SUBIC BAY vs. FERNANDEZ (Civil Law Review 2)

G.R. No. 193426               September 29, 2014

SUBIC BAY LEGEND RESORTS AND CASINOS, INC., Petitioner,

vs.

BERNARD C. FERNANDEZ, Respondent.

FACTS:

Ludwin Fernandez, brother of Bernard visited the Legenda Hotel and Casino owned and operated by Subic Bay Kegend Resorts and Casino. Legenda had strategically installed (CCTV) cameras as part of security measures required by its business. The monitors revealed that Ludwin changed $5,000.00 worth of chips into smaller denominations. Legenda admitted in its brief that its surveillance staff paid close attention to Ludwin simply because it was "wmsual" for a Filipino to play using dollar-denominated chips. After Ludwin won $200.00 in a game of baccarat, he redeemed the value of chips worth $7,200.00.

Shortly thereafter, Legenda's internal security officers accosted Ludwin and Deoven and ordered them to return the cash and they complied because they were being pulled away.

Fernandez filed Civil Case for recovery of sum of money with damages against Casino.

The RTC rendered its decision, which decreed as follows:

In arriving at the above conclusion, the trial court held:

There is no dispute that the subject chips were in the possession of the plaintiff. He claims he got hold of them as payment for car services he rendered to a Chinese individual. Defendant however, contends that said chips were stolen from the casino and it is the lawful owner of the same.

The onus fell on defendant to prove that the casino chips were stolen. The proof adduced however, is wanting. The statements of Deoven and Ludwin C. Fernandez, confessing to the source of the chips were recanted hence, have little probative value. The testimony of defendant's witnesses narrated defendant's action responding to the suspicious movements of the Fernandez brothers based on surveillance tapes.

Finding that the evidence preponderates in favor of the Fernandez.

The CA affirmed the trial court's decision. Casino's motion for Reconsideration was rebuffed as well.

ISSUE:

Whether casino chips constitute legal tender.

RULING:

Though casino chips do not constitute legal tender, there is no law which prohibits their use or trade outside of the casino which issues them. In any case, it is not unusual – nor is it unlikely – that respondent could be paid by his Chinese client at the former' s car shop with the casino chips in question; said transaction, if not common, is nonetheless not unlawful. These chips are paid for anyway; petitioner would not have parted with the same if their corresponding representative equivalent - in legal tender, goodwill, or otherwise – was not received by it in return or exchange. Given this premise - that casino chips are considered to have been exchanged with their corresponding representative value - it is with more reason that this Court should require petitioner to prove convincingly and persuasively that the chips it confiscated from Ludwin and Deoven were indeed stolen from it; if so, any Tom, Dick or Harry in possession of genuine casino chips is presumed to have paid for their representative value in exchange therefor. If petitioner cannot prove its loss, then Article 559 cannot apply; the presumption that the chips were exchanged for value remains.

LEONOR and ROSA BADUA vs. CORDILLERA BODONG ADMINISTRATION (Public Corporation)

G.R. No. 92649             February 14, 1991

SPOUSES LEONOR and ROSA BADUA, petitioners,

vs.

CORDILLERA BODONG ADMINISTRATION, CORDILLERA PEOPLE'S LIBERATION ARMY, MANUEL TAO-IL, AMOGAO-EN KISSIP, DALALO ILLIQUES, JUANITO GAYYED, PEDRO CABANTO, VICENTE DAYEM and DAVID QUEMA, respondents.

FACTS:

Spouses Leonor and Rosa Badua, allegedly own a farm land in Lucaga, Lumaba, Villaviciosa, Abra. They were forcibly ejected from the land by virtue of a "decision" of the Cordillera Bodong Administration in Case No. O, entitled "David Quema vs. Leonor Badua."

Quema, as the owner of two parcels of land in Lucaga, Lumaba, Villaviciosa, Abra, mortgaged said parcels of land to Dra. Erotida Valera. He was able to redeem the land twenty-two (22) years later, long after the mortgagee had already died. He allegedly paid the redemption price of to the mortgagee's heir, Jessie Macaraeg.

On the other hand, Rosa Badua, alleged that the land was sold to her by Dra. Erotida Valera when she was still alive. However, Rosa could not produce the deed of sale because it is allegedly in the possession of Vice-Governor Benesa.

As Quema was prevented by Rosa Badua from cultivating the land, he filed a case before the Barangay Council, but it failed to settle the dispute, A certain Judge Cacho advised Quema to file his complaint in the provincial level courts. Instead, Quema filed it in the tribal court of the Maeng Tribe. The tribal court conducted a trial and ruled in favor of Quema.

ISSUE:

Whether a tribal court of the Cordillera Bodong Administration can render a valid and executory decision in a land dispute.

RULING:

No. Such tribal courts are not a part of the Philippine judicial system which consists of the Supreme Court and the lower courts which have been established by law (Sec. 1, Art. VIII, 1987 Constitution). They do not possess judicial power. Like the pangkats or conciliation panels created by P.D. No. 1508 in the barangays, they are advisory and conciliatory bodies whose principal objective is to bring together the parties to a dispute and persuade them to make peace, settle, and compromise.

An amicable settlement, compromise, and arbitration award rendered by a pangkat, if not seasonably repudiated, has the force and effect of a final judgment of a court (Sec. 11, P.D. 1508), but it can be enforced only through the local city or municipal court to which the secretary of the Lupon transmits the compromise settlement or arbitration award upon expiration of the period to annul or repudiate it (Sec. 14, P.D. 1508). Similarly, the decisions of a tribal court based on compromise or arbitration, as provided in P.D. 1508, may be enforced or set aside, in and through the regular courts today.

ABBAS vs. COMELEC (Public Corporation)

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.

FACTS:

Republic Act No. 6734, entitled "An Act Providing for an Organic Act for the Autonomous Region in Muslim Mindanao."

Petitioner Abbas argues that R.A. No. 6734 unconditionally creates an autonomous region in Mindanao, contrary to the 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.

ISSUE:

Whether R.A No. 6734 violates the constitution.

RULING:

No. 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.

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.

CORDILLERA BROAD COALITION vs. COMMISSION ON AUDIT (Public Corporation)

G.R. No. 79956               January 29, 1990

CORDILLERA BROAD COALITION, petitioner,

vs.

COMMISSION ON AUDIT, respondent.

FACTS:

Executive Order No. 220, issued by the President in the exercise of her legislative powers under Art. XVIII, sec. 6 of the 1987 Constitution, created the Cordillera Administrative Region (CAR) , which covers the provinces of Abra, Benguet, Ifugao, Kalinga-Apayao and Mountain Province and the City of Baguio [secs. 1 and 2]. It was created to accelerate economic and social growth in the region and to prepare for the establishment of the autonomous region in the Cordilleras.

Petitioners principally argue that by issuing E.O. No. 220 the President, in the exercise of her legislative powers prior to the convening of the first Congress under the 1987 Constitution, has virtually pre-empted Congress from its mandated task of enacting an organic act and created an autonomous region in the Cordilleras. 

It must be noted that RA No. 6766 "An Act Providing for an Organic Act for the Cordillera Autonomous Region," was enacted and signed into law during the pendency of the case. The Act recognizes the CAR and the offices and agencies created under E.O. No. 220.

ISSUE:

Whether E.O 220 the creation of Cordillera Administrative Region (CAR), pre-empts the enactment of an organic act by the Congress and the creation of' the autonomous region in the Cordilleras.

RULING:

NO, It does not create the autonomous region contemplated in the Constitution. It merely provides for transitory measures in anticipation of the enactment of an organic act and the creation of an autonomous region. In short, it prepares the ground for autonomy. This does not necessarily conflict with the provisions of the Constitution on autonomous.

E.O. No. 220 did not establish an autonomous regional government. It created a region, covering a specified area, for administrative purposes with the main objective of coordinating the planning and implementation of programs and services [secs. 2 and 5]. 

The bodies created by E.O. No. 220 do not supplant the existing local governmental structure, nor are they autonomous government agencies. They merely constitute the mechanism for an "umbrella" that brings together the existing local governments, the agencies of the National Government, the ethno-linguistic groups or tribes, and non-governmental organizations in a concerted effort to spur development in the Cordilleras.

CAR is not the autonomous region in the Cordilleras contemplated by the Constitution, Thus, we now address petitioners' assertion that E. 0. No. 220 contravenes the Constitution by creating a new territorial and political subdivision.

After carefully considering the provisions of E.O. No. 220, we find that it did not create a new territorial and political subdivision or merge existing ones into a larger subdivision. The CAR is not a public corporation or a territorial and political subdivision. It does not have a separate juridical personality, unlike provinces, cities and municipalities. Neither is it vested with the powers that are normally granted to public corporations, e.g. the power to sue and be sued, the power to own and dispose of property, the power to create its own sources of revenue, etc. As stated earlier, the CAR was created primarily to coordinate the planning and implementation of programs and services in the covered areas.

METROPOLITAN MANILA DEVELOPMENT AUTHORITY vs. BEL-AIR VILLAGE ASSOCIATION, INC. (Public Corporation)

G.R. No. 135962             March 27, 2000

METROPOLITAN MANILA DEVELOPMENT AUTHORITY, petitioner,

vs.

BEL-AIR VILLAGE ASSOCIATION, INC., respondent.

FACTS:

Petitioner MMDA is a government agency tasked with the delivery of basic services in Metro Manila. Respondent Bel-Air Village Association, Inc. (BAVA) is a non-stock, non-profit corporation whose members are homeowners in Bel-Air Village, a private subdivision in Makati City. Respondent BAVA is the registered owner of Neptune Street, a road inside Bel-Air Village.

Bel-Air received from MMDA, through its Chairman, a notice requesting respondent to open Neptune Street to public vehicular traffic.

Bel-Air instituted against MMDA before the Regional Trial Court a Civil Case for injunction. Bel-Air prayed for the issuance of a temporary restraining order and preliminary injunction enjoining the opening of Neptune Street and prohibiting the demolition of the perimeter wall. The trial court issued a temporary restraining order the following day.

After due hearing, the trial court denied issuance of a preliminary injunction.  Bel-Air questioned the denial before the Court of Appeals. The appellate court conducted an ocular inspection of Neptune Street 3 and then it issued a writ of preliminary injunction enjoining the implementation of the MMDA's proposed action. 

The appellate court rendered a Decision on the merits of the case finding that the MMDA has no authority to order the opening of Neptune Street, a private subdivision road and cause the demolition of its perimeter walls. It held that the authority is lodged in the City Council of Makati by ordinance.

The Motion for Reconsideration of the decision was denied. Hence, this recourse.

ISSUE:

HAS THE METROPOLITAN MANILA DEVELOPMENT AUTHORITY (MMDA) THE MANDATE TO OPEN NEPTUNE STREET TO PUBLIC TRAFFIC PURSUANT TO ITS REGULATORY AND POLICE POWERS?

RULING:

None, It will be noted that the powers of the MMDA are limited to the following acts: formulation, coordination, regulation, implementation, preparation, management, monitoring, setting of policies, installation of a system and administration. There is no syllable in R.A. No. 7924 that grants the MMDA police power, let alone legislative power. Even the Metro Manila Council has not been delegated any legislative power. Unlike the legislative bodies of the local government units, there is no provision in R.A. No. 7924 that empowers the MMDA or its Council to "enact ordinances, approve resolutions appropriate funds for the general welfare" of the inhabitants of Metro Manila. The MMDA is, as termed in the charter itself, "development authority."  It is an agency created for the purpose of laying down policies and coordinating with the various national government agencies, people's organizations, non-governmental organizations and the private sector for the efficient and expeditious delivery of basic services in the vast metropolitan area. All its functions are administrative in nature and these are actually summed up in the charter itself.

SUPANGAN JR. vs SANTOS (Public Corporation)

G.R. No. 84663 August 24, 1990

JOHNNY D. SUPANGAN, JR., petitioner,

vs.

HON. LUIS T. SANTOS, Secretary of the Department of Local Government, and MARISSA DOMANTAY, respondents.

FACTS:

Petitioner Johnny D. Supangan, Jr., is a member of the Kabataang Barangay (KB) of Mabini, Pangasinan. In 1985, he was elected KB Chairman of the said municipality. In that same year he was elected KB Provincial Federation President of the province of Pangasinan.

On November 25, 1985, petitioner was appointed by then President Marcos as member of the Sangguniang Panlalawigan of the province of Pangasinan representing the youth sector. He accordingly assumed office, discharged his functions and paranticipated in the deliberations of the said body.

However on August 8, 1988 at the session hall of the Sangguniang Panlalawigan, respondent Marissa Domantay presented to the Presiding Officer a letter dated August 3, 1988 written by respondent Secretary Luis T. Santos advising the Sangguniang Panlalawigan that respondent "Marissa Domantay has been named as member thereof to replace Johnny D. Supangan, Jr." (Annex "D", p. 15, Rollo). She took her oath of office on August 25, 1988 and began attending the sessions of the said body.

Claiming that Sec. Santos has no legal authority to designate private respondent Marissa Domantay as member of the Sangguniang Panlalawigan representing the youth sector because (a) respondent Marissa Domantay has never been elected as KB Provincial Federation President of Pangasinan, a basic qualification for appointment as member representing the youth sector, and (b) respondent Secretary has no legal authority in issuing his letter dated August 3, 1988 because the term of office of petitioner Johnny D. Supangan, Jr. has not yet expired nor his successor, if any, been elected/appointed and qualified, petitioner instituted the present quo warranto and injunction proceedings.

ISSUE:

Whether the Secretary of Local Government has authority to designate/appoint members/sectoral representatives to the local legislative bodies.

RULING:

Yes. Section 9 Article X of the 1973 Constitution mandates that legislative bodies of local governments shall have sectoral representation as may be prescribed by law.

Under the Local Government Code (BP 337), the power to appoint sectoral representatives is conferred upon the President of the Philippines.

But the Secretary of Local Government may, by authority of the President inform the sectoral representatives of their appointments. Otherwise stated, it is actually the President who has made the appointments in the cases involved herein, and the Secretary of Local Government is only the transmitter or communicator of said appointments.

DAVID vs. COMELEC (Public Corporation)

[G.R. No. 127116. April 8, 1997]

ALEX L. DAVID, in his own behalf as Barangay Chairman of Barangay 77, Zone 7, Kalookan City and as President of the LIGA NG MGA BARANGAY SA PILIPINAS, Petitioner, v. COMMISSION ON ELECTIONS, THE HONORABLE SECRETARY, Department of Interior and Local Government, and THE HONORABLE SECRETARY, Department of Budget and Management, Respondents.

FACTS:

In his capacity as barangay chairman of Barangay 77, Zone 7, Kalookan City and as president of the Liga ng mga Barangay sa Pilipinas, Petitioner Alex L. David filed on December 2, 1996 a petition for prohibition docketed in this Court as G.R. No. 127116, under Rule 65 of the Rules of Court, to prohibit the holding of the barangay election scheduled on the second Monday of May 1997.

Petitioners contend that under Sec. 2 of Republic Act No. 6653, approved on May 6, 1988, (t)he term of office of barangay officials shall be for five (5) years x x x. This is reiterated in Republic Act No. 6679, approved on November 4, 1988, which reset the barangay elections from the second Monday of November 1988 to March 28, 1989 and provided in Sec. 1 thereof that such five-year term shall begin on the first day of May 1989 and ending on the thirty-first day of May 1994.

Petitioners further aver that although Sec. 43 of RA 7160 reduced the term of office of all local elective officials to three years, such reduction does not apply to barangay officials because (1) RA 6679 is a special law applicable only to barangays while RA 7160 is a general law which applies to all other local government units; (2) RA 7160 does not expressly or impliedly repeal RA 6679 insofar as the term of barangay officials is concerned; (3) while Sec. 8 of Article X of the 1987 Constitution fixes the term of elective local officials at three years, the same provision states that the term of barangay officials shall be determined by law; and (4) thus, it follows that the constitutional intention is to grant barangay officials any term, except three years; otherwise, there would be no rhyme or reason for the framers of the Constitution to except barangay officials from the three year term found in Sec. 8 (of) Article X of the Constitution.

ISSUE:

1.      Which law governs the term of office of barangay officials: RA 7160 or RA 6679?

2. Is RA 7160 insofar as it shortened such term to only three years constitutional?

RULING:

1. RA 7160. 

RA 7160, the Local Government Code, was enacted later than RA 6679. It is basic that in case of an irreconciliable conflict between two laws of different vintages, the later enactment prevails.31 Legis posteriores priores contrarias abrogant. The rationale is simple: a later law repeals an earlier one because it is the later legislative will. It is to be presumed that the lawmakers knew the older law and intended to change it.

Petitioner may be correct in alleging that RA 6679 is a special law, but they are incorrect in stating (without however giving the reasons therefor) that RA 7160 is necessarily a general law. It is a special law insofar as it governs the term of office of barangay officials. In its repealing clause, RA 7160 states that all general and special laws x x x which are inconsistent with any of the provisions of this Code are hereby repealed or modified accordingly. There being a clear repugnance and incompatibility between the two specific provisions, they cannot stand together. The later law, RA 7160, should thus prevail in accordance with its repealing clause. When a subsequent law encompasses entirely the subject matter of the former enactments, the latter is deemed repealed.

2. Yes, 

Sec. 8, Article X of the Constitution states:

"The term of office of elective local officials, except barangay officials, which shall be determined by law, shall be three years, and no such official shall serve for more than three consecutive terms. Voluntary renunciation of the office for any length of time shall not be considered as an interruption in the continuity of his service for the full term for which he was elected."

Thus, the Constitution did not expressly prohibit Congress from fixing any term of office for barangay officials. It merely left the determination of such term to the lawmaking body, without any specific limitation or prohibition, thereby leaving to the lawmakers full discretion to fix such term in accordance with the exigencies of public service. It must be remembered that every law has in its favor the presumption of constitutionality.38 For a law to be nullified, it must be shown that there is a clear and unequivocal (not just implied) breach of the Constitution.39 To strike down a law as unconstitutional, there must be a clear and unequivocal showing that what the fundamental law prohibits, the statute permits. The petitioners have miserably failed to discharge this burden and to show clearly the unconstitutionality they aver.

BORJA vs COMELEC (Public Corporation)

G.R. No. 133495. September 3, 1998

BENJAMIN U. BORJA, JR., petitioner vs. COMMISSION ON ELECTIONS and JOSE T. CAPCO, JR., Respondents.

FACTS:

Jose T. Capco, Jr. was elected vice-mayor of Pateros on January 18, 1988 for a term ending June 30, 1992. On September 2, 1989, he became mayor, by operation of law, upon the death of the incumbent, Cesar Borja. On May 11, 1992, he ran and was elected mayor for a term of three years which ended on June 30, 1995. On May 8, 1995, he was reelected mayor for another term of three years ending June 30, 1998.1cräläwvirtualibräry

On March 27, 1998, private respondent Capco filed a certificate of candidacy for mayor of Pateros relative to the May 11, 1998 elections. Petitioner Benjamin U. Borja, Jr., who was also a candidate for mayor, sought Capcos disqualification on the theory that the latter would have already served as mayor for three consecutive terms by June 30, 1998 and would therefore be ineligible to serve for another term after that.

ISSUE:

Whether Capco Jr. is eligible to run for mayor.

RULING:

Yes. In both the Constitution and the Local Government Code, the three-term limitation refers to the term of office for which the local official was elected. It made no reference to succession to an office to which he was not elected. In the case before the Commission, respondent Capco was not elected to the position of mayor in the January 18, 1988 local elections. He succeeded to such office by operation of law and served for the unexpired term of his predecessor. Consequently, such succession into office is not counted as one (1) term for purposes of the computation of the three-term limitation under the Constitution and the Local Government Code.

Article X, 8 of the Constitution provides:

SEC. 8. The term of office of elective local officials, except barangay officials, which shall be determined by law, shall be three years and no such official shall serve for more than three consecutive terms. Voluntary renunciation of the office for any length of time shall not be considered as an interruption in the continuity of his service for the full term for which he was elected.

This provision is restated in 43(b) of the Local Government Code (R.A. No. 7160):

Sec. 43. Term of Office - . . .

(b) No local elective official shall serve for more than three (3) consecutive terms in the same position. Voluntary renunciation of the office for any length of time shall not be considered as an interruption in the continuity of service for the full term for which the elective official concerned was elected.

PIMENTEL vs. AGUIRRE (Public Corporation)

[G.R. No. 132988. July 19, 2000

AQUILINO Q. PIMENTEL JR.,, Petitioner, v. Hon.ANDER AGUIRRE in his capacity as Executive Secretary, Hon. EMILIA BONCODIN in her capacity as Secretary of the Department of Budget and Management, Respondents.

FACTS:

This is a petition for Certiorari and Prohibition seeking (1) to annul Section 1 of Administrative Order (AO) No. 372, insofar as it requires local government units to reduce their expenditures by 25 percent of their authorized regular appropriations for non-personal services; and (2) to enjoin respondents from implementing Section 4 of the Order, which withholds a portion of their internal revenue allotments.

President of the Philippines Fidel V. Ramos issued AO 372 "ADOPTION OF ECONOMY MEASURES IN GOVERNMENT FOR FY 1998" due to economic difficulties brought about by the peso depreciation which requires continued prudence in government fiscal management to maintain economic stability and sustain the country's growth momentum;

Section 1 requires local government units to reduce their expenditures by 25 percent of their authorized regular appropriations for non-personal services; and Section 4 of the Order, which withholds a portion of their internal revenue allotments.

Petitioner contends that the President, in issuing AO 372, was in effect exercising the power of control over LGUs. Petitioner further argues that the directive to withhold ten percent (10%) of their IRA is in contravention of Section 286 of the Local Government Code and of Section 6, Article X of the Constitution, providing for the automatic release to each of these units its share in the national internal revenue.

The solicitor general, on behalf of the respondents, claims on the other hand that AO 372 was issued to alleviate the "economic difficulties brought about by the peso devaluation" and constituted merely an exercise of the President's power of supervision over LGUs. It allegedly does not violate local fiscal autonomy, because it merely directs local governments to identify measures that will reduce their total expenditures for non-personal services by at least 25 percent. Likewise, the withholding of 10 percent of the LGUs IRA does not violate the statutory prohibition on the imposition of any lien or holdback on their revenue shares, because such withholding is "temporary in nature pending the assessment and evaluation by the Development Coordination Committee of the emerging fiscal situation."

ISSUE:

Whether (a) Section 1 of AO 372, insofar as it "directs" LGUs to reduce their expenditures by 25 percent; and (b) Section 4 of the same issuance, which withholds 10 percent of their internal revenue allotments, are valid exercises of the President's power of general supervision over local governments.

RULING:

(a) Yes, Sec. 4. The President of the Philippines shall exercise general supervision over local governments. x x x"

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 this case, 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. The provision is merely an advisory to prevail upon local executives to recognize the need for fisestraint 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.

(b) No, 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. 

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.