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Malaga vs.

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

03 September 1992

Chartered Institution and GOCC, defined.

FACTS: The Iloilo State College of Fisheries (ISCOF) through its Pre-qualifications, Bids and
Awards Committee (PBAC) caused the publication in the November 25, 26 and 28, 1988 issues of
the Western Visayas Daily an Invitation to Bid for the construction of a Micro Laboratory Building
at ISCOF. The notice announced that the last day for the submission of pre-qualification
requirements was on December 2, 1988, and that the bids would be received and opened on
December 12, 1988 at 3 o'clock in the afternoon.
Petitioners Malaga and Najarro, doing business under the name of BE Construction and Best Built
Construction, respectively, submitted their pre-qualification documents at two o'clock in the
afternoon of December 2, 1988. Petitioner Occeana submitted his own PRE-C1 on December 5,
1988. All three of them were not allowed to participate in the bidding as their documents were
considered late.
On December 12, 1988, the petitioners filed a complaint with the Iloilo RTC against the officers of
PBAC for their refusal without just cause to accept them resulting to their non-inclusion in the list
of pre-qualified bidders. They sought to the resetting of the December 12, 1988 bidding and the
acceptance of their documents. They also asked that if the bidding had already been conducted,
the defendants be directed not to award the project pending resolution of their complaint.
On the same date, Judge Lebaquin issued a restraining order prohibiting PBAC from conducting
the bidding and award the project. The defendants filed a motion to lift the restraining order on
the ground that the court is prohibited from issuing such order, preliminary injunction and
preliminary mandatory injunction in government infrastructure project under Sec. 1 of P.D. 1818.
They also contended that the preliminary injunction had become moot and academic as it was
served after the bidding had been awarded and closed.
On January 2, 1989, the trial court lifted the restraining order and denied the petition for
preliminary injunction. It declared that the building sought to be constructed at the ISCOF was
an infrastructure project of the government falling within the coverage of the subject law.

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


1818?
RULING: The 1987 Administrative Code defines a government instrumentality as follows:
Instrumentality refers to any agency of the National Government, not integrated within the
department framework, vested with special functions or jurisdiction by law, endowed with some
if not all corporate powers, administering special funds, and enjoying operational autonomy,
usually through a charter. This term includes regulatory agencies, chartered institutions, and
government-owned or controlled corporations. (Sec. 2 (5) Introductory Provisions).
The same Code describes a chartered institution thus:
Chartered institution - refers to any agency organized or operating under a special charter, and
vested by law with functions relating to specific constitutional policies or objectives. This term
includes the state universities and colleges, and the monetary authority of the state. (Sec. 2 (12)
Introductory Provisions).

It is clear from the above definitions that ISCOF is a chartered institution and is therefore covered
by P.D. 1818.
There are also indications in its charter that ISCOF is a government instrumentality. First, it was
created in pursuance of the integrated fisheries development policy of the State, a priority
program of the government to effect the socio-economic life of the nation. Second, the Treasurer
of the Republic of the Philippines shall also be the ex-officio Treasurer of the state college with its
accounts and expenses to be audited by the Commission on Audit or its duly authorized
representative. Third, heads of bureaus and offices of the National Government are authorized to
loan or transfer to it, upon request of the president of the state college, such apparatus,
equipment, or supplies and even the services of such employees as can be spared without
serious detriment to public service. Lastly, an additional amount of P1.5M had been appropriated
out of the funds of the National Treasury and it was also decreed in its charter that the funds and
maintenance of the state college would henceforth be included in the General Appropriations
Law.
Nevertheless, it does not automatically follow that ISCOF is covered by the prohibition in the said
decree as there are irregularities present surrounding the transaction that justified the injunction
issued as regards to the bidding and the award of the project (citing the case of Datiles vs.
Sucaldito).

Maria Elena Malaga, et al. vs. Manuel R. Penachos Jr. et al.


GR No. 86695 September 3, 1992
FACTS: The Iloilo State College of Fisheries (ISCOF) through its Pre-qualification, Bids and Awards
Committee (PBAC) caused the publication for an Invitation to Bid for the construction of a Micro Laboratory
Building. The notice announced that the last day for submission of pre-qualification requirements (PRE-C1)
was 2 December 1988, and that the bids would be opened on 12 December 1988 at 3 pm. Petitioners Malaga
and Najarro submitted their PRE-C1 at 2pm of 2 December 1988 while petitioner Occena submitted on 5
December 1988. All three were not allowed to participate in the bidding because their documents were
considered late, having been submitted after the cut-off time of 10 am of 2 December 1988. On 12 December,
petitioners file a complaint with the RTC against the chairman and PBAC members, claiming that although they
submitted their PRE-C1 on time, the PBAC refused without just cause to accept them. On the same date,
respondent Judge Labaquin issued a restraining order prohibiting PBAC from conducting the bidding and
awarding the project. On 16 December, defendants filed a motion to lift the restraining order on the ground that
the Court was prohibited from issuing restraining orders, preliminary injunctions and preliminary mandatory
injunctions by PD No. 1818, which provides: Section 1. No court in the Philippines shall have jurisdiction to
issue any restraining order in any case, dispute, or controversy involving an infrastructure project of the
government to prohibit any person or persons, entity or government official from proceeding with, or
continuing the execution or implementation of any such project Plaintiffs argue against the applicability of
PD No. 1818, pointing out that while ISCOF was a state college, it had its own charter and separate existence
and was not part of the national government or of any local political subdivision; that even if PD No. 1818 were
applicable, the prohibition presumed a valid and legal government project, not one tainted with anomalies like
the project at bar. On 2 January 1989, the RTC lifted the restraining order and denied the petition for
preliminary injunction. It declared that the building sought to be constructed was an infrastructure project of the
government falling within the coverage of PD 1818.
ISSUE: Whether or not the ISCOF is considered a government instrumentality such that it would necessarily
fall under the prohibition in PD 1818.
HELD: Yes, the 1987 Administrative Code defines a government instrumentality as follows: Instrumentality
refers to any agency of the National Government, not integrated within the department framework, vested with
special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special
funds, and enjoying operational autonomy, usually through a charter. This includes regulatory agencies,
chartered institutions, and GOCCs. The same Code describes a chartered institution thus: Chartered
Institutionrefers to any agency organized or operating under a special charter, and vested by law with
functions relating to specific constitutional policies or objectives. This includes state universities and colleges,
and the monetary authority of the state. It is clear from the above definitions that ISCOF is a chartered
institution and is therefore covered by PD 1818. HOWEVER, it is apparent that the present controversy did not
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arise from the discretionary acts of the administrative body nor does it involve merely technical matters. What
is involved here is non-compliance with the procedural rules on bidding which required strict observance. PD
1818 was not intended to shield from judicial scrutiny irregularities committed by administrative agencies such
as the anomalies in the present case. Hence, the challenged restraining order was not improperly issued by
the respondent judge and the writ of preliminary injunction should not have been denied.

Beja Sr. vs. Court of Appeals


207 SCRA 689
FACTS: Fidencio Beja Sr. an employee of Philippine ports authority, hired as Arrastre supervisor in 1975. and
later on appointed as terminal supervisor in 1988. On October 21, 1988, the General Manager, Rogelio A.
Dayan filed administrative case against Beja Sr. and Villaluz for grave dishonesty. Grave misconduct willful
violation of reasonable office rules and regulations and conduct prejudicial to the best interest of the service.
Consequently they were preventively suspended for the charges. After preliminary investigation conducted by
the district attorney for region X, administrative case no. 11-04-88 was considered closed for lack of merit. On
December 13, 1988 another administrative case was filed against Beja by the PPA manager also for
dishonesty grave misconduct violation of office rules and regulations, conduct prejudicial to the best interest of
the service and for being notoriously undesirable. Beja was also placed under preventive suspension pursuant
to sec. 412 of PD No. 807. The case was redocketed as administrative case n o. PPA-AAB-1-049-89 and
thereafter, the PPA indorsed it to the AAB for appropriate action. The AAB proceeded to hear the case and
gave Beja an opportunity to present evidence. However, on February 20, 1989, Beja filed petition for certiorari
with preliminary injunction before the Regional Trial Court of Misamis Oriental. Two days later, he filed with the
ABB a manifestation and motion to suspend the hearing of administrative case no. PPA-AAB-1-049-89 on
account of the pendency of the certiorari proceeding before the court. AAB denied the motion and continued
with the hearing of the administrative case. Thereafter, Beja moved for the dismissal of the certiorari case and
proceeded to file before the Court for a petition for certiorari with preliminary injunction and/or temporary
restraining order.
ISSUE: Wether or not the Administrative Action Board of DOTC has jurisdiction over administrative cases
involving personnel below the rank of Assistant General Manager of the Philippine Ports Authority, an attached
agency of DOTC.
HELD: The PPA General Manager is the disciplining authority who may, by himself and without the approval of
the PPA Board of Directors, subject a respondent in an administrative case to preventive suspension. His
disciplining powers are sanctioned not only by Sec.8 of PD no. 857 but also by Sec. 37 of PD no. 807 granting
the heads of agencies the Jurisdiction to investigate and decide matters involving disciplinary actions against
officers and employees in the PPA. With respect to the issue, the Court qualifiedly rules in favor of the
petitioner. The PPA was created through PD no. 505 dated July 1974. Under the Law, the corporate powers of
the PPA were vested in a governing Board of Directors known as the Philippine Ports Authority Council. Sec.
5(i) of the same decree gave the council the power to appoint, discipline and remove, and determine the
composition of the technical staff of the authority and other personnel. On December 23, 1975, PD no. 505
was substituted by PD no. 857 sec. 4(a) thereof created the Philippine Ports Authority which would be attached
to the then Department of Public Works, Transportation and Communication. When Executive order no. 125
dated January 30, 1987 reorganizing the Ministry of Transportation and Communication was issued, the PPA
retained its attached status. Administrative Code of 1987 classiffied PPA as an attached agency to the DOTC.
Book IV of the Administrative Code of 1987, the other two being supervision and control and administrative
supervision, Attachment is defined as the lateral relationship between the department or its equivalent and
the attached agency or corporation for purposes of policy and program coordination. An attached agency has
a larger measure of independence from the Department to which it is attached than one which is under
departmental supervision and control or administrative supervision. This is borne out by the lateral
relationship between the Department and the attached agency. The attachment is merely for policy and
program coordination. With respect to administrative matters, the independence of an attached agency from
the department control and supervision is furthermore reinforced by the fact that even an agency under a
Departments administrative supervision is free from Departmental interference with respect to appointments
and other personnel actions in accordance with the decentralization of personnel functions under the
administrative Code of 1987. The Law impliedly grants the general Manager with the approval of the PPA
board of Directors the power to investigate its personnel below the rank of Assistant Manager who may be
charged with an administrative offense. During such investigation, the PPA General Manager, may subject the
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employee concerned to preventive suspension. The investigation should be conducted in accordance with the
procedure set out in Sec. 38 of PD no. 807. The Decision of the Court of Appeal is AFFIRMED as so far as it
upholds the power of the PPA General Manager to to subject petitioner to preventive suspension and
REVERSED insofar as it validates the jurisdiction of the DOTC and/or the AAB to act on administrative case
no. PPA AAB-1-049-89. The AAB decision in said cased is hereby declared NULL and VOID and the case is
REMANDED to the PPA whose General Manager shall conduct with dispatch its reinvestigation.

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