1. Liban v. Gordon, GR 175352, January 18, 2011, Leonardo de Castro, J.

(PNRC neither strictly private nor public)

FACTS:
This is a motion for clarification/reconsideration filed by respondent Richard Gordon of the SC’s decision of July 15, 2009 and a MR of PH National Red Cross (PNRC). In the
July 15, 2009 decision, the Court held that Gordon did not forfeit his seat in the senate when he accepted the chairmanship of PNRC Board of Governors as the office of PNRC
Chairman is “not a government office or an office in a GOCC” for purposes of the prohibition in S13, Art. VI. But the decision also declared void the PNRC Charter insofar as it
creates the PNRC as a private corporation and ruled that PNRC should incorporate under the Corporation Code if it wants to be a private corporation. The decision declared void
Sections 1-13 of PNRC’s charter, RA 95 as amended by PD 1264.

Gordon argues that the validity of RA 95 was not an issue in the case, thus it was unnecessary for the Court to decide on that question.

ISSUE:
Whether PNRC is a private corporation.
HELD: NO.
1) The issue of constitutionality of RA 95 was not raised. It was not the very lis mota of the case. This Court will not touch the issue of unconstitutionality unless it is the very lis
mota. This Court should not have declared void certain sections of RA 95 and should have exercised judicial restraint.

2) RA 95 was enacted on March 22, 1947. Under 1935 Constitution, there is a proscription against creation of private corporations by special law:
SEC. 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.
Similar provisions are found in the 1973 Constitution and Art. XII, S16 of the 1987 Constitution:
SECTION 16. The Congress shall not, except by general law, provide for the formation, organization, or regulation of private corporations. Government-
owned or controlled corporations may be created or established by special charters in the interest of the common good and subject to the test of economic viability.
Since its enactment, PNRC charter was amended several times, particularly by RA 855, RA 6373, PD 1264, and PD 1643. The passage of these laws notwithstanding the
constitutional proscription is a recognition that PNRC is not strictly a private corporation.

3) A closer look at the nature of PNRC shows that there is none like it not just in terms of structure, but also in terms of history, public service, and official status, accorded to it by
the state and international community. Its structure is sui generis.

It was created by Congress after PH became independent on July 6, 1946 and proclaimed on Feb. 14, 1947 its adherence to the Geneva Convention for the Amelioration of the
Condition of the Wounded and Sick of Armies in the Field (Geneva Red Cross Convention). By this action, PH indicated its desire to participate with the world nations in
mitigating the suffering caused by war and to establish in PH a voluntary organization for that purpose. RA 95, 855 etc. show the historical background of PNRC as a voluntary
organization impressed with public interest.
The significant public service PNRC renders can be gleaned from S3 of its charter (volunteer aid to the wounded of armed forces during war, etc.)

4) National Societies like PNRC act as auxiliaries to the public authorities in their own countries in the humanitarian field. National Societies like PNRC are guided by the 7
principles of the Red Cross: humanity, impartiality, neutrality, independence, voluntary service, unity, and universality. National societies are organizations directly regulated
by international humanitarian law, in contrast to other ordinary private entities, including NGOs. The auxiliary status of a Red Cross Society means that it is at one and the same
time a private institution and a public service organization because the nature of its work implies cooperation with the authorities. No other organization has a duty to be its
governemnt’s humanitarian partner while remaining independent.

So must this Court recognize too the country’s adherence to the Geneva Convention and respect the unique status of PNRC in consonance with its treaty obligations. Art. II, S2
must be harmonized with Art. XII, S16 of the 1987 Constitution instead of using the latter to negate the former.

Thus, although PNRC is neither a subdivision, agency, or instrumentality of the government nor a GOCC, such a conclusion does not ipso facto imply that PNRC is a private
corporation that must be organized under the Corporation Code. The sui generis character of PNRC requires us to approach controversies involving PNRC on a case-to-
case basis.

4) The purpose of Art. XII, S16 is to prevent the grant of special privileges to certain families or groups which are denied to other groups. It can be seen that PNRC Charter does
not come within the spirit of this constitutional provision as it does not grant such special privileges.

The SC declared the sections of RA 95 declared void in the July 2009 decision to remain valid.

2. Boy Scouts of the PH v. COA, GR 177131, June 7, 2011, Leonardo-de Castro, J., En Banc.
FACTS:
COA issued Resolution 99-011 resolving to conduct an annual financial audit of the Boy Scouts of the PH (BSP).

BSP president Jejomar Binay sought reconsideration, claiming that: the ruling in BSP v. NLRC classifying BSP as a government-controlled corporation is anchored on the
substantial government participation in the board of BSP. Since RA 7278, amending BSP’s original charter in CA 111, eliminated the “substantial government participation” in
BSP’s board, BSP is no longer a government-controlled corporation or a government instrumentality.

COA denied reconsideration, saying that BSP v. NLRC relied not only on the substantial government participation but also considered BSP’s purposes and functions and the
statutory designation of BSP as a public corporation in ruling that BSP is a government-controlled corporation.

BSP filed this petition for prohibition against COA.

ISSUE:
Whether BSP is subject to COA’s audit jurisdiction.
HELD: YES.
1) BSP is a public corporation under the NCC, Art. 44(2):
Art. 44. The following are juridical persons:
(2) Other corporations, institutions and entities for public interest or purpose created by law; their personality begins as soon as they have been constituted according
to law;
Under Art. 45, BSP is subject to the law creating it:
Art. 45. Juridical persons mentioned in Nos. 1 and 2 of the preceding article are governed by the laws creating or recognizing them.
The purpose of BSP is to implement the state policy in Art. II, S13 of the constitution (vital role of the youth in nation-building). Thus, BSP, which was created by special law to
serve a public purpose, comes within the class of “public corporations” under Art. 44 (2).

2) Under EO 292, Administrative Code of 1987, BSP is an attached agency of DECS:

Chapter 8 — Attached Agencies SEC. 20. Attached Agencies. — The following agencies are hereby attached to the Department: xxx xxx xxx (12) Boy Scouts of the
Philippines; (13) Girl Scouts of the Philippines

The administrative relationship of an attached agency to the department is defined in EO 292, Book IV (The Executive Branch), Chapter 7- Administrative Relationship, S38:
(3) Attachment. — (a) This refers to the lateral relationship between the department or its equivalent and the attached agency or corporation for purposes of policy
and program coordination. The coordination may be accomplished by having the department represented in the governing board of the attached agency or
corporation, either as chairman or as a member, with or without voting rights, if this is permitted by the charter
As an attached agency, BSP enjoys operational autonomy, as long as policy and program coordination is achieved by having at least 1 representative of government in its
governing board, which for BSP is the DECS Secretary. In this sense, BSP is not under government “supervision and control,” but this does not make it a private corporation.

3) S16, Art. XII bans the creation of private corporations by special law. This should not be construed as to prohibit the creation of public corporations intended to serve a public
purpose. BSP is a public corporation which does not fall within the prohibition in S16, Art. XII notwithstanding amendments to its charter. Not all corporations which are not
GOCCs are ipso facto to be considered private corporations as there exists another distinct class of corporations or chartered institutions known as “PUBLIC
CORPORATIONS.” These corporations are treated by law as agencies or instrumentalities of government which are NOT subject to the tests of ownership or control and
economic viability but to different criteria relating to their public purposes/interests or objectives and their administrative relationship to the government or any of its
departments or offices.

4) Justice Carpio’s dissent insists that the constitution recognizes only 2 classes of corporations: 1) private corporations under a general law, and 2) GOCCs created by special
charters. We disagree. S16, Art. XII should not be construed so as to prohibit Congress from creating public corporations.

The existence of public or government juridical entities or chartered institutions by legislative fiat distinct from private corporations and GOCCs is best exemplified by the 1987
Administrative Code:
Section 2. (10) “Instrumentality refers to any agency of the National Government, not integrated within the department framework, vested with special functions or
jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy, usually through a charter.
This term includes regulatory agencies, chartered institutions and government-owned or controlled corporations.
(12) “Chartered institution” refers to any agency organized or operating under a special charter, and vested by law with functions relating to specific constitutional
policies or objectives. This term includes the state universities and colleges and the monetary authority of the State.
(13) "Government-owned or controlled corporation" refers to any agency organized as a stock or non-stock corporation, vested with functions relating to public needs
whether governmental or proprietary in nature, and owned by the Government directly or through its instrumentalities either wholly, or, where applicable as in the
case of stock corporations, to the extent of at least fifty-one (51) per cent of its capital stock: Provided, That government-owned or controlled corporations may be
further categorized by the Department of the Budget, the Civil Service Commission, and the Commission on Audit for purposes of the exercise and
discharge of their respective powers xxx.
Assuming for the sake of argument that the BSP ceases to be owned or controlled by the government because of reduction of the number of representatives of the government in
the BSP Board, it does not follow that it also ceases to be a government instrumentality as it still retains all the characteristics of the latter as an attached agency of the
DECS under the Administrative Code.

5) Justice Carpio claims that by recognizing a new class of public corporations created by special charter not subject to the test of economic viability, the constitutional provision
will be circumvented.

But the Constitutional Convention records reveals the intent of the framers to distinguish between government corporations performing governmental functions and
corporations involved in business or proprietary functions.
MR. OPLE. Yes. There is nothing here (*in S16, Art. XII), Madam President, that will prevent the formation of a government corporation in accordance with a
special charter given by 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 we should also build a certain standard of economic viability.
MR. MONSOD. Madam President, . . . . There are two types of government corporations — those that are involved in performing governmental functions, like
garbage disposal, Manila waterworks, and so on; and those government corporations that are involved in business functions. As we said earlier, there are two criteria
that should be followed for corporations that want to go into business. First is for government corporations to 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 functions. Secondly , they
should not go into activities that the private sector can do better.
Thus, the test of economic viability (*in S16, Art. XII) does not apply to public corporations dealing with GOVERNMENTAL functions to which BSP belongs. The
constitutional intent is not to apply the constitutional ban on the creation of public corporations where the economic viability test would be irrelevant. The test would apply only
if the corporation is engaged in some economic or BUSINESS function for the government.

6) BSP performs functions impressed with public interest. The changes in RA 7278 to the BSP Charter is not a manifestation of intent of Congress to return BSP to the private
sector as justice Carpio claims. Even though the amended BSP charter did away with most governmental presence in the BSP Board, this was done to more strongly promote
BSP’s objectives. The BSP objectives are consistent with the public purpose of the promotion of the well-being of the youth.

7) The ownership and control test is likewise irrelevant for a public corporation like BSP. BSP is an attached agency to the government thru DECS. BSP meets the statutory
requirement of an attached government agency as the DECS secretary sits at the BSP Board ex officio, facilitating the policy and program coordination between BSP and
DECS.
s
8) Historically, BSP had been subjected to government audit insofar as public funds had been infused thereto. But “the situation right now is that the BSP does not receive any
funding from government xxx.” “There is no auditing made (*against BSP) because there’s no money put in the organization.” As to BSP’s donors, “BSP has an external auditor
xxx.”

However, this practice should not preclude the exercise by COA of its audit jurisdiction. Art. IX, D, S2(1) states:
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, xxx.
Since BSP continues to be a public corporation, it is subject to the exercise by COA of its audit jurisdiction.

3. PH Society for the Prevention of Cruelty to Animals v. COA, GR 169752, September 25, 2007, Austria-Martinez, J., En Banc
FACTS:
Petitioner PSPCA was incorporated as a juridical entity by Act 1285 on January 19, 1905 by the PH Commission. Its object was to enforce laws relating to anilam cruety. Act
1285 antedated the original Corporation Law, Act 1459. Act 1285 originally allowed PSPCA to make arrests for violation of laws for prevention of animal cruelty. But later,thru
CA 148, this authority was changed to “authority to denounce to regular peace officers any violation of the laws” for prevention of animal cruelty. Immediately thereafter, Pres.
Quezon issued EO 63, stating that CA 148, in depriving the agents of PSPCA of the power to arrest persons, corrected a “serious defect in one of the laws existing in our
statute books.”

COA audit team, on Dec. 1, 2003, visited PSPCA’s office to conduct an audit survey. PSPCA demurred on the ground that it was a private entity not under COA’s jurisdiction
citing S2(1), Art. IX of the constitution. PSPCA claims that since it was deprived of the power to make arrests and that it lost its operational funding, and that it exercises no
governmental function, it is a private entity. Office Order 2005-021 was issued by COA informing PSPCA that COA’s audit team will conduct an audit survey on PSPCA. Hence
this petition.

ISSUE:
Whether PSPCA is under COA’s audit jurisdiction.
HELD: NO.
1) The Charter Test does not apply. This test provides: The test to determine whether a corporation is government owned or controlled or private in nature is simple. Is it created
by its own charter for the exercise of a public function, or by incorporation under the general corporation law? Those with special charters are government corporations subject
to its provisions, and its employees are under the jurisdiction of the Civil Service Commission. This test is predicated under S7, Art. XIII of the 1935 Constitution, prohibiting the
national assembly from forming private corporations except by general law. This proscription is carried over to the 1973 and S16, Art. XII of the 1987 constitution. This
proscription was to prevent temptation to the lawmakers to favor certain groups. And since the underpinnings of the charter test was introduced by the 1935 constitution and not
earlier, this test cannot apply to PSPCA which was incorporated under Act 1285 on January 19, 1905. Laws in general have no retroactive effect. There are exceptions
which are not present here.

Prospectivity also applies to the Corporation Law, Act 1459 enacted on March 1, 1906.

Thus, the PH Commission at that moment in history in 1905 was within its powers to constitute petitioner as a private juridical entity. The amendments introduced by CA 148
made it clear that petitioner was a private corporation and not an agency of government. This is evident in EO 63 where Pres. Quezon declared that the revocation of powers of
petitioner to appoint agents with powers of arrest “corrected a serious defect” in one of the laws. As a curative statute, CA 148 has to be given retroactive effect, freeing all
doubts as to which class of corporation petitioner is- a QUASI-PUBLIC corporation.

2) Petitioner’s charter also shows that it is not subject to control or supervision by any agency of the state unlike GOCCs. No government representative sits on its board of
trustees. Like private corporations, the successors of its members are determined voluntarily and solely by it in accordance with its by-lwas. It may exercise powers generally
accorded private corporations like the power to hold property, to sue and be sued, etc.

3) Petitioner’s employees are registered and covered by SSS at its initiative and not thru the GSIS, which should be the case if its employees are considered government
employees. RA 1161 as amended by RA 8282, Social Security Act of 1997, defines employer as any person xxx. Except the government and any of its political subdivisions etc.

4) COA claims that petitioner is a “body politic” because its primary purpose is to protect the welfare of animals which redounds to the public good.

But the fact that a juridical entity is impressed with public interest does not by that circumstance alone make it a public corporation inasmuch as a corporation may be private
although its charter contains provisions of a public character, incorporated solely for the public good . This class of corporations may be considered quasi-public
corporations, which are private corporations that render public service. While organized for gain of its members, they are required by law to discharge functions for the
public benefit. Examples are utility, telephone, water supply, and transportation companies. A quasi-public corporation is a species of private corporations, but the qualifying
factor is the type of service it renders to the public. If it performs a public service, it becomes a quasi-public corporation.

The PURPOSE ALONE of the corporation CANNOT BE TAKEN AS A SAFE GUIDE, for almost all corporations are nowadays created to promote public interest. A bank is
a public corporation, yet it is created for public benefit. Same with private schools, private hospitals, common carriers.

The TRUE CRITERION, thus 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 created by the state as its own agency or instrumentality to help it in carrying out its governmental functions, then that corporation is
public. Otherwise, it is private. Applying this test, provinces, chartered cities, and barangays can best exemplify public corporations.

5) COA argues that since the charter of petitioner requires it to render periodic reports to the Civil Governor, whose functions have been inherited by the president now, it is thus a
government instrumentality. But this is inconclusive. By virtue of the fiction that all corporations owe their very existence and powers to the state, the reportorial requirement
is applicable to all corporations of whatever nature, whether public, quasi-public, or private- as creatures of the state, there is a reserved right in the legislature to
investigate the activities of a corporation to determine if it acted within its powers.

4. Province of North Cotabato v. Government of the Republic of the PH Peace Panel on Ancestral Domain (GRP), GR 183591, October 14, 2008, Carpio-Morales, J., En
Banc.
1) The MOA-AD uses the word “association” to describe the envisioned relationship between BJE and the Central Government:
4. The relationship between the Central Government and the Bangsamoro juridical entity shall be associative characterized by shared authority and responsibility xxx.
An association is formed when two states of unequal power voluntarily establish durable links. In the basic model, one state, the associate, delegates certain responsibilities to the
other, the principal, while maintaining its international status as a state. Free associations represent a middle ground between integration and independence. In international
practice the associated state has usually been used as a transitional device of former colonies on their way to full independence.

No province, city, or municipality, not even ARMM, is recognized under our laws as having an “associative” relationship with the national government. The concept implies
powers that go beyond anything every granted by the constitution to any local or regional government. It also implies the recognition of the associated entity as a state.
But the constitution does not contemplate any state in this jurisdiction other than the PH state. Even the mere concept animating many of MOA-AD’s provisions require for
its validity amendment of constitutional provisions, specifically Art. X:
SEC. 1. The territorial and political subdivisions of the Republic of the Philippines are the provinces, cities, municipalities, and barangays. There shall be
autonomous regions in Muslim Mindanao and the Cordilleras as hereinafter provided.
SEC. 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 this
Constitution and the national sovereignty as well as territorial integrity of the Republic of the Philippines.

BJE is not merely an expanded version of ARMM. It is a state in all but name as it meets the criteria of a state laid down in the Montevideo Convention: 1) permanent population,
2) defined territory, 3) government, and 4) capacity to enter into relations with other states.

2) Art. X, S18 provides that the creation of the autonomous region shall be effective when approved by a majority of the votes cast by the constituent units in a plebiscite called for
the purpose, provided that only provinces, cities, and geographic areas voting favorably in such plebiscite shall be included in the autonomous region". Under MOA-AD, the
present ARMM and in addition, the municipalities of Lanao del Norte which voted for inclusion in ARMM during the 2001 plebiscite, are automatically part of BJE without need
of another plebiscite.

PRINCIPLES OF LOCAL AUTONOMY

5. Basco v. PAGCOR, GR 91649, May 14, 1991, Paras, J., En Banc. (Local Autonomy)
FACTS:
PAGCOR was created under PD 1869 to let the government regulate and centralize all games of chance authorized by existing franchise or permitted by law. To attain these
objectives, PAGCOR is given territorial jurisdiction all over PH.

Petitioners filed this petition seeking to annul the PH Amusement and Gaming Corporation (PAGCOR) Charter- PD 1869, because it allegedly intruded into the local
government’s right to impose local taxes and violates local autonomy. They claim that PD 1869 constitutes a waiver of the right of Manila City to impose taxes and legal fees. The
exemption clause in PD 1869 violates local autonomy. S13 par. 2 thereof, which exempts PAGCOR as franchise holder from paying any tax of any kind or form etc., states:
"(2) Income and other taxes. —(a) Franchise Holder: No tax of any kind or form, income or otherwise as well as fees, charges or levies of whatever nature, whether
National or Local, shall be assessed and collected under this franchise from the Corporation; nor shall any form of tax or charge attach in any way to the earnings of
the Corporation, except a franchise tax of five (5%) percent of the gross revenues or earnings derived by the Corporation from its operations under this franchise.
Such tax shall be due and payable quarterly to the National Government and shall be in lien of all kinds of taxes, levies, fees or assessments of any kind, nature or
description, levied, established or collected by any municipal, provincial or national government authority"

ISSUE:
Whether PAGCOR’s local tax exemption violates local autonomy.
HELD: NO.
1) Manila City, being a mere municipal corporation, has no inherent right to impose taxes. A municipality’s charter must show an intent to confer that power or the
municipality cannot assume it. Its power to tax must thus always yield to a legislative act which is superior having been passed by the state which has the inherent power to tax.
2) Manila City’s Charter is subject to control by Congress. Municipal corporations are mere creatures of Congress which ahs the power to create and abolish them due to its
general legislative powers. Congress thus has the power of control over local governments. If Congress can grant Manila City the power to tax certain matters, it can also
provide exemptions or even take back the power.

3) Local governments have no power to tax instrumentalities of the national government. PAGCOR is a GOCC with original charter, PD 1869. All of its shares of stocks are
owned by the national government. It also exercises regulatory powers. PAGCOR has a dual role- to operate and regulate gambling casinos. The latter role is governmental,
which makes it an agency or instrumentality of government. Being such instrumentality, PAGCOR is exempt from local taxes. This doctrine emanates from the supremacy of the
national government over local governments. Otherwise, mere creatures of the state can defeat national policies thru use of the power to tax as a tool for regulation.

4) Petitioners argue that the local autonomy clause of the constitution will be violated by PD 1869. This is a pointless argument. Art. X of 1987 Constitution provides:
"Sec. 5. Each local government unit shall have the power to create its own source of revenue and to levy taxes, fees, and other charges subject to such guidelines
and limitation as the congress may provide, consistent with the basic policy on local autonomy. Such taxes, fees and charges shall accrue exclusively to the local
government."
The power of local governments to impose taxes and fees is always subject to limitations which Congress may provide by law. Besides, the principle of local autonomy under
the constitution simply means DECENTRALIZATION. It does not make local governments sovereign within the state or an “imperium in imperio.” Under the PH
constitution, local governments can only be an intra sovereign subdivision of one sovereign nation. It cannot be an imperium in imperio (*government within a government?).

5) As to what state powers may be “decentralized and delegated to LGUs, this remains a matter of policy concerning wisdom. It is a political question. What is settled is that the
matter of regulating, taxing, or dealing with gambling is a state concern and thus the sole prerogative of the state to retain or delegate to LGUs.

6. Hon. Lina v. Hon. Paño, GR 129093, August 30, 2001, Quisumbing, J., Second Div.
FACTS:
Respondent Tony Calvento was appointed agent by PCSO to install Terminal OM 20 for the operation of lotto. He asked Mayor Cataquiz of San Pedro Laguna for a mayor’s
permit to open the lotto outlet. This was denied by Cataquiz on the ground of an ordinance passed by the Sangguniang Panlalawigan of Laguna, entitled KApasiyahan 508:
IPINASIYA, na tutulan gaya ng dito ay mahigpit na TINUTUTULAN ang ano mang uri ng sugal dito sa lalawigan ng Laguna lalo't higit ang Lotto;
Thus, Calvento filed a complaint in RTC for TRO or preliminary injunction against Cataquiz. Judge Paño promulgated his decision, enjoining petitioners from implementing
Kapasiyahan 508. Hence this petition.

ISSUE:
Whether a local government may validly prohibit the opration of a lotto by a government agency authorized by law.
HELD: NO.
1) The ordinance or Kapasiyahan merely states the “objection” of the council to the operation of the lotto. It is but a mere policy statement which is not self-executing. As a policy
statement, it is valid. This is part of the LGU’s autonomy to air its views which may be contrary to that of the national government’s.

But this does not mean that local governments may actually enact ordinance that go against laws. The game of lotto is duly authorized by the national government thru a law.
RA 1169 as amended by BP 42 grants a franchise to PCSO and allows it to operate the lotteries.

The national government deems it wise to permit lotto. Thus, the Sangguniang Panlalawigan of Laguna, a LGU, cannot issue a resolution or ordinance that would seek to prohibit
permits. What the national legislature expressly allows by law like lotto, a provincial board may not disallow by ordinance or resolution.

2) The power of LGUs to legislate is merely a DELEGATED POWER coming from Congress. Ordinances should not contravene an existing statute. Municipal
governments are only agents of the national governments. The delegate cannot be superior to the principal. Municipal corporations owe their origin to and derive their powers
wholly from the legislature. Unless there is some constitutional limitation, the legislature might sweep from existence all of the municipal corporations in the state.

3) Nothing in the present constitutional provision enhancing local autonomy dictates a different conclusion.

7. Limbona v. Mangelin, GR 80391, February 28, 1989, Sarmiento, J., En Banc.

FACTS:
Limbona was elected speaker of the regional legislative assembly or Batasang Pampook of Central Mindanao. 2 members of the assembly are respondents Tomawis and
Dagalangit. Congressman Matalam, chairman of the Committee on Muslim Affairs of the HoR, invited Limbona as speaker of the assembly, Region XII. Thus, Limbona sent a
telegram to the secretary to wire to the assemblymen, which the secretary did. The telegram stated that since Limbona was requested to assist the HoR Committee from Nov. 1 to
Nov. 15, 1987, “there shall be no session in November as our presence in the House Committee takes precedence over any pending business in Batasang Pampook.” But in Nov.
2, 1987, the assembly held session in defiance of Limbona’s advice. A motion to declare the seat of speaker vacant was approved. On Nov. 5, 1987, such motion was reconfirmed.

Limbona filed this petition praying that the proceedings on Nov. 2 be declared void and that an injunction be issued to restrain respondents from proceeding with their session on
Nov. 5 and thereafter.

Pending this case, SC received a resolution from the Sangguniang Pampook or the assembly, “Expelling Limbona from membership of the Sangguniang Pampook” for signing and
paying the salaries of one Abdula who was already resigned and for filing a case in SC on matters which should have been resolved in the assembly.

ISSUE:
Whether SC has jurisdiction over the case.
HELD: YES.
1) The case is not rendered moot with Limbona’s expulsion from the assembly. There is no showing that the Sanggunian conducted an investigation or that Limbona had been
heard in his defense if there was such investigation. While due process, as it is known in administrative law, does not absolutely require notice and that a party need only be given
opportunity to be heard, it does not appear that petitioner had, to begin with, been made aware of the fact that he stoof charged of graft and corruption before his colleagues. Thus,
he was not accorded opportunity to rebut their accusations. Thus, while it is in the discretion of the Sanggunian members to punish their erring colleagues, their acts are
nonetheless subject to the moderating hand of this court if such discretion is exercised with grave absue.

2) It is said that the Sangguniang Pampooks are “autonomous” and thus the courts may not intervene in their affairs. Are autonomous governments of Mindanao subject to
jurisdiction of the national courts? The autonomous governments of Mindanao were organized by PD 1618.

Autonomy is either 1) decentralization of administration or 2) decentralization of power.

There is decentralization of administration where the central government delegates administrative powers to political subdivisions to broaden the base of government power
and in the process to make local government “more responsive and accountable” and ensure their fullest development as self-reliant communities. It relieves the central
government of the burden of managing local affairs and lets it 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 that he can substitute their judmgents with his own.

Decentralization of power involves an abdication of political power in favor of LGUs declared to be autonomous. The autonomous government is free to chart its own destiny
and shape its future with minimal intervention from central authorities. According to a constitutional author, this amounts to self-immolation since in that event, the autonomous
government becomes accountable not to the central authorities but to its constituency. The autonomous government is subject alone to the decree of the organic act creating it
and accepted principles on the limits of “autonomy.

Thus, if the Sangguniang Pampook of Region XII is autonomous in the latter sense (power), its acts are, debatably, beyond the domain of SC in perhaps the same way that the
internal acts of Congress are beyond our jurisdiction. But if only of the former (administration) category, it unarguably comes under our jurisdiction.
3) PD 1618 shows that the autonomous governments of Mindanao were never meant to exercise autonomy in the second sense. It mandates that the president shall have the
power of general supervision and control over autonomous regions. Secondly, their legislative arm, the Sangguniang Pampook, is made to discharge chiefly administrative
services (e.g. organization of regional administrative system, urban and rural planning for the autonomous region, etc.). (*autonomous regions under PD 1618, not under the 1987
Constitution)

Thus, the SC assumed jurisdiction and ruled in favor of Limbona.

8. Disomangcop v. Sec. of DPWH Datumanong, GR 149848, November 25, 2005, Tinga, J., En Banc.
FACTS:
RA6734, Organic Act for ARMM, was enacted. It called for a plebiscite in various provinces to be included in the ARMM. Only 4 provinces voted for the creation of an
autonomous region: Lanao del Sure, Maguindanao, Sulu, and Tawi-Tawi. These provinces became the ARMM. In accordance with RA 6734, Pres. Cory issued EO 426, entitled
"Placing the Control and Supervision of the Offices of the DPWH within the ARMM under the Autonomous Regional Government (ARG), and for other purposes.”

9 years later on May 20, 1999, DPWH issued DO 119, creating 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 the province of Lanao del Sure.” On January 17, 2001, Pres. Erap signed into law RA 8999:
SECTION 1. The City of Marawi and the municipalities comprising the First District of the Province of Lanao del Sur are hereby constituted into an engineering
district to be known as the First Engineering District of the Province of Lanao del Sur
SEC. 3. The amount necessary to carry out the provisions of this Act shall be included in the General Appropriations Act of the year following its enactment into
law. Thereafter, such sums as may be necessary for the maintenance and continued operation of the engineering district office shall be included in the annual
General Appropriations Act.
Congress later passed RA 9054, An Act to Strengthen and Expand the Organic Act for ARMM, amending RA 6734. RA 9054 was also ratified in a plebiscite. Basilan province
and Marawi city voted to join ARMM.

Petitioners Disomangcop and Dimalotang filed this petition as OIC and District Engineer respectively of the first engineering district of the DPWH-ARMM in Lanao del Sur.
They pray that DO 119 be annulled, and that DPWH Sec. be prohibited from implementing DO 119 and RA 8999, releasing funds for public works intended for Lanao and
Marawi. They also pray that the DBM be compelled to release all funds for public works intended for Marawi be released to DPWH-ARMM only and that DPWH be compelled to
let DPWH-ARMM implement all public works within its jurisdictional area.

ISSUE:
Whether RA 8999 and DO 119 are valid.
HELD: NO.
1) The ARMM Organic Acts (RA 6734 & 9054), while classified as statues (*cuz hindi nag conass si Congress), are more than ordinary statutes because they enjoy affirmation by
a plebiscite. Thus, they cannot be amended by an ordinary statute like RA 8999. The amendatory law has to be submitted to a plebiscite. RA 9054 was in fact ratified in a
plebiscite.

RA 6074, as implemented by EO 426, devolved the functions of DPWH in ARMM to the Regional Government. By creating an office with previously devolved functions, RA
8999 sought to amend RA 6074. Without plebiscite, RA 8999 has not even become operative.

Another perspective is that RA 8999 was repealed by RA 9054. RA 9054 is anchored on the 1987 constitution, granting ARG jurisdiction over regional urban and rural planning.
RA 8999 however ventures to reestablish the national government’s jurisdiction over infrastructure programs in Lanao del Sur and thus is patently inconsistent with RA 9054.

2) The creation of autonomous regions does not signify the establishment of a sovereignty distinct from that of the Republic, as it can be installed only “ within the framework of
this constitution and the national sovereignty as well as territorial integrity” of PH.

3) The objective of the autonomy system is to permit determined groups, with a common tradition and shared social-cultural characteristics, to freely develop their ways of life etc.
In PH, regional autonomy implies the cultivation of more positive means for national integration.

A prerequisite of autonomy is DECENTRALIZATION. Decentralization is a decision by the central government authorizing its subordinates, whether geographically or
functionally defined, to exercise authority in certain areas. Federalism implies some measure of decentralization, but unitary systems may also decentralize. Decentralization
differs from federalism in that the sub-units that have been authorized to act by delegation do not possess any claim of right against the central government.

Decentralization comes in 2 forms- DECONCENTRATION and DEVOLUTION. Deconcentration (or administrative decentralization) is administrative in nature; it
involves the transfer of functions or the delegation of authority and responsibility from the national office to the regional and local offices. Devolution connotes political
decentralization or the transfer of powers, responsibilities, and resources for the performance of certain functions from the central government to LGUs. This is a more liberal
decentralization. This is elucidated in Limbona v. Mangelin (decentralization of administration or decentralization of power).

In Cordillera Broad Coalition v. COA, the SC ruled that the creation of autonomous regoins contemplates the grant of political autonomy, an autonomy which is greater than
the administrative autonomy granted to LGUs. The constitutional guarantee of local autonomy in Art. X, S2 of the constitution refers to administrative autonomy of LGUs
while the creation of autonomous regions in Muslim Mindanao contemplates a grant of political and not just administrative autonomy.

To this end, S16, Art. X (The president shall exercise general supervision over autonomous regions to ensure that the laws are faithfully executed) limits the power of the
president over autonomous regions. The provision also curtails the power of congress over autonomous regions. Congress will have to re-examine national laws and make
sure they reflect the constitution’s adherence to local autonomy. The diminution of Congress’ powers over autonomous regions was confirmed in Ganzon v. CA where we held that
the omission of “as may be provided by law” underscores LGUs’ autonomy from Congress.

4) This is true to subjects over which autonomous regions have powers as specified in S18 and 20 of Art. X. The area of public works is not excluded and neither is it reserved
for the national government:
SEC. 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 the basic structure of government for the region
consisting of the executive department and legislative assembly, both of which shall be elective and 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 the Constitution and national laws.
SEC. 20. Within its territorial jurisdiction and subject to the provisions of this Constitution and national laws, the organic act of autonomous regions shall provide for
legislative powers over: (1) Administrative organization; (2) Creation of sources of revenues; (3) Ancestral domain and natural resources; (4) Personal, family and
property relations; (5) Regional urban and rural planning development; (6) Economic, social, and tourism development; (7) Educational policies; (8) Preservation and
development of the cultural heritage; and (9) Such other matters as may be authorized by law for the promotion of general welfare of the people of the region.

EO 426 devolved the powers of DPWH in ARMM to the ARG:

SECTION 1. Transfer of Control and Supervision. The offices of the DPWH within the ARMM including their functions, powers and responsibilities, personnel,
equipment, properties, budgets and liabilities are hereby placed under the control and supervision of the Autonomous Regional Government.
More importantly, RA 9054 transferred and devolved the administrative and fiscal management of public works and funds for public works to the ARG.

The aim of the constitution is to extend to the autonomous peoples, people of Muslim Mindanao in this case, the right to self-determination. This necessarily includes the freedom
to decide on, build, and maintain the public works and infrastructure projects within the autonomous region. With RA 8999, however, this freedom is taken away, and the national
government takes control again.
5) DO 119, creating the Marawi Sub-District Engineering Office having jurisdiction over infrastructure projects within MArawi and Lanao, violates EO 426. The office under DO
119, having essentially the same powers, is a duplication of the DPWH-ARMM first engineering district in Lanao formed under EO 426. Thus, DO 119 takes back powers
previously devolved under EO 426 and runs counter thereto. DPWH’s order cannot rise higher than its source of power- the executive.

Thus, the SC ruled that RA 8999 was repealed by RA 9054 and rendered DO 119 of DPWH functus officio. The petition for writs of certiorari and prohibition was granted.

9. Batangas Catv, Inc. v. CA, GR 138810, September 29, 2004, Sandoval-Gutierrez, J., En Banc.
FACTS:
Respondent Sangguniang Panlungsod enacted Resolution 210 granting Batangas CATV a permit to operate a CATV system in Batangas city. It allows petitioner to charge its
subscribers the maximum rates specified therein, but “any increase of its rates shall be subject to the approval of the Sangguniang Panlungsod.” Petitioner increased its rates
from P88 to P180 per month. Respondent mayor wrote petitioner a letter threatening to cancel its permit unless it secures the approval of the Sangguniang Panlungsod pursuant to
Resolution 210.

Petitioner filed in RTC a petition for injunction. RTC ruled in favor of petitioner. CA reversed. Hence this petition.

ISSUE:
Whether Resolution 210 is a valid regulatory measure.
HELD: NO.
Petitioner claims that while RA 7160 or LGC grants to LGUs the general power to perform any act that will benefit their constituents, it does not authorize them to regulate the
CATV operation as pursuant to EO 205, only the NTC has such authority, including fixing of subscriber rates.

1) Pres. Marcos issued PD 1512 establishing a monopoly of the CATV industry, granting to Sining Makulay Inc. an exclusive franchise and cancelling all franchises previously
granted by LGUs. EO 546 integrated the Board of Communications and Telecommunications Control Bureau into a single entity, the National Telecommunications Commission
(NTC). After the revolution, Pres. Cory issued EO 205, opening the CATV industry to all citizens and mandated NTC to grant certificates of authority to CATV operators.

Pres. Fidel issued EO 436, restating NTC’s regulatory powers over CATV operations: "SECTION 2. The regulation and supervision of the cable television industry in
the Philippines shall remain vested solely with the NTC.
Marcos and Cory issued PD 1512, EO 546, and EO 205 in the exercise of their legislative power. Thus, these have the force and effect of laws. EO 436 mandates that the
regulation of the CATV industry shall remain vested “solely” in NTC. Thus, in light of these laws and EO 436, NTC exercises regulatory power over CATV operators to the
exclusion of other bodies.

2) Respondents justify their exercise of regulatory power over petitioner’s CATV operations under the general welfare clause of the LGC. S16 of RA 7160/LGC states:
"SECTION 16. General Welfare. — Every local government unit shall exercise the powers expressly granted, those necessarily implied therefrom, as well as powers
necessary, appropriate, or incidental for its efficient and effective governance, and those which are essential to the promotion of the general welfare. Within their
respective territorial jurisdictions, xxx.
The general welfare clause is the delegation in statutory form of the police power of the state to LGUs. Through this, LGUs may prescribe regulations to protect the lives,
health, and property of their constituents and maintain peace and order within their respective territorial jurisdictions. Like any other enterprise, CATV operation may be regulated
by LGUs under the general welfare clause primarily because the CATV system crosses public properties, using public properties to reach subscribers.

However, we cannot sustain Resolution 210 as it violates the mandate of existing laws.

3) An ordinance enacted by virtue of the general welfare clause is valid, unless it contravenes the fundamental law of the Philippine Islands, or an Act of the Philippine
Legislature, or unless it is against public policy, or is unreasonable, oppressive, partial, discriminating, or in derogation of common right." Ordinances must not be inconsistent
with the laws or policy of the state. Resolution 210 contravenes EO 205 and EO 436 as it permits Sangguniang Panlungsod to usurp a power exclusively vested in NTC, the
power to fix subscriber rates.

Where the state legislature has made provision for the regulation of conduct, it has manifested its intention that the subject matter shall be FULLY COVERED by the
statute, and that a municipality, under its general powers, cannot regulate the same conduct . Where there is no express power in the charter of a municipality authorizing it to
adopt ordinances regulating certain matters which are specifically covered by a general statute, a municipal ordinance, insofar as it attempts to regulate the subject which is
completely covered by a general statute of the legislature, may be rendered invalid.

Since EO 205, a general law, mandates that the regulation of CATV operations shall be exercised by NTC, an LGU cannot enact an ordinance in violation of said law.

4) Municipal ordinances are inferior in status to the laws of the state. The principle is frequently expressed in the declaration that municipal authorities, under a general grant of
power, cannot adopt ordinances which infringe the spirit of a state law or repugnant to the general policy of the state.

Municipal governments are only agents of the national government. Local councils exercise only delegated legislative powers conferred by Congress as a nationwide
lawmaking body. The delegate cannot be superior to the principal. Municipal corporations owe their origin, powers, and rights wholly from the legislature. Unless there is some
constitutional limitation, the legislature might sweep from existence all of the municipal corporations in the state. This basic relationship between the national legislature and
LGUs has not been enfeebled by the new provisions in the constitution strengthening the policy of local autonomy. Congress retains control of LGUs although in
significantly reduced degree now than under our previous constitutions. The power to create still includes the power to destroy.

5) Resolutoin 210 also violated the state’s policy of deregulation under the whereas clause of EO 436 (minimal reasonable government regulations). Where the state declares a
policy of deregulation, the LGUs are bound to follow.

6) Municipal corporations are bodies politic and corporate, created not only as local units of local self-government, but as governmental agencies of the state. The legislature, by
establishing a municipal corporation, does not divest the State of any of its sovereignty; absolve itself from its right and duty to administer the public affairs of the entire state; or
divest itself of any power over the inhabitants of the district which it possesses before the charter was granted.

SC granted the petition for review on certiorari.

POWER OF PRESIDENT OVER LGUS

10. Judge Dadole v. COA, GR 125350, December 3, 2002, Corona, J., En Banc.
FACTS:
RTC and MTC judges of Mandaue started receiving monthly allowances of P1,260 in 1986 thru the yearly appropriation ordinance enacted by the Sangguniang Panlungsod. In
1991, Mandaue City increased this to P1,500 per judge. DBM issued Local Budget Circular (LBC) 55 providing that additional allowances granted by LGUs to employees
assigned in their locality cannot exceed P1000 in provinces and cities and P700 in municipalities. Thus, Mandaue City Auditor issued notices of disallowance to petitioners judges.
Their allowances were reduced to P1,000, and they were asked to reimburse the amount they previously received in excess of P1,000.

Petitioners filed a protest with the city auditor who treated the protest as a MR. The auditor indorsed it to COA regional office, which in turn referred the motion to the head office.
COA denied the MR. Hence this petition for certiorari.

ISSUE:
Whether LBC 55 is valid.
HELD: NO.
Petitioners claim that the circular goes beyond the supervisory powers of the president.

1) LBC 55 is void. Art. X, S4 of the 1987 constitution states:

Sec. 4. The President of the Philippines shall exercise general supervision over local governments…
In Pimentel v. Aguirre, we defined the president’s supervisory power and distinguished it form the power of control exercised by Congress.

In administrative law, supervision means overseeing or the power of an officer to see that subordinate officers PERFORM THEIR DUTIES. If the latter fail or neglect to
fulfill them, the former may take such action as prescribed by law to make them perform their duties. Control means the power of an officer to ALTER or MODIFY or
NULLIFY what a subordinate officer has done in the performance of his duties and to substitute the judgment of the former for that of the latter.

Supervisory power, contrasted with control, is mere oversight over an inferior body. It does not include any restraining authority over such body.

Officers in control LAY DOWN the RULES in the performance or accomplishment of act. If these rules are not followed, they may order the act undone or redone by their
subordinates or even decide to do it themselves. Supervision does not cover such authority. Supervising officials merely see to it that the rules are followed, but they
themselves do NOT lay down the rules.

Executive power is vested in the president. His cabinet members and other executive officials are merely alter egos and subject to the president’s control at whose behest they can
be removed from office, or their actions and decisions changed, suspended, or reversed. In contrast, the heads of political subdivisions are elected by the people. They are subject
to the president’s supervision only, not control.

Thus, the president can only interfere in the affairs of a LGU if he finds that the LGU has acted contrary to law. The president or his alter egos cannot interfere in local affairs
as long as the LGU acts within the parameters of the law and constitution. Any directive by the president or his alter egos seeking to alter the wisdom of a law-conforming
judgment on local affairs of a LGU is a nullity as it violates the principle of local autonomy and separation of powers of the executive and legislative in governing municipal
corporations.

2) 1) The yearly appropriation ordinance for allowances to judges is allowed by S458, par. (a)(1)(xi) of RA 7160, LGC:
(xi) When the finances of the city government allow, provide for additional allowances and other benefits to judges, prosecutors, public elementary and high school
teachers, and other national government officials stationed in or assigned to the city;

LBC 55 goes beyond the law it seeks to implement. S458 (a)(1)(xi) of RA 7160 that supposedly serves as legal basis of LBC 55 allows additional allowances when the finances of
the city government allow. This does not authorize the setting a maximum limit to the additional allowances. The DBM overstepped its power of supervision by imposing a
prohibition that did not correspond with the law it sought to implement. The prohibitory nature of the circular had no legal basis.

3) LBC 55 is also void for lack of publication in violation of Tañada v. Tuvera.

11. Pimentel v. Hon. Aguirre, GR 132988, July 19, 2000, Panganiban, J., En Banc.
FACTS:
President Fidel Ramos issued AO 372, which provides in part:
SECTION 1. All government departments and agencies, including state universities and colleges, government-owned and controlled corporations and local
governments units will identify and implement measures in FY 1998 that will reduce total expenditures for the year by at least 25% of authorized regular
appropriations for non-personal services items, along the following suggested areas: xxx.
SECTION 4. Pending the assessment and evaluation by the Development Budget Coordinating Committee of the emerging fiscal situation, the amount equivalent to
10% of the internal revenue allotment to local government units shall be withheld.
Pres. Erap issued AO 43, reducing to 5% the IRA to be withheld from LGUs.

Petitioner contends that in issuing AO 372, the president was exercising the power of control over LGUs, but he only has the power of general supervision over LGUs under the
constitution.

ISSUE:
Whether AO 372 violates local fiscal autonomy.
HELD: YES.
1) S4, Art. X of the constitution confines the president’s power over LGUs to one of general supervision. This excludes the power of control. (*See case 10, #1, supervision vs
power)

2) Hand in hand with the constitutional restraint on the president’s power over LGUs is the state policy of ensuring local autonomy. LGUs are still subject to regulation, however
limited, for the purpose of enhancing self-government. Decentralization simply means devolution of national administration, not power, to LGUs. Local officials remain
accountable to the central government. The difference between decentralization of administration and that of power was explained in Limbona v. Mangelin. (*See Case 7, #2,
decentralization of administration or of power)

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.

3) LGUs, in addition to having administrative autonomy, enjoy fiscal autonomy as well. Fiscal autonomy means that local governments have the power to create their own
sources of revenue in addition to their equitable share in the national taxes, as well as the power to allocate their resources in accordance with their own priorities. It extends
to preparation of their budgets. But local fiscal autonomy does not rule out any manner of national government intervention thru supervision to ensure that local programs are
consistent with national goals. The president, by constitutional fiat, is the head of the economic and planning agency of the government. But under the constitution, the
formulation of economic policies and their implementation are subject to consultations with the appropriate public agencies, private sectors, and LGUs. The president cannot do so
unilaterally.

LGC S284 provides:

". . . [I]n the event the national government incurs an unmanaged public sector deficit, the President of the Philippines is hereby authorized, upon the recommendation
of [the] Secretary of Finance, Secretary of the Interior and Local Government and Secretary of Budget and Management, and subject to consultation with the
presiding officers of both Houses of Congress and the presidents of the liga, to make the necessary adjustments in the internal revenue allotment of local
government units but in no case shall the allotment be less than thirty percent (30%) of the collection of national internal revenue taxes of the third fiscal year
preceding the current fiscal year .
There are thus several requisites before the president may interfere in local fiscal matters: 1) unmanaged public sector deficit of the national government; 2) consultations
with the presiding officers of the senate and HoR and presidents of the various local leagues (liga); 3) recommendation of the secretaries of DoF, DILG, and DBM.

Petitioner claims that respondents did not even try to show the first requisite or claim having conducted consultations. Thus, the president has no authority to adjust LGUs IRA.
Solgen insists that AO 372 S1 is merely directory.

While the wordings of S1, AO 372 have a rather commanding tone and while we ageree that the requirements of S284 have not been satisfied, we accept solgen’s assurance that
the directives are merely advisory.

4) But S4 of AO 372 cannot be upheld. A basic feature of local fiscal autonomy is the automatic release of the shares of LGUs in the national internal revenue. This is mandated
by the constitution. LGC also specifies that the release shall be made directly to the LGU within 5 days after every quarter of the year and shall not be subject to any lien or
holdback that may be imposed by the national government for whatever purpose. S4, AO 372 orders the withholding of 10% of LGU’s IRA. Such withholding clearly
contravenes the constitution. Although temporary, it is equivalent to a holdback which means “something held back or withheld, often temporarily.” Thus, the temporary nature
of the retention does not matter.