G.R. No.

1051 May 19, 1903

THE UNITED STATES, complainant-appellee,
vs.
FRED L. DORR, ET AL., defendants-appellants.
F. G. Waite for appellants.
Solicitor-General Araneta for appellee.
LADD, J .:
The defendants have been convicted upon a complaint charging them with the offense of
writing, publishing, and circulating a scurrilous libel against the Government of the United States
and the Insular Government of the Philippine Islands. The complaint is based upon section 8 of
Act No. 292 of the Commission, which is as follows:
Every person who shall utter seditious words or speeches, write, publish, or circulate
scurrilous libels against the Government of the United States or the Insular Government of
the Philippine Islands, or which tend to disturb or obstruct any lawful officer in executing his
office, or which tend to instigate others to cabal or meet together for unlawful purposes, or
which suggest or incite rebellious conspiracies or riots, or which tend to stir up the people
against the lawful authorities, or to disturb the peace of the community, the safety and order
of the Government, or who shall knowingly conceal such evil practices, shall be punished by
a fine not exceeding two thousand dollars or by imprisonment not exceeding two years, or
both, in the discretion of the court.
The alleged libel was published as an editorial in the issue of the "Manila Freedom" of April 6,
1902, under the caption of "A few hard facts."
The Attorney-General in his brief indicates the following passages of the article as those upon
which he relies to sustain the conviction:
Sidney Adamson, in a late letter in "Leslie's Weekly," has the following to say of the action of
the Civil Commission in appointing rascally natives to important Government positions:
"It is a strong thing to say, but nevertheless true, that the Civil Commission, through
its ex-insurgent office holders, and by its continual disregard for the records of
natives obtained during the military rule of the Islands, has, in its distribution of
offices, constituted a protectorate over a set of men who should be in jail or deported.
. . . [Reference is then made to the appointment of one Tecson as justice of the
peace.] This is the kind of foolish work that the Commission is doing all over the
Islands, reinstating insurgents and rogues and turning down the men who have
during the struggle, at the risk of their lives, aided the Americans."
xxx xxx xxx
There is no doubt but that the Filipino office holders of the Islands are in a good many
instances rascals.
xxx xxx xxx
The commission has exalted to the highest positions in the Islands Filipinos who are alleged
to be notoriously corrupt and rascally, and men of no personal character.
xxx xxx xxx
Editor Valdez, of "Miau," made serious charges against two of the native Commissioners
charges against Trinidad H. Pardo de Tavera, which, if true, would brand the man as a coward
and a rascal, and with what result? . . . [Reference is then made to the prosecution and
conviction of Valdez for libel "under a law which specifies that the greater the truth the greater
the libel."] Is it the desire of the people of the United States that the natives against whom these
charges have been made (which, if true, absolutely vilify their personal characters) be permitted
to retain their seats on the Civil Commission, the executive body of the Philippine Government,
without an investigation?
xxx xxx xxx
It is a notorious fact that many branches of the Government organized by the Civil
Commission are rotten and corrupt. The fiscal system, upon which life, liberty, and justice
depends, is admitted by the Attorney-General himself to be most unsatisfactory. It is a fact
that the Philippine judiciary is far from being what it should. Neither fiscals nor judges can be
persuaded to convict insurgents when they wish to protect them.
xxx xxx xxx
Now we hear all sorts of reports as to rottenness existing in the province [of Tayabas], and
especially the northern end of it; it is said that it is impossible to secure the conviction of
lawbreakers and outlaws by the native justices, or a prosecution by the native fiscals.
xxx xxx xxx
The long and short of it is that Americans will not stand for an arbitrary government,
especially when evidences of carpetbagging and rumors of graft are too thick to be pleasant.
We do not understand that it is claimed that the defendants succeeded in establishing at the trial
the truth of any of the foregoing statements. The only question which we have considered is
whether their publication constitutes an offense under section 8 of Act No. 292, above cited.
Several allied offenses or modes of committing the same offense are defined in that section, viz:
(1) The uttering of seditious words or speeches; (2) the writing, publishing, or circulating of
scurrilous libels against the Government of the United States or the Insular Government of the
Philippine Islands; (3) the writing, publishing, or circulating of libels which tend to disturb or
obstruct any lawful officer in executing his office; (4) or which tend to instigate others to cabal or
meet together for unlawful purposes; (5) or which suggest or incite rebellious conspiracies or
riots; (6) or which tend to stir up the people against the lawful authorities or to disturb the peace
of the community, the safety and order of the Government; (7) knowingly concealing such evil
practices.
The complaint appears to be framed upon the theory that a writing, in order to be punishable as
a libel under this section, must be of a scurrilous nature and directed against the Government of
the United States or the Insular Government of the Philippine Islands, and must, in addition,
tend to some one of the results enumerated in the section. The article in question is described in
the complaint as "a scurrilous libel against the Government of the United States and the Insular
Government of the Philippine Islands, which tends to obstruct the lawful officers of the United
States and the Insular Government of the Philippine Islands in the execution of their offices, and
which tends to instigate others to cabal and meet together for unlawful purposes, and which
suggests and incites rebellious conspiracies, and which tends to stir up the people against the
lawful authorities, and which disturbs the safety and order of the Government of the United
States and the Insular Government of the Philippine Islands." But it is "a well-settled rule in
considering indictments that where an offense may be committed in any of several different
modes, and the offense, in any particular instance, is alleged to have been committed in two or
more modes specified, it is sufficient to prove the offense committed in any one of them,
provided that it be such as to constitute the substantive offense" (Com. vs. Kneeland, 20 Pick.,
Mass., 206, 215), and the defendants may, therefore, be convicted if any one of the substantive
charges into which the complaint may be separated has been made out.
We are all, however, agreed upon the proposition that the article in question has no appreciable
tendency to "disturb or obstruct any lawful officer in executing his office," or to "instigate" any
person or class of persons "to cabal or meet together for unlawful purposes," or to "suggest or
incite rebellious conspiracies or riots," or to "stir up the people against the lawful authorities or to
disturb the peace of the community, the safety and order of the Government." All these various
tendencies, which are described in section 8 of Act No. 292, each one of which is made an
element of a certain form of libel, may be characterized in general terms as seditious
tendencies. This is recognized in the description of the offenses punished by this section, which
is found in the title of the act, where they are defined as the crimes of the "seditious utterances,
whether written or spoken."
Excluding from consideration the offense of publishing "scurrilous libels against the Government
of the United States or the Insular Government of the Philippine Islands," which may
conceivably stand on a somewhat different footing, the offenses punished by this section all
consist in inciting, orally or in writing, to acts of disloyalty or disobedience to the lawfully
constituted authorities in these Islands. And while the article in question, which is, in the main, a
virulent attack against the policy of the Civil Commission in appointing natives to office, may
have had the effect of exciting among certain classes dissatisfaction with the Commission and
its measures, we are unable to discover anything in it which can be regarded as having a
tendency to produce anything like what may be called disaffection, or, in other words, a state of
feeling incompatible with a disposition to remain loyal to the Government and obedient to the
laws. There can be no conviction, therefore, for any of the offenses described in the section on
which the complaint is based, unless it is for the offense of publishing a scurrilous libel against
the Government of the of the United States or the Insular Government of the Philippine Islands.
Can the article be regarded as embraced within the description of "scurrilous libels against the
Government of the United States or the Insular Government of the Philippine Islands?" In the
determination of this question we have encountered great difficulty, by reason of the almost
entire lack of American precedents which might serve as a guide in the construction of the law.
There are, indeed, numerous English decisions, most of them of the eighteenth century, on the
subject of libelous attacks upon the "Government, the constitution, or the law generally," attacks
upon the Houses of Parliament, the Cabinet, the Established Church, and other governmental
organisms, but these decisions are not now accessible to us, and, if they were, they were made
under such different conditions from those which prevail at the present day, and are founded
upon theories of government so foreign to those which have inspired the legislation of which the
enactment in question forms a part, that they would probably afford but little light in the present
inquiry. In England, in the latter part of the eighteenth century, any "written censure upon public
men for their conduct as such," as well as any written censure "upon the laws or upon the
institutions of the country," would probably have been regarded as a libel upon the Government.
(2 Stephen, History of the Criminal Law of England, 348.) This has ceased to be the law in
England, and it is doubtful whether it was ever the common law of any American State. "It is true
that there are ancient dicta to the effect that any publication tending to "possess the people with
an ill opinion of the Government" is a seditious libel ( per Holt, C. J., in R. vs. Tuchin, 1704, 5 St.
Tr., 532, and Ellenborough, C. J., in R. vs. Cobbett, 1804, 29 How. St. Tr., 49), but no one
would accept that doctrine now. Unless the words used directly tend to foment riot or rebellion
or otherwise to disturb the peace and tranquility of the Kingdom, the utmost latitude is allowed in
the discussion of all public affairs." (11 Enc. of the Laws of England, 450.) Judge Cooley says
(Const. Lim., 528): "The English common law rule which made libels on the constitution or the
government indictable, as it was administered by the courts, seems to us unsuited to the
condition and circumstances of the people of America, and therefore never to have been
adopted in the several States."
We find no decisions construing the Tennessee statute (Code, sec. 6663), which is apparently
the only existing American statute of a similar character to that in question, and from which
much of the phraseology of then latter appears to have been taken, though with some essential
modifications.
The important question is to determine what is meant in section 8 of Act No. 292 by the
expression "the Insular Government of the Philippine Islands." Does it mean in a general and
abstract sense the existing laws and institutions of the Islands, or does it mean the aggregate of
the individuals by whom the government of the Islands is, for the time being, administered?
Either sense would doubtless be admissible.
We understand, in modern political science, . . . by the term government, that institution or
aggregate of institutions by which an independent society makes and carries out those rules of
action which are unnecessary to enable men to live in a social state, or which are imposed upon
the people forming that society by those who possess the power or authority of prescribing
them. Government is the aggregate of authorities which rule a society. By "dministration, again,
we understand in modern times, and especially in more or less free countries, the aggregate of
those persons in whose hands the reins of government are for the time being (the chief
ministers or heads of departments)." (Bouvier, Law Dictionary, 891.) But the writer adds that the
terms "government" and "administration" are not always used in their strictness, and that
"government" is often used for "administration."
In the act of Congress of July 14, 1798, commonly known as the "Sedition Act," it is made an
offense to "write, print, utter, or published," or to "knowingly and willingly assist or aid in writing,
printing, uttering, or publishing any false, scandalous, and malicious writing or writings against
the Government of the United States, or either House of the Congress of the United States, or
the President of the United States, with intent to defame the said Government, or either House
of the said Congress, or the said President, or to bring them, or either of them, into contempt or
disrepute, or to excite against them or either or any of them the hatred of the good people of the
United States," etc. The term "government" would appear to be used here in the abstract sense
of the existing political system, as distinguished from the concrete organisms of the Government
the Houses of Congress and the Executive which are also specially mentioned.
Upon the whole, we are of the opinion that this is the sense in which the term is used in the
enactment under consideration.
It may be said that there can be no such thing as a scurrilous libel, or any sort of a libel, upon an
abstraction like the Government in the sense of the laws and institutions of a country, but we
think an answer to this suggestion is that the expression "scurrilous libel" is not used in section
8 of Act No. 292 in the sense in which it is used in the general libel law (Act No. 277) that is,
in the sense of written defamation of individuals but in the wider sense, in which it is applied
in the common law to blasphemous, obscene, or seditious publications in which there may be
no element of defamation whatever. "The word 'libel' as popularly used, seems to mean only
defamatory words; but words written, if obscene, blasphemous, or seditious, are technically
called libels, and the publication of them is, by the law of England, an indictable offense."
(Bradlaugh vs. The Queen, 3 Q. B. D., 607, 627, per Bramwell L. J. See Com. vs. Kneeland, 20
Pick., 206, 211.)
While libels upon forms of government, unconnected with defamation of individuals, must in the
nature of things be of uncommon occurrence, the offense is by no means an imaginary one. An
instance of a prosecution for an offense essentially of this nature is Republica vs. Dennie, 4
Yeates (Pa.), 267, where the defendant was indicted "as a factious and seditious person of a
wicked mind and unquiet and turbulent disposition and conversation, seditiously, maliciously,
and willfully intending, as much as in him lay, to bring into contempt and hatred the
independence of the United States, the constitution of this Commonwealth and of the United
States, to excite popular discontent and dissatisfaction against the scheme of polity instituted,
and upon trial in the said United States and in the said Commonwealth, to molest, disturb, and
destroy the peace and tranquility of the said United States and of the said Commonwealth, to
condemn the principles of the Revolution, and revile, depreciate, and scandalize the characters
of the Revolutionary patriots and statesmen, to endanger, subvert, and totally destroy the
republican constitutions and free governments of the said United States and this
Commonwealth, to involve the said United States and this Commonwealth in civil war,
desolation, and anarchy, and to procure by art and force a radical change and alteration in the
principles and forms of the said constitutions and governments, without the free will, wish, and
concurrence of the people of the said United States and this Commonwealth, respectively," the
charge being that "to fulfill, perfect, and bring to effect his wicked, seditious, and detestable
intentions aforesaid he . . . falsely, maliciously, factiously, and seditiously did make, compose,
write, and publish the following libel, to wit; 'A democracy is scarcely tolerable at any period of
national history. Its omens are always sinister and its powers are unpropitious. With all the lights
or experience blazing before our eyes, it is impossible not to discover the futility of this form of
government. It was weak and wicked at Athens, it was bad in Sparta, and worse in Rome. It has
been tried in France and terminated in despotism. it was tried in England and rejected with the
utmost loathing and abhorrence. It is on its trial here and its issue will be civil war, desolation,
and anarchy. No wise man but discerns its imperfections; no good man but shudders at its
miseries; no honest man but proclaims its fraud, and no brave man but draws his sword against
its force. The institution of a scheme of polity so radically contemptible and vicious is a
memorable example of what the villainy of some men can devise, the folly of others receive, and
both establish, in despite of reason, reflection, and sensation.'"
An attack upon the lawfully established system of civil government in the Philippine Islands, like
that which Dennie was accused of making upon the republican form of government lawfully
established in the United States and in the State of Pennsylvania would, we think, if couched in
scandalous language, constitute the precise offense described in section 8 of Act No. 292 as a
scurrilous libel against the Insular Government of the Philippine Islands.
Defamation of individuals, whether holding official positions or not, and whether directed to their
public conduct or to their private life, may always be adequately punished under the general
libel law. Defamation of the Civil Commission as an aggregation, it being "a body of persons
definite and small enough for its individual members to be recognized as such" (Stephen, Digest
of the Criminal Law, art. 277), as well as defamation of any of the individual members of the
Commission or of the Civil Governor, either in his public capacity or as a private individual, may
be so punished. The general libel law enacted by the Commission was in force when Act No.
292, was passed. There was no occasion for any further legislation on the subject of libels
against the individuals by whom the Insular Government is administered against the Insular
Government in the sense of the aggregate of such individuals. There was occasion for stringent
legislation against seditious words or libels, and that is the main if not the sole purpose of the
section under consideration. It is not unreasonable to suppose that the Commission, in enacting
this section, may have conceived of attacks of a malignant or scurrilous nature upon the existing
political system of the United States, or the political system established in these Islands by the
authority of the United States, as necessarily of a seditious tendency, but it is not so reasonable
to suppose that they conceived of attacks upon the personnel of the government as necessarily
tending to sedition. Had this been their view it seems probable that they would, like the framers
of the Sedition Act of 1798, have expressly and specifically mentioned the various public
officials and collegiate governmental bodies defamation of which they meant to punish as
sedition.
The article in question contains no attack upon the governmental system of the United States,
and it is quite apparent that, though grossly abusive as respects both the Commission as a body
and some of its individual members, it contains no attack upon the governmental system by
which the authority of the United States is enforced in these Islands. The form of government by
a Civil Commission and a Civil Governor is not assailed. It is the character of the men who are
intrusted with the administration of the government that the writer is seeking to bring into
disrepute by impugning the purity of their motives, their public integrity, and their private morals,
and the wisdom of their policy. The publication of the article, therefore, no seditious tendency
being apparent, constitutes no offense under Act No. 292, section 8.
The judgment of conviction is reversed and the defendants are acquitted, with costs de oficio.
Arellano, C.J. Torres, Willard and Mapa, JJ., concur.

MECANO vs.COA
G.R. No. 103982
December 11, 1992

FACTS: Mecano is a Director II of the NBI. He was hospitalized and on account of which he incurred
medical and hospitalization expenses, the total amount of which he is claiming from the COA.
In a memorandum to the NBI Director, Director Lim requested reimbursement for his expenses on the
ground that he is entitled to the benefits under Section 699 of the RAC, the pertinent provisions of
which read:
Sec. 699. Allowances in case of injury, death, or sickness incurred in performance of duty. When a
person in the service of the national government of a province, city, municipality or municipal district
is so injured in the performance of duty as thereby to receive some actual physical hurt or wound, the
proper Head of Department may direct that absence during any period of disability thereby occasioned
shall be on full pay, though not more than six months, and in such case he may in his discretion also
authorize the payment of the medical attendance, necessary transportation, subsistence and hospital
fees of the injured person. Absence in the case contemplated shall be charged first against vacation
leave, if any there be.
xxx xxx xxx
In case of sickness caused by or connected directly with the performance of some act in the line of
duty, the Department head may in his discretion authorize the payment of the necessary hospital fees.
Director Lim then forwarded petitioners claim, to the Secretary of Justice. Finding petitioners illness
to be service-connected, the Committee on Physical Examination of the Department of Justice
favorably recommended the payment of petitioners claim.
However, then Undersecretary of Justice Bello III returned petitioners claim to Director Lim, having
considered the statements of the Chairman of the COA to the effect that the RAC being relied
upon was repealed by the Administrative Code of 1987.
Petitioner then re-submitted his claim to Director Lim, with a copy of Opinion No. 73, S. 1991

of then
Secretary of Justice Drilon stating that the issuance of the Administrative Code did not operate to
repeal or abregate in its entirety the Revised Administrative Code, including the particular Section 699
of the latter.
Director Lim transmitted anew Mecanos claim to then Undersecretary Bello for favorable
consideration; Secretary Drilon forwarded petitioners claim to the COA Chairman, recommending
payment of the same. COA Chairman however, denied petitioners claim on the ground that Section
699 of the RAC had been repealed by the Administrative Code of 1987, solely for the reason that the
same section was not restated nor re-enacted in the Administrative Code of 1987. He
commented, however, that the claim may be filed with the Employees Compensation Commission,
considering that the illness of Director Mecano occurred after the effectivity of the Administrative Code
of 1987.
Eventually, petitioners claim was returned by Undersecretary of Justice Montenegro to Director Lim
with the advice that petitioner elevate the matter to the Supreme Court if he so desires.
Hence this petition for certiorari.
ISSUE: 1. WON the Administrative Code of 1987 repealed or abrogated Section 699 of the RAC

HELD: The Court resolves to GRANT the petition; respondent is hereby ordered to give due course to
petitioners claim for benefits
NO
The question of whether a particular law has been repealed or not by a subsequent law is a matter of
legislative intent. The lawmakers may expressly repeal a law by incorporating therein a repealing
provision which expressly and specifically cites the particular law or laws, and portions thereof, that
are intended to be repealed. A declaration in a statute, usually in its repealing clause, that a particular
and specific law, identified by its number or title, is repealed is an express repeal; all others are
implied repeals
In the case of the two Administrative Codes in question, the ascertainment of whether or not it was
the intent of the legislature to supplant the old Code with the new Code partly depends on the scrutiny
of the repealing clause of the new Code. This provision is found in Section 27, Book VII (Final
Provisions) of the Administrative Code of 1987 which reads:
Sec. 27. Repealing Clause. All laws, decrees, orders, rules and regulations, or portions thereof,
inconsistent with this Code are hereby repealed or modified accordingly.
The question that should be asked is: What is the nature of this repealing clause?
It is certainly not an express repealing clause because it fails to identify or designate the act or acts
that are intended to be repealed.

Rather, it is an example of a general repealing provision. It is
a clause which predicates the intended repeal under the condition that substantial conflict must be
found in existing and prior acts. This latter situation falls under the category of an implied repeal.
There are two categories of repeal by implication.
1. Where provisions in the two acts on the same subject matter are in an irreconcilable conflict, the
later act to the extent of the conflict constitutes an implied repeal of the earlier one.
2.
2.
If the later act covers the whole subject of the earlier one and is clearly intended as a
substitute, it will operate to repeal the earlier law.
Comparing the two Codes, it is apparent that the new Code does not cover nor attempt to cover the
entire subject matter of the old Code. There are several matters treated in the old Code which are not
found in the new Code, such as the provisions on notaries public, the leave law, the public bonding
law, military reservations, claims for sickness benefits under Section 699, and still others.
According to Opinion No. 73, S. 1991 of the Secretary of Justice, what appears clear is the intent to
cover only those aspects of government that pertain to administration, organization and procedure,
understandably because of the many changes that transpired in the government structure since the
enactment of the RAC decades of years ago.
Moreover, the COA failed to demonstrate that the provisions of the two Codes on the matter of the
subject claim are in an irreconcilable conflict. In fact, there can be no such conflict because the
provision on sickness benefits of the nature being claimed by petitioner has not been restated in the
Administrative Code of 1987.
Lastly, it is a well-settled rule of statutory construction that repeals of statutes by implication are not
favored.
20
The presumption is against inconsistency and repugnancy for the legislature is presumed to
know the existing laws on the subject and not to have enacted inconsistent or conflicting statutes.
NOTES:
1. the COA would have Us consider that the fact that Section 699 was not restated in the
Administrative Code of 1987 meant that the same section had been repealed. The COA anchored this
argument on the whereas clause of the 1987 Code, which states:
WHEREAS, the effectiveness of the Government will be enhanced by a new Administrative Code which
incorporate in a unified document the major structural, functional and procedural principles and rules
of governance; and
xxx xxx xxx
It argues, in effect, that what is contemplated is only one Code the Administrative Code of 1987.
This contention is untenable.
The fact that a later enactment may relate to the same subject matter as that of an earlier statute is
not of itself sufficient to cause an implied repeal of the prior act, since the new statute may merely
be cumulative or a continuation of the old one. What is necessary is a manifest indication of
legislative purpose to repeal.
2. Regarding COA contention that recovery under this subject section (699) shall bar the recovery of
benefits under the Employees Compensation Program, the same cannot be upheld. The second
sentence of Article 173, Chapter II, Title II (dealing on Employees Compensation and State Insurance
Fund), Book IV of the Labor Code, as amended by P.D. 1921, expressly provides that the payment of
compensation under this Title shall not bar the recovery of benefits as provided for in Section 699 of
the Revised Administrative Code . . . whose benefits are administered by the system (meaning SSS or
GSIS) or by other agencies of the government.
G.R. No. 103982 December 11, 1992
ANTONIO A. MECANO, petitioner,
vs.
COMMISSION ON AUDIT, respondent.

CAMPOS, JR., J .:
Antonio A. Mecano, through a petition for certiorari, seeks to nullify the decision of the Commission
on Audit (COA, for brevity) embodied in its 7th Indorsement, dated January 16, 1992, denying his
claim for reimbursement under Section 699 of the Revised Administrative Code (RAC), as amended,
in the total amount of P40,831.00.
Petitioner is a Director II of the National Bureau of Investigation (NBI). He was hospitalized for
cholecystitis from March 26, 1990 to April 7, 1990, on account of which he incurred medical and
hospitalization expenses, the total amount of which he is claiming from the COA.
On May 11, 1990, in a memorandum to the NBI Director, Alfredo S. Lim (Director Lim, for brevity),
he requested reimbursement for his expenses on the ground that he is entitled to the benefits under
Section 699
1
of the RAC, the pertinent provisions of which read:
Sec. 699. Allowances in case of injury, death, or sickness incurred in performance of
duty. When a person in the service of the national government of a province, city,
municipality or municipal district is so injured in the performance of duty as thereby to
receive some actual physical hurt or wound, the proper Head of Department may
direct that absence during any period of disability thereby occasioned shall be on full
pay, though not more than six months, and in such case he may in his discretion also
authorize the payment of the medical attendance, necessary transportation,
subsistence and hospital fees of the injured person. Absence in the case
contemplated shall be charged first against vacation leave, if any there be.
xxx xxx xxx
In case of sickness caused by or connected directly with the performance of some
act in the line of duty, the Department head may in his discretion authorize the
payment of the necessary hospital fees.
Director Lim then forwarded petitioner's claim, in a 1st Indorsement dated June 22, 1990, to the
Secretary of Justice, along with the comment, bearing the same date, of Gerarda Galang, Chief,
LED of the NBI, "recommending favorable action thereof". Finding petitioner's illness to be service-
connected, the Committee on Physical Examination of the Department of Justice favorably
recommended the payment of petitioner's claim.
However, then Undersecretary of Justice Silvestre H. Bello III, in a 4th Indorsement dated November
21, 1990, returned petitioner's claim to Director Lim, having considered the statements of the
Chairman of the COA in its 5th Indorsement dated 19 September 1990, to the effect that the RAC
being relied upon was repealed by the Administrative Code of 1987.
Petitioner then re-submitted his claim to Director Lim, with a copy of Opinion No. 73, S. 1991
2
dated
April 26, 1991 of then Secretary of Justice Franklin M. Drilon (Secretary Drilon, for brevity) stating that
"the issuance of the Administrative Code did not operate to repeal or abregate in its entirety the Revised
Administrative Code, including the particular Section 699 of the latter".
On May 10, 1991, Director Lim, under a 5th Indorsement transmitted anew Mecano's claim to then
Undersecretary Bello for favorable consideration. Under a 6th Indorsement, dated July 2, 1991,
Secretary Drilon forwarded petitioner's claim to the COA Chairman, recommending payment of the
same. COA Chairman Eufemio C. Domingo, in his 7th Indorsement of January 16, 1992, however,
denied petitioner's claim on the ground that Section 699 of the RAC had been repealed by the
Administrative Code of 1987, solely for the reason that the same section was not restated nor re-
enacted in the Administrative Code of 1987. He commented, however, that the claim may be filed
with the Employees' Compensation Commission, considering that the illness of Director Mecano
occurred after the effectivity of the Administrative Code of 1987.
Eventually, petitioner's claim was returned by Undersecretary of Justice Eduardo Montenegro to
Director Lim under a 9th Indorsement dated February 7, 1992, with the advice that petitioner
"elevate the matter to the Supreme Court if he so desires".
On the sole issue of whether or not the Administrative Code of 1987 repealed or abrogated Section
699 of the RAC, this petition was brought for the consideration of this Court.
Petitioner anchors his claim on Section 699 of the RAC, as amended, and on the aforementioned
Opinion No. 73, S. 1991 of Secretary Drilon. He further maintains that in the event that a claim is
filed with the Employees' Compensation Commission, as suggested by respondent, he would still not
be barred from filing a claim under the subject section. Thus, the resolution of whether or not there
was a repeal of the Revised Administrative Code of 1917 would decide the fate of petitioner's claim
for reimbursement.
The COA, on the other hand, strongly maintains that the enactment of the Administrative Code of
1987 (Exec. Order No. 292) operated to revoke or supplant in its entirety the Revised Administrative
Code of 1917. The COA claims that from the "whereas" clauses of the new Administrative Code, it
can be gleaned that it was the intent of the legislature to repeal the old Code. Moreover, the COA
questions the applicability of the aforesaid opinion of the Secretary of Justice in deciding the matter.
Lastly, the COA contends that employment-related sickness, injury or death is adequately covered
by the Employees' Compensation Program under P.D. 626, such that to allow simultaneous recovery
of benefits under both laws on account of the same contingency would be unfair and unjust to the
Government.
The question of whether a particular law has been repealed or not by a subsequent law is a matter
of legislative intent. The lawmakers may expressly repeal a law by incorporating therein a repealing
provision which expressly and specifically cites the particular law or laws, and portions thereof, that
are intended to be repealed.
3
A declaration in a statute, usually in its repealing clause, that a particular
and specific law, identified by its number or title, is repealed is an express repeal; all others are implied
repeals.
4

In the case of the two Administrative Codes in question, the ascertainment of whether or not it was
the intent of the legislature to supplant the old Code with the new Code partly depends on the
scrutiny of the repealing clause of the new Code. This provision is found in Section 27, Book VII
(Final Provisions) of the Administrative Code of 1987 which reads:
Sec. 27. Repealing Clause. All laws, decrees, orders, rules and regulations, or
portions thereof, inconsistent with this Code are hereby repealed or modified
accordingly.
The question that should be asked is: What is the nature of this repealing clause? It is certainly not
an express repealing clause because it fails to identify or designate the act or acts that are intended
to be repealed.
5
Rather, it is an example of a general repealing provision, as stated in Opinion No. 73, S.
1991. It is a clause which predicates the intended repeal under the condition that substantial conflict must
be found in existing and prior acts. The failure to add a specific repealing clause indicates that the intent
was not to repeal any existing law, unless an irreconcilable inconcistency and repugnancy exist in the
terms of the new and old laws.
6
This latter situation falls under the category of an implied repeal.
Repeal by implication proceeds on the premise that where a statute of later date clearly reveals an
intention on the part of the legislature to abrogate a prior act on the subject, that intention must be
given effect.
7
Hence, before there can be a repeal, there must be a clear showing on the part of the
lawmaker that the intent in enacting the new law was to abrogate the old one. The intention to repeal
must be clear and manifest;
8
otherwise, at least, as a general rule, the later act is to be construed as a
continuation of, and not a substitute for, the first act and will continue so far as the two acts are the same
from the time of the first enactment.
9

There are two categories of repeal by implication. The first is where provisions in the two acts on the
same subject matter are in an irreconcilable conflict, the later act to the extent of the conflict
constitutes an implied repeal of the earlier one. The second is if the later act covers the whole
subject of the earlier one and is clearly intended as a substitute, it will operate to repeal the earlier
law.
10

Implied repeal by irreconcilable inconsistency takes place when the two statutes cover the same
subject matter; they are so clearly inconsistent and incompatible with each other that they cannot be
reconciled or harmonized; and both cannot be given effect, that is, that one law cannot be enforced
without nullifying the other.
11

Comparing the two Codes, it is apparent that the new Code does not cover nor attempt to cover the
entire subject matter of the old Code. There are several matters treated in the old Code which are
not found in the new Code, such as the provisions on notaries public, the leave law, the public
bonding law, military reservations, claims for sickness benefits under Section 699, and still others.
Moreover, the COA failed to demonstrate that the provisions of the two Codes on the matter of the
subject claim are in an irreconcilable conflict. In fact, there can be no such conflict because the
provision on sickness benefits of the nature being claimed by petitioner has not been restated in the
Administrative Code of 1987. However, the COA would have Us consider that the fact that Section
699 was not restated in the Administrative Code of 1987 meant that the same section had been
repealed. It further maintained that to allow the particular provisions not restated in the new Code to
continue in force argues against the Code itself. The COA anchored this argument on the whereas
clause of the 1987 Code, which states:
WHEREAS, the effectiveness of the Government will be enhanced by a new
Administrative Code which incorporate in a unified document the major structural,
functional and procedural principles and rules of governance; and
xxx xxx xxx
It argues, in effect, that what is contemplated is only one Code the Administrative Code of 1987.
This contention is untenable.
The fact that a later enactment may relate to the same subject matter as that of an earlier statute is
not of itself sufficient to cause an implied repeal of the prior act, since the new statute may merely be
cumulative or a continuation of the old one.
12
What is necessary is a manifest indication of legislative
purpose to repeal.
13

We come now to the second category of repeal the enactment of a statute revising or codifying
the former laws on the whole subject matter. This is only possible if the revised statute or code was
intended to cover the whole subject to be a complete and perfect system in itself. It is the rule that a
subsequent statute is deemed to repeal a prior law if the former revises the whole subject matter of
the former statute.
14
When both intent and scope clearly evidence the idea of a repeal, then all parts and
provisions of the prior act that are omitted from the revised act are deemed repealed.
15
Furthermore,
before there can be an implied repeal under this category, it must be the clear intent of the legislature that
the later act be the substitute to the prior act.
16

According to Opinion No. 73, S. 1991 of the Secretary of Justice, what appears clear is the intent to
cover only those aspects of government that pertain to administration, organization and procedure,
understandably because of the many changes that transpired in the government structure since the
enactment of the RAC decades of years ago. The COA challenges the weight that this opinion
carries in the determination of this controversy inasmuch as the body which had been entrusted with
the implementation of this particular provision has already rendered its decision. The COA relied on
the rule in administrative law enunciated in the case of Sison vs.Pangramuyen
17
that in the absence
of palpable error or grave abuse of discretion, the Court would be loathe to substitute its own judgment for
that of the administrative agency entrusted with the enforcement and implementation of the law. This will
not hold water. This principle is subject to limitations. Administrative decisions may be reviewed by the
courts upon a showing that the decision is vitiated by fraud, imposition or mistake.
18
It has been held that
Opinions of the Secretary and Undersecretary of Justice are material in the construction of statutes in pari
materia.
19

Lastly, it is a well-settled rule of statutory construction that repeals of statutes by implication are not
favored.
20
The presumption is against inconsistency and repugnancy for the legislature is presumed to
know the existing laws on the subject and not to have enacted inconsistent or conflicting statutes.
21

This Court, in a case, explains the principle in detail as follows: "Repeals by implication are not
favored, and will not be decreed unless it is manifest that the legislature so intended. As laws are
presumed to be passed with deliberation with full knowledge of all existing ones on the subject, it is
but reasonable to conclude that in passing a statute it was not intended to interfere with or abrogate
any former law relating to some matter, unless the repugnancy between the two is not only
irreconcilable, but also clear and convincing, and flowing necessarily from the language used, unless
the later act fully embraces the subject matter of the earlier, or unless the reason for the earlier act is
beyond peradventure renewed. Hence, every effort must be used to make all acts stand and if, by
any reasonable construction, they can be reconciled, the later act will not operate as a repeal of the
earlier.
22

Regarding respondent's contention that recovery under this subject section shall bar the recovery of
benefits under the Employees' Compensation Program, the same cannot be upheld. The second
sentence of Article 173, Chapter II, Title II (dealing on Employees' Compensation and State
Insurance Fund), Book IV of the Labor Code, as amended by P.D. 1921, expressly provides that "the
payment of compensation under this Title shall not bar the recovery of benefits as provided for in
Section 699 of the Revised Administrative Code . . . whose benefits are administered by the system
(meaning SSS or GSIS) or by other agencies of the government."
WHEREFORE, premises considered, the Court resolves to GRANT the petition; respondent is
hereby ordered to give due course to petitioner's claim for benefits. No costs.
SO ORDERED.

LEVERIZA et al vs. IAC, Mobil oil and CAA
G.R. No. L-66614
January 25, 1988

FACTS: Around three contracts of lease resolve the basic issues in the instant case:
Contract A a lease contract of April 2, 1965 between the Republic of the Philippines, represented by
Civil Aeronautics Administration (CAA) and. Leveriza over a parcel of land containing an area of 4,502
square meters, for 25 years.
Contract B a lease contract (in effect a sublease) of May 21, 1965 between Leveriza and Mobil Oil
Philippines, Inc., over the same parcel of land, but reduced to 3,000 square meters for 25 years; and
Contract C a lease contract of June 1, 1968 between defendant CAA and plaintiff Mobil Oil over the
same parcel of land, but reduced to 3,000 square meters, for 25 years.
There is no dispute among the parties that the subject matter of the three contracts of lease above
mentioned, Contract A, Contract B, and Contract C, is the same parcel of land, with the noted
difference that while in Contract A, the area leased is 4,502 square meters, in Contract B and Contract
C, the area has been reduced to 3,000 square meters.
It is important to note, for a clear understanding of the issues involved, that it appears that defendant
CAA as LESSOR, leased the same parcel of land, for durations of time that overlapped to two lessees,
to wit: (1) Leveriza and Mobil Oil, and the latter, as LESSEE, leased the same parcel of land from two
lessors, to wit: (1) Leveriza and (2) CAA for durations of time that also overlapped.
Leveriza, the lessee in Contract A and the lessor in Contract B, is now deceased. This is the reason
why her successor-in-interest, her heirs, are sued. For purposes of brevity, these defendants shall be
referred to hereinafter as Defendants Leveriza.
Mobil Oil seeks the rescission or cancellation of Contract A and Contract B on the ground that
Contract A from which Contract B is derived and depends has already been cancelled by the defendant
CAA and maintains that Contract C with the defendant CAA is the only valid and subsisting contract
insofar as the parcel of land, subject to the present litigation is concerned.
Defendants Leverizas claim that Contract A which is their contract with CAA has never been legally
cancelled and still valid and subsisting; that it is Contract C between plaintiff and defendant CAA which
should be declared void.
CAA asserts that Contract A is still valid and subsisting because its cancellation by Jurado was
ineffective and asks the court to annul Contract A because of the violation committed by Leveriza in
leasing the parcel of land to plaintiff by virtue of Contract B without the consent of CAA. CAA further
asserts that Contract C not having been approved by the Director of Public Works and
Communications is not valid.
After trial, the lower courts rendered judgment:
1. Declaring Contract A as having been validly cancelled on June 28, 1966, and has therefore ceased
to have any effect as of that date;
2. Declaring that Contract B has likewise ceased to have any effect as of June 28, 1966 because of the
cancellation of Contract A;
3. Declaring that Contract C was validly entered into on June 1, 1968, and that it is still valid and
subsisting;
CAA filed a Motion for Reconsideration, averring that because the lot lease was properly registered in
the name of the Republic of the Philippines, it was only the President of the Philippines or an officer
duly designated by him who could execute the lease contract pursuant to Sec. 567 of the Revised
Administrative Code; that the Airport General Manager has no authority to cancel Contract A, the
contract entered into between the CAA and Leveriza, and that Contract C between the CAA and Mobil
was void for not having been approved by the Secretary of Public Works and Communications. Said
motion was however denied.
On appeal, the IAC affirmed in toto the decision of the lower court. Hence this petition for Review on
certiorari.
ISSUE: There is no dispute that Contract A at the time of its execution was a valid contract. The
issue therefore is whether or not said contract is still subsisting after its cancellation by CAA on the
ground of a sublease executed by petitioners with Mobil Oil (CONTRACT B) without the consent of CAA
and the execution of another contract of lease between CAA and Mobil Oil (CONTRACT C)
The issue narrows down to: WON there is a valid ground for the cancellation of Contract A
HELD: The petition is DISMISSED for lack of merit and the decision of the Court of Appeals appealed
from is AFFIRMED in toto.
YES
Contract A was entered into by CAA as the lessor and the Leverizas as the lessee specifically for the
purpose of operating and managing a gasoline station by the latter, to serve vehicles going in and out
of the airport.
As regards prior consent of the lessor to the transfer of rights to the leased premises, the provision of
paragraph 7 of said Contract reads in full:
7. The Party of the Second part may transfer her rights to the leased premises but in such eventuality,
the consent of the Party of the First Part shall first be secured. In any event, such transfer of rights
shall have to respect the terms and conditions of this agreement.
Paragraph 8 provides the sanction for the violation of the above-mentioned terms and conditions of
the contract. Said paragraph reads:
8. Failure on the part of the Party of the Second Part to comply with the terms and conditions herein
agreed upon shall be sufficient for revocation of this contract by the Party of the First Part without
need of judicial demand.
It is not disputed that the Leverizas (lessees) entered into a contract of sublease (Contract B) with
Mobil Oil without the consent of CAA (lessor). The cancellation of the contract was made in a letter by
Jurado, Airport General Manager of CAA addressed to Rosario Leveriza.
Respondent Leverizas and the CAA assailed the validity of such cancellation, claiming that the Airport
General Manager had no legal authority to make the cancellation. They maintain that it is only the
(1)Secretary of Public Works and Communications, acting for the President, or by delegation of power,
the (2)Director of CCA who could validly cancel the contract. Petitioners argue that cancelling or
setting aside a contract approved by the Secretary is, in effect, repealing an act of the Secretary
which is beyond the authority of the Administrator.
Such argument is untenable. The terms and conditions under which such revocation or cancellation
may be made, have already been specifically provided for in Contract A which has already been
approved by the Department Head, It is evident that in the implementation of aforesaid contract, the
approval of said Department Head is no longer necessary if not redundant
NOTES:
1. It is further contended that even granting that such cancellation was effective, a subsequent billing
by the Accounting Department of the CAA has in effect waived or nullified the rescission of Contract
A.
The billing of the petitioners by the Accounting Department of the CAA if indeed it transpired, after the
cancellation of Contract A is obviously an error. However, this Court has already ruled that the
mistakes of government personnel should not affect public interest.

2. Petitioners further assail the interpretation of Contract A, claiming that Contract B was a mere
sublease to Mobil Oil and requires no prior consent of CAA to perfect the same. Citing Article 1650 of
the Civil Code, they assert that the prohibition to sublease must be expressed and cannot be merely
implied or inferred.
As correctly found by the Court of Appeals, petitioners in asserting the non- necessity for a prior
consent interprets the first sentence of paragraph 7 of Contract A to refer to an assignment of lease
under Article 1649 of the Civil Code and not to a mere sublease. A careful scrutiny of said paragraph
of Contract A clearly shows that it speaks of transfer of rights of Rosario Leveriza to the leased
premises and not to assignment of the lease.
2. Petitioners likewise argued that it was contemplated by the parties to Contract A that Mobil Oil
would be the owner of the gasoline station it would construct on the leased premises during the period
of the lease, hence, it is understood that it must be given a right to use and occupy the lot in question
in the form of a sub-lease.
In Contract A, it was categorically stated that it is the lessee (petitioner) who will manage and
operate the gasoline station. The fact that Mobil Oil was mentioned in that contract was clearly not
intended to give approval to a sublease between petitioners and said company but rather to
insure that in the arrangements to be made between them, it must be understood that after the
expiration of the lease contract, whatever improvements have been constructed in the leased
premises shall be relinquished to CAA. Thus, this Court held that the primary and elementary rule of
construction of documents is that when the words or language thereof is clear and plain or readily
understandable by any ordinary reader thereof, there is absolutely no room for interpretation or
construction anymore.

3. <ADMINISTRATIVE LAW>Finally, petitioners contend that the administrator of CAA cannot
execute without approval of the Department Secretary, a valid contract of lease over real property
owned by the Republic of the Philippines, citing the Revised Administrative Code, which provide
that Under 567 of the Revised Administrative Code, such contract of lease must be executed:
(1) by the President of the Philippines, or
(2) by an officer duly designated by him or
(3) by an officer expressly vested by law.
On the other hand, respondent CAA avers that the CAA Administrator has the authority to lease real
property belonging to the RP under its administration even without the approval of the Secretary of
Public Works and Communications, which authority is expressly vested in it by law, more particularly
Section 32 (24) of Republic Act 776, which reads:
Sec. 32. Powers and Duties of the Administrator. Subject to the general control and supervision of
the Department Head, the Administrator shall have, among others, the following powers and duties:
xxx xxx xxx
(24) To administer, operate, manage, control, maintain and develop the Manila International Airport
and all government aerodromes except those controlled or operated by the Armed Forces of the
Philippines including such power and duties as: (b) to enter into, make and execute contracts of any
kind with any person, firm, or public or private corporation or entity; (c) to acquire, hold, purchase, or
lease any personal or real property; right of ways, and easements which may be proper or necessary:
Provided, that no real property thus acquired and any other real property of the Civil Aeronautics
Administration shall be sold without the approval of the President of the Philippines.
There is no dispute that the Revised Administrative Code is a general law while Republic Act 776 is a
special law nor in the fact that the real property subject of the lease in Contract C is real property
belonging to the Republic of the Philippines.
It is readily apparent that in the case at bar, the CAA has the authority to enter into Contracts of
Lease for the government under the third category (Art. 567. )Thus, as correctly ruled by the Court of
Appeals, the CAA has the power to execute the deed or contract involving leases of real properties
belonging to the RP, not because it is an entity duly designated by the President but because the said
authority to execute the same is, by law expressly vested in it, which in this case is RA 776.
Under the above-cited Section 32 (par. 24) of Republic Act 776, the Administrator (Director) of the
CAA by reason of its creation and existence, administers properties belonging to the RP and it is on
these properties that the Administrator must exercise his vast power and discharge his duty to enter
into, make and execute contract of any kind with any person, firm, or public or private corporation or
entity and to acquire, hold, purchase, or lease any personal or real property, right of ways and
easements which may be proper or necessary. (The exception, however, is the sale of properties
acquired by CAA or any other real properties of the same which must have the approval of the
President of the Philippines.) The Court of appeals took cognizance of the striking absence of such
proviso in the other transactions contemplated in paragraph (24) and is convinced as we are, that the
Director of the CAA does not need the prior approval of the President or the Secretary of Public
Works and Communications in the execution of Contract C.
In this regard, this Court, ruled that another basic principle of statutory construction mandates that
general legislation must give way to special legislation on the same subject, and generally be so
interpreted as to embrace only cases in which the special provisions are not applicable; that specific
statute prevails over a general ; and that where two statutes are of equal theoretical application to a
particular case, the one designed therefor specially should prevail.
G.R. No. L-66614 January 25, 1988
PRIMITIVO LEVERIZA, FE LEVERIZA, PARUNGAO & ANTONIO C. VASCO, petitioners,
vs.
INTERMEDIATE APPELLATE COURT, MOBIL OIL PHILIPPINES & CIVIL AERONAUTICS
ADMINISTRATION, respondents.

BIDIN, J .:
This is a Petition for Review on certiorari seeking the reversal of the decision of the Intermediate
Appellate Court, Third Division * dated February 29, 1984 in AC-G.R. No. CV No. 61705 entitled Mobil Oil Philippines, Inc.,
plaintiff-appellee vs. Primitivo Leveriza Parungao, Antonio C. Vasco and Civil Aeronautics Administration, defendants-appellants; Primitive
Leveriza, Fe Leveriza Parungao and Antonio C. Leveriza, cross-defendant, affirming in toto the decision of the trial court dated April 6, 1976.
As found by the trial court and adopted by the Intermediate Appellate Court, the facts of this case
are as follows:
Around three contracts of lease resolve the basic issues in the instant case. These
three contracts are as follows:
First Contract. For purposes of easy reference and brevity, this contract shall be
referred to hereinafter as Contract A. This is a "CONTRACT OF LEASE", executed
between the REPUBLIC OF THE PHILIPPINES, represented by Defendant CIVIL
AERONAUTICS ADMINISTRATION, as lessor, and ROSARIO C. LEVERIZA, as
lessee, on April 2, 1965, over a certain parcel of land at the MIA area, consisting of
approximately 4,502 square meters, at a monthly rental of P450.20, for a period of 25
years, (Exhibit "A", Exhibit "I-Leverizas", Exhibit "I-CAA").
Second Contracts. For purposes of easy references and brevity, this contract shall
be referred to hereinafter as Contract B. This is a "LEASE AGREEMENT", executed
between ROSARIO C. LEVERIZA, as lessor, and Plaintiff MOBIL OIL PHILIPPINES,
INC., as lessee on May 21, 1965, over 3,000 square meters of that SAME Parcel of
land subject of Contract A above mentioned, at a monthly rental of P1,500.00, for a
period of 25 years (Exhibit 'B', Exhibit 4-Leverizas' ).
Third Contract. For purposes of easy reference and brevity, this contract shall be
referred to hereinafter as Contract C. This is a "LEASE AGREEMENT", executed
between Defendant CIVIL AERONAUTICS ADMINISTRATION, as lessor, and
plaintiff MOBIL OIL PHILIPPINES, INC., as lessee, on June 1, 1968 over that SAME
parcel of land (Lot A, on plan being a portion of Parcel, Psu 2031), containing an
area of 3,000 square meters more or less, at a monthly rental of P.25 per square
meter for the second 200 square meters, and P.20 per square meter for the rest, for
a period of 29 (sic) years. (Exhibit "C").
There is no dispute among the parties that the subject matter of the three contracts
of lease above mentioned, Contract A, Contract B, and Contract C, is the same
parcel of land, with the noted difference that while in Contract A, the area leased is
4,502 square meters, in Contract B and Contract C, the area has been reduced to
3,000 square meters. To summarize:
Contract A a lease contract of April 2, 1965 between the Republic
of the Philippines, represented by Defendant Civil Aeronautics
Administration and Rosario C. Leveriza over a parcel of land
containing an area of 4,502 square meters, for 25 years.
Contract B a lease contract (in effect a sublease) of May 21, 1965
between defendant Rosario C. Leveriza and plaintiff Mobil Oil
Philippines, Inc. over the same parcel of land, but reduced to 3,000
square meters for 25 years; and
Contract C a lease contract of June 1, 1968 between defendant
Civil Aeronautics Administration and plaintiff Mobil Oil Philippines,
Inc., over the same parcel of land, but reduced to 3,000 square
meters, for 25 years.
It is important to note, for a clear understanding of the issues involved, that it appears
that defendant Civil Aeronautics Administration as LESSOR, leased the same parcel
of land, for durations of time that overlapped to two lessees, to wit: (1) Defendant
Rosario C. Leveriza, and that plaintiff Mobil Oil Philippines, Inc., as LESSEE, leased
the same parcel of land from two lessors, to wit: (1) defendant Rosario C. Leveriza
and (2) defendant Civil Aeronautics Administration, Inc., for durations of time that
also overlapped.
For purposes of brevity defendant Civil Aeronautics Administration shall be referred
to hereinafter as defendant CAA.
Rosario C. Leveriza, the lessee in Contract A and the lessor in Contract B, is now
deceased. This is the reason why her successor-in-interest, her heirs, are sued,
namely: Defendants Primitive Leveriza, her second husband, (now also deceased),
Fe Leveriza Parungao, her daughter by her second husband, and Antonio C. Vasco,
her son by her first husband. For purposes of brevity, these defendants shall be
referred to hereinafter as Defendants Leveriza.
Plaintiff Mobil Oil Philippines, Inc., shall be referred to hereinafter simply as the
Plaintiff. (pp. 95-99, Record on Appeal).
Plaintiff in this case seeks the rescission or cancellation of Contract A and Contract B
on the ground that Contract A from which Contract B is derived and depends has
already been cancelled by the defendant Civil Aeronautics Administration and
maintains that Contract C with the defendant CAA is the only valid and subsisting
contract insofar as the parcel of land, subject to the present litigation is concerned.
On the other hand, defendants Leverizas' claim that Contract A which is their
contract with CAA has never been legally cancelled and still valid and subsisting; that
it is Contract C between plaintiff and defendant CAA which should be declared void.
Defendant CAA asserts that Exhibit "A" is still valid and subsisting because its
cancellation by Guillermo Jurado was ineffective and asks the court to annul Contract
A because of the violation committed by defendant Leveriza in leasing the parcel of
land to plaintiff by virtue of Contract B without the consent of defendant CAA.
Defendant CAA further asserts that Contract C not having been approved by the
Director of Public Works and Communications is not valid. ...
xxx xxx xxx
After trial, the lower court render judgment on April 6, 1976 the dispositive part of which reads:
WHEREFORE, after having thus considered the evidence of all the parties,
testimonial and documentary, and their memoranda and reply-memoranda, this
Court hereby renders judgment:
1. Declaring Contract A as having been validly cancelled on June 28,
1966, and has therefore ceased to have any effect as of that date;
2. Declaring that Contract B has likewise ceased to have any effect
as of June 28, 1966 because of the cancellation of Contract A;
3. Declaring that Contract C was validly entered into on June 1, 1968,
and that it is still valid and subsisting;
4. Ordering defendant CAA to refund to defendants Leverizas the
amount of P32,189.30 with 6% per annum until fully paid;
5. Ordering defendants Leverizas to refund to plaintiff the amount of
P48,000.00 with 6% interest per annum until fully paid;
6. Dismissing defendants Leverizas' four counterclaims against
plaintiff;
7. Dismissing defendants Leverizas' cross-claim against defendant
CAA;
8. Dismissing defendant CAA's counterclaim against plaintiff;
9. Dismissing defendant CAA's counterclaim against defendant
Leverizas.
No pronouncements as to costs.
On June 2, 1976, defendant Leveriza filed a motion for new trial on the ground of newly discovered
evidence, lack of jurisdiction of the court over the case and lack of evidentiary support of the
decision which was denied in the order of November 12,1976 (Rollo, p. 17).
On July 27, 1976, the CAA filed a Motion for Reconsideration, averring that because the lot lease
was properly registered in the name of the Republic of the Philippines, it was only the President of
the Philippines or an officer duly designated by him who could execute the lease contract pursuant
to Sec. 567 of the Revised Administrative Code; that the Airport General Manager has no authority
to cancel Contract A, the contract entered into between the CAA and Leveriza, and that Contract C
between the CAA and Mobil was void for not having been approved by the Secretary of Public
Works and Communications. Said motion was however denied on November 12, 1976 (Rollo, p. 18).
On appeal, the Intermediate Appellate Court, being in full accord with the trial court, rendered a
decision on February 29, 1984, the dispositive part of which reads:
WHEREFORE, finding no reversible error in the decision of the lower court dated
April 6, 1976, the same is hereby affirmed in toto.
Hence, this petition.
The petitioners raised the following assignment of errors:
I
THE INTERMEDIATE APPELLATE COURT ERRED IN HOLDING THAT THE
ADMINISTRATOR OF THE CIVIL AERONAUTICS ADMINISTRATION (CAA) HAD
THE STATUTORY AUTHORITY TO LEASE, EVEN WITHOUT APPROVAL OF THE
THEN SECRETARY OF PUBLIC WORKS AND COMMUNICATIONS, REAL
PROPERTY BELONGING TO THE REPUBLIC OF THE PHILIPPINES.
II
THE INTERMEDIATE APPELLATE COURT ERRED IN HOLDING THAT THE
ADMINISTRATOR OF THE CIVIL AERONAUTICS ADMINISTRATION HAD
STATUTORY AUTHORITY, WITHOUT THE APPROVAL OF THE THEN
SECRETARY OF PUBLIC WORKS AND COMMUNICATIONS, TO CANCEL A
LEASE CONTRACT OVER REAL PROPERTY OWNED BY THE REPUBLIC OF
THE PHILIPPINES, WHICH CONTRACT WAS APPROVED, AS REQUIRED BY
LAW, BY THE SECRETARY.
III
THE INTERMEDIATE APPELLATE COURT ERRED WHEN IT RULED THAT THE
CONTRACT OF SUBLEASE (CONTRACT B) ENTERED INTO BETWEEN
PETITIONERS' PREDECESSOR-IN-INTEREST AND RESPONDENT MOBIL OIL
PHILIPPINES, INC. WAS WITHOUT THE CONSENT OF THE ADMINISTRATOR
OF THE CIVIL AERONAUTICS ADMINISTRATION.
The petition is devoid of merit.
There is no dispute that Contract "A" at the time of its execution was a valid contract. The issue
therefore is whether or not said contract is still subsisting after its cancellation by CAA on the ground
of a sublease executed by petitioners with Mobil Oil Philippines without the consent of CAA and the
execution of another contract of lease between CAA and Mobil Oil Philippines (Contract "C").
Petitioners contend that Contract "A" is still subsisting because Contract "B" is a valid sublease and
does not constitute a ground for the cancellation of Contract "A", while Contract "C", a subsequent
lease agreement between CAA and Mobil Oil Philippines is null and void, for lack of approval by the
Department Secretary. Petitioners anchor their position on Sections 567 and 568 of the Revised
Administrative Code which require among others, that subject contracts should be executed by the
President of the Philippines or by an officer duly designated by him, unless authority to execute the
same is by law vested in some other officer (Petition, Rollo, pp. 15-16).
At the other extreme, respondent Mobil Oil Philippines asserts that Contract "A" was validly
cancelled on June 28, 1966 and so was Contract "B" which was derived therefrom. Accordingly, it
maintains that Contract "C" is the only valid contract insofar as the parcel of land in question is
concerned and that approval of the Department Head is not necessary under Section 32 (par. 24) of
the Republic Act 776 which expressly vested authority to enter into such contracts in the
Administrator of CAA (Comment; Rollo, p. 83).
On its part, respondent Civil Aeronautics Administration took the middle ground with its view that
Contract "A" is still subsisting as its cancellation is ineffective without the approval of the Department
Head but said contract is not enforceable because of petitioners' violation of its terms and conditions
by entering into Contract "B" of sublease without the consent of CAA. The CAA further asserts that
Contract "C" not having been approved by the Secretary of Public Works and Communications, is
not valid (Rollo, p. 43). However, in its comment filed with the Supreme Court, the CAA made a
complete turnabout adopting the interpretation and ruling made by the trial court which was affirmed
by the Intermediate Appellate Court (Court of Appeals), that the CAA Administrator has the power to
execute the deed or contract of lease involving real properties under its administration belonging to
the Republic of the Philippines without the approval of the Department Head as clearly provided in
Section 32, paragraph (24) of Republic Act 776.
The issue narrows down to whether or not there is a valid ground for the cancellation of Contract "A."
Contract "A" was entered into by CAA as the lessor and the Leverizas as the lessee specifically "for
the purpose of operating and managing a gasoline station by the latter, to serve vehicles going in
and out of the airport."
As regards prior consent of the lessor to the transfer of rights to the leased premises, the provision
of paragraph 7 of said Contract reads in full:
7. The Party of the Second part may transfer her rights to the leased premises but in
such eventuality, the consent of the Party of the First Part shall first be secured. In
any event, such transfer of rights shall have to respect the terms and conditions of
this agreement.
Paragraph 8 provides the sanction for the violation of the above-mentioned terms and conditions of
the contract. Said paragraph reads:
8. Failure on the part of the Party of the Second Part to comply with the terms and
conditions herein agreed upon shall be sufficient for revocation of this contract by the
Party of the First Part without need of judicial demand.
It is not disputed that the Leverizas (lessees) entered into a contract of sublease (Contract "B") with
Mobil Oil Philippines without the consent of CAA (lessor). The cancellation of the contract was made
in a letter dated June 28, 1966 of Guillermo P. Jurado, Airport General Manager of CAA addressed
to Rosario Leveriza, as follows:
(Letterhead)
June 28, 1966
Mrs. Rosario Leveriza
Manila International Airport
Madam:
It has been found out by the undersigned that you have sublet the
property of the CAA leased to you and by virtue of this, your lease
contract is hereby cancelled because of the violation of the
stipulations of the contract. I would like to inform you that even
without having sublet the said property the said contract would have
been cancelled as per attached communication.
Very
truly
yours,
For the
Directo
r:
(Sgd.)
Illegible
(Typed
)
GUILLERMO P.
JURADO
Airport General
Manager
Respondent Leverizas and the CAA assailed the validity of such cancellation, claiming that the
Airport General Manager had no legal authority to make the cancellation. They maintain that it is
only the Secretary of Public Works and Communications, acting for the President, or by delegation
of power, the Director of Civil Aeronautics Administration who could validly cancel the contract. They
do admit, however, and it is evident from the records that the Airport General Manager signed "For
the Director." Under the circumstances, there is no question that such act enjoys the presumption of
regularity, not to mention the unassailable fact that such act was subsequently affirmed or ratified by
the Director of the CAA himself (Record on Appeal, pp. 108-110).
Petitioners argue that cancelling or setting aside a contract approved by the Secretary is, in effect,
repealing an act of the Secretary which is beyond the authority of the Administrator.
Such argument is untenable. The terms and conditions under which such revocation or cancellation
may be made, have already been specifically provided for in Contract "A" which has already been
approved by the Department Head, It is evident that in the implementation of aforesaid contract, the
approval of said Department Head is no longer necessary if not redundant.
It is further contended that even granting that such cancellation was effective, a subsequent billing
by the Accounting Department of the CAA has in effect waived or nullified the rescission of Contract
"A."
It will be recalled that the questioned cancellation of Contract "A" was among others, mainly based
on the violation of its terms and conditions, specifically, the sublease of the property by the lessee
without the consent of the lessor.
The billing of the petitioners by the Accounting Department of the CAA if indeed it transpired, after
the cancellation of Contract "A" is obviously an error. However, this Court has already ruled that the
mistakes of government personnel should not affect public interest. In San Mauricio Mining
Company v. Ancheta (105 SCRA 391, 422), it has been held that as a matter of law rooted in the
protection of public interest, and also as a general policy to protect the government and the people,
errors of government personnel in the performance of their duties should never deprive the people of
the right to rectify such error and recover what might be lost or be bartered away in any actuation,
deal or transaction concerned. In the case at bar, the lower court in its decision which has been
affirmed by the Court of Appeals, ordered the CAA to refund to the petitioners the amount of rentals
which was not due from them with 6% interest per annum until fully paid.
Petitioners further assail the interpretation of Contract "A", claiming that Contract "B" was a mere
sublease to respondent Mobil Oil Philippines, Inc. and requires no prior consent of CAA to perfect
the same. Citing Article 1650 of the Civil Code, they assert that the prohibition to sublease must be
expressed and cannot be merely implied or inferred (Rollo, p. 151).
As correctly found by the Court of Appeals, petitioners in asserting the non- necessity for a prior
consent interprets the first sentence of paragraph 7 of Contract "A" to refer to an assignment of lease
under Article 1649 of the Civil Code and not to a mere sublease. A careful scrutiny of said paragraph
of Contract "A" clearly shows that it speaks of transfer of rights of Rosario Leveriza to the leased
premises and not to assignment of the lease (Rollo, pp. 48-49).
Petitioners likewise argued that it was contemplated by the parties to Contract "A" that Mobil Oil
Philippines would be the owner of the gasoline station it would construct on the leased premises
during the period of the lease, hence, it is understood that it must be given a right to use and occupy
the lot in question in the form of a sub-lease (Rollo, p. 152).
In Contract "A", it was categorically stated that it is the lessee (petitioner) who will manage and
operate the gasoline station. The fact that Mobil Oil was mentioned in that contract was clearly not
intended to give approval to a sublease between petitioners and said company but rather to insure
that in the arrangements to be made between them, it must be understood that after the expiration of
the lease contract, whatever improvements have been constructed in the leased premises shall be
relinquished to CAA. Thus, this Court held that "the primary and elementary rule of construction of
documents is that when the words or language thereof is clear and plain or readily understandable
by any ordinary reader thereof, there is absolutely no room for interpretation or construction
anymore." (San Mauricio Mining Company v. Ancheta, supra).
Finally, petitioners contend that the administrator of CAA cannot execute without approval of the
Department Secretary, a valid contract of lease over real property owned by the Republic of the
Philippines, citing Sections 567 and 568 of the Revised Administrative Code, which provide as
follows:
SEC. 567. Authority of the President of the Philippines to execute contracts relative
to real property. When the Republic of the Philippines is party to a deed conveying
the title to real property or is party to any lease or other contract relating to real
property belonging to said government, said deed or contract shall be executed on
behalf of said government by the President of the Philippinesor by an officer duly
designated by him, unless authority to execute the same is by law expressly vested
in some other officer. (Emphasis supplied)
SEC. 568. Authority of national officials to make contract. Written contracts not
within the purview of the preceding section shall, in the absence of special provision,
be executed, with the approval of the proper Department Head, by the Chief of the
Bureau or Office having control of the appropriation against which the contract would
create a charge; or if there is no such chief, by the proper Department Head himself
or the President of the Philippines as the case may require.
On the other hand, respondent CAA avers that the CAA Administrator has the authority to lease real
property belonging to the Republic of the Philippines under its administration even without the
approval of the Secretary of Public Works and Communications, which authority is expressly vested
in it by law, more particularly Section 32 (24) of Republic Act 776, which reads:
Sec. 32. Powers and Duties of the Administrator. Subject to the general control
and supervision of the Department Head, the Administrator shall have, among
others, the following powers and duties:
xxx xxx xxx
(24) To administer, operate, manage, control, maintain and develop the Manila
International Airport and all government aerodromes except those controlled or
operated by the Armed Forces of the Philippines including such power and duties as:
... (b) to enter into, make and execute contracts of any kind with any person, firm, or
public or private corporation or entity; (c) to acquire, hold, purchase, or lease any
personal or real property; right of ways, and easements which may be proper or
necessary: Provided, that no real property thus acquired and any other real property
of the Civil Aeronautics Administration shall be sold without the approval of the
President of the Philippines. ...
There is no dispute that the Revised Administrative Code is a general law while
Republic Act 776 is a special law nor in the fact that the real property subject of the
lease in Contract "C" is real property belonging to the Republic of the Philippines.
Under 567 of the Revised Administrative Code, such contract of lease must be executed: (1) by the
President of the Philippines, or (2) by an officer duly designated by him or (3) by an officer expressly
vested by law. It is readily apparent that in the case at bar, the Civil Aeronautics Administration has
the authority to enter into Contracts of Lease for the government under the third category. Thus, as
correctly ruled by the Court of Appeals, the Civil Aeronautics Administration has the power to
execute the deed or contract involving leases of real properties belonging to the Republic of the
Philippines, not because it is an entity duly designated by the President but because the said
authority to execute the same is, by law expressly vested in it.
Under the above-cited Section 32 (par. 24) of Republic Act 776, the Administrator (Director) of the
Civil Aeronautics Administration by reason of its creation and existence, administers properties
belonging to the Republic of the Philippines and it is on these properties that the Administrator must
exercise his vast power and discharge his duty to enter into, make and execute contract of any kind
with any person, firm, or public or private corporation or entity and to acquire, hold, purchase, or
lease any personal or real property, right of ways and easements which may be proper or
necessary. The exception, however, is the sale of properties acquired by CAA or any other real
properties of the same which must have the approval of the President of the Philippines. The Court
of appeals took cognizance of the striking absence of such proviso in the other transactions
contemplated in paragraph (24) and is convinced as we are, that the Director of the Civil Aeronautics
Administration does not need the prior approval of the President or the Secretary of Public Works
and Communications in the execution of Contract "C."
In this regard, this Court, ruled that another basic principle of statutory construction mandates that
general legislation must give way to special legislation on the same subject, and generally be so
interpreted as to embrace only cases in which the special provisions are not applicable (Sto.
Domingo v. De los Angeles, 96 SCRA 139),. that specific statute prevails over a general statute (De
Jesus v. People, 120 SCRA 760) and that where two statutes are of equal theoretical application to
a particular case, the one designed therefor specially should prevail (Wil Wilhensen, Inc. v. Baluyot,
83 SCRA 38)
WHEREFORE, the petition is DISMISSED for lack of merit and the decision of the Court of Appeals
appealed from is AFFIRMED in toto.
SO ORDERED.

Luzon Development Bank vs Association vs
Association
Chester Cabalza recommends his visitors to please read the original & full text of the case cited. Xie xie!

LUZON DEVELOPMENT BANK, petitioner,
vs.
ASSOCIATION OF LUZON DEVELOPMENT BANK EMPLOYEES and ATTY. ESTER S. GARCIA in her capacity
as VOLUNTARY ARBITRATOR, respondents

G.R. No. 120319
October 6, 1995

Facts:

From a submission agreement of the Luzon Development Bank (LDB) and the Association of Luzon Development
Bank Employees (ALDBE) arose an arbitration case to resolve the following issue: whether or not the company has
violated the Collective Bargaining Agreement provision and the Memorandum of Agreement dated April 1994, on
promotion.

At a conference, the parties agreed on the submission of their respective Position Papers on December 1-15, 1994.
Atty. Ester S. Garcia, in her capacity as Voluntary Arbitrator, received ALDBE's Position Paper on January 18, 1995.
LDB, on the other hand, failed to submit its Position Paper despite a letter from the Voluntary Arbitrator reminding
them to do so. As of May 23, 1995 no Position Paper had been filed by LDB. On May 24, 1995, without LDB's
Position Paper, the Voluntary Arbitrator rendered a decision disposing as follows:

WHEREFORE, finding is hereby made that the Bank has not adhered to the Collective Bargaining Agreement
provision nor the Memorandum of Agreement on promotion. Hence, this petition for certiorari and prohibition seeking
to set aside the decision of the Voluntary Arbitrator and to prohibit her from enforcing the same.

Issue:

Which court has the jurisdiction for the appellate review of adjudications of all quasi-judicial entities

Held:

Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides that the Court of Appeals shall exercise:

(B) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional Trial
Courts and quasi-judicial agencies, instrumentalities, boards or commissions, including the Securities and Exchange
Commission, the Employees Compensation Commission and the Civil Service Commission, except those falling
within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code of the
Philippines under Presidential Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the
third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.

The voluntary arbitrator no less performs a state function pursuant to a governmental power delegated to him under
the provisions therefor in the Labor Code and he falls, therefore, within the contemplation of the term "instrumentality"
in the aforequoted Sec. 9 of B.P. 129. The fact that his functions and powers are provided for in the Labor Code does
not place him within the exceptions to said Sec. 9 since he is a quasi-judicial instrumentality as contemplated therein
A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should likewise be appealable to the
Court of Appeals, in line with the procedure outlined in Revised Administrative Circular No. 1-95, just like those of the
quasi-judicial agencies, boards and commissions enumerated therein.

This would be in furtherance of, and consistent with, the original purpose of Circular No. 1-91 to provide a uniform
procedure for the appellate review of adjudications of all quasi-judicial entities not expressly excepted from the
coverage of Sec. 9 of B.P. 129 by either the Constitution or another statute. In the same vein, it is worth mentioning
that under Section 22 of Republic Act No. 876, also known as the Arbitration Law, arbitration is deemed a special
proceeding of which the court specified in the contract or submission, or if none be specified, the Regional Trial Court
for the province or city in which one of the parties resides or is doing business, or in which the arbitration is held, shall
have jurisdiction. A party to the controversy may, at any time within one (1) month after an award is made, apply to
the court having jurisdiction for an order confirming the award and the court must grant such order unless the award
is vacated, modified or corrected.

In effect, this equates the award or decision of the voluntary arbitrator with that of the regional trial court.
Consequently, in a petition for certiorari from that award or decision, ACCORDINGLY, the Court resolved to REFER
this case to the Court of Appeals.

SO ORDERED.


LUZON DEVELOPMENT BANK vs. ASSO. OF LDB EMPLOYEES and GARCIA
G.R. No. 120319
October 6, 1995
FACTS: From a submission agreement of the LDB and the Association of Luzon Development Bank
Employees (ALDBE) arose an arbitration case to resolve the following issue:
Whether or not the company has violated the CBA provision and the MOA on promotion.
At a conference, the parties agreed on the submission of their respective Position Papers. Atty. Garcia,
in her capacity as Voluntary Arbitrator, received ALDBEs Position Paper ; LDB, on the other hand,
failed to submit its Position Paper despite a letter from the Voluntary Arbitrator reminding them to do
so. As of May 23, 1995 no Position Paper had been filed by LDB.
Without LDBs Position Paper, the Voluntary Arbitrator rendered a decision disposing as follows:
WHEREFORE, finding is hereby made that the Bank has not adhered to the CBA provision nor the MOA
on promotion.
Hence, this petition for certiorari and prohibition seeking to set aside the decision of the Voluntary
Arbitrator and to prohibit her from enforcing the same.
ISSUE: WON a voluntary arbiters decision is appealable to the CA and not the SC
HELD: the Court resolved to REFER this case to the Court of Appeals.
YES
The jurisdiction conferred by law on a voluntary arbitrator or a panel of such arbitrators is quite
limited compared to the original jurisdiction of the labor arbiter and the appellate jurisdiction of the
NLRC for that matter. The (d)ecision, awards, or orders of the Labor Arbiter are final and
executory unless appealed to the Commission

Hence, while there is an express mode of appeal
from the decision of a labor arbiter, Republic Act No. 6715 is silent with respect to an appeal from the
decision of a voluntary arbitrator.
Yet, past practice shows that a decision or award of a voluntary arbitrator is, more often than not,
elevated to the SC itself on a petition for certiorari, in effect equating the voluntary arbitrator with the
NLRC or the CA. In the view of the Court, this is illogical and imposes an unnecessary burden upon it.
In Volkschel Labor Union, et al. v. NLRC, et al.,
8
on the settled premise that the judgments of
courts and awards of quasi-judicial agencies must become final at some definite time, this Court
ruled that the awards of voluntary arbitrators determine the rights of parties; hence, their decisions
have the same legal effect as judgments of a court. In Oceanic Bic Division (FFW), et al. v. Romero, et
al.,

this Court ruled that a voluntary arbitrator by the nature of her functionsacts in a quasi-judicial
capacity. Under these rulings, it follows that the voluntary arbitrator, whether acting solely or in a
panel, enjoys in law the status of a quasi-judicial agency but independent of, and apart from, the
NLRC since his decisions are not appealable to the latter.
Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides that the Court of Appeals
shall exercise:
(B) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of
RTC s and quasi-judicial agencies, instrumentalities,boards or commissions, including the
Securities and Exchange Commission, the Employees Compensation Commission and the Civil Service
Commission, except those falling within the appellate jurisdiction of the Supreme Court in accordance
with the Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as
amended, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph
(4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.
Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators may not strictly
be considered as a quasi-judicial agency, board or commission, still both he and the panel are
comprehended within the concept of a quasi-judicial instrumentality.
An instrumentality is anything used as a means or agency.

Thus, the terms governmental agency
or instrumentality are synonymous in the sense that either of them is a means by which a
government acts, or by which a certain government act or function is performed.

The word
instrumentality, with respect to a state, contemplates an authority to which the state delegates
governmental power for the performance of a state function.

An individual person, like an
administrator or executor, is a judicial instrumentality in the settling of an estate, in the same manner
that a sub-agent appointed by a bankruptcy court is an instrumentality of the court,

and a trustee in
bankruptcy of a defunct corporation is an instrumentality of the state.
The voluntary arbitrator no less performs a state function pursuant to a governmental power
delegated to him under the provisions therefor in the Labor Code and he falls, therefore, within the
contemplation of the term instrumentality in the aforequoted Sec. 9 of B.P. 129. The fact that his
functions and powers are provided for in the Labor Code does not place him within the exceptions to
said Sec. 9 since he is a quasi-judicial instrumentality as contemplated therein.
It will be noted that, although the Employees Compensation Commission is also provided for in the
Labor Code, Circular No. 1-91, which is the forerunner of the present Revised Administrative Circular
No. 1-95, laid down the procedure for the appealability of its decisions to the CA under the foregoing
rationalization, and this was later adopted by Republic Act No. 7902 in amending Sec. 9 of B.P. 129. A
fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should likewise be
appealable to the CA, in line with the procedure outlined in Revised Administrative Circular No. 1-95,
just like those of the quasi-judicial agencies, boards and commissions enumerated therein.
In the same vein, it is worth mentioning that under Section 22 of Republic Act No. 876, also known as
the Arbitration Law, arbitration is deemed a special proceeding of which the court specified in the
contract or submission, or if none be specified, the RTC for the province or city in which one of the
parties resides or is doing business, or in which the arbitration is held, shall have jurisdiction.
In effect, this equates the award or decision of the voluntary arbitrator with that of the RTC.
Consequently, in a petition for certiorari from that award or decision, the CA must be deemed to have
concurrent jurisdiction with the SC. As a matter of policy, this Court shall henceforth remand to the
Court of Appeals petitions of this nature for proper disposition.
NOTES:
1. In labor law context, arbitration is the reference of a labor dispute to an impartial third person for
determination on the basis of evidence and argumentspresented by such parties who have bound
themselves to accept the decision of the arbitrator as final and binding. Arbitration may be classified,
on the basis of the obligation on which it is based, as either compulsory or voluntary.
Compulsory arbitration is a system whereby the parties to a dispute are compelled by the government
to forego their right to strike and are compelled to accept the resolution of their dispute through
arbitration by a third party.
1
The essence of arbitration remains since a resolution of a dispute is
arrived at by resort to a disinterested third party whose decision is final and binding on the parties,
but in compulsory arbitration, such a third party is normally appointed by the government.
Under voluntary arbitration, on the other hand, referral of a dispute by the parties is made, pursuant
to a voluntary arbitration clause in their collective agreement, to an impartial third person for a final
and binding resolution.
2
Ideally, arbitration awards are supposed to be complied with by both parties
without delay, such that once an award has been rendered by an arbitrator, nothing is left to be done
by both parties but to comply with the same. After all, they are presumed to have freely chosen
arbitration as the mode of settlement for that particular dispute. Pursuant thereto, they have chosen a
mutually acceptable arbitrator who shall hear and decide their case. Above all, they have mutually
agreed to de bound by said arbitrators decision.
2. Article 261 of the Labor Code accordingly provides for exclusive original jurisdiction of such
voluntary arbitrator or panel of arbitrators over
(1) the interpretation or implementation of the CBA and
(2) the interpretation or enforcement of company personnel policies.
Article 262 authorizes them, but only upon agreement of the parties, to exercise jurisdiction over
other labor disputes.
On the other hand, a labor arbiter under Article 217 of the Labor Code has jurisdiction over the
following enumerated cases:
. . . (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the
case by the parties for decision without extension, even in the absence of stenographic notes, the
following cases involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages,
rates of pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-
employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving the
legality of strikes and lockouts;
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all
other claims, arising from employer-employee relations, including those of persons in domestic or
household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of
whether accompanied with a claim for reinstatement.
G.R. No. 120319 October 6, 1995
LUZON DEVELOPMENT BANK, petitioner,
vs.
ASSOCIATION OF LUZON DEVELOPMENT BANK EMPLOYEES and ATTY. ESTER S. GARCIA
in her capacity as VOLUNTARY ARBITRATOR, respondents.

ROMERO, J .:
From a submission agreement of the Luzon Development Bank (LDB) and the Association of Luzon
Development Bank Employees (ALDBE) arose an arbitration case to resolve the following issue:
Whether or not the company has violated the Collective Bargaining Agreement
provision and the Memorandum of Agreement dated April 1994, on promotion.
At a conference, the parties agreed on the submission of their respective Position Papers on
December 1-15, 1994. Atty. Ester S. Garcia, in her capacity as Voluntary Arbitrator, received
ALDBE's Position Paper on January 18, 1995. LDB, on the other hand, failed to submit its Position
Paper despite a letter from the Voluntary Arbitrator reminding them to do so. As of May 23, 1995 no
Position Paper had been filed by LDB.
On May 24, 1995, without LDB's Position Paper, the Voluntary Arbitrator rendered a decision
disposing as follows:
WHEREFORE, finding is hereby made that the Bank has not adhered to the
Collective Bargaining Agreement provision nor the Memorandum of Agreement on
promotion.
Hence, this petition for certiorari and prohibition seeking to set aside the decision of the Voluntary
Arbitrator and to prohibit her from enforcing the same.
In labor law context, arbitration is the reference of a labor dispute to an impartial third person for
determination on the basis of evidence and arguments presented by such parties who have bound
themselves to accept the decision of the arbitrator as final and binding.
Arbitration may be classified, on the basis of the obligation on which it is based, as either
compulsory or voluntary.
Compulsory arbitration is a system whereby the parties to a dispute are compelled by the
government to forego their right to strike and are compelled to accept the resolution of their dispute
through arbitration by a third party.
1
The essence of arbitration remains since a resolution of a dispute is
arrived at by resort to a disinterested third party whose decision is final and binding on the parties, but in
compulsory arbitration, such a third party is normally appointed by the government.
Under voluntary arbitration, on the other hand, referral of a dispute by the parties is made, pursuant
to a voluntary arbitration clause in their collective agreement, to an impartial third person for a final
and binding resolution.
2
Ideally, arbitration awards are supposed to be complied with by both parties
without delay, such that once an award has been rendered by an arbitrator, nothing is left to be done by
both parties but to comply with the same. After all, they are presumed to have freely chosen arbitration as
the mode of settlement for that particular dispute. Pursuant thereto, they have chosen a mutually
acceptable arbitrator who shall hear and decide their case. Above all, they have mutually agreed to de
bound by said arbitrator's decision.
In the Philippine context, the parties to a Collective Bargaining Agreement (CBA) are required to
include therein provisions for a machinery for the resolution of grievances arising from the
interpretation or implementation of the CBA or company personnel policies.
3
For this purpose, parties
to a CBA shall name and designate therein a voluntary arbitrator or a panel of arbitrators, or include a
procedure for their selection, preferably from those accredited by the National Conciliation and Mediation
Board (NCMB). Article 261 of the Labor Code accordingly provides for exclusive original jurisdiction of
such voluntary arbitrator or panel of arbitrators over (1) the interpretation or implementation of the CBA
and (2) the interpretation or enforcement of company personnel policies. Article 262 authorizes them, but
only upon agreement of the parties, to exercise jurisdiction over other labor disputes.
On the other hand, a labor arbiter under Article 217 of the Labor Code has jurisdiction over the
following enumerated cases:
. . . (a) Except as otherwise provided under this Code the Labor Arbiters shall have
original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days
after the submission of the case by the parties for decision without extension, even in
the absence of stenographic notes, the following cases involving all workers, whether
agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file
involving wages, rates of pay, hours of work and other terms and conditions of
employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions
involving the legality of strikes and lockouts;
6. Except claims for Employees Compensation, Social Security, Medicare and
maternity benefits, all other claims, arising from employer-employee relations,
including those of persons in domestic or household service, involving an amount
exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with
a claim for reinstatement.
xxx xxx xxx
It will thus be noted that the jurisdiction conferred by law on a voluntary arbitrator or a panel of such
arbitrators is quite limited compared to the original jurisdiction of the labor arbiter and the appellate
jurisdiction of the National Labor Relations Commission (NLRC) for that matter.
4
The state of our
present law relating to voluntary arbitration provides that "(t)he award or decision of the Voluntary
Arbitrator . . . shall be final and executory after ten (10) calendar days from receipt of the copy of the
award or decision by the parties,"
5
while the "(d)ecision, awards, or orders of the Labor Arbiter are final
and executory unless appealed to the Commission by any or both parties within ten (10) calendar days
from receipt of such decisions, awards, or orders."
6
Hence, while there is an express mode of appeal
from the decision of a labor arbiter, Republic Act No. 6715 is silent with respect to an appeal from the
decision of a voluntary arbitrator.
Yet, past practice shows that a decision or award of a voluntary arbitrator is, more often than not,
elevated to the Supreme Court itself on a petition for certiorari,
7
in effect equating the voluntary
arbitrator with the NLRC or the Court of Appeals. In the view of the Court, this is illogical and imposes an
unnecessary burden upon it.
In Volkschel Labor Union, et al. v. NLRC, et al.,
8
on the settled premise that the judgments of courts
and awards of quasi-judicial agencies must become final at some definite time, this Court ruled that the
awards of voluntary arbitrators determine the rights of parties; hence, their decisions have the same legal
effect as judgments of a court. In Oceanic Bic Division (FFW), et al. v.Romero, et al.,
9
this Court ruled
that "a voluntary arbitrator by the nature of her functions acts in a quasi-judicial capacity." Under these
rulings, it follows that the voluntary arbitrator, whether acting solely or in a panel, enjoys in law the status
of a quasi-judicial agency but independent of, and apart from, the NLRC since his decisions are not
appealable to the latter.
10

Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides that the Court of
Appeals shall exercise:
xxx xxx xxx
(B) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions,
orders or awards of Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions, including the Securities and Exchange
Commission, the Employees Compensation Commission and the Civil Service
Commission, except those falling within the appellate jurisdiction of the Supreme
Court in accordance with the Constitution, the Labor Code of the Philippines under
Presidential Decree No. 442, as amended, the provisions of this Act, and of
subparagraph (1) of the third paragraph and subparagraph (4) of the fourth
paragraph of Section 17 of the Judiciary Act of 1948.
xxx xxx xxx
Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators may not strictly
be considered as a quasi-judicial agency, board or commission, still both he and the panel are
comprehended within the concept of a "quasi-judicial instrumentality." It may even be stated that it
was to meet the very situation presented by the quasi-judicial functions of the voluntary arbitrators
here, as well as the subsequent arbitrator/arbitral tribunal operating under the Construction Industry
Arbitration Commission,
11
that the broader term "instrumentalities" was purposely included in the above-
quoted provision.
An "instrumentality" is anything used as a means or agency.
12
Thus, the terms governmental "agency"
or "instrumentality" are synonymous in the sense that either of them is a means by which a government
acts, or by which a certain government act or function is performed.
13
The word "instrumentality," with
respect to a state, contemplates an authority to which the state delegates governmental power for the
performance of a state function.
14
An individual person, like an administrator or executor, is a judicial
instrumentality in the settling of an estate,
15
in the same manner that a sub-agent appointed by a
bankruptcy court is an instrumentality of the court,
16
and a trustee in bankruptcy of a defunct corporation
is an instrumentality of the state.
17

The voluntary arbitrator no less performs a state function pursuant to a governmental power
delegated to him under the provisions therefor in the Labor Code and he falls, therefore, within the
contemplation of the term "instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact that his
functions and powers are provided for in the Labor Code does not place him within the exceptions to
said Sec. 9 since he is a quasi-judicial instrumentality as contemplated therein. It will be noted that,
although the Employees Compensation Commission is also provided for in the Labor Code, Circular
No. 1-91, which is the forerunner of the present Revised Administrative Circular No. 1-95, laid down
the procedure for the appealability of its decisions to the Court of Appeals under the foregoing
rationalization, and this was later adopted by Republic Act No. 7902 in amending Sec. 9 of B.P. 129.
A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should likewise be
appealable to the Court of Appeals, in line with the procedure outlined in Revised Administrative
Circular No. 1-95, just like those of the quasi-judicial agencies, boards and commissions enumerated
therein.
This would be in furtherance of, and consistent with, the original purpose of Circular No. 1-91 to
provide a uniform procedure for the appellate review of adjudications of all quasi-judicial
entities
18
not expressly excepted from the coverage of Sec. 9 of B.P. 129 by either the Constitution or
another statute. Nor will it run counter to the legislative intendment that decisions of the NLRC be
reviewable directly by the Supreme Court since, precisely, the cases within the adjudicative competence
of the voluntary arbitrator are excluded from the jurisdiction of the NLRC or the labor arbiter.
In the same vein, it is worth mentioning that under Section 22 of Republic Act No. 876, also known
as the Arbitration Law, arbitration is deemed a special proceeding of which the court specified in the
contract or submission, or if none be specified, the Regional Trial Court for the province or city in
which one of the parties resides or is doing business, or in which the arbitration is held, shall have
jurisdiction. A party to the controversy may, at any time within one (1) month after an award is made,
apply to the court having jurisdiction for an order confirming the award and the court must grant such
order unless the award is vacated, modified or corrected.
19

In effect, this equates the award or decision of the voluntary arbitrator with that of the regional trial
court. Consequently, in a petition for certiorari from that award or decision, the Court of Appeals
must be deemed to have concurrent jurisdiction with the Supreme Court. As a matter of policy, this
Court shall henceforth remand to the Court of Appeals petitions of this nature for proper disposition.
ACCORDINGLY, the Court resolved to REFER this case to the Court of Appeals.
SO ORDERED.
Iron and Steel Authority (ISA) v. Court of Appeals, 249 SCRA
538

FACTS: Petitioner ISA was created by PD No. 272 in order, generally, to develop and promote the iron
and steel industry.

PD No. 272 initially created ISA for a term of 5 years counting from August 9, 1973. When ISAs original
term expired on October 10, 1978, its term was extended for another 10 years by EO No. 555 dated
August 31, 1979.

The National Steel Corporation (NSC) then a wholly owned subsidiary of the National Development
Corporation which is itself an entity wholly owned by the National Government, embarked on an
expansion program embracing, among other things, the construction of an integrated steel mill in Iligan
City. The construction of such steel mill was considered a priority and major industrial project of the
government. Pursuant to the expansion program of the NSC, Proclamation No. 2239 was issued by the
President of the Philippines on November 16, 1982 withdrawing from sale or settlement a large tract of
public land located in Iligan City, and reserving that land for the use and immediate occupancy of NSC.
Since certain portions of the aforesaid public land were occupied by a non-operational chemical fertilizer
plant and related facilities owned by Maria Cristina Fertilizer Corporation (MCFC), LOI No. 1277, also
dated November 16, 1982, was issued directing the NSC to negotiate with the owners of MCFC, for and
on behalf of the Government, for the compensation of MCFCs present occupancy rights on the subject
land.

Negotiations between NSC and MCFC failed.

ISSUE: WON the Government is entitled to be substituted for ISA in view of the expiration of ISAs term.

RULING: Yes
.
Clearly, ISA was vested with some of the powers or attributed normally associated with juridical
personality. There is, however, no provision in PD No. 272 recognizing ISA as possessing general or
comprehensive juridical personality separate and distinct from that of the government. The ISA in fact
appears to the Court to be a non-incorporated agency or instrumentality of the RP, or more precisely of
the Government of the Philippines. It is common knowledge that other agencies or instrumentalities of the
Government of the Republic are cast in corporate form, that is to say, are incorporated agencies or
instrumentalities, sometimes with and at other times without capital stock, and accordingly vested with a
juridical personality distinct from the personality of the Republic.

We consider that the ISA is properly regarded as an agent or delegate of the RP. The Republic itself is a
body corporate and juridical person vested with the full panoply of powers and attributes which are
compendiously described as legal personality.

When the statutory term of non-incorporated agency expires, the powers, duties and functions as well as
the assets and liabilities of that agency revert back to, and are reassumed by the RP, in the absence of
special provisions of law specifying some other disposition thereof, e.g., devolution or transmission of
such powers, duties and functions, etc. to some other identified successor agency or instrumentality of
the RP.

When the expiring agency is an incorporated one, the consequence of such expiry must be looked for, in
the first instance, in the charters and, by way of supplementation, the provisions of the Corporation Code.
Since in the instant case, ISA is a non-incorporated agency or instrumentality of the Republic, its powers,
duties and functions, assets and liabilities are properly regarded as folded back into the Government and
hence assumed once again by the Republic, no special statutory provision having been shown to have
mandated succession thereto by some other entity or agency of the Republic.
In the instant case, ISA substituted the expropriation proceedings in its capacity as an agent or delegate
or representative of the Republic of the Philippines pursuant to its authority under PD 272.
The principal or the real party in interest is thus the Republic of the Philippines and not the NSC, even
though the latter may be an ultimate user of the properties involved.

From the foregoing premises, it follows that the Republic is entitled to be substituted in the expropriation
proceedings in lieu of ISA, the statutory term of ISA having expired. Put a little differently, the expiration of
ISAs statutory term did not by itself require or justify the dismissal of the eminent domain proceedings.


IRON AND STEEL AUTHORITY vs. CA and MARIA CRISTINA FERTILIZER CORPORATION
G.R. No. 102976
October 25, 1995
FACTS: Iron and Steel Authority (ISA) was created by P.D. No. 272 in order, generally, to develop
and promote the iron and steel industry in the Philippines. The list of powers and functions of the ISA
included the following: xx
Sec. 4. Powers and Functions. The authority shall have the following powers and functions: xx
(j) to initiate expropriation of land required for basic iron and steel facilities for subsequent resale
and/or lease to the companies involved if it is shown that such use of the States power is necessary
to implement the construction of capacity which is needed for the attainment of the objectives of the
Authority; xx
The National Steel Corporation (NSC) then a wholly owned subsidiary of the National Development
Corporation which is itself an entity wholly owned by the National Government, embarked on an
expansion program embracing, among other things, the construction of an integrated steel mill in
Iligan City. Pursuant to the expansion program of the NSC, Proc. No. 2239 was issued by the
President of the Philippines withdrawing from sale or settlement a large tract of public located in Iligan
City, and reserving that land for the use and immediate occupancy of NSC.
Since certain portions of the public land subject matter Proclamation No. 2239 were occupied by a
non-operational chemical fertilizer plant and related facilities owned by Maria Cristina Fertilizer
Corporation (MCFC), Letter of Instruction (LOI), No. 1277, was issued directing the NSC to
negotiate with the owners of MCFC, for and on behalf of the Government, for the compensation of
MCFCs present occupancy rights on the subject land. LOI No. 1277 also directed that should NSC and
private respondent MCFC fail to reach an agreement within a period of sixty (60) days from the date
of LOI No. 1277, petitioner ISA was to exercise its power of eminent domain under P.D. No. 272 and
to initiate expropriation proceedings in respect of occupancy rights of private respondent MCFC
relating to the subject public land as well as the plant itself and related facilities and to cede the same
to the NSC.
Negotiations between NSC and private respondent MCFC did fail. Accordingly ISA commenced eminent
domain proceedings against MCFC in the RTC of Iligan City, praying that it be placed in possession of
the property involved upon depositing in court representing ten percent (10%) of the declared market
values of that property.
A writ of possession was issued by the trial court in favor of ISA. ISA in turn placed NSC in possession
and control of the land occupied by MCFCs fertilizer plant installation.
The case proceeded to trial. While the trial was ongoing, however, the statutory existence of
petitioner ISA expired. MCFC then filed a motion to dismiss, contending that no valid judgment
could be rendered against ISA which had ceased to be a juridical person. Petitioner ISA filed its
opposition to this motion.
The trial court granted MCFCs motion to dismiss and did dismiss the case. The dismissal was
anchored on the provision of the Rules of Court stating that only natural or juridical persons or
entities authorized by law may be parties in a civil case.
Petitioner ISA moved for reconsideration which the trial court denied.
ISA went on appeal to the CA, which affirmed the order of dismissal of the trial court. At the same
time, however, the Court of Appeals held that it was premature for the trial court to have ruled that
the expropriation suit was not for a public purpose, considering that the parties had not yet rested
their respective cases.
Hence this Petition for Review.
ISSUE: WON the RP is entitled to be substituted for ISA in view of the expiration of ISAs term.
HELD: The Decision of the CA to the extent that it affirmed the trial courts order dismissing the
expropriation proceedings, is hereby REVERSED and SET ASIDE and the case is REMANDED to the
court a quo which shall allow the substitution of the RPfor petitioner ISA
YES
Rule 3, Section 1 of the Rules of Court specifies who may be parties to a civil action:
Sec. 1. Who May Be Parties. Only natural or juridical persons or entities authorized by law may
be parties in a civil action.
Examination of the statute which created petitioner ISA shows that ISA falls under category (b) above.
P.D. No. 272, as already noted, contains express authorization to ISA to commence expropriation
proceedings like those here involved. It should also be noted that the enabling statute of ISA
expressly authorized it to enter into certain kinds of contracts for and in behalf of the Government in
the following terms: xx
(i) to negotiate, and when necessary, to enter into contracts for and in behalf of the government, for
the bulk purchase of materials, supplies or services for any sectors in the industry, and to maintain
inventories of such materials in order to insure a continuous and adequate supply thereof and thereby
reduce operating costs of such sector; xxx
Clearly, ISA was vested with some of the powers or attributes normally associated with juridical
personality. There is, however, no provision in P.D. No. 272 recognizing ISA as possessing general or
comprehensive juridical personality separate and distinct from that of the Government.
We consider that the ISA is properly regarded as an agent or delegate of the RP. The Republic itself is
a body corporate and juridical person vested with the full panoply of powers and attributes which are
compendiously described as legal personality. The relevant definitions are found in the
Administrative Code of 1987:
Sec. 2. General Terms Defined. Unless the specific words of the text, or the context as a whole, or a
particular statute, require a different meaning:
(1) Government of the RPrefers to the corporate governmental entity through which the functions of
government are exercised throughout the Philippines, including, save as the contrary appears from the
context, the various arms through which political authority is made effective in the Philippines,
whether pertaining to the autonomous regions, the provincial, city, municipal or barangay subdivisions
or other forms of local government.
xxx xxx xxx
(4) Agency of the Government refers to any of the various units of the Government, including a
department, bureau, office, instrumentality, or government-owned or controlled corporation, or a local
government or a distinct unit therein.
xxx xxx xxx
(10) Instrumentality refers to any agency of the National Government, not integrated within the
department framework, vested with special functions or jurisdiction by law, endowed with some if not
all corporate powers, administering special funds, and enjoying operational autonomy, usually through
a charter. This term includes regulatory agencies, chartered institutions and government-owned or
controlled corporations.
xxx xxx xxx
When the statutory term of a non-incorporated agency expires, the powers, duties and functions as
well as the assets and liabilities of that agency revertback to, and are re-assumed by, the RP, in the
absence of special provisions of law specifying some other disposition thereof such as, e.g., devolution
or transmission of such powers, duties, functions, etc. to some other identified successor agency or
instrumentality of the RP.
When the expiring agency is an incorporated one, the consequences of such expiry must be looked
for, in the first instance, in the charter of that agency and, by way of supplementation, in the
provisions of the Corporation Code.
Since, in the instant case, ISA is a non-incorporated agency or instrumentality of the Republic, its
powers, duties, functions, assets and liabilities are properly regarded as folded back into GRP and
hence assumed once again by the Republic, no special statutory provision having been shown to have
mandated succession thereto by some other entity or agency of the Republic.
The principal or the real party in interest is thus the RP and not the NSC, even though the latter may
be an ultimate user of the properties involved should the condemnation suit be eventually successful.
From the foregoing premises, it follows that the RP is entitled to be substituted in the expropriation
proceedings as party-plaintiff in lieu of ISA, the statutory term of ISA having expired. Put a little
differently, the expiration of ISAs statutory term did not by itself require or justify the dismissal of the
eminent domain proceedings.
In E.B. Marcha, the Court also stressed that to require the Republic to commence all over again
another proceeding, as the trial court and CA had required, was to generate unwarranted delay and
create needless repetition of proceedings:
NOTES:
1. Since, as we have held above, the powers and functions of ISA have reverted to the RP upon the
termination of the statutory term of ISA, the question should be addressed whether fresh legislative
authority is necessary before the RP may continue the expropriation proceedings initiated by its own
delegate or agent.
While the power of eminent domain is, in principle, vested primarily in the legislative department of
the government, we believe and so hold that no new legislative act is necessary should the
Republic decide, upon being substituted for ISA, in fact to continue to prosecute the expropriation
proceedings. For the legislative authority, a long time ago, enacted a continuing or standing
delegation of authority to the President of the Philippines to exercise, or cause the exercise of, the
power of eminent domain on behalf of the Government of the Republic of the Philippines. The 1917
Revised Administrative Code, which was in effect at the time of the commencement of the present
expropriation proceedings before the Iligan RTC , provided that:
Sec. 64. Particular powers and duties of the President of the Philippines. In addition to his general
supervisory authority, the President of the Philippines shall have such other specific powers and duties
as are expressly conferred or imposed on him by law, and also, in particular, the powers and duties
set forth in this Chapter.
Among such special powers and duties shall be: xx
(h) To determine when it is necessary or advantageous to exercise the right of eminent domain in
behalf of the Government of the Philippines; and to direct the Secretary of Justice, where such act is
deemed advisable, to cause the condemnation proceedings to be begun in the court having proper
jurisdiction. xx
The Revised Administrative Code of 1987 currently in force has substantially reproduced the foregoing
provision in the following terms:
Sec. 12. Power of eminent domain. The President shall determine when it is necessary or
advantageous to exercise the power of eminent domain in behalf of the National Government,
and direct the Solicitor General, whenever he deems the action advisable, to institute expopriation
proceedings in the proper court. (Emphasis supplied)
In the present case, the President, exercising the power duly delegated under both the 1917 and 1987
Revised Administrative Codes in effect made a determination that it was necessary and advantageous
to exercise the power of eminent domain in behalf of the Government of the Republic and accordingly
directed the SG to proceed with the suit.
17

2. It is argued by private respondent MCFC that, because Congress after becoming once more the
depository of primary legislative power, had not enacted a statute extending the term of ISA, such
non-enactment must be deemed a manifestation of a legislative design to discontinue or abort the
present expropriation suit. We find this argument much too speculative; it rests too much upon simple
silence on the part of Congress and casually disregards the existence of Section 12 of the 1987
Administrative Code already quoted above.
3. Other contentions are made by private respondent MCFC, such as, that the constitutional
requirement of public use or public purpose is not present in the instant case, and that the
indispensable element of just compensation is also absent. We agree with the Court of Appeals in this
connection that these contentions, which were adopted and set out by the RTC in its order of
dismissal, are premature and are appropriately addressed in the proceedings before the trial court.
Those proceedings have yet to produce a decision on the merits, since trial was still on going at the
time the RTC precipitously dismissed the expropriation proceedings. Moreover, as a pragmatic matter,
the Republic is, by such substitution as party-plaintiff, accorded an opportunity to determine whether
or not, or to what extent, the proceedings should be continued in view of all the subsequent
developments in the iron and steel sector of the country including, though not limited to, the partial
privatization of the NSC
BALICAS vs. FFIB, OFFICE OF THE OMBUDSMAN
G. R. No. 145972
March 23, 2004
FACTS: In the development of the Cherry Hills Subdivision (CHS), Philjas applied for the issuance of
ECC from the DENR-Region IV
Respondent BALICAS, PENRO senior environmental management specialist, monitored the
implementation of the CHS Project Development to check compliance with the terms and conditions in
the ECC. She conducted another monitoring on the project for the same purpose. In both instances,
she noted that the project was still in the construction stage hence, compliance with the stipulated
conditions could not be fully assessed, and therefore, a follow-up monitoring is proper. It appeared
from the records that this August 23, 1995 monitoring inspection was the last one conducted by the
DENR.
Immediately after the tragic incident on August 3, 1999, a fact-finding investigation was conducted by
the Office of the Ombudsman through its Fact-Finding and Intelligence Bureau (FFIB), which duly filed
an administrative complaint with the Office of the Ombudsman against several officials of the Housing
and Land Use Regulatory Board (HLURB), Department of Environment and Natural Resources (DENR),
and the local government of Antipolo.
The charge against petitioner involved a supposed failure on her part to monitor and inspect the
development of CHS, which was assumed to be her duty as DENR senior environmental management
specialist assigned in the province of Rizal.
For her part, petitioner belied allegations that monitoring was not conducted, claiming that she
monitored the development of CHS as evidenced by 3 monitoring reports .She further claimed good
faith and exercise of due diligence, insisting that the tragedy was a fortuitous event. She reasoned
that the collapse did not occur in Cherry Hills, but in the adjacent mountain eastern side of the
subdivision.
The Office of the Ombudsman rendered a decision imposing upon petitioner the supreme penalty of
dismissal from office for gross neglect of duty.
Petitioner seasonably filed a petition for review of the Ombudsmans decision with the CA. The Court of
Appeals dismissed the petition for lack of merit and affirmed the appealed decision. It found that the
landslide was a preventable occurrence and that petitioner was guilty of gross negligence in failing to
closely monitor Philjas compliance with the conditions of the ECC given the known inherent instability
of the ground where the subdivision was developed. The appellate court likewise denied petitioners
motion for reconsideration.
This petition for review on certiorari
ISSUE: WON Balicas is guilty of gross neglect of duty
HELD: the petition is hereby GRANTED, The CA decision affirming the Ombudsmans dismissal of
petitioner IGNACIA BALICAS from office is REVERSED and SET ASIDE, and petitioners
REINSTATEMENT to her position with back pay and without loss of seniority rights is hereby ordered.
NO
In order to ascertain if there had been gross neglect of duty, we have to look at the lawfully
prescribed duties of petitioner. Unfortunately, DENR regulations are silent on the specific duties of a
senior environmental management specialist. Internal regulations merely speak of the functions of the
Provincial Environment and Natural Resources Office (PENRO) to which petitioner directly reports.
Tthe monitoring duties of the PENRO mainly deal with broad environmental concerns,
particularly pollution abatement. This general monitoring duty is applicable to all types of physical
developments that may adversely impact on the environment, whether housing projects, industrial
sites, recreational facilities, or scientific undertakings.
However, a more specific monitoring duty is imposed on the HLURB as the sole regulatory body for
housing and land development.
P.D. No. 1586 prescribes the following duties on the HLURB (then Ministry of Human Settlements) in
connection with environmentally critical projects requiring an ECC:
SECTION 4. Presidential Proclamation of Environmentally Critical Areas and Projects. The President of
the Philippines may, on his own initiative or upon recommendation of the National Environment
Protection Council, by proclamation declare certain projects, undertakings or areas in the country as
environmentally critical. No person, partnership or corporation shall undertake or operate any such
declared environmentally critical project or area without first securing an Environmental Compliance
Certificate issued by the President or his duly authorized representative. For the proper management
of said critical project or area, the President may by his proclamation reorganize such government
offices, agencies, institutions, corporations or instrumentalities including the re-alignment of
government personnel, and their specific functions and responsibilities.
For the same purpose as above, the Ministry of Human Settlements [now HLURB] shall:
(a) prepare the proper land or water use pattern for said critical project(s) or area(s);
(b) establish ambient environmental quality standards;
(c) develop a program of environmental enhancement or protective measures against
calamitous factors such as earthquake, floods, water erosion and others; and
(d) perform such other functions as may be directed by the President from time to time.
The legal duty to monitor housing projects, like the CHP, against calamities such as landslides due to
continuous rain, is clearly placed on the HLURB, not on the petitioner as PENRO senior
environmental management specialist. In fact, the law imposes no clear and direct duty on
petitioner to perform such narrowly defined monitoring function.

[G.R. No. 145972. March 23, 2004]
IGNACIA BALICAS, petitioner, vs. FACT-FINDING & INTELLIGENCE
BUREAU (FFIB), OFFICE OF THE OMBUDSMAN, respondent.
D E C I S I O N
QUISUMBING, J .:
This petition for review on certiorari assails the Court of Appeals
decision
[1]
dated August 25, 2000 and resolution
[2]
of November 13, 2000 in CA-
G.R. SP No. 56386, which affirmed the Ombudsmans decision
[3]
dismissing
petitioner from government service for gross neglect of duty in connection with
the tragedy at the Cherry Hills Subdivision in Antipolo City on August 3, 1999.
The antecedent facts as summarized in the Ombudsmans decision are as
follows:
Based on the evidence adduced by the complainant, the following is the chronological
series of events which led to the development of the CHS (Cherry Hills Subdivision):
August 28, 1990 Philjas Corporation, whose primary purposes, among others are: to
own, develop, subdivide, market and provide low-cost housing for the poor, was
registered with the Securities and Exchange Commission (SEC).
February 19, 1991 then City Mayor Daniel S. Garcia, endorsed to the Housing and
Land Use Regulatory Board (HLURB) the proposed CHS.
Thereafter, or on 07 March 1991, based on the favorable recommendations of Mayor
Garcia, respondent TAN, issued the Preliminary Approval and Locational Clearance
(PALC) for the development of CHS.
On July 5, 1991, then HLURB Commissioner respondent TUNGPALAN issued
Development Permit No. 91-0216 for land development only for the entire land area
of 12.1034 hectares covered by TCT No. 35083 (now TCT 208837) and with 1,003
saleable lots/units with project classification B.P. 220 Model A-Socialized Housing
(p. 96, Records), with several conditions for its development.
Three (3) days thereafter or on July 8, 1991, respondent JASARENO, allowed/granted
the leveling/earth-moving operations of the development project of the area subject to
certain conditions.
On November 18, 1991, then HLURB Commissioner AMADO B. DELORIA issued
Certificate of Registration No. 91-11-0576 in favor of CHS, with License to Sell
No. 91-11-0592 for the 1,007 lots/units in the subdivision.
Eventually, on December 10, 1991, respondent POLLISCO issued Small Scale
Mining Permit (SSMP) No. IV-316 to Philjas to extract and remove 10,000 cu. meters
of filling materials from the area where the CHS is located.
Thereafter, or on January 12, 1994, Philjas applied for a Small Scale Mining Permit
(SSMP) under P.D. 1899 with the Rizal Provincial Government to extract and remove
50,000 metric tons of filling materials per annum on CHS 2.8 hectares.
Thus, on January 17, 1994, respondent MAGNO, informed ELIEZER I.
RODRIGUEZ of Philjas that CHS is within the EIS System and as such must secure
ECC from the DENR. Philjas was accordingly informed of the matter such that it
applied for the issuance of ECC from the DENR-Region IV, on February 3, 1994.
On March 12, 1994, an Inspection Report allegedly prepared by respondent
BALICAS, attested by respondent RUTAQUIO and approved by respondent
TOLENTINO re: field evaluation to the issuance of ECC, was submitted.
Consequently, on April 28, 1994, upon recommendations of respondent
TOLENTINO, Philjas application for ECC was approved by respondent PRINCIPE,
then Regional Executive Director, DENR under ECC-137-R1-212-94.
A Mining Field Report for SSMP dated May 10, 1994 was submitted pursuant to the
inspection report prepared by respondents CAYETANO, FELICIANO, HILADO and
BURGOS, based on their inspection conducted on April 25 to 29, 1994. The report
recommended, among others, that the proposed extraction of materials would pose no
adverse effect to the environment.
Records further disclosed that on August 10, 1994, respondent BALICAS monitored
the implementation of the CHS Project Development to check compliance with the
terms and conditions in the ECC. Again, on August 23, 1995, she conducted another
monitoring on the project for the same purpose. In both instances, she noted that the
project was still in the construction stage hence, compliance with the stipulated
conditions could not be fully assessed, and therefore, a follow-up monitoring is
proper. It appeared from the records that this August 23, 1995 monitoring inspection
was the last one conducted by the DENR.
On September 24, 1994, GOV. CASIMIRO I. YNARES, JR., approved the SSMP
applied for by Philjas under SSMP No. RZL-012, allowing Philjas to extract and
remove 50,000 metric tons of filling materials from the area for a period of two (2)
years from date of its issue until September 6, 1996.
[4]

Immediately after the tragic incident on August 3, 1999, a fact-finding
investigation was conducted by the Office of the Ombudsman through its
Fact-Finding and Intelligence Bureau (FFIB), which duly filed an administrative
complaint with the Office of the Ombudsman against several officials of the
Housing and Land Use Regulatory Board (HLURB), Department of
Environment and Natural Resources (DENR), and the local government of
Antipolo.
The charge against petitioner involved a supposed failure on her part to
monitor and inspect the development of Cherry Hills Subdivision, which was
assumed to be her duty as DENR senior environmental management
specialist assigned in the province of Rizal.
For her part, petitioner belied allegations that monitoring was not
conducted, claiming that she monitored the development of Cherry Hills
Subdivision as evidenced by three (3) monitoring reports dated March 12,
1994, August 10, 1994 and August 23, 1995. She averred that she also
conducted subsequent compliance monitoring of the terms and conditions of
Philjas Environmental Compliance Certificate (ECC) on May 19, 1997 and
noted no violation thereon. She further claimed good faith and exercise of
due diligence, insisting that the tragedy was a fortuitous event. She reasoned
that the collapse did not occur in Cherry Hills, but in the adjacent mountain
eastern side of the subdivision.
On November 15, 1999, the Office of the Ombudsman rendered a
decision imposing upon petitioner the supreme penalty of dismissal from office
for gross neglect of duty finding:
RESPONDENT BALICAS
Records show that she monitored and inspected the CHS [Cherry Hills Subdivision]
only thrice (3), to wit:
1. Inspection Report dated 12 March 1994
2. Monitoring Report dated 10 August 1994
3. Monitoring Report dated 23 August 1995
Verily, with this scant frequency, how can respondent Balicas sweepingly claim that
there was no violation of ECC compliance and that she had done what is necessary in
accordance with the regular performance of her duties. She herself recognized the
fact that the collapsed area is not the subdivision in question but the adjacent
mountain eastern side of the CHS. It is incumbent upon her to establish the same in
her monitoring and inspection reports and make objective recommendations re: its
possible adverse effect to the environment and to the residents of the CHS and nearby
areas. Her defense that the position of the CHS shows the impossibility of checking
the would-be adverse effect clearly established her incompetence. No expert mind is
needed to know that mountains cause landslide and erosion. Cherry Hills Subdivision
is a living witness to this.
[5]

Petitioner seasonably filed a petition for review of the Ombudsmans
decision with the Court of Appeals. In its decision dated August 25, 2000, the
Court of Appeals dismissed the petition for lack of merit and affirmed the
appealed decision. It found that the landslide was a preventable occurrence
and that petitioner was guilty of gross negligence in failing to closely monitor
Philjas compliance with the conditions of the ECC given the known inherent
instability of the ground where the subdivision was developed. The appellate
court likewise denied petitioners motion for reconsideration in its resolution
dated November 13, 2000.
Petitioner now comes to this Court for review on certiorari, under Rule 45
of the Rules of Civil Procedure, of the appellate courts decision. She alleges
that the Court of Appeals committed serious errors of law in affirming the
Ombudsmans conclusion that:
1 There was gross negligence on the part of petitioner Balicas in the performance of
her official duties as Senior Environmental Management Specialist (SEMS) of the
Provincial Environment and Natural Resources Office (PENRO) Province of Rizal,
DENR Region IV; and the alleged gross neglect of duty of petitioner warranted the
imposition of the extreme penalty of dismissal from the service.
2. The landslide which caused the death of several residents of the subdivision and
the destruction of property is not a fortuitous event and therefore preventible.
[6]

The main issues are whether or not the Court of Appeals committed
serious errors of law in: (1) holding petitioner guilty of gross neglect of duty
and (2) imposing upon her the extreme penalty of dismissal from office.
In order to ascertain if there had been gross neglect of duty, we have to
look at the lawfully prescribed duties of petitioner. Unfortunately, DENR
regulations are silent on the specific duties of a senior environmental
management specialist. Internal regulations merely speak of the functions of
the Provincial Environment and Natural Resources Office (PENRO) to which
petitioner directly reports.
Nonetheless, petitioner relies on a letter
[7]
dated December 13, 1999 from
the chief of personnel, DENR Region IV, which defines the duties of a senior
environmental management specialist as follows:
1. Conducts investigation of pollution sources or complaints;
2. Review[s] plans and specifications of proposes (sic) or existing treatment plants and
pollution abatement structures and devices to determine their efficiency and
suitability for the kind of pollutants to be removed and to recommend issuance or
denial of permits;
3. Conducts follow-up inspection of construction of pollution abatement/work and
structures to oversee compliance with approved plans and specifications;
4. Recommends remedial measures for the prevention, abatement and control of
pollution;
5. Prepares technical reports on pollution investigation and related activities; and
6. Performs related work as assigned.
It is readily apparent that no monitoring duty whatsoever is mentioned in
the said letter. The PENRO, on the other hand, is mandated to:
1. conduct surveillance and inspection of pollution sources and control facilities and
undertake/initiate measures relative to pollution-related complaints of the general
public for appropriate referral to the regional office;
2. comment on the project description, determine if the project fall within the
Environmental Impact Statement (EIS) System
[8]
and submit the same to the
regional office; and
3. implement programs and projects related to environmental management within the
PENRO.
[9]

In addition, the PENRO is likewise tasked to monitor the project
proponents compliance with the conditions stipulated in the ECC, with
support from the DENR regional office and the Environmental Management
Bureau.
[10]
The primary purpose of compliance monitoring is to ensure the
judicious implementation of sound and standard environmental quality during
the development stage of a particular project. Specifically, it aims to:
1. monitor project compliance with the conditions set in the ECC;
2. monitor compliance with the Environmental Management Plan (EMP) and
applicable laws, rules and regulations; and
3. provide a basis for timely decision-making and effective planning and management
of environmental measures through the monitoring of actual project impacts vis--
vis predicted impacts in the EIS.
[11]

Based on the foregoing, the monitoring duties of the PENRO mainly deal
with broad environmental concerns, particularly pollution abatement. This
general monitoring duty is applicable to all types of physical developments
that may adversely impact on the environment, whether housing projects,
industrial sites, recreational facilities, or scientific undertakings.
However, a more specific monitoring duty is imposed on the HLURB as
the sole regulatory body for housing and land development. It is mandated to
encourage greater private sector participation in low-cost housing through (1)
liberalization of development standards, (2) simplification of regulations and
(3) decentralization of approvals for permits and licenses.
[12]

P.D. No. 1586
[13]
prescribes the following duties on the HLURB (then
Ministry of Human Settlements) in connection with environmentally critical
projects requiring an ECC:
SECTION 4. Presidential Proclamation of Environmentally Critical Areas and
Projects. The President of the Philippines may, on his own initiative or upon
recommendation of the National Environment Protection Council, by proclamation
declare certain projects, undertakings or areas in the country as environmentally
critical. No person, partnership or corporation shall undertake or operate any such
declared environmentally critical project or area without first securing an
Environmental Compliance Certificate issued by the President or his duly authorized
representative. For the proper management of said critical project or area, the
President may by his proclamation reorganize such government offices, agencies,
institutions, corporations or instrumentalities including the re-alignment of
government personnel, and their specific functions and responsibilities.
For the same purpose as above, the Ministry of Human Settlements [now HLURB]
shall: (a) prepare the proper land or water use pattern for said critical project(s)
or area(s); (b) establish ambient environmental quality standards; (c) develop a
program of environmental enhancement or protective measures against
calamitous factors such as earthquake, floods, water erosion and others; and (d)
perform such other functions as may be directed by the President from time to time.
(Emphasis ours.)
The legal duty to monitor housing projects, like the Cherry Hills
Subdivision, against calamities such as landslides due to continuous rain, is
clearly placed on the HLURB, not on the petitioner as PENRO senior
environmental management specialist. In fact, the law imposes no clear and
direct duty on petitioner to perform such narrowly defined monitoring function.
In the related case of Principe v. Fact-Finding and Intelligence
Bureau,
[14]
this Court found Antonio Principe, regional executive director for
DENR Region IV who approved Philjas application for ECC, not liable for
gross neglect of duty. The Court reversed the decision of the Court of
Appeals and thereby annulled the decision of the Ombudsman in OMB-ADM-
09-661, dated December 1, 1999, dismissing Principe from the government
service. We ordered his reinstatement with back pay and without loss of
seniority.
[15]

The rationale for our decision in Principe bears reiteration: the
responsibility of monitoring housing and land development projects is not
lodged with the DENR, but with the HLURB as the sole regulatory body for
housing and land development. Thus, we must stress that we find no legal
basis to hold petitioner, who is an officer of DENR, liable for gross neglect of
the duty pertaining to another agency, the HLURB. It was grave error for the
appellate court to sustain the Ombudsmans ruling that she should be
dismissed from the service. The reinstatement of petitioner is clearly called
for.
WHEREFORE, the petition is hereby GRANTED. The Court of Appeals
decision affirming the Ombudsmans dismissal of petitioner IGNACIA
BALICAS from office is REVERSED and SET ASIDE, and petitioners
REINSTATEMENT to her position with back pay and without loss of seniority
rights is hereby ordered.
SO ORDERED.

Malaga vs. Penachos (Digest)
Ma. Elena Malaga, et. al. vs. Manuel R. Penachos, Jr., et.al.
GR No. 86995 03 September 1992


Chartered Institution and GOCC, defined.


FACTS: The Iloilo State College of Fisheries (ISCOF) through its Pre-qualifications, Bids and
Awards Committee (PBAC) caused the publication in the November 25, 26 and 28, 1988 issues of
the Western Visayas Daily an Invitation to Bid for the construction of a Micro Laboratory Building at
ISCOF. The notice announced that the last day for the submission of pre-qualification requirements
was on December 2, 1988, and that the bids would be received and opened on December 12, 1988
at 3 o'clock in the afternoon.

Petitioners Malaga and Najarro, doing business under the name of BE Construction and Best Built
Construction, respectively, submitted their pre-qualification documents at two o'clock in the afternoon
of December 2, 1988. Petitioner Occeana submitted his own PRE-C1 on December 5, 1988. All
three of them were not allowed to participate in the bidding as their documents were considered late.

On December 12, 1988, the petitioners filed a complaint with the Iloilo RTC against the officers of
PBAC for their refusal without just cause to accept them resulting to their non-inclusion in the list of
pre-qualified bidders. They sought to the resetting of the December 12, 1988 bidding and the
acceptance of their documents. They also asked that if the bidding had already been conducted, the
defendants be directed not to award the project pending resolution of their complaint.

On the same date, Judge Lebaquin issued a restraining order prohibiting PBAC from conducting the
bidding and award the project. The defendants filed a motion to lift the restraining order on the
ground that the court is prohibited from issuing such order, preliminary injunction and preliminary
mandatory injunction in government infrastructure project under Sec. 1 of P.D. 1818. They also
contended that the preliminary injunction had become moot and academic as it was served after the
bidding had been awarded and closed.

On January 2, 1989, the trial court lifted the restraining order and denied the petition for preliminary
injunction. It declared that the building sought to be constructed at the ISCOF was an infrastructure
project of the government falling within the coverage of the subject law.

ISSUE: Whether or not ISCOF is a government instrumentality subject to the provisions of PD 1818?

RULING: The 1987 Administrative Code defines a government instrumentality as follows:
Instrumentality refers to any agency of the National Government, not integrated within the
department framework, vested with special functions or jurisdiction by law, endowed with some if not
all corporate powers, administering special funds, and enjoying operational autonomy, usually
through a charter. This term includes regulatory agencies, chartered institutions, and government-
owned or controlled corporations. (Sec. 2 (5) Introductory Provisions).

The same Code describes a chartered institution thus:
Chartered institution - refers to any agency organized or operating under a special charter, and
vested by law with functions relating to specific constitutional policies or objectives. This term
includes the state universities and colleges, and the monetary authority of the state. (Sec. 2 (12)
Introductory Provisions).

It is clear from the above definitions that ISCOF is a chartered institution and is therefore covered by
P.D. 1818.

There are also indications in its charter that ISCOF is a government instrumentality. First, it was
created in pursuance of the integrated fisheries development policy of the State, a priority program
of the government to effect the socio-economic life of the nation. Second, the Treasurer of the
Republic of the Philippines shall also be the ex-officio Treasurer of the state college with its accounts
and expenses to be audited by the Commission on Audit or its duly authorized representative. Third,
heads of bureaus and offices of the National Government are authorized to loan or transfer to it,
upon request of the president of the state college, such apparatus, equipment, or supplies and even
the services of such employees as can be spared without serious detriment to public service. Lastly,
an additional amount of P1.5M had been appropriated out of the funds of the National Treasury and
it was also decreed in its charter that the funds and maintenance of the state college would
henceforth be included in the General Appropriations Law.

Nevertheless, it does not automatically follow that ISCOF is covered by the prohibition in the said
decree as there are irregularities present surrounding the transaction that justified the injunction
issued as regards to the bidding and the award of the project (citing the case of Datiles vs.
Sucaldito).
Preclaro vs Sandiganbayan, 247 SCRA 454
Posted by Pius Morados on November 7, 2011
(Public Officers, Non-Career Service)
Facts: Accused is a project manager/consultant of the Chemical Mineral Division,
Industrial Technology Development Institute, Department of Science and Technology,
a component of the Industrial Development Institute which is an agency of the DOST.
He is to supervise the construction of the ITDI-CMD building, while the Jaime Sta.
Maria Construction undertook the construction. The structure is jointly funded by the
Philippine and Japanese Governments.
While the said construction has not yet been completed, accused either directly
requested and/or demanded for himself the sum of P200,000.00, claimed as part of the
expected profit of the contractor.
Petitioner was charged for violation of the Anti-Graft and Corrupt Practices Act for
committing said offense in relation to the performance of his official duties.
Petitioner asserts in a petition for review that he is not a public officer because he was
neither elected nor appointed to a public office, but merely a private individual hired
by the ITDI on contractual basis for a particular project and for a specified period.
Hence the Sandiganbayan erred in taking cognizance of the case.
Section 2 (b) of RA 3019 defines a public officer to include elective and appointive
officials and employees, permanent or temporary, whether in the classified or
unclassified or exemption service receiving compensation, even nominal, from the
government
Issue: WON a private individual hired on a contractual basis by the government is a
public officer.
Held: Yes. The word includes used in defining a public officer indicates that the
definition is not restrictive. The terms classified, unclassified or exemption service
were the old categories of position in the civil service which have been reclassified
into Career Service and Non-Career Service by PD 807 providing for the organization
of the Civil Service Commission by the Administrative Code of 1987.
A private individual hired on a contractual basis as Project Manager for a government
undertaking falls under the non-career service category of the Civil Service and thus is
a public officer as defined by Sec 2(b) of RA 3019.
Under Book V, Title I, Subtitle A, Chapter 2, Sec 6(2) of the Administrative Code of
1987, non-career service in particular is characterized by 1) entrance other than those
of the usual test of merit and fitness utilized for the career service; and 2) tenure
which is limited to a period specified by law, or which is coterminous with that of the
appointing authority or subject to his pleasure, or which is limited to the duration of a
particular project for which purpose employment was made.
Section 9(4) of the same provides that Non-Career Service It shall include Contractual
personnel or those employment in the government is in accordance with a special
contract to undertake a specific work or job, requiring special or technical skills not
available in the employing agency, to be accomplished within a specific period, which
in no case shall exceed one year, and performs or accomplishes the specific work or
job, under his own responsibility with a minimum of direction and supervision from
the hiring agency.

Describe the Administrative Code of 1987.
Held: The Code is a general law and incorporates in a unified document the major
structural, functional and procedural principles of governance (Third Whereas Clause,
Administrative Code of 1987) and embodies changes in administrative structures and
procedures designed to serve the people. (Fourth Whereas Clause, Administrative Code of
1987) The Code is divided into seven (7) books. These books contain provisions on the
organization, powers and general administration of departments, bureaus and offices under
the executive branch, the organization and functions of the Constitutional Commissions and
other constitutional bodies, the rules on the national government budget, as well as
guidelines for the exercise by administrative agencies of quasi-legislative and quasi-judicial
powers. The Code covers both the internal administration, i.e., internal organization,
personnel and recruitment, supervision and discipline, and the effects of the functions
performed by administrative officials on private individuals or parties outside
government. (Ople v. Torres, G.R. No. 127685, July 23, 1998 [Puno])

BLAS F. OPLEv. RUBEN D. TORRES, ALEXANDER AGUIRRE, HECTOR VILLANUEVA,
CIELITO HABITO,
ROBERT BARBERS, CARMENCITA REODICA, CESAR SARINO, RENATO VALENCIA,
TOMAS P. AFRICA, HEAD
OF THE NATIONAL COMPUTER CENTER and CHAIRMAN OF THE COMMISSION ON
AUDIT

Facts: The petition at bar is a commendable effort on the part of Senator Blas F. Ople to prevent
the shrinking of the right to privacy, which the revered Mr. Justice Brandeis considered as "the most
comprehensive of rights and the right most valued by civilized men." Petitioner Ople prays that we
invalidate Administrative Order No. 308 entitled "Adoption of a National Computerized
Identification Reference System" on two important constitutional grounds,
viz:

(1) it is a usurpation of the power of Congress to legislate, and
(2) it impermissibly intrudes on our citizenry's protected zone of privacy.

We grant the petition for the rights sought to be vindicated by the petitioner need stronger barriers
against further erosion. A.O. No. 308 was published in four newspapers of general circulation on
January 22, 1997 and January 23, 1997. On
January 24, 1997, petitioner filed the instant petition against respondents, then Executive Secretary
Ruben Torres and the heads of the government agencies, who as members of the Inter-Agency
Coordinating Committee, are charged with the implementation of A.O. No. 308. On April 8, 1997,
we issued a temporary restraining order enjoining its implementation.

Issue: WON the petitioner has the stand to assail the validity of A.O. No. 308

Ruling: YES

Rationale: As is usual in constitutional litigation, respondents raise the threshold issues relating to
the standing to sue of the petitioner and the justiciability of the case at bar. More specifically,
respondents aver that petitioner has no legal interest to uphold and that the implementing rules of
A.O. No. 308 have yet to be promulgated. These submissions do not deserve our sympathetic ear.
Petitioner Ople is a distinguished member of our Senate. As a Senator, petitioner is possessed of the
requisite standing to bring suit raising the issue that the issuance of A.O.No. 308 is a usurpation of
legislative power.4 As taxpayer and member of the Government Service Insurance
System (GSIS), petitioner can also impugn the legality of the misalignment of public funds and the
misuse of GSIS funds to implement A.O. No. 308.
The ripeness for adjudication of the Petition at bar is not affected by the fact that the implementing
rules of A.O. No. 308 have yet to be promulgated. Petitioner Ople assails A.O. No. 308 as invalid
per se and as infirmed on its face. His action is not premature for the rules yet to be promulgated
cannot cure its fatal defects. Moreover, the respondents themselves have started the implementation
of A.O. No. 308 without waiting for the rules. As early as January 19, 1997, respondent Social
Security System (SSS) caused the publication of a notice to bid for the manufacture of the National
Identification (ID) card. Respondent Executive Secretary Torres has publicly announced that
representatives from the GSIS and the SSS have completed the guidelines for the national
identification system. All signals from the respondents show their unswerving will to implement
A.O. No. 308 and we need not wait for the formality of the rules to pass judgment on its
constitutionality. In this light, the dissenters insistence that we tighten the rule on standing is not a
commendable stance as its result would be to throttle an important constitutional principle and a
fundamental right.


ARATUC VS COMELEC
EN BANC
[G.R. Nos. 95203-05 : December 18, 1990.]
192 SCRA 363
SENATOR ERNESTO MACEDA, Petitioner, vs. ENERGY REGULATORY BOARD (ERB);
MARCELO N. FERNANDO, ALEJANDRO B. AFURONG; REX V. TANTIONGCO; and
OSCAR E. ALA, in their collective official capacities as Chairman and Members of
the Board (ERB), respectively; CATALINO MACARAIG, in his quadruple official
capacities as Executive Secretary, Chairman of Philippine National Oil Company;
Office of the Energy Affairs, and with MANUEL ESTRELLA, in their respective
official capacities as Chairman and President of the Petron Corporation; PILIPINAS
SHELL PETROLEUM CORPORATION; with CESAR BUENAVENTURA and REY GAMBOA
as chairman and President, respectively; CALTEX PHILIPPINES with FRANCIS
ABLAN, President and Chief Executive Officer; and the Presidents of Philippine
Petroleum Dealer's Association, Caltex Dealer's Co., Petron Dealer's Asso., Shell
Dealer's Asso. of the Phil., Liquefied Petroleum Gas Institute of the Phils., any and
all concerned gasoline and petrol dealers or stations; and such other persons,
officials, and parties, acting for and on their behalf; or in representation of and/or
under their authority, Respondents.
[G.R. Nos. 95119-21 : December 18, 1990.]
192 SCRA 363
OLIVER O. LOZANO, Petitioner, vs. ENERGY REGULATORY BOARD (ERB),
PILIPINAS SHELL PETROLEUM CORPORATION, CALTEX (PHIL.), INC., and PETRON
CORPORATION, Respondents.

D E C I S I O N

SARMIENTO, J.:

The petitioners pray for injunctive relief, to stop the Energy Regulatory Board (Board
hereinafter) from implementing its Order, dated September 21, 1990, mandating a
provisional increase in the prices of petroleum and petroleum products, as follows:
PRODUCTS IN PESOS PER LITER
OPSF
Premium Gasoline 1.7700
Regular Gasoline 1.7700
Avturbo 1.8664
Kerosene 1.2400
Diesel Oil 1.2400
Fuel Oil 1.4900
Feedstock 1.4900
LPG 0.8487
Asphalts 2.7160
Thinners 1.7121 1
It appears that on September 10, 1990, Caltex (Philippines), Inc., Pilipinas Shell Petroleum
Corporation, and Petron Corporation proferred separate applications with the Board for
permission to increase the wholesale posted prices of petroleum products, as follows:
Caltex P3.2697 per liter
Shell 2.0338 per liter
Petron 2.00 per liter 2
and meanwhile, for provisional authority to increase temporarily such wholesale posted
prices pending further proceedings.:-cralaw
On September 21, 1990, the Board, in a joint (on three applications) Order granted
provisional relief as follows:
WHEREFORE, considering the foregoing, and pursuant to Section 8 of Executive Order No.
172, this Board hereby grants herein applicants' prayer for provisional relief and,
accordingly, authorizes said applicants a weighted average provisional increase of ONE
PESO AND FORTY-TWO CENTAVOS (P1.42) per liter in the wholesale posted prices of their
various petroleum products enumerated below, refined and/or marketed by them locally. 3
The petitioners submit that the above Order had been issued with grave abuse of discretion,
tantamount to lack of jurisdiction, and correctible by Certiorari.
The petitioner, Senator Ernesto Maceda, 4 also submits that the same was issued without
proper notice and hearing in violation of Section 3, paragraph (e), of Executive Order No.
172; that the Board, in decreeing an increase, had created a new source for the Oil Price
Stabilization Fund (OPSF), or otherwise that it had levied a tax, a power vested in the
legislature, and/or that it had "re-collected", by an act of taxation, ad valorem taxes on oil
which Republic Act No. 6965 had abolished.
The petitioner, Atty. Oliver Lozano, 5 likewise argues that the Board's Order was issued
without notice and hearing, and hence, without due process of law.
The intervenor, the Trade Union of the Philippines and Allied Services (TUPAS/FSM)-
W.F.T.U., 6 argues on the other hand, that the increase cannot be allowed since the
respondents oil companies had not exhausted their existing oil stock which they had bought
at old prices and that they cannot be allowed to charge new rates for stock purchased at
such lower rates.
The Court set the cases (in G.R. Nos. 95203-05) for hearing on October 25, 1990, in which
Senator Maceda and his counsel, Atty. Alexander Padilla, argued. The Solicitor General, on
behalf of the Board, also presented his arguments, together with Board Commissioner Rex
Tantiangco. Attys. Federico Alikpala, Jr. and Joselia Poblador represented the oil firms
(Petron and Caltex, respectively).
The parties were thereafter required to submit their memorandums after which, the Court
considered the cases submitted for resolution.
On November 20, 1990, the Court ordered these cases consolidated.
On November 27, 1990, we gave due course to both petitions.
The Court finds no merit in these petitions.
Senator Maceda and Atty. Lozano, in questioning the lack of a hearing, have overlooked the
provisions of Section 8 of Executive Order No. 172, which we quote:
"SECTION 8. Authority to Grant Provisional Relief . The Board may, upon the filing of an
application, petition or complaint or at any stage thereafter and without prior hearing, on
the basis of supporting papers duly verified or authenticated, grant provisional relief on
motion of a party in the case or on its own initiative, without prejudice to a final decision
after hearing, should the Board find that the pleadings, together with such affidavits,
documents and other evidence which may be submitted in support of the motion,
substantially support the provisional order: Provided, That the Board shall immediately
schedule and conduct a hearing thereon within thirty (30) days thereafter, upon publication
and notice to all affected parties.: nad
As the Order itself indicates, the authority for provisional increase falls within the above
provision.
There is no merit in the Senator's contention that the "applicable" provision is Section 3,
paragraph (e) of the Executive Order, which we quote:
(e) Whenever the Board has determined that there is a shortage of any petroleum product,
or when public interest so requires, it may take such steps as it may consider necessary,
including the temporary adjustment of the levels of prices of petroleum products and the
payment to the Oil Price Stabilization Fund created under Presidential Decree No. 1956 by
persons or entities engaged in the petroleum industry of such amounts as may be
determined by the Board, which will enable the importer to recover its cost of importation.
What must be stressed is that while under Executive Order No. 172, a hearing is
indispensable, it does not preclude the Board from ordering, ex parte, a provisional
increase, as it did here, subject to its final disposition of whether or not: (1) to make it
permanent; (2) to reduce or increase it further; or (3) to deny the application. Section 37
paragraph (e) is akin to a temporary restraining order or a writ of preliminary attachment
issued by the courts, which are given ex parte, and which are subject to the resolution of
the main case.
Section 3, paragraph (e) and Section 8 do not negate each other, or otherwise, operate
exclusively of the other, in that the Board may resort to one but not to both at the same
time. Section 3(e) outlines the jurisdiction of the Board and the grounds for which it may
decree a price adjustment, subject to the requirements of notice and hearing. Pending that,
however, it may order, under Section 8, an authority to increase provisionally, without need
of a hearing, subject to the final outcome of the proceeding. The Board, of course, is not
prevented from conducting a hearing on the grant of provisional authority which is of
course, the better procedure however, it cannot be stigmatized later if it failed to conduct
one. As we held in Citizens' Alliance for Consumer Protection v. Energy Regulatory Board. 7
In the light of Section 8 quoted above, public respondent Board need not even have
conducted formal hearings in these cases prior to issuance of its Order of 14 August 1987
granting a provisional increase of prices. The Board, upon its own discretion and on the
basis of documents and evidence submitted by private respondents, could have issued an
order granting provisional relief immediately upon filing by private respondents of their
respective applications. In this respect, the Court considers the evidence presented by
private respondents in support of their applications i.e., evidence showing that
importation costs of petroleum products had gone up; that the peso had depreciated in
value; and that the Oil Price Stabilization Fund (OPSF) had by then been depleted as
substantial and hence constitutive of at least prima facie basis for issuance by the Board of
a provisional relief order granting an increase in the prices of petroleum products. 8
We do not therefore find the challenged action of the Board to have been done in violation
of the due process clause. The petitioners may contest however, the applications at the
hearings proper.
Senator Maceda's attack on the Order in question on premises that it constitutes an act of
taxation or that it negates the effects of Republic Act No. 6965, cannot prosper. Republic
Act No. 6965 operated to lower taxes on petroleum and petroleum products by imposing
specific taxes rather than ad valorem taxes thereon; it is, not, however, an insurance
against an "oil hike", whenever warranted, or is it a price control mechanism on petroleum
and petroleum products. The statute had possibly forestalled a larger hike, but it operated
no more.: nad
The Board Order authorizing the proceeds generated by the increase to be deposited to the
OPSF is not an act of taxation. It is authorized by Presidential Decree No. 1956, as amended
by Executive Order No. 137, as follows:
SECTION 8. There is hereby created a Trust Account in the books of accounts of the
Ministry of Energy to be designated as Oil Price Stabilization Fund (OPSF) for the purpose of
minimizing frequent price changes brought about by exchange rate adjustments and/or
changes in world market prices of crude oil and imported petroleum products. The Oil Price
Stabilization Fund (OPSF) may be sourced from any of the following:
a) Any increase in the tax collection from ad valorem tax or customs duty imposed on
petroleum products subject to tax under this Decree arising from exchange rate adjustment,
as may be determined by the Minister of Finance in consultation with the Board of Energy;
b) Any increase in the tax collection as a result of the lifting of tax exemptions of
government corporations, as may be determined by the Minister of Finance in consultation
with the Board of Energy;
c) Any additional amount to be imposed on petroleum products to augment the resources of
the Fund through an appropriate Order that may be issued by the Board of Energy requiring
payment by persons or companies engaged in the business of importing, manufacturing
and/or marketing petroleum products;
d) Any resulting peso cost differentials in case the actual peso costs paid by oil companies in
the importation of crude oil and petroleum products is less than the peso costs computed
using the reference foreign exchange rates as fixed by the Board of Energy.
Anent claims that oil companies cannot charge new prices for oil purchased at old rates,
suffice it to say that the increase in question was not prompted alone by the increase in
world oil prices arising from tension in the Persian Gulf. What the Court gathers from the
pleadings as well as events of which it takes judicial notice, is that: (1) as of June 30, 1990,
the OPSF has incurred a deficit of P6.1 Billion; (2) the exchange rate has fallen to P28.00 to
$1.00; (3) the country's balance of payments is expected to reach $1 Billion; (4) our trade
deficit is at $2.855 Billion as of the first nine months of the year.
Evidently, authorities have been unable to collect enough taxes necessary to replenish the
OPSF as provided by Presidential Decree No. 1956, and hence, there was no available
alternative but to hike existing prices.
The OPSF, as the Court held in the aforecited CACP cases, must not be understood to be a
funding designed to guarantee oil firms' profits although as a subsidy, or a trust account,
the Court has no doubt that oil firms make money from it. As we held there, however, the
OPSF was established precisely to protect the consuming public from the erratic movement
of oil prices and to preclude oil companies from taking advantage of fluctuations occurring
every so often. As a buffer mechanism, it stabilizes domestic prices by bringing about a
uniform rate rather than leaving pricing to the caprices of the market.
In all likelihood, therefore, an oil hike would have probably been imminent, with or without
trouble in the Gulf, although trouble would have probably aggravated it.: nad
The Court is not to be understood as having prejudged the justness of an oil price increase
amid the above premises. What the Court is saying is that it thinks that based thereon, the
Government has made out a prima facie case to justify the provisional increase in question.
Let the Court therefore make clear that these findings are not final; the burden, however, is
on the petitioners' shoulders to demonstrate the fact that the present economic picture does
not warrant a permanent increase.
There is no doubt that the increase in oil prices in question (not to mention another one
impending, which the Court understands has been under consideration by policy-makers)
spells hard(er) times for the Filipino people. The Court can not, however, debate the wisdom
of policy or the logic behind it (unless it is otherwise arbitrary), not because the Court
agrees with policy, but because the Court is not the suitable forum for debate. It is a
question best judged by the political leadership which after all, determines policy, and
ultimately, by the electorate, that stands to be better for it or worse off, either in the short
or long run.
At this point, the Court shares the indignation of the people over the conspiracy of events
and regrets its own powerlessness, if by this Decision it has been powerless. The
constitutional scheme of things has simply left it with no choice.
In fine, we find no grave abuse of discretion committed by the respondent Board in issuing
its questioned Order.
WHEREFORE, these petitions are DISMISSED. No costs.
SO ORDERED.


Ernesto M. Maceda vs. Energy Regulatory
Board, et al.
18 July 1991 :: G.R. No. 96266
Medialdea, J.

FACTS:

Upon the outbreak of the Persian Gulf conflict on August 1990, private respondents oil companies filed with the ERB
their respective applications on oil price increases. ERB then issued an order granting a provisional increase of P1.42
per liter. Petitioner Maceda filed a petition for Prohibition seeking to nullify said increase.

ISSUE:

Whether or not the decisions of the Energy Regulatory Board should be subject to presidential review.

HELD:

Pursuant to Section 8 of E.O. No. 172, while hearing is indispensable, it does not preclude the Board from ordering a
provisional increase subject to final disposition of whether or not to make it permanent or to reduce or increase it
further or to deny the application. The provisional increase is akin to a temporary restraining order, which are given
ex-parte.
The Court further noted the Solicitor Generals comments that the ERB is not averse to the idea of a presidential
review of its decision, except that there is no law at present authorizing the same. The Court suggested that it will be
under the scope of the legislative to allow the presidential review of the decisions of the ERB since, despite its being a
quasi-judicial body, it is still an administrative body under the Office of the President whose decisions should be
appealed to the President under the established principle of exhaustion of administrative remedies, especially on a
matter as transcendental as oil price increases which affect the lives of almost all Filipinos.

United Residents of Dominican Hills vs. Commission on Settlement of Land Problems, 353 SCRA 782

Quasi-judicial function is a term which applies to the actions, discretion, etc. of public administrative
officers or bodies, who are required to investigate facts, or ascertain the existence of facts, hold hearings,
and draw conclusions from them, as a basis for their official action and to exercise discretion of a judicial
nature. However, it does not depart from its basic nature as an administrative agency, albeit one that
exercises quasi-judicial functions. Still, administrative agencies are not considered courts; they are neither
part of the judicial system nor are they deemed judicial tribunals.

FACTS:

Some 800 public school teachers undertook mass concerted actions to protest the alleged failure of
public authorities to act upon their grievances. The mass actions consisted in staying away from their
classes, converging at the Liwasang Bonifacio, gathering in peacable assemblies, etc. The Secretary of
Education served them with an order to return to work within 24 hours or face dismissal. For failure to
heed the return-to-work order, eight teachers at the Ramon Magsaysay High School were administratively
charged, preventively suspended for 90 days pursuant to sec. 41, P.D. 807 and temporarily replaced. An
investigation committee was consequently formed to hear the charges.

When their motion for suspension was denied by the Investigating Committee, said teachers staged a
walkout signifying their intent to boycott the entire proceedings. Eventually, Secretary Carino decreed
dismissal from service of Esber and the suspension for 9 months of Babaran, Budoy and del Castillo. In
the meantime, a case was filed with RTC, raising the issue of violation of the right of the striking
teachers to due process of law. The case was eventually elevated to SC. Also in the meantime, the
respondent teachers submitted sworn statements to Commission on Human Rights to complain that while
they were participating in peaceful mass actions, they suddenly learned of their replacement as teachers,
allegedly without notice and consequently for reasons completely unknown to them.

While the case was pending with CHR, SC promulgated its resolution over the cases filed with it earlier,
upholding the Sec. Carinos act of issuing the return-to-work orders. Despite this, CHR continued hearing
its case and held that the striking teachers were denied due process of law;they should not have
been replaced without a chance to reply to the administrative charges; there had been violation of their
civil and political rights which the Commission is empowered to investigate.

ISSUE:


Whether or not CHR has jurisdiction to try and hear the issues involved

HELD:

The threshold question is whether or not the Commission on Human Rights has the power under the
Constitution to do so; whether or not, like a court of justice, 19 or even a quasi-judicial agency, it has
jurisdiction or adjudicatory powers over, or the power to try and decide, or hear and determine, certain
specific type of cases, like alleged human rights violations involving civil or political rights.

The Court declares the Commission on Human Rights to have no such power; and that it was not meant
by the fundamental law to be another court or quasi-judicial agency in this country, or duplicate much
less take over the functions of the latter.

The most that may be conceded to the Commission in the way of adjudicative power is that it may
investigate, i.e., receive evidence and make findings of fact as regards claimed human rights violations
involving civil and political rights. But fact finding is not adjudication, and cannot be likened to the judicial
function of a court of justice, or even a quasi-judicial agency or official. The function of receiving
evidence and ascertaining therefrom the facts of a controversy is not a judicial function, properly
speaking. To be considered such, the faculty of receiving evidence and making factual conclusions in a
controversy must be accompanied by the authority of applying the law to those factual conclusions to the
end that the controversy may be decided or determined authoritatively, finally and definitively, subject to
such appeals or modes of review as may be provided by law. This function, to repeat, the Commission
does not have.

Power to Investigate

The Constitution clearly and categorically grants to the Commission the power to investigate all forms of
human rights violations involving civil and political rights. It can exercise that power on its own initiative
or on complaint of any person. It may exercise that power pursuant to such rules of procedure as it may
adopt and, in cases of violations of said rules, cite for contempt in accordance with the Rules of Court. In
the course of any investigation conducted by it or under its authority, it may grant immunity from
prosecution to any person whose testimony or whose possession of documents or other evidence is
necessary or convenient to determine the truth. It may also request the assistance of any department,
bureau, office, or agency in the performance of its functions, in the conduct of its investigation or in
extending such remedy as may be required by its findings. But it cannot try and decide cases (or hear
and determine causes) as courts of justice, or even quasi-judicial bodies do. To investigate is not to
adjudicate or adjudge. Whether in the popular or the technical sense, these terms have well understood
and quite distinct meanings.

Investigate vs. Adjudicate

"Investigate," commonly understood, means to examine, explore, inquire or delve or probe into, research
on, study. The dictionary definition of "investigate" is "to observe or study closely: inquire into
systematically. "to search or inquire into: . . . to subject to an official probe . . .: to conduct an official
inquiry." The purpose of investigation, of course, is to discover, to find out, to learn, obtain information.
Nowhere included or intimated is the notion of settling, deciding or resolving a controversy involved in
the facts inquired into by application of the law to the facts established by the inquiry.

The legal meaning of "investigate" is essentially the same: "(t)o follow up step by step by patient inquiry
or observation. To trace or track; to search into; to examine and inquire into with care and accuracy; to
find out by careful inquisition; examination; the taking of evidence; a legal inquiry;" "to inquire; to make
an investigation," "investigation" being in turn describe as "(a)n administrative function, the exercise of
which ordinarily does not require a hearing. 2 Am J2d Adm L Sec. 257; . . . an inquiry, judicial or
otherwise, for the discovery and collection of facts concerning a certain matter or matters."

"Adjudicate," commonly or popularly understood, means to adjudge, arbitrate, judge, decide, determine,
resolve, rule on, settle. The dictionary defines the term as "to settle finally (the rights and duties of the
parties to a court case) on the merits of issues raised: . . . to pass judgment on: settle judicially: . . . act
as judge." And "adjudge" means "to decide or rule upon as a judge or with judicial or quasi-judicial
powers: . . . to award or grant judicially in a case of controversy . . . ."

In the legal sense, "adjudicate" means: "To settle in the exercise of judicial authority. To determine
finally. Synonymous with adjudge in its strictest sense;" and "adjudge" means: "To pass on judicially, to
decide, settle or decree, or to sentence or condemn. . . . Implies a judicial determination of a fact, and
the entry of a judgment."

Hence it is that the Commission on Human Rights, having merely the power "to investigate," cannot and
should not "try and resolve on the merits" (adjudicate) the matters involved in Striking Teachers HRC
Case No. 90-775, as it has announced it means to do; and it cannot do so even if there be a claim that in
the administrative disciplinary proceedings against the teachers in question, initiated and conducted by
the DECS, their human rights, or civil or political rights had been transgressed. More particularly, the
Commission has no power to "resolve on the merits" the question of (a) whether or not the mass
concerted actions engaged in by the teachers constitute and are prohibited or otherwise restricted by
law; (b) whether or not the act of carrying on and taking part in those actions, and the failure of the
teachers to discontinue those actions, and return to their classes despite the order to this effect by the
Secretary of Education, constitute infractions of relevant rules and regulations warranting administrative
disciplinary sanctions, or are justified by the grievances complained of by them; and (c) what where the
particular acts done by each individual teacher and what sanctions, if any, may properly be imposed for
said acts or omissions.

Who has Power to Adjudicate?

These are matters within the original jurisdiction of the Sec. of Education, being within the scope of the
disciplinary powers granted to him under the Civil Service Law, and also, within the appellate jurisdiction
of the CSC.

Manner of Appeal

Now, it is quite obvious that whether or not the conclusions reached by the Secretary of Education in
disciplinary cases are correct and are adequately based on substantial evidence; whether or not the
proceedings themselves are void or defective in not having accorded the respondents due process; and
whether or not the Secretary of Education had in truth committed "human rights violations involving civil
and political rights," are matters which may be passed upon and determined through a motion for
reconsideration addressed to the Secretary Education himself, and in the event of an adverse verdict,
may be reviewed by the Civil Service Commission and eventually the Supreme Court.

G.R. No. 97149 March 31, 1992
FIDENCIO Y. BEJA, SR., petitioner,
vs.
COURT OF APPEALS, HONORABLE REINERIO O. REYES, in his capacity as Secretary of the
Department of Transportation and Communications; COMMODORE ROGELIO A. DAYAN, in
his capacity as General Manager of the Philippine Ports Authority; DEPARTMENT OF
TRANSPORTATION AND COMMUNICATIONS, ADMINISTRATIVE ACTION BOARD; and
JUSTICE ONOFRE A. VILLALUZ, in his capacity as Chairman of the Administrative Action
Board, DOTC, respondents.

ROMERO, J .:
The instant petition for certiorari questions the jurisdiction of the Secretary of the Department of
Transportation and Communications (DOTC) and/or its Administrative Action Board (AAB) over
administrative cases involving personnel below the rank of Assistant General Manager of the
Philippine Ports Authority (PPA), an agency attached to the said Department.
Petitioner Fidencio Y. Beja, Sr.
1
was first employed by the PPA as arrastre supervisor in 1975. He
became Assistant Port Operations Officer in 1976 and Port Operations Officer in 1977. In February 1988,
as a result of the reorganization of the PPA, he was appointed Terminal Supervisor.
On October 21, 1988, the PPA General Manager, Rogelio A. Dayan, filed Administrative Case No.
11-04-88 against petitioner Beja and Hernando G. Villaluz for grave dishonesty, grave misconduct,
willful violation of reasonable office rules and regulations and conduct prejudicial to the best interest
of the service. Beja and Villaluz allegedly erroneously assessed storage fees resulting in the loss of
P38,150.77 on the part of the PPA. Consequently, they were preventively suspended for the
charges. After a preliminary investigation conducted by the district attorney for Region X,
Administrative Case No. 11-04-88 was "considered closed for lack of merit."
On December 13, 1988, another charge sheet, docketed as Administrative Case No. 12-01-88, was
filed against Beja by the PPA General Manager also for dishonesty, grave misconduct, violation of
reasonable office rules and regulations, conduct prejudicial to the best interest of the service and for
being notoriously undesirable. The charge consisted of six (6) different specifications of
administrative offenses including fraud against the PPA in the total amount of P218,000.00. Beja
was also placed under preventive suspension pursuant to Sec. 41 of P.D. No. 807.
The case was redocketed as Administrative Case No. PPA-AAB-1-049-89 and thereafter, the PPA
general manager indorsed it to the AAB for "appropriate action." At the scheduled hearing, Beja
asked for continuance on the ground that he needed time to study the charges against him. The
AAB proceeded to hear the case and gave Beja an opportunity to present evidence. However, on
February 20, 1989, Beja filed a petition for certiorari with preliminary injunction before the Regional
Trial Court of Misamis Oriental.
2
Two days later, he filed with the AAB a manifestation and motion to
suspend the hearing of Administrative Case No. PPA-AAB-1-049-89 on account of the pendency of
the certiorari proceeding before the court. AAB denied the motion and continued with the hearing of the
administrative case.
Thereafter, Beja moved for the dismissal of the certiorari case below and proceeded to file before
this Court a petition for certiorari with preliminary injunction and/or temporary restraining order. The
case was docketed as G.R. No. 87352 captioned "Fidencio Y. Beja v. Hon. Reinerio 0. Reyes, etc.,
et al." In the en banc resolution of March 30, 1989, this Court referred the case to the Court of
Appeals for "appropriate action."
3
G.R. No. 87352 was docketed in the Court of Appeals as CA-G.R. SP
No. 17270.
Meanwhile, a decision was rendered by the AAB in Administrative Case No. PPA-AAB-049-89. Its
dispositive portion reads:
WHEREFORE, judgment is hereby rendered, adjudging the following, namely:
a) That respondents Geronimo Beja, Jr. and Hernando Villaluz are exonerated from
the charge against them;
b) That respondent Fidencio Y. Beja be dismissed from the service;
c) That his leave credits and retirement benefits are declared forfeited;
d) That he be disqualified from re-employment in the government service;
e) That his eligibility is recommended to be cancelled.
Pasig, Metro Manila, February 28, 1989.
On December 10, 1990, after appropriate proceedings, the Court of Appeals also rendered a
decision
4
in CA-G.R. SP No. 17270 dismissing the petition for certiorari for lack of merit. Hence, Beja
elevated the case back to this Court through an "appeal by certiorari with preliminary injunction and/or
temporary restraining order."
We find the pleadings filed in this case to be sufficient bases for arriving at a decision and hence, the
filing of memoranda has been dispensed with.
In his petition, Beja assails the Court of Appeals for having "decided questions of substance in a way
probably not in accord with law or with the applicable decisions" of this Court.
5
Specifically, Beja
contends that the Court of Appeals failed to declare that: (a) he was denied due process; (b) the PPA
general manager has no power to issue a preventive suspension order without the necessary approval of
the PPA board of directors; (c) the PPA general manager has no power to refer the administrative case
filed against him to the DOTC-AAB, and (d) the DOTC Secretary, the Chairman of the DOTC-AAB and
DOTC-AAB itself as an adjudicatory body, have no jurisdiction to try the administrative case against him.
Simply put, Beja challenges the legality of the preventive suspension and the jurisdiction of the DOTC
Secretary and/or the AAB to initiate and hear administrative cases against PPA personnel below the rank
of Assistant General Manager.
Petitioner anchors his contention that the PPA general manager cannot subject him to a preventive
suspension on the following provision of Sec. 8, Art. V of Presidential Decree No. 857 reorganizing
the PPA:
(d) the General Manager shall, subject to the approval of the Board, appoint and
remove personnel below the rank of Assistant General Manager. (Emphasis
supplied.)
Petitioner contends that under this provision, the PPA Board of Directors and not the PPA General
Manager is the "proper disciplining authority.
6

As correctly observed by the Solicitor General, the petitioner erroneously equates "preventive
suspension" as a remedial measure with "suspension" as a penalty for administrative dereliction.
The imposition of preventive suspension on a government employee charged with an administrative
offense is subject to the following provision of the Civil Service Law, P.D. No. 807:
Sec. 41. Preventive Suspension. The proper disciplining authority may
preventively suspend any subordinate officer or employee under his authority
pending an investigation, if the charge against such officer or employee involves
dishonesty, oppression or grave misconduct, or neglect in the performance of duty,
or if there are reasons to believe that the respondent is guilty of charges which would
warrant his removal from the service.
Imposed during the pendency of an administrative investigation, preventive suspension is not a
penalty in itself. It is merely a measure of precaution so that the employee who is charged may be
separated, for obvious reasons, from the scene of his alleged misfeasance while the same is being
investigated.
7
Thus, preventive suspension is distinct from the administrative penalty of removal from
office such as the one mentioned in Sec. 8(d) of P.D. No 857. While the former may be imposed on a
respondent during the investigation of the charges against him, the latter is the penalty which may only be
meted upon him at the termination of the investigation or the final disposition of the case.
The PPA general manager is the disciplining authority who may, by himself and without the approval
of the PPA Board of Directors, subject a respondent in an administrative case to preventive
suspension. His disciplinary powers are sanctioned, not only by Sec. 8 of P.D. No. 857 aforequoted,
but also by Sec. 37 of P.D. No. 807 granting heads of agencies the "jurisdiction to investigate and
decide matters involving disciplinary actions against officers and employees" in the PPA.
Parenthetically, the period of preventive suspension is limited. It may be lifted even if the disciplining
authority has not finally decided the administrative case provided the ninety-day period from the
effectivity of the preventive suspension has been exhausted. The employee concerned may then be
reinstated. 8 However, the said ninety-day period may be interrupted. Section 42 of P.D. No. 807 also mandates that any fault,
negligence or petition of a suspended employee may not be considered in the computation of the said period. Thus, when a suspended
employee obtains from a court of justice a restraining order or a preliminary injunction inhibiting proceedings in an administrative case, the
lifespan of such court order should be excluded in the reckoning of the permissible period of the preventive suspension.
9

With respect to the issue of whether or not the DOTC Secretary and/or the AAB may initiate and
hear administrative cases against PPA Personnel below the rank of Assistant General Manager, the
Court qualifiedlyrules in favor of petitioner.
The PPA was created through P.D. No. 505 dated July 11, 1974. Under that Law, the corporate
powers of the PPA were vested in a governing Board of Directors known as the Philippine Port
Authority Council. Sec. 5(i) of the same decree gave the Council the power "to appoint, discipline
and remove, and determine the composition of the technical staff of the Authority and other
personnel."
On December 23, 1975, P.D. No. 505 was substituted by P.D. No. 857, See. 4(a) thereof created the
Philippine Ports Authority which would be "attached" to the then Department of Public Works,
Transportation and Communication. When Executive Order No. 125 dated January 30, 1987
reorganizing the Ministry of Transportation and Communications was issued, the PPA retained its
"attached" status.
10
Even Executive Order No. 292 or the Administrative Code of 1987 classified the
PPA as an agency "attached" to the Department of Transportation and Communications (DOTC). Sec. 24
of Book IV, Title XV, Chapter 6 of the same Code provides that the agencies attached to the DOTC "shall
continue to operate and function in accordance with the respective charters or laws creating them, except
when they conflict with this Code."
Attachment of an agency to a Department is one of the three administrative relationships mentioned
in Book IV, Chapter 7 of the Administrative Code of 1987, the other two being supervision and
control and administrative supervision. "Attachment" is defined in Sec. 38 thereof as follows:
(3) Attachment. (a) This refers to the lateral relationship between the Department
or its equivalent and the attached agency or corporation for purposes of policy and
program coordination. The coordination shall be accomplished by having the
department represented in the governing board of the attached agency or
corporation, either as chairman or as a member, with or without voting rights, if this is
permitted by the charter; having the attached corporation or agency comply with a
system of periodic reporting which shall reflect the progress of programs and
projects; and having the department or its equivalent provide general policies through
its representative in the board, which shall serve as the framework for the internal
policies of the attached corporation or agency;
(b) Matters of day-to-day administration or all those pertaining to internal operations
shall he left to the discretion or judgment of the executive officer of the agency or
corporation. In the event that the Secretary and the head of the board or the attached
agency or corporation strongly disagree on the interpretation and application of
policies, and the Secretary is unable to resolve the disagreement, he shall bring the
matter to the President for resolution and direction;
(c) Government-owned or controlled corporations attached to a department shall
submit to the Secretary concerned their audited financial statements within sixty (60)
days after the close of the fiscal year; and
(d) Pending submission of the required financial statements, the corporation shall
continue to operate on the basis of the preceding year's budget until the financial
statements shall have been submitted. Should any government-owned or controlled
corporation incur an operation deficit at the close of its fiscal year, it shall be subject
to administrative supervision of the department; and the corporation's operating and
capital budget shall be subject to the department's examination, review, modification
and approval. (emphasis supplied.)
An attached agency has a larger measure of independence from the Department to which it is
attached than one which is under departmental supervision and control or administrative
supervision. This is borne out by the "lateral relationship" between the Department and the attached
agency. The attachment is merely for "policy and program coordination." With respect to
administrative matters, the independence of an attached agency from Departmental control and
supervision is further reinforced by the fact that even an agency under a Department's administrative
supervision is free from Departmental interference with respect to appointments and other personnel
actions "in accordance with the decentralization of personnel functions" under the Administrative
Code of 1987.
11
Moreover, the Administrative Code explicitly provides that Chapter 8 of Book IV on
supervision and control shall not apply to chartered institutions attached to a Department.
12

Hence, the inescapable conclusion is that with respect to the management of personnel, an attached
agency is, to a certain extent, free from Departmental interference and control. This is more explicitly
shown by P.D. No. 857 which provides:
Sec. 8. Management and Staff. a) The President shall, upon the recommendation
of the Board, appoint the General Manager and the Assistant General Managers.
(b) All other officials and employees of the Authority shall be selected and appointed
on the basis of merit and fitness based on a comprehensive and progressive merit
system to be established by the Authority immediately upon its organization and
consistent with Civil Service rules and regulations.The recruitment, transfer,
promotion, and dismissal of all personnel of the Authority, including temporary
workers, shall be governed by such merit system.
(c) The General Manager shall, subject to the approval of the Board, determine the
staffing pattern and the number of personnel of the Authority, define their duties and
responsibilities, and fix their salaries and emoluments. For professional and technical
positions, the General Manager shall recommend salaries and emoluments that are
comparable to those of similar positions in other government-owned corporations,
the provisions of existing rules and regulations on wage and position classification
notwithstanding.
(d) The General Manager shall, subject to the approval by the Board, appoint and
remove personnel below the rank of Assistant General Manager.
xxx xxx xxx
(emphasis supplied.)
Although the foregoing section does not expressly provide for a mechanism for an administrative
investigation of personnel, by vesting the power to remove erring employees on the General
Manager, with the approval of the PPA Board of Directors, the law impliedly grants said officials the
power to investigate its personnel below the rank of Assistant Manager who may be charged with an
administrative offense. During such investigation, the PPA General Manager, as earlier stated, may
subject the employee concerned to preventive suspension. The investigation should be conducted in
accordance with the procedure set out in Sec. 38 of P.D. No. 807.
13
Only after gathering sufficient
facts may the PPA General Manager impose the proper penalty in accordance with law. It is the latter
action which requires the approval of the PPA Board of Directors.
14

From an adverse decision of the PPA General Manager and the Board of Directors, the employee
concernedmay elevate the matter to the Department Head or Secretary. Otherwise, he may appeal
directly to the Civil Service Commission. The permissive recourse to the Department Secretary is
sanctioned by the Civil Service Law (P.D. No. 807) under the following provisions:
Sec. 37. Disciplinary Jurisdiction. (a) The Commission shall decide upon appeal
all administrative disciplinary cases involving the imposition of a penalty of
suspension for more than thirty days, or fine in an amount exceeding thirty days
salary, demotion in rank or salary or transfer, removal or dismissal from office. A
complaint may be filed directly with the Commission by a private citizen against a
government official or employee in which case it may hear and decide the case or it
may deputize any department or agency or official or group of officials to conduct the
investigation. The results of the investigation shall be submitted to the Commission
with recommendation as to the penalty to be imposed or other action to be taken.
(b) The heads of departments, agencies and instrumentalities, provinces, cities and
municipalities shall have jurisdiction to investigate and decide matters involving
disciplinary action against officers and employees under their jurisdiction. The
decisions shall be final in case the penalty imposed is suspension for not more than
thirty days or fine in an amount not exceeding thirty days' salary. In case the decision
rendered by a bureau or office head is appealable to the Commission, the same may
be initially appealed to the department and finally to the Commission and pending
appeal, the same shall be executory except when the penalty is removal, in which
case the same shall be executory only after confirmation by the department head.
xxx xxx xxx
(Emphasis supplied.)
It is, therefore, clear that the transmittal of the complaint by the PPA General Manager to the AAB
was premature. The PPA General Manager should have first conducted an investigation, made the
proper recommendation for the imposable penalty and sought its approval by the PPA Board of
Directors. It was discretionary on the part of the herein petitioner to elevate the case to the then
DOTC Secretary Reyes. Only then could the AAB take jurisdiction of the case.
The AAB, which was created during the tenure of Secretary Reyes under Office Order No. 88-318
dated July 1, 1988, was designed to act, decide and recommend to him "all cases of administrative
malfeasance, irregularities, grafts and acts of corruption in the Department." Composed of a
Chairman and two (2) members, the AAB came into being pursuant to Administrative Order No. 25
issued by the President on May 25, 1987.
15
Its special nature as a quasi-judicial administrative body
notwithstanding, the AAB is not exempt from the observance of due process in its proceedings.
16
We are
not satisfied that it did so in this case the respondents protestation that petitioner waived his right to be
heard notwithstanding. It should be observed that petitioner was precisely questioning the AAB's
jurisdiction when it sought judicial recourse.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED insofar as it upholds the power of
the PPA General Manager to subject petitioner to preventive suspension and REVERSED insofar as
it validates the jurisdiction of the DOTC and/or the AAB to act on Administrative Case No. PPA-AAB-
1-049-89 and rules that due process has been accorded the petitioner.
The AAB decision in said case is hereby declared NULL and VOID and the case in REMANDED to
the PPA whose General Manager shall conduct with dispatch its reinvestigation.
The preventive suspension of petitioner shall continue unless after a determination of its duration, it
is found that he had served the total of ninety (90) days in which case he shall be reinstated
immediately.
SO ORDERED.
EUGENIO vs. CSC et al
G.R. No. 115863
March 31, 1995
FACTS: . Eugenio is the Deputy Director of the Philippine Nuclear Research Institute. She applied for a
Career Executive Service (CES) Eligibility and a CESO rank,. She was given a CES eligibility and was
recommended to the President for a CESO rank by the Career Executive Service Board.
Then respondent Civil Service Commission

passed a Resolution which abolished the CESB, relying on
the provisions of Section 17, Title I, Subtitle A. Book V of the Administrative Code of 1987 allegedly
conferring on the Commission the power and authority to effect changes in its organization as the
need arises. Saidresolution states:
Pursuant thereto, the Career Executive Service Board, shall now be known as the Office for Career
Executive Service of the Civil Service Commission. Accordingly, the existing personnel, budget,
properties and equipment of the Career Executive Service Board shall now form part of the Office for
Career Executive Service.
Finding herself bereft of further administrative relief as the Career Executive Service Board which
recommended her CESO Rank IV has been abolished, petitioner filed the petition at bench to annul,
among others, said resolution.
ISSUE: WON CSC given the authority to abolish the office of the CESB
HELD: the petition is granted and Resolution of the respondent Commission is hereby annulled and
set aside
NO
1. The controlling fact is that the CESB was created in PD No. 1 on September 1, 1974
.
It cannot be
disputed, therefore, that as the CESB was created by law, it can only be abolished by the legislature.
This follows an unbroken stream of rulings that the creation and abolition of public offices is primarily
a legislative function
In the petition at bench, the legislature has not enacted any law authorizing the abolition of the CESB.
On the contrary, in all the General Appropriations Acts from 1975 to 1993, the legislature has set
aside funds for the operation of CESB.
Respondent Commission, however, invokes Section 17, Chapter 3, Subtitle A. Title I, Book V of the
Administrative Code of 1987 as the source of its power to abolish the CESB.
But as well pointed out by petitioner and the Solicitor General, Section 17 must be read together with
Section 16 of the said Code which enumerates the offices under the respondent Commission.
As read together, the inescapable conclusion is that respondent Commissions power to reorganize is
limited to offices under its control as enumerated in Section 16..
2. . From its inception, the CESB was intended to be an autonomous entity, albeit administratively
attached to respondent Commission. As conceptualized by the Reorganization Committee the CESB
shall be autonomous. It is expected to view the problem of building up executive manpower in the
government with a broad and positive outlook.
The essential autonomous character of the CESB is not negated by its attachment to respondent
Commission. By said attachment, CESB was not made to fall within the control of respondent
Commission. Under the Administrative Code of 1987, the purpose of attaching one functionally inter-
related government agency to another is to attain policy and program coordination. This is
clearly etched out in Section 38(3), Chapter 7, Book IV of the aforecited Code, to wit:
(3) Attachment. (a) This refers to the lateral relationship between the department or its equivalent
and attached agency or corporation for purposes of policy and program coordination. The coordination
may be accomplished by having the department represented in the governing board of the attached
agency or corporation, either as chairman or as a member, with or without voting rights, if this is
permitted by the charter; having the attached corporation or agency comply with a system of periodic
reporting which shall reflect the progress of programs and projects; and having the department or its
equivalent provide general policies through its representative in the board, which shall serve as the
framework for the internal policies of the attached corporation or agency.
NOTES:
Section 17, Chapter 3, Subtitle A. Title I, Book V of the Administrative Code of 1987 as the source of
its power to abolish the CESB. Section 17 provides:
Sec. 17. Organizational Structure. Each office of the Commission shall be headed by a Director with
at least one Assistant Director, and may have such divisions as are necessary independent
constitutional body, the Commission may effect changes in the organization as the need arises.
Sec. 16. Offices in the Commission. The Commission shall have the following offices:
(1) The Office of the Executive
(2) The Merit System Protection Board composed of a Chairman and two (2) members
(3) The Office of Legal Affairs
(4) The Office of Planning and Management
(5) The Central Administrative Office.
(6) The Office of Central Personnel Records
(7) The Office of Position Classification and Compensation
(8) The Office of Recruitment, Examination and Placement
(9) The Office of Career Systems and Standards
(10) The Office of Human Resource Development
(11) The Office of Personnel Inspection and Audit.
(12) The Office of Personnel Relations
(13) The Office of Corporate Affairs
(14) The Office of Retirement
(15) The Regional and Field Offices.
G.R. No. 115863 March 31, 1995
AIDA D. EUGENIO, petitioner,
vs.
CIVIL SERVICE COMMISSION, HON. TEOFISTO T. GUINGONA, JR. & HON. SALVADOR
ENRIQUEZ, JR.,respondents.

PUNO, J .:
The power of the Civil Service Commission to abolish the Career Executive Service Board is
challenged in this petition for certiorari and prohibition.
First the facts. Petitioner is the Deputy Director of the Philippine Nuclear Research Institute. She
applied for a Career Executive Service (CES) Eligibility and a CESO rank on August 2, 1993, she
was given a CES eligibility. On September 15, 1993, she was recommended to the President for a
CESO rank by the Career Executive Service Board.
1

All was not to turn well for petitioner. On October 1, 1993, respondent Civil Service
Commission
2
passed Resolution No. 93-4359, viz:
RESOLUTION NO. 93-4359
WHEREAS, Section 1(1) of Article IX-B provides that Civil Service shall be
administered by the Civil Service Commission, . . .;
WHEREAS, Section 3, Article IX-B of the 1987 Philippine Constitution provides that
"The Civil Service Commission, as the central personnel agency of the government,
is mandated to establish a career service and adopt measures to promote morale,
efficiency, integrity, responsiveness, progresiveness and courtesy in the civil service,
. . .";
WHEREAS, Section 12 (1), Title I, Subtitle A, Book V of the Administrative Code of
1987 grants the Commission the power, among others, to administer and enforce the
constitutional and statutory provisions on the merit system for all levels and ranks in
the Civil Service;
WHEREAS, Section 7, Title I, Subtitle A, Book V of the Administrative Code of 1987
Provides, among others, that The Career Service shall be characterized by (1)
entrance based on merit and fitness to be determined as far as practicable by
competitive examination, or based highly technical qualifications; (2) opportunity for
advancement to higher career positions; and (3) security of tenure;
WHEREAS, Section 8 (c), Title I, Subtitle A, Book V of the administrative Code of
1987 provides that "The third level shall cover Positions in the Career Executive
Service";
WHEREAS, the Commission recognizes the imperative need to consolidate,
integrate and unify the administration of all levels of positions in the career service.
WHEREAS, the provisions of Section 17, Title I, Subtitle A. Book V of the
Administrative Code of 1987 confers on the Commission the power and authority to
effect changes in its organization as the need arises.
WHEREAS, Section 5, Article IX-A of the Constitution provides that the Civil Service
Commission shall enjoy fiscal autonomy and the necessary implications thereof;
NOW THEREFORE, foregoing premises considered, the Civil Service Commission
hereby resolves to streamline reorganize and effect changes in its organizational
structure. Pursuant thereto, the Career Executive Service Board, shall now be known
as the Office for Career Executive Service of the Civil Service Commission.
Accordingly, the existing personnel, budget, properties and equipment of the Career
Executive Service Board shall now form part of the Office for Career Executive
Service.
The above resolution became an impediment. to the appointment of petitioner as Civil Service
Officer, Rank IV. In a letter to petitioner, dated June 7, 1994, the Honorable Antonio T. Carpio, Chief
Presidential legal Counsel, stated:
xxx xxx xxx
On 1 October 1993 the Civil Service Commission issued CSC Resolution No. 93-
4359 which abolished the Career Executive Service Board.
Several legal issues have arisen as a result of the issuance of CSC Resolution No.
93-4359, including whether the Civil Service Commission has authority to abolish the
Career Executive Service Board. Because these issues remain unresolved, the
Office of the President has refrained from considering appointments of career service
eligibles to career executive ranks.
xxx xxx xxx
You may, however, bring a case before the appropriate court to settle the legal
issues arising from issuance by the Civil Service Commission of CSC Resolution No.
93-4359, for guidance of all concerned.
Thank You.
Finding herself bereft of further administrative relief as the Career Executive Service Board which
recommended her CESO Rank IV has been abolished, petitioner filed the petition at bench to annul,
among others, resolution No. 93-4359. The petition is anchored on the following arguments:
A.
IN VIOLATION OF THE CONSTITUTION, RESPONDENT COMMISSION
USURPED THE LEGISLATIVE FUNCTIONS OF CONGRESS WHEN IT
ABOLISHED THE CESB, AN OFFICE CREATED BY LAW, THROUGH THE
ISSUANCE OF CSC: RESOLUTION NO. 93-4359;
B.
ALSO IN VIOLATION OF THE CONSTITUTION, RESPONDENT CSC USURPED
THE LEGISLATIVE FUNCTIONS OF CONGRESS WHEN IT ILLEGALLY
AUTHORIZED THE TRANSFER OF PUBLIC MONEY, THROUGH THE ISSUANCE
OF CSC RESOLUTION NO. 93-4359.
Required to file its Comment, the Solicitor General agreed with the contentions of petitioner.
Respondent Commission, however, chose to defend its ground. It posited the following position:
ARGUMENTS FOR PUBLIC RESPONDENT-CSC
I. THE INSTANT PETITION STATES NO CAUSE OF ACTION AGAINST THE
PUBLIC RESPONDENT-CSC.
II. THE RECOMMENDATION SUBMITTED TO THE PRESIDENT FOR
APPOINTMENT TO A CESO RANK OF PETITIONER EUGENIO WAS A VALID
ACT OF THE CAREER EXECUTIVE SERVICE BOARD OF THE CIVIL SERVICE
COMMISSION AND IT DOES NOT HAVE ANY DEFECT.
III. THE OFFICE OF THE PRESIDENT IS ESTOPPED FROM QUESTIONING THE
VALIDITY OF THE RECOMMENDATION OF THE CESB IN FAVOR OF
PETITIONER EUGENIO SINCE THE PRESIDENT HAS PREVIOUSLY APPOINTED
TO CESO RANK FOUR (4) OFFICIALS SIMILARLY SITUATED AS SAID
PETITIONER. FURTHERMORE, LACK OF MEMBERS TO CONSTITUTE A
QUORUM. ASSUMING THERE WAS NO QUORUM, IS NOT THE FAULT OF
PUBLIC RESPONDENT CIVIL SERVICE COMMISSION BUT OF THE PRESIDENT
WHO HAS THE POWER TO APPOINT THE OTHER MEMBERS OF THE CESB.
IV. THE INTEGRATION OF THE CESB INTO THE COMMISSION IS AUTHORIZED
BY LAW (Sec. 12 (1), Title I, Subtitle A, Book V of the Administrative Code of the
1987). THIS PARTICULAR ISSUE HAD ALREADY BEEN SETTLED WHEN THE
HONORABLE COURT DISMISSED THE PETITION FILED BY THE HONORABLE
MEMBERS OF THE HOUSE OF REPRESENTATIVES, NAMELY: SIMEON A.
DATUMANONG, FELICIANO R. BELMONTE, JR., RENATO V. DIAZ, AND
MANUEL M. GARCIA IN G.R. NO. 114380. THE AFOREMENTIONED
PETITIONERS ALSO QUESTIONED THE INTEGRATION OF THE CESB WITH
THE COMMISSION.
We find merit in the petition.
3

The controlling fact is that the Career Executive Service Board (CESB) was created in the
Presidential Decree (P.D.) No. 1 on September 1, 1974
4
which adopted the Integrated Plan. Article IV,
Chapter I, Part of the III of the said Plan provides:
Article IV Career Executive Service
1. A Career Executive Service is created to form a continuing pool of well-selected
and development oriented career administrators who shall provide competent and
faithful service.
2. A Career Executive Service hereinafter referred to in this Chapter as the Board, is
created to serve as the governing body of the Career Executive Service. The Board
shall consist of the Chairman of the Civil Service Commission as presiding officer,
the Executive Secretary and the Commissioner of the Budget as ex-officio members
and two other members from the private sector and/or the academic community who
are familiar with the principles and methods of personnel administration.
xxx xxx xxx
5. The Board shall promulgate rules, standards and procedures on the selection,
classification, compensation and career development of members of the Career
Executive Service. The Board shall set up the organization and operation of the
service. (Emphasis supplied)
It cannot be disputed, therefore, that as the CESB was created by law, it can only be abolished by
the legislature. This follows an unbroken stream of rulings that the creation and abolition of public
offices is primarily a legislative function. As aptly summed up in AM JUR 2d on Public Officers and
Employees,
5
viz:
Except for such offices as are created by the Constitution, the creation of public
offices is primarily a legislative function. In so far as the legislative power in this
respect is not restricted by constitutional provisions, it supreme, and the legislature
may decide for itself what offices are suitable, necessary, or convenient. When in the
exigencies of government it is necessary to create and define duties, the legislative
department has the discretion to determine whether additional offices shall be
created, or whether these duties shall be attached to and become ex-officio duties of
existing offices. An office created by the legislature is wholly within the power of that
body, and it may prescribe the mode of filling the office and the powers and duties of
the incumbent, and if it sees fit, abolish the office.
In the petition at bench, the legislature has not enacted any law authorizing the abolition of the
CESB. On the contrary, in all the General Appropriations Acts from 1975 to 1993, the legislature has
set aside funds for the operation of CESB. Respondent Commission, however, invokes Section 17,
Chapter 3, Subtitle A. Title I, Book V of the Administrative Code of 1987 as the source of its power to
abolish the CESB. Section 17 provides:
Sec. 17. Organizational Structure. Each office of the Commission shall be headed
by a Director with at least one Assistant Director, and may have such divisions as are
necessary independent constitutional body, the Commission may effect changes in
the organization as the need arises.
But as well pointed out by petitioner and the Solicitor General, Section 17 must be read together with
Section 16 of the said Code which enumerates the offices under the respondent Commission, viz:
Sec. 16. Offices in the Commission. The Commission shall have the following
offices:
(1) The Office of the Executive Director headed by an Executive Director, with a
Deputy Executive Director shall implement policies, standards, rules and regulations
promulgated by the Commission; coordinate the programs of the offices of the
Commission and render periodic reports on their operations, and perform such other
functions as may be assigned by the Commission.
(2) The Merit System Protection Board composed of a Chairman and two (2)
members shall have the following functions:
xxx xxx xxx
(3) The Office of Legal Affairs shall provide the Chairman with legal advice and
assistance; render counselling services; undertake legal studies and researches;
prepare opinions and ruling in the interpretation and application of the Civil Service
law, rules and regulations; prosecute violations of such law, rules and regulations;
and represent the Commission before any court or tribunal.
(4) The Office of Planning and Management shall formulate development plans,
programs and projects; undertake research and studies on the different aspects of
public personnel management; administer management improvement programs; and
provide fiscal and budgetary services.
(5) The Central Administrative Office shall provide the Commission with personnel,
financial, logistics and other basic support services.
(6) The Office of Central Personnel Records shall formulate and implement policies,
standards, rules and regulations pertaining to personnel records maintenance,
security, control and disposal; provide storage and extension services; and provide
and maintain library services.
(7) The Office of Position Classification and Compensation shall formulate and
implement policies, standards, rules and regulations relative to the administration of
position classification and compensation.
(8) The Office of Recruitment, Examination and Placement shall provide leadership
and assistance in developing and implementing the overall Commission programs
relating to recruitment, execution and placement, and formulate policies, standards,
rules and regulations for the proper implementation of the Commission's examination
and placement programs.
(9) The Office of Career Systems and Standards shall provide leadership and
assistance in the formulation and evaluation of personnel systems and standards
relative to performance appraisal, merit promotion, and employee incentive benefit
and awards.
(10) The Office of Human Resource Development shall provide leadership and
assistance in the development and retention of qualified and efficient work force in
the Civil Service; formulate standards for training and staff development; administer
service-wide scholarship programs; develop training literature and materials;
coordinate and integrate all training activities and evaluate training programs.
(11) The Office of Personnel Inspection and Audit shall develop policies, standards,
rules and regulations for the effective conduct or inspection and audit personnel and
personnel management programs and the exercise of delegated authority; provide
technical and advisory services to Civil Service Regional Offices and government
agencies in the implementation of their personnel programs and evaluation systems.
(12) The Office of Personnel Relations shall provide leadership and assistance in the
development and implementation of policies, standards, rules and regulations in the
accreditation of employee associations or organizations and in the adjustment and
settlement of employee grievances and management of employee disputes.
(13) The Office of Corporate Affairs shall formulate and implement policies,
standards, rules and regulations governing corporate officials and employees in the
areas of recruitment, examination, placement, career development, merit and awards
systems, position classification and compensation, performing appraisal, employee
welfare and benefit, discipline and other aspects of personnel management on the
basis of comparable industry practices.
(14) The Office of Retirement Administration shall be responsible for the enforcement
of the constitutional and statutory provisions, relative to retirement and the regulation
for the effective implementation of the retirement of government officials and
employees.
(15) The Regional and Field Offices. The Commission shall have not less than
thirteen (13) Regional offices each to be headed by a Director, and such field offices
as may be needed, each to be headed by an official with at least the rank of an
Assistant Director.
As read together, the inescapable conclusion is that respondent Commission's power to
reorganize is limited to offices under its control as enumerated in Section 16, supra. From its
inception, the CESB was intended to be an autonomous entity, albeit administratively
attached to respondent Commission. As conceptualized by the Reorganization Committee
"the CESB shall be autonomous. It is expected to view the problem of building up executive
manpower in the government with a broad and positive outlook."
6
The essential autonomous
character of the CESB is not negated by its attachment to respondent Commission. By said
attachment, CESB was not made to fall within the control of respondent Commission. Under the
Administrative Code of 1987, the purpose of attaching one functionally inter-related government
agency to another is to attain "policy and program coordination." This is clearly etched out in
Section 38(3), Chapter 7, Book IV of the aforecited Code, to wit:
(3) Attachment. (a) This refers to the lateral relationship between the department
or its equivalent and attached agency or corporation for purposes of policy and
program coordination. The coordination may be accomplished by having the
department represented in the governing board of the attached agency or
corporation, either as chairman or as a member, with or without voting rights, if this is
permitted by the charter; having the attached corporation or agency comply with a
system of periodic reporting which shall reflect the progress of programs and
projects; and having the department or its equivalent provide general policies through
its representative in the board, which shall serve as the framework for the internal
policies of the attached corporation or agency.
Respondent Commission also relies on the case of Datumanong, et al., vs. Civil Service
Commission, G. R. No. 114380 where the petition assailing the abolition of the CESB was dismissed
for lack of cause of action. Suffice to state that the reliance is misplaced considering that the cited
case was dismissed for lack of standing of the petitioner, hence, the lack of cause of action.
IN VIEW WHEREOF, the petition is granted and Resolution No. 93-4359 of the respondent
Commission is hereby annulled and set aside. No costs.
SO ORDERED.

[G.R. No. 134990. April 27, 2000]
MANUEL M. LEYSON JR., petitioner, vs. OFFICE OF THE OMBUDSMAN,
TIRSO ANTIPORDA, Chairman, UCPB and CIIF Oil Mills, and OSCAR A.
TORRALBA, President, CIIF Oil Mills, respondents. ALEX
D E C I S I O N
BELLOSILLO, J .:
On 7 February 1996 International Towage and Transport Corporation (ITTC),
a domestic corporation engaged in the lighterage or shipping business,
entered into a one (1)-year contract with Legaspi Oil Company, Inc. (LEGASPI
OIL), Granexport Manufacturing Corporation (GRANEXPORT) and United
Coconut Chemicals, Inc. (UNITED COCONUT), comprising the Coconut
Industry Investment Fund (CIIF) companies, for the transport of coconut oil in
bulk through MT Transasia. The majority shareholdings of these CIIF
companies are owned by the United Coconut Planters Bank (UCPB) as
administrator of the CIIF. Under the terms of the contract, either party could
terminate the agreement provided a three (3)-month advance notice was
given to the other party. However, in August 1996, or prior to the expiration of
the contract, the CIIF companies with their new President, respondent Oscar
A. Torralba, terminated the contract without the requisite advance notice. The
CIIF companies engaged the services of another vessel, MT
Marilag, operated by Southwest Maritime Corporation. miso
On 11 March 1997 petitioner Manuel M. Leyson Jr., Executive Vice President
of ITTC, filed with public respondent Office of the Ombudsman a grievance
case against respondent Oscar A. Torralba. The following is a summary of the
irregularities and corrupt practices allegedly committed by respondent
Torralba: (a) breach of contract - unilateral cancellation of valid and existing
contract; (b) bad faith - falsification of documents and reports to stop the
operation of MT Transasia; (c) manipulation - influenced their insurance to
disqualify MT Transasia; (d) unreasonable denial of requirement imposed; (e)
double standards and inconsistent in favor of MT Marilag; (f) engaged and
entered into a contract with Southwest Maritime Corp. which is not the owner
of MT Marilag, where liabilities were waived and whose paid-up capital is
only P250,000.00; and, (g) overpricing in the freight rate causing losses of
millions of pesos to Cocochem.
[1]

On 2 January 1998 petitioner charged respondent Tirso Antiporda, Chairman
of UCPB and CIIF Oil Mills, and respondent Oscar A. Torralba with violation
of The Anti-Graft and Corrupt Practices Act also before the Ombudsman
anchored on the aforementioned alleged irregularities and corrupt
practices. spped
On 30 January 1998 public respondent dismissed the complaint based on its
finding that
The case is a simple case of breach of contract with damages
which should have been filed in the regular court. This Office has
no jurisdiction to determine the legality or validity of the
termination of the contract entered into by CIIF and ITTC. Besides
the entities involved are private corporations (over) which this
Office has no jurisdiction.
[2]

On 4 June 1998 reconsideration of the dismissal of the complaint was denied.
The Ombudsman was unswayed in his finding that the present controversy
involved breach of contract as he also took into account the circumstance that
petitioner had already filed a collection case before the Regional Trial Court of
Manila-Br. 15, docketed as Civil Case No. 97-83354. Moreover, the
Ombudsman found that the filing of the motion for reconsideration on 31
March 1998 was beyond the inextendible period of five (5) days from notice of
the assailed resolution on 19 March 1998.
[3]
miso
Petitioner now imputes grave abuse of discretion on public respondent in
dismissing his complaint. He submits that inasmuch as Philippine Coconut
Producers Federation, Inc. (COCOFED) v. PCGG
[4]
and Republic v.
Sandiganbayan
[5]
have declared that the coconut levy funds are public funds
then, conformably with Quimpo v. Tanodbayan,
[6]
corporations formed and
organized from those funds or whose controlling stocks are from those funds
should be regarded as government owned and/or controlled corporations. As
in the present case, since the funding or controlling interest of the companies
being headed by private respondents was given or owned by the CIIF as
shown in the certification of their Corporate Secretary,
[7]
it follows that they are
government owned and/or controlled corporations. Corollarily, petitioner
asserts that respondents Antiporda and Torralba are public officers subject to
the jurisdiction of the Ombudsman. Sdaadsc
Petitioner alleges next that public respondent's conclusion that his complaint
refers to a breach of contract is whimsical, capricious and irresponsible
amounting to a total disregard of its main point, i. e., whether private
respondents violated The Anti-Graft and Corrupt Practices Act when they
entered into a contract with Southwest Maritime Corporation which was
grossly disadvantageous to the government in general and to the CIIF in
particular. Petitioner admits that his motion for reconsideration was filed out of
time. Nonetheless, he advances that public respondent should have relaxed
its rules in the paramount interest of justice; after all, the delay was just a
matter of days and he, a layman not aware of technicalities, personally filed
the complaint.Rtcspped
Private respondents counter that the CIIF companies were duly organized and
are existing by virtue of the Corporation Code. Their stockholders are private
individuals and entities. In addition, private respondents contend that they are
not public officers as defined under The Anti-Graft and Corrupt Practices
Act but are private executives appointed by the Boards of Directors of the CIIF
companies. They asseverate that petitioner's motion for reconsideration was
filed through the expert assistance of a learned counsel. They then charge
petitioner with forum shopping since he had similarly filed a case for collection
of a sum of money plus damages before the trial court.
The Office of the Solicitor General maintains that the Ombudsman approved
the recommendation of the investigating officer to dismiss the complaint
because he sincerely believed there was no sufficient basis for the criminal
indictment of private respondents. spped
We find no grave abuse of discretion committed by the
Ombudsman. COCOFED v. PCGG referred to in Republic
v. Sandiganbayan reviewed the history of the coconut levy funds. I These
funds actually have four (4) general classes: (a) the Coconut Investment Fund
created under R. A. No. 6260;
[8]
(b) the Coconut Consumers Stabilization Fund
created under P. D. No. 276;
[9]
(c) the Coconut Industry Development Fund
created under P. D. No. 582;
[10]
and, (d) the Coconut Industry Stabilization
Fund created under P. D. No. 1841.
[11]

The various laws relating to the coconut industry were codified in 1976. On 21
October of that year, P. D. No. 961
[12]
was promulgated. On 11 June 1978 it
was amended by P. D. No. 1468
[13]
by inserting a new provision authorizing the
use of the balance of the Coconut Industry Development Fund for the
acquisition of "shares of stocks in corporations organized for the purpose of
engaging in the establishment and operation of industries x x x commercial
activities and other allied business undertakings relating to coconut and other
palm oil indust(ries)."
[14]
From this fund thus created, or the CIIF, shares of
stock in what have come to be known as the "CIIF companies" were
purchased. miso
We then stated in COCOFED that the coconut levy funds were raised by the
State's police and taxing powers such that the utilization and proper
management thereof were certainly the concern of the Government. These
funds have a public character and are clearly affected with public interest.
Quimpo v. Tanodbayan involved the issue as to whether PETROPHIL was a
government owned or controlled corporation the employees of which fell
within the jurisdictional purview of the Tanodbayan for purposes of The Anti-
Graft and Corrupt Practices Act. We upheld the jurisdiction of the Tanodbayan
on the ratiocination that -
While it may be that PETROPHIL was not originally "created" as a
government-owned or controlled corporation, after it was acquired
by PNOC, which is a government-owned or controlled
corporation, PETROPHIL became a subsidiary of PNOC and thus
shed-off its private status. It is now funded and owned by the
government as, in fact, it was acquired to perform functions
related to government programs and policies on oil, a vital
commodity in the economic life of the nation. It was acquired not
temporarily but as a permanent adjunct to perform essential
government or government-related functions, as the marketing
arm of the PNOC to assist the latter in selling and distributing oil
and petroleum products to assure and maintain an adequate and
stable domestic supply. Korte
But these jurisprudential rules invoked by petitioner in support of his claim that
the CIIF companies are government owned and/or controlled corporations are
incomplete without resorting to the definition of "government owned or
controlled corporation" contained in par. (13), Sec. 2, Introductory Provisions
of the Administrative Code of 1987, i. e., any agency organized as a stock or
non-stock corporation vested with functions relating to public needs whether
governmental or proprietary in nature, and owned by the Government directly
or through its instrumentalities either wholly, or, where applicable as in the
case of stock corporations, to the extent of at least fifty-one (51) percent of its
capital stock. The definition mentions three (3) requisites, namely, first, any
agency organized as a stock or non-stock corporation; second, vested with
functions relating to public needs whether governmental or proprietary in
nature; and, third, owned by the Government directly or through its
instrumentalities either wholly, or, where applicable as in the case of stock
corporations, to the extent of at least fifty-one (51) percent of its capital
stock. Sclaw
In the present case, all three (3) corporations comprising the CIIF companies
were organized as stock corporations. The UCPB-CIIF owns 44.10% of the
shares of LEGASPI OIL, 91.24% of the shares of GRANEXPORT, and
92.85% of the shares of UNITED COCONUT.
[15]
Obviously, the below 51%
shares of stock in LEGASPI OIL removes this firm from the definition of a
government owned or controlled corporation. Our concern has thus been
limited to GRANEXPORT and UNITED COCONUT as we go back to the
second requisite. Unfortunately, it is in this regard that petitioner failed to
substantiate his contentions. There is no showing that GRANEXPORT and/ or
UNITED COCONUT was vested with functions relating to public needs
whether governmental or proprietary in nature unlike PETROPHIL
in Quimpo. The Court thus concludes that the CIIF companies are, as found
by public respondent, private corporations not within the scope of its
jurisdiction. Sclex
With the foregoing conclusion, we find it unnecessary to resolve the other
issues raised by petitioner.
A brief note on private respondents' charge of forum shopping. Executive
Secretary v. Gordon
[16]
is instructive that forum shopping consists of filing
multiple suits involving the same parties for the same cause of action, either
simultaneously or successively, for the purpose of obtaining a favorable
judgment. It is readily apparent that the present charge will not prosper
because the cause of action herein, i. e., violation of The Anti-Graft and
Corrupt Practices Act, is different from the cause of action in the case pending
before the trial court which is collection of a sum of money plus damages. miso
WHEREFORE, the petition is DISMISSED. The Resolution of public
respondent Office of the Ombudsman of 30 January 1998 which dismissed
the complaint of petitioner Manuel M. Leyson Jr., as well as its Order of 4
June 1998 denying his motion for reconsideration, is AFFIRMED. Costs
against petitioner.
SO ORDERED.apdc
[G.R. Nos. 147706-07. February 16, 2005]
PEOPLE OF THE PHILIPPINES, petitioner, vs. THE HONORABLE
SANDIGANBAYAN (Fifth Division) and EFREN L.
ALAS, respondents.
D E C I S I O N
CORONA, J .:
Does the Sandiganbayan have jurisdiction over presidents, directors or
trustees, or managers of government-owned or controlled corporations
organized and incorporated under the Corporation Code for purposes of the
provisions of RA 3019, otherwise known as the Anti-Graft and Corrupt
Practices Act? The petitioner, represented by the Office of the Special
Prosecutor (OSP), takes the affirmative position in this petition
for certiorari under Rule 65 of the Rules of Court. Respondent Efren L. Alas
contends otherwise, together with the respondent court.
Pursuant to a resolution dated September 30, 1999 of the Office of the
Ombudsman, two separate informations
[1]
for violation of Section 3(e) of RA
3019, otherwise known as the Anti-Graft and Corrupt Practices Act, were filed
with the Sandiganbayan on November 17, 1999 against Efren L. Alas. The
charges emanated from the alleged anomalous advertising contracts entered
into by Alas, in his capacity as President and Chief Operating Officer of the
Philippine Postal Savings Bank (PPSB), with Bagong Buhay Publishing
Company which purportedly caused damage and prejudice to the
government.
On October 30, 2002, Alas filed a motion to quash the informations for
lack of jurisdiction, which motion was vehemently opposed by the prosecution.
After considering the arguments of both parties, the respondent court ruled
that PPSB was a private corporation and that its officers, particularly herein
respondent Alas, did not fall under Sandiganbayan jurisdiction. According to
the Sandiganbayan:
After a careful consideration of the arguments of the accused-movant as well as of
that of the prosecution, we are of the considered opinion that the instant motion of the
accused is well taken. Indeed, it is the basic thrust of Republic Act as well as (sic)
Presidential Decree No. 1606 as amended by President Decree No. 1486 and Republic
Act No. 7975 and Republic Act No. 8249 that the Sandiganbayan has jurisdiction only
over public officers unless private persons are charged with them in the commission
of the offenses.
The records disclosed that while Philippine Postal Savings Bank is a subsidiary of the
Philippine Postal Corporation which is a government owned corporation, the same is
not created by a special law. It was organized and incorporated under the Corporation
Code which is Batas Pambansa Blg. 68. It was registered with the Securities and
Exchange Commission under SEC No. AS094-005593 on June 22, 1994 with a
lifetime of fifty (50) years. Under its Articles of Incorporation the purpose for which
said entity is formed was primarily for business, xxx
Likewise, a scrutiny of the seven (7) secondary purposes of the corporation points to
the conclusion that it exists for business. Obviously, it is not involved in the
performance of a particular function in the exercise of government power. Thus, its
officers and employees are not covered by the GSIS and are under the SSS law, and
actions for reinstatement and backwages are not within the jurisdiction of the Civil
Service Commission but by the National Labor Relations Commission (NLRC).
The Supreme Court, in the case of Trade Unions of the Philippines and Allied
Services vs. National Housing Corp., 173 SCRA 33, held that the Civil Service now
covers only government owned or controlled corporations with original or legislative
charters, those created by an act of Congress or by special law, and not those
incorporated under and pursuant to a general legislation. The Highest Court
categorically ruled that the Civil Service does not include government-owned or
controlled corporation which are organized as subsidiaries of government-owned or
controlled corporation under the general corporation law.
In Philippine National Oil Company Energy Development Corporation vs.
Leogardo, 175 SCRA 26, the Supreme Court emphasized that:
The test in determining whether a government-owned or controlled corporation is
subject to the Civil Service Law is the manner of its creation such that government
corporation created by special charter are subject to its provision while those
incorporated under the general corporation law are not within its coverage.
Likewise in Davao City Water District vs. Civil Service Commission, 201 SCRA 601
it was held that by government-owned or controlled corporation with original charter
we mean government-owned or controlled corporation created by a special law and
not under the Corporation Code of the Philippines while in Llenes vs. Dicdican, et
al., 260 SCRA 207, a public officer has been ruled, as a person whose duties involve
the exercise of discretion in the performance of the function of government.
Clearly, on the basis of the foregoing pronouncements of the Supreme Court, the
accused herein cannot be considered a public officer. Thus, this Court may not
exercise jurisdiction over his act.
[2]

Dissatisfied, the People, through the Office of the Special Prosecutor
(OSP), filed this petition
[3]
arguing, in essence, that the PPSB was a
government-owned or controlled corporation as the term was defined under
Section 2(13) of the Administrative Code of 1987.
[4]
Likewise, in further defining
the jurisdiction of the Sandiganbayan, RA 8249 did not make a distinction as
to the manner of creation of the government-owned or controlled corporations
for their officers to fall under its jurisdiction. Hence, being President and Chief
Operating Officer of the PPSB at the time of commission of the crimes
charged, respondent Alas came under the jurisdiction of the Sandiganbayan.
Quoting at length from the assailed resolution dated February 15, 2001,
respondent Alas, on the other hand, practically reiterated the pronouncements
made by the respondent court in support of his conclusion that the PPSB was
not created by special law, hence, its officers did not fall within the jurisdiction
of the Sandiganbayan.
[5]

We find merit in the petition.
Section 2(13) of EO 292
[6]
defines government-owned or controlled
corporations as follows:
Sec. 2. General Terms Defined Unless the specific words of the text or the context
as a whole or a particular statute, shall require a different meaning:
xxx xxx xxx
(13) government owned or controlled corporations refer to any agency organized as a
stock or non-stock corporation vested with functions relating to public needs whether
governmental or proprietary in nature, and owned by the government directly or
indirectly or through its instrumentalities either wholly, or where applicable as in the
case of stock corporations to the extent of at least 51% of its capital stock: provided,
that government owned or controlled corporations maybe further categorized by the
department of the budget, the civil service commission and the commission on audit
for the purpose of the exercise and discharge of their respective powers, functions and
responsibilities with respect to such corporations.
From the foregoing, PPSB fits the bill as a government-owned or
controlled corporation, and organized and incorporated under the Corporation
Code as a subsidiary of the Philippine Postal Corporation (PHILPOST). More
than 99% of the authorized capital stock of PPSB belongs to the government
while the rest is nominally held by its incorporators who are/were themselves
officers of PHILPOST. The creation of PPSB was expressly sanctioned by
Section 32 of RA 7354, otherwise known as the Postal Service Act of 1992,
for purposes of, among others, to encourage and promote the virtue of thrift
and the habit of savings among the general public, especially the youth and
the marginalized sector in the countryside xxx and to facilitate postal service
by receiving collections and making payments, including postal money
orders.
[7]

It is not disputed that the Sandiganbayan has jurisdiction over presidents,
directors or trustees, or managers of government-owned or controlled
corporations with original charters whenever charges of graft and corruption
are involved. However, a question arises whether the Sandiganbayan has
jurisdiction over the same officers in government-owned or controlled
corporations organized and incorporated under the Corporation Code in view
of the delimitation provided for in Article IX-B Section 2(1) of the 1987
Constitution which states that:
SEC. 2. (1) The Civil Service embraces all branches, subdivisions, instrumentalities,
and agencies of the government, including government-owned or controlled
corporations with original charters.
It should be pointed out however, that the jurisdiction of the
Sandiganbayan is separate and distinct from the Civil Service Commission.
The same is governed by Article XI, Section 4 of the 1987 Constitution which
provides that the present anti-graft court known as the Sandiganbayan shall
continue to function and exercise its jurisdiction as now or hereafter may be
provided by law. This provision, in effect, retained the jurisdiction of the anti-
graft court as defined under Article XIII, Section 5 of the 1973 Constitution
which mandated its creation, thus:
Sec. 5. The Batasang Pambansa shall create a special court, to be known as
Sandiganbayan, which shall have jurisdiction over criminal and civil cases involving
graft and corrupt practices and such other offense committed by public officers and
employees, including those in government-owned or controlled corporations, in
relation to their office as may be determined by law. (Italics ours)
On March 30, 1995, Congress, pursuant to its authority vested under the
1987 Constitution, enacted RA 7975
[8]
maintaining the jurisdiction of the
Sandiganbayan over presidents, directors or trustees, or managers of
government-owned or controlled corporations without any distinction
whatsoever. Thereafter, on February 5, 1997, Congress enacted RA
8249
[9]
which preserved the subject provision:
Section 4, Jurisdiction. The Sandiganbayan shall exercise exclusive original
jurisdiction in all cases involving:
a. Violations of Republic Act No. 3019, as amended, otherwise known as
the Anti-Graft and Corrupt Practices Act, Republic Act No. 1379, and
Chapter II, Section, Title VII, Book II of the Revised Penal Code, where
one or more of the accused are officials occupying the following
positions in the government, whether in a permanent, acting or interim
capacity, at the time of the commission of the offense,
(1) Officials of the executive branch occupying the positions of
regional director, and higher, otherwise classified as grade 27 and
higher, of the Compensation and Position Classification Act of 1989
(Republic Act No. 6758) specifically including:
xxx xxx xxx
(g) Presidents, directors or trustees, or managers of
government-owned or controlled corporations, state universities
or educational institutions or foundations. (Italics ours)
The legislature, in mandating the inclusion of presidents, directors or
trustees, or managers of government-owned or controlled corporations within
the jurisdiction of the Sandiganbayan, has consistently refrained from making
any distinction with respect to the manner of their creation.
The deliberate omission, in our view, clearly reveals the intention of the
legislature to include the presidents, directors or trustees, or managers
of both types of corporations within the jurisdiction of the Sandiganbayan
whenever they are involved in graft and corruption. Had it been otherwise, it
could have simply made the necessary distinction. But it did not.
It is a basic principle of statutory construction that when the law does not
distinguish, we should not distinguish. Ubi lex non distinguit nec nos
distinguere debemos. Corollarily, Article XI Section 12 of the 1987
Constitution, on the jurisdiction of the Ombudsman (the governments
prosecutory arm against persons charged with graft and corruption), includes
officers and employees of government-owned or controlled corporations,
likewise without any distinction.
In Quimpo v. Tanodbayan,
[10]
this Court, already mindful of the pertinent
provisions of the 1987 Constitution, ruled that the concerned officers of
government-owned or controlled corporations, whether created by special law
or formed under the Corporation Code, come under the jurisdiction of the
Sandiganbayan for purposes of the provisions of the Anti-Graft and Corrupt
Practices Act. Otherwise, as we emphasized therein, a major policy of
Government, which is to eradicate, or at the very least minimize, the graft and
corruption that has permeated the fabric of the public service like a malignant
social cancer, would be seriously undermined. In fact, Section 1 of the Anti-
Graft and Corrupt Practices Act embodies this policy of the government, that
is, to repress certain acts not only of public officers but also of private persons
constituting graft or corrupt practices or which may lead thereto.
The foregoing pronouncement has not outlived its usefulness. On the
contrary, it has become even more relevant today due to the rampant cases of
graft and corruption that erode the peoples faith in government. For indeed, a
government-owned or controlled corporation can conceivably create as many
subsidiary corporations under the Corporation Code as it might wish, use
public funds, disclaim public accountability and escape the liabilities and
responsibilities provided by law. By including the concerned officers of
government-owned or controlled corporations organized and incorporated
under the Corporation Code within the jurisdiction of the Sandiganbayan, the
legislature evidently seeks to avoid just that.
WHEREFORE, in view of the foregoing, the petition is hereby GRANTED
and the assailed resolution dated February 15, 2001 of the respondent court
is hereby REVERSED and SET ASIDE.
SO ORDERED.