BOY SCOUTS OF THE PHILIPPINES VS.
COMMISSION ON AUDIT The Constitution emphatically prohibits the creation of private corporations
FACTS: The Commission on Audit issued COA Resolution No. 99-011 in which the said
resolution state that the BSP was created as a public corporation under Commonwealth Act
No. 111, as amended by Presidential Decree No. 460 and Republic Act No. 7278; that in Boy
Scouts of the Philippines vs. National Labor Relations Commission, the Supreme Court ruled
that the BSP, as constituted under its charter, was a “government-controlled corporation
within the meaning of Article IX (B)(2)(1) of the Constitution; and that “the BSP is
appropriately regarded as a government instrumentality under the 1987 Administrative
Code.”
The BSP sought reconsideration of the COA Resolution in a letter signed by the
BSP National President Jejomar Binay. He claimed that RA 7278 eliminated the “substantial
government participation” in the National Executive Board by removing: (i) the President of
the Philippines and executive secretaries, with the exception of the Secretary of Education,
as members thereof; and (ii) the appointment and confirmation power of the President of
the Philippines, as Chief Scout, over the members of the said Board.
The BSP further claimed that the 1987 Administrative Code itself, of which the
BSP s. NLRC relied on for some terms, defines government-owned and controlled
corporations as agencies organized as stock or non-stock corporations which the BSP,
under its present charter, is not.
And finally, they claim that the Government, like in other GOCCs, does not have
funds invested in the BSP. The BSP is not an entity administering special funds. The BSP is
neither a unit of the Government; a department which refers to an executive department as
created by law; nor a bureau which refers to any principal subdivision or unit of any
department.
ISSUE: Whether the BSP falls under the COA’s audit jurisdiction.
RULING: After considering the legislative history of the amended charter and the applicable
laws and the arguments of both parties, the Court found that the BSP is a public corporation
and its funds are subject to the COA’s audit jurisdiction.
The BSP Charter created the BSP as a “public corporation” to serve the following
public interest or purpose: xxx to promote through organization and cooperation with
other agencies, the ability of boys to do useful things for themselves and others, to train
them in scout craft, and to inculcate in them patriotism, civic consciousness and
responsibility, courage, self-reliance, discipline and kindred virtues, and moral values, using
the method which are in common use by boy scouts.
The purpose of the BSP as stated in its amended charter shows that it was created
in order to implement a State policy declared in Article II, Section 13 of the Constitution.
Evidently, the BSP, which was created by a special law to serve a public purpose in pursuit
of a constitutional mandate, comes within the class of “public corporations” defined by
paragraph 2, Article 44 of the Civil Code and governed by the law which creates it, pursuant
to Article 45 of the same Code.
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 historically gave
certain individuals, families or groups special privileges denied to other citizens.
The BSP is a public corporation or a government agency or instrumentality with
juridical personality, which does not fall within the constitutional prohibition in 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 exist 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 which are not subject to the test of
ownership or control and economic viability but to different criteria relating to their public
purposes/interests or constitutional policies and objectives and their administrative
relationship to the government or any of its Departments or Offices.
Since BSP, under its amended charter, continues to be a public corporation or a
government instrumentality, the Court concludes that it is subject to the exercise by the
COA of its audit jurisdiction in the manner consistent with the provisions of the BSP
Charter.
LIMBONA VS. MANGELIN
Facts:
Petitioner, Sultan Alimbusar Limbona, was elected Speaker of the Regional Legislative
Assembly or Batasang Pampook of Central Mindanao (Assembly). On October 21, 1987
Congressman Datu Guimid Matalam, Chairman of the Committee on Muslim Affairs of the
House of Representatives, invited petitioner in his capacity as Speaker of the Assembly of
Region XII in a consultation/dialogue with local government officials. Petitioner accepted
the invitation and informed the Assembly members through the Assembly Secretary that
there shall be no session in November as his presence was needed in the house committee
hearing of Congress. However, on November 2, 1987, the Assembly held a session in
defiance of the Limbona's advice, where he was unseated from his position. Petitioner prays
that the session's proceedings be declared null and void and be it declared that he was still
the Speaker of the Assembly. Pending further proceedings of the case, the SC received a
resolution from the Assembly expressly expelling petitioner's membership therefrom.
Respondents argue that petitioner had "filed a case before the Supreme Court against some
members of the Assembly on a question which should have been resolved within the
confines of the Assembly," for which the respondents now submit that the petition had
become "moot and academic" because of its resolution.
Issues:
1. Whether or not the expulsion of the petitioner (pending litigation) has made the case
moot and academic.
2. Are the so-called autonomous governments of Mindanao subject to the jurisdiction of the
national courts? In other words, what is the extent of self-government given to the two
autonomous governments of Region 9 and 12?
Ruling:
1. The Court does not agree that the case is moot and academic simply by reason of the
expulsion resolution that was issued. If the expulsion was done purposely to make the
petition moot and academic, it will not make it academic. On the ground of due process, the
Court hold that the expulsion is without force and effect. First, there is no showing that the
Sanggunian had conducted an investigation. It also does not appear that the petitioner had
been made aware that he was charged with graft and corruption before his colleagues. It
cannot be said therefore that he was accorded any opportunity to rebut their accusations.
As it stands, the charges now are leveled amount to mere accusations that cannot warrant
expulsion. Thus, the Court ordered reinstatement of the petitioner.
2. The autonomous governments of Mindanao were organized in Regions 9 and 12 by
Presidential Decree No. 1618. In relation to the central government, the Presidential Decree
provides that “the President shall have the power of general supervision and control over
the Autonomous Regions...” Now, autonomy is either decentralization of administration or
decentralization of power. There is decentralization of administration when the central
government delegates administrative powers to political subdivisions in order to broaden
the base of government power and in the process to make local governments “more
responsive and accountable,” “and ensure their fullest development as self-reliant
communities and make them more effective partners in the pursuit of national
development and social progress.” At the same time, it relieves the central government of
the burden of managing local affairs and enables it to concentrate on national concerns. The
president exercises “general supervision” over them, but only to “ensure that local affairs
are administered according to law.” He has not control over their acts in the sense that he
can substitute their judgments with his own. Decentralization of power, on the other hand,
involves an abdication of political power in the favor of local government units declared to
be autonomous. In that case, the autonomous government is free to chart its own destiny
and shape its future with minimum intervention from central authorities.
According to the Supreme Court, an examination of the very Presidential Decree creating
the autonomous governments of Mindanao persuades us to believe that they were never
meant to exercise autonomy through decentralization of power. The Presidential Decree, in
the first place, mandates that “the President shall have the power of general supervision
and control over Autonomous Regions.” In the second place, the Sangguniang Pampook,
their legislative arm, is made to dischage chiefly administrative services. Thus, the SC
assumes jurisdiction.
Upon the facts presented, the Court finds two sessions held on November to be invalid.
Wherefore, the petition is Granted. The petitioner is reinstated as Member and speaker of
the Sanggunian.
BASCO VS PHILIPPINE AMUSEMENTS AND GAMING CORPORATION
Facts: A TV ad proudly announces: “The New PAGCOR – Responding Through Responsible
Gaming.” But the petitioners think otherwise, that is why, they filed the instant petition
seeking to annul the PAGCOR charter – PD 1869, because it is allegedly contrary to morals,
public policy and order, and because –
a. It constitutes a waiver of a right prejudicial to a third person with a right recognized by
law. It waived the Manila city government’s right to impose taxes and license fees, which is
recognized by law;
b. For the same reason stated in the immediately preceeding paragraph, the law has
intruded into the local government’s right to impose local taxes and license fees. This, in
contravention of the constitutionally enshrined principle of local autonomy;
c. It violates the equal protection clause of the constitution in that it legalizes PAGCOR –
conducted gambling, while most other forms of gambling are outlawed, together with
prostitution, drug trafficking and other vices;
d. It violates the avowed trend of the Cory government away from the monopolistic and
crony economy, and toward free enterprise and privatization.
Issue: Whether or not the city of Manila may levy taxes on PAGCOR.
Held: No. The city of Manila, being a mere municipal corporation has no inherent right to
impose taxes. Thus, the charter or statute must plainly show an intent to confer that power
or the municipality cannot assume it. Its power to tax therefore must always yield to a
legislative act which is superior having been passed upon by the state itself which has the
inherent power to tax.
The city of Manila’s power to impose license fees on gambling has long been revoked. As
early as 1975, the power of local governments to regulate gambling thru the grant of
“franchise, licenses or permits” was withdrawn by PD no. 771 and was vested exclusively
on the national government.
Therefore, only the national government has the power to issue “license or permits” for the
operation of gambling. Necessarily the power to demand or collect license fees which is a
consequence of the issuance of “licenses or permits” is no longer vested in the City of
Manila.
Local governments has no power to tax instrumentalities of the National Government.
PAGCOR is a government owned or controlled corporation with an original charter, PD
1869. All of its shares of stocks are owned by the national government.
The power of the local government to “impose taxes and fees” is always subject to
“limitations” which congress may provide by law. Since PD 1869 remains an operative law
until amended, repealed or revoked, its exemption clause remains as an exception to the
exercise of the power of local governments to impose taxes and fees. It cannot therefore be
violative but rather is consistent with the principle of local autonomy.
Besides, the principle of local autonomy under the 1987 constitution simply means
“decentralization.” It does not make local governments sovereign within the state or an
“imperium in imperio.”
What is settled is that the matter of regulating; taxing or otherwise dealing with gambling in
a state concern and hence, it is the sole prerogative of the state to retain it or delegate it to
local governments.
LINA V. PAÑO
Facts:
Private respondent Tony Calvento, was appointed agent by PCSO to install a
terminal for the operation of lotto, applied for a mayor’s permit to operate a lotto outlet in
San Pedro, Laguna. It was denied on the ground that an ordinance entitled Kapasiyahan Blg.
508, Taon 1995 of the Sangguniang Panlalawigan of Laguna prohibited gambling in the
province, including the operation of lotto. With the denial of his application, private
respondent filed an action for declaratory relief with prayer for preliminary injunction and
temporary restraining order. The trial court rendered judgment in favor of private
respondent enjoining petitioners from implementing or enforcing the subject resolution.
Issue:
whether Kapasiyahan Blg. 508, T. 1995 of the Sangguniang Panlalawigan of
Laguna and the denial of a mayor’s permit based thereon are valid
Held:
No. The questioned ordinance merely states the “objection” of the council to the
said game. It is but a mere policy statement on the part of the local council, which is not self-
executing. Nor could it serve as a valid ground to prohibit the operation of the lotto system
in the province of Laguna. As a policy statement expressing the local government’s
objection to the lotto, such resolution is valid. This is part of the local government’s
autonomy to air its views which may be contrary to that of the national government’s.
However, this freedom to exercise contrary views does not mean that local governments
may actually enact ordinances that go against laws duly enacted by Congress. Given this
premise, the assailed resolution in this case could not and should not be interpreted as a
measure or ordinance prohibiting the operation of lotto.
Moreover, ordinances should not contravene statutes as municipal governments
are merely agents of the national government. The local councils exercise only delegated
legislative powers which have been conferred on them by Congress. The delegate cannot be
superior to the principal or exercise powers higher than those of the latter. This being the
case, these councils, as delegates, cannot be superior to the principal or exercise powers
higher than those of the latter. The question of whether gambling should be permitted is for
Congress to determine, taking into account national and local interests. Since Congress has
allowed the PCSO to operate lotteries which PCSO seeks to conduct in Laguna, pursuant to
its legislative grant of authority, the province's Sangguniang Panlalawigan cannot nullify the
exercise of said authority by preventing something already allowed by Congress.
CORDILLERA BROAD COALITION vs. COMMISSION ON AUDIT
Facts: Article X of the 1987 Constitution mandated the creation of 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
this Constitution and the national sovereignty as well as territorial integrity of the Republic
of the Philippines.
On July 15, 1987, Executive Order No. 220 was issued which created the Cordillera
Administrative Region. It covers the provinces of Abra, Benguet, Ifugao, Kalinga, Apayao
and Mountain Province and the City of Baguio. It was created to accelerate economic and
social growth in the region and to prepare for the establishment of the autonomous region
in the Cordilleras. Its main function is to coordinate the planning and implementation of
programs and services in the region, particularly, to coordinate with the local government
units as well as with the executive departments of the National Government in the
supervision of field offices and in identifying, planning, monitoring, and accepting projects
and activities in the region. It shall also monitor the implementation of all ongoing national
and local government projects in the region.
Then, Republic Act No. 6766 entitled "An Act Providing for an Organic Act for the
Cordillera Autonomous Region," was enacted and signed into law. The Act recognizes the
CAR and the offices and agencies created under E.O. No. 220 and its transitory nature.
Issues: (1) Whether or not the creation of the Cordillera Administrative Region pre-empts the
enactment of an organic act by the Congress and the creation of' the autonomous region in the
Cordilleras.
(2) Whether or not EO 220 created a new territorial and political subdivision or
merger of existing ones into a larger subdivision.
Held: (1) No. the Supreme Court held that EO 220 did not create the autonomous region
contemplated in the Constitution. It envisions the consolidation and coordination of the
delivery of services of line departments and agencies of the National Government in the
areas covered by the administrative region as a step preparatory to the grant of autonomy
to the Cordilleras.
Moreover, the transitory nature of the CAR does not necessarily mean that it is
"the interim autonomous region in the Cordilleras." It created a region, covering a specified
area, for administrative purposes and not a basic structure of government composed of an
elective executive and legislature and special courts with personal, family and property law
jurisdiction as the Constitution required.
(2) No. According to the Supreme Court, CAR is not a public corporation or a territorial and
political subdivision. It does not have a separate juridical personality, unlike provinces,
cities and municipalities. Furthermore, it is not vested with the powers that are granted to
public corporations, such as the power to sue and be sued, the power to own and dispose of
property, the power to create its own sources of revenue, etc. The Supreme Court added
that CAR is similar as the administrative regions created under the Reorganization Plan for
the purpose of expediting the delivery of services.
Moreover, under the said law the President exercises control and supervision over
CAR and the offices that were created. CAR may be likened to a regional coordinating
agency of the National Government, similar to the regional development councils which the
President may create under the Constitution. These councils are "composed of local
government officials, regional heads of departments and other government offices, and
representatives from non-governmental organizations within the region for purposes of
administrative decentralization to strengthen the autonomy of the units therein and to
accelerate the economic and social growth and development of the units in the region."
PIMENTEL V. EXECUTIVE SECRETARY
Doctrine: An intervention program formulated by the national government itself but
implemented in partnership with the local government units to achieve the common
national goal development and social progress can by no means be an encroachment upon
the autonomy of local governments.
Facts:
 The petioner assets the validity of certain provisions of Republic Act No. 10147 or
the General Appropriations Act (GAA) of 20111 which provides a P21 Billion
budget allocation for the Conditional Cash Transfer Program (CCTP) headed by
the Department of Social Welfare & Development (DSWD). Petitioners seek to
enjoin respondents Executive Secretary Paquito N. Ochoa and DSWD Secretary
Corazon Juliano-Soliman from implementing the said program on the ground that
it amounts to a "recentralization" of government functions that have already been
devolved from the national government to the local government units.
 Petitioners admit that the wisdom of adopting the CCTP as a poverty reduction
strategy for the Philippines is with the legislature. They take exception, however,
to the manner by which it is being implemented, that is, primarily through a
national agency like DSWD instead of the LGUs to which the responsibility and
functions of delivering social welfare, agriculture and health care services have
been devolved pursuant to Section 17 of Republic Act No. 7160, also known as the
Local Government Code of 1991, in relation to Section 25, Article II & Section 3,
Article X of the 1987 Constitution.
 Petitioners assert that giving the DSWD full control over the identification of
beneficiaries and the manner by which services are to be delivered or
conditionalities are to be complied with, instead of allocating the P21 Billion CCTP
Budget directly to the LGUs that would have enhanced its delivery of basic
services, results in the "recentralization" of basic government functions, which is
contrary to the precepts of local autonomy and the avowed policy of
decentralization.
Issue: Whether or not the 21 billion budget allocation of Conditional Cash Transfer violates
Article 2, Section 2 of Article 10, section 6 of the 1987 Philippine constitution in relation of
section 17 of the Local Government Code of 1991?
Held:
 Petition is dismissed. Under the Philippine concept of local autonomy, the national
government has not completely relinquished all its powers over local
governments, including autonomous regions. Only administrative powers over
local affairs are delegated to political subdivisions. The purpose of the delegation
is to make governance more directly responsive and effective at the local levels. In
turn, economic, political and social development at the smaller political units are
expected to propel social and economic growth and development. But to enable
the country to develop as a whole, the programs and policies effected locally must
be integrated and coordinated towards a common national goal. Thus, policy-
setting for the entire country still lies in the President and Congress.
Every law has in its favor the presumption of constitutionality, and to justify its
nullification, there must be a clear and unequivocal breach of the Constitution, not a
doubtful and argumentative one.23 Petitioners have failed to discharge the burden of
proving the invalidity of the provisions under the GAA of 2011. The allocation of a P21
billion budget for an intervention program formulated by the national government itself but
implemented in partnership with the local government units to achieve the common
national goal development and social progress can by no means be an encroachment upon
the autonomy of local governments.
LAGUNA LAKE DEVELOPMENT AUTHORITY VS CA
FACTS:
The Laguna Lake Development Authority (LLDA) was created through Republic Act No.
4850. It was granted, inter alia, exclusive jurisdiction to issue permits for the use of all
surface water for any project or activity in or affecting the said region including navigation,
construction, and operation of fishpens, fish enclosures, fish corrals and the like.
Then came RA 7160, the Local Government Code of 1991. The municipalities in the Laguna
Lake region interpreted its provisions to mean that the newly passed law gave municipal
governments the exclusive jurisdiction to issue fishing privileges within their municipal
waters.
ISSUE:
Who should exercise jurisdiction over the Laguna Lake and its environs insofar as the
issuance of permits for fishing privileges is concerned, the LLDA or the towns and
municipalities comprising the region?
HELD:
LLDA has jurisdiction over such matters because the charter of the LLDA prevails over the
Local Government Code of 1991. The said charter constitutes a special law, while the latter
is a general law. It is basic in statutory construction that the enactment of a later legislation
which is a general law, cannot be construed to have repealed a special law. The special law
is to be taken as an exception to the general law in the absence of special circumstances
forcing a contrary conclusion.
In addition, the charter of the LLDA embodies a valid exercise of police power for the
purpose of protecting and developing the Laguna Lake region, as opposed to the Local
Government Code, which grants powers to municipalities to issue fishing permits for
revenue purposes.
Thus it has to be concluded that the charter of the LLDA should prevail over the Local
Government Code of 1991 on matters affecting Laguna de Bay.
MMDA VS. BEL-AIR VILLAGE ASSOCIATION
Facts:
On December 30, 1995, respondent received from petitioner a notice requesting the former
to open its private road, Neptune Street, to public vehicular traffic starting January 2, 1996.
On the same day, respondent was apprised that the perimeter separating the subdivision
from Kalayaan Avenue would be demolished.
Respondent instituted a petition for injunction against petitioner, praying for the issuance
of a TRO and preliminary injunction enjoining the opening of Neptune Street and
prohibiting the demolition of the perimeter wall. The trial court denied issuance of a
preliminary injunction. On appeal, the appellate court ruled that the MMDA has no
authority to order the opening of Neptune Street, and cause the demolition of its perimeter
walls. It held that the authority is lodged in the City Council of Makati by ordinance.

MMDA said it has the authority to open Neptune St. because it is an agent of the
Government endowed with police power in the delivery of basic services in Metro Manila.
From the premise of police powers, it follow then that it need not for an ordinance to be
enacted first.
Hence this petition.
Issue:
Does MMDA has the mandate to open Neptune Street to public traffic pursuant to its
regulatory and police powers?
Ruling:
According to SC, Police power is an inherent attribute of sovereignty. Police power is lodged
primarily in the National Legislature, which the latter can delegate to the President and
administrative boards, LGU or other lawmaking bodies.
LGU is a political subdivision for local affairs. Which has a legislative body empowered to
enact ordinances, approved resolutions and appropriate funds for the general welfare of the
province/city/municipality.
The MMDA is, as termed in the charter itself, "development authority." All its functions are
administrative in nature.The powers of the MMDA are limited to the following acts:
formulation, coordination, regulation,implementation, preparation, management,
monitoring, setting of policies, installation of a system and administration. There is no
syllable in R.A. No. 7924 that grants the MMDA police power, let alone legislative power
In sum, the MMDA has no power to enact ordinances for the welfare of the community. It is
the LGUs, acting through their respective legislative councils, that possess legislative power
and police power.
The Sangguniang Panlungsod of Makati City did not pass any ordinance or resolution
ordering the opening of Neptune Street, hence, its proposed opening by the MMDA is illegal.
DISOMANGCOP VS DPWH SECRETARY
FACTS
On Aug. 1, 1989, RA 6734 was passed (Organic Act of ARMM). Four provinces voted for
inclusion in ARMM, namely: Lanao del Sur, Maguindanao, Sulu and Tawi-Tawi. In
accordance with it, EO 426 was issued by Pres. Cory Aquino on Oct. 12, 1990. The same
devolved to the ARMM the power of the DPWH. Consequently, DO 119 entitled "Creation of
Marawi Sub-District Engineering Office." was issued by DPWH Sec. Vigilar last May 20,
1999, which is in accordance with the E.O 124. It created a DPWH Marawi Sub-District
Engineering Office which shall have jurisdiction over all national infrastructure projects and
facilities under the DPWH within Marawi City and Lanao del Sur. On Jan. 17, 2001, RA 8999
which created a new Engineering District in the first district of Lanao del Sur was passed by
Pres. Estrada entitled “An act establishing an engineering district as the first district of
Lanao Del Sur and appropriating funds therefor”. On March 31, 2001, RA 9054 which
amended RA 6734 was passed. The province of Basilan and the City of Marawi voted to join
ARMM through said law.
Disomangcop and Dimalotang sin their capacity as Officer-in-Charge and Engineer II
respectively of the First Engineering District of DPWH-ARMM in Lanao del Sur filed a
petition questioning the constitutionality and validity of DO 119 and RA 8999 on the ground
that they contravene the constitution and the organic acts of the ARMM. Moreover they
sought mainly the following relief: to prohibit respondent DPWH Secretary from
implementing D.O 119 and R.A 8999 and releasing funds for public work projects intended
for Lanao Del Sur and Marawi City to the Marawi Sub-District Engineering Office and other
administrative regions of DPWH.
ISSUE
WON DO 119 and RA 8999 are both invalid and constitutionally infirm
HELD
Yes, Republic Act 8999 never became an operative and was superseded or repealed by
Republic Act 9054. RA 8999 is patently inconsistent with RA 9054 which is a later law. RA
9054, which is anchored on the 1987 Constitution advances the constitutional grant of
autonomy by detailing the powers of the ARMM which covers among others Lanao del Sur.
However, RA 8999 ventures to re-establish the National Government's jurisdiction over the
infrastructure programs in Lanao del Sur. RA 8999 is patently inconsistent with RA 9054,
and it destroys the latter law's objective of devolution of the functions of DPWH in line with
the policy of the Constitution to grant LGUs meaningful and authentic regional autonomy.
DO 119 creating the Marawi Sub-District Engineering Office which has jurisdiction over
infrastructure projects within Marawi City and Lanao del Sur is violate of the provisions of
EO 426 which implements the transfer of control and supervision of the DPWH to the
ARMM in line with RA 6734. The office created under DO 119 having essentially the same
powers with the District Engineering Office of Lanao del Sur as created under EO 426, is a
duplication. The DO in effect takes back powers which have been previously devolved
under EO 426. RA 9054 however has repealed DO Department Order 119.
Thus, R.A 8999 is antagonistic to and cannot be reconciled with both ARMM Organic Acts. It
contravened true decentralization which is the essence of regional autonomy. And, D.O
were issued unconstitutional and were issued grave abuse of discretion
MANDANAS VS. ROMULO
FACTS:
In 1998, then President Estrada issued EO No. 48 establishing the “Program for Devolution
Adjustment and Equalization” to enhance the capabilities of LGUs in the discharge of the
functions and services devolved to them through the LGC.
The Oversight Committee under Executive Secretary Ronaldo Zamora passed Resolutions
No. OCD-99-005, OCD-99-006 and OCD-99-003 which were approved by Pres. Estrada on
October 6, 1999. The guidelines formulated by the Oversight Committee required the LGUs
to identify the projects eligible for funding under the portion of LGSEF and submit the
project proposals and other requirements to the DILG for appraisal before the Committee
serves notice to the DBM for the subsequent release of the corresponding funds.
Hon. Herminaldo Mandanas, Governor of Batangas, petitioned to declare unconstitutional
and void certain provisos contained in the General Appropriations Acts (GAAs) of 1999,
2000, and 2001, insofar as they uniformly earmarked for each corresponding year the
amount of P5billion for the Internal Revenue Allotment (IRA) for the Local Government
Service Equalization Fund (LGSEF) & imposed conditions for the release thereof.
ISSUE:
Whether the assailed provisos in the GAAs of 1999, 2000, and 2001, and the OCD
resolutions infringe the Constitution and the LGC of 1991.
general & substantive law. To permit the Congress to undertake these amendments through
the GAAs would unduly infringe the fiscal autonomy of the LGUs.
The value of LGUs as institutions of democracy is measured by the degree of
autonomy they enjoy. Our national officials should not only comply with the constitutional
provisions in local autonomy but should also appreciate the spirit and liberty upon which
these provisions are based.

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

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

The entire process involving the distribution & release of the LGSEF is constitutionally
impermissible. The LGSEF is part of the IRA or “just share” of the LGUs in the national taxes.
Sec.6, Art.X of the Constitution mandates that the “just share” shall be automatically
released to the LGUs. Since the release is automatic, the LGUs aren’t required to perform any
act to receive the “just share” – it shall be released to them “without need of further action“.
To subject its distribution & release to the vagaries of the implementing rules & regulations
as sanctioned by the assailed provisos in the GAAs of 1999-2001 and the OCD Resolutions
would violate this constitutional mandate.

The only possible exception to the mandatory automatic release of the LGUs IRA is if the
national internal revenue collections for the current fiscal year is less than 40% of the
collections of the 3rd preceding fiscal year. The exception does not apply in this case.

The Oversight Committee’s authority is limited to the implementation of the LGC of 1991 not
to supplant or subvert the same, and neither can it exercise control over the IRA of the LGUs.

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

A general appropriations bill is a special type of legislation, whose content is limited to

specified sums of money dedicated to a specific purpose or a separate fiscal unit – any
provision therein which is intended to amend another law is considered an “inappropriate
provision“. Increasing/decreasing the IRA of LGUs fixed in the LGC of 1991 are matters of