Public Corporations Case Digests

2S – Atty. Randolph Pascasio

1. Liban v. Gordon (G.R. No. 175352, 18 January 2011, 654 PHIL 680-738)

Facts:
Dante V. Liban, Reynaldo M. Bernardo, and Salvador M. Viari (petitioners) filed with this Court
a Petition to Declare Richard J. Gordon as having forfeited his seat in the Senate. Petitioners are
officers of the Board of Directors of the Quezon City Red Cross Chapter while respondent is
Chairman of the Philippine National Red Cross (PNRC) Board of Governors.

During respondent’s incumbency as a member of the Senate of the Philippines, he was elected
Chairman of the PNRC. Petitioners allege that by accepting the chairmanship of the PNRC
Board of Governors, respondent has ceased to be a member of the Senate as provided in the
Constitution.

Petitioner filed this instant petition.

Issue/s:
Whether or not the Philippine National Red Cross (PNRC) is a government-owned or controlled
corporation.

Ruling:
No. The PNRC is not government-owned but privately owned. The vast majority of the
thousands of PNRC members are private individuals, including students. Under the PNRC
Charter, those who contribute to the annual fund campaign of the PNRC are entitled to
membership in the PNRC for one year. PNRC is, thus, a privately owned, privately funded, and
privately run charitable organization.

The office of the PNRC Chairman is not a government office or an office in a government-
owned or controlled corporation for purposes of the prohibition in the 1987 Constitution.
However, since the PNRC Charter is void insofar as it creates the PNRC as a private corporation,
the PNRC should incorporate under the Corporation Code and register with the Securities and
Exchange Commission if it wants to be a private corporation.

2. Boy Scouts of the Phil. v. COA (G.R. No. 177131, [June 7, 2011], 666 PHIL 140-224)
Public Corporations Case Digests
2S – Atty. Randolph Pascasio

Facts:
The Commission on Audit issued COA Resolution No. 99-011 in which the said resolution state
that the BSP was created as a public corporation under Commonwealth Act No. 111, as amended
by Presidential Decree No. 460 and Republic Act No. 7278; that in Boy Scouts of the Philippines
vs. National Labor Relations Commission, the Supreme Court ruled that the BSP, as constituted
under its charter, was a “government-controlled corporation within the meaning of Article IX
(B)(2)(1) of the Constitution; and that “the BSP is appropriately regarded as a government
instrumentality under the 1987 Administrative Code.”
The BSP sought reconsideration of the COA Resolution in a letter signed by the BSP National
President Jejomar Binay. He claimed that RA 7278 eliminated the “substantial government
participation” in the National Executive Board by removing: (i) the President of the Philippines
and executive secretaries, with the exception of the Secretary of Education, as members thereof;
and (ii) the appointment and confirmation power of the President of the Philippines, as Chief
Scout, over the members of the said Board.

The BSP further claimed that the 1987 Administrative Code itself, of which the BSP s. NLRC
relied on for some terms, defines government-owned and controlled corporations as agencies
organized as stock or non-stock corporations which the BSP, under its present charter, is not.
And finally, they claim that the Government, like in other GOCCs, does not have funds invested
in the BSP. The BSP is not an entity administering special funds. The BSP is neither a unit of the
Government; a department which refers to an executive department as created by law; nor a
bureau which refers to any principal subdivision or unit of any department.

Issue/s:
Whether or not the BSP falls under the COA’s audit jurisdiction.

Ruling:
Yes. After considering the legislative history of the amended charter and the applicable laws and
the arguments of both parties, the Court found that the BSP is a public corporation and its funds
are subject to the COA’s audit jurisdiction.
The BSP Charter created the BSP as a “public corporation” to serve the following public interest
or purpose: xxx to promote through organization and cooperation with other agencies, the ability
of boys to do useful things for themselves and others, to train them in scout craft, and to
inculcate in them patriotism, civic consciousness and responsibility, courage, self-reliance,
discipline and kindred virtues, and moral values, using the method which are in common use by
boy scouts.

The purpose of the BSP as stated in its amended charter shows that it was created in order to
implement a State policy declared in Article II, Section 13 of the Constitution. Evidently, the
BSP, which was created by a special law to serve a public purpose in pursuit of a constitutional
mandate, comes within the class of “public corporations” defined by paragraph 2, Article 44 of
the Civil Code and governed by the law which creates it, pursuant to Article 45 of the same
Code.
The Constitution emphatically prohibits the creation of private corporations except by a general
law applicable to all citizens. The purpose of this constitutional provision is to ban private
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2S – Atty. Randolph Pascasio

corporations created by special charters, which historically gave certain individuals, families or
groups special privileges denied to other citizens.

The BSP is a public corporation or a government agency or instrumentality with juridical

personality, which does not fall within the constitutional prohibition in Article XII, Section 16,
notwithstanding the amendments to its charter. Not all corporations, which are not government
owned or controlled, are ipso facto to be considered private corporations as there exist another
distinct class of corporations or chartered institutions which are otherwise known as “public
corporations.” These corporations are treated by law as agencies or instrumentalities of the
government which are not subject to the test of ownership or control and economic viability but
to different criteria relating to their public purposes/interests or constitutional policies and
objectives and their administrative relationship to the government or any of its Departments or
Offices.

Since BSP, under its amended charter, continues to be a public corporation or a government
instrumentality, the Court concludes that it is subject to the exercise by the COA of its audit
jurisdiction in the manner consistent with the provisions of the BSP Charter.

3. Philippine Society for the Prevention of Cruelty to Animals v. Commission on

Audit, et al. (G.R. No. 169752, 25 September 2007)

Facts:
Public Corporations Case Digests
2S – Atty. Randolph Pascasio

The petitioner was incorporated as a juridical entity over one hundred years ago by virtue of Act
No. 1285, enacted on January 19, 1905, by the Philippine Commission. The petitioner, at the
time it was created, was composed of animal aficionados and animal propagandists. The objects
of the petitioner, as stated in Section 2 of its charter, shall be to enforce laws relating to cruelty
inflicted upon animals or the protection of animals in the Philippine Islands, and generally, to do
and perform all things which may tend in any way to alleviate the suffering of animals and
promote their welfare.

At the time of the enactment of Act No. 1285, the original Corporation Law, Act No. 1459, was
not yet in existence. Act No. 1285 antedated both the Corporation Law and the constitution of
the SEC.

For the purpose of enhancing its powers in promoting animal welfare and enforcing laws for the
protection of animals, the petitioner was initially imbued under its charter with the power to
apprehend violators of animal welfare laws. In addition, the petitioner was to share 1/2 of the
fines imposed and collected through its efforts for violations of the laws related thereto.

Subsequently, however, the power to make arrests as well as the privilege to retain a portion of
the fines collected for violation of animal-related laws were recalled by virtue of C.A. No. 148.
Whereas, the cruel treatment of animals is now an offense against the State, penalized under our
statutes, which the Government is duty bound to enforce;

When the COA was to perform an audit on them they refuse to do so, by the reason that they are
a private entity and not under the said commission. It argued that COA covers only government
entities. On the other hand the COA decided that it is a government entity.

Issue/s:
Whether or not the said petitioner is a private entity.

Ruling:
YES. First, the Court agrees with the petitioner that the “charter test” cannot be applied.
Essentially, the “charter test” provides that 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 CSC, and are compulsory members of the GSIS.

And since the “charter test” had been introduced by the 1935 Constitution and not earlier, it
follows that the test cannot apply to the petitioner, which was incorporated by virtue of Act No.
1285, enacted on January 19, 1905. Settled is the rule that laws in general have no retroactive
effect, unless the contrary is provided. All statutes are to be construed as having only a
prospective operation, unless the purpose and intention of the legislature to give them a
retrospective effect is expressly declared or is necessarily implied from the language used. In
case of doubt, the doubt must be resolved against the retrospective effect.
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2S – Atty. Randolph Pascasio

Second, a reading of petitioner’s charter shows that it is not subject to control or supervision
by any agency of the State, unlike GOCCs. No government representative sits on the board of
trustees of the petitioner. Like all private corporations, the successors of its members are
determined voluntarily and solely by the petitioner in accordance with its by-laws, and may
exercise those powers generally accorded to private corporations, such as the powers to hold
property, to sue and be sued, to use a common seal, and so forth. It may adopt by-laws for its
internal operations: the petitioner shall be managed or operated by its officers “in accordance
with its by-laws in force.”

Third. The employees of the petitioner are registered and covered by the SSS at the latter’s
initiative, and not through the GSIS, which should be the case if the employees are considered
government employees. This is another indication of petitioner’s nature as a private entity.

Fourth. The respondents contend that the petitioner is a “body politic” because its primary
purpose is to secure the protection and welfare of animals which, in turn, redounds to the public
good. This argument, is not tenable. The fact that a certain juridical entity is impressed with
public interest does not, by that circumstance alone, make the entity 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, supply
public wants, or pursue other eleemosynary objectives. While purposely organized for the gain
or benefit of its members, they are required by law to discharge functions for the public benefit.
Examples of these corporations are utility, railroad, warehouse, telegraph, telephone, water
supply corporations and transportation companies. It must be stressed that a quasi-public
corporation is a species of private corporations, but the qualifying factor is the type of service the
former renders to the public: if it performs a public service, then it becomes a quasi-public
corporation.

Authorities are of the view that the purpose alone of the corporation cannot be taken as a safe
guide, for the fact is that almost all corporations are nowadays created to promote the interest,
good, or convenience of the public. A bank, for example, is a private corporation; yet, it is
created for a public benefit. Private schools and universities are likewise private corporations;
and yet, they are rendering public service. Private hospitals and wards are charged with heavy
social responsibilities. More so with all common carriers. On the other hand, there may exist a
public corporation even if it is endowed with gifts or donations from private individuals.

The true criterion, therefore, to determine whether a corporation is public or private is found in
the totality of the relation of the corporation to the State. If the corporation is created by the
State as the latter’s own agency or instrumentality to help it in carrying out its governmental
functions, then that corporation is considered public; otherwise, it is private. Applying the above
test, provinces, chartered cities, and barangays can best exemplify public corporations. They are
created by the State as its own device and agency for the accomplishment of parts of its own
public works.
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2S – Atty. Randolph Pascasio

Fifth. The respondents argue that since the charter of the petitioner requires the latter to
render periodic reports to the Civil Governor, whose functions have been inherited by the
President, the petitioner is, therefore, a government instrumentality.

This contention 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 they are public, quasi-public, or private corporations—as creatures of
the State, there is a reserved right in the legislature to investigate the activities of a corporation to
determine whether it acted within its powers. In other words, the reportorial requirement is the
principal means by which the State may see to it that its creature acted according to the powers
and functions conferred upon it.

4. The Province of North Cotabato v. the Gov. of the Republic of the Phils. Peace Panel
(G.R. No. 183591, 14 October 2008)

Facts:
On August 5, 2008, the Government of the Republic of the Philippines (GRP) and the MILF,
through the Chairpersons of their respective peace negotiating panels, were scheduled to sign a
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2S – Atty. Randolph Pascasio

Memorandum of Agreement on the Ancestral Domain (MOA-AD) Aspect of the GRP-MILF

Tripoli Agreement on Peace of 2001 in Kuala Lumpur, Malaysia.

The signing of the MOA-AD between the GRP and the MILF was not to materialize, however,
for upon motion of petitioners, specifically those who filed their cases before the scheduled
signing of the MOA-AD, this Court issued a Temporary Restraining Order enjoining the GRP
from signing the same.

The MOA-AD was preceded by a long process of negotiation and the concluding of several prior
agreements between the two parties beginning in 1996, when the GRP-MILF peace negotiations
began. On July 18, 1997, the GRP and MILF Peace Panels signed the Agreement on General
Cessation of Hostilities. The following year, they signed the General Framework of Agreement
of Intent on August 27, 1998.

On July 23, 2008, the Province of North Cotabato and Vice-Governor Emmanuel Piñol filed a
petition, docketed as G.R. No. 183591, for Mandamus and Prohibition with Prayer for the
Issuance of Writ of Preliminary Injunction and Temporary Restraining Order. Invoking the right
to information on matters of public concern, petitioners seek to compel respondents to disclose
and furnish them the complete and official copies of the MOA-AD including its attachments, and
to prohibit the slated signing of the MOA-AD, pending the disclosure of the contents of the
MOA-AD and the holding of a public consultation thereon. Supplementarily, petitioners pray
that the MOA-AD be declared unconstitutional.

Issue/s:
Whether or not the Government of the Republic of the Philippines would be binding itself to
concede to or recognize the claim of the Moro Islamic Liberation Front for ancestral domain in
violation of Republic Act No. 8371 by signing the MOA.

Ruling:
This strand begins with the statement that it is “the birthright of all Moros and all Indigenous
peoples of Mindanao to identify themselves and be accepted as ‘Bangsamoros.’” It defines
“Bangsamoro people” as the natives or original inhabitants of Mindanao and its adjacent islands
including Palawan and the Sulu archipelago at the time of conquest or colonization, and their
descendants whether mixed or of full blood, including their spouses.

Thus, the concept of “Bangsamoro,” as defined in this strand of the MOA-AD, includes not only
“Moros” as traditionally understood even by Muslims, but all indigenous peoples of Mindanao
and its adjacent islands. The MOA-AD adds that the freedom of choice of indigenous peoples
shall be respected. What this freedom of choice consists in has not been specifically defined. The
MOA-AD proceeds to refer to the “Bangsamoro homeland,” the ownership of which is vested
exclusively in the Bangsamoro people by virtue of their prior rights of occupation. Both parties
to the MOA-AD acknowledge that ancestral domain does not form part of the public domain.

Republic Act No. 8371 or the Indigenous Peoples Rights Act of 1997 provides for clear-cut
procedure for the recognition and delineation of ancestral domain, which entails, among other
things, the observance of the free and prior informed consent of the Indigenous Cultural
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2S – Atty. Randolph Pascasio

Communities/Indigenous Peoples. Notably, the statute does not grant the Executive Department
or any government agency the power to delineate and recognize an ancestral domain claim by
mere agreement or compromise.

Two, Republic Act No. 7160 or the Local Government Code of 1991 requires all national offices
to conduct consultations beforeany project or program critical to the environment and human
ecology including those that may call for the eviction of a particular group of people residing in
such locality, is implemented therein. The MOA-AD is one peculiar program that unequivocally
and unilaterally vests ownership of a vast territory to the Bangsamoro people, which could
pervasively and drastically result to the diaspora or displacement of a great number of inhabitants
from their total environment.

5. Basco v. PAGCOR (G.R. No. 91649, May 14, 1991)

Facts:
On July 11, 1983, PAGCOR was created under PD 1869 to enable the Government to regulate
and centralize all games of chance authorized by existing franchise or permitted by law. Basco
and four others (all lawyers)assailed the validity of the law creating PAGCOR on constitutional
grounds among others particularly citing that the PAGCOR’s charter is against the constitutional
provision on local autonomy.
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2S – Atty. Randolph Pascasio

Basco et al contend that P.D. 1869 constitutes a waiver of the right of the City of Manila to
impose taxes and legal fees; that Section 13 par. (2) of P.D. 1869 which exempts PAGCOR, as
the franchise holder from paying any “tax of any kind or form, income or otherwise, as well as
fees, charges or levies of whatever nature, whether National or Local” is violative of the local
autonomy principle.

Issue/s:
Whether or not PAGCOR’s charter is violative of the principle of local autonomy.

Ruling:
NO. Section 5, Article 10 of the 1987 Constitution provides:

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.

A close reading of the above provision does not violate local autonomy(particularly on taxing
powers) as it was clearly stated that the taxing power of LGUs are subject to such guidelines and
limitation as Congress may provide.

Further, the City of Manila, being a mere Municipal corporation has no inherent right to impose
taxes. The Charter of the City of Manila is subject to control by Congress. It should be stressed
that “municipal corporations are mere creatures of Congress” which has the power to “create and
abolish municipal corporations” due to its “general legislative powers”. Congress, therefore, has
the power of control over Local governments. And if Congress can grant the City of Manila the
power to tax certain matters, it can also provide for exemptions or even take back the power.

Further still, local governments have no power to tax instrumentalities of the National
Government. PAGCOR is a government owned or controlled corporation with an original
charter, PD 1869. All of its shares of stocks are owned by the National Government. Otherwise,
its operation might be burdened, impeded or subjected to control by a mere Local government.

This doctrine emanates from the “supremacy” of the National Government over local
governments.

6. Lina v. Paño (G.R. No. 129093, August 30, 2001)

Facts:
On December 29, 1995, respondent Tony Calvento was appointed agent by the Philippine
Charity Sweepstakes Office (PCSO) to install Terminal OM 20 for the operation of lotto. He
asked Mayor Calixto Cataquiz, Mayor of San Pedro, Laguna, for a mayor’s permit to open the
lotto outlet. This was denied by Mayor Cataquiz in a letter dated February 19, 1996. The
ground for said denial was an ordinance passed by the Sangguniang Panlalawigan of Laguna
entitled Kapasiyahan Blg. 508, T. 1995 which was issued on September 18, 1995. As a result of
this resolution of denial, respondent Calvento filed a complaint for declaratory relief with prayer
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2S – Atty. Randolph Pascasio

for preliminary injunction and temporary restraining order. In the said complaint, respondent
Calvento asked the Regional Trial Court of San Pedro Laguna, Branch 93, for the following
reliefs:

(1) a preliminary injunction or temporary restraining order, ordering the defendants to

refrain from implementing or enforcing Kapasiyahan Blg. 508, T. 1995;

(2) an order requiring Hon. Municipal Mayor Calixto R. Cataquiz to issue a business
permit for the operation of a lotto outlet; and

(3) an order annulling or declaring as invalid Kapasiyahan Blg. 508, T. 1995.

On February 10, 1997, the respondent judge, Francisco Dizon Paño, promulgated his decision
enjoining the petitioners from implementing or enforcing resolution or Kapasiyahan Blg. 508, T.
1995.

Issue/s:
Whether or not Kapasiyahan Blg. 508, T. 1995 is valid.

Ruling:
As a policy statement expressing the local government’s objection to the lotto, such resolution is
valid. This is part of the local government’s autonomy to air its views which may be contrary to
that of the national government’s. However, this freedom to exercise contrary views does not
mean that local governments may actually enact ordinances that go against laws duly enacted by
Congress. Given this premise, the assailed resolution in this case could not and should not be
interpreted as a measure or ordinance prohibiting the operation of lotto in our system of
government, the power of local government units to legislate and enact ordinances and
resolutions is merely a delegated power coming from Congress. As held in Tatel vs. Virac,
ordinances should not contravene an existing statute enacted by Congress. The reasons for this is
obvious, as elucidated in Magtajas v. Pryce Properties Corp.

7. Limbona v. Mangelin (G.R. No. 80391, February 28, 1989)

Facts:
Petitioner, Sultan Alimbusar Limbona, was elected Speaker of the Regional Legislative
Assembly or Batasang Pampook of Central Mindanao (Assembly). On October 21, 1987
Congressman Datu Guimid Matalam, Chairman of the Committee on Muslim Affairs of the
House of Representatives, invited petitioner in his capacity as Speaker of the Assembly of
Region XII in a consultation/dialogue with local government officials. Petitioner accepted the
invitation and informed the Assembly members through the Assembly Secretary that there shall
be no session in November as his presence was needed in the house committee hearing of
Congress. However, on November 2, 1987, the Assembly held a session in defiance of the
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2S – Atty. Randolph Pascasio

Limbona's advice, where he was unseated from his position. Petitioner prays that the session's
proceedings be declared null and void and be it declared that he was still the Speaker of the
Assembly. Pending further proceedings of the case, the SC received a resolution from the
Assembly expressly expelling petitioner's membership therefrom. Respondents argue that
petitioner had "filed a case before the Supreme Court against some members of the Assembly on
a question which should have been resolved within the confines of the Assembly," for which the
respondents now submit that the petition had become "moot and academic" because of its
resolution.

Issue/s:
Whether or not the autonomous governments of Mindanao are subject to the jurisdiction of the
national courts.

Ruling:
The autonomous governments of Mindanao were organized in Regions 9 and 12 by Presidential
Decree No. 1618. In relation to the central government, the Presidential Decree provides that
“the President shall have the power of general supervision and control over the Autonomous
Regions...” Now, autonomy is either decentralization of administration or decentralization of
power. There is decentralization of administration when the central government delegates
administrative powers to political subdivisions in order to broaden the base of government power
and in the process to make local governments “more responsive and accountable,” “and ensure
their fullest development as self-reliant communities and make them more effective partners in
the pursuit of national development and social progress.” At the same time, it relieves the central
government of the burden of managing local affairs and enables it to concentrate on national
concerns. The president exercises “general supervision” over them, but only to “ensure that local
affairs are administered according to law.” He has not control over their acts in the sense that he
can substitute their judgments with his own. Decentralization of power, on the other hand,
involves an abdication of political power in the favor of local government units declared to be
autonomous. In that case, the autonomous government is free to chart its own destiny and shape
its future with minimum intervention from central authorities.

According to the Supreme Court, an examination of the very Presidential Decree creating the
autonomous governments of Mindanao persuades us to believe that they were never meant to
exercise autonomy through decentralization of power. The Presidential Decree, in the first place,
mandates that “the President shall have the power of general supervision and control over
Autonomous Regions.” In the second place, the Sangguniang Pampook, their legislative arm, is
made to dischage chiefly administrative services. Thus, the SC assumes jurisdiction.

Upon the facts presented, the Court finds two sessions held on November to be invalid.
Wherefore, the petition is Granted. The petitioner is reinstated as Member and speaker of the
Sanggunian.
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2S – Atty. Randolph Pascasio

8. Disomangcop v. Datumanong (G.R. No. 149848, 25 November 2004)

Facts:
On Aug. 1, 1989, RA 6734 was passed (Organic Act of ARMM). Four provinces voted for
inclusion in ARMM, namely: Lanao del Sur, Maguindanao, Sulu and Tawi-Tawi. In accordance
with it, EO 426 was issued by Pres. Cory Aquino on Oct. 12, 1990. The same devolved to the
ARMM the power of the DPWH. Consequently, DO 119 entitled "Creation of Marawi Sub-
District Engineering Office." was issued by DPWH Sec. Vigilar last May 20, 1999, which is in
accordance with the E.O 124. It created a DPWH Marawi Sub-District Engineering Office which
shall have jurisdiction over all national infrastructure projects and facilities under the DPWH
within Marawi City and Lanao del Sur. On Jan. 17, 2001, RA 8999 which created a new
Engineering District in the first district of Lanao del Sur was passed by Pres. Estrada entitled
“An act establishing an engineering district as the first district of Lanao Del Sur and
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appropriating funds therefor”. On March 31, 2001, RA 9054 which amended RA 6734 was
passed. The province of Basilan and the City of Marawi voted to join ARMM through said law.

Disomangcop and Dimalotang in their capacity as Officer-in-Charge and Engineer II

respectively of the First Engineering District of DPWH-ARMM in Lanao del Sur filed a petition
questioning the constitutionality and validity of DO 119 and RA 8999 on the ground that they
contravene the constitution and the organic acts of the ARMM. Moreover they sought mainly the
following relief: to prohibit respondent DPWH Secretary from implementing D.O 119 and R.A
8999 and releasing funds for public work projects intended for Lanao Del Sur and Marawi City
to the Marawi Sub-District Engineering Office and other administrative regions of DPWH.

Issue/s:
Whether or not DO 119 and RA 8999 are both invalid and constitutionally infirm.

Ruling:
Yes, Republic Act 8999 never became an operative and was superseded or repealed by Republic
Act 9054. RA 8999 is patently inconsistent with RA 9054 which is a later law. RA 9054, which
is anchored on the 1987 Constitution advances the constitutional grant of autonomy by detailing
the powers of the ARMM which covers among others Lanao del Sur. However, RA 8999
ventures to re-establish the National Government's jurisdiction over the infrastructure programs
in Lanao del Sur. RA 8999 is patently inconsistent with RA 9054, and it destroys the latter law's
objective of devolution of the functions of DPWH in line with the policy of the Constitution to
grant LGUs meaningful and authentic regional autonomy.

DO 119 creating the Marawi Sub-District Engineering Office which has jurisdiction over
infrastructure projects within Marawi City and Lanao del Sur is violate of the provisions of EO
426 which implements the transfer of control and supervision of the DPWH to the ARMM in
line with RA 6734. The office created under DO 119 having essentially the same powers with
the District Engineering Office of Lanao del Sur as created under EO 426, is a duplication. The
DO in effect takes back powers which have been previously devolved under EO 426. RA 9054
however has repealed DO Department Order 119.
Thus, R.A 8999 is antagonistic to and cannot be reconciled with both ARMM Organic Acts. It
contravened true decentralization which is the essence of regional autonomy. And, D.O were
issued unconstitutional and were issued grave abuse of discretion
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2S – Atty. Randolph Pascasio

9. Batangas CATV, Inc. v. Court of Appeals (G.R. No. 138810, 29 September 2004)

Facts:
On July 28, 1986, respondent Sangguniang Panlungsod enacted Resolution No. 210 granting
petitioner a permit to construct, install, and operate a CATV system in Batangas City. Section 8
of the Resolution provides that petitioner is authorized to charge its subscribers the maximum
rates specified therein, “provided, however, that any increase of rates shall be subject to the
approval of the Sangguniang Panlungsod.

Sometime in November 1993, petitioner increased its subscriber rates from P88.00 to P180.00
per month. As a result, respondent Mayor wrote petitioner a letter threatening to cancel its permit
unless it secures the approval of respondent Sangguniang Panlungsod, pursuant to Resolution
No. 210. Respondent argues that Resolution was enacted pursuant to Sec. 177 (c) & (d) of BP
337 (LGC of 1983) which authorizes LGUs to regulate businesses and is in the nature of a
contract between Petitioner and Respondent.
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2S – Atty. Randolph Pascasio

Petitioner then filed with the RTC, Branch 7, Batangas City, a petition for injunction alleging
that respondent Sangguniang Panlungsod has no authority to regulate the subscriber rates
charged by CATV operators because under Executive Order No. 205, the National
Telecommunications Commission (NTC) has the sole authority to regulate the CATV operation
in the Philippines.

Issue/s:
Whether or not a local government unit (LGU) regulate the subscriber rates charged by CATV
operators within its territorial jurisdiction.

Ruling:
The resolution is an enactment of an LGU acting only as agent of the national legislature. There
is no law authorizing LGUs to grant franchises to operate CATV. Whatever authority the LGUs
had before, the same had been withdrawn when President Marcos issued PD 1512 terminating all
franchises, permits or certificates for the operation of CATV system previously granted by local
governments. Today, pursuant to Sec. 3 of EO 436 only persons, associations, partnerships,
corporations or cooperatives granted a Provisional Authority or Certificate of Authority by the
NTC may install, operate and maintain a cable television system or render cable television
service within a service area. It is clear that in the absence of constitutional or legislative
authorization, municipalities have no power to grant franchises. Consequently, the protection of
the constitutional provision as to impairment of the obligation of a contract does not extend to
privileges, franchises and grants given by a municipality in excess of its powers, or ultra vires.

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.
Accordingly, we have upheld enactments providing, for instance, the regulation of gambling, the
occupation of rig drivers, the installation and operation of pinball machines, the maintenance and
operation of cockpits, the exhumation and transfer of corpses from public burial grounds, and the
operation of hotels, motels, and lodging houses as valid exercises by local legislatures of the
police power under the general welfare clause.

Like any other enterprise, CATV operation maybe regulated by LGUs under the general welfare
clause. This is primarily because the CATV system commits the indiscretion of crossing public
properties. (It uses public properties in order to reach subscribers.) The physical realities of
constructing CATV system the use of public streets, rights of ways, the founding of structures,
and the parceling of large regions allow an LGU a certain degree of regulation over CATV
operators. This is the same regulation that it exercises over all private enterprises within its
territory.

But, while we recognize the LGUs power under the general welfare clause, we cannot sustain
Resolution No. 210. We are convinced that respondents strayed from the well recognized limits
of its power. The flaws in Resolution No. 210 are: (1) it violates the mandate of existing laws
and (2) it violates the States deregulation policy over the CATV industry.
Public Corporations Case Digests
2S – Atty. Randolph Pascasio

1. The apparent defect in Resolution No. 210 is that it contravenes E.O. No. 205 and E.O. No.
436 insofar as it permits respondent Sangguniang Panlungsod to usurp a power exclusively
vested in the NTC, i.e., the power to fix the subscriber rates charged by CATV operators. The
fixing of subscriber rates is definitely one of the matters within the NTCs exclusive domain.

2. Deregulation is the reduction of government regulation of business to permit freer markets and
competition.[50] Oftentimes, the State, through its regulatory agencies, carries out a policy of
deregulation to attain certain objectives or to address certain problems. In the field of
telecommunications, it is recognized that many areas in the Philippines are still unserved or
underserved. Thus, to encourage private sectors to venture in this field and be partners of the
government in stimulating the growth and development of telecommunications, the State
promoted the policy of deregulation.

The fifth Whereas Clause of E.O. No. 436 states:

WHEREAS, professionalism and self-regulation among existing operators, through a nationally

recognized cable television operators association, have enhanced the growth of the cable
television industry and must therefore be maintained along with minimal reasonable government
regulations;

When the State declared a policy of deregulation, the LGUs are bound to follow. Verily, in the
case at bar, petitioner may increase its subscriber rates without respondents approval.

PETITION GRANTED.

10. Judge Dadole v. Commission on Audit (G.R. No. 125350, December 3, 2002)

Facts:
Acting on the DBM's Local Budget Circular No. 55, the Mandaue City Auditor issued notices of
disallowances to RTC and MTC Judges, in excess of the amount (maximum of P1000 and P700
in provinces and cities and municipalities, respectively) authorized by said circular. The
additional monthly allowances of the judges shall be reduced to P1000 each. They were also
asked to reimbursed the amount they received in excess of P1000 from the last six months.

Issue/s:
Whether or not Local Budget Circular No. 55 void for going beyond the supervisory powers of
the President.

Ruling:
Yes. Although the Constitution guarantees autonomy to local government units, the exercise of
local autonomy remains subject to the power of control by Congress and the power of
supervision by the President. Sec 4 Art X of 1987 Constitution: "The President of the
Public Corporations Case Digests
2S – Atty. Randolph Pascasio

Philippines shall exercise general supervision over local governments. x x x" The said provision
has been interpreted to exclude the power of control.

The members of the Cabinet and other executive officials are merely alter egos of the President.
As such, they are subject to the power of control of the President; he will see to it that the local
governments or their officials were performing their duties as provided by the Constitution and
by statutes, at whose will and behest they can be removed from office; or their actions and
decisions changed, suspended or reversed. They are subject to the President's supervision only,
not control, so long as their acts are exercised within the sphere of their legitimate powers. The
President can only interfere in the affairs and activities of a LGU if he or she finds that the latter
has acted contrary to law. This is the scope of the President's supervisory powers over LGUs.

11. Pimentel v. Aguirre, et al. (G.R. No. 132988, July 19, 2000), in relation to Secs. 284-
294, LGC.

Facts:
In 1997, President Ramos issued AO 372 which:

(1) required all government departments and agencies, including SUCs, GOCCs and
LGUs to 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 (Section 1); and

(2) ordered the withholding of 10% of the IRA to LGUs (Section 4) . On 10 December
1998, President Estrada issued AO 43, reducing to 5% the amount of IRA to be withheld
from LGU.

Issue/s:
1. Whether or not the president committed grave abuse of discretion in ordering all LGUS
to adopt a 25% cost reduction program in violation of the LGU'S fiscal autonomy; and
Public Corporations Case Digests
2S – Atty. Randolph Pascasio

2. Whether Section 4 of the same issuance, which withholds 10 percent of their internal
revenue allotments, are valid exercises of the President's power of general supervision
over local governments.

Ruling:
1. Section 1 of AO 372 does not violate local fiscal autonomy. Local fiscal autonomy does
not rule out any manner of national government intervention by way of supervision, in
order to ensure that local programs, fiscal and otherwise, are consistent with national
goals. Significantly, the President, by constitutional fiat, is the head of the economic and
planning agency of the government, primarily responsible for formulating and
implementing continuing, coordinated and integrated social and economic policies, plans
and programs for the entire country. However, under the Constitution, the formulation
and the implementation of such policies and programs are subject to "consultations with
the appropriate public agencies, various private sectors, and local government units." The
President cannot do so unilaterally.

Consequently, the Local Government Code provides:

"x x x [I]n the event the national government incurs an unmanaged public sector
deficit, the President of the Philippines is hereby authorized, upon the
recommendation of [the] Secretary of Finance, Secretary of the Interior and Local
Government and Secretary of Budget and Management, and subject to
consultation with the presiding officers of both Houses of Congress and the
presidents of the liga, to make the necessary adjustments in the internal revenue
allotment of local government units but in no case shall the allotment be less than
thirty percent (30%) of the collection of national internal revenue taxes of the
third fiscal year preceding the current fiscal year x x x."

There are therefore several requisites before the President may interfere in local fiscal
matters: (1) an unmanaged public sector deficit of the national government; (2)
consultations with the presiding officers of the Senate and the House of Representatives
and the presidents of the various local leagues; and (3) the corresponding
recommendation of the secretaries of the Department of Finance, Interior and Local
Government, and Budget and Management. Furthermore, any adjustment in the allotment
shall in no case be less than thirty percent (30%) of the collection of national internal
revenue taxes of the third fiscal year preceding the current one.

Petitioner points out that respondents failed to comply with these requisites before the
issuance and the implementation of AO 372. At the very least, they did not even try to
show that the national government was suffering from an unmanageable public sector
deficit. Neither did they claim having conducted consultations with the different leagues
of local governments. Without these requisites, the President has no authority to adjust,
much less to reduce, unilaterally the LGU's internal revenue allotment.

AO 372, however, is merely directory and has been issued by the President consistent
with his power of supervision over local governments. It is intended only to advise all
Public Corporations Case Digests
2S – Atty. Randolph Pascasio

government agencies and instrumentalities to undertake cost-reduction measures that will

help maintain economic stability in the country, which is facing economic difficulties.
Besides, it does not contain any sanction in case of noncompliance. Being merely an
advisory, therefore, Section 1 of AO 372 is well within the powers of the President. Since
it is not a mandatory imposition, the directive cannot be characterized as an exercise of
the power of control.

2. Section 4 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 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. (Pimentel vs. Aguirre, G.R. No. 132988, July 19, 2000).

12. Province of Batangas v. Romulo (G.R. No. 152774, 27 May 2004)

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

Facts:
In 1998, then President Estrada issued E.O. No. 48, the “Program for Devolution Adjustment and
Equalization” to enhance the capabilities of LGUs in the discharge of the functions and services
devolved to them through the LGC.

The Oversight Committee under Executive Secretary Ronaldo Zamora passed Resolutions No.
OCD-99-005, OCD-99-006 and OCD-99-003 which were approved by Pres. Estrada on October
6, 1999. The guidelines formulated by the Oversight Committee required the LGUs to identify
the projects eligible for funding under the portion of LGSEF and submit the project proposals
and other
requirements to the DILG for appraisal before the Committee serves notice to the DBM for the
subsequent release of the corresponding funds.
Public Corporations Case Digests
2S – Atty. Randolph Pascasio

Hon. Herminaldo Mandanas, Governor of Batangas, petitioned to declare unconstitutional and

void certain provisos contained in the General Appropriations Acts (GAAs) of 1999, 2000, and
2001, insofar as they uniformly earmarked for each corresponding year the amount of P5billion
for the Internal Revenue Allotment (IRA) for the Local Government Service Equalization Fund
(LGSEF) and imposed conditions for the release thereof.

Issue/s:
Whether or not the assailed provisos in the GAAs of 1999, 2000, and 2001, and the OCD
resolutions infringe the Constitution and the LGC of 1991.

Ruling:
Yes. The assailed provisos in the GAAS of 1999, 2000, and 2001, and the OCD resolutions
constitute a "withholding" of a portion of the IRA – they effectively encroach on the fiscal
autonomy enjoyed by LGUS and must be struck down.

According to Art. II, Sec.25 of the Constitution, "the State shall ensure the local autonomy of
local governments“. Consistent with the principle of local autonomy, the Constitution confines
the President's power over the LGUS to one of general supervision, which has been interpreted
to exclude the power of control. Drilon v. Lim distinguishes supervision from control: control
lays down the rules in the doing of an act – the officer has the discretion to order his subordinate
to do or redo the act, or decide to do it himself; supervision merely sees to it that the rules are
followed but has no authority to set down the rules or the discretion to modify/replace them.
The entire process involving the distribution& release of the LGSEF is constitutionally
impermissible. The LGSEF is part of the IRA or "just share" of the LGUS in the national taxes.
Sec.6, Art. X of the Constitution mandates that the "just share" shall be automatically released to
the LGUS. Since the release is automatic, the LGUS aren't required to perform any act to receive
the "just share" – it shall be released to them "without need of further action". To subject its
distribution & release to the vagaries of the implementing rules & regulations as sanctioned by
the assailed provisos in the GAAS of 1999-2001 and the OCD Resolutions would violate this
constitutional mandate.

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

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

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

A general appropriations bill is a special type of legislation, whose content is limited to specified
sums of money dedicated to a specific purpose or a separate fiscal unit – any provision therein
which is intended to amend another law is considered an "inappropriate provision“.
Public Corporations Case Digests
2S – Atty. Randolph Pascasio

Increasing/decreasing the IRA of LGU fixed in the LGC of 1991 are matters of general &
substantive law. To permit the Congress to undertake these amendments through the GAAS
would unduly infringe the fiscal autonomy of the LGUs.

The value of LGUS as institutions of democracy is measured by the degree of autonomy they
enjoy. Our national officials should not only comply with the constitutional provisions in local
autonomy but should also appreciate the spirit and liberty upon which these provisions are based.

13. ACORD v. Zamora (G.R. No. 144256, 08 June 2005)

Doctrine:
Automatic release of IRA.

Facts:
Pres. Estrada, pursuant to Sec 22, Art VII mandating the Pres to submit to Congress a budget of
expenditures within 30 days before the opening of every regular session, submitted the National
Expenditures program for FY 2000. The President proposed an IRA of P121,778,000,000. This
became RA 8760, “AN ACT APPROPRIATING FUNDS FOR THE OPERATION OF THE
GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES FROM JANUARY ONE TO
DECEMBER THIRTY-ONE, TWO THOUSAND, AND FOR OTHER PURPOSES” also
known as General Appropriations Act (GAA) for the Year 2000. It provides under the heading
“ALLOCATIONS TO LOCAL GOVERNMENT UNITS” that the IRA for local government
units shall amount to P111,778,000,000”.

In another part of the GAA, under the heading “UNPROGRAMMED FUND,” it is provided that
an amount of P10,000,000,000 (P10 Billion), apart from the P111,778,000,000 mentioned above,
shall be used to fund the IRA, which amount shall be released only when the original revenue
targets submitted by the President to Congress can be realized based on a quarterly assessment to
be conducted by certain committees which the GAA specifies, namely, the Development Budget
Coordinating Committee, the Committee on Finance of the Senate, and the Committee on
Appropriations of the House of Representatives.

Thus, while the GAA appropriates P111,778,000,000 of IRA as Programmed Fund, it

appropriates a separate amount of P10 Billion of IRA under the classification of Unprogrammed
Public Corporations Case Digests
2S – Atty. Randolph Pascasio

Fund, the latter amount to be released only upon the occurrence of the condition stated in the
GAA.

On August 22, 2000, a number of NGOs and POs, along with 3 barangay officials filed with this
Court the petition at bar, for Certiorari, Prohibition and Mandamus With Application for
Temporary Restraining Order, against respondents then Executive Secretary Ronaldo Zamora,
then Secretary of the Department of Budget and Management Benjamin Diokno, then National
Treasurer Leonor Magtolis-Briones, and the Commission on Audit, challenging the
constitutionality of provision XXXVII (ALLOCATIONS TO LOCAL GOVERNMENT UNITS)
referred to by petitioners as Section 1, XXXVII (A), and LIV (UNPROGRAMMED FUND)
Special Provisions 1 and 4 of the GAA (the GAA provisions).

Petitioners contend that the said provisions violates the LGUs autonomy by unlawfully reducing
the IRA allotted by 10B and by withholding its release by placing the same under
“Unprogrammed funds”. Although the effectivity of the Year 2000 GAA has ceased, this Court
shall nonetheless proceed to resolve the issues raised in the present case, it being impressed with
public interest. Petitioners argue that the GAA violated the constitutional mandate of
automatically releasing the IRAs when it made its release contingent on whether revenue
collections could meet the revenue targets originally submitted by the President, rather than
making the release automatic.

Issue/s:
Whether or not the subject GAA violates LGUs fiscal autonomy by not automatically releasing
the whole amount of the allotted IRA.

Ruling:
Article X, Section 6 of the Constitution provides:

SECTION 6. Local government units shall have a just share, as determined by law, in the
national taxes which shall be automatically released to them.

Petitioners argue that the GAA violated this constitutional mandate when it made the release of
IRA contingent on whether revenue collections could meet the revenue targets originally
submitted by the President, rather than making the release automatic. Respondents counterargue
that the above constitutional provision is addressed not to the legislature but to the executive,
hence, the same does not prevent the legislature from imposing conditions upon the release of the
IRA.

Respondents thus infer that the subject constitutional provision merely prevents the executive
branch of the government from “unilaterally” withholding the IRA, but not the legislature from
authorizing the executive branch to withhold the same. In the words of respondents, “This
essentially means that the President or any member of the Executive Department cannot
unilaterally, i.e., without the backing of statute, withhold the release of the IRA.”

As the Constitution lays upon the executive the duty to automatically release the just share of
local governments in the national taxes, so it enjoins the legislature not to pass laws that might
Public Corporations Case Digests
2S – Atty. Randolph Pascasio

prevent the executive from performing this duty. To hold that the executive branch may
disregard constitutional provisions which define its duties, provided it has the backing of statute,
is virtually to make the Constitution amendable by statute – a proposition which is patently
absurd. If indeed the framers intended to allow the enactment of statutes making the release of
IRA conditional instead of automatic, then Article X, Section 6 of the Constitution would have
been worded differently.

Since, under Article X, Section 6 of the Constitution, only the just share of local governments is
qualified by the words “as determined by law,” and not the release thereof, the plain implication
is that Congress is not authorized by the Constitution to hinder or impede the automatic release
of the IRA.

In another case, the Court held that the only possible exception to mandatory automatic release
of the IRA is, as held in Batangas:
…if the national internal revenue collections for the current fiscal year is less than 40
percent of the collections of the preceding third fiscal year, in which case what should be
automatically released shall be a proportionate amount of the collections for the current
fiscal year. The adjustment may even be made on a quarterly basis depending on the
actual collections of national internal revenue taxes for the quarter of the current fiscal
year.
This Court recognizes that the passage of the GAA provisions by Congress was motivated by the
laudable intent to “lower the budget deficit in line with prudent fiscal management.” The
pronouncement in Pimentel, however, must be echoed: “[T]he rule of law requires that even the
best intentions must be carried out within the parameters of the Constitution and the law. Verily,
laudable purposes must be carried out by legal methods.”

WHEREFORE, the petition is GRANTED. XXXVII and LIV Special Provisions 1 and 4 of the
Year 2000 GAA are hereby declared unconstitutional insofar as they set apart a portion of the
IRA, in the amount of P10 Billion, as part of the UNPROGRAMMED FUND.
Public Corporations Case Digests
2S – Atty. Randolph Pascasio

14. Kida v. Senate of the Philippines (G.R. No. 196271, 18 October 2011; and Resolution
dated 28 February 2012)

Facts:
Several laws pertaining to the Autonomous Region in Muslim Mindanao (ARMM) were enacted
by Congress. Republic Act (RA) No. 6734 is the organic act that established the ARMM and
scheduled the first regular elections for the ARMM regional officials. RA No. 9054 amended the
ARMM Charter and refined the basic ARMM structure. It also reset the regular elections for the
ARMM regional officials to the second Monday of September 2001.

RA No. 9140 further reset the first regular elections to November 26, 2001. It likewise set the
plebiscite to ratify RA No. 9054, which was successfully held on August 14, 2001. RA No. 9333
reset for the third time the ARMM regional elections to the 2nd Monday of August 2005 and on
the same date every 3 years thereafter.

Pursuant to RA No. 9333, the next ARMM regional elections should have been held on August
8, 2011. COMELEC had begun preparations for these elections and had accepted certificates of
candidacies for the various regional offices to be elected. But on June 30, 2011, RA No. 10153
was enacted, resetting the next ARMM regular elections to May 2013 to coincide with the
regular national and local elections of the country.

RA No. 10153 originated in the House of Representatives as House Bill No. 4146, which the
House passed on March 22, 2011 with 191 (of the 285) Members voting in its favor. The Senate
adopted its own version, Senate Bill No. 2756, on June 6, 2011. 13 (of the 23) Senators voted
favorably for its passage. On June 7, 2011, the House of Representative concurred with the
Senate amendments and on June 30, 2011, the President signed RA No. 10153 into law.

In these consolidated petitions filed directly with the Supreme Court, the petitioners assailed the
constitutionality of RA No. 10153.
Public Corporations Case Digests
2S – Atty. Randolph Pascasio

Issue/s:
1. Whether or not the requirement of a plebiscite applies only in the creation of autonomous
regions under Section 18(2), Article X of the 1987 Constitution.

2. Whether or not the grant to the President of the power to appoint OICs constitutional.

Ruling:
1. The plebiscite requirement only applies to the creation of autonomous regions; Section 3,
Article XVII of RA No. 9054 unconstitutional for excessively enlarging the plebiscite
requirement in Section 18, Article X of the Constitution.

The plebiscite requirement under Section 3, Article XVII of RA No. 9054 is excessive to
point of absurdity and, hence, a violation of the Constitution.

Section 18, Article X of the Constitution states that the plebiscite is required only for the
creation of autonomous regions and for [the determination of] which provinces, cities and
geographic areas will be included in the autonomous regions. While the settled rule is
that amendments to the Organic Act have to comply with the plebiscite requirement in
order to become effective, questions on the extent of the matters requiring ratification
may unavoidably arise because of the seemingly general terms of the Constitution and the
obvious absurdity that would result if a plebiscite were to be required for every statutory
amendment.

Section 18, Article X of the Constitution plainly states that “The creation of the
autonomous region shall be effective when approved by the majority of the votes cast by
the constituent units in a plebiscite called for the purpose.” With these wordings as
standard, we interpret the requirement to mean that only amendments to, or revisions of,
the Organic Act constitutionally-essential to the creation of autonomous regions – i.e.,
those aspects specifically mentioned in the Constitution which Congress must provide for
in the Organic Act – require ratification through a plebiscite. These amendments to the
Organic Act are those that relate to: (a) the basic structure of the regional government; (b)
the region’s judicial system, i.e., the special courts with personal, family, and property
law jurisdiction; and, (c) the grant and extent of the legislative powers constitutionally
conceded to the regional government under Section 20, Article X of the Constitution.

The date of the ARMM elections does not fall under any of the matters that the
Constitution specifically mandated Congress to provide for in the Organic Act.
Therefore, even assuming that the supermajority votes and the plebiscite requirements are
valid, any change in the date of elections cannot be construed as a substantial amendment
of the Organic Act that would require compliance with these requirements.

2. Yes, the grant [to the President] of the power to appoint OICs is constitutional.

During the oral arguments, the Court identified the three options open to Congress in
order to resolve the problem on who should sit as ARMM officials in the interim: (1)
Public Corporations Case Digests
2S – Atty. Randolph Pascasio

allow the elective officials in the ARMM to remain in office in a hold over capacity until
those elected in the synchronized elections assume office; (2) hold special elections in the
ARMM, with the terms of those elected to expire when those elected in the [2013]
synchronized elections assume office; or (3) authorize the President to appoint OICs,
[their terms to last] also until those elected in the [2013] synchronized elections assume
office.

The Supreme Court] DISMISSED the petitions and UPHELD the constitutionality of RA No.
10153 in toto.]

15. Gov. Villafuerte, Jr. and Prov. Of Camsur v. Robredo, G.R. No. 195390, 10
December 2014

Facts:
In 1995, the Commission on Audit found that some LGUs had actually used 20% of their
Internal Revenue Allotment (IRA) for Maintenance and Other Operating Expenses (MOOE), in
violation of R.A. No. 7160 or the Local Government Code of 1991 (LGC). Following this, on
September 20, 2005, then DILG Sec. Angelo Reyes and DBM Sec. Romulo Neri issued Joint
Memorandum Circular No. 1, s. 2005, which contained guidelines on the proper use of the said
20% for development projects. On August 31, 2010, respondent incumbent DILG Sec. Jesse
Robredo issued Memorandum Circular (MC) No. 2010-83, which mandated local chief
executives to publicly post budget statements such as the CY 2010 Annual Budget and CY 2010
20% of the IRA Utilization. Afterward, on December 2 that same year he issued MC No. 2010-
138, which provided a list of expenses for which 20% of the IRA must not be utilized. On
January 13, 2011, respondent issued MC No. 2011-08, which imposed strict compliance with
Secs. 288 and 354 of the LGC and MC No. 2010-83.

On February 21, 2011, petitioner then Camarines Sur Gov. Luis Raymund Villafuerte, Jr. and the
Provincial Government of Camarines Sur filed a petition for certiorari, seeking to nullify MC
Nos. 2010-83, 2010-138, and 2011-08.

Issue/s:
Whether or not the Memorandum Circulars Nos. 2010-83, 2010-138, and 2011-08 violates the
principles of local and fiscal autonomy in the Constitution and the LGC.

Ruling:
No. Petitioners assert that MC No. 2010-83 is mandatory in nature, and by issuing it respondent
has exceeded his supervisory powers. A reading of the assailed circular reveals that it is in fact
an advisory to LGUs reminding them to observe Sec. 287 of the LGC in utilizing 20% of their
IRA. Likewise, the enumeration provided by MC No. 2010-138 is not meant to restrict LGUs’
discretion in using their funds. Rather, the list is meant to show what expenses are not covered
by the development fund, and LGUs remain at liberty to map out their own development plans.
Public Corporations Case Digests
2S – Atty. Randolph Pascasio

Contrary to petitioners’ claims, the said circulars also do not provide sanctions for non-
compliance, but only reminds LGUs to adhere to existing rules regarding the 20% development
fund.

It must also be stressed that the state policy of LGU autonomy outlined in Art. X of the
Constitution does not totally sever them from the national government. In Ganzon v. Court of
Appeals, the Court mentioned the paradoxical dynamic where local governments are subject to
limited regulation to enhance self-government. At any rate, MC Nos. 2010-83 and 2011-08 are
really implementations of the constitutional mandate of transparency and accountability, as
reiterated in the LGC and R.A. No. 9184.

Petition is dismissed for lack of merit.

16. Mandanas v. Ochoa, G.R. Nos. 199802, 03 July 2018

Facts:
One of the key features of the 1987 Constitution is its push towards decentralization of
government and local autonomy. Local autonomy has two facets, the administrative and the
fiscal.

Implementing the constitutional mandate for decentralization and local autonomy, Congress
enacted Republic Act No. 7160, otherwise known as the Local Government Code (LGC).

The share of the LGUs, heretofore known as the Internal Revenue Allotment (IRA), has been
regularly released to the LGUs. According to the implementing rules and regulations of the LGC,
the IRA is determined on the basis of the actual collections of the National Internal Revenue
Taxes (NIRTs) as certified by the Bureau of Internal Revenue (BIR).

Mandanas, et al. allege herein that certain collections of NIR Ts by the Bureau of Customs
(BOC) - specifically: excise taxes, value added taxes (VATs) and documentary stamp taxes
(DSTs) - have not been included in the base amounts for the computation of the IRA; that such
taxes, albeit collected by the BOC, should form part of the base from which the IRA should be
computed because they constituted NIRTs; that, consequently, the release of the additional
amount of ₱60,750,000,000.00 to the LGUs as their IRA for FY 2012 should be ordered; and
that for the same reason the LGUs should also be released their unpaid IRA for FY 1992 to FY
2011, inclusive, totaling ₱438,103,906,675.73.

Issue/s:
Whether or not Section 284 of the LGC is unconstitutional for being repugnant to Section 6,
Article X of the 1987 Constitution.

Ruling:
There is no issue as to what constitute the LGUs’ just share expressed in the percentages of the
national taxes (i.e.,30%, 35% and 40% stipulated in subparagraphs (a), (b), and (c) of Section
284 ). Yet, Section 6, supra, mentions national taxes as the source of the just share of the LGUs
Public Corporations Case Digests
2S – Atty. Randolph Pascasio

while Section 284 ordains that the share of the LG Us be taken from national internal revenue
taxes instead.

Although the power of Congress to make laws is plenary in nature, congressional lawmaking
remains subject to the limitations stated in the 1987 Constitution. The phrase national internal
revenue taxes engrafted in Section 284 is undoubtedly more restrictive than the term national
taxes written in Section 6. As such, Congress has actually departed from the letter of the 1987
Constitution stating that national taxes should be the base from which the just share of the LGU
comes. Such departure is impermissible. Verba legis non est recedendum (from the words of a
statute there should be no departure). Equally impermissible is that Congress has also thereby
curtailed the guarantee of fiscal autonomy in favor of the LGUs under the 1987 Constitution.

Although it has the primary discretion to determine and fix the just share of the LGUs in the
national taxes (e.g., Section 284 of the LGC), Congress cannot disobey the express mandate of
Section 6, Article X of the 1987 Constitution for the just share of the LGUs to be derived from
the national taxes. The phrase as determined by law in Section 6 follows and qualifies the phrase
just share, and cannot be construed as qualifying the succeeding phrase in the national taxes. The
intent of the people in respect of Section 6 is really that the base for reckoning the just share of
the LGUs should include all national taxes.

To read Section 6 differently as requiring that the just share of LGUs in the national taxes shall
be determined by law is tantamount to the unauthorized revision of the 1987 Constitution.
Public Corporations Case Digests
2S – Atty. Randolph Pascasio

17. Zabal v. Duterte, G.R. No. 238467, 12 February 2019

Facts:
President Duterte made public his plan on shutting down the Boracay during a business forum
held in Davao sometime in Feb 2018. This was followed by several speeches and news stating
that he would place Boracay under a state of calamity. Petitioner Zabal and Jacosalem filed a
petition despite the government was yet to release a formal issuance on the matter, they prayed
for the grant of TRO and/or writ of Preliminary Prohibition Injunction and that the banning of
tourist and non-resident to travel from Boracay be declared as unconstitutional. Following the
day of filling their petition the president issued Proclamation No. 475 declaring state calamity in
Boracay ordering its closure for six months. Petitioner implore the court to declare the
proclamation unconstitutional, that the right to travel is impaired resulting to economic loss.
Respondent argued that the petition filed by the petitioner is a Strategic Lawsuit Against Public
Participation (SLAPP).

Issue/s:
Whether or not the case is a SLAPP.

Ruling:
No, while the case touches on the environmental issue on Boracay, the ultimate issue is the
resolution of the constitutionality of Proclamation No. 475 which allegedly impairs the
petitioners right to travel. The procedure under Rule 6 of the Rules of Procedure for
Environmental Cases should not be applied.