You are on page 1of 44

G.R. No.

135945 March 7, 2001 all its assets, programs and projects, were transferred to the Presidential
Management Staff (PMS).2
THE UNITED RESIDENTS OF DOMINICAN HILL, INC., represented by its
President RODRIGO S. MACARIO, SR., petitioner, On October 18, 1988, the PMS received an application from petitioner
vs. UNITED RESIDENTS OF DOMINICAN HILL, INC. (UNITED, for brevity), a
COMMISSION ON THE SETTLEMENT OF LAND PROBLEMS, represented by its community housing association composed of non-real property owning
Commissioner, RUFINO V. MIJARES; MARIO PADILAN, PONCIANO BASILAN, residents of Baguio City, to acquire a portion of the Dominican Hills property.
HIPOLITO ESLAVA, WILLIAM LUMPISA, PACITO MOISES, DIONISIO ANAS, NOLI On February 2, 1990, PMS Secretary Elfren Cruz referred the application to
DANGLA, NAPOLEON BALESTEROS, ELSIE MOISES, SEBIO LACWASAN, BEN the HOME INSURANCE GUARANTY CORPORATION (HIGC). HIGC consented to
FLORES, DOMINGO CANUTAB, MARCELINO GABRIANO, TINA TARNATE, act as originator for UNITED.3 Accordingly, on May 9, 1990, a Memorandum
ANDREW ABRAZADO, DANNY LEDDA, FERNANDO DAYAO, JONATHAN DE LA of Agreement was signed by and among the PMS, the HIGC, and UNITED. The
PENA, JERRY PASSION, PETER AGUINSOD, and LOLITA DURAN, respondents. Memorandum of Agreement called for the PMS to sell the Dominican Hills
property to HIGC which would, in turn, sell the same to UNITED. The parties
DE LEON, JR., J.: agreed on a selling price of P75.00 per square meter.

Before us is a petition for prohibition and declaratory relief seeking the Thus, on June 12, 1991, HIGC sold 2.48 hectares of the property to UNITED.
annulment of a status quo order1 dated September 29, 1998 issued by the The deed of conditional sale provided that ten (10) per cent of the purchase
public respondent Commission on the Settlement of Land Problems (COSLAP, price would be paid upon signing, with the balance to be amortized within
for brevity) in COSLAP Case No. 98-253. one year from its date of execution. After UNITED made its final payment on
January 31, 1992, HIGC executed a Deed of Absolute Sale dated July 1, 1992.
The facts are:
Petitioner alleges that sometime in 1993, private respondents entered the
The property being fought over by the parties is a 10.36-hectare property in Dominican Hills property allocated to UNITED and constructed houses
Baguio City called Dominican Hills, formerly registered in the name of thereon. Petitioner was able to secure a demolition order from the city
Diplomat Hills, Inc. It appeared that the property was mortgaged to the mayor.4
United Coconut Planters Bank (UCPB) which eventually foreclosed the
mortgage thereon and acquired the same as highest bidder. On April 11, Unable to stop the razing of their houses, private respondents, under the
1983, it was donated to the Republic of the Philippines by UCPB through its name DOMINICAN HILL BAGUIO RESIDENTS HOMELESS ASSOCIATION
President, Eduardo Cojuangco. The deed of donation stipulated that (ASSOCIATION, for brevity) filed an action5 for injunction docketed as Civil
Dominican Hills would be utilized for the "priority programs, projects, Case No. 3316-R, in the Regional Trial Court of Baguio City, Branch 4. Private
activities in human settlements and economic development and respondents were able to obtain a temporary restraining order but their
governmental purposes" of the Ministry of Human Settlements. prayer for a writ of preliminary injunction was later denied in an Order dated
March 18, 1996.6
On December 12, 1986, the then President Corazon C. Aquino issued
Executive Order No. 85 abolishing the Office of Media Affairs and the Ministry While Civil Case No. 3316-R was pending, the ASSOCIATION, this time
of Human Settlements. All agencies under the latter's supervision as well as represented by the Land Reform Beneficiaries Association, Inc.
(BENEFICIARIES, for brevity), filed Civil Case No. 3382-R before Branch 61 of

1
the same court. The complaint7 prayed for damages, injunction and ASSUMING THAT THE COMMISSION ON THE SETTLEMENT OF LAND
annulment of the said Memorandum of Agreement between UNITED and PROBLEMS [COSLAP] HAS JURISDICTION ON THE MATTER, IS IT EXEMPTED
HIGC. Upon motion of UNITED, the trial court in an Order dated May 27, 1996 FROM OBSERVING A CLEAR CASE OF FORUM SHOPPING ON THE PART OF THE
dismissed Civil Case No. 3382-R.8 The said Order of dismissal is currently on PRIVATE RESPONDENTS?
appeal with the Court of Appeals.9
To the extent that the instant case is denominated as one for declaratory
Demolition Order No. 1-96 was subsequently implemented by the Office of relief, we initially clarify that we do not possess original jurisdiction to
the City Mayor and the City Engineer's Office of Baguio City. However, entertain such petitions.11 Such is vested in the Regional Trial Courts.12
petitioner avers that private respondents returned and reconstructed the Accordingly, we shall limit our review to ascertaining if the proceedings
demolished structures. before public respondent COSLAP are without or in excess, of its jurisdiction.
In this wise, a recounting of the history of the COSLAP may provide useful
To forestall the re-implementation of the demolition order, private insights into the extent of its powers and functions.
respondents filed on September 29, 1998 a petition10 for annulment of
contracts with prayer for a temporary restraining order, docketed as COSLAP The COSLAP was created by virtue of Executive Order No. 561 dated
Case No. 98-253, in the Commission on the Settlement of Land Problems September 21, 1979. Its forerunner was the Presidential Action Committee
(COSLAP) against petitioner, HIGC, PMS, the City Engineer's Office, the City on Land Problems (PACLAP) founded on July 31, 1970 by virtue of Executive
Mayor, as well as the Register of Deeds of Baguio City. On the very same day, Order No. 251. As originally conceived, the committee was tasked "to
public respondent COSLAP issued the contested order requiring the parties expedite and coordinate the investigation and resolution of land disputes,
to maintain the status quo. streamline and shorten administrative procedures, adopt bold and decisive
measures to solve land problems, and/or recommend other solutions." It was
Without filing a motion for reconsideration from the aforesaid status quo given the power to issue subpoenas duces tecum and ad testificandum and
order, petitioner filed the instant petition questioning the jurisdiction of the to call upon any department, office, agency or instrumentality of the
COSLAP. government, including government owned or controlled corporations and
local government units, for assistance in the performance of its functions. At
The issues we are called upon to resolve are: the time, the PACLAP did not exercise quasi-judicial functions.

1 On March 19, 1971, Executive Order No. 305 was issued reconstituting the
PACLAP.13 The committee was given exclusive jurisdiction over all cases
IS THE COMMISSION ON THE SETTLEMENT OF LAND PROBLEMS [COSLAP] involving public lands and other lands of the public domain and accordingly
CREATED UNDER EXECUTIVE ORDER NO. 561 BY THE OFFICE OF THE was tasked:
PHILIPPINES [sic] EMPOWERED TO HEAR AND TRY A PETITION FOR
ANNULMENT OF CONTRACTS WITH PRAYER FOR A TEMPORARY 1. To investigate, coordinate, and resolve expeditiously land disputes,
RESTRAINING ORDER AND THUS, ARROGATE UNTO ITSELF THE POWER TO streamline administrative procedures, and in general, to adopt bold and
ISSUE STATUS QUO ORDER AND CONDUCT A HEARING THEREOF [sic]? decisive measures to solve problems involving public lands and lands of the
public domain;
2

2
2. To coordinate and integrate the activities of all government agencies
having to do with public lands or lands of the public domain; xxx xxx xxx

3. To study and review present policies as embodied in land laws and Notably, the said Presidential Decree No. 832 did not contain any provision
administrative rules and regulations, in relation to the needs for land of the for judicial review of the resolutions, orders or decisions of the PACLAP.
agro-industrial sector and small farmers, with the end in view to evolving and
recommending new laws and policies and establishing priorities in the grant On September 21, 1979, the PACLAP was abolished and its functions
of public land, and the simplification of processing of land applications in transferred to the present Commission on the Settlement of Land Problems
order to relieve the small man from the complexities of existing laws, rules by virtue of Executive Order No. 561. This reorganization, effected in line with
and regulations; Presidential Decree No. 1416, brought the COSLAP directly under the Office
of the President.15 It was only at this time that a provision for judicial review
4. To evolve and implement a system for the speedy investigation and was made from resolutions, orders or decisions of the said agency, as
resolution of land disputes; embodied in section 3(2) thereof, to wit:

5. To receive all complaints of settlers and small farmers, involving Powers and functions. — The Commission shall have the following powers
public lands or other lands of the public domain; and functions:

6. To look into the conflicts between Christians and non-Christians, 1. Coordinate the activities, particularly the investigation work, of the
between corporations and small settlers and farmers; cause the speedy various government offices and agencies involved in the settlement of land
settlement of such conflicts in accordance with priorities or policies problems or disputes, and streamline administrative procedures to relieve
established by the Committee; and small settlers and landholders and members of cultural minorities of the
expense and time-consuming delay attendant to the solution of such
7. To perform such other functions as may be assigned to it by the problems or disputes;
President.
2. Refer and follow-up for immediate action by the agency having
Thereafter, the PACLAP was reorganized pursuant to Presidential Decree No. appropriate jurisdiction any land problem or dispute referred to the
832 dated November 27, 1975.14 Its jurisdiction was revised thus: Commission: Provided, that the Commission may, in the following cases,
assume jurisdiction and resolve land problems or disputes which are critical
xxx xxx xxx and explosive in nature considering, for instance, the large number of the
parties involved, the presence or emergence of social tension or unrest, or
2. Refer for immediate action any land problem or dispute brought to other similar critical situations requiring immediate action:
the attention of the PACLAP, to any member agency having jurisdiction
thereof: Provided, that when the Executive Committee decides to act on a (a) Between occupants/squatters and pasture lease agreement holders
case, its resolution, order or decision thereon, shall have the force and effect or timber concessionaires;
of a regular administrative resolution, order or decision, and shall be binding
upon the parties therein involved and upon the member agency having (b) Between occupants/squatters and government reservation grantees;
jurisdiction thereof;

3
(c) Between occupants/squatters and public land claimants or This contention is devoid of merit. It is true that Executive Order No. 561
applicants; provides that the COSLAP may take cognizance of cases which are "critical
and explosive in nature considering, for instance, the large number of parties
(d) Petitions for classification, release and/or subdivision of lands of the involved, the presence or emergence of social tension or unrest, or other
public domain; and similar critical situations requiring immediate action." However, the use of
the word "may" does not mean that the COSLAP's jurisdiction is merely
(e) Other similar land problems of grave urgency and magnitude. confined to the above mentioned cases. The provisions of the said Executive
Order are clear that the COSLAP was created as a means of providing a more
The Commission shall promulgate such rules of procedure as will insure effective mechanism for the expeditious settlement of land problems in
expeditious resolution and action on the above cases. The resolution, order general, which are frequently the source of conflicts among settlers,
or decision of the Commission on any of the foregoing cases shall have the landowners and cultural minorities. Besides, the COSLAP merely took over
force and effect of a regular administrative resolution, order or decision and from the abolished PACLAP whose functions, including its jurisdiction, power
shall be binding upon the parties therein and upon the agency having and authority to act on, decide and resolve land disputes (Sec. 2, P.D. No. 832)
jurisdiction over the same. Said resolution, order or decision shall become were all assumed by it. The said Executive Order No. 561 containing said
final and executory within thirty (30) days from its promulgation and shall be provision, being enacted only on September 21, 1979, cannot affect the
appealable by certiorari only to the Supreme Court. exercise of jurisdiction of the PACLAP Provincial Committee of Koronadal on
September 29, 1978. Neither can it affect the decision of the COSLAP which
xxx xxx xxx merely affirmed said exercise of jurisdiction.

In the performance of its functions and discharge of its duties, the Given the facts of the case, it is our view that the COSLAP is not justified in
Commission is authorized, through the Commission, to issue subpoena and assuming jurisdiction over the controversy. As matters stand, it is not the
subpoena duces tecum for the appearance of witnesses and the production judiciary's place to question the wisdom behind a law;17 our task is to
of records, books and documents before it. It may also call upon any ministry, interpret the law. We feel compelled to observe, though, that by reason of
office, agency or instrumentality of the National Government, including the ambiguous terminology employed in Executive Order No. 561, the power
government-owned or controlled corporations, and local governments for to assume jurisdiction granted to the COSLAP provides an ideal breeding
assistance. This authority is likewise, conferred upon the provincial offices as ground for forum shopping, as we shall explain subsequently. Suffice it to
may be established pursuant to Section 5 of this Executive Order. state at this stage that the COSLAP may not assume jurisdiction over cases
which are already pending in the regular courts.
In Bañaga v. Commission on the Settlement of Land Problems,16 we
characterized the COSLAP's jurisdiction as being general in nature, as follows: The reason is simple. Section 3(2) of Executive Order 561 speaks of any
resolution, order or decision of the COSLAP as having the "force and effect of
Petitioners also contend in their petition that the COSLAP itself has no a regular administrative resolution, order or decision." The qualification
jurisdiction to resolve the protest and counter-protest of the parties because places an unmistakable emphasis on the administrative character of the
its power to resolve land problems is confined to those cases "which are COSLAP's determination, amplified by the statement that such resolutions,
critical and explosive in nature." orders or decisions "shall be binding upon the parties therein and upon the
agency having jurisdiction over the same." An agency is defined by statute as
"any of the various units of the Government, including a department, bureau,

4
office, instrumentality, or government-owned or controlled corporation, or a observed in our system of government reposes the three (3) great powers
local government or a distinct unit therein."18 A department, on the other into its three (3) branches — the legislative, the executive, and the judiciary
hand, "refers to an executive department created by law."19 Whereas, a — each department being co-equal and coordinate, and supreme in its own
bureau is understood to refer "to any principal subdivision of any sphere. Accordingly, the executive department may not, by its own fiat,
department."20 In turn, an office "refers, within the framework of impose the judgment of one of its own agencies, upon the judiciary. Indeed,
governmental organization, to any major functional unit of a department or under the expanded jurisdiction of the Supreme Court, it is empowered "to
bureau including regional offices. It may also refer to any position held or determine whether or not there has been grave abuse of discretion
occupied by individual persons, whose functions are defined by law or amounting to lack of or excess of jurisdiction on the part of any branch or
regulation."21 An instrumentality is deemed to refer "to any agency of the instrumentality of the Government."26
National Government, not integrated within the department framework,
vested with special functions or jurisdiction by law, endowed with some if not There is an equally persuasive reason to grant the petition. As an additional
all corporate powers, administering special funds and enjoying operational ground for the annulment of the assailed status quo order of COSLAP, UNITED
autonomy, usually through a charter. This term includes regulatory agencies, accuses private respondents of engaging in forum shopping. Forum shopping
chartered institutions and government-owned or controlled corporations."22 exists when a party "repetitively avail[s] of several judicial remedies in
Applying the principle in statutory construction of ejusdem generis, i.e., different courts, simultaneously or successively, all substantially founded on
"where general words follow an enumeration or persons or things, by words the same transactions and the same essential facts and circumstances, and
of a particular and specific meaning, such general words are not to be all raising substantially the same issues either pending in, or already resolved
construed in their widest extent, but are to be held as applying only to adversely by some other court."27 In this connection, Supreme Court
persons or things of the same kind or class as those specifically Administrative Circular No. 04-94 dated February 8, 1994 provides:
mentioned,"23 section 3(2) of Executive Order 561 patently indicates that the
COSLAP's dispositions are binding on administrative or executive agencies. Revised Circular No. 28-91, dated February 8, 1994, applies to and governs
The history of the COSLAP itself bolsters this view. Prior enactments the filing of petitions in the Supreme Court and the Court of Appeals and is
enumerated its member agencies among which it was to exercise a intended to prevent the multiple filing of petitions or complaints involving
coordinating function. the same issues in other tribunals or agencies as a form of forum shopping.

The COSLAP discharges quasi-judicial functions: Complementary thereto and for the same purpose, the following
requirements, in addition to those in pertinent provisions of the Rules of
"Quasi-judicial function" is a term which applies to the actions, discretion, Court and existing circulars, shall be strictly complied with in the filing of
etc. of public administrative officers or bodies, who are required to complaints, petitions, applications or other initiatory pleadings in all courts
investigate facts, or ascertain the existence of facts, hold hearings, and draw and agencies other than the Supreme Court and the Court of Appeals and
conclusions from them, as a basis for their official action and to exercise shall be subject to the sanctions provided hereunder.
discretion of a judicial nature."24
1. The plaintiff, petitioner, applicant or principal part seeking relief in
However, it does not depart from its basic nature as an administrative agency, the complaint, petition, application or other initiatory pleading shall certify
albeit one that exercises quasi-judicial functions. Still, administrative agencies under oath in such original pleading, or in a sworn certification annexed
are not considered courts; they are neither part of the judicial system nor are thereto and simultaneously filed therewith, to the truth of the following facts
they deemed judicial tribunals.25 The doctrine of separation of powers and undertakings: (a) he has not theretofore commenced any other action or

5
proceeding involving the same issues in the Supreme Court, the Court of It bears stressing that there is a material distinction between the requirement
Appeals, or any other tribunal or agency; (b) to the best of his knowledge, no of submission of the certification against forum shopping from the
such action or proceedings is pending in the Supreme Court, the Court of undertakings stated therein. Accordingly,
Appeals, or any other tribunal or agency; (c) if there is any such action or
proceeding which is either pending or may have been terminated, he must x x x [f]ailure to comply with this requirement cannot be excused by the fact
state the status thereof; and (d) if he should thereafter learn that a similar that plaintiff is not guilty of forum shopping. The Court of Appeals, therefore,
action or proceeding has been filed or is pending before the Supreme Court, erred in concluding that Administrative Circular No. 04-94 did not apply to
the Court of Appeals or any other tribunal or agency, he undertakes to report private respondent's case merely because her complaint was not based on
that fact within five (5) days therefrom to the court or agency wherein the petitioner's cause of action. The Circular applies to any complaint, petition,
original pleading and sworn certification contemplated herein have been application, or other initiatory pleading, regardless of whether the party filing
filed. it has actually committed forum shopping. Every party filing a complaint or
any other initiatory pleading is required to swear under oath that he has not
The complaint and other initiatory pleadings referred to and subject of this committed nor will he commit forum shopping. Otherwise, we would have an
Circular are the original civil complaint, counterclaim, cross-claim, third absurd situation where the parties themselves would be the judge of whether
(fourth, etc.) party complaint, or complaint-in-intervention, petition, or their actions constitute a violation of said Circular, and compliance therewith
application wherein a party asserts his claim for relief. would depend on their belief that they might or might not have violated the
requirement. Such interpretation of the requirement would defeat the very
2. Any violation of this Circular shall be a cause for the dismissal of the purpose of Circular 04-94.
complaint, petition, application or other initiatory pleading, upon motion and
after hearing. However, any clearly willful and deliberate forum shopping by Indeed, compliance with the certification against forum shopping is separate
any other party and his counsel through the filing of multiple complaints or from, and independent of, the avoidance of forum shopping itself. Thus,
other initiatory pleadings to obtain favorable action shall be a ground for the there is a difference in the treatment — in terms of imposable sanctions —
summary dismissal thereof and shall constitute contempt of court. between failure to comply with the certification requirement and violation of
Furthermore, the submission of a false certification or non-compliance with the prohibition against forum shopping. The former is merely a cause for the
the undertakings therein, as provided in Paragraph 1 hereof, shall constitute dismissal, without prejudice, of the complaint or initiatory pleading, while the
indirect contempt of court, without prejudice to disciplinary proceedings latter is a ground for summary dismissal thereof and constitutes direct
against the counsel and the filing of a criminal action against the part. contempt.30
[emphasis supplied]
A scrutiny of the pleadings filed before the trial courts and the COSLAP
xxx xxx xxx sufficiently establishes private respondents' propensity for forum shopping.
We lay the premise that the certification against forum shopping must be
The said Administrative Circular's use of the auxiliary verb "shall" imports "an executed by the plaintiff or principal party, and not by his counsel.31 Hence,
imperative obligation . . . inconsistent with the idea of discretion."28 Hence, one can deduce that the certification is a peculiar personal representation on
compliance therewith is mandatory.29 the part of the principal party, an assurance given to the court or other
tribunal that there are no other pending cases involving basically the same
parties, issues and causes of action. In the case at bar, private respondents'
litany of omissions range from failing to submit the required certification

6
against forum shopping to filing a false certification, and then to forum discretion on the part of the Makati court, being a mere co-equal of the
shopping itself. First, the petition filed before the COSLAP conspicuously Parañaque court, in not giving due deference to the latter before which the
lacked a certification against forum shopping. Second, it does not appear issue of the alleged violation of the sub-judice rule had already been raised
from the record that the ASSOCIATION informed Branch 4 of the Regional and submitted. In such instance, the Makati court, if it was wary of dismissing
Trial Court of Baguio City before which Civil Case No. 3316-R was pending, the action outrightly under Administrative Circular No. 04-94, should have, at
that another action, Civil Case No. 3382-R, was filed before Branch 61 of the least, ordered the consolidation of its case with that of the Parañaque court,
same court. Another group of homeless residents of Dominican Hill, the LAND which had first acquired jurisdiction over the related case x x x, or it should
REFORM BENEFICIARIES ASSOCIATION, INC. initiated the latter case. The have suspended the proceedings until the Parañaque court may have ruled
aforesaid plaintiff, however, does not hesitate to admit that it filed the on the issue x x x.
second case in representation of private respondent, as one of its affiliates.
In the same manner, the certification against forum shopping accompanying xxx xxx xxx
the complaint in Civil Case No. 3382-R does not mention the pendency of Civil
Case No. 3316-R. In fact, the opposite assurance was given, that there was no Thus, while we might admit that the causes of action before the Makati court
action pending before any other tribunal. Another transgression is that both and the Parañaque court are distinct, and that private respondent cannot
branches of the trial court do not appear to have been notified of the filing of seek civil indemnity in the contempt proceedings, the same being in the
the subject COSLAP Case No. 98-253. nature of criminal contempt, we nonetheless cannot ignore private
respondent's intention of seeking exactly identical reliefs when it sought the
It is evident from the foregoing facts that private respondents, in filing preliminary relief of injunction in the Makati court. As earlier indicated, had
multiple petitions, have mocked our attempts to eradicate forum shopping private respondent been completely in good faith there would have been no
and have thereby upset the orderly administration of justice. They sought hindrance in filing the action for damages with the regional trial court of
recourse from three (3) different tribunals in order to obtain the writ of Parañaque and having it consolidated with the contempt proceedings before
injunction they so desperately desired. "The willful attempt by private Branch 274, so that the same issue on the alleged violation of the sub judice
respondents to obtain a preliminary injunction in another court after it failed rule will not have to be passed upon twice, and there would be no possibility
to acquire the same from the original court constitutes grave abuse of the of having two courts of concurrent jurisdiction making two conflicting
judicial process."32 resolutions.

In this connection, we expounded on forum shopping in Viva Productions, Inc. Yet from another angle, it may be said that when the Parañaque court
v. Court of Appeals33 that: acquired jurisdiction over the said issue, it excluded all other courts of
concurrent jurisdiction from acquiring jurisdiction over the same. To hold
Private respondent's intention to engage in forum shopping becomes otherwise would be to risk instances where courts of concurrent jurisdiction
manifest with undoubted clarity upon the following considerations. Notably, might have conflicting orders. This will create havoc and result in an
if not only to ensure the issuance of an injunctive relief, the significance of extremely disordered administration of justice. Therefore, even on the
the action for damages before the Makati court would be nil. What damages assumption that the Makati court may acquire jurisdiction over the subject
against private respondent would there be to speak about if the Parañaque matter of the action for damages, without prejudice to the application of
court already enjoins the performance of the very same act complained of in Administrative Circular No. 04-94, it cannot nonetheless acquire jurisdiction
the Makati court? Evidently, the action for damages is premature if not for over the issue of whether or not petitioner has violated the sub judice rule.
the preliminary injunctive relief sought. Thus, we find grave abuse of At best, the Makati court may hear the case only with respect to the alleged

7
injury suffered by private respondent after the Parañaque court shall have pronouncement on Civil Case No. 3382-R, the dismissal of which was elevated
ruled favorably on the said issue. on appeal to the Court of Appeals where it is still pending.

We also noted several indications of private respondents' bad faith. The WHEREFORE, the petition is hereby GRANTED. The status quo order dated
complaint filed in Civil Case No. 3316-R was prepared by the ASSOCIATION's September 29, 1998 issued in COSLAP Case No. 98-253 by respondent
counsel, Atty. Conrado Villamor Catral, Jr. whereas the complaint filed in Civil Commission On The Settlement Of Land Problems (COSLAP) is hereby SET
Case No. 3382-R was signed by a different lawyer, Atty. Thomas S. Tayengco. ASIDE; and the petition filed in COSLAP Case No. 98-253 and the complaint in
With regard to the petition filed with the COSLAP, the same was signed by Civil Case No. 3316-R are hereby DISMISSED for lack of jurisdiction and forum
private respondents individually. As to the latter case, we noted that the shopping. Costs against private respondents.
petition itself could not have been prepared by ordinary laymen, inasmuch as
it exhibits familiarity with statutory provisions and legal concepts, and is SO ORDERED.
written in a lawyerly style.

In the same manner, the plaintiffs in the three (3) different cases were made
to appear as dissimilar: in Civil Case No. 3316-R, the plaintiff was
ASSOCIATION of which private respondent Mario Padilan was head, while the
plaintiff in Civil Case No. 3382-R was the BENEFICIARIES. Before the COSLAP,
private respondents themselves were the petitioners, led again by Padilan.34
Private respondents also attempted to vary their causes of action: in Civil
Case No. 3382-R and COSLAP Case No. 98-253, they seek the annulment of
the Memorandum of Agreement executed by and among UNITED, the PMS,
and HIGC as well as the transfer certificates of title accordingly issued to
petitioner. All three (3) cases sought to enjoin the demolition of private
respondents' houses.

It has been held that forum shopping is evident where the elements of litis
pendentia or res judicata are present. Private respondents' subterfuge comes
to naught, for the effects of res judicata or litis pendentia may not be avoided
by varying the designation of the parties or changing the form of the action
or adopting a different mode of presenting one's case.35

In view of the foregoing, all that remains to be done is the imposition of the
proper penalty. A party's willful and deliberate act of forum shopping is
punishable by summary dismissal of the actions filed.36 The summary
dismissal of both COSLAP Case No. 98-253 and Civil Case No. 3316-R is
therefore warranted under the premises. We shall refrain from making any

8
G.R. No. 134990 April 27, 2000 capital is only P250,000.00; and, (g) overpricing in the freight rate causing
losses of millions of pesos to Cocochem.1
MANUEL M. LEYSON JR., petitioner,
vs. On 2 January 1998 petitioner charged respondent Tirso Antiporda, Chairman
OFFICE OF THE OMBUDSMAN, TIRSO ANTIPORDA, Chairman, UCPB and CIIF of UCPB and CIIF Oil Mills, and respondent Oscar A. Torralba with violation of
Oil Mills, and OSCAR A. TORRALBA, President, CIIF Oil Mills, respondents. The Anti-Graft and Corrupt Practices Act also before the Ombudsman
anchored on the aforementioned alleged irregularities and corrupt practices.

BELLOSILLO, J.: On 30 January 1998 public respondent dismissed the complaint based on its
finding that —
On 7 February 1996 International Towage and Transport Corporation (ITTC),
a domestic corporation engaged in the lighterage or shipping business, The case is a simple case of breach of contract with damages which should
entered into a one (1)-year contract with Legaspi Oil Company, Inc. (LEGASPI have been filed in the regular court. This Office has no jurisdiction to
OIL), Granexport Manufacturing Corporation (GRANEXPORT) and United determine the legality or validity of the termination of the contract entered
Coconut Chemicals, Inc. (UNITED COCONUT), comprising the Coconut into by CIIF and ITTC. Besides the entities involved are private corporations
Industry Investment Fund (CIIF) companies, for the transport of coconut oil (over) which this Office has no jurisdiction.2
in bulk through MT Transasia. The majority shareholdings of these CIIF
companies are owned by the United Coconut Planters Bank (UCPB) as On 4 June 1998 reconsideration of the dismissal of the complaint was denied.
administrator of the CIIF. Under the terms of the contract, either party could The Ombudsman was unswayed in his finding that the present controversy
terminate the agreement provided a three (3)-month advance notice was involved breach of contract as he also took into account the circumstance
given to the other party. However, in August 1996, or prior to the expiration that petitioner had already filed a collection case before the Regional Trial
of the contract, the CIIF companies with their new President, respondent Court of Manila-Br. 15, docketed as Civil Case No. 97-83354. Moreover, the
Oscar A. Torralba, terminated the contract without the requisite advance Ombudsman found that the filing of the motion for reconsideration on 31
notice. The CIIF companies engaged the services of another vessel, MT March 1998 was beyond the inextendible period of five (5) days from notice
Marilag, operated by Southwest Maritime Corporation. of the assailed resolution on 19 March 1998. 3

On 11 March 1997 petitioner Manuel M. Leyson Jr., Executive Vice President Petitioner now imputes grave abuse of discretion on public respondent in
of ITTC, filed with public respondent Office of the Ombudsman a grievance dismissing his complaint. He submits that inasmuch as Philippine Coconut
case against respondent Oscar A. Torralba. The following is a summary of the Producers Federation, Inc. (COCOFED) v. PCGG4 and Republic v.
irregularities and corrupt practices allegedly committed by respondent Sandiganbayan5 have declared that the coconut levy funds are public funds
Torralba: (a) breach of contract - unilateral cancellation of valid and existing then, conformably with Quimpo v. Tanodbayan,6 corporations formed and
contract; (b) bad faith - falsification of documents and reports to stop the organized from those funds or whose controlling stocks are from those funds
operation of MT Transasia; (c) manipulation - influenced their insurance to should be regarded as government owned and/or controlled corporations. As
disqualify MT Transasia; (d) unreasonable denial of requirement imposed; (e) in the present case, since the funding or controlling interest of the companies
double standards and inconsistent in favor of MT Marilag; (f) engaged and being headed by private respondents was given or owned by the CIIF as
entered into a contract with Southwest Maritime Corp. which is not the shown in the certification of their Corporate Secretary,7 it follows that they
owner of MT Marilag, where liabilities were waived and whose paid-up are government owned and/or controlled corporations. Corollarily,

9
petitioner asserts that respondents Antiporda and Torralba are public officers
subject to the jurisdiction of the Ombudsman. The various laws relating to the coconut industry were codified in 1976. On
21 October of that year, P. D. No. 961 12 was promulgated. On 11 June 1978
Petitioner alleges next that public respondent's conclusion that his complaint it was amended by P. D. No. 1468 13 by inserting a new provision authorizing
refers to a breach of contract is whimsical, capricious and irresponsible the use of the balance of the Coconut Industry Development Fund for the
amounting to a total disregard of its main point, i. e., whether private acquisition of "shares of stocks in corporations organized for the purpose of
respondents violated The Anti-Graft and Corrupt Practices Act when they engaging in the establishment and operation of industries . . . commercial
entered into a contract with Southwest Maritime Corporation which was activities and other allied business undertakings relating to coconut and other
grossly disadvantageous to the government in general and to the CIIF in palm oil indust(ries)." 14 From this fund thus created, or the CIIF, shares of
particular. Petitioner admits that his motion for reconsideration was filed out stock in what have come to be known as the "CIIF companies" were
of time. Nonetheless, he advances that public respondent should have purchased.
relaxed its rules in the paramount interest of justice; after all, the delay was
just a matter of days and he, a layman not aware of technicalities, personally We then stated in COCOFED that the coconut levy funds were raised by the
filed the complaint. State's police and taxing powers such that the utilization and proper
management thereof were certainly the concern of the Government. These
Private respondents counter that the CIIF companies were duly organized and funds have a public character and are clearly affected with public interest.
are existing by virtue of the Corporation Code. Their stockholders are private
individuals and entities. In addition, private respondents contend that they Quimpo v. Tanodbayan involved the issue as to whether PETROPHIL was a
are not public officers as defined under The Anti-Graft and Corrupt Practices government owned or controlled corporation the employees of which fell
Act but are private executives appointed by the Boards of Directors of the CIIF within the jurisdictional purview of the Tanodbayan for purposes of The Anti-
companies. They asseverate that petitioner's motion for reconsideration was Graft and Corrupt Practices Act. We upheld the jurisdiction of the
filed through the expert assistance of a learned counsel. They then charge Tanodbayan on the ratiocination that —
petitioner with forum shopping since he had similarly filed a case for
collection of a sum of money plus damages before the trial court. While it may be that PETROPHIL was not originally "created" as a
government-owned or controlled corporation, after it was acquired by PNOC,
The Office of the Solicitor General maintains that the Ombudsman approved which is a government-owned or controlled corporation, PETROPHIL became
the recommendation of the investigating officer to dismiss the complaint a subsidiary of PNOC and thus shed-off its private status. It is now funded and
because he sincerely believed there was no sufficient basis for the criminal owned by the government as, in fact, it was acquired to perform functions
indictment of private respondents. related to government programs and policies on oil, a vital commodity in the
economic life of the nation. It was acquired not temporarily but as a
We find no grave abuse of discretion committed by the Ombudsman. permanent adjunct to perform essential government or government-related
COCOFED v. PCGG referred to in Republic v. Sandiganbayan reviewed the functions, as the marketing arm of the PNOC to assist the latter in selling and
history of the coconut levy funds. These funds actually have four (4) general distributing oil and petroleum products to assure and maintain an adequate
classes: (a) the Coconut Investment Fund created under R. A. No. 6260;8 (b) and stable domestic supply.
the Coconut Consumers Stabilization Fund created under P. D. No. 276;9 (c)
the Coconut Industry Development Fund created under P. D. No. 582; 10 and, But these jurisprudential rules invoked by petitioner in support of his claim
(d) the Coconut Industry Stabilization Fund created under P. D. No. 1841. 11 that the CIIF companies are government owned and/or controlled

10
corporations are incomplete without resorting to the definition of because the cause of action herein, i. e., violation of The Anti-Graft and
"government owned or controlled corporation" contained in par. (13), Sec. 2, Corrupt Practices Act, is different from the cause of action in the case pending
Introductory Provisions of the Administrative Code of 1987, i. e., any agency before the trial court which is collection of a sum of money plus damages.
organized as a stock or non-stock corporation vested with functions relating WHEREFORE, the petition is DISMISSED. The Resolution of public respondent
to public needs whether governmental or proprietary in nature, and owned Office of the Ombudsman of 30 January 1998 which dismissed the complaint
by the Government directly or through its instrumentalities either wholly, or, of petitioner Manuel M. Leyson Jr., as well as its Order of 4 June 1998 denying
where applicable as in the case of stock corporations, to the extent of at least his motion for reconsideration, is AFFIRMED. Costs against
fifty-one (51) percent of its capital stock. The definition mentions three (3) petitioner.1âwphi1.nêt
requisites, namely, first, any agency organized as a stock or non-stock
corporation; second, vested with functions relating to public needs whether SO ORDERED.
governmental or proprietary in nature; and, third, owned by the Government
directly or through its instrumentalities either wholly, or, where applicable as
in the case of stock corporations, to the extent of at least fifty-one (51)
percent of its capital stock.

In the present case, all three (3) corporations comprising the CIIF companies
were organized as stock corporations.1âwphi1 The UCPB-CIIF owns 44.10%
of the shares of LEGASPI OIL, 91.24% of the shares of GRANEXPORT, and
92.85% of the shares of UNITED COCONUT. 15 Obviously, the below 51%
shares of stock in LEGASPI OIL removes this firm from the definition of a
government owned or controlled corporation. Our concern has thus been
limited to GRANEXPORT and UNITED COCONUT as we go back to the second
requisite. Unfortunately, it is in this regard that petitioner failed to
substantiate his contentions. There is no showing that GRANEXPORT and/or
UNITED COCONUT was vested with functions relating to public needs
whether governmental or proprietary in nature unlike PETROPHIL in Quimpo.
The Court thus concludes that the CIIF companies are, as found by public
respondent, private corporations not within the scope of its jurisdiction.

With the foregoing conclusion, we find it unnecessary to resolve the other


issues raised by petitioner.

A brief note on private respondents' charge of forum shopping. Executive


Secretary v. Gordon 16 is instructive that forum shopping consists of filing
multiple suits involving the same parties for the same cause of action, either
simultaneously or successively, for the purpose of obtaining a favorable
judgment. It is readily apparent that the present charge will not prosper

11
1. ADMINISTRATIVE LAW; GOVERNMENT INSTRUMENTALITY, DEFINED.
— The 1987 Administrative Code defines a government instrumentality as
follows: Instrumentality refers to any agency of the National Government,
not integrated within the department framework, vested with special
functions or jurisdiction by law, endowed with some if not all corporate
powers, administering special funds, and enjoying operational autonomy,
usually through a charter. This term includes regulatory agencies, chartered
institutions, and government-owned or controlled corporations. (Sec. 2 (5)
Introductory Provisions).

2. ID.; CHARTERED INSTITUTION; DEFINED; APPLICATION IN CASE AT


BAR. — The 1987 Administrative Code describes a chartered institution thus:
Chartered institution — refers to any agency organized or operating under a
special charter, and vested by law with functions relating to specific
FIRST DIVISION constitutional policies or objectives. This term includes the state universities
and colleges, and the monetary authority of the state. (Sec. 2 (12)
[G.R. No. 86695. September 3, 1992.] Introductory Provisions). It is clear from the above definitions that ISCOF is a
chartered institution and is therefore covered by P.D. 1818. There are also
MARIA ELENA MALAGA, doing business under the name B.E. CONSTRUCTION; indications in its charter that ISCOF is a government instrumentality. First, it
JOSIELEEN NAJARRO, doing business under the name BEST BUILT was created in pursuance of the integrated fisheries development policy of
CONSTRUCTION; JOSE N. OCCEÑA, doing business under the name THE FIRM the State, a priority program of the government to effect the socio-economic
OF JOSE N. OCCEÑA; and the ILOILO BUILDERS CORPORATION, Petitioners, v. life of the nation. Second, the Treasurer of the Republic of the Philippines
MANUEL R. PENACHOS, JR., ALFREDO MATANGGA, ENRICO TICAR AND shall also be the ex-officio Treasurer of the state college with its accounts and
TERESITA VILLANUEVA, in their respective capacities as Chairman and expenses to be audited by the Commission on Audit or its duly authorized
Members of the Pre-qualification Bids and Awards Committee (PBAC)- representative. Third, heads of bureaus and offices of the National
BENIGNO PANISTANTE, in his capacity as President of Iloilo State College of Government are authorized to loan or transfer to it, upon request of the
Fisheries, as well as in their respective personal capacities; and HON. president of the state college, such apparatus, equipment, or supplies and
LODRIGIO L. LEBAQUIN, Respondents. even the services of such employees as can be spared without serious
detriment to public service. Lastly, an additional amount of P1.5M had been
Salas, Villareal & Velasco, for Petitioners. appropriated out of the funds of the National Treasury and it was also
decreed in its charter that the funds and maintenance of the state college
Virgilio A. Sindico for Respondents. would henceforth be included in the General Appropriations Law.
(Presidential Decree No. 1523)

SYLLABUS 3. ID.; PROHIBITION OF ANY COURT FROM ISSUING INJUNCTION IN


CASES INVOLVING INFRASTRUCTURE PROJECTS OF GOVERNMENT (P.D.
1818); POWER OF THE COURTS TO RESTRAIN APPLICATION. — In the case of

12
Datiles and Co. v. Sucaldito, (186 SCRA 704) this Court interpreted a similar recorded in the minutes of the PBAC meeting held on December 6, 1988.
prohibition contained in P.D. 605, the law after which P.D. 1818 was While it may be true that there were fourteen contractors who were pre-
patterned. It was there declared that the prohibition pertained to the qualified despite the change in schedule, this fact did not cure the defect of
issuance of injunctions or restraining orders by courts against administrative the irregular notice. Notably, the petitioners were disqualified because they
acts in controversies involving facts or the exercise of discretion in technical failed to meet the new deadline and not because of their expired licenses.
cases. The Court observed that to allow the courts to judge these matters (B.E. & Best Built’s licenses were valid until June 30, 1989. [Ex. P & O
would disturb the smooth functioning of the administrative machinery. respectively: both were marked on December 28, 1988]) We have held that
Justice Teodoro Padilla made it clear, however, that on issues definitely where the law requires a previous advertisement before government
outside of this dimension and involving questions of law, courts could not be contracts can be awarded, non-compliance with the requirement will, as a
prevented by P.D. No. 605 from exercising their power to restrain or prohibit general rule, render the same void and of no effect. (Caltex Phil. v. Delgado
administrative acts. We see no reason why the above ruling should not apply Bros., 96 Phil. 368) The fact that an invitation for bids has been communicated
to P.D. 1818. There are at least two irregularities committed by PBAC that to a number of possible bidders is not necessarily sufficient to establish
justified injunction of the bidding and the award of the project. compliance with the requirements of the law if it is shown that other possible
bidders have not been similarly notified.
4. ID.; POLICIES AND GUIDELINES PRESCRIBED FOR GOVERNMENT
INFRASTRUCTURE (PD 1594); RULES IMPLEMENTING THEREOF, NOT 5. ID.; ID.; ID.; PURPOSE THEREOF; CASE AT BAR. — The purpose of the
SUFFICIENTLY COMPLIED WITH IN CASE AT BAR. — Under the Rules rules implementing P.D. 1594 is to secure competitive bidding and to prevent
Implementing P.D. 1594, prescribing policies and guidelines for government favoritism, collusion and fraud in the award of these contracts to the
infrastructure contracts, PBAC shall provide prospective bidders with the detriment of the public. This purpose was defeated by the irregularities
Notice to Pre-qualification and other relevant information regarding the committed by PBAC. It has been held that the three principles in public
proposed work. Prospective contractors shall be required to file their ARC- bidding are the offer to the public, an opportunity for competition and a basis
Contractors Confidential Application for Registration & Classifications & the for exact comparison of bids. A regulation of the matter which excludes any
PRE-C2 Confidential Pre-qualification Statement for the Project (prior to the of these factors destroys the distinctive character of the system and thwarts
amendment of the rules, this was referred to as Pre-C1) not later than the the purpose of its adoption. (Hannan v. Board of Education, 25 Okla. 372) In
deadline set in the published Invitation to Bid, after which date no PRE-C2 the case at bar, it was the lack of proper notice regarding the pre-qualification
shall be submitted and received. Invitations to Bid shall be advertised for at requirement and the bidding that caused the elimination of petitioners B.E.
least three times within a reasonable period but in no case less than two and Best Built. It was not because of their expired licenses, as private
weeks in at least two newspapers of general circulations. (IB 13 1.2-19, respondents now claim. Moreover, the plans and specifications which are the
Implementing Rules and Regulations of P.D. 1594 as amended) PBAC contractors’ guide to an intelligent bid, were not issued on time, thus
advertised the pre-qualification deadline as December 2, 1988, without defeating the guaranty that contractors be placed on equal footing when they
stating the hour thereof, and announced that the opening of bids would be submit their bids. The purpose of competitive bidding is negated if some
at 3 o’clock in the afternoon of December 12, 1988. This scheduled was contractors are informed ahead of their rivals of the plans and specifications
changed and a notice of such change was merely posted at the ISCOF bulletin that are to be the subject of their bids.
board. The notice advanced the cut-off time for the submission of pre-
qualification documents to 10 o’clock in the morning of December 2, 1988, 6. ID.; ID.; ID.; EFFECT OF NON-COMPLIANCE THEREOF. — It has been
and the opening of bids to 1 o’clock in the afternoon of December 12, 1988. held in a long line of cases that a contract granted without the competitive
The new schedule caused the pre-disqualification of the petitioners as bidding required by law is void, and the party to whom it is awarded cannot

13
benefit from it. It has not been shown that the irregularities committed by publication in the November 25, 26, 28, 1988 issues of the Western Visayas
PBAC were induced by or participated in by any of the contractors. Hence, Daily an Invitation to Bid for the construction of the Micro Laboratory Building
liability shall attach only to the private respondents for the prejudice at ISCOF. The notice announced that the last day for the submission of pre-
sustained by the petitioners as a result of the anomalies described above. qualification requirements (PRE C-1) ** was December 2, 1988, and that the
bids would be received and opened on December 12, 1988, 3 o’clock in the
7. CIVIL LAW; NOMINAL DAMAGES; AWARD THEREOF, WHEN afternoon. 1
AVAILABLE. — As there is no evidence of the actual loss suffered by the
petitioners, compensatory damage may not be awarded to them. Moral Petitioners Maria Elena Malaga and Josieleen Najarro, respectively doing
damages do not appear to be due either. Even so, the Court cannot close its business under the name of the B.E. Construction and Best Built Construction,
eyes to the evident bad faith that characterized the conduct of the private submitted their pre-qualification documents at two o’clock in the afternoon
respondents, including the irregularities in the announcement of the bidding of December 2, 1988. Petitioner Jose Occeña submitted his own PRE-C1 on
and their efforts to persuade the ISCOF president to award the project after December 5, 1988. All three of them were not allowed to participate in the
two days from receipt of the restraining order and before they moved to lift bidding because their documents were considered late, having been
such order. For such questionable acts, they are liable in nominal damages at submitted after the cut-off time of ten o’clock in the morning of December 2,
least in accordance with Article 2221 of the Civil Code, which states: Art. 1988.
2221. Nominal damages are adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant may be vindicated or, On December 12, 1988, the petitioners filed a complaint with the Regional
recognized, and not for the purpose of indemnifying the plaintiff for any loss Trial Court of Iloilo against the chairman and members of PBAC in their official
suffered by him. These damages are to be assessed against the private and personal capacities. The plaintiffs claimed that although they had
respondents in the amount of P10,000.00 each, to be paid separately for each submitted their PRE-C1 on time, the PBAC refused without just cause to
of petitioners B.E. Construction and Best Built Construction. accept them. As a result, they were not included in the list of pre-qualified
bidders, could not secure the needed plans and other documents, and were
unable to participate in the scheduled bidding.
DECISION
In their prayer, they sought the resetting of the December 12, 1988 bidding
and the acceptance of their PRE-C1 documents. They also asked that if the
CRUZ, J.: bidding had already been conducted, the defendants be directed not to
award the project pending resolution of their complaint.

This controversy involves the extent and applicability of P.D. 1818, which On the same date, Judge Lodrigio L. Lebaquin issued a restraining order
prohibits any court from issuing injunctions in cases involving infrastructure prohibiting PBAC from conducting the bidding and awarding the project. 2
projects of the government.chanrobles.com.ph : virtual law library
On December 16, 1988, the defendants filed a motion to lift the restraining
The facts are not disputed. order on the ground that the Court was prohibited from issued restraining
orders, preliminary injunctions and preliminary mandatory injunctions by
The Iloilo State College of Fisheries (henceforth ISCOF) through its Pre- P.D. 1818.chanroblesvirtualawlibrary
qualification, Bids and Awards Committee (henceforth PBAC) caused the

14
The decree reads pertinently as follows:chanrob1es virtual 1aw library
On January 2, 1989, the trial court lifted the restraining order and denied the
Section 1. No Court in the Philippines shall have jurisdiction to issue any petition for preliminary injunction. It declared that the building sought to be
restraining order, preliminary injunction, or preliminary infrastructure construed at the ISCOF was an infrastructure project of the government
project, or a mining, fishery, forest or other natural resource development falling within the coverage of P.D. 1818. Even if it were not, the petition for
project of the government, or any public utility operated by the government, the issuance of a writ of preliminary injunction would still fail because the
including among others public utilities for the transport of the goods and sheriff’s return showed that PBAC was served a copy of the restraining order
commodities, stevedoring and arrastre contracts, to prohibit any person or after the bidding sought to be restrained had already been held.
persons, entity or government official from proceeding with, or continuing Furthermore, the members of the PBAC could not be restrained from
the execution or implementation of any such project, or the operation of such awarding the project because the authority to do so was lodged in the
public utility, or pursuing any lawful activity necessary for such execution, President of the ISCOF, who was not a party to the case. 4
implementation or operation.
In the petition now before us, it is reiterated that P.D. 1818 does not cover
The movants also contended that the question of the propriety of a the ISCOF because of its separate and distinct corporate personality. It is also
preliminary injunction had become moot and academic because the stressed again that the prohibition under P.D. 1818 could not apply to the
restraining order was received late, at 2 o’clock in the afternoon of December present controversy because the project was vitiated with irregularities, to
12, 1988, after the bidding had been conducted and closed at eleven thirty in wit:chanrobles.com : virtual law library
the morning of that date.
1. The invitation to bid as published fixed the deadline of submission of
In their opposition of the motion, the plaintiffs argued against the pre-qualification document on December 2, 1988 without indicating any
applicability of P.D. 1818, pointing out that while ISCOF was a state college, it time, yet after 10:00 o’clock of the given late, the PBAC already refused to
had its own charter and separate existence and was not part of the national accept petitioners’ documents.
government or of any local political subdivision. Even if P.D. 1818 were
applicable, the prohibition presumed a valid and legal government project, 2. The time and date of bidding was published as December 12, 1988 at
not one tainted with anomalies like the project at bar. 3:00 p.m. yet it was held at 10:00 o’clock in the morning.

They also cited Filipinas Marble Corp. v. IAC, 3 where the Court allowed the 3. Private respondents, for the purpose of inviting bidders to
issuance of a writ of preliminary injunction despite a similar prohibition found participate, issued a mimeographed "Invitation to Bid" form, which by law
in P.D. 385. The Court therein stated that:chanrob1es virtual 1aw library (P.D. 1594 and Implementing Rules, Exh. B-1) is to contain the particulars of
the project subject of bidding for the purpose of.
The government, however, is bound by basic principles of fairness and
decency under the due process clauses of the Bill of Rights. P.D. 385 was (i) enabling bidders to make an intelligent and accurate bids;
never meant to protect officials of government-lending institutions who take
over the management of a borrower corporation, lead that corporation to (ii) for PBAC to have a uniform basis for evaluating the bids;
bankruptcy through mismanagement or misappropriation of its funds, and
who, after ruining it, use the mandatory provisions of the decree to avoid the (iii) to prevent collusion between a bidder and the PBAC, by opening to
consequences of their misleads (p. 188, Emphasis supplied). all the particulars of a project.

15
In the petitioners’ Reply, they raise as an additional irregularity the violation
Additionally, the Invitation to Bid prepared by the respondents and the of the rule that where the estimate project cost is from P1M to P5M, the
Itemized Bill of Quantities therein were left blank. 5 And although the project issuance of plans, specifications and proposal book forms should made thirty
in question was a "Construction," the private respondents used an Invitation days before the date of bidding. 7 They point out that these forms were
to Bid form for "Materials." 6 issued only on December 2, 1988, and not at the latest on November 12,
1988, the beginning of the 30-day period prior to the scheduled bidding.
The petitioners also point out that the validity of the writ of preliminary
injunction had not yet become moot and academic because even if the bids In their Rejoinder, the private respondents aver that the documents of B.E.
had been opened before the restraining order was issued, the project itself and Best Built were received although filed late and were reviewed by the
had not yet been awarded. The ISCOF president was not an indispensable Award Committee, which discovered that the contractors had expired
party because the signing of the award was merely a ministerial function licenses. B.E.’s temporary certificate of Renewal of Contractor’s License was
which he could perform only upon the recommendation of the Award valid only until September 30, 1988, while Best Built’s license was valid only
Committee. At any rate, the complaint had already been duly amended to up to June 30, 1988.chanrobles lawlibrary : rednad
include him as a party defendant.
The Court has considered the arguments of the parties in light of their
In their Comment, the private respondents maintain that since the members testimonial and documentary evidence and the applicable laws and
of the board of trustees of the ISCOF are all government officials under jurisprudence. It finds for the petitioners.
Section 7 of P.D. 1523 and since the operations and maintenance of the ISCOF
are provided for in the General Appropriations Law, it is should be considered The 1987 Administrative Code defines a government instrumentality as
a government institution whose infrastructure project is covered by P.D. follows:chanrob1es virtual 1aw library
1818.
Instrumentality refers to any agency of the National Government, not
Regarding the schedule for pre-qualification, the private respondents insist integrated within the department framework, vested with special functions
that PBAC posted on the ISCOF bulletin board an announcement that the or jurisdiction by law, endowed with some if not all corporate powers,
deadline for the submission of pre-qualifications documents was at 10 o’clock administering special funds, and enjoying operational autonomy, usually
of December 2, 1988, and the opening of bids would be held at 1 o’clock in through a charter. This term includes regulatory agencies, chartered
the afternoon of December 12, 1988. As of ten o’clock in the morning of institutions, and government-owned or controlled corporations. (Sec. 2 (5)
December 2, 1988, B.E. construction and Best Built construction had filed only Introductory Provisions).
their letters of intent. At two o’clock in the afternoon, B.E., and Best Built filed
through their common representative, Nenette Garuello, their pre- The same Code describes a chartered institution thus:chanrob1es virtual 1aw
qualification documents which were admitted but stamped "submitted late." library
The petitioners were informed of their disqualification on the same date, and
the disqualification became final on December 6, 1988. Having failed to take Chartered institution — refers to any agency organized or operating under a
immediate action to compel PBAC to pre-qualify them despite their notice of special charter, and vested by law with functions relating to specific
disqualification, they cannot now come to this Court to question the binding constitutional policies or objectives. This term includes the state universities
proper in which they had not participated. and colleges, and the monetary authority of the state. (Sec. 2 (12)
Introductory Provisions).

16
There are at least two irregularities committed by PBAC that justified
It is clear from the above definitions that ISCOF is a chartered institution and injunction of the bidding and the award of the project.chanrobles
is therefore covered by P.D. 1818. virtualawlibrary chanrobles.com:chanrobles.com.ph

There are also indications in its charter that ISCOF is a government First, PBAC set deadlines for the filing of the PRE-C1 and the opening of bids
instrumentality. First, it was created in pursuance of the integrated fisheries and then changed these deadlines without prior notice to prospective
development policy of the State, a priority program of the government of participants.
effect the socio-economic life of the nation. Second, the Treasurer of the
Republic of the Philippines also be the ex-officio Treasurer of the state college Under the Rules Implementing P.D. 1594, prescribing policies and guidelines
with its accounts and expenses to be audited by the Commission on Audit or for government infrastructure contracts, PBAC shall provide prospective
its duly authorized representative. Third, heads of bureaus and offices of the bidders with the Notice of Pre-qualification and other relevant information
National Government are authorized to loan or transfer to it, upon request regarding the proposed work. Prospective contractors shall be required to file
of the president of the state college, such apparatus, equipment, or supplies their ARC-Contractors Confidential Application for Registration &
and even the services of such employees as can be spared without serious Classifications & the PRE-C2 Confidential Pre-qualification Statement for the
detriment to public service. Lastly, an additional amount of P1.5M had been Project (prior to the amendment of the rules, this was referred to as PRE-C1)
appropriated out of the funds of the National Treasury and it was also not later than the deadline set in the published Invitation to Bid, after which
decreed in its charter that the funds and maintenance of the state college date no PRE-C2 shall be submitted and received. Invitations to Bid shall be
would henceforth be included in the General Appropriations Law. 8 advertised for at least three times within a reasonable period but in no case
less than two weeks in at least two newspapers of general circulations. 10
Nevertheless, it does not automatically follow that ISCOF is covered by the
prohibition in the said decree. PBAC advertised the pre-qualification deadline as December 2, 1988, without
stating the hour thereof, and announced that the opening of bids would be
In the case of Datiles and Co. v. Sucaldito, 9 this Court interpreted a similar at 3 o’clock in the afternoon of December 12, 1988. This schedule was
prohibition contained in P.D. 605, the law after which P.D. 1818 was changed and a notice of such change was merely posted at the ISCOF bulletin
patterned. It was there declared that the prohibition pertained to the board. The notice advanced the cut-off time for the submission of pre-
issuance of injunctions or restraining orders by courts against administrative qualification documents to 10 o’clock in the morning of December 2, 1988,
acts in controversies involving facts or the exercise of discretion in technical and the opening of bids to 1 o’clock in the afternoon of December 12, 1988.
cases. The Court observed that to allow the courts to judge these matters
would disturb the smooth functioning of the administrative machinery. The new schedule caused the pre-disqualification of the petitioners as
Justice Teodoro Padilla made it clear, however, that on issues definitely recorded in the minutes of the PBAC meeting held on December 6, 1988.
outside of this dimension and involving questions of law, courts could not be While it may be true that there were fourteen contractors who were pre-
prevented by P.D. No. 605 from exercising their power to restrain or prohibit qualified despite the change in schedule, this fact did not cure the defect of
administrative acts. the irregular notice. Notably, the petitioners were disqualified because they
failed to meet the new deadline and not because of their expired licenses.
We see no reason why the above ruling should not apply to P.D. 1818. ***

17
We have held that where the law requires a previous advertisement before submit their bids. The purpose of competitive bidding is negated if some
government contracts can be awarded, non-compliance with the contractors are informed ahead of their rivals of the plans and specifications
requirement will, as a general rule, render the same void and of no effect 11 that are to be the subject of their bids.
The facts that an invitation for bids has been communicated to a number of
possible bidders is not necessarily sufficient to establish compliance with the P.D. 1818 was not intended to shield from judicial scrutiny irregularities
requirements of the law if it is shown that other public bidders have not been committed by administrative agencies such as the anomalies above
similarly notified. 12 described. Hence, the challenged restraining order was not improperly issued
by the respondent judge and the writ of preliminary injunction should not
Second, PBAC was required to issue to pre-qualified applicants the plans, have been denied. We note from Annex Q of the private respondent’s
specifications and proposal book forms for the project to be bid thirty days memorandum, however, that the subject project has already been "100%
before the date of bidding if the estimate project cost was between P1M and completed as to the Engineering Standard." This fait accompli has made the
P5M. PBAC has not denied that these forms were issued only on December petition for a writ of preliminary injunction moot and academic.
2, 1988, or only ten days before the bidding scheduled for December 12,
1988. At the very latest, PBAC should have issued them on November 12, We come now to the liabilities of the private respondents.
1988, or 30 days before the scheduled bidding.
It has been held in a long line of cases that a contract granted without the
It is apparent that the present controversy did not arise from the competitive bidding required by law is void, and the party to whom it is
discretionary acts of the administrative body nor does it involve merely awarded cannot benefit from it. 14 It has not been shown that the
technical matters. What is involved here is non-compliance with the irregularities committed by PBAC were induced by or participated in by any
procedural rules on bidding which required strict observance. The purpose of of the contractors. Hence, liability shall attach only to the private respondents
the rules implementing P.D. 1594 is to secure competitive bidding and to for the prejudice sustained by the petitioners as a result of the anomalies
prevent favoritism, collusion and fraud in the award of these contracts to the described above.
detriment of the public. This purpose was defeated by the irregularities
committed by PBAC.chanrobles law library : red As there is no evidence of the actual loss suffered by the petitioners,
compensatory damage may not be awarded to them. Moral damages do not
It has been held that the three principles in public bidding are the offer to the appear to be due either. Even so, the Court cannot close its eyes to the
public, an opportunity for competition and a basis for exact comparison of evident bad faith that characterized the conduct of the private respondents,
bids. A regulation of the matter which excludes any of these factors destroys including the irregularities in the announcement of the bidding and their
the distinctive character of the system and thwarts and purpose of its efforts to persuade the ISCOF president to award the project after two days
adoption. 13 from receipt of the restraining order and before they moved to lift such order.
For such questionable acts, they are liable in nominal damages at least in
In the case at bar, it was the lack of proper notice regarding the pre- accordance with Article 2221 of the Civil Code, which
qualification requirement and the bidding that caused the elimination of states:jgc:chanrobles.com.ph
petitioners B.E. and Best Built. It was not because of their expired licenses, as
private respondents now claim. Moreover, the plans and specifications which "Art. 2221. Nominal damages are adjudicated in order that a right of the
are the contractors’ guide to an intelligent bid, were not issued on time, thus plaintiff, which has been violated or invaded by the defendant may be
defeating the guaranty that contractors be placed on equal footing when they

18
vindicated or, recognized, and not for the purpose of indemnifying the
plaintiff for any loss suffered by him.

These damages are to assessed against the private respondents in the


amount of P10,000.00 each, to be paid separately for each of petitioners B.E.
Construction and Best Built Construction. The other petitioner, Occeña
Builders, is not entitled to relief because it admittedly submitted its pre-
qualification documents on December 5, 1988, or three days after the
deadline.chanrobles virtual lawlibrary

WHEREFORE, judgment is hereby rendered: a) upholding the restraining


order dated December 12, 1988, as not covered by the prohibition in P.D.
1818; b) ordering the chairman and the members of the PBAC board of
trustees, namely Manuel R. Penachos, Jr., Alfredo Matangga, Enrico Ticar,
and Teresita Villanueva, to each pay separately to petitioners Maria Elena
Malaga and Josieleen Najarro nominal damages P10,000.00 each; and c)
removing the said chairman and members from the PBAC board of trustees,
or whoever among them is still incumbent therein, for their malfeasance in
office. Costs against PBAC.

Let a copy of this decision be sent to the Office of the Ombudsman.

SO ORDERED.

19
PURISIMA, J.: Corporate Auditor on the ground that it was "prohibited under
Administrative Order No. 29 dated January 19, 1993." 6 The disallowance of
These are cases for certiorari and prohibition, challenging the the bonus in question was finally brought on appeal to the Commission an
constitutionality and validity of Administrative Order Nos. 29 and 268 on Audit (COA) which denied the appeal in its Decision 7 of March 6, 1995,
various grounds. ratiocinating, thus:

The facts in G.R. Nos. 109406, 110642, 111494, and 112056 are undisputed, . . . Firstly, the provisions of RA #6971 insofar as the coverage is concerned
to wit: refer to business enterprises including government owned and/or controlled
corporations performing proprietary functions.
Petitioners are officials and employees of several government departments
and agencies who were paid incentive benefits for the year 1992, pursuant to Sec. 1a of the Supplemental Rules Implementing RA #6971 classified such
Executive Order No. 292 1 ("EO 292"), otherwise known as the Administrative coverage as:
Code of 1987, and the Omnibus Rules Implementing Book V 2 of EO 292. On
January 19, 1993, then President Fidel V. Ramos ("President Ramos") issued All business enterprises, with or without existing duly certified labor
Administrative Order No. 29 ("AO 29") authorizing the grant of productivity organizations, including government owned and/or controlled corporations
incentive benefits for the year 1992 in the maximum amount of P1,000.00 3 performing proprietary functions which are established solely for business or
and reiterating the prohibition 4 under Section 7 5 of Administrative Order profit and accordingly excluding those created, maintained or acquired in
No. 268 ("AO 268"), enjoining the grant of productivity incentive benefits pursuance of a policy of the State enunciated in the Constitution, or by law
without prior approval of the President. Section 4 of AO 29 directed "[a]ll and those whose officers and employess are covered by the Civil Service.
departments, offices and agencies which authorized payment of CY 1992 (emphasis supplied)
Productivity Incentive Bonus in excess of the amount authorized under
Section 1 hereof [are hereby directed] to immediately cause the The PTrA is a GOCC created in pursuance of a policy of the State, Section 9 of
return/refund of the excess within a period of six months to commence Presidential Decree No. 189 states that "To implement the policies and
fifteen (15) days after the issuance of this Order." In compliance therewith, program of the Department (Dept. of Tourism), there is hereby created a
the heads of the departments or agencies of the government concerned, who Philippine Tourism Authority, . . ." Likewise, Section 21 of the same decree
are the herein respondents, caused the deduction from petitioners' salaries provides that "All officials and employees of the Authority, . . ., shall be
or allowances of the amounts needed to cover the alleged overpayments. To subject to Civil Service Law, rules and regulations, and the coverage of the
prevent the respondents from making further deductions from their salaries Wage and Position Classification Office.
or allowances, the petitioners have come before this Court to seek relief.
Furthermore, although Supplemental Rules and Regulations implementing
In G.R. No. 119597, the facts are different but the petition poses a common R.A. #6971 was issued only on December 27, 1991, the law itself is clear that
issue with the other consolidated cases. The petitioner, Association of it pertains to private business enterprises whose employees are covered by
Dedicated Employees of the Philippine Tourism Authority ("ADEPT"), is an the Labor Code of the Philippines, as mentioned in the following provisions:
association of employees of the Philippine Tourism Authority ("PTA") who
were granted productivity incentive bonus for calendar year 1992 pursuant Sec. 5. Labor Management Committee. . . . that at the reguest of any party
to Republic Act No. 6971 ("RA 6971"), otherwise known as the Productivity to the negotiation, the National Wages and Productivity Commission of the
Incentives Act of 1990. Subject bonus was, however, disallowed by the

20
Department of Labor and Employment shall provide the necessary studies, . . With the denial of its appeal, petitioner found its way here via the petition in
.. G.R. No. 119597, to seek relief from the aforesaid decision of COA.

Sec. 8. Notification. — A business enterprise which adopts a productivity We will first resolve the issue on the applicability of RA 6971 to petitioner
incentive program shall submit copies of the same to the National Wages and ADEPT in G.R. No. 119597 before passing upon the constitutionality or validity
Productivity Commission and to the Bureau of Internal Revenue for their of Administrative Orders 29 and 268.
information and record.
Sec. 3 of RA 6971, reads:
Sec. 9. Disputes and Grievances. — Whenever disputes, grievances, or other
matters arise from the interpretation or implementation of the productivity Sec. 3. Coverage. This Act shall apply to all business enterprises with or
incentive program, . . . may seek the assistance of the National Conciliation without existing and duly recognized or certified labor organizations,
and Mediation Board of the Department of Labor and Employment for such including government-owned and controlled corporations performing
purpose. . . . proprietary functions. It shall cover all employees and workers including
casual, regular, supervisory and managerial employees. (emphasis ours)
Therefore, considering the foregoing, the PTrA is within the "exclusion"
provision of the Implementing Rules of RA #6971 and so, it (PTrA) does not Pursuant to Section 10 8 of RA 6971, the Secretary of Labor and Secretary of
fall within its coverage as being entitled to, the productivity incentive bonus Finance issued Supplemental Rules to Implement the said law, as follows:
under RA #6971.
Sec. 1. — Paragraph (a) Section 1, Rule II of the Rules Implementing RA 6971,
Secondly, Administrative Order No. 29 which is the basis for the grant of the shall be amended to read as follows:
productivity incentive bonus/benefits for CY 1992 also explessly provides
"prohibiting payments of similar benefits in future years unless duly Coverage. These Rules shall apply to:
authorized by the President."
(a) All business enterprises with or without existing duly certified labor
Thirdly, the disallowance of the Auditor, PTrA has already been resolved organizations, including government-owned and controlled corporations
when this Commission circularized thru COA Memorandum #92-758 dated performing proprietary functions which are established solely for business or
April 3, 1992 the Supplemental to Rules implementing RA 6971 otherwise profit or gain and accordingly excluding those created, maintained or
known as the "Productivity Incentives Act of 1990." . . . acquired in pursuance of a policy of the state, enunciated in the Constitution
or by law, and those whose officers and employees are covered by the Civil
Lastly, considering the title of RA #6971, i.e. "An Act to encourage Service. (emphasis ours)
productivity and maintain industrial peace by providing incentives to both
labor and capital", and its implementing rules and regulations prepared by xxx xxx xxx
the Department of Labor and Employment and the Department of Finance,
this Office concludes that said law/regulation pertains to agencies in the Petitioner contends that the PTA is a government-owned and controlled
private sector whose employees are covered by the Labor Code. corporation performing proprietary function, and therefore the Secretary of
Labor and Employment and Secretary of Finance exceeded their authority in
issuing the aforestated Supplemental Rules Implementing RA 6971.

21
Government-owned and controlled corporations may perform governmental b. To formulate a development plan for each zone;
or proprietary functions or both, depending on the purpose for which they
have been created. If the purpose, is to obtain special corporate benefits or c. To submit to the President through the National Economic and
earn pecuniary profit, the function is proprietary. If it is in the interest of Development Athority for review and approval all development plans before
health, safety and for the advancement of public good and welfare, affecting the same are enforced or implemented;
the public in general, the function is governmental. 9 Powers classified as
"proprietary" are those intended for private advantage and benefit. 10 d. To submit to the President an Annual Progress Report;

The PTA was established by Presidential Decree No. 189, as amended by e. To assist the Department to determine the additional capacity
Presidential Decree No. 564 ("PD 564"). requirements for various tourist facilities and services; to prepare a ten-year
Tourism Priorities Plan; to update annually the ten year Tourism Priorities
Its general purposes 11 are: Plan.

1. To implement the policies and programs of the Department of f. To gather, collate and analyze statistical data and other pertinent
Tourism ("Department"); information for the effective implementation of PD 564.

2. To develop tourist zones; 2. Acquisition and disposition of lands and other assets for tourist zone
purposes
3. To assist private enterprises in undertaking tourism projects;
a. To acquire possession and ownership of all lands transferred to it
4. To operate and maintain tourist facilities; from other government corporations and institutions and any land having
tourism potential and earmarked in the Tourism Priorities Plans for intensive
5. To assure rand availability for private investors in hotels and other development into a tourist zone or as a part thereof, subject to the approval
tourist facilities; of the President.

6. To coordinate all tourism project plans and operations. b. To acquire by purchase, by negotiation or by condemnation
proceedings any private land within and without the tourist zones for any of
Its specific functions and powers 12 are: the following reasons: (a) consolidation of lands for tourist zone development
purposes, (b) prevention of land speculation in areas declared as tourist
1. Planning and development of tourism projects zones, (c) acquisition of right of way to the zones, (d) protection of water shed
areas and natural assets with tourism value, and (e) for any other purpose
a. To assist the Department make a comprehensive survey of the expressly authorized under PD 564.
physical and natural tourism resources of the Philippines; to establish the
order of priority for development of said areas; to recommend to the c. For the purpose of providing land acquisition assistance to registered
President the proclamation of a tourist zone; and to define and fix the tourism enterprises, to sell, subdivide, resell, lease, sublease, rent out, or
boundaries of the zone; otherwise, to said registered tourism enterprises under sufficiently soft terms

22
for use specifically in the development of hotels, recreational facilities, and
other tourist services. 5. Project and investment promotions

d. To develop and/or subdivide any land in its name or undertake a. To identify, develop, invest in, own, manage and operate such
condominium projects thereon, and sell subdivision lots or condominium projects as it may deem to be vital for recreation and rest but not sufficiently
units to private persons for investment purposes. attractive economically for private investment.
e. To take over or transfer to a registered tourism enterprise in b. To construct hotel buildings and other tourist facilities within a
accordance with law any lease on foreshore areas within a tourist zone or tourist zone and in turn lease such facilities to registered tourism enterprises
adjacent thereto, in cases said areas are not being utilized in accordance with for operation, management and maintenance.
the PTA's approved zone development plan and wherein the lessee c. To organize, finance, invest in, manage and operate wholly-owned
concerned does not agree to conform accordingly. subsidiary corporations.
f. To arrange for the reclamation of any land adjacent to or adjoining a
tourist zone in coordination with appropriate government agencies. 6. Direct assistance to registered enterprises
a. To administer the tax and other incentives granted to registered
3. Infrastructure development for tourist zone purposes enterprises.
a. To contract, supervise and pay for infrastructure works and civil b. To evaluate, approve and register or reject any and all tourism
works within a tourist zone owned and operated by the PTA. projects or enterprises established within the tourist zones.
b. To coordinate with appropriate government agencies the c. To grant medium and long-term loans and/or re-lend any funds
development of infrastructure requirements supporting a tourist zone. borrowed for the purpose to duly qualified registered tourism enterprises.
c. To take water from any public stream, river, creek, lake, spring, or d. To guarantee local and foreign borrowings of registered enterprises.
waterfall and to alter, straighten, obstruct or increase the flow of water in e. To provide equity investments in the form of cash and/or land.
streams. f. To extend technical, management and financial assistance to tourism
projects.
4. Zone adminstration and control g. To identify, contact and assist in negotiations of suitable partners for
a. To formulate and implement zoning regulations. both local and foreign investors interested in investment or participation in
b. To determine and regulate the enterprises to be established within a the tourism industry.
tourist zone. h. To assist registered enterprises and prospective investors to have
c. To ensure, through the proper authorities concerned, the ecological their papers processed with dispatch by government offices.
preservation, maintenance and/or rehabilitation of the common and the
public areas within a tourist zone and the environment thereof. 7. Other powers and functions
d. To identify and recommend to the President the preservation and/or a. To engage or retain the services of financial, management, legal,
restoration of national monuments or preserves; to arrange for the technical, and/or project consultants from the private or government sector.
preservation and/or restoration of the same with appropriate government b. To have the power to succeed by its corparate name.
agencies or with the private sector or with the owners themselves of said c. To adopt, alter, and use a corporate seal.
tourist attractions; and to identify and recommend to the appropriate d. To sue and be sued under its corporate name.
authorities concerned the declaration of tourist areas and attractions as e. To enter into any contracts of any kind and description.
national monuments and preserves.

23
f. To own or possess personal and/or real property. judgment repugnant to the legislative intent and to established doctrines, as
g. To make, adopt and enforce rules and regulations to execute its well, such as on the prohibition against government workers to strike. 14
powers, duties and functions. Under RA 6971, the workers have the right to strike.
h. To purchase, hold, and alienate shares of stock or bonds of any
corporation. To ascertain whether PTA is within the ambit of RA 6971, there is need to find
i. To collect fees or charges as may be imposed under PD 564. out the legislative intent, and to refer to other provisions of RA 6971 and
j. To contract indebtedness and issue bonds. other pertinent laws, that may aid the Court in ruling on the right or officials
k. To fix and collect rentals for the lease, use or occupancy of lands, and employees of PTA to receive bonuses under RA 8971.
buildings, or other property owned or administered by PTA.
l. To do any and all acts and things necessary to carry out the purposes Petitioner cites an entry in the journal of the House of Representatives to
for which the PTA is created. buttress its submission that PTA is within the coverage of RA 6971, to wit:

Categorited in light of the foregoing provisions of law in point, PTA's Chairman Veloso: The intent of including government-owned and
governmental functions include the first, third, fourth, and sixth of the controlled corporations within the coverage of the Act is the recognition of
aforesaid general purposes. The second 13 and fifth general purposes fall the principle that when government goes into business, it (divests) itself of
under its proprietary functions. its immunity from suit and goes down to the level of ordinary private
enterprises and subjects itself to the ordinary laws of the land just like
With respect to PTA's specific functions and powers, the first and fourth are ordinary private enterprises. Now, when people work therefore in
governmental in nature while the specific functions and powers are government-owned or controlled corporations, it is as if they are also, just
proprietary in character. The second, third, sixth, and seventh specific like in the private sector, entitled to all the benefits of all laws that apply to
functions and powers can be considered partly-governmental and partly- workers in the private sector. In my view, even including the right to organize,
proprietary, considering that 2(a), 2(b), 2(c), 2(d), 2(e), 3(a), 6(c), 6(d), 6(e), bargain. . . . VELOSO (Bicameral Conference Committee on Labor and
7(h), 7(j), and 7(k) are proprietary functions while 2(f), 3(b), 3(c), 6(a), 6(b), Employment, pp. 15-16)
6(f), 6(g), 6(h), 7(a), 7(b), 7(c), 7(d), 7(f), 7(g), and 7(l) are governmental
functions. The specific functions and powers treated in 7(e) and 7(i) may be After a careful study, the Court is of the view, and go holds, that contrary to
classified either as propietary or governmental, depending on the petitioner's interpretation, the government-owned and controlled
circumstances under which they are exercised or performed. corporations Mr. Chairman Veloso had in mind were government-owned and
controlled corporations incorporated under the general corporation law. This
The aforecited powers and functions of PTA are predominantly is so because only workers in private corporations and government-owned
governmental, principally geared towards the development and promotion and controlled corporations, incorporated under the general corporation law,
of tourism in the scenic Philippine archipelago. But it is irrefutable that have the right to bargain (collectively). Those in government corporations
PTA.also performs proprietary functions, as envisaged by its charter. with special charter, which are subject to Civil Service Laws, have no right to
bargain (collectively), except where the terms and conditions of employment
Reliance on the above analysis of the functions and powers of PTA does not are not fixed by law 15. Their rights and duties are not comparable with those
suffice for the determination of whether or not it is within the coverage of RA in the private sector.
6971. For us to resolve the issues raised here solely on the basis of the
classification of PTA's powers and functions may lead to the rendition of

24
Since the terms and conditions of government employment are fixed by law,
government workers cannot use the same weapons employed by workers in To repeat, employees of government corporations created by special
the private sector to secure concessions from their employers. The principle charters have neither the right to strike nor the right to bargain collectively,
behind labor unionism in private industry is that industrial peace cannot be as defined in the Labor Code. The case of Social Security System Employees
secured through compulsion by law. Relations between private employers Associalion indicates the following remedy of government workers not
and their employees rest on an essentially voluntary basis. Subject to the allowed to strike or bargain collectively, to wit:
minimum requirements of wage laws and other labor and welfare legislation,
the terms and conditions of employment in the unionized private sector are Government employees may, therefore, through their unions or associations,
settled through the process of collective bargaining. In government either petition the Congress the betterment of the terms and conditions of
employment however, it is the legisleture and, where properly given employment which are within the ambit of legislation or negotiate with the
delegated power, the administrative heads of government which fix the appropriate government agencies for the improvement of those which are
terms and conditions of employment. And this is effected through statutes or not fixed by law. If there be any unresolved grievances, the dispute may be
administrative circulars, rules, and regulations, not through collective referred to the Public Sector Labor-Management Council for appropriate
bargaining agreements. (Alliance of Government Workers v. Minister of Labor action. But employees in the civil service may not resort to strikes, walkouts
and Employment, 124 SCRA 1) (emphasis ours) and other temporary work stoppages, like workers in the private sector, to
pressure the Government to accede to their demands, (supra, footnote 14,
Government corporations may be created by special charters or by p. 698; emphasis ours)
incorporation under the general corporation law. Those created by special
charters are governed by the Civil Service Law while those incorporated It is a rule in statutory construction that every part of the statute must be
under the general corporation law are governed by the Labor Code. 16 interpreted with reference to the context, i.e., that every part of the statute
must be considered together with the other parts, and kept subservient to
The legislative intent to place only government-owned and controlled the general intent of the whole enactment. 23 The provisions of RA 6971,
corporations performing proprietary functions under the coverage of RA taken together, reveal the legislative intent to include only government-
6971 is gleanable from the other provisions of the law. For instance, section owned and controlled corporations performing proprietary functions within
2 17 of said law envisions "industrial peace and harmony" and "to provide its coverage.
corresponding incentives to both labor and capital;" section 4 18 refers to
"representatives of labor and management," section 5 19 mentions of Every statute must be construed harmonized with other statutes as to form
"collective bargaining agent(s) of the bargaining unit(s);" section 6 20 relates a uniform system of jurisprudence. 24 We note Section 1, Rule X of the
to "existing collective bargaining agreements," and "labor and management;" Omnibus Rules Implementing Book V of EO 292, which reads:
section 7 21 speaks of "strike or lockout;" and section 9 22 purports to "seek
the assistance of the National Conciliation and Mediation Board of the Sec. 1. — Each department or agency of government, whether national or
Department of Labor and Employment" and "include the name(s) of the local, including bureaus and agencies, state colleges and universities, and
voluntary arbitrators or panel of voluntary arbitrator." All the aforecited government owned and controlled corporations with original charters, shall
provisions of law apply only to private corporations and government-owned establish its own Department or Agency Employee Suggestions and
and controlled corporations organized under the general corporation law. Incentives Award System in accordance with these Rules and shall submit the
Only they have collective bargaining agents, collective bargaining units, same to the Commission for approval. (emphasis ours)
collective bargaining agreements, and the right to strike or lockout.

25
It is thus evident that PTA, being a government-owned and controlled Issued by the then President Corazon Aquino ("President Aquino") on July 25,
corporation with original charter subject to Civil Service Law, Rules and 1987 in the exercise ol her legislative powers under the 1987 Constitution, 27
Regulations, 25 is already within the scope of an incentives award systern EO 292, or the Administrative Code or 1987, provided for the following
under Section 1, Rule X of the Omnibus Rules Implementing EO 292 issued by incentive award system:
the Civil Service Commission ("Commission"). Since government-owned and
controlled corporations with original charters do have an incentive award Sec. 31. Career and Personnel Development Plans. — Each department or
system, Congress enacted a law that would address the same concern of agency shall prepare a career and personnel development plan which shall
officials and employees of government-owned and controlled corporations be integrated into a national plan by the Commission. Such career and
incorporated under the general corporation law. personnel development plans which shall include provisions on merit
promotions, performance evaluation, in-service training, including overseas
All things studiedly considered in proper perspective, the Court finds no and local schorlarship and training grants, job rotation, suggestions and
reversible error in the finding by respondent Commission that PTA is not incentive award systems, and such other provisions for employees' health,
within the purview of RA 6971. As regards the promulgation of implementing welfare, counseling, recreation and similar services.
rules and regulations, it bears stressing that the "power of administrative
officials to promulgate rules in the implementation of the statute is Sec. 35. Employee Suggestions and Incentive Award Syatem. — There shall be
necessarily limited to what is provided for in the legislative enactment." 26 In established a government-wide employee suggestions and incentive awards
the case under scrutiny, the Supplementary Rules Implementing RA 6971 system which shall be administered under such rules, regulations, and
issued by the Secretary of Labor and Employment and the Secretary of standards as maybe promulgated by the Commssion.
Finance accord with the intendment and provisions of RA 6971.
Consequently, not being covered by RA 6971, AO 29 applies to the petitioner. In accordance with rules, regulations, and standards promulgated by the
Commission, the President or the head of each department or agency is
We now tackle the common issue posited by the consolidated petitions on authorized to incur whatever necessary expensesd involved in the honorary
the constitutionality of AO 29 and AO 268. recognition of subordinate officers and employees of the government who
by their suggestions, inventions, superior accomplishment, and other
Petitioners contend and argue, that: personal efforts contribute to the efficiency, economy, or other improvement
of government operations, or who perform such other extraordinary acts or
I. AO 29 AND AO 268 ARE VIOLATIVE OF THE PROVISIONS OF EO 292 services in the public interest in connection with, or in relations to, their
AND, HENCE, NULL AND VOID. official employment.
II. AO 29 AND AO 268 UNLAWFULLY USURP THE CONSTITUTIONAL
AUTHORITY GRANTED SOLELY TO THE CIVIL SERVICE COMMISSION. Sec. 36. Personnel Relations. — (1) It shall be the concern of the Commission
III. THE FORCED REFUND OF INCENTIVE PAY IS AN UNCONSTITUTIONAL to provide leadership and assistance in developing employee relations
IMPAIRMENT OF A CONTRACTUAL OBLIGAITION. programs in the department or agencies.
IV. ASSUMING, FOR THE SAKE OF ARGUMENT ONLY, THAT THE GRANT
OF PRODUCTIVITY INCENTIVE BENEFITS WAS INVALID, THE SAME SHOULD BE (2) Every Secretary or head of agency shall take all proper steps toward
THE PERSONAL LIABILITY OF OFFICIALS DIRECTLY RESPONSIBLE THEREFOR IN the creation of an atmosphere conducive to good supervisor-employee
ACCORDANCE WITH SECTION 9 OF AO 268. relations and the improvement of employee morale.

26
Pursuant to the provision of Section 12(2), 28 Chapter 3, Book V or EO 292, corporations and financial institutions, are hereby strictly prohibited from
the commission adopted and prescribed the Omnibus Rules Implementing authorizing/granting productivity incentive benefits or other allowances of
Book V of EO 292 which, among others, provide: similar nature for Calendar Year 1992 and future years pending the result of
a comprehensive study being undertaken by the Office of the President in
Sec. 1. — Each department or agency of government, whether national or coordination with the Civil Service Commission and the Department of
local, including bureaus and agencies, state colleges and universities, and Budget and Management on the matter.
government owned and controlled corporations with original charters, shall
establish its own Department or Agency Employee Suggestions and The formulation of the necessary implementing guidelines for Executive
Incentives Award System in accordance with these Rules and shall submit the Order No. 486 dated 8 November 1991 establishing a performance-based
same to the Commission for approval. incentive system for government-owned or
-controlled corporations shall likewise be included in the comprehensive
Sec. 2. — The System is designed to encourage creativity, innovativeness, study referred to in the preceding paragraph.
efficiency, integrity and productivity in the public service by recognizing and
rewarding officials and employees, individually or in groups, for their On January 19, 1993, President Ramos issued AO 29 which granted
suggestions, inventions, superior accomplishments, and other personal productivity incentive benefits to government employees in the maximum
efforts which contribute to the efficiency, economy, or other improvement in amount of P1,000.00 31 for the calendar year 1992 but reiterated the
government operations, or for other extraordinary acts of services in the proscription under Section 7 of AO 268, thus:
public interest.
Sec. 2. The prohibition prescribed under Section 7 of Administrative Order
Sec. 7. — The incentive awards shall consist of, though not limited to, the No. 268 is hereby reiterated. Accordingly, all heads of government
following: offices/agencies, including government-owned and/or controlled
corporations, as well as their respective governing boards are hereby
(c) Productivity Incentive which shall be given to an employee or group enjoined and prohibited from authorizing/granting Productivity Incentive
of employees who has exceeded their targets or has incurred incremental Benefits or any and all similar forms of allowances/benefits without prior
improvement over existing targets. approval and authorization via Administrative Order by the Office of the
President. Henceforth, anyone found violating any of the mandates in this
On February 21, 1992, President Aquino issued AO 268 which granted "each Order, including all officials/employees and the COA Auditor-in-Charge of
official and employee of the government the productivity incentive benefits such government office/agency found to have taken part thereof, shall be
in a maximum amount equivalent to thirty percent (30%) of his one (1) month accordingly and severely dealt with in accordance with the applicable
basic salary but in no case shall such amount be less than two thousand pesos provisions of existing penal laws.
(P2,000.00)," 29 for those who have rendered at least one year of service as
of December 31, 1991. 30 Said AO carried the prohibition, provided in Section Consequently, all administrative authorizations to grant any form of
7 thereof, which reads: allowances/benefits and all forms of additional compensation usually paid
outside of the prescribed basic salary under R.A. No. 6758, the Salary
Sec. 7. The productivity incentive benefits herein authorized shall be Standardization Law, that are inconsistent with the legislated policy on the
granted only for Calendar Year 1991. Accordingly, all heads of agencies, matter or are not covered by any legislative action are hereby revoked.
including the governing boards of government-owned or -controlled

27
The implementation of Executive Order No. 486 dated November 8, 1991, as Sec. 1. Declaration of Policy. — The State shall insure and promote the
amended by Executive Order No. 518 dated May 29, 1992, is hereby deferred Constitutional mandate that appointment in the Civil Service shall be made
until a more comprehensive and equitable scheme for the grant of the only according to merit and fitness; that the Civil Service Commission, as the
benefits that can be applied government-wide is formulated by the central personnel agency of the Government shall establish a career service,
Department of Budget and Management. adopt measures to promote morale, efficiency, integrity, responsiveness, and
courtesy in the civil service, strengthen the merit and rewards system,
Petitioners theorize that AO 29 and AO 268 violate EO 292 and since the latter integrate all human resources development programs for all levels and ranks,
is a law, it prevails over executive issuances. Petitioners likewise assert that and institutionalize a management climate conducive to public
AO 29 and AO 268 encroach upon the constitutional authority of the Civil accountability; that public office is a public trust and public officers and
Service Commission to adopt measures to strengthen the merit and rewards employees must at all times be accountable to the people; and that personnel
system and to promulgate rules, regulations and standards governing the functions shall be decentralized, delegating the corresponding authority to
incentive awards system of the civil service. the departments, offices and agencies where such functions can be
effectively performed. (Section 1, Chapter I, Subtitle A, Title I, EO 292)
The Court is not impressed with petitioners' submission. AO 29 and AO 268 (emphasis ours)
were issued in the valid exercise of presidential control over the executive
departments. Specifically, implementation of the Employee Suggestions and Incentive
Award System has been decentralized to the President or to the head of each
In establishing a Civil Service Commission, the 1987 Constitution delineated department of agency —
its function, as follows:
Sec. 35. Employee Suggestions and Incentive Award System. — There shall be
The Civil Service Commission, as the central personnel agency of the established a government-wide employee suggestions and incentive awards
Government, shall establish a career service and adopt measures to promote system which shall be administered under such rules, regulations, and
morale, efficiency, integrity responsiveness, progressiveness, and courtesy in standards as maybe promulgated by the Commission.
the civil service. It shall strengthen the merit and rewards system, integrate
all human resources development programs for all levels and ranks, and In accordance with rules, regulations, and standards promulgated by the
institutionalize a management climate conducive to public accountability. It Commission, the President or the head of each department or agency is
shall submit to the President and the Congress an annual report on its authorized to incur whatever necessary expenses involved in the honorary
personnel programs. (Section 3, Article IX, B, 1987 Constitution) recognition of subordinate officers and employees of the government who
by their suggestions, inventions, superior accomplishment, and other
The Commission handles personnel matters of the government. As the personal efforts contribute to the efficiency, economy, or other improvement
central personnel agency of the Government, it is tasked to formulate and of government operations or who perform such other extraordinary acts or
establish a system of incentives and rewards for officials and employees in services in the public interest in connection with, or in relation to, their official
the public sector, alike. employment. (EO 292) (emphasis ours)

The functions of the Commission have been decentralized to the different The President is the head of the government. Governmental power and
departments, offices, and agencies of the government — authority are exercised and implemented through him. His power includes
the control executive departments —

28
in the President of the Philippines under Section 17, Article VII of the, 1987
The president shall have control of all the executive departments, bureaus, Constitution;
and offices. He shall ensure that the laws be faithfully execute. (Section 17,
Article VII, 1987 Constitution) WHEREAS, the Constitutional prerogetive includes the determination of the
rates, the timing and schedule of payment, and final authority to commit
Control means "the power of an officer to alter or modify or set aside what a limited resources of government for the payment of personnel incentives,
subordinate officer had done in the performance of his duties and to cash awards, productivity bonus, and other forms of additional compensation
substitute the judgment of the former for that of the latter." 32 It has been and fringe benefits;
held that "[t]he President can, by virtue of his power of control, review,
modify, alter or nullify any action, or decision, of his subordinate in the WHEREAS, some government agencies have overlooked said Constitutional
executive departments, bureaus, or offices under him. He can exercise this prerogative and have unilaterally granted to their respective officials and
power motu proprio without need of any appeal from any party." 33 employees incentive awards;

When the President issued AO 29 limiting the amount of incentive benefits, WHEREAS, the Offioe of the President issued Administrative Order No. 268,
enjoining heads of government agencies from granting incentive benefits dated February 21, 1992, strictly prohibiting the grant of Productivity
without prior approval from him, and directing the refund of the excess over Incentive Bonus or other allowances of similar nature for Calender Year 1992
the prescribed amount, the President was just exercising his power of control and future years pending the issuance of the requisite authorization by the
over executive departments. This is decisively clear from the WHEREAS President;
CLAUSES of AO 268 and AO 29, to wit:
WHEREAS, notwithstanding said prohibition some government
ADMINISTRATIVE ORDER NO. 268 offices/agencies and government-owned and/or controlled corporations and
financial institutions have granted productivity incentive benefits in varying
WHEREAS, the Productivity incentive benefits granted by the different nomenclature and amounts without the proper authorization/coordination
agencies are of varying amounts, causing dissension/demoralization on the with the Office of the President;
part of those who had received less and those who have not yet received any
such benefit, thereby defeating the purpose for which the same should be WHEREAS, the unilateral and uncoordinated grant of productivity incentive
granted; and benefits gave rise to discontentment, dissatisfaction and demoralization
among government personnel who have received less or have not received
WHEREAS, there exists the need to regulate the grant of the productivity at all such benefits;
incentive benefits or other similar allowances in conformity with the policy
on standardization of compensation pursuant to Republic Act No. 6758; The President issued subject Administrative Orders to regulate the grant of
productivity incentive benefits and to prevent discontentment,
ADMINISTRATIVE ORDER NO. 29 dissatisfaction and demoralization among government personnel by
committing limited resources of government for the equal payment of
WHEREAS the faithful implementation of statutes, including the incentives and awards. The President was only exercising his power of control
Administrative Code of 1987 and all laws governing all forms of additional by modifying the acts of the respondents who granted incentive benefits to
compensation and personnel benefits is a Constitutional prerogative vested their employees without appropriate clearance from the Office of the

29
President, thereby resulting in the uneven distribution of government
resources. In the view of the President, respondents did a mistake which had Conformably, it is "the President or the head of each department or agency
to be corrected. In so acting, the President exercised a constitutionally- who is authorized to incur the necessary expenses involved in the honorary
protected prerogative — recognition of subordinate officers and employees of the government." It is
not the duty of the Commission to fix the amount of the incentives. Such
The President's duty to execute the law is of constitutional origin. So, too, is function belongs to the President or his duly empowered alter ego.
his control of all executive departments. Thus it is, that department heads are
men of his confidence. His is the power to appoint them; his, too, is the Anent petitioners' contention that the forcible refund of incentive benefits is
privilege to dismiss them at pleasure. Naturally he controls and directs their an unconstitutional impairment of a contractual obligation, suffice it to state
acts. Implicit then is his authority to go over, confirm, modify or reverse the that "[n]ot all contracts entered into by the government will operate as a
action taken by his department secretaries. In this context, it may not be said waiver of its non-suability; distinction must be made between its sovereign
that the President cannot rule on the correctness of a decision of a and proprietary acts (United States of America v. Ruiz, 136 SCRA 487)." 35
department secretary. (Lacson-Magallanes Co., Inc. v. Paño, 21 SCRA 898) The acts involved in this case are governmental. Besides, the Court is in
agreement with the Solicitor General that the incentive pay or benefit is in
Neither can it be said that the President encroached upon the authority of the nature of a bonus which is not a demandable or enforceable obligation.
the Commission on Civil Service to grant benefits to government personnel.
AO 29 and AO 268 did not revoke the privilege of employees to receive It is understood that the Judiciary, Civil Service Commission, Commission on
incentive benefits. The same merely regulated the grant and amount thereof. Audit, Commission on Elections, and Office of the Ombudsman, which enjoy
fiscal autonomy, are not covered by the amount fixed by the President. As
Sound management and effective utilization of financial resources of explained in Bengzon vs. Drilon (208 SCRA 133):
government are basically executive functions, 34 not the Commission's.
Implicit is this recognition in EO 292, which states: As envisioned in the Constitution, the fiscal autonomy enjoyed by the
Judiciary, the Civil Service Commission, the Commission on Audit, the
Sec. 35. Employee Suggestions and Incentive Award System. — There shall be Commission on Elections, and the Office of the Ombudsman contemplates a
established a government-wide employee suggestions and incentive awards guarantee of full flexibility to allocate and utilize their resources with the
system which shall be administered under such rules, regulations, and wisdom and dispatch that their needs require. It recognizes the power and
standards as maybe promulgated by the Commission. authority to levy, assess and collect fees, fix rates of compensation not
exceeding the highest rates authorized by law for compensation and pay
In accordance with rules, regulations and standards promulgeted by the plans of the government and allocate and disburse such sums as may be
Commission, the President or the head of each department or agency is provided by law or prescribed by them in the course of the discharge of their
authorized to incur whatever necessary expenses involved in the honorary functions.
recognition of subordinate officers and employees of the government who
by their suggestions, inventions, superior accomplishment, and other Fiscal autonomy means freedom from outside control. If the Supreme Court
personal efforts contribute to the efficiency, economy, or other improvement says it needs 100 typewriters but DBM rules we need only 10 typewriters and
of government operations, or who perform such other extraordinary acts or sends its recommendations to Congress without even informing us, the
services in the public interest in connection with, or in relation to their official autonomy given by the Constitution becomes an empty and illusory platitude.
employment. (Chapter 5, Subtitle A, Book V) (emphasis ours)

30
The Judiciary, the Constitutional Commissions, and the Ombudsman must WHEREFORE, the Petitions in G.R. Nos. 109406, 110642, 111494, and 112056
have the independence and flexibility needed in the discharge of their are hereby DIMISSED, and as above ratiocinated, further deductions from the
constitutional duties. The imposition of restrictions and constraints on the salaries and allowances of petitioners are hereby ENJOINED.
manner the independent constitutional offices allocate and utilize the funds
appropriated for their operations is anathema to fiscal autonomy and In G.R. No. 119597, the assailed Decision of respondent Commission on Audit
violative not only of the express mandate of the Constitution but especially is AFFIRMED. No pronouncement as to costs.
as regards the Supreme Court, of the independence and separation of powers
upon which the entire fabric of our constitutional system is based. In the SO ORDERED.
interest of comity and cooperation, the Supreme Court, Constitutional
Commissions, and the Ombudsman have so far limited their objections to
constant reminders. We now agree with the petitioners that this grant of
autonomy should cease to be a meaningless provision.

Untenable is petitioners' contention that the herein respondents be held


personally liable for the refund in question. Absent a showing of bad faith or
malice, public officers are not personally liable for damage resulting from the
performance of official duties. 36

Every public official is entitled to the presumption of good faith in the


discharge of official duties. 37 Absent any showing of bad faith or malice,
there is likewise a presumption of regularity in the performance of official
duties. 38

In upholding the constitutionality of AO 268 and AO 29, the Court reiterates


the well-entrenched doctrine that "in interpreting statutes, that which will
avoid a finding of unconstitutionality is to be preferred." 39

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

31
G.R. No. L-57883 March 12, 1982 Minister of the Budget, respondent Chairman of the Commission on Audit,
and respondent Minister of Justice from taking any action implementing
GUALBERTO J. DE LA LLANA Presiding Judge, Branch II of the City Court of Batas Pambansa Blg. 129. Petitioners 5 sought to bolster their claim by
Olongapo, ESTANISLAO L. CESA, JR., FIDELA Y. VARGAS, BENJAMIN C. imputing lack of good faith in its enactment and characterizing as an undue
ESCOLANGO, JUANITO C. ATIENZA, MANUEL REYES ROSAPAPAN, JR., delegation of legislative power to the President his authority to fix the
VIRGILIO E. ACIERTO, and PORFIRIO AGUILLON AGUILA, petitioners, compensation and allowances of the Justices and judges thereafter
vs. appointed and the determination of the date when the reorganization shall
MANUEL ALBA, Minister of Budget, FRANCISCO TANTUICO, Chairman, be deemed completed. In the very comprehensive and scholarly Answer of
Commission on Audit, and RICARDO PUNO, Minister of Justice, Respondents. Solicitor General Estelito P. Mendoza, 6 it was pointed out that there is no
valid justification for the attack on the constitutionality of this statute, it being
a legitimate exercise of the power vested in the Batasang Pambansa to
FERNANDO, C.J.: reorganize the judiciary, the allegations of absence of good faith as well as
the attack on the independence of the judiciary being unwarranted and
This Court, pursuant to its grave responsibility of passing upon the validity of devoid of any support in law. A Supplemental Answer was likewise filed on
any executive or legislative act in an appropriate cases, has to resolve the October 8, 1981, followed by a Reply of petitioners on October 13. After the
crucial issue of the constitutionality of Batas Pambansa Blg. 129, entitled "An hearing in the morning and afternoon of October 15, in which not only
act reorganizing the Judiciary, Appropriating Funds Therefor and for Other petitioners and respondents were heard through counsel but also the amici
Purposes." The task of judicial review, aptly characterized as exacting and curiae, 7 and thereafter submission of the minutes of the proceeding on the
delicate, is never more so than when a conceded legislative power, that of debate on Batas Pambansa Blg. 129, this petition was deemed submitted for
judicial reorganization, 1 may possibly collide with the time-honored principle decision.
of the independence of the judiciary 2 as protected and safeguarded by this
constitutional provision: "The Members of the Supreme Court and judges of The importance of the crucial question raised called for intensive and rigorous
inferior courts shall hold office during good behavior until they reach the age study of all the legal aspects of the case. After such exhaustive deliberation
of seventy years or become incapacitated to discharge the duties of their in several sessions, the exchange of views being supplemented by
office. The Supreme Court shall have the power to discipline judges of inferior memoranda from the members of the Court, it is our opinion and so hold that
courts and, by a vote of at least eight Members, order their dismissal." 3 For Batas Pambansa Blg. 129 is not unconstitutional.
the assailed legislation mandates that Justices and judges of inferior courts
from the Court of Appeals to municipal circuit courts, except the occupants 1. The argument as to the lack of standing of petitioners is easily
of the Sandiganbayan and the Court of Tax Appeals, unless appointed to the resolved. As far as Judge de la Llana is concerned, he certainly falls within the
inferior courts established by such Act, would be considered separated from principle set forth in Justice Laurel's opinion in People v. Vera. 8 Thus: "The
the judiciary. It is the termination of their incumbency that for petitioners unchallenged rule is that the person who impugns the validity of a statute
justifies a suit of this character, it being alleged that thereby the security of must have a personal and substantial interest in the case such that he has
tenure provision of the Constitution has been ignored and disregarded, sustained, or will sustain, direct injury as a result of its enforcement." 9 The
other petitioners as members of the bar and officers of the court cannot be
That is the fundamental issue raised in this proceeding, erroneously entitled considered as devoid of "any personal and substantial interest" on the
Petition for Declaratory Relief and/or for Prohibition 4 considered by this matter. There is relevance to this excerpt from a separate opinion in Aquino,
Court as an action for prohibited petition, seeking to enjoin respondent Jr. v. Commission on Elections: 10 "Then there is the attack on the standing

32
of petitioners, as vindicating at most what they consider a public right and paragraph: "The Committee on Judicial Reorganization has the honor to
not protecting their rights as individuals. This is to conjure the specter of the submit the following Report. It expresses at the outset its appreciation for the
public right dogma as an inhibition to parties intent on keeping public officials opportunity accorded it to study ways and means for what today is a basic
staying on the path of constitutionalism. As was so well put by Jaffe: 'The and urgent need, nothing less than the restructuring of the judicial system.
protection of private rights is an essential constituent of public interest and, There are problems, both grave and pressing, that call for remedial measures.
conversely, without a well-ordered state there could be no enforcement of The felt necessities of the time, to borrow a phrase from Holmes, admit of no
private rights. Private and public interests are, both in substantive and delay, for if no step be taken and at the earliest opportunity, it is not too much
procedural sense, aspects of the totality of the legal order.' Moreover, to say that the people's faith in the administration of justice could be shaken.
petitioners have convincingly shown that in their capacity as taxpayers, their It is imperative that there be a greater efficiency in the disposition of cases
standing to sue has been amply demonstrated. There would be a retreat from and that litigants, especially those of modest means — much more so, the
the liberal approach followed in Pascual v. Secretary of Public Works, poorest and the humblest — can vindicate their rights in an expeditious and
foreshadowed by the very decision of People v. Vera where the doctrine was inexpensive manner. The rectitude and the fairness in the way the courts
first fully discussed, if we act differently now. I do not think we are prepared operate must be manifest to all members of the community and particularly
to take that step. Respondents, however, would hark back to the American to those whose interests are affected by the exercise of their functions. It is
Supreme Court doctrine in Mellon v. Frothingham with their claim that what to that task that the Committee addresses itself and hopes that the plans
petitioners possess 'is an interest which is shared in common by other people submitted could be a starting point for an institutional reform in the
and is comparatively so minute and indeterminate as to afford any basis and Philippine judiciary. The experience of the Supreme Court, which since 1973
assurance that the judicial process can act on it.' That is to speak in the has been empowered to supervise inferior courts, from the Court of Appeals
language of a bygone era even in the United States. For as Chief Justice to the municipal courts, has proven that reliance on improved court
Warren clearly pointed out in the later case of Flast v. Cohen, the barrier thus management as well as training of judges for more efficient administration
set up if not breached has definitely been lowered." 11 does not suffice. I hence, to repeat, there is need for a major reform in the
judicial so stem it is worth noting that it will be the first of its kind since the
2. The imputation of arbitrariness to the legislative body in the Judiciary Act became effective on June 16, 1901." 14 I t went to say: "I t does
enactment of Batas Pambansa Blg. 129 to demonstrate lack of good faith not admit of doubt that the last two decades of this century are likely to be
does manifest violence to the facts. Petitioners should have exercised greater attended with problems of even greater complexity and delicacy. New social
care in informing themselves as to its antecedents. They had laid themselves interests are pressing for recognition in the courts. Groups long inarticulate,
open to the accusation of reckless disregard for the truth, On August 7, 1980, primarily those economically underprivileged, have found legal spokesmen
a Presidential Committee on Judicial Reorganization was organized. 12 This and are asserting grievances previously ignored. Fortunately, the judicially
Executive Order was later amended by Executive Order No. 619-A., dated has not proved inattentive. Its task has thus become even more formidable.
September 5 of that year. It clearly specified the task assigned to it: "1. The For so much grist is added to the mills of justice. Moreover, they are likewise
Committee shall formulate plans on the reorganization of the Judiciary which to be quite novel. The need for an innovative approach is thus apparent. The
shall be submitted within seventy (70) days from August 7, 1980 to provide national leadership, as is well-known, has been constantly on the search for
the President sufficient options for the reorganization of the entire Judiciary solutions that will prove to be both acceptable and satisfactory. Only thus
which shall embrace all lower courts, including the Court of Appeals, the may there be continued national progress." 15 After which comes: "To be less
Courts of First Instance, the City and Municipal Courts, and all Special Courts, abstract, the thrust is on development. That has been repeatedly stressed —
but excluding the Sandigan Bayan." 13 On October 17, 1980, a Report was and rightly so. All efforts are geared to its realization. Nor, unlike in the past,
submitted by such Committee on Judicial Reorganization. It began with this was it to b "considered as simply the movement towards economic progress

33
and growth measured in terms of sustained increases in per capita income generations. 22 The reference was to the basic Judiciary Act generations .
and Gross National Product (GNP). 16 For the New Society, its implication enacted in June of 1901, 23 amended in a significant way, only twice previous
goes further than economic advance, extending to "the sharing, or more to the Commonwealth. There was, of course, the creation of the Court of
appropriately, the democratization of social and economic opportunities, the Appeals in 1935, originally composed "of a Presiding Judge and ten appellate
substantiation of the true meaning of social justice." 17 This process of Judges, who shall be appointed by the President of the Philippines, with the
modernization and change compels the government to extend its field of consent of the Commission on Appointments of the National Assembly, 24 It
activity and its scope of operations. The efforts towards reducing the gap could "sit en banc, but it may sit in two divisions, one of six and another of
between the wealthy and the poor elements in the nation call for more five Judges, to transact business, and the two divisions may sit at the same
regulatory legislation. That way the social justice and protection to labor time." 25 Two years after the establishment of independence of the Republic
mandates of the Constitution could be effectively implemented." 18 There is of the Philippines, the Judiciary Act of 1948 26 was passed. It continued the
likelihood then "that some measures deemed inimical by interests adversely existing system of regular inferior courts, namely, the Court of Appeals,
affected would be challenged in court on grounds of validity. Even if the Courts of First Instance, 27 the Municipal Courts, at present the City Courts,
question does not go that far, suits may be filed concerning their and the Justice of the Peace Courts, now the Municipal Circuit Courts and
interpretation and application. ... There could be pleas for injunction or Municipal Courts. The membership of the Court of Appeals has been
restraining orders. Lack of success of such moves would not, even so, result continuously increased. 28 Under a 1978 Presidential Decree, there would be
in their prompt final disposition. Thus delay in the execution of the policies forty-five members, a Presiding Justice and forty-four Associate Justices, with
embodied in law could thus be reasonably expected. That is not conducive to fifteen divisions. 29 Special courts were likewise created. The first was the
progress in development." 19 For, as mentioned in such Report, equally of Court of Tax Appeals in 1954, 30 next came the Court of Agrarian Relations in
vital concern is the problem of clogged dockets, which "as is well known, is 1955, 31 and then in the same year a Court of the Juvenile and Domestic
one of the utmost gravity. Notwithstanding the most determined efforts Relations for Manila in 1955, 32 subsequently followed by the creation of two
exerted by the Supreme Court, through the leadership of both retired Chief other such courts for Iloilo and Quezon City in 1966. 33 In 1967, Circuit
Justice Querube Makalintal and the late Chief Justice Fred Ruiz Castro, from Criminal Courts were established, with the Judges having the same
the time supervision of the courts was vested in it under the 1973 qualifications, rank, compensation, and privileges as judges of Courts of First
Constitution, the trend towards more and more cases has continued." 20 It is Instance. 34
understandable why. With the accelerated economic development, the
growth of population, the increasing urbanization, and other similar factors, 4. After the submission of such Report, Cabinet Bill No. 42, which later
the judiciary is called upon much oftener to resolve controversies. Thus became the basis of Batas Pambansa Blg. 129, was introduced. After setting
confronted with what appears to be a crisis situation that calls for a remedy, forth the background as above narrated, its Explanatory Note continues:
the Batasang Pambansa had no choice. It had to act, before the ailment "Pursuant to the President's instructions, this proposed legislation has been
became even worse. Time was of the essence, and yet it did not hesitate to drafted in accordance with the guidelines of that report with particular
be duly mindful, as it ought to be, of the extent of its coverage before attention to certain objectives of the reorganization, to wit, the attainment
enacting Batas Pambansa Blg. 129. of more efficiency in disposal of cases, a reallocation of jurisdiction, and a
revision of procedures which do not tend to the proper meeting out of justice.
3. There is no denying, therefore, the need for "institutional reforms," In consultation with, and upon a consensus of, the governmental and
characterized in the Report as "both pressing and urgent." 21 It is worth parliamentary leadership, however, it was felt that some options set forth in
noting, likewise, as therein pointed out, that a major reorganization of such the Report be not availed of. Instead of the proposal to confine the
scope, if it were to take place, would be the most thorough after four jurisdiction of the intermediate appellate court merely to appellate

34
adjudication, the preference has been opted to increase rather than diminish faith that characterized its enactment from its inception to the affixing of the
its jurisdiction in order to enable it to effectively assist the Supreme Court. Presidential signature.
This preference has been translated into one of the innovations in the
proposed Bill." 35 In accordance with the parliamentary procedure, the Bill 5. Nothing is better settled in our law than that the abolition of an office
was sponsored by the Chairman of the Committee on Justice, Human Rights within the competence of a legitimate body if done in good faith suffers from
and Good Government to which it was referred. Thereafter, Committee no infirmity. The ponencia of Justice J.B.L. Reyes in Cruz v. Primicias, Jr. 38
Report No. 225 was submitted by such Committee to the Batasang Pambansa reiterated such a doctrine: "We find this point urged by respondents, to be
recommending the approval with some amendments. In the sponsorship without merit. No removal or separation of petitioners from the service is
speech of Minister Ricardo C. Puno, there was reference to the Presidential here involved, but the validity of the abolition of their offices. This is a legal
Committee on Judicial Reorganization. Thus: "On October 17, 1980, the issue that is for the Courts to decide. It is well-known rule also that valid
Presidential Committee on Judicial Reorganization submitted its report to the abolition of offices is neither removal nor separation of the incumbents. ...
President which contained the 'Proposed Guidelines for Judicial And, of course, if the abolition is void, the incumbent is deemed never to have
Reorganization.' Cabinet Bill No. 42 was drafted substantially in accordance ceased to hold office. The preliminary question laid at rest, we pass to the
with the options presented by these guidelines. Some options set forth in the merits of the case. As well-settled as the rule that the abolition of an office
aforesaid report were not availed of upon consultation with and upon does not amount to an illegal removal of its incumbent is the principle that,
consensus of the government and parliamentary leadership. Moreover, some in order to be valid, the abolition must be made in good faith." 39 The above
amendments to the bill were adopted by the Committee on Justice, Human excerpt was quoted with approval in Bendanillo, Sr. v. Provincial Governor,
Rights and Good Government, to which The bill was referred, following the 40 two earlier cases enunciating a similar doctrine having preceded it. 41 As
public hearings on the bill held in December of 1980. The hearings consisted with the offices in the other branches of the government, so it is with the
of dialogues with the distinguished members of the bench and the bar who judiciary. The test remains whether the abolition is in good faith. As that
had submitted written proposals, suggestions, and position papers on the bill element is conspicuously present in the enactment of Batas Pambansa Blg.
upon the invitation of the Committee on Justice, Human Rights and Good 129, then the lack of merit of this petition becomes even more apparent. The
Government." 36 Stress was laid by the sponsor that the enactment of such concurring opinion of Justice Laurel in Zandueta v. De la Costa 42 cannot be
Cabinet Bill would, firstly, result in the attainment of more efficiency in the any clearer. This is a quo warranto proceeding filed by petitioner, claiming
disposal of cases. Secondly, the improvement in the quality of justice that he, and not respondent, was entitled to he office of judge of the Fifth
dispensed by the courts is expected as a necessary consequence of the easing Branch of the Court of First Instance of Manila. There was a Judicial
of the court's dockets. Thirdly, the structural changes introduced in the bill, Reorganization Act in 1936, 43 a year after the inauguration of the
together with the reallocation of jurisdiction and the revision of the rules of Commonwealth, amending the Administrative Code to organize courts of
procedure, are designated to suit the court system to the exigencies of the original jurisdiction known as the Courts of First Instance Prior to such
present day Philippine society, and hopefully, of the foreseeable future." 37 statute, petitioner was the incumbent of such branch. Thereafter, he received
it may be observed that the volume containing the minutes of the an ad interim appointment, this time to the Fourth Judicial District, under the
proceedings of the Batasang Pambansa show that 590 pages were devoted new legislation. Unfortunately for him, the Commission on Appointments of
to its discussion. It is quite obvious that it took considerable time and effort then National Assembly disapproved the same, with respondent being
as well as exhaustive study before the act was signed by the President on appointed in his place. He contested the validity of the Act insofar as it
August 14, 1981. With such a background, it becomes quite manifest how resulted in his being forced to vacate his position This Court did not rule
lacking in factual basis is the allegation that its enactment is tainted by the squarely on the matter. His petition was dismissed on the ground of estoppel.
vice of arbitrariness. What appears undoubted and undeniable is the good Nonetheless, the separate concurrence of Justice Laurel in the result reached,

35
to repeat, reaffirms in no uncertain terms the standard of good faith to for reorganization consequent upon the establishment of the new
preclude any doubt as to the abolition of an inferior court, with due government than at the time Acts Nos. 2347 and 4007 were approved by the
recognition of the security of tenure guarantee. Thus: " I am of the opinion defunct Philippine Legislature, and although in the case of these two Acts
that Commonwealth Act No. 145 in so far as it reorganizes, among other there was an express provision providing for the vacation by the judges of
judicial districts, the Ninth Judicial District, and establishes an entirely new their offices whereas in the case of Commonwealth Act No. 145 doubt is
district comprising Manila and the provinces of Rizal and Palawan, is valid and engendered by its silence, this doubt should be resolved in favor of the valid
constitutional. This conclusion flows from the fundamental proposition that exercise of the legislative power." 45
the legislature may abolish courts inferior to the Supreme Court and
therefore may reorganize them territorially or otherwise thereby 6. A few more words on the question of abolition. In the above-cited
necessitating new appointments and commissions. Section 2, Article VIII of opinion of Justice Laurel in Zandueta, reference was made to Act No. 2347 46
the Constitution vests in the National Assembly the power to define, on the reorganization of the Courts of First Instance and to Act No. 4007 47
prescribe and apportion the jurisdiction of the various courts, subject to on the reorganization of all branches of the government, including the courts
certain limitations in the case of the Supreme Court. It is admitted that of first instance. In both of them, the then Courts of First Instance were
section 9 of the same article of the Constitution provides for the security of replaced by new courts with the same appellation. As Justice Laurel pointed
tenure of all the judges. The principles embodied in these two sections of the out, there was no question as to the fact of abolition. He was equally
same article of the Constitution must be coordinated and harmonized. A categorical as to Commonwealth Act No. 145, where also the system of the
mere enunciation of a principle will not decide actual cases and controversies courts of first instance was provided for expressly. It was pointed out by
of every sort. (Justice Holmes in Lochner vs. New York, 198 U.S., 45; 49 Law. Justice Laurel that the mere creation of an entirely new district of the same
ed; 937)" 44 justice Laurel continued: "I am not insensible to the argument court is valid and constitutional. such conclusion flowing "from the
that the National Assembly may abuse its power and move deliberately to fundamental proposition that the legislature may abolish courts inferior to
defeat the constitutional provision guaranteeing security of tenure to all the Supreme Court and therefore may reorganize them territorially or
judges, But, is this the case? One need not share the view of Story, Miller and otherwise thereby necessitating new appointments and commissions." 48
Tucker on the one hand, or the opinion of Cooley, Watson and Baldwin on The challenged statute creates an intermediate appellate court, 49 regional
the other, to realize that the application of a legal or constitutional principle trial courts, 50 metropolitan trial courts of the national capital region, 51 and
is necessarily factual and circumstantial and that fixity of principle is the other metropolitan trial courts, 52 municipal trial courts in cities, 53 as well
rigidity of the dead and the unprogressive. I do say, and emphatically, as in municipalities, 54 and municipal circuit trial courts. 55 There is even less
however, that cases may arise where the violation of the constitutional reason then to doubt the fact that existing inferior courts were abolished. For
provision regarding security of tenure is palpable and plain, and that the Batasang Pambansa, the establishment of such new inferior courts was
legislative power of reorganization may be sought to cloak an the appropriate response to the grave and urgent problems that pressed for
unconstitutional and evil purpose. When a case of that kind arises, it will be solution. Certainly, there could be differences of opinion as to the
the time to make the hammer fall and heavily. But not until then. I am appropriate remedy. The choice, however, was for the Batasan to make, not
satisfied that, as to the particular point here discussed, the purpose was the for this Court, which deals only with the question of power. It bears
fulfillment of what was considered a great public need by the legislative mentioning that in Brillo v. Eñage 56 this Court, in an unanimous opinion
department and that Commonwealth Act No. 145 was not enacted purposely penned by the late Justice Diokno, citing Zandueta v. De la Costa, ruled: "La
to affect adversely the tenure of judges or of any particular judge. Under segunda question que el recurrrido plantea es que la Carta de Tacloban ha
these circumstances, I am for sustaining the power of the legislative abolido el puesto. Si efectivamente ha sido abolido el cargo, entonces ha
department under the Constitution. To be sure, there was greater necessity quedado extinguido el derecho de recurente a ocuparlo y a cobrar el salario

36
correspodiente. Mc Culley vs. State, 46 LRA, 567. El derecho de un juez de to the fiscalization of the Assembly, and of public opinion, will not only know
desempenarlo hasta los 70 años de edad o se incapacite no priva al Congreso how to govern, but will actually govern, with a firm and steady hand,
de su facultad de abolir, fusionar o reorganizar juzgados no constitucionales." unembarrassed by vexatious interferences by other departments, or by
57 Nonetheless, such well-established principle was not held applicable to unholy alliances with this and that social group." 61 The above excerpt was
the situation there obtaining, the Charter of Tacloban City creating a city cited with approval by Justice Laurel in Planas v. Gil. 62 Moreover, under the
court in place of the former justice of the peace court. Thus: "Pero en el caso 1981 Amendments, it may be affirmed that once again the principle of
de autos el Juzgado de Tacloban no ha sido abolido. Solo se le ha cambiado separation of powers, to quote from the same jurist as ponente in Angara v.
el nombre con el cambio de forma del gobierno local." 58 The present case is Electoral Commission, 63 "obtains not through express provision but by
anything but that. Petitioners did not and could not prove that the challenged actual division." 64 The president, under Article VII, shall be the head of state
statute was not within the bounds of legislative authority. and chief executive of the Republic of the Philippines." 65 Moreover, it is
equally therein expressly provided that all the powers he possessed under
7. This opinion then could very well stop at this point. The the 1935 Constitution are once again vested in him unless the Batasang
implementation of Batas Pambansa Blg. 129, concededly a task incumbent on Pambansa provides otherwise." 66 Article VII of the 1935 Constitution speaks
the Executive, may give rise, however, to questions affecting a judiciary that categorically: "The Executive power shall be vested in a President of the
should be kept independent. The all-embracing scope of the assailed Philippines." 67 As originally framed, the 1973 Constitution created the
legislation as far as all inferior courts from the Courts of Appeals to municipal position of President as the "symbolic head of state." 68 In addition, there
courts are concerned, with the exception solely of the Sandiganbayan and the was a provision for a Prime Minister as the head of government exercising
Court of Tax Appeals 59 gave rise, and understandably so, to misgivings as to the executive power with the assistance of the Cabinet 69 Clearly, a modified
its effect on such cherished Ideal. The first paragraph of the section on the parliamentary system was established. In the light of the 1981 amendments
transitory provision reads: "The provisions of this Act shall be immediately though, this Court in Free Telephone Workers Union v. Minister of Labor 70
carried out in accordance with an Executive Order to be issued by the could state: "The adoption of certain aspects of a parliamentary system in the
President. The Court of Appeals, the Courts of First Instance, the Circuit amended Constitution does not alter its essentially presidential character."
Criminal Courts, the Juvenile and Domestic Relations Courts, the Courts of 71 The retention, however, of the position of the Prime Minister with the
Agrarian Relations, the City Courts, the Municipal Courts, and the Municipal Cabinet, a majority of the members of which shall come from the regional
Circuit Courts shall continue to function as presently constituted and representatives of the Batasang Pambansa and the creation of an Executive
organized, until the completion of the reorganization provided in this Act as Committee composed of the Prime Minister as Chairman and not more than
declared by the President. Upon such declaration, the said courts shall be fourteen other members at least half of whom shall be members of the
deemed automatically abolished and the incumbents thereof shall cease to Batasang Pambansa, clearly indicate the evolving nature of the system of
hold the office." 60 There is all the more reason then why this Court has no government that is now operative. 72 What is equally apparent is that the
choice but to inquire further into the allegation by petitioners that the strongest ties bind the executive and legislative departments. It is likewise
security of tenure provision, an assurance of a judiciary free from extraneous undeniable that the Batasang Pambansa retains its full authority to enact
influences, is thereby reduced to a barren form of words. The amended whatever legislation may be necessary to carry out national policy as usually
Constitution adheres even more clearly to the long-established tradition of a formulated in a caucus of the majority party. It is understandable then why
strong executive that antedated the 1935 Charter. As noted in the work of in Fortun v. Labang 73 it was stressed that with the provision transferring to
former Vice-Governor Hayden, a noted political scientist, President Claro M. the Supreme Court administrative supervision over the Judiciary, there is a
Recto of the 1934 Convention, in his closing address, in stressing such a greater need "to preserve unimpaired the independence of the judiciary,
concept, categorically spoke of providing "an executive power which, subject

37
especially so at present, where to all intents and purposes, there is a fusion Tribunal is ignored or disregarded. The challenged Act would thus be free
between the executive and the legislative branches." 74 from any unconstitutional taint, even one not readily discernidble except to
those predisposed to view it with distrust. Moreover, such a construction
8. To be more specific, petitioners contend that the abolition of the would be in accordance with the basic principle that in the choice of
existing inferior courts collides with the security of tenure enjoyed by alternatives between one which would save and another which would
incumbent Justices and judges under Article X, Section 7 of the Constitution. invalidate a statute, the former is to be preferred. 78 There is an obvious way
There was a similar provision in the 1935 Constitution. It did not, however, to do so. The principle that the Constitution enters into and forms part of
go as far as conferring on this Tribunal the power to supervise every act to avoid any constitutional taint must be applied Nuñez v.
administratively inferior courts. 75 Moreover, this Court is em powered "to Sandiganbayan, 79 promulgated last January, has this relevant excerpt: "It is
discipline judges of inferior courts and, by a vote of at least eight members, true that other Sections of the Decree could have been so worded as to avoid
order their dismissal." 76 Thus it possesses the competence to remove any constitutional objection. As of now, however, no ruling is called for. The
judges. Under the Judiciary Act, it was the President who was vested with view is given expression in the concurring and dissenting opinion of Justice
such power. 77 Removal is, of course, to be distinguished from termination Makasiar that in such a case to save the Decree from the direct fate of
by virtue of the abolition of the office. There can be no tenure to a non- invalidity, they must be construed in such a way as to preclude any possible
existent office. After the abolition, there is in law no occupant. In case of erosion on the powers vested in this Court by the Constitution. That is a
removal, there is an office with an occupant who would thereby lose his proposition too plain to be committed. It commends itself for approval." 80
position. It is in that sense that from the standpoint of strict law, the question Nor would such a step be unprecedented. The Presidential Decree
of any impairment of security of tenure does not arise. Nonetheless, for the constituting Municipal Courts into Municipal Circuit Courts, specifically
incumbents of inferior courts abolished, the effect is one of separation. As to provides: "The Supreme Court shall carry out the provisions of this Decree
its effect, no distinction exists between removal and the abolition of the through implementing orders, on a province-to-province basis." 81 It is true
office. Realistically, it is devoid of significance. He ceases to be a member of there is no such provision in this Act, but the spirit that informs it should not
the judiciary. In the implementation of the assailed legislation, therefore, it be ignored in the Executive Order contemplated under its Section 44. 82 Thus
would be in accordance with accepted principles of constitutional Batas Pambansa Blg. 129 could stand the most rigorous test of
construction that as far as incumbent justices and judges are concerned, this constitutionality. 83
Court be consulted and that its view be accorded the fullest consideration.
No fear need be entertained that there is a failure to accord respect to the 9. Nor is there anything novel in the concept that this Court is called
basic principle that this Court does not render advisory opinions. No question upon to reconcile or harmonize constitutional provisions. To be specific, the
of law is involved. If such were the case, certainly this Court could not have Batasang Pambansa is expressly vested with the authority to reorganize
its say prior to the action taken by either of the two departments. Even then, inferior courts and in the process to abolish existing ones. As noted in the
it could do so but only by way of deciding a case where the matter has been preceding paragraph, the termination of office of their occupants, as a
put in issue. Neither is there any intrusion into who shall be appointed to the necessary consequence of such abolition, is hardly distinguishable from the
vacant positions created by the reorganization. That remains in the hands of practical standpoint from removal, a power that is now vested in this
the Executive to whom it properly belongs. There is no departure therefore Tribunal. It is of the essence of constitutionalism to assure that neither
from the tried and tested ways of judicial power, Rather what is sought to be agency is precluded from acting within the boundaries of its conceded
achieved by this liberal interpretation is to preclude any plausibility to the competence. That is why it has long been well-settled under the
charge that in the exercise of the conceded power of reorganizing tulle constitutional system we have adopted that this Court cannot, whenever
inferior courts, the power of removal of the present incumbents vested in this appropriate, avoid the task of reconciliation. As Justice Laurel put it so well in

38
the previously cited Angara decision, while in the main, "the Constitution has Municipal Circuit Trial Judges shall receive such receive such compensation
blocked out with deft strokes and in bold lines, allotment of power to the and allowances as may be authorized by the President along the guidelines
executive, the legislative and the judicial departments of the government, the set forth in Letter of Implementation No. 93 pursuant to Presidential Decree
overlapping and interlacing of functions and duties between the several No. 985, as amended by Presidential Decree No. 1597." 87 The existence of a
departments, however, sometimes makes it hard to say just where the one standard is thus clear. The basic postulate that underlies the doctrine of non-
leaves off and the other begins." 84 It is well to recall another classic delegation is that it is the legislative body which is entrusted with the
utterance from the same jurist, even more emphatic in its affirmation of such competence to make laws and to alter and repeal them, the test being the
a view, moreover buttressed by one of those insights for which Holmes was completeness of the statue in all its terms and provisions when enacted. As
so famous "The classical separation of government powers, whether viewed pointed out in Edu v. Ericta: 88 "To avoid the taint of unlawful delegation,
in the light of the political philosophy of Aristotle, Locke, or Motesquieu or of there must be a standard, which implies at the very least that the legislature
the postulations of Mabini, Madison, or Jefferson, is a relative theory of itself determines matters of principle and lays down fundamental policy.
government. There is more truism and actuality in interdependence than in Otherwise, the charge of complete abdication may be hard to repel. A
independence and separation of powers, for as observed by Justice Holmes standard thus defines legislative policy, marks its limits, maps out its
in a case of Philippine origin, we cannot lay down 'with mathematical boundaries and specifies the public agency to apply it. It indicates the
precision and divide the branches into water-tight compartments' not only circumstances under which the legislative command is to be effected. It is the
because 'the great ordinances of the Constitution do not establish and divide criterion by which legislative purpose may be carried out. Thereafter, the
fields of black and white but also because 'even the more specific of them are executive or administrative office designated may in pursuance of the above
found to terminate in a penumbra shading gradually from one extreme to the guidelines promulgate supplemental rules and regulations. The standard may
other.'" 85 This too from Justice Tuazon, likewise expressing with force and be either express or implied. If the former, the non-delegation objection is
clarity why the need for reconciliation or balancing is well-nigh unavodiable easily met. The standard though does not have to be spelled out specifically.
under the fundamental principle of separation of powers: "The constitutional It could be implied from the policy and purpose of the act considered as a
structure is a complicated system, and overlappings of governmental whole." 89 The undeniably strong links that bind the executive and legislative
functions are recognized, unavoidable, and inherent necessities of departments under the amended Constitution assure that the framing of
governmental coordination." 86 In the same way that the academe has noted policies as well as their implementation can be accomplished with unity,
the existence in constitutional litigation of right versus right, there are promptitude, and efficiency. There is accuracy, therefore, to this observation
instances, and this is one of them, where, without this attempt at in the Free Telephone Workers Union decision: "There is accordingly more
harmonizing the provisions in question, there could be a case of power receptivity to laws leaving to administrative and executive agencies the
against power. That we should avoid. adoption of such means as may be necessary to effectuate a valid legislative
purpose. It is worth noting that a highly-respected legal scholar, Professor
10. There are other objections raised but they pose no difficulty. Jaffe, as early as 1947, could speak of delegation as the 'dynamo of modern
Petitioners would characterize as an undue delegation of legislative power to government.'" 90 He warned against a "restrictive approach" which could be
the President the grant of authority to fix the compensation and the "a deterrent factor to much-needed legislation." 91 Further on this point from
allowances of the Justices and judges thereafter appointed. A more careful the same opinion" "The spectre of the non-delegation concept need not
reading of the challenged Batas Pambansa Blg. 129 ought to have cautioned haunt, therefore, party caucuses, cabinet sessions or legislative chambers."
them against raising such an issue. The language of the statute is quite clear. 92 Another objection based on the absence in the statue of what petitioners
The questioned provisions reads as follows: "Intermediate Appellate Justices, refer to as a "definite time frame limitation" is equally bereft of merit. They
Regional Trial Judges, Metropolitan Trial Judges, municipal Trial Judges, and ignore the categorical language of this provision: "The Supreme Court shall

39
submit to the President, within thirty (30) days from the date of the effectivity were not consulted. They did not testify. The challenged legislation is entirely
of this act, a staffing pattern for all courts constituted pursuant to this Act the product of the efforts of the legislative body. 100 Their work was limited,
which shall be the basis of the implementing order to be issued by the as set forth in the Executive Order, to submitting alternative plan for
President in accordance with the immediately succeeding section." 93 The reorganization. That is more in the nature of scholarly studies. That the
first sentence of the next section is even more categorical: "The provisions of undertook. There could be no possible objection to such activity. Ever since
this Act shall be immediately carried out in accordance with an Executive 1973, this Tribunal has had administrative supervision over interior courts. It
Order to be issued by the President." 94 Certainly petitioners cannot be heard has had the opportunity to inform itself as to the way judicial business is
to argue that the President is insensible to his constitutional duty to take care conducted and how it may be improved. Even prior to the 1973 Constitution,
that the laws be faithfully executed. 95 In the meanwhile, the existing inferior it is the recollection of the writer of this opinion that either the then Chairman
courts affected continue functioning as before, "until the completion of the or members of the Committee on Justice of the then Senate of the Philippines
reorganization provided in this Act as declared by the President. Upon such 101 consulted members of the Court in drafting proposed legislation affecting
declaration, the said courts shall be deemed automatically abolished and the the judiciary. It is not inappropriate to cite this excerpt from an article in the
incumbents thereof shall cease to hold office." 96 There is no ambiguity. The 1975 Supreme Court Review: "In the twentieth century the Chief Justice of
incumbents of the courts thus automatically abolished "shall cease to hold the United States has played a leading part in judicial reform. A variety of
office." No fear need be entertained by incumbents whose length of service, conditions have been responsible for the development of this role, and
quality of performance, and clean record justify their being named anew, 97 foremost among them has been the creation of explicit institutional
in legal contemplation without any interruption in the continuity of their structures designed to facilitate reform." 102 Also: "Thus the Chief Justice
service. 98 It is equally reasonable to assume that from the ranks of lawyers, cannot avoid exposure to and direct involvement in judicial reform at the
either in the government service, private practice, or law professors will come federal level and, to the extent issues of judicial federalism arise, at the state
the new appointees. In the event that in certain cases a little more time is level as well." 103
necessary in the appraisal of whether or not certain incumbents deserve
reappointment, it is not from their standpoint undesirable. Rather, it would 12. It is a cardinal article of faith of our constitutional regime that it is the
be a reaffirmation of the good faith that will characterize its implementation people who are endowed with rights, to secure which a government is
by the Executive. There is pertinence to this observation of Justice Holmes instituted. Acting as it does through public officials, it has to grant them either
that even acceptance of the generalization that courts ordinarily should not expressly or impliedly certain powers. Those they exercise not for their own
supply omissions in a law, a generalization qualified as earlier shown by the benefit but for the body politic. The Constitution does not speak in the
principle that to save a statute that could be done, "there is no canon against language of ambiguity: "A public office is a public trust." 104 That is more
using common sense in construing laws as saying what they obviously mean." than a moral adjuration It is a legal imperative. The law may vest in a public
99 Where then is the unconstitutional flaw official certain rights. It does so to enable them to perform his functions and
fulfill his responsibilities more efficiently. It is from that standpoint that the
11. On the morning of the hearing of this petition on September 8, 1981, security of tenure provision to assure judicial independence is to be viewed.
petitioners sought to have the writer of this opinion and Justices Ramon C. It is an added guarantee that justices and judges can administer justice
Aquino and Ameurfina Melencio-Herrera disqualified because the first- undeterred by any fear of reprisal or untoward consequence. Their
named was the chairman and the other two, members of the Committee on judgments then are even more likely to be inspired solely by their knowledge
Judicial Reorganization. At the hearing, the motion was denied. It was made of the law and the dictates of their conscience, free from the corrupting
clear then and there that not one of the three members of the Court had any influence of base or unworthy motives. The independence of which they are
hand in the framing or in the discussion of Batas Pambansa Blg. 129. They assured is impressed with a significance transcending that of a purely

40
personal right. As thus viewed, it is not solely for their welfare. The challenged aspirations and to fulfilling the hopes of the sovereign people as expressed in
legislation Thus subject d to the most rigorous scrutiny by this Tribunal, lest the Constitution. There is wisdom as well as validity to this pronouncement
by lack of due care and circumspection, it allow the erosion of that Ideal so of Justice Malcolm in Manila Electric Co. v. Pasay Transportation Company,
firmly embedded in the national consciousness There is this farther thought 109 a decision promulgated almost half a century ago: "Just as the Supreme
to consider. independence in thought and action necessarily is rooted in one's Court, as the guardian of constitutional rights, should not sanction
mind and heart. As emphasized by former Chief Justice Paras in Ocampo v. usurpations by any other department or the government, so should it as
Secretary of Justice, 105 there is no surer guarantee of judicial independence strictly confine its own sphere of influence to the powers expressly or by
than the God-given character and fitness of those appointed to the Bench. implication conferred on it by the Organic Act." 110 To that basic postulate
The judges may be guaranteed a fixed tenure of office during good behavior, underlying our constitutional system, this Court remains committed.
but if they are of such stuff as allows them to be subservient to one
administration after another, or to cater to the wishes of one litigant after WHEREFORE, the unconstitutionality of Batas Pambansa Blg. 129 not having
another, the independence of the judiciary will be nothing more than a myth been shown, this petition is dismissed. No costs.
or an empty Ideal. Our judges, we are confident, can be of the type of Lord
Coke, regardless or in spite of the power of Congress — we do not say
unlimited but as herein exercised — to reorganize inferior courts." 106 That
is to recall one of the greatest Common Law jurists, who at the cost of his
office made clear that he would not just blindly obey the King's order but "will
do what becomes [him] as a judge." So it was pointed out in the first leading
case stressing the independence of the judiciary, Borromeo v. Mariano, 107
The ponencia of Justice Malcolm Identified good judges with "men who have
a mastery of the principles of law, who discharge their duties in accordance
with law, who are permitted to perform the duties of the office undeterred
by outside influence, and who are independent and self-respecting human
units in a judicial system equal and coordinate to the other two departments
of government." 108 There is no reason to assume that the failure of this suit
to annul Batas Pambansa Blg. 129 would be attended with deleterious
consequences to the administration of justice. It does not follow that the
abolition in good faith of the existing inferior courts except the
Sandiganbayan and the Court of Tax Appeals and the creation of new ones
will result in a judiciary unable or unwilling to discharge with independence
its solemn duty or one recreant to the trust reposed in it. Nor should there
be any fear that less than good faith will attend the exercise be of the
appointing power vested in the Executive. It cannot be denied that an
independent and efficient judiciary is something to the credit of any
administration. Well and truly has it been said that the fundamental principle
of separation of powers assumes, and justifiably so, that the three
departments are as one in their determination to pursue the Ideals and

41
G.R. No. 157542 October 10, 2008 On June 30, 1997, a Special Audit Team of COA Regional Office No. III at San
Fernando, Pampanga audited the financial accounts of SFWD for the period
REBECCA A. BARBO, ELEONORA R. DE JESUS, and ANTONIO B. MAGTIBAY, covering January 1, 1994 to July 15, 1996. The COA Special Audit Team
petitioners, disallowed the payment of the above-mentioned benefits and allowances
vs. received by petitioners after the same were found to be excessive and
COMMISSION ON AUDIT, respondent. contrary to Sections 228, 162 and 163 of the Government Accounting and
Auditing Manual (GAAM) and to Civil Service Commission (CSC) Resolution
DECISION No. 9540736 in relation to Section 13 of Presidential Decree (PD) No. 198
(Provincial Water Utilities Act of 1973) as amended. Thus, petitioners were
LEONARDO-DE CASTRO, J.: directed to refund the benefits and allowances subject of the disallowance.

By this Petition for Certiorari under Rule 64 of the Rules of Court petitioners Petitioners appealed to the COA Regional Director raising the following
seek to annul or reverse COA Decision No. 2000-1331 dated May 16, 2000 arguments:
and Resolution2 dated February 27, 2003 rendered by the Commission on
Audit (COA). In the said issuances, the COA affirmed its Regional Director's 1. That CSC Resolution No. 954073 issued in Cruz v. Cabili cannot extend to
1st Indorsement 3 dated June 5, 1998, which in turn affirmed Notice of appellants, they not having been made parties to the case;
Disallowance No. 97-004 (94, 95, 96)4 dated June 30, 1997 issued by the 2. That it applied to appellants, said resolution will partake the nature of an
Special Audit Team against petitioners Rebecca A. Barbo, Eleonora R. de implementing rule and regulation which is beyond CSC's jurisdiction to issue;
Jesus, and Antonio B. Magtibay. 3. That DBM, not CSC, is the appropriate authority to rule on compensation;
4. That Christmas Bonus, Productivity Bonus, Rice Allowance, and Uniform
Petitioners are officials of the Local Water Utilities Administration (LWUA) Allowance are not compensation;
and designated members of the Interim Board of Directors of the San 5. That Extraordinary and Miscellaneous Expenses are not compensation but
Fernando Water District (SFWD). reimbursement of expenses; and
6. That the right of water district directors and the interim general manager
On December 4, 1995 and February 12 1996, the LWUA Board of Trustees to receive allowances and other benefits is appropriately recognized by
issued Board Resolution No. 313, Series of 1995 and Board Resolution No. 39, LWUA.
Series of 1996 5 respectively. These Board Resolutions authorized the Board
of Directors of SFWD to receive reimbursable allowances in the form of The Regional Director, in his First Indorsement dated June 5, 1998, affirmed
Representation and Transportation Allowance (RATA), Travel Allowance, and the Special Audit Team's Notice of Disallowance No. 97-004 (94, 95, 96). The
Extraordinary & Miscellaneous Expense (EME); Christmas Bonus; Uniform Regional Director declared that the COA Special Audit Team was correct in
Allowance; Rice Allowance; Medical and Dental Benefits; and Productivity citing CSC Resolution No. 954073, which resolved the case of LWUA
Incentive Bonus. Employees Association for Progress (LEAP) v. Cabili and de Vera7, because the
said resolution applied on all fours to petitioners' case. In the said resolution,
Pursuant to the said Board Resolutions, petitioners received EME, Rice the CSC held that it is illegal for any LWUA officer or employee who sits as
Allowance, Christmas Bonus, and Productivity Bonus from SFWD during the member of the Board of Directors of a water district to receive and collect
calendar years starting 1994 until 1996. any additional, double, or indirect compensation from said water district,
except per diems, pursuant to Section 13 of PD No. 198, as amended.

42
II. WHETHER OR NOT SEC. 13, PD NO. 198, AS AMENDED, PROHIBIT
From the denial of their appeal by the COA Regional Director, petitioners PETITIONERS' ENTITLEMENT TO RATA, EME, BONUSES AND OTHER BENEFITS
elevated the matter to the COA via a petition for review. AND ALLOWANCES.
III. WHETHER OR NOT PETITIONERS ARE LIABLE TO SETTLE / REFUND THE
In the herein challenged Decision dated May 16, 2000, the COA denied the DISALLOWED ALLOWANCES, BONUSES AND OTHER BENEFITS RECEIVED BY
petition for review and affirmed the ruling of the COA Regional Director as PETITIONERS.
contained in its First Indorsement. The COA stressed that the Directors of
local water districts (LWDs) were prohibited from receiving compensation The petition is partly meritorious.
other than per diems and that LWUA Board Resolution Nos. 313 and 39 were
contrary to the law which it intended to implement, specifically, Section 13 Petitioners contend that the COA lacks jurisdiction to declare whether or not
of PD No. 198, as amended. Citing the case Peralta v. Mathay,8 the COA LWUA Board Resolution Nos. 313 and 39 are consistent with Section 13 of PD
declared that the subject bonuses and allowances received by petitioners No. 198, as amended, on matters pertaining to the compensation and "other
constituted additional compensation or remuneration. The dispositive benefits" of the Directors of the LWD. This is allegedly the function of the
portion of the decision reads: courts.

PREMISES CONSIDERED, the instant Petition for Review of Mr. Simplicio The Court has already settled this issue in a myriad of cases.9 Particularly, in
Belisario, et al. [herein petitioners included], is hereby denied. Accordingly, Rodolfo S. de Jesus [Catbalogan Water District] v. COA,10 the Court upheld
the subject disallowances are affirmed with all officers and employees who the authority and jurisdiction of the COA to rule on the legality of the
received the bonuses and allowances liable for their settlement together with disbursement of government funds by a water district and declared that such
the officers named in the Notice of Disallowance, namely: Mr. Dionisio power does not conflict with the jurisdiction of the courts, the DBM, and the
Polintan, General Manager, Ms. Merlita Garcia, Finance Officer, and Ms. LWUA. Citing Section 2, Subdivision D, Article IX of the 1987 Constitution11
Arsenia Sicat, Cashier / Property Management Supervisor. (Words in brackets the Court declared that it is the mandate of the COA to audit all government
ours) agencies, including government-owned and controlled corporations with
original charters. Indeed, the Constitution specifically vests in the COA the
Petitioners' motion for reconsideration was denied by the COA in its authority to determine whether government entities comply with laws and
challenged Resolution dated February 27, 2003. regulations in disbursing government funds, and to disallow illegal or
irregular disbursements of government funds.12 This independent
Thus, petitioners now come to this Court, imputing grave abuse of discretion constitutional body is tasked to be vigilant and conscientious in safeguarding
amounting to lack of jurisdiction on the part of the COA in issuing COA the proper use of the government's, and ultimately the people's, property.13
Decision No. 2000-133 and February 27, 2003 Resolution. Specifically,
petitioners raise the following issues: Anent the second issue, a water district is a government-owned and
I. WHETHER OR NOT RESPONDENT HAS THE JURISDICTION TO MOTU controlled corporation with a special charter since it is created pursuant to a
PROPRIO DECLARE LWUA BOARD RESOLUTION NO. 313, SERIES OF 1995, AS special law, Presidential Decree (PD) 198. It is undeniable that PD 198
AMENDED BY RESOLUTION NO. 39, SERIES OF 1996, TO BE TOTALLY IN expressly prohibits the grant of RATA, EME, and bonuses to members of the
CONFLICT WITH SEC. 13 OF PD NO. 198, AS AMENDED. board of Water Districts. Section 13 of PD 198, as amended, reads as follows:

43
Compensation. - Each director shall receive a per diem, to be determined by While we sustain the disallowance of the above benefits by respondent COA,
the board, for each meeting of the board actually attended by him, but no however, we find that the SFWD affected personnel who received the above
director shall receive per diems in any given month in excess of the equivalent mentioned benefits and privileges acted in good faith under the honest belief
of the total per diems of four meetings in any given month. No director shall that Board Resolution Nos. 313 and 39 authorized such payment. In Abanilla
receive other compensation for services to the district. v. Commission On Audit15 citing Querubin v. Regional Cluster Director, Legal
and Adjudication Office, COA Regional Office VI, Pavia, Iloilo City,16 this Court
Any per diem in excess of P50 shall be subject to approval of the held:
Administration.
Considering, however, that all the parties here acted in good faith, we cannot
In Baybay Water District v. Commission on Audit,14 the members of the countenance the refund of subject incentive benefits for the year 1992, which
board of Baybay Water District also questioned the disallowance by the COA amounts the petitioners have already received. Indeed, no indicia of bad faith
of payment of RATA, rice allowance and excessive per diems. The Court ruled can be detected under the attendant facts and circumstances. The officials
that pursuant to PD 198, members of the board of water districts cannot and chiefs of offices concerned disbursed such incentive benefits in the
receive allowances and benefits more than those allowed by PD 198. honest belief that the amounts given were due to the recipients and the latter
Construing Section 13 of PD 198, in Baybay, the Court declared: accept the same with gratitude, confident that they richly deserve such
benefits.
xxx Under §13 of this Decree, per diem is precisely intended to be the
compensation of members of board of directors of water districts. Indeed, x x x. Petitioners here received the additional allowances and bonuses in good
words and phrases in a statute must be given their natural, ordinary, and faith under the honest belief that LWUA Board Resolution No. 313 authorized
commonly-accepted meaning, due regard being given to the context in which such payment. At the time petitioners received the additional allowances and
the words and phrases are used. By specifying the compensation which a bonuses, the Court had not yet decided Baybay Water District. Petitioners
director is entitled to receive and by limiting the amount he/she is allowed to had no knowledge that such payment was without legal basis. Thus, being in
receive in a month, and, in the same paragraph, providing "No director shall good faith, petitioners need not refund the allowances and bonuses they
receive other compensation" than the amount provided for per diems, the received but disallowed by the COA.
law quite clearly indicates that directors of water districts are authorized to
receive only the per diem authorized by law and no other compensation or The foregoing disquisitions were also applied to the more recent cases of De
allowance in whatever form. Jesus [Metro Cariaga Water District];17 Molen [Metro Iloilo Water District];
and Magno [Mangaldan Water District].18 The same reasoning and
Section 13 of PD 198 is clear enough that it needs no interpretation. It conclusions of the Court were reiterated in de Jesus v. CSC19 and Cabili and
expressly prohibits the grant of compensation other than the payment of per de Vera v. CSC.20 We find no reason to depart from the rulings in these cases
diem, thus preempting the exercise of any discretion by water districts in which essentially involve the same issues as the instant case.
paying other allowances and bonuses.
WHEREFORE, the instant petition is hereby PARTIALLY GRANTED. COA
Lastly, the petitioners claim that they are not liable to settle or refund the Decision No. 2000-133 dated May 16, 2000 and Resolution dated February
disallowed payments of benefits and allowances which they have received in 27, 2003 are hereby AFFIRMED with the MODIFICATION that the petitioners
good faith and as de jure officers of SFWD. need not refund the benefits and allowances disallowed by the COA.
No costs.

44