BUKLOD NG KAWANING EIIB, vs. HON. EXECUTIVE SECRETARY RONALDO B.

ZAMORA (GR 142801, July 10, 2001)

Doctrine: Buklod ng Kawaning EIIB vs. Zamora 7 ruled that the President, based on
existing laws, had the authority to carry out a reorganization in any branch or agency of
the executive department.|||

Facts: The Economic Intelligence and Investigation Bureau (EIIB) of the Ministry of
Finance was created on June 30, 1987 by Executive Order No. 127. On January 7,
2000, then President Joseph Estrada issued Executive Order No. 191 deactivating the
EIIB. Its function was transferred to the newly created Task Force Aduana, which
utilized the personnel, facilities and resources of existing departments, agencies and
bureaus. Thus, no new employees were hired. Its personnel came from other agencies
and detailed with the Task Force. On March 29, 2000, Executive Order No. 223 was
issued separating all EIIB personnel from the service effective April 30, 2000.
Aggrieved, petitioners, employees of the EIIB, without exhausting administrative
remedies and the hierarchy of courts, resorted to this recourse challenging Executive
Orders Nos. 191 and 223.

Petitioners contend that the issuance of the afore-mentioned executive orders is: (a) a
violation of their right to security of tenure; (b) tainted with bad faith as they were not
actually intended to make the bureaucracy more efficient but to give way to Task Force
"Aduana," the functions of which are essentially and substantially the same as that of
EIIB; and (c) a usurpation of the power of Congress to decide whether or not to abolish
the EIIB.

Arguing in behalf of respondents, the Solicitor General maintains that: (a) the President
enjoys the totality of the executive power provided under Sections 1 and 7, Article VII of
the Constitution, thus, he has the authority to issue Executive Order Nos. 191 and 223;
(b) the said executive orders were issued in the interest of national economy, to avoid
duplicity of work and to streamline the functions of the bureaucracy; and (c) the EIIB
was not "abolished," it was only "deactivated."

Issue: a.) Does the President have the authority to reorganize the executive
department? And, b) How should the reorganization be carried out?

Held: a.) In the whereas clause of E.O. No. 191, former President Estrada anchored his
authority to deactivate EIIB on Section 77 of Republic Act 8745 (FY 1999 General
Appropriations Act), a provision similar to Section 62 of R.A. 7645 quoted in Larin, thus;

"SECTION 77. Organized Changes. — Unless otherwise provided by law or directed by

the President of the Philippines, no changes in key positions or organizational units in
any department or agency shall be authorized in their respective organizational
structures and funded from appropriations provided by this Act."

The general rule has always been that the power to abolish a public office is lodged with
the legislature. The exception, however, is that as far as bureaus, agencies or offices in
the executive department are concerned, the President's power of control may justify
him to inactivate the functions of a particular office, 19 or certain laws may grant him the
broad authority to carry out reorganization measures. Under Section 31, Book III of
Executive Order No. 292 (otherwise known as the Administrative Code of 1987), "the
President, subject to the policy in the Executive Office and in order to achieve simplicity,
economy and efficiency, shall have the continuing authority to reorganize the
administrative structure of the Office of the President." For this purpose, he may transfer
the functions of other Departments or Agencies to the Office of the President.

b.) In the instructive words laid down by this Court in Dario v. Mison, 39 through Justice
Abraham F. Sarmiento:

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

Also, Petitioners claim that the deactivation of EIIB was done in bad faith because four
days after its deactivation, President Estrada created the Task Force Aduana.

We are not convinced. While basically, the functions of the EIIB have devolved upon the
Task Force Aduana, we find the latter to have additional new powers. Consequently, it
cannot be said that there is a feigned reorganization. In Blaquera v. Civil Service
Commission, 37 we ruled that a reorganization in good faith is one designed to trim the
fat off the bureaucracy and institute economy and greater efficiency in its operation.

Lastly, we hold that petitioners' right to security of tenure is not violated. Nothing is
better settled in our law than that the abolition of an office within the competence of a
legitimate body if done in good faith suffers from no infirmity. Valid abolition of offices is
neither removal nor separation of the incumbents.

DRIANITA BAGAOISAN, vs. NATIONAL TOBACCO ADMINISTRATION, represented

by ANTONIO DE GUZMAN and PERLITA BAULA

Facts: President Joseph Estrada issued on 30 September 1998 Executive Order No.
29, entitled "Mandating the Streamlining of the National Tobacco Administration (NTA),"
a government agency under the Department of Agriculture. The order was followed by
another issuance, on 27 October 1998, by President Estrada of Executive Order No. 36,
amending Executive Order No. 29, insofar as the new staffing pattern was concerned,
by increasing from four hundred (400) to not exceeding seven hundred fifty (750) the
positions affected thereby. In compliance therewith, the NTA prepared and adopted a
new Organization Structure and Staffing Pattern (OSSP) which, on 29 October 1998,
was submitted to the Office of the President.

On 11 November 1998, the rank and file employees of NTA Batac, among whom
included herein petitioners, filed a letter-appeal with the Civil Service Commission and
sought its assistance in recalling the OSSP. On 04 December 1998, the OSSP was
approved by the Department of Budget and Management (DBM) subject to certain
revisions. On even date, the NTA created a placement committee to assist the
appointing authority in the selection and placement of permanent personnel in the
revised OSSP. The results of the evaluation by the committee on the individual
qualifications of applicants to the positions in the new OSSP were then disseminated
and posted at the central and provincial offices of the NTA.

On 10 June 1996, petitioners, all occupying different positions at the NTA office in
Batac, Ilocos Norte, received individual notices of termination of their employment with
the NTA effective thirty (30) days from receipt thereof. Finding themselves without any
immediate relief from their dismissal from the service, petitioners filed a petition for
certiorari, prohibition and mandamus, with prayer for preliminary mandatory injunction
and/or temporary restraining order, with the Regional Trial Court (RTC) of Batac, Ilocos
Norte, and prayed.
The RTC, on 09 September 2000, ordered the NTA to appoint petitioners in the new
OSSP to positions similar or comparable to their respective former assignments. A
motion for reconsideration filed by the NTA was denied by the trial court in its order of
28 February 2001.

Thereupon, the NTA filed an appeal with the Court of Appeals. The appellate court
rendered a decision reversing and setting aside the assailed orders of the trial court. On
18 November 2002, after the NTA had filed its comment of 23 September 2002, the
Court issued its resolution denying the petition for failure of petitioners to sufficiently
show any reversible error on the part of the appellate court in its challenged decision so
as to warrant the exercise by this Court of its discretionary appellate jurisdiction. A
motion for reconsideration filed by petitioners was denied in the Court's resolution of 20
January 2002.
On 21 February 2003, petitioners submitted a "Motion to Admit Petition For En Banc
Resolution" of the case.

Issue: whether the NTA may be reorganized by an executive fiat, not by legislative
action.

Held: It is important to emphasize that the questioned Executive Orders No. 29 and No.
36 have not abolished the National Tobacco Administration but merely mandated its
reorganization through the streamlining or reduction of its personnel. Article VII, Section
17, 10 of the Constitution, expressly grants the President control of all executive
departments, bureaus, agencies and offices which may justify an executive action to
inactivate the functions of a particular office or to carry out reorganization measures
under a broad authority of law. 11 Section 78 of the General Provisions of Republic Act
No. 8522 (General Appropriations Act of FY 1998) has decreed that the President may
direct changes in the organization and key positions in any department, bureau or
agency pursuant to Article VI, Section 25, 12 of the Constitution, which grants to the
Executive Department the authority to recommend the budget necessary for its
operation. Evidently, this grant of power includes the authority to evaluate each and
every government agency, including the determination of the most economical and
efficient staffing pattern, under the Executive Department. n the present instance,
involving neither an abolition nor transfer of offices, the assailed action is a mere
reorganization under the general provisions of the law consisting mainly of streamlining
the NTA in the interest of simplicity, economy and efficiency. It is an act well within the
authority of President motivated and carried out, according to the findings of the
appellate court, in good faith, a factual assessment that this Court could only but accept.

ROSA LIGAYA C. DOMINGO vs. HON. RONALDO D. ZAMORA

Facts: On March 5, 1999, former President Joseph E. Estrada issued Executive Order
No. 81 3 ("EO 81" for brevity) entitled "Transferring the Sports Programs and Activities
of the Department of Education, Culture and Sports to the Philippine Sports
Commission and Defining the Role of DECS in School-Based Sports.” Pursuant to EO
81, former DECS Secretary Andrew B. Gonzales ("Secretary Gonzales" for brevity)
issued Memorandum No. 01592 on January 10, 2000 temporarily reassigning, in the
exigency of the service, all remaining BPESS Staff to other divisions or bureaus of the
DECS and In their Petition, petitioners argue that EO 81 is void and unconstitutional for
being an undue legislation by President Estrada. Petitioners maintain that the
President's issuance of EO 81 violated the principle of separation of powers. Petitioners
also challenge the DECS Memoranda for violating their right to security of tenure.

Petitioners seek to nullify EO 81 and the DECS Memoranda. Petitioners pray that this
Court prohibit the PSC from performing functions related to school sports development.
Petitioners further pray that, upon filing of the petition, this Court issue a temporary
restraining order against respondents to desist from implementing EO 81.

During the pendency of the case, Republic Act No. 9155 ("RA 9155" for brevity),
otherwise known as the "Governance of Basic Education Act of 2001," was enacted on
August 11, 2001. RA 9155 expressly abolished the BPESS and transferred the
functions, programs and activities of the DECS relating to sports competition to the
PSC.

Issue: he issue to resolve is whether EO 81 and the DECS Memoranda are valid.

Held: Executive Order No. 292 ("EO 292" for brevity), otherwise known as the
Administrative Code of 1987, expressly grants the President continuing authority to
reorganize the Office of the President. Section 31 of EO 292 provides:
"SEC. 31. Continuing Authority of the President to Reorganize his Office. — The
President, subject to the policy in the Executive Office and in order to achieve simplicity,
economy and efficiency, shall have continuing authority to reorganize the administrative
structure of the Office of the President. For this purpose, he may take any of the
following actions:

(1) Restructure the internal organization of the Office of the President Proper, including
the immediate Offices, the Presidential Special Assistants/Advisers System and the
Common Support System, by abolishing, consolidating or merging units thereof or
transferring functions from one unit to another;

(2) Transfer any function under the Office of the President to any other Department or
Agency as well as transfer functions agencies to the Office of the President from other
Departments or Agencies;" and

(3) Transfer any agency under the Office of the President to any other department or
agency as well as transfer agencies to the Office of the President from other
Departments or Agencies;"(Emphasis supplied.)

Since EO 81 is based on the President's continuing authority under Section 31 (2) and
(3) of EO 292, 8 EO 81 is a valid exercise of the President's delegated power to
reorganize the Office of the President. The law grants the President this power in
recognition of the recurring need of every President to reorganize his office "to achieve
simplicity, economy and efficiency." The Office of the President is the nerve center of
the Executive Branch. To remain effective and efficient, the Office of the President must
be capable of being shaped and reshaped by the President in the manner he deems fit
to carry out his directives and policies. After all, the Office of the President is the
command post of the President. This is the rationale behind the President's continuing
authority to reorganize the administrative structure of the Office of the President.
However, the President's power to reorganize the Office of the President under Section
31 (2) and (3) of EO 292 should be distinguished from his power to reorganize the
Office of the President Proper. Under Section 31 (1) of EO 292, the President can
reorganize the Office of the President Proper by abolishing, consolidating or merging
units, or by transferring functions from one unit to another. In contrast, under Section 31
(2) and (3) of EO 292, the President's power to reorganize offices outside the Office of
the President Proper but still within the Office of the President is limited to merely
transferring functions or agencies from the Office of the President to Departments or
Agencies, and vice versa.

This distinction is crucial as it affects the security of tenure of employees. The abolition
of an office in good faith necessarily results in the employee's cessation in office, but in
such event there is no dismissal or separation because the office itself ceases to exist.
On the other hand, the transfer of functions or agencies does not result in the
employee's cessation in office because his office continues to exist although in another
department, agency or office. In the instant case, the BPESS employees who were not
transferred to PSC were at first temporarily, then later permanently reassigned to other
offices of the DECS, ensuring their continued employment. At any rate, RA 9155 now
mandates that these employees "shall be retained by the Department.

4. AQUILINO T. LARIN vs. THE EXECUTIVE SECRETARY

Facts: Petitioner was convicted by the Sandiganbayan of the crimes of violation of

Section 268 (4) of the National Internal Revenue Code and Section 3 (e) of Republic Act
3019. The fact of his conviction was reported to the President of the Philippines and
acting by authority of the latter, then Sr. Deputy Executive Secretary Leonardo A.
Quisumbing issued Memorandum Order No. 164 which provides for the creation of an
Executive Committee to investigate the administrative charge against petitioner. The
Committee directed the petitioner to respond to the administrative charge. Meanwhile,
the President issued the challenged Executive Order No. 132 which mandated the
streamlining of the Bureau of Internal Revenue. The Excise Tax Service or the Specific
Tax Service, of which petitioner was the Assistant Commissioner, was one of those
offices that was abolished by the said executive order. The President found petitioner
guilty of grave misconduct and imposed upon him the penalty of dismissal with forfeiture
of all benefits and disqualification for reappointment in the government service. In this
petition, petitioner challenges the authority of the President to dismiss him from office
arguing that insofar as presidential appointees who are Career Executive Service
Officers are concerned, the President exercises only the power of control and not the
power to remove.

On the other hand, respondents contended that since petitioner is a presidential

appointee, he falls under the disciplining authority of the President. They also
contended that E.O. No. 132 and its implementing rules were validly issued pursuant to
Sections 48 and 62 of Republic Act No. 7645. Respondents claimed that he was
removed from office because he was found guilty of grave misconduct in the
administrative cases filed against him.

Issue: Whether or not the petitioner's dismissal from office is valid.

Held: At the outset, it is worthy to note that the position of Assistant Commissioner of
the BIR is part of the Career Executive Service. The fact that petitioner is a presidential
appointee does not give the appointing authority the license to remove him at will or at
his pleasure for it is an admitted fact that he is likewise a career service officer who
under the law is the recipient of tenurial protection, thus, may only be removed for a
cause and in accordance with procedural due process.

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

We do not agree.

Under its preamble, E.O. No. 132 lays down the legal bases of its issuance, namely: a)
Section 48 (clearly mentions the acts of "scaling down, phasing out and abolition" of
offices only and does not cover the creation of offices or transfer of functions) and 62 of
R.A. No. 7645, (evidently shows that the President is authorized to effect organizational
changes including the creation of offices in the department or agency concerned.) b)
Section 20, Book III of E.O. No. 292. (This provision speaks of such other powers
vested in the President under the law.) What law then which gives him the power to
reorganize? It is Presidential Decree No. 1772, which amended Presidential Decree No.
1416. These decrees expressly grant the President of the Philippines the continuing
authority to reorganize the national government, which includes the power to group,
consolidate bureaus and agencies, to abolish offices, to transfer functions, to create and
classify functions, services and activities and to standardize salaries and materials.
While the President's power to reorganize can not be denied, this does not mean
however that the reorganization itself is properly made in accordance with law. Well-
settled is the rule that reorganization is regarded as valid provided it is pursued in good
faith. Thus, in Dario vs. Mison, this Court has had the occasion to clarify that:

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

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

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

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

c) Where incumbents are replaced by those less qualified in terms of status of

appointment, performance and merit;

d) Where there is a reclassification of offices in the department or agency concerned

and the reclassified offices perform substantially the same functions as the original
offices;

e) Where the removal violates the order of separation provided in Section 3 hereof."
A reading of some of the provisions of the questioned E.O. No. 132 clearly leads us to
an inescapable conclusion that there are circumstances considered as evidences of bad
faith in the reorganization of the BIR.

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

Commissioner violates Section 4 of R.A. No. 6656. Under said provision, officers
holding permanent appointments are given preference for appointment to the new
positions in the approved staffing pattern comparable to their former positions or in case
there are not enough comparable positions to positions next lower in rank. It is
undeniable that petitioner is a career executive officer who is holding a permanent
position. Hence, he should have been given preference for appointment in the position
of Assistant Commissioner. We should not lose sight of the second paragraph of
Section 4 of R.A. No. 6656 which explicitly states that no new employees shall be taken
in until all permanent officers shall have been appointed for permanent position.