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1.) G.R. No.

L-49705-09 February 8, 1979 The authority of the Commission is in reviewing


TOMATIC ARATUC, SERGIO TOCAO, CISCOLARIO such actuations does not spring from any appellant
DIAZ, FRED TAMULA, MANGONTAWAR GURO and jurisdiction conferred by any provisions of the law,
BONIFACIO LEGASPI, petitioners, vs. for there is none such provision anywhere in the
The COMMISSION ON ELECTIONS, REGIONAL election Code, but from the plenary prerogative of
BOARD OF CANVASSERS for Region XII (Central direct control and supervision endowed to it by the
Mindanao), ABDULLAH DIMAPORO, JESUS provisions in Section 168. And in administrative law,
AMPARO, ANACLETO BADOY, et al., respondents. it is a too well settled postulate to need any
supporting citation here, that a superior body or
Nos. L-49717-21 February 8,1979. office having supervision and control over another
LINANG MANDANGAN, petitioner, vs. may do directly what the latter is supposed to do or
THE COMMISSION ON ELECTIONS, THE REGIONAL ought to have done.
BOARD OF CANVASSERS for Region XII, and
ERNESTO ROLDAN, respondents.

FACTS: On April 7, 1978, election for the position of 2.) G.R. Nos. 95203-05 : December 18, 1990
Representative to the Batasang Pambansa were 192 SCRA 363
held throughout the Philippines. The cases at bar
concern only the results of the elections in Region SENATOR ERNESTO MACEDA, Petitioner, vs.
XII which comprises the provinces of Lanao Del Sur, ENERGY REGULATORY BOARD (ERB); MARCELO N.
Lanao Del Norte, Maguindanao, North Cotabato and FERNANDO, ALEJANDRO B. AFURONG; REX V.
Sultan Kudarat, and the cities of Marawi, Iligan and TANTIONGCO; and OSCAR E. ALA, in their collective
Cotabato. official capacities as Chairman and Members of the
Board (ERB), respectively; CATALINO MACARAIG, in
Tomatic Aratuc sought the suspension of the his quadruple official capacities as Executive
canvass then being undertaken by Regional Board of Secretary, Chairman of Philippine National Oil
Canvassers in Cotabato City and in which, the Company; Office of the Energy Affairs, and with
returns in 1,966 out of 4,107voting centers in the MANUEL ESTRELLA, in their respective official
whole region had already been canvassed showing capacities as Chairman and President of the Petron
partial results. Corporation; PILIPINAS SHELL PETROLEUM
CORPORATION; with CESAR BUENAVENTURA and
A Supervening Panel headed by Commissioner of REY GAMBOA as chairman and President,
Election Hon. Venancio S. Duque had conducted the respectively; CALTEX PHILIPPINES with FRANCIS
hearings of the complaints of the petitioners therein ABLAN, President and Chief Executive Officer; and
of the alleged irregularities in the election records of the Presidents of Philippine Petroleum Dealer's
the mentioned provinces. On July 11, 1978, the Association, Caltex Dealer's Co., Petron Dealer's
Regional Board of Canvassers issued a resolution, Asso., Shell Dealer's Asso. of the Phil., Liquefied
over the objection of the Konsensiya ng Bayan Petroleum Gas Institute of the Phils., any and all
candidates,declaring all the eight Kilusan ng Bagong concerned gasoline and petrol dealers or stations;
Lipunan candidates elected. Appeal was taken by and such other persons, officials, and parties,
the KB candidates to the Comelec. acting for and on their behalf; or in representation
of and/or under their authority, Respondents.
On January 13, 1979, the Comelec issued its
questioned resolution declaring seven KBL G.R. Nos. 95119-21 : December 18, 1990.
candidates and one KB candidate as having obtained 192 SCRA 363
the first eight places, and ordering the Regional
Board of Canvassers to proclaim the winning OLIVER O. LOZANO, Petitioner, vs. ENERGY
candidates. The KB candidates interposed the REGULATORY BOARD (ERB), PILIPINAS SHELL
present petition. PETROLEUM CORPORATION, CALTEX (PHIL.), INC.,
and PETRON CORPORATION, Respondents.
ISSUE: Whether or not respondent Comelec has
committed grave abuse of discretion,amounting to FACTS: Caltex, Shell Petroleum, and Petron
lack of jurisdiction. Corporation filed separate applications with the
Board for permission to increase the wholesale
HELD: No. As the Superior administrative body posted prices of petroleum products and
having control over boards of canvassers, the meanwhile, for provisional authority to increase
Comelec may review the actuations of the Regional temporarily such wholesale posted prices pending
Board of Canvassers, such as by extending its inquiry further proceedings.
beyond the election records of the voting centers in The Board, in a joint order, granted provisional relief
questions. pursuant to Section 8 of Executive Order No. 172.
The petitioners submit that the Order had been Section 3, paragraph (e) and Section 8 do not negate
issued with grave abuse of discretion, tantamount each other, or otherwise, operate exclusively of the
to lack of jurisdiction. Senator Ernesto Maceda, also other, in that the Board may resort to one but not to
submits that the same was issued without proper both at the same time. Section 3(e) outlines the
notice and hearing in violation of Section 3, jurisdiction of the Board and the grounds for which
paragraph (e), of Executive Order No. 172; that the it may decree a price adjustment, subject to the
Board, in decreeing an increase, had created a new requirements of notice and hearing. Pending that,
source for the Oil Price Stabilization Fund (OPSF), or however, it may order, under Section 8, an authority
otherwise that it had levied a tax, a power vested in to increase provisionally, without need of a hearing,
the legislature. subject to the final outcome of the proceeding.

The petitioner, Atty. Oliver Lozano, likewise argues In the light of Section 8 quoted above, public
that the Board's Order was issued without notice respondent Board need not even have conducted
and hearing, and hence, without due process of law. formal hearings in these cases prior to issuance of
its Order granting a provisional increase of prices.
The intervenor, the Trade Union of the Philippines The Board, upon its own discretion and on the basis
and Allied Services argues on the other hand, that of documents and evidence submitted by private
the increase cannot be allowed since the respondents, could have issued an order granting
respondents oil companies had not exhausted their provisional relief immediately upon filing by private
existing oil stock which they had bought at old respondents of their respective applications.
prices and that they cannot be allowed to charge
new rates for stock purchased at such lower rates. We do not therefore find the challenged action of
the Board to have been done in violation of the due
ISSUE: Whether or not ERB orders granting process clause. The petitioners may contest
provisional oil increase without prior notice is valid. however, the applications at the hearings proper.

HELD: Senator Maceda and Atty. Lozano, in


questioning the lack of a hearing, have overlooked
the provisions of Section 8 of Executive Order No.
172, which we quote: 3.) G.R. No. 1051 May 19, 1903
THE UNITED STATES, complainant-appellee, vs.
"SECTION 8. Authority to Grant Provisional Relief . FRED L. DORR, ET AL., defendants-appellants.
The Board may, upon the filing of an application,
petition or complaint or at any stage thereafter and FACTS: The defendants have been convicted upon a
without prior hearing, on the basis of supporting complaint charging them with the offense of
papers duly verified or authenticated, grant writing, publishing, and circulating a scurrilous libel
provisional relief on motion of a party in the case or against the Government of the United States and
on its own initiative, without prejudice to a final the Insular Government of the Philippine Islands.
decision after hearing, should the Board find that The complaint is based upon section 8 of Act No.
the pleadings, together with such affidavits, 292 of the Commission, which is as follows:
documents and other evidence which may be
submitted in support of the motion, substantially Evert person who shall utter seditious words or
support the provisional order: Provided, That the speeches, write, publish, or circulate scurrilous
Board shall immediately schedule and conduct a libels against the Government of the United States
hearing thereon within thirty (30) days thereafter, or the Insular Government of the Philippine Islands,
upon publication and notice to all affected parties. or which tend to disturb or obstruct any lawful
officer in executing his office, or which tend to
As the Order itself indicates, the authority for instigate others to cabal or meet together for
provisional increase falls within the above provision. unlawful purposes, or which suggest or incite
What must be stressed is that while under Executive rebellious conspiracies or riots, or which tend to stir
Order No. 172, a hearing is indispensable, it does up the people against the lawful authorities, or to
not preclude the Board from ordering, ex parte, a disturb the peace of the community, the safety and
provisional increase, as it did here, subject to its order of the Government, or who shall knowingly
final disposition of whether or not: (1) to make it conceal such evil practices, shall be punished by a
permanent; (2) to reduce or increase it further; or fine not exceeding two thousand dollars or by
(3) to deny the application. Section 37 paragraph (e) imprisonment not exceeding two years, or both, in
is akin to a temporary restraining order or a writ of the discretion of the court.
preliminary attachment issued by the courts, which
are given ex parte, and which are subject to the The alleged libel was published as an editorial in the
resolution of the main case. issue of the Manila Freedom of April 6, 1902,
under the caption of few hard facts.
persons in whose hands the reins of government
ISSUE: Whether or not the article be regarded as are for the time being (the chief ministers or heads
embraced within the description of scurrilous libels of departments). The terms "government and
against the Government of the United States or the administration" are not always used in their
Insular Government of the Philippine Islands. strictness, and that "government" is often used for
administration.
HELD: No. 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 4.) MARIA ELENA MALAGA, doing business under
abstract sense the existing laws and institutions of the name B.E. CONSTRUCTION; JOSIELEEN
the Islands, or does it mean the aggregate of the NAJARRO, doing business under the name BEST
individuals by whom the Government of the Islands BUILT CONSTRUCTION; JOSE N. OCCEA, doing
is, for the time being, administered? Either sense business under the name THE FIRM OF JOSE N.
would doubtless be admissible. OCCEA; and the ILOILO BUILDERS CORPORATION,
Petitioners,
We understand, in modern political science, by the v. MANUEL R. PENACHOS, JR., ALFREDO
term government, that institution or aggregate of MATANGGA, ENRICO TICAR AND TERESITA
institutions by which an independent society makes VILLANUEVA, in their respective capacities as
and carries out those rules of action which are Chairman and Members of the Pre-qualification
necessary to enable men to live in a social state, or Bids and Awards Committee (PBAC)-BENIGNO
which are imposed upon the people forming that PANISTANTE, in his capacity as President of Iloilo
society by those who possess the power or State College of Fisheries, as well as in their
authority of prescribing them. respective personal capacities; and HON.
LODRIGIO L. LEBAQUIN, Respondents
Government is the aggregate of authorities which
rule a society. By administration, we understand in GR No. 86695 September 3, 1992
modern times, and especially in more or less free
countries, the aggregate of those persons in whose FACTS: The Iloilo State College of Fisheries (ISCOF)
hands the reins of government are for the time through its Pre-qualification, Bids and Awards
being (the chief ministers or heads of departments). Committee (PBAC) caused the publication for an
Invitation to Bid for the construction of a Micro
But the writer adds that the terms government and Laboratory Building. The notice announced that the
administration and are not always used in their last day for submission of pre-qualification
strictness, and that government is often used for requirements (PRE-C1) was 2 December 1988, and
administration. that the bids would be opened on 12 December
1988 at 3 pm.
The article in question contains no attack upon the
governmental system of the United States, and it is Petitioners Malaga and Najarro submitted their PRE-
quite apparent that, though grossly abusive as C1 at 2pmof 2 December 1988 while petitioner
respects both the Commission as a body and some Occena submitted on 5 December 1988. All three
of its individual members, it contains no attack upon were not allowed to participate in the bidding
the governmental system by which the authority of because their documents were considered late,
the United States is enforced in these Islands. The having been submitted after the cut-off time of 10
form of government by a Civil Commission and a am of 2 December 1988.
Civil Governor is not assailed.
On 12 December,petitioners file a complaint with
It is the character of the men who are entrusted the RTC against the chairman and PBAC members,
with the administration of the government that the claiming that although they submitted their PRE-C1
writer is seeking to bring into disrepute by on time, the PBAC refused without just cause to
impugning the purity of their motives,their public accept them. On the same date, respondent Judge
integrity, and their private morals, and the wisdom Labaquin issued a restraining order prohibiting
of their policy. The publication of the article, PBAC from conducting the bidding and awarding the
therefore, no seditious tendency being apparent, project.
constitutes no offense under Section 8 of Act No.
292 On 16 December, defendants filed a motion to lift
the restraining order on the ground that the Court
RATIO: Government is the aggregate of authorities was prohibited from issuing restraining orders,
which rule a society. By "administration" again, we preliminary injunctions and preliminary mandatory
understand in modern times, and especially in more injunctions by PD No. 1818, which provides:
or less free countries, the aggregate of those Section 1. No court in the Philippines shall have
jurisdiction toi ssue any restraining order in any
case, dispute, or controversy involving an
infrastructure project of the government to 5.) THE UNITED RESIDENTS OF DOMINICAN HILL,
prohibit any person or persons, entity or INC., vs. COMMISSION ON THE SETTLEMENT OF
government official from proceeding with, or LAND PROBLEMS
continuing the execution or implementation of any G.R. No.135945 March 7, 2001
such project
FACTS: Dominican Hills, formerly registered as
Plaintiffs argue against the applicability of PD No. Diplomat Hills in Baguio City, was mortgaged to the
1818, pointing out that while ISCOF was a state United Coconut Planters Bank (UCPB). It was
college, it had its own charter and separate eventually foreclosed and acquired later on by the
existence and was not part of the national said bank as the highest bidder.
government or of any local political subdivision; that
even if PD No. 1818 were applicable, the prohibition On 11 April 1983, through its President Eduardo
presumed a valid and legal government project, not Cojuangco Jr., the subject property was donated to
one tainted with anomalies like the project at bar. the Republic of the Philippines. The deed of
On 2 January 1989, the RTC lifted the restraining donation stipulated that Dominican Hills would be
order and denied the petition for preliminary utilized for the "priority programs, projects,
injunction. It declared that the building sought to be activities in human settlements and economic
constructed was an infrastructure project of the development and governmental purposes" of the
government falling within the coverage of PD 1818. Ministry of Human Settlements.

ISSUE: Whether or not the ISCOF is considered a On December 12, 1986, then President Corazon
government instrumentality such that it would Aquino issued EO 85 abolishing the Ministry of
necessarily fall under the prohibition in PD 1818. Human Settlements. All agencies under the its
supervision as well as all its assets, programs and
HELD: Yes, the 1987 Administrative Code defines a projects, were transferred to the Presidential
government instrumentality as follows: Management Staff (PMS).
Instrumentality refers to any agency of the National
Government, not integrated within the department On 18 October 1988, United (Dominican Hills)
framework, vested with special functions or submitted its application before the PMS to acquire
jurisdiction by law, endowed with some if not all a portion of the Dominican Hills property. In a
corporate powers, administering special funds, and MOA, PMS and United agreed that the latter may
enjoying operational autonomy,usually through a purchase a portion of the said property from HOME
charter. This includes regulatory agencies, chartered INSURANCE GUARANTY CORPORATIO, acting as
institutions, and GOCCs. originator, on a selling price of P75.00 per square
meter.
The same Code describes a chartered institution
thus: Chartered Institutionrefers to any agency Thus, on June 12, 1991, HIGC sold 2.48 hectares of
organized or operating under a special charter, and the property to UNITED. The deed of conditional
vested by law with functions relating to specific sale provided that 10 per cent of the purchase price
constitutional policies or objectives. This includes would be paid upon signing, with the balance to be
state universities and colleges, and the monetary amortized within one year from its date of
authority of the state. It is clear from the above execution. After UNITED made its final payment on
definitions that ISCOF is a chartered institution and January 31, 1992, HIGC executed a Deed of Absolute
is therefore covered by PD 1818. Sale dated July 1, 1992.

HOWEVER, it is apparent that the present Petitioner alleges that sometime in 1993, private
controversy did not arise from the discretionary acts respondents entered the Dominican Hills property
of the administrative body nor does it involve allocated to UNITED and constructed houses
merely technical matters. What is involved here is thereon. Petitioner was able to secure a demolition
non-compliance with the procedural rules on order from the city mayor. Unable to stop the
bidding which required strict observance. PD 1818 razing of their houses, private respondents, under
was not intended to shield from judicial scrutiny the name DOMINICAN HILL BAGUIO RESIDENTS
irregularities committed by administrative agencies HOMELESS ASSOCIATION (ASSOCIATION, for brevity)
such as the anomalies in the present case. Hence, filed an action for injunction before RTC Baguio City.
the challenged restraining order was not Private respondents were able to obtain a
improperlyissued by the respondent judge and the temporary restraining order but their prayer for a
writ of preliminary injunction should not have been writ of preliminary injunction was later denied.
denied
The ASSOCIATION filed a separate civil case for "to determine whether or not there has been grave
damages, injunction and annulment of the said abuse of discretion amounting to lack of or excess
MOA. It was later on dismissed upon motion of of jurisdiction on the part of any branch or
United. The said Order of dismissal is currently on instrumentality of the Government."
appeal with the Court of Appeals.

The demolition order was subsequently


implemented by the Office of the City Mayor and 6.) G.R. No. 166052 August 29, 2007
the City Engineer's Office of Baguio City. However,
petitioner avers that private respondents returned ANAK MINDANAO PARTY-LIST GROUP, as
and reconstructed the demolished structures. represented by Rep. Mujiv S. Hataman, and
MAMALO DESCENDANTS ORGANIZATION, INC., as
To forestall the re-implementation of the demolition represented by its Chairman Romy Pardi,
order, private respondents filed a petition for Petitioners, vs.
annulment of contracts with prayer for a temporary THE EXECUTIVE SECRETARY, THE HON. EDUARDO R.
restraining order before the Commission on the ERMITA, and THE SECRETARY OF AGRARIAN/LAND
Settlement of Land Problems (COSLAP) against REFORM, THE HON. RENE C. VILLA, Respondents.
petitioner, HIGC, PMS, the City Engineer's Office, the
City Mayor, as well as the Register of Deeds of FACTS: Petitioners Anak Mindanao Party-List Group
Baguio City. On the very same day, public (AMIN) and Mamalo Descendants Organization, Inc.
respondent COSLAP issued the contested order (MDOI) assail the constitutionality of Executive
requiring the parties to maintain the status quo. Order (E.O.) Nos. 364 and 379.
Without filing a motion for reconsideration from the
aforesaid status quo order, petitioner filed the AMIN charges the Executive Department with
instant petition questioning the jurisdiction of the transgression of the principle of separation of
COSLAP. powers. It contends that since the DAR, PCUP and
NCIP were created by statutes, they can only be
ISSUE: Whether or not COSLAP is empowered to transformed, merged or attached by statutes, not by
hear and try a petition for annulment of contracts mere executive orders.
with prayer for a TRO and to issue a status quo
order and conduct a hearing thereof. While AMIN concedes that the executive power is
vested in the President who, as Chief Executive,
RULING: COSLAP is not justified in assuming holds the power of control of all the executive
jurisdiction over the controversy. It discharges quasi- departments, bureaus, and offices, it posits that this
judicial functions: broad power of control including the power to
reorganize is qualified and limited, for it cannot be
"Quasi-judicial function" is a term which applies to exercised in a manner contrary to law, citing the
the actions, discretion, etc. of public administrative constitutional duty of the President to ensure that
officers or bodies, who are required to investigate the laws, including those creating the agencies, be
facts, or ascertain the existence of facts, hold faithfully executed. AMIN cites the naming of the
hearings, and draw conclusions from them, as a PCUP as a presidential commission to be clearly an
basis for their official action and to exercise extension of the President, and the creation of the
discretion of a judicial nature." NCIP as an independent agency under the Office of
the President.
However, it does not depart from its basic nature as
an administrative agency, albeit one that exercises It thus argues that since the legislature had seen fit
quasi-judicial functions. Still, administrative to create these agencies at separate times and with
agencies are not considered courts; they are neither distinct mandates, the President should respect that
part of the judicial system nor are they deemed legislative disposition. In fine, AMIN contends that
judicial tribunals. any reorganization of these administrative agencies
should be the subject of a statute.
The doctrine of separation of powers observed in
our system of government reposes the three (3) AMIN argues that there is an anachronism of sorts
great powers into its three (3) branches the because there can be no policy and program
legislative, the executive, and the judiciary each coordination between conceptually different areas
department being co-equal and coordinate, and of reform (NCIP and DAR). It claims that the new
supreme in its own sphere. Accordingly, the framework subsuming agrarian reform, urban land
executive department may not, by its own fiat, reform and ancestral domain reform is
impose the judgment of one of its own agencies, fundamentally incoherent in view of the widely
upon the judiciary. Indeed, under the expanded different contexts. And it posits that it is a
jurisdiction of the Supreme Court, it is empowered substantive transformation or reorientation that
runs contrary to the constitutional scheme and order to achieve simplicity, economy and
policies. efficiency. Gauged against these guidelines, the
challenged executive orders may not be said to
AMIN also argues that the Constitution did not have been issued with grave abuse of discretion
intend an over-arching concept of agrarian reform or in violation of the rule of law.
to encompass NCIP and PCUP, and that how the law
is ordered in a certain way should not be The references in E.O. 364 to asset reform as an
undermined by mere executive orders in the guise anti-poverty measure for social justice and to
of administrative efficiency.
rationalization of the bureaucracy in furtherance
of good government encapsulate a portion of the
ISSUE: Whether or not the reorganization of these
existing policy in the Executive Office. As averred
administrative agencies should be the subject of a
statute. by the OSG, the President saw it fit to streamline
the agencies so as not to hinder the delivery of
HELD: No. The Constitution confers, by express crucial social reforms.
provision, the power of control over executive
departments, bureaus and offices in the President The consolidation of functions in E.O. 364 aims to
alone. And it lays down a limitation on the attain the objectives of simplicity, economy and
legislative power. efficiency as gathered from the provision granting
PCUP and NCIP access to the range of services
Legislative power is the authority, under the provided by the DARs technical offices and
Constitution, to make laws, and to alter and support systems.
repeal them. The Constitution has vested this
power in the Congress of the Philippines. Except The characterization of the NCIP as an
as limited by the Constitution, either expressly or independent agency under the Office of the
impliedly, legislative power embraces all subjects President does not remove said body from the
and extends to matters of general concern or Presidents control and supervision with respect
common interest. to its performance of administrative functions.

While Congress is vested with the power to enact In transferring the NCIP to the DAR as an attached
laws, the President executes the laws. The agency, the President effectively tempered the
President also has the duty of supervising and exercise of presidential authority and
enforcement of laws for the maintenance of considerably recognized that degree of
general peace and public order. Thus, he is independence.
granted administrative power over bureaus and
offices under his control to enable him to In the present case, AMIN glaringly failed to show
discharge his duties effectively. how the reorganization by executive fiat would
hamper the exercise of citizens rights and
The Constitutions express grant of the power of privileges. It rested on the ambiguous conclusion
control in the President justifies an executive that the reorganization jeopardizes economic,
action to carry out reorganization measures social and cultural rights. It intimated, without
under a broad authority of law. expounding, that the agendum behind the
issuances is to weaken the indigenous peoples
It is not disputed that PCUP and NCIP were rights in favor of the mining industry. And it raised
formed as agencies under the Office of the concerns about the possible retrogression in
President. The Agencies under the Office of the DARs performance as the added workload may
President refer to those offices placed under the impede the implementation of the
chairmanship of the President, those under the comprehensive agrarian reform program.
supervision and control of the President, those
under the administrative supervision of the Office AMIN has not shown, however, that by placing
of the President, those attached to the Office for the NCIP as an attached agency of the DAR, the
policy and program coordination, and those that President altered the nature and dynamics of the
are not placed by law or order creating them jurisdiction and adjudicatory functions of the
under any special department. NCIP concerning all claims and disputes involving
rights of indigenous cultural communities and
As thus provided by law, the President may indigenous peoples. Nor has it been shown, nay
transfer any agency under the Office of the alleged, that the reorganization was made in bad
President to any other department or agency, faith.
subject to the policy in the Executive Office and in
As correctly observed by the Solicitor General, the
petitioner erroneously equates "preventive
suspension" as a remedial measure with
7.) G.R. No. 97149 March 31, 1992 "suspension" as a penalty for administrative
dereliction. The imposition of preventive suspension
FIDENCIO Y. BEJA, SR., petitioner, vs. on a government employee charged with an
COURT OF APPEALS, HONORABLE REINERIO O. administrative offense is subject to the following
REYES, in his capacity as Secretary of the provision of the Civil Service Law, P.D. No. 807:
Department of Transportation and
Communications; COMMODORE ROGELIO A. Sec. 41. Preventive Suspension The proper
DAYAN, in his capacity as General Manager of the disciplining authority may preventively suspend any
Philippine Ports Authority; DEPARTMENT OF subordinate officer or employee under his authority
TRANSPORTATION AND COMMUNICATIONS, pending an investigation, if the charge against such
ADMINISTRATIVE ACTION BOARD; and JUSTICE officer or employee involves dishonesty, oppression
ONOFRE A. VILLALUZ, in his capacity as Chairman or grave misconduct, or neglect in the performance
of the Administrative Action Board, DOTC, of duty, or if there are reasons to believe that the
respondents. respondent is guilty of charges which would warrant
his removal from the service.
FACTS: Petitioner Fidencio Y. Beja, Sr. is an employee
of the Manila Port authority as a terminal Although the foregoing section does not expressly
supervisor. Two administrative cases was filed provide for a mechanism for an administrative
against him by the PPA General Manager where the investigation of personnel, by vesting the power to
first one was dismissed while the second one remove erring employees on the General Manager,
prospered. Both where for dishonesty, grave with the approval of the PPA Board of Directors, the
misconduct, violation of reasonable office rules and law impliedly grants said officials the power to
regulations, conduct prejudicial to the best interest investigate its personnel below the rank of
of the service and for being notoriously undesirable. Assistant Manager who may be charged with an
The second charge consisted of six (6) different administrative offense. During such investigation,
specifications of administrative offenses including the PPA General Manager, as earlier stated, may
fraud against the PPA in the total amount of subject the employee concerned to preventive
P218,000.00. suspension. The investigation should be conducted
in accordance with the procedure set out in Sec. 38
Beja was also placed under preventive suspension of P.D. No. 807.
pursuant to Sec. 41 of P.D. No. 807. PPA general
manager indorsed it to the AAB for "appropriate Only after gathering sufficient facts may the PPA
action." Beja filed a petition for Certiorari with General Manager impose the proper penalty in
preliminary injunction before the Regional Trial accordance with law. It is the latter action which
Court of Misamis Oriental. requires the approval of the PPA Board of Directors.

Beja challenges the legality of the preventive It is, therefore, clear that the transmittal of the
suspension and the jurisdiction of the DOTC complaint by the PPA General Manager to the AAB
Secretary and/or the AAB to initiate and hear was premature. The PPA General Manager should
administrative cases against PPA personnel below have first conducted an investigation, made the
the rank of Assistant General Manager. proper recommendation for the imposable penalty
and sought its approval by the PPA Board of
ISSUE: Whether or not the DOTC Secretary and/or Directors. It was discretionary on the part of the
the AAB has the jurisdiction to initiate and hear herein petitioner to elevate the case to the then
administrative cases against PPA personnel below DOTC Secretary Reyes. Only then could the AAB take
the rank of Assistant General Manager. jurisdiction of the case.

HELD: Yes. Petitioner anchors his contention that


the PPA general manager cannot subject him to a
preventive suspension on the following provision of 8.) LUZON DEVELOPMENT BANK vs. ASSO. OF LDB
Sec. 8, Art. V of Presidential Decree No. 857 EMPLOYEES and GARCIA
reorganizing the PPA: MARCH 26, 2011 ~ LEAVE A COMMENT
LUZON DEVELOPMENT BANK vs. ASSO. OF LDB
(d) the General Manager shall, subject to the EMPLOYEES and GARCIA
approval of the Board, appoint and remove
personnel below the rank of Assistant General G.R. No. 120319 October 6, 1995
Manager..
FACTS: From a submission agreement of the LDB ruled that a voluntary arbitrator by the nature of
and the Association of Luzon Development Bank her functions acts in a quasi-judicial capacity.
Employees (ALDBE) arose an arbitration case to Under these rulings, it follows that the voluntary
resolve the following issue: Whether or not the arbitrator, whether acting solely or in a panel,
company has violated the CBA provision and the enjoys in law the status of a quasi-judicial agency
MOA on promotion. but independent of, and apart from, the NLRC since
his decisions are not appealable to the latter.
At a conference, the parties agreed on the
submission of their respective Position Papers. Atty. Section 9 of B.P. Blg. 129, as amended by Republic
Garcia, in her capacity as Voluntary Arbitrator, Act No. 7902, provides that the Court of Appeals
received ALDBEs Position Paper ; LDB, on the other shall exercise:
hand, failed to submit its Position Paper despite a
letter from the Voluntary Arbitrator reminding them (B) Exclusive appellate jurisdiction over all final
to do so. As of May 23, 1995 no Position Paper had judgments, decisions, resolutions, orders or awards
been filed by LDB. of RTC s and quasi-judicial agencies,
instrumentalities, boards or commissions, including
Without LDBs Position Paper, the Voluntary the Securities and Exchange Commission, the
Arbitrator rendered a decision disposing as follows: Employees Compensation Commission and the Civil
WHEREFORE, finding is hereby made that the Bank Service Commission, except those falling within the
has not adhered to the CBA provision nor the MOA appellate jurisdiction of the Supreme Court in
on promotion. accordance with the Constitution, the Labor Code of
the Philippines under Presidential Decree No. 442,
Hence, this petition for certiorari and prohibition as amended, the provisions of this Act, and of
seeking to set aside the decision of the Voluntary subparagraph (1) of the third paragraph and
Arbitrator and to prohibit her from enforcing the subparagraph (4) of the fourth paragraph of Section
same. 17 of the Judiciary Act of 1948.

ISSUE: WON a voluntary arbiters decision is Assuming arguendo that the voluntary arbitrator or
appealable to the CA and not the SC the panel of voluntary arbitrators may not strictly be
considered as a quasi-judicial agency, board or
HELD: YES. The Court resolved to REFER this case to commission, still both he and the panel are
the Court of Appeals. comprehended within the concept of a quasi-
judicial instrumentality.
The jurisdiction conferred by law on a voluntary
arbitrator or a panel of such arbitrators is quite An instrumentality is anything used as a means or
limited compared to the original jurisdiction of the agency. Thus, the terms governmental agency or
labor arbiter and the appellate jurisdiction of the instrumentality are synonymous in the sense that
NLRC for that matter. The (d)ecision, awards, or either of them is a means by which a government
orders of the Labor Arbiter are final and executory acts, or by which a certain government act or
unless appealed to the Commission Hence, while function is performed. The word instrumentality,
there is an express mode of appeal from the with respect to a state, contemplates an authority
decision of a labor arbiter, Republic Act No. 6715 is to which the state delegates governmental power
silent with respect to an appeal from the decision of for the performance of a state function. An
a voluntary arbitrator. individual person, like an administrator or executor,
is a judicial instrumentality in the settling of an
Yet, past practice shows that a decision or award of estate, in the same manner that a sub-agent
a voluntary arbitrator is, more often than not, appointed by a bankruptcy court is an
elevated to the SC itself on a petition for certiorari, instrumentality of the court, and a trustee in
in effect equating the voluntary arbitrator with the bankruptcy of a defunct corporation is an
NLRC or the CA. In the view of the Court, this is instrumentality of the state.
illogical and imposes an unnecessary burden upon
it. The voluntary arbitrator no less performs a state
function pursuant to a governmental power
In Volkschel Labor Union, et al. v. NLRC, et al., 8 on delegated to him under the provisions therefor in
the settled premise that the judgments of courts the Labor Code and he falls, therefore, within the
and awards of quasi-judicial agencies must become contemplation of the term instrumentality in the
final at some definite time, this Court ruled that the aforequoted Sec. 9 of B.P. 129. The fact that his
awards of voluntary arbitrators determine the rights functions and powers are provided for in the Labor
of parties; hence, their decisions have the same Code does not place him within the exceptions to
legal effect as judgments of a court. In Oceanic Bic said Sec. 9 since he is a quasi-judicial
Division (FFW), et al. v. Romero, et al., this Court instrumentality as contemplated therein.
located in Iligan City, and reserving that land for
It will be noted that, although the Employees the use and immediate occupancy of NSC.
Compensation Commission is also provided for in
the Labor Code, Circular No. 1-91, which is the Certain portions of the public land however
forerunner of the present Revised Administrative were occupied by a non-operational chemical
Circular No. 1-95, laid down the procedure for the fertilizer plant and related facilities owned by
appealability of its decisions to the CA under the private respondent Maria Cristina Fertilizer
foregoing rationalization, and this was later adopted Corporation ("MCFC")
by Republic Act No. 7902 in amending Sec. 9 of B.P.
129. A fortiori, the decision or award of the NSC was directed to "negotiate with the owners
voluntary arbitrator or panel of arbitrators should of MCFC, for and on behalf of the
likewise be appealable to the CA, in line with the Government, for the compensation of MCFC's
procedure outlined in Revised Administrative present occupancy rights on the subject land.
Circular No. 1-95, just like those of the quasi-judicial
agencies, boards and commissions enumerated
LOI No. 1277 directed that should NSC and
therein.
private respondent MCFC fail to reach an
agreement within a period of sixty (60) days,
In the same vein, it is worth mentioning that under
petitioner ISA was to exercise its power of
Section 22 of Republic Act No. 876, also known as
eminent domain under P.D. No. 272 and to
the Arbitration Law, arbitration is deemed a special
initiate expropriation proceedings in respect of
proceeding of which the court specified in the
occupancy rights of private respondent MCFC
contract or submission, or if none be specified, the
relating to the subject public land as well as the
RTC for the province or city in which one of the
plant itself and related facilities and to cede the
parties resides or is doing business, or in which the
same to the NSC.
arbitration is held, shall have jurisdiction.

In effect, this equates the award or decision of the Negotiations between NSC and private
voluntary arbitrator with that of the RTC. respondent MCFC did fail.
Consequently, in a petition for certiorari from that
award or decision, the CA must be deemed to have Accordingly, on 18 August 1983, petitioner ISA
concurrent jurisdiction with the SC. As a matter of commenced eminent domain proceedings
policy, this Court shall henceforth remand to the against private respondent
Court of Appeals petitions of this nature for proper
disposition. The case proceeded to trial. While the trial was
ongoing, however, the statutory existence of
petitioner ISA expired on 11 August 1988.

9.) IRON AND STEEL AUTHORITY, petitioner, MCFCs contention: no valid judgment could
vs. THE COURT OF APPEALS and MARIA CRISTINA be rendered against ISA which had ceased to
FERTILIZER CORPORATION, respondents. be a juridical person.

FACTS: Petitioners contention: despite the expiration


Petitioner Iron and Steel Authority ("ISA") was of its term, its juridical existence continued until
created by Presidential Decree (P.D.) No. 272. the winding up of its affairs could be completed.
In the alternative, petitioner ISA urged that the
P.D. No. 272 initially created petitioner ISA for a Republic of the Philippines, being the real
term of five (5) years. When ISA's original term party-in-interest, should be allowed to be
expired, its term was extended for another ten substituted for petitioner ISA.
(10) years.
ISSUE:
Whether or not the Republic of the Philippines is
The National Steel Corporation ("NSC") then a
entitled to be substituted for ISA in view of the
wholly owned subsidiary of the National
expiration of ISA's term
Development Corporation which is itself an
entity wholly owned by the National
RULING: YES.
Government, embarked on an expansion
Under Rule 3, Section 1 (b) of the Rules of
program.
Court entities authorized by law to institute actions
may be parties to a civil action.
Pursuant to the expansion program of the NSC,
Proclamation No. 2239 was issued withdrawing
from sale or settlement a large tract of public
land (totalling about 30.25 hectares in area)
P.D. No. 272 contains express authorization to The present expropriation suit was brought on
ISA to commence expropriation proceedings like behalf of and for the benefit of the Republic as the
those here involved: principal of ISA.

Sec. 4. Powers and Functions. The Authority From the foregoing premises, it follows that
shall have the following powers and functions: the Republic of the Philippines is entitled to be
(j) to initiate expropriation of land required for substituted in the expropriation proceedings as
basic iron and steel facilities for subsequent resale party-plaintiff in lieu of ISA, the statutory term of
and/or lease to the companies involved if it is ISA having expired.
shown that such use of the State's power is
necessary to implement the construction of capacity Put a little differently, the expiration of ISA's
which is needed for the attainment of the objectives statutory term did not by itself require or justify
of the Authority; the dismissal of the eminent domain proceedings.

It should also be noted that the enabling While the power of eminent domain is, in
statute of ISA expressly authorized it to enter into principle, vested primarily in the legislative
certain kinds of contracts "for and in behalf of the department of the government, we believe and so
Government" in the following terms: hold that no new legislative act is necessary should
(i) to negotiate, and when necessary, to enter the Republic decide, upon being substituted for ISA,
into contracts for and in behalf of the in fact to continue to prosecute the expropriation
government, for the bulk purchase of materials, proceedings. For the legislative authority, a long
supplies or services for any sectors in the industry, time ago, enacted a continuing or standing
and to maintain inventories of such materials in delegation of authority to the President of the
order to insure a continuous and adequate supply Philippines to exercise, or cause the exercise of, the
thereof and thereby reduce operating costs of power of eminent domain on behalf of the
such sector; Government of the Republic of the Philippines.

Clearly, ISA was vested with some of the


powers or attributes normally associated with
juridical personality.
10) MANUEL M. LEYSON JR., petitioner, vs. OFFICE
There is, however, no provision in P.D. No. 272 OF THE OMBUDSMAN, TIRSO ANTIPORDA,
recognizing ISA as possessing general or Chairman, UCPB and CIIF Oil Mills, and OSCAR A.
comprehensive juridical personality separate and TORRALBA, President, CIIF Oil Mills,
distinct from that of the Government. respondents. ALEX

The ISA in fact appears to the Court to be Facts:


a non-incorporated agency or instrumentality of International Towage and Transport
the Republic of the Philippines, or more precisely of Corporation (ITTC), a domestic corporation
the Government of the Republic of the Philippines. engaged in the lighterage or shipping
business, entered into a one (1)-year
We consider that the ISA is properly regarded contract with Legaspi Oil Company, Inc.
as an agent or delegate of the Republic of the (LEGASPI OIL), Granexport Manufacturing
Philippines. Corporation (GRANEXPORT) and United
Coconut Chemicals, Inc. (UNITED
When the statutory term of a non- COCONUT), comprising the Coconut
incorporated agency expires, the powers, duties Industry Investment Fund (CIIF) companies,
and functions as well as the assets and liabilities of for the transport of coconut oil in bulk
that agency revert back to, and are re-assumed by, through MT Transasia.
the Republic of the Philippines, in the absence of
special provisions of law specifying some other
The majority shareholdings of these CIIF
disposition thereof such as, e.g., devolution or
companies are owned by the United
transmission of such powers, duties, functions, etc.
Coconut Planters Bank (UCPB) as
to some other identified successor agency or
administrator of the CIIF.
instrumentality of the Republic of the Philippines.
Under the terms of the contract, either
ISA instituted the expropriation proceedings in
party could terminate the agreement
its capacity as an agent or delegate or
provided a three (3)-month advance notice
representative of the Republic of the Philippines
was given to the other party.
pursuant to its authority under P.D. No. 272.
However, in August 1996, or prior to the nature, and owned by the Government directly or
expiration of the contract, the CIIF through its instrumentalities either wholly, or,
companies with their new President, where applicable as in the case of stock
respondent Oscar A. Torralba, terminated corporations, to the extent of at least fifty-one (51)
the contract without the requisite advance percent of its capital stock.
notice.
The definition mentions three (3) requisites,
The CIIF companies engaged the services of namely, first, any agency organized as a stock or
another vessel, MT Marilag, operated by non-stock corporation; second, vested with
Southwest Maritime Corporation. functions relating to public needs whether
governmental or proprietary in nature; and, third,
owned by the Government directly or through its
Manuel M. Leyson Jr. (Executive Vice
instrumentalities either wholly, or, where
President of ITTC) filed with public
applicable as in the case of stock corporations, to
respondent Office of the Ombudsman a
the extent of at least fifty-one (51) percent of its
grievance case against respondent Oscar
capital stock.
A. Torralba.
In the present case, all three (3) corporations
petitioner also charged respondent Tirso
comprising the CIIF companies were organized as
Antiporda, Chairman of UCPB and CIIF Oil
stock corporations. The UCPB-CIIF owns 44.10% of
Mills, and respondent Oscar A. Torralba
the shares of LEGASPI OIL, 91.24% of the shares of
with violation of The Anti-Graft and
GRANEXPORT, and 92.85% of the shares of UNITED
Corrupt Practices Act also before the
COCONUT. Obviously, the below 51% shares of stock
Ombudsman.
in LEGASPI OIL removes this firm from the definition
of a government owned or controlled corporation.
The Office of the Ombudsman dismissed Our concern has thus been limited to GRANEXPORT
the complaint based on one of its findings and UNITED COCONUT as we go back to the second
that the entities involved are private requisite. Unfortunately, it is in this regard that
corporations (over) which this Office has no petitioner failed to substantiate his contentions.
jurisdiction. There is no showing that GRANEXPORT and/ or
It is the contention of the petitioner that UNITED COCONUT was vested with functions
since it was declared coconut levy funds are relating to public needs whether governmental or
public funds then, conformably proprietary in nature. The Court thus concludes that
with Quimpo v. Tanodbayan, corporations the CIIF companies are, as found by public
formed and organized from those funds or respondent, private corporations not within the
whose controlling stocks are from those scope of its jurisdiction.
funds should be regarded as government
owned and/or controlled corporations.
11.) MANILA INTERNATIONAL AIRPORT
As in the present case, since the funding or AUTHORITY, Petitioner, vs. CITY OF PASAY,
controlling interest of the companies being SANGGUNIANG PANGLUNGSOD NG PASAY, CITY
headed by private respondents was given MAYOR OF PASAY, CITY TREASURER OF PASAY, and
or owned by the CIIF as shown in the CITY ASSESSOR OF PASAY, Respondents.
certification of their Corporate Secretary, [ it
follows that they are government owned Facts:
and/or controlled corporations. Petitioner Manila International Airport
Authority (MIAA) operates and administers
Corollarily, petitioner asserts that the Ninoy Aquino International Airport
respondents Antiporda and Torralba are (NAIA) Complex under Executive Order No.
public officers subject to the jurisdiction of 903 (EO 903), otherwise known as the
the Ombudsman. Revised Charter of the Manila International
Airport Authority.
Issue:
Whether or not the CIIF companies are government On 28 August 2001, MIAA received Final
corporations Notices of Real Property Tax Delinquency
from the City of Pasay for the taxable years
Ruling: NO. 1992 to 2001. MIAAs real property tax
Government owned or controlled corporation delinquency for its real properties located
is any agency organized as a stock or non-stock in NAIA Complex, Ninoy Aquino Avenue,
corporation vested with functions relating to public Pasay City (NAIA Pasay properties).
needs whether governmental or proprietary in
On 24 August 2001, the City of Pasay, instrumentalities of the national government like
through its City Treasurer, issued notices of the MIAA. Hence, MIAA is not liable to pay real
levy and warrants of levy for the NAIA property tax for the NAIA Pasay properties.
Pasay properties. MIAA received the notices
and warrants of levy on 28 August 2001. Furthermore, the airport lands and buildings of
Thereafter, the City Mayor of Pasay MIAA are properties of public dominion intended
threatened to sell at public auction the for public use, and as such are exempt from real
NAIA Pasay properties if the delinquent property tax under Section 234(a) of the Local
real property taxes remain unpaid. Government Code. However, under the same
provision, if MIAA leases its real property to a
On 29 October 2001, MIAA filed with the taxable person, the specific property leased
Court of Appeals a petition for prohibition becomes subject to real property tax. 12 In this case,
and injunction with prayer for preliminary only those portions of the NAIA Pasay properties
injunction or temporary restraining order. which are leased to taxable persons like private
The petition sought to enjoin the City of parties are subject to real property tax by the City of
Pasay from imposing real property taxes on, Pasay.
levying against, and auctioning for public
sale the NAIA Pasay properties.
On 30 October 2002, the Court of Appeals
dismissed the petition and upheld the 12.) UNIVERSITY OF THE PHILIPPINES, JOSE V.
power of the City of Pasay to impose and ABUEVA, RAUL P. DE GUZMAN, RUBEN P. ASPIRAS,
collect realty taxes on the NAIA Pasay EMMANUEL P. BELLO, WILFREDO P. DAVID,
properties. MIAA filed a motion for CASIANO S. ABRIGO, and JOSEFINA R. LICUANAN,
reconsideration, which the Court of Appeals Petitioners,
denied. Hence, this petition. vs. HON. AGUSTIN S. DIZON, his capacity as
Presiding Judge of the Regional Trial Court of
Issue: Quezon City, Branch 80, STERN BUILDERS, INC., and
Whether or not the NAIA Pasay properties of MIAA SERVILLANO DELA CRUZ, Respondents.
are exempt from real property tax
Facts:
Ruling: YES. UP entered into a General Construction
MIAA is a government instrumentality vested Agreement with respondent Stern Builders
with corporate powers to perform efficiently its Corporation (Stern Builders), for the
governmental functions. MIAA is like any other construction of the extension building and the
government instrumentality, the only difference is renovation of the College of Arts and Sciences
that MIAA is vested with corporate powers. x x x Building in the campus of the University of the
Philippines in Los Baos (UPLB).
When the law vests in a government
instrumentality corporate powers, the In the course of the implementation of the
instrumentality does not become a corporation. contract, Stern Builders submitted three
Unless the government instrumentality is organized progress billings corresponding to the work
as a stock or non-stock corporation, it remains a accomplished, but the UP paid only two of the
government instrumentality exercising not only billings.
governmental but also corporate powers. Thus,
MIAA exercises the governmental powers of The third billing worth P 273,729.47 was not
eminent domain, police authority and the levying of paid due to its disallowance by the
fees and charges. At the same time, MIAA exercises Commission on Audit (COA).
"all the powers of a corporation under the
Corporation Law, insofar as these powers are not Despite the lifting of the disallowance, the UP
inconsistent with the provisions of this Executive failed to pay the billing, prompting Stern
Order." Builders and dela Cruz to sue the UP and its co-
respondent officials to collect the unpaid billing
Thus, MIAA is not a government-owned or and to recover various damages.
controlled corporation but a government
instrumentality which is exempt from any kind of tax Issue:
from the local governments. Indeed, the exercise of Whether or not UP funds can validly be garnished
the taxing power of local government units is
subject to the limitations enumerated in Section 133 Ruling: NO
of the Local Government Code. Under Section
133(o) of the Local Government Code, local UPs argument:
government units have no power to tax
CA contravened Section 5, Article XIV of the The UP correctly submits here that the
Constitution by allowing the garnishment of UP garnishment of its funds to satisfy the judgment
funds, because the garnishment resulted in a awards of actual and moral damages (including
substantial reduction of the UPs limited budget attorneys fees) was not validly made if there was no
allocated for the remuneration, job satisfaction and special appropriation by Congress to cover the
fulfillment of the best available teachers; liability.

UPs funds, being government funds, are not Indeed, an appropriation by Congress was
subject to garnishment required before the judgment that rendered the UP
liable for moral and actual damages (including
Irrefragably, the UP is a government attorneys fees) would be satisfied considering that
instrumentality, performing the States such monetary liabilities were not covered by the
constitutional mandate of promoting quality and "appropriations earmarked for the said project."
accessible education. As a government The Constitution strictly mandated that "(n)o money
instrumentality, the UP administers special funds shall be paid out of the Treasury except in
sourced from the fees and income enumerated pursuance of an appropriation made by law."
under Act No. 1870 and Section 1 of Executive
Order No. 714, and from the yearly appropriations,
to achieve the purposes laid down by Section 2 of
Act 1870, as expanded in Republic Act No. 9500. All 13.) LOCKHEED DETECTIVE AND WATCHMAN
the funds going into the possession of the UP, AGENCY, INC., Petitioner, vs. UNIVERSITY OF THE
including any interest accruing from the deposit of PHILIPPINES, Respondent.
such funds in any banking institution, constitute a
"special trust fund," the disbursement of which Facts:
should always be aligned with the UPs mission and Petitioner Lockheed Detective and Watchman
purpose, and should always be subject to auditing Agency, Inc. (Lockheed) entered into a contract
by the COA. for security services with respondent University
of the Philippines (UP).
Presidential Decree No. 1445 defines a "trust
fund" as a fund that officially comes in the In 1998, several security guards assigned to UP
possession of an agency of the government or of a filed separate complaints against Lockheed and
public officer as trustee, agent or administrator, or UP for payment of underpaid wages, 25%
that is received for the fulfillment of some overtime pay, premium pay for rest days and
obligation. A trust fund may be utilized only for the special holidays, holiday pay, service incentive
"specific purpose for which the trust was created leave pay, night shift differentials, 13th month
or the funds received." pay, refund of cash bond, refund of deductions
for the Mutual Benefits Aids System (MBAS),
The funds of the UP are government funds unpaid wages from December 16-31, 1998, and
that are public in character. They include the attorneys fees.
income accruing from the use of real property
ceded to the UP that may be spent only for the Lower Court rulings:
attainment of its institutional objectives. Hence, the
funds subject of this action could not be validly Labor Arbiter: Lockheed Detective and
made the subject of the RTCs writ of execution or Watchman Agency, Inc. and UP as job
garnishment. contractor and principal, respectively, are
hereby declared to be solidarily liable to
Other Discussions: Suability of the State did not complainants.
necessarily mean its liability
NLRC: The respondent University of the
"Suability depends on the consent of the state to be Philippines is still solidarily liable with Lockheed in
sued, liability on the applicable law and the the payment of the rest of the claims covering the
established facts. The circumstance that a state is period of their service contract.
suable does not necessarily mean that it is liable; on As the parties did not appeal the NLRC
the other hand, it can never be held liable if it does decision, the same became final and executory on
not first consent to be sued. Liability is not October 26, 2002. A writ of execution was then
conceded by the mere fact that the state has issued but later quashed by the Labor Arbiter on
allowed itself to be sued. When the state does November 23, 2003 on motion of UP due to
waive its sovereign immunity, it is only giving the disputes regarding the amount of the award. Later,
plaintiff the chance to prove, if it can, that the however, said order quashing the writ was reversed
defendant is liable. by the NLRC.
UP moved to reconsider the NLRC resolution. procedure (the filing of a claim with the COA), UP is
On December 28, 2004, the NLRC upheld its entitled to reimbursement of the garnished funds
resolution but with modification that the plus interest of 6% per annum, to be computed
satisfaction of the judgment award in favor of from the time of judicial demand to be reckoned
Lockheed will be only against the funds of UP from the time UP filed a petition for certiorari
which are not identified as public funds. before the CA which occurred right after the
CA (motion for recon by UP ruling) withdrawal of the garnished funds from PNB.
It held that without departing from its findings
that the funds covered in the savings account
sought to be garnished do not fall within the
classification of public funds, it reconsiders the
dismissal of the petition in light of the ruling in the 14.) DANTE V. LIBAN, REYNALDO M. BERNARDO,
case of National Electrification Administration v. and SALVADOR M. VIARI, Petitioners, vs. RICHARD
Morales which mandates that all money claims J. GORDON, Respondent.
against the government must first be filed with the
Commission on Audit (COA). Hence, this petition. Facts:
Petitioners Dante V. Liban, Reynaldo M.
Issue: Bernardo, and Salvador M. Viari (petitioners)
Whether or not the UP funds can validly be filed with this Court a Petition to Declare
garnished Richard J. Gordon as Having Forfeited His Seat
in the Senate. Petitioners are officers of the
Held: Board of Directors of the Quezon City Red Cross
This Court finds that the CA correctly applied Chapter while respondent is Chairman of the
the NEA case. Like NEA, UP is a juridical personality Philippine National Red Cross (PNRC) Board of
separate and distinct from the government and has Governors.
the capacity to sue and be sued. Thus, also like NEA,
it cannot evade execution, and its funds may be Petitioners allege that by accepting the
subject to garnishment or levy. However, before chairmanship of the PNRC Board of Governors,
execution may be had, a claim for payment of the respondent has ceased to be a member of the
judgment award must first be filed with the COA. Senate as provided in Section 13, Article VI of
the Constitution, which reads:
Under Commonwealth Act No. 327, as
amended by Section 26 of P.D. No. 1445, it is the SEC. 13. No Senator or Member of the House
COA which has primary jurisdiction to examine, of Representatives may hold any other office or
audit and settle "all debts and claims of any sort" employment in the Government, or any subdivision,
due from or owing the Government or any of its agency, or instrumentality thereof, including
subdivisions, agencies and instrumentalities, government-owned or controlled corporations or
including government-owned or controlled their subsidiaries, during his term without forfeiting
corporations and their subsidiaries. his seat. Neither shall he be appointed to any office
With respect to money claims arising from the which may have been created or the emoluments
implementation of Republic Act No. 6758, their thereof increased during the term for which he was
allowance or disallowance is for COA to decide, elected.
subject only to the remedy of appeal by petition for
certiorari to this Court. On the other hand, respondent insists that the
PNRC is not a government-owned or controlled
We cannot subscribe to Lockheeds argument corporation and that the prohibition under Section
that NEA is not similarly situated with UP because 13, Article VI of the Constitution does not apply in
the COAs jurisdiction over the latter is only on post- the present case since volunteer service to the
audit basis. A reading of the pertinent PNRC is neither an office nor an employment.
Commonwealth Act provision clearly shows that it
does not make any distinction as to which of the Issue:
government subdivisions, agencies and Whether or not the office of the PNRC Chairman is a
instrumentalities, including government-owned or government office or an office in a government-
controlled corporations and their subsidiaries whose owned or controlled corporation for purposes of the
debts should be filed before the COA. prohibition in Section 13, Article VI of the
Constitution.
As to the fait accompli argument of Lockheed,
contrary to its claim that there is nothing that can Ruling: NO.
be done since the funds of UP had already been The PNRC is not government-owned but
garnished, since the garnishment was erroneously privately owned. The vast majority of the
carried out and did not go through the proper thousands of PNRC members are private individuals,
including students. Under the PNRC Charter, those
who contribute to the annual fund campaign of the Facts:
PNRC are entitled to membership in the PNRC for The Public Estates Authority (PEA) is a
one year. Thus, any one between 6 and 65 years of government corporation created by virtue of
age can be a PNRC member for one year upon Presidential Decree (P.D.) No. 1084 to provide a
contributing P35, P100, P300, P500 or P1,000 for coordinated, economical and efficient
the year. Even foreigners, whether residents or not, reclamation of lands, and the administration
can be members of the PNRC. and operation of lands belonging to, managed
and/or operated by, the government with the
Thus, the PNRC is a privately owned, privately object of maximizing their utilization and
funded, and privately run charitable organization. hastening their development consistent with
The PNRC is not a government-owned or controlled public interest.
corporation.
PEA was designated as the agency primarily
Petitioners anchor their petition on the 1999 responsible for integrating, directing and
case of Camporedondo v. NLRC, which ruled that coordinating all reclamation projects for and on
the PNRC is a government-owned or controlled behalf of the National Government.
corporation. In ruling that the PNRC is a
government-owned or controlled corporation, the From PEA its name was changed to PRA.
simple test used was whether the corporation was
created by its own special charter for the exercise of By virtue of its mandate, PRA reclaimed several
a public function or by incorporation under the portions of the foreshore and offshore areas of
general corporation law. Since the PNRC was Manila Bay, including those located in
created under a special charter, the Court then Paraaque City.
ruled that it is a government corporation. However,
the Camporedondo ruling failed to consider the Paraaque City Treasurer Liberato M. Carabeo
definition of a government-owned or controlled (Carabeo) issued Warrants of Levy on PRAs
corporation as provided under Section 2(13) of the reclaimed properties (Central Business Park and
Introductory Provisions of the Administrative Code Barangay San Dionisio) located in Paraaque
of 1987. Hence, it is now deemed inapplicable. City based on the assessment for delinquent
real property taxes made by then Paraaque
Just like the Local Water Districts, the PNRC City Assessor.
was created through a special charter. However,
unlike the Local Water Districts, the elements of Issue:
government ownership and control are clearly Whether or not petitioner Philippine Reclamation
lacking in the PNRC. Thus, although the PNRC is Authority (PRA) is a government-owned and
created by a special charter, it cannot be considered controlled corporation (GOCC), a taxable entity, and,
a government-owned or controlled corporation in therefore, not exempt from payment of real
the absence of the essential elements of ownership property taxes
and control by the government.
Ruling: NO
In sum, we hold that the office of the PNRC 1st point:
Chairman is not a government office or an office in a This Court is convinced that PRA is not a GOCC
government-owned or controlled corporation for either under Section 2(3) of the Introductory
purposes of the prohibition in Section 13, Article VI Provisions of the Administrative Code or under
of the 1987 Constitution. Section 16, Article XII of the 1987 Constitution. The
facts, the evidence on record and jurisprudence on
Other Rulings: the issue support the position that PRA was not
PNRC Charter is void insofar as it creates organized either as a stock or a non-stock
the PNRC as a private corporation, the corporation. Neither was it created by Congress to
PNRC should incorporate under the operate commercially and compete in the private
Corporation Code and register with the market. Instead, PRA is a government
Securities and Exchange Commission if it instrumentality vested with corporate powers and
wants to be a private corporation. performing an essential public service pursuant to
Petitioners have no standing to file this Section 2(10) of the Introductory Provisions of the
petition Administrative Code. Being an incorporated
government instrumentality, it is exempt from
payment of real property tax.
15.) REPUBLIC OF THE PHILIPPINES, represented by
the PHILIPPINE RECLAMATION AUTHORITY (PRA), 2nd point:
Petitioner, vs. CITY OF PARANAQUE, Respondent.
Section 234 of the Local Government Code Here, the subject lands are reclaimed lands,
provides that real property owned by the Republic specifically portions of the foreshore and offshore
of the Philippines (the Republic) is exempt from real areas of Manila Bay. As such, these lands remain
property tax unless the beneficial use thereof has public lands and form part of the public domain. In
been granted to a taxable person. In this case, there the case of Chavez v. Public Estates Authority and
is no proof that PRA granted the beneficial use of AMARI Coastal Development Corporation, the Court
the subject reclaimed lands to a taxable entity. held that foreshore and submerged areas irrefutably
There is no showing on record either that PRA belonged to the public domain and were inalienable
leased the subject reclaimed properties to a private unless reclaimed, classified as alienable lands open
taxable entity. to disposition and further declared no longer
needed for public service. The fact that alienable
This exemption should be read in relation to lands of the public domain were transferred to the
Section 133(o) of the same Code, which prohibits PEA (now PRA) and issued land patents or
local governments from imposing "taxes, fees or certificates of title in PEAs name did not
charges of any kind on the National Government, its automatically make such lands private. This Court
agencies and instrumentalities x x x." The also held therein that reclaimed lands retained their
Administrative Code allows real property owned by inherent potential as areas for public use or public
the Republic to be titled in the name of agencies or service.
instrumentalities of the national government. Such
real properties remain owned by the Republic and As the central implementing agency tasked to
continue to be exempt from real estate tax. undertake reclamation projects nationwide, with
authority to sell reclaimed lands, PEA took the place
Indeed, the Republic grants the beneficial use of DENR as the government agency charged with
of its real property to an agency or instrumentality leasing or selling reclaimed lands of the public
of the national government. This happens when the domain. The reclaimed lands being leased or sold by
title of the real property is transferred to an agency PEA are not private lands, in the same manner that
or instrumentality even as the Republic remains the DENR, when it disposes of other alienable lands,
owner of the real property. Such arrangement does does not dispose of private lands but alienable
not result in the loss of the tax exemption, unless lands of the public domain. Only when qualified
"the beneficial use thereof has been granted, for private parties acquire these lands will the lands
consideration or otherwise, to a taxable person." become private lands. In the hands of the
government agency tasked and authorized to
3rd point: dispose of alienable of disposable lands of the
The Court agrees with PRA that the subject public domain, these lands are still public, not
reclaimed lands are still part of the public domain, private lands.
owned by the State and, therefore, exempt from
payment of real estate taxes.
Section 2, Article XII of the 1987 Constitution
reads in part, as follows: 18.) BOY SCOUTS OF THE PHILIPPINES, vs.
Section 2. All lands of the public domain, waters, NATIONAL LABOR RELATIONS
minerals, coal, petroleum, and other mineral oils, all COMMISSION, FORTUNATO ESGUERRA,
forces of potential energy, fisheries, forests or ROBERTO MALABORBOR, ESTANISLAO
timber, wildlife, flora and fauna, and other natural MISA, VICENTE EVANGELISTA, and
resources are owned by the State. With the MARCELINO GARCIA
exception of agricultural lands, all other natural
resources shall not be alienated. X x x Facts:
Similarly, Article 420 of the Civil Code enumerates
properties belonging to the State: Private respondents Fortunato C. Esquerra,
Art. 420. The following things are property of public Roberto O. Malaborbor, Estanislao M. Misa,
dominion: Vicente N. Evangelista and Marcelino P.
(1) Those intended for public use, such as Garcia, had all been rank-and-file
roads, canals, rivers, torrents, ports and employees of petitioner Boy Scouts of
bridges constructed by the State, banks, the Philippines ("BSP").
shores, roadsteads, and others of similar They received an order from the BSP
character; General that they were to be transferred
(2) Those which belong to the State, from the BSP Camp in Makiling to the BSP
without being for public use, and are Land Grant in Asuncion, Davao del Norte.
They opposed the said transfer and later on
intended for some public service or for the
filed a complaint for illegal transfer was filed
development of the national wealth.
with the then Ministry of Labor and
[Emphases supplied]
Employment.
Petitioner BSP imposed a five-day those to which the BSP dedicates itself by
suspension on the five (5) private statutory mandate have in fact, been accorded
respondents but later they were eventually constitutional recognition. Article II of the 1987
terminated. Constitution includes in the "Declaration of
They amended their Complaint and included Principles and State Policies," the following:
therein Illegal Dismissal.
Labor Arbiter (dismissed the complaint) Sec. 13. The State recognizes the vital
NLRC (reversed and said that private role of the youth in nation-building and
respondents had been illegally dismissed by shall promote and protect their physical,
petitioner BSP) moral, spiritual, intellectual, and social
well-being. It shall inculcate in the youth
Issues: patriotism and nationalism, and
encourage their involvement in public and
WON BSP is a government-owned or civic affairs.
controlled corporation
WON the BSP is embraced within the At the same time, BSP's sanctions do not
Civil Service as that term is defined in relate to the governance of any part of territory of
Article IX (B) (2) (1) of the 1987 the Philippines; BSP is not a public corporation in
Constitution the same sense that municipal corporations or
local governments are public corporations. BSP's
Ruling: functions can not also be described as proprietary
functions in the same sense that the functions or
The central issue is whether or not the BSP is activities of government-owned or controlled
embraced within the Civil Service as that term is corporations like the National Development
defined in Article IX (B) (2) (1) of the 1987 Company or the National Steel Corporation can be
Constitution which reads as follows: described as proprietary or "business-like" in
character. Nevertheless, the public character of
BSP's functions and activities must be conceded,
The Civil Service embraces all branches,
for they pertain to the educational, civic and social
subdivisions, instrumentality mentalities
development of the youth which constitutes a
and agencies of the Government,
very substantial and important part of the nation.
including government-owned or controlled
corporations with original charters.
The second aspect that the Court must
take into account relates to the governance
The answer to the central issue will
of the BSP. The composition of the National
determine whether or not private respondent
Executive Board of the BSP includes, as noted
NLRC had jurisdiction to render the Decision and
from Section 5 of its charter quoted earlier,
Resolution which are here sought to be nullified.
includes seven (7) Secretaries of Executive
Departments. The seven (7) Secretaries (now six
The responses of the parties, on the one [6] in view of the abolition of the Department of
hand, and of the Office of the Solicitor General Youth and Sports and merger thereof into the
and the Office of the Government Corporate Department of Education, Culture and Sports) by
Counsel, upon the other hand, in compliance with themselves do not constitute a majority of the
the Resolution of this Court of 9 August 1989, members of the National Executive Board. We
present a noteworthy uniformity. Petitioner BSP must note at the same time that the
and private respondents submit substantially the appointments of members of the National
same view "that the BSP is a purely private Executive Board, except only the appointments of
organization". In contrast, the Solicitor General the Regional Chairman and Scouts of Senior age
and the Government Corporate Counsel take from the various Scout Regions, are subject to
much the same position, that is, that the BSP is a ratification and confirmation by the Chief Scout,
"public corporation' or a "quasi-public who is the President of the Philippines. Vacancies
corporation" and, as well, a "government to the Board are filled by a majority vote of the
controlled corporation." remaining members thereof, but again subject to
ratification and confirmation by the Chief
The Court considers that the following need Scout.18 We must assume that such confirmation
to be considered in arriving at the appropriate or ratification involves the exercise of choice or
legal characterization of the BSP for purposes of discretion on the part of ratifying or confirming
determining whether its officials and staff power. It does appears therefore that there is
members are embraced in the Civil Service. substantial governmental (i.e., Presidential)
Firstly, BSP's functions as set out in its participation or intervention in the choice of the
statutory charter do have a public aspect. majority of the members of the National Executive
BSP's functions do relate to the fostering of the Board of the BSP.
public virtues of citizenship and patriotism and the
general improvement of the moral spirit and fiber
of our youth. The social value of activities like
The third aspect relates to the character the monetary authority of the
of the assets and funds of the BSP. The State. (Emphasis supplied)
original assets of the BSP were acquired by
purchase or gift or other equitable arrangement We believe that the BSP is appropriately
with the Boy Scouts of America, of which the BSP regarded as "a government instrumentality"
was part before the establishment of the under the 1987 Administrative Code.
Commonwealth of the Philippines. The BSP
charter, however, does not indicate that such It thus appears that the BSP may be
assets were public or statal in character or had regarded as both a "government controlled
originated from the Government or the State. We corporation with an original charter" and as an
note only that BSP funds have not apparently "instrumentality" of the Government within the
heretofore been regarded as public funds by the meaning of Article IX (B) (2) (1) of the
Commission on Audit, considering that such funds Constitution. It follows that the employees of
have not been audited by the Commission. petitioner BSP are embraced within the Civil
Service and are accordingly governed by the Civil
While the BSP may be seen to be a Service Law and Regulations.
mixed type of entity, combining aspects of
both public and private entities, we believe In view of the foregoing, we hold that both
that considering the character of its the Labor Arbiter and public respondent NLRC had
purposes and its functions, the statutory no jurisdiction over the complaint filed by private
designation of the BSP as "a public respondents in NLRC Case No. 1637-84; neither
corporation" and the substantial labor agency had before it any matter which could
participation of the Government in the validly have been passed upon by it in the
selection of members of the National exercise of original or appellate jurisdiction.
Executive Board of the BSP, the BSP, as
presently constituted under its charter, is a
government-controlled corporation within
19.) COMMISSIONER OF INTERNAL
the meaning of Article IX. (B) (2) (1) of the
REVENUE vs GENERAL FOODS (PHILS.),
Constitution.
INC.,

We are fortified in this conclusion when we Facts:


note that the Administrative Code of 1987
On June 14, 1985, respondent corporation,
designates the BSP as one of the attached
which is engaged in the manufacture of
agencies of the Department of Education, Culture
beverages such as Tang, Calumet and Kool-
and Sports ("DECS"). An "agency of the
Aid, filed its income tax return for the fiscal
Government" is defined as referring to any of the
year ending February 28, 1985. In said tax
various units of the Government including a
return, respondent corporation claimed as
department, bureau, office, instrumentality,
deduction, among other business
government-owned or-controlled corporation, or
expenses, the amount of P9,461,246 for
local government or distinct unit therein.
media advertising for Tang.
Government instrumentality" is in turn defined in
the 1987 Administrative Code in the following On May 31, 1988, the Commissioner
manner: disallowed 50% or P4,730,623 of the
deduction claimed by respondent
Instrumentality refers to any agency of the corporation.
National Government, not integrated within Consequently, respondent corporation was
the department framework, vested with special assessed deficiency income taxes in the
functions or jurisdiction by law, endowed with amount of P2,635, 141.42.
some if not all corporate powers , administering
special funds, and enjoying operational
The latter filed a motion for reconsideration
autonomy usually through a charter. This term but the same was denied.
includes regulatory agencies, chartered CTA (dismissed in favor of Petitioner)
institutions and government-owned or CA (reversed in favor of Respondent)
controlled corporations. (Emphasis supplied)
Issue:
The same Code describes a "chartered institution"
in the following terms: WON the subject media advertising expense for
Tang incurred by respondent corporation was an
Chartered institution refers to ordinary and necessary expense fully deductible
any agency organized or operating under under the National Internal Revenue Code (NIRC)
a special charter, and vested by law with
functions relating to specific constitutional Ruling: NO
policies or objectives. This term includes
the state universities and colleges, and It is a governing principle in taxation that
tax exemptions must be construed in
strictissimi juris against the taxpayer and these, among other factors and properly weighed,
liberally in favor of the taxing authority; that will yield a proper evaluation.
and he who claims an exemption must be In the case at bar, the P9,461,246 claimed as
able to justify his claim by the clearest media advertising expense for Tang alone was
grant of organic or statute law. almost one-half of its total claim for
An exemption from the common burden marketing expenses. Aside from that,
cannot be permitted to exist upon vague respondent-corporation also claimed P2,678,328
implication as other advertising and promotions expense and
Deductions for income tax purposes partake another P1,548,614, for consumer promotion.
of the nature of tax exemptions; hence, if tax Furthermore, the subject P9,461,246
exemptions are strictly construed, then deductions media advertising expense for Tang was almost
must also be strictly construed. double the amount of respondent
Section 34 (A) (1), formerly Section 29 (a) corporations P4,640,636 general and
(1) (A), of the NIRC provides: administrative expenses.
(A) Expenses.- We find the subject expense for the
(1) Ordinary and necessary trade, business or advertisement of a single product to be
professional expenses.- inordinately large. Therefore, even if it is
(a) In general.- There shall be allowed as necessary, it cannot be considered an
deduction from gross income all ordinary and ordinary expense deductible under then Section
necessary expenses paid or incurred during the 29 (a) (1) (A) of the NIRC.
taxable year in carrying on, or which are Advertising is generally of two kinds: (1)
directly attributable to, the development, advertising to stimulate the current sale of
management, operation and/or conduct of merchandise or use of services and (2) advertising
the trade, business or exercise of a designed to stimulate the future sale of
profession. merchandise or use of services.
Simply put, to be deductible from gross The second type involves expenditures
income, the subject advertising expense must incurred, in whole or in part, to create or maintain
comply with the following requisites: (a) the some form of goodwill for the taxpayers trade or
expense must be ordinary and necessary; (b) business or for the industry or profession of which
it must have been paid or incurred during the taxpayer is a member. If the expenditures are
the taxable year; (c) it must have been paid or for advertising of the second kind, then normally
incurred in carrying on the trade or business they should be spread out over a reasonable
of the taxpayer; and (d) it must be supported period of time.
by receipts, records or other pertinent We agree with the Court of Tax Appeals that
papers. the subject advertising expense was of the second
The parties are in agreement that the subject kind. Not only was the amount staggering;
advertising expense was paid or incurred within the respondent corporation itself also admitted, in
the corresponding taxable year and was incurred its letter protest to the Commissioner of Internal
in carrying on a trade or business. Hence, it was Revenues assessment, that the subject media
necessary. However, their views conflict as to expense was incurred in order to protect
whether or not it was ordinary. To be respondent corporations brand franchise, a critical
deductible, an advertising expense should not point during the period under review.
only be necessary but also ordinary. These two
requirements must be met. The protection of brand franchise is
The Commissioner maintains that the subject analogous to the maintenance of goodwill
advertising expense was not ordinary on the or title to ones property. This is a capital
ground that it failed the two conditions set by U.S. expenditure which should be spread out over a
jurisprudence: first, reasonableness of the amount reasonable period of time.
incurred and second, the amount incurred must
not be a capital outlay to create goodwill for the ADMIN PART (I think)z:
product and/or private respondents
business. Otherwise, the expense must be It has been a long standing policy and
considered a capital expenditure to be spread out practice of the Court to respect the conclusions of
over a reasonable time. quasi-judicial agencies such as the Court of Tax
We agree. Appeals, a highly specialized body specifically
There is yet to be a clear-cut criteria or fixed created for the purpose of reviewing tax cases.
test for determining the reasonableness of an The CTA, by the nature of its functions, is
advertising expense. There being no hard and fast dedicated exclusively to the study and
rule on the matter, the right to a deduction consideration of tax problems. It has necessarily
depends on a number of factors such as but not developed an expertise on the subject. We extend
limited to: the type and size of business in which due consideration to its opinion unless there is an
the taxpayer is engaged; the volume and amount abuse or improvident exercise of authority. Since
of its net earnings; the nature of the expenditure there is none in the case at bar, the Court
itself; the intention of the taxpayer and the adheres to the findings of the CTA.
general economic conditions. It is the interplay of
A mentions insurance companies. Section
182(A)(3)(dd) provides for the taxation of
lending investors in different localities. Section
195-A refers to dealers in securities and
lending investors.
COMMISSIONER OF INTERNAL REVENUE, The burden is thus on petitioner to show that
petitioner, vs. THE PHILIPPINE insurance companies are lending investors for
AMERICAN ACCIDENT INSURANCE purposes of taxation.
COMPANY, INC., THE PHILIPPINE In this case, petitioner does not dispute that
AMERICAN ASSURANCE COMPANY, INC., respondents are in the insurance business.
and THE PHILIPPINE AMERICAN GENERAL Petitioner merely alleges that the definition of
INSURANCE CO., INC., respondents. lending investors under CA 466 is broad
enough to encompass insurance companies.

Facts: 2. Plainly, insurance companies and


Respondents are domestic corporations lending investors are different
licensed to transact insurance business in enterprises in the eyes of the law.
the country. Lending investors cannot, for a consideration,
From August 1971 to September 1972, hold anyone harmless from loss, damage or
respondents paid the Bureau of Internal liability, nor provide compensation or
Revenue under protest the 3% tax indemnity for loss. The underwriting of risks is
imposed on lending investors by the prerogative of insurers, the great majority
Section 195-A of Commonwealth Act No. of which are incorporated insurance
466 (CA 466), as amended by Republic Act companies like respondents.
No. 6110 (RA 6110) and other laws.
3. True, respondents granted mortgage and
Respondents paid the following
other kinds of loans. However, this was not
amounts: P7,985.25 from Philippine
done independently of respondents insurance
American (PHILAM) Accident
business. The granting of certain loans is one
Insurance Company; P7,047.80 from
of several means of investment allowed to
PHILAM Assurance Company;
insurance companies. No less than the
and P14,541.97 from PHILAM General
Insurance Code mandates and regulates this
Insurance Company. These amounts
practice
represented 3% of each companys
Unlike the practice of lending investors, the
interest income from mortgage and
lending activities of insurance
other loans.
companies are circumscribed and
Respondents also paid the taxes required
strictly regulated by the State. Insurance
of insurance companies under CA 466.
companies cannot freely lend to themselves
In 1973, respondents sent a letter-claim to or others as lending investors can, nor can
petitioner seeking a refund of the taxes insurance companies grant simply any kind of
paid under protest. loan. Even prior to 1978, the Insurance Code
When respondents did not receive a prescribed strict rules for the granting of loans
response, each respondent filed on 26 April by insurance companies. These provisions on
1973 a petition for review with the CTA. mortgage, collateral and policy loans were
These three petitions, which were later reiterated in the Insurance Code of 1978 and
consolidated, argued that respondents are still in force today.
were not lending investors and as 4. The separate provisions on lending investors
such were not subject to the 3% and insurance companies demonstrate an
lending investors tax under Section intention to treat these businesses
195-A. differently. If Congress intended insurance
CTA ruled that respondents were companies to be taxed as lending investors,
entitled to their refund. there would be no need for Section 182(A)(3)
The petitioner (CIR) appealed with the CA (gg). Section 182(A)(3)(dd) would have been
but the latter affirmed the ruling of the sufficient. That insurance companies were
CTA included with banks, finance and
investment companies also supports the
Issue: CTAs conclusion that insurance companies
WON Insurance Companies should be taxed had more in common with the latter
(3% percentage tax) as lending investors enterprises than with lending investors. As the
CTA pointed out, banks also regularly lend
Ruling: NO. money at interest, but are not taxable as
lending investors.
1.Insurance companies cannot be considered
lending investors under CA 466, as amended. 5. Petitioner does not dispute that it issued a
Neither Section 182(A)(3)(dd) nor Section 195- ruling in 1920 to the effect that the lending of
money at interest was a necessary incident of
the insurance business, and that insurance
companies were thus not subject to the tax
on money lenders. Petitioner argues only that
the 1920 ruling does not apply to the instant
case because RA 6110 introduced the
definition of lending investors to CA 466 only
in 1969. The subject definition was actually
introduced much earlier, at a time when
lending investors were still referred to as
money lenders.
Money lender includes all persons
who make a practice of lending
money for themselves or others at
interest. (Emphasis supplied)
As can be seen, the definitions of money
lender under the 1914 Tax Code and lending
investor under CA 466 are identical. The term
money lender was merely changed to lending
investor when Act No. 3963 amended the
Revised Administrative Code in 1932. This same
definition of lending investor has since appeared
in Section 194(u) of CA 466 and later tax laws.
Note that insurance companies were not
included among the businesses subject to an
annual fixed tax under the 1914 Tax Code. That
Congress later saw the need to introduce
Section 182(A)(3)(gg) in CA 466 bolsters our view
that there was no legislative intent to tax
insurance companies as lending investors. If
insurance companies were already taxed as
lending investors, there would have been no
need for a separate provision specifically
requiring insurance companies to pay fixed
taxes.

NOTE: CTA Ruling

The CTA held that respondents are not


taxable as lending investors because the term
lending investors does not embrace insurance
companies.
The term money lenders were later changed
to lending investors but the definition of the term
remains the same. [Sec. 1464(x), Rev. Adm.
Code, as finally amended by Com. Act No. 215,
and Sec. 1465(v) of the same Code, as finally
amended by Act No. 3963] The same law is
embodied in the present National Internal
Revenue Code (Com. Act No. 466) without
change, except in the amount of the tax.
It is a well-settled rule that an administrative
interpretation of a law which has been followed
and applied for a long time, and thereafter the
law is re-enacted without substantial change, such
administrative interpretation is deemed to have
received legislative approval. In short, the
administrative interpretation becomes part of the
law as it is presumed to carry out the legislative
purpose.

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