CASE 1

Republic of the Philippines SUPREME COURT

Manila

EN BANC

G.R. No. 89651 November 10, 1989

DATU FIRDAUSI I.Y. ABBAS, DATU BLO UMPAR ADIONG, DATU MACALIMPOWAC DELANGALEN, CELSO PALMA, ALI MONTANA BABAO, JULMUNIR JANNARAL, RASHID SABER, and DATU JAMAL ASHLEY ABBAS, representing the other taxpayers of Mindanao, petitioners, vs. COMMISSION ON ELECTIONS, and HONORABLE GUILLERMO C. CARAGUE, DEPARTMENT SECRETARY OF BUDGET AND MANAGEMENT, respondents.

G.R. No. 89965 November 10, 1989

ATTY. ABDULLAH D. MAMA-O, petitioner, vs. HON. GUILLERMO CARAGUE, in his capacity as the Secretary of the Budget, and the COMMISSION ON ELECTIONS, respondents.

Abbas, Abbas, Amora, Alejandro-Abbas & Associates for petitioners in G.R. Nos. 89651 and 89965.

Abdullah D. Mama-o for and in his own behalf in 89965.

CORTES, J.:

The present controversy relates to the plebiscite in thirteen (13) provinces and nine (9) cities in Mindanao and Palawan, 1 scheduled for November 19, 1989, in implementation of Republic Act No. 6734, entitled "An Act Providing for an Organic Act for the Autonomous Region in Muslim Mindanao."

These consolidated petitions pray that the Court: (1) enjoin the Commission on Elections (COMELEC) from conducting the plebiscite and the Secretary of Budget and Management from releasing funds to the COMELEC for that purpose; and (2) declare R.A. No. 6734, or parts thereof, unconstitutional .

After a consolidated comment was filed by Solicitor General for the respondents, which the Court considered as the answer, the case was deemed submitted for decision, the issues having been joined. Subsequently, petitioner Mama-o filed a "Manifestation with Motion for Leave to File Reply on Respondents' Comment and to Open Oral Arguments," which the Court noted.

The arguments against R.A. 6734 raised by petitioners may generally be categorized into either of the following:

(a) that R.A. 6734, or parts thereof, violates the Constitution, and

(b) that certain provisions of R.A. No. 6734 conflict with the Tripoli Agreement.

The Tripoli Agreement, more specifically, the Agreement Between the government of the Republic of the Philippines of the Philippines and Moro National Liberation Front with the Participation of the Quadripartie Ministerial Commission Members of the Islamic Conference and the Secretary General of the Organization of Islamic Conference" took effect on December 23, 1976. It provided for "[t]he establishment of Autonomy in the southern Philippines within the realm of the sovereignty and territorial integrity of the Republic of the Philippines" and enumerated the thirteen (13) provinces comprising the "areas of autonomy." 2

In 1987, a new Constitution was ratified, which the for the first time provided for regional autonomy, Article X, section 15 of the charter provides that "[t]here shall be created autonomous regions in Muslim Mindanao and in the Cordilleras consisting of provinces, cities, municipalities, and geographical areas sharing common and distinctive historical and cultural heritage, economic and social structures, and other relevant characteristics within the framework of this Constitution and the national sovereignty as well as territorial integrity of the Republic of the Philippines."

To effectuate this mandate, the Constitution further provides:

Sec. 16. The President shall exercise general supervision over autonomous regions to ensure that the laws are faithfully executed.

Sec. 17. All powers, functions, and responsibilities not granted by this Constitution or by law to the autonomous regions shall be vested in the National Government.

Sec. 18. The Congress shall enact an organic act for each autonomous region with the assistance and participation of the regional consultative commission composed of representatives appointed by the President from a list of nominees from multisectoral bodies. The organic act shall define the basic structure of government for the region consisting of the executive and representative of the constituent political units. The organic acts shall likewise provide for special

courts with personal, family, and property law jurisdiction consistent with the provisions of this Constitution and national laws.

The creation of the autonomous region shall be effective when approved by majority of the votes cast by the constituent units in a plebiscite called for the purpose, provided that only the provinces, cities, and geographic areas voting favorably in such plebiscite shall be included in the autonomous region.

Sec. 19 The first Congress elected under this Constitution shall, within eighteen months from the time of organization of both Houses, pass the organic acts for the autonomous regions in Muslim Mindanao and the Cordilleras.

Sec. 20. Within its territorial jurisdiction and subject to the provisions of this Constitution and national laws, the organic act of autonomous regions shall provide for legislative powers over:

(1) Administrative organization;

(2) Creation of sources of revenues;

(3) Ancestral domain and natural resources;

(4) Personal, family, and property relations;

(5) Regional urban and rural planning development;

(6) Economic, social and tourism development;

(7) Educational policies;

(8) Preservation and development of the cultural heritage; and

(9) Such other matters as may be authorized by law for the promotion of the general welfare of the people of the region.

Sec. 21. The preservation of peace and order within the regions shall be the responsibility of the local police agencies which shall be organized, maintained, supervised, and utilized in accordance with applicable laws. The defense and security of the region shall be the responsibility of the National Government.

Pursuant to the constitutional mandate, R.A. No. 6734 was enacted and signed into law on August 1, 1989.

1. The Court shall dispose first of the second category of arguments raised by petitioners, i.e. that certain provisions of R.A. No. 6734 conflict with the provisions of the Tripoli Agreement.

Petitioners premise their arguments on the assumption that the Tripoli Agreement is part of the law of the land, being a binding international agreement . The Solicitor General asserts that the Tripoli Agreement is neither a binding treaty, not having been entered into by the Republic of the Philippines with a sovereign state and ratified according to the provisions of the 1973 or 1987 Constitutions, nor a binding international agreement.

We find it neither necessary nor determinative of the case to rule on the nature of the Tripoli Agreement and its binding effect on the Philippine Government whether under public international or internal Philippine law. In the first place, it is now the Constitution itself that provides for the creation of an autonomous region in Muslim Mindanao. The standard for any inquiry into the validity of R.A. No. 6734 would therefore be what is so provided in the Constitution. Thus, any conflict between the provisions of R.A. No. 6734 and the provisions of the Tripoli Agreement will not have the effect of enjoining the implementation of the Organic Act. Assuming for the sake of argument that the Tripoli Agreement is a binding treaty or international agreement, it would then constitute part of the law of the land. But as internal law it would not be superior to R.A. No. 6734, an enactment of the Congress of the Philippines, rather it would be in the same class as the latter [SALONGA, PUBLIC INTERNATIONAL LAW 320 (4th ed., 1974), citing Head Money Cases, 112 U.S. 580 (1884) and Foster v. Nelson, 2 Pet. 253 (1829)]. Thus, if at all, R.A. No. 6734 would be amendatory of the Tripoli Agreement, being a subsequent law. Only a determination by this Court that R.A. No. 6734 contravened the Constitution would result in the granting of the reliefs sought. 3

2. The Court shall therefore only pass upon the constitutional questions which have been raised by petitioners.

Petitioner Abbas argues that R.A. No. 6734 unconditionally creates an autonomous region in Mindanao, contrary to the aforequoted provisions of the Constitution on the autonomous region which make the creation of such region dependent upon the outcome of the plebiscite.

In support of his argument, petitioner cites Article II, section 1(1) of R.A. No. 6734 which declares that "[t]here is hereby created the Autonomous Region in Muslim Mindanao, to be composed of provinces and cities voting favorably in the plebiscite called for the purpose, in accordance with Section 18, Article X of the Constitution." Petitioner contends that the tenor of the above provision makes the creation of an autonomous region absolute, such that even if only two provinces vote in favor of autonomy, an autonomous region would still be created composed of the two provinces where the favorable votes were obtained.

The matter of the creation of the autonomous region and its composition needs to be clarified.

Firs, the questioned provision itself in R.A. No. 6734 refers to Section 18, Article X of the Constitution which sets forth the conditions necessary for the creation of the autonomous

region. The reference to the constitutional provision cannot be glossed over for it clearly indicates that the creation of the autonomous region shall take place only in accord with the constitutional requirements. Second, there is a specific provision in the Transitory Provisions (Article XIX) of the Organic Act, which incorporates substantially the same requirements embodied in the Constitution and fills in the details, thus:

SEC. 13. The creation of the Autonomous Region in Muslim Mindanao shall take effect when approved by a majority of the votes cast by the constituent units provided in paragraph (2) of Sec. 1 of Article II of this Act in a plebiscite which shall be held not earlier than ninety (90) days or later than one hundred twenty (120) days after the approval of this Act: Provided, That only the provinces and cities voting favorably in such plebiscite shall be included in the Autonomous Region in Muslim Mindanao. The provinces and cities which in the plebiscite do not vote for inclusion in the Autonomous Region shall remain the existing administrative determination, merge the existing regions.

Thus, under the Constitution and R.A. No 6734, the creation of the autonomous region shall take effect only when approved by a majority of the votes cast by the constituent units in a plebiscite, and only those provinces and cities where a majority vote in favor of the Organic Act shall be included in the autonomous region. The provinces and cities wherein such a majority is not attained shall not be included in the autonomous region. It may be that even if an autonomous region is created, not all of the thirteen (13) provinces and nine (9) cities mentioned in Article II, section 1 (2) of R.A. No. 6734 shall be included therein. The single plebiscite contemplated by the Constitution and R.A. No. 6734 will therefore be determinative of (1) whether there shall be an autonomous region in Muslim Mindanao and (2) which provinces and cities, among those enumerated in R.A. No. 6734, shall compromise it. [See III RECORD OF THE CONSTITUTIONAL COMMISSION 482-492 (1986)].

As provided in the Constitution, the creation of the Autonomous region in Muslim Mindanao is made effective upon the approval "by majority of the votes cast by the constituent units in a plebiscite called for the purpose" [Art. X, sec. 18]. The question has been raised as to what this majority means. Does it refer to a majority of the total votes cast in the plebiscite in all the constituent units, or a majority in each of the constituent units, or both?

We need not go beyond the Constitution to resolve this question.

If the framers of the Constitution intended to require approval by a majority of all the votes cast in the plebiscite they would have so indicated. Thus, in Article XVIII, section 27, it is provided that "[t]his Constitution shall take effect immediately upon its ratification by a majority of the votes cast in a plebiscite held for the purpose ... Comparing this with the provision on the creation of the autonomous region, which reads:

The creation of the autonomous region shall be effective when approved by majority of the votes cast by the constituent units in a plebiscite called for the

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purpose, provided that only provinces, cities and geographic areas voting favorably in such plebiscite shall be included in the autonomous region. [Art. X, sec, 18, para, 2].

it will readily be seen that the creation of the autonomous region is made to depend, not on the total majority vote in the plebiscite, but on the will of the majority in each of the constituent units and the proviso underscores this. for if the intention of the framers of the Constitution was to get the majority of the totality of the votes cast, they could have simply adopted the same phraseology as that used for the ratification of the Constitution, i.e. "the creation of the autonomous region shall be effective when approved by a majority of the votes cast in a plebiscite called for the purpose."

It is thus clear that what is required by the Constitution is a simple majority of votes approving the organic Act in individual constituent units and not a double majority of the votes in all constituent units put together, as well as in the individual constituent units.

More importantly, because of its categorical language, this is also the sense in which the vote requirement in the plebiscite provided under Article X, section 18 must have been understood by the people when they ratified the Constitution.

Invoking the earlier cited constitutional provisions, petitioner Mama-o, on the other hand, maintains that only those areas which, to his view, share common and distinctive historical and cultural heritage, economic and social structures, and other relevant characteristics should be properly included within the coverage of the autonomous region. He insists that R.A. No. 6734 is unconstitutional because only the provinces of Basilan, Sulu, Tawi-Tawi, Lanao del Sur, Lanao del Norte and Maguindanao and the cities of Marawi and Cotabato, and not all of the thirteen (13) provinces and nine (9) cities included in the Organic Act, possess such concurrence in historical and cultural heritage and other relevant characteristics. By including areas which do not strictly share the same characteristics. By including areas which do not strictly share the same characteristic as the others, petitioner claims that Congress has expanded the scope of the autonomous region which the constitution itself has prescribed to be limited.

Petitioner's argument is not tenable. The Constitution lays down the standards by which Congress shall determine which areas should constitute the autonomous region. Guided by these constitutional criteria, the ascertainment by Congress of the areas that share common attributes is within the exclusive realm of the legislature's discretion. Any review of this ascertainment would have to go into the wisdom of the law. This the Court cannot do without doing violence to the separation of governmental powers. [Angara v. Electoral Commission, 63 Phil 139 (1936); Morfe v. Mutuc, G.R. No. L-20387, January 31, 1968, 22 SCRA 424].

After assailing the inclusion of non-Muslim areas in the Organic Act for lack of basis, petitioner Mama-o would then adopt the extreme view that other non-Muslim areas in Mindanao should likewise be covered. He argues that since the Organic Act covers several non-Muslim areas, its scope should be further broadened to include the rest of the non-Muslim areas in Mindanao in

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order for the other non-Muslim areas denies said areas equal protection of the law, and therefore is violative of the Constitution.

Petitioner's contention runs counter to the very same constitutional provision he had earlier invoked. Any determination by Congress of what areas in Mindanao should compromise the autonomous region, taking into account shared historical and cultural heritage, economic and social structures, and other relevant characteristics, would necessarily carry with it the exclusion of other areas. As earlier stated, such determination by Congress of which areas should be covered by the organic act for the autonomous region constitutes a recognized legislative prerogative, whose wisdom may not be inquired into by this Court.

Moreover, equal protection permits of reasonable classification [People v. Vera, 65 Phil. 56 (1963); Laurel v. Misa, 76 Phil. 372 (1946); J.M. Tuason and Co. v. Land tenure Administration, G.R. No. L-21064, February 18, 1970, 31 SCRA 413]. In Dumlao v. Commission on Elections G.R. No. 52245, January 22, 1980, 95 SCRA 392], the Court ruled that once class may be treated differently from another where the groupings are based on reasonable and real distinctions. The guarantee of equal protection is thus not infringed in this case, the classification having been made by Congress on the basis of substantial distinctions as set forth by the Constitution itself.

Both petitions also question the validity of R.A. No. 6734 on the ground that it violates the constitutional guarantee on free exercise of religion [Art. III, sec. 5]. The objection centers on a provision in the Organic Act which mandates that should there be any conflict between the Muslim Code [P.D. No. 1083] and the Tribal Code (still be enacted) on the one had, and the national law on the other hand, the Shari'ah courts created under the same Act should apply national law. Petitioners maintain that the islamic law (Shari'ah) is derived from the Koran, which makes it part of divine law. Thus it may not be subjected to any "man-made" national law. Petitioner Abbas supports this objection by enumerating possible instances of conflict between provisions of the Muslim Code and national law, wherein an application of national law might be offensive to a Muslim's religious convictions.

As enshrined in the Constitution, judicial power includes the duty to settle actual controversies involving rights which are legally demandable and enforceable. [Art. VIII, Sec. 11. As a condition precedent for the power to be exercised, an actual controversy between litigants must first exist [Angara v. Electoral Commission, supra; Tan v. Macapagal, G.R. No. L-34161, February 29, 1972, 43 SCRA 677]. In the present case, no actual controversy between real litigants exists. There are no conflicting claims involving the application of national law resulting in an alleged violation of religious freedom. This being so, the Court in this case may not be called upon to resolve what is merely a perceived potential conflict between the provisions the Muslim Code and national law.

Petitioners also impugn the constitutionality of Article XIX, section 13 of R.A. No. 6734 which, among others, states:

. . . Provided, That only the provinces and cities voting favorably in such plebiscite shall be included in the Autonomous Region in Muslim Mindanao. The provinces and cities which in the plebiscite do not vote for inclusion in the Autonomous Region shall remain in the existing administrative regions:Provided, however, that the President may, by administrative determination, merge the existing regions.

According to petitioners, said provision grants the President the power to merge regions, a power which is not conferred by the Constitution upon the President. That the President may choose to merge existing regions pursuant to the Organic Act is challenged as being in conflict with Article X, Section 10 of the Constitution which provides:

No province, city, municipality, or barangay may be created, divided, merged, abolished, or its boundary substantially altered, except in accordance with the criteria established in the local government code and subject to approval by a majority of the votes cast in a plebiscite in the political units directly affected.

It must be pointed out that what is referred to in R.A. No. 6734 is the merger of administrative regions, i.e. Regions I to XII and the National Capital Region, which are mere groupings of contiguous provinces for administrative purposes [Integrated Reorganization Plan (1972), which was made as part of the law of the land by Pres. dec. No. 1, Pres. Dec. No. 742]. Administrative regions are not territorial and political subdivisions like provinces, cities, municipalities and barangays [see Art. X, sec. 1 of the Constitution]. While the power to merge administrative regions is not expressly provided for in the Constitution, it is a power which has traditionally been lodged with the President to facilitate the exercise of the power of general supervision over local governments [see Art. X, sec. 4 of the Constitution]. There is no conflict between the power of the President to merge administrative regions with the constitutional provision requiring a plebiscite in the merger of local government units because the requirement of a plebiscite in a merger expressly applies only to provinces, cities, municipalities or barangays, not to administrative regions.

Petitioners likewise question the validity of provisions in the Organic Act which create an Oversight Committee to supervise the transfer to the autonomous region of the powers, appropriations, and properties vested upon the regional government by the organic Act [Art. XIX, Secs. 3 and 4]. Said provisions mandate that the transfer of certain national government offices and their properties to the regional government shall be made pursuant to a schedule prescribed by the Oversight Committee, and that such transfer should be accomplished within six (6) years from the organization of the regional government.

It is asserted by petitioners that such provisions are unconstitutional because while the Constitution states that the creation of the autonomous region shall take effect upon approval in a plebiscite, the requirement of organizing an Oversight committee tasked with supervising the transfer of powers and properties to the regional government would in effect delay the creation of the autonomous region.

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Under the Constitution, the creation of the autonomous region hinges only on the result of the plebiscite. if the Organic Act is approved by majority of the votes cast by constituent units in the scheduled plebiscite, the creation of the autonomous region immediately takes effect delay the creation of the autonomous region.

Under the constitution, the creation of the autonomous region hinges only on the result of the plebiscite. if the Organic Act is approved by majority of the votes cast by constituent units in the scheduled plebiscite, the creation of the autonomous region immediately takes effect. The questioned provisions in R.A. No. 6734 requiring an oversight Committee to supervise the transfer do not provide for a different date of effectivity. Much less would the organization of the Oversight Committee cause an impediment to the operation of the Organic Act, for such is evidently aimed at effecting a smooth transition period for the regional government. The constitutional objection on this point thus cannot be sustained as there is no bases therefor.

Every law has in its favor the presumption of constitutionality [Yu Cong Eng v. Trinidad, 47 Phil. 387 (1925); Salas v. Jarencio, G.R. No. L-29788, August 30, 1979, 46 SCRA 734; Morfe v. Mutuc, supra; Peralta v. COMELEC, G.R. No. L-47771, March 11, 1978, 82 SCRA 30]. Those who petition this Court to declare a law, or parts thereof, unconstitutional must clearly establish the basis for such a declaration. otherwise, their petition must fail. Based on the grounds raised by petitioners to challenge the constitutionality of R.A. No. 6734, the Court finds that petitioners have failed to overcome the presumption. The dismissal of these two petitions is, therefore, inevitable.

WHEREFORE, the petitions are DISMISSED for lack of merit.

SO ORDERED.

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CASE 2

Republic of the Philippines SUPREME COURT

Manila

EN BANC

G.R. No. 91023 July 13, 1990

METROPOLITAN TRAFFIC COMMAND WEST TRAFFIC DISTRICT, petitioner, vs. HON. ARSENIO M. GONONG, in his capacity as Presiding Judge of the Regional Trial Court, Branch 8 at Manila, and DANTE S. DAVID, respondents.

Dante S. David for and in his own behalf as private respondent.

CRUZ, J.:

We deal here with a practice known to many motorists in Metro Manila: the removal of the license plates of illegally parked vehicles. This was challenged by the private respondent in the regional trial court of Manila, which held the practice unlawful. The petitioner is now before us, urging reversal of the decision for grave abuse of discretion.

The original complaint was filed with the said court on August 10, 1989, by Dante S. David, a lawyer, who claimed that the rear license plate, of his car was removed by the Metropolitan Traffic Command while the vehicle was parked on Escolta. He questioned the petitioner's act on the ground not only that the car was not illegally parked but, more importantly, that there was no ordinance or law authorizing such removal. He asked that the practice be permanently enjoined and that in the meantime a temporary restraining order or a writ of preliminary injunction be issued.

Judge Arsenio M. Gonong issued a temporary restraining order on August 14, 1989, and hearings on the writ of preliminary injunction were held on August 18, 23, and 25, 1989. The writ was granted on this last date. The parties also agreed to submit the case for resolution on the sole issue of whether there was a law or ordinance authorizing the removal of the license plates of illegally parked vehicles. The parties then submitted simultaneous memoranda in support of their respective positions, following which the respondent judge rendered the assailed decision.

In ruling for the complainant, Judge Gonong held that LOI 43, which the defendant had invoked, did not empower it "to detach, remove and confiscate vehicle plates of motor vehicles illegally parked and unattended as in the case at bar. It merely authorizes the removal of said vehicles when they are obstacles to free passage or continued flow of traffic on streets and highways." At any rate, he said, the LOI had been repealed by PD 1605. Moreover, the defendant had not been able to point to any MMC rule or regulation or to any city ordinance to justify the questioned act. On the allegation that the practice was "the root cause of graft and corruption or at the very least the equivalent of street racket among defendant's deployed agents," His Honor made the following pointed observations:

At this juncture, it may not be amiss to say, that if the arbitrary and capricious detachment and confiscation of vehicles plates illegally parked and unattended as in the act complained of in the instant case, the image of the man clothed in a traffic or police uniform will be greatly impaired if not cursed with disrespect on the part of those who have suffered at his hands. Worse, he will cease (if he had not already ceased) to be the law-abiding, courageous and valiant protector of a citizen of the Republic that he is meant to be, and instead his real oppressor and enemy, thereby fortifying the contemporaneous public perception that he is a dyed-in-the-wool extortionist if not an unmitigated chiseler. 1

It bears noting that this petition should have been filed first with the Court of Appeals, which has concurrent jurisdiction with this Court on decisions of the regional trial courts involving questions of law. However, in view of the importance of the issue raised, we have decided to take cognizance thereof under Rule 65 of the Rules of Court so we can address and resolve the question directly.

Upon the filing of this petition, we issued a temporary restraining order dated February 6, 1990, to prevent enforcement of the said decision until further orders from this Court. Thereafter, we required a comment from the private respondent, to which the petitioner filed a reply as also directed.

The petitioner reiterates and reinforces its argument in the court below and insists that LOI 43 remains in force despite the issuance of PD 1605. It contends that there is no inconsistency between the two measures because the former deals with illegally parked vehicles anywhere in the Philippines whereas the latter deals with the regulation of the flow of traffic in the Metro Manila area only. The two measures may be enforced together because implied repeals are not favored and, furthermore, to look at them another way, LOI 43 is the special law dealing only with illegal parking while PD 1605 is the general law dealing with all other kinds of traffic violations. The special law must of course prevail over the general law. The petitioner also deplores the above-quoted remarks of the trial judge, pointing out that the parties had agreed to limit the issue to whether there was a statutory basis for the act complained of. And even assuming that abuses have been committed in the enforcement of LOI 43, the remedy is not to disregard it or consider it revoked but to prosecute the guilty parties.

In his comment, the private respondent argues that LOI 43 has been repealed by PD 1605, which specifies all the sanctions available against the various traffic violations, including illegal parking. He stresses that removal and confiscation of the license plates of illegally parked vehicles is not one of them, the penalties being limited in the decree to imposition of fine and suspension or revocation of driver's licenses or certificates of public convenience, etc. Expressio unius est exclusio alterius. He agrees that the special law prevails over the general law but maintains it is PD 1605 that is the special law because it is applicable only on Metro Manila and LOI 43 that is the general law because it was intended to operate throughout the country. As for his allegation that the challenged practice is a source of graft, he maintains that it was not improper to discuss it in his memorandum because it was pertinent to the central issue under consideration. Finally, he claims that removal and confiscation of the license plate without notice and hearing violates due process because such license plate is a form of property protected by the Bill of Rights against unlawful deprivation.

In its reply, the petitioner faults the private respondent for belatedly raising the constitutionality of LOI 43, suggesting faintly that this should not be permitted. In any case, it maintains, the license plate is not property in the constitutional sense, being merely the identification of the vehicle, and its "temporary confiscation" does not deprive the owner of the use of the vehicle itself. Hence, there is no unlawful taking under the due process clause. The petitioner also takes issue with the contention that it is PD 1605 that should be considered the special law because of its limited territorial application. Repeal of LOI 43 on that ground would run counter to the legislative intention as it is in fact in Metro Manila that the problem of illegal parking is most acute.

LOI 43, entitled Measures to Effect a Continuing Flow of Transportation on Streets and Highways, was issued on November 28, 1972, with the following pertinent provisions:

Motor vehicles that stall on the streets and highways, streets and sidewalks, shall immediately be removed by their owners/users; otherwise said vehicles shall be dealt with and disposed in the manner stated hereunder;

1. For the first offense the stalled or illegally parked vehicle shall be removed, towed and impounded at the expense of the owner, user or claimant;

2. For the second and subsequent offenses, the registry plates of the vehicles shall be confiscated and the owner's certificate of registration cancelled. (Emphasis supplied).

PD 1605 (Granting the Metropolitan Manila Commission Central Powers Related to Traffic Management, Providing Penalties, and for Other Purposes) was issued, also by President Marcos, on November 21, 1978, and pertinently provides:

Section 1. The Metropolitan Manila Commission shall have the power to impose fines and otherwise discipline drivers and operators of motor vehicles for

violations of traffic laws, ordinances, rules and regulations in Metropolitan Manila in such amounts and under such penalties as are herein prescribed. For his purpose, the powers of the Land Transportation Commission and the Board of Transportation under existing laws over such violations and punishment thereof are hereby transferred to the Metropolitan Manila Commission. When the proper penalty to be imposed is suspension or revocation of driver's license or certificate of public convenience, the Metropolitan Manila Commission or its representatives shall suspend or revoke such license or certificate. The suspended or revoked driver's license or the report of suspension or revocation of the certificate of public convenience shall be sent to the Land Transportation Commission or the Board of Transportation, as the case may be, for their records update.

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Section 3. Violations of traffic laws, ordinances, rules and regulations, committed within a twelve-month period, reckoned from the date of birth of the licensee, shall subject the violator to graduated fines as follows: P10.00 for the first offense, P20.00 for the second offense, P50.00 for the third offense, a one-year suspension of driver's license for the fourth offense, and a revocation of the driver' license for the fifth offense: Provided, That the Metropolitan Manila Commission may impose higher penalties as it may deem proper for violations of its ordinances prohibiting or regulating the use of certain public roads, streets or thoroughfares in Metropolitan Manila.

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Section 5. In case of traffic violations, the driver's license shall not be confiscated but the erring driver shall be immediately issued a traffic citation ticket prescribed by the Metropolitan Manila Commission which shall state the violation committed, the amount of fine imposed for the violation and an advice that he can make payment to the city or municipal treasurer where the violation was committed or to the Philippine National Bank or Philippine Veterans Bank or their branches within seven days from the date of issuance of the citation ticket.

If the offender fails to pay the fine imposed within the period herein prescribed, the Metropolitan Manila Commission or the law enforcement agency concerned shall endorse the case to the proper fiscal for appropriate proceedings preparatory to the filing of the case with the competent traffic court, city or municipal court.

If at the time a driver renews his driver's license and records show that he has an unpaid fine, his driver's license shall not be renewed until he has paid the fine and corresponding surcharges.

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Section 8. Insofar as the Metropolitan Manila area is concerned, all laws, decrees, orders, ordinances, rules and regulations, or parts thereof inconsistent herewith are hereby repealed or modified accordingly. (Emphasis supplied).

A careful reading of the above decree will show that removal and confiscation of the license plate of any illegally parked vehicle is not among the specified penalties. Moreover, although the Metropolitan Manila Commission is authorized by the decree to "otherwise discipline" and "impose higher penalties" on traffic violators, whatever sanctions it may impose must be "in such amounts and under such penalties as are herein prescribed." The petitioner has not pointed to any such additional sanctions, relying instead on its argument that the applicable authority for the questioned act is LOI 43.

The petitioner stresses that under the decree, "the powers of the Land Transportation Commission and the Board of Transportation over such violations and punishment thereof are (hereby) transferred to the Metropolitan Manila Commission," and one of such laws is LOI 43. The penalties prescribed by the LOI are therefore deemed incorporated in PD 1605 as additional to the other penalties therein specified.

It would appear that what the LOI punishes is not a traffic violation but a traffic obstruction, which is an altogether different offense. A violation imports an intentional breach or disregard of a rule, as where a driver leaves his vehicle in a no-parking area against a known and usually visible prohibition. Contrary to the common impression, LOI 43 does not punish illegal parking per se but parking of stalled vehicles, i.e., those that involuntarily stop on the road due to some unexpected trouble such as engine defect, lack of gasoline, punctured tires, or other similar cause. The vehicle is deemed illegally parked because it obstructs the flow of traffic, but only because it has stalled. The obstruction is not deliberate. In fact, even the petitioner recognizes that "there is a world of difference between a stalled vehicle and an illegally parked and unattended one" and suggests a different treatment for either. "The first means one which stopped unnecessarily or broke down while the second means one which stopped to accomplish something, including temporary rest. 2

LOI 43 deals with motor vehicles "that stall on the streets and highways' and not those that are intentionally parked in a public place in violation of a traffic law or regulation. The purpose of the LOI evidently is to discipline the motorist into keeping his vehicle in good condition before going out into the streets so as not to cause inconvenience to the public when the car breaks down and blocks other vehicles. That is why, for the first offense, the stalled vehicle is immediately towed at the owner's expense to clear the street of the traffic obstruction. Where it appears that the owner has not learned from his first experience because the vehicle has stalled again, presumably due to his failure to repair it, the penalty shall be confiscation of the license plate and cancellation of the certificate of registration petition.

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It is worth noting that it is not the driver's license that is confiscated and canceled when the vehicle stalls on a public street. The LOI goes against the vehicle itself. The object of the measure is to ensure that only motor vehicles in good condition may use the public streets, and this is effected by confiscating the license plates and canceling the certificates of registration of those vehicles that are not roadworthy.

In the case of the private respondent, it is not alleged or shown that his vehicle stalled on a public thoroughfare and obstructed the flow of traffic. The charge against him is that he purposely parked his vehicle in a no parking area (although this is disputed by him).itc-asl The act, if true, is a traffic violation that may not be punished under LOI 43. The applicable law is PD 1605, which does not include removal and confiscation of the license plate of the vehicle among the imposable penalties.

Indeed, even if LOI 43 were applicable, the penalty of confiscation would still not be justified as it has not been alleged, much less shown, that the illegal parking was a second or subsequent offense. That circumstance must be established at a trial before a court of justice where the vehicle owner shall have a right to be heard in his defense. The second or subsequent offense cannot be simply pronounced by the traffic authorities without hearing and without proof. Confiscation of the registry plate without a judicial finding that the offense charge is a second or subsequent one would, unless the owner concedes this point, be invalid.

While it is true that the license plate is strictly speaking not a property right, it does not follow that it may be removed or confiscated without lawful cause. Due process is a guaranty against all forms of official arbitrariness. Under the principle that ours is a government of laws and not of men, every official must act by and within the authority of a valid law and cannot justify the lack of it on the pretext alone of good intentions. It is recalled that more than seventy years ago, the mayor of Manila deported one hundred seventy prostitutes to Davao for the protection of the morals and health of the city. This Court acknowledged his praiseworthy purpose but just the same annulled his unauthorized act, holding that no one could take the law into his own hands. 3 We can rule no less in the case before us.

We find that there is no inconsistency between LOI 43 and PD 1605, whichever is considered the special law either because of its subject or its territorial application. The former deals with motor vehicles that have stalled on a public road while the latter deals with motor vehicles that have been deliberately parked in a no-parking area; and while both cover illegal parking of motor vehicles, the offense is accidental under the first measure and intentional under the second. This explains why the sanctions are different. The purpose of the LOI is to discourage the use of the public streets by motor vehicles that are likely to break down while that of the decree is to penalize the driver for his defiance of the traffic laws.

As it has not been shown that the private respondent's motor vehicle had stalled because of an engine defect or some other accidental cause and, no less importantly, that it had stalled on the road for a second or subsequent time, confiscation of the license plate cannot be justified under LOI 43. And neither can that sanction be sustained under PD 1605, which clearly provides

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that "in case of traffic violations, (even) the driver's license shall not be confiscated," let alone the license plate of the motor vehicle. If at all, the private respondent may be held liable for illegal parking only and subjected to any of the specific penalties mentioned in Section 3 of the decree.

We recognize the problem of the traffic policeman who comes upon an illegally parked and unattended vehicle and is unable to serve a citation on the offending driver who is nowhere in sight. But that problem is not addressed to the courts; it is for the legislative and administrative authorities to solve. What is clear to the Court is that the difficulty cannot be avoided by the removal of the license plate of the offending vehicle because the petitioner has not shown that this penalty is authorized by a valid law or ordinance.

The petitioner complains that the respondent judge did not confine himself to the issue agreed upon by the parties and made gratuitous accusations that were not only irrelevant but virtually condemned the whole traffic force as corrupt. Assuming that this issue was indeed not properly raised at the trial, the Court is nevertheless not inhibited from considering it in this proceeding, on the basis of its own impressions on the matter.

This Court is not isolated from the mainstream of society and secluded in a world of its own, unconcerned with the daily lives of the rest of the nation. On the contrary, the members of this Court mix with the people and know their problems and complaints. And among these are the alleged abuses of the police in connection with the issue now before us.

It is claimed that the removal of the license plates of illegally parked motor vehicles in Metro Manila has become a veritable gold mine for some police officers. To be sure, we do not have hard, provable facts at hand but only vague and unsubstantiated rumors that could be no more than malicious and invented charges. Nevertheless, these accusations have become too prevalent and apparently too persuasive that they cannot be simply swept under the rug.

The widespread report is that civilian "agents," mostly street urchins under the control and direction of certain policemen, remove these license plates from illegally parked vehicles and later discreetly suggest to the owners that these may be retrieved for an unofficial fee. This ranges from P50.00 to P200.00, depending on the type of vehicle. If the owner agrees, payment is usually made and the license plate returned at a private rendezvous. No official receipt is issued. Everything is done quietly. The owners, it is said, prefer this kind of fast settlement to the inconvenience of an official proceeding that may entail not only the payment of a higher fine but also other administrative impositions, like attendance at a traffic seminar.

The Court is not saying that these reports are true nor is it stigmatizing the entire police force on the basis of these unsubstantiated charges. But it does believe and stress that the proper authorities should take official notice of these reports instead of blandly dismissing them as mere canards that do not deserve their attention and concern. An inquiry is in our view indicated. The old adage that where there's smoke there's fire is not necessarily true and can hardly be the rationale of a judicial conclusion; but the Court feels just the same that serious

steps should be taken, especially because of the persistence of these charges, to determine the source of the smoke.

We realize the seriousness of our traffic problems, particularly in Metro Manila, and commend the earnest efforts of the police to effect a smoother flow of vehicles in the public thoroughfares for the comfort and convenience of the people. But we must add, as a reminder that must be made, that such efforts must be authorized by a valid law, which must clearly define the offenses proscribed and as clearly specify the penalties prescribed.

WHEREFORE, the petition is DISMISSED. The Court holds that LOI 43 is valid but may be applied only against motor vehicles that have stalled in the public streets due to some involuntary cause and not those that have been intentionally parked in violation of the traffic laws. The challenged decision of the trial court is AFFIRMED in so far as it enjoins confiscation of the private respondent's license plate for alleged deliberate illegal parking, which is subject to a different penalty. The temporary restraining order dated February 6, 1990, is LIFTED.

SO ORDERED.

CASE 3

Republic of the Philippines SUPREME COURT

Manila

EN BANC

G.R. No. 152774 May 27, 2004

THE PROVINCE OF BATANGAS, represented by its Governor, HERMILANDO I. MANDANAS, petitioner, vs. 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 Government, respondents.

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 (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.

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).

Background

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

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 ofP96,780,000,000 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 proviso:

... PROVIDED, That the amount of FIVE BILLION PESOS (P5,000,000,000) 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:

OCD-99-005

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 ALLOCATION SCHEME.

OCD-99-006

RESOLUTION 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.

OCD-99-003

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:

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. To wit:

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;

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. The modified CODEF sharing formula is as follows:

Province : 40%

Cities : 20%

Municipalities : 40%

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. This 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:

III. CRITERIA FOR ELIGIBILITY:

1. LGUs (province, city, municipality, or barangay), 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 aforecited purposes. A barangay may also access this fund directly or through their respective municipality or city.

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 research;

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 of tourism;

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 dikes;

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;

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:

(a) general 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 levels;

(c) target outputs or key result areas;

(d) schedule of activities and details of requirements;

(e) total cost requirement of the project;

(f) proponent's counterpart funding share, if any, and identified source(s) of counterpart funds for the full implementation of the project;

(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 DILG's appraisal would then be submitted to the Oversight Committee for review, evaluation and approval. Upon its 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 amount of 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. This proviso, 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:

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 Provinces 26% or P 910,000,000

For Cities 23% or 805,000,000

For Municipalities 35% or 1,225,000,000

For Barangays 16% or 560,000,000

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 budget/release documents.

2. The remaining 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:

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. OCD-2000-023.

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 2000." 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 the LAAP. 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:

Modified Codal Formula P 3.000 billion

Priority Projects 1.900 billion

Capability Building Fund .100 billion

P 5.000 billion

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, as follows:

LGUs Percentage Amount

Provinces 25 P 0.750 billion

Cities 25 0.750

Municipalities 35 1.050

Barangays 15 0.450

100 P 3.000 billion

RESOLVED FURTHER, that the P1.9 B earmarked for priority projects shall be distributed according to the following criteria:

1.0 For projects of the 4th, 5th and 6th class LGUs; or

2.0 Projects in consonance with the President's 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 of 1991.

On January 25, 2002, Pres. Macapagal-Arroyo approved Resolution No. OCD-2002-001.

The Petitioner's 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. Similarly assailed are the Oversight Committee's Resolutions Nos. OCD-99-003, OCD-99-005, OCD-99-006, OCD-2000-023, OCD-2001-029 and OCD-2002-001 issued pursuant thereto. 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 them. 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 word "shall" must be given a compulsory meaning.

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 latter's 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 actually allocated. 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' Arguments

The respondents, through the Office of the Solicitor General, urge the Court to dismiss the petition on procedural and substantive grounds. 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 infirm. 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. In 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. Congress 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 operation. There is nothing in the Constitution which prohibits Congress from making such determination through the appropriations laws. If the 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 facts. Specifically, the petitioner's 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 controversy. The IRAs for the years 1999, 2000 and 2001, have already been released and the government is now operating under the 2003 budget. In 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 petitioner's "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 provinces. 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 Court Procedural Issues

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 to maintain 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 way. 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

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. The petitioner's 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 measures. 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 legal issue

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 not disputed:

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;

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; and

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 Oversight Committee.

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. The 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 Court's primary jurisdiction.12

The crucial legal issue submitted for resolution of this Court entails the proper legal interpretation of constitutional and statutory provisions. Moreover, the "transcendental importance" of the case, as it necessarily involves the application of the constitutional principle on local autonomy, cannot be gainsaid. 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 notwithstanding 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.13Even 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

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. It, thus, behooves this Court to make a categorical ruling on the substantive issue now.

Substantive Issue

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 that:

Section 25. 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:

Section 2. The territorial and political subdivisions shall enjoy local autonomy.

Consistent with the principle of local autonomy, the Constitution confines the President's 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

An officer in control lays down the rules in the doing of an act. 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 replace them. If the rules are not observed, he may order the work done or re-done but only to conform to the prescribed rules. He may not prescribe his own manner for doing the act. He has no judgment on this matter except to see to it that the rules are followed.19

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:

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 goals. 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 2001 and the OCD resolutions violate the constitutional precept on local autonomy

Section 6, Article X of the Constitution reads:

Sec. 6. Local government 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:

Sec. 18. Power to Generate and Apply Resources. Local 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;

...

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.

Webster's 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 perfunctory. 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,22viz:

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. Such withholding clearly contravenes the Constitution and the law. Although temporary, it is equivalent to a

holdback, which means "something held back or withheld, often temporarily." 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. Verily, laudable purposes must be carried out by legal methods.23

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 such that:

For 1999

P2 billion - allocated according to Sec. 285 LGC

P2 billion - Modified Sharing Formula (Provinces 40%;

Cities 20%; Municipalities 40%)

P1 billion projects (LAAP) approved by OCD.24

For 2000

P3.5 billion Modified Sharing Formula (Provinces 26%;

Cities 23%; Municipalities 35%; Barangays 16%);

P1.5 billion projects (LAAP) approved by the OCD.25

For 2001

P3 billion Modified Sharing Formula (Provinces 25%;

Cities 25%; Municipalities 35%; Barangays 15%)

P1.9 billion priority projects

P100 million capability building fund.26

Significantly, the LGSEF could not be released to the LGUs without the Oversight Committee's 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 LGSEF. 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 and approval. It was only upon approval thereof that the Oversight Committee would direct the DBM to release the funds for the projects.

To the Court's 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 L