G.R. No.

164789

August 27, 2009

CHRISTIAN GENERAL ASSEMBLY, INC., Petitioner,

vs.
SPS. AVELINO C. IGNACIO and PRISCILLA T. IGNACIO, Respondents.
DECISION
BRION, J.:
We resolve in this Rule 45 petition the legal issue of whether an action to rescind a contract to sell a
subdivision lot that the buyer found to be under litigation falls under the exclusive jurisdiction of the
Housing and Land Use Regulatory Board (HLURB).
In this petition,1 Christian General Assembly, Inc. (CGA) prays that we set aside the decision 2 issued by
the Court of Appeals (CA) in CAG.R. SP No. 75717 that dismissed its complaint for rescission filed with
the Regional Trial Court (RTC) of Bulacan for lack of jurisdiction, as well as the CA resolution 3 that denied
its motion for reconsideration.
FACTUAL ANTECEDENTS
The present controversy traces its roots to the case filed by CGA against the Spouses Avelino and
Priscilla Ignacio (respondents) for rescission of their Contract to Sell before the RTC, Branch 14, Malolos,
Bulacan. The facts, drawn from the records and outlined below, are not in dispute.
On April 30, 1998, CGA entered into a Contract to Sell a subdivision lot 4 (subject property) with the
respondents the registered owners and developers of a housing subdivision known as Villa Priscilla
Subdivision located in Barangay Cutcut, Pulilan, Bulacan. Under the Contract to Sell, CGA would
pay P2,373,000.00 for the subject property on installment basis; they were to pay a down payment
of P1,186,500, with the balance payable within three years on equal monthly amortization payments
of P46,593.85, inclusive of interest at 24% per annum, starting June 1998.
On August 5, 2000, the parties mutually agreed to amend the Contract to Sell to extend the payment
period from three to five years, calculated from the date of purchase and based on the increased total
consideration ofP2,706,600, with equal monthly installments of P37,615.00, inclusive of interest at 24%
per annum, starting September 2000.
According to CGA, it religiously paid the monthly installments until its administrative pastor discovered
that the title covering the subject property suffered from fatal flaws and defects. CGA learned that the
subject property was actually part of two consolidated lots (Lots 2-F and 2-G Bsd-04-000829 [OLT]) that
the respondents had acquired from Nicanor Adriano (Adriano) and Ceferino Sison (Sison), respectively.
Adriano and Sison were former tenant-beneficiaries of Purificacion S. Imperial (Imperial) whose property
in Cutcut, Pulilan, Bulacan5 had been placed under Presidential Decree (PD) No. 27s Operation Land
Transfer.6 According to CGA, Imperial applied for the retention of five hectares of her land under Republic
Act No. 6657,7 which the Department of Agrarian Reform (DAR) granted in its October 2, 1997 order
(DAR Order). The DAR Order authorized Imperial to retain the farm lots previously awarded to the tenantbeneficiaries, including Lot 2-F previously awarded to Adriano, and Lot 2-G Bsd-04-000829 awarded to
Sison. On appeal, the Office of the President8 and the CA9 upheld the DAR Order. Through the Courts
Resolution dated January 19, 2005 in G.R. No. 165650, we affirmed the DAR Order by denying the
petition for review of the appellate decision.

Understandably aggrieved after discovering these circumstances, CGA filed a complaint against the
respondents before the RTC on April 30, 2002.10 CGA claimed that the respondents fraudulently
concealed the fact that the subject property was part of a property under litigation; thus, the Contract to
Sell was a rescissible contract under Article 1381 of the Civil Code. CGA asked the trial court to rescind
the contract; order the respondents to return the amounts already paid; and award actual, moral and
exemplary damages, attorneys fees and litigation expenses.
Instead of filing an answer, the respondents filed a motion to dismiss asserting that the RTC had no
jurisdiction over the case.11 Citing PD No. 95712 and PD No. 1344, the respondents claimed that the case
falls within the exclusive jurisdiction of the HLURB since it involved the sale of a subdivision lot. CGA
opposed the motion to dismiss, claiming that the action is for rescission of contract, not specific
performance, and is not among the actions within the exclusive jurisdiction of the HLURB, as specified by
PD No. 957 and PD No. 1344.
On October 15, 2002, the RTC issued an order denying the respondents motion to dismiss. The RTC
held that the action for rescission of contract and damages due to the respondents fraudulent
misrepresentation that they are the rightful owners of the subject property, free from all liens and
encumbrances, is outside the HLURBs jurisdiction.1avvphi1
The respondents countered by filing a petition for certiorari with the CA. In its October 20, 2003 decision,
the CA found merit in the respondents position and set the RTC order aside; the CA ruled that the
HLURB had exclusive jurisdiction over the subject matter of the complaint since it involved a contract to
sell a subdivision lot based on the provisions of PD No. 957 and PD No. 1344.
Contending that the CA committed reversible error, the CGA now comes before the Court asking us to
overturn the CA decision and resolution.
THE PETITION
In its petition, CGA argues that the CA erred (1) in applying Article 1191 of the Civil Code for breach of reciprocal obligation, while the
petitioners action is for the rescission of a rescissible contract under Article 1381 of the same
Code, which is cognizable by the regular court; and
(2) in holding that the HLURB has exclusive jurisdiction over the petitioners action by applying
Antipolo Realty Corp v. National Housing Corporation13 and other cited cases.
In essence, the main issue we are asked to resolve is which of the two the regular court or the HLURB
has exclusive jurisdiction over CGAs action for rescission and damages.
According to CGA, the exclusive jurisdiction of the HLURB, as set forth in PD No. 1344 and PD No. 957,
is limited to cases involving specific performance and does not cover actions for rescission.
Taking the opposing view, respondents insist that since CGAs case involves the sale of a subdivision lot,
it falls under the HLURBs exclusive jurisdiction.
THE COURTS RULING
We find no merit in the petition and consequently affirm the CA decision.

Development of the HLURBs jurisdiction

The nature of an action and the jurisdiction of a tribunal are determined by the material allegations of the
complaint and the law governing at the time the action was commenced. The jurisdiction of the tribunal
over the subject matter or nature of an action is conferred only by law, not by the parties consent or by
their waiver in favor of a court that would otherwise have no jurisdiction over the subject matter or the
nature of an action.14Thus, the determination of whether the CGAs cause of action falls under the
jurisdiction of the HLURB necessitates a closer examination of the laws defining the HLURBs jurisdiction
and authority.
PD No. 957, enacted on July 12, 1976, was intended to closely supervise and regulate the real estate
subdivision and condominium businesses in order to curb the growing number of swindling and fraudulent
manipulations perpetrated by unscrupulous subdivision and condominium sellers and operators. As one
of its "whereas clauses" states:
WHEREAS, reports of alarming magnitude also show cases of swindling and fraudulent manipulations
perpetrated by unscrupulous subdivision and condominium sellers and operators, such as failure to
deliver titles to the buyers or titles free from liens and encumbrances, and to pay real estate taxes, and
fraudulent sales of the same subdivision lots to different innocent purchasers for value;
Section 3 of PD No. 957 granted the National Housing Authority (NHA) the "exclusive jurisdiction to
regulate the real estate trade and business." Thereafter, PD No. 1344 was issued on April 2, 1978 to
expand the jurisdiction of the NHA to include the following:
SECTION 1. In the exercise of its functions to regulate the real estate trade and business and in addition
to its powers provided for in Presidential Decree No. 957, the National Housing Authority shall have
exclusive jurisdiction to hear and decide cases of the following nature:
A. Unsound real estate business practices;
B. Claims involving refund and any other claims filed by subdivision lot or condominium unit buyer
against the project owner, developer, dealer, broker or salesman; and
C. Cases involving specific performance of contractual and statutory obligations filed by buyers of
subdivision lot or condominium unit against the owner, developer, dealer, broker or salesman.
Executive Order No. 648 (EO 648), dated February 7, 1981, transferred the regulatory and quasi-judicial
functions of the NHA to the Human Settlements Regulatory Commission (HSRC). Section 8 of EO 648
provides:
SECTION 8. Transfer of Functions. -The regulatory functions of the National Housing Authority pursuant
to Presidential Decree Nos. 957, 1216, 1344 and other related laws are hereby transferred to the
Commission [Human Settlements Regulatory Commission]. x x x. Among these regulatory functions are:
1) Regulation of the real estate trade and business; x x x 11) Hear and decide cases of unsound real
estate business practices; claims involving refund filed against project owners, developers, dealers,
brokers, or salesmen; and cases of specific performance.
Pursuant to Executive Order No. 90 dated December 17, 1986, the HSRC was renamed as the HLURB.
Rationale for HLURBs extensive quasi-judicial powers

The surge in the real estate business in the country brought with it an increasing number of cases
between subdivision owners/developers and lot buyers on the issue of the extent of the HLURBs
exclusive jurisdiction. In the cases that reached us, we have consistently ruled that the HLURB has
exclusive jurisdiction over complaints arising from contracts between the subdivision developer and the lot
buyer or those aimed at compelling the subdivision developer to comply with its contractual and statutory
obligations to make the subdivision a better place to live in. 15
We explained the HLURBs exclusive jurisdiction at length in Sps. Osea v. Ambrosio, 16 where we said:
Generally, the extent to which an administrative agency may exercise its powers depends largely, if not
wholly, on the provisions of the statute creating or empowering such agency. Presidential Decree (P.D.)
No. 1344, "Empowering The National Housing Authority To Issue Writ Of Execution In The Enforcement
Of Its Decision Under Presidential Decree No. 957," clarifies and spells out the quasi-judicial dimensions
of the grant of jurisdiction to the HLURB in the following specific terms:
SEC. 1. In the exercise of its functions to regulate the real estate trade and business and in addition to its
powers provided for in Presidential Decree No. 957, the National Housing Authority shall have exclusive
jurisdiction to hear and decide cases of the following nature:
A. Unsound real estate business practices;
B. Claims involving refund and any other claims filed by subdivision lot or condominium unit buyer
against the project owner, developer, dealer, broker or salesman; and
C. Cases involving specific performance of contractual and statutory obligations filed by buyers of
subdivision lots or condominium units against the owner, developer, dealer, broker or salesman.
The extent to which the HLURB has been vested with quasi-judicial authority must also be determined by
referring to the terms of P.D. No. 957, "The Subdivision And Condominium Buyers' Protective Decree."
Section 3 of this statute provides:
x x x National Housing Authority [now HLURB]. - The National Housing Authority shall have exclusive
jurisdiction to regulate the real estate trade and business in accordance with the provisions of this Decree.
The need for the scope of the regulatory authority thus lodged in the HLURB is indicated in the second,
third and fourth preambular paragraphs of PD 957 which provide:
WHEREAS, numerous reports reveal that many real estate subdivision owners, developers, operators,
and/or sellers have reneged on their representations and obligations to provide and maintain properly
subdivision roads, drainage, sewerage, water systems, lighting systems, and other similar basic
requirements, thus endangering the health and safety of home and lot buyers;
WHEREAS, reports of alarming magnitude also show cases of swindling and fraudulent manipulations
perpetrated by unscrupulous subdivision and condominium sellers and operators, such as failure to
deliver titles to the buyers or titles free from liens and encumbrances, and to pay real estate taxes, and
fraudulent sales of the same subdivision lots to different innocent purchasers for value;
xxxx

WHEREAS, this state of affairs has rendered it imperative that the real estate subdivision and
condominium businesses be closely supervised and regulated, and that penalties be imposed on
fraudulent practices and manipulations committed in connection therewith.
The provisions of PD 957 were intended to encompass all questions regarding subdivisions and
condominiums. The intention was aimed at providing for an appropriate government agency, the HLURB,
to which all parties aggrieved in the implementation of provisions and the enforcement of contractual
rights with respect to said category of real estate may take recourse. The business of developing
subdivisions and corporations being imbued with public interest and welfare, any question arising from the
exercise of that prerogative should be brought to the HLURB which has the technical know-how on the
matter. In the exercise of its powers, the HLURB must commonly interpret and apply contracts and
determine the rights of private parties under such contracts. This ancillary power is no longer a uniquely
judicial function, exercisable only by the regular courts.
As observed in C.T. Torres Enterprises, Inc. v. Hibionada:
The argument that only courts of justice can adjudicate claims resoluble under the provisions of the Civil
Code is out of step with the fast-changing times. There are hundreds of administrative bodies now
performing this function by virtue of a valid authorization from the legislature. This quasi-judicial function,
as it is called, is exercised by them as an incident of the principal power entrusted to them of regulating
certain activities falling under their particular expertise.
In the Solid Homes case for example the Court affirmed the competence of the Housing and Land Use
Regulatory Board to award damages although this is an essentially judicial power exercisable ordinarily
only by the courts of justice. This departure from the traditional allocation of governmental powers is
justified by expediency, or the need of the government to respond swiftly and competently to the pressing
problems of the modern world. [Emphasis supplied.]
Another case Antipolo Realty Corporation v. NHA17 explained the grant of the HLURBs expansive
quasi-judicial powers. We said:
In this era of clogged court dockets, the need for specialized administrative boards or commissions with
the special knowledge, experience and capability to hear and determine promptly disputes on technical
matters or essentially factual matters, subject to judicial review in case of grave abuse of discretion, has
become well nigh indispensable. Thus, in 1984, the Court noted that between the power lodged in an
administrative body and a court, the unmistakable trend has been to refer it to the former.
xxx
In general, the quantum of judicial or quasi-judicial powers which an administrative agency may exercise
is defined in the enabling act of such agency. In other words, the extent to which an administrative entity
may exercise such powers depends largely, if not wholly on the provisions of the statute creating or
empowering such agency. In the exercise of such powers, the agency concerned must commonly
interpret and apply contracts and determine the rights of private parties under such contracts, One thrust
of the multiplication of administrative agencies is that the interpretation of contracts and the determination
of private rights thereunder is no longer a uniquely judicial function, exercisable only by our regular courts.
[Emphasis supplied.]
Subdivision cases under the RTCs jurisdiction

The expansive grant of jurisdiction to the HLURB does not mean, however, that all cases involving
subdivision lots automatically fall under its jurisdiction. As we said in Roxas v. Court of Appeals: 18
In our view, the mere relationship between the parties, i.e., that of being subdivision owner/developer and
subdivision lot buyer, does not automatically vest jurisdiction in the HLURB. For an action to fall within the
exclusive jurisdiction of the HLURB, the decisive element is the nature of the action as enumerated in
Section 1 of P.D. 1344. On this matter, we have consistently held that the concerned administrative
agency, the National Housing Authority (NHA) before and now the HLURB, has jurisdiction over
complaints aimed at compelling the subdivision developer to comply with its contractual and statutory
obligations.
xxx
Note particularly pars. (b) and (c) as worded, where the HLURBs jurisdiction concerns cases commenced
by subdivision lot or condominium unit buyers. As to par. (a), concerning "unsound real estate practices,"
it would appear that the logical complainant would be the buyers and customers against the sellers
(subdivision owners and developers or condominium builders and realtors ), and not vice versa.
[Emphasis supplied.]
Pursuant to Roxas, we held in Pilar Development Corporation v. Villar 19 and Suntay v. Gocolay20 that the
HLURB has no jurisdiction over cases filed by subdivision or condominium owners or developers against
subdivision lot or condominium unit buyers or owners. The rationale behind this can be found in the
wordings of Sec. 1, PD No. 1344, which expressly qualifies that the cases cognizable by the HLURB are
those instituted by subdivision or condomium buyers or owners against the project developer or owner.
This is also in keeping with the policy of the law, which is to curb unscrupulous practices in the real estate
trade and business.21
Thus, in the cases of Fajardo Jr. v. Freedom to Build, Inc.,[22] and Cadimas v. Carrion,23 we upheld the
RTCs jurisdiction even if the subject matter was a subdivision lot since it was the subdivision developer
who filed the action against the buyer for violation of the contract to sell.
The only instance that HLURB may take cognizance of a case filed by the developer is when said case is
instituted as a compulsory counterclaim to a pending case filed against it by the buyer or owner of a
subdivision lot or condominium unit. This was what happened in Francel Realty Corporation v.
Sycip,24 where the HLURB took cognizance of the developers claim against the buyer in order to forestall
splitting of causes of action.
Obviously, where it is not clear from the allegations in the complaint that the property involved is a
subdivision lot, as in Javellana v. Hon. Presiding Judge, RTC, Branch 30, Manila,25 the case falls under
the jurisdiction of the regular courts and not the HLURB. Similarly, in Spouses Dela Cruz v. Court of
Appeals,26 we held that the RTC had jurisdiction over a case where the conflict involved a subdivision lot
buyer and a party who owned a number of subdivision lots but was not himself the subdivision developer.
The Present Case
In the present case, CGA is unquestionably the buyer of a subdivision lot from the respondents, who sold
the property in their capacities as owner and developer. As CGA stated in its complaint:
2.01. Defendants are the registered owners and developers of a housing subdivision presently
known as Villa Priscilla Subdivision located at Brgy. Cutcut, Pulilan, Bulacan;

2.02 On or about April 30, 1998, the plaintiff thru its Administrative Pastor bought from defendants
on installment basis a parcel of land designated at Lot 1, Block 4 of the said Villa Priscilla
Subdivision xxx
xxx
2.04 At the time of the execution of the second Contract to Sell (Annex "B"), Lot 1, Block 4 of the
Villa Priscilla Subdivision was already covered by Transfer Certificate of Title No. T-127776 of the
Registry of Deeds of Quezon City in the name of Iluminada T. Soneja, married to Asterio Soneja
(defendant Priscilla T. Ignacios sister and brother-in-law) and the defendants as co-owners, but
the latter represented themselves to be the real and absolute owners thereof, as in fact it was
annotated in the title that they were empowered to sell the same. Copy of TCT No. T-127776 is
hereto attached and made part hereof as Annex "C".
2.05 Plaintiff has been religiously paying the agreed monthly installments until its Administrative
Pastor discovered recently that while apparently clean on its face, the title covering the subject lot
actually suffers from fatal flaws and defects as it is part of the property involved in litigation even
before the original Contract to Sell (Annex "A"), which defendants deliberately and fraudulently
concealed from the plaintiff;
2.06 As shown in the technical description of TCT No. T-127776 (Annex "C"), it covers a portion
of consolidated Lots 2-F and 2-G Bsd-04-000829 (OLT), which were respectively acquired by
defendants from Nicanor Adriano and Ceferino Sison, former tenants-beneficiaries of Purificacion
S. Imperial, whose property at Cutcut, Pulilan, Bulacan originally covered by TCT No. 240878
containing an area of 119,431 square meters was placed under Operation Land Transfer under
P.D. No. 27;
2.07 Said Purificacion S. Imperial applied for retention of five (5) hectares of her property at
Cutcut, Pulilan, Bulacan under Rep, Act No. 6657 and the same was granted by the Department
of Agrarian Reform (DAR) to cover in whole or in part farm lots previously awarded to tenantsbeneficiaries, including inter alia Nicanor Adrianos Lot 2-F and Ceferino Sisons Lot 2-G Bsd-04000829 (OLT).
xxx
2.08 Said order of October 2, 1997 was affirmed and declared final and executory, and the case
was considered closed, as in fact there was already an Implementing Order dated November 10,
1997.
xxx
3.03 As may thus be seen, the defendants deliberately and fraudulently concealed from the
plaintiff that fact that the parcel of land sold to the latter under the Contract to Sell (Annexes "A"
and "B") is part of the property already under litigation and in fact part of the five-hectare retention
awarded to the original owner, Purificacion S. Imperial.
xxx
3.05 Plaintiff is by law entitled to the rescission of the Contracts to Sell (Annexes "A" and "B") by
restitution of what has already been paid to date for the subject property in the total amount of

P2,515,899.20, thus formal demand therefor was made on the defendants thru a letter dated April
5, 2002, which they received but refused to acknowledge receipt. Copy of said letter is hereto
attached and made part hereof as Annex "J". 27 [Emphasis supplied.]
From these allegations, the main thrust of the CGA complaint is clear to compel the respondents to
refund the payments already made for the subject property because the respondents were selling a
property that they apparently did not own. In other words, CGA claims that since the respondents cannot
comply with their obligations under the contract, i.e., to deliver the property free from all liens and
encumbrances, CGA is entitled to rescind the contract and get a refund of the payments already made.
This cause of action clearly falls under the actions contemplated by Paragraph (b), Section 1 of PD No.
1344, which reads:
SEC. 1. In the exercise of its functions to regulate the real estate trade and business and in addition to its
powers provided for in Presidential Decree No. 957, the National Housing Authority shall have exclusive
jurisdiction to hear and decide cases of the following nature:
xxx
B. Claims involving refund and any other claims filed by subdivision lot or condominium unit buyer
against the project owner, developer, dealer, broker or salesman; and
We view CGAs contention that the CA erred in applying Article 1191 of the Civil Code as basis for the
contracts rescission to be a negligible point. Regardless of whether the rescission of contract is based
on Article 1191 or 1381 of the Civil Code, the fact remains that what CGA principally wants is a refund of
all payments it already made to the respondents. This intent, amply articulated in its complaint, places its
action within the ambit of the HLURBs exclusive jurisdiction and outside the reach of the regular courts.
Accordingly, CGA has to file its complaint before the HLURB, the body with the proper jurisdiction.
WHEREFORE, premises considered, we DENY the petition and AFFIRM the October 20, 2003 Decision
of the Court of Appeals in CA G.R. SP No. 75717 dismissing for lack of jurisdiction the CGA complaint
filed with the RTC, Branch 14 of Malolos, Bulacan.
SO ORDERED.

G.R. No. 109703 July 5, 1994

REALTY EXCHANGE VENTURE CORPORATION AND/OR MAGDIWANG, REALTY
CORPORATION, petitioner,
vs.
LUCINA S. SENDINO and the OFFICE OF THE EXECUTIVE SECRETARY, Office of the
President, Malacaang, Manila, respondents.
Siruelo, Muyco & Associates Law Office for petitioner.
Sisenando Villaluz, Jr. for private respondent.

KAPUNAN, J.:
Private respondent Lucina C. Sendino entered into a reservation agreement with Realty Exchange
Venture, Inc. (REVI) for a 120-square meter lot in Raymondville Subdivision in Sucat, Paranaque for
P307,800.00 as its purchase price. 1 She paid P1,000.00 as partial reservation fee on January 15, 1989
and completed payment of this fee on January 20, 1989 by paying P4,000.00. 2
On July 18, 1989, private respondent paid REVI P16,600.00 as full downpayment on the purchase
price. 3However, she was advised by REVI to change her co-maker, which she agreed, asking for an
extension of one month to do so.
For alleged non-compliance with the requirement of submission of the appropriate documents under
the terms of the original agreement, 4 REVI, through its Vice-President for Marketing, informed
respondent of the cancellation of the contract on the 31st of July 1989. 5
On April 20, 1990, private respondent filed a complaint for Specific Performance against REVI with
the office of Appeals, Adjudication and Legal Affairs (OAALA) of the Housing and Land Use
Regulatory Board (HLURB) asking that respondent be ordered:
1. To comply and continue with the sale of the house and lot, Block 4, Lot 17 at the
Raymondville Subdivision, Sucat Road, Paranaque, Metro Manila;
2. To pay complainant actual, nominal and moral damages, the amount of which will
be proved in the hearing;
3. To pay complainant attorney's fee in the sum of P10,000.00;
4. To pay complainant exemplary damages in the sum of P10,000.00 to set an
example and to avoid a repetition of such illegal and unsound business practices of
the respondent. 6
This petition was amended on August 17, 1990 by impleading petitioners Magdiwang Realty
Corporation (MRC) which appeared to be the registered owner of the subject lot as per TCT No.
76023.

On April 3, 1991 the HLURB, whose authority to hear and decide the complaint was challenged by
REVI in its answer, 7 rendered its judgment in favor of private respondent and ordered petitioners to
continue with the sale of the house and lot and to pay private respondent P5,000 as moral damages,
P5,000 as exemplary damages and P6,000 as attorney's fees and costs of the suit. 8 An appeal from this
decision was taken to the HLURB OAALA Arbiter, which affirmed the Board's decision. The decision of the
OAALA Arbiter was appealed to the Office of the President, herein public respondent.
On January 7, 1993, the public respondent rendered its decision dismissing the petitioners' appeal.
Motion for reconsideration of the decision was denied by the public respondent on January 26, 1993.
Consequently petitioners come before this Court, in this petition, which the Court resolves to treat as
a petition for certiorari, raising the following issues:
I
PUBLIC RESPONDENT COMMITTED SERIOUS ERROR IN DECLARING THAT
THE HOUSING AND LAND USE REGULATORY BOARD HAS QUASIJUDICIAL FUNCTIONS, NOTWITHSTANDING ABSENCE OF EXPRESS GRANT
BY EXECUTIVE ORDER NO. 90 OF DECEMBER 17, 1986 WHICH CREATED IT.
AND EVEN IF THE HLURB HAS QUASI-JUDICIAL FUNCTIONS, PUBLIC
RESPONDENT LIKEWISE SERIOUSLY ERRED IN DECLARING THAT THE
BOARD OF COMMISSIONERS IS ALLOWED TO SIT IN A DECISION TO RENDER
JUDGMENT AND TO DELEGATE ITS QUASI-JUDICIAL AUTHORITY TO A
SUBORDINATE OFFICE.
II
PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION IN DECLARING
THAT THE LOT SUBJECT OF THE CONTRACT SOUGHT TO BE ENFORCED IS
PARAPHERNAL DESPITE ADMISSION OF ITS CONJUGAL NATURE.
III
PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION IN DECLARING
THAT ONLY NOTARIAL NOTICE OF RESCISSION MAY VALIDLY CANCEL A
RESERVATION AGREEMENT PURSUANT TO REPUBLIC ACT NO. 6552.
As the first and third issues raised by the petitioners strike at the core of the case at bench, this
Court deems it appropriate to initially dispose of the issue of private respondent's capacity to bring
her complaint before the HLURB-OAALA.
It is settled that rules of procedure are as a matter of course construed liberally in proceedings
before administrative bodies. 9 In the instant case, the original suit for specific performance and
damages was filed by the private respondent with the HLURB-OAALA, an administrative body not
hamstrung by the strict procedural technicalities of the Rules of Court. Under the circumstances, it was
certainly appropriate for the HLURB-OAALA to have acted on the substantive questions relating to the
validity of petitioners' unilateral rescission of the contract without unduly concerning itself with a mere
procedural slip, the non-joinder of private petitioner's husband in the original complaint before the
HLURB. Moreover, since petitioners participated in the administrative proceedings without objecting to or

raising the procedural infirmity, they were certainly estopped from raising it on appeal before the Office of
the President and before this Court.

Proceeding to the principal issues raised by the petitioner, while E.O. 85 dated 12 December 1986
abolished the Ministry of Human Settlements (MHS), it is patently clear from a reading of its
provisions that the said executive order did not abolish the Human Settlements Regulatory
Commission (HSRC) which continued to exercise its powers and functions even after the Ministry of
Human Settlements ceased to exist. In spite of the Aquino Government's stated intention of
eradicating what it considered the vestiges of the previous regime, it was not its intention to create a
vacuum by abolishing those juridical entities, agencies, corporations, etc., attached to or supervised
by the MHS, which performed vital administrative functions. Pertinently, Section 3 of E.O. 85
mandates that:
. . . The final disposition and final organizational alignment or attachment of the
juridical entities, agencies, corporations and councils attached to, or under the
administrative supervision of the MHS including their respective existing projects,
appropriations and other assets shall be subject to subsequent enactments by the
President.
Pursuant to this provision therefore, the President subsequently issued Executive Order No. 90,
series of 1986, recognizing the Human Settlements Regulatory Commission (renamed the HLURB)
as one of the principal housing agencies of the government. Prior to this, Executive Order No. 648 in
1981 transferred all the functions of the National Housing Authority (pursuant to Presidential Decrees
Nos. 957, 1216 and 1344) to the Human Settlements Regulatory Commission (HSRC) consolidating
all regulatory functions relating to land use and housing development in a single entity. 10 Being the
sole regulatory body for housing and land development, the renamed body, the HLURB, 11 would have
been reduced to a functionally sterile entity if, as the petitioner contends, it lacked the powers exercised
by its predecessor which included the power to settle disputes concerning land use and housing
development and acquisition. Moreover, this Court has had the occasion to definitively rule on the
question as to whether or not the Housing and Land Use Regulatory Board could exercise the same
quantum of judicial or quasi-judicial powers possessed by the HSRC under the Ministry of Human
Settlements in the exercise of its regulatory functions when it held, in United Housing Corporation vs.
Hon. Dayrit 12 that:
As explicitly provided by law, jurisdiction over actions for specific performance of
contractual and statutory obligations filed by buyers of subdivision lot or
condominium unit against the owner or developer, is vested exclusively in the HSRC,
Section 1 of PD 1344, in no uncertain terms, provides:
Sec. 1. In the exercise of its functions to regulate real estate trade and business and
in addition to its powers provided for in Presidential Decree No. 957, the National
Housing Authority shall have exclusive jurisdiction to hear and decide cases of the
following nature:
A. Unsound real estate business practices;
B. Claims involving refund and any other claims filed by subdivision
lot or condominium unit buyer against the project owner, developer,
dealer, broker or salesman; and

C. Cases involving specific performance of contractual and statutory

obligations filed by buyers of subdivision lot or condominium unit
against the owner, developer, dealer, broker or salesman. (Emphasis
Ours)
This is reinforced by section 8 of EO 648 (otherwise known as the Charter of the
Human Settlements Regulatory Commission) which took effect on February 7, 1981,
thus:
Sec. 8. Transfer of Functions. The Regulatory functions of the National Housing
Authority pursuant to Presidential Decree Nos. 957, 1216, 1344 and other related
laws are hereby transferred to the Human Settlements Regulatory Commission. . . .
Among the regulatory functions are . . . (11) Hear and decide cases of unsound real
estate business practices, claims involving refund filed against project owners,
developers, dealers, brokers, or salesmen and cases of specific
performance(Emphasis Ours).
Private respondents reliance, therefore, on sections 1 and 8 of the Judiciary
Reorganization Act of 1980 is untenable. Thus, as correctly pointed out by petitioner,
section 19, paragraph 6 of said law is material to the issue of where jurisdiction lies,
and We quote:
Sec. 19. . . .
(6) In all other cases not within the exclusive jurisdiction of any court,
tribunal, persons or body exercising judicial or quasi-judicial
functions.
xxx xxx xxx
Neither can We accede to private respondents' claim that resort to
the courts is justified under section 41 of PD 957 specifically under
the phrase "legal remedies that may beavailable to aggrieved
subdivision lot buyers."
There is no question that a statute may vest exclusive original jurisdiction in an
administrative agency over certain disputes and controversies falling within the
agency's special expertise. The constitutionality of such grant of exclusive jurisdiction
to the National Housing Authority (now Housing and Land Use Regulatory Board)
over cases involving the sale of lots in commercial subdivisions was upheld
in Tropical Homes Inc. v. National Housing Authority (152 SCRA 540 [1987]) and
again sustained in a later decision in Antipolo Realty Corporation v. National Housing
Authority (153 SCRA 399 [1987]) where We restated that the National Housing
Authority (now HLURB) shall have exclusive jurisdiction to regulate the real estate
trade and business in accordance with the terms of PD No. 957 which defines the
quantum of judicial or quasi-judicial powers of said agency. 13
Clearly, therefore, the HLURB properly exercised its jurisdiction over the case filed by the petitioners
with its adjudicative body, the OAALA, in ordering petitioners to comply with their obligations arising

from the Reservation Agreement. In general, the quantum of judicial or quasi-judicial powers which
an administrative agency may exercise is defined in the agency's enabling act. In view of the Court's
pronouncement in United Housing Corporation vs. Hon. Dayrit, supra, recognizing the HLURB as the
successor agency of the HSRC's powers and functions, it therefore follows that the transfer of such
functions from the NHA to the HRSC effected by Section 8 of E.O. 648, series of 1981, thereby
resulted in the acquisition by the HLURB of adjudicatory powers which included the power to "(h)ear
and decide cases of unsound real estate business practices . . . and cases of specific
performance." 14 Obviously, in the exercise of its powers and functions, the HLURB must interpret and
apply contracts, determine the rights of the parties under these contracts, and award damages whenever
appropriate. 15 We fail to see how the HSRC which possessed jurisdiction over the actions for specific
performance for contractual and statutory obligations filed by buyers of subdivision lots against
developers had suddenly lots its adjudicatory powers by the mere fiat of a change in name through
E.O. 90. One thrust of the multiplication of administrative agencies is that the interpretation of such
contracts and agreements and the determination of private rights under these agreements is no longer a
uniquely judicial function. 16 The absence of any provision, express or implied, in E.O. 90, repealing those
quasi-judicial powers inherited by the HSRC from the National Housing Authority, furthermore militates
against petitioners' position on the question.
Going to petitioners' contention that the decision of the OAALA should have been rendered by the
Board of Commissioners sitting en banc, we find ample authority both in the statutes and in
jurisprudence-justifying the Board's act of dividing itself into divisions of three. Under Section 5 of
E.O. 648 which defines the powers and duties of the Commission, the Board is specifically
mandated to "(a)dopt rules of procedure for the conduct of its business" and perform such functions
necessary for the effective accomplishment of (its) above mentioned functions." Since nothing in the
provisions of either E.O. 90 or E.O. 648 denies or withholds the power or authority to delegate
adjudicatory functions to a division, we cannot see how the Board, for the purpose of effectively
carrying out its administrative responsibilities and quasi-judicial powers as a regulatory body should
be denied the power, as a matter of practical administrative procedure, to constitute its adjudicatory
boards into various divisions. After all, the power conferred upon an administrative agency to issue
rules and regulations necessary to carry out its functions has been held "to be an adequate source
of authority to delegate a particular function, unless by express provision of the Act or by implication
it has been withheld." 17 The practical necessity of establishing a procedure whereby cases are decided
by three (3) Commissioners furthermore assumes greater significance when one notes that the HLURB,
as constituted, only has four (4) full time commissioners and five (5) part time commissioners to deal with
all the functions, administrative, adjudicatory, or otherwise, entrusted to
it. 18 As the Office of the President noted in its February 26, 1993 Resolution denying petitioners' Motion
for Reconsideration, "it is impossible and very impractical to gather the four (4) full time and five (5) part
time commissioners (together) just to decide a case." Considering that its part time commissioners act
merely in an ex-officio capacity, requiring a majority of the Board to sit en banc on each and every case
brought before it would result in an administrative nightmare. 19
Finally, petitioners' assertion that RA 6552 is inapplicable in the instant case because the said law
does not apply to cases of reservation agreements finds no merit in the case at bench in view of
Section 24 of P.D. 957 which provides:
Sec. 24. Failure to Pay Installments The rights of the buyer in the event of his
failure to pay the installments due for reasons other than the failure of the owner or
developer to develop the project shall be governed by Republic Act No. 6552.

As the Solicitor General correctly pointed out, RA 6552 makes no distinction between "option" and
"sale" 20 which, under P.D. 957 also includes "an exchange or attempt to sell, an option of sale or
purchase, a solicitation of a sale or an offer to sell directly." 21 This all-embracing definition virtually
includes all transactions concerning land and housing acquisition, including reservation agreements.
Since R.A. 6552 mandates cancellation by notarial
act among other requirements before any cancellation of a contract may be effected, petitioners'
precipitate cancellation of its contract with private respondent without observing the conditions imposed
by the said law was invalid and improper.
In fine, the HLURB-OAALA acted within the scope of its authority in ordering petitioners to comply
and continue with the sale of the house and lot subject of the contract between the original parties. It
cannot be gainsaid that the quasi-judicial functions exercised by the body are necessary incidents to
the proper exercise of its powers and functions under E.O. 90 and the laws enacted delineating the
scope of authority of its Board of Commissioners. Denying the body those functions so necessary in
carrying out its power to regulate housing and land use results in its effective emasculation as an
important regulatory body in an area vital to the national economy.
The acute housing shortage problem has prompted thousands of middle and lower class buyers of
houses and lots and condominium units to enter into all sorts of agreements with private housing
developers involving all manner of installment schemes under contracts drawn exclusively by these
developers. Many of these virtual contracts of adhesion entrap innocent buyers by requiring cash
deposits under reservation agreements which include, sometimes in the fine print, default clauses
guaranteeing huge monetary windfalls for the developers in the event that their buyers (oftentimes
for the flimsiest of reasons) default by failing to come up with certain requirements. While the Court
can take judicial notice of this pernicious practice, it can only hope that future legislation would
address the need to protect the innocent middle or lower class home purchaser. In the case of the
individual victim, this Court can only go to the extent of awarding such damages as may be proper
under the peculiar circumstances of the cases brought before it.
WHEREFORE, premises considered, the petition is hereby DISMISSED for lack of merit. Costs
against petitioners.
SO ORDERED.

G.R. No. L-50444 August 31, 1987

ANTIPOLO REALTY CORPORATION, petitioner,
vs.
THE NATIONAL HOUSING AUTHORITY, HON. G.V. TOBIAS, in his capacity as General
Manager of the National Housing Authority, THE HON. JACOBO C. CLAVE, in his capacity as
Presidential Executive Assistant and VIRGILIO A. YUSON, respondents.

FELICIANO, J.:
By virtue of a Contract to Sell dated 18 August 1970, Jose Hernando acquired prospective and
beneficial ownership over Lot. No. 15, Block IV of the Ponderosa Heights Subdivision in Antipolo,
Rizal, from the petitioner Antipolo Realty Corporation.
On 28 August 1974, Mr. Hernando transferred his rights over Lot No. 15 to private respondent
Virgilio Yuson. The transfer was embodied in a Deed of Assignment and Substitution of Obligor
(Delegacion), executed with the consent of Antipolo Realty, in which Mr. Yuson assumed the
performance of the vendee's obligations under the original contract, including payment of his
predecessor's installments in arrears. However, for failure of Antipolo Realty to develop the
subdivision project in accordance with its undertaking under Clause 17 of the Contract to Sell, Mr.
Yuson paid only the arrearages pertaining to the period up to, and including, the month of August
1972 and stopped all monthly installment payments falling due thereafter Clause 17 reads:
Clause 17. SUBDIVISION BEAUTIFICATION. To insure the beauty of the
subdivision in line with the modern trend of urban development, the SELLER hereby
obligates itself to provide the subdivision with:
a) Concrete curbs and gutters
b) Underground drainage system
c) Asphalt paved roads
d) Independent water system
e) Electrical installation with concrete posts.
f) Landscaping and concrete sidewall
g) Developed park or amphi-theatre
h) 24-hour security guard service.
These improvements shall be complete within a period of two (2) years from date of
this contract.Failure by the SELLER shall permit the BUYER to suspend his monthly

installments without any penalties or interest charges until such time that such
improvements shall have been completed. 1
On 14 October 1976, the president of Antipolo Realty sent a notice to private respondent Yuson
advising that the required improvements in the subdivision had already been completed, and
requesting resumption of payment of the monthly installments on Lot No. 15. For his part, Mr. Yuson
replied that he would conform with the request as soon as he was able to verify the truth of the
representation in the notice.
In a second letter dated 27 November 1976, Antipolo Realty reiterated its request that Mr. Yuson
resume payment of his monthly installments, citing the decision rendered by the National Housing
Authority (NHA) on 25 October 1976 in Case No. 252 (entitled "Jose B. Viado Jr., complainant vs.
Conrado S. Reyes, respondent") declaring Antipolo Realty to have "substantially complied with its
commitment to the lot buyers pursuant to the Contract to Sell executed by and between the lot
buyers and the respondent." In addition, a formal demand was made for full and immediate payment
of the amount of P16,994.73, representing installments which, Antipolo Realty alleged, had accrued
during the period while the improvements were being completed i.e., between September 1972
and October 1976.
Mr. Yuson refused to pay the September 1972-October 1976 monthly installments but agreed to pay
the post October 1976 installments. Antipolo Realty responded by rescinding the Contract to Sell,
and claiming the forfeiture of all installment payments previously made by Mr. Yuson.
Aggrieved by the rescission of the Contract to Sell, Mr. Yuson brought his dispute with Antipolo
Realty before public respondent NHA through a letter-complaint dated 10 May 1977 which complaint
was docketed in NHA as Case No. 2123.
Antipolo Realty filed a Motion to Dismiss which was heard on 2 September 1977. Antipolo Realty,
without presenting any evidence, moved for the consolidation of Case No. 2123 with several other
cases filed against it by other subdivision lot buyers, then pending before the NHA. In an Order
issued on 7 February 1978, the NHA denied the motion to dismiss and scheduled Case No. 2123 for
hearing.
After hearing, the NHA rendered a decision on 9 March 1978 ordering the reinstatement of the
Contract to Sell under the following conditions:
l) Antipolo Realty Corporation shall sent [sic] to Virgilio Yuzon a statement of account
for the monthly amortizations from November 1976 to the present;
m) No penalty interest shall be charged for the period from November 1976 to the
date of the statement of account; and
n) Virgilio Yuzon shall be given sixty (60) days to pay the arrears shown in the
statement of account.2
Antipolo Realty filed a Motion for Reconsideration asserting: (a) that it had been denied due process
of law since it had not been served with notice of the scheduled hearing; and (b) that the jurisdiction
to hear and decide Mr. Yuson's complaint was lodged in the regular courts, not in the NHA, since
that complaint involved the interpretation and application of the Contract to Sell.

The motion for reconsideration was denied on 28 June 1978 by respondent NHA General Manager
G.V. Tobias, who sustained the jurisdiction of the NHA to hear and decide the Yuson complaint. He
also found that Antipolo Realty had in fact been served with notice of the date of the hearing, but that
its counsel had failed to attend the hearing. 3 The case was submitted for decision, and eventually
decided, solely on the evidence presented by the complainant.
On 2 October 1978, Antipolo Realty came to this Court with a Petition for certiorari and Prohibition
with Writ of Preliminary Injunction, which was docketed as G.R. No. L-49051. Once more, the
jurisdiction of the NHA was assailed. Petitioner further asserted that, under Clause 7 of the Contract
to Sell, it could validly terminate its agreement with Mr. Yuson and, as a consequence thereof, retain
all the prior installment payments made by the latter. 4
This Court denied certiorari in a minute resolution issued on 11 December 1978, "without prejudice
to petitioner's pursuing the administrative remedy." 5 A motion for reconsideration was denied on 29
January 1979.
Thereafter, petitioner interposed an appeal from the NHA decision with the Office of the President
which, on 9 March 1979, dismissed the same through public respondent Presidential Executive
Assistant Jacobo C. Clave. 6
In the present petition, Antipolo Realty again asserts that, in hearing the complaint of private
respondent Yuson and in ordering the reinstatement of the Contract to Sell between the parties, the
NHA had not only acted on a matter beyond its competence, but had also, in effect, assumed the
performance of judicial or quasi-judicial functions which the NHA was not authorized to perform.
We find the petitioner's arguments lacking in merit.
It is by now commonplace learning that many administrative agencies exercise and perform
adjudicatory powers and functions, though to a limited extent only. Limited delegation of judicial or
quasi-judicial authority to administrative agencies (e.g., the Securities and Exchange Commission
and the National Labor Relations Commission) is well recognized in our jurisdiction, 7 basically
because the need for special competence and experience has been recognized as essential in the
resolution of questions of complex or specialized character and because of a companion recognition that
the dockets of our regular courts have remained crowded and clogged. In Spouses Jose Abejo and
Aurora Abejo, et al. vs. Hon. Rafael dela Cruz, etc., et al., 8 the Court, through Mr. Chief Justice
Teehankee, said:
In the fifties, the Court taking cognizance of the move to vest jurisdiction in
administrative commissions and boards the power to resolve specialized disputes in
the field of labor (as in corporations, public transportation and public utilities) ruled
that Congress in requiring the Industrial Court's intervention in the resolution of labor
management controversies likely to cause strikes or lockouts meant such jurisdiction
to be exclusive, although it did not so expressly state in the law. The Court held that
under the "sense-making and expeditious doctrine of primary jurisdiction . . . the
courts cannot or will not determine a controversy involving a question which is within
the jurisdiction of an administrative tribunal where the question demands the
exercise of sound administrative discretion requiring the special knowledge,
experience, and services of the administrative tribunal to determine technical and
intricate matters of fact, and a uniformity of ruling is essential to comply with the

purposes of the regulatory statute administered" (Pambujan Sur United Mine

Workers v. Samar Mining Co., Inc., 94 Phil, 932, 941 [1954]).
In this era of clogged court dockets, the need for specialized administrative boards or
commissions with the special knowledge, experience and capability to hear and
determine promptly disputes on technical matters or essentially factual matters,
subject to judicial review in case of grave abuse of discretion has become well nigh
indispensable. Thus, in 1984, the Court noted that 'between the power lodged in an
administrative body and a court, the unmistakeable trend has been to refer it to the
former, "Increasingly, this Court has been committed to the view that unless the law
speaks clearly and unequivocably, the choice should fall on fan administrative
agency]" ' (NFL v. Eisma, 127 SCRA 419, 428, citing precedents). The Court in the
earlier case of Ebon vs. De Guzman (113 SCRA 52, 56 [1982]), noted that the
lawmaking authority, in restoring to the labor arbiters and the NLRC their jurisdiction
to award all kinds of damages in labor cases, as against the previous P.D.
amendment splitting their jurisdiction with the regular courts, "evidently, . . . had
second thoughts about depriving the Labor Arbiters and the NLRC of the jurisdiction
to award damages in labor cases because that setup would mean duplicity of suits,
splitting the cause of action and possible conflicting findings and conclusions by two
tribunals on one and the same claim."
In an even more recent case, Tropical Homes, Inc. vs. National Housing Authority, et al., 9 Mr. Justice
Gutierrez, speaking for the Court, observed that:
There is no question that a statute may vest exclusive original jurisdiction in an
administrative agency over certain disputes and controversies falling within the
agency's special expertise. The very definition of an administrative agency includes
its being vested with quasi-judicial powers. The ever increasing variety of powers and
functions given to administrative agencies recognizes the need for the active
intervention of administrative agencies in matters calling for technical knowledge and
speed in countless controversies which cannot possibly be handled by regular
courts.
In general the quantum of judicial or quasi-judicial powers which an administrative agency may
exercise is defined in the enabling act of such agency. In other words, the extent to which an
administrative entity may exercise such powers depends largely, if not wholly, on the provisions of
the statute creating or empowering such agency. 10 In the exercise of such powers, the agency concerned must
commonly interpret and apply contracts and determine the rights of private parties under such contracts. One thrust of the multiplication of
administrative agencies is that the interpretation of contracts and the determination of private rights thereunder is no longer a uniquely
judicial function, exercisable only by our regular courts.

Thus, the extent to which the NHA has been vested with quasi-judicial authority must be determined
by referring to the terms of Presidential Decree No. 957, known as "The Subdivision and
Condominium Buyers' Decree." 11Section 3 of this statute provides as follows:
National Housing Authority. The National Housing Authority shall have exclusive
jurisdiction to regulate the real estate trade and business in accordance with the
provisions of this decree (emphasis supplied)

The need for and therefore the scope of the regulatory authority thus lodged in the NHA are
indicated in the second and third preambular paragraphs of the statute which provide:
WHEREAS, numerous reports reveal that many real estate subdivision owners,
developers, operators, and/or sellers have reneged on their representations and
obligations to provide and maintain properly subdivision roads, drainage, sewerage,
water systems lighting systems and other similar basic requirements, thus
endangering the health and safety of home and lot buyers;
WHEREAS, reports of alarming magnitude also show cases of swindling and
fraudulent manipulations perpetrated by unscrupulous subdivision and condominium
sellers and operators, such as failure to deliver titles to the buyers or titles free from
liens and encumbrances, and to pay real estate taxes, and fraudulent sales of the
same subdivision lots to different innocent purchasers for value . (emphasis
supplied)
Presidential Decree No. 1344 12 clarified and spelled out the quasi-judicial dimensions of the grant of regulatory authority to the
NHA in the following quite specific terms:

SECTION 1. In the exercise of its functions to regulate the real estate trade and
business and in addition to its powers provided for in Presidential Decree No. 957,
the National Housing Authority shall have exclusive jurisdiction to hear and decide
cases of the following nature:
A. Unsound real estate business practices:
B. Claims involving refund and any other claims filed by sub- division lot or
condominium unit buyer against the project owner, developer, dealer, broker or
salesman; and
C. Cases involving specific performance of contractual and statutory obligations filed
by buyers of subdivision lots or condominium units against the owner, developer,
dealer, broker or salesman.(emphasis supplied.)
The substantive provisions being applied and enforced by the NHA in the instant case are found in
Section 23 of Presidential Decree No. 957 which reads:
Sec. 23. Non-Forfeiture of Payments. No installment payment made by a buyer in
a subdivision or condominium project for the lot or unit he contracted to buy shall be
forfeited in favor of the owner or developer when the buyer, after due notice to the
owner or developer, desists from further payment due to the failure of the owner or
developer to develop the subdivision or condominium project according to the
approved plans and within the time limit for complying with the same. Such buyer
may, at his option, be reimbursed the total amount paid including amortization and
interests but excluding delinquency interests, with interest thereon at the legal rate.
(emphasis supplied.)
Having failed to comply with its contractual obligation to complete certain specified improvements in
the subdivision within the specified period of two years from the date of the execution of the Contract

to Sell, petitioner was not entitled to exercise its options under Clause 7 of the Contract. Hence,
petitioner could neither rescind the Contract to Sell nor treat the installment payments made by the
private respondent as forfeited in its favor. Indeed, under the general Civil Law, 13 in view of petitioner's
breach of its contract with private respondent, it is the latter who is vested with the option either to rescind the contract and receive
reimbursement of an installment payments (with legal interest) made for the purchase of the subdivision lot in question, or to suspend
payment of further purchase installments until such time as the petitioner had fulfilled its obligations to the buyer. The NHA was therefore
correct in holding that private respondent's prior installment payments could not be forfeited in favor of petitioner.

Neither did the NHA commit any abuse, let alone a grave abuse of discretion or act in excess of its
jurisdiction when it ordered the reinstatement of the Contract to Sell between the parties. Such
reinstatement is no more than a logical consequence of the NHA's correct ruling, just noted, that the
petitioner was not entitled to rescind the Contract to Sell. There is, in any case, no question that
under Presidential Decree No. 957, the NHA was legally empowered to determine and protect the
rights of contracting parties under the law administered by it and under the respective agreements,
as well as to ensure that their obligations thereunder are faithfully performed.
We turn to petitioner's assertion that it had been denied the right to due process. This assertion lacks
substance. The record shows that a copy of the order denying the Motion to Dismiss and scheduling
the hearing of the complaint for the morning of 6 March 1978, was duly served on counsel for
petitioner, as evidenced by the annotation appearing at the bottom of said copy indicating that such
service had been effected. 14 But even if it be assumed, arguendo, that such notice had not been served on the petitioner,
nevertheless the latter was not deprived of due process, for what the fundamental law abhors is not the absence of previous notice but rather
the absolute lack of opportunity to be heard. 15 In the instant case, petitioner was given ample opportunity to present its side and to be heard
on a motion for reconsideration as well, and not just on a motion to dismiss; the claim of denial of due process must hence sound even more
hollow. 16

We turn finally to the question of the amount of P16,994.73 which petitioner insists had accrued
during the period from September 1972 to October 1976, when private respondent had suspended
payment of his monthly installments on his chosen subdivision lot. The NHA in its 9 March 1978
resolution ruled that the regular monthly installments under the Contract to Sell did not accrue during
the September 1972 October 1976 period:
[R]espondent allowed the complainant to suspend payment of his monthly
installments until the improvements in the subdivision shall have been completed.
Respondent informed complainant on November 1976 that the improvements have
been completed. Monthly installments during the period of suspension of payment
did not become due and demandable Neither did they accrue Such must be the
case, otherwise, there is no sense in suspending payments. If the suspension is
lifted the debtor shall resume payments but never did he incur any arrears.
Such being the case, the demand of respondent for complainant to pay the arrears
due during the period of suspension of payment is null and void. Consequently, the
notice of cancellation based on the refusal to pay the s that were not due and
demandable is also null and void. 17
The NHA resolution is probably too terse and in need of certification and amplification. The NHA
correctly held that no installment payments should be considered as having accrued during the
period of suspension of payments. Clearly, the critical issue is what happens to the installment
payments which would have accrued and fallen due during the period of suspension had no default
on the part of the petitioner intervened. To our mind, the NHA resolution is most appropriately read
as directing that the original period of payment in the Contract to Sell must be deemed extended by

a period of time equal to the period of suspension (i.e., by four (4) years and two (2) months) during
which extended time (tacked on to the original contract period) private respondent buyer must
continue to pay the monthly installment payments until the entire original contract price shall have
been paid. We think that such is the intent of the NHA resolution which directed that "[i]f the
suspension is lifted, the debtor shall resume payments" and that such is the most equitable and just
reading that may be given to the NHA resolution. To permit Antipolo Realty to collect the disputed
amount in a lump sum after it had defaulted on its obligations to its lot buyers, would tend to defeat
the purpose of the authorization (under Sec. 23 of Presidential Decree No. 957, supra) to lot buyers
to suspend installment payments. As the NHA resolution pointed out, [s]uch must be the case,
otherwise, there is no sense in suspending payments." Upon the other hand, to condone the entire
amount that would have become due would be an expressively harsh penalty upon the petitioner
and would result in the unjust enrichment of the private respondent at the expense of the petitioner.
It should be recalled that the latter had already fulfilled, albeit tardily, its obligations to its lot buyers
under their Contracts to Sell. At the same time, the lot buyer should not be regarded as delinquent
and as such charged penalty interest. The suspension of installment payments was attributable to
the petitioner, not the private respondent. The tacking on of the period of suspension to the end of
the original period precisely prevents default on the part of the lot buyer. In the words of the NHA
resolution, "never would [the buyer] incur any arrears."
WHEREFORE, the Petition for certiorari is DISMISSED. The NHA decision appealed from is hereby
AFFIRMED and clarified as providing for the lengthening of the original contract period for payment
of installments under the Contract to Sell by four (4) years and two (2) months, during which
extended time private respondent shall continue to pay the regular monthly installment payments
until the entire original contract price shall have been paid. No pronouncement as to costs.
SO ORDERED.

G.R. No. 1051

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 AttorneyGeneral 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 wellsettled 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.

G.R. No. L-12859

November 18, 1959

CEBU UNITED ENTERPRISES, plaintiff-appellee,

vs.
JOSE GALLOFIN, Collector of Customs, Cebu Port, defendant-appellant.

Manuel A. Zoza for appellee.

First Assistant Solicitor General Guillermo E. Torres and Solicitors Frine C. Zaballero and Pedro Ocampo
for appellant.

REYES, J.B.L., J.:

This suit for mandatory injunction was instituted in the Court of First Instance of Cebu United Enterprise to
compel Jose Gallofin, as collector of Customs, Cebu Port, to release and deliver to the plaintiff two
imported shipments of 7,834 bales of over issue newspapers purchased by the latter from the United
States. As ancillary relief during the pendency of the action, the plaintiff prayed for the issuance of a writ
of preliminary mandatory injunction, which was granted by the court after the plaintiff posted a bond in the
amount of P60,000.00 in favor of the defendant. Thereafter, the goods were released to the plaintiff, it
appearing further that the advance sales tax due on the same had been duly paid upon arrival of the
merchandise at port.

The importation of the aforesaid shipments was made under and by virtue of an Import Control
Commission License No. 1225, issued by the defunct Import Control Commission. Under the terms of the
license, the plaintiff could import, on a no-dollar remittance basis, over issue newspapers up to the
amount or value of $118,000.00.

The refusal of the defendant to deliver the imported items is premised on his contention that while the five
bills of lading covering the two shipments of the over issue newspapers were all dated at Los Angeles,
U.S.A. December 17, 1953, or one day before the expiration of the import license in question, the vessels
M/S VENTURA and M/S BATAAN, carrying on board the said merchandise, actually left the ports of
embarkation, Los Angeles, and San Francisco, on January 12 and January 16, 1954 respectively. Hence,
according to the defendant, the importation must be considered as having been made without a valid
import license, because under the regulations issued by the Central Bank and the Monetary Board, "all
shipments that left the port of origin after June 30, 1953, and are covered by ICC licenses, may be
released by the Bureau of Customs without the need of a Central Bank release certificate; provided they
left the port of origin within the period of validity of the licenses". No Central Bank certificate for the
release of the goods having been shown or presented to the defendant, the latter refused to make the
delivery.

The lower court was thus conformed with the issue of determining whether the valid period of the license
in question should be counted up to the time when the vessels carrying the imported items left the ports of
origin on January 12 and January 16, 1954, or when the corresponding bills of lading were dated, or
December 17, 1953. The court chose the latter date, and held:

In view therefore, this Court pronounces judgment making writ of preliminary mandatory injunction issued
against defendant permanent, with orders for the cancellation of plaintiff's bond, this after whatever
advance sales tax or any taxes, surcharges and so forth might be due on the goods shall have been paid,
without costs.

The defendant appealed to the Court of Appeals. The question raised, however, being purely one of law,
the appeal was certified to us pursuant to a resolution of said court dated July 19, 1957. The appeal has
no merit.

The authority of the appellee to import was contained in the Import Control Commission License No.
17225, validated on June 18, 1953, and under Resolution 70 of the Commission (adopted March 27,
1952), the same had a six-month period of validity counted from the said date June 18, 1953. This license
states, among other conditions, that

Commodities covered by this license must be shipped from the country of origin before the expiry date of
the license, and are subject to sec. 13 of Republic Act. No. 650.

Although Republic Act No. 650, creating the Import Control Commission, expired on July 31, 1953, it is to
be conceded that its duly executed acts can have valid effects even beyond the life span of said
governmental agency.

What is important to consider only is the legal connotation of the word "shipped" as the term was used in
the license. Defendant maintains that it is when the vessel leaves the port of embarkation, while plaintiff
holds that it is the dates of the bills of lading, which are usually issued after the cargo is placed on board
the vessel. The date of the shipment is the date when the goods for dispatch are loaded on board the
vessel, and not necessarily when the ship puts to sea, is clearly implied from our ruling in the case of U.S
Tobacco Corporation vs. Rufino Luna, et al., (87 Phil., 4), wherein we said:

By section 6 of Act No. 426, all goods including leaf tobacco have been placed under control. Petitioner's
merchandise left the port of departure before the passage of that Act but arrived in Manila after its
approval. For the purpose of enforcing or applying said section 6, there can only be one date of
importation. Which was the date? The date the goods were ordered, the date they were put on board
vessel, or the date they reached the port of destination? We are of the opinion that the date of importation
is the date of shipment and not the date of Arrival in Manila. (Emphasis supplied)

The issuance of the bill of lading, furthermore, presupposes or carries the presumption that the goods
were delivered to the carrier for immediate shipment (13 C.J.S. sec. 123 (2), p. 235, and cases cited
therein). It does not appear here that the bill of lading specified any designated day on which the vessel
were to lift anchor, nor was it shown that plaintiff had any knowledge that the vessel M/S VENTURA and
M/S BATAAN were not to depart soon after he placed his cargo on board and the corresponding bills of
lading issued to him. From this latter time, the goods in contemplation of law, are deemed already in
transit (New Civil Code, Arts. 1531 and 1736).

It should also be considered that it is entirely outside the shipper's hands to fix the dates of departure,
route or arrival of a vessel (unless he charters the whole ship [see Art. 656, Code of Commerce]).

Defendant's reliance upon Central Bank regulations that the shipment licensed must have "left the port of
origin within the period of validity of the "license" is not maintainable in the present case, because the
regulations came onto effect only on July 1, 1953 already after issuance of the appellee' license and
cannot be read into the same.

The Solicitor General's contention that, assuming the six months are counted up to the date the imports
goods were placed on board the vessels for shipment the period of validity had likewise already elapsed
because, legally six months mean 180 days, which in this case expired on December 15, cannot now be
entertained because the defendant-appellant, under paragraph 3 of his answer to the Complaint,
expressly admitted that the date appearing on the bills of lading (December 17, 1953) as the date of
loading on board the vessels "is one day before the expiration of the validity of the import license". What
he only questioned in the court below is the legal connotation of the word "shipped" under the import
license.

In the light of the resolution we have taken on the main issue, it becomes unnecessary for us to dwell
further upon the other questions raised by the parties.

Wherefore, the appeal should be dismissed and the judgment of the lower court affirmed. So rendered.

Paras, C.J., Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Endencia, Barrera, and Gutierrez
David, JJ., concur.

[G.R. No. 106296. July 5, 1996]

ISABELO T. CRISOSTOMO, petitioner, vs. THE COURT OF APPEALS and the PEOPLE OF THE
PHILIPPINES, respondents.*
DECISION
MENDOZA, J.:

This is a petition to review the decision of the Court of Appeals dated July 15, 1992, the dispositive portion
of which reads:

WHEREFORE, the present petition is partially granted. The questioned Orders and writs directing (1)
reinstatement of respondent Isabelo T. Crisostomo to the position of President of the Polytechnic
University of the Philippines, and (2) payment of salaries and benefits which said respondent failed to
receive during his suspension insofar as such payment includes those accruing after the abolition of the
PCC and its transfer to the PUP, are hereby set aside. Accordingly, further proceedings consistent with
this decision may be taken by the court a quo to determine the correct amounts due and payable to said
respondent by the said university.

The background of this case is as follows:

Petitioner Isabelo Crisostomo was President of the Philippine College of Commerce (PCC), having been
appointed to that position by the President of the Philippines on July 17, 1974.

During his incumbency as president of the PCC, two administrative cases were filed against petitioner for
illegal use of government vehicles, misappropriation of construction materials belonging to the college,
oppression and harassment, grave misconduct, nepotism and dishonesty. The administrative cases,
which were filed with the Office of the President, were subsequently referred to the Office of the Solicitor
General for investigation.

Charges of violations of R.A. No. 3019, 3 (e) and R.A. No. 992, 20-21 and R.A. No. 733, 14 were
likewise filed against him with the Office of Tanodbayan.

On June 14, 1976, three (3) informations for violation of Sec. 3 (e) of the Anti-Graft and Corrupt Practices
Act (R.A. No. 3019, as amended) were filed against him. The informations alleged that he appropriated
for himself a bahay kubo, which was intended for the College, and construction materials worth
P250,000.00, more or less. Petitioner was also accused of using a driver of the College as his personal
and family driver.[1]

On October 22, 1976, petitioner was preventively suspended from office pursuant to R.A. No. 3019, 13,
as amended. In his place Dr. Pablo T. Mateo, Jr. was designated as officer-in-charge on November 10,
1976, and then as Acting President on May 13, 1977.

On April 1, 1978, P.D. No. 1341 was issued by then President Ferdinand E. Marcos, CONVERTING THE
PHILIPPINE COLLEGE OF COMMERCE INTO A POLYTECHNIC UNIVERSITY, DEFINING ITS
OBJECTIVES, ORGANIZATIONAL STRUCTURE AND FUNCTIONS, AND EXPANDING ITS
CURRICULAR OFFERINGS.

Mateo continued as the head of the new University. On April 3, 1979, he was appointed Acting President
and on March 28, 1980, as President for a term of six (6) years.

On July 11, 1980, the Circuit Criminal Court of Manila rendered judgment acquitting petitioner of the
charges against him. The dispositive portion of the decision reads:

WHEREFORE, the Court finds the accused, Isabelo T. Crisostomo, not guilty of the violations charged in
all these three cases and hereby acquits him therefrom, with costs de oficio. The bail bonds filed by said
accused for his provisional liberty are hereby cancelled and released.

Pursuant to the provisions of Section 13, R.A. No. 3019, as amended, otherwise known as The Anti-Graft
and Corrupt Practices Act, and under which the accused has been suspended by this Court in an Order
dated October 22, 1976, said accused is hereby ordered reinstated to the position of President of the
Philippine College of Commerce, now known as the Polytechnic University of the Philippines, from which
he has been suspended. By virtue of said reinstatement, he is entitled to receive the salaries and other
benefits which he failed to receive during suspension, unless in the meantime administrative proceedings
have been filed against him.

The bail bonds filed by the accused for his provisional liberty in these cases are hereby cancelled and
released.

SO ORDERED.

The cases filed before the Tanodbayan (now the Ombudsman) were likewise dismissed on August 8,
1991 on the ground that they had become moot and academic. On the other hand, the administrative
cases were dismissed for failure of the complainants to prosecute them.

On February 12, 1992, petitioner filed with the Regional Trial Court a motion for execution of the
judgment, particularly the part ordering his reinstatement to the position of president of the PUP and the
payment of his salaries and other benefits during the period of suspension.

The motion was granted and a partial writ of execution was issued by the trial court on March 6, 1992.
On March 26, 1992, however, President Corazon C. Aquino appointed Dr. Jaime Gellor as acting
president of the PUP, following the expiration of the term of office of Dr. Nemesio Prudente, who had
succeeded Dr. Mateo. Petitioner was one of the five nominees considered by the President of the
Philippines for the position.

On April 24, 1992, the Regional Trial Court, through respondent Judge Teresita Dy-Liaco Flores, issued
another order, reiterating her earlier order for the reinstatement of petitioner to the position of PUP
president. A writ of execution, ordering the sheriff to implement the order of reinstatement, was issued.

In his return dated April 28, 1992, the sheriff stated that he had executed the writ by installing petitioner as
President of the PUP, although Dr. Gellor did not vacate the office as he wanted to consult with the
President of the Philippines first. This led to a contempt citation against Dr. Gellor. A hearing was set on
May 7, 1992. On May 5, 1992, petitioner also moved to cite Department of Education, Culture and Sports
Secretary Isidro Cario in contempt of court. Petitioner assumed the office of president of the PUP.

On May 18, 1992, therefore, the People of the Philippines filed a petition for certiorari and prohibition (CA
G.R. No. 27931), assailing the two orders and the writs of execution issued by the trial court. It also
asked for a temporary restraining order.

On June 25, 1992, the Court of Appeals issued a temporary restraining order, enjoining petitioner to
cease and desist from acting as president of the PUP pursuant to the reinstatement orders of the trial
court, and enjoining further proceedings in Criminal Cases Nos. VI-2329-2331.

On July 15, 1992, the Seventh Division of the Court of Appeals rendered a decision,[2] the dispositive
portion of which is set forth at the beginning of this opinion. Said decision set aside the orders and writ of
reinstatement issued by the trial court. The payment of salaries and benefits to petitioner accruing after
the conversion of the PCC to the PUP was disallowed. Recovery of salaries and benefits was limited to
those accruing from the time of petitioners suspension until the conversion of the PCC to the PUP. The
case was remanded to the trial court for a determination of the amounts due and payable to petitioner.

Hence this petition. Petitioner argues that P.D. No. 1341, which converted the PCC into the PUP, did not
abolish the PCC. He contends that if the law had intended the PCC to lose its existence, it would have
specified that the PCC was being abolished rather than converted and that if the PUP was intended to
be a new institution, the law would have said it was being created. Petitioner claims that the PUP is
merely a continuation of the existence of the PCC, and, hence, he could be reinstated to his former
position as president.

In part the contention is well taken, but, as will presently be explained, reinstatement is no longer possible
because of the promulgation of P.D. No. 1437 by the President of the Philippines on June 10, 1978.

P.D. No. 1341 did not abolish, but only changed, the former Philippine College of Commerce into what is
now the Polytechnic University of the Philippines, in the same way that earlier in 1952, R.A. No. 778 had
converted what was then the Philippine School of Commerce into the Philippine College of Commerce.
What took place was a change in academic status of the educational institution, not in its corporate life.
Hence the change in its name, the expansion of its curricular offerings, and the changes in its structure
and organization.

As petitioner correctly points out, when the purpose is to abolish a department or an office or an
organization and to replace it with another one, the lawmaking authority says so. He cites the following
examples:

E.O. No. 709:

1. There is hereby created a Ministry of Trade and Industry, hereinafter referred to as the Ministry. The
existing Ministry of Trade established pursuant to Presidential Decree No. 721 as amended, and the
existing Ministry established pursuant to Presidential Decree No. 488 as amended, are abolished together
with their services, bureaus and similar agencies, regional offices, and all other entities under their
supervision and control. . . .

E.O. No. 710:

1. There is hereby created a Ministry of Public Works and Highways, hereinafter referred to as the
Ministry. The existing Ministry of Public Works established pursuant to Executive Order No. 546 as
amended, and the existing Ministry of Public Highways established pursuant to Presidential Decree No.
458 as amended, are abolished together with their services, bureaus and similar agencies, regional
offices, and all other entities within their supervision and control. . . .

R.A. No. 6975:

13. Creation and Composition. - A National Police Commission, hereinafter referred to as the
Commission, is hereby created for the purpose of effectively discharging the functions prescribed in the
Constitution and provided in this Act. The Commission shall be a collegial body within the Department. It
shall be composed of a Chairman and four (4) regular commissioners, one (1) of whom shall be
designated as Vice-Chairman by the President. The Secretary of the Department shall be the ex-officio
Chairman of the Commission, while the Vice-Chairman shall act as the executive officer of the
Commission.

xxx xxx

xxx

90. Status of Present NAPOLCOM, PC-INP. - Upon the effectivity of this Act, the present National
Police Commission, and the Philippine Constabulary-Integrated National Police shall cease to exist. The
Philippine Constabulary, which is the nucleus of the integrated Philippine Constabulary-Integrated
National Police, shall cease to be a major service of the Armed Forces of the Philippines. The Integrated
National Police, which is the civilian component of the Philippine Constabulary-Integrated National Police,
shall cease to be the national police force and in lieu thereof, a new police force shall be established and
constituted pursuant to this Act.

In contrast, P.D. No. 1341, provides:

 1. The present Philippine College of Commerce is hereby converted into a university to be known as
the Polytechnic University of the Philippines, hereinafter referred to in this Decree as the University.

As already noted, R.A. No. 778 earlier provided:

1. The present Philippine School of Commerce, located in the City of Manila, Philippines, is hereby
granted full college status and converted into the Philippine College of Commerce, which will offer not
only its present one-year and two-year vocational commercial curricula, the latter leading to the titles of
Associate in Business Education and/or Associate in Commerce, but also four-year courses leading to the
degrees of Bachelor of Science in Business in Education and Bachelor of Science in Commerce, and fiveyear courses leading to the degrees of Master of Arts in Business Education and Master of Arts in
Commerce, respectively.

The appellate court ruled, however, that the PUP and the PCC are not one and the same institution but
two different entities and that since petitioner Crisostomos term was coterminous with the legal
existence of the PCC, petitioners term expired upon the abolition of the PCC. In reaching this
conclusion, the Court of Appeals took into account the following:

a) After respondent Crisostomos suspension, P.D. No. 1341 (entitled CONVERTING THE PHILIPPINE
COLLEGE OF COMMERCE INTO A POLYTECHNIC UNIVERSITY, DEFINING ITS OBJECTIVES,
ORGANIZATIONAL STRUCTURE AND FUNCTIONS, AND EXPANDING ITS CURRICULAR
OFFERINGS) was issued on April 1, 1978. This decree explicitly provides that PUPs objectives and
purposes cover not only PCCs offering of programs in the field of commerce and business
administration but also programs in other polytechnic areas and in other fields such as agriculture, arts
and trades and fisheries . . . (section 2). Being a university, PUP was conceived as a bigger institution
absorbing, merging and integrating the entire PCC and other national schools as may be transferred to
this new state university.

b) The manner of selection and appointment of the university head is substantially different from that
provided by the PCC Charter. The PUP President shall be appointed by the President of the Philippines
upon recommendation of the Secretary of Education and Culture after consultation with the University
Board of Regents (section 4, P.D. 1341). The President of PCC, on the other hand, was appointed by
the President of the Philippines upon recommendation of the Board of Trustees (Section 4, R.A. 778).

c) The composition of the new universitys Board of Regents is likewise different from that of the PCC
Board of Trustees (which included the chairman of the Senate Committee on Education and the chairman
of the House Committee on Education, the President of the PCC Alumni Association as well as the
President of the Chamber of Commerce of the Philippines). Whereas, among others, the NEDA DirectorGeneral, the Secretary of Industry and the Secretary of Labor are members of the PUP Board of Regents.
(Section 6, P.D. 1341).

d) The decree moreover transferred to the new university all the properties including equipment and
facilities:

. . . owned by the Philippine College of Commerce and such other National Schools as may be integrated
. . . including their obligations and appropriations . . . (Sec. 12; Italics supplied).[3]

But these are hardly indicia of an intent to abolish an existing institution and to create a new one. New
course offerings can be added to the curriculum of a school without affecting its legal existence. Nor will
changes in its existing structure and organization bring about its abolition and the creation of a new one.
Only an express declaration to that effect by the lawmaking authority will.

The Court of Appeals also cites the provision of P.D. No. 1341 as allegedly implying the abolition of the
PCC and the creation of a new one the PUP in its stead:

12. All parcels of land, buildings, equipment and facilities owned by the Philippine College of
Commerce and such other national schools as may be integrated by virtue of this decree, including their
obligations and appropriations thereof, shall stand transferred to the Polytechnic University of the
Philippines, provided, however, that said national schools shall continue to receive their corresponding
shares from the special education fund of the municipal/provincial/city government concerned as are now
enjoyed by them in accordance with existing laws and/or decrees.

The law does not state that the lands, buildings and equipment owned by the PCC were being
transferred to the PUP but only that they stand transferred to it. Stand transferred simply means, for
example, that lands transferred to the PCC were to be understood as transferred to the PUP as the new
name of the institution.

But the reinstatement of petitioner to the position of president of the PUP could not be ordered by the trial
court because on June 10, 1978, P.D. No. 1437 had been promulgated fixing the term of office of
presidents of state universities and colleges at six (6) years, renewable for another term of six (6) years,
and authorizing the President of the Philippines to terminate the terms of incumbents who were not
reappointed. P.D. No. 1437 provides:

6. The head of the university or college shall be known as the President of the university or college. He
shall be qualified for the position and appointed for a term of six (6) years by the President of the
Philippines upon recommendation of the Secretary of Education and Culture after consulting with the
Board which may be renewed for another term upon recommendation of the Secretary of Education and
Culture after consulting the Board. In case of vacancy by reason of death, absence or resignation, the
Secretary of Education and Culture shall have the authority to designate an officer in charge of the
college or university pending the appointment of the President.

The powers and duties of the President of the university or college, in addition to those specifically
provided for in this Decree shall be those usually pertaining to the office of the president of a university or
college.

7. The incumbent president of a chartered state college or university whose term may be terminated
according to this Decree, shall be entitled to full retirement benefits: provided that he has served the
government for at least twenty (20) years; and provided, further that in case the number of years served is
less than 20 years, he shall be entitled to one month pay for every year of service.

In this case, Dr. Pablo T. Mateo Jr., who had been acting president of the university since April 3, 1979,
was appointed president of PUP for a term of six (6) years on March 28, 1980, with the result that
petitioners term was cut short. In accordance with 7 of the law, therefore, petitioner became entitled
only to retirement benefits or the payment of separation pay. Petitioner must have recognized this fact,
that is why in 1992 he asked then President Aquino to consider him for appointment to the same position
after it had become vacant in consequence of the retirement of Dr. Prudente.

WHEREFORE, the decision of the Court of Appeals is MODIFIED by SETTING ASIDE the questioned
orders of the Regional Trial Court directing the reinstatement of the petitioner Isabelo T. Crisostomo to the
position of president of the Polytechnic University of the Philippines and the payment to him of salaries
and benefits which he failed to receive during his suspension in so far as such payment would include
salaries accruing after March 28, 1980 when petitioner Crisostomos term was terminated. Further
proceedings in accordance with this decision may be taken by the trial court to determine the amount due
and payable to petitioner by the university up to March 28, 1980.

SO ORDERED.

[G.R. No. 115844. August 15, 1997]

CESAR G. VIOLA, Chairman, Bgy. 167, Zone 15, District II, Manila, petitioner, vs. HON. RAFAEL M.
ALUNAN III, Secretary, DILG, ALEX L. DAVID, President/Secretary General, National Liga ng mga
Barangay, LEONARDO L. ANGAT, President, City of Manila, Liga ng mga Barangay, respondents.
DECISION
MENDOZA, J.:

This is a petition for prohibition challenging the validity of Art. III, 1-2 of the Revised Implementing Rules
and Guidelines for the General Elections of the Liga ng mga Barangay Officers so far as they provide for
the election of first, second and third vice presidents and for auditors for the National Liga ng mga
Barangay and its chapters. The provisions in question read:

1. Local Liga Chapters. The Municipal, City, Metropolitan and Provincial Chapters shall directly elect the
following officers and directors to constitute their respective Board of Directors, namely:

1.1 President
1.2 Executive Vice-President
1.3 First Vice-President
1.4 Second Vice-President
1.5 Third Vice-President
1.6 Auditor
1.7 Five (5) Directors

2. National Liga. The National Liga shall directly elect the following officers and directors to constitute
the National Liga Board of Directors namely:

2.1 President
2.2 Executive Vice-President
2.3 First Vice-President
2.4 Second Vice-President
2.5 Third Vice-President
2.6 Secretary General
2.7 Auditor
2.8 Five (5) Directors

Petitioner Cesar G. Viola brought this action as barangay chairman of Bgy. 167, Zone 15, District II,
Manila against then Secretary of Interior and Local Government Rafael M. Alunan III, Alex L. David,
president/secretary general of the National Liga ng mga Barangay, and Leonardo L. Angat, president of
the City of Manila Liga ng mga Barangay, to restrain them from carrying out the elections for the
questioned positions on July 3, 1994.

Petitioners contention is that the positions in question are in excess of those provided in the Local
Government Code (R.A. No. 7160), 493 of which mentions as elective positions only those of president,
vice president, and five members of the board of directors in each chapter at the municipal, city,
provincial, metropolitan political subdivision, and national levels. Petitioner argues that, in providing for
the positions of first, second and third vice presidents and auditor for each chapter, 1-2 of the
Implementing Rules expand the number of positions authorized in 493 of the Local Government Code in
violation of the principle that implementing rules and regulations cannot add or detract from the provisions
of the law they are designed to implement.

Although the elections are now over, the issues raised in this case are likely to arise again in future
elections of officers of the Liga ng mga Barangay. For one thing, doubt may be cast on the validity of the
acts of those elected. For another, this comes within the rule that courts will decide a question which is
otherwise moot and academic if it is capable of repetition, yet evading review.[1]

We will therefore proceed to the merits of this case.

Petitioners contention that the additional positions in question have been created without authority of law
is untenable. To begin with, the creation of these positions was actually made in the Constitution and Bylaws of the Liga ng Mga Barangay, which was adopted by the First Barangay National Assembly on
January 11, 1994. This Constitution and By-laws provide in pertinent parts:

ARTICLE VI
OFFICERS AND DIRECTORS

Section 1. Organization of Board of Directors of Local Chapters. - The chapters shall directly elect their
respective officers, namely, a president; executive vice president; first, second, and third vice presidents;
auditor; and five (5) members to constitute the Board of Directors of their respective chapter. Thereafter,
the Board shall appoint a secretary, treasurer, and public relations officer from among the five (5)
members, with the rest serving as Directors of Board. The Board may create such other positions as it
may deem necessary for the management of the chapter. Pending elections of the president of the
municipal, city, provincial and metropolitan chapters of the Liga, the incumbent presidents of the ABCs of
the municipality, city province and Metropolitan Manila shall continue to act as presidents of the
corresponding Liga chapters, subject to the provisions of the Local Government Code of 1991.

Section 2. Organization of Board of Directors of the National Liga. - The National Liga shall be composed
of the presidents of the provincial Liga chapters, highly urbanized and independent component city
chapters, and the metropolitan chapter who shall directly elect their respective officers, namely, a
president, executive vice president; first, second, and third vice president, auditor, secretary general; and
five (5) members to constitute the Board of Directors of the National Liga. Thereafter, the Board shall

appoint a treasurer, secretary and public relations officers from among the five (5) members with the rest
serving as directors of the Board. The Board may create such other positions as it may deem necessary
for the management of the National Liga. Pending election of Secretary-General, the incumbent
president of the Pambansang Katipunan ng mga Barangay (PKB) shall act as the Secretary-General.
The incumbent members of the Board of the PKB, headed by the Secretary-General who continue to be
presidents of the respective chapters of the Liga to which they belong, shall constitute a committee to
exercise the powers and duties of the National Liga and with the primordial responsibility of drafting a
Constitution and By-Laws needed for the organization of the Liga as a whole pursuant to the provisions of
the Local Government Code of 1991.

The post of executive vice president is in reality that of the vice president in 493 of the LGC, so that the
only additional positions created for each chapter in the Constitution and By-laws are those of first,
second and third vice presidents and auditor. Contrary to petitioners contention, the creation of the
additional positions is authorized by the LGC which provides as follows:

493. Organization. The liga at the municipal, city, provincial, metropolitan political subdivision, and
national levels directly elect a president, a vice-president, and five (5) members of the board of directors.
The board shall appoint its secretary and treasurer and create such other positions as it may deem
necessary for the management of the chapter. A secretary-general shall be elected from among the
members of the national liga and shall be charged with the overall operation of the liga on the national
level. The board shall coordinate the activities of the chapters of the liga. (emphasis added)

This provision in fact requires and not merely authorizes the board of directors to create such
other positions as it may deem necessary for the management of the chapter and belies petitioners
claim that said provision (493) limits the officers of a chapter to the president, vice president, five
members of the board of directors, secretary, and treasurer. That Congress can delegate the power to
create positions such as these has been settled by our decisions upholding the validity of reorganization
statutes authorizing the President of the Philippines to create, abolish or merge offices in the executive
department.[2] The question is whether, in making a delegation of this power to the board of directors of
each chapter of the Liga ng Mga Barangay, Congress provided a sufficient standard so that, in the phrase
of Justice Cardozo, administrative discretion may be canalized within proper banks that keep it from
overflowing.[3]

Statutory provisions authorizing the President of the Philippines to make reforms and changes in
government owned or controlled corporations for the purpose of promoting simplicity, economy and
efficiency[4] in their operations and empowering the Secretary of Education to prescribe minimum
standards of adequate and efficient instruction[5] in private schools and colleges have been found to be
sufficient for the purpose of valid delegation. Judged by these cases, we hold that 493 of the Local
Government Code, in directing the board of directors of the liga to create such other positions as may be
deemed necessary for the management of the chapter[s], embodies a fairly intelligible standard. There
is no undue delegation of power by Congress.

Justice Davide contends in dissent, however, that only the Board of Directors and not any other body
is vested with the power to create other positions as may be necessary for the management of the
chapter and that, in any case, there is no showing that the Barangay National Assembly was authorized
to draft the Constitution and By-laws because he is unable to find any law creating it. The Barangay
National Assembly is actually the Pambansang Katipunan ng mga Barangay (PKB) referred to in Art.
210(f)(2)(3) of the Rules and Regulations Implementing the Local Government Code of 1991, which
Justice Davides dissent cites. It will be helpful to quote these provisions:

(2)
A secretary-general shall be elected from among the members of the national liga who shall be
responsible for the overall operation of the liga. Pending election of a secretary-general under this rule,
the incumbent president of the pambansang katipunan ng mga barangay shall act as the secretarygeneral. The incumbent members of the board of the pambansang katipunan ng mga barangay, headed
by the secretary-general, who continue to be presidents of the respective chapters of the liga to which
they belong, shall constitute a committee to exercise the powers and duties of the national liga and draft
or amend the constitution and by-laws of the national liga to conform to the provisions of this Rule.

(3)

The board of directors shall coordinate the activities of the various chapters of the liga.

(Emphasis added)

Pursuant to these provisions, pending the organization of the Liga ng mga Barangay, the board of
directors of the PKB was constituted into a committee, headed by the PKB president, who acted as
secretary general, with a two-fold mandate: [1] exercise the powers and duties of the national liga and
[2] draft or amend the constitution and by-laws of the national liga to conform to the provisions of this
Rule. The board of directors of the PKB, functioning in place of the board of directors of the National Liga
ng mga Barangay, exercised one of these powers of the National Liga board, namely, to create additional
positions which it deemed necessary for the management of a chapter. There is therefore no basis for
the claim that because the power to create additional positions in the Liga or its chapters is vested only in
the board of directors the exercise of this power by the Barangay National Assembly is unauthorized and
illegal and the positions created are void. The Barangay National Assembly was actually the
Pambansang Katipunan ng mga Barangay or PKB. Pending the organization of the Liga ng mga
Barangay, it served as the Liga.

But it is contended in the dissent that Section 493 of the LGC . . . vests the power to create additional
positions in the Board of Directors of the chapter. The implication seems to be that the board of the
directors at the national level did not have that power. It is necessary to consider the organizational
structure of the Liga ng mga Barangay as provided in the LGC, as follows:

492. Representation, Chapters, National Liga. - Every barangay shall be represented in said liga by the
punong barangay, or in his absence or incapacity, by a sanggunian member duly elected for the purpose
among its members, who shall attend all meetings or deliberations called by the different chapters of the
liga.

The liga shall have chapters at the municipal, city, provincial and metropolitan political subdivision levels.

The municipal and city chapters of the liga shall be composed of the barangay representatives of
municipal and city barangays, respectively. The duly elected presidents of component municipal and city
chapters shall constitute the provincial chapter or the metropolitan political subdivision chapter. The duly
elected presidents of highly-urbanized cities, provincial chapters, the Metropolitan Manila chapter and
metropolitan political subdivision chapters shall constitute the National Liga ng mga Barangay.

493. Organization. The liga at the municipal, city, provincial, metropolitan political subdivision, and
national levels directly elect a president, a vice-president, and five (5) members of the board of directors.
The board shall appoint its secretary and treasurer and create such other positions as it may deem
necessary for the management of the chapter. A secretary-general shall be elected from among the
members of the national liga and shall be charged with the overall operation of the liga on the national
level. The board shall coordinate the activities of the chapters of the liga.

(Emphasis added)

While the board of directors of a local chapter can create additional positions to provide for the needs of
the chapter, the board of directors of the National Liga must be deemed to have the power to create
additional positions not only for its management but also for that of all the chapters at the municipal, city,
provincial and metropolitan political subdivision levels. Otherwise the National Liga would be no different
from the local chapters. There would then be only so many local chapters without a national one, when
what is contemplated in the above-quoted provisions of the LGC is that there should be one Liga ng mga
Barangay with local chapters at all levels of local government units. The dissent, by denying to the board
of directors at the National Liga the power to create additional positions in the local chapters, would
reduce such board to a board of a local chapter. The fact is that 493 grants the power to create
positions not only to the boards of the local chapters but to the board of the Liga at the national level as
well.

Indeed what was done in the Constitution and By-laws of their liga was to create additional positions in
each chapter, whether national or local, without however precluding the boards of directors of the
chapters as well as that of the national liga from creating other positions for their peculiar needs. The
creation by the board of the National Liga of the positions of first, second and third vice presidents,
auditors and public relations officers was intended to provide uniform officers for the various chapters in
line with the mandate in Art. 210(g)(2) of the Rules and Regulations Implementing the Local Government
Code of 1991 to the Barangay National Assembly to formulate uniform constitution and by-laws
applicable to the national liga and all local chapters. The various chapters could have different minor
officers depending on their local needs, but they must have the same major elective officers, meaning to
say, the additional vice presidents and auditors.

The dissent further argues that, following the rule of ejusdem generis, what may be created as additional
positions can only be appointive ones because the positions of secretary and treasurer are appointive
positions. The rule might apply if what is involved is the appointment of other officers. But what we are
dealing with in this case is the creation of additional positions. Section 493 actually gives the board the
power to [1] appoint its secretary and treasurer and [2] create such other positions as it may deem
necessary for the management of the chapter. The additional positions to be created need not therefore
be appointive positions.

Nor is it correct to say that 493, in providing that additional positions to be created must be those which
are deemed necessary for the management of the chapter, contemplates only appointive positions.
Management positions are not necessarily limited to appointive positions. Elective officers, such as the
president and vice president, can be expected to be involved in the general administration or
management of the chapter. Hence, the creation of other elective positions which may be deemed
necessary for the management of the chapter is within the purview of 493.

WHEREFORE, the petition for prohibition is DISMISSED for lack of merit.

SO ORDERED.

[G.R. No. 112745. October 16, 1997]

AQUILINO T. LARIN, petitioner, vs. THE EXECUTIVE SECRETARY, SECRETARY OF FINANCE,

COMMISSIONER OF THE BUREAU OF INTERNAL REVENUE AND THE COMMITTEE CREATED TO
INVESTIGATE THE ADMINISTRATIVE COMPLAINT AGAINST AQUILINO T. LARIN, COMPOSED OF
FRUMENCIO A. LAGUSTAN, JOSE B. ALEJANDRINO and JAIME M. MAZA, respondents.
DECISION
TORRES, JR., J.:

Challenge in this petition is the validity of petitioners removal from service as Assistant Commissioner of
the Excise Tax Service of the Bureau of Internal Revenue. Incidentally, he questions Memorandum order
no. 164 issued by the Office of the President, which provides for the creation of A Committee to
Investigate the Administrative Complaint Against Aquilino T. Larin, Assistant Commissioner, Bureau of
Internal Revenue as well as the investigation made in pursuance thereto and Administrative Order No.
101 dated December 2, 1993 which found him guilty of grave misconduct in the administrative charge and
imposed upon him the penalty of dismissal from office.

Likewise, petitioner seeks to assail the legality of Executive Order No. 132, issued by President Ramos
on October 26, 1993, which provides for the Streamlining of the Bureau of Internal Revenue, and of its
implementing rules issued by the Bureau of Internal Revenue, namely: a) Administrative Order No. 4-93,
which provides for the Organizational Structure and Statement of General Functions of Offices in the
National Office and b) Administrative Order No. 5-93, which provides for Redefining the Areas of
Jurisdiction and Renumbering of Regional And District Offices.

The antecedent facts of the instant case as succinctly related by the Solicitor General are as follows:

On September 18, 1992, [1] a decision was rendered by the Sandiganbayan convicting herein petitioner
Aquilino T. Larin, Revenue Specific Tax Officer, then Assistant Commisioner of the Bureau of Internal
Revenue and his co-accused (except Justino E. Galban, Jr.) of the crimes of violation of Section 268 (4)
of the National Internal Revenue Code and Section 3 (e) of R.A. 3019 in Criminal Cases Nos. 1420814209, entitled People of the Philippines, Plaintiff vs. Aquilino T. Larin, Teodoro T. Pareno, Justino E.
Galban, Jr. and Potenciana N. Evangelista, Accused, the dispositive portion of the judgment reads:

"WHEREFORE, judgment is now rendered in Criminal Cases Nos. 14208 and 14209 convicting accused
Assistant Commissioner for Specific Tax Aquilino T. Larin, Chief of the Alcohol tax Division TEODORO P.
PARENO, and Chief of the Revenue accounting Division POTENCIANA M. EVANGELISTA:

xxx

SO ORDERED.

The fact of petitioners conviction was reported to the President of the Philippines by the then Acting
Finance Secretary Leong through a memorandum dated June 4, 1993. The memorandum states, inter
alia:

This is a report in the case of Assistant Commissioner AQUILINO T. LARIN of the Excise tax Service,
Bureau of Internal Revenue, a presidential appointee, one of those convicted in the Criminal Case Nos.
14208-14209, entitled People of the Philippines vs. Aquilino T. Larin, et. al. Referred to the Department of
Finace by the Commissioner of Internal Revenue.

The cases against Pareno and Evangelista are being acted upon by the Bureau of Internal revenue as
they non-presidential appointees.

xxx

It is clear from the foregoing that Mr. Larin has found beyond reasonable doubt to have committed acts
constituting grave misconduct. Under the Civil Service Laws and Rules which require only preponderance
of evidence, grave misconduct is punishable by dismissal.

Acting by authority of the President, Sr. Deputy Executive Secretary Leonardo A. Quisumbing issued
Memorandum Order No. 164 dated August 25, 1993 which provides for the creation of an Executive
Committee to investigate the administrative charge against herein petitioner Aquilino T. Larin. It states
thus:

A Committee is hereby created to investigate the administrative complaint filed against Aquilino T. Larin,
Assistant Commissioner, Bureau of Internal Revenue, to be composed of:

Atty. Frumencio A. Lagustan Chairman

Assistant Executive Secretary for Legislation
Mr. Jose B. Alejandro Member
Presidential Assistant

Atty. Jaime M. Maza Member

Assistant commissioner of Inspector services
Bureau of Internal Revenue

The Committee shall have the powers and prerogatives of (an) investigating committee under the
administrative Code of 1987 including the power to summon witnesses, administer oath or take testimony
or evidence relevant to the investigation by subpoena ad testificandum and subpoena duces tecum:

xxx

The Committee shall convene immediately, conduct the investigation in the most expeditious manner, and
terminate the same as soon as practicable from its first scheduled date of hearing.

xxx

Consequently, the Committee directed the petitioner to respond to the administrative charge leveled
against him through a letter dated September 17, 1993, thus:

Presidential Memorandum Order No. 164 dated August 25, 1993, a xerox copy of which is hereto
attached for your ready reference, created an Investigation Committee to look into the charges against
you which are also the subject of the Criminal Cases No. 14208 and 14209 entitled People of the
Philippines vs. Aquilino T. Larin, et. al.

The committee has its possession a certified true copy of the Decision of the Sandiganbayan in the
above-mentioned cases.

Pursuant to Presidential Memorandum Order No. 164, you are hereby directed to file your position paper
on the aforementioned charges within seven (7) days from receipt hereof xxx.

Failure to file the required position paper shall be considered as a waiver on your part to submit such
paper or to be heard, in which case, the Committee shall deem the case submitted on the basis of the
documents and records at hand.

In compliance, petitioner submitted a letter dated September 30, 1993 which was addressed to Atty.
Frumencio A. Lagustan , the Chairman of the Investigating Committee. In said latter, he asserts that,

The case being sub-judice, I may not , therefore, comment on the merits of issues involved for fear of
being cited in contempt of Court. This position paper is thus limited to furnishing the Committee pertinent
documents submitted with the Supreme Court and other tribunal which took cognizance of the case in the
past, as follows:

xxx

The foregoing documents readily show that I am not administratively liable or criminally culpable of the
charges leveled against me, and that the aforesaid cases are mere prosecutions caused to be filed and
are being orchestrated by taxpayers who were prejudiced by multi-million peso assessments I caused to
be issued against them in my official capacity as Assistant Commissioner, Excise Tax office of Bureau of
Internal Revenue.

In the same letter, petitioner claims that the administrative complaint against him is already barred: a) on
jurisdictional ground as the Office of the Ombudsman had already taken cognizance of the case and had
caused the filing only of the criminal charges against him, b) by res judicata, c) double jeopardy, and d)
because to proceed with the case would be redundant, oppressive and a plain persecution against him.

Meanwhile, the President issued the challenged Executive order No. 132 dated October 26, 1993 which
mandates for the streamlining of the Bureau of Internal Revenue. Under said order, some positions and
functions are either abolished, renamed, decentralized or transferred to other offices, while other offices
are also created. The Excise Tax Service or the Specific Tax Service, of which petitioner was the Assistant
Commissioner, was one of those offices that was abolished by said executive order.

The corresponding implementing rules of Executive Order No. 132, namely, revenue Administrative
Orders Nos. 4-93 and 5-93, were subsequently issued .by the Bureau of Internal Revenue.

On October 27, 1993, or one day after the promulgation of Executive Order No.132, the President
appointed the following as BIR Assistant Commissioners:

1. Bernardo A. Frianeza
2. Dominador L. Galura
3. Jaime D. Gonzales
4. Lilia C. Guillermo
5. Rizalina S. Magalona
6. Victorino C. Mamalateo
7. Jaime M. Masa
8. Antonio N. Pangilinan
9. Melchor S. Ramos
10. Joel L. Tan-Torres

Consequently, the president, in the assailed Administrative Order No. 101 dated December 2, 1993, found
petitioner guilty of grave misconduct in the administrative charge and imposed upon him the penalty of
dismissal with forfeiture of his leave credits and retirement benefits including disqualification for
reappointment in the government service.

Aggrieved, petitioner filed directly with this Court the instant petition on December 13, 1993 to question
basically his alleged unlawful removal from office.

On April 17, 1996 and while the instant petition is pending, this Court set aside the conviction of the
petitioner in Criminal Case Nos. 14208 and 14209.

In his petition, petitioner challenged the authority of the President to dismiss him from office. He argued
that in so far as presidential appointees who are Career Executive Service Officers are concerned, the
President exercises only the power of control not the power to remove. He also averred that the
administrative investigation conducted under Memorandum Order No. 164 is void as it violated his right to
due process. According to him, the letter of the Committee dated September 17, 1993 and his position
paper dated September 30, 1993 are not sufficient for purposes of complying with the requirements of
due process. He alleged that he was not informed of the administrative charges leveled against him nor
was he given official notice of his dismissal.

Petitioner likewise claimed that he was removed as a result of the reorganization made by the Executive
Department in the BIR pursuant to Executive Order No. 132. Thus, he assailed said Executive Order No.
132 and its implementing rules, namely, Revenue Administrative Orders 4-93 and 5-93 for being ultra
vires. He claimed that there is yet no law enacted by Congress which authorizes the reorganization by the
Executive Department of executive agencies, particularly the Bureau of Internal revenue. He said that the
reorganization sought to be effected by the Executive Department on the basis of E.O. No. 132 is tainted
with bad faith in apparent violation of Section 2 of R.A. 6656, otherwise known as the Act Protecting the
Security of Tenure of Civil Service Officers and Employees in the Implementation of Government
Reorganization.

On the other hand, respondents contended that since petitioner is the presidential appointee, he falls
under the disciplining authority of the President. They also contended that E.O. No. 132 and its
implementing rules were validly issued pursuant to Sections 48 and 62 of Republic Act No. 7645. Apart
from this, the other legal bases of E.O. No. 132 as stated in its preamble are Section 63 of E.O No.127
(Reorganizing the Ministry of Finance), and Section 20, Book III of E.O. No. 292, otherwise known as the
Administrative Code of 1987. In addition, it is clear that in Section 11 of R.A No.6656 future reorganization
is expressly contemplated and nothing in said law that prohibits subsequent reorganization through an
executive order. Significantly, respondents clarified that petitioner was not dismissed by virtue of EO 132.
Respondents claimed that he was removed from office because he was found guilty of grave misconduct
in the administrative cases filed against him.

The ultimate issue to be resolved in the instant case falls on the determination of the validity of
petitioners dismissal from office. Incidentally, in order to resolve this matter, it is imperative that We
consider these questions : a) Who has the power to discipline the petitioner?, b) Were the proceedings
taken pursuant to Memorandum Order No. 164 in accord with due process?, c) What is the effect of
petitioners acquittal in the criminal case to his administrative charge? d) Does the President have the
power to reorganize the BIR or to issue the questioned E.O. NO. 132?, e) Is the reorganization of BIR
pursuant to E.O. No. 132 tainted with bad faith?

At the outset, it is worthy to note that the position of the Assistant Commissioner of the BIR is part of the
Career Executive Service.[2] Under the law,[3] Career Executive Service officers, namely Undersecretary,
Assistant Secretary, Bureau director, Assistant Bureau Director, Regional Director, Assistant Regional
Director, Chief of Department Service and other officers of equivalent rank as may be identified by the
Career Executive Service Board, are all appointed by the President. Concededly, petitioner was
appointed as Assistant Commissioner in January, 1987 by then President Aquino. Thus, petitioner is a
presidential appointee who belongs to career service of the Civil Service. Being a presidential appointee,
he comes under the direct diciplining authority of the President. This is in line with the well settled
principle that the power to remove is inherent in the power to appoint conferred to the President by
Section 16, Article VII of the Constitution. Thus, it is ineluctably clear that Memorandum Order No. 164,
which created a committee to investigate the administrative charge against petitioner, was issued

pursuant to the power of removal of the President. This power of removal, however, is not an absolute
one which accepts no reservation. It must be pointed out that petitioner is a career service officer. Under
the Administrative Code of 1987, career service is characterized by the existence of security of tenure, as
contra-distinguished from non-career service whose tenure is co-terminus with that of the appointing or
subject to his pleasure, or limited to a period specified by law or to the duration of a particular project for
which purpose the employment was made. As a career service officer, petitioner enjoys the right to
security of tenure. No less than the 1987 Constitution guarantees the right of security of tenure of the
employees of the civil service. Specifically, Section 36 of P.D. No. 807, as amended, otherwise known as
Civil Service Decree of the Philippines, is emphatic that career service officers and employees who enjoy
security of tenure may be removed only for any of the causes enumerated in said law. In other words, the
fact that the petitioner is a presidential appointee does not give the appointing authority the license to
remove him at will or at his pleasure for it is an admitted fact that he is likewise a career service officer
who under the law is the recipient of tenurial protection, thus, may only be removed for a cause and in
accordance with procedural due process.

Was petitioner then removed from office for a legal cause under a valid proceeding?

Although the proceedings taken complied with the requirements of procedural due process, this Court,
however, considers that petitioner was not dismissed for a valid cause.

It should be noted that what precipitated the creation of the investigative committee to look into the
administrative charge against petitioner is his conviction by the Sandiganbayan in criminal Case Nos.
14208 and 14209. As admitted by the respondents, the administrative case against petitioner is based on
the Sandiganbayan Decision of September 18, 1992. Thus, in the Administrative Order No. 101 issued by
Senior Deputy Executive Secretary Quisumbing which found petitioner guilty of grave misconduct, it
clearly states that:

"This pertains to the administrative charge against Assistant Commissioner Aquilino T. Larin of the Bureau
of Internal Revenue, for grave misconduct by virtue of a Memorandum signed by Acting Secretary Leong
of the Department of Finance, on the basis of decision handed down by the Hon. Sandiganbayan
convicting Larin, et. al. in Criminal Cases No. 14208 and 14209."[4]

In a nutshell, the criminal cases against petitioner refer to his alleged violation of Section 268 (4) of the
National Internal Revenue Code and of section 3(e) of R.A. No.3019 as a consequence of his act of
favorably recommending the grant of tax credit to Tanduay Distillery, Inc.. The pertinent portion of the
judgment of the Sandiganbayan reads:

"As above pointed out, the accused had conspired in knowingly preparing false memoranda and
certification in order to effect a fraud upon taxes due to the government. By their separate acts which had
resulted in an appropriate tax credit of P180,701,682.00 in favor of Tanduay. The government had been
defrauded of a tax revenue - for the full amount, if one is to look at the availments or utilization thereof
(Exhibits 'AA' to 'AA-31-a'), or for a substantial portion thereof (P73,000,000.00) if we are to rely on the
letter of Deputy Commissioner Eufracio D. Santos (Exhibits '21' for all the accused).

As pointed out above, the confluence of acts and omissions committed by accused Larin, Pareno and
Evangelista adequately prove conspiracy among them for no other purpose than to bring about a tax

credit which Tanduay did not deserve. These misrepresentations as to how much Tanduay had paid in ad
valorem taxes obviously constituted a fraud of tax revenue of the government xxx.'[5]

However, it must be stressed at this juncture that the conviction of petitioner by the Sandiganbayan was
set aside by this court in our decision promulgated on April 17, 1996 in G.R. Nos. 108037-38 and 10711920. We specifically ruled in no uncertain terms that : a) petitioner cannot be held negligent in relying on
the certification of a co-equal unit in the BIR, b) it is not incumbent upon Larin to go beyond the
certification made by the Revenue Accounting Division that Tanduay Distillery, Inc. had paid the ad
valorem taxes, c) there is nothing irregular or anything false in Larin's marginal note on the memorandum
addressed to Pareno, the Chief of Alcohol Tax Division who was also one of the accused, but eventually
acquitted, in the said criminal cases, and d) there is no proof of actual agreement between the accused,
including petitioner, to commit the illegal acts charged. We are emphatic in our resolution in said cases
that there is nothing "illegal with the acts committed by the petitioner(s)." We also declare that "there is no
showing that petitioner(s) had acted irregularly, or performed acts outside of his (their) official functions."
Significantly, these acts which We categorically declare to be not unlawful and improper in G.R. Nos.
108037-38 and G.R. Nos. 107119-20 are the very same acts for which petitioner is held to be
administratively responsible. Any charge of malfeasance or misfeasance on the part of the petitioner is
clearly belied by our conclusion in said cases. In the light of this decisive pronouncement, We see no
reason for the administrative charge to continue - it must, thus, be dismissed.

We are not unaware of the rule that since administrative cases are independent from criminal actions for
the same act or omission, the dismissal or acquittal of the criminal charge does not foreclose the
institution of administrative action nor carry with it the relief from administrative liability.[6] However, the
circumstantial setting of the instant case sets it miles apart from the foregoing rule and placed it well
within the exception. Corollarily, where the very basis of the administrative case against petitioner is his
conviction in the criminal action which was later on set aside by this court upon a categorical and clear
findings that the acts for which he was administratively held liable are not unlawful and irregular, the
acquittal of the petitioner in the criminal case necessarily entails the dismissal of the administrative action
against him, because in such a case, there is no basis nor justifiable reason to maintain the administrative
suit.

On the aspect of procedural due process, suffice it to say that petitioner was given every chance to
present his side. The rule is well settled that the essence of due process in administrative proceedings is
that a party be afforded a reasonable opportunity to be heard and to submit any evidence he may have in
support of his defense.[7] The records clearly show that on October 1, 1993 petitioner submitted his letterresponse dated September 30, 1993 to the administrative charged filed against him. Aside from his letter,
he also submitted various documents attached as annexes to his letter, all of which are evidences
supporting his defense. Prior to this, he received a letter dated September 17, 1993 from the Investigation
Committee requiring him to explain his side concerning the charge. It cannot therefore be argued that
petitioner was denied of due process.

Let us now examine Executive Order No. 132.

As stated earlier, with the issuance of Executive Order No. 132, some of the positions and offices,
including the office of Excise Tax Services of which petitioner was the Assistant Commissioner, were
abolished or otherwise decentralized. Consequently, the President released the list of appointed Assistant
Commissioners of the BIR. Apparently, petitioner was not included.

Initially, it is argued that there is no law yet which empowers the President to issue E.O. No. 132 or to
reorganize the BIR.

We do not agree.

Under its Preamble, E.O. No. 132 lays down the legal basis of its issuance, namely: a) Section 48 and 62
of R.A. No. 7645, b) Section 63 of E.O. No. 127, and c) Section 20, Book III of E.O. No. 292.

Section 48 of R.A. 7645 provides that:

"Sec. 48. Scaling Down and Phase Out of Activities of Agencies Within the Executive Branch. -- The
heads of departments, bureaus and offices and agencies are hereby directed to identify their respective
activities which are no longer essential in the delivery of public services and which may be scaled down,
phased out or abolished, subject to civil rules and regulations. xxx. Actual scaling down, phasing out or
abolition of the activities shall be effective pursuant to Circulars or Orders issued for the purpose by the
Office of the President." (italics ours)

Said provision clearly mentions the acts of "scaling down, phasing out and abolition" of offices only and
does not cover the creation of offices or transfer of functions. Nevertheless, the act of creating and
decentralizing is included in the subsequent provision of Section 62, which provides that:

"Sec. 62, Unauthorized Organizational Charges. -- Unless otherwise created by law or directed by the
President of the Philippines, no organizational unit or changes in key positions in any department or
agency shall be authorized in their respective organization structures and be funded from appropriations
by this Act." (italics ours)

The foregoing provision evidently shows that the President is authorized to effect organizational changes
including the creation of offices in the department or agency concerned.

The contention of petitioner that the two provisions are riders deserves scant consideration. Well settled is
the rule that every law has in its favor the presumption of constitutionality.[8] Unless and until a specific
provision of the law is declared invalid and unconstitutional, the same is valid and binding for all intents
and purposes.

Another legal basis of E.O. No. 132 is Section 20, Book III of E.O. No. 292 which states:

"Sec.20. Residual Powers. -- Unless Congress provides otherwise, the President shall exercise such
other powers and functions vested in the President which are provided for under the laws and which are
not specifically enumerated above or which are not delegated by the President in accordance with law."
(italics ours)

This provision speaks of such other powers vested in the President under the law. What law then which
gives him the power to reorganize? It is Presidential Decree No. 1772[9] which amended Presidential
Decree No. 1416. These decrees expressly grant the President of the Philippines the continuing authority
to reorganize the national government, which includes the power to group, consolidate bureaus and
agencies, to abolish offices, to transfer functions, to create and classify functions, services and activities
and to standardize salaries and materials. The validity of these two decrees are unquestionable. The
1987 Constitution clearly provides that "all laws, decrees, executive orders, proclamations, letters of
instructions and other executive issuances not inconsistent with this Constitution shall remain operative
until amended, repealed or revoked."[10] So far, there is yet no law amending or repealing said decrees.
Significantly, the Constitution itself recognizes future reorganizations in the government as what is
revealed in Section 16 of Article XVIII, thus:

"Sec. 16. Career civil service employees separated from service not for cause but as a result of the xxx
reorganization following the ratification of this Constitution shall be entitled to appropriate separation pay
xxx."

However, We can not consider E.O. No. 127 signed on January 30, 1987 as a legal basis for the
reorganization of the BIR. E.O. No. 127 should be related to the second paragraph of Section 11 of
Republic Act No. 6656.

Section 11 provides inter alia:

"xxx

In the case of the 1987 reorganization of the executive branch, all departments and agencies which are
authorized by executive orders promulgated by the President to reorganize shall have ninety days from
the approval of this act within which to implement their respective reorganization plans in accordance with
the provisions of this Act." (italics ours)

Executive Order No. 127 was part of the 1987 reorganization contemplated under said provision.
Obviously, it had become stale by virtue of the expiration of the ninety day deadline period. It can not thus
be used as a proper basis for the reorganization of the BIR. Nevertheless, as shown earlier, there are
other legal bases to sustain the authority of the President to issue the questioned E.O. No. 132.

While the President's power to reorganize can not be denied, this does not mean however that the
reorganization itself is properly made in accordance with law. Well-settled is the rule that reorganization is
regarded as valid provided it is pursued in good faith. Thus, in Dario vs. Mison, this court has had the
occasion to clarify that:

"As a general rule, a reorganization is carried out in good faith if it is for the purpose of economy or to
make bureaucracy more efficient. In that event no dismissal or separation actually occurs because the
position itself ceases to exist. And in that case the security of tenure would not be a Chinese Wall. Be that
as it may, if the abolition which is nothing else but a separation or removal, is done for political reasons or
purposely to defeat security of tenure, or otherwise not in good faith, no valid abolition takes place and

whatever abolition is done is void ab initio. There is an invalid abolition as where there is merely a change
of nomenclature of positions or where claims of economy are belied by the existence of ample funds."[11]

In this regard, it is worth mentioning that Section 2 of R.A. No. 6656 lists down the circumstances
evidencing bad faith in the removal of employees as a result of the reorganization, thus:

Sec. 2. No officer or employee in the career service shall be removed except for a valid cause and after
due notice and hearing. A valid cause for removal exist when, pursuant to a bona fide reorganization, a
position has been abolished or rendered redundant or there is a need to merge, divide, or consolidate
positions in order to meet the exigencies of the service, or other lawful causes allowed by the Civil
Service Law. The existence of any or some of the following circumstances may be considered as
evidence of bad faith in the removals made as a result of the reorganization, giving rise to a claim for
reinstatement or reappointment by an aggrieved party:

a) Where there is a significant increase in the number of positions in the new staffing pattern of the
department or agency concerned;

b) Where an office is abolished and another performing substantially the same functions is created;

c) Where incumbents are replaced by those less qualified in terms of status of appointment, performance
and merit;

d) Where there is a reclassification of offices in the department or agency concerned and the reclassified
offices perform substantially the same functions as the original offices;

e) Where the removal violates the order of separation provided in Section 3 hereof."

A reading of some of the provisions of the questioned E.O. No. 132 clearly leads us to an inescapable
conclusion that there are circumstances considered as evidences of bad faith in the reorganization of the
BIR.

Section 1.1.2 of said executive order provides that:

"1.1.2 The Intelligence and Investigation Office and the Inspection Service are abolished. An Intelligence
and Investigation Service is hereby created to absorb the same functions of the abolished office and
service. xxx" (italics ours)

This provision is a clear illustration of the circumstance mentioned in Section 2 (b) of R.A. No. 6656 that
an office is abolished and another one performing substantially the same function is created.

Another circumstance is the creation of services and divisions in the BIR resulting to a significant increase
in the number of positions in the said bureau as contemplated in paragraph (a) of section 2 of R.A. No.
6656. Under Section 1.3 of E.O. No. 132, the Information Systems Group has two newly created Systems
Services. Aside from this, six new divisions are also created. Under Section 1.2.1, three more divisions of
the Assessment Service are formed. With this newly created offices, there is no doubt that a significant
increase of positions will correspondingly follow.

Furthermore, it is perceivable that the non-reappointment of the petitioner as Assistant Commissioner

violates Section 4 of R.A. No. 6656. Under said provision, officers holding permanent appointments are
given preference for appointment to the new positions in the approved staffing pattern comparable to their
former position or in case there are not enough comparable positions to positions next lower in rank. It is
undeniable that petitioner is a career executive officer who is holding a permanent position. Hence, he
should have given preference for appointment in the position of Assistant Commissioner. As claimed by
petitioner, Antonio Pangilinan who was one of those appointed as Assistant Commissioner, "is an outsider
of sorts to the bureau, not having been an incumbent officer of the bureau at the time of the
reorganization." We should not lose sight of the second paragraph of Section 4 of R.A. No. 6656 which
explicitly states that no new employees shall be taken in until all permanent officers shall have been
appointed for permanent position.

IN VIEW OF THE FOREGOING, the petition is granted, and petitioner is hereby reinstated to his position
as Assistant Commissioner without loss of seniority rights and shall be entitled to full backwages from the
time of his separation from service until actual reinstatement unless, in the meanwhile, he would have
reached the compulsory retirement age of sixty-five years in which case, he shall be deemed to have
retired at such age and entitled thereafter to the corresponding retirement benefits.

SO ORDERED.

G.R. No. 81954

August 8, 1989

CESAR Z. DARIO, petitioner,

vs.
HON. SALVADOR M. MISON, HON. VICENTE JAYME and HON. CATALINO MACARAIG, JR., in their
respective capacities as Commissioner of Customs, Secretary of Finance, and Executive Secretary,
respondents.

G.R. No. 81967

August 8, 1989

VICENTE A. FERIA JR., petitioner,

vs.
HON. SALVADOR M. MISON, HON. VICENTE JAYME, and HON. CATALINO MACARAIG, JR., in their
respective capacities as Commissioner of Customs, Secretary of Finance, and Executive Secretary,
respondents.

G.R. No. 82023

August 8, 1989

ADOLFO CASARENO, PACIFICO LAGLEVA, JULIAN C. ESPIRITU, DENNIS A. AZARRAGA, RENATO

DE JESUS, NICASIO C. GAMBOA, CORAZON RALLOS NIEVES, FELICITACION R. GELUZ,
LEODEGARIO H. FLORESCA, SUBAER PACASUM, ZENAIDA LANARIA, JOSE B. ORTIZ, GLICERIO
R. DOLAR, CORNELIO NAPA, PABLO B. SANTOS, FERMIN RODRIGUEZ, DALISAY BAUTISTA,
LEONARDO JOSE, ALBERTO LONTOK, PORFIRIO TABINO, JOSE BARREDO, ROBERTO ARNALDO,
ESTER TAN, PEDRO BAKAL, ROSARIO DAVID, RODOLFO AFUANG, LORENZO CATRE, LEONCIA
CATRE, ROBERTO ABADA, petitioners,
vs.
COMMISSIONER SALVADOR M. MISON, COMMISSIONER, BUREAU OF CUSTOMS, respondent.

G.R. No. 83737

August 8, 1989

BENEDICTO L. AMASA and WILLIAM S. DIONISIO, petitioners,

vs.
PATRICIA A. STO. TOMAS, in her capacity as Chairman of the Civil Service Commission and SALVADOR
MISON, in his capacity as Commissioner of the Bureau of Customs, respondents.

G.R. No. 85310

August 8, 1989

SALVADOR M. MISON, in his capacity as Commissioner of Customs, petitioner,

vs.
CIVIL SERVICE COMMISSION, ABACA, SISINIO T., ABAD, ROGELIO C., ABADIANO, JOSE P.,
ABCEDE, NEMECIO C., ABIOG, ELY F., ABLAZA, AURORA M., AGBAYANI, NELSON I., AGRES
ANICETO, AGUILAR, FLOR, AGUILUCHO MA. TERESA R., AGUSTIN, BONIFACIO T., ALANO, ALEX
P., ALBA, MAXIMO F. JR., ALBANO, ROBERT B., ALCANTARA, JOSE G., ALMARIO, RODOLFO F.,
ALVEZ, ROMUALDO R., AMISTAD RUDY M., AMOS, FRANCIS F., ANDRES, RODRIGO V., ANGELES,
RICARDO S., ANOLIN, MILAGROS H., AQUINO, PASCASIO E., ARABE, MELINDA M., ARCANGEL,
AGUSTIN S., JR., ARPON, ULPLIANO U., JR., ARREZA, ARTEMIO M., JR., ARROJO, ANTONIO P.,
ARVISU, ALEXANDER S., ASCA;O, ANTONIO T., ASLAHON, JULAHON P., ASUNCION, VICTOR R.,
ATANGAN, LORNA S., ATIENZA, ALEXANDER R., BACAL, URSULINO C., BA;AGA, MARLOWE, Z.,
BANTA, ALBERTO T., BARREDO, JOSE B., BARROS, VICTOR C., BARTOLOME, FELIPE A., BAYSAC,
REYNALDO S., BELENO, ANTONIO B., BERNARDO, ROMEO D., BERNAS, MARCIANO S., BOHOL,
AUXILIADOR G., BRAVO, VICTOR M., BULEG, BALILIS R., CALNEA, MERCEDES M., CALVO,
HONESTO G., CAMACHO, CARLOS V., CAMPOS, RODOLFO C., CAPULONG, RODRIGO G.,
CARINGAL, GRACIA Z., CARLOS, LORENZO B., CARRANTO, FIDEL U., CARUNGCONG, ALFREDO
M., CASTRO, PATRICIA J., CATELO, ROGELIO B., CATURLA, MANUEL B., CENIZAL, JOSEFINA F.,
CINCO, LUISITO, CONDE0, JOSE C., JR., CORCUERA, FIDEL S., CORNETA, VICENTE S.,
CORONADO, RICARDO S., CRUZ, EDUARDO S., CRUZ, EDILBERTO A., CRUZ, EFIGENIA B.,
CRUZADO, MARCIAL C., CUSTODIO, RODOLFO M., DABON, NORMA M., DALINDIN, EDNA MAE D.,
DANDAL, EDEN F., DATUHARON, SATA A., DAZO, GODOFREDO L., DE CASTRO, LEOPAPA, DE
GUZMAN, ANTONIO A., DE GUZMAN, RENATO E., DE LA CRUZ, AMADO A., JR., DE LA CRUZ,
FRANCISCO C., DE LA PE;A, LEONARDO, DEL CAMPO, ORLANDO, DEL RIO, MAMERTO P., JR.,
DEMESA, WILHELMINA T., DIMAKUTA, SALIC L., DIZON, FELICITAS A., DOCTOR, HEIDY M., DOLAR,
GLICERIO R., DOMINGO, NICANOR J., DOMINGO, PERFECTO V., JR., DUAY, JUANA G.,
DYSANGCO, RENATO F., EDILLOR, ALFREDO P., ELEVAZO, LEONARDO A., ESCUYOS, MANUEL M.,
JR., ESMERIA, ANTONIO E., ESPALDON, MA. LOURDES H., ESPINA, FRANCO A., ESTURCO,
RODOLFO C., EVANGELINO, FERMIN I., FELIX, ERNESTO G., FERNANDEZ, ANDREW M.,
FERRAREN, ANTONIO C., FERRERA, WENCESLAO A., FRANCISCO, PELAGIO S., JR., FUENTES,
RUDY L., GAGALANG, RENATO V., GALANG, EDGARDO R., GAMBOA, ANTONIO C., GAN, ALBERTO
R., GARCIA, GILBERT M., GARCIA, EDNA V., GARCIA, JUAN L., GAVIOLA, LILIAN V., GEMPARO,
SEGUNDINA G., GOBENCIONG, FLORDELIZ B., GRATE, FREDERICK R., GREGORIO, LAURO P.,
GUARTICO, AMMON H., GUIANG, MYRNA N., GUINTO, DELFIN C., HERNANDEZ, LUCAS A.,
HONRALES, LORETO N., HUERTO, LEOPOLDO H., HULAR , LANNYROSS E., IBA;EZ, ESTER C.,
ILAGAN, HONORATO C., INFANTE, REYNALDO C., ISAIS, RAY C., ISMAEL, HADJI AKRAM B.,
JANOLO, VIRGILIO M., JAVIER, AMADOR L., JAVIER, ROBERTO S., JAVIER, WILLIAM R., JOVEN,
MEMIA A., JULIAN, REYNALDO V., JUMAMOY, ABUNDIO A., JUMAQUIAO, DOMINGO F., KAINDOY,
PASCUAL B., JR., KOH, NANIE G., LABILLES, ERNESTO S., LABRADOR, WILFREDO M., LAGA,
BIENVENIDO M., LAGLEVA, PACIFICO Z., LAGMAN, EVANGELINE G., LAMPONG, WILFREDO G.,
LANDICHO, RESTITUTO A., LAPITAN, CAMILO M., LAURENTE, REYNALDO A., LICARTE, EVARISTO
R., LIPIO, VICTOR O., LITTAUA, FRANKLIN Z., LOPEZ, MELENCIO L., LUMBA, OLIVIA., MACAISA,
BENITO T., MACAISA, ERLINDA C., MAGAT, ELPIDIO, MAGLAYA, FERNANDO P., MALABANAN,
ALFREDO C., MALIBIRAN, ROSITA D., MALIJAN, LAZARO V., MALLI, JAVIER M., MANAHAN, RAMON
S., MANUEL, ELPIDIO R., MARAVILLA, GIL B., MARCELO, GIL C., MARI;AS, RODOLFO V.,
MAROKET, JESUS C., MARTIN, NEMENCIO A., MARTINEZ, ROMEO M., MARTINEZ, ROSELINA M.,
MATIBAG, ANGELINA G., MATUGAS, ERNESTO T., MATUGAS, FRANCISCO T., MAYUGA, PORTIA E.,
MEDINA, NESTOR M., MEDINA, ROLANDO S., MENDAVIA, AVELINO I., MENDOZA, POTENCIANO G.,
MIL, RAY M., MIRAVALLES, ANASTACIA L., MONFORTE, EUGENIO, JR., G., MONTANO, ERNESTO F.,
MONTERO, JUAN M. III., MORALDE, ESMERALDO B., JR., MORALES, CONCHITA D.L., MORALES,
NESTOR P., MORALES, SHIRLEY S., MUNAR, JUANITA L., MU;OZ, VICENTE R., MURILLO,
MANUEL M., NACION, PEDRO R., NAGAL, HENRY N., NAPA, CORNELIO B., NAVARRO, HENRY L.,
NEJAL, FREDRICK E., NICOLAS, REYNALDO S., NIEVES, RUFINO A., OLAIVAR, SEBASTIAN T.,
OLEGARIO, LEO Q., ORTEGA, ARLENE R., ORTEGA, JESUS R., OSORIO, ABNER S., PAPIO,
FLORENTINO T. II, PASCUA, ARNULFO A., PASTOR, ROSARIO, PELAYO, ROSARIO L., PE;A, AIDA
C., PEREZ, ESPERIDION B., PEREZ, JESUS BAYANI M., PRE, ISIDRO A., PRUDENCIADO, EULOGIA
S., PUNZALAN, LAMBERTO N., PURA, ARNOLD T., QUINONES, EDGARDO I., QUINTOS, AMADEO

C., JR., QUIRAY, NICOLAS C., RAMIREZ, ROBERTO P., RA;ADA, RODRIGO C., RARAS, ANTONIO
A., RAVAL, VIOLETA V., RAZAL, BETTY R., REGALA, PONCE F., REYES, LIBERATO R., REYES,
MANUEL E., REYES, NORMA Z., REYES, TELESFORO F., RIVERA, ROSITA L., ROCES, ROBERTO V.,
ROQUE, TERESITA S., ROSANES, MARILOU M., ROSETE, ADAN I., RUANTO, REY, CRISTO C., JR.,
SABLADA, PASCASIO G., SALAZAR, SILVERIA S., SALAZAR, VICTORIA A., SALIMBACOD, PERLITA
C., SALMINGO, LOURDES M., SANTIAGO, EMELITA B., SATINA, PORFIRIO C., SEKITO, COSME B.,
JR., SIMON, RAMON P., SINGSON, MELECIO C., SORIANO, ANGELO L., SORIANO, MAGDALENA R.,
SUMULONG, ISIDRO L., JR., SUNICO, ABELARDO T., TABIJE, EMMA B., TAN, RUDY, GOROSPE,
TAN, ESTER S., TAN, JULITA S., TECSON, BEATRIZ B., TOLENTINO, BENIGNO A., TURINGAN,
ENRICO T., JR., UMPA, ALI A., VALIC, LUCIO E., VASQUEZ, NICANOR B., VELARDE, EDGARDO C.,
VERA, AVELINO A., VERAME, OSCAR E., VIADO, LILIAN T., VIERNES, NAPOLEON K., VILLALON,
DENNIS A., VILLAR, LUZ L., VILLALUZ, EMELITO V., ZATA, ANGEL A., JR., ACHARON, CRISTETO,
ALBA, RENATO B., AMON, JULITA C., AUSTRIA, ERNESTO C., CALO, RAYMUNDO M., CENTENO,
BENJAMIN R., DE CASTRO, LEOPAPA C ., DONATO, ESTELITA P., DONATO, FELIPE S., FLORES,
PEDRITO S., GALAROSA, RENATO, MALAWI, MAUYAG, MONTENEGRO, FRANCISCO M., OMEGA,
PETRONILO T., SANTOS, GUILLERMO F., TEMPLO, CELSO, VALDERAMA, JAIME B., and VALDEZ,
NORA M., respondents.

G.R. No. 85335

August 8, 1989

FRANKLIN Z. LITTAUA, ADAN I. ROSETE, FRANCISCO T. MATUGAS, MA. J. ANGELINA G. MATIBAG,

LEODEGARDIO H. FLORESCA, LEONARDO A. DELA PE;A, ABELARDO T. SUNICO, MELENCIO L.
LOPEZ, NEMENCIO A. MARTIN, RUDY M. AMISTAD, ERNESTO T. MATUGAS, SILVERIA S. SALAZAR,
LILLIAN V. GAVIOLA, MILAGROS ANOLIN, JOSE B. ORTIZ, ARTEMIO ARREZA, JR., GILVERTO M.
GARCIA, ANTONIO A. RARAS, FLORDELINA B. GOBENCIONG, ANICETO AGRES, EDGAR Y.
QUINONES, MANUEL B. CATURLA, ELY F. ABIOG, RODRIGO C. RANADA, LAURO GREGORIO,
ALBERTO I. GAN, EDGARDO GALANG, RAY C. ISAIS, NICANOR B. VASQUEZ, MANUEL ESCUYOS,
JR., ANTONIO B. BELENO, ELPIO R. MANUEL, AUXILIADOR C. BOHOL, LEONARDO ELEVAZO,
VICENTE S. CORNETA, petitioners,
vs.
COM. SALVADOR M. MISON/BUREAU OF CUSTOMS and the CIVIL SERVICE COMMISSION,
respondents.

G.R. No. 86241

August 8, 1989

SALVADOR M. MISON, in his capacity as Commissioner of Customs, petitioner,

vs.
CIVIL SERVICE COMMISSION, SENEN S. DIMAGUILA, ROMEO P. ARABE BERNARDO S.
QUINTONG, GREGORIO P. REYES, and ROMULO C. BADILLO respondents

SARMIENTO, J.:

The Court writes finis to this contreversy that has raged bitterly for the several months. It does so out of
ligitimate presentement of more suits reaching it as a consequence of the government reorganization and
the instability it has wrought on the performance and efficiency of the bureaucracy. The Court is
apprehensive that unless the final word is given and the ground rules are settled, the issue will fester, and
likely foment on the constitutional crisis for the nation, itself biset with grave and serious problems.

The facts are not in dispute.

On March 25, 1986, President Corazon Aquino promulgated Proclamation No. 3, "DECLARING A
NATIONAL POLICY TO IMPLEMENT THE REFORMS MANDATED BY THE PEOPLE, PROTECTING
THEIR BASIC RIGHTS, ADOPTING A PROVISIONAL CONSTITUTION, AND PROVIDING FOR AN
ORDERLY TRANSITION TO A GOVERNMENT UNDER A NEW CONSTITUTION." Among other things,
Proclamation No. 3 provided:

SECTION 1. ...

The President shall give priority to measures to achieve the mandate of the people to:

(a)
Completely reorganize the government, eradicate unjust and oppressive structures, and all
iniquitous vestiges of the previous regime; 1

...

Pursuant thereto, it was also provided:

SECTION 1.
In the reorganization of the government, priority shall be given to measures to promote
economy, efficiency, and the eradication of graft and corruption.

SECTION 2.
All elective and appointive officials and employees under the 1973 Constitution shall
continue in office until otherwise provided by proclamation or executive order or upon the appointment
and qualification of their successors, if such is made within a period of one year from February 25, 1986.

SECTION 3.
Any public officer or employee separated from the service as a result of the organization
effected under this Proclamation shall, if entitled under the laws then in force, receive the retirement and
other benefits accruing thereunder.

SECTION 4.
The records, equipment, buildings, facilities and other properties of all government offices
shall be carefully preserved. In case any office or body is abolished or reorganized pursuant to this
Proclamation, its FUNDS and properties shall be transferred to the office or body to which its powers,
functions and responsibilities substantially pertain. 2

Actually, the reorganization process started as early as February 25, 1986, when the President, in her first
act in office, called upon "all appointive public officials to submit their courtesy resignation(s) beginning
with the members of the Supreme Court."3 Later on, she abolished the Batasang Pambansa4 and the
positions of Prime Minister and Cabinet 5 under the 1973 Constitution.

Since then, the President has issued a number of executive orders and directives reorganizing various
other government offices, a number of which, with respect to elected local officials, has been challenged
in this Court, 6 and two of which, with respect to appointed functionaries, have likewise been questioned
herein. 7

On May 28, 1986, the President enacted Executive Order No. 17, "PRESCRIBING RULES AND
REGULATIONS FOR THE IMPLEMENTATION OF SECTION 2, ARTICLE III OF THE FREEDOM
CONSTITUTION." Executive Order No. 17 recognized the "unnecessary anxiety and demoralization
among the deserving officials and employees" the ongoing government reorganization had generated,
and prescribed as "grounds for the separation/replacement of personnel," the following:

SECTION 3.

1)

The following shall be the grounds for separation replacement of personnel:

Existence of a case for summary dismissal pursuant to Section 40 of the Civil Service Law;

2)
Existence of a probable cause for violation of the Anti-Graft and Corrupt Practices Act as
determined by the Mnistry Head concerned;

3)

Gross incompetence or inefficiency in the discharge of functions;

4)

Misuse of public office for partisan political purposes;

5)
Any other analogous ground showing that the incumbent is unfit to remain in the service or his
separation/replacement is in the interest of the service.8

On January 30, 1987, the President promulgated Executive Order No. 127, "REORGANIZING THE
MINISTRY OF FINANCE." 9 Among other offices, Executive Order No. 127 provided for the
reorganization of the Bureau of Customs 10 and prescribed a new staffing pattern therefor.

Three days later, on February 2, 1987, 11 the Filipino people adopted the new Constitution.

On January 6, 1988, incumbent Commissioner of Customs Salvador Mison issued a Memorandum, in the
nature of "Guidelines on the Implementation of Reorganization Executive Orders," 12 prescribing the
procedure in personnel placement. It also provided:

1.
By February 28, 1988, the employees covered by Executive Order 127 and the grace period
extended to the Bureau of Customs by the President of the Philippines on reorganization shall be:

a)

informed of their re-appointment, or

b)

offered another position in the same department or agency or

c)

informed of their termination. 13

On the same date, Commissioner Mison constituted a Reorganization Appeals Board charged with
adjudicating appeals from removals under the above Memorandum. 14 On January 26, 1988,
Commissioner Mison addressed several notices to various Customs officials, in the tenor as follows:

Sir:

Please be informed that the Bureau is now in the process of implementing the Reorganization Program
under Executive Order No. 127.

Pursuant to Section 59 of the same Executive Order, all officers and employees of the Department of
Finance, or the Bureau of Customs in particular, shall continue to perform their respective duties and
responsibilities in a hold-over capacity, and that those incumbents whose positions are not carried in the
new reorganization pattern, or who are not re- appointed, shall be deemed separated from the service.

In this connection, we regret to inform you that your services are hereby terminated as of February 28,
1988. Subject to the normal clearances, you may receive the retirement benefits to which you may be
entitled under existing laws, rules and regulations.

In the meantime, your name will be included in the consolidated list compiled by the Civil Service
Commission so that you may be given priority for future employment with the Government as the need
arises.

Sincerely yours,
(Sgd) SALVADOR M. MISON
Commissioner15

As far as the records will yield, the following were recipients of these notices:

1.

CESAR DARIO

2.

VICENTE FERIA, JR.

3.

ADOLFO CASARENO

4.

PACIFICO LAGLEVA

5.

JULIAN C. ESPIRITU

6.

DENNIS A. AZARRAGA

7.

RENATO DE JESUS

8.

NICASIO C. GAMBOA

9.

CORAZON RALLOS NIEVES

10.

FELICITACION R. GELUZ

11.

LEODEGARIO H. FLORESCA

12.

SUBAER PACASUM

13.

ZENAIDA LANARIA

14.

JOSE B. ORTIZ

15.

GLICERIO R. DOLAR

16.

CORNELIO NAPA

17.

PABLO B. SANTOS

18.

FERMIN RODRIGUEZ

19.

DALISAY BAUTISTA

20.

LEONARDO JOSE

21.

ALBERTO LONTOK

22.

PORFIRIO TABINO

23.

JOSE BARREDO

24.

ROBERTO ARNALDO

25.

ESTER TAN

26.

PEDRO BAKAL

27.

ROSARIO DAVID

28.

RODOLFO AFUANG

29.

LORENZO CATRE

30.

LEONCIA CATRE

31.

ROBERTO ABADA

32.

ABACA, SISINIO T.

33.

ABAD, ROGELIO C.

34.

ABADIANO, JOSE P

35.

ABCEDE, NEMECIO C.

36.

ABIOG, ELY F.

37.

ABLAZA, AURORA M.

38.

AGBAYANI, NELSON I.

39.

AGRES, ANICETO

40.

AGUILAR, FLOR

41.

AGUILUCHO, MA. TERESA R.

42.

AGUSTIN, BONIFACIO T.

43.

ALANO, ALEX P.

44.

ALBA, MAXIMO F. JR.

45.

ALBANO, ROBERT B.

46.

ALCANTARA, JOSE G.

47.

ALMARIO, RODOLFO F.

48.

ALVEZ, ROMUALDO R.

49.

AMISTAD, RUDY M.

50.

AMOS, FRANCIS F.

51.

ANDRES, RODRIGO V.

52.

ANGELES, RICARDO S.

53.

ANOLIN, MILAGROS H.

54.

AQUINO, PASCASIO E. L.

55.

ARABE, MELINDA M.

56.

ARCANGEL, AGUSTIN S, JR.

57.

ARPON, ULPIANO U., JR.

58.

ARREZA, ARTEMIO M, JR.

59.

ARROJO, ANTONIO P.

60.

ARVISU, ALEXANDER S.

61.

ASCA;O, ANTONIO T.

62.

ASLAHON, JULAHON P.

63.

ASUNCION, VICTOR R.

64.

ATANGAN, LORNA S.

65.

ANTIENZA, ALEXANDER R.

66.

BACAL URSULINO C.

67.

BA;AGA, MARLOWE Z.

68.

BANTA, ALBERTO T.

69.

BARROS, VICTOR C.

70.

BARTOLOME, FELIPE A.

71.

BAYSAC, REYNALDO S.

72.

BELENO, ANTONIO B.

73.

BERNARDO, ROMEO D.

74.

BERNAS, MARCIANO S.

75.

BOHOL, AUXILIADOR G.

76.

BRAVO, VICTOR M.

77.

BULEG, BALILIS R.

78.

CALNEA, MERCEDES M.

79.

CALVO, HONESTO G.

80.

CAMACHO, CARLOS V.

81.

CAMPOS, RODOLFO C.

82.

CAPULONG, RODRIGO G.

83.

CARINGAL, GRACIA Z.

84.

CARLOS, LORENZO B.

85.

CARRANTO, FIDEL U.

86.

CARUNGCONG, ALFREDO M.

87.

CASTRO, PATRICIA J.

88.

CATELO, ROGELIO B.

89.

CATURLA, MANUEL B.

90.

CENIZAL, JOSEFINA F.

91.

CINCO, LUISITO

92.

CONDE, JOSE C., JR.

93.

CORCUERA, FIDEL S.

94.

CORNETA, VICENTE S.

95.

CORONADO, RICARDO S.

96.

CRUZ, EDUARDO S.

97.

CRUZ, EDILBERTO A,

98.

CRUZ, EFIGENIA B.

99.

CRUZADO,NORMA M.

100.

CUSTODIO, RODOLFO M.

101.

DABON, NORMA M.

102.

DALINDIN, EDNA MAE D.

103.

DANDAL, EDEN F.

104.

DATUHARON, SATA A.

105.

DAZO, GODOFREDO L.

106.

DE CASTRO, LEOPAPA

107.

DE GUZMAN, ANTONIO A.

108.

DE GUZMAN, RENATO E.

109.

DE LA CRUZ, AMADO A., JR.

110.

DE LA CRUZ, FRANCISCO C.

111.

DE LA PE;A, LEONARDO

112.

DEL CAMPO, ORLANDO

113.

DEL RIO, MAMERTO P., JR.

114.

DEMESA, WILHELMINA T.

115.

DIMAKUTA, SALIC L.

116.

DIZON, FELICITAS A.

117.

DOCTOR, HEIDY M.

118.

DOMINGO, NICANOR J.

119.

DOMINGO, PERFECTO V., JR.

120.

DUAY, JUANA G.

121.

DYSANGCO, RENATO F.

122.

EDILLOR, ALFREDO P.

123.

ELEVAZO, LEONARDO A

124.

ESCUYOS, MANUEL M., JR.

125.

ESMERIA, ANTONIO E.

126.

ESPALDON, MA. LOURDES H.

127.

ESPINA, FRANCO A.

128.

ESTURCO, RODOLFO C.

129.

EVANGELINO, FERMIN I.

130.

FELIX, ERNESTO G.

131.

FERNANDEZ, ANDREW M.

132.

FERRAREN, ANTONIO C.

133.

FERRERA, WENCESLAO A.

134.

FRANCISCO, PELAGIO S, JR.

135.

FUENTES, RUDY L.

136.

GAGALANG, RENATO V.

137.

GALANG, EDGARDO R.

138.

GAMBOA, ANTONIO C.

139.

GAN, ALBERTO P

140.

GARCIA, GILBERT M.

141.

GARCIA, EDNA V.

142.

GARCIA, JUAN L.

143.

GAVIOIA, LILIAN V.

144.

GEMPARO, SEGUNDINA G.

145.

GOBENCIONG, FLORDELIZ B.

146.

GRATE, FREDERICK R.

147.

GREGORIO, LAURO P.

148.

GUARTICO, AMMON H.

149.

GUIANG, MYRNA N.

150.

GUINTO, DELFIN C.

151.

HERNANDEZ, LUCAS A.

152.

HONRALES, LORETO N.

153.

HUERTO, LEOPOLDO H.

154.

HULAR, LANNYROSS E.

155.

IBA;EZ, ESTER C.

156.

ILAGAN, HONORATO C.

157.

INFANTE, REYNALDO C.

158.

ISAIS, RAY C.

159.

ISMAEL, HADJI AKRAM B.

160.

JANOLO, VIRGILIO M.

161.

JAVIER, AMADOR L.

162.

JAVIER, ROBERTO S.

163.

JAVIER, WILLIAM R.

164.

JOVEN, MEMIA A.

165.

JULIAN, REYNALDO V.

166.

JUMAMOY, ABUNDIO A.

167.

JUMAQUIAO, DOMINGO F.

168.

KAINDOY, PASCUAL B., JR.

169.

KOH, NANIE G.

170.

LABILLES, ERNESTO S.

171.

LABRADOR, WILFREDO M.

172.

LAGA, BIENVENIDO M.

173.

LAGMAN, EVANGELINE G.

174.

LAMPONG, WILFREDO G.

175.

LANDICHO, RESTITUTO A.

176.

LAPITAN, CAMILO M.

177.

LAURENTE, REYNALDO A.

178.

LICARTE, EVARISTO R.

179.

LIPIO, VICTOR O.

180.

LITTAUA, FRANKLIN Z.

181.

LOPEZ, MELENCIO L.

182.

LUMBA, OLIVIA R.

183.

MACAISA, BENITO T.

184.

MACAISA, ERLINDA C.

185.

MAGAT, ELPIDIO

186.

MAGLAYA, FERNANDO P.

187.

MALABANAN, ALFREDO C.

188.

MALIBIRAN, ROSITA D.

189.

MALIJAN, LAZARO V.

190.

MALLI, JAVIER M.

191.

MANAHAN, RAMON S.

192.

MANUEL, ELPIDIO R.

193.

MARAVILLA, GIL B.

194.

MARCELO, GIL C.

195.

MARI;AS, RODOLFO V.

196.

MAROKET ,JESUS C.

197.

MARTIN, NEMENCIO A.

198.

MARTINEZ, ROMEO M.

199.

MARTINEZ, ROSELINA M.

200.

MATIBAG, ANGELINA G.

201.

MATUGAS, ERNESTO T.

202.

MATUGAS, FRANCISCO T.

203.

MAYUGA, PORTIA E.

204.

MEDINA, NESTOR M.

205.

MEDINA, ROLANDO S.

206.

MENDAVIA, AVELINO

207.

MENDOZA, POTENCIANO G.

208.

MIL, RAY M.

209.

MIRAVALLES, ANASTACIA L.

210.

MONFORTE, EUGENIO, JR. G.

211.

MONTANO, ERNESTO F.

212.

MONTERO, JUAN M. III

213.

MORALDE, ESMERALDO B., JR.

214.

MORALES, CONCHITA D. L

215.

MORALES, NESTOR P.

216.

MORALES, SHIRLEY S.

217.

MUNAR, JUANITA L.

218.

MU;OZ, VICENTE R.

219.

MURILLO, MANUEL M.

220.

NACION, PEDRO R.

221.

NAGAL, HENRY N.

222.

NAVARRO, HENRY L.

223.

NEJAL FREDRICK E.

224.

NICOLAS, REYNALDO S.

225.

NIEVES, RUFINO A.

226.

OLAIVAR, SEBASTIAN T.

227.

OLEGARIO, LEO Q.

228.

ORTEGA, ARLENE R.

229.

ORTEGA, JESUS R.

230.

OSORIO, ABNER S.

231.

PAPIO FLORENTINO T. II

232.

PASCUA, ARNULFO A.

233.

PASTOR, ROSARIO

234.

PELAYO, ROSARIO L.

235.

PE;A, AIDA C.

236.

PEREZ, ESPERIDION B.

237.

PEREZ, JESUS BAYANI M.

238.

PRE, ISIDRO A.

239.

PRUDENCIADO, EULOGIA S.

240.

PUNZALAN, LAMBERTO N.

241.

PURA, ARNOLD T.

242.

QUINONES, EDGARDO I.

243.

QUINTOS, AMADEO C., JR.

244.

QUIRAY, NICOLAS C.

245.

RAMIREZ, ROBERTO P.

246.

RANADA, RODRIGO C.

247.

RARAS, ANTONIO A.

248.

RAVAL, VIOLETA V.

249.

RAZAL, BETTY R.

250.

REGALA, PONCE F.

251.

REYES, LIBERATO R.

252.

REYES, MANUEL E.

253.

REYES, NORMA Z.

254.

REYES, TELESPORO F.

255.

RIVERA, ROSITA L.

256.

ROCES, ROBERTO V.

257.

ROQUE, TERESITA S.

258.

ROSANES, MARILOU M.

259.

ROSETE, ADAN I.

260.

RUANTO, REY CRISTO C., JR.

261.

SABLADA, PASCASIO G.

262.

SALAZAR, SILVERIA S.

263.

SALAZAR, VICTORIA A.

264.

SALIMBACOD, PERLITA C.

265.

SALMINGO, LOURDES M.

266.

SANTIAGO, EMELITA B.

267.

SATINA, PORFIRIO C.

268.

SEKITO, COSME B JR.

269.

SIMON, RAMON P.

270.

SINGSON, MELENCIO C.

271.

SORIANO, ANGELO L.

272.

SORIANO, MAGDALENA R.

273.

SUNICO, ABELARDO T.

274.

TABIJE, EMMA B.

275.

TAN, RUDY GOROSPE

276.

TAN, ESTER S.

277.

TAN, JULITA S.

278.

TECSON, BEATRIZ B.

279.

TOLENTINO, BENIGNO A.

280.

TURINGAN, ENRICO T JR.

281.

UMPA, ALI A.

282.

VALIC, LUCIO E.

283.

VASQUEZ, NICANOR B.

284.

VELARDE, EDGARDO C.

285.

VERA, AVELINO A.

286.

VERAME, OSCAR E.

287.

VIADO, LILIAN T.

288.

VIERNES, NAPOLEON K

289.

VILLALON, DENNIS A.

290.

VILLAR, LUZ L.

291.

VILLALUZ, EMELITO V.

292.

VILLAR, LUZ L.

293.

ZATA, ANGELA JR.

294.

ACHARON, CRISTETO

295.

ALBA, RENATO B.

296.

AMON, JULITA C.

297.

AUSTRIA, ERNESTO C.

298.

CALO, RAYMUNDO M.

299.

CENTENO, BENJAMIN R.

300.

DONATO, ESTELITA P.

301.

DONATO, FELIPE S

302.

FLORES, PEDRITO S.

303.

GALAROSA, RENATO

304.

MALAWI, MAUYAG

305.

MONTENEGRO, FRANSISCO M.

306.

OMEGA, PETRONILO T.

307.

SANTOS, GUILLERMO P.

308.

TEMPLO, CELSO

309.

VALDERAMA, JAIME B.

310.

VALDEZ, NORA M.

Cesar Dario is the petitioner in G.R. No. 81954; Vicente Feria, Jr., is the petitioner in G.R. No. 81967;
Messrs. Adolfo Caserano Pacifico Lagleva Julian C. Espiritu, Dennis A. Azarraga Renato de Jesus,
Nicasio C. Gamboa, Mesdames Corazon Rallos Nieves and Felicitacion R. Geluz Messrs. Leodegario H.
Floresca, Subaer Pacasum Ms. Zenaida Lanaria Mr. Jose B. Ortiz, Ms. Gliceria R. Dolar, Ms. Cornelia
Napa, Pablo B. Santos, Fermin Rodriguez, Ms. Daligay Bautista, Messrs. Leonardo Jose, Alberto Lontok,
Porfirio Tabino Jose Barredo, Roberto Arnaldo, Ms. Ester Tan, Messrs. Pedro Bakal, Rosario David,
Rodolfo Afuang, Lorenzo Catre,, Ms. Leoncia Catre, and Roberto Abaca, are the petitioners in G.R. No.
82023; the last 279 16 individuals mentioned are the private respondents in G.R. No. 85310.

As far as the records will likewise reveal, 17 a total of 394 officials and employees of the Bureau of
Customs were given individual notices of separation. A number supposedly sought reinstatement with the
Reorganization Appeals Board while others went to the Civil Service Commission. The first thirty-one
mentioned above came directly to this Court.

On June 30, 1988, the Civil Service Commission promulgated its ruling ordering the reinstatement of the
279 employees, the 279 private respondents in G.R. No. 85310, the dispositive portion of which reads as
follows:

WHEREFORE, it is hereby ordered that:

1.
Appellants be immediately reappointed to positions of comparable or equivalent rank in the
Bureau of Customs without loss of seniority rights;

2.
Appellants be paid their back salaries reckoned from the dates of their illegal termination based
on the rates under the approved new staffing pattern but not lower than their former salaries.

This action of the Commission should not, however, be interpreted as an exoneration of the appellants
from any accusation of wrongdoing and, therefore, their reappointments are without prejudice to:

1.
Proceeding with investigation of appellants with pending administrative cases, and where
investigations have been finished, to promptly, render the appropriate decisions;

2.
The filing of appropriate administrative complaints against appellants with derogatory reports or
information if evidence so warrants.

SO ORDERED. 18

On July 15, 1988, Commissioner Mison, represented by the Solicitor General, filed a motion for
reconsideration Acting on the motion, the Civil Service Commission, on September 20, 1988, denied
reconsideration. 19

On October 20, 1988, Commissioner Mison instituted certiorari proceedings with this Court, docketed, as
above-stated, as G.R. No. 85310 of this Court.

On November 16,1988, the Civil Service Commission further disposed the appeal (from the resolution of
the Reorganization Appeals Board) of five more employees, holding as follows:

WHEREFORE, it is hereby ordered that:

1.
Appellants be immediately reappointed to positions of comparable or equivalent rank in the
Bureau of Customs without loss of seniority rights; and

2.
Appellants be paid their back salaries to be reckoned from the date of their illegal termination
based on the rates under the approved new staffing pattern but not lower than their former salaries.

This action of the Commission should not, however, be interpreted as an exoneration of the herein
appellants from any accusation of any wrongdoing and therefore, their reappointments are without
prejudice to:

1.
Proceeding with investigation of appellants with pending administrative cases, if any, and where
investigations have been finished, to promptly, render the appropriate decisions; and

2.
The filing of appropriate administrative complaints against appellant with derogatory reports or
information, if any, and if evidence so warrants.

SO ORDERED. 20

On January 6, 1989, Commissioner Mison challenged the Civil Service Commission's Resolution in this
Court; his petitioner has been docketed herein as G.R. No. 86241. The employees ordered to be
reinstated are Senen Dimaguila, Romeo Arabe, Bemardo Quintong,Gregorio Reyes, and Romulo Badillo.
21

On June 10, 1988, Republic Act No. 6656, "AN ACT TO PROTECT THE SECURITY OF TENURE OF
CIVIL SERVICE OFFICERS AND EMPLOYEES IN THE IMPLEMENTATION OF GOVERNMENT
REORGANIZATION," 22 was signed into law. Under Section 7, thereof:

Sec. 9. All officers and employees who are found by the Civil Service Commission to have been
separated in violation of the provisions of this Act, shall be ordered reinstated or reappointed as the case
may be without loss of seniority and shall be entitled to full pay for the period of separation. Unless also
separated for cause, all officers and employees, including casuals and temporary employees, who have
been separated pursuant to reorganization shall, if entitled thereto, be paid the appropriate separation pay
and retirement and other benefits under existing laws within ninety (90) days from the date of the
effectivity of their separation or from the date of the receipt of the resolution of their appeals as the case
may be: Provided, That application for clearance has been filed and no action thereon has been made by
the corresponding department or agency. Those who are not entitled to said benefits shall be paid a
separation gratuity in the amount equivalent to one (1) month salary for every year of service. Such
separation pay and retirement benefits shall have priority of payment out of the savings of the department
or agency concerned. 23

On June 23, 1988, Benedicto Amasa and William Dionisio, customs examiners appointed by
Commissioner Mison pursuant to the ostensible reorganization subject of this controversy, petitioned the
Court to contest the validity of the statute. The petition is docketed as G.R. No. 83737.

On October 21, 1988, thirty-five more Customs officials whom the Civil Service Commission had ordered
reinstated by its June 30,1988 Resolution filed their own petition to compel the Commissioner of Customs
to comply with the said Resolution. The petition is docketed as G.R. No. 85335.

On November 29, 1988, we resolved to consolidate all seven petitions.

On the same date, we resolved to set the matter for hearing on January 12, 1989. At the said hearing, the
parties, represented by their counsels (a) retired Justice Ruperto Martin; (b) retired Justice Lino Patajo.
(c) former Dean Froilan Bacungan (d) Atty. Lester Escobar (e) Atty. Faustino Tugade and (f) Atty.
Alexander Padilla, presented their arguments. Solicitor General Francisco Chavez argued on behalf of the
Commissioner of Customs (except in G.R. 85335, in which he represented the Bureau of Customs and
the Civil Service Commission).lwph1.t Former Senator Ambrosio Padilla also appeared and argued
as amicus curiae Thereafter, we resolved to require the parties to submit their respective memoranda
which they did in due time.

There is no question that the administration may validly carry out a government reorganization insofar
as these cases are concerned, the reorganization of the Bureau of Customs by mandate not only of
the Provisional Constitution, supra, but also of the various Executive Orders decreed by the Chief
Executive in her capacity as sole lawmaking authority under the 1986-1987 revolutionary government. It
should also be noted that under the present Constitution, there is a recognition, albeit implied, that a
government reorganization may be legitimately undertaken, subject to certain conditions. 24

The Court understands that the parties are agreed on the validity of a reorganization per se the only
question being, as shall be later seen: What is the nature and extent of this government reorganization?

The Court disregards the questions raised as to procedure, failure to exhaust administrative remedies, the
standing of certain parties to sue, 25 and other technical objections, for two reasons, "[b]ecause of the
demands of public interest, including the need for stability in the public service,"26 and because of the
serious implications of these cases on the administration of the Philippine civil service and the rights of
public servants.

The urgings in G.R. Nos. 85335 and 85310, that the Civil Service Commission's Resolution dated June
30, 1988 had attained a character of finality for failure of Commissioner Mison to apply for judicial review
or ask for reconsideration seasonalbly under Presidential Decree No. 807, 27 or under Republic Act No.
6656, 28 or under the Constitution, 29 are likewise rejected. The records show that the Bureau of
Customs had until July 15, 1988 to ask for reconsideration or come to this Court pursuant to Section 39 of
Presidential Decree No. 807. The records likewise show that the Solicitor General filed a motion for
reconsideration on July 15, 1988.30 The Civil Service Commission issued its Resolution denying
reconsideration on September 20, 1988; a copy of this Resolution was received by the Bureau on
September 23, 1988.31 Hence the Bureau had until October 23, 1988 to elevate the matter on certiorari
to this Court.32 Since the Bureau's petition was filed on October 20, 1988, it was filed on time.

We reject, finally, contentions that the Bureau's petition (in G.R. 85310) raises no jurisdictional questions,
and is therefore bereft of any basis as a petition for certiorari under Rule 65 of the Rules of Court. 33 We
find that the questions raised in Commissioner Mison's petition (in G.R. 85310) are, indeed, proper for
certiorari, if by "jurisdictional questions" we mean questions having to do with "an indifferent disregard of
the law, arbitrariness and caprice, or omission to weigh pertinent considerations, a decision arrived at
without rational deliberation, 34 as distinguished from questions that require "digging into the merits and
unearthing errors of judgment 35 which is the office, on the other hand, of review under Rule 45 of the
said Rules. What cannot be denied is the fact that the act of the Civil Service Commission of reinstating
hundreds of Customs employees Commissioner Mison had separated, has implications not only on the
entire reorganization process decreed no less than by the Provisional Constitution, but on the Philippine
bureaucracy in general; these implications are of such a magnitude that it cannot be said that
assuming that the Civil Service Commission erred the Commission committed a plain "error of
judgment" that Aratuc says cannot be corrected by the extraordinary remedy of certiorari or any special
civil action. We reaffirm the teaching of Aratuc as regards recourse to this Court with respect to rulings
of the Civil Service Commission which is that judgments of the Commission may be brought to the
Supreme Court through certiorari alone, under Rule 65 of the Rules of Court.

In Aratuc we declared:

It is once evident from these constitutional and statutory modifications that there is a definite tendency to
enhance and invigorate the role of the Commission on Elections as the independent constitutional body
charged with the safeguarding of free, peaceful and honest elections. The framers of the new Constitution
must be presumed to have definite knowledge of what it means to make the decisions, orders and rulings
of the Commission "subject to review by the Supreme Court'. And since instead of maintaining that
provision intact, it ordained that the Commission's actuations be instead 'brought to the Supreme Court on
certiorari", We cannot insist that there was no intent to change the nature of the remedy, considering that
the limited scope of certiorari, compared to a review, is well known in remedial law.36

We observe no fundamental difference between the Commission on Elections and the Civil Service
Commission (or the Commission on Audit for that matter) in terms of the constitutional intent to leave the
constitutional bodies alone in the enforcement of laws relative to elections, with respect to the former, and
the civil service, with respect to the latter (or the audit of government accounts, with respect to the
Commission on Audit). As the poll body is the "sole judge" 37 of all election cases, so is the Civil Service
Commission the single arbiter of all controversies pertaining to the civil service.

It should also be noted that under the new Constitution, as under the 1973 Charter, "any decision, order,
or ruling of each Commission may be brought to the Supreme Court on certiorari," 38 which, as Aratuc
tells us, "technically connotes something less than saying that the same 'shall be subject to review by the
Supreme Court,' " 39 which in turn suggests an appeal by petition for review under Rule 45. Therefore,
our jurisdiction over cases emanating from the Civil Service Commission is limited to complaints of lack or
excess of jurisdiction or grave abuse of discretion tantamount to lack or excess of jurisdiction, complaints
that justify certiorari under Rule 65.

While Republic Act No. 6656 states that judgments of the Commission are "final and executory"40 and
hence, unappealable, under Rule 65, certiorari precisely lies in the absence of an appeal. 41

Accordingly, we accept Commissioner Mison petition (G.R. No. 85310) which clearly charges the Civil
Service Commission with grave abuse of discretion, a proper subject of certiorari, although it may not
have so stated in explicit terms.

As to charges that the said petition has been filed out of time, we reiterate that it has been filed
seasonably. It is to be stressed that the Solicitor General had thirty days from September 23, 1988 (the
date the Resolution, dated September 20,1988, of the Civil Service Commission, denying reconsideration,
was received) to commence the instant certiorari proceedings. As we stated, under the Constitution, an
aggrieved party has thirty days within which to challenge "any decision, order, or ruling" 42 of the
Commission. To say that the period should be counted from the Solicitor's receipt of the main Resolution,
dated June 30, 1988, is to say that he should not have asked for reconsideration But to say that is to deny
him the right to contest (by a motion for reconsideration) any ruling, other than the main decision, when,
precisely, the Constitution gives him such a right. That is also to place him at a "no-win" situation because
if he did not move for a reconsideration, he would have been faulted for demanding certiorari too early,
under the general rule that a motion for reconsideration should preface a resort to a special civil action. 43
Hence, we must reckon the thirty-day period from receipt of the order of denial.

We come to the merits of these cases.

G.R. Nos. 81954, 81967, 82023, and 85335:

The Case for the Employees

The petitioner in G.R. No. 81954, Cesar Dario was one of the Deputy Commissioners of the Bureau of
Customs until his relief on orders of Commissioner Mison on January 26, 1988. In essence, he questions
the legality of his dismiss, which he alleges was upon the authority of Section 59 of Executive Order No.
127, supra, hereinbelow reproduced as follows:

SEC. 59.
New Structure and Pattern. Upon approval of this Executive Order, the officers and
employees of the Ministry shall, in a holdover capacity, continue to perform their respective duties and
responsibilities and receive the corresponding salaries and benefits unless in the meantime they are
separated from government service pursuant to Executive Order No. 17 (1986) or Article III of the
Freedom Constitution.

The new position structure and staffing pattern of the Ministry shall be approved and prescribed by the
Minister within one hundred twenty (120) days from the approval of this Executive Order and the
authorized positions created hereunder shall be filled with regular appointments by him or by the
President, as the case may be. Those incumbents whose positions are not included therein or who are
not reappointed shall be deemed separated from the service. Those separated from the service shall
receive the retirement benefits to which they may be entitled under existing laws, rules and regulations.
Otherwise, they shall be paid the equivalent of one month basic salary for every year of service, or the
equivalent nearest fraction thereof favorable to them on the basis of highest salary received but in no
case shall such payment exceed the equivalent of 12 months salary.

No court or administrative body shall issue any writ of preliminary injunction or restraining order to enjoin
the separation/replacement of any officer or employee effected under this Executive Order.44

a provision he claims the Commissioner could not have legally invoked. He avers that he could not have
been legally deemed to be an "[incumbent] whose [position] [is] not included therein or who [is] not
reappointed"45 to justify his separation from the service. He contends that neither the Executive Order
(under the second paragraph of the section) nor the staffing pattern proposed by the Secretary of Finance
46 abolished the office of Deputy Commissioner of Customs, but, rather, increased it to three. 47 Nor can
it be said, so he further maintains, that he had not been "reappointed" 48 (under the second paragraph of
the section) because "[[r]eappointment therein presupposes that the position to which it refers is a new
one in lieu of that which has been abolished or although an existing one, has absorbed that which has
been abolished." 49 He claims, finally, that under the Provisional Constitution, the power to dismiss public
officials without cause ended on February 25, 1987,50 and that thereafter, public officials enjoyed security
of tenure under the provisions of the 1987 Constitution.51

Like Dario Vicente Feria, the petitioner in G.R. No. 81967, was a Deputy Commissioner at the Bureau
until his separation directed by Commissioner Mison. And like Dario he claims that under the 1987
Constitution, he has acquired security of tenure and that he cannot be said to be covered by Section 59 of
Executive Order No. 127, having been appointed on April 22, 1986 during the effectivity of the
Provisional Constitution. He adds that under Executive Order No. 39, "ENLARGING THE POWERS AND
FUNCTIONS OF THE COMMISSIONER OF CUSTOMS,"52 the Commissioner of Customs has the
power "[t]o appoint all Bureau personnel, except those appointed by the President," 53 and that his
position, which is that of a Presidential appointee, is beyond the control of Commissioner Mison for
purposes of reorganization.

The petitioners in G.R. No. 82023, collectors and examiners in venous ports of the Philippines, say, on
the other hand, that the purpose of reorganization is to end corruption at the Bureau of Customs and that
since there is no finding that they are guilty of corruption, they cannot be validly dismissed from the
service.

The Case for Commissioner Mison

In his comments, the Commissioner relies on this Court's resolution in Jose v. Arroyo54 in which the
following statement appears in the last paragraph thereof:

The contention of petitioner that Executive Order No. 127 is violative of the provision of the 1987
Constitution guaranteeing career civil service employees security of tenure overlooks the provisions of
Section 16, Article XVIII (Transitory Provisions) which explicitly authorize the removal of career civil
service employees "not for cause but as a result of the reorganization pursuant to Proclamation No. 3
dated March 25, 1986 and the reorganization following the ratification of this Constitution." By virtue of
said provision, the reorganization of the Bureau of Customs under Executive Order No. 127 may continue
even after the ratification of the Constitution, and career civil service employees may be separated from
the service without cause as a result of such reorganization.55

For this reason, Mison posits, claims of violation of security of tenure are allegedly no defense. He further
states that the deadline prescribed by the Provisional Constitution (February 25, 1987) has been

superseded by the 1987 Constitution, specifically, the transitory provisions thereof, 56 which allows a
reorganization thereafter (after February 25, 1987) as this very Court has so declared in Jose v. Arroyo.
Mison submits that contrary to the employees' argument, Section 59 of Executive Order No. 127 is
applicable (in particular, to Dario and Feria in the sense that retention in the Bureau, under the Executive
Order, depends on either retention of the position in the new staffing pattern or reappointment of the
incumbent, and since the dismissed employees had not been reappointed, they had been considered
legally separated. Moreover, Mison proffers that under Section 59 incumbents are considered on holdover
status, "which means that all those positions were considered vacant." 57 The Solicitor General denies
the applicability of Palma-Fernandez v. De la Paz 58 because that case supposedly involved a mere
transfer and not a separation. He rejects, finally, the force and effect of Executive Order Nos. 17 and 39
for the reason that Executive Order No. 17, which was meant to implement the Provisional Constitution,
59 had ceased to have force and effect upon the ratification of the 1987 Constitution, and that, under
Executive Order No. 39, the dismissals contemplated were "for cause" while the separations now under
question were "not for cause" and were a result of government reorganize organization decreed by
Executive Order No. 127. Anent Republic Act No. 6656, he expresses doubts on the constitutionality of
the grant of retroactivity therein (as regards the reinforcement of security of tenure) since the new
Constitution clearly allows reorganization after its effectivity.

G.R. Nos. 85310 and 86241

The Position of Commissioner Mison

Commissioner's twin petitions are direct challenges to three rulings of the Civil Service Commission: (1)
the Resolution, dated June 30, 1988, reinstating the 265 customs employees above-stated; (2) the
Resolution, dated September 20, 1988, denying reconsideration; and (3) the Resolution, dated November
16, 1988, reinstating five employees. The Commissioner's arguments are as follows:

1.
The ongoing government reorganization is in the nature of a "progressive" 60 reorganization
"impelled by the need to overhaul the entire government bureaucracy" 61 following the people power
revolution of 1986;

2.
There was faithful compliance by the Bureau of the various guidelines issued by the President, in
particular, as to deliberation, and selection of personnel for appointment under the new staffing pattern;

3.
The separated employees have been, under Section 59 of Executive Order No. 127, on mere
holdover standing, "which means that all positions are declared vacant;" 62

4.
Jose v. Arroyo has declared the validity of Executive Order No. 127 under the transitory
provisions of the 1987 Constitution;

5.

Republic Act No. 6656 is of doubtful constitutionality.

The Ruling of the Civil Service Commission

The position of the Civil Service Commission is as follows:

1.
Reorganizations occur where there has been a reduction in personnel or redundancy of functions;
there is no showing that the reorganization in question has been carried out for either purpose on the
contrary, the dismissals now disputed were carried out by mere service of notices;

2.
The current Customs reorganization has not been made according to Malaca;ang guidelines;
information on file with the Commission shows that Commissioner Mison has been appointing unqualified
personnel;

3.

Jose v. Arroyo, in validating Executive Order No. 127, did not countenance illegal removals;

4.

Republic Act No. 6656 protects security of tenure in the course of reorganizations.

The Court's ruling

Reorganization, Fundamental Principles of.

I.

The core provision of law involved is Section 16 Article XVIII, of the 1987 Constitution. We quote:

Sec. 16.
Career civil service employees separated from the service not for cause but as a result of
the reorganization pursuant to Proclamation No. 3 dated March 25, 1986 and the reorganization following
the ratification of this Constitution shag be entitled to appropriate separation pay and to retirement and
other benefits accruing to them under the laws of general application in force at the time of their
separation. In lieul thereof, at the option of the employees, they may be considered for employment in the
Government or in any of its subdivisions, instrumentalities, or agencies, including government-owned or
controlled corporations and their subsidiaries. This provision also applies to career officers whose
resignation, tendered in line with the existing policy, had been accepted. 63

The Court considers the above provision critical for two reasons: (1) It is the only provision in so far as
it mentions removals not for cause that would arguably support the challenged dismissals by mere
notice, and (2) It is the single existing law on reorganization after the ratification of the 1987 Charter,
except Republic Act No. 6656, which came much later, on June 10, 1988. [Nota been Executive Orders
No. 116 (covering the Ministry of Agriculture & Food), 117 (Ministry of Education, Culture & Sports), 119
(Health), 120 (Tourism), 123 (Social Welfare & Development), 124 (Public Works & Highways), 125
transportation & Communications), 126 (Labor & Employment), 127 (Finance), 128 (Science &
Technology), 129 (Agrarian Reform), 131 (Natural Resources), 132 (Foreign Affairs), and 133 (Trade &

Industry) were all promulgated on January 30,1987, prior to the adoption of the Constitution on February
2, 1987].64

It is also to be observed that unlike the grants of power to effect reorganizations under the past
Constitutions, the above provision comes as a mere recognition of the right of the Government to
reorganize its offices, bureaus, and instrumentalities. Under Section 4, Article XVI, of the 1935
Constitution:

Section 4. All officers and employees in the existing Government of the Philippine Islands shall continue in
office until the Congress shall provide otherwise, but all officers whose appointments are by this
Constitution vested in the President shall vacate their respective office(s) upon the appointment and
qualification of their successors, if such appointment is made within a period of one year from the date of
the inauguration of the Commonwealth of the Philippines. 65

Under Section 9, Article XVII, of the 1973 Charter:

Section 9. All officials and employees in the existing Government of the Republic of the Philippines shall
continue in office until otherwise provided by law or decreed by the incumbent President of the
Philippines, but all officials whose appointments are by this Constitution vested in the Prime Minister shall
vacate their respective offices upon the appointment and qualification of their successors. 66

The Freedom Constitution is, as earlier seen, couched in similar language:

SECTION 2.
All elective and appointive officials and employees under the 1973 Constitution shall
continue in office until otherwise provided by proclamation or executive order or upon the appointment
and qualification of their successors, if such is made within a period of one year from February 25,
1986.67

Other than references to "reorganization following the ratification of this Constitution," there is no
provision for "automatic" vacancies under the 1987 Constitution.

Invariably, transition periods are characterized by provisions for "automatic" vacancies. They are dictated
by the need to hasten the passage from the old to the new Constitution free from the "fetters" of due
process and security of tenure.

At this point, we must distinguish removals from separations arising from abolition of office (not by virtue
of the Constitution) as a result of reorganization carried out by reason of economy or to remove
redundancy of functions. In the latter case, the Government is obliged to prove good faith.68 In case of
removals undertaken to comply with clear and explicit constitutional mandates, the Government is not
hard put to prove anything, plainly and simply because the Constitution allows it.

Evidently, the question is whether or not Section 16 of Article XVIII of the 1987 Constitution is a grant of a
license upon the Government to remove career public officials it could have validly done under an
"automatic" vacancy-authority and to remove them without rhyme or reason.

As we have seen, since 1935, transition periods have been characterized by provisions for "automatic"
vacancies. We take the silence of the 1987 Constitution on this matter as a restraint upon the
Government to dismiss public servants at a moment's notice.

What is, indeed, apparent is the fact that if the present Charter envisioned an "automatic" vacancy, it
should have said so in clearer terms, as its 1935, 1973, and 1986 counterparts had so stated.

The constitutional "lapse" means either one of two things: (1) The Constitution meant to continue the
reorganization under the prior Charter (of the Revolutionary Government), in the sense that the latter
provides for "automatic" vacancies, or (2) It meant to put a stop to those 'automatic" vacancies. By itself,
however, it is ambiguous, referring as it does to two stages of reorganization the first, to its conferment
or authorization under Proclamation No. 3 (Freedom Charter) and the second, to its implementation on its
effectivity date (February 2, 1987).lwph1.t But as we asserted, if the intent of Section 16 of Article
XVIII of the 1987 Constitution were to extend the effects of reorganize tion under the Freedom
Constitution, it should have said so in clear terms. It is illogical why it should talk of two phases of
reorganization when it could have simply acknowledged the continuing effect of the first reorganization.

Second, plainly the concern of Section 16 is to ensure compensation for victims" of constitutional
revamps whether under the Freedom or existing Constitution and only secondarily and impliedly, to
allow reorganization. We turn to the records of the Constitutional Commission:

INQUIRY OF MR. PADILLA

On the query of Mr. Padilla whether there is a need for a specific reference to Proclamation No. 3 and not
merely state "result of the reorganization following the ratification of this Constitution', Mr. Suarez, on
behalf of the Committee, replied that it is necessary, inasmuch as there are two stages of reorganization
covered by the Section.

Mr. Padilla pointed out that since the proposal of the Commission on Government Reorganization have
not been implemented yet, it would be better to use the phrase "reorganization before or after the
ratification of the Constitution' to simplify the Section. Mr. Suarez instead suggested the phrase "as a
result of the reorganization effected before or after the ratification of the Constitution' on the
understanding that the provision would apply to employees terminated because of the reorganization
pursuant to Proclamation No. 3 and even those affected by the reorganization during the Marcos regime.
Additionally, Mr. Suarez pointed out that it is also for this reason that the Committee specified the two
Constitutions the Freedom Constitution and the 1986 [1987] Constitution. 69

Simply, the provision benefits career civil service employees separated from the service. And the
separation contemplated must be due to or the result of (1) the reorganization pursuant to Proclamation
No. 3 dated March 25, 1986, (2) the reorganization from February 2, 1987, and (3) the resignations of
career officers tendered in line with the existing policy and which resignations have been accepted. The

phrase "not for cause" is clearly and primarily exclusionary, to exclude those career civil service
employees separated "for cause." In other words, in order to be entitled to the benefits granted under
Section 16 of Article XVIII of the Constitution of 1987, two requisites, one negative and the other positive,
must concur, to wit:

1.

the separation must not be for cause, and

2.

the separation must be due to any of the three situations mentioned above.

By its terms, the authority to remove public officials under the Provisional Constitution ended on February
25, 1987, advanced by jurisprudence to February 2, 1987. 70 It Can only mean, then, that whatever
reorganization is taking place is upon the authority of the present Charter, and necessarily, upon the
mantle of its provisions and safeguards. Hence, it can not be legitimately stated that we are merely
continuing what the revolutionary Constitution of the Revolutionary Government had started. We are
through with reorganization under the Freedom Constitution the first stage. We are on the second
stage that inferred from the provisions of Section 16 of Article XVIII of the permanent basic document.

This is confirmed not only by the deliberations of the Constitutional Commission, supra, but is apparent
from the Charter's own words. It also warrants our holding in Esguerra and Palma-Fernandez, in which
we categorically declared that after February 2, 1987, incumbent officials and employees have acquired
security of tenure, which is not a deterrent against separation by reorganization under the quondam
fundamental law.

Finally, there is the concern of the State to ensure that this reorganization is no "purge" like the execrated
reorganizations under martial rule. And, of course, we also have the democratic character of the Charter
itself.

Commissioner Mison would have had a point, insofar as he contends that the reorganization is openended ("progressive"), had it been a reorganization under the revolutionary authority, specifically of the
Provisional Constitution. For then, the power to remove government employees would have been truly
wide ranging and limitless, not only because Proclamation No. 3 permitted it, but because of the nature of
revolutionary authority itself, its totalitarian tendencies, and the monopoly of power in the men and women
who wield it.

What must be understood, however, is that notwithstanding her immense revolutionary powers, the
President was, nevertheless, magnanimous in her rule. This is apparent from Executive Order No. 17,
which established safeguards against the strong arm and ruthless propensity that accompanies
reorganizations notwithstanding the fact that removals arising therefrom were "not for cause," and in
spite of the fact that such removals would have been valid and unquestionable. Despite that, the Chief
Executive saw, as we said, the "unnecessary anxiety and demoralization" in the government rank and file
that reorganization was causing, and prescribed guidelines for personnel action. Specifically, she said on
May 28, 1986:

WHEREAS, in order to obviate unnecessary anxiety and demoralization among the deserving officials
and employees, particularly in the career civil service, it is necessary to prescribe the rules and

regulations for implementing the said constitutional provision to protect career civil servants whose
qualifications and performance meet the standards of service demanded by the New Government, and to
ensure that only those found corrupt, inefficient and undeserving are separated from the government
service; 71

Noteworthy is the injunction embodied in the Executive Order that dismissals should be made on the
basis of findings of inefficiency, graft, and unfitness to render public service.*

The President's Memorandum of October 14, 1987 should furthermore be considered. We quote, in part:

Further to the Memorandum dated October 2, 1987 on the same subject, I have ordered that there will be
no further layoffs this year of personnel as a result of the government reorganization. 72

Assuming, then, that this reorganization allows removals "not for cause" in a manner that would have
been permissible in a revolutionary setting as Commissioner Mison so purports, it would seem that the
Commissioner would have been powerless, in any event, to order dismissals at the Customs Bureau left
and right. Hence, even if we accepted his "progressive" reorganization theory, he would still have to come
to terms with the Chief Executive's subsequent directives moderating the revolutionary authority's plenary
power to separate government officials and employees.

Reorganization under the 1987 Constitution, Nature, Extent, and Limitations of; Jose v. Arroyo, clarified.

The controversy seems to be that we have, ourselves, supposedly extended the effects of government
reorganization under the Provisional Constitution to the regime of the 1987 Constitution. Jose v. Arroyo73
is said to be the authority for this argument. Evidently, if Arroyo indeed so ruled, Arroyo would be
inconsistent with the earlier pronouncement of Esguerra and the later holding of Palma-Fernandez. The
question, however, is: Did Arroyo, in fact, extend the effects of reorganization under the revolutionary
Charter to the era of the new Constitution?

There are a few points about Arroyo that have to be explained. First, the opinion expressed therein that
"[b]y virtue of said provision the reorganization of the Bureau of Customs under Executive Order No. 127
may continue even after the ratification of this constitution and career civil service employees may be
separated from the service without cause as a result of such reorganization" 74 is in the nature of an
obiter dictum. We dismissed Jose's petition 75 primarily because it was "clearly premature, speculative,
and purely anticipatory, based merely on newspaper reports which do not show any direct or threatened
injury," 76 it appearing that the reorganization of the Bureau of Customs had not been, then, set in motion.
Jose therefore had no cause for complaint, which was enough basis to dismiss the petition. The remark
anent separation "without cause" was therefore not necessary for the disposition of the case. In Morales
v. Parades,77 it was held that an obiter dictum "lacks the force of an adjudication and should not ordinarily
be regarded as such."78

Secondly, Arroyo is an unsigned resolution while Palma Fernandez is a full-blown decision, although both
are en banc cases. While a resolution of the Court is no less forceful than a decision, the latter has a
special weight.

Thirdly, Palma-Fernandez v. De la Paz comes as a later doctrine. (Jose v. Arroyo was promulgated on
August 11, 1987 while Palma-Fernandez was decided on August 31, 1987.) It is well-established that a
later judgment supersedes a prior one in case of an inconsistency.

As we have suggested, the transitory provisions of the 1987 Constitution allude to two stages of the
reorganization, the first stage being the reorganization under Proclamation No. 3 which had already
been consummated the second stage being that adverted to in the transitory provisions themselves
which is underway. Hence, when we spoke, in Arroyo, of reorganization after the effectivity of the new
Constitution, we referred to the second stage of the reorganization. Accordingly, we cannot be said to
have carried over reorganization under the Freedom Constitution to its 1987 counterpart.

Finally, Arroyo is not necessarily incompatible with Palma-Fernandez (or Esguerra).

As we have demonstrated, reorganization under the aegis of the 1987 Constitution is not as stern as
reorganization under the prior Charter. Whereas the latter, sans the President's subsequently imposed
constraints, envisioned a purgation, the same cannot be said of the reorganization inferred under the new
Constitution because, precisely, the new Constitution seeks to usher in a democratic regime. But even if
we concede ex gratia argumenti that Section 16 is an exception to due process and no-removal-"except
for cause provided by law" principles enshrined in the very same 1987 Constitution, 79 which may
possibly justify removals "not for cause," there is no contradiction in terms here because, while the former
Constitution left the axe to fall where it might, the present organic act requires that removals "not for
cause" must be as a result of reorganization. As we observed, the Constitution does not provide for
"automatic" vacancies. It must also pass the test of good faith a test not obviously required under the
revolutionary government formerly prevailing, but a test well-established in democratic societies and in
this government under a democratic Charter.

When, therefore, Arroyo permitted a reorganization under Executive Order No. 127 after the ratification of
the 1987 Constitution, Arroyo permitted a reorganization provided that it is done in good faith. Otherwise,
security of tenure would be an insuperable implement. 80

Reorganizations in this jurisdiction have been regarded as valid provided they are pursued in good faith.
81 As a general rule, a reorganization is carried out in "good faith" if it is for the purpose of economy or to
make bureaucracy more efficient. In that event, no dismissal (in case of a dismissal) or separation
actually occurs because the position itself ceases to exist. And in that case, security of tenure would not
be a Chinese wall. Be that as it may, if the "abolition," which is nothing else but a separation or removal, is
done for political reasons or purposely to defeat sty of tenure, or otherwise not in good faith, no valid
"abolition' takes place and whatever "abolition' is done, is void ab initio. There is an invalid "abolition" as
where there is merely a change of nomenclature of positions, 82 or where claims of economy are belied
by the existence of ample funds. 83

It is to be stressed that by predisposing a reorganization to the yardstick of good faith, we are not, as a
consequence, imposing a "cause" for restructuring. Retrenchment in the course of a reorganization in
good faith is still removal "not for cause," if by "cause" we refer to "grounds" or conditions that call for
disciplinary action.**

Good faith, as a component of a reorganization under a constitutional regime, is judged from the facts of
each case. However, under Republic Act No. 6656, we are told:

SEC. 2. No officer or employee in the career service shall be removed except for a valid cause and after
due notice and hearing. A valid cause for removal exists when, pursuant to a bona fide reorganization, a
position has been abolished or rendered redundant or there is a need to merge, divide, or consolidate
positions in order to meet the exigencies of the service, or other lawful causes allowed by the Civil
Service Law. The existence of any or some of the following circumstances may be considered as
evidence of bad faith in the removals made as a result of reorganization, giving rise to a claim for
reinstatement or reappointment by an aggrieved party: (a) Where there is a significant increase in the
number of positions in the new staffing pattern of the department or agency concerned; (b) Where an
office is abolished and another performing substantially the same functions is created; (c) Where
incumbents are replaced by those less qualified in terms of status of appointment, performance and merit;
(d) Where there is a reclassification of offices in the department or agency concerned and the reclassified
offices perform substantially the same functions as the original offices; (e) Where the removal violates the
order of separation provided in Section 3 hereof. 84

It is in light hereof that we take up questions about Commissioner Mison's good faith, or lack of it.

Reorganization of the Bureau of Customs,

Lack of Good Faith in.

The Court finds that after February 2, 1987 no perceptible restructuring of the Customs hierarchy
except for the change of personnel has occurred, which would have justified (an things being equal)
the contested dismisses. The contention that the staffing pattern at the Bureau (which would have
furnished a justification for a personnel movement) is the same s pattern prescribed by Section 34 of
Executive Order No. 127 already prevailing when Commissioner Mison took over the Customs helm, has
not been successfully contradicted 85 There is no showing that legitimate structural changes have been
made or a reorganization actually undertaken, for that matter at the Bureau since Commissioner
Mison assumed office, which would have validly prompted him to hire and fire employees. There can
therefore be no actual reorganization to speak of, in the sense, say, of reduction of personnel,
consolidation of offices, or abolition thereof by reason of economy or redundancy of functions, but a
revamp of personnel pure and simple.

The records indeed show that Commissioner Mison separated about 394 Customs personnel but
replaced them with 522 as of August 18, 1988. 86 This betrays a clear intent to "pack" the Bureau of
Customs. He did so, furthermore, in defiance of the President's directive to halt further layoffs as a
consequence of reorganization. 87 Finally, he was aware that layoffs should observe the procedure laid
down by Executive Order No. 17.

We are not, of course, striking down Executive Order No. 127 for repugnancy to the Constitution. While
the act is valid, still and all, the means with which it was implemented is not. 88

Executive Order No. 127, Specific Case of.

With respect to Executive Order No. 127, Commissioner Mison submits that under Section 59 thereof,
"[t]hose incumbents whose positions are not included therein or who are not reappointed shall be deemed
separated from the service." He submits that because the 394 removed personnel have not been
"reappointed," they are considered terminated. To begin with, the Commissioner's appointing power is
subject to the provisions of Executive Order No. 39. Under Executive Order No. 39, the Commissioner of
Customs may "appoint all Bureau personnel, except those appointed by the President." 89

Accordingly, with respect to Deputy Commissioners Cesar Dario and Vicente Feria, Jr., Commissioner
Mison could not have validly terminated them, they being Presidential appointees.

Secondly, and as we have asserted, Section 59 has been rendered inoperative according to our holding
in Palma-Fernandez.

That Customs employees, under Section 59 of Executive Order No. 127 had been on a mere holdover
status cannot mean that the positions held by them had become vacant. In Palma-Fernandez, we said in
no uncertain terms:

The argument that, on the basis of this provision, petitioner's term of office ended on 30 January 1987
and that she continued in the performance of her duties merely in a hold over capacity and could be
transferred to another position without violating any of her legal rights, is untenable. The occupancy of a
position in a hold-over capacity was conceived to facilitate reorganization and would have lapsed on 25
February 1987 (under the Provisional Constitution), but advanced to February 2, 1987 when the 1987
Constitution became effective (De Leon. et al., vs. Hon. Benjamin B. Esquerra, et. al., G.R. No. 78059, 31
August 1987). After the said date the provisions of the latter on security of tenure govern. 90

It should be seen, finally, that we are not barring Commissioner Mison from carrying out a reorganization
under the transitory provisions of the 1987 Constitution. But such a reorganization should be subject to
the criterion of good faith.

Resume.

In resume, we restate as follows:

1.
The President could have validly removed government employees, elected or appointed, without
cause but only before the effectivity of the 1987 Constitution on February 2, 1987 (De Leon v. Esguerra,
supra; Palma-Fernandez vs. De la Paz, supra); in this connection, Section 59 (on non-reappointment of
incumbents) of Executive Order No. 127 cannot be a basis for termination;

2.
In such a case, dismissed employees shall be paid separation and retirement benefits or upon
their option be given reemployment opportunities (CONST. [1987], art. XVIII, sec. 16; Rep. Act No. 6656,
sec. 9);

3.
From February 2, 1987, the State does not lose the right to reorganize the Government resulting
in the separation of career civil service employees [CONST. (1987), supra] provided, that such a
reorganization is made in good faith. (Rep. Act No. 6656, supra.)

G.R. No. 83737

This disposition also resolves G.R. No. 83737. As we have indicated, G.R. No. 83737 is a challenge to
the validity of Republic Act No. 6656. In brief, it is argued that the Act, insofar as it strengthens security of
tenure 91 and as far as it provides for a retroactive effect, 92 runs counter to the transitory provisions of
the new Constitution on removals not for cause.

It can be seen that the Act, insofar as it provides for reinstatament of employees separated without "a
valid cause and after due notice and hearing" 93 is not contrary to the transitory provisions of the new
Constitution. The Court reiterates that although the Charter's transitory provisions mention separations
"not for cause," separations thereunder must nevertheless be on account of a valid reorganization and
which do not come about automatically. Otherwise, security of tenure may be invoked. Moreover, it can be
seen that the statute itself recognizes removals without cause. However, it also acknowledges the
possibility of the leadership using the artifice of reorganization to frustrate security of tenure. For this
reason, it has installed safeguards. There is nothing unconstitutional about the Act.

We recognize the injury Commissioner Mison's replacements would sustain. We also commisserate with
them. But our concern is the greater wrong inflicted on the dismissed employees on account of their regal
separation from the civil service.

WHEREFORE, THE RESOLUTIONS OF THE CIVIL SERVICE COMMISSION, DATED JUNE 30, 1988,
SEPTEMBER 20, 1988, NOVEMBER 16, 1988, INVOLVED IN G.R. NOS. 85310, 85335, AND 86241,
AND MAY 8, 1989, INVOLVED IN G.R. NO. 85310, ARE AFFIRMED.

THE PETITIONS IN G.R. NOS. 81954, 81967, 82023, AND 85335 ARE GRANTED. THE PETITIONS IN
G.R. NOS. 83737, 85310 AND 86241 ARE DISMISSED.

THE COMMISSIONER OF CUSTOMS IS ORDERED TO REINSTATE THE EMPLOYEES SEPARATED

AS A RESULT OF HIS NOTICES DATED JANUARY 26, 1988.

THE EMPLOYEES WHOM COMMISSIONER MISON MAY HAVE APPOINTED AS REPLACEMENTS

ARE ORDERED TO VACATE THEIR POSTS SUBJECT TO THE PAYMENT OF WHATEVER BENEFITS
THAT MAY BE PROVIDED BY LAW.

NO COSTS.

IT IS SO ORDERED.

Gutierrez, Jr., Paras, Gancayco, Bidin, Cortes, Gri;o-Aquino and Medialdea, JJ., concur.

Padilla, J., took no part.

Separate Opinions

CRUZ, J., concurring:

I concur with the majority view so ably presented by Mr. Justice Abraham F. Sarmiento. While additional
comments may seem superfluous in view of the exhaustiveness of his ponencia, I nevertheless offer the
following brief observations for whatever they may be worth.

Emphasizing Article XVII, Section 16 of the Constitution, the dissenting opinion considers the ongoing
government reorganization valid because it is merely a continuation of the reorganization begun during
the transition period. The reason for this conclusion is the phrase "and the reorganization following the
ratification of the Constitution," that is to say, after February 2, 1987, appearing in the said provision. The
consequence (and I hope I have not misread it) is that the present reorganization may still be undertaken
with the same "absoluteness" that was allowed the revolutionary reorganization although the Freedom
Constitution is no longer in force.

Reorganization of the government may be required by the legislature even independently of specific
constitutional authorization, as in the case, for example, of R.A. No. 51 and B.P. No. 129. Being
revolutionary in nature, the reorganization decreed by Article III of the Freedom Constitution was unlimited
as to its method except only as it was later restricted by President Aquino herself through various
issuances, particularly E.O. No. 17. But this reorganization, for all its permitted summariness, was not
indefinite. Under Section 3 of the said Article III, it was allowed only up to February 29,1987 (which we
advanced to February 2, 1987, when the new Constitution became effective).

The clear implication is that any government reorganization that may be undertaken thereafter must be
authorized by the legislature only and may not be allowed the special liberties and protection enjoyed by
the revolutionary reorganization. Otherwise, there would have been no necessity at all for the time
limitation expressly prescribed by the Freedom Constitution.

I cannot accept the view that Section 16 is an authorization for the open-ended reorganization of the
government "following the ratification of the Constitution." I read the provision as merely conferring
benefits deservedly or not on persons separated from the government as a result of the

reorganization of the government, whether undertaken during the transition period or as a result of a law
passed thereafter. What the grants is privileges to the retirees, not power to the provision government. It
is axiomatic that grants of power are not lightly inferred, especially if these impinge on individual rights,
and I do not see why we should depart from this rule.

To hold that the present reorganization is a continuation of the one begun during the transition period is to
recognize the theory of the public respondent that all officers and employees not separated earlier remain
in a hold-over capacity only and so may be replaced at any time even without cause. That is a dangerous
proposition that threatens the security and stability of every civil servant in the executive department.
What is worse is that this situation may continue indefinitely as the claimed "progressive" reorganization
has no limitation as to time.

Removal imports the forcible separation of the incumbent before the expiration of his term and can be
done only for cause as provided by law. Contrary to common belief, a reorganization does not result in
removal but in a different mode of terminating official relations known as abolition of the office (and the
security of tenure attached thereto.) The erstwhile holder of the abolished office cannot claim he has been
removed without cause in violation of his constitutional security of tenure. The reason is that the right itself
has disappeared with the abolished office as an accessory following the principal. (Ocampo v. Sec. of
Justice, 51 O.G. 147; De la Llana v. Alba, 112 SCRA 294; Manalang v. Quitoriano, 94 Phil. 903.)

This notwithstanding, the power to reorganize is not unlimited. It is essential that it be based on a valid
purpose, such as the promotion of efficiency and economy in the government through a pruning of offices
or the streamlining of their functions. (Cervantes v. Auditor-General, 91 Phil. 359.) Normally, a
reorganization cannot be validly undertaken as a means of purging the undesirables for this would be a
removal in disguise undertaken en masse to circumvent the constitutional requirement of legal cause.
(Eradication of graft and corruption was one of the expressed purposes of the revolutionary organization,
but this was authorized by the Freedom Constitution itself.) In short, a reorganization, to be valid, must be
done in good faith. (Urgelio v. Osmena, 9 SCRA 317; Cuneta v. Court of Appeals, 1 SCRA 663; Carino v.
ACCFA, 18 SCRA 183.)

A mere recitation no matter how lengthy of the directives, guidelines, memoranda, etc. issued by the
government and the action purportedly taken thereunder does not by itself prove good faith. We know
only too well that these instructions, for all their noble and sterile purposes, are rarely followed in their
actual implementation. The reality in this case, as the majority opinion has pointed out and as clearly
established in the hearing we held, is that the supposed reorganization was undertaken with an eye not to
achieving the avowed objectives but to accommodating new appointees at the expense of the dislodged
petitioners. That was also the finding of the Civil Service Commission, to which we must accord a
becoming respect as the constitutional office charged with the protection of the civil service from the evils
of the spoils system.

The present administration deserves full support in its desire to improve the civil service, but this objective
must be pursued in a manner consistent with the Constitution. This praiseworthy purpose cannot be
accomplished by an indiscriminate reorganization that will sweep in its wake the innocent along with the
redundant and inept, for the benefit of the current favorites.

MELENCIO-HERRERA, J., dissenting:

The historical underpinnings of Government efforts at reorganization hark back to the people power
phenomenon of 22-24 February 1986, and Proclamation No. 1 of President Corazon C. Aquino, issued on
25 February 1986, stating in no uncertain terms that "the people expect a reorganization of government."
In its wake followed Executive Order No. 5, issued on 12 March 1986, "Creating a Presidential
Commission on Government Reorganization," with the following relevant provisions:

WHEREAS, there is need to effect the necessary and proper changes in the organizational and functional
structures of the national and local governments, its agencies and instrumentalities, including
government-owned and controlled corporations and their subsidiaries, in order to promote economy,
efficiency and effectiveness in the delivery of public services

xxx

xxx

xxx

Section 2.
The functional jurisdiction of the PCGR shall encompass, as necessary, the
reorganization of the national and local governments, its agencies and instrumentalities including
government-owned or controlled corporations and their subsidiaries.

xxx

xxx

xxx (Emphasis supplied)

Succeeding it was Proclamation No. 3, dated 25 March 1986, also known as the Freedom Constitution,
declaring, in part, in its Preamble as follows:

WHEREAS, the direct mandate of the people as manifested by their extraordinary action demands the
complete reorganization of the government, ... (Emphasis supplied)

and pertinently providing:

ARTICLE II

Section I

xxx

xxx

xxx

The President shall give priority to measures to achieve the mandate of the people to:

(a)
Completely reorganize the government and eradicate unjust and oppressive structures, and all
iniquitous vestiges of the previous regime;" (Emphasis supplied)

xxx

xxx

xxx

ARTICLE III GOVERNMENT REORGANIZATION

Section 2.
All elective and appointive officials and employees under the 1973 Constitution shall
continue in office until otherwise provided by proclamation or executive order or upon the designation or
appointment and qualification of their successors, if such is made within a period of one year from
February 25, 1986.

Section 3. Any public office or employee separated from the service as a result of the reorganization
effected under this Proclamation shall, if entitled under the laws then in force, receive the retirement and
other benefits accruing thereunder. (Emphasis ours)

On 28 May 1986, Executive Order No. 17 was issued "Prescribing Rules and Regulations for the
Implementation of Section 2, Article III of the Freedom Constitution' providing, inter alia, as follows:

Section 1. In the course of implementing Article III, Section 2 of the Freedom Constitution, the Head of
each Ministry shall see to it that the separation or replacement of officers and employees is made only for
justifiable reasons, to prevent indiscriminate dismissal, of personnel in the career civil service whose
qualifications and performance meet the standards of public service of the New Government.

xxx

xxx

xxx

The Ministry concerned shall adopt its own rules and procedures for the review and assessment of its
own personnel, including the identification of sensitive positions which require more rigid assessment of
the incumbents, and shall complete such review/assessment as expeditiously as possible but not later
than February 24, 1987 to prevent undue demoralization in the public service.

Section 2.
The Ministry Head concerned, on the basis of such review and assessment shall
determine who shall be separated from the service. Thereafter, he shall issue to the official or employee
concerned a notice of separation which shall indicate therein the reason/s or ground /s for such
separation and the fact that the separated official or employee has the right to file a petition for
reconsideration pursuant to this Order. Separation from the service shall be effective upon receipt of such
notice, either personally by the official or employee concerned or on his behalf by a person of sufficient
discretion.

Section 3. The following shall be the grounds for separation/ replacement of personnel:

1.

Existence of a case for summary dismissal pursuant to Section 40 of the Civil Service Law;

2.
Existence of a probable cause for violation of the Anti-Graft and Corrupt Practice Act as
determined by the Ministry Head concerned;

3.

Gross incompetence or inefficiency in the discharge of functions;

4.

Misuse of Public office for partisan political purposes;

5.
Any other analogous ground showing that the incumbent is unfit to remain in the service or his
separation/replacement is in the interest of the service.

Section 11.
This Executive Order shall not apply to elective officials or those designated to replace
them, presidential appointees, casual and contractual employees, or officials and employees removed
pursuant to disciplinary proceedings under the Civil Service Law and rules, and to those laid off as a
result of the reorganization undertaken pursuant to Executive Order No. 5. (Emphasis supplied)

On 6 August 1986, Executive Order No. 39 was issued by the President "Enlarging the Powers and
Functions of the Commissioner of Customs", as follows:

xxx

xxx

xxx

SECTION 1.
In addition to the powers and functions of the Commissioner of Customs, he is hereby
authorized, subject to the Civil Service Law and its implementing rules and regulations:

a)

To appoint all Bureau personnel, except those appointed by the President;

b)

To discipline, suspend, dismiss or otherwise penalize erring Bureau officers and employees;

c)
To act on all matters pertaining to promotion, transfer, detail, reassignment, reinstatement,
reemployment and other personnel action, involving officers and employees of the Bureau of Customs.

xxx

xxx

xxx

On 30 January 1987, Executive Order No. 127 was issued "Reorganizing the Ministry of Finance." Similar
Orders, approximately thirteen (13) in all, 1 were issued in respect of the other executive departments.
The relevant provisions relative to the Bureau of Customs read:

RECALLING that the reorganization of the government is mandated expressly in Article II, Section l(a)
and Article III of the Freedom Constitution;

HAVING IN MIND that pursuant to Executive Order No. 5 (1986), it is directed that the necessary and
proper changes in the organizational and functional structures of the government, its agencies and
instrumentalities, be effected in order to promote efficiency and effectiveness in the delivery of public
services;

BELIEVING that it is necessary to reorganize the Ministry of Finance to make it more capable and
responsive, organizationally and functionally, in its primary mandate of judiciously generating and
efficiently managing the financial resources of the Government, its subdivisions and instrumentalities in
order to attain the socio-economic objectives of the national development programs.

xxx

xxx

xxx

SEC. 2. Reorganization. The Ministry of Finance, hereinafter referred to as Ministry, is hereby

reorganized, structurally and functionally, in accordance with the provisions of this Executive Order.

SEC. 33.

Bureau of Customs.

... Executive Order No. 39 dated 6 August 1986 which grants autonomy to the Commissioner of Customs
in matters of appointment and discipline of Customs personnel shall remain in effect.

SEC. 55. Abolition of Units Integral to Ministry. All units not included in the structural organization as
herein provided and all positions thereof are hereby deemed abolished. ... Their personnel shall be
entitled to the benefits provided in the second paragraph of Section 59 hereof.

SEC. 59. New Structure and Pattern. Upon approval of this Executive Order, the officers and
employees of the Ministry shall, in a holdover capacity, continue to perform their respective duties and
responsibilities and receive the corresponding salaries and benefits unless in the meantime they are
separated from government service pursuant to executive Order No. 17 (1986) or article III of the
Freedom Constitution.

The new position structure and staffing pattern of the ministry shall be approved and prescribed by the
Minister within one hundred twenty (120) days from the approval of this Executive Order and the
authorized positions created hereunder shall be filled with regular appointments by him or by the
President, as the case may be. Those incumbents whose positions are not included therein or who are
not reappointed shall be deemed separated from the service. Those separated from the service shall
receive the retirement benefits to which they may be entitled under the existing laws, rules and
regulations. Otherwise, they shall be paid the equivalent of one month basic salary for every year of
service or the equivalent nearest fraction thereof favorable to them on the basis of highest salary
received, but in no case shall such payment exceed the equivalent of 12 months salary.

No court or administrative body shall issue any writ or preliminary junction or restraining order to enjoin
the separation/replacement of any officer or employee affected under this Executive Order.

Section 67 All laws, ordinances, rules, regulations and other issuances or parts thereof, which are
inconsistent with this Executive Order, are hereby repealed or modified accordingly.

xxx

xxx

xxx (Emphasis ours)

On 2 February 1987, the present Constitution took effect (De Leon, et al., vs. Esguerra, G.R. No. 78059,
August 31, 1987153 SCRA 602). Reorganization in the Government service pursuant to Proclamation No.
3, supra, was provided for in its Section 16, Article XVIII entitled Transitory Provisions, reading:

Section 16. Career civil service employees separated from the service not for cause but as a result of the
reorganization pursuant to Proclamation No. 3 dated March 25, 1986 and the reorganization following the
ratification of this Constitution shall be entitled to appropriate separation pay and to retirement and other
benefits accruing to them under the laws of general application in force at the time of their separation. In
lieu thereof, at the option of the employees, they may be considered for employment in the Government
or in any of its subdivisions, instrumentalities, or agencies, including government owned or controlled
corporations and their subsidiaries. Ms provision also applies to career officers whose resignation,
tendered in line with the existing policy, has been accepted.

On 24 May 1987 the then Commissioner of Customs, Alexander A. Padilla, transmitted to the Department
of Finance for approval the proposed "position structure and staffing pattern" of the Bureau of Customs.
Said Department gave its imprimatur. Thereafter, the staffing pattern was transmitted to and approved by
the Department of Budget and Management on 7 September 1987 for implementation. Under the old
staffing pattern, there were 7,302 positions while under the new staffing pattern, there are 6,530 positions
CSC Resolution in CSC Case No. 1, dated 20 September 1988, pp. 3-4).

On 22 September 1987, Salvador M. Mison assumed office as Commissioner of Customs.

On 2 October 1987 "Malacanang Memorandum Re: Guidelines on the Implementation of Reorganization

Executive Orders" was issued reading, insofar as revelant to these cases, as follows:

It is my concern that ongoing process of government reorganization be conducted in a manner that is

expeditious, as well as sensitive to the dislocating consequences arising from specific personnel
decisions.

The entire process of reorganization, and in particular the process of separation from service, must be
carried out in the most humane manner possible.

For this purpose, the following guidelines shall be strictly followed:

1.
By October 21, 1987, all employees covered by the Executive Orders for each agency on
reorganization shall be:

a. informed of their reappointment or

b. offered another position in the same department/ agency or

c. informed of their termination.

2.

xxx

In the event of an offer for a lower position, there will be no reduction in the salary.

xxx

xxx

4.
Each department/agency shall constitute a Reorganization Appeals Board at the central office, on
or before October 21, 1987, to review or reconsider appeals or complaints relative to reorganization. All
cases submitted to the Boards shall be resolved subject to the following guidelines:

a.

publication or posting of the appeal procedure promulgated by the Department Secretary;

b.

adherence to due process;

c.

disposition within 30 days from submission of the case;

written notification of the action taken and the grounds thereof.

Action by the Appeals Review Board does not preclude appeal to the Civil Service Commission.

5.
Placement in the new staffing pattern of incumbent personnel shall be completed prior to the
hiring of new personnel, if any.

xxx

xxx

xxx (Emphasis ours)

On 25 November 1987 Commissioner Mison wrote the President requesting a grace period until the end
of February 1988 within which to completely undertake the reorganization of the Bureau of Customs
pursuant to Executive Order No. 127 dated 30 January 1987. Said request was granted in a letter-reply
by Executive Secretary Catalino Macaraig, Jr., dated 22 December 1987.

On 6 January 1988, within the extended period requested, Bureau of Customs Memorandum "Re:
Guidelines on the Implementation of Reorganization Executive Orders" was issued in the same tenor as
the Malacanang Memorandum of 2 October 1987, providing inter alia:

To effectively implement the reorganization at the Bureau of Customs, particularly in the selection and
placement of personnel, and insure that the best qualified and most competent personnel in the career
service are retained, the following guidelines are hereby prescribed for the guidance of all concerned

1.
By February 28, 1988 all employees covered by Executive Order No. 127 and the grace period
extended to the Bureau of Customs by the President of the Philippines on reorganization shall be:

a.

informed of their reappointment, or

b.

offered another position in the same department or agency or

c.

informed of their termination.

2.

In the event of termination, the employee shall:

a.
be included in a consolidated list compiled by the Civil Service Commission. All departments who
are recruiting shall give preference to the employees in the list; and

b.

continue to receive salary and benefits until February 28, 1988, and

c.
be guaranteed the release of separation benefits within 45 days from termination and in no case
later than June 15, 1988.

xxx

xxx

xxx (Emphasis supplied)

It is to be noted that paragraph 1 above and its sub-sections reproduced verbatim the Malacanang
Guidelines of 2 October 1987 in that the employees concerned were merely to be informed of their
termination.

On 28 January 1988 Commissioner Mison addressed identical letters of termination to Bureau of

Customs officers and employees effective on 28 February 1988.

As of 18 August 1988, Commissioner Mison appointed five hundred twenty-two (522) officials and
employees of the Bureau of Customs (CSC Resolution in CSC Case No. 1, dated 20 September 1988, p.
6). In fact, in a letter dated 27 January 1988, Commissioner Mison recommended Jose M. Balde for
appointment to President Aquino as one of three (3) Deputy Commissioners under Executive Order No.
127.

In the interim, during the pendency of these Petitions, Republic Act No. 6656, entitled "An Act to Protect
the Security of Tenure of Civil Service Officers and Employees in the Implementation of Government
Reorganization" was passed by Congress on 9 June 1988. The President signed it into law on 10 June
1988 and the statute took effect on 29 June 1988.

On 20 June 1988 Motions were filed, in these cases pending before this Court, invoking the provisions of
Republic Act No. 6656. The relevant provisions thereof read:

SECTION 1.
It is hereby declared the policy of the State to protect the security of tenure of civil service
officers and employees in the reorganization of the various agencies of the National government ....

SECTION 2.
No officer or employee in the career service shall be removed except for a valid cause
and after due notice and hearing. A valid cause for removal exists when, pursuant to a bona fide
reorganization, a position has been abolished or rendered redundant or there is a need to merge, divide,
or consolidate positions in order to meet the exigencies of the service, or other lawful causes allowed by
the Civil Service Law. The existence of any or some of the following circumstances may be considered as
evidence of bad faith in the removals made as a result of reorganization, giving rise to a claim for
reinstatement or reappointment by an aggrieved party:

(a)
Where there is a significant increase in the number of positions in the new staffing pattern of the
department or agency concerned;

(b)

Where an office is abolished and another performing substantially the same functions is created;

(c)
Where incumbents are replaced by those less qualified in terms of status of appointment,
performance and merit;

(d)
Where there is a reclassification of offices in the department or agency concerned and the
reclassified offices perform substantially the same functions as the original offices;

(e)

xxx

Where the removal violates the order of separation provided in Section 3 hereof.

xxx

xxx

SECTION 9.
All officers and employees who are found by the Civil Service Commission to have been
separated in violation of the provisions of this Act, shall be ordered reinstated or reappointed as the case
may be without loss of seniority and shall be entitled to full pay for the period of separation. Unless also
separated for cause, all officers and employees, including casuals and temporary employees, who have
been separated pursuant to reorganization shall, if entitled thereto, be paid the appropriate separation pay
and retirement and other benefits under existing laws within ninety (90) days from the date of the
effectivity of their separation or from the date of the receipt of the resolution of their appeals as the case
may be: Provided, That application for clearance has been filed and no action thereon has been made by
the corresponding department or agency. Those who are not entitled to said benefits shall be paid a
separation gratuity in the amount equivalent to one (1) month salary for every year of service. Such
separation pay and retirement benefits shall have priority of payment out of the savings of the department
or agency concerned.

xxx

xxx

xxx

SECTION 11. The executive branch of the government shall implement reorganization schemes within
a specified period of time authorized by law.

In the case of the 1987 reorganization of the executive branch, all departments and agencies which are
authorized by executive orders promulgated by the President to reorganize shall have ninety (90) days
from the approval of this Act within which to implement their respective reorganization plans in
accordance with the provisions of this Act.

xxx

xxx

xxx

SECTION 13. All laws, rules and regulations or parts thereof, inconsistent with the provisions of this Act
are hereby repealed or modified accordingly. The rights and benefits under this Act shall be retroactive as
of June 30, 1987.

xxx

xxx

xxx (Emphasis ours)

Given the foregoing statutory backdrop, the issues can now be addressed.

Scope of Section 16, Art. XVIII, 1987 Constitution

Crucial to the present controversy is the construction to be given to the abovementioned Constitutional
provision (SECTION 16, for brevity), which speaks of.

Career civil service employees separated from the service not for cause

but as a result of the reorganization pursuant to Proclamation No. 3 dated March 25, 1986

and the reorganization following the ratification of this Constitution ... (paragraphing supplied).

To our minds, SECTION 16 clearly recognizes (1) the reorganization authorized by Proclamation No. 3;
(2) that such separation is NOT FOR CAUSE but as a result of the reorganization pursuant to said
Proclamation; and (3) that the reorganization pursuant to Proclamation No. 3 may be continued even after
the ratification of the 1987 Constitution during the transition period.

Separation NOT FOR CAUSE

The canon for the removal or suspension of a civil service officer or employee is that it must be FOR
CAUSE. That means a guarantee of both procedural and substantive due process. Basically, procedural
due process would require that suspension or dismissal come only after notice and hearing. Substantive
due process would require that suspension or dismissal be 'for cause'." Bernas The Constitution of the
Republic of the Philippines: A Commentary, Vol. II, First Edition, 1988, p. 334)

The guarantee of removal FOR CAUSE is enshrined in Article IX-B, Section 2(3) of the 1987 Constitution,
which states that 'No officer or employee of the civil service shall be removed or suspended except FOR
CAUSE provided by law."

There can be no question then as to the meaning of the phrase FOR CAUSE. It simply means the
observance of both procedural and substantive due process in cases of removal of officers or employees
of the civil service. When SECTION 16 speaks, therefore, of separation from the service NOT FOR
CAUSE, it can only mean the diametrical opposite. The constitutional intent to exempt the separation of
civil service employees pursuant to Proclamation No. 3 from the operation of Article IX-B, Section 2(3),
becomes readily apparent. A distinction is explicitly made between removal FOR CAUSE, which as
aforestated, requires due process, and dismissal NOT FOR CAUSE, which implies that the latter is not
bound by the "fetters' of due process.

It is obviously for that reason that Section 16 grants separation pay and retirement benefits to those
separated NOT FOR CAUSE but as a result of the reorganization precisely to soften the impact of the
non-observance of due process. "What is envisioned in Section 16 is not a remedy for arbitrary removal
of civil servants enjoying security of tenure but some form of relief for members of the career civil service
who may have been or may be legally but involuntarily 'reorganized out' of the service or may have
voluntarily resigned pursuant to the reorganization policy" (ibid., p. 615).

Reorganization Pursuant to Proclamation No. 3 to Continue Transitorily Even After Ratification

By its very context, SECTION 16 envisages the continuance of the reorganization pursuant to
Proclamation No. 3 even after ratification of the Constitution and during the transition period. The two [2]
stages contemplated, namely, (1) the stage before and (2) after ratification, refer to the same nature of
separation "NOT FOR CAUSE but as a result of Proclamation No. 3." No valid reason has been
advanced for a different treatment after ratification as the majority opines i.e., that separation NOT FOR
CAUSE is allowed before ratification but that, thereafter, separation can only be FOR CAUSE.

A fundamental principle of Constitutional construction is to assure the realization of the purpose of the
framers of the organic law and of the people who adopted it.

That the reorganization commenced pursuant to Proclamation No. 3 was envisioned to continue even
after the ratification of the 1987 Constitution, at least transitorily, is evident from the intent of its authors
discoverable from their deliberations held on 3 October 1986 and evincing their awareness that such
reorganization had not as yet been fully implemented. Thus:

Mr. PADILLA. Mr. Presiding Officer, on lines 2 to 5 is the clause 'pursuant to the provisions of Article III
of Proclamation No. 3, issued on March 25, 1986, and the reorganization.' Are those words necessary?
Can we not just say 'result of the reorganization following the ratification of this Constitution'? In other
words, must we make specific reference to Proclamation No. 3?

Mr. SUAREZ. Yes. I think the committee feels that is necessary, because in truth there has been a
reorganization by virtue of Proclamation No. 3. In other words, there are two stages of reorganization
covered by this section.

Mr. PADILIA.

I understand there is a reorganization committee headed by a minister?

Mr. SUAREZ.

Philippine Commission on Government Reorganization.

Mr. PADILLA. But whether that has already been implemented or not, I do not believe in it. There has
been a plan, but I do not think it has been implemented. If we want to include any previous reorganization
after or before the ratification, why do we not just say reorganization before or after the ratification' to
simplify the provision and eliminate two-and-a-half sentences that may not be necessary? And as a result
of the reorganization, if the committee feels there has been reorganization before ratification and there be
reorganization after, we just say 'before or after the ratification of this Constitution.

Mr. SUAREZ. Something like this as a result of the reorganization effected before or after the ratification
of the Constitution on the understanding, with the statement into the records, that this would be applicable
to those reorganized out pursuant to the Freedom Constitution also.

Mr. PADILLA. That is understood if there has been a reorganization before the ratification or a
reorganization after the ratification." (RECORDS of the Constitutional Commission, Vol. 5, p. 416)
(Emphasis provided)

It should also be recalled that the deadline for the reorganization under Proclamation No. 3 was "one year
from February 25, 1986" (Article III, Section 2), or up to February 24, 1987. Executive Order No. 17 itself
provided that the review/assessment of personnel be completed "not later than February 24, 1987." But,
confronted with the reality of the ratification of the Constitution before that deadline without reorganization
having been completed, there was need for a provision allowing for its continuance even after ratification
and until completed. It was also to beat that deadline that EO 127 and similar issuances, providing for the

reorganization of departments of government, were all dated 30 January 1987 or prior to the plebiscite
held on 2 February 1987. The intent to continue and complete the reorganizations started is self- evident
in SECTION 16.

In Jose vs. Arroyo, et al. (G.R. No. 78435, August 11, 1987), which was a Petition for certiorari and
Prohibition to enjoin the implementation of Executive Order No. 127, we recognized that the
reorganization pursuant to Proclamation No. 3 as mandated by SECTION 16, was to continue even after
ratification when we stated:

The contention of petitioner that EO No. 127 is violative of the provision of the 1987 Constitution
guaranteeing career civil service employees security of tenure overlooks the provision of Section 16, Art.
XVIII (Transitory Provisions) which explicitly authorizes the removal of career civil service employees not
for cause but as a result of the reorganization pursuant to Proclamation No. 3 dated March 25, 1986 and
the reorganization following the ratification of the Constitution. By virtue of said provision, the
reorganization of the Bureau of Customs under Executive Order No. 127 may continue even after the
ratification of this Constitution and career civil service employees may be separated from the service
without cause as a result of such reorganization. (Emphasis ours)

With due respect to the majority, we disagree with its conclusion that the foregoing pronouncement is
mere "obiter dictum."

An obiter dictum or dictum has been defined as a remark or opinion uttered, by the way. It is a statement
of the court concerning a question which was not directly before it (In re Hess 23 A. 2d. 298, 301, 20 N.J.
Misc. 12).lwph1.t It is language unnecessary to a decision, (a) ruling on an issue not raised, or (an)
opinion of a judge which does not embody the resolution or determination of the court, and is made
without argument or full consideration of the point (Lawson v. US, 176 F2d 49, 51, 85 U.S. App. D.C.
167). It is an expression of opinion by the court or judge on a collateral question not directly involved,
(Crescent Ring Co. v. Travelers Indemnity Co. 132 A. 106, 107, 102 N.J. Law 85) or not necessary for the
decision Du Bell v. Union Central Life Ins. Co., 29, So. 2d 709, 712; 211 La. 167).

In the case at bar, however, directly involved and squarely before the Court was the issue of whether EO
127 violates Section 2(3) of Article IX-B of the 1987 Constitution against removal of civil service
employees except for cause." Petitioner batted for the affirmative of the proposition, while respondents
contended that "removal of civil service employees without cause is allowed not only under the
Provisional Constitution but also under the 1987 Constitution if the same is made pursuant to a
reorganization after the ratification of the Constitution."

It may be that the Court dismissed that Petition for being premature, speculative and purely anticipatory"
inasmuch as petitioner therein had "not received any communication terminating or threatening to
terminate his services." But that was only one consideration. The Court still proceeded to decide all the
issues adversatively contested by the parties, namely "1) that the expiration date of February 25, 1 987
fixed by Section 2 of Proclamation No. 3 on which said Executive order is based had already lapsed; 2)
that the Executive Order has not been published in the Official Gazette as required by Article 2 of the Civil
Code and Section 1 1 of the Revised Administrative Code; and 3) that its enforcement violates Section
2(3) of Article IX B of the 1987 Constitution against removal of civil service employees except for cause."

The ruling of the Court, therefore, on the Constitutional issues presented, particularly, the lapse of the
period mandated by Proclamation No. 3, and the validity of EO 127, cannot be said to be mere "obiter."
They were ultimate issues directly before the Court, expressly decided in the course of the consideration
of the case, so that any resolution thereon must be considered as authoritative precedent, and not a mere
dictum (See Valli v. US, 94 F2d 687 certiorari granted 58 S. Ct. 760, 303 U.S. 82 L. Ed. 1092; See also
Weedin v. Tayokichi Yamada 4 F. (2d) 455). Such resolution would not lose its value as a precedent just
because the disposition of the case was also made on some other ground.

.....And this rule applies as to all pertinent questions although only incidentally involved, which are
presented and decided in the regular course of the consideration of the case, and lead up to the final
conclusion (Northern Pac. Ry Co. v. Baker, D.C. Wash., 3 F. Suppl. 1; See also Wisconsin Power and
Light Co. v. City of Beloit 254 NW 119; Chase v. American Cartage Co. 186 N.W. 598; City of Detroit, et
al. v. Public Utilities Comm. 286 N.W. 368). Accordingly, a point expressly decided does not lose its value
as a precedent because the disposition of the case is made on some other ground. (Wagner v. Com
Products Refining Co. D.C. N.J. 28 F 2d 617) Where a case presents two or more points, any one of
which is sufficient to determine the ultimate issue, but the court actually decides all such points, the case
is an authoritative precedent as to every point decided, and none of such points can be regarded as
having merely the status of a dictum (See U.S. Title Insurance and Trust Co., Cal., 44 S. Ct. 621, 265
U.S. 472, 68 L. Ed. 1110; Van Dyke v. Parker 83 F. (2d) 35) and one point should not be denied authority
merely because another point was more dwelt on and more fully argued and considered. (Richmond
Screw Anchor Co. v. U.S. 48 S. Ct. 194, 275 U.S. 331, 72 L. Ed. 303)"

It is true that in Palma-Fernandez vs. de la Paz (G.R. No. 78946, April 15, 1986, 160 SCRA 751), we had
stated:

The argument that, on the basis of this provision (Section 26 of Executive Order No. 119, or the
'Reorganization Act of the Ministry of Health'), petitioner's term of office ended on 30 January 1987 and
that she continued in the performance of her duties merely in a hold-over capacity and could be
transferred to another position without violating any of her legal rights, is untenable. The occupancy of a
position in a hold-over capacity was conceived to facilitate reorganization and would have lapsed on 25
February 1987 (under the Provisional Constitution), but advanced to 2 February 1987 when the 1987
Constitution became effective (De Leon, et al., vs. Hon. Esguerra, et al., G.R. No. 78059, 31 August 1987,
153 SCRA 602). After the d date the provisions of the latter on security of tenure govern.

The factual situation in the two cases, however, radically differ. In the cited case, Dra. Palma-Fernandez,
the petitioner, had already been extended a permanent appointment as Assistant Director for Professional
Services of the East Avenue Medical Center but was still being transferred by the Medical Center Chief to
the Research Office against her consent. Separation from the service as a result of reorganization was
not involved. The question then arose as to whether the latter official had the authority to transfer or
whether the power to appoint and remove subordinate officers and employees was lodged in the
Secretary of Health. Related to that issue was the vital one of whether or not her transfer, effected on 29
May 1987, was tantamount to a removal without cause. Significant, too, is the fact that the transfer was
basically made "in the interest of the service" pursuant to Section 24(c) of PD No. 807, or the Civil Service
Decree, and not because she was being reorganized out by virtue of EO 119 or the "Reorganization Act of
the Ministry of Health," although the said Act was invoked after the fact. And so it was that SECTION 16
was never mentioned, much less invoked in the Palma-Fernandez case.

Finally, on this point, it is inaccurate for the majority to state that there were no reorganization orders after
ratification. There were, namely, EO 181 (Reorganization Act of the Civil Service Commission), June 1,

1987; EO 193 (Reorganization Act of the Office of Energy Affairs), June 10, 1987; EO 230
(Reorganization Act of NEDA), July 22, 1987; EO 262 (Reorganization Act of the Department of Local
Government), July 25, 1987; EO 297 (Reorganization Act of the Office of the Press Secretary), July 25,
1987.

The Element of Good Faith

The majority concedes that reorganization can be undertaken provided it be in good faith but concludes
that Commissioner Mison was not in good faith.

The aforesaid conclusion is contradicted by the records.

Executive Order No. 127, dated 30 January 1987, specifically authorized the reorganization of the Bureau
of Customs "structurally and functionally" and provided for the abolition of all units and positions thereof
not included in the structural organization S election 55).

As stated heretofore, it was the former Commissioner of Customs, Alexander A. Padilla who, on 24 May
1987, transmitted to the Department of Finance for approval the proposed "position structure and staffing
pattern" of the Bureau of Customs. This was approved by the Department of Finance. Thereafter, it was
transmitted to and approved by the Department of Budget and Management on 7 September 1987 for
implementation. Under the old staffing pattern, there were 7,302 positions while under the new staffing
pattern, there are 6,530 positions.

On 2 October 1987 "Malacanang Memorandum Re: Guidelines on the Implementation of Reorganization

Executive Orders" provided:

By October 21, 1987, all employees covered by the Executive orders for each agency on reorganization
shall be:

a.

informed of their reappointment, or

b.

offered another position in the same department or agency, or

c.

informed of their termination. (emphasis supplied)

On 25 November 1987 Commissioner Mison asked for and was granted by the President an extension up
to February 1988 within which to completely undertake the reorganization of the Bureau of Customs.

On 6 January 1988, he issued Bureau of Customs Memorandum "Re Guidelines on the Implementation
of Reorganization Executive Orders" reiterating the above- quoted portion of the Malacanang
Memorandum of 2 October 1987. Pursuant thereto, on 28 January 1988, Commissioner Mison addressed
uniform letters of termination to the employees listed on pages 15, 16 and 17 of the majority opinion,
effective on 28 February 1988, within the extended period granted.

The records further show that upon Commissioner Mison's official inquiry, Secretary of Justice Sedfrey A.
Ordo;ez, rendered the following Opinion:

. . . It is believed that customs employees who are reorganized out in the course of the implementation of
E.O. No. 127 (reorganizing the Department of Finance) need not be informed of the nature and cause of
their separation from the service. It is enough that they be 'informed of their termination' pursuant to
section 1(c) of the Memorandum dated October 2, 1987 of President Aquino, which reads:

1.
By October 21, 1987, all employees covered by the Executive orders for each agency on
reorganization shall be:

xxx

c)

xxx

xxx

Informed of their terminations.

The constitutional mandate that 'no officer or employee of the civil service shall be renewed or suspended
except for cause as provided by law' (Sec. 2(4) (sic), Article IX-B of the 1987 Constitution) does not apply
to employees who are separated from office as a result of the reorganization of that Bureau as directed in
Executive Order No. 127.

xxx

xxx

xxx

Regarding your (third) query, the issue as to the constitutionality of Executive Order No. 127 is set at rest,
after the Supreme Court resolved to dismiss the petition for certiorari questioning its enforceability, for
lack of merit (see Jose vs. Arroyo, et al., supra). (Opinion No. 41, s. 1988, March 3, 1988) (Emphasis
supplied)

The former Chairman of the Civil Service Commission, Celerina G. Gotladera likewise periodically
consulted by Commissioner Mison, also expressed the opinion that "it is not a prerequisite prior to the
separation of an employee pursuant to reorganization that he be administratively charged." (Annex 16, p.
411, Rollo, G.R. No. 85310)

Moreover, the records show that the final selection and placement of personnel was done by a Placement
Committee, one of whose members is the Head of the Civil Service Commission Field Office, namely,
Mrs. Purificacion Cuerdo The appointment of employees made by Commissioner Mison was based on the
list approved by said Placement Committee.

But the majority further faults Mison for defying the President's directive to halt further layoffs as a
consequence of reorganization, citing OP Memo of 14 October 1987, reading:

Further to the Memorandum dated October 2, 1987 on the same subject, I have ordered that there will be
no further layoffs this year of personnel as a result of the government reorganization. (p. 45, Decision)

The foregoing, however, must be deemed superseded by later developments, namely, the grant to
Commissioner Mison by the President on 22 December 1987 of a grace period until the end of February
1988 within which to completely undertake the reorganization of the Bureau of Customs, which was, in
fact, accomplished by 28 February 1988.

To further show lack of good faith, the majority states that Commissioner Mison failed to observe the
procedure laid down by EO 17, supra, directing inter alia that a notice of separation be issued to an
employee to be terminated indicating therein the reason/s or ground/s for such separation. That
requirement, however, does not appear in Section 59 of EO 127, which provides on the contrary "that
those incumbents whose positions are not included in the new position structure and staffing pattern of
the Ministry or who are not reappointed shall be deemed separated from the service." The right granted
by EO 17 to an employee to be informed of the ground for his separation must be deemed to have been
revoked by the repealing clause of EO 127 (Section 67) providing that "all laws, ordinances or parts
thereof, which are inconsistent with this Executive Order, are hereby repealed and modified accordingly."

Moreover, Section 11 of EO 17 explicitly excepts from its coverage a reorganization pursuant to EO 5.

Thus

The Executive Order shall not apply to elective officials or those designated to replace them, presidential
appointees, casual and contractual employees, or officials and employees removed pursuant to
desciplinary proceedings under the Civil Service law and rules, and to those laid off as a result of
reorganization undertaken pursuant to Executive Order No. 5. (Emphasis ours)

That EO 127 was issued pursuant to or in implementation of EO 5, is shown by its introductory portion
reading:

Recalling that the reorganization of the government is mandated expressly by Article II, Section 1 (a) and
Article III of the Freedom Constitution;

Having in mind that pursuant to Executive order No. 5 (1986), it is directed that the necessary and proper
changes in the organizational and functional structures of the government, its agencies and
instrumentalities, be effected in order to promote efficiency and effectiveness in the delivery of public
service; (Italics supplied)

Constitutionality of Republic Act No. 6656

The majority also relies on Republic Act No. 6656 entitled an "Act to Protect the Security of Tenure of Civil
Service Officers and Employees in the Implementation of Government Reorganization," particularly
Section 2 thereof, to test the good faith of Commissioner Mison.

We are of the view, however, that in providing for retroactivity in its Section 13, RA 6656 clashes frontally
with SECTION 16.

1)
SECTION 16 clearly recognizes that career service employees separated from the service by
reason of the "complete reorganization of the government" pursuant to Proclamation No. 3 may be
separated NOT FOR CAUSE. And yet, RA 6656 requires the exact opposite separation FOR CAUSE.
It would not be remiss to quote the provision again:

SEC. 2. No officer or employee in the career service shall be removed except for a valid cause and after
due notice and hearing. A valid cause for removal exist when, pursuant to a bona fide reorganization, a
position has been abolished or rendered redundant or there is a need to merge, divide, or consolidate
positions in order to meet the exigencies of the service, or other lawful causes allowed by the Civil
Service law. The existence of any or some of the following circumstances may be considered as evidence
of bad faith in the removals made as a result of reorganization, giving rise to a claim for reinstatement or
reappointment by an aggrieved party: (a) Where there is a significant increase in the number of positions
in the new staffing pattern of the department or agency concerned; (b) Where an office is abolished and
another performing substantially the same functions is created; (c) Where incumbents are replaced by
those less qualified in terms of status of appointment, performance and merit; (d) Where there is a
reclassification of offices in the department or agency concerned and the reclassified offices perform
substantially the same functions as the original offices; (e) Where the removal violates the order of
separation provided in Section 3 hereof. (Republic Act No. 6156)

The standards laid down are the "traditional" criteria for removal of employees from the career service,
e.g. valid cause, due notice and hearing, abolition of, or redundancy of offices. Proclamation No. 3, on the
other hand, effectuates the "progressive" type of reorganization dictated by the exigencies of the historical
and political upheaval at the time. The "traditional" type is limited in scope. It is concerned with the
individual approach where the particular employee involved is charged administratively and where the
requisites of notice and hearing have to be observed. The "progressive" kind of reorganization, on the
other hand, is the collective way. It is wider in scope, and is the reorganization contemplated under
SECTION 16.

2)
By providing for reinstatement in its Section 9, RA 6656 adds a benefit not included in SECTION
16. The benefits granted by the latter provision to employees separated NOT FOR CAUSE but as a
consequence of reorganization are "separation pay, retirement, and other benefits accruing to them under
the laws of general application in force at the time of their separation." The benefit of reinstatement is not
included. RA 6656, however, allows reinstatement. That it cannot do because under SECTION 16, it is not
one of the laws "in force at the time of their separation."

The Constitution is the paramount law to which all laws must conform. It is from the Constitution that all
statutes must derive their bearings. The legislative authority of the State must yield to the expression of
the sovereign will. No statutory enactment can disregard the Charter from which it draws its own
existence (Phil. Long Distance Telephone Co. v. Collector of Internal Revenue, 90 Phil. 674 [1952]). But,

that is exactly what RA 6656 does in providing for retroactivity it disregards and contravenes a
Constitutional imperative. To save it, it should be applied and construed prospectively and not
retroactively notwithstanding its explicit provision. Then, and only then, would it make good law.

Effects of Reorganization

To be sure, the reorganization could effect the tenure of members of the career service as defined in
Section 5, Article IV of Presidential Decree No. 807, and may even result in the separation from the office
of some meritorious employees. But even then, the greater good of the greatest number and the right of
the citizenry to a good government, and as they themselves have mandated through the vehicle of
Proclamation No. 3, provide the justification for the said injury to the individual. In terms of values, the
interest of an employee to security of tenure must yield to the interest of the entire populace and to an
efficient and honest government.

But a reorganized employee is not without rights. His right lies in his past services, the entitlement to
which must be provided for by law. EO 127 provides for the same in its Section 59, and so does
SECTION 16 when the latter specified that career civil service employees separated from the service not
for cause:

shall be entitled to appropriate separation pay and to retirement and other benefits accruing to them
under the laws of general application in force at the time of their separation. In lieu thereof, at the option
of the employees, they may be considered for employment in the Government or in any of its
subdivisions, instrumentalities, or agencies, including government-owned or controlled corporations and
their subsidiaries. This provision also applies to career officers whose resignation, tendered in line with
the existing policy, has been accepted.

This is a reward for the employee's past service to the Government. But this is all There is no vested
property right to be reemployed in a reorganized office.

The right to an office or to employment with government or any of its agencies is not a vested property
right, and removal therefrom will not support the question of due process" Yantsin v. Aberdeen, 54 Wash
2d 787, 345 P 2d 178). A civil service employee does not have a constitutionally protected right to his
position, which position is in the nature of a public office, political in character and held by way of grant or
privilege extended by government; generally he has been held to have no property right or vested interest
to which due process guaranties extend (See Taylor v. Beckham 178 U.S. 548, 44 L Ed. 1187; Angilly v.
US CA2 NY 199 F 2d 642; People ex. rel. Baker v. Wilson, 39 III App 2d 443, 189 NE 2d 1; Kelliheller v.
NY State Civil Service Com 21 Misc 2d 1034, 194 NYS 2d 89).

To ensure, however, that no meritorious employee has been separated from the service, there would be
no harm, in fact, it could do a lot of good, if the Commissioner of Customs reviews the evaluation and
placements he has so far made and sees to it that those terminated are included in a consolidated list to
be given preference by departments who are recruiting (Section 2[a], BOC Memorandum, January
6,1988).lwph1.t

Conclusion

Premises considered, and subject to the observation hereinabove made, it is our considered view that the
separation from the service "NOT FOR CAUSE but as a result of the reorganization pursuant to
Proclamation No. 3 dated March 25, 1986" of the affected officers and employees of the Bureau of
Customs should be UPHELD, and the Resolutions of the Civil Service Commission, dated 30 June 1988,
20 September 1988, and 16 November 1988 should be SET ASIDE for having been issued in grave
abuse of discretion.

Republic Act No. 6656, in so far as it provides for retroactivity, should be declared UNCONSTITUTIONAL
for being repugnant to the letter and spirit of Section 16, Article XVIII of the 1987 Constitution.

Fernan, C.J., Narvasa, Feliciano, Regalado, JJ., concur.

Separate Opinions

CRUZ, J., concurring:

I concur with the majority view so ably presented by Mr. Justice Abraham F. Sarmiento. While additional
comments may seem superfluous in view of the exhaustiveness of his ponencia, I nevertheless offer the
following brief observations for whatever they may be worth.

Emphasizing Article XVII, Section 16 of the Constitution, the dissenting opinion considers the ongoing
government reorganization valid because it is merely a continuation of the reorganization begun during
the transition period. The reason for this conclusion is the phrase "and the reorganization following the
ratification of the Constitution," that is to say, after February 2, 1987, appearing in the said provision. The
consequence (and I hope I have not misread it) is that the present reorganization may still be undertaken
with the same "absoluteness" that was allowed the revolutionary reorganization although the Freedom
Constitution is no longer in force.

Reorganization of the government may be required by the legislature even independently of specific
constitutional authorization, as in the case, for example, of R.A. No. 51 and B.P. No. 129. Being
revolutionary in nature, the reorganization decreed by Article III of the Freedom Constitution was unlimited
as to its method except only as it was later restricted by President Aquino herself through various
issuances, particularly E.O. No. 17. But this reorganization, for all its permitted summariness, was not
indefinite. Under Section 3 of the said Article III, it was allowed only up to February 29,1987 (which we
advanced to February 2, 1987, when the new Constitution became effective).

The clear implication is that any government reorganization that may be undertaken thereafter must be
authorized by the legislature only and may not be allowed the special liberties and protection enjoyed by

the revolutionary reorganization. Otherwise, there would have been no necessity at all for the time
limitation expressly prescribed by the Freedom Constitution.

I cannot accept the view that Section 16 is an authorization for the open-ended reorganization of the
government "following the ratification of the Constitution." I read the provision as merely conferring
benefits deservedly or not on persons separated from the government as a result of the
reorganization of the government, whether undertaken during the transition period or as a result of a law
passed thereafter. What the grants is privileges to the retirees, not power to the provision government. It
is axiomatic that grants of power are not lightly inferred, especially if these impinge on individual rights,
and I do not see why we should depart from this rule.

To hold that the present reorganization is a continuation of the one begun during the transition period is to
recognize the theory of the public respondent that all officers and employees not separated earlier remain
in a hold-over capacity only and so may be replaced at any time even without cause. That is a dangerous
proposition that threatens the security and stability of every civil servant in the executive department.
What is worse is that this situation may continue indefinitely as the claimed "progressive" reorganization
has no limitation as to time.

Removal imports the forcible separation of the incumbent before the expiration of his term and can be
done only for cause as provided by law. Contrary to common belief, a reorganization does not result in
removal but in a different mode of terminating official relations known as abolition of the office (and the
security of tenure attached thereto.) The erstwhile holder of the abolished office cannot claim he has been
removed without cause in violation of his constitutional security of tenure. The reason is that the right itself
has disappeared with the abolished office as an accessory following the principal. (Ocampo v. Sec. of
Justice, 51 O.G. 147; De la Llana v. Alba, 112 SCRA 294; Manalang v. Quitoriano, 94 Phil. 903.)

This notwithstanding, the power to reorganize is not unlimited. It is essential that it be based on a valid
purpose, such as the promotion of efficiency and economy in the government through a pruning of offices
or the streamlining of their functions. (Cervantes v. Auditor-General, 91 Phil. 359.) Normally, a
reorganization cannot be validly undertaken as a means of purging the undesirables for this would be a
removal in disguise undertaken en masse to circumvent the constitutional requirement of legal cause.
(Eradication of graft and corruption was one of the expressed purposes of the revolutionary organization,
but this was authorized by the Freedom Constitution itself.) In short, a reorganization, to be valid, must be
done in good faith. (Urgelio v. Osmena, 9 SCRA 317; Cuneta v. Court of Appeals, 1 SCRA 663; Carino v.
ACCFA, 18 SCRA 183.)

A mere recitation no matter how lengthy of the directives, guidelines, memoranda, etc. issued by the
government and the action purportedly taken thereunder does not by itself prove good faith. We know
only too well that these instructions, for all their noble and sterile purposes, are rarely followed in their
actual implementation. The reality in this case, as the majority opinion has pointed out and as clearly
established in the hearing we held, is that the supposed reorganization was undertaken with an eye not to
achieving the avowed objectives but to accommodating new appointees at the expense of the dislodged
petitioners. That was also the finding of the Civil Service Commission, to which we must accord a
becoming respect as the constitutional office charged with the protection of the civil service from the evils
of the spoils system.

The present administration deserves full support in its desire to improve the civil service, but this objective
must be pursued in a manner consistent with the Constitution. This praiseworthy purpose cannot be

accomplished by an indiscriminate reorganization that will sweep in its wake the innocent along with the
redundant and inept, for the benefit of the current favorites.

MELENCIO-HERRERA, J., dissenting:

The historical underpinnings of Government efforts at reorganization hark back to the people power
phenomenon of 22-24 February 1986, and Proclamation No. 1 of President Corazon C. Aquino, issued on
25 February 1986, stating in no uncertain terms that "the people expect a reorganization of government."
In its wake followed Executive Order No. 5, issued on 12 March 1986, "Creating a Presidential
Commission on Government Reorganization," with the following relevant provisions:

WHEREAS, there is need to effect the necessary and proper changes in the organizational and functional
structures of the national and local governments, its agencies and instrumentalities, including
government-owned and controlled corporations and their subsidiaries, in order to promote economy,
efficiency and effectiveness in the delivery of public services

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xxx

Section 2.
The functional jurisdiction of the PCGR shall encompass, as necessary, the
reorganization of the national and local governments, its agencies and instrumentalities including
government-owned or controlled corporations and their subsidiaries.

xxx

xxx

xxx (Emphasis supplied)

Succeeding it was Proclamation No. 3, dated 25 March 1986, also known as the Freedom Constitution,
declaring, in part, in its Preamble as follows:

WHEREAS, the direct mandate of the people as manifested by their extraordinary action demands the
complete reorganization of the government, ... (Emphasis supplied)

and pertinently providing:

ARTICLE II

Section I

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xxx

The President shall give priority to measures to achieve the mandate of the people to:

(a)
Completely reorganize the government and eradicate unjust and oppressive structures, and all
iniquitous vestiges of the previous regime;" (Emphasis supplied)

xxx

xxx

xxx

ARTICLE III GOVERNMENT REORGANIZATION

Section 2.
All elective and appointive officials and employees under the 1973 Constitution shall
continue in office until otherwise provided by proclamation or executive order or upon the designation or
appointment and qualification of their successors, if such is made within a period of one year from
February 25, 1986.

Section 3. Any public office or employee separated from the service as a result of the reorganization
effected under this Proclamation shall, if entitled under the laws then in force, receive the retirement and
other benefits accruing thereunder. (Emphasis ours)

On 28 May 1986, Executive Order No. 17 was issued "Prescribing Rules and Regulations for the
Implementation of Section 2, Article III of the Freedom Constitution' providing, inter alia, as follows:

Section 1. In the course of implementing Article III, Section 2 of the Freedom Constitution, the Head of
each Ministry shall see to it that the separation or replacement of officers and employees is made only for
justifiable reasons, to prevent indiscriminate dismissal, of personnel in the career civil service whose
qualifications and performance meet the standards of public service of the New Government.

xxx

xxx

xxx

The Ministry concerned shall adopt its own rules and procedures for the review and assessment of its
own personnel, including the identification of sensitive positions which require more rigid assessment of
the incumbents, and shall complete such review/assessment as expeditiously as possible but not later
than February 24, 1987 to prevent undue demoralization in the public service.

Section 2.
The Ministry Head concerned, on the basis of such review and assessment shall
determine who shall be separated from the service. Thereafter, he shall issue to the official or employee
concerned a notice of separation which shall indicate therein the reason/s or ground /s for such
separation and the fact that the separated official or employee has the right to file a petition for
reconsideration pursuant to this Order. Separation from the service shall be effective upon receipt of such
notice, either personally by the official or employee concerned or on his behalf by a person of sufficient
discretion.

Section 3. The following shall be the grounds for separation/ replacement of personnel:

1.

Existence of a case for summary dismissal pursuant to Section 40 of the Civil Service Law;

2.
Existence of a probable cause for violation of the Anti-Graft and Corrupt Practice Act as
determined by the Ministry Head concerned;

3.

Gross incompetence or inefficiency in the discharge of functions;

4.

Misuse of Public office for partisan political purposes;

5.
Any other analogous ground showing that the incumbent is unfit to remain in the service or his
separation/replacement is in the interest of the service.

Section 11.
This Executive Order shall not apply to elective officials or those designated to replace
them, presidential appointees, casual and contractual employees, or officials and employees removed
pursuant to disciplinary proceedings under the Civil Service Law and rules, and to those laid off as a
result of the reorganization undertaken pursuant to Executive Order No. 5. (Emphasis supplied)

On 6 August 1986, Executive Order No. 39 was issued by the President "Enlarging the Powers and
Functions of the Commissioner of Customs", as follows:

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xxx

SECTION 1.
In addition to the powers and functions of the Commissioner of Customs, he is hereby
authorized, subject to the Civil Service Law and its implementing rules and regulations:

a)

To appoint all Bureau personnel, except those appointed by the President;

b)

To discipline, suspend, dismiss or otherwise penalize erring Bureau officers and employees;

c)
To act on all matters pertaining to promotion, transfer, detail, reassignment, reinstatement,
reemployment and other personnel action, involving officers and employees of the Bureau of Customs.

xxx

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xxx

On 30 January 1987, Executive Order No. 127 was issued "Reorganizing the Ministry of Finance." Similar
Orders, approximately thirteen (13) in all, 1 were issued in respect of the other executive departments.
The relevant provisions relative to the Bureau of Customs read:

RECALLING that the reorganization of the government is mandated expressly in Article II, Section l(a)
and Article III of the Freedom Constitution;

HAVING IN MIND that pursuant to Executive Order No. 5 (1986), it is directed that the necessary and
proper changes in the organizational and functional structures of the government, its agencies and
instrumentalities, be effected in order to promote efficiency and effectiveness in the delivery of public
services;

BELIEVING that it is necessary to reorganize the Ministry of Finance to make it more capable and
responsive, organizationally and functionally, in its primary mandate of judiciously generating and
efficiently managing the financial resources of the Government, its subdivisions and instrumentalities in
order to attain the socio-economic objectives of the national development programs.

xxx

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xxx

SEC. 2. Reorganization. The Ministry of Finance, hereinafter referred to as Ministry, is hereby

reorganized, structurally and functionally, in accordance with the provisions of this Executive Order.

SEC. 33.

Bureau of Customs.

... Executive Order No. 39 dated 6 August 1986 which grants autonomy to the Commissioner of Customs
in matters of appointment and discipline of Customs personnel shall remain in effect.

SEC. 55. Abolition of Units Integral to Ministry. All units not included in the structural organization as
herein provided and all positions thereof are hereby deemed abolished. ... Their personnel shall be
entitled to the benefits provided in the second paragraph of Section 59 hereof.

SEC. 59. New Structure and Pattern. Upon approval of this Executive Order, the officers and
employees of the Ministry shall, in a holdover capacity, continue to perform their respective duties and
responsibilities and receive the corresponding salaries and benefits unless in the meantime they are
separated from government service pursuant to executive Order No. 17 (1986) or article III of the
Freedom Constitution.

The new position structure and staffing pattern of the ministry shall be approved and prescribed by the
Minister within one hundred twenty (120) days from the approval of this Executive Order and the
authorized positions created hereunder shall be filled with regular appointments by him or by the

President, as the case may be. Those incumbents whose positions are not included therein or who are
not reappointed shall be deemed separated from the service. Those separated from the service shall
receive the retirement benefits to which they may be entitled under the existing laws, rules and
regulations. Otherwise, they shall be paid the equivalent of one month basic salary for every year of
service or the equivalent nearest fraction thereof favorable to them on the basis of highest salary
received, but in no case shall such payment exceed the equivalent of 12 months salary.

No court or administrative body shall issue any writ or preliminary junction or restraining order to enjoin
the separation/replacement of any officer or employee affected under this Executive Order.

Section 67 All laws, ordinances, rules, regulations and other issuances or parts thereof, which are
inconsistent with this Executive Order, are hereby repealed or modified accordingly.

xxx

xxx

xxx (Emphasis ours)

On 2 February 1987, the present Constitution took effect (De Leon, et al., vs. Esguerra, G.R. No. 78059,
August 31, 1987153 SCRA 602). Reorganization in the Government service pursuant to Proclamation No.
3, supra, was provided for in its Section 16, Article XVIII entitled Transitory Provisions, reading:

Section 16. Career civil service employees separated from the service not for cause but as a result of the
reorganization pursuant to Proclamation No. 3 dated March 25, 1986 and the reorganization following the
ratification of this Constitution shall be entitled to appropriate separation pay and to retirement and other
benefits accruing to them under the laws of general application in force at the time of their separation. In
lieu thereof, at the option of the employees, they may be considered for employment in the Government
or in any of its subdivisions, instrumentalities, or agencies, including government owned or controlled
corporations and their subsidiaries. Ms provision also applies to career officers whose resignation,
tendered in line with the existing policy, has been accepted.

On 24 May 1987 the then Commissioner of Customs, Alexander A. Padilla, transmitted to the Department
of Finance for approval the proposed "position structure and staffing pattern" of the Bureau of Customs.
Said Department gave its imprimatur. Thereafter, the staffing pattern was transmitted to and approved by
the Department of Budget and Management on 7 September 1987 for implementation. Under the old
staffing pattern, there were 7,302 positions while under the new staffing pattern, there are 6,530 positions
CSC Resolution in CSC Case No. 1, dated 20 September 1988, pp. 3-4).

On 22 September 1987, Salvador M. Mison assumed office as Commissioner of Customs.

On 2 October 1987 "Malacanang Memorandum Re: Guidelines on the Implementation of Reorganization

Executive Orders" was issued reading, insofar as revelant to these cases, as follows:

It is my concern that ongoing process of government reorganization be conducted in a manner that is

expeditious, as well as sensitive to the dislocating consequences arising from specific personnel
decisions.

The entire process of reorganization, and in particular the process of separation from service, must be
carried out in the most humane manner possible.

For this purpose, the following guidelines shall be strictly followed:

1. By October 21, 1987, all employees covered by the Executive Orders for each agency on
reorganization shall be:

a. informed of their reappointment or

b. offered another position in the same department/ agency or

c. informed of their termination.

2. In the event of an offer for a lower position, there will be no reduction in the salary.

xxx

xxx

xxx

4.
Each department/agency shall constitute a Reorganization Appeals Board at the central office, on
or before October 21, 1987, to review or reconsider appeals or complaints relative to reorganization. All
cases submitted to the Boards shall be resolved subject to the following guidelines:

a.

publication or posting of the appeal procedure promulgated by the Department Secretary;

b.

adherence to due process;

c.

disposition within 30 days from submission of the case;

written notification of the action taken and the grounds thereof.

Action by the Appeals Review Board does not preclude appeal to the Civil Service Commission.

5.
Placement in the new staffing pattern of incumbent personnel shall be completed prior to the
hiring of new personnel, if any.

xxx

xxx

xxx (Emphasis ours)

On 25 November 1987 Commissioner Mison wrote the President requesting a grace period until the end
of February 1988 within which to completely undertake the reorganization of the Bureau of Customs
pursuant to Executive Order No. 127 dated 30 January 1987. Said request was granted in a letter-reply
by Executive Secretary Catalino Macaraig, Jr., dated 22 December 1987.

On 6 January 1988, within the extended period requested, Bureau of Customs Memorandum "Re:
Guidelines on the Implementation of Reorganization Executive Orders" was issued in the same tenor as
the Malacanang Memorandum of 2 October 1987, providing inter alia:

To effectively implement the reorganization at the Bureau of Customs, particularly in the selection and
placement of personnel, and insure that the best qualified and most competent personnel in the career
service are retained, the following guidelines are hereby prescribed for the guidance of all concerned

1.
By February 28, 1988 all employees covered by Executive Order No. 127 and the grace period
extended to the Bureau of Customs by the President of the Philippines on reorganization shall be:

a.

informed of their reappointment, or

b.

offered another position in the same department or agency or

c.

informed of their termination.

2.

In the event of termination, the employee shall:

a.
be included in a consolidated list compiled by the Civil Service Commission. All departments who
are recruiting shall give preference to the employees in the list; and

b.

continue to receive salary and benefits until February 28, 1988, and

c.
be guaranteed the release of separation benefits within 45 days from termination and in no case
later than June 15, 1988.

xxx

xxx

xxx (Emphasis supplied)

It is to be noted that paragraph 1 above and its sub-sections reproduced verbatim the Malacanang
Guidelines of 2 October 1987 in that the employees concerned were merely to be informed of their
termination.

On 28 January 1988 Commissioner Mison addressed identical letters of termination to Bureau of

Customs officers and employees effective on 28 February 1988.

As of 18 August 1988, Commissioner Mison appointed five hundred twenty-two (522) officials and
employees of the Bureau of Customs (CSC Resolution in CSC Case No. 1, dated 20 September 1988, p.
6). In fact, in a letter dated 27 January 1988, Commissioner Mison recommended Jose M. Balde for
appointment to President Aquino as one of three (3) Deputy Commissioners under Executive Order No.
127.

In the interim, during the pendency of these Petitions, Republic Act No. 6656, entitled "An Act to Protect
the Security of Tenure of Civil Service Officers and Employees in the Implementation of Government
Reorganization" was passed by Congress on 9 June 1988. The President signed it into law on 10 June
1988 and the statute took effect on 29 June 1988.

On 20 June 1988 Motions were filed, in these cases pending before this Court, invoking the provisions of
Republic Act No. 6656. The relevant provisions thereof read:

SECTION 1.
It is hereby declared the policy of the State to protect the security of tenure of civil service
officers and employees in the reorganization of the various agencies of the National government ....

SECTION 2.
No officer or employee in the career service shall be removed except for a valid cause
and after due notice and hearing. A valid cause for removal exists when, pursuant to a bona fide
reorganization, a position has been abolished or rendered redundant or there is a need to merge, divide,
or consolidate positions in order to meet the exigencies of the service, or other lawful causes allowed by
the Civil Service Law. The existence of any or some of the following circumstances may be considered as
evidence of bad faith in the removals made as a result of reorganization, giving rise to a claim for
reinstatement or reappointment by an aggrieved party:

(a)
Where there is a significant increase in the number of positions in the new staffing pattern of the
department or agency concerned;

(b)

Where an office is abolished and another performing substantially the same functions is created;

(c)
Where incumbents are replaced by those less qualified in terms of status of appointment,
performance and merit;

(d)
Where there is a reclassification of offices in the department or agency concerned and the
reclassified offices perform substantially the same functions as the original offices;

(e)

xxx

Where the removal violates the order of separation provided in Section 3 hereof.

xxx

xxx

SECTION 9.
All officers and employees who are found by the Civil Service Commission to have been
separated in violation of the provisions of this Act, shall be ordered reinstated or reappointed as the case
may be without loss of seniority and shall be entitled to full pay for the period of separation. Unless also
separated for cause, all officers and employees, including casuals and temporary employees, who have
been separated pursuant to reorganization shall, if entitled thereto, be paid the appropriate separation pay
and retirement and other benefits under existing laws within ninety (90) days from the date of the
effectivity of their separation or from the date of the receipt of the resolution of their appeals as the case
may be: Provided, That application for clearance has been filed and no action thereon has been made by
the corresponding department or agency. Those who are not entitled to said benefits shall be paid a
separation gratuity in the amount equivalent to one (1) month salary for every year of service. Such
separation pay and retirement benefits shall have priority of payment out of the savings of the department
or agency concerned.

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xxx

xxx

SECTION 11. The executive branch of the government shall implement reorganization schemes within
a specified period of time authorized by law.

In the case of the 1987 reorganization of the executive branch, all departments and agencies which are
authorized by executive orders promulgated by the President to reorganize shall have ninety (90) days
from the approval of this Act within which to implement their respective reorganization plans in
accordance with the provisions of this Act.

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xxx

xxx

SECTION 13. All laws, rules and regulations or parts thereof, inconsistent with the provisions of this Act
are hereby repealed or modified accordingly. The rights and benefits under this Act shall be retroactive as
of June 30, 1987.

xxx

xxx

xxx (Emphasis ours)

Given the foregoing statutory backdrop, the issues can now be addressed.

Scope of Section 16, Art. XVIII, 1987 Constitution

Crucial to the present controversy is the construction to be given to the abovementioned Constitutional
provision (SECTION 16, for brevity), which speaks of.

Career civil service employees separated from the service not for cause

but as a result of the reorganization pursuant to Proclamation No. 3 dated March 25, 1986

and the reorganization following the ratification of this Constitution ... (paragraphing supplied).

To our minds, SECTION 16 clearly recognizes (1) the reorganization authorized by Proclamation No. 3;
(2) that such separation is NOT FOR CAUSE but as a result of the reorganization pursuant to said
Proclamation; and (3) that the reorganization pursuant to Proclamation No. 3 may be continued even after
the ratification of the 1987 Constitution during the transition period.

Separation NOT FOR CAUSE

The canon for the removal or suspension of a civil service officer or employee is that it must be FOR
CAUSE. That means a guarantee of both procedural and substantive due process. Basically, procedural
due process would require that suspension or dismissal come only after notice and hearing. Substantive
due process would require that suspension or dismissal be 'for cause'." Bernas The Constitution of the
Republic of the Philippines: A Commentary, Vol. II, First Edition, 1988, p. 334)

The guarantee of removal FOR CAUSE is enshrined in Article IX-B, Section 2(3) of the 1987 Constitution,
which states that 'No officer or employee of the civil service shall be removed or suspended except FOR
CAUSE provided by law."

There can be no question then as to the meaning of the phrase FOR CAUSE. It simply means the
observance of both procedural and substantive due process in cases of removal of officers or employees
of the civil service. When SECTION 16 speaks, therefore, of separation from the service NOT FOR
CAUSE, it can only mean the diametrical opposite. The constitutional intent to exempt the separation of
civil service employees pursuant to Proclamation No. 3 from the operation of Article IX-B, Section 2(3),
becomes readily apparent. A distinction is explicitly made between removal FOR CAUSE, which as
aforestated, requires due process, and dismissal NOT FOR CAUSE, which implies that the latter is not
bound by the "fetters' of due process.

It is obviously for that reason that Section 16 grants separation pay and retirement benefits to those
separated NOT FOR CAUSE but as a result of the reorganization precisely to soften the impact of the
non-observance of due process. "What is envisioned in Section 16 is not a remedy for arbitrary removal
of civil servants enjoying security of tenure but some form of relief for members of the career civil service
who may have been or may be legally but involuntarily 'reorganized out' of the service or may have
voluntarily resigned pursuant to the reorganization policy" (ibid., p. 615).

Reorganization Pursuant to Proclamation No. 3 to Continue Transitorily Even After Ratification

By its very context, SECTION 16 envisages the continuance of the reorganization pursuant to
Proclamation No. 3 even after ratification of the Constitution and during the transition period. The two [2]
stages contemplated, namely, (1) the stage before and (2) after ratification, refer to the same nature of
separation "NOT FOR CAUSE but as a result of Proclamation No. 3." No valid reason has been
advanced for a different treatment after ratification as the majority opines i.e., that separation NOT FOR
CAUSE is allowed before ratification but that, thereafter, separation can only be FOR CAUSE.

A fundamental principle of Constitutional construction is to assure the realization of the purpose of the
framers of the organic law and of the people who adopted it.

That the reorganization commenced pursuant to Proclamation No. 3 was envisioned to continue even
after the ratification of the 1987 Constitution, at least transitorily, is evident from the intent of its authors
discoverable from their deliberations held on 3 October 1986 and evincing their awareness that such
reorganization had not as yet been fully implemented. Thus:

Mr. PADILLA. Mr. Presiding Officer, on lines 2 to 5 is the clause 'pursuant to the provisions of Article III
of Proclamation No. 3, issued on March 25, 1986, and the reorganization.' Are those words necessary?
Can we not just say 'result of the reorganization following the ratification of this Constitution'? In other
words, must we make specific reference to Proclamation No. 3?

Mr. SUAREZ. Yes. I think the committee feels that is necessary, because in truth there has been a
reorganization by virtue of Proclamation No. 3. In other words, there are two stages of reorganization
covered by this section.

Mr. PADILIA.

I understand there is a reorganization committee headed by a minister?

Mr. SUAREZ.

Philippine Commission on Government Reorganization.

Mr. PADILLA. But whether that has already been implemented or not, I do not believe in it. There has
been a plan, but I do not think it has been implemented. If we want to include any previous reorganization
after or before the ratification, why do we not just say reorganization before or after the ratification' to
simplify the provision and eliminate two-and-a-half sentences that may not be necessary? And as a result
of the reorganization, if the committee feels there has been reorganization before ratification and there be
reorganization after, we just say 'before or after the ratification of this Constitution.

Mr. SUAREZ. Something like this as a result of the reorganization effected before or after the ratification
of the Constitution on the understanding, with the statement into the records, that this would be applicable
to those reorganized out pursuant to the Freedom Constitution also.

Mr. PADILLA. That is understood if there has been a reorganization before the ratification or a
reorganization after the ratification." (RECORDS of the Constitutional Commission, Vol. 5, p. 416)
(Emphasis provided)

It should also be recalled that the deadline for the reorganization under Proclamation No. 3 was "one year
from February 25, 1986" (Article III, Section 2), or up to February 24, 1987. Executive Order No. 17 itself
provided that the review/assessment of personnel be completed "not later than February 24, 1987." But,
confronted with the reality of the ratification of the Constitution before that deadline without reorganization
having been completed, there was need for a provision allowing for its continuance even after ratification
and until completed. It was also to beat that deadline that EO 127 and similar issuances, providing for the
reorganization of departments of government, were all dated 30 January 1987 or prior to the plebiscite
held on 2 February 1987. The intent to continue and complete the reorganizations started is self- evident
in SECTION 16.

In Jose vs. Arroyo, et al. (G.R. No. 78435, August 11, 1987), which was a Petition for certiorari and
Prohibition to enjoin the implementation of Executive Order No. 127, we recognized that the
reorganization pursuant to Proclamation No. 3 as mandated by SECTION 16, was to continue even after
ratification when we stated:

The contention of petitioner that EO No. 127 is violative of the provision of the 1987 Constitution
guaranteeing career civil service employees security of tenure overlooks the provision of Section 16, Art.
XVIII (Transitory Provisions) which explicitly authorizes the removal of career civil service employees not
for cause but as a result of the reorganization pursuant to Proclamation No. 3 dated March 25, 1986 and
the reorganization following the ratification of the Constitution. By virtue of said provision, the
reorganization of the Bureau of Customs under Executive Order No. 127 may continue even after the
ratification of this Constitution and career civil service employees may be separated from the service
without cause as a result of such reorganization. (Emphasis ours)

With due respect to the majority, we disagree with its conclusion that the foregoing pronouncement is
mere "obiter dictum."

An obiter dictum or dictum has been defined as a remark or opinion uttered, by the way. It is a statement
of the court concerning a question which was not directly before it (In re Hess 23 A. 2d. 298, 301, 20 N.J.
Misc. 12). It is language unnecessary to a decision, (a) ruling on an issue not raised, or (an) opinion of a
judge which does not embody the resolution or determination of the court, and is made without argument
or full consideration of the point (Lawson v. US, 176 F2d 49, 51, 85 U.S. App. D.C. 167). It is an
expression of opinion by the court or judge on a collateral question not directly involved, (Crescent Ring
Co. v. Travelers Indemnity Co. 132 A. 106, 107, 102 N.J. Law 85) or not necessary for the decision Du
Bell v. Union Central Life Ins. Co., 29, So. 2d 709, 712; 211 La. 167).

In the case at bar, however, directly involved and squarely before the Court was the issue of whether EO
127 violates Section 2(3) of Article IX-B of the 1987 Constitution against removal of civil service
employees except for cause." Petitioner batted for the affirmative of the proposition, while respondents
contended that "removal of civil service employees without cause is allowed not only under the
Provisional Constitution but also under the 1987 Constitution if the same is made pursuant to a
reorganization after the ratification of the Constitution."

It may be that the Court dismissed that Petition for being premature, speculative and purely anticipatory"
inasmuch as petitioner therein had "not received any communication terminating or threatening to
terminate his services." But that was only one consideration. The Court still proceeded to decide all the
issues adversatively contested by the parties, namely "1) that the expiration date of February 25, 1 987
fixed by Section 2 of Proclamation No. 3 on which said Executive order is based had already lapsed; 2)
that the Executive Order has not been published in the Official Gazette as required by Article 2 of the Civil
Code and Section 1 1 of the Revised Administrative Code; and 3) that its enforcement violates Section
2(3) of Article IX B of the 1987 Constitution against removal of civil service employees except for cause."

The ruling of the Court, therefore, on the Constitutional issues presented, particularly, the lapse of the
period mandated by Proclamation No. 3, and the validity of EO 127, cannot be said to be mere "obiter."
They were ultimate issues directly before the Court, expressly decided in the course of the consideration
of the case, so that any resolution thereon must be considered as authoritative precedent, and not a mere
dictum (See Valli v. US, 94 F2d 687 certiorari granted 58 S. Ct. 760, 303 U.S. 82 L. Ed. 1092; See also
Weedin v. Tayokichi Yamada 4 F. (2d) 455).lwph1.t Such resolution would not lose its value as a
precedent just because the disposition of the case was also made on some other ground.

.....And this rule applies as to all pertinent questions although only incidentally involved, which are
presented and decided in the regular course of the consideration of the case, and lead up to the final
conclusion (Northern Pac. Ry Co. v. Baker, D.C. Wash., 3 F. Suppl. 1; See also Wisconsin Power and
Light Co. v. City of Beloit 254 NW 119; Chase v. American Cartage Co. 186 N.W. 598; City of Detroit, et
al. v. Public Utilities Comm. 286 N.W. 368). Accordingly, a point expressly decided does not lose its value
as a precedent because the disposition of the case is made on some other ground. (Wagner v. Com
Products Refining Co. D.C. N.J. 28 F 2d 617) Where a case presents two or more points, any one of
which is sufficient to determine the ultimate issue, but the court actually decides all such points, the case
is an authoritative precedent as to every point decided, and none of such points can be regarded as
having merely the status of a dictum (See U.S. Title Insurance and Trust Co., Cal., 44 S. Ct. 621, 265
U.S. 472, 68 L. Ed. 1110; Van Dyke v. Parker 83 F. (2d) 35) and one point should not be denied authority
merely because another point was more dwelt on and more fully argued and considered. (Richmond
Screw Anchor Co. v. U.S. 48 S. Ct. 194, 275 U.S. 331, 72 L. Ed. 303)"

It is true that in Palma-Fernandez vs. de la Paz (G.R. No. 78946, April 15, 1986, 160 SCRA 751), we had
stated:

The argument that, on the basis of this provision (Section 26 of Executive Order No. 119, or the
'Reorganization Act of the Ministry of Health'), petitioner's term of office ended on 30 January 1987 and
that she continued in the performance of her duties merely in a hold-over capacity and could be
transferred to another position without violating any of her legal rights, is untenable. The occupancy of a
position in a hold-over capacity was conceived to facilitate reorganization and would have lapsed on 25
February 1987 (under the Provisional Constitution), but advanced to 2 February 1987 when the 1987
Constitution became effective (De Leon, et al., vs. Hon. Esguerra, et al., G.R. No. 78059, 31 August 1987,
153 SCRA 602). After the d date the provisions of the latter on security of tenure govern.

The factual situation in the two cases, however, radically differ. In the cited case, Dra. Palma-Fernandez,
the petitioner, had already been extended a permanent appointment as Assistant Director for Professional
Services of the East Avenue Medical Center but was still being transferred by the Medical Center Chief to
the Research Office against her consent. Separation from the service as a result of reorganization was
not involved. The question then arose as to whether the latter official had the authority to transfer or
whether the power to appoint and remove subordinate officers and employees was lodged in the

Secretary of Health. Related to that issue was the vital one of whether or not her transfer, effected on 29
May 1987, was tantamount to a removal without cause. Significant, too, is the fact that the transfer was
basically made "in the interest of the service" pursuant to Section 24(c) of PD No. 807, or the Civil Service
Decree, and not because she was being reorganized out by virtue of EO 119 or the "Reorganization Act of
the Ministry of Health," although the said Act was invoked after the fact. And so it was that SECTION 16
was never mentioned, much less invoked in the Palma-Fernandez case.

Finally, on this point, it is inaccurate for the majority to state that there were no reorganization orders after
ratification. There were, namely, EO 181 (Reorganization Act of the Civil Service Commission), June 1,
1987; EO 193 (Reorganization Act of the Office of Energy Affairs), June 10, 1987; EO 230
(Reorganization Act of NEDA), July 22, 1987; EO 262 (Reorganization Act of the Department of Local
Government), July 25, 1987; EO 297 (Reorganization Act of the Office of the Press Secretary), July 25,
1987.

The Element of Good Faith

The majority concedes that reorganization can be undertaken provided it be in good faith but concludes
that Commissioner Mison was not in good faith.

The aforesaid conclusion is contradicted by the records.

Executive Order No. 127, dated 30 January 1987, specifically authorized the reorganization of the Bureau
of Customs "structurally and functionally" and provided for the abolition of all units and positions thereof
not included in the structural organization S election 55).

As stated heretofore, it was the former Commissioner of Customs, Alexander A. Padilla who, on 24 May
1987, transmitted to the Department of Finance for approval the proposed "position structure and staffing
pattern" of the Bureau of Customs. This was approved by the Department of Finance. Thereafter, it was
transmitted to and approved by the Department of Budget and Management on 7 September 1987 for
implementation. Under the old staffing pattern, there were 7,302 positions while under the new staffing
pattern, there are 6,530 positions.

On 2 October 1987 "Malacanang Memorandum Re: Guidelines on the Implementation of Reorganization

Executive Orders" provided:

By October 21, 1987, all employees covered by the Executive orders for each agency on reorganization
shall be:

a.

informed of their reappointment, or

b.

offered another position in the same department or agency, or

c.

informed of their termination. (emphasis supplied)

On 25 November 1987 Commissioner Mison asked for and was granted by the President an extension up
to February 1988 within which to completely undertake the reorganization of the Bureau of Customs.

On 6 January 1988, he issued Bureau of Customs Memorandum "Re Guidelines on the Implementation
of Reorganization Executive Orders" reiterating the above- quoted portion of the Malacanang
Memorandum of 2 October 1987. Pursuant thereto, on 28 January 1988, Commissioner Mison addressed
uniform letters of termination to the employees listed on pages 15, 16 and 17 of the majority opinion,
effective on 28 February 1988, within the extended period granted.

The records further show that upon Commissioner Mison's official inquiry, Secretary of Justice Sedfrey A.
Ordo;ez, rendered the following Opinion:

. . . It is believed that customs employees who are reorganized out in the course of the implementation of
E.O. No. 127 (reorganizing the Department of Finance) need not be informed of the nature and cause of
their separation from the service. It is enough that they be 'informed of their termination' pursuant to
section 1(c) of the Memorandum dated October 2, 1987 of President Aquino, which reads:

1.
By October 21, 1987, all employees covered by the Executive orders for each agency on
reorganization shall be:

xxx

c)

xxx

xxx

Informed of their terminations.

The constitutional mandate that 'no officer or employee of the civil service shall be renewed or suspended
except for cause as provided by law' (Sec. 2(4) (sic), Article IX-B of the 1987 Constitution) does not apply
to employees who are separated from office as a result of the reorganization of that Bureau as directed in
Executive Order No. 127.

xxx

xxx

xxx

Regarding your (third) query, the issue as to the constitutionality of Executive Order No. 127 is set at rest,
after the Supreme Court resolved to dismiss the petition for certiorari questioning its enforceability, for
lack of merit (see Jose vs. Arroyo, et al., supra). (Opinion No. 41, s. 1988, March 3, 1988) (Emphasis
supplied)

The former Chairman of the Civil Service Commission, Celerina G. Gotladera likewise periodically
consulted by Commissioner Mison, also expressed the opinion that "it is not a prerequisite prior to the
separation of an employee pursuant to reorganization that he be administratively charged." (Annex 16, p.
411, Rollo, G.R. No. 85310)

Moreover, the records show that the final selection and placement of personnel was done by a Placement
Committee, one of whose members is the Head of the Civil Service Commission Field Office, namely,
Mrs. Purificacion Cuerdo The appointment of employees made by Commissioner Mison was based on the
list approved by said Placement Committee.

But the majority further faults Mison for defying the President's directive to halt further layoffs as a
consequence of reorganization, citing OP Memo of 14 October 1987, reading:

Further to the Memorandum dated October 2, 1987 on the same subject, I have ordered that there will be
no further layoffs this year of personnel as a result of the government reorganization. (p. 45, Decision)

The foregoing, however, must be deemed superseded by later developments, namely, the grant to
Commissioner Mison by the President on 22 December 1987 of a grace period until the end of February
1988 within which to completely undertake the reorganization of the Bureau of Customs, which was, in
fact, accomplished by 28 February 1988.

To further show lack of good faith, the majority states that Commissioner Mison failed to observe the
procedure laid down by EO 17, supra, directing inter alia that a notice of separation be issued to an
employee to be terminated indicating therein the reason/s or ground/s for such separation. That
requirement, however, does not appear in Section 59 of EO 127, which provides on the contrary "that
those incumbents whose positions are not included in the new position structure and staffing pattern of
the Ministry or who are not reappointed shall be deemed separated from the service." The right granted
by EO 17 to an employee to be informed of the ground for his separation must be deemed to have been
revoked by the repealing clause of EO 127 (Section 67) providing that "all laws, ordinances or parts
thereof, which are inconsistent with this Executive Order, are hereby repealed and modified accordingly."

Moreover, Section 11 of EO 17 explicitly excepts from its coverage a reorganization pursuant to EO 5.

Thus

The Executive Order shall not apply to elective officials or those designated to replace them, presidential
appointees, casual and contractual employees, or officials and employees removed pursuant to
desciplinary proceedings under the Civil Service law and rules, and to those laid off as a result of
reorganization undertaken pursuant to Executive Order No. 5. (Emphasis ours)

That EO 127 was issued pursuant to or in implementation of EO 5, is shown by its introductory portion
reading:

Recalling that the reorganization of the government is mandated expressly by Article II, Section 1 (a) and
Article III of the Freedom Constitution;

Having in mind that pursuant to Executive order No. 5 (1986), it is directed that the necessary and proper
changes in the organizational and functional structures of the government, its agencies and
instrumentalities, be effected in order to promote efficiency and effectiveness in the delivery of public
service; (Italics supplied)

Constitutionality of Republic Act No. 6656

The majority also relies on Republic Act No. 6656 entitled an "Act to Protect the Security of Tenure of Civil
Service Officers and Employees in the Implementation of Government Reorganization," particularly
Section 2 thereof, to test the good faith of Commissioner Mison.

We are of the view, however, that in providing for retroactivity in its Section 13, RA 6656 clashes frontally
with SECTION 16.

1)
SECTION 16 clearly recognizes that career service employees separated from the service by
reason of the "complete reorganization of the government" pursuant to Proclamation No. 3 may be
separated NOT FOR CAUSE. And yet, RA 6656 requires the exact opposite separation FOR CAUSE.
It would not be remiss to quote the provision again:

SEC. 2. No officer or employee in the career service shall be removed except for a valid cause and after
due notice and hearing. A valid cause for removal exist when, pursuant to a bona fide reorganization, a
position has been abolished or rendered redundant or there is a need to merge, divide, or consolidate
positions in order to meet the exigencies of the service, or other lawful causes allowed by the Civil
Service law. The existence of any or some of the following circumstances may be considered as evidence
of bad faith in the removals made as a result of reorganization, giving rise to a claim for reinstatement or
reappointment by an aggrieved party: (a) Where there is a significant increase in the number of positions
in the new staffing pattern of the department or agency concerned; (b) Where an office is abolished and
another performing substantially the same functions is created; (c) Where incumbents are replaced by
those less qualified in terms of status of appointment, performance and merit; (d) Where there is a
reclassification of offices in the department or agency concerned and the reclassified offices perform
substantially the same functions as the original offices; (e) Where the removal violates the order of
separation provided in Section 3 hereof. (Republic Act No. 6156)

The standards laid down are the "traditional" criteria for removal of employees from the career service,
e.g. valid cause, due notice and hearing, abolition of, or redundancy of offices. Proclamation No. 3, on the
other hand, effectuates the "progressive" type of reorganization dictated by the exigencies of the historical
and political upheaval at the time. The "traditional" type is limited in scope. It is concerned with the
individual approach where the particular employee involved is charged administratively and where the
requisites of notice and hearing have to be observed. The "progressive" kind of reorganization, on the
other hand, is the collective way. It is wider in scope, and is the reorganization contemplated under
SECTION 16.

2)
By providing for reinstatement in its Section 9, RA 6656 adds a benefit not included in SECTION
16. The benefits granted by the latter provision to employees separated NOT FOR CAUSE but as a
consequence of reorganization are "separation pay, retirement, and other benefits accruing to them under
the laws of general application in force at the time of their separation." The benefit of reinstatement is not
included. RA 6656, however, allows reinstatement. That it cannot do because under SECTION 16, it is not
one of the laws "in force at the time of their separation."

The Constitution is the paramount law to which all laws must conform. It is from the Constitution that all
statutes must derive their bearings. The legislative authority of the State must yield to the expression of
the sovereign will. No statutory enactment can disregard the Charter from which it draws its own
existence (Phil. Long Distance Telephone Co. v. Collector of Internal Revenue, 90 Phil. 674 [1952]). But,
that is exactly what RA 6656 does in providing for retroactivity it disregards and contravenes a
Constitutional imperative. To save it, it should be applied and construed prospectively and not
retroactively notwithstanding its explicit provision. Then, and only then, would it make good law.

Effects of Reorganization

To be sure, the reorganization could effect the tenure of members of the career service as defined in
Section 5, Article IV of Presidential Decree No. 807, and may even result in the separation from the office
of some meritorious employees. But even then, the greater good of the greatest number and the right of
the citizenry to a good government, and as they themselves have mandated through the vehicle of
Proclamation No. 3, provide the justification for the said injury to the individual. In terms of values, the
interest of an employee to security of tenure must yield to the interest of the entire populace and to an
efficient and honest government.

But a reorganized employee is not without rights. His right lies in his past services, the entitlement to
which must be provided for by law. EO 127 provides for the same in its Section 59, and so does
SECTION 16 when the latter specified that career civil service employees separated from the service not
for cause:

shall be entitled to appropriate separation pay and to retirement and other benefits accruing to them
under the laws of general application in force at the time of their separation. In lieu thereof, at the option
of the employees, they may be considered for employment in the Government or in any of its
subdivisions, instrumentalities, or agencies, including government-owned or controlled corporations and
their subsidiaries. This provision also applies to career officers whose resignation, tendered in line with
the existing policy, has been accepted.

This is a reward for the employee's past service to the Government. But this is all There is no vested
property right to be reemployed in a reorganized office.

The right to an office or to employment with government or any of its agencies is not a vested property
right, and removal therefrom will not support the question of due process" Yantsin v. Aberdeen, 54 Wash
2d 787, 345 P 2d 178). A civil service employee does not have a constitutionally protected right to his
position, which position is in the nature of a public office, political in character and held by way of grant or
privilege extended by government; generally he has been held to have no property right or vested interest
to which due process guaranties extend (See Taylor v. Beckham 178 U.S. 548, 44 L Ed. 1187; Angilly v.

US CA2 NY 199 F 2d 642; People ex. rel. Baker v. Wilson, 39 III App 2d 443, 189 NE 2d 1; Kelliheller v.
NY State Civil Service Com 21 Misc 2d 1034, 194 NYS 2d 89).

To ensure, however, that no meritorious employee has been separated from the service, there would be
no harm, in fact, it could do a lot of good, if the Commissioner of Customs reviews the evaluation and
placements he has so far made and sees to it that those terminated are included in a consolidated list to
be given preference by departments who are recruiting (Section 2[a], BOC Memorandum, January
6,1988).

Conclusion

Premises considered, and subject to the observation hereinabove made, it is our considered view that the
separation from the service "NOT FOR CAUSE but as a result of the reorganization pursuant to
Proclamation No. 3 dated March 25, 1986" of the affected officers and employees of the Bureau of
Customs should be UPHELD, and the Resolutions of the Civil Service Commission, dated 30 June 1988,
20 September 1988, and 16 November 1988 should be SET ASIDE for having been issued in grave
abuse of discretion.

Republic Act No. 6656, in so far as it provides for retroactivity, should be declared UNCONSTITUTIONAL
for being repugnant to the letter and spirit of Section 16, Article XVIII of the 1987 Constitution.

Fernan, C.J., Narvasa, Feliciano, Regalado, JJ., concur.

G.R. No. 83578 March 16, 1989

THE PRESIDENTIAL ANTI-DOLLAR SALTING TASK FORCE, petitioner,

vs.
HONORABLE COURT OF APPEALS, HONORABLE TEOFILO L, GUADIZ, JR.,Presiding Judge,
REGIONAL TRIAL COURT, Branch 147: NCR (MAKATI), and KARAMFIL IMPORT-EXPORT CO., INC.,
respondents.

K. V. Faylona & Associates for respondents.

SARMIENTO, J.:

The petitioner, the Presidential Anti-Dollar Salting Task Force, the President's arm assigned to investigate
and prosecute so-called "dollar salting" activities in the country (per Presidential Decree No. 1936 as
amended by Presidential Decree No. 2002), asks the Court to hold as null and void two Resolutions of the
Court of Appeals, dated September 24, 1987 1 and May 20, 1988, 2 reversing its Decision, dated October
24, 1986. 3 The Decision set aside an Order, dated April 16, 1985, of the Regional Trial Court, 4 as well
as its Order, dated August 21, 1985. The Resolution, dated September 24, 1987 disposed of, and
granted, the private respondent Karamfil Import-Export Co., Inc.'s motion for reconsideration of the
October 24, 1986 Decision; the Resolution dated May 20, 1988, in turn, denied the petitioner's own
motion for reconsideration.

The facts are not in controversy. We quote:

On March 12, 1985, State Prosecutor Jose B. Rosales, who is assigned with the Presidential Anti-Dollar
Salting Task Force hereinafter referred to as PADS Task Force for purposes of convenience, issued
search warrants Nos. 156, 157, 158, 159, 160 and 161 against the petitioners Karamfil Import-Export Co.,
Inc., P & B Enterprises Co., Inc., Philippine Veterans Corporation, Philippine Veterans Development
Corporation, Philippine Construction Development Corporation, Philippine Lauan Industries Corporation,
Inter-trade Development (Alvin Aquino), Amelili U. Malaquiok Enterprises and Jaime P. Lucman
Enterprises.

The application for the issuance of said search warrants was filed by Atty. Napoleon Gatmaytan of the
Bureau of Customs who is a deputized member of the PADS Task Force. Attached to the said application
is the affidavit of Josefin M. Castro who is an operative and investigator of the PADS Task Force. Said
Josefin M. Castro is likewise the sole deponent in the purported deposition to support the application for
the issuance of the six (6) search warrants involved in this case. The application filed by Atty. Gatmaytan,
the affidavit and deposition of Josefin M. Castro are all dated March 12, 1985. 5

Shortly thereafter, the private respondent (the petitioner below) went to the Regional Trial Court on a
petition to enjoin the implementation of the search warrants in question. 6 On March 13, 1985, the trial
court issued a temporary restraining order [effective "for a period of five (5) days notice " 7 ] and set the
case for hearing on March 18, 1985.

In disposing of the petition, the said court found the material issues to be:

1)

Competency of this Court to act on petition filed by the petitioners;

2)

Validity of the search warrants issued by respondent State Prosecutor;

3)
Whether or not the petition has become moot and academic because all the search warrants
sought to be quashed had already been implemented and executed. 8

On April 16, 1985, the lower court issued the first of its challenged Orders, and held:

WHEREFORE, in view of all the foregoing, the Court hereby declares Search Warrant Nos. 156, 157,
158, 159, 160, and 161 to be null and void. Accordingly, the respondents are hereby ordered to return and
surrender immediately all the personal properties and documents seized by them from the petitioners by
virtue of the aforementioned search warrants.

SO ORDERED. 9

On August 21, 1985, the trial court denied reconsideration.

On April 4, 1986, the Presidential Anti-Dollar Salting Task Force went to the respondent Court of Appeals
to contest, on certiorari, the twin Order(s) of the lower court.

In ruling initially for the Task Force, the Appellate Court held:

Herein petitioner is a special quasi-judicial body with express powers enumerated under PD 1936 to
prosecute foreign exchange violations defined and punished under P.D. No. 1883.

The petitioner, in exercising its quasi-judicial powers, ranks with the Regional Trial Courts, and the latter in
the case at bar had no jurisdiction to declare the search warrants in question null and void.

Besides as correctly pointed out by the Assistant Solicitor General the decision of the Presidential AntiDollar Salting Task Force is appealable to the Office of the President.10

On November 12, 1986, Karamfil Import-Export Co., Inc. sought a reconsideration, on the question
primarily of whether or not the Presidential Anti-Dollar Salting Task Force is "such other responsible
officer' countenanced by the 1973 Constitution to issue warrants of search and seizure.

As we have indicated, the Court of Appeals, on Karamfil's motion, reversed itself and issued its
Resolution, dated September 1987, and subsequently, its Resolution, dated May 20, 1988, denying the
petitioner's motion for reconsideration.

In its petition to this Court, the petitioner alleges that in so issuing the Resolution(s) above-mentioned, the
respondent Court of Appeals "committed grave abuse of discretion and/or acted in excess of its appellate
jurisdiction," 11 specifically:

a)
In deviating from the settled policy and rulings of the Supreme Court that no Regional Trial Courts
may countermand or restrain the enforcement of lawful writs or decrees issued by a quasi-judicial body of
equal and coordinate rank, like the PADS Task Force;

b)
For resorting to judicial legislation to arrive at its erroneous basis for reconsidering its previous
Decision dated October 24, 1986 (see Annex "I") and thus promulgated the questioned Resolutions
(Annexes "A" and "B"), which violated the constitutional doctrine on separation of powers;

c)
In not resolving directly the other important issues raised by the petitioner in its Petition in CAG.R. No. 08622-SP despite the fact that petitioner has demonstrated sufficiently and convincingly that
respondent RTC, in issuing the questioned Orders in Special Proceeding No. M-624 (see Annexes "C"
and 'D"), committed grave abuse of discretion and/or acted in excess of jurisdiction:

1.
In ruling that (a) the description of the things to be seized as stated in the contested search
warrant were too general which allegedly render the search warrants null and void; (b) the applications for
the contested search warrants actually charged two offenses in contravention of the 2nd paragraph,
Section 3, Rule 126 of the Rules of Court; and (c) this case has not become moot and academic, even if
the contested search warrants had already been fully implemented with positive results; and

2.
In ruling that the petitioner PADS Task Force has not been granted under PD 1936 'judicial or
quasi-judicial jurisdiction. 12

We find, upon the foregoing facts, that the essential questions that confront us are- (i) is the Presidential
Anti-Dollar Salting Task Force a quasi-judicial body, and one co-equal in rank and standing with the
Regional Trial Court, and accordingly, beyond the latter's jurisdiction; and (ii) may the said presidential
body be said to be "such other responsible officer as may be authorized by law" to issue search warrants
under the 1973 Constitution questions we take up seriatim.**

In submitting that it is a quasi-judicial entity, the petitioner states that it is endowed with "express powers
and functions under PD No. 1936, to prosecute foreign exchange violations as defined and punished

under PD No. 1883." 13 "By the very nature of its express powers as conferred by the laws," so it is
contended, "which are decidedly quasi-judicial or discretionary function, such as to conduct preliminary
investigation on the charges of foreign exchange violations, issue search warrants or warrants of arrest,
hold departure orders, among others, and depending upon the evidence presented, to dismiss the
charges or to file the corresponding information in court of Executive Order No. 934, PD No. 1936 and its
Implementing Rules and Regulations effective August 26, 1984), petitioner exercises quasi-judicial power
or the power of adjudication ." 14

The Court of Appeals, in its Resolution now assailed, 15 was of the opinion that "[t]he grant of quasijudicial powers to petitioner did not diminish the regular courts' judicial power of interpretation. The right to
interpret a law and, if necessary to declare one unconstitutional, exclusively pertains to the judiciary. In
assuming this function, courts do not proceed on the theory that the judiciary is superior to the two other
coordinate branches of the government, but solely on the theory that they are required to declare the law
in every case which come before them." 16

This Court finds the Appellate Court to be in error, since what the petitioner puts to question is the
Regional Trial Court's act of assuming jurisdiction over the private respondent's petition below and its
subsequent countermand of the Presidential Anti-Dollar Salting Task Force's orders of search and
seizure, for the reason that the presidential body, as an entity (allegedly) coordinate and co-equal with the
Regional Trial Court, was (is) not vested with such a jurisdiction. An examination of the Presidential AntiDollar Salting Task Force's petition shows indeed its recognition of judicial review (of the acts of
Government) as a basic privilege of the courts. Its objection, precisely, is whether it is the Regional Trial
Court, or the superior courts, that may undertake such a review.

Under the Judiciary Reorganization Act of 1980, 17 the Court of Appeals exercises:

(3)
Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards
of Regional Trial Court and quasi-judicial agencies, instrumentalities, boards or commissions, except
those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, 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. 18

xxx xxx xxx

Under the present Constitution, with respect to its provisions on Constitutional Commissions, it is
provided, in part that:

... Unless otherwise provided by this Constitution or by law, any decision, order, or ruling of each
Commission may be brought to the Supreme Court on certiorari by the aggrieved party within thirty days
from receipt of a copy thereof. 19

On the other hand, Regional Trial Courts have exclusive original jurisdiction:

(6)
In all cases not within the exclusive jurisdiction of any court, tribunal, person or body exercising
judicial or quasi-judicial functions. 20

xxx

xxx

xxx

Likewise:

... The Supreme Court may designate certain branches of the Regional Trial Court to handle exclusively
criminal cases, juvenile and domestic relations cases, agrarian case, urban land reform cases which do
not fall under the jurisdiction of quasi- judicial bodies and agencies and/or such other special cases as the
Supreme Court may determine in the interest of a speedy and efficient administration of justice. 21

xxx xxx xxx

Under our Resolution dated January 11, 1983: 22

... The appeals to the Intermediate Appellate Court [now, Court of Appeals] from quasi-judicial bodies shall
continue to be governed by the provisions of Republic Act No. 5434 insofar as the same is not
inconsistent with the provisions of B.P. Blg. 129. 23

The pertinent provisions of Republic Act No. 5434 are as follows:

SECTION 1. Appeals from specified agencies. Any provision of existing law or Rule of Court to the
contrary notwithstanding, parties aggrieved by a final ruling, award, order, decision, or judgment of the
Court of Agrarian Relations; the Secretary of Labor under Section 7 of Republic Act Numbered Six
hundred and two, also known as the "Minimum Wage Law"; the Department of Labor under Section 23 of
Republic Act Numbered Eight hundred seventy-five, also known as the "Industrial Peace Act"; the Land
Registration Commission; the Securities and Exchange Commission; the Social Security Commission; the
Civil Aeronautics Board; the Patent Office and the Agricultural Inventions Board, may appeal therefrom to
the Court of Appeals, within the period and in the manner herein provided, whether the appeal involves
questions of fact, mixed questions of fact and law, or questions of law, or all three kinds of questions.
From final judgments or decisions of the Court of Appeals, the aggrieved party may appeal by certiorari to
the Supreme Court as provided in Rule 45 of the Rules of Court. 24

Because of subsequent amendments, including the abolition of various special courts, 25 jurisdiction over
quasi-judicial bodies has to be, consequently, determined by the corresponding amendatory statutes.
Under the Labor Code, decisions and awards of the National Labor Relations Commission are final and
executory, but, nevertheless, 'reviewable by this Court through a petition for certiorari and not by way of
appeal." 26

Under the Property Registration Decree, decisions of the Commission of Land Registration, en consults,
are appealable to the Court of Appeals. 27

The decisions of the Securities and Exchange Commission are likewise appealable to the Appellate
Court, 28 and so are decisions of the Social Security Commission.29

As a rule, where legislation provides for an appeal from decisions of certain administrative bodies to the
Court of Appeals, it means that such bodies are co-equal with the Regional Trial Courts, in terms of rank
and stature, and logically, beyond the control of the latter.

As we have observed, the question is whether or not the Presidential Anti-Dollar Salting Task Force is, in
the first place, a quasi-judicial body, and one whose decisions may not be challenged before the regular
courts, other than the higher tribunals the Court of Appeals and this Court.

A quasi-judicial body has been defined as "an organ of government other than a court and other than a
legislature, which affects the rights of private parties through either adjudication or rule making." 30 The
most common types of such bodies have been listed as follows:

(1)
Agencies created to function in situations wherein the government is offering some gratuity, grant,
or special privilege, like the defunct Philippine Veterans Board, Board on Pensions for Veterans, and
NARRA, and Philippine Veterans Administration.

(2)
Agencies set up to function in situations wherein the government is seeking to carry on certain
government functions, like the Bureau of Immigration, the Bureau of Internal Revenue, the Board of
Special Inquiry and Board of Commissioners, the Civil Service Commission, the Central Bank of the
Philippines.

(3)
Agencies set up to function in situations wherein the government is performing some business
service for the public, like the Bureau of Posts, the Postal Savings Bank, Metropolitan Waterworks &
Sewerage Authority, Philippine National Railways, the Civil Aeronautics Administration.

(4)
Agencies set up to function in situations wherein the government is seeking to regulate business
affected with public interest, like the Fiber Inspections Board, the Philippine Patent Office, Office of the
Insurance Commissioner.

(5)
Agencies set up to function in situations wherein the government is seeking under the police
power to regulate private business and individuals, like the Securities & Exchange Commission, Board of
Food Inspectors, the Board of Review for Moving Pictures, and the Professional Regulation Commission.

(6)
Agencies set up to function in situations wherein the government is seeking to adjust individual
controversies because of some strong social policy involved, such as the National Labor Relations
Commission, the Court of Agrarian Relations, the Regional Offices of the Ministry of Labor, the Social
Security Commission, Bureau of Labor Standards, Women and Minors Bureau. 31

As may be seen, it is the basic function of these bodies to adjudicate claims and/or to determine rights,
and unless its decision are seasonably appealed to the proper reviewing authorities, the same attain
finality and become executory. A perusal of the Presidential Anti-Dollar Salting Task Force's organic act,
Presidential Decree No. 1936, as amended by Presidential Decree No. 2002, convinces the Court that the
Task Force was not meant to exercise quasi-judicial functions, that is, to try and decide claims and
execute its judgments. As the President's arm called upon to combat the vice of "dollar salting" or the
blackmarketing and salting of foreign exchange, 32 it is tasked alone by the Decree to handle the
prosecution of such activities, but nothing more. We quote:

SECTION 1. Powers of the Presidential Anti-Dollar Salting Task Force.-The Presidential Anti-Dollar
Salting Task Force, hereinafter referred to as Task Force, shall have the following powers and authority:

a)
Motu proprio or upon complaint, to investigate and prosecute all dollar salting activities, including
the overvaluation of imports and the undervaluation of exports;

b)
To administer oaths, summon persons or issue subpoenas requiring the attendance and
testimony of witnesses or the production of such books, papers, contracts, records, statements of
accounts, agreements, and other as may be necessary in the conduct of investigation;

c)
To appoint or designate experts, consultants, state prosecutors or fiscals, investigators and
hearing officers to assist the Task Force in the discharge of its duties and responsibilities; gather data,
information or documents; conduct hearings, receive evidence, both oral and documentary, in all cases
involving violation of foreign exchange laws or regulations; and submit reports containing findings and
recommendations for consideration of appropriate authorities;

d)
To punish direct and indirect contempts with the appropriate penalties therefor under Rule 71 of
the Rules of Court; and to adopt such measures and take such actions as may be necessary to
implement this Decree.

xxx xxx xxx

f. After due investigation but prior to the filing of the appropriate criminal charges with the fiscal's office or
the courts as the case may be, to impose a fine and/or administrative sanctions as the circumstances
warrant, upon any person found committing or to have committed acts constituting blackmarketing or
salting abroad of foreign exchange, provided said person voluntarily admits the facts and circumstances
constituting the offense and presents proof that the foreign exchange retained abroad has already been
brought into the country.

Thereafter, no further civil or criminal action may be instituted against said person before any other
judicial regulatory or administrative body for violation of Presidential Decree No. 1883.

The amount of the fine shall be determined by the Chairman of the Presidential Anti- Dollar Salting Task
Force and paid in Pesos taking into consideration the amount of foreign exchange retained abroad, the

exchange rate differentials, uncollected taxes and duties thereon, undeclared profits, interest rates and
such other relevant factors.

The fine shall be paid to the Task Force which shall retain Twenty percent (20 %) thereof. The informer, if
any, shall be entitled to Twenty percent (20 %) of the fine. Should there be no informer, the Task Force
shall be entitle to retain Forty percent (40 %) of the fine and the balance shall accrue to the general funds
of the National government. The amount of the fine to be retained by the Task Force shall form part of its
Confidential Fund and be utilized for the operations of the Task Force . 33

The Court sees nothing in the aforequoted provisions (except with respect to the Task Force's powers to
issue search warrants) that will reveal a legislative intendment to confer it with quasi-judicial
responsibilities relative to offenses punished by Presidential Decree No. 1883. Its undertaking, as we
said, is simply, to determine whether or not probable cause exists to warrant the filing of charges with the
proper court, meaning to say, to conduct an inquiry preliminary to a judicial recourse, and to recommend
action "of appropriate authorities". It is not unlike a fiscal's office that conducts a preliminary investigation
to determine whether or not prima facie evidence exists to justify haling the respondent to court, and yet,
while it makes that determination, it cannot be said to be acting as a quasi-court. For it is the courts,
ultimately, that pass judgment on the accused, not the fiscal.

It is not unlike the Presidential Commission on Good Government either, the executive body appointed to
investigate and prosecute cases involving "ill-gotten wealth". It had been vested with enormous powers,
like the issuance of writs of sequestration, freeze orders, and similar processes, but that did not, on
account thereof alone, make it a quasi-judicial entity as defined by recognized authorities. It cannot
pronounce judgement of the accused's culpability, the jurisdiction to do which is exclusive upon the
Sandiganbayan. 34

If the Presidential Anti-Dollar Salting Task Force is not, hence, a quasi-judicial body, it cannot be said to
be co-equal or coordinate with the Regional Trial Court. There is nothing in its enabling statutes that
would demonstrate its standing at par with the said court.

In that respect, we do not find error in the respondent Court of Appeal's resolution sustaining the
assumption of jurisdiction by the court a quo.

It will not do to say that the fact that the Presidential Task Force has been empowered to issue warrants
of arrest, search, and seizure, makes it, ergo, a "semi-court". Precisely, it is the objection interposed by
the private respondent, whether or not it can under the 1973 Charter, issue such kinds of processes.

It must be observed that under the present Constitution, the powers of arrest and search are exclusive
upon judges. 35 To that extent, the case has become moot and academic. Nevertheless, since the
question has been specifically put to the Court, we find it unavoidable to resolve it as the final arbiter of
legal controversies, pursuant to the provisions of the 1973 Constitution during whose regime the case
was commenced.

Since the 1973 Constitution took force and effect and until it was so unceremoniously discarded in 1986,
its provisions conferring the power to issue arrest and search warrants upon an officer, other than a judge,

by fiat of legislation have been at best controversial. In Lim v. Ponce de Leon, 36 a 1975 decision, this
Court ruled that a fiscal has no authority to issue search warrants, but held in the same vein that, by virtue
of the responsible officer" clause of the 1973 Bill of Rights, "any lawful officer authorized by law can issue
a search warrant or warrant of arrest.37 Authorities, however, have continued to express reservations
whether or not fiscals may, by statute, be given such a power. 38

Less than a year later, we promulgated Collector of Customs v. Villaluz, 39 in which we categorically
averred: Until now only the judge can issue the warrant of arrest." 40 "No law or presidential decree has
been enacted or promulgated vesting the same authority in a particular responsible officer ." 41

Apparently, Villaluz had settled the debate, but the same question persisted following this Courts
subsequent rulings upholding the President's alleged emergency arrest powers .42 [Mr. Justice Hugo
Gutierrez would hold, however, that a Presidential Commitment Order (PCO) is (was) not a species of
"arrest" in its technical sense, and that the (deposed) Chief Executive, in issuing one, does not do so in
his capacity as a "responsible officer" under the 1973 Charter, but rather, as Commander-in-Chief of the
Armed Forces in times of emergency, or in order to carry out the deportation of undesirable aliens.43 In
the distinguished Justice's opinion then, these are acts that can be done without need of judicial
intervention because they are not, precisely, judicial but Presidential actions.]

In Ponsica v. Ignalaga,44 however, we held that the mayor has been made a "responsible officer' by the
Local Government Code, 45 but had ceased to be one with the approval of the 1987 Constitution
according judges sole authority to issue arrest and search warrants. But in the same breath, we did not
rule the grant under the Code unconstitutional based on the provisions of the former Constitution. We
were agreed, though, that the "responsible officer" referred to by the fundamental law should be one
capable of approximating "the cold neutrality of an impartial judge." 46

In striking down Presidential Decree No. 1936 the respondent Court relied on American jurisprudence,
notably, Katz v. United States, 47 Johnson v. United States, 48 and Coolidge v. New Hampshire 49 in
which the American Supreme Court ruled that prosecutors (like the petitioner) cannot be given such
powers because of their incapacity for a "detached scrutiny" 50 of the cases before them. We affirm the
Appellate Court.

We agree that the Presidential Anti-Dollar Salting Task Force exercises, or was meant to exercise,
prosecutorial powers, and on that ground, it cannot be said to be a neutral and detached "judge" to
determine the existence of probable cause for purposes of arrest or search. Unlike a magistrate, a
prosecutor is naturally interested in the success of his case. Although his office "is to see that justice is
done and not necessarily to secure the conviction of the person accused," 51 he stands, invariably, as the
accused's adversary and his accuser. To permit him to issue search warrants and indeed, warrants of
arrest, is to make him both judge and jury in his own right, when he is neither. That makes, to our mind
and to that extent, Presidential Decree No. 1936 as amended by Presidential Decree No. 2002,
unconstitutional.

It is our ruling, thus, that when the 1973 Constitution spoke of "responsible officer" to whom the authority
to issue arrest and search warrants may be delegated by legislation, it did not furnish the legislator with
the license to give that authority to whomsoever it pleased. It is to be noted that the Charter itself makes
the qualification that the officer himself must be "responsible". We are not saying, of course, that the
Presidential Anti-Dollar Salting Task Force (or any similar prosecutor) is or has been irresponsible in
discharging its duty. Rather, we take "responsibility", as used by the Constitution, to mean not only skill

and competence but more significantly, neutrality and independence comparable to the impartiality
presumed of a judicial officer. A prosecutor can in no manner be said to be possessed of the latter
qualities.

According to the Court of Appeals, the implied exclusion of prosecutors under the 1973 Constitution was
founded on the requirements of due process, notably, the assurance to the respondent of an unbiased
inquiry of the charges against him prior to the arrest of his person or seizure of his property. We add that
the exclusion is also demanded by the principle of separation of powers on which our republican structure
rests. Prosecutors exercise essentially an executive function (the petitioner itself is chaired by the
Minister, now Secretary, of Trade and Industry), since under the Constitution, the President has pledged
to execute the laws. 52 As such, they cannot be made to issue judicial processes without unlawfully
impinging the prerogative of the courts.

At any rate, Ponsica v. Ignalaga should foreclose all questions on the matter, although the Court hopes
that this disposition has clarified a controversy that had generated often bitter debates and bickerings.

The Court joins the Government in its campaign against the scourge of "dollar- salting", a pernicious
practice that has substantially drained the nation's coffers and has seriously threatened its economy. We
recognize the menace it has posed (and continues to pose) unto the very stability of the country, the
urgency for tough measures designed to contain if not eradicate it, and foremost, the need for cooperation
from the citizenry in an all-out campaign. But while we support the State's efforts, we do so not at the
expense of fundamental rights and liberties and constitutional safeguards against arbitrary and
unreasonable acts of Government. If in the event that as a result of this ruling, we prove to be an
"obstacle" to the vital endeavour of stamping out the blackmarketing of valuable foreign exchange, we do
not relish it and certainly, do not mean it. The Constitution simply does not leave us much choice.

WHEREFORE, the petition is DISMISSED. No costs. SO ORDERED.

G. R. No. 174350

August 13, 2008

SPOUSES BERNYL BALANGAUAN & KATHERENE BALANGAUAN, petitioners,

vs.
THE HONORABLE COURT OF APPEALS, SPECIAL NINETEENTH (19TH) DIVISION, CEBU CITY &
THE HONGKONG AND SHANGHAI BANKING CORPORATION, LTD., respondents.

DECISION

CHICO-NAZARIO, J.:

Before Us is a Petition for Certiorari under Rule 65 of the Revised Rules of Court assailing the 28 April
2006 Decision1 and 29 June 2006 Resolution2 of the Court of Appeals in CA-G.R. CEB-SP No. 00068,
which annulled and set aside the 6 April 20043 and 30 August 20044 Resolutions of the Department of
Justice (DOJ) in I.S. No. 02-9230-I, entitled "The Hongkong and Shanghai Banking Corporation v.
Katherine Balangauan, et al." The twin resolutions of the DOJ affirmed, in essence, the Resolution of the
Office of the City Prosecutor,5 Cebu City, which dismissed for lack of probable cause the criminal
complaint for Estafa and/or Qualified Estafa, filed against petitioner-Spouses Bernyl Balangauan (Bernyl)
and Katherene Balangauan (Katherene) by respondent Hong Kong and Shanghai Banking Corporation,
Ltd. (HSBC).

In this Petition for Certiorari, petitioners Bernyl and Katherene urge this Court to "reverse and set aside
the Decision of the Court of Appeals, Special nineteenth (sic) [19th] division (sic), Cebu City (sic) and
accordingly, dismiss the complaint against the [petitioners Bernyl and Katherene] in view of the absence
of probable cause to warrant the filing of an information before the Court and for utter lack of merit."6

As culled from the records, the antecedents of the present case are as follows:

Petitioner Katherene was a Premier Customer Services Representative (PCSR) of respondent bank,
HSBC. As a PCSR, she managed the accounts of HSBC depositors with Premier Status. One such client
and/or depositor handled by her was Roger Dwayne York (York).

York maintained several accounts with respondent HSBC. Sometime in April 2002, he went to respondent
HSBCs Cebu Branch to transact with petitioner Katherene respecting his Dollar and Peso Accounts.
Petitioner Katherene being on vacation at the time, York was attended to by another PCSR. While at the
bank, York inquired about the status of his time deposit in the amount of P2,500,000.00. The PCSR
representative who attended to him, however, could not find any record of said placement in the banks
data base.

York adamantly insisted, though, that through petitioner Katherene, he made a placement of the
aforementioned amount in a higher-earning time deposit. York further elaborated that petitioner Katherene
explained to him that the alleged higher-earning time deposit scheme was supposedly being offered to

Premier clients only. Upon further scrutiny and examination, respondent HSBCs bank personnel
discovered that: (1) on 18 January 2002, York pre-terminated a P1,000,000.00 time deposit; (2) there
were cash movement tickets and withdrawal slips all signed by York for the amount of P1,000,000.00; and
(3) there were regular movements in Yorks accounts, i.e., beginning in the month of January 2002,
monthly deposits in the amount of P12,500.00 and P8,333.33 were made, which York denied ever
making, but surmised were the regular interest earnings from the placement of the P2,500,000.00.

It was likewise discovered that the above-mentioned deposits were transacted using petitioner
Katherenes computer and work station using the code or personal password "CEO8." The significance of
code "CEO8," according to the bank personnel of respondent HSBC, is that, "[i]t is only Ms. Balangauan
who can transact from [the] computer in the work station CEO-8, as she is provided with a swipe card
which she keeps sole custody of and only she can use, and which she utilizes for purposes of performing
bank transactions from that computer."7

Bank personnel of respondent HSBC likewise recounted in their affidavits that prior to the filing of the
complaint for estafa and/or qualified estafa, they were in contact with petitioners Bernyl and Katherene.
Petitioner Bernyl supposedly met with them on two occasions. At first he disavowed any knowledge
regarding the whereabouts of Yorks money but later on admitted that he knew that his wife invested the
funds with Shell Company. He likewise admitted that he made the phone banking deposit to credit Yorks
account with the P12,500.00 and the P8,333.33 using their landline telephone. With respect to petitioner
Katherene, she allegedly spoke to the bank personnel and York on several occasions and admitted that
the funds were indeed invested with Shell Company but that York knew about this.

So as not to ruin its name and goodwill among its clients, respondent HSBC reimbursed York the
P2,500,000.00.

Based on the foregoing factual circumstances, respondent HSBC, through its personnel, filed a criminal
complaint for Estafa and/or Qualified Estafa before the Office of the City Prosecutor, Cebu City.

Petitioners Bernyl and Katherene submitted their joint counter-affidavit basically denying the allegations
contained in the affidavits of the aforenamed employees of respondent HSBC as well as that made by
York. They argued that the allegations in the Complaint-Affidavits were pure fabrications. Specifically,
petitioner Katherene denied 1) having spoken on the telephone with Dy and York; and 2) having admitted
to the personnel of respondent HSBC and York that she took the P2,500,000.00 of York and invested the
same with Shell Corporation. Petitioner Bernyl similarly denied 1) having met with Dy, Iigo, Cortes and
Arcuri; and 2) having admitted to them that York knew about petitioner Katherenes move of investing the
formers money with Shell Corporation.

Respecting the P12,500.00 and P8,333.33 regular monthly deposits to Yorks account made using the
code "CEO8," petitioners Bernyl and Katherene, in their defense, argued that since it was a deposit, it
was her duty to accept the funds for deposit. As regards Yorks time deposit with respondent HSBC,
petitioners Bernyl and Katherene insisted that the funds therein were never entrusted to Katherene in the
latters capacity as PCSR Employee of the former because monies deposited "at any bank would not and
will not be entrusted to specific bank employee but to the bank as a whole."

Following the requisite preliminary investigation, Assistant City Prosecutor (ACP) Victor C. Laborte,
Prosecutor II of the OCP, Cebu City, in a Resolution8 dated 21 February 2003, found no probable cause
to hold petitioners Bernyl and Katherene liable to stand trial for the criminal complaint of estafa and/or
qualified estafa, particularly Article 315 of the Revised Penal Code. Accordingly, the ACP recommended
the dismissal of respondent HSBCs complaint.

The ACP explained his finding, viz:

As in any other cases, we may never know the ultimate truth of this controversy. But on balance, the
evidence on record tend to be supportive of respondents contention rather than that of complaint.

xxxx

First of all, it is well to dwell on what Mr. York said in his affidavit. Thus:

`18. For purposes of opening these two time deposits (sic) accounts, Ms. Balangauan asked me to sign
several Bank documents on several occasions, the nature of which I was unfamiliar with.

`20. I discovered later that these were withdrawal slips and cash movement tickets, with which documents
Ms. Balangauan apparently was able to withdraw the amount from my accounts, and take the same from
the premises of the Bank.

In determining the credibility of an evidence, it is well to consider the probability or improbability of ones
statements for it has been said that there is no test of the truth of human testimony except its conformity
to our knowledge, observation and experience.

Mr. York could not have been that unwary and unknowingly innocent to claim unfamiliarity with withdrawal
slips and cash movement tickets which Ms. Balangauan made him to sign on several occasions. He is a
premier client of HSBC maintaining an account in millions of pesos. A withdrawal slip and cash movement
tickets could not have had such intricate wordings or terminology so as to render them nonunderstandable even to an ordinary account holder. Mr. York admittedly is a long-standing client of the
bank. Within the period of long-standing he certainly must have effected some withdrawals. It goes
without saying therefore that the occasions that Ms. Balangauan caused him to sign withdrawal slips are
not his first encounter with such kinds of documents.

The one ineluctable conclusion therefore that can be drawn from the premises is that Mr. York freely and
knowingly knew what was going on with his money, who has in possession of them and where it was
invested. These take out the elements of deceit, fraud, abuse of confidence and without the owners
consent in the crimes charged.

The other leg on which complainants cause of action stands rest on its claim for sum of money against
respondents allegedly after it reimbursed Mr. York for his missing account supposedly taken/withdrawn by

Ms. Balangauan. The banks action against respondents would be a civil suit against them which
apparently it already did after the bank steps into the shoes of Mr. York and becomes the creditor of Ms.
Balangauan.9

The ACP then concluded that:

By and large, the evidence on record do (sic) not engender enough bases to establish a probable cause
against respondents.10

On 1 July 2003, respondent HSBC appealed the above-quoted resolution and foregoing comment to the
Secretary of the DOJ by means of a Petition for Review.

In a Resolution dated 6 April 2004, the Chief State Prosecutor, Jovencito R. Zuo, for the Secretary of the
DOJ, dismissed the petition. In denying respondent HSBCs recourse, the Chief State Prosecutor held
that:

Sec. 12 (c) of Department Circular No. 70 dated July 2, 2000 provides that the Secretary of Justice may,
motu proprio, dismiss outright the petition if there is no showing of any reversible error in the questioned
resolution.

We carefully examined the petition and its attachments and found no reversible error that would justify a
reversal of the assailed resolution which is in accord with the law and evidence on the matter.

Respondent HSBCs Motion for Reconsideration was likewise denied with finality by the DOJ in a
lengthier Resolution dated 30 August 2004.

The DOJ justified its ruling in this wise:

A perusal of the motion reveals no new matter or argument which was not taken into consideration in our
review of the case. Hence, we find no cogent reason to reconsider our resolution. Appellant failed to
present any iota of evidence directly showing that respondent Katherene Balangauan took the money and
invested it somewhere else. All it tried to establish was that Katherene unlawfully took the money and
fraudulently invested it somewhere else x x x, because after the withdrawals were made, the money
never reached Roger York as appellant adopted hook, line and sinker the latters declaration, despite
Yorks signatures on the withdrawal slips covering the total amount of P2,500,000.00 x x x. While
appellant has every reason to suspect Katherene for the loss of the P2,500,000.00 as per Yorks bank
statements, the cash deposits were identified by the numerals "CEO8" and it was only Katherene who
could transact from the computer in the work station CEO-8, plus alleged photographs showing
Katherene "leaving her office at 5:28 p.m. with a bulky plastic bag presumably containing cash" since a
portion of the funds was withdrawn, we do not, however, dwell on possibilities, suspicion and speculation.
We rule based on hard facts and solid evidence.

Moreover, an examination of the petition for review reveals that appellant failed to append thereto all
annexes to respondents urgent manifestations x x x together with supplemental affidavits of Melanie de
Ocampo and Rex B. Balucan x x x, which are pertinent documents required under Section 5 of
Department Circular No. 70 dated July 3, 2000.11

Respondent HSBC then went to the Court of Appeals by means of a Petition for Certiorari under Rule 65
of the Revised Rules of Court.

On 28 April 2006, the Court of Appeals promulgated its Decision granting respondent HSBCs petition,
thereby annulling and setting aside the twin resolutions of the DOJ.

The fallo of the assailed decision reads:

WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us GRANTING the
petition filed in this case. The assailed Resolutions dated April 6, 2004 and August 30, 2004 are
ANNULLED and SET ASIDE.

The City Prosecutor of Cebu City is hereby ORDERED to file the appropriate Information against the
private respondents.12

Petitioners Bernyl and Katherenes motion for reconsideration proved futile, as it was denied by the
appellate court in a Resolution dated 29 June 2006.

Hence, this petition for certiorari filed under Rule 65 of the Revised Rules of Court.

Petitioners Bernyl and Katherene filed the present petition on the argument that the Court of Appeals
committed grave abuse of discretion in reversing and setting aside the resolutions of the DOJ when: (1)
"[i]t reversed the resolution of the Secretary of Justice, Manila dated August 30, 2004 and
correspondingly, gave due course to the Petition for Certiorari filed by HSBC on April 28, 2006 despite
want of probable cause to warrant the filing of an information against the herein petitioners"13; (2) "[i]t
appreciated the dubious evidence adduced by HSBC albeit the absence of legal standing or personality of
the latter"14; (3) "[i]t denied the motions for reconsideration on June 29, 2006 notwithstanding the glaring
evidence proving the innocence of the petitioners"15; (4) "[i]t rebuffed the evidence of the herein
petitioners in spite of the fact that, examining such evidence alone would establish that the money in
question was already withdrawn by Mr. Roger Dwayne York"16; and (5) "[i]t failed to dismiss outright the
petition by HSBC considering that the required affidavit of service was not made part or attached in the
said petition pursuant to Section 13, Rule 13 in relation to Section 3, Rule 46, and Section 2, Rule 56 of
the Rules of Court."17

Required to comment on the petition, respondent HSBC remarked that the filing of the present petition is
improper and should be dismissed. It argued that the correct remedy is an appeal by certiorari under Rule
45 of the Revised Rules of Court.

Petitioners Bernyl and Katherene, on the other hand, asserted in their Reply18 that the petition filed under
Rule 65 was rightfully filed considering that not only questions of law were raised but questions of fact and
error of jurisdiction as well. They insist that the Court of Appeals "clearly usurped into the jurisdiction and
authority of the Public Prosecutor/Secretary of justice (sic) x x x."19

Given the foregoing arguments, there is need to address, first, the issue of the mode of appeal resorted to
by petitioners Bernyl and Katherene. The present petition is one for certiorari under Rule 65 of the
Revised Rules of Court. Notice that what is being assailed in this recourse is the decision and resolution
of the Court of Appeals dated 28 April 2006 and 29 June 2006, respectively. The Revised Rules of Court,
particularly Rule 45 thereof, specifically provides that an appeal by certiorari from the judgments or final
orders or resolutions of the appellate court is by verified petition for review on certiorari.20

In the present case, there is no question that the 28 April 2006 Decision and 29 June 2006 Resolution of
the Court of Appeals granting the respondent HSBCs petition in CA-G.R. CEB. SP No. 00068 is already a
disposition on the merits. Therefore, both decision and resolution, issued by the Court of Appeals, are in
the nature of a final disposition of the case set before it, and which, under Rule 45, are appealable to this
Court via a Petition for Review on Certiorari, viz:

SECTION 1. Filing of petition with Supreme Court. A party desiring to appeal by certiorari from a
judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court
or other courts whenever authorized by law, may file with the Supreme Court a verified petition for review
on certiorari. The petition shall raise only questions of law which must be distinctly set forth. (Emphasis
supplied.)

It is elementary in remedial law that a writ of certiorari will not issue where the remedy of appeal is
available to an aggrieved party. A remedy is considered "plain, speedy and adequate" if it will promptly
relieve the petitioners from the injurious effects of the judgment and the acts of the lower court or
agency.21 In this case, appeal was not only available but also a speedy and adequate remedy.22 And
while it is true that in accordance with the liberal spirit pervading the Rules of Court and in the interest of
substantial justice,23 this Court has, before,24 treated a petition for certiorari as a petition for review on
certiorari, particularly if the petition for certiorari was filed within the reglementary period within which to
file a petition for review on certiorari;25 this exception is not applicable to the present factual milieu.

Pursuant to Sec. 2, Rule 45 of the Revised Rules of Court:

SEC. 2. Time for filing; extension. The petition shall be filed within fifteen (15) days from notice of the
judgment or final order or resolution appealed from, or of the denial of the petitioners motion for new trial
or reconsideration filed in due time after notice of the judgment. x x x.

a party litigant wishing to file a petition for review on certiorari must do so within 15 days from receipt of
the judgment, final order or resolution sought to be appealed. In this case, petitioners Bernyl and
Katherenes motion for reconsideration of the appellate courts Resolution was denied by the Court of
Appeals in its Resolution dated 29 June 2006, a copy of which was received by petitioners on 4 July
2006. The present petition was filed on 1 September 2006; thus, at the time of the filing of said petition,
59 days had elapsed, way beyond the 15-day period within which to file a petition for review under Rule
45, and even beyond an extended period of 30 days, the maximum period for extension allowed by the

rules had petitioners sought to move for such extra time. As the facts stand, petitioners Bernyl and
Katherene had lost the right to appeal via Rule 45.

Be that as it may, alternatively, if the decision of the appellate court is attended by grave abuse of
discretion amounting to lack or excess of jurisdiction, then such ruling is fatally defective on jurisdictional
ground and may be questioned even after the lapse of the period of appeal under Rule 4526 but still
within the period for filing a petition for certiorari under Rule 65.

We have previously ruled that grave abuse of discretion may arise when a lower court or tribunal violates
and contravenes the Constitution, the law or existing jurisprudence. By grave abuse of discretion is meant
such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. The abuse of
discretion must be grave, as where the power is exercised in an arbitrary or despotic manner by reason of
passion or personal hostility and must be so patent and gross as to amount to an evasion of positive duty
or to a virtual refusal to perform the duty enjoined by or to act at all in contemplation of law.27 The word
"capricious," usually used in tandem with the term "arbitrary," conveys the notion of willful and
unreasoning action. Thus, when seeking the corrective hand of certiorari, a clear showing of caprice and
arbitrariness in the exercise of discretion is imperative.28

In reversing and setting aside the resolutions of the DOJ, petitioners Bernyl and Katherene contend that
the Court of Appeals acted with grave abuse of discretion amounting to lack or excess of jurisdiction.

The Court of Appeals, when it resolved to grant the petition in CA-G.R. CEB. SP No. 00068, did so on two
grounds, i.e., 1) that "the public respondent (DOJ) gravely abused his discretion in finding that there was
no reversible error on the part of the Cebu City Prosecutor dismissing the case against the private
respondent without stating the facts and the law upon which this conclusion was made"29; and 2) that
"the public respondent (DOJ) made reference to the facts and circumstances of the case leading to his
finding that no probable cause exists, x x x (the) very facts and circumstances (which) show that there
exists a probable cause to believe that indeed the private respondents committed the crimes x x x
charged against them."30

It explained that:

In refusing to file the appropriate information against the private respondents because he does not dwell
on possibilities, suspicion and speculation and that he rules based on hard facts and solid evidence,
(sic) the public respondent exceeded his authority and gravely abused his discretion. It must be
remembered that a finding of probable cause does not require an inquiry into whether there is sufficient
evidence to procure a conviction. It is enough that it is believed that the act or omission complained of
constitutes the offense charged. The term does not mean actual or positive cause; (sic) nor does it
import absolute certainty. It is merely based on opinion and reasonable belief. [Citation omitted.] A trial is
there precisely for the reception of evidence of the prosecution in support of the charge.

In this case, the petitioner had amply established that it has a prima facie case against the private
respondents. As observed by the public respondent in his second assailed resolution, petitioner was able
to present photographs of private respondent Ms. Balangauan leaving her office carrying a bulky plastic
bag. There was also the fact that the transactions in Mr. Yorks account used the code CEO8 which

presumably point to the private respondent Ms. Balangauan as the author thereof for she is the one
assigned to such work station.

Furthermore, petitioner was able to establish that it was Ms. Balangauan who handled Mr. Yorks account
and she was the one authorized to make the placement of the sum of P2,500,000.00. Since said sum is
nowhere to be found in the records of the bank, then, apparently, Ms. Balangauan must be made to
account for the same.31

The appellate court then concluded that:

These facts engender a well-founded belief that that (sic) a crime has been committed and that the
private respondents are probably guilty thereof. In refusing to file the corresponding information against
the private respondents despite the presence of the circumstances making out a prima facie case against
them, the public respondent gravely abused his discretion amounting to an evasion of a positive duty or to
a virtual refusal either to perform the duty enjoined or to act at all in contemplation of law.32

The Court of Appeals found fault in the DOJs failure to identify and discuss the issues raised by the
respondent HSBC in its Petition for Review filed therewith. And, in support thereof, respondent HSBC
maintains that it is incorrect to argue that "it was not necessary for the Secretary of Justice to have his
resolution recite the facts and the law on which it was based," because courts and quasi-judicial bodies
should faithfully comply with Section 14, Article VIII of the Constitution requiring that decisions rendered
by them should state clearly and distinctly the facts of the case and the law on which the decision is
based.33

Petitioners Bernyl and Katherene, joined by the Office of the Solicitor General, on the other hand, defends
the DOJ and assert that the questioned resolution was complete in that it stated the legal basis for
denying respondent HSBCs petition for review "that (after) an examination (of) the petition and its
attachment [it] found no reversible error that would justify a reversal of the assailed resolution which is in
accord with the law and evidence on the matter."

It must be remembered that a preliminary investigation is not a quasi-judicial proceeding, and that the
DOJ is not a quasi-judicial agency exercising a quasi-judicial function when it reviews the findings of a
public prosecutor regarding the presence of probable cause. In Bautista v. Court of Appeals,34 this Court
held that a preliminary investigation is not a quasi-judicial proceeding, thus:

[T]he prosecutor in a preliminary investigation does not determine the guilt or innocence of the accused.
He does not exercise adjudication nor rule-making functions. Preliminary investigation is merely
inquisitorial, and is often the only means of discovering the persons who may be reasonably charged with
a crime and to enable the fiscal to prepare his complaint or information. It is not a trial of the case on the
merits and has no purpose except that of determining whether a crime has been committed and whether
there is probable cause to believe that the accused is guilty thereof. While the fiscal makes that
determination, he cannot be said to be acting as a quasi-court, for it is the courts, ultimately, that pass
judgment on the accused, not the fiscal.

Though some cases35 describe the public prosecutors power to conduct a preliminary investigation as
quasi-judicial in nature, this is true only to the extent that, like quasi-judicial bodies, the prosecutor is an
officer of the executive department exercising powers akin to those of a court, and the similarity ends at
this point.36 A quasi-judicial body is an organ of government other than a court and other than a
legislature which affects the rights of private parties through either adjudication or rule-making.37 A quasijudicial agency performs adjudicatory functions such that its awards, determine the rights of parties, and
their decisions have the same effect as judgments of a court. Such is not the case when a public
prosecutor conducts a preliminary investigation to determine probable cause to file an Information against
a person charged with a criminal offense, or when the Secretary of Justice is reviewing the formers order
or resolutions. In this case, since the DOJ is not a quasi-judicial body, Section 14, Article VIII of the
Constitution finds no application. Be that as it may, the DOJ rectified the shortness of its first resolution by
issuing a lengthier one when it resolved respondent HSBCs motion for reconsideration.

Anent the substantial merit of the case, whether or not the Court of Appeals decision and resolution are
tainted with grave abuse of discretion in finding probable cause, this Court finds the petition dismissible.

The Court of Appeals cannot be said to have acted with grave abuse of discretion amounting to lack or
excess of jurisdiction in reversing and setting aside the resolutions of the DOJ. In the resolutions of the
DOJ, it affirmed the recommendation of ACP Laborte that no probable cause existed to warrant the filing
in court of an Information for estafa and/or qualified estafa against petitioners Bernyl and Katherene. It
was the reasoning of the DOJ that "[w]hile appellant has every reason to suspect Katherene for the loss
of the P2,500,000.00 as per Yorks bank statements, the cash deposits were identified by the numerals
CEO8 and it was only Katherene who could transact from the computer in the work station CEO-8, plus
alleged photographs showing Katherene leaving her office at 5:28 p.m. with a bulky plastic bag
presumably containing cash since a portion of the funds was withdrawn, we do not, however, dwell on
possibilities, suspicion and speculation. We rule based on hard facts and solid evidence."38

We do not agree.

Probable cause has been defined as the existence of such facts and circumstances as would excite belief
in a reasonable mind, acting on the facts within the knowledge of the prosecutor, that the person charged
was guilty of the crime for which he was prosecuted.39 A finding of probable cause merely binds over the
suspect to stand trial. It is not a pronouncement of guilt.40

The executive department of the government is accountable for the prosecution of crimes, its principal
obligation being the faithful execution of the laws of the land. A necessary component of the power to
execute the laws is the right to prosecute their violators,41 the responsibility for which is thrust upon the
DOJ. Hence, the determination of whether or not probable cause exists to warrant the prosecution in
court of an accused is consigned and entrusted to the DOJ. And by the nature of his office, a public
prosecutor is under no compulsion to file a particular criminal information where he is not convinced that
he has evidence to prop up the averments thereof, or that the evidence at hand points to a different
conclusion.

But this is not to discount the possibility of the commission of abuses on the part of the prosecutor. It is
entirely possible that the investigating prosecutor has erroneously exercised the discretion lodged in him
by law. This, however, does not render his act amenable to correction and annulment by the extraordinary
remedy of certiorari, absent any showing of grave abuse of discretion amounting to excess of
jurisdiction.42

And while it is this Courts general policy not to interfere in the conduct of preliminary investigations,
leaving the investigating officers sufficient discretion to determine probable cause,43 we have
nonetheless made some exceptions to the general rule, such as when the acts of the officer are without
or in excess of authority,44 resulting from a grave abuse of discretion. Although there is no general
formula or fixed rule for the determination of probable cause, since the same must be decided in the light
of the conditions obtaining in given situations and its existence depends to a large degree upon the
finding or opinion of the judge conducting the examination, such a finding should not disregard the facts
before the judge (public prosecutor) or run counter to the clear dictates of reason.45

Applying the foregoing disquisition to the present petition, the reasons of DOJ for affirming the dismissal
of the criminal complaints for estafa and/or qualified estafa are determinative of whether or not it
committed grave abuse of discretion amounting to lack or excess of jurisdiction. In requiring "hard facts
and solid evidence" as the basis for a finding of probable cause to hold petitioners Bernyl and Katherene
liable to stand trial for the crime complained of, the DOJ disregards the definition of probable cause that
it is a reasonable ground of presumption that a matter is, or may be, well-founded, such a state of facts in
the mind of the prosecutor as would lead a person of ordinary caution and prudence to believe, or
entertain an honest or strong suspicion, that a thing is so.46 The term does not mean "actual and positive
cause" nor does it import absolute certainty.47 It is merely based on opinion and reasonable belief;48 that
is, the belief that the act or omission complained of constitutes the offense charged. While probable cause
demands more than "bare suspicion," it requires "less than evidence which would justify conviction."
Herein, the DOJ reasoned as if no evidence was actually presented by respondent HSBC when in fact the
records of the case were teeming; or it discounted the value of such substantiation when in fact the
evidence presented was adequate to excite in a reasonable mind the probability that petitioners Bernyl
and Katherene committed the crime/s complained of. In so doing, the DOJ whimsically and capriciously
exercised its discretion, amounting to grave abuse of discretion, which rendered its resolutions amenable
to correction and annulment by the extraordinary remedy of certiorari.

From the records of the case, it is clear that a prima facie case for estafa/qualified estafa exists against
petitioners Bernyl and Katherene. A perusal of the records, i.e., the affidavits of respondent HSBCs
witnesses, the documentary evidence presented, as well as the analysis of the factual milieu of the case,
leads this Court to agree with the Court of Appeals that, taken together, they are enough to excite the
belief, in a reasonable mind, that the Spouses Bernyl Balangauan and Katherene Balangauan are guilty
of the crime complained of. Whether or not they will be convicted by a trial court based on the same
evidence is not a consideration. It is enough that acts or omissions complained of by respondent HSBC
constitute the crime of estafa and/or qualified estafa.

Collectively, the photographs of petitioner Katherene leaving the premises of respondent HSBC carrying a
bulky plastic bag and the affidavits of respondent HSBCs witnesses sufficiently establish acts adequate
to constitute the crime of estafa and/or qualified estafa. What the affidavits bear out are the following: that
York was a Premier Client of respondent HSBC; that petitioner Katherene handled all the accounts of
York; that not one of Yorks accounts reflect the P2,500,000.00 allegedly deposited in a higher yielding
account; that prior to the discovery of her alleged acts and omissions, petitioner Katherene supposedly
persuaded York to invest in a "new product" of respondent HSBC, i.e., a higher interest yielding time
deposit; that York made a total of P2,500,000.00 investment in the "new product" by authorizing petitioner
Balangauan to transfer said funds to it; that petitioner Katherene supposedly asked York to sign several
transaction documents in order to transfer the funds to the "new product"; that said documents turned out
to be withdrawal slips and cash movement tickets; that at no time did York receive the cash as a result of
signing the documents that turned out to be withdrawal slips/cash movement tickets; that Yorks account
was regularly credited "loose change" in the amounts of P12,500.00 and P8,333.33 beginning in the
month after the alleged "transfer" of Yorks funds to the "new product"; that the regular deposits of loose

change were transacted with the use of petitioner Katherenes work terminal accessed by her password
"CEO8"; that the "CEO8" password was keyed in with the use of a swipe card always in the possession of
petitioner Katherene; that one of the loose-change deposits was transacted via the phone banking feature
of respondent HSBC and that when traced, the phone number used was the landline number of the house
of petitioners Bernyl and Katherene; that respondent HSBCs bank personnel, as well as York,
supposedly a) talked with petitioner Katherene on the phone, and that she allegedly admitted that the
missing funds were invested with Shell Company, of which York approved, and that it was only for one
year; and b) met with petitioner Bernyl, and that the latter at first denied having knowledge of his wifes
complicity, but later on admitted that he knew of the investment with Shell Company, and that he
supposedly made the loose-change deposit via phone banking; that after 23 April 2002, York was told that
respondent HSBC had no "new product" or that it was promoting investment with Shell Company; that
York denied having any knowledge that his money was invested outside of respondent HSBC; and that
petitioner Katherene would not have been able to facilitate the alleged acts or omissions without taking
advantage of her position or office, as a consequence of which, HSBC had to reimburse York the missing
P2,500,000.00.

From the above, the alleged circumstances of the case at bar make up the elements of abuse of
confidence, deceit or fraudulent means, and damage under Art. 315 of the Revised Penal Code on estafa
and/or qualified estafa. They give rise to the presumption or reasonable belief that the offense of estafa
has been committed; and, thus, the filing of an Information against petitioners Bernyl and Katherene is
warranted. That respondent HSBC is supposed to have no personality to file any criminal complaint
against petitioners Bernyl and Katherene does not ipso facto clear them of prima facie guilt. The same
goes for their basic denial of the acts or omissions complained of; or their attempt at shifting the doubt to
the person of York; and their claim that witnesses of respondent HSBC are guilty of fabricating the whole
scenario. These are matters of defense; their validity needs to be tested in the crucible of a full-blown trial.
Lest it be forgotten, the presence or absence of the elements of the crime is evidentiary in nature and is a
matter of defense, the truth of which can best be passed upon after a full-blown trial on the merits.
Litigation will prove petitioners Bernyl and Katherenes innocence if their defense be true.

In fine, the relaxation of procedural rules may be allowed only when there are exceptional circumstances
to justify the same. Try as we might, this Court cannot find grave abuse of discretion on the part of the
Court of Appeals, when it reversed and set aside the resolutions of the DOJ. There is no showing that the
appellate court acted in an arbitrary and despotic manner, so patent or gross as to amount to an evasion
or unilateral refusal to perform its legally mandated duty. On the contrary, we find the assailed decision
and resolution of the Court of Appeals to be more in accordance with the evidence on record and relevant
laws and jurisprudence than the resolutions of the DOJ.

Considering the allegations, issues and arguments adduced and our disquisition above, we hereby
dismiss the instant petition for being the wrong remedy under the Revised Rules of Court, as well as for
petitioner Bernyl and Katherenes failure to sufficiently show that the challenged Decision and Resolution
of the Court of Appeals were rendered in grave abuse of discretion amounting to lack or excess of
jurisdiction.

WHEREFORE, premises considered, the instant Petition for Certiorari is DISMISSED for lack of merit.
The 28 April 2006 Decision and the 29 June 2006 Resolution of the Court of Appeals in CA-G.R. CEB- SP
No. 00068, are hereby AFFIRMED. With costs against petitioners -- Spouses Bernyl Balangauan and
Katherene Balangauan.

SO ORDERED.

G.R. No. 81385 February 21, 1989

EDUARDO B. OLAGUER AND CONRADO S. REYES in their official capacity as FISCAL
AGENTS OF THE PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, petitioners,
vs.
THE REGIONAL TRIAL COURT, NATIONAL CAPITAL JUDICIAL REGION, BRANCH 48,
MANILA, PRESIDED BY THE HONORABLE JUDGE DEMETRIO M. BATARIO, JR., M.B.
OLIVARES, AUGUSTO VILLANUEVA, ARACELLI LINSANGAN, LUISA LINSANGAN,
ALEJANDRO MARAMAG, MANUEL SALAK, TURNITA SORIANO, LINO SISON DOMINGO
FLORES, MILAGROS HIZON and CARIDAD ORPIADA, respondents.
The Solicitor General for petitioners.
Delia L. Hermoso for private respondents.

GANCAYCO, J.:
The parameters of the jurisdiction of the ordinary courts in relation to the Securities and Exchange
Commission (SEC) and the Sandiganbayan are put into issue in this petition.
On December 17, 1987, private respondents filed a complaint for injunction and damages, with a
prayer for the issuance of a writ of preliminary injunction and/or temporary restraining order, in the
Regional Trial Court (RTC) of Manila against petitioners and Winston Marbella, Gaston Ortigas,
Robeto Federis, Manuel C. Villa-Real, Emanuel Soriano, Jack Arroyo and Benjamin Tulio.
The complaint alleges, among others, that private respondents are the only stockholders with the
right to vote of the Philippine Journalists, Inc. (PJI) Publisher of several daily periodicals such
as Manila Journal, People's Journal, etc. Sometime in 1977, PJI obtained from the Development
Bank of the Philippines (DBP) certain financing accommodations and as security thereof executed a
first mortgage in favor of DBP on its acts enumerated in a list attached to the mortgage. The PJI
stockholders assigned to DBP the voting rights over 67% of the total subscribed and outstanding
voting shares of stock of the company held by them. The DBP appointed said PJI stockholders as
proxies to exercise its right to vote. Due to some financial difficulty on its part, PJI requested for a
restructuring of its loan obligation with certain conditions. The request was granted by the DBP in a
letter dated August 4, 1986. Due to the default on the part of the PJI the DBP cancelled the proxies
in favor of the assigning stockholders on September 30, 1986 and designated as its proxies
petitioner Eduardo Olaguer, Jose Mari Velez and Manuel de Leon. DBP scheduled a special
stockholders meeting for the purpose of electing a new set of directors.
It is also alleged in the complaint that before the special meeting, petitioner Olaguer asked private
respondent Rosario M. Barreto Olivares to assign qualifying shares not only to the three proxies of
DBP but also to two others to be chosen by him so as to enable the five of them to sit in the PJI
board of directors, and that, accordingly, they may be able to coordinate more effectively with DBP
as regards the early evaluation and approval of the request for another restructuring of the PJI loan.
Thus respondent Olivares assigned her shareholdings covered by Stock Certificate. No. 34 (which
were at that time assigned to DBP) to petitioner Olaguer, Marbella, Ortigas, Mari Velez and De Leon,
at one share each. The deeds of assignment provided that the said assignment are valid only as
long as the nominee is the person designated by the DBP as its representative to sit in the board of
directors.

The complaint also alleges that although Olaguer was elected chairman of the board and chief
executive officer of PJI he failed to comply with his commitment and that this gave private
respondents a reason to cancel the assignment. Olaguer also committed certain illegal acts which
gave rise to the filing of several complaints against him. However, before these cases could be
resolved, Olaguer's appointment as member of the board of directors of DBP was terminated by
President Corazon C. Aquino effective September 9, 1987. He was informed about his termination
through two letters dated August 27 and October 12, 1987.
It is likewise alleged that, the termination notwithstanding, Olaguer continued to exercise and retain
full management and control of PJI The DBP chief legal counsel wrote to petitioner Reyes informing
him of Olaguer's removal from office and enjoining him from implementing or complying with any
instructions from Olaguer and from disposing of the properties of PJI and disbursing any funds
without prior approval of the board of directors of PJI which will soon be elected, except such
amounts needed in the ordinary course of business. Accordingly, the DBP, acting through its
Chairman, Jesus Estanislao and its Director-in-Charge, Jose Mari Velez, entered into an Interim
Agreement with private respondents. The said agreement called for a special stockholders meeting
for the purpose of electing a new board of directors which shall hold office until the next regular
stockholders meeting to be held on February 2, 1988.
The complaint further alleges that in a letter dated December 14, 1987, the DBP chief legal counsel
informed the private respondents that the said Interim Agreement cannot be implemented because
Olaguer claims that he has just been designated the fiscal and team leader of the Presidential
Commission on Good Government (PCGG) assigned to the PJI and that all his actions are
sanctioned and reported to PCGG Chairman Ramon A. Diaz, and that it is the PCGG which
exercises the voting rights of all PJI common stocks sequestered since 1986, including those
assigned to DBP and that the PJI qualifying share now held by PJI Directors came from shares
sequestered by the PCGG. These observations are contained in a letter dated October 31, 1987
written by petitioner Reyes in his capacity as chief legal counsel and corporate secretary of PJI It is
stated therein that Olaguer, together with Marbella, Ortigas, Soriano, Federis, Arroyo and Villa-Real
have been acting as corporate officers and/or members of the board without their having been
elected by the majority vote of stockholders and without their owning in their own right even a single
qualifying share.
In addition, it is alleged that petitioner Reyes had been sending out notices to private respondents
about an alleged stockholders meeting to be held on December 21, 1987 at the PJI building, and
that in the letter written by the DBP chief legal counsel, 1 it is stated that petitioner Olaguer and his
associates who claim to be members of the board and corporate officers of PJI do not represent DBP and
that they are not authorized to act in its behalf.
The complaint emphasizes that the claim of petitioner Reyes that Olaguer can sit as chairman of the
board of directos of PJI even if he is no longer a director of DBP but as long as he is the fiscal agent
and team leader of the PCGG assigned is baseless because: (a) the writs of sequestration on the
shares of respondents Hizon, Orpiada, Maramag, Flores and Sison, served on them on or about
February 19, 1987, and on respondents Linsangan, Salak, Soriano and Villanueva, served on them
on or about April 28, 1987, bad been automatically lifted last August 19, 1987 and October 28, 1987,
respectively, pursuant to Section 26, Article XVIII of the 1987 Constitution; and only the
sequestration on the shares of respondent Olivares has not been lifted since a complaint was filed
against her before the expiration of the constitutional deadline for filing cases; (b) the sequestered
shares of respondent Olivares could not be voted upon by petitioners herein and their companions
under their claim of being PCGG fiscal agents under the recent pronouncement of the Supreme
Court in several cases clearly stating that sequestration does not involve the right of ownership; (c)
no other meeting has been validly called for the election of a new set of directors after the members
of the board elected last October 2, 1986 had ceased to be such directors, either by virtue of the

cancellation of their qualifying shares or their resignation; (d) with the filing of Civil Case No. 35
before the Sandiganbayan where the PJI was listed as one of the involved corporations, all actions
affecting said corporation, including those which will affect rights of ownership and disposition of
assets, must have the prior approval of the Sandiganbayan which excercises jurisdiction over these
corporations as one of the properties in litigation; and (e) by order of President Aquino, petitioner
Olaguer's separation from the PJI was called for; that the acts of all the petitioners and their
companions of either continuing to sit in the board of directors of PJI and/or representing and acting
as its corporate officers are illegal and are the acts of usurpers and intruders violative of the rights of
private respondents as stockholders and are causing great damage and prejudice to them as well as
to the rights of the DBP under the Deed of Assignment, and that such acts of usurpation should be
enjoined by the trial court.
Under the second cause of action for damages, it is alleged that Olaguer acted illegally and outside
the authority granted him as nominee of DBP and, accordingly, Olivares cancelled the Deed of
Assignment of one qualifying share to him as well as the Deed of Assignment in favor of Marbella
and Ortigas. The notice of cancellation was served upon them on December 5, 1986. As a
consequence of such cancellation, the three failed to qualify to sit as members of the board of PJI.
Private respondents also alleged that despite such notice, petitioner and his associates continued to
sit in the board and that Olaguer took over the complete management of the corporation and even
caused the appointment of other members of the board and/or corporate officers even if such
appointees do not own PJI shares of stock in their own right. It is likewise alleged that the petitioner
and his associates should be enjoined from committing further acts of usurpation and that they
should be held liable for all unlawful disbursements they have made. It is further alleged that some of
the private respondents had been unlawfully dismissed and/or retired one after another thereby
depriving them of all benefits they are entitled to and subjecting them to great mental anguish,
sleepless nights, deep humiliation and great anxiety for which they must be paid damages in an
amount left to the sound discretion of the court. Private respondents also asked for exemplary
damages as well as the sum of P200,000.00 for attorney's fees and expenses of litigation.
Private respondents prayed that pending a hearing on the merits of the case, a writ of preliminary
injunction or a temporary restraining order be issued against petitioner Reyes enjoining him from
holding the special stockholders meeting scheduled at 8:00 A.M. on December 21, 1987, and
enjoining Olaguer and his associates from sitting and acting as members of the board of directors of
PJI or as corporate officers. Private respondents also prayed that such temporary restraining order
and/or writ of preliminary injunction be made permanent after due hearing and that Petitioner
Olaguer and his associates be made to pay, jointly and severally, actual damages as may be proved
after audit, including moral and exemplary damages, attorney's fees and litigation expenses in the
amount of P200,000.00, and the costs of the suit. 2
On December 18, 1987, an order was issued by the trial court setting the petition for the issuance of
a writ of preliminary injunction for bearing on January 4, 1988 at 1:30 in the afternoon. A temporary
restraining order was issued enjoining petitioner Reyes from holding the special stockholders
meeting scheduled for December 21, 1987 and enjoining all the other petitioners including Olaguer
from sitting and acting as members of the board and/or corporate officers of PJI until further orders
of the court.
On January 4, 1988, a motion to dismiss was filed by the petitioners on the ground that the court has
no jurisdiction over the persons of petitioners; that they were not served summons and that the
subject matter of the action involves controversies arising out of intra-corporate relations between
and among stockholders which are covered by the provisions of Section 5 of Presidential Decree
No. 902-A so that the matter is within the original and exclusive jurisdiction of the Securities and

Exchange Commission (SEC); that the venue for a petition seeking injunctive relief should be the
Sandiganbayan where aforesaid PCGG Case No. 0035 against Benjamin Romualdez, Rosario
Olivares, et al. is pending, pursuant to Executive Order No. 14 defining the jurisdiction over cases
involving the alleged ill-gotten wealth of Former President Marcos, et al.; that it is the SEC which
should exercise jurisdiction over the case pursuant to Section 6 of Presidential Decree No. 902-A;
and that the complaint states no cause of action inasmuch as the petitioners and the other
defendants hold shares emanating from the PCGG, and not from the DBP; that the shares issued to
DBP for Olivares, et al. on the basis of an erroneous DBP legal opinion have been declared void ab
initio and cancelled by the PCGG on November 4, 1987 so that the DBP is not a stockholder of
record; that the call for the stockholders meeting by petitioner Reyes was with the approval of the
PCGG Chairman; that PJI is a sequestered corporation listed as item No. 49 under "Shares of
Stock" in "Assets and Other Property of Benjamin Romualdez" marked Annex "A", in Case No. 0035
for "Reconveyance, Reversion, Accounting, Restitution and Damages," entitled "Republic of the
Philippines, plaintiff versus Benjamin (Kokoy) Romualdez, et al.,"; that the PJI pursuant to its Board
Resolution No. 43, dated November 14, 1987, has authorized the filing of criminal complaints
against Benjamin (Kokoy) Romualdez, Rosario Olivares, Tuynita Soriano, Jose T. Abundo, Evelyn
Nicasio, Alejandro Maramag, Caridad Orpiada and other former and present PJI officers and
employees who defrauded the company by conspiring in and/or authorizing the illegal disbursements
of PJI funds amounting to P 10.6 million, all for the account and upon instructions of said Romualdez
who was neither an officer, director, stockholder of record of PJI nor a creditor or supplier thereof;
that regarding the sequestration of PJI pursuant to orders of the PCGG dated April 22, 1986 and
February 19, 1987, the actual sequestration proceedings have not been terminated upon the filing of
PCGG Case No. 0035 before the Sandiganbayan on July 31, 1987.
Petitioners maintain that under the pertinent provisions of the 1987 Constitution, the commencement
of a judicial action does not ipso facto lift the sequestration order. It is the non-filing of a judicial
action within six months from the ratification of the 1987 Constitution if the sequestration order is
issued before the ratification, or within six months from the time sequestration order was issued if the
same was issued after such ratification, which will automatically lift the sequestration order.
Petitioners also stated that while the PJI suffered huge loses under the administration of private
respondents, the corporation realized profits under the management of petitioner Olaguer. All the
common and preferred stocks of private respondents have been sequestered pursuant to the orders
of the PCGG dated April 22, 1986 and February 19, 1987 and it is the PCGG which exercises the
voting rights pertaining to said sequestered shares pursuant to the Memorandum of President
Aquino to the PCGG dated June 26, 1986.
A Memorandum in support of the prayer for the issuance of a writ of preliminary injunction and
opposition to the motion to dismiss was filed by counsel for private respondents.
On January 14, 1988, an order was issued by the trial court denying the motion to dismiss and
issuing a writ of preliminary injunction as prayed for upon a bond in the amount of P50,000.00 to be
filed by private respondents.
Hence, the herein petition for certiorari and prohibition with a prayer for the issuance of a temporary
restraining order and/ or a writ of preliminary injunction wherein the main issue is whether or not the
trial court has jurisdiction over the subject matter of the action.
On January 26, 1988, a resolution was issued by this Court requiring the respondents to comment
therein within ten (10) days from notice. A temporary restraining order was issued enjoining the
respondent judge to cease and desist from enforcing the order of the trial court dated January 14,
1988 in Civil Case No. 87-43156 as well as the writ of preliminary injunction issued against
petitioners.

Acting on the manifestation and motion filed by counsel for private respondents on February 4, 1988,
this Court issued a resolution enjoining petitioner Reyes and/or the corporate officers of PJI from
holding another special stockholders meeting on February 5, 1988 or at any date thereafter pending
resolution of this case, and directing the parties to maintain the status quo until further orders from
the Court.
The private respondents filed their comment on the petition. Thereafter, the petitioners filed their
reply. On April 5, 1988, the court resolved to give due course to the petition and considered the case
submitted for decision. Nevertheless, the private respondents filed a rejoinder.
The petition is impressed with merit. There is no dispute that the PJI is now under sequestration by
the PCGG and that Civil Case No. 0035 was filed in the Sandiganbayan wherein the PJI is listed as
among the corporations involved in the unexplained wealth case against former President Marcos,
Romualdez and many others. The records likewise show that petitioner Olaguer, among others, is a
fiscal agent of the PCGG and that as Chairman of the Board of Directors of the PJI he was acting for
and in behalf of the PCGG. Under Section 2 of Executive Order No. 14, the Sandiganbayan has
exclusive and original jurisdiction over all cases regarding "the funds, moneys, assets and properties
illegally acquired by Former President Ferdinand E. Marcos, Mrs. Imelda Romualdez Marcos, their
close relatives, subordinates, business associates, dummies, agents, or nominees," 3civil or criminal,
including incidents arising from such cases. The Decision of the Sandiganbayan is subject to review on
certiorari exclusively by the Supreme Court. 4
In the exercise of its functions, the PCGG is a co-equal body with the regional trial courts and coequal bodies have no power to control the other. 5 The regional trial courts and the Court of Appeals
have no jurisdiction over the PCGG in the exercise of its powers under the applicable Executive Orders
and Section 26, Article XVIII of the 1987 Constitution and, therefore, may not interfere with and restrain or
set aside the orders and actions of the PCGG. 6 By the same token, the regional trial courts have no
jurisdiction over the acts of fiscal agents of the PCGG acting for and in behalf of said commission.
The Commission should not be embroiled in and swamped by legal suits before inferior courts all
over the land. Otherwise, the Commission will be forced to spend valuable time defending all its
actuations in such courts. This will defeat the very purpose behind the creation of the Commission.
Accordingly, Section 4(a) of Executive Order No. 1 expressly accorded the Commission and its
members immunity from suit for damages in that: "No civil action shall lie against the Commission or
any member thereof for anything done or omitted in the discharge of the task contemplated by this
order."
Civil Case No. 87-43156 pending before the respondent judge is denominated as one for "injunction
with prayer for writ of preliminary injunction and/or temporary restraining order and damages."
Particularly, under paragraph 17(d) of the complaint, private respondents admitted that the PJI is
listed as one of the involved corporations in Civil Case No. 0035 pending before the Sandiganbayan
which now exercises jurisdiction over the said corporation. Petitioners Olaguer and Reyes appear to
be fiscal agents of the PCGG. There can be no doubt, therefore, that the subject matter of the action
(the PJI its properties and assets) falls within the exclusive jurisdiction of the Sandiganbayan.
Petitioners, as fiscal agents of the PCGG, cannot be sued in such capacity before the ordinary
courts. The tribunal for such purpose is the Sandiganbayan.
It necessarily follows that the issues raised by the private respondents before the respondent judge
to the effect that petitioners are usurpers and have no right to sit in the board of directors or act as
corporate officers of the PJI are issues which should be addressed to the Sandiganbayan.

WHEREFORE, the petition is GRANTED. The respondent judge is permanently enjoined from
enforcing the order of the trial court dated January 14, 1988. The restraining order issued by this
Court dated February 4, 1988 enjoining petitioner Reyes and/or the corporate officers of the PJI from
holding the special stockholders meeting on February 5, 1988 or at any date thereafter, and to
preserve and maintain the status quo, is hereby lifted. The order of the trial court dated January 14,
1988 is hereby SET ASIDE and another order is hereby issued dismissing the complaint, without
pronouncement as to costs. This Decision is immediately executory.
SO ORDERED.

[G.R. No. 141949. October 14, 2002]

CEFERINO PADUA, petitioner, vs. HON. SANTIAGO RANADA,

PRESIDING JUDGE OF MAKATI, RTC, BRANCH 137, PHILIPPINE
NATIONAL CONSTRUCTION CORP., TOLL REGULATORY
BOARD, DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS,
and REPUBLIC OF THE PHILIPPINES, respondents.
[G.R. No. 151108. October 14, 2002]

EDUARDO C. ZIALCITA, petitioner, vs. TOLL REGULATORY BOARD

AND
CITRA
METRO
MANILA
TOLLWAYS
CORPORATION, respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:

The focal point upon which these two consolidated cases converge is
whether Resolution No. 2001-89 issued by the Toll Regulatory Board (TRB) is
valid.
A brief narration of the factual backdrop is imperative, thus:
On November 9, 2001, the TRB issued Resolution No. 2001-89
authorizing provisional toll rate adjustments at the Metro Manila Skyway,
effective January 1, 2002, thus:
[1]

NOW THEREFORE, it is RESOLVED, as it is hereby RESOLVED:

1.
That in view of urgent public interest, the Board hereby GRANTS to the Metro
Manila Skyway Project, Provisional Relief in accordance with Rule 10, Section 3 of
the Rules of Practice and Procedure Governing Hearing before the Toll Regulatory
Board which states, among others that the Board may grant (provisional relief)in
its own initiativewithout prejudice to the final decision after completion of the
hearing;
2. That the Provisional Relief shall be in form of an interim toll rate adjustment in
accordance with Section 7.04(3) of the Supplemental Toll Operation Agreement, dated

November 27, 1995, referring to Interim Adjustments in Toll Rates upon the
occurrence of a significant currency devaluation:
Be APPROVED, as it is hereby APPROVED.
RESOLVED FURTHER, as it is hereby RESOLVED:
That the Provisional Toll Rates, which are not to exceed the following:
Section

Unrounded Tol
l Rates

Toll Rates for Implementation

CLASS 1

CLASS 2

CLASS
3

75.00

75.00

150.00

225.00

Magallanes to
Bicutan

19.35

19.50

38.50

58.00

Bicutan to Sucat

11.21

11.00

22.50

34.00

Sucat to Alabang

10.99

11.00

21.00

32.50

Elevated
Portion
At-Grade
Portion

* includes C5 entry/exit and Merville exit.

For implementation starting January 1, 2002 after its publication once a week for
three (3) consecutive weeks in a newspaper of general circulation and that said
Provisional Toll Rate Increase shall remain in effect until such time that the TRB
Board has determined otherwise:
Be APPROVED as it is hereby APPROVED.
RESOLVED FURTHERMORE, as it is hereby RESOLVED that the Provisional
Toll Rates be implemented in two (2) stages in accordance with the following
schedule:

Unrounded Toll
Rates as
Maximum for
One (1) Year

Section

Toll Rates for Implementation For

Class 1 as Reference

JANUARY 1,
2002
to
JUNE
30, 2002

JULY 1, 2002
to
DECEMBER
31, 2002

75.00

65.00

75.00

Magallanes to
Bicutan

19.35

15.00

20.00

Bicutan to Sucat

11.21

9.00

11.00

Sucat to Alabang

10.99

9.00

11.00

Elevated Portion

At-Grade Portion

PROVIDED that the recovery of the sum from the interim rate adjustment shall be
applied starting the year 2003.
APPROVED as it is hereby APPROVED.
On December 17, 24 and 31, 2001, the above Resolution approving
provisional toll rate adjustments was published in the newspapers of general
circulation.
[2]

Tracing back the events that led to the issuance of the said Resolution, it
appears that on February 27, 2001 the Citra Metro Manila Tollways
Corporation (CITRA) filed with the TRB an application for an interim
adjustment of the toll rates at the Metro Manila Skyway Project Stage 1.
CITRA moored its petition on the provisions of the Supplemental Toll
Operation Agreement (STOA), authorizing it, as the investor, to apply for and
[3]

[4]

if warranted, to be granted an interim adjustment of toll rates in the event of a

significant currency devaluation. The relevant portions of the STOA read:
a. The Investor and/or the Operator shall be entitled to apply for and if warranted, to be
granted an interim adjustment of Toll Rates upon the occurrence of any of the
following events:

(ii) a significant currency devaluation

x

(i) A currency devaluation shall be deemed significant if it results in a depreciation of

the value of the Philippine peso relative to the US dollar by at least 10%. For
purposes hereof the exchange rate between the Philippine peso and the US dollar
which shall be applicable shall be the exchange rate between the above mentioned
currencies in effect as of the date of approval of the prevailing preceding Toll Rate.
(ii) The Investors right to apply for an interim Toll Rate adjustment under section 7.04
(3) (a) (ii) shall be effective only while any Financing is outstanding and have not yet
been paid in full.

(iv) An interim adjustment in Toll Rate shall be considered such amount as may be
required to provide interim relief to the Investor from a substantial increase in debtservice burden resulting from the devaluation.[5]

Claiming that the peso exchange rate to a U.S. dollar had devaluated from
P26.1671 in 1995 to P48.00 in 2000, CITRA alleged that there was a
compelling need for the increase of the toll rates to meet the loan obligations
of the Project and the substantial increase in debt-service burden.
Due to heavy opposition, CITRAs petition remained unresolved. This
prompted CITRA to file on October 9, 2001 an Urgent Motion for Provisional
Approval, this time, invoking Section 3, Rule 10 of the Rules of Practice and
Procedure Governing Hearing Before the Toll Regulatory Board (TRB Rules
of Procedure) which provides:
[6]

SECTION 3. Provisional Relief. Upon the filing of an application or petition for

the approval of the initial toll rate or toll rate adjustment, or at any stage,
thereafter, the Board may grant on motion of the pleader or in itsown initiative,

the relief prayed for without prejudice to a final decision after completion of the
hearing should the Board find that the pleading, together with the affidavits and
supporting documents attached thereto and such additional evidence as may have been
requested and presented, substantially support the provisional order; Provided: That
the Board may, motu proprio, continue to issue orders or grant relief in the exercise of
its powers of general supervision under existing laws. Provided: Finally, that pending
finality of the decision, the Board may require the Petitioner to deposit in whole or in
part in escrow the provisionally approved adjustment or initial toll rates. (Emphasis
supplied)
On October 30, 2001, CITRA moved to withdraw its Urgent Motion for
Provisional Approval without prejudice to its right to seek or be granted
provisional relief under the above-quoted provisions of the TRB Rules of
Procedure, obviously, referring to the power of the Board to act on its own
initiative.
[7]

On November 7, 2001, CITRA wrote a letter to TRB expressing its

concern over the undue delay in the proceeding, stressing that any further
setback would bring the Projects financial condition, as well as the Philippine
banking system, to a total collapse. CITRA recounted that out of the US$354
million funding from creditors, two-thirds (2/3) thereof came from the
Philippine banks and financial institutions, such as the Landbank of the
Philippines and the Government Service Insurance Services. Thus, CITRA
requested TRB to find a timely solution to its predicament.
[8]

On November 9, 2001, TRB granted CITRAs motion to withdraw the

Urgent Motion for Provisional Approval and, at the same time, issued
Resolution No. 2001-89, earlier quoted.
[9]

[10]

Hence, petitioners Ceferino Padua and Eduardo Zialcita assail before this
Court the validity and legality of TRB Resolution No. 2001-89.
Petitioner Ceferino Padua, as a toll payer, filed an Urgent Motion for a
Temporary Restraining Order to Stop Arbitrary Toll Fee Increases in G.R.
No. 141949, a petition for mandamus earlierfiled by him. In that petition,
Padua seeks to compel respondent Judge Santiago Ranada of the Regional
Trial Court, Branch 137, Makati City, to issue a writ of execution for the
enforcement of the Court of Appeals Decision dated August 4, 1989 in CAG.R. SP No. 13235. In its Decision, the Court of Appeals ordered the
[11]

[12]

exclusion of certain portions of the expressways (from Villamor Air Base to

Alabang in the South, and from Balintawak to Tabang in the North) from the
franchise of the PNCC.
In his urgent motion, petitioner Padua claims that: (1) Resolution No.
2001-89 was issued without the required publication and in violation of due
process; (2) alone, TRB Executive Director Jaime S. Dumlao, Jr., could not
authorize the provisional toll rate adjustments because the TRB is a collegial
body; and (3) CITRA has no standing to apply for a toll fee increase since it is
an investor and not a franchisee-operator.
On January 4, 2002, petitioner Padua filed a Supplemental Urgent Motion
for a TRO against Toll Fee Increases, arguing further that: (1) Resolution
2001-89 refers exclusively to the Metro Manila Skyway Project, hence, there
is no legal basis for the imposition of the increased rate at the at-grade
portions; (2) Resolution No. 2001-89 was issued without basis considering
that while it was signed by three (3) of the five members of the TRB, none of
them actually attended the hearing; and 3) the computation of the rate
adjustment under the STOA is inconsistent with the rate adjustment formula
under Presidential Decree No. 1894.
[13]

[14]

On January 10, 2002, the Office of the Solicitor General (OSG) filed, in
behalf of public respondent TRB, Philippine National Construction Corporation
(PNCC), Department of Public Works and Highways (DPWH) and Judge
Ranada, a Consolidated Comment contending that: (1) the TRB has the
exclusive jurisdiction over all matters relating to toll rates; (2) Resolution No.
2001-89 covers both the Skyway and the at-grade level of the South Luzon
Expressway as provided under the STOA; (3) that while Resolution No. 200189 does not mention any factual basis to justify its issuance, however, it does
not mean that TRB's finding of facts is not supported by evidence;
and (4) petitioner Padua cannot assail the validity of the STOA because he is
not a party thereto.
[15]

Upon the other hand, on January 9, 2002, petitioner Eduardo Zialcita, as a

taxpayer and as Congressman of Paraaque City, filed the present petition for
prohibition with prayer for a temporary restraining order and/or writ of
preliminary injunction against TRB and CITRA, docketed as G.R. No.
151108, impugning the same Resolution No. 2001-89.
[16]

Petitioner Zialcita asserts that the provisional toll rate adjustments are
exorbitant and that the TRB violated its own Charter, Presidential Decree No.
1112, when it promulgated Resolution No. 2001-89 without the benefit of any
public hearing. He also maintains that the TRB violated the Constitution when
it did not express clearly and distinctly the facts and the law on which
Resolution No. 2001-89 was based. And lastly, he claims that Section 3,
Rule 10 of the TRB Rules of Procedure is not sanctioned by P.D. No. 1112.
[17]

Private respondent CITRA, in its comment on Congressman Zialcitas

petition, counters that: (1)the TRB has primary administrative jurisdiction over
all matters relating to toll rates; (2) prohibition is an inappropriate remedy
because its function is to restrain acts about to be done and not acts already
accomplished; (3) Resolution No. 2001-89 was issued in accordance with
law; (4) Section 3, Rule 10 of the TRB Rules is constitutional; and (5) private
respondent and the Republic of the Philippines would suffer more irreparable
damages than petitioner.
[18]

The TRB, through the OSG, filed a separate comment reiterating the
same arguments raised by private respondent CITRA.
[19]

On January 11, 2002, this Court resolved to consolidate the instant

petitions, G.R. No. 141949 and G.R. No. 151108.
[20]

We rule for the respondents.

In assailing Resolution No. 2001-89, petitioners came to us via two
unconventional remedies one is an urgent motion for a TRO to stop arbitrary
toll fee increases; and the other is a petition for prohibition. Unfortunately,
both are procedurally impermissible.
I
Petitioner Paduas motion is a leap to a legal contest of different
dimension. As previously stated, G.R. No. 141949 is a petition for
mandamus seeking to compel respondent Judge Ranada to issue a writ of
execution for the enforcement of the Court of Appeals Decision dated August
4, 1989 in CA-G.R. SP No. 13235. The issue therein is whether the
application for a writ of execution should be by a mere motion or by an action
for revival of judgment. Thus, for petitioner Padua to suddenly interject in the

same petition the issue of whether Resolution No. 2001-89 is valid is to drag
this Court to his web of legal convolution. Courts cannot, as a case
progresses, resolve the intrinsic merit of every issue that comes along its way,
particularly those which bear no relevance to the resolution of the case.
Certainly, petitioner Paduas recourse in challenging the validity of TRB
Resolution No. 2001-89 should have been to institute an action, separate and
independent from G.R. No. 141949.
II
The remedy of prohibition initiated by petitioner Zialcita in G.R. No. 151108
also suffers several infirmities. Initially, it violates the twin doctrine of primary
administrative jurisdiction and non-exhaustion of administrative remedies.
P.D. No. 1112 explicitly provides that the decisions of the TRB on petitions
for the increase of toll rate shall be appealable to the Office of the President
within ten (10) days from the promulgation thereof. P.D. No. 1894 reiterates
this instruction and further provides:
[21]

SECTION 9. The GRANTEE shall have the right and authority to adjust any
existing toll being charged the users of the Expressways under the following
guidelines:
x

c)
Any interested Expressways user shall have the right to file, within a period of
ninety (90) days after the date of publication of the adjusted toll rate (s), a petition
with the Toll Regulatory Board for a review of the adjusted toll rate
(s); provided, however, that notwithstanding the filing of such petition and the
pendency of the resolution thereof, the adjusted toll shall be enforceable and
collectible by the GRANTEE effective on the first day of January in accordance with
the immediately preceding paragraph.
x

e)
Decisions of the Toll Regulatory Board on petitions for review of adjusted toll
shall be appealable to the Office of the President within ten (10) days from the
promulgation thereof.

These same provisions are incorporated in the TRB Rules of Procedure,

particularly in Section 6, Rule 5 and Section 1, Rule 12 thereof.
[22]

Obviously, the laws and the TRB Rules of Procedure have provided the
remedies of an interested Expressways user. The initial proper recourse is to
file a petition for review of the adjusted toll rates with the TRB. The need for a
prior resort to this body is with reason. The TRB, as the agency assigned to
supervise the collection of toll fees and the operation of toll facilities, has the
necessary expertise, training and skills to judiciously decide matters of this
kind. As may be gleaned from the petition, the main thrust of petitioner
Zialcitas argument is that the provisional toll rate adjustments are
exorbitant, oppressive, onerous and unconscionable. This is obviously
a question of fact requiring knowledge of the formula used and the
factors considered in determining the assailed rates. Definitely, this task
is within the province of the TRB.
[23]

We take cognizance of the wealth of jurisprudence on the doctrine of

primary administrative jurisdiction and exhaustion of administrative
remedies. In this era of clogged court dockets, the need for specialized
administrative boards or commissions with the special knowledge, experience
and capability to hear and determine promptly disputes on technical matters
or intricate questions of facts, subject to judicial review in case of grave abuse
of discretion, is indispensable. Between the power lodged in an
administrative body and a court, the unmistakable trend is to refer it to
the former." In Industrial Enterprises, Inc. vs. Court of Appeals, we ruled:
[24]

[25]

x x x, if the case is such that its determination requires the expertise, specialized
skills and knowledge of the proper administrative bodies because technical matters or
intricate questions of facts are involved, then relief must first be obtained in an
administrative proceeding before a remedy will be supplied by the courts even though
the matter is within the proper jurisdiction of a court.
Moreover, petitioner Zialcitas resort to prohibition is intrinsically
inappropriate. It bears stressing that the office of this remedy is not to correct
errors of judgment but to prevent or restrain usurpation of jurisdiction or
authority by inferior tribunals and to compel them to observe the limitation of
their jurisdictions. G.R. No. 151108, while designated as a petition for
prohibition, has for its object the setting aside of Resolution No. 2001-89
on the ground that it was issued without prior notice, hearing and

publication and that the provisional toll rate adjustments are

exorbitant. This is not the proper subject of prohibition because as long as
the inferior court, tribunal or board has jurisdiction over the person and subject
matter of the controversy, the writ will not lie to correct errors and
irregularities in procedure, or to prevent an erroneous decision or an
enforcement of an erroneous judgment. And even in cases of encroachment,
usurpation, and improper assumption of jurisdiction, the writ will not
issue where an adequate and applicable remedy by appeal, writ or error,
certiorari, or other prescribed methods of review are available. In this
case, petitioner Zialcita should have sought a review of the assailed
Resolution before the TRB.
[26]

III
Even granting that petitioners recourse to the instant remedies is in order,
still, we cannot rule in their favor.
For one, it is not true that the provisional toll rate adjustments were not
published prior to its implementation on January 1, 2002. Records show that
they were published on December 17, 24 and 31, 2001 in three newspapers
of general circulation, particularly the Philippine Star, Philippine Daily Inquirer
and The Manila Bulletin. Surely, such publications sufficiently complied with
Section 5 of P.D. No. 1112 which mandates that no new rates shall be
collected unless published in a newspaper of general publication at
least once a week for three consecutive weeks. At any rate, it must be
pointed out that under Letter of Instruction No. 1334-A, the TRB may grant
and issue ex-parte to any petitioner, without need of notice, publication or
hearing, provisional authority to collect, pending hearing and decision on the
merits of the petition, the increase in rates prayed for or such lesser amount
as the TRB may in its discretion provisionally grant. That LOI No. 1334-A has
the force and effect of law finds support in a catena of cases decreeing that
all proclamations, orders, decrees,instructions, and acts promulgated,
issued, or done by the former President (Ferdinand E. Marcos) are part of the
law of the land, and shall remain valid, legal, binding, and effective, unless
modified, revoked or superseded by subsequent proclamations, orders,
decrees, instructions, or other acts of the President. In Association of Small
Landowners in the Philippines, Inc. vs. Secretary of Agrarian Reform, this
Court held:
[27]

[28]

[29]

[30]

The Court wryly observes that during the past dictatorship, every presidential
issuance, by whatever name it was called, had the force and effect of law because it
came from President Marcos. Such are the ways of despots. Hence, it is futile to
argue, as the petitioners do in G.R. No. 79744, that LOI 474 could not have repealed
P.D. No. 27 because the former was only a letter of instruction. The important thing
is that it was issued by President Marcos, whose word was law during that time.
(Emphasis supplied)
For another, it is not true that it was TRB Executive Director Dumlao, Jr.
alone who issued Resolution No. 2001-89. The Resolution itself contains the
signature of the four TRB Directors, namely, Simeon A. Datumanong,
Emmanuel P. Bonoan, Ruben S. Reinoso, Jr. and Mario K. Espinosa.
Petitioner Padua would argue that while these Directors signed the
Resolution, none of them personally attended the hearing. This argument is
misplaced. Under our jurisprudence, an administrative agency may employ
other persons, such as a hearing officer, examiner or investigator, to receive
evidence, conduct hearing and make reports, on the basis of which the
agency shall render its decision. Such a procedure is a practical necessity.
Thus, in Mollaneda vs. Umacob, we ruled:
[31]

[32]

[33]

x x x At any rate, it cannot be gainsaid that the term administrative body or

agency includes the subordinate officials upon whose hand the body or agency
delegates a portion of its authority. Included therein are the hearing officers
through whose eyes and ears the administrative body or agency observes the
demeanor, conduct and attitude of the witnesses and listens to their testimonies.
It must be emphasized that the appointment of competent officers to hear and receive
evidence is commonly resorted to by administrative bodies or agencies in the interest
of an orderly and efficient disposition of administrative cases. x x x
x x x Corollarily, in a catena of cases, this Court laid down the cardinal
requirements of due process in administrative proceedings, one of which is that the
tribunal or body or any of its judges must act on its or his own independent
consideration of the law and facts of the controversy, and not simply accept the views
of a subordinate. Thus, it is logical to say that this mandate was rendered
precisely to ensure that in cases where the hearing or reception of evidence is
assigned to a subordinate, the body or agency shall not merely rely on his
recommendation but instead shall personally weigh and assess the evidence
which the said subordinate has gathered.

Be that as it may, we must stress that the TRBs authority to grant

provisional toll rate adjustments does not require the conduct of a
hearing. Pertinent laws and jurisprudence support this conclusion.
It may be recalled that Former President Ferdinand E. Marcos
promulgated P.D. No. 1112 creating the TRB on March 31, 1977. The end in
view was to authorize the collection of toll fees for the use of certain public
improvements in order to attract private sector investment in the government
infrastructure projects. The TRB was tasked to supervise the collection of toll
fees and the operation of toll facilities. One of its powers is to issue, modify
and promulgate from time to time the rates of toll that will be charged
the direct users of toll facilities and upon notice and hearing, to approve
or disapprove petitions for the increase thereof.
[34]

To clarify the intent of P.D. No. 1112 as to the extent of the TRBs power,
Former President Marcos further issued LOI No. 1334-A expressly allowing
the TRB to grant ex-parte provisional or temporary increase in toll rates, thus:
[35]

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Republic of

the Philippines, by virtue of the powers vested in me by the Constitution, do hereby
direct, order and instruct the Toll Regulatory Board to grant and issue exparte to any petitioner, without need of notice, publication or hearing, provisional
authority to collect, pending hearing of and decision on the merits of such
petition, the increase in rates prayed for or such lesser amount as the Board may
in its discretion provisionally grant, upon (a) a finding that the said petition is
sufficient in form and substance, (b) the submission of an affidavit by the petitioner
showing that the increase in rates substantially conforms to the formula, if any
stipulated in the franchise or toll operation agreement/certificate of the petitioner and
that failure to immediately impose and collect the increase in rates would result in
outright delay or stoppage of urgently needed improvements, expansion or repairs of
toll facilities and/or in great irreparable injury to the petitioner, and (c) the submission
by the petitioner to the Board of a bond, in such amount and from such surety or
sureties and under such terms and conditions as the Board shall fix, to guarantee the
refund of the increase in rates to the affected toll payers in case it is finally
determined, after notice and hearing, that the petitioner is not entitled, in whole or in
part, to the same. Any provisional toll rate increases shall be effective
immediately upon approval without need of publication.

Thereafter, the TRB promulgated as part of its Rules of Procedure, the

following provision:
RULE 5
PROCEDURE FOR APPROVAL OF TOLL RATE
Section 2. Provisional Relief Upon initial findings of the Board that the Petition for
the approval of initial toll rate or the petition for toll rate adjustment is in accordance
with Sections 1 and 2 of Rule 2, Section 2 of Rule 3 and Section 1 of Rule 4 hereof,
the Board within a reasonable time after the filing of the Petition, may in an en banc
decision provisionally approve the initial toll rate or toll rate adjustment, without the
necessity of any notice and hearing.
From the foregoing, it is clear that a hearing is not necessary for the grant
of provisional toll rate adjustment. The language of LOI No. 1334-A is not
susceptible of equivocation. It directs, orders and instructs the TRB to issue
provisional
toll
rates
adjustment ex-parte without
the
need
of
notice, hearingand publication. All that is necessary is that it be issued
upon (1) a finding that the main petition is sufficient in form and
substance; (2) the submission of an affidavit showing that the increase in
rates substantially conforms to the formula, if any is stipulated in the
franchise or toll operation agreement, and that failure to immediately
impose and collect the increase in rates would result in great irreparable injury
to the petitioner; and (3) the submission of a bond. Again, whether or not
CITRA complied with these requirements is an issue that must be
addressed to the TRB.
The practice is not something peculiar. We have ruled in a number of
cases that an administrative agency may be empowered to approve
provisionally, when demanded by urgent public need, rates of public utilities
without a hearing. The reason is easily discerned from the fact that
provisional rates are by their nature temporary and subject to
adjustment in conformity with the definitive rates approved after final
hearing. In Maceda vs. Energy Regulatory Board, we ruled that while the
ERB is not precluded from conducting a hearing on the grant of provisional
authority which is of course, the better procedure however, it can not be
stigmatized if it failed to conduct one. CitingCitizens Alliance for
Consumer Protection vs. Energy Regulatory Board, this Court held:
[36]

[37]

[38]

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 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.
Anent petitioner Paduas contention that CITRA has no standing to apply
for a toll fee increase, suffice it to say that CITRAs right stems from the STOA
which was entered into by no less than the Republic of the Philippines and by
the PNCC. Section 7.04 of the STOA provides that the Investor,CITRA,
and/or the Operator, PNCC, shall be entitled to apply for and if warranted, to
be granted an interim adjustment of toll rates in case of force majeure and a
significant currency valuation. Now, unless set aside through proper action,
the STOA has the force and effect of law between the contracting parties, and
is entitled to recognition by this Court. On the same breath, we cannot
sustain Paduas contention that the term Metro Manila Skyway Project
excludes the at-grade portions of the South Luzon Expressway considering
that under the same STOA the Metro Manila Skyway includes: (a) the South
Metro Manila Skyway, coupled with the rehabilitated at-grade portion of the
South Luzon Expressway, from Alabang to Quirino Avenue; (b) the Central
Metro Manila Skyway, from Quirino Avenue to A. Bonifacio Avenue; x x x.
[39]

[40]

[41]

Petitioner Zialcita faults the TRB for not stating the facts and the law on
which Resolution No. 2001-89 is based. Petitioner is wrong. Suffice it to state
that while Section 14, Article VIII of the 1987 Constitution provides that no
decision shall be rendered by any court without expressing therein clearly and
distinctly the facts and the law on which it is based, this rule applies only to
a decision of a court of justice, not TRB.
[42]

At this point, let it be stressed that we are not passing upon the
reasonableness of the provisional toll rate adjustments. As we have
earlier mentioned, this matter is best addressed to the TRB.

IV
In fine, as what we intimated in Philippine National Construction Corp. vs.
Court of Appeals, we commend petitioners for devoting their time and effort
on a matter so imbued with public interest as in this case. But we can do no
better than to brush aside their chief objections to the provisional toll rate
adjustments, for a different approach would lead this Court astray into the field
of factual conflict where its pronouncements would not rest on solid
grounds. Time and again, we have impressed that this Court is not a trier of
facts, more so, in the consideration of an extraordinary remedy of prohibition
where only questions of lack or excess of jurisdiction or grave abuse of
discretion is to be entertained.
[43]

And to accord the main petition for mandamus in G.R. No. 141949 the full
deliberation it deserves, we deem it appropriate to discuss its merit on another
occasion. Anyway, G.R. No. 141949 was consolidated with G.R. No. 151108
only by reason of petitioner Paduas deviant motion assailing Resolution
2001-89. As we have previously said, the main petition in G.R. No. 141949
presents an entirely different issue and is set on a different factual landscape.
WHEREFORE, petitioner Paduas Urgent Motion for Temporary
Restraining Order to Stop Arbitrary Toll Fee Increases is DENIED and
petitioner Zialcitas Petition for Prohibition isDISMISSED.
SO ORDERED.