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EPA dismissed upon motion of United.

The said Order of


Part 2 Cases dismissal is currently on appeal with the Court of Appeals.

1) United Residents of Dominican Hills Inc. v. The demolition order was subsequently implemented by the
Commission on the Settlement of Land Problems Office of the City Mayor and the City Engineer's Office of
Baguio City. However, petitioner avers that private
TOPIC: AN EXECUTIVE AGENCY IS NOT A COURT. respondents returned and reconstructed the demolished
FACTS: Dominican Hills, formerly registered as Diplomat structures.
Hills in Baguio City, was mortgaged to the United Coconut
Planters Bank (UCPB). It was eventually foreclosed and To forestall the re-implementation of the demolition order,
acquired later on by the said bank as the highest bidder. private respondents filed a petition for annulment of
On 11 April 1983, through its President Eduardo Cojuangco contracts with prayer for a temporary restraining order
Jr., the subject property was donated to the Republic of the before the Commission on the Settlement of Land Problems
Philippines. The deed of donation stipulated that (COSLAP) against petitioner, HIGC, PMS, the City
Dominican Hills would be utilized for the "priority programs, Engineer's Office, the City Mayor, as well as the Register of
projects, activities in human settlements and economic Deeds of Baguio City. On the very same day, public
development and governmental purposes" of the Ministry of respondent COSLAP issued the contested order requiring
Human Settlements. the parties to maintain the status quo. Without filing a
motion for reconsideration from the aforesaid status quo
On December 12, 1986, then President Corazon Aquino order, petitioner filed the instant petition questioning the
issued EO 85 abolishing the Ministry of Human jurisdiction of the COSLAP.
Settlements. All agencies under the its supervision as well
as all its assets, programs and projects, were transferred to ISSUE: W/O COSLAP is empowered to hear and try a
the Presidential Management Staff (PMS). petition for annulment of contracts with prayer for a TRO
and to issue a status quo order and conduct a hearing
On 18 October 1988, United (Dominican Hills) submitted its thereof?
application before the PMS to acquire a portion of the
Dominican Hills property. In a MOA, PMS and United RULING: COSLAP is not justified in assuming jurisdiction
agreed that the latter may purchase a portion of the said over the controversy. It discharges quasi-judicial functions:
property from HOME INSURANCE GUARANTY
CORPORATIO, acting as originator, on a selling price of "Quasi-judicial function" is a term which applies to the
P75.00 per square meter. actions, discretion, etc. of public administrative officers or
bodies, who are required to investigate facts, or ascertain
Thus, on June 12, 1991, HIGC sold 2.48 hectares of the the existence of facts, hold hearings, and draw conclusions
property to UNITED. The deed of conditional sale provided from them, as a basis for their official action and to exercise
that ten (10) per cent of the purchase price would be paid discretion of a judicial nature."
upon signing, with the balance to be amortized within one
year from its date of execution. After UNITED made its final However, it does not depart from its basic nature as an
payment on January 31, 1992, HIGC executed a Deed of administrative agency, albeit one that exercises quasi-
Absolute Sale dated July 1, 1992. judicial functions. Still, administrative agencies are not
considered courts; they are neither part of the judicial
Petitioner alleges that sometime in 1993, private system nor are they deemed judicial tribunals. The doctrine
respondents entered the Dominican Hills property allocated of separation of powers observed in our system of
to UNITED and constructed houses thereon. Petitioner was government reposes the three (3) great powers into its
able to secure a demolition order from the city mayor. three (3) branches — the legislative, the executive, and the
Unable to stop the razing of their houses, private judiciary — each department being co-equal and
respondents, under the name DOMINICAN HILL BAGUIO coordinate, and supreme in its own sphere. Accordingly, the
RESIDENTS HOMELESS ASSOCIATION (ASSOCIATION, executive department may not, by its own fiat, impose the
for brevity) filed an action for injunction before RTC Baguio judgment of one of its own agencies, upon the judiciary.
City. Private respondents were able to obtain a temporary Indeed, under the expanded jurisdiction of the Supreme
restraining order but their prayer for a writ of preliminary Court, it is empowered "to determine whether or not there
injunction was later denied. has been grave abuse of discretion amounting to lack of or
excess of jurisdiction on the part of any branch or
The ASSOCIATION filed a separate civil case for damages, instrumentality of the Government."
injunction and annulment of the said MOA. It was later on
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2) Rural Bank of Davao Inc. v. Onahon 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
3) Leyson v. Office of the Ombudsman and the acceptance of their documents. They also asked
that if the bidding had already been conducted, the
The Coconut Industry Investment Fund (CIIF) companies defendants be directed not to award the project pending
failed to comply with its contract agreement with the resolution of their complaint.
International Towage and Transport Corporation (ITTC) for
the transport of coconut oil in bulk. ITTC Executive Vice On the same date, Judge Lebaquin issued a restraining
President Manuel Leyson, Jr. filed a complaint with the order prohibiting PBAC from conducting the bidding and
Office of the Ombudsman for breach of contract, among award the project. The defendants filed a motion to lift the
others. The complaint was dismissed. restraining order on the ground that the court is prohibited
from issuing such order, preliminary injunction and
ISSUE(S): Whether or not the Office of the Ombudsman preliminary mandatory injunction in government
has jurisdiction to further act on the complaint. infrastructure project under Sec. 1 of P.D. 1818. They also
contended that the preliminary injunction had become moot
HELD: NO. All three corporations comprising the CIIF and academic as it was served after the bidding had been
companies were organized as stock corporations. The awarded and closed.
UCPB-CIIF owns 44.10% of the shares of Legaspi Oil,
91.24% of the shares of GranExport, and 92.85% of the On January 2, 1989, the trial court lifted the restraining
shares of United Coconut. Obviously, the below 51% order and denied the petition for preliminary injunction. It
shares of stock in Legaspi Oil removes it from the definition declared that the building sought to be constructed at the
of a government-owned or controlled corporation. There is ISCOF was an infrastructure project of the government
no showing that GranExport and United Coconut was falling within the coverage of the subject law.
vested with functions relating to publi cneeds whether
governmental or proprietary in nature. Thus, the CIIF ISSUE: Whether or not ISCOF is a government
companies are private corporations not within the scope of instrumentality subject to the provisions of PD 1818?
the Ombudsman’s jurisdiction.
RULING: The 1987 Administrative Code defines a
4) Malaga v. Penachos government instrumentality as follows:
Chartered Institution and GOCC, defined. Instrumentality refers to any agency of the National
Government, not integrated within the department
FACTS: The Iloilo State College of Fisheries (ISCOF) framework, vested with special functions or jurisdiction by
through its Pre-qualifications, Bids and Awards Committee law, endowed with some if not all corporate powers,
(PBAC) caused the publication in the November 25, 26 and administering special funds, and enjoying operational
28, 1988 issues of the Western Visayas Daily an Invitation autonomy, usually through a charter. This term includes
to Bid for the construction of a Micro Laboratory Building at regulatory agencies, chartered institutions, and
ISCOF. The notice announced that the last day for the government-owned or controlled corporations. (Sec. 2 (5)
submission of pre-qualification requirements was on Introductory Provisions).
December 2, 1988, and that the bids would be received and
opened on December 12, 1988 at 3 o'clock in the The same Code describes a chartered institution thus:
afternoon. Chartered institution - refers to any agency organized or
operating under a special charter, and vested by law with
Petitioners Malaga and Najarro, doing business under the functions relating to specific constitutional policies or
name of BE Construction and Best Built Construction, objectives. This term includes the state universities and
respectively, submitted their pre-qualification documents at colleges, and the monetary authority of the state. (Sec. 2
two o'clock in the afternoon of December 2, 1988. (12) Introductory Provisions).
Petitioner Occeana submitted his own PRE-C1 on
December 5, 1988. All three of them were not allowed to It is clear from the above definitions that ISCOF is a
participate in the bidding as their documents were chartered institution and is therefore covered by P.D. 1818.
considered late.
There are also indications in its charter that ISCOF is a
government instrumentality. First, it was created in
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pursuance of the integrated fisheries development policy of deduction from petitioners’ salaries or allowances of the
the State, a priority program of the government to effect the amounts needed to cover the alleged overpayments.
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 Issue: Whether or not AO 29 and AO 268 were issued in
expenses to be audited by the Commission on Audit or its the valid exercise of presidential control over the executive
duly authorized representative. Third, heads of bureaus and departments
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 Held: The Pres. is the head of the government.
the services of such employees as can be spared without Governmental power and authority are exercised and
serious detriment to public service. Lastly, an additional implemented through him. His power includes the control of
amount of P1.5M had been appropriated out of the funds of executive departments as provided under Sec. 17, Art. VII
the National Treasury and it was also decreed in its charter of the Constitution.
that the funds and maintenance of the state college would
henceforth be included in the General Appropriations Law. Control means the power of an officer to alter or modify or
set aside what a subordinate officer had done in the
Nevertheless, it does not automatically follow that ISCOF is performance of his duties and to substitute the judgment of
covered by the prohibition in the said decree as there are the former for that of the latter. The Pres. can, by virtue of
irregularities present surrounding the transaction that his power of control, review, modify, alter or nullify any
justified the injunction issued as regards to the bidding and action or decision of his subordinate in the executive
the award of the project (citing the case of Datiles vs. departments, bureau or offices under him.
Sucaldito).
When the Pres. issued AO 29 limiting the amount of
incentive benefits,enjoining heads of government agencies
5) Blaquera v. Alcala from granting incentive benefits without approval from him
and directing the refund of the excess over the prescribed
Facts: On Feb. 21, 1992, then Pres. Aquino issued AO 268 amount, the Pres. was just exercising his power of control
which granted each official and employee of the over executive departments.
government the productivity incentive benefits in a
maximum amount equivalent to 30% of the employee’s one The Pres. issued subject AOs to regulate the grant of
month basic salary but which amount not be less than P2, productivity incentive benefits and to prevent discontent,
000.00. Said AO provided that the productivity incentive dissatisfaction and demoralization among government
benefits shall be granted only for the year 1991. personnel by committing limited resources of government
Accordingly, all heads of agencies, including government for the equal payment of incentives and awards. The Pres.
boards of government-owned or controlled corporations and was only exercising his power of control by modifying the
financial institutions, are strictly prohibited from granting acts of the heads of the government agencies who granted
productivity incentive benefits for the year 1992 and future incentive benefits to their employees without appropriate
years pending the result of a comprehensive study being clearance from the Office of the Pres., thereby resulting in
undertaken by the Office of the Pres. the uneven distribution of government resources.

The petitioners, who are officials and employees of several The President’s duty to execute the law is of constitutional
government departments and agencies, were paid incentive origin. So, too, is his control of executive departments.
benefits for the year 1992. Then, on Jan. 19, 1993, then
Pres. Ramos issued AO 29 authorizing the grant of 6) Dela Llana v. Alba
productivity incentive benefits for the year 1992 in the
maximum amount of P1,000.00 and reiterating the FACTS: De La Llana, et. al. filed a Petition for Declaratory
prohibition under Sec. 7 of AO 268, enjoining the grant of Relief and/or for Prohibition, seeking ti enjoin the Minister of
productivity incentive benefits without prior approval of the the Budget, the Chairman of the Commission on Audit, and
President. Sec. 4 of AO 29 directed all departments, offices the Minister of Justice from taking any action implementing
and agencies which authorized payment of productivity BP 129 which mandates that Justices and judges of inferior
incentive bonus for the year 1992 in excess of P1, 000.00 courts from the CA to MTCs, except the occupants of the
to immediately cause the refund of the excess. In Sandiganbayan and the CTA, unless appointed to the
compliance therewith, the heads of the departments or inferior courts established by such act, would be considered
agencies of the government concerned caused the separated from the judiciary. It is the termination of their
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incumbency that for petitioners justify a suit of this Office No. III at San Fernando, Pampanga audited the
character, it being alleged that thereby the security of financial accounts of SFWD for the period covering January
tenure provision of the Constitution has been ignored and 1, 1994 to July 15, 1996. The COA Special Audit Team
disallowed the payment of the above-mentioned benefits
disregarded.
and allowances received by petitioners after the same were
found to be excessive and contrary to Sections 228, 162
ISSUES: W/N BP 129 is unconstitutional for impairing the and 163 of the Government Accounting and Auditing
security of tenure of the justices and judges in this case? Manual (GAAM) and to Civil Service Commission (CSC)
Resolution No. 954073[6] in relation to Section 13 of
RULING: It is a well-known rule that valid abolition of Presidential Decree (PD) No. 198 (Provincial Water Utilities
offices is neither removal nor separation of the incumbents. Act of 1973) as amended. Thus, petitioners were directed to
refund the benefits and allowances subject of the
Of course, if the abolition is void, the incumbent is deemed
disallowance.
never to have ceased to hold office. The rule that the
abolition of an office does not amount to an illegal removal Petitioners appealed to the COA Regional Director raising
of its incumbent is the principle that, in order to be valid, the the following arguments:
abolition must be made in good faith.

Removal is to be distinguished from termination by virtue of 1. That CSC Resolution No. 954073 issued in Cruz v.
valid abolition of the office. There can be no tenure to a Cabili cannot extend to appellants, they not having
non-existent office. After the abolition, there is in law no been made parties to the case;
2. That it applied to appellants, said resolution will
occupant. In case of removal, there is an office with an
partake the nature of an implementing rule and
occupant who would thereby lose his position. It is in that regulation which is beyond CSC's jurisdiction to
sense that from the standpoint of strict law, the question of issue;
any impairment of security of tenure does not arise. 3. That DBM, not CSC, is the appropriate authority to
rule on compensation;
7) Barbo, et. Al. v. CoA 4. That Christmas Bonus, Productivity Bonus, Rice
Allowance, and Uniform Allowance are not
compensation;
By this Petition for Certiorari under Rule 64 of the Rules of 5. That Extraordinary and Miscellaneous Expenses
Court petitioners seek to annul or reverse COA Decision are not compensation but reimbursement of
No. 2000-133[1]dated May 16, 2000 and Resolution[2] dated expenses; and
February 27, 2003 rendered by the Commission on Audit 6. That the right of water district directors and the
(COA). In the said issuances, the COA affirmed its Regional interim general manager to receive allowances and
Director's 1st Indorsement [3] dated June 5, 1998, which in other benefits is appropriately recognized by
turn affirmed Notice of Disallowance No. 97-004 (94, 95, LWUA.
96)[4] dated June 30, 1997 issued by the Special Audit
Team against petitioners Rebecca A. Barbo, Eleonora R.
de Jesus, and Antonio B. Magtibay. The Regional Director, in his First Indorsement dated June
5, 1998, affirmed the Special Audit Team's Notice of
Petitioners are officials of the Local Water Utilities Disallowance No. 97-004 (94, 95, 96). The Regional
Administration (LWUA) and designated members of the Director declared that the COA Special Audit Team was
Interim Board of Directors of the San Fernando Water correct in citing CSC Resolution No. 954073, which
District (SFWD). resolved the case of LWUA Employees Association for
Progress (LEAP) v. Cabili and de Vera[7], because the said
On December 4, 1995 and February 12 1996, the LWUA resolution applied on all fours to petitioners' case. In the
Board of Trustees issued Board Resolution No. 313, Series said resolution, the CSC held that it is illegal for any LWUA
of 1995 and Board Resolution No. 39, Series of officer or employee who sits as member of the Board of
1996 [5] respectively. These Board Resolutions authorized Directors of a water district to receive and collect any
the Board of Directors of SFWD to receive reimbursable additional, double, or indirect compensation from said water
allowances in the form of Representation and district, except per diems, pursuant to Section 13 of PD No.
Transportation Allowance (RATA), Travel Allowance, and 198, as amended.
Extraordinary & Miscellaneous Expense (EME); Christmas
Bonus; Uniform Allowance; Rice Allowance; Medical and From the denial of their appeal by the COA Regional
Dental Benefits; and Productivity Incentive Bonus. Director, petitioners elevated the matter to the COA via a
petition for review.
Pursuant to the said Board Resolutions, petitioners
received EME, Rice Allowance, Christmas Bonus, and In the herein challenged Decision dated May 16, 2000, the
Productivity Bonus from SFWD during the calendar years COA denied the petition for review and affirmed the ruling
starting 1994 until 1996. of the COA Regional Director as contained in its First
Indorsement. The COA stressed that the Directors of local
On June 30, 1997, a Special Audit Team of COA Regional water districts (LWDs) were prohibited from receiving

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compensation other than per diems and that LWUA Board jurisdiction of the courts, the DBM, and the LWUA. Citing
Resolution Nos. 313 and 39 were contrary to the law which Section 2, Subdivision D, Article IX of the 1987
it intended to implement, specifically, Section 13 of PD No. Constitution the Court declared that it is the mandate of the
198, as amended. Citing the case Peralta v. Mathay,[8] the COA to audit all government agencies, including
COA declared that the subject bonuses and allowances government-owned and controlled corporations with original
received by petitioners constituted additional compensation charters. Indeed, the Constitution specifically vests in the
or remuneration. The dispositive portion of the decision COA the authority to determine whether government
reads: entities comply with laws and regulations in disbursing
government funds, and to disallow illegal or irregular
PREMISES CONSIDERED, the instant Petition for Review disbursements of government funds.[12] This independent
of Mr. Simplicio Belisario, et al. [herein petitioners included], constitutional body is tasked to be vigilant and
is hereby denied. Accordingly, the subject disallowances conscientious in safeguarding the proper use of the
are affirmed with all officers and employees who received government's, and ultimately the people's, property.
the bonuses and allowances liable for their settlement
together with the officers named in the Notice of Anent the second issue, a water district is a government-
Disallowance, namely: Mr. Dionisio Polintan, General owned and controlled corporation with a special charter
Manager, Ms. Merlita Garcia, Finance Officer, and Ms. since it is created pursuant to a special law, Presidential
Arsenia Sicat, Cashier / Property Management Supervisor. Decree (PD) 198. It is undeniable that PD 198 expressly
(Words in brackets ours) prohibits the grant of RATA, EME, and bonuses to
Petitioners' motion for reconsideration was denied by the members of the board of Water Districts. Section 13 of PD
COA in its challenged Resolution dated February 27, 2003. 198, as amended, reads as follows:

Thus, petitioners now come to this Court, imputing grave Compensation. - Each director shall receive a per diem, to
abuse of discretion amounting to lack of jurisdiction on the be determined by the board, for each meeting of the board
part of the COA in issuing COA Decision No. 2000-133 and actually attended by him, but no director shall receive per
February 27, 2003 Resolution. Specifically, petitioners raise diems in any given month in excess of the equivalent of the
the following issues: total per diems of four meetings in any given month. No
director shall receive other compensation for services to the
district.
I. WHETHER OR NOT RESPONDENT HAS THE
JURISDICTION TO MOTU PROPRIO DECLARE Any per diem in excess of P50 shall be subject to approval
LWUA BOARD RESOLUTION NO. 313, SERIES of the Administration.
OF 1995, AS AMENDED BY RESOLUTION NO.
39, SERIES OF 1996, TO BE TOTALLY IN In Baybay Water District v. Commission on Audit,[14] the
CONFLICT WITH SEC. 13 OF PD NO. 198, AS members of the board of Baybay Water District also
AMENDED. questioned the disallowance by the COA of payment of
RATA, rice allowance and excessive per diems. The Court
II. WHETHER OR NOT SEC. 13, PD NO. 198, AS ruled that pursuant to PD 198, members of the board of
AMENDED, PROHIBIT PETITIONERS' water districts cannot receive allowances and benefits more
ENTITLEMENT TO RATA, EME, BONUSES AND than those allowed by PD 198. Construing Section 13 of PD
OTHER BENEFITS AND ALLOWANCES. 198, in Baybay, the Court declared:

III. WHETHER OR NOT PETITIONERS ARE LIABLE xxx Under §13 of this Decree, per diem is precisely
TO SETTLE / REFUND THE DISALLOWED intended to be the compensation of members of board of
ALLOWANCES, BONUSES AND OTHER directors of water districts. Indeed, words and phrases in a
BENEFITS RECEIVED BY PETITIONERS. statute must be given their natural, ordinary, and
commonly-accepted meaning, due regard being given to
the context in which the words and phrases are used. By
The petition is partly meritorious.
specifying the compensation which a director is entitled to
receive and by limiting the amount he/she is allowed to
Petitioners contend that the COA lacks jurisdiction to
receive in a month, and, in the same paragraph, providing
declare whether or not LWUA Board Resolution Nos. 313
"No director shall receive other compensation" than the
and 39 are consistent with Section 13 of PD No. 198, as
amount provided for per diems, the law quite clearly
amended, on matters pertaining to the compensation and
indicates that directors of water districts are authorized to
"other benefits" of the Directors of the LWD. This is
receive only the per diem authorized by law and no other
allegedly the function of the courts.
compensation or allowance in whatever form.
The Court has already settled this issue in a myriad of
Section 13 of PD 198 is clear enough that it needs no
cases.[9] Particularly, in Rodolfo S. de Jesus [Catbalogan
interpretation. It expressly prohibits the grant of
Water District] v. COA,[10] the Court upheld the authority and
compensation other than the payment of per diem, thus
jurisdiction of the COA to rule on the legality of the
preempting the exercise of any discretion by water districts
disbursement of government funds by a water district and
in paying other allowances and bonuses.
declared that such power does not conflict with the

5
Lastly, the petitioners claim that they are not liable to settle
or refund the disallowed payments of benefits and
allowances which they have received in good faith and
as de jure officers of SFWD.

While we sustain the disallowance of the above benefits by


respondent COA, however, we find that the SFWD affected
personnel who received the above mentioned benefits and
privileges acted in good faith under the honest belief that
Board Resolution Nos. 313 and 39 authorized such
payment.

In Abanilla v. Commission On Audit citing Querubin v.


Regional Cluster Director, Legal and Adjudication
Office, COA Regional Office VI, Pavia, Iloilo City,[16] this
Court held:

Considering, however, that all the parties here acted in


good faith, we cannot countenance the refund of subject
incentive benefits for the year 1992, which amounts the
petitioners have already received. Indeed, no indicia of bad
faith can be detected under the attendant facts and
circumstances. The officials and chiefs of offices concerned
disbursed such incentive benefits in the honest belief that
the amounts given were due to the recipients and the latter
accept the same with gratitude, confident that they richly
deserve such benefits.

x x x. Petitioners here received the additional allowances


and bonuses in good faith under the honest belief that
LWUA Board Resolution No. 313 authorized such payment.
At the time petitioners received the additional allowances
and bonuses, the Court had not yet decided Baybay Water
District. Petitioners had no knowledge that such payment
was without legal basis. Thus, being in good faith,
petitioners need not refund the allowances and bonuses
they received but disallowed by the COA.

The foregoing disquisitions were also applied to the more


recent cases of De Jesus [Metro Cariaga Water
District];[17] Molen [Metro Iloilo Water District]; and Magno
[Mangaldan Water District].[18] The same reasoning and
conclusions of the Court were reiterated in de Jesus v.
CSC[19] and Cabili and de Vera v. CSC.[20] We find no
reason to depart from the rulings in these cases which
essentially involve the same issues as the instant case.

WHEREFORE, the instant petition is hereby PARTIALLY


GRANTED. COA Decision No. 2000-133 dated May 16,
2000 and Resolution dated February 27, 2003 are
hereby AFFIRMED with the MODIFICATION that the
petitioners need not refund the benefits and allowances
disallowed by the COA.