PIMENTEL vs. AGUIRRE
G.R. No.
132988 July 19, 2000
FACTS:
President
Ramos issued Administrative Order 372 (Adoption of Economic Measures in
Government for Fiscal Year 1998). Section 1 provided that all government
departments and agencies, including state universities and colleges, GOCCs and
LGUs will identify and implement measures in FY 1998 that will replace total
expenditures by at least 25% of authorized regular appropriations for
non-personal services items. Section 4 also provided that pending assessment by
the Development Budget Coordinating Committee of the emerging fiscal situation,
the amount equivalent to 10% of the IRA to LGUs shall be withheld. President
Estrada issued AO 43, amending Section 4 by reducing to 5% the IRA to be
withheld.
ISSUES:
1. WON
Section 1 of AO 372, insofar as it "directs" LGUs to reduce their
expenditures by 25% is valid
2. WON withholding a part of LGUs IRA is
valid
HELD:
1. Yes. Section
1 of AO 372, insofar as it “directs” LGUs to reduce expenditures by at least
25% is a valid exercise of the President’s power of general supervision over
LGUs as it is advisory only.
“Supervisory power, when contrasted with control, is the power of mere
oversight over an inferior body; it does not include any restraining authority
over such body.” Under existing law, LGU, in addition to having administrative
autonomy, enjoy fiscal autonomy as well.
Fiscal autonomy means that local governments have the power to create
their own sources of revenue in addition to their equitable share in the
national taxes released by the national government, as well as the power to
allocate their resources in accordance with their own priorities. It extends to the preparation of their
budgets, and local officials in turn have to work within the constraints
thereof.
Local
fiscal autonomy does not however rule out any manner of national government
intervention by way of supervision, in order to ensure that local programs,
fiscal and otherwise, are consistent with national goals. Significantly, the President, by
constitutional fiat, is the head of the economic and planning agency of the
government, primarily responsible for formulating and implementing continuing,
coordinated and integrated social and economic policies, plans and programs for
the entire country. However, under the
Constitution, the formulation and the implementation of such policies and
programs are subject to "consultations with the appropriate public
agencies, various private sectors, and local government units." The President cannot do so unilaterally.
Consequently,
the Local Government Code provides:
"x x x In the event the national
government incurs an unmanaged public sector deficit, the President of the
Philippines is hereby authorized, upon the recommendation of [the] Secretary of
Finance, Secretary of the Interior and Local Government and Secretary of Budget
and Management, and subject to consultation with the presiding officers of both
Houses of Congress and the presidents of the liga, to make the necessary
adjustments in the internal revenue allotment of local government units but in
no case shall the allotment be less than thirty percent (30%) of the collection
of national internal revenue taxes of the third fiscal year preceding the
current fiscal year x x x."
There are therefore several requisites before
the President may interfere in local fiscal matters:
(1) An unmanaged
public sector deficit of the national government;
(2) Consultations
with the presiding officers of the Senate and the House of Representatives and
the presidents of the various local leagues; and
(3) The corresponding
recommendation of the secretaries of the Department of Finance, Interior
and Local Government, and Budget and Management. Furthermore, any adjustment in the allotment
shall in no case be less than thirty percent (30%) of the collection of
national internal revenue taxes of the third fiscal year preceding the current
one.
Petitioner
points out that respondents failed to comply with these requisites before the
issuance and the implementation of AO 372.
At the very least, they did not even try to show that the national
government was suffering from an unmanageable public sector deficit. Neither did they claim having conducted
consultations with the different leagues of local governments. Without these requisites, the President has
no authority to adjust, much less to reduce, unilaterally the LGU's internal
revenue allotment.
The
solicitor general insists, however, that AO 372 is merely directory and has
been issued by the President consistent with his power of supervision over
local governments. It is intended only
to advise all government agencies and instrumentalities to undertake cost-reduction
measures that will help maintain economic stability in the country, which is
facing economic difficulties. Besides,
it does not contain any sanction in case of noncompliance. Being merely an advisory, therefore, Section
1 of AO 372 is well within the powers of the President. Since it is not a mandatory imposition, the
directive cannot be characterized as an exercise of the power of control.
While the
wordings of Section 1 of AO 372 have a rather commanding tone, and while we
agree with petitioner that the requirements of Section 284 of the Local
Government Code have not been satisfied, we are prepared to accept the
solicitor general's assurance that the
directive to "identify and implement measures x x x
that will reduce total expenditures
x x x by at least 25% of
authorized regular appropriation" is merely advisory in character, and
does not constitute a mandatory or binding order that interferes with local
autonomy. The language used, while
authoritative, does not amount to a command that emanates from a boss to a
subaltern.
Rather,
the provision is merely an advisory to prevail upon local executives to
recognize the need for fiscal restraint in a period of economic
difficulty. Indeed, all concerned would
do well to heed the President's call to unity, solidarity and teamwork to help
alleviate the crisis. It is understood,
however, that no legal sanction may be imposed upon LGUs and their officials
who do not follow such advice. It is
in this light that we sustain the solicitor general's contention in regard to
Section 1.
2. No. Section
4 is invalid because it interferes with local autonomy, particularly local
fiscal autonomy. 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.
Scope of President's Power of Supervision
Over LGUs
Section 4
of Article X of the Constitution confines the President's power over local
governments to one of general supervision.
It reads as follows:
"Sec.
4. The President of the Philippines shall exercise general supervision over
local governments. x x x"
This
provision has been interpreted to exclude the power of control. In Mondano v. Silvosa, the Court contrasted
the President's power of supervision over local government officials with that
of his power of control over executive officials of the national
government. It was emphasized that the
two terms -- supervision and control -- differed in meaning and extent. The Court distinguished them as follows:
"x x x In administrative law, supervision
means overseeing or the power or authority of an officer to see that
subordinate officers perform their duties.
If the latter fail or neglect to fulfill them, the former may take such
action or step as prescribed by law to make them perform their duties. Control, on the other hand, means the
power of an officer to alter or modify or nullify or set aside what a
subordinate officer ha[s] done in the performance of his duties and to
substitute the judgment of the former for that of the latter."
In Taule
v. Santos, we further stated that the Chief Executive wielded no more authority
than that of checking whether local governments or their officials were
performing their duties as provided by the fundamental law and by
statutes. He cannot interfere with local
governments, so long as they act within the scope of their authority. "Supervisory power, when contrasted with
control, is the power of mere oversight over an inferior body; it does not
include any restraining authority over such body," we said.
In a more
recent case, Drilon v. Lim, the difference between control and supervision was
further delineated. Officers in control
lay down the rules in the performance or accomplishment of an act. If these rules are not followed, they may, in
their discretion, order the act undone or redone by their subordinates or even
decide to do it themselves. On the other
hand, supervision does not cover such authority. Supervising officials merely see to it that
the rules are followed, but they themselves do not lay down such rules, nor do
they have the discretion to modify or replace them. If the rules are not observed, they may order
the work done or redone, but only to conform to such rules. They may not prescribe their own manner of
execution of the act. They have no
discretion on this matter except to see to it that the rules are followed.
Under our
present system of government, executive power is vested in the President. The
members of the Cabinet and other executive officials are merely alter
egos. As such, they are subject to the
power of control of the President, at whose will and behest they can be removed
from office; or their actions and decisions changed, suspended or reversed. In
contrast, the heads of political subdivisions are elected by the
people. Their sovereign powers emanate
from the electorate, to whom they are directly accountable. By constitutional fiat, they are subject to
the President’s supervision only, not control, so long as their acts are
exercised within the sphere of their legitimate powers. By the same token, the President may not
withhold or alter any authority or power given them by the Constitution and the
law.
Extent of Local Autonomy
Hand in
hand with the constitutional restraint on the President's power over local
governments is the state policy of ensuring local autonomy.
In Ganzon
v. Court of Appeals, we said that local autonomy signified "a more
responsive and accountable local government structure instituted through a
system of decentralization." The
grant of autonomy is intended to "break up the monopoly of the national
government over the affairs of local governments, x x x not x x
x to end the relation of partnership and
interdependence between the central administration and local government
units x x x." Paradoxically, local governments are still
subject to regulation, however limited, for the purpose of enhancing
self-government.
Decentralization
simply means the devolution of national administration, not power, to local
governments. Local officials
remain accountable to the central government as the law may provide. The
difference between decentralization of administration and that of power was
explained in detail in Limbona v. Mangelin as follows:
"Now,
autonomy is either decentralization of administration or decentralization of
power. There is decentralization of administration when the central government delegates
administrative powers to political subdivisions in order to broaden the base of
government power and in the process to make local governments 'more responsive
and accountable,' and 'ensure their fullest development as self-reliant
communities and make them more effective partners in the pursuit of national
development and social progress.' At the same time, it relieves the central
government of the burden of managing local affairs and enables it to concentrate
on national concerns. The President exercises 'general supervision' over them,
but only to 'ensure that local affairs are administered according to law.' He
has no control over their acts in the sense that he can substitute their
judgments with his own.
Decentralization of power, on the
other hand, involves an abdication of political power in the favor of
local government units declared to be autonomous. In that case, the autonomous government is
free to chart its own destiny and shape its future with minimum intervention
from central authorities. According to a
constitutional author, decentralization of power amounts to 'self-immolation,'
since in that event, the autonomous government becomes accountable not to the
central authorities but to its constituency."
Under the
Philippine concept of local autonomy, the national government has not
completely relinquished all its powers over local governments, including
autonomous regions. Only administrative
powers over local affairs are delegated to political subdivisions. The purpose of the delegation is to make
governance more directly responsive and effective at the local levels. In turn, economic, political and social
development at the smaller political units are expected to propel social and
economic growth and development. But to
enable the country to develop as a whole, the programs and policies effected
locally must be integrated and coordinated towards a common national goal. Thus, policy-setting for the entire country
still lies in the President and Congress.
As we stated in Magtajas v. Pryce Properties Corp., Inc., municipal
governments are still agents of the national government.
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