The Province of Batangas v. Romulo : 152774 : May 27, 2004 : J. Callejo
Sr : En Banc : Decision
[G.R. NO. 152774 : May 27, 2004]
THE PROVINCE OF BATANGAS, represented by its Governor,
HERMILANDO I. MANDANAS, Petitioner, v. HON.
ALBERTO G. ROMULO, Executive Secretary and Chairman of the Oversight Committee
on Devolution; HON. EMILIA BONCODIN, Secretary, Department of Budget and
Management; HON. JOSE D. LINA, JR., Secretary, Department of Interior and Local
D E C I S I O N
CALLEJO, SR., J.:
The Province of Batangas, represented by its Governor, Hermilando
I. Mandanas, filed the present Petition for Certiorari, prohibition and mandamus under Rule 65 of the Rules of Court, as amended, to declare as
unconstitutional and void certain provisos contained in the General
Appropriations Acts (GAA) of 1999, 2000 and 2001, insofar as they uniformly
earmarked for each corresponding year the amount of five billion pesos (
of the Internal Revenue Allotment (IRA) for the Local Government Service
Equalization Fund (LGSEF) and imposed conditions for the release thereof.
Named as respondents are Executive Secretary Alberto G. Romulo,
in his capacity as Chairman of the Oversight Committee on Devolution, Secretary
Emilia Boncodin of the Department of Budget and Management (DBM) and Secretary Jose
Lina of the Department of Interior and Local Government (DILG).
On December 7, 1998, then President Joseph Ejercito Estrada
issued Executive Order (E.O.) No. 48 entitled ESTABLISHING A PROGRAM FOR
DEVOLUTION ADJUSTMENT AND EQUALIZATION. The program was established to
facilitate the process of enhancing the capacities of local government units
(LGUs) in the discharge of the functions and services devolved to them by the
National Government Agencies concerned pursuant to the Local Government Code.1 The Oversight Committee (referred to as the Devolution Committee in E.O. No.
48) constituted under Section 533(b) of Republic Act No. 7160 (The Local
Government Code of 1991) has been tasked to formulate and issue the appropriate
rules and regulations necessary for its effective implementation.2 Further, to address the funding shortfalls of functions and services devolved
to the LGUs and other funding requirements of the program, the Devolution
Adjustment and Equalization Fund was created.3 For 1998, the DBM was directed to set aside an amount to be determined by the
Oversight Committee based on the devolution status appraisal surveys undertaken
by the DILG.4 The initial fund was to be sourced from the available savings of the national
government for CY 1998.5 For 1999 and the succeeding years, the corresponding amount required to sustain
the program was to be incorporated in the annual GAA.6 The Oversight Committee has been authorized to issue the implementing rules and
regulations governing the equitable allocation and distribution of said fund to
the LGUs.7 cralawred
The LGSEF in the GAA of 1999
In Republic Act No. 8745, otherwise known as the GAA of 1999, the
program was renamed as the LOCAL GOVERNMENT SERVICE EQUALIZATION FUND
(LGSEF). Under said appropriations law,
the amount of
P96,780,000,000 was allotted as the share of the LGUs in
the internal revenue taxes.
Item No. 1,
Special Provisions, Title XXXVI A.
Internal Revenue Allotment of Rep. Act No. 8745 contained the following
... PROVIDED, That the amount of FIVE BILLION PESOS (
shall be earmarked for the Local Government Service Equalization Fund for the
funding requirements of projects and activities arising from the full and
efficient implementation of devolved functions and services of local government
units pursuant to R.A. No. 7160, otherwise known as the Local Government Code
of 1991: PROVIDED, FURTHER, That such amount shall be released to the local
government units subject to the implementing rules and regulations, including
such mechanisms and guidelines for the equitable allocations and distribution
of said fund among local government units subject to the guidelines that may be
prescribed by the Oversight Committee on Devolution as constituted pursuant to
Book IV, Title III, Section 533(b) of R.A. No. 7160.The Internal Revenue Allotment shall be released directly by the
Department of Budget and Management to the Local Government Units concerned.
On July 28, 1999, the Oversight Committee (with then Executive
Secretary Ronaldo B. Zamora as Chairman) passed Resolution Nos. OCD-99-003,
OCD-99-005 and OCD-99-006 entitled as follows:chanroblesvirtua1awlibrary
RESOLUTION ADOPTING THE ALLOCATION SCHEME
FOR THE PhP5 BILLION CY 1999 LOCAL GOVERNMENT SERVICE EQUALIZATION FUND (LGSEF)
AND REQUESTING HIS EXCELLENCY PRESIDENT JOSEPH EJERCITO ESTRADA TO APPROVE SAID
ADOPTING THE ALLOCATION SCHEME FOR THE PhP4.0 BILLION OF THE 1999 LOCAL
GOVERNMENT SERVICE EQUALIZATION FUND AND ITS CONCOMITANT GENERAL FRAMEWORK,
IMPLEMENTING GUIDELINES AND MECHANICS FOR ITS IMPLEMENTATION AND RELEASE, AS
PROMULGATED BY THE OVERSIGHT COMMITTEE ON DEVOLUTION.
RESOLUTION REQUESTING HIS EXCELLENCY
PRESIDENT JOSEPH EJERCITO ESTRADA TO APPROVE THE REQUEST OF THE OVERSIGHT
COMMITTEE ON DEVOLUTION TO SET ASIDE TWENTY PERCENT (20%) OF THE LOCAL
GOVERNMENT SERVICE EQUALIZATION FUND (LGSEF) FOR LOCAL AFFIRMATIVE ACTION
PROJECTS AND OTHER PRIORITY INITIATIVES FOR LGUs INSTITUTIONAL AND CAPABILITY
BUILDING IN ACCORDANCE WITH THE IMPLEMENTING GUIDELINES AND MECHANICS AS
PROMULGATED BY THE COMMITTEE.
These OCD resolutions were approved by then President Estrada on
October 6, 1999.
Under the allocation scheme adopted pursuant to Resolution No.
OCD-99-005, the five billion pesos LGSEF was to be allocated as follows:chanroblesvirtua1awlibrary
1.The PhP4 Billion of
the LGSEF shall be allocated in accordance with the allocation scheme and
implementing guidelines and mechanics promulgated and adopted by the OCD.
a.The first PhP2 Billion of the LGSEF shall be
allocated in accordance with the codal formula sharing scheme as prescribed
under the 1991 Local Government Code;chanroblesvirtuallawlibrary
b.The second PhP2 Billion of the LGSEF shall be
allocated in accordance with a modified 1992 cost of devolution fund (CODEF)
sharing scheme, as recommended by the respective leagues of provinces, cities
and municipalities to the OCD.
modified CODEF sharing formula is as follows:chanroblesvirtua1awlibrary
This is applied to
the P2 Billion after the approved amounts granted to individual provinces,
cities and municipalities as assistance to cover decrease in 1999 IRA share due
to reduction in land area have been taken out.
2.The remaining PhP1
Billion of the LGSEF shall be earmarked to support local affirmative action
projects and other priority initiatives submitted by LGUs to the Oversight
Committee on Devolution for approval in accordance with its prescribed
guidelines as promulgated and adopted by the OCD.
In Resolution No. OCD-99-003, the Oversight Committee set aside
the one billion pesos or 20% of the LGSEF to support Local Affirmative Action
Projects (LAAPs) of LGUs.
remaining amount was intended to respond to the urgent need for additional
funds assistance, otherwise not available within the parameters of other
existing fund sources.
For LGUs to be
eligible for funding under the one-billion-peso portion of the LGSEF, the OCD
promulgated the following:chanroblesvirtua1awlibrary
1.LGUs (province, city, municipality, or
individually or by group or multi-LGUs or leagues of LGUs,
especially those belonging to the 5th and 6th class, may
access the fund to support any projects or activities that satisfy any of the
A barangay may
also access this fund directly or through their respective municipality or
2.The proposed project/activity should be
need-based, a local priority, with high development impact and are congruent
with the socio-cultural, economic and development agenda of the Estrada
Administration, such as food security, poverty alleviation, electrification, and peace and order, among others.
3.Eligible for funding under this fund are
projects arising from, but not limited to, the following areas of concern:
a.delivery of local health and sanitation
services, hospital services and other tertiary services;
b.delivery of social welfare services;
c.provision of socio-cultural services and
facilities for youth and community development;
d.provision of agricultural and on-site related
e.improvement of community-based forestry
projects and other local projects on environment and natural resources
protection and conservation;
f.improvement of tourism facilities and promotion
g.peace and order and public safety;
h.construction, repair and maintenance of public
works and infrastructure, including public buildings and facilities for public
use, especially those destroyed or damaged by man-made or natural calamities
and disaster as well as facilities for water supply, flood control and river
i.provision of local electrification facilities;
j.livelihood and food production services,
facilities and equipment;
k.other projects that may be authorized by the
OCD consistent with the aforementioned objectives and guidelines;chanroblesvirtuallawlibrary
4.Except on extremely meritorious cases, as may
be determined by the Oversight Committee on Devolution, this portion of the
LGSEF shall not be used in expenditures for personal costs or benefits under existing
laws applicable to governments.
Generally, this fund shall cover the following objects of expenditures
for programs, projects and activities arising from the implementation of
devolved and regular functions and services:
a.acquisition/procurement of supplies and
materials critical to the full and effective implementation of devolved
programs, projects and activities;
b.repair and/or improvement of facilities;
c.repair and/or upgrading of equipment;
d.acquisition of basic equipment;
e.construction of additional or new facilities;
f.counterpart contribution to joint arrangements
or collective projects among groups of municipalities, cities and/or provinces
related to devolution and delivery of basic services.
5.To be eligible for funding, an LGU or group of
LGU shall submit to the Oversight Committee on Devolution through the
Department of Interior and Local Governments, within the prescribed schedule
and timeframe, a Letter Request for Funding Support from the Affirmative Action
Program under the LGSEF, duly signed by the concerned LGU(s) and endorsed by
cooperators and/or beneficiaries, as well as the duly signed
Resolution of Endorsement by the respective
Sanggunian(s) of the LGUs concerned. The LGU-proponent shall also be required
to submit the Project Request (PR),
using OCD Project Request Form No. 99-02,
that details the following:
description or brief of the project;
(b) objectives and justifications for undertaking
the project, which should highlight the benefits to the locality and the
expected impact to the local program/project arising from the full and
efficient implementation of social services and facilities, at the local
(c) target outputs or key result areas;
(d) schedule of activities and details of
(e) total cost requirement of the project;
(f) proponents counterpart funding share, if any, and identified source(s) of counterpart funds for the full implementation of
(g) requested amount of project cost to be covered
by the LGSEF.
Further, under the guidelines formulated by the Oversight
Committee as contained in Attachment - Resolution No. OCD-99-003, the LGUs were
required to identify the projects eligible for funding under the
one-billion-peso portion of the LGSEF and submit the project proposals thereof
and other documentary requirements to the DILG for appraisal.
The project proposals that passed the DILGs
appraisal would then be submitted to the Oversight Committee for review,
evaluation and approval.
approval, the Oversight Committee would then serve notice to the DBM for the
preparation of the Special Allotment Release Order (SARO) and Notice of Cash
Allocation (NCA) to effect the release of funds to the said LGUs.
The LGSEF in the GAA of 2000
Under Rep. Act No. 8760, otherwise known as the GAA of 2000, the
P111,778,000,000 was allotted as the share of the LGUs in the
internal revenue taxes.
As in the GAA
of 1999, the GAA of 2000 contained a proviso earmarking five billion pesos of
the IRA for the LGSEF.
found in Item No. 1, Special Provisions, Title XXXVII A.
Internal Revenue Allotment, was similarly
worded as that contained in the GAA of 1999.
The Oversight Committee, in its Resolution No. OCD-2000-023 dated
June 22, 2000, adopted the following allocation scheme governing the five
billion pesos LGSEF for 2000:chanroblesvirtua1awlibrary
1.The PhP3.5 Billion of the CY 2000 LGSEF shall
be allocated to and shared by the four levels of LGUs, i.e., provinces, cities,
municipalities, and barangays, using the following percentage-sharing formula
agreed upon and jointly endorsed by the various Leagues of LGUs:
For Cities23% or 805,000,000
For Barangays16% or
Provided that the
respective Leagues representing the provinces, cities, municipalities and
barangays shall draw up and adopt the horizontal distribution/sharing schemes
among the member LGUs whereby the Leagues concerned may opt to adopt direct
financial assistance or project-based arrangement, such that the LGSEF
allocation for individual LGU shall be released directly to the LGU concerned;
Provided further that the
individual LGSEF shares to LGUs are used in accordance with the general
purposes and guidelines promulgated by the OCD for the implementation of the
LGSEF at the local levels pursuant to Res. No. OCD-99-006 dated October 7, 1999
and pursuant to the Leagues guidelines and mechanism as approved by the OCD;
Provided further that
each of the Leagues shall submit to the OCD for its approval their respective
allocation scheme, the list of LGUs with the corresponding LGSEF shares and the
corresponding project categories if project-based;
Provided further that
upon approval by the OCD, the lists of LGUs shall be endorsed to the DBM as the
basis for the preparation of the corresponding NCAs, SAROs, and related
P1,500,000,000 of the CY
2000 LGSEF shall be earmarked to support the following initiatives and local
affirmative action projects, to be endorsed to and approved by the Oversight
Committee on Devolution in accordance with the OCD agreements, guidelines,
procedures and documentary requirements:chanroblesvirtua1awlibrary
On July 5, 2000, then President Estrada issued a Memorandum
authorizing then Executive Secretary Zamora and the DBM to implement and
release the 2.5 billion pesos LGSEF for 2000 in accordance with Resolution No.
Thereafter, the Oversight Committee, now under the administration
of President Gloria Macapagal-Arroyo, promulgated Resolution No. OCD-2001-29
entitled ADOPTING RESOLUTION NO. OCD-2000-023 IN THE ALLOCATION,
IMPLEMENTATION AND RELEASE OF THE REMAINING
P2.5 BILLION LGSEF FOR CY
Under this resolution, the
amount of one billion pesos of the LGSEF was to be released in accordance with
paragraph 1 of Resolution No. OCD-2000-23, to complete the 3.5 billion pesos
allocated to the LGUs, while the amount of 1.5 billion pesos was allocated for
However, out of the latter
amount, P400,000,000 was to be allocated and released as follows: P50,000,000
as financial assistance to the LAAPs of LGUs; P275,360,227 as financial
assistance to cover the decrease in the IRA of LGUs concerned due to reduction
in land area; and P74,639,773 for the LGSEF Capability-Building Fund.
The LGSEF in the GAA of 2001
In view of the failure of Congress to enact the general
appropriations law for 2001, the GAA of 2000 was deemed re-enacted, together
with the IRA of the LGUs therein and the proviso earmarking five billion pesos thereof
for the LGSEF.
On January 9, 2002, the Oversight Committee adopted Resolution
No. OCD-2002-001 allocating the five billion pesos LGSEF for 2001 as follows:chanroblesvirtua1awlibrary
P 3.000 billion
Capability Building Fund
RESOLVED FURTHER, that the
P3.0 B of the CY 2001 LGSEF which
is to be allocated according to the modified codal formula shall be released to
the four levels of LGUs, i.e., provinces, cities, municipalities and barangays,
P 0.750 billion
P 3.000 billion
RESOLVED FURTHER, that the
P1.9 B earmarked for priority
projects shall be distributed according to the following criteria:chanroblesvirtua1awlibrary
1.0For projects of the 4th,
5th and 6th class LGUs; or
2.0Projects in consonance with the Presidents State
of the Nation Address (SONA) /summit commitments.
RESOLVED FURTHER, that the remaining
P100 million LGSEF
capability building fund shall be distributed in accordance with the
recommendation of the Leagues of Provinces, Cities, Municipalities and Barangays, and approved by the OCD.
Upon receipt of a copy of the above resolution, Gov. Mandanas
wrote to the individual members of the Oversight Committee seeking the
reconsideration of Resolution No. OCD-2002-001.He also wrote to Pres. Macapagal-Arroyo urging her to disapprove
said resolution as it violates the Constitution and the Local Government Code
On January 25, 2002, Pres. Macapagal-Arroyo approved Resolution
The Petitioners Case
The petitioner now comes to this Court assailing as
unconstitutional and void the provisos in the GAAs of 1999, 2000 and 2001,
relating to the LGSEF.
assailed are the Oversight Committees Resolutions Nos. OCD-99-003, OCD-99-005,
OCD-99-006, OCD-2000-023, OCD-2001-029 and OCD-2002-001 issued pursuant
The petitioner submits that
the assailed provisos in the GAAs and the OCD resolutions, insofar as they
earmarked the amount of five billion pesos of the IRA of the LGUs for 1999,
2000 and 2001 for the LGSEF and imposed conditions for the release thereof,
violate the Constitution and the Local Government Code of 1991.
Section 6, Article X of the Constitution is invoked as it
mandates that the just share of the LGUs shall be automatically released to
Sections 18 and 286 of the Local
Government Code of 1991, which enjoin that the just share of the LGUs shall
be automatically and directly released to them without need of further
action are, likewise, cited.
The petitioner posits that to subject the distribution and
release of the five-billion-peso portion of the IRA, classified as the LGSEF,
to compliance by the LGUs with the implementing rules and regulations,
including the mechanisms and guidelines prescribed by the Oversight Committee,
contravenes the explicit directive of the Constitution that the LGUs share in
the national taxes shall be automatically released to them.
The petitioner maintains that the use of the
must be given a compulsory
To further buttress this argument, the petitioner contends that
to vest the Oversight Committee with the authority to determine the
distribution and release of the LGSEF, which is a part of the IRA of the LGUs,
is an anathema to the principle of local autonomy as embodied in the
Constitution and the Local Government Code of 1991.The petitioner cites as an example the experience in 2001 when
the release of the LGSEF was long delayed because the Oversight Committee was
not able to convene that year and no guidelines were issued therefor.
Further, the possible disapproval by the
Oversight Committee of the project proposals of the LGUs would result in the
diminution of the latters share in the IRA.
Another infringement alleged to be occasioned by the assailed OCD
resolutions is the improper amendment to Section 285 of the Local Government
Code of 1991 on the percentage sharing of the IRA among the LGUs.
Said provision allocates the IRA as
follows: Provinces 23%; Cities 23%; Municipalities 34%; and Barangays
20%.8 This formula has been improperly amended or modified, with respect to the
five-billion-peso portion of the IRA allotted for the LGSEF, by the assailed
OCD resolutions as they invariably provided for a different sharing scheme.
The modifications allegedly constitute an illegal amendment by
the executive branch of a substantive law.
Moreover, the petitioner mentions that in the Letter dated December 5,
2001 of respondent Executive Secretary Romulo addressed to respondent Secretary
Boncodin, the former endorsed to the latter the release of funds to certain
LGUs from the LGSEF in accordance with
the handwritten instructions of President Arroyo.Thus, the LGUs are at a loss as to how a portion of the LGSEF is
Further, there are
still portions of the LGSEF that, to date, have not been received by the
petitioner; hence, resulting in damage and injury to the petitioner.
The petitioner prays that the Court declare as unconstitutional
and void the assailed provisos relating to the LGSEF in the GAAs of 1999, 2000
and 2001 and the assailed OCD resolutions (Resolutions Nos. OCD-99-003,
OCD-99-005, OCD-99-006, OCD-2000-023, OCD-2001-029 and OCD-2002-001) issued by
the Oversight Committee pursuant thereto.
The petitioner, likewise, prays that the Court direct the respondents to
rectify the unlawful and illegal distribution and releases of the LGSEF for the
aforementioned years and release the same in accordance with the sharing
formula under Section 285 of the Local Government Code of 1991.
Finally, the petitioner urges the Court to
declare that the entire IRA should be released automatically without further
action by the LGUs as required by the Constitution and the Local Government
Code of 1991.
The respondents, through the Office of the Solicitor General,
urge the Court to dismiss the petition on procedural and substantive
On the latter, the respondents
contend that the assailed provisos in the GAAs of 1999, 2000 and 2001 and the
assailed resolutions issued by the Oversight Committee are not constitutionally
The respondents advance the
view that Section 6, Article X of the Constitution does not specify that the
just share of the LGUs shall be determined solely by the Local Government
Code of 1991.
Moreover, the phrase as
determined by law in the same constitutional provision means that there exists
no limitation on the power of Congress to determine what is the just share of
the LGUs in the national taxes.
other words, Congress is the arbiter of what should be the just share of the
LGUs in the national taxes.
The respondents further theorize that Section 285 of the Local
Government Code of 1991, which provides for the percentage sharing of the IRA
among the LGUs, was not intended to be a fixed determination of their just
share in the national taxes.
may enact other laws, including appropriations laws such as the GAAs of 1999,
2000 and 2001, providing for a different sharing formula.
Section 285 of the Local Government Code of
1991 was merely intended to be the default share of the LGUs to do away with
the need to determine annually by law their just share.
However, the LGUs have no vested right in a
permanent or fixed percentage as Congress may increase or decrease the just
share of the LGUs in accordance with what it believes is appropriate for their
There is nothing in the
Constitution which prohibits Congress from making such determination through
the appropriations laws.
provisions of a particular statute, the GAA in this case, are within the
constitutional power of the legislature to enact, they should be sustained
whether the courts agree or not in the wisdom of their enactment.
On procedural grounds, the respondents urge the Court to dismiss
the petition outright as the same is defective.The petition allegedly raises factual issues which should be
properly threshed out in the lower courts, not this Court, not being a trier of
Specifically, the petitioners
allegation that there are portions of the LGSEF that it has not, to date,
received, thereby causing it (the petitioner) injury and damage, is subject to
proof and must be substantiated in the proper venue, i.e., the lower courts.
Further, according to the respondents, the petition has already
been rendered moot and academic as it no longer presents a justiciable
The IRAs for the years
1999, 2000 and 2001, have already been released and the government is now
operating under the 2003 budget.
support of this, the respondents submitted certifications issued by officers of
the DBM attesting to the release of the allocation or shares of the petitioner
in the LGSEF for 1999, 2000 and 2001.
There is, therefore, nothing more to prohibit.
Finally, the petitioner allegedly has no legal standing to bring
the suit because it has not suffered any injury.In fact, the petitioners just share has even increased.
Pursuant to Section 285 of the Local
Government Code of 1991, the share of the provinces is 23%.
OCD Nos. 99-005, 99-006 and 99-003 gave the
provinces 40% of
P2 billion of the LGSEF.OCD Nos. 2000-023 and 2001-029 apportioned 26% of P3.5
billion to the provinces.
On the other
hand, OCD No. 2001-001 allocated 25% of P3 billion to the
Thus, the petitioner has not
suffered any injury in the implementation of the assailed provisos in the GAAs
of 1999, 2000 and 2001 and the OCD resolutions.
The Ruling of the
Before resolving the petition on its merits, the Court shall
first rule on the following procedural issues raised by the respondents: (1)
whether the petitioner has legal standing or locus standi to file the present suit; (2) whether the petition
involves factual questions that are properly cognizable by the lower courts;
and (3) whether the issue had been rendered moot and academic.
The petitioner has locus standi
the present suit
The gist of the question of standing is whether a party has
alleged such a personal stake in the outcome of the controversy as to assure
that concrete adverseness which sharpens the presentation of issues upon which
the court so largely depends for illumination of difficult constitutional
questions.9 Accordingly, it has been held that the interest of a party assailing the
constitutionality of a statute must be direct and personal.
Such party must be able to show, not only
that the law or any government act is invalid, but also that he has sustained
or is in imminent danger of sustaining some direct injury as a result of its
enforcement, and not merely that he suffers thereby in some indefinite
It must appear that the person
complaining has been or is about to be denied some right or privilege to which
he is lawfully entitled or that he is about to be subjected to some burdens or
penalties by reason of the statute or act complained of.10 cralawred
The Court holds that the petitioner possesses the requisite
standing to maintain the present suit.
The petitioner, a local government unit, seeks relief in order to
protect or vindicate an interest of its own, and of the other LGUs.
This interest pertains to the LGUs share in
the national taxes or the IRA.
petitioners constitutional claim is, in substance, that the assailed provisos
in the GAAs of 1999, 2000 and 2001, and the OCD resolutions contravene Section
6, Article X of the Constitution, mandating the automatic release to the LGUs
of their share in the national taxes.
Further, the injury that the petitioner claims to suffer is the
diminution of its share in the IRA, as provided under Section 285 of the Local
Government Code of 1991, occasioned by the implementation of the assailed
These allegations are
sufficient to grant the petitioner standing to question the validity of the
assailed provisos in the GAAs of 1999, 2000 and 2001, and the OCD resolutions
as the petitioner clearly has a plain, direct and adequate interest in the
manner and distribution of the IRA among the LGUs.
The petition involves a significant
The crux of the instant controversy is whether the assailed
provisos contained in the GAAs of 1999, 2000 and 2001, and the OCD resolutions
infringe the Constitution and the Local Government Code of 1991.
This is undoubtedly a legal question.
On the other hand, the following facts are
1.The earmarking of five
billion pesos of the IRA for the LGSEF in the assailed provisos in the GAAs of
1999, 2000 and re-enacted budget for 2001;chanroblesvirtuallawlibrary
2.The promulgation of
the assailed OCD resolutions providing for the allocation schemes covering the
said five billion pesos and the implementing rules and regulations therefor; andcralawlibrary
3.The release of the
LGSEF to the LGUs only upon their compliance with the implementing rules and
regulations, including the guidelines and mechanisms, prescribed by the
Considering that these facts, which are necessary to resolve the
legal question now before this Court, are no longer in issue, the same need not
be determined by a trial court.11 In any case, the rule on hierarchy of courts will not prevent this Court from assuming
jurisdiction over the petition.
said rule may be relaxed when the redress desired cannot be obtained in the
appropriate courts or where exceptional and compelling circumstances justify
availment of a remedy within and calling for the exercise of this Courts
primary jurisdiction.12 cralawred
The crucial legal issue submitted for resolution of this Court
entails the proper legal interpretation of constitutional and statutory
transcendental importance of the case, as it necessarily involves the
application of the constitutional principle on local autonomy, cannot be
The nature of the present
controversy, therefore, warrants the relaxation by this Court of procedural
rules in order to resolve the case forthwith.
The substantive issue needs to be resolved
the supervening events
Granting arguendo that,
as contended by the respondents, the resolution of the case had already been
overtaken by supervening events as the IRA, including the LGSEF, for 1999, 2000
and 2001, had already been released and the government is now operating under a
new appropriations law, still, there is compelling reason for this Court to
resolve the substantive issue raised by the instant petition.
Supervening events, whether intended or
accidental, cannot prevent the Court from rendering a decision if there is a
grave violation of the Constitution.13 Even in cases where supervening events had
made the cases moot, the Court did not hesitate to resolve the legal or
constitutional issues raised to formulate controlling principles to guide the
bench, bar and public.14 cralawred
Another reason justifying the resolution by this Court of the
substantive issue now before it is the rule that courts will decide a question
otherwise moot and academic if it is capable of repetition, yet evading
review.15 For the GAAs in the coming years may contain provisos similar to those now
being sought to be invalidated, and yet, the question may not be decided before
another GAA is enacted.
behooves this Court to make a categorical ruling on the substantive issue now.
As earlier intimated, the resolution of the substantive legal
issue in this case calls for the application of a most important constitutional
policy and principle, that of local autonomy.16 In Article II of the Constitution, the State has expressly adopted as a policy
The State shall
ensure the autonomy of local governments.
An entire article (Article X) of the Constitution has been
devoted to guaranteeing and promoting the autonomy of LGUs.
Section 2 thereof reiterates the State
policy in this wise:chanroblesvirtua1awlibrary
and political subdivisions shall enjoy local autonomy.
Consistent with the principle of local autonomy, the Constitution
confines the Presidents power over the LGUs to one of general supervision.17 This provision has been interpreted to exclude the power of control.
The distinction between the two powers was
enunciated in Drilon v. Lim:18 cralawred
An officer in control lays down the rules in the doing of an
If they are not followed, he may,
in his discretion, order the act undone or re-done by his subordinate or he may
even decide to do it himself.
Supervision does not cover such authority. The supervisor or
superintendent merely sees to it that the rules are followed, but he himself
does not lay down such rules, nor does he have the discretion to modify or
If the rules are not
observed, he may order the work done or re-done but only to conform to the
He may not prescribe
his own manner for doing the act.
has no judgment on this matter except to see to it that the rules are followed.19 cralawred
The Local Government Code of 199120 was enacted to flesh out the mandate of the Constitution.21 The State policy on local autonomy is amplified in Section 2 thereof:chanroblesvirtua1awlibrary
Sec. 2. Declaration of Policy.
(a) It is hereby declared the policy of the State that the territorial and
political subdivisions of the State shall enjoy genuine and meaningful local
autonomy to enable them to attain their fullest development as self-reliant
communities and make them more effective partners in the attainment of national
Toward this end, the State shall
provide for a more responsive and accountable local government structure
instituted through a system of decentralization whereby local government units
shall be given more powers, authority, responsibilities, and resources.
The process of decentralization shall
proceed from the National Government to the local government units.
Guided by these precepts, the Court shall now determine whether
the assailed provisos in the GAAs of 1999, 2000 and 2001, earmarking for each
corresponding year the amount of five billion pesos of the IRA for the LGSEF
and the OCD resolutions promulgated pursuant thereto, transgress the
Constitution and the Local Government Code of 1991.
The assailed provisos in the GAAs of 1999, 2000
and the OCD resolutions violate the
precept on local autonomy
Section 6, Article X of the Constitution reads:chanroblesvirtua1awlibrary
units shall have a just share, as determined by law, in the national
taxes which shall be automatically
released to them.
When parsed, it would be readily seen that this provision
mandates that (1) the LGUs shall have a just share in the national taxes; (2)
the just share shall be determined by law; and (3) the just share shall be
automatically released to the LGUs.
The Local Government Code of 1991, among its salient provisions,
underscores the automatic release of the LGUs just share in this wise:chanroblesvirtua1awlibrary
Sec. 18. Power to Generate
and Apply Resources.
government units shall have the power and authority to establish an
organization that shall be responsible for the efficient and effective
implementation of their development plans, program objectives and priorities;
to create their own sources of revenue and to levy taxes, fees, and charges
which shall accrue exclusively for their use and disposition and which shall be
retained by them; to have a just share in national taxes which shall be
automatically and directly released to them without need of further action;chanroblesvirtuallawlibrary
Sec. 286. Automatic Release
of Shares. (a) The share of each local government unit shall be released,
without need of any further action, directly to the provincial, city, municipal
or barangay treasurer, as the case may be, on a quarterly basis within five (5)
days after the end of each quarter, and which shall not be subject to any lien
or holdback that may be imposed by the national government for whatever purpose.
(b) Nothing in this Chapter shall be understood to diminish the
share of local government units under existing laws.
Websters Third New International Dictionary defines automatic
as involuntary either wholly or to a major extent so that any activity of the
will is largely negligible; of a reflex nature; without volition; mechanical;
like or suggestive of an automaton. Further, the word automatically is
defined as in an automatic manner: without thought or conscious intention.
Being automatic, thus, connotes something mechanical, spontaneous and
As such, the LGUs are not
required to perform any act to receive the just share accruing to them from
the national coffers.
As emphasized by
the Local Government Code of 1991, the just share of the LGUs shall be
released to them without need of further action.Construing Section 286 of the LGC, we held in Pimentel,
Jr. v. Aguirre ,22 viz:chanroblesvirtua1awlibrary
Section 4 of AO 372 cannot, however, be upheld.
A basic feature of local fiscal autonomy is
the automatic release of the shares
of LGUs in the National internal revenue.
This is mandated by no less than the Constitution.
The Local Government Code specifies further
that the release shall be made directly to the LGU concerned within five (5)
days after every quarter of the year and shall
not be subject to any lien or holdback that may be imposed by the national
government for whatever purpose.
As a rule, the term SHALL
is a word of command that must be given a compulsory meaning.
The provision is, therefore, IMPERATIVE.
Section 4 of AO 372, however, orders the withholding, effective
January 1, 1998, of 10 percent of the LGUs IRA pending the assessment and
evaluation by the Development Budget Coordinating Committee of the emerging
fiscal situation in the country.
withholding clearly contravenes the Constitution and the law.
Although temporary, it is equivalent to a
holdback, which means something held back or withheld, often
Hence, the temporary
nature of the retention by the national government does not matter.
Any retention is prohibited.
In sum, while Section 1 of AO 372 may be upheld as an advisory
effected in times of national crisis, Section 4 thereof has no color of
validity at all.
The latter provision
effectively encroaches on the fiscal autonomy of local governments.
Concededly, the President was well-intentioned
in issuing his Order to withhold the LGUs IRA, but the rule of law requires
that even the best intentions must be carried out within the parameters of the
Constitution and the law.
laudable purposes must be carried out by legal methods.23 cralawred
The just share of the LGUs is incorporated as the IRA in the
appropriations law or GAA enacted by Congress annually.
Under the assailed provisos in the GAAs of
1999, 2000 and 2001, a portion of the IRA in the amount of five billion pesos
was earmarked for the LGSEF, and these provisos imposed the condition that
such amount shall be released to the local government units subject to the
implementing rules and regulations, including such mechanisms and guidelines
for the equitable allocations and distribution of said fund among local
government units subject to the guidelines that may be prescribed by the
Oversight Committee on Devolution. Pursuant thereto, the Oversight Committee,
through the assailed OCD resolutions, apportioned the five billion pesos LGSEF
P2 billion -
allocated according to Sec. 285 LGC
P2 billion - Modified Sharing
Formula (Provinces 40%;chanroblesvirtuallawlibrary
Cities 20%; Municipalities 40%)
P1 billion projects (LAAP) approved
by OCD.24 cralawred
Modified Sharing Formula (Provinces 26%;chanroblesvirtuallawlibrary
Cities 23%; Municipalities 35%;
P1.5 billion projects (LAAP)
approved by the OCD.25 cralawred
Modified Sharing Formula (Provinces 25%;chanroblesvirtuallawlibrary
Cities 25%; Municipalities 35%;
P1.9 billion priority projects
P100 million capability building
Significantly, the LGSEF could not be released to the LGUs
without the Oversight Committees prior approval.Further, with respect to the portion of the LGSEF allocated for
various projects of the LGUs (
P1 billion for 1999; P1.5 billion
for 2000 and P2 billion for 2001),
the Oversight Committee, through the
assailed OCD resolutions, laid down guidelines and mechanisms that the LGUs had
to comply with before they could avail of funds from this portion of the
The guidelines required (a) the
LGUs to identify the projects eligible for funding based on the criteria laid
down by the Oversight Committee; (b) the LGUs to submit their project proposals
to the DILG for appraisal; (c) the project proposals that passed the appraisal
of the DILG to be submitted to the Oversight Committee for review, evaluation
It was only upon approval
thereof that the Oversight Committee would direct the DBM to release the funds
for the projects.
To the Courts mind, the entire process involving the
distribution and release of the LGSEF is constitutionally impermissible. The
LGSEF is part of the IRA or just share of the LGUs in the national
To subject its distribution and
release to the vagaries of the implementing rules and regulations, including
the guidelines and mechanisms unilaterally prescribed by the Oversight
Committee from time to time, as sanctioned by the assailed provisos in the GAAs
of 1999, 2000 and 2001 and the OCD resolutions, makes the release not automatic, a flagrant
violation of the constitutional and statutory mandate that the just share of
the LGUs shall be automatically released to them. The LGUs are, thus, placed
at the mercy of the Oversight Committee.
Where the law, the Constitution in this case, is clear and
unambiguous, it must be taken to mean exactly what it says, and courts have no
choice but to see to it that the mandate is obeyed.27 Moreover, as correctly posited by the petitioner, the use of the word shall
connotes a mandatory order.
Its use in
a statute denotes an imperative obligation and is inconsistent with the idea of
Indeed, the Oversight Committee exercising discretion, even
control, over the distribution and release of a portion of the IRA, the LGSEF,
is an anathema to and subversive of the principle of local autonomy as embodied
in the Constitution. Moreover, it finds no statutory basis at all as the
Oversight Committee was created merely to formulate the rules and regulations
for the efficient and effective implementation of the Local Government Code of
1991 to ensure compliance with the principles of local autonomy as defined
under the Constitution.29 In fact, its creation was placed under the title of Transitory Provisions,
signifying its ad hoc character.
According to Senator Aquilino Q. Pimentel,
the principal author and sponsor of the bill that eventually became Rep. Act
No. 7160, the Committees work was supposed to be done a year from the approval
of the Code, or on October 10, 1992.30 The Oversight Committees authority is undoubtedly limited to the implementation
of the Local Government Code of 1991, not to supplant or subvert the same.
Neither can it exercise control over the
IRA, or even a portion thereof, of the LGUs.
That the automatic release of the IRA was precisely intended to
guarantee and promote local autonomy can be gleaned from the discussion below
between Messrs. Jose N. Nolledo and Regalado M. Maambong, then members of the
1986 Constitutional Commission, to wit:chanroblesvirtua1awlibrary
MR. MAAMBONG. Unfortunately, under Section 198 of the Local
Government Code, the existence of subprovinces is still acknowledged by the
law, but the statement of the Gentleman on this point will have to be taken up
probably by the Committee on Legislation. A second point, Mr. Presiding
Officer, is that under Article 2, Section 10 of the 1973 Constitution, we have
a provision which states:chanroblesvirtua1awlibrary
The State shall
guarantee and promote the autonomy of local government units, especially the
barrio, to insure their fullest development as self-reliant communities.
This provision no
longer appears in the present configuration; does this mean that the concept of
giving local autonomy to local governments is no longer adopted as far as this
Article is concerned?chanroblesvirtualawlibrary
In the report of the Committee on Preamble,
National Territory, and Declaration of Principles, that concept is included and
widened upon the initiative of Commissioner Bennagen.
Thank you for
With regard to Section 6, sources of revenue, the creation of
sources as provided by previous law was subject to limitations as may be
provided by law, but now, we are using the term subject to such guidelines as
may be fixed by law.
In Section 7,
mention is made about the unique, distinct and exclusive charges and contributions, and in Section 8, we talk about exclusivity of local taxes and the share in
the national wealth.
was one of the authors of this provision, and I am very thankful.
Does this indicate local autonomy, or was
the wording of the law changed to give more autonomy to the local government
MR. NOLLEDO. Yes. In effect, those words indicate also
decentralization because local political units can collect taxes, fees and
charges subject merely to guidelines, as recommended by the league of governors
and city mayors, with whom I had a dialogue for almost two hours.
They told me that limitations may be
questionable in the sense that Congress may limit and in effect deny the right
provision on automatic release of national tax share points to more local
Is this the intention?chanroblesvirtualawlibrary
Commissioner is perfectly right.32 cralawred
The concept of local autonomy was explained in Ganzon v. Court of Appeals33 in this wise:chanroblesvirtua1awlibrary
As the Constitution itself declares, local autonomy means a more
responsive and accountable local government structure instituted through a
system of decentralization. The Constitution, as we observed, does nothing
more than to break up the monopoly of the national government over the affairs
of local governments and as put by political adherents, to liberate the local
governments from the imperialism of Manila.
Autonomy, however, is not meant to end the relation of partnership and
interdependence between the central administration and local government units,
or otherwise, to usher in a regime of federalism.The Charter has not taken such a radical step.
Local governments, under the Constitution,
are subject to regulation, however limited, and for no other purpose than
precisely, albeit paradoxically, to enhance self-government.
As we observed in one case, decentralization means devolution of
national administration but not power to the local levels.
Now, autonomy is either decentralization of administration or
decentralization of power.
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.
the same time, it relieves the central government of the burden of managing
local affairs and enables it to concentrate on national concerns.
The President exercises general
supervision over them, but only to ensure that local affairs are administered
according to law.
He has no control
over their acts in the sense that he can substitute their judgments with his
Decentralization of power, on the other hand, involves an
abdication of political power in the [sic] favor of local governments [sic]
units declared to be autonomous.
that case, the autonomous government is free to chart its own destiny and shape
its future with minimum intervention from central authorities.
According to a constitutional author,
decentralization of power amounts to self-immolation, since in that event,
the autonomous government becomes accountable not to the central authorities
but to its constituency.34 cralawred
Local autonomy includes both administrative and fiscal autonomy.
The fairly recent case of Pimentel v. Aguirre35 is particularly instructive.
declared therein that local fiscal autonomy includes the power of the LGUs to, inter alia, allocate their resources in
accordance with their own priorities:chanroblesvirtua1awlibrary
Under existing law, local government units, in addition to having
administrative autonomy in the exercise of their functions, enjoy fiscal
autonomy as well.
Fiscal autonomy means
that local governments have the power to create their own sources of revenue in
addition to their equitable share in the national taxes released by the
national government, as well as the power to allocate their resources in
accordance with their own priorities.
It extends to the preparation of their budgets, and local officials in
turn have to work within the constraints thereof.They are not formulated at the national level and imposed on
local governments, whether they are relevant to local needs and resources or
not. ..36 cralawred
Further, a basic feature of local fiscal autonomy is the
constitutionally mandated automatic
release of the shares of LGUs in the national internal revenue.37 cralawred
Following this ratiocination, the Court in Pimentel struck down as unconstitutional Section 4 of
Administrative Order (A.O.) No. 372 which ordered the withholding, effective
January 1, 1998, of ten percent of the LGUs IRA pending the assessment and
evaluation by the Development Budget Coordinating Committee of the emerging
In like manner, the assailed provisos in the GAAs of 1999, 2000
and 2001, and the OCD resolutions constitute a withholding of a portion of
They put on hold the distribution
and release of the five billion pesos LGSEF and subject the same to the
implementing rules and regulations, including the guidelines and mechanisms
prescribed by the Oversight Committee from time to time.
Like Section 4 of A.O. 372, the assailed
provisos in the GAAs of 1999, 2000 and 2001 and the OCD resolutions effectively
encroach on the fiscal autonomy enjoyed by the LGUs and must be struck
They cannot, therefore, be
The assailed provisos in the GAAs of 1999, 2000
and the OCD resolutions cannot amend
of the Local Government Code of 1991
Section 28438 of the Local Government Code provides that, beginning the third year of its
effectivity, the LGUs share in the national internal revenue taxes shall be
This percentage is fixed and may
not be reduced except in the event the national government incurs an
unmanageable public sector deficit" and only upon compliance with
stringent requirements set forth in the same section:chanroblesvirtua1awlibrary
Provided, That in the
event that the national government incurs an unmanageable public sector
deficit, the President of the Philippines is hereby authorized, upon
recommendation of Secretary of Finance, Secretary of Interior and Local
Government and Secretary of Budget and Management, and subject to consultation
with the presiding officers of both Houses of Congress and the presidents of
the liga, to make the necessary adjustments in the internal revenue allotment
of local government units but in no case shall the allotment be less than
thirty percent (30%) of the collection of the national internal revenue taxes
of the third fiscal year preceding the current fiscal year;
Provided, further That in the first year of the
effectivity of this Code, the local government units shall, in addition to the
thirty percent (30%) internal revenue allotment which shall include the cost of
devolved functions for essential public services, be entitled to receive the
amount equivalent to the cost of devolved personnel services.
Thus, from the above provision, the only possible exception to
the mandatory automatic release of the LGUs IRA is if the national internal
revenue collections for the current fiscal year is less than 40 percent of the
collections of the preceding third fiscal year, in which case what should be
automatically released shall be a proportionate amount of the collections for
the current fiscal year.
may even be made on a quarterly basis depending on the actual collections of
national internal revenue taxes for the quarter of the current fiscal
In the instant case, however,
there is no allegation that the national internal revenue tax collections for
the fiscal years 1999, 2000 and 2001 have fallen compared to the preceding
three fiscal years.
Section 285 then specifies how the IRA shall be allocated among
Sec. 285. Allocation to Local
Government Units. The share of local government units in the internal
revenue allotment shall be allocated in the following manner:chanroblesvirtua1awlibrary
(a) Provinces Twenty-three (23%)
Twenty-three percent (23%);chanroblesvirtuallawlibrary
Thirty-four (34%); andcralawlibrary
Twenty percent (20%).
However, this percentage sharing is not followed with respect to
the five billion pesos LGSEF as the assailed OCD resolutions, implementing the
assailed provisos in the GAAs of 1999, 2000 and 2001, provided for a different
For example, for 1999,
billion of the LGSEF was allocated as follows: Provinces 40%; Cities 20%;
Municipalities 40%.39 For 2000, P3.5 billion of the LGSEF was allocated in this manner:
Provinces 26%; Cities 23%; Municipalities 35%; Barangays 26%.40 For 2001, P3 billion of the LGSEF was
allocated, thus: Provinces 25%; Cities 25%; Municipalities 35%; Barangays
The respondents argue that this modification is allowed since the
Constitution does not specify that the just share of the LGUs shall only be
determined by the Local Government Code of 1991.That it is within the power of Congress to enact other laws,
including the GAAs, to increase or decrease the just share of the LGUs.
This contention is untenable.
The Local Government Code of 1991 is a
And while it is
conceded that Congress may amend any of the provisions therein, it may not do
so through appropriations laws or GAAs.
Any amendment to the Local Government Code of 1991 should be done in a
separate law, not in the appropriations law, because Congress cannot include in
a general appropriation bill matters that should be more properly enacted in a
separate legislation.42 cralawred
A general appropriations bill is a special type of legislation,
whose content is limited to specified sums of money dedicated to a specific
purpose or a separate fiscal unit.43 Any provision therein which is intended to
amend another law is considered an inappropriate provision. The category of
inappropriate provisions includes unconstitutional provisions and provisions
which are intended to amend other laws, because clearly these kinds of laws
have no place in an appropriations bill.44 cralawred
Increasing or decreasing the IRA of the LGUs or modifying their
percentage sharing therein, which are fixed in the Local Government Code of
1991, are matters of general and substantive law.To permit Congress to undertake these amendments through the
GAAs, as the respondents contend, would be to give Congress the unbridled
authority to unduly infringe the fiscal autonomy of the LGUs, and thus put the
same in jeopardy every year.
Court cannot sanction.
It is relevant to point out at this juncture that, unlike those
of 1999, 2000 and 2001, the GAAs of 2002 and 2003 do not contain provisos
similar to the herein assailed provisos.
In other words, the GAAs of 2002 and 2003 have not earmarked any amount
of the IRA for the LGSEF.
perhaps seen fit to discontinue the practice as it recognizes its
Nonetheless, as earlier
mentioned, this Court has deemed it necessary to make a definitive ruling on
the matter in order to prevent its recurrence in future appropriations laws and
that the principles enunciated herein would serve to guide the bench, bar and
In closing, it is well to note that the principle of local
autonomy, while concededly expounded in greater detail in the present
Constitution, dates back to the turn of the century when President William
McKinley, in his Instructions to the Second Philippine Commission dated April
7, 1900, ordered the new Government to devote their attention in the first
instance to the establishment of municipal governments in which the natives of
the Islands, both in the cities and in the rural communities, shall be afforded
the opportunity to manage their own affairs to the fullest extent of which they
are capable, and subject to the least degree of supervision and control in
which a careful study of their capacities and observation of the workings of
native control show to be consistent with the maintenance of law, order and
loyalty.45 While the 1935 Constitution had no specific article on local autonomy,
nonetheless, it limited the executive power over local governments to general
supervision. .. as may be provided by law.46 Subsequently, the 1973 Constitution explicitly stated that [t]he State shall
guarantee and promote the autonomy of local government units, especially the
barangay to ensure their fullest development as self-reliant communities.47 An entire article on Local Government was incorporated therein.
The present Constitution, as earlier opined,
has broadened the principle of local autonomy.
The 14 sections in Article X thereof markedly increased the powers of
the local governments in order to accomplish the goal of a more meaningful
Indeed, the value of local governments as institutions of
democracy is measured by the degree of autonomy that they enjoy.48 As eloquently put by M. De Tocqueville, a distinguished French political
writer, [l]ocal assemblies of citizens constitute the strength of free
nations. Township meetings are to liberty what primary schools are to science;
they bring it within the peoples reach; they teach men how to use and enjoy
it. A nation may establish a system of free governments but without the spirit
of municipal institutions, it cannot have the spirit of liberty.49 cralawred
Our national officials should not only comply with the
constitutional provisions on local autonomy but should also appreciate the
spirit and liberty upon which these provisions are based.50 cralawred
WHEREFORE, the petition
The assailed provisos in
the General Appropriations Acts of 1999, 2000 and 2001, and the assailed OCD
Resolutions, are declared UNCONSTITUTIONAL.
Vitug, (Acting Chief Justice),
Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona,
Carpio-Morales, Azcuna, and TINGA, JJ., concur.
Davide, Jr., C.J., andPuno, J., on official leave.
1 Section 1, E.O. No. 48.
9 Baker v. Carr, 369 U.S. 186, 7 L.Ed.
2d 633 cited in, among others, Agan, Jr. v. PIATCO, G.R. NOS. 155001, 155547 and 155661, May 5, 2003 and Farias v. Executive Secretary, G.R. NOS. 147387 and 152161, December
10 Agan, Jr. v. PIATCO, supra.
14 Ibid, citing, among others, Salonga v. Pao, 134 SCRA 438 (1995).
16 San Juan v. Civil Service Commission,
196 SCRA 69 (1991).
20 Rep. Act No. 7160 was signed into law by then President Corazon C. Aquino on
October 10, 1991.
It took effect on
January 1, 1992.
21 Section 3, Article X reads:chanroblesvirtua1awlibrary
The Congress shall enact a local government
code which shall provide for a more responsive and accountable local government
structure instituted through a system of decentralization with effective
mechanisms of recall, initiative, and referendum, allocate among the different
local government units their powers, responsibilities, and resources, and
provide for the qualifications, election, appointment and removal, terms,
salaries, powers and functions and duties of local officials, and all other
matters relating to the organization and operation of local government units.
23 Id. at 220-221.
24 Per OCD-99-005, 99-006, 99-003.
25 Per OCD-2000-023 and 2001-029.
29 Section 533 of Rep. Act 7160 reads in part:chanroblesvirtua1awlibrary
Sec. 533. Formulation of Implementing Rules and
Within one (1)
month after the approval of this Code, the President shall convene the
Oversight Committee as herein provided for.
The said Committee shall formulate and issue the appropriate rules and
regulations necessary for the efficient and effective implementation of any and
all provisions of this Code, thereby ensuring compliance with the principles of
local autonomy as defined under the Constitution.
(c) The Committee
shall submit its report and recommendation to the President within two (2)
months after its organization.
President fails to act within thirty (30) days from receipt thereof, the
recommendation of the Oversight Committee shall be deemed approved.
Thereafter, the Committee shall supervise
the transfer of such powers and functions mandated under this Code to the local
government units, together with the corresponding personnel, properties, assets
and liabilities of the offices or agencies concerned, with the least possible
disruptions to existing programs and projects.
The Committee shall, likewise, recommend the corresponding
appropriations necessary to effect the said transfer.
30 Pimentel, The Local Government Code of 1991: The Key to National Development,
31 The Committee Report No. 21 submitted by the Committee on Local Governments of
the Constitutional Commission, headed by Commissioner Jose N. Nolledo, proposed
to incorporate the following provisions:chanroblesvirtua1awlibrary
Each government unit shall have the power
to create its own sources of revenue and to levy taxes, fees and charges
subject to such guidelines as may be fixed by law.
Local governments shall have the power to
levy and collect charges or contributions unique, distinct and exclusive to
Local taxes shall belong exclusively to
local governments and they shall, likewise, be entitled to share in the
proceeds of the exploitation and development of the national wealth within
their respective areas.
The share of
local governments in the national taxes shall be released to them
32 3 RECORD OF THE CONSTITUTIONAL COMMISSION 231.
34 Id. at 286-287. (Citations omitted.)
38 The provision reads in part:chanroblesvirtua1awlibrary
Sec. 284. Allotment of Internal Revenue Taxes.
Local government units shall have a share in
the national internal revenue taxes based on the collection of the third fiscal
year preceding the current fiscal year as follows:
(a) On the first year of the effectivity of this Code, thirty
(b) On the second year, thirty-five percent (35%); andcralawlibrary
(c) (c) On
the third year and, thereafter, forty percent (40%).
Res.-99-005, 99-006, 99-003.
40 Per OCD-2000-023 and 2001-029.
42 Philippine Constitutional Association v. Enriquez, 235 SCRA 506 (1994).
43 Ibid, citing Beckman, The Item Veto
Power of the Executive, 31 Temple Law Quarterly 27 (1957).
45 Mendoza, From McKinleys Instructions to the New Constitution: Documents on the
Philippine Constitutional System, pp. 67-68.
46 Paragraph (1),
Section 11, Article VII of the 1935 Constitution reads:chanroblesvirtua1awlibrary
Sec. 11(1). The President shall have control of all the
executive departments, bureaus or offices, exercise general supervision over
all local governments as may be provided by law, and take care that the laws be
47 Section 10, Article II thereof.
48 Sinco, Philippine Political Law, 10th ed., pp. 681-682.
50 San Juan v. Civil Service Commission,
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