curative statute, and based on the doctrines so far discussed, C.A. No. 148 has as may not be inconsistent with law or this charter.
to be given retroactive effect, thereby freeing all doubt as to which class of corporations
the petitioner belongs, that is, it is a quasi-public corporation, a kind of private domestic
corporation, which the Court will further elaborate on under the fourth point. xxxx

Second, a reading of petitioners charter shows that it is not subject to control or

supervision by any agency of the State, unlike government-owned and -controlled

129
 Sec. 3. The said society shall be operated under the provisions of a public character, incorporated solely for the public good. This class of
direction of its officers, in accordance with its by-laws in force, and corporations may be considered quasi-public corporations, which are private
this charter. corporations that render public service, supply public wants, [21] or pursue other
eleemosynary objectives. While purposely organized for the gain or benefit of its
members, they are required by law to discharge functions for the public
xxxx benefit. Examples of these corporations are utility,[22] railroad, warehouse, telegraph,
telephone, water supply corporations and transportation companies. [23] It must be
stressed that a quasi-public corporation is a species of private corporations, but the
qualifying factor is the type of service the former renders to the public: if it performs a
Sec. 6. The principal office of the society shall be kept in the public service, then it becomes a quasi-public corporation.[24]
city of Manila, and the society shall have full power to locate and
establish branch offices of the society wherever it may deem
advisable in the Philippine Islands, such branch offices to be under
Authorities are of the view that the purpose alone of the corporation cannot be taken
the supervision and control of the principal office.
as a safe guide, for the fact is that almost all corporations are nowadays created to
promote the interest, good, or convenience of the public. A bank, for example, is a
private corporation; yet, it is created for a public benefit. Private schools and
Third. The employees of the petitioner are registered and covered by the Social universities are likewise private corporations; and yet, they are rendering public
Security System at the latters initiative, and not through the Government Service service. Private hospitals and wards are charged with heavy social
Insurance System, which should be the case if the employees are considered responsibilities. More so with all common carriers. On the other hand, there may exist
government employees. This is another indication of petitioners nature as a private a public corporation even if it is endowed with gifts or donations from private individuals.
entity. Section 1 of Republic Act No. 1161, as amended by Republic Act No. 8282,
otherwise known as the Social Security Act of 1997, defines the employer:
The true criterion, therefore, to determine whether a corporation is public or private is
found in the totality of the relation of the corporation to the State. If the corporation is
Employer Any person, natural or juridical, domestic or created by the State as the latters own agency or instrumentality to help it in carrying
foreign, who carries on in the Philippines any trade, business, out its governmental functions, then that corporation is considered public; otherwise, it
industry, undertaking or activity of any kind and uses the services of is private. Applying the above test, provinces, chartered cities, and barangays can best
another person who is under his orders as regards the exemplify public corporations. They are created by the State as its own device and
employment, except the Government and any of its political agency for the accomplishment of parts of its own public works. [25]
subdivisions, branches or instrumentalities, including corporations
owned or controlled by the Government: Provided, That a self-
employed person shall be both employee and employer at the same It is clear that the amendments introduced by C.A. No. 148 revoked the powers of the
time. (Emphasis supplied) petitioner to arrest offenders of animal welfare laws and the power to serve processes
in connection therewith.

Fourth. The respondents contend that the petitioner is a body politic because its
primary purpose is to secure the protection and welfare of animals which, in turn, Fifth. The respondents argue that since the charter of the petitioner requires the latter
redounds to the public good. to render periodic reports to the Civil Governor, whose functions have been inherited
by the President, the petitioner is, therefore, a government instrumentality.

This argument, is, at best, specious. The fact that a certain juridical entity is impressed
with public interest does not, by that circumstance alone, make the entity a public This contention is inconclusive. By virtue of the fiction that all corporations owe their
corporation, inasmuch as a corporation may be private although its charter contains very existence and powers to the State, the reportorial requirement is applicable to all
130
corporations of whatever nature, whether they are public, quasi-public, or private
corporationsas creatures of the State, there is a reserved right in the legislature to SO ORDERED.
investigate the activities of a corporation to determine whether it acted within its
powers. In other words, the reportorial requirement is the principal means by which the
State may see to it that its creature acted according to the powers and functions
conferred upon it. These principles were extensively discussed in Bataan Shipyard &
Engineering Co., Inc. v. Presidential Commission on Good Government.[26] Here, the
Court, in holding that the subject corporation could not invoke the right against self-
incrimination whenever the State demanded the production of its corporate books and
papers, extensively discussed the purpose of reportorial requirements, viz:

x x x The corporation is a creature of the state. It is presumed to be

incorporated for the benefit of the public. It received certain special
privileges and franchises, and holds them subject to the laws of the
state and the limitations of its charter. Its powers are limited by law.
It can make no contract not authorized by its charter. Its rights to act
as a corporation are only preserved to it so long as it obeys the laws
of its creation. There is a reserve[d] right in the legislature to
investigate its contracts and find out whether it has exceeded its
powers. It would be a strange anomaly to hold that a state, having
chartered a corporation to make use of certain franchises, could not,
in the exercise of sovereignty, inquire how these franchises had been
employed, and whether they had been abused, and demand the
production of the corporate books and papers for that purpose. The
defense amounts to this, that an officer of the corporation which is
charged with a criminal violation of the statute may plead the
criminality of such corporation as a refusal to produce its books. To
state this proposition is to answer it. While an individual may lawfully
refuse to answer incriminating questions unless protected by an
immunity statute, it does not follow that a corporation vested with
special privileges and franchises may refuse to show its hand when
charged with an abuse of such privileges. (Wilson v. United States,
55 Law Ed., 771, 780.)[27]

WHEREFORE, the petition is GRANTED. Petitioner is DECLARED a private domestic

corporation subject to the jurisdiction of the Securities and Exchange Commission. The
respondents are ENJOINED from investigating, examining and auditing the petitioner's
fiscal and financial affairs.

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G.R. No. 72807 September 9, 1991 on the grounds and under the conditions set forth in Section 44" of the law, but nothing
in the resolution of formation, the decree adds, "shall state or infer that the local
MARILAO WATER CONSUMERS ASSOCIATION, INC., petitioners, legislative body has the power to dissolve, alter or affect the district beyond that
vs. specifically provided for in this Act."11
INTERMEDIATE APPELLATE COURT, MUNICIPALITY OF MARILAO, BULACAN,
SANGGUNIANG BAYAN, MARILAO, BULACAN, and MARILAO WATER The juridical entities thus created and organized under PD 198 are considered quasi-
DISTRICT, respondents. public corporations, performing public services and supplying public wants. They are
authorized not only to "exercise all the powers which are expressly granted" by said
Magtanggol C. Gunigundo for petitioner. decree, and those "which are necessarily implied from or incidental to" said powers,
but also "the power of eminent domain, the exercise .. (of which) shall however be
subject to review by the Administration" (LWUA). In addition to the powers granted in,
Prospero A. Crescini for Marilao Water District. and subject to such restrictions imposed under, the Act, they may also exercise the
powers, rights and privileges given to private corporations under existing laws. 12
NARVASA, J.:p
The decree also established a government corporation attached to the Office of the
Involved in this appeal is the determination of which triburial has jurisdiction over the President, known as the Local Water Utilities Administration (LWUA) 13 to function
dissolution of a water district organized and operating as a quasi-public corporation primarily as "a specialized lending institution for the promotion development and
under the provisions of Presidential Decree No. 198, as amended; 1 the Regional Trial financing of local water utilities." It has the following specific powers and duties; 14
Court, or the Securities & Exchange Commission.
(1) prescribe minimum standards and regulations in order to assure
PD 198 authorizes the formation, lays down the powers and functions, and governs the acceptable standards of construction materials and supplies, maintenance,
operation of water districts throughout the country; it is "the source of authorization and operation, personnel training, accounting and fiscal practices for local water
power to form and maintain a (water) district." Once formed, it says, a district is subject utilities;
to its provisions and is not under the jurisdiction of any political subdivision. 2
(2) furnish technical assistance and personnel training programs for local
Under PD 198, water districts may be created by the different local legislative bodies water utilities;
by the passage of a resolution to this effect, subject to the terms of the decree. The
primary function of these water districts is to sell water to residents within their territory, (3) monitor and evaluate local water standards; and
under such schedules of rates and charges as may be determined by their
boards.3They shall manage, administer, operate and maintain all watersheds within
their territorial boundaries, safeguard and protect the use of the waters therein, (4) effect systems integration, joint investment and operations, district
supervise and control structures within their service areas, and prohibit any person from annexation and deannexation whenever economically warranted.
selling or otherwise disposing of water for public purposes within their service areas
where district facilities are available to provide such service. 4 It was pursuant to the foregoing rules and norms that the Marilao Water District was
formed by Resolution of the Sangguniang Bayan of the Municipality of Marilao dated
The decree specifies the terms under which water districts may be formed and operate. September 18, 1982, which resolution was thereafter forwarded to the LWUA and "duly
It prescribes, particularly — filed" by it on October 4, 1982 after ascertaining that it conformed to the requirements
of the law.15
a) the name by which a water district shad be known, which shall be contained in the
enabling resolution, and shall include the name of the city, municipality, or province, or The claim was thereafter made that the creation of the Marilao Water District in the
region thereof, served by said system, followed by the words, 'Water District;'5 manner aforestated was defective and illegal. The claim was made by a non-stock,
non-profit corporation known as the Marilao Water Consumers Association, Inc., in a
petition dated December 12, 1983 filed with the Regional Trial Court at Malolos,
b) the number and qualifications of the members of the boards of directors, with the Bulacan. Impleaded as respondents were the Marilao Water District, as well as the
date of expiration of term of office for each;6 the manner of their selection and initial Municipality of Marilao, Bulacan; its Sangguniang Bayan; and Mayor Nicanor V.
appointment by the head of the local political subdivision; 7their terms of office (which GUILLERMO. The petition prayed for the dissolution of the water district on the basis
shall be in staggered periods of two, four and six years); 8 the manner of filling up chiefly of the following allegations, to wit:
vacancies in the board;9 the compensation and liabilities of members of the
board.10 The resolution shall contain a "statement that the district may only be dissolved
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1) there had been no real, but only a "farcical" public hearing prior to the creation of the to determine if the dissolution of the water district is for the best interest of the people,
Water District; is within the competence of a regular court of justice, and neither the LWUA nor the
National Water Resources Council is competent to take cognizance of the matter of
2) not only was the waterworks system turned over to the Water District without dissolution of the water district and recovery of its waterworks system, or the exorbitant
compensation. but a subsidy was illegally authorized for it; rates imposed by it. The Consumers Association also opposed admission of the third-
party complaint on the ground that its individual officers are not personally amenable
to suit for acts of the corporation,17 which has a personality distinct from theirs.
3) the Water District was being run with "negligence, apathy, indifference and
mismanagement," and was not providing adequate and efficient service to the
community, but this notwithstanding, the consumers were being billed in full and The Trial Court found for the respondents. It dismissed the Consumers Association's
threatened with disconnection for failure to pay bills on time; in fact, one of the suit by Order handed down on June 8, 1984 which pertinently reads as follows:
consumers who complained had his water service cut off;
After a consideration of the arguments raised by the herein parties, the Court
4) the consumers were consequently "forced to organize themselves into a corporation is more inclined to take the position of the respondents that the Securities and
last October 3, 1983 ... for the purpose of demanding adequate and sufficient supply of Exchange Commission has the exclusive and original jurisdiction over this
water and efficient management of the waterworks in Marilao, Bulacan.16 case.

Acting on the complaint, particularly on the application for temporary restraining order WHEREFORE, the instant petition, the third-party complaint, and the
and preliminary injunction set out therein, the Trial Court issued an Order on December compulsory counterclaim filed herein are hereby DISMISSED, for lack of
22, 1983 setting the application for preliminary hearing, requiring the respondents to jurisdiction.
answer the petition and restraining them until further orders from collecting any water
bill, disconnecting any water service, transferring any property of the waterworks, or Its motion for reconsideration having been denied, by Order dated September 20, 1984,
disbursing any amount in favor of any person. The order was modified on January 6, the Consumers Association filed with this Court a petition for review on certiorari, which
1984 to allow the respondents to pay the district's outstanding obligations to Meralco, was docketed as G.R. No. 68742. The case was however referred to the Intermediate
by way of exception to the restraining order. Appellate Court by this Court's Second Division, in a Resolution dated November 19,
1984, where it was docketed as AC-G.R. S.P. No. 04862.
On January 13, 1984 the Marilao Water District filed its Answer with Compulsory
Counterclaim, denying the material allegations of the petition and asserting as But there in the Intermediate Appellate Court, the Consumers Association's cause also
affirmative defenses (a) the Court's lack of jurisdiction of the subject matter, and (b) the met with failure. The Appellate Court, in its Decision promulgated on September 10,
failure of the petition to state a cause of action. The answer alleged that the matter of 1985, ruled that its cause could not prosper because —
the water district's dissolution fell under the original and exclusive jurisdiction of the
Securities & Exchange Commission (SEC); and the matter of the propriety of water 1) it had availed of the wrong remedy, i.e., the special civil action of certiorari; the Order
rates, within the primary administrative jurisdiction of the LWUA and the quasi-judicial of June 8, 1984 being a final order in the sense that it "left nothing else to be done in
jurisdiction of the National Water Resources Council. On the same date, Marilao Water the case the proper remedy was appeal under Rule 41 of the Rules of Court and not a
District filed a motion for admission of its third-party complaint against the officers and certiorari suit under Rule 65; and
directors of the petitioner corporation, it being claimed that they had instigated the filing
of the petition simply because one of them was a political adversary of the respondent
Mayor. 2) even if the certiorari action be treated as an appeal, it was 14 unerringly clear that
the controversy ... falls within the competence of the SEC in virtue of P.D. 902-
A18 Which provides that said agency "shall have original and exclusive jurisdiction to
The other respondents also filed their answer through the Provincial Fiscal of Bulacan, hear and decide cases involving:
setting up the same affirmative defense of lack of jurisdiction on the part of the Trial
Court; and failure of the petition to state a cause of action since it admitted that it was
by resolution of the Marilao Sangguniang Bayan that the Marilao Water District was a) xxx xxx xxx
constituted.
b) Controversies arising out of intra-corporate or partnership relations,
The petitioner — the Marilao Consumers Association filed a reply, and an answer to between and among stockholders, members or associates; between any or
the counterclaim, on January 26, 1984. It averred that since the Marilao Water District all of them and the corporation, partnership or association of which they are
had not been organized under the Corporation Code, the SEC had no jurisdiction over stockholders, members or associates, respectively; and between such
a proceeding for its dissolution; and that under Section 45 of PD 198, the proceeding
133
 corporation, partnership or association and the state insofar as it concerns which is charged with enforcement of the Corporation Code as regards corporations,
their individual franchise or right to exist as such entity ... partnerships and associations formed or operating under its provisions, has no power
of supervision or control over the activities of water districts. More particularly, the SEC
The Appellate Court subsequently denied the petitioner's motion for reconsideration, has no power of oversight over such activities of water districts as selling water, fuling
by Resolution dated November 4, 1985. Hence, the petition for review on certiorari at the rates and charges therefor22 or the management, administration, operation and
bar, in which reversal of the Appellate Tribunal's decision is sought, the petitioner maintenance of watersheds within their territorial boundaries, or the
insisting that the remedy resorted to by it was correct but misunderstood by the I.A.C. safeguarding and protection of the use of the waters therein, or the supervision
and that the law does indeed vest exclusive jurisdiction over the subject matter of the and control of structures within the service areas of the district, and the
case in the Regional Trial Court, not the Securities and Exchange Commission. prohibition of any person from selling or otherwise disposing of water for public
purposes within their service areas where district facilities are available to
provide such service.23 That function of supervision or control over water
Turning first to the adjective issue, it is quite evident that the Order of the Trial Court of districts is entrusted to the Local Water Utilities Administration.24 Consequently,
June 8, 1984, dismissing the action of the Consumers Association, is really a final order; as regards the activities of water districts just mentioned, the SEC obviously can
it finally disposed of the proceeding and left nothing more to be done by the Court on have no claim to any expertise.
the merits. Now, the firmly settled principle is that the remedy against such a finalorder
is the ordinary remedy of an appeal, either solely on questions of law — in which case
the appeal may be taken only to the Supreme Court — or questions of fact and law — The "Provincial Water Utilities Act of 1973" has a specific provision governing
in which event the appeal should be brought to the Court of Appeals. The extraordinary dissolution of water districts created thereunder This is Section 45 of PD
remedy of a special civil action of certiorari or prohibition is not the appropriate recourse 19825 reading as follows:
because precisely, one of the conditions for availing of it is that there should be "no
appeal, nor any plain, speedy and adequate remedy in the ordinary course of law. 19 A SEC. 45. Dissolution. — A district may be dissolved by resolution of its
resort to the latter instead of the former would ordinarily be fatal, unless it should appear board of directors filed in the manner of filing the resolution forming the
in a given case that appeal would otherwise be an inefficacious or inadequate district: Provided, however, That prior to the adoption of any such
remedy.20 resolution: (1) another public entity has acquired the assets of the
district and has assumed all obligations and liabilities attached thereto;
In holding that Marilao Water District had resorted to the wrong remedy against the (2) all bondholders and other creditors have been notified and they
Trial Court's order dismissing its suit, i.e., the special civil action of certiorari, instead of consent to said transfer and dissolution; and (3) a court of competent
an appeal, the Intermediate Appellate Court quite overlooked the fact, not seriously jurisdiction has found that said transfer and dissolution are in the best
disputed by the Marilao Water District and its co-respondents, that the former had in interest of the public.
fact availed of the remedy of appeal by certiorari under Rule 45 of the Rules of Court,
as required by paragraph 25 of the Interim Rules & Guidelines of this Court, Under this provision, it is the LWUA which is the administrative body involved in
implementing Batas Pambansa Bilang 129; that before doing so, it had first asked for the voluntary dissolution of a water district; it is with it that the resolution of
and been granted an extension of thirty (30) days within which to file a petition for review dissolution is filed, not the Securities and Exchange Commission. And this
on certiorari; but that subsequently, by Resolution of this Court's Second Division dated provision is evidently quite distinct and different from those on dissolution of
November 19, 1984, the case was referred to the Intermediate Appellate Court, corporations "formed or organized under the provisions of xx (the Corporation)
evidently because it was felt that certain factual issues had yet to be determined. In any Code" set out in Sections 117 to 121, inclusive, of said Code, under which
case, all things considered, the Court is not prepared to have the case at bar finally dissolution may be voluntary (by vote of the stockholders or members), generally
determined on this procedural issue. effected by the filing of the corresponding resolution with the Securities and
Exchange Commission, or involuntary, commenced by the filing of a verified
The juridical entities known as water districts created by PD 198, although considered complaint also with the SEC.
as quasi-public corporations and authorized to exercise the powers, rights and
privileges given to private corporations under existing laws 21 are entirely distinct from All these argue against conceding jurisdiction in the Securities and Exchange
corporations organized under the Corporation Code, PD 902-A, as amended. The Commission over proceedings for the dissolution of water districts. For although
Corporation Code has nothing whatever to do with their formation and organization, all described as quasipublic corporations, and granted the same powers as private
the terms and conditions for their organization and operation being particularly spelled corporations, water districts are not really corporations. They have no
out in PD 198. The resolutions creating them, their charters, in other words, are filed incorporators, stockholders or members, who have the right to vote for directors,
not with the Securities and Exchange Commission but with the LWUA. It is these or amend the articles of incorporation or by-laws, or pass resolutions, or
resolutions qua charters, and not articles of incorporation drawn up under the otherwise perform such other acts as are authorized to stockholders or members
Corporation Code, which set forth the name of the water districts, the number of their of corporations by the Corporation Code. In a word, there can be no such thing
directors, the manner of their selection and replacement, their powers, etc. The SEC as a relation of corporation and stockholders or members in a water district for

134
the simple reason that in the latter there are no stockholders or members. and deannexations (addition to or exclusion from the district of territory). Again
Between the water district and those who are recipients of its water services it does not appear that the case at bar is a water rights controversy or one
there exists not the relationship of corporation-and-stockholder, but that of a involving annexation or deannexation.
service agency and users or customers. There can therefore be no such thing in
a water district as "intra-corporate or partnership relations, between and among What essentially is sought by the Consumers Association is the dissolution of
stockholders, members or associates (or) between any or all of them and the the Marilao Water District, on the ground that its formation was illegal and invalid;
corporation, partnership or association of which they are stockholders, members the waterworks system had been turned over to it without compensation and a
or associates, respectively," within the contemplation of Section 5 of the subsidy illegally authorized for it; and the Water District was being run with
Corporation Code so as to bring controversies involving them within the "negligence, apathy, indifference and mismanagement," and was not providing
competence and cognizance of the SEC. adequate and efficient service to the community.32

There can be even less debate about the fact that the SEC has no jurisdiction Now, as already above stated, the dissolution of a water district is governed by Section
over the co-respondents of the Marilao Water District — the Municipality of 45 of PD 198, as amended, stating that it "may be dissolved by resolution of its board
Marilao, its Sangguniang Bayan and its Mayor — who are accused of a of directors filed in the manner of filing the resolution forming the district," subject to
"conspiracy" with the water district in respect of the anomalies described in the enumerated pre-requisites.33 The procedure for dissolution thus consists of the
Consumer Associations' petition.26 following steps:

The controversy, therefore, between the Consumers Association, on the one 1) the initiation by the board of directors of the water district motu proprio or at
hand, and Marilao District and its co-respondents, on the other, is not within the the relation of an interested party, of proceedings for the dissolution of the water
jurisdiction of the SEC. district, including:

In their answer with counterclaim in the proceedings a quo, the respondents a) the ascertainment by said board that —
advocated the theory that the case falls within the jurisdiction of the LWUA
and/or the National Water Resources Council.
1) another public entity has acquired the assets of the district and has assumed
all obligations and liabilities attached thereto; and
The LWUA does not appear to have any adjudicatory functions. It is, as already
pointed out, "primarily a specialized lending institution for the promotion,
development and financing of local water utilities, 27 with power to prescribe 2) all bondholders and other creditors have been notified and consent to said
minimum standards and regulations regarding maintenance, operation, transfer and dissolution;
personnel training, accounting and fiscal practices for local water utilities, to
furnish technical assistance and personnel training programs therefor; monitor b) the commencement by the water district in a court of competent jurisdiction
and evaluate local water standards; and effect systems integration, joint of a proceeding to obtain a declaration that "said transfer and dissolution are in
investment and operations, district annexation and deannexation whenever the best interest of the public;
economically warranted.28 The LWUA has quasi-judicial power only as regards
rates or charges fixed by water districts, which it may review to establish 2) after compliance with the foregoing requisites, the adoption by the board of
compliance with the provisions of PD 198, without prejudice to appeal being directors of the water district of a resolution dissolving the water district and its
taken therefrom by a water concessionaire to the National Water Resources submission to the Sangguniang Bayan concerned for approval;
Council whose decision thereon shall be appealable to the Office of the
President.29 The rates or charges established by respondent Marilao Water
District do not appear to be at issue in the controversy at bar. 3) submission of the resolution of the Sangguniang Bayan dissolving the water
district to the head of the local government concerned for approval, and
ultimately to the LWUA for final approval and filing.
The National Water Resources Council, on the other hand, is conferred "original
jurisdiction over all disputes relating to appropriation, utilization, exploitation,
development, control, conservation and protection of waters within the meaning The Consumer Association's action therefore is, in fine, in the nature of a
and context of the provisions of ..." (the Code by which said Council was created, mandamus suit, seeking to compel the board of directors of the Marilao Water
Presidential Decree No. 1067, otherwise known as the Water Code of the District, and its alleged co-conspirators, the Sangguniang Bayan and the Mayor
Philippines);30 and its decision on water rights controversies may be appealed to of Marilao to go through the process above described for the dissolution of the
the Court of First Instance of the province where the subject matter of the water district. In this sense, and indeed, taking account of the nature of the
controversy is situated.31 It also has authority to review questions of annexations proceedings for dissolution just described, it seems plain that the case does not
135
fall within the limited jurisdiction of the SEC., but within the general jurisdiction
of Regional Trial Courts.

WHEREFORE, the Decision of the Intermediate Appellate Court of September 10,

1985 — affirming that of the Regional Trial Court of June 8, 1984 — is REVERSED
and SET ASIDE, and the case is remanded to the Regional Trial Court for further
proceedings and adjudication in accordance with law. No costs.

SO ORDERED.

136