Province of Batangas vs. Romulo

GR 152774
May 27, 2004

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

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

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

ISSUE:
Whether the assailed provisos in the GAAs of 1999, 2000, and 2001, and the OCD resolutions infringe the Constitution and the LGC of 1991.

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

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

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

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

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

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

A general appropriations bill is a special type of legislation, whose content is limited to specified sums of money dedicated to a specific purpose or a separate fiscal unitany provision therein which is intended to amend another law is considered an “inappropriate provision. Increasing/decreasing the IRA of LGUs fixed in the LGC of 1991 are matters of 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.

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