G.R. No. 137718 , July 27, 1999
REYNALDO O. MALONZO, ET AL. vs. HON. RONALDO B. ZAMORA, ET AL.

FACTS

The Sangguniang Panlungsod of Caloocan City enacted Ordinance No. 0168 in 1994, appropriating funds for the expropriation of a lot owned by CLT Realty for public use. In 1997, the council passed Ordinance No. 0246, amending the earlier ordinance and increasing the appropriation. However, a legal question arose regarding the city’s territorial jurisdiction over the property due to a pending interpleader case. Based on a legal opinion that this constituted a prejudicial question, the city mayor discontinued the expropriation. Subsequently, the city council enacted Ordinance No. 0254 in 1998, which reverted the unused expropriation fund to the general fund and reappropriated it via a supplemental budget for other purposes, such as office renovations.
Respondent Eduardo Tibor filed an administrative complaint with the Office of the President against the city officials, alleging dishonesty, misconduct, and abuse of authority for unlawfully reverting and reappropriating the funds. The Executive Secretary found petitioners administratively liable and suspended them for six months. The officials challenged this decision, arguing the ordinance was valid and its legality could not be collaterally attacked in an administrative proceeding.

ISSUE

Whether the Office of the President acted with grave abuse of discretion in finding the petitioners administratively liable for the passage of Ordinance No. 0254, which reverted and reappropriated funds originally allocated for a discontinued expropriation project.

RULING

The Supreme Court ruled in favor of the petitioners and set aside the suspension order. The Court held that the Office of the President committed grave abuse of discretion. The administrative complaint effectively questioned the wisdom and legality of Ordinance No. 0254, a legislative act presumed valid. The determination of an ordinance’s validity is a judicial function, not an administrative one. An administrative body cannot adjudicate the legality of a local ordinance; such power belongs to the courts.
The Court found that the petitioners acted in good faith based on the City Treasurer’s certification of fund availability and the City Legal Officer’s advice to discontinue the expropriation. The reversion and reappropriation complied with the Local Government Code provisions on continuing appropriations for capital outlays. Since the expropriation, a capital outlay project, was discontinued, the unexpended balance reverted automatically and was available for reappropriation. The administrative liability was predicated on an erroneous interpretation of law, constituting grave abuse of discretion. The President’s power of supervision over local governments must be exercised without infringing on local autonomy or usurping judicial prerogatives.