G.R. No.

120319 October 6, 1995

LUZON DEVELOPMENT BANK, petitioner,
vs.
ASSOCIATION OF LUZON DEVELOPMENT BANK EMPLOYEES and ATTY.
ESTER S. GARCIA in her capacity as VOLUNTARY
ARBITRATOR, respondents.

ROMERO, J.:

From a submission agreement of the Luzon Development Bank (LDB) and the
Association of Luzon Development Bank Employees (ALDBE) arose an arbitration
case to resolve the following issue:

Whether or not the company has violated the Collective Bargaining

Agreement provision and the Memorandum of Agreement dated
April 1994, on promotion.

At a conference, the parties agreed on the submission of their respective Position

Papers on December 1-15, 1994. Atty. Ester S. Garcia, in her capacity as Voluntary
Arbitrator, received ALDBE's Position Paper on January 18, 1995. LDB, on the
other hand, failed to submit its Position Paper despite a letter from the Voluntary
Arbitrator reminding them to do so. As of May 23, 1995 no Position Paper had
been filed by LDB.

On May 24, 1995, without LDB's Position Paper, the Voluntary Arbitrator
rendered a decision disposing as follows:

WHEREFORE, finding is hereby made that the Bank has not adhered
to the Collective Bargaining Agreement provision nor the
Memorandum of Agreement on promotion.

Hence, this petition for certiorari and prohibition seeking to set aside the decision
of the Voluntary Arbitrator and to prohibit her from enforcing the same.

In labor law context, arbitration is the reference of a labor dispute to an impartial

third person for determination on the basis of evidence and arguments presented
by such parties who have bound themselves to accept the decision of the
arbitrator as final and binding.

Arbitration may be classified, on the basis of the obligation on which it is based,

as either compulsory or voluntary.

Compulsory arbitration is a system whereby the parties to a dispute are

compelled by the government to forego their right to strike and are compelled to
accept the resolution of their dispute through arbitration by a third party.1 The
essence of arbitration remains since a resolution of a dispute is arrived at by
resort to a disinterested third party whose decision is final and binding on the
parties, but in compulsory arbitration, such a third party is normally appointed by
the government.

Under voluntary arbitration, on the other hand, referral of a dispute by the

parties is made, pursuant to a voluntary arbitration clause in their collective
agreement, to an impartial third person for a final and binding resolution.2 Ideally,
arbitration awards are supposed to be complied with by both parties without
delay, such that once an award has been rendered by an arbitrator, nothing is left
to be done by both parties but to comply with the same. After all, they are
presumed to have freely chosen arbitration as the mode of settlement for that
particular dispute. Pursuant thereto, they have chosen a mutually acceptable
arbitrator who shall hear and decide their case. Above all, they have mutually
agreed to de bound by said arbitrator's decision.

In the Philippine context, the parties to a Collective Bargaining Agreement (CBA)

are required to include therein provisions for a machinery for the resolution of
grievances arising from the interpretation or implementation of the CBA or
company personnel policies.3 For this purpose, parties to a CBA shall name and
designate therein a voluntary arbitrator or a panel of arbitrators, or include a
procedure for their selection, preferably from those accredited by the National
Conciliation and Mediation Board (NCMB). Article 261 of the Labor Code
accordingly provides for exclusive original jurisdiction of such voluntary arbitrator
or panel of arbitrators over (1) the interpretation or implementation of the CBA
and (2) the interpretation or enforcement of company personnel policies. Article
262 authorizes them, but only upon agreement of the parties, to exercise
jurisdiction over other labor disputes.
On the other hand, a labor arbiter under Article 217 of the Labor Code has
jurisdiction over the following enumerated cases:

. . . (a) Except as otherwise provided under this Code the Labor

Arbiters shall have original and exclusive jurisdiction to hear and
decide, within thirty (30) calendar days after the submission of the
case by the parties for decision without extension, even in the
absence of stenographic notes, the following cases involving all
workers, whether agricultural or non-agricultural:

1. Unfair labor practice cases;

2. Termination disputes;

3. If accompanied with a claim for reinstatement, those cases that

workers may file involving wages, rates of pay, hours of work and
other terms and conditions of employment;

4. Claims for actual, moral, exemplary and other forms of damages

arising from the employer-employee relations;

5. Cases arising from any violation of Article 264 of this Code,

including questions involving the legality of strikes and lockouts;

6. Except claims for Employees Compensation, Social Security,

Medicare and maternity benefits, all other claims, arising from
employer-employee relations, including those of persons in domestic
or household service, involving an amount exceeding five thousand
pesos (P5,000.00) regardless of whether accompanied with a claim
for reinstatement.

xxx xxx xxx

It will thus be noted that the jurisdiction conferred by law on a voluntary

arbitrator or a panel of such arbitrators is quite limited compared to the original
jurisdiction of the labor arbiter and the appellate jurisdiction of the National
Labor Relations Commission (NLRC) for that matter.4 The state of our present law
relating to voluntary arbitration provides that "(t)he award or decision of the
Voluntary Arbitrator . . . shall be final and executory after ten (10) calendar days
from receipt of the copy of the award or decision by the parties,"5 while the
"(d)ecision, awards, or orders of the Labor Arbiter are final and executory unless
appealed to the Commission by any or both parties within ten (10) calendar days
from receipt of such decisions, awards, or orders."6 Hence, while there is an
express mode of appeal from the decision of a labor arbiter, Republic Act No.
6715 is silent with respect to an appeal from the decision of a voluntary
arbitrator.

Yet, past practice shows that a decision or award of a voluntary arbitrator is, more
often than not, elevated to the Supreme Court itself on a petition
for certiorari,7 in effect equating the voluntary arbitrator with the NLRC or the
Court of Appeals. In the view of the Court, this is illogical and imposes an
unnecessary burden upon it.

In Volkschel Labor Union, et al. v. NLRC, et al.,8 on the settled premise that the
judgments of courts and awards of quasi-judicial agencies must become final at
some definite time, this Court ruled that the awards of voluntary arbitrators
determine the rights of parties; hence, their decisions have the same legal effect
as judgments of a court. In Oceanic Bic Division (FFW), et al. v. Romero, et al.,9 this
Court ruled that "a voluntary arbitrator by the nature of her functions acts in a
quasi-judicial capacity." Under these rulings, it follows that the voluntary
arbitrator, whether acting solely or in a panel, enjoys in law the status of a quasi-
judicial agency but independent of, and apart from, the NLRC since his decisions
are not appealable to the latter.10

Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides that the
Court of Appeals shall exercise:

xxx xxx xxx

(B) Exclusive appellate jurisdiction over all final judgments, decisions,

resolutions, orders or awards of Regional Trial Courts and quasi-
judicial agencies, instrumentalities, boards or commissions, including
the Securities and Exchange Commission, the Employees
Compensation Commission and the Civil Service Commission, except
those falling within the appellate jurisdiction of the Supreme Court in
accordance with the Constitution, the Labor Code of the Philippines
under Presidential Decree No. 442, as amended, the provisions of
 this Act, and of subparagraph (1) of the third paragraph and
subparagraph (4) of the fourth paragraph of Section 17 of the
Judiciary Act of 1948.

xxx xxx xxx

Assuming arguendo that the voluntary arbitrator or the panel of voluntary

arbitrators may not strictly be considered as a quasi-judicial agency, board or
commission, still both he and the panel are comprehended within the concept of
a "quasi-judicial instrumentality." It may even be stated that it was to meet the
very situation presented by the quasi-judicial functions of the voluntary
arbitrators here, as well as the subsequent arbitrator/arbitral tribunal operating
under the Construction Industry Arbitration Commission,11 that the broader term
"instrumentalities" was purposely included in the above-quoted provision.

An "instrumentality" is anything used as a means or agency.12 Thus, the terms

governmental "agency" or "instrumentality" are synonymous in the sense that
either of them is a means by which a government acts, or by which a certain
government act or function is performed.13 The word "instrumentality," with
respect to a state, contemplates an authority to which the state delegates
governmental power for the performance of a state function.14 An individual
person, like an administrator or executor, is a judicial instrumentality in the
settling of an estate,15 in the same manner that a sub-agent appointed by a
bankruptcy court is an instrumentality of the court,16and a trustee in bankruptcy
of a defunct corporation is an instrumentality of the state.17

The voluntary arbitrator no less performs a state function pursuant to a

governmental power delegated to him under the provisions therefor in the Labor
Code and he falls, therefore, within the contemplation of the term
"instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact that his functions
and powers are provided for in the Labor Code does not place him within the
exceptions to said Sec. 9 since he is a quasi-judicial instrumentality as
contemplated therein. It will be noted that, although the Employees
Compensation Commission is also provided for in the Labor Code, Circular No. 1-
91, which is the forerunner of the present Revised Administrative Circular No. 1-
95, laid down the procedure for the appealability of its decisions to the Court of
Appeals under the foregoing rationalization, and this was later adopted by
Republic Act No. 7902 in amending Sec. 9 of B.P. 129.
A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators
should likewise be appealable to the Court of Appeals, in line with the procedure
outlined in Revised Administrative Circular No. 1-95, just like those of the quasi-
judicial agencies, boards and commissions enumerated therein.

This would be in furtherance of, and consistent with, the original purpose of
Circular No. 1-91 to provide a uniform procedure for the appellate review of
adjudications of all quasi-judicial entities18 not expressly excepted from the
coverage of Sec. 9 of B.P. 129 by either the Constitution or another statute. Nor
will it run counter to the legislative intendment that decisions of the NLRC be
reviewable directly by the Supreme Court since, precisely, the cases within the
adjudicative competence of the voluntary arbitrator are excluded from the
jurisdiction of the NLRC or the labor arbiter.

In the same vein, it is worth mentioning that under Section 22 of Republic Act No.
876, also known as the Arbitration Law, arbitration is deemed a special
proceeding of which the court specified in the contract or submission, or if none
be specified, the Regional Trial Court for the province or city in which one of the
parties resides or is doing business, or in which the arbitration is held, shall have
jurisdiction. A party to the controversy may, at any time within one (1) month
after an award is made, apply to the court having jurisdiction for an order
confirming the award and the court must grant such order unless the award is
vacated, modified or corrected.19

In effect, this equates the award or decision of the voluntary arbitrator with that
of the regional trial court. Consequently, in a petition for certiorari from that
award or decision, the Court of Appeals must be deemed to have concurrent
jurisdiction with the Supreme Court. As a matter of policy, this Court shall
henceforth remand to the Court of Appeals petitions of this nature for proper
disposition.

ACCORDINGLY, the Court resolved to REFER this case to the Court of Appeals.

SO ORDERED.
G.R. No. 102976 October 25, 1995
IRON AND STEEL AUTHORITY, petitioner,
vs.
THE COURT OF APPEALS and MARIA CRISTINA FERTILIZER
CORPORATION, respondents.

FELICIANO, J.:

Petitioner Iron and Steel Authority ("ISA") was created by Presidential Decree
(P.D.) No. 272 dated 9 August 1973 in order, generally, to develop and promote
the iron and steel industry in the Philippines. The objectives of the ISA are spelled
out in the following terms:

Sec. 2. Objectives — The Authority shall have the following

objectives:

(a) to strengthen the iron and steel industry of the Philippines and to
expand the domestic and export markets for the products of the
industry;

(b) to promote the consolidation, integration and rationalization of

the industry in order to increase industry capability and viability to
service the domestic market and to compete in international
markets;

(c) to rationalize the marketing and distribution of steel products in

order to achieve a balance between demand and supply of iron and
steel products for the country and to ensure that industry prices and
profits are at levels that provide a fair balance between the interests
of investors, consumers suppliers, and the public at large;

(d) to promote full utilization of the existing capacity of the industry,

to discourage investment in excess capacity, and in coordination,
with appropriate government agencies to encourage capital
investment in priority areas of the industry;
 (e) to assist the industry in securing adequate and low-cost supplies
of raw materials and to reduce the excessive dependence of the
country on imports of iron and steel.

The list of powers and functions of the ISA included the following:

Sec. 4. Powers and Functions. — The authority shall have the

following powers and functions:

xxx xxx xxx

(j) to initiate expropriation of land required for basic iron and steel
facilities for subsequent resale and/or lease to the companies
involved if it is shown that such use of the State's power is necessary
to implement the construction of capacity which is needed for the
attainment of the objectives of the Authority;

xxx xxx xxx

(Emphasis supplied)

P.D. No. 272 initially created petitioner ISA for a term of five (5) years counting
from 9 August 1973.1 When ISA's original term expired on 10 October 1978, its
term was extended for another ten (10) years by Executive Order No. 555 dated
31 August 1979.

The National Steel Corporation ("NSC") then a wholly owned subsidiary of the
National Development Corporation which is itself an entity wholly owned by the
National Government, embarked on an expansion program embracing, among
other things, the construction of an integrated steel mill in Iligan City. The
construction of such a steel mill was considered a priority and major industrial
project of the Government. Pursuant to the expansion program of the NSC,
Proclamation No. 2239 was issued by the President of the Philippines on 16
November 1982 withdrawing from sale or settlement a large tract of public land
(totalling about 30.25 hectares in area) located in Iligan City, and reserving that
land for the use and immediate occupancy of NSC.

Since certain portions of the public land subject matter Proclamation No. 2239
were occupied by a non-operational chemical fertilizer plant and related facilities
owned by private respondent Maria Cristina Fertilizer Corporation ("MCFC"),
Letter of Instruction (LOI), No. 1277, also dated 16 November 1982, was issued
directing the NSC to "negotiate with the owners of MCFC, for and on behalf of the
Government, for the compensation of MCFC's present occupancy rights on the
subject land." LOI No. 1277 also directed that should NSC and private respondent
MCFC fail to reach an agreement within a period of sixty (60) days from the date
of LOI No. 1277, petitioner ISA was to exercise its power of eminent domain
under P.D. No. 272 and to initiate expropriation proceedings in respect of
occupancy rights of private respondent MCFC relating to the subject public land
as well as the plant itself and related facilities and to cede the same to the NSC.2

Negotiations between NSC and private respondent MCFC did fail. Accordingly, on
18 August 1983, petitioner ISA commenced eminent domain proceedings against
private respondent MCFC in the Regional Trial Court, Branch 1, of Iligan City,
praying that it (ISA) be places in possession of the property involved upon
depositing in court the amount of P1,760,789.69 representing ten percent (10%)
of the declared market values of that property. The Philippine National Bank, as
mortgagee of the plant facilities and improvements involved in the expropriation
proceedings, was also impleaded as party-defendant.

On 17 September 1983, a writ of possession was issued by the trial court in favor
of ISA. ISA in turn placed NSC in possession and control of the land occupied by
MCFC's fertilizer plant installation.

The case proceeded to trial. While the trial was ongoing, however, the statutory
existence of petitioner ISA expired on 11 August 1988. MCFC then filed a motion
to dismiss, contending that no valid judgment could be rendered against ISA
which had ceased to be a juridical person. Petitioner ISA filed its opposition to this
motion.

In an Order dated 9 November 1988, the trial court granted MCFC's motion to
dismiss and did dismiss the case. The dismissal was anchored on the provision of
the Rules of Court stating that "only natural or juridical persons or entities
authorized by law may be parties in a civil case."3 The trial court also referred to
non-compliance by petitioner ISA with the requirements of Section 16, Rule 3 of
the Rules of Court.4
Petitioner ISA moved for reconsideration of the trial court's Order, contending
that despite the expiration of its term, its juridical existence continued until the
winding up of its affairs could be completed. In the alternative, petitioner ISA
urged that the Republic of the Philippines, being the real party-in-interest, should
be allowed to be substituted for petitioner ISA. In this connection, ISA referred to
a letter from the Office of the President dated 28 September 1988 which
especially directed the Solicitor General to continue the expropriation case.

The trial court denied the motion for reconsideration, stating, among other things
that:

The property to be expropriated is not for public use or benefit [__]

but for the use and benefit [__] of NSC, a government controlled
private corporation engaged in private business and for profit,
specially now that the government, according to newspaper reports,
is offering for sale to the public its [shares of stock] in the National
Steel Corporation in line with the pronounced policy of the present
administration to disengage the government from its private
business ventures.5 (Brackets supplied)

Petitioner went on appeal to the Court of Appeals. In a Decision dated 8 October

1991, the Court of Appeals affirmed the order of dismissal of the trial court. The
Court of Appeals held that petitioner ISA, "a government regulatory agency
exercising sovereign functions," did not have the same rights as an ordinary
corporation and that the ISA, unlike corporations organized under the
Corporation Code, was not entitled to a period for winding up its affairs after
expiration of its legally mandated term, with the result that upon expiration of its
term on 11 August 1987, ISA was "abolished and [had] no more legal authority to
perform governmental functions." The Court of Appeals went on to say that the
action for expropriation could not prosper because the basis for the proceedings,
the ISA's exercise of its delegated authority to expropriate, had become
ineffective as a result of the delegate's dissolution, and could not be continued in
the name of Republic of the Philippines, represented by the Solicitor General:

It is our considered opinion that under the law, the complaint cannot
prosper, and therefore, has to be dismissed without prejudice to the
refiling of a new complaint for expropriation if the Congress sees it
fit." (Emphases supplied)
 At the same time, however, the Court of Appeals held that it was
premature for the trial court to have ruled that the expropriation suit was
not for a public purpose, considering that the parties had not yet rested
their respective cases.

In this Petition for Review, the Solicitor General argues that since ISA initiated and
prosecuted the action for expropriation in its capacity as agent of the Republic of
the Philippines, the Republic, as principal of ISA, is entitled to be substituted and
to be made a party-plaintiff after the agent ISA's term had expired.

Private respondent MCFC, upon the other hand, argues that the failure of
Congress to enact a law further extending the term of ISA after 11 August 1988
evinced a "clear legislative intent to terminate the juridical existence of ISA," and
that the authorization issued by the Office of the President to the Solicitor
General for continued prosecution of the expropriation suit could not prevail over
such negative intent. It is also contended that the exercise of the eminent domain
by ISA or the Republic is improper, since that power would be exercised "not on
behalf of the National Government but for the benefit of NSC."

The principal issue which we must address in this case is whether or not the
Republic of the Philippines is entitled to be substituted for ISA in view of the
expiration of ISA's term. As will be made clear below, this is really the only issue
which we must resolve at this time.

Rule 3, Section 1 of the Rules of Court specifies who may be parties to a civil
action:

Sec. 1. Who May Be Parties. — Only natural or juridical persons or

entities authorized by law may be parties in a civil action.

Under the above quoted provision, it will be seen that those who can be
parties to a civil action may be broadly categorized into two (2) groups:

(a) those who are recognized as persons under the law whether
natural, i.e., biological persons, on the one hand, or juridical person
such as corporations, on the other hand; and

(b) entities authorized by law to institute actions.

Examination of the statute which created petitioner ISA shows that ISA falls under
category (b) above. P.D. No. 272, as already noted, contains express authorization
to ISA to commence expropriation proceedings like those here involved:

Sec. 4. Powers and Functions. — The Authority shall have the

following powers and functions:

xxx xxx xxx

(j) to initiate expropriation of land required for basic iron and steel
facilities for subsequent resale and/or lease to the companies
involved if it is shown that such use of the State's power is necessary
to implement the construction of capacity which is needed for the
attainment of the objectives of the Authority;

xxx xxx xxx

(Emphasis supplied)

It should also be noted that the enabling statute of ISA expressly authorized
it to enter into certain kinds of contracts "for and in behalf of the
Government" in the following terms:

xxx xxx xxx

(i) to negotiate, and when necessary, to enter into contracts for and
in behalf of the government, for the bulk purchase of materials,
supplies or services for any sectors in the industry, and to maintain
inventories of such materials in order to insure a continuous and
adequate supply thereof and thereby reduce operating costs of such
sector;

xxx xxx xxx

(Emphasis supplied)

Clearly, ISA was vested with some of the powers or attributes normally associated
with juridical personality. There is, however, no provision in P.D. No. 272
recognizing ISA as possessing general or comprehensive juridical personality
separate and distinct from that of the Government. The ISA in fact appears to the
Court to be a non-incorporated agency or instrumentality of the Republic of the
Philippines, or more precisely of the Government of the Republic of the
Philippines. It is common knowledge that other agencies or instrumentalities of
the Government of the Republic are cast in corporate form, that is to say,
are incorporated agencies or instrumentalities, sometimes with and at other times
without capital stock, and accordingly vested with a juridical personality distinct
from the personality of the Republic. Among such incorporated agencies or
instrumentalities are: National Power Corporation;6 Philippine Ports
Authority;7 National Housing Authority;8 Philippine National Oil
Company;9 Philippine National Railways; 10 Public Estates Authority; 11 Philippine
Virginia Tobacco Administration,12 and so forth. It is worth noting that the term
"Authority" has been used to designate both incorporated and non-incorporated
agencies or instrumentalities of the Government.

We consider that the ISA is properly regarded as an agent or delegate of the

Republic of the Philippines. The Republic itself is a body corporate and juridical
person vested with the full panoply of powers and attributes which are
compendiously described as "legal personality." The relevant definitions are
found in the Administrative Code of 1987:

Sec. 2. General Terms Defined. — Unless the specific words of the

text, or the context as a whole, or a particular statute, require a
different meaning:

(1) Government of the Republic of the Philippines refers to

the corporate governmental entity through which the functions of
government are exercised throughout the Philippines, including, save
as the contrary appears from the context, the various arms through
which political authority is made effective in the Philippines, whether
pertaining to the autonomous regions, the provincial, city, municipal
or barangay subdivisions or other forms of local government.

xxx xxx xxx

(4) Agency of the Government refers to any of the various units of the
Government, including a department, bureau, office, instrumentality,
 or government-owned or controlled corporation, or a local
government or a distinct unit therein.

xxx xxx xxx

(10) 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.

xxx xxx xxx

(Emphases supplied)

When the statutory term of a non-incorporated agency expires, the powers,

duties and functions as well as the assets and liabilities of that agency revert back
to, and are re-assumed by, the Republic of the Philippines, in the absence of
special provisions of law specifying some other disposition thereof such as, e.g.,
devolution or transmission of such powers, duties, functions, etc. to some other
identified successor agency or instrumentality of the Republic of the Philippines.
When the expiring agency is an incorporated one, the consequences of such
expiry must be looked for, in the first instance, in the charter of that agency and,
by way of supplementation, in the provisions of the Corporation Code. Since, in
the instant case, ISA is a non-incorporated agency or instrumentality of the
Republic, its powers, duties, functions, assets and liabilities are properly regarded
as folded back into the Government of the Republic of the Philippines and hence
assumed once again by the Republic, no special statutory provision having been
shown to have mandated succession thereto by some other entity or agency of
the Republic.

The procedural implications of the relationship between an agent or delegate of

the Republic of the Philippines and the Republic itself are, at least in part, spelled
out in the Rules of Court. The general rule is, of course, that an action must be
prosecuted and defended in the name of the real party in interest. (Rule 3,
Section 2) Petitioner ISA was, at the commencement of the expropriation
proceedings, a real party in interest, having been explicitly authorized by its
enabling statute to institute expropriation proceedings. The Rules of Court at the
same time expressly recognize the role of representative parties:

Sec. 3. Representative Parties. — A trustee of an expressed trust, a

guardian, an executor or administrator, or a party authorized by
statute may sue or be sued without joining the party for whose
benefit the action is presented or defended; but the court may, at any
stage of the proceedings, order such beneficiary to be made a party. .
. . . (Emphasis supplied)

In the instant case, ISA instituted the expropriation proceedings in its capacity as
an agent or delegate or representative of the Republic of the Philippines pursuant
to its authority under P.D. No. 272. The present expropriation suit was brought on
behalf of and for the benefit of the Republic as the principal of ISA. Paragraph 7 of
the complaint stated:

7. The Government, thru the plaintiff ISA, urgently needs the subject
parcels of land for the construction and installation of iron and steel
manufacturing facilities that are indispensable to the integration of
the iron and steel making industry which is vital to the promotion of
public interest and welfare. (Emphasis supplied)

The principal or the real party in interest is thus the Republic of the
Philippines and not the National Steel Corporation, even though the latter
may be an ultimate user of the properties involved should the
condemnation suit be eventually successful.

From the foregoing premises, it follows that the Republic of the Philippines is
entitled to be substituted in the expropriation proceedings as party-plaintiff in
lieu of ISA, the statutory term of ISA having expired. Put a little differently, the
expiration of ISA's statutory term did not by itself require or justify the dismissal
of the eminent domain proceedings.

It is also relevant to note that the non-joinder of the Republic which occurred
upon the expiration of ISA's statutory term, was not a ground for dismissal of such
proceedings since a party may be dropped or added by order of the court, on
motion of any party or on the court's own initiative at any stage of the action and
on such terms as are just. 13 In the instant case, the Republic has precisely moved
to take over the proceedings as party-plaintiff.
In E.B. Marcha Transport Company, Inc. v. Intermediate Appellate Court, 14 the
Court recognized that the Republic may initiate or participate in actions involving
its agents. There the Republic of the Philippines was held to be a proper party to
sue for recovery of possession of property although the "real" or registered
owner of the property was the Philippine Ports Authority, a government agency
vested with a separate juridical personality. The Court said:

It can be said that in suing for the recovery of the rentals, the
Republic of the Philippines acted as principal of the Philippine Ports
Authority, directly exercising the commission it had earlier conferred
on the latter as its agent. . . .15 (Emphasis supplied)

In E.B. Marcha, the Court also stressed that to require the Republic to
commence all over again another proceeding, as the trial court and Court of
Appeals had required, was to generate unwarranted delay and create
needless repetition of proceedings:

More importantly, as we see it, dismissing the complaint on the

ground that the Republic of the Philippines is not the proper party
would result in needless delay in the settlement of this matter and
also in derogation of the policy against multiplicity of suits. Such a
decision would require the Philippine Ports Authority to refile the
very same complaint already proved by the Republic of the
Philippines and bring back as it were to square one.16 (Emphasis
supplied)

As noted earlier, the Court of Appeals declined to permit the substitution of the
Republic of the Philippines for the ISA upon the ground that the action for
expropriation could not prosper because the basis for the proceedings, the ISA's
exercise of its delegated authority to expropriate, had become legally ineffective
by reason of the expiration of the statutory term of the agent or delegated i.e.,
ISA. Since, as we have held above, the powers and functions of ISA have reverted
to the Republic of the Philippines upon the termination of the statutory term of
ISA, the question should be addressed whether fresh legislative authority is
necessary before the Republic of the Philippines may continue the expropriation
proceedings initiated by its own delegate or agent.
While the power of eminent domain is, in principle, vested primarily in the
legislative department of the government, we believe and so hold that no new
legislative act is necessary should the Republic decide, upon being substituted for
ISA, in fact to continue to prosecute the expropriation proceedings. For the
legislative authority, a long time ago, enacted a continuing or standing delegation
of authority to the President of the Philippines to exercise, or cause the exercise
of, the power of eminent domain on behalf of the Government of the Republic of
the Philippines. The 1917 Revised Administrative Code, which was in effect at the
time of the commencement of the present expropriation proceedings before the
Iligan Regional Trial Court, provided that:

Sec. 64. Particular powers and duties of the President of the

Philippines. — In addition to his general supervisory authority, the
President of the Philippines shall have such other specific powers and
duties as are expressly conferred or imposed on him by law, and also,
in particular, the powers and duties set forth in this Chapter.

Among such special powers and duties shall be:

xxx xxx xxx

(h) To determine when it is necessary or advantageous to exercise

the right of eminent domain in behalf of the Government of the
Philippines; and to direct the Secretary of Justice, where such act is
deemed advisable, to cause the condemnation proceedings to be
begun in the court having proper jurisdiction. (Emphasis supplied)

The Revised Administrative Code of 1987 currently in force has

substantially reproduced the foregoing provision in the following terms:

Sec. 12. Power of eminent domain. — The President shall determine

when it is necessary or advantageous to exercise the power of
eminent domain in behalf of the National Government, and direct the
Solicitor General, whenever he deems the action advisable, to
institute expopriation proceedings in the proper court. (Emphasis
supplied)

In the present case, the President, exercising the power duly delegated
under both the 1917 and 1987 Revised Administrative Codes in effect made
 a determination that it was necessary and advantageous to exercise the
power of eminent domain in behalf of the Government of the Republic and
accordingly directed the Solicitor General to proceed with the suit. 17

It is argued by private respondent MCFC that, because Congress after becoming

once more the depository of primary legislative power, had not enacted a statute
extending the term of ISA, such non-enactment must be deemed a manifestation
of a legislative design to discontinue or abort the present expropriation suit. We
find this argument much too speculative; it rests too much upon simple silence on
the part of Congress and casually disregards the existence of Section 12 of the
1987 Administrative Code already quoted above.

Other contentions are made by private respondent MCFC, such as, that the
constitutional requirement of "public use" or "public purpose" is not present in
the instant case, and that the indispensable element of just compensation is also
absent. We agree with the Court of Appeals in this connection that these
contentions, which were adopted and set out by the Regional Trial Court in its
order of dismissal, are premature and are appropriately addressed in the
proceedings before the trial court. Those proceedings have yet to produce a
decision on the merits, since trial was still on going at the time the Regional Trial
Court precipitously dismissed the expropriation proceedings. Moreover, as a
pragmatic matter, the Republic is, by such substitution as party-plaintiff, accorded
an opportunity to determine whether or not, or to what extent, the proceedings
should be continued in view of all the subsequent developments in the iron and
steel sector of the country including, though not limited to, the partial
privatization of the NSC.

WHEREFORE, for all the foregoing, the Decision of the Court of Appeals dated 8
October 1991 to the extent that it affirmed the trial court's order dismissing the
expropriation proceedings, is hereby REVERSED and SET ASIDE and the case is
REMANDED to the court a quo which shall allow the substitution of the Republic
of the Philippines for petitioner Iron and Steel Authority and for further
proceedings consistent with this Decision. No pronouncement as to costs.

SO ORDERED.

G.R. No. 90482 August 5, 1991

REPUBLIC OF THE PHILIPPINES, acting through the SUGAR REGULATORY
ADMINISTRATION, and REPUBLIC PLANTERS BANK, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, 15th Division, THE HONORABLE
CORONA IBAY-SOMERA, in her official capacity as Presiding Judge of the
Regional Trial Court, National Capital Region, Branch 26, Manila, JORGE C.
VICTORINO and JAIME K. DEL ROSARIO, in their official capacities as RTC
Deputy Sheriffs of Manila, ROGER Z. REYES, ERNESTO L. TREYES, JR., and
EUTIQUIO M. FUDOLIN, respondents.
Enrique V. Olmedo for Independent Sugar Farmers, Inc.
Reyes, Treyes & Fudolin Law Firm for respondents.

DAVIDE, JR., J.:

This is an appeal by certiorari under Rule 45 of the Revised Rules of Court, with
prayer for a temporary restraining order or writ of preliminary injunction, filed on
25 October 1989 by the Office of the Government Corporate Counsel (OGCC) in
behalf of the Republic of the Philippines "acting through the Sugar Regulatory
Administration" (SRA) and the Republic Planters Bank (RPB) seeking the review of
the 13 October 1989 Decision of the Court of Appeals (15th Division) in CAGR No.
17188.

The assailed decision1 dismissed the petition for certiorari filed by Petitioners
against herein public respondents Judge and deputy sheriffs and private
respondents for the nullification of the Orders of respondent Judge of 13 March
1989, 21 March 1989 and 27 March 1989 in Civil Case No. 86-35880 of Branch 26
of the Regional Trial Court of Manila on the following grounds: (a) the funds upon
which the attorney's fees are sought to be executed now belong to the Republic
of the Philippines due to legal subrogation, (b) execution is not proper against the
Republic which is not a party to the case, (c) the issuance of a writ of execution
would violate the Constitution since according to it no money shall be paid out of
the treasury except in pursuance to an appropriations made by law, and (d)
execution for attomey's fees is unwarranted.
Respondent Court of Appeals dismissed the petition for lack of merit principally
because

(a) Under the compromise agreement petitioner (RPB) accepted the

designation/appointment as Trustee whose obligation is to pay; it received
benefits by way of trustee's fees; it may not question the right of private
respondents to attorney's fees;

(b) Petitioner (SRA) may not lawfully bring an action on behalf of the Republic of
the Philippines since under Section 13 of Executive Order No. 18 dated 28 May
1986, which created it, it simply was to take over the functions of the defunct
PHILSUCOM; however, the latter was to remain a judicial entity for three more
years for the purpose of prosecuting and defending suits against it; hence it is
PHILSUCOM, being a party to the compromise agreement, which may properly
contest the right of private respondents to attomey's fees;

(c) The petition should have been filed through the Office of the Solicitor General
OSG and not through the (OGCC); neither the latter nor the (SRA) may lawfully
represent the Government of the Philippines in any suit or proceeding such as the
present petition for administrative agencies may only perform such powers and
functions as may be authorized by the laws which created or gave them
existence; and

(d) The respondent judge did not commit any error of jurisdiction in issuing the
questioned orders; hence, the remedy should be appeal.

The facts which gave rise to said petition are summarized by the Court of Appeals
as follows:

On May 16,1986, Republic Planters Bank (hereafter referred to as RPB),

Zosimo Maravilla, Rosendo de la Rama, Bibiano Sabino, Roberto
Mascufiana and Ernesto Kramer "for themselves and in representation of
other sugar producers" filed a Complaint with the respondent court, RTC
Branch 26, docketed as C.C. 86-35880 "For Sum of Money and/or Delivery
of Personal Property with Restraining Order and/or Preliminary Injunction"
against the Philippine Sugar Commission (PHILSUCOM) and the National
Sugar Trading Corporation (NASUTRA) with the prayer:
WHEREFORE PREMISES CONSIDERED, it is respectfully prayed of this
Honorable Court that, after due hearing and trial, judgment be
rendered in favor of Plaintiffs and against Defendants ordering them
to do the following:

1. To render a correct and faithful account of whatever amount of

United States dollar accounts/deposits in different banks, domestic
and foreign, being held in agents and/or representatives.

2. To render a correct and faithful inventory of all the physical sugar

stocks for crop year 1984-85 presently remaining in the warehouses
of the different sugar mills all over the country.

3. To deliver or remit to the Plaintiffs any and all United States dollar
accounts/deposits in various banks, domestic or foreign, held in the
name of Defendants, their subsidiaries, conducts (sic), agents and/or
representatives.

4. To deliver the entire remaining physical sugar stocks

corresponding to crop year 1984-85 presently remaining in the
warehouses of the different sugar mills all over the country in favor
of Plaintiffs who were unlawfully deprived of their possession and
control by Defendants, to be applied and deducted from Defendant's
liability to Plaintiffs for the unaccounted sugar for crop year 1984-85.

5. To jointly and severally pay Plaintiffs-Producers all interests and

penalties imposed by Assignee-banks/creditors for accounts covered
by unpaid sugar quedans for crop year 1984-85.

6. To jointly and severally pay Plaintiffs claims for moral,

compensatory and exemplary damages in such accounts to be
determined in the course of the trial.

7. To jointly and severally pay for the attorney's fees of twenty

percent (20%) based on the total amount that may be recovered.

8. To jointly and severally pay for the costs and litigation expenses
incurred by the Plaintiffs.
Plaintiffs likewise pray that, in order to prevent grave and irreparable
injury, this Honorable Court shall issue a writ of preliminary injunction
enjoining and/or prohibiting the Defendants, their officers and/or agents
from transferring, releasing or in any manner disposing of all U.S. dollar
deposits/accounts held in the name of Defendants, its subsidiaries,
conduits agents and/or representatives in the different banks, domestic
and foreign, including the physical sugar corresponding to crop year 1984-
85 presently remaining in the warehouses of the different sugar mills all
over the country after requiring the Plaintiffs to post a bond that may be
determined by the Honorable Court to answer for the damages in the event
judgment will be rendered in Defendant's favor. Furthermore, Plaintiffs
pray that a Restraining Order be immediately issued for the purpose of
enjoining the Defendants from committing and/or proceeding with the
foregoing acts, pending hearing of the application for a writ of preliminary
injunction.

Plaintiffs further pray for such other reliefs and remedies, just and
equitable under the premises.

Before PHILSUCOM and NASUTRA could answer, a Compromise Agreement

dated May 23, 1986 was submitted by the parties which the lower court
approved and based on it, the Judgment dated June 2,1986 (Annex "B",
Petition, Id., pp. 22-36) was issued. A motion for the issuance of writ of
execution was filed (Annex "C", Petition, Id., pp, 37-50). PHILSUCOM and
NASUTRA filed their "Comment and Opposition (To Motion for Issuance of
Writ of Execution)" (Annex D Petition, Id., pp. 51- 62). A Reply was filed by
the plaintiffs (Annex "E", Id., pp. 63- 72) and a Rejoinder was also filed by
the defendants (Annex "E", Petition, Id., pp. 73-78). The lower court issued
the Order dated March 13, 1989 which dismissed the separate petitions for
relief from judgment filed by Franklin Fuentebella, George Lacson,
Fernando Ballesteros, and Antonio Lopez in one petition; Romeo Guanzon
as sugar producer and president of National Federation of Sugar Cane
Planters; PASSI (Iloilo) Sugar Central, Inc., represented by Romeo
Villavicencio; the Independent Sugar Planters represented by Corazon
Sagimalet (In a Motion for Intervention which substituted as a Petition for
Relief from Judgment); and Zosimo Maravilla, Rosendo dela Rama and
Bibiano Sabino (Annex "G", Petition, Id., pp. 79-98). This Order dated March
 13, 1989 (which as aforesaid, dismissed the petitions for relief from
judgment) is the first of the orders now being assailed.

On March 21, 1989, the lower court issued the second of the assailed
orders which granted a second motion to resolve a pending motion for
issuance of a writ of execution and allowed the issuance of an alias writ of
execution in words, thus:

Let an alias writ of execution be issued for the final implementation

of the Judgment on Compromise Agreement, dated June 2, 1986, the
only remaining provision of said judgment is the 10% attorney's fees
of counsels for the plaintiffs (Paragraph 12 sub-section Annex "H",
Petition, Id., pp. 99-100).

Correspondingly, on that same date March 21, 1989, RTC Mala Deputy
Sheriff Jaime K. del Rosario issued a "Notice of Delivery of Money" asking
the RPB to "pay in cash the 10% of P45,293,552.60 to Attys. Roger Reyes,
Ernesto Treyes, Jr. and Eutiquio Fudolin, Jr. ... immediately upon receipt of
this notice" (Annex "I", Petition, Id., p. 101).

And on March 27, 1989, the third of the questioned orders was issued by
the lower court, in response to the "Ex-Parte Motion to Require Officers of
Trustee Republic Planters Bank to Deliver Amount Subject of Alias Writ of
Execution", requiring the officers of the RPB named therein to "appear
before the Court on March 29,1989 at 10:30 in the morning to explain why
they should not be cited for contempt of court for defying ... the alias writ
of execution." (Annex "J", Petition, Id. pp. 102-103).

The instant petition was filed in this court on March 29, 1989, ...

Parenthetically, it may also be added that, as stated in paragraph 15 of the instant

petition, the producers and producer organizations who filed various petitions for
relief from the judgment based on the compromise agreement have appealed to
the Court of Appeals the Order of 13 March 1989 denying their petitions.2

In the instant petition petitioners limit their grounds to only two errors allegedly
committed by respondent Court of Appeals, namely: (a) it erred in holding that
neither the OGCC nor the SRA can represent the Government of the Philippines in
the action before it and (b) it deviated from the decision of the Ninth Division of
said court in CAGR SP No. 11046 (Kramer, et al. vs. Hon. Doroteo, Cañeba, et al.
promulgated on 16 March 1987), which declared that there was no valid class suit
and the controversial compromise agreement did not extend to the 40,000
unnamed sugar producers.3

In the resolution of 26 October 1989 We required respondents to comment on

the petition and issued a temporary restraining order directing respondent Judge
to desist and refrain from further proceeding in Civil Case No. 86-35880, entitled
Republic Planters Bank, et al. vs. Philippine Sugar Commission, et al.4

On 23 November 1989 petitioners filed a manifestation informing this Court that

at 9:30 a.m. on 26 October 1989, private respondents, accompanied by
respondents sheriff and a squad of police Special Action Force, swooped upon
RPB's Bacolod Branch and divested a teller of money from her booth allegedly
because the branch manager had instructed the bank personnel to close the bank
vault while the enforcement of the court order was being verified - with the head
office in Manila; the amount taken was P179,955.31; these acts were allegedly
done by virtue of, among others, the orders dated October 24 and 25, 1989 of
respondent judge ordering the implementation of an alias Writ of Execution
dated 21 March 1989 and the Writ of Execution dated 21 March 1986; and
claiming that what was enforced was an expired writ.5

In Our resolution of 5 December 1989 respondents were required to comment on

this manifestation.6

After motions for extension of time to file their Comments on the petition,
separately filed by the private respondents and the Solicitor General for the
public respondents, were granted, the former ultimately filed their Comment on
20 December 1989.7 The Solicitor General filed his Comment on 4 January 1990.8

In his Comment the Solicitor General maintains that the SRA has no legal
personality to file the instant petition in the name of the Republic of the
Philippines for under its charter, Executive Order No. 18, the SRA is not vested
with legal capacity to sue. He further argues that the SRA was not a party to the
court-approved compromise agreement in Civil Case No. 8635880 which provided
for the questioned 10% attorney's fees; PHILSUCOM and NASUTRA, which were
parties thereto, did not file any action to annul the compromise agreement; that
while Executive Order No. 18 abolished the PHILSUCOM, the latter's juridical
personality was to continue for three (3) years, during which period it may
prosecute and defend suits against it; and that, finally, even if SRA has the
capacity to sue, it cannot still bring any action on behalf of the Republic of the
Philippines as this can be done only by the Office of the Solicitor General per
Section 1 of P.D. No. 478.

The Solicitor General likewise stresses that the interest of the national
government in this case is confined only to the amount remaining in RPB subject
to legal subrogation; the judgment on the compromise agreement had long
become final and executory; and that no reversible error was committed by
respondent judge and respondent Court of Appeals.

Private respondents assert that the SRA and RPB do not have the legal authority
to sue for and in behalf of the Republic of the Philippines. In respect to the
former, their conclusion is supported by almost the same arguments as that
asserted by the Solicitor General. As regards the RPB, they maintain that it "is a
government-controlled corporation engaged in the banking business with
corporate powers vested in a Board of Directors," hence, it is "legally untenable
for such a banking institution, even assuming that it is government-controlled, to
initiate suits for and in behalf of the Republic of the Philippines." p.171, Rollo).
They further argued that petitioners have no legal personality to initiate the
instant petition for (a) SRA is not a party in the case before the trial court; the
only reason why it became involved was because of the contempt proceedings
initiated by private respondents against SRA's Arsenio Yulo, Carlos Ledesma and
Bibiano Sabino for issuing Sugar Orders No. 9 and 14; and that neither can it be
presumed that SRA had substituted defendants PHILSUCOM and the NASUTRA in
the case as both continue to legally exist for the purpose of prosecuting and
defending suits in liquidation of its affairs; both did not file any petition for relief
from judgment questioning the validity of the judgment of the trial court
approving the compromise agreement; and that, moreover, RPB was a signatory
to the Compromise Agreement as a Trustee and, as such, it regarded itself as only
a nominal party and in a series of pleadings it recognized the final and executory
nature of the decision approving the compromise agreement.

As to the second assigned error, private respondents pointed out that the Ninth
Division of the Court of Appeals did not rule in C.A.-G.R. No. 11046 that Civil Case
No. 86-35880 before the trial court was not a class suit, and whether or not it was
a class suit was not an issue therein.
On 15 January 1990 petitioners filed a motion for leave to file consolidated reply,
which We granted in the resolution of 18 January 1990.9

On 18 January 1990 petitioners filed a Manifestation and Motion10 "wherein they

informed the Court that despite the temporary restraining order issued on 26
October 1989, respondent Judge, to whom the Order was addressed, continued
to hear the case, particularly on the whereabouts of 177,087.14 piculs of sugar for
the crop year 1984-1985 allegedly stored in the different warehouses throughout
the country".

In the resolution of 30 January 199011 We required respondent judge to show

cause why no disciplinary action should be taken against her for failure to comply
with the resolution of 26 October 1989 ordering her to refrain from further
proceeding with Civil Case No. 86-35880 and to answer why she should not be
cited for contempt of court for such failure, within ten (10) days from notice.

On 8 March 1990 petitioners filed their Consolidated Reply to the Comment with
Motion to Dismiss filed by private respondents and the Comment of the Solicitor
General.12

On 5 April 1990 private respondents filed a Rejoinder to the Consolidated Reply.13

On 16 April 1990 respondent judge, through the OSG, filed her Compliance as
required by the Resolution of 30 January 1990.14 She claims that she did not defy
the temporary restraining order issued by this Court on 26 October 1989 because
the petitioners sought for the issuance of the temporary restraining order to stop
the enforcement of the decision of the respondent Court of Appeals in CA GR No.
17188 dated October 13, 1989; hence, the temporary restraining order that this
Court issued "actually orders herein respondent judge to desist from enforcing
the Decision of the respondent Court of Appeals in CAGR No. 17188 which is the
subject of the instant petition for review". Consequently, she stresses, her 15
December 1989 order was not issued in defiance of the restraining resolution;
said order pertains exclusively to the whereabouts of the 177,087.14 piculs of
physical sugar for the crop year 1984-1985 and did not in any way attempt to
enforce the questioned decisions of the court a quo and the Court of Appeals to
the prejudice of petitioner's right to appeal.

In Our resolution of 15 May 199015 We resolved to consider the comments of

respondents as Answers to the petition, give due course to the petition, require
the parties to submit their respective memoranda within thirty days from notice,
and to note the compliance of respondent judge.

Petitioners filed their memorandum on 28 June 1990.16 Private respondents sent

theirs by registered mail on 22 August 1990 which this Court actually received on
8 September 1990.17 We shall now take up the assigned errors.

I.

The Court of Appeals correctly ruled that petitioner Sugar Regulatory

Administration may not lawfully bring an action on behalf of the Republic of the
Philippines and that the Office of the Government Corporate Counsel does not
have the authority to represent said petitioner in this case.

Executive Order No. 18, enacted on 28 May 1986 and which took effect
immediately, abolished the Philippine Sugar Commission (PHILSUCOM) and
created the Sugar Regulatory Administration (SRA) which shall be under the Office
of the President. However, under the third paragraph of Section 13 thereof, the
PHILSUCOM was allowed to continue as a juridical entity for three (3) years for
the purpose of prosecuting and defending suits by or against it and enabling it to
settle and close its affairs, to dispose of and convey its property and to distribute
its assets, but not for the purpose of continuing the functions for which it was
established, under the supervision of the SRA.

Section 3 of said Executive Order enumerates the powers and functions of the
SRA; but it does not specifically include the power to represent the Republic of
the Philippines in suits filed by or against it, nor the power to sue and be sued
although it has the power to "enter, make and execute routinary contracts as may
be necessary for or incidental to the attainment of its purposes between any
persons, firms, public or private, and the Government of the Philippines" and "[t]o
do all such other things, transact such other businesses and perform such
functions directly or indirectly incidental or conducive to the attainment of the
purposes of the Sugar Regulatory Administration."18

Section 4 thereof provides for the governing board of the Administration, known
as the Sugar Board, which shall exercise "[a]ll the corporate powers" of the SRA.
Its specific functions are enumerated in Section 6; however, the enumeration
does not include the power to represent the Republic of the Philippines, although
among such functions is "[t]o enter into contracts, transactions, or undertakings
of whatever nature which are necessary or incidental to its functions and
objectives with any natural or juridical persons and with any foreign government
institutions, private corporations, partnership or private individuals.19

It is apparent that its charter does not grant the SRA the power to represent the
Republic of the Philippines in suits filed by or against the latter.

It is a fundamental rule that an administrative agency has only such powers as are
expressly granted to it by law and those that are necessarily implied in the
exercise thereof. (Guerzon vs Court of Appeals, et al., 77707, August 8, 1988, 164
SCRA 182,189, citing Makati Stock Exchange, Inc. vs. SEC, 14 SCRA 620, and Sy vs.
Central Bank, 70 SCRA 570.)20

The SRA no doubt, is an administrative agency or body. An administrative agency

is defined as "[a] government body charged with administering and implementing
particular legislation. Examples are workers' compensation commissions ... and
the like. ... The term 'agency' includes any department, independent
establishment, commission, administration, authority board or bureau ...21

The power to represent the Republic of the Philippines in any suit by or against it
having been withheld from SRA, it following that the latter cannot institute the
instant petition and the petition in C.A.-G.R. No. 17188 on behalf of the Republic
of the Philippines.

This conclusion does not, however, mean that the SRA cannot sued and be sued.
This power can be implied from its powers to make and execute routinary
contracts as may be necessary for or incidental to the attainment of its purposes
between any persons, firms public or private, and the Government of the
Philippines and to do all such other things, transact such other businesses and
perform such other functions directly or indirectly incidental or conducive to the
attainment of the purposes of the SRA and the powers of its governing board to
enter into contracts, transactions, or undertaking of whatever nature which are
necessary or incidental to its functions and objectives with any natural or juridical
persons and with any foreign government institutions, private corporations,
partnership or private individuals.

The Court of Appeals also correctly ruled that the OGCC can represent neither the
SRA nor the Republic of the Philippines. We do not, however, share the view
that only the Office of the Solicitor General can represent the SRA.
The entry of appearance by the OGCC for the SRA was precipitated by the sudden
turn-about of the Office of the Solicitor General. Records show that the OSG
eventually represented the PHILSUCOM, NASUTRA and SRA in the trial court.
However, on 29 January 1988 it filed a Manifestation dated January 27, 1988
informing the court that its appearance in the case "is limited to the issues
relating only to the contempt proceedings against the public respondents and is
not concerned with the other issues raised by various parties in their petitions for
relief".22 By reason thereof, the Chairman/Administrator of SRA, Mr. Arsenio Yulo,
Jr., sent a letter23 dated 6 April 1988 to the Solicitor General, informing him that
since the appearance of the OSG is limited and that it has taken a different
position, SRA's only alternative is to seek another representative and that much
to its regret, it is constrained to terminate OSG's services. He further informed the
Solicitor General that the case is being indorsed to the Office of the Government
Corporate Counsel for appropriate legal action pursuant to P.D. No. 478. There is,
however, no showing that the OSG withdrew its appearance for PHILSUCOM,
NASUTRA or the SRA in the trial court. On the contrary, per its Manifestation
dated 8 February 1990, and filed with this Court on 12 February 1990,24 it "has
retained its appearance" "on behalf of the Republic of the Philippines to recover
whatever amount may be owing to the National Treasury by virtue of legal
subrogation."

Also on April 6,1988, SRA sent a letter25 to OGCC to engage its legal services to
represent SRA as successor agency of the PHILSUCOM in the case pending before
the trial court.

The OGCC, availing of P.D. No. 1415, the law creating it, particularly Section 1
which, as quoted by it on page 16 of the Petition,26 reads:

SECTION 1. The Office of the Government Corporate Counsel shall be the

principal law office of all government-owned and controlled corporations,
including their subsidiaries except as may otherwise be provided by their
respective charters or authorized by the President (Emphasis supplied).

sent a letter to the Office of the President, "in essence, requesting for authority
for OGCC to represent SRA in the case before the trial court," This was favorably
acted by Executive Secretary Catalino Macaraig, Jr.27
Indeed, under Section 35, Chapter 12, Title III of Book IV of the Administrative
Code of 1987 (Executive Order No. 292) the Solicitor General is the lawyer of the
government, its agencies and instrumentalities, and its officials or agents. Said
Section reads as follows:

SECTION 35. Functions and Organization. — The Office of the Solicitor

General shall represent the Government of the Philippines, its agencies and
instrumentalities and its officials and agents in any litigation, proceeding,
investigation or matter requiring the services of lawyers. When authorized
by the President or head of the office concerned, it shall also represent
government-owned and controlled corporations. The Office of the Solicitor
General shall constitute the law office of the Government and, as such,
shall discharge duties requiring the services of lawyers. ... .

This is similar to subsection (1) of Section 1 of P.D. No. 478.

In Republic, et al. vs. Partisala et al. (G.R. No. 61997, 15 November 1982, 118
SCRA 370, 373), We ruled that only the Solicitor General can bring or defend
actions on behalf of the Republic of the Philippines and that, henceforth, actions
filed in the name of the Republic if not initiated by the Solicitor General will be
summarily dismissed.

However, in Secretary Oscar Orbos vs. Civil Service Commission, et al., G.R. No.
92561, 12 September 1990,28 We stated:

In the discharge of this task, the Solicitor General must see to it that the
best interest of the government is upheld within the limits set by law.
When confronted with a situation where one government office takes an
adverse position against another government agency, as in this case, the
Solicitor General should not refrain from performing his duty as the lawyer
of the government. It is incumbent upon him to present to the court what
he considers should legally uphold the best interest of the government
although it may run counter to a client's position. In such an instance the
government office adversely affected by the position taken by the Solicitor
General, if it still believes in the merit of its case, may appear in its own
behalf through its legal personnel or representative.
Consequently, the SRA need not be represented by the Office of the Solicitor
General. It may appear in its own behalf through its legal personnel or
representative.

The question that logically crops up then is: May it be represented by the OGCC?
Respondents hold the negative view. Petitioners maintain otherwise, for the
reason that pursuant to Section 1 of the charter of the OGCC (P.D. No. 1415), as
they quoted, the Office of the President, through the Executive Secretary, has
authorized it to represent the SRA. The specific basis for such authority is the
alleged portion of the exceptionary clause therein, reading "... or authorized by
the President."

The words or authorized by the President are not found in the law. We are not
aware of any law, decree or executive order which amended Section 1 of P.D. No.
1415 by inserting therein said words. Besides, even granting for the sake of
argument that such words are written into the law, such exception cannot confer
upon the OGCC authority to represent the SRA. The exception simply means that
although the OGCC is the principal law office of all government-owned and
controlled corporations including their subsidiaries, the President may not allow it
to act as lawyer for a specified government-owned or controlled corporation or a
subsidiary thereof. It will be noted that under Section 1 of P.D. No. 478 the
President may authorize the OSG to represent government-owned or controlled
corporations. In short, the exception limits, rather than expands, the authority of
the OGCC. Thus, the so-called approval by the Executive Secretary of the request
of OGCC to represent the SRA is based on an erroneous interpretation of the law.

In any case, even if we grant that there was such an exception, as well construed
in the manner urged by petitioners, it must be deemed, nevertheless, to have
been repealed by the Administrative Code of 1987. Section 10, Chapter 3, Title III,
Book IV thereof on the Office of the Government Corporate counsel does not
contain the purported exception. It reads:

SECTION 10. Office of the Government Corporate Counsel. —The Office of

the Government Corporate Counsel (OGCC) shall act as the principal law
office of all government-owned or controlled corporations, their
subsidiaries, other corporate offsprings and government acquired asset
corporations and shall exercise control and supervision over all legal
departments or divisions maintained separately and such powers and
 functions as are now or may hereafter be provided by law. In the exercise
of such control or suspension, the Government Corporate Counsel shall
promulgate rules and regulations to effectively implement the objectives of
the Office. ...

Since the SRA is neither a government-owned or controlled corporation nor a

subsidiary thereof, OGCC does not have the authority to represent it. As to who
may represent it, the Orbos case29 provides the answer.

The case of the RPB is, however, different. It is admitted to be a government-

owned corporation. The OGCC can, therefore, legally represent RPB in actions
filed by or against it. Unfortunately, this issue was not categorically and expressly
addressed by the Court of Appeals and has not been raised in the petition.
Anyway, even if We have to rule that OGCC's appearance for the RPB in the
petition before the Court of Appeals in CAGR No. 17188 was proper, the result
would be the same dismissal of the petition. As also correctly pointed out by the
Court of Appeals, having received benefits by way of trustee's fees, the RPB may
not question the right of private respondents to attorney's fees; its only obligation
under the judgment based on compromise was to pay the attorney's fees from
out of the funds it held in trust.

II.

The second assigned error is without merit. Petitioners have misread the decision
of the Court of Appeals in CAGR SP No. 11046 (Ernesto Kramer, et al. vs. Hon.
Doroteo Caneba et al. promulgated on 16 March 1987).30 The case was a petition
for certiorari and mandamus with a prayer for preliminary injunction wherein
petitioners principally prayed the Court to declare null and void the order of
respondent judge of 16 December 1986 and to order him to issue the writ of
execution of the judgment of 2 June 1986, require respondent NASUTRA to
account and turn over to petitioners any and all sales proceeds of 1984-1985
sugar from 2 June 1986 up to the present in favor of respondent Trustee Bank
RPB for proper distribution to petitioners, issue an order requiring respondent
Trustee Bank to distribute without delay all the sales proceeds of the 1984-1985
sugar in its possession in accordance with the judgment of respondent court, and
issue a restraining order/preliminary injunction enjoining the SRA, its
agents/representatives from implementing Sugar Order No. 9 dated 25
September 1986. Although in the body of the opinion a discussion was made on
the matter of the sufficiency of representation to make Civil Case No. 86-35880 a
class suit, the resolution of the petition was not in any way based thereon or
influenced by it. As a matter of fact, the Court categorically stated that it was
premature to rule on that issue because of the pendency of the petition for relief
from judgment and interventions. The full disquisition of the Court of Appeals on
this point reads:

xxx xxx xxx

At the outset, let it be stated that the incidents which arose from the class
suit before the respondent court are predominantly related to the ten
percent (10%) attorney's fees stipulated in the compromise agreement
approved by the respondent court in its June 2, 1986 judgment in favor of
petitioner's counsels Atty. Roger Z. Reyes, Ernesto L. Treyes, Jr. and
Eutiquio M. Fudolin, Jr.

In the said class suit, only the five original plaintiffs and producers Zosimo
Maravilla, for himself and in representation of Rosendo dela Rama, Roberto
Mascurafia and Bibiano Sabino per Special Power of Attorney, and Ernesto
Kramer represented by Atty. Roger Z. Reyes per Special Power of Attorney,
have authorized said Attys. Reyes, Treyes, Jr. and Fudolin, Jr. to represent
them as counsel.

On page 18 of the instant petition, petitioners allege that there is no

necessity to secure Special Powers of Attorney from the unnamed parties in
a class suit, and the failure of petitioners' counsel to do so does not
constitute fraud, the named parties having contest over the class suit.' By
such statement, petitioners and their counsels admit their lack of authority
from the rest of the alleged 40,000 sugar producers to file the class suit and
enter into the compromise agreement.

Section 12, Rule 3, Revised Rules of Court provides that in order that one or
more may sue for the benefit of others as a class suit, it is necessary that
'the court shall make sure that the parties actually before it are sufficiently
numerous and representative so that all interests are fully protected.
(Dimayuga, et al. vs. CIR, et al., G.R. No. L-1 0213, May 27, 1957).

For that matter, in the case below, therein plaintiffs Zosimo Maravilla,
Rosendo dela Rama and Bibiano Sabino filed with the respondent court a
motion to partially annul decision and/or petition for relief against the said
ten (10%) percent attorney's fees on the allegation that they were deceived
into signing the compromise agreement believing, as was agreed upon
during the negotiations, that the ten (10%) percent of whatever would be
collected would go to a trust fund for the benefit of the sugar farmers and
producers and not as attorney's fees. Also, petition, for relief was filed by
thirteen other alleged sugar producers principally on the ground that the
compromise agreement entered into was without their express authority
by way of Special Power of Attorney and that the class suit was
unnecessary. Some of these sugar producers are the Association de
Agricultores de la Region Oesta de Batangas, Inc. (AAROB) with 742
members; the Samahang Mag-aasukal sa Kanluran Batangas (SABA) with
4,000 members and Independent Sugar Farmers, Inc. with 200 members.

Here is a situation, as pointed out by respondent NASUTRA and SRA, where

petitioners in filing the class suit claim to represent 40,000 sugar producers
all over the country and yet when some of these producers filed petition for
relief and interventions, petitioners 'disowned' them, stating that the other
sugar producers have no personality to intervene, not having been named
parties to the class suit.

It should not be overlooked that the said sugar producers, although not
named parties in the class suit, are the very alleged persons represented in
the class suit. They certainly have interests in the subject matter of the
controversy; in the contents of the compromise agreement.

The filing of petitions for relief from judgment has not been prohibited by
B.P. 129. The remedy of petitions for relief from judgment is still available
when a judgment is rendered by an inferior court in a case, and a party
thereto, by fraud, accident, mistake or excusable negligence, has been
unjustly deprived of a hearing therein, or has been prevented from taking
an appeal. Section 9, paragraph 2 of BP 129 placing the original exclusive
jurisdiction on the Court of Appeals to annul judgments of Regional Trial
Courts has no relation to (sic) all to the petition for relief provided for in
Rule 38 because these two are completely different remedies.

The petitions for relief from judgment and interventions are still pending
action by respondent court.1âwphi1 In view thereof, it would be premature
 for this Court to resolve the issue of estoppel on the part of the said sugar
producers to question the pertinent portion of the judgment of compromise,
and fraud on the part of the counsels for petitioners therein. (Emphasis
supplied).

IV.

Having disposed of the main issues, We shall now consider the motion of
petitioners of 16 January 1990 to hold in contempt respondent Judge Corona
Ibay-Somera for violating/defying the Temporary Restraining Order issued by Us
on 26 October 1989. They allegedly "continued to hear the case particularly on
the whereabouts of 177,087.14 piculs of sugar for the crop year 1984-1985
allegedly stored in different warehouses throughout the country," and that she
even further reset the hearing of the case on January 19, 1990 notwithstanding
the cautionary manifestation filed by petitioners during the 15 December 1989
hearing that said continued hearing would be a violation of the TRO. In the
resolution of 26 October 1989, this Court specifically ordered respondent Judge
to desist and refrain from further proceeding in Civil Case No. 86-35880, entitled
Republic Planters Bank, et al. vs. Philippine Sugar Commission, et al.

In her Compliance, respondent judge explained that the TRO in question actually
ordered her to desist from enforcing the Decision of the respondent Court of
Appeals in CAGR No. 17188, which is the subject of the instant petition, and that
her "only honest motivation "in making the inquiry is to see to it that while the
instant petition is pending ... , whatever funds may be owing to the Republic of
the Philippines is duly preserved and protected."

We find the explanation to be satisfactory. No malice attended the commission of

the challenged act. We accord to respondent judge good faith in her claimed
desire to preserve and protect public funds. Moreover, petitioners failed to show
that the act in question caused any injury or damage to their rights or interest.

IN VIEW OF ALL THE FOREGOING, the Petition is DENIED for lack of merit. Costs
against petitioners.

SO ORDERED.
GR No. 86695, Sep 03, 1992
MARIA ELENA MALAGA v. MANUEL R. PENACHOS +

CRUZ, J.:
This controversy involves the extent and applicability of P.D. 1818, which
prohibits any court from issuing injunctions in cases involving infrastructure
projects of the government.
The facts are not disputed.
The Iloilo State College of Fisheries (henceforth ISCOF) through its Pre-
qualification, Bids and Awards Committee (henceforth PBAC) caused the
publication in the November 25, 26, 28, 1988 issues of the Western Visayas Daily
an Invitation to Bid for the construction of a Micro Laboratory Building at ISCOF.
The notice announced that the last day for the submission of pre-qualification
requirements (PRE C-1)* was December 2, 1988, and that the bids would be
received and opened on December 12, 1988, at 3 o'clock in the afternoon.[1]
Petitioners Maria Elena Malaga and Josieleen Najarro, respectively doing business
under the name of B.E. Construction and Best Built Construction, submitted their
pre-qualification documents at two o'clock in the afternoon of December 2, 1988.
Petitioner Jose Occeña submitted his own PRE-C1 on December 5, 1988. All three
of them were not allowed to participate in the bidding because their documents
were considered late, having been submitted after the cut-off time of ten o'clock
in the morning of December 2, 1988.
On December 12, 1988, the petitioners filed a complaint with the Regional Trial
Court of Iloilo against the chairman and members of PBAC in their official and
personal capacities. The plaintiffs claimed that although they had submitted their
PRE-C1 on time, the PBAC refused without just cause to 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.
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 bidding
had already been conducted, the defendants be directed not to award the project
pending resolution of their complaint.
On the same date, Judge Lodrigio L. Lebaquin issued a restraining order
prohibiting PBAC from conducting the bidding and awarding the project.[2]
On December 16, 1988, the defendants filed a motion to lift the restraining order
on the ground that the court was prohibited from issuing restraining orders,
preliminary injunctions and preliminary mandatory injunctions by P.D. 1818.
The decree reads pertinently as follows:
Section 1. No Court in the Philippines shall have jurisdiction to issue any
restraining order, preliminary injunction, or preliminary mandatory injunction in
any case, dispute, or controversy involving an infrastructure project, or a mining,
fishery, forest or other natural resource development project of the government,
or any public utility operated by the government, including among others public
utilities for the transport of the goods or commodities, stevedoring and arrastre
contracts, to prohibit any person or persons, entity or government official from
proceeding with, or continuing the execution or implementation of any such
project, or the operation of such public utility, or pursuing any lawful activity
necessary for such execution, implementation or operation.
The movants also contended that the question of the propriety of a preliminary
injunction had become moot and academic because the restraining order was
received late, at 2 o'clock in the afternoon of December 12, 1988, after the
bidding had been conducted and closed at eleven thirty in the morning of that
date.
In their opposition to the motion, the plaintiffs argued against the applicability of
P.D. 1818, pointing out that while ISCOF was a state college, it had its own charter
and separate existence and was not part of the national government or of any
local political subdivision. Even if P.D.1818 were applicable, the prohibition
presumed a valid and legal government project, not one tainted with anomalies
like the project at bar.
They also cited Filipinas Marble Corp. vs. IAC,[3] where the Court allowed the
issuance of a writ of preliminary injunction despite a similar prohibition found in
P.D. 385. The Court therein stated that:
The government, however, is bound by basic principles of fairness and decency
under the due process clause of the Bill of Rights. P.D. 385 was never meant to
protect officials of government-lending institutions who take over the
management of a borrower corporation, lead that corporation to bankruptcy
through mismanagement or misappropriation of its funds, and who, after ruining
it, use the mandatory provisions of the decree to avoid the consequences of their
misdeeds (p. 188, underscoring supplied).
On January 2, 1989, the trial court lifted the restraining order and denied the
petition for preliminary injunction. It declared that the building sought to be
constructed at the ISCOF was an infrastructure project of the government falling
within the coverage of P.D. 1818. Even if it were not, the petition for the issuance
of a writ of preliminary injunction would still fail because the sheriff's return
showed that PBAC was served a copy of the restraining order after the bidding
sought to be restrained had already been held. Furthermore, the members of the
PBAC could not be restrained from awarding the project because the authority to
do so was lodged in the President of the ISCOF, who was not a party to the case.[4]
In the petition now before us, it is reiterated that P.D. 1818 does not cover the
ISCOF because of its separate and distinct corporate personality. It is also stressed
again that the prohibition under P.D. 1818 could not apply to the present
controversy because the project was vitiated with irregularities, to wit:
1. The invitation to bid as published fixed the deadline of submission of pre-
qualification document on December 2, 1988 without indicating any time, yet
after 10:00 o'clock of the given date, the PBAC already refused to accept
petitioners' documents.
2. The time and date of bidding was published as December 12, 1988 at 3:00 p.m.
yet it was held at 10:00 o'clock in the morning.
3. Private respondents, for the purpose of inviting bidders to participate, issued a
mimeographed "Invitation to Bid" form, which by law (P.D. 1594 and
Implementing Rules, Exh. B-1) is to contain the particulars of the project subject
of bidding for the purposes of
(i) enabling bidders to make an intelligent and accurate bids;
(ii) for PBAC to have a uniform basis for evaluating the bids;
(iii) to prevent collusion between a bidder and the PBAC, by opening to all the
particulars of a project.
Additionally, the Invitation to Bid prepared by the respondents and the Itemized
Bill of Quantities therein were left blank.[5] And although the project in question
was a "Construction," the private respondents used an Invitation to Bid form for
"Materials."[6]
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 had been
opened before the restraining order was issued, the project itself had not yet
been awarded. The ISCOF president was not an indispensable party because the
signing of the award was merely a ministerial function which he could perform
only upon the recommendation of the Award Committee. At any rate, the
complaint had already been duly amended to include him as a party defendant.
In their Comment, the private respondents maintain that since the members of
the board of trustees of the ISCOF are all government officials under Section 7 of
P.D. 1523 and since the operations and maintenance of the ISCOF are provided
for in the General Appropriations Law, it should be considered a government
institution whose infrastructure project is covered by P.D. 1818.
Regarding the schedule for pre-qualification, the private respondents insist that
PBAC posted on the ISCOF bulletin board an announcement that the deadline for
the submission of pre-qualification documents was at 10 o'clock of December 2,
1988, and the opening of bids would be held at 1 o'clock in the afternoon of
December 12, 1988. As of ten o'clock in the morning of December 2, 1988, B.E.
Construction and Best Built Construction had filed only their letters of intent. At
two o'clock in the afternoon, B.E. and Best Built file through their common
representative, Nenette Garuello, their pre-qualification documents which were
admitted but stamped "submitted late." The petitioners were informed of their
disqualification on the same date, and the disqualification became final on
December 6, 1988. Having failed to take immediate action to compel PBAC to pre-
qualify them despite their notice of disqualification, they cannot now come to this
Court to question the bidding proper in which they had not participated.
In the petitioners' Reply, they raise as an additional irregularity the violation of
the rule that where the estimated project cost is from P1M to P5M, the issuance
of plans, specifications and proposal book forms should be made thirty days
before the date of bidding.[7] They point out that these forms were 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.
In their Rejoinder, the private respondents aver that the documents of B.E. and
Best Built were received although filed late and were reviewed by the Award
Committee, which discovered that the contractors had expired licenses. B.E.'s
temporary certificate of Renewal of Contractor's License was valid only until
September 30, 1988, while Best Built's license was valid only up to June 30, 1988.
The Court has considered the arguments of the parties in light of their testimonial
and documentary evidence and the applicable laws and jurisprudence. It finds for
the petitioners.
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 acharter. This term includes
regulatory agencies, chartered institutions, and government-owned or controlled
corporations. (Sec. 2 (5) Introductory Provisions).
The same Code describes a chartered institution thus:
Chartered institution - refers to any agency organized or operating under a special
charter, and vested by law with functions relating to specific constitutional
policies or objectives. This term includes the state universities and colleges, and
the monetary authority of the state. (Sec. 2 (12) Introductory Provisions).
It is clear from the above definitions that ISCOF is a chartered institution and is
therefore covered by P.D. 1818.
There are also indications in its charter that ISCOF is a government
instrumentality. First, it was created in pursuance of the integrated fisheries
development policy of the State, a priority program of the government to effect
the socio-economic life of the nation. Second, the Treasurer of the Republic of the
Philippines shall also be the ex-officio Treasurer of the state college with its
accounts and expenses to be audited by the Commission on Audit or its duly
authorized representative. Third, heads of bureaus and offices of the National
Government are authorized to loan or transfer to it, upon request of the
president of the state college, such apparatus, equipment, or supplies and even
the services of such employees as can be spared without serious detriment to
public service. Lastly, an additional amount of P1.5M had been appropriated out
of the funds of the National Treasury and it was also decreed in its charter that
the funds and maintenance of the state college would henceforth be included in
the General Appropriations Law.[8]
Nevertheless, it does not automatically follow that ISCOF is covered by the
prohibition in the said decree.
In the case of Datiles and Co. vs. Sucaldito,[9] this Court interpreted a similar
prohibition contained in P.D. 605, the law after which P.D. 1818 was patterned. It
was there declared that the prohibition pertained to the issuance of injunctions or
restraining orders by courts against administrative acts in controversies involving
facts or the exercise of discretionin technical cases. The Court observed that to
allow the courts to judge these matters would disturb the smooth functioning of
the administrative machinery. Justice Teodoro Padilla made it clear, however,
that on issues definitely outside of this dimension and involving questions of law,
courts could not be prevented by P.D. No. 605 from exercising their power to
restrain or prohibit administrative acts.
We see no reason why the above ruling should not apply to P.D. 1818.
There are at least two irregularities committed by PBAC that justified injunction of
the bidding and the award of the project.
First, PBAC set deadlines for the filing of the PRE-C1 and the opening of bids and
then changed these deadlines without prior notice to prospective participants.
Under the Rules Implementing P.D. 1594, prescribing policies and guidelines for
government infrastructure contracts, PBAC shall provide prospective bidders with
the Notice to Pre-qualification and other relevant information regarding the
proposed work. Prospective contractors shall be required to file their ARC-
Contractors Confidential Application for Registration & Classifications & the PRE-
C2 Confidential Pre-qualification Statement for the Project (prior to the
amendment of the rules, this was referred to as Pre-C1) not later than the
deadline set in the published Invitation to Bid, after which date no PRE-C2 shall be
submitted and received. Invitations to Bid shall be 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]
PBAC advertised the pre-qualification deadline as December 2, 1988, without
stating the hour thereof, and announced that the opening of bids would be at 3
o'clock in the afternoon of December 12, 1988. This schedule was changed and a
notice of such change was merely posted at the ISCOF bulletin 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, and the opening of bids to 1 o'clock
in the afternoon of December 12, 1988.
The new schedule caused the pre-disqualification of the petitioners as recorded in
the minutes of the PBAC meeting held on December 6, 1988. While it may be true
that there were fourteen contractors who were pre-qualified despite the change
in schedule, this fact did not cure the defect of the irregular notice. Notably, the
petitioners were disqualified because they failed to meet the new deadline and
not because of their expired licenses.**
We have held that where the law requires a previous advertisement before
government contracts can be awarded, non-compliance with the requirement
will, as a general rule, render the same void and of no effect.[11] The fact that
an invitation for bids has been communicated to a number of possible bidders is
not necessarily sufficient to establish compliance with the requirements of the
law if it is shown that other possible bidders have not been similarly notified.[12]
Second, PBAC was required to issue to pre-qualified applicants the plans,
specifications and proposal book forms for the project to be bid thirty days before
the date of bidding if the estimated project cost was between P1M and P5M.
PBAC has not denied that these forms were issued only on December 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, 1988, or 30 days before
the scheduled bidding.
It is apparent that the present controversy did not arise from the discretionary
acts of the administrative body nor does it involve merely technical matters. What
is involved here is non-compliance with the procedural rules on bidding which
required strict observance. The purpose of the rules implementing P.D. 1594 is to
secure competitive bidding and to prevent favoritism, collusion and fraud in the
award of these contracts to the detriment of the public. This purpose was
defeated by the irregularities committed by PBAC.
It has been held that the three principles in public bidding are the offer to the
public, an opportunity for competition and a basis for exact comparison of bids. A
regulation of the matter which excludes any of these factors destroys the
distinctive character of the system and thwarts the purpose of its adoption.[13]
In the case at bar, it was the lack of proper notice regarding the pre-qualification
requirement and the bidding that caused the elimination of 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 are the contractors'
guide to an intelligent bid, were not issued on time, thus defeating the guaranty
that contractors be placed on equal footing when they submit their bids. The
purpose of competitive bidding is negated if some contractors are informed
ahead of their rivals of the plans and specifications that are to be the subject of
their bids.
P.D. 1818 was not intended to shield from judicial scrutiny irregularites
committed by administrative agencies such as the anomalies above described.
Hence, the challenged restraining order was not improperly issued by the
respondent judge and the writ of preliminary injunction should not have been
denied. We note from Annex Q of the private respondent's memorandum,
however, that the subject project has already been "100% completed as to the
Engineering Standard." This fait accompli has made the petition for a writ of
preliminary injunction moot and academic.
We come now to the liabilities of the private respondents.
It has been held in a long line of cases that a contract granted without the
competitive bidding required by law is void, and the party to whom it is awarded
cannot benefit from it.[14] It has not been shown that the irregularities committed
by PBAC were induced by or participated in by any of the contractors. Hence,
liability shall attach only to the private respondents for the prejudice sustained by
the petitioners as a result of the anomalies described above.
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
appear to be due either. Even so, the Court cannot close its eyes to the evident
bad faith that characterized the conduct of the private respondents, including the
irregularities in the announcement of the bidding and their efforts to persuade
the ISCOF president to award the project after two days 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 accordance with Article 2221
of the Civil Code, which states:
Art. 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,
recognized, and not for the purpose of indemnifying the plaintiff for any loss
suffered by him.
These damages are to be 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.
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 of 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.

G.R. No. 115863 March 31, 1995

AIDA D. EUGENIO, petitioner,
vs.
CIVIL SERVICE COMMISSION, HON. TEOFISTO T. GUINGONA, JR. & HON.
SALVADOR ENRIQUEZ, JR., respondents.

PUNO, J.:

The power of the Civil Service Commission to abolish the Career Executive Service
Board is challenged in this petition for certiorari and prohibition.

First the facts. Petitioner is the Deputy Director of the Philippine Nuclear Research
Institute. She applied for a Career Executive Service (CES) Eligibility and a CESO
rank on August 2, 1993, she was given a CES eligibility. On September 15, 1993,
she was recommended to the President for a CESO rank by the Career Executive
Service Board. 1
All was not to turn well for petitioner. On October 1, 1993, respondent Civil
Service Commission2 passed Resolution No. 93-4359, viz:

RESOLUTION NO. 93-4359

WHEREAS, Section 1(1) of Article IX-B provides that Civil Service shall
be administered by the Civil Service Commission, . . .;

WHEREAS, Section 3, Article IX-B of the 1987 Philippine Constitution

provides that "The Civil Service Commission, as the central personnel
agency of the government, is mandated to establish a career service
and adopt measures to promote morale, efficiency, integrity,
responsiveness, progresiveness and courtesy in the civil service, . . .";

WHEREAS, Section 12 (1), Title I, Subtitle A, Book V of the

Administrative Code of 1987 grants the Commission the power,
among others, to administer and enforce the constitutional and
statutory provisions on the merit system for all levels and ranks in
the Civil Service;

WHEREAS, Section 7, Title I, Subtitle A, Book V of the Administrative

Code of 1987 Provides, among others, that The Career Service shall
be characterized by (1) entrance based on merit and fitness to be
determined as far as practicable by competitive examination, or
based highly technical qualifications; (2) opportunity for
advancement to higher career positions; and (3) security of tenure;

WHEREAS, Section 8 (c), Title I, Subtitle A, Book V of the

administrative Code of 1987 provides that "The third level shall cover
Positions in the Career Executive Service";

WHEREAS, the Commission recognizes the imperative need to

consolidate, integrate and unify the administration of all levels of
positions in the career service.

WHEREAS, the provisions of Section 17, Title I, Subtitle A. Book V of

the Administrative Code of 1987 confers on the Commission the
power and authority to effect changes in its organization as the need
arises.
 WHEREAS, Section 5, Article IX-A of the Constitution provides that
the Civil Service Commission shall enjoy fiscal autonomy and the
necessary implications thereof;

NOW THEREFORE, foregoing premises considered, the Civil Service

Commission hereby resolves to streamline reorganize and effect
changes in its organizational structure. Pursuant thereto, the Career
Executive Service Board, shall now be known as the Office for Career
Executive Service of the Civil Service Commission. Accordingly, the
existing personnel, budget, properties and equipment of the Career
Executive Service Board shall now form part of the Office for Career
Executive Service.

The above resolution became an impediment. to the appointment of petitioner as

Civil Service Officer, Rank IV. In a letter to petitioner, dated June 7, 1994, the
Honorable Antonio T. Carpio, Chief Presidential legal Counsel, stated:

xxx xxx xxx

On 1 October 1993 the Civil Service Commission issued CSC

Resolution No. 93-4359 which abolished the Career Executive Service
Board.

Several legal issues have arisen as a result of the issuance of CSC

Resolution No. 93-4359, including whether the Civil Service
Commission has authority to abolish the Career Executive Service
Board. Because these issues remain unresolved, the Office of the
President has refrained from considering appointments of career
service eligibles to career executive ranks.

xxx xxx xxx

You may, however, bring a case before the appropriate court to

settle the legal issues arising from issuance by the Civil Service
Commission of CSC Resolution No. 93-4359, for guidance of all
concerned.

Thank You.
Finding herself bereft of further administrative relief as the Career Executive
Service Board which recommended her CESO Rank IV has been abolished,
petitioner filed the petition at bench to annul, among others, resolution No. 93-
4359. The petition is anchored on the following arguments:

A.

IN VIOLATION OF THE CONSTITUTION, RESPONDENT COMMISSION

USURPED THE LEGISLATIVE FUNCTIONS OF CONGRESS WHEN IT
ABOLISHED THE CESB, AN OFFICE CREATED BY LAW, THROUGH THE
ISSUANCE OF CSC: RESOLUTION NO. 93-4359;

B.

ALSO IN VIOLATION OF THE CONSTITUTION, RESPONDENT CSC

USURPED THE LEGISLATIVE FUNCTIONS OF CONGRESS WHEN IT
ILLEGALLY AUTHORIZED THE TRANSFER OF PUBLIC MONEY,
THROUGH THE ISSUANCE OF CSC RESOLUTION NO. 93-4359.

Required to file its Comment, the Solicitor General agreed with the contentions of
petitioner. Respondent Commission, however, chose to defend its ground. It
posited the following position:

ARGUMENTS FOR PUBLIC RESPONDENT-CSC

I. THE INSTANT PETITION STATES NO CAUSE OF ACTION AGAINST THE

PUBLIC RESPONDENT-CSC.

II. THE RECOMMENDATION SUBMITTED TO THE PRESIDENT FOR

APPOINTMENT TO A CESO RANK OF PETITIONER EUGENIO WAS A
VALID ACT OF THE CAREER EXECUTIVE SERVICE BOARD OF THE CIVIL
SERVICE COMMISSION AND IT DOES NOT HAVE ANY DEFECT.

III. THE OFFICE OF THE PRESIDENT IS ESTOPPED FROM QUESTIONING

THE VALIDITY OF THE RECOMMENDATION OF THE CESB IN FAVOR OF
PETITIONER EUGENIO SINCE THE PRESIDENT HAS PREVIOUSLY
APPOINTED TO CESO RANK FOUR (4) OFFICIALS SIMILARLY SITUATED
AS SAID PETITIONER. FURTHERMORE, LACK OF MEMBERS TO
CONSTITUTE A QUORUM. ASSUMING THERE WAS NO QUORUM, IS
 NOT THE FAULT OF PUBLIC RESPONDENT CIVIL SERVICE
COMMISSION BUT OF THE PRESIDENT WHO HAS THE POWER TO
APPOINT THE OTHER MEMBERS OF THE CESB.

IV. THE INTEGRATION OF THE CESB INTO THE COMMISSION IS

AUTHORIZED BY LAW (Sec. 12 (1), Title I, Subtitle A, Book V of the
Administrative Code of the 1987). THIS PARTICULAR ISSUE HAD
ALREADY BEEN SETTLED WHEN THE HONORABLE COURT DISMISSED
THE PETITION FILED BY THE HONORABLE MEMBERS OF THE HOUSE
OF REPRESENTATIVES, NAMELY: SIMEON A. DATUMANONG,
FELICIANO R. BELMONTE, JR., RENATO V. DIAZ, AND MANUEL M.
GARCIA IN G.R. NO. 114380. THE AFOREMENTIONED PETITIONERS
ALSO QUESTIONED THE INTEGRATION OF THE CESB WITH THE
COMMISSION.

We find merit in the petition.3

The controlling fact is that the Career Executive Service Board (CESB) was created
in the Presidential Decree (P.D.) No. 1 on September 1, 19744 which adopted the
Integrated Plan. Article IV, Chapter I, Part of the III of the said Plan provides:

Article IV — Career Executive Service

1. A Career Executive Service is created to form a continuing pool of

well-selected and development oriented career administrators who
shall provide competent and faithful service.

2. A Career Executive Service hereinafter referred to in this Chapter as

the Board, is created to serve as the governing body of the Career
Executive Service. The Board shall consist of the Chairman of the Civil
Service Commission as presiding officer, the Executive Secretary and
the Commissioner of the Budget as ex-officio members and two
other members from the private sector and/or the academic
community who are familiar with the principles and methods of
personnel administration.

xxx xxx xxx

 5. The Board shall promulgate rules, standards and procedures on
the selection, classification, compensation and career development
of members of the Career Executive Service. The Board shall set up
the organization and operation of the service. (Emphasis supplied)

It cannot be disputed, therefore, that as the CESB was created by law, it can only
be abolished by the legislature. This follows an unbroken stream of rulings that
the creation and abolition of public offices is primarily a legislative function. As
aptly summed up in AM JUR 2d on Public Officers and
Employees, 5 viz:

Except for such offices as are created by the Constitution, the

creation of public offices is primarily a legislative function. In so far as
the legislative power in this respect is not restricted by constitutional
provisions, it supreme, and the legislature may decide for itself what
offices are suitable, necessary, or convenient. When in the exigencies
of government it is necessary to create and define duties, the
legislative department has the discretion to determine whether
additional offices shall be created, or whether these duties shall be
attached to and become ex-officio duties of existing offices. An office
created by the legislature is wholly within the power of that body,
and it may prescribe the mode of filling the office and the powers
and duties of the incumbent, and if it sees fit, abolish the office.

In the petition at bench, the legislature has not enacted any law authorizing the
abolition of the CESB. On the contrary, in all the General Appropriations Acts from
1975 to 1993, the legislature has set aside funds for the operation of CESB.
Respondent Commission, however, invokes Section 17, Chapter 3, Subtitle A. Title
I, Book V of the Administrative Code of 1987 as the source of its power to abolish
the CESB. Section 17 provides:

Sec. 17. Organizational Structure. — Each office of the Commission

shall be headed by a Director with at least one Assistant Director, and
may have such divisions as are necessary independent constitutional
body, the Commission may effect changes in the organization as the
need arises.
But as well pointed out by petitioner and the Solicitor General, Section 17 must
be read together with Section 16 of the said Code which enumerates the offices
under the respondent Commission, viz:

Sec. 16. Offices in the Commission. — The Commission shall have the
following offices:

(1) The Office of the Executive Director headed by an Executive

Director, with a Deputy Executive Director shall implement policies,
standards, rules and regulations promulgated by the Commission;
coordinate the programs of the offices of the Commission and render
periodic reports on their operations, and perform such other
functions as may be assigned by the Commission.

(2) The Merit System Protection Board composed of a Chairman and

two (2) members shall have the following functions:

xxx xxx xxx

(3) The Office of Legal Affairs shall provide the Chairman with legal
advice and assistance; render counselling services; undertake legal
studies and researches; prepare opinions and ruling in the
interpretation and application of the Civil Service law, rules and
regulations; prosecute violations of such law, rules and regulations;
and represent the Commission before any court or tribunal.

(4) The Office of Planning and Management shall formulate

development plans, programs and projects; undertake research and
studies on the different aspects of public personnel management;
administer management improvement programs; and provide fiscal
and budgetary services.

(5) The Central Administrative Office shall provide the Commission

with personnel, financial, logistics and other basic support services.

(6) The Office of Central Personnel Records shall formulate and

implement policies, standards, rules and regulations pertaining to
personnel records maintenance, security, control and disposal;
provide storage and extension services; and provide and maintain
library services.

(7) The Office of Position Classification and Compensation shall

formulate and implement policies, standards, rules and regulations
relative to the administration of position classification and
compensation.

(8) The Office of Recruitment, Examination and Placement shall

provide leadership and assistance in developing and implementing
the overall Commission programs relating to recruitment, execution
and placement, and formulate policies, standards, rules and
regulations for the proper implementation of the Commission's
examination and placement programs.

(9) The Office of Career Systems and Standards shall provide

leadership and assistance in the formulation and evaluation of
personnel systems and standards relative to performance appraisal,
merit promotion, and employee incentive benefit and awards.

(10) The Office of Human Resource Development shall provide

leadership and assistance in the development and retention of
qualified and efficient work force in the Civil Service; formulate
standards for training and staff development; administer service-
wide scholarship programs; develop training literature and materials;
coordinate and integrate all training activities and evaluate training
programs.

(11) The Office of Personnel Inspection and Audit shall develop

policies, standards, rules and regulations for the effective conduct or
inspection and audit personnel and personnel management
programs and the exercise of delegated authority; provide technical
and advisory services to Civil Service Regional Offices and
government agencies in the implementation of their personnel
programs and evaluation systems.

(12) The Office of Personnel Relations shall provide leadership and

assistance in the development and implementation of policies,
standards, rules and regulations in the accreditation of employee
 associations or organizations and in the adjustment and settlement
of employee grievances and management of employee disputes.

(13) The Office of Corporate Affairs shall formulate and implement

policies, standards, rules and regulations governing corporate
officials and employees in the areas of recruitment, examination,
placement, career development, merit and awards systems, position
classification and compensation, performing appraisal, employee
welfare and benefit, discipline and other aspects of personnel
management on the basis of comparable industry practices.

(14) The Office of Retirement Administration shall be responsible for

the enforcement of the constitutional and statutory provisions,
relative to retirement and the regulation for the effective
implementation of the retirement of government officials and
employees.

(15) The Regional and Field Offices. — The Commission shall have not
less than thirteen (13) Regional offices each to be headed by a
Director, and such field offices as may be needed, each to be headed
by an official with at least the rank of an Assistant Director.

As read together, the inescapable conclusion is that respondent

Commission's power to reorganize is limited to offices under its control as
enumerated in Section 16, supra. From its inception, the CESB was intended
to be an autonomous entity, albeit administratively attached to respondent
Commission. As conceptualized by the Reorganization Committee "the
CESB shall be autonomous. It is expected to view the problem of building
up executive manpower in the government with a broad and positive
outlook." 6 The essential autonomous character of the CESB is not negated
by its attachment to respondent Commission. By said attachment, CESB
was not made to fall within the control of respondent Commission. Under
the Administrative Code of 1987, the purpose of attaching one functionally
inter-related government agency to another is to attain "policy and
program coordination." This is clearly etched out in Section 38(3), Chapter
7, Book IV of the aforecited Code, to wit:
 (3) Attachment. — (a) This refers to the lateral relationship between
the department or its equivalent and attached agency or corporation
for purposes of policy and program coordination. The coordination
may be accomplished by having the department represented in the
governing board of the attached agency or corporation, either as
chairman or as a member, with or without voting rights, if this is
permitted by the charter; having the attached corporation or agency
comply with a system of periodic reporting which shall reflect the
progress of programs and projects; and having the department or its
equivalent provide general policies through its representative in the
board, which shall serve as the framework for the internal policies of
the attached corporation or agency.

Respondent Commission also relies on the case of Datumanong, et al., vs. Civil
Service Commission, G. R. No. 114380 where the petition assailing the abolition of
the CESB was dismissed for lack of cause of action. Suffice to state that the
reliance is misplaced considering that the cited case was dismissed for lack of
standing of the petitioner, hence, the lack of cause of action.

IN VIEW WHEREOF, the petition is granted and Resolution No. 93-4359 of the
respondent Commission is hereby annulled and set aside. No costs.

SO ORDERED.
G.R. No. L-57883 March 12, 1982
GUALBERTO J. DE LA LLANA Presiding Judge, Branch II of the City Court of
Olongapo, ESTANISLAO L. CESA, JR., FIDELA Y. VARGAS, BENJAMIN C.
ESCOLANGO, JUANITO C. ATIENZA, MANUEL REYES ROSAPAPAN, JR.,
VIRGILIO E. ACIERTO, and PORFIRIO AGUILLON AGUILA, petitioners,
vs.
MANUEL ALBA, Minister of Budget, FRANCISCO TANTUICO, Chairman,
Commission on Audit, and RICARDO PUNO, Minister of
Justice, Respondents .

FERNANDO, C.J.:

This Court, pursuant to its grave responsibility of passing upon the validity of any
executive or legislative act in an appropriate cases, has to resolve the crucial issue
of the constitutionality of Batas Pambansa Blg. 129, entitled "An act reorganizing
the Judiciary, Appropriating Funds Therefor and for Other Purposes." The task of
judicial review, aptly characterized as exacting and delicate, is never more so than
when a conceded legislative power, that of judicial reorganization, 1 may possibly
collide with the time-honored principle of the independence of the judiciary 2 as
protected and safeguarded by this constitutional provision: "The Members of the
Supreme Court and judges of inferior courts shall hold office during good behavior
until they reach the age of seventy years or become incapacitated to discharge
the duties of their office. The Supreme Court shall have the power to discipline
judges of inferior courts and, by a vote of at least eight Members, order their
dismissal." 3 For the assailed legislation mandates that Justices and judges of
inferior courts from the Court of Appeals to municipal circuit courts, except the
occupants of the Sandiganbayan and the Court of Tax Appeals, unless appointed
to the inferior courts established by such Act, would be considered separated
from the judiciary. It is the termination of their incumbency that for petitioners
justifies a suit of this character, it being alleged that thereby the security of tenure
provision of the Constitution has been ignored and disregarded,

That is the fundamental issue raised in this proceeding, erroneously entitled

Petition for Declaratory Relief and/or for Prohibition 4 considered by this Court as
an action for prohibited petition, seeking to enjoin respondent Minister of the
Budget, respondent Chairman of the Commission on Audit, and respondent
Minister of Justice from taking any action implementing Batas Pambansa Blg. 129.
Petitioners 5 sought to bolster their claim by imputing lack of good faith in its
enactment and characterizing as an undue delegation of legislative power to the
President his authority to fix the compensation and allowances of the Justices and
judges thereafter appointed and the determination of the date when the
reorganization shall be deemed completed. In the very comprehensive and
scholarly Answer of 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 reorganize the judiciary, the allegations of absence of good faith as
well as the attack on the independence of the judiciary being unwarranted and
devoid of any support in law. A Supplemental Answer was likewise filed on
October 8, 1981, followed by a Reply of petitioners on October 13. After the
hearing in the morning and afternoon of October 15, in which not only petitioners
and respondents were heard through counsel but also the amici curiae, 7 and
thereafter submission of the minutes of the proceeding on the debate on Batas
Pambansa Blg. 129, this petition was deemed submitted for decision.

The importance of the crucial question raised called for intensive and rigorous
study of all the legal aspects of the case. After such exhaustive deliberation in
several sessions, the exchange of views being supplemented by memoranda from
the members of the Court, it is our opinion and so hold that Batas Pambansa Blg.
129 is not unconstitutional.

1. The argument as to the lack of standing of petitioners is easily resolved. As far

as Judge de la Llana is concerned, he certainly falls within the principle set forth in
Justice Laurel's opinion in People v. Vera. 8 Thus: "The unchallenged rule is that
the person who impugns the validity of a statute must have a personal and
substantial interest in the case such that he has 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 considered as devoid of "any personal and
substantial interest" on the matter. There is relevance to this excerpt from a
separate opinion in Aquino, Jr. v. Commission on Elections: 10 "Then there is the
attack on the standing of petitioners, as vindicating at most what they consider a
public right and not protecting their rights as individuals. This is to conjure the
specter of the public right dogma as an inhibition to parties intent on keeping
public officials staying on the path of constitutionalism. As was so well put by
Jaffe: 'The protection of private rights is an essential constituent of public interest
and, conversely, without a well-ordered state there could be no enforcement of
private rights. Private and public interests are, both in substantive and procedural
sense, aspects of the totality of the legal order.' Moreover, petitioners have
convincingly shown that in their capacity as taxpayers, their standing to sue has
been amply demonstrated. There would be a retreat from the liberal approach
followed in Pascual v. Secretary of Public Works, foreshadowed by the very
decision of People v. Vera where the doctrine was first fully discussed, if we act
differently now. I do not think we are prepared to take that step. Respondents,
however, would hark back to the American Supreme Court doctrine in Mellon v.
Frothingham with their claim that what petitioners possess 'is an interest which is
shared in common by other people and is comparatively so minute and
indeterminate as to afford any basis and assurance that the judicial process can
act on it.' That is to speak in the language of a bygone era even in the United
States. For as Chief Justice Warren clearly pointed out in the later case of Flast v.
Cohen, the barrier thus set up if not breached has definitely been lowered." 11

2. The imputation of arbitrariness to the legislative body in the enactment of

Batas Pambansa Blg. 129 to demonstrate lack of good faith does manifest
violence to the facts. Petitioners should have exercised greater care in informing
themselves as to its antecedents. They had laid themselves open to the
accusation of reckless disregard for the truth, On August 7, 1980, a Presidential
Committee on Judicial Reorganization was organized. 12 This Executive Order was
later amended by Executive Order No. 619-A., dated September 5 of that year. It
clearly specified the task assigned to it: "1. The Committee shall formulate plans
on the reorganization of the Judiciary which shall be submitted within seventy
(70) days from August 7, 1980 to provide the President sufficient options for the
reorganization of the entire Judiciary which shall embrace all lower courts,
including the Court of Appeals, the Courts of First Instance, the City and Municipal
Courts, and all Special Courts, but excluding the Sandigan Bayan." 13 On October
17, 1980, a Report was submitted by such Committee on Judicial Reorganization.
It began with this paragraph: "The Committee on Judicial Reorganization has the
honor to submit the following Report. It expresses at the outset its appreciation
for the opportunity accorded it to study ways and means for what today is a basic
and urgent need, nothing less than the restructuring of the judicial system. There
are problems, both grave and pressing, that call for remedial measures. The felt
necessities of the time, to borrow a phrase from Holmes, admit of no delay, for if
no step be taken and at the earliest opportunity, it is not too much to say that the
people's faith in the administration of justice could be shaken. It is imperative that
there be a greater efficiency in the disposition of cases and that litigants,
especially those of modest means — much more so, the poorest and the
humblest — can vindicate their rights in an expeditious and inexpensive manner.
The rectitude and the fairness in the way the courts operate must be manifest to
all members of the community and particularly to those whose interests are
affected by the exercise of their functions. It is to that task that the Committee
addresses itself and hopes that the plans submitted could be a starting point for
an institutional reform in the Philippine judiciary. The experience of the Supreme
Court, which since 1973 has been empowered to supervise inferior courts, from
the Court of Appeals to the municipal courts, has proven that reliance on
improved court management as well as training of judges for more efficient
administration 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 Judiciary Act became effective on June 16, 1901." 14 I t went to say: "I t
does not admit of doubt that the last two decades of this century are likely to be
attended with problems of even greater complexity and delicacy. New social
interests are pressing for recognition in the courts. Groups long inarticulate,
primarily those economically underprivileged, have found legal spokesmen and
are asserting grievances previously ignored. Fortunately, the judicially has not
proved inattentive. Its task has thus become even more formidable. For so much
grist is added to the mills of justice. Moreover, they are likewise to be quite novel.
The need for an innovative approach is thus apparent. The national leadership, as
is well-known, has been constantly on the search for solutions that will prove to
be both acceptable and satisfactory. Only thus may there be continued national
progress." 15 After which comes: "To be less abstract, the thrust is on
development. That has been repeatedly stressed — and rightly so. All efforts are
geared to its realization. Nor, unlike in the past, was it to b "considered as simply
the movement towards economic progress and growth measured in terms of
sustained increases in per capita income and Gross National Product (GNP). 16 For
the New Society, its implication goes further than economic advance, extending
to "the sharing, or more appropriately, the democratization of social and
economic opportunities, the substantiation of the true meaning of social
justice." 17 This process of modernization and change compels the government to
extend its field of activity and its scope of operations. The efforts towards
reducing the gap between the wealthy and the poor elements in the nation call
for more regulatory legislation. That way the social justice and protection to labor
mandates of the Constitution could be effectively implemented." 18 There is
likelihood then "that some measures deemed inimical by interests adversely
affected would be challenged in court on grounds of validity. Even if the question
does not go that far, suits may be filed concerning their interpretation and
application. ... There could be pleas for injunction or restraining orders. Lack of
success of such moves would not, even so, result in their prompt final disposition.
Thus delay in the execution of the policies embodied in law could thus be
reasonably expected. That is not conducive to progress in development." 19 For, as
mentioned in such Report, equally of vital concern is the problem of clogged
dockets, which "as is well known, is one of the utmost gravity. Notwithstanding
the most determined efforts exerted by the Supreme Court, through the
leadership of both retired Chief Justice Querube Makalintal and the late Chief
Justice Fred Ruiz Castro, from the time supervision of the courts was vested in it
under the 1973 Constitution, the trend towards more and more cases has
continued." 20 It is understandable why. With the accelerated economic
development, the growth of population, the increasing urbanization, and other
similar factors, the judiciary is called upon much oftener to resolve controversies.
Thus confronted with what appears to be a crisis situation that calls for a remedy,
the Batasang Pambansa had no choice. It had to act, before the ailment became
even worse. Time was of the essence, and yet it did not hesitate to be duly
mindful, as it ought to be, of the extent of its coverage before enacting Batas
Pambansa Blg. 129.

3. There is no denying, therefore, the need for "institutional reforms,"

characterized in the Report as "both pressing and urgent." 21 It is worth noting,
likewise, as therein pointed out, that a major reorganization of such scope, if it
were to take place, would be the most thorough after four generations. 22 The
reference was to the basic Judiciary Act generations . enacted in June of
1901, 23 amended in a significant way, only twice previous to the Commonwealth.
There was, of course, the creation of the Court of Appeals in 1935, originally
composed "of a Presiding Judge and ten appellate Judges, who shall be appointed
by the President of the Philippines, with the consent of the Commission on
Appointments of the National Assembly, 24 It could "sit en banc, but it may sit in
two divisions, one of six and another of five Judges, to transact business, and the
two divisions may sit at the same time." 25 Two years after the establishment of
independence of the Republic of the Philippines, the Judiciary Act of 1948 26 was
passed. It continued the existing system of regular inferior courts, namely, the
Court of Appeals, Courts of First Instance, 27 the Municipal Courts, at present the
City Courts, and the Justice of the Peace Courts, now the Municipal Circuit Courts
and Municipal Courts. The membership of the Court of Appeals has been
continuously increased. 28 Under a 1978 Presidential Decree, there would be
forty-five members, a Presiding Justice and forty-four Associate Justices, with
fifteen divisions. 29 Special courts were likewise created. The first was the Court of
Tax Appeals in 1954, 30 next came the Court of Agrarian Relations in 1955, 31 and
then in the same year a Court of the Juvenile and Domestic Relations for Manila in
1955, 32 subsequently followed by the creation of two other such courts for Iloilo
and Quezon City in 1966. 33 In 1967, Circuit Criminal Courts were established, with
the Judges having the same qualifications, rank, compensation, and privileges as
judges of Courts of First Instance. 34

4. After the submission of such Report, Cabinet Bill No. 42, which later became
the basis of Batas Pambansa Blg. 129, was introduced. After setting forth the
background as above narrated, its Explanatory Note continues: "Pursuant to the
President's instructions, this proposed legislation has been drafted in accordance
with the guidelines of that report with particular attention to certain objectives of
the reorganization, to wit, the attainment 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. In consultation with, and upon a consensus of,
the governmental and parliamentary leadership, however, it was felt that some
options set forth in the Report be not availed of. Instead of the proposal to
confine the jurisdiction of the intermediate appellate court merely to appellate
adjudication, the preference has been opted to increase rather than diminish its
jurisdiction in order to enable it to effectively assist the Supreme Court. This
preference has been translated into one of the innovations in the proposed
Bill." 35 In accordance with the parliamentary procedure, the Bill was sponsored
by the Chairman of the Committee on Justice, Human Rights and Good
Government to which it was referred. Thereafter, Committee Report No. 225 was
submitted by such Committee to the Batasang Pambansa recommending the
approval with some amendments. In the sponsorship speech of Minister Ricardo
C. Puno, there was reference to the Presidential Committee on Judicial
Reorganization. Thus: "On October 17, 1980, the Presidential Committee on
Judicial Reorganization submitted its report to the President which contained the
'Proposed Guidelines for Judicial Reorganization.' Cabinet Bill No. 42 was drafted
substantially in accordance with the options presented by these guidelines. Some
options set forth in the aforesaid report were not availed of upon consultation
with and upon consensus of the government and parliamentary leadership.
Moreover, some amendments to the bill were adopted by the Committee on
Justice, Human Rights and Good Government, to which The bill was referred,
following the public hearings on the bill held in December of 1980. The hearings
consisted of dialogues with the distinguished members of the bench and the bar
who had submitted written proposals, suggestions, and position papers on the bill
upon the invitation of the Committee on Justice, Human Rights and Good
Government." 36 Stress was laid by the sponsor that the enactment of such
Cabinet Bill would, firstly, result in the attainment of more efficiency in the
disposal of cases. Secondly, the improvement in the quality of justice dispensed
by the courts is expected as a necessary consequence of the easing of the court's
dockets. Thirdly, the structural changes introduced in the bill, together with the
reallocation of jurisdiction and the revision of the rules of procedure, are
designated to suit the court system to the exigencies of the present day Philippine
society, and hopefully, of the foreseeable future." 37 it may be observed that the
volume containing the minutes of the proceedings of the Batasang Pambansa
show that 590 pages were devoted to its discussion. It is quite obvious that it took
considerable time and effort as well as exhaustive study before the act was signed
by the President on August 14, 1981. With such a background, it becomes quite
manifest how lacking in factual basis is the allegation that its enactment is tainted
by the vice of arbitrariness. What appears undoubted and undeniable is the good
faith that characterized its enactment from its inception to the affixing of the
Presidential signature.

5. 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. The ponencia of Justice J.B.L. Reyes in Cruz v. Primicias, Jr. 38reiterated
such a doctrine: "We find this point urged by respondents, to be without merit.
No removal or separation of petitioners from the service is here involved, but the
validity of the abolition of their offices. This is a legal issue that is for the Courts to
decide. It is well-known rule also that valid abolition of offices is neither removal
nor separation of the incumbents. ... And, of course, if the abolition is void, the
incumbent is deemed never to have ceased to hold office. The preliminary
question laid at rest, we pass to the merits of the case. As well-settled as the rule
that the abolition of an office does not amount to an illegal removal of its
incumbent is the principle that, in order to be valid, the abolition must be made in
good faith." 39 The above excerpt was quoted with approval in Bendanillo, Sr. v.
Provincial Governor, 40 two earlier cases enunciating a similar doctrine having
preceded it. 41 As with the offices in the other branches of the government, so it is
with the judiciary. The test remains whether the abolition is in good faith. As that
element is conspicuously present in the enactment of Batas Pambansa Blg. 129,
then the lack of merit of this petition becomes even more apparent. The
concurring opinion of Justice Laurel in Zandueta v. De la Costa 42 cannot be any
clearer. This is a quo warranto proceeding filed by petitioner, claiming that he,
and not respondent, was entitled to he office of judge of the Fifth Branch of the
Court of First Instance of Manila. There was a Judicial Reorganization Act in
1936, 43 a year after the inauguration of the Commonwealth, amending the
Administrative Code to organize courts of original jurisdiction known as the
Courts of First Instance Prior to such statute, petitioner was the incumbent of
such branch. Thereafter, he received an ad interim appointment, this time to the
Fourth Judicial District, under the new legislation. Unfortunately for him, the
Commission on Appointments of then National Assembly disapproved the same,
with respondent being appointed in his place. He contested the validity of the Act
insofar as it resulted in his being forced to vacate his position This Court did not
rule squarely on the matter. His petition was dismissed on the ground of estoppel.
Nonetheless, the separate concurrence of Justice Laurel in the result reached, to
repeat, reaffirms in no uncertain terms the standard of good faith to preclude any
doubt as to the abolition of an inferior court, with due recognition of the security
of tenure guarantee. Thus: " I am of the opinion that Commonwealth Act No. 145
in so far as it reorganizes, among other judicial districts, the Ninth Judicial District,
and establishes an entirely new district comprising Manila and the provinces of
Rizal and Palawan, is valid and constitutional. This conclusion flows from the
fundamental proposition that the legislature may abolish courts inferior to the
Supreme Court and therefore may reorganize them territorially or otherwise
thereby necessitating new appointments and commissions. Section 2, Article VIII
of the Constitution vests in the National Assembly the power to define, prescribe
and apportion the jurisdiction of the various courts, subject to certain limitations
in the case of the Supreme Court. It is admitted that section 9 of the same article
of the Constitution provides for the security of tenure of all the judges. The
principles embodied in these two sections of the same article of the Constitution
must be coordinated and harmonized. A mere enunciation of a principle will not
decide actual cases and controversies of every sort. (Justice Holmes in Lochner vs.
New York, 198 U.S., 45; 49 Law. ed; 937)" 44 justice Laurel continued: "I am not
insensible to the argument that the National Assembly may abuse its power and
move deliberately to defeat the constitutional provision guaranteeing security of
tenure to all judges, But, is this the case? One need not share the view of Story,
Miller and Tucker on the one hand, or the opinion of Cooley, Watson and Baldwin
on the other, to realize that the application of a legal or constitutional principle is
necessarily factual and circumstantial and that fixity of principle is the rigidity of
the dead and the unprogressive. I do say, and emphatically, however, that cases
may arise where the violation of the constitutional provision regarding security of
tenure is palpable and plain, and that legislative power of reorganization may be
sought to cloak an unconstitutional and evil purpose. When a case of that kind
arises, it will be the time to make the hammer fall and heavily. But not until then.
I am satisfied that, as to the particular point here discussed, the purpose was the
fulfillment of what was considered a great public need by the legislative
department and that Commonwealth Act No. 145 was not enacted purposely to
affect adversely the tenure of judges or of any particular judge. Under these
circumstances, I am for sustaining the power of the legislative department under
the Constitution. To be sure, there was greater necessity for reorganization
consequent upon the establishment of the new government than at the time Acts
Nos. 2347 and 4007 were approved by the defunct Philippine Legislature, and
although in the case of these two Acts there was an express provision providing
for the vacation by the judges of their offices whereas in the case of
Commonwealth Act No. 145 doubt is engendered by its silence, this doubt should
be resolved in favor of the valid exercise of the legislative power." 45

6. A few more words on the question of abolition. In the above-cited opinion of

Justice Laurel in Zandueta, reference was made to Act No. 2347 46 on the
reorganization of the Courts of First Instance and to Act No. 4007 47 on the
reorganization of all branches of the government, including the courts of first
instance. In both of them, the then Courts of First Instance were replaced by new
courts with the same appellation. As Justice Laurel pointed out, there was no
question as to the fact of abolition. He was equally categorical as to
Commonwealth Act No. 145, where also the system of the courts of first instance
was provided for expressly. It was pointed out by Justice Laurel that the mere
creation of an entirely new district of the same court is valid and constitutional.
such conclusion flowing "from the fundamental proposition that the legislature
may abolish courts inferior to the Supreme Court and therefore may reorganize
them territorially or otherwise thereby necessitating new appointments and
commissions." 48 The challenged statute creates an intermediate appellate
court, 49 regional trial courts, 50 metropolitan trial courts of the national capital
region, 51 and other metropolitan trial courts, 52 municipal trial courts in
cities, 53 as well as in municipalities, 54 and municipal circuit trial courts. 55 There is
even less reason then to doubt the fact that existing inferior courts were
abolished. For the Batasang Pambansa, the establishment of such new inferior
courts was the appropriate response to the grave and urgent problems that
pressed for solution. Certainly, there could be differences of opinion as to the
appropriate remedy. The choice, however, was for the Batasan to make, not for
this Court, which deals only with the question of power. It bears mentioning that
in Brillo v. Eñage 56 this Court, in an unanimous opinion penned by the late Justice
Diokno, citing Zandueta v. De la Costa, ruled: "La segunda question que el
recurrrido plantea es que la Carta de Tacloban ha abolido el puesto. Si
efectivamente ha sido abolido el cargo, entonces ha quedado extinguido el
derecho de recurente a ocuparlo y a cobrar el salario correspodiente. Mc Culley
vs. State, 46 LRA, 567. El derecho de un juez de desempenarlo hasta los 70 años
de edad o se incapacite no priva al Congreso de su facultad de abolir, fusionar o
reorganizar juzgados no constitucionales." 57 Nonetheless, such well-established
principle was not held applicable to the situation there obtaining, the Charter of
Tacloban City creating a city court in place of the former justice of the peace
court. Thus: "Pero en el caso de autos el Juzgado de Tacloban no ha sido abolido.
Solo se le ha cambiado el nombre con el cambio de forma del gobierno
local." 58 The present case is anything but that. Petitioners did not and could not
prove that the challenged statute was not within the bounds of legislative
authority.

7. This opinion then could very well stop at this point. The implementation of
Batas Pambansa Blg. 129, concededly a task incumbent on the Executive, may
give rise, however, to questions affecting a judiciary that should be kept
independent. The all-embracing scope of the assailed legislation as far as all
inferior courts from the Courts of Appeals to municipal courts are concerned, with
the exception solely of the Sandiganbayan and the Court of Tax Appeals 59 gave
rise, and understandably so, to misgivings as to its effect on such cherished Ideal.
The first paragraph of the section on the transitory provision reads: "The
provisions of this Act shall be immediately carried out in accordance with an
Executive Order to be issued by the President. The Court of Appeals, the Courts of
First Instance, the Circuit Criminal Courts, the Juvenile and Domestic Relations
Courts, the Courts of Agrarian Relations, the City Courts, the Municipal Courts,
and the Municipal Circuit Courts shall continue to function as presently
constituted and organized, until the completion of the reorganization provided in
this Act as declared by the President. Upon such declaration, the said courts shall
be deemed automatically abolished and the incumbents thereof shall cease to
hold the office." 60 There is all the more reason then why this Court has no choice
but to inquire further into the allegation by petitioners that the security of tenure
provision, an assurance of a judiciary free from extraneous influences, is thereby
reduced to a barren form of words. The amended Constitution adheres even
more clearly to the long-established tradition of a strong executive that
antedated the 1935 Charter. As noted in the work of former Vice-Governor
Hayden, a noted political scientist, President Claro M. Recto of the 1934
Convention, in his closing address, in stressing such a concept, categorically spoke
of providing "an executive power which, subject to the fiscalization of the
Assembly, and of public opinion, will not only know how to govern, but will
actually govern, with a firm and steady hand, unembarrassed by vexatious
interferences by other departments, or by unholy alliances with this and that
social group." 61 The above excerpt was cited with approval by Justice Laurel
in Planas v. Gil. 62 Moreover, under the 1981 Amendments, it may be affirmed
that once again the principle of separation of powers, to quote from the same
jurist as ponente in Angara v. Electoral Commission, 63 "obtains not through
express provision but by actual division." 64 The president, under Article VII, shall
be the head of state and chief executive of the Republic of the
Philippines." 65Moreover, it is equally therein expressly provided that all the
powers he possessed under the 1935 Constitution are once again vested in him
unless the Batasang Pambansa provides otherwise." 66 Article VII of the 1935
Constitution speaks categorically: "The Executive power shall be vested in a
President of the Philippines." 67 As originally framed, the 1973 Constitution
created the position of President as the "symbolic head of state." 68 In addition,
there was a provision for a Prime Minister as the head of government exercising
the executive power with the assistance of the Cabinet 69 Clearly, a modified
parliamentary system was established. In the light of the 1981 amendments
though, this Court in Free Telephone Workers Union v. Minister of Labor 70 could
state: "The adoption of certain aspects of a parliamentary system in the amended
Constitution does not alter its essentially presidential character." 71 The retention,
however, of the position of the Prime Minister with the Cabinet, a majority of the
members of which shall come from the regional representatives of the Batasang
Pambansa and the creation of an Executive Committee composed of the Prime
Minister as Chairman and not more than fourteen other members at least half of
whom shall be members of the Batasang Pambansa, clearly indicate the evolving
nature of the system of government that is now operative. 72 What is equally
apparent is that the strongest ties bind the executive and legislative departments.
It is likewise undeniable that the Batasang Pambansa retains its full authority to
enact whatever legislation may be necessary to carry out national policy as
usually formulated in a caucus of the majority party. It is understandable then
why in Fortun v. Labang 73 it was stressed that with the provision transferring to
the Supreme Court administrative supervision over the Judiciary, there is a
greater need "to preserve unimpaired the independence of the judiciary,
especially so at present, where to all intents and purposes, there is a fusion
between the executive and the legislative branches." 74

8. To be more specific, petitioners contend that the abolition of the existing

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

9. Nor is there anything novel in the concept that this Court is called upon to
reconcile or harmonize constitutional provisions. To be specific, the Batasang
Pambansa is expressly vested with the authority to reorganize inferior courts and
in the process to abolish existing ones. As noted in the preceding paragraph, the
termination of office of their occupants, as a necessary consequence of such
abolition, is hardly distinguishable from the practical standpoint from removal, a
power that is now vested in this Tribunal. It is of the essence of constitutionalism
to assure that neither agency is precluded from acting within the boundaries of its
conceded competence. That is why it has long been well-settled under the
constitutional system we have adopted that this Court cannot, whenever
appropriate, avoid the task of reconciliation. As Justice Laurel put it so well in the
previously cited Angara decision, while in the main, "the Constitution has blocked
out with deft strokes and in bold lines, allotment of power to the executive, the
legislative and the judicial departments of the government, the overlapping and
interlacing of functions and duties between the several departments, however,
sometimes makes it hard to say just where the one leaves off and the other
begins." 84 It is well to recall another classic utterance from the same jurist, even
more emphatic in its affirmation of such a view, moreover buttressed by one of
those insights for which Holmes was so famous "The classical separation of
government powers, whether viewed in the light of the political philosophy of
Aristotle, Locke, or Motesquieu or of the postulations of Mabini, Madison, or
Jefferson, is a relative theory of government. There is more truism and actuality in
interdependence than in independence and separation of powers, for as observed
by Justice Holmes in a case of Philippine origin, we cannot lay down 'with
mathematical precision and divide the branches into water-tight compartments'
not only because 'the great ordinances of the Constitution do not establish and
divide fields of black and white but also because 'even the more specific of them
are found to terminate in a penumbra shading gradually from one extreme to the
other.'" 85 This too from Justice Tuazon, likewise expressing with force and clarity
why the need for reconciliation or balancing is well-nigh unavodiable under the
fundamental principle of separation of powers: "The constitutional structure is a
complicated system, and overlappings of governmental functions are recognized,
unavoidable, and inherent necessities of governmental coordination." 86 In the
same way that the academe has noted the existence in constitutional litigation of
right versus right, there are instances, and this is one of them, where, without this
attempt at harmonizing the provisions in question, there could be a case of power
against power. That we should avoid.

10. There are other objections raised but they pose no difficulty. Petitioners
would characterize as an undue delegation of legislative power to the President
the grant of authority to fix the compensation and the allowances of the Justices
and judges thereafter appointed. A more careful reading of the challenged Batas
Pambansa Blg. 129 ought to have cautioned them against raising such an issue.
The language of the statute is quite clear. The questioned provisions reads as
follows: "Intermediate Appellate Justices, Regional Trial Judges, Metropolitan Trial
Judges, municipal Trial Judges, and Municipal Circuit Trial Judges shall receive
such receive such compensation and allowances as may be authorized by the
President along the guidelines set forth in Letter of Implementation No. 93
pursuant to Presidential Decree No. 985, as amended by Presidential Decree No.
1597." 87 The existence of a standard is thus clear. The basic postulate that
underlies the doctrine of non-delegation is that it is the legislative body which is
entrusted with the competence to make laws and to alter and repeal them, the
test being the completeness of the statue in all its terms and provisions when
enacted. As pointed out in Edu v. Ericta: 88 "To avoid the taint of unlawful
delegation, there must be a standard, which implies at the very least that the
legislature itself determines matters of principle and lays down fundamental
policy. Otherwise, the charge of complete abdication may be hard to repel. A
standard thus defines legislative policy, marks its limits, maps out its boundaries
and specifies the public agency to apply it. It indicates the circumstances under
which the legislative command is to be effected. It is the criterion by which
legislative purpose may be carried out. Thereafter, the executive or
administrative office designated may in pursuance of the above guidelines
promulgate supplemental rules and regulations. The standard may be either
express or implied. If the former, the non-delegation objection is easily met. The
standard though does not have to be spelled out specifically. It could be implied
from the policy and purpose of the act considered as a whole." 89 The undeniably
strong links that bind the executive and legislative departments under the
amended Constitution assure that the framing of policies as well as their
implementation can be accomplished with unity, promptitude, and efficiency.
There is accuracy, therefore, to this observation in the Free Telephone Workers
Union decision: "There is accordingly more receptivity to laws leaving to
administrative and executive agencies the 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 Jaffe, as early as 1947, could speak of
delegation as the 'dynamo of modern government.'" 90 He warned against a
"restrictive approach" which could be "a deterrent factor to much-needed
legislation." 91 Further on this point from the same opinion" "The spectre of the
non-delegation concept need not haunt, therefore, party caucuses, cabinet
sessions or legislative chambers." 92 Another objection based on the absence in
the statue of what petitioners refer to as a "definite time frame limitation" is
equally bereft of merit. They ignore the categorical language of this provision:
"The Supreme Court shall submit to the President, within thirty (30) days from the
date of the effectivity of this act, a staffing pattern for all courts constituted
pursuant to this Act which shall be the basis of the implementing order to be
issued by the President in accordance with the immediately succeeding
section." 93 The first sentence of the next section is even more categorical: "The
provisions of this Act shall be immediately carried out in accordance with an
Executive Order to be issued by the President." 94 Certainly petitioners cannot be
heard to argue that the President is insensible to his constitutional duty to take
care that the laws be faithfully executed. 95 In the meanwhile, the existing inferior
courts affected continue functioning as before, "until the completion of the
reorganization provided in this Act as declared by the President. Upon such
declaration, the said courts shall be deemed automatically abolished and the
incumbents thereof shall cease to hold office." 96 There is no ambiguity. The
incumbents of the courts thus automatically abolished "shall cease to hold office."
No fear need be entertained by incumbents whose length of service, quality of
performance, and clean record justify their being named anew, 97 in legal
contemplation without any interruption in the continuity of their service. 98 It is
equally reasonable to assume that from the ranks of lawyers, either in the
government service, private practice, or law professors will come the new
appointees. In the event that in certain cases a little more time is necessary in the
appraisal of whether or not certain incumbents deserve reappointment, it is not
from their standpoint undesirable. Rather, it would be a reaffirmation of the good
faith that will characterize its implementation by the Executive. There is
pertinence to this observation of Justice Holmes that even acceptance of the
generalization that courts ordinarily should not supply omissions in a law, a
generalization qualified as earlier shown by the principle that to save a statute
that could be done, "there is no canon against using common sense in construing
laws as saying what they obviously mean." 99 Where then is the unconstitutional
flaw

11. On the morning of the hearing of this petition on September 8, 1981,

petitioners sought to have the writer of this opinion and Justices Ramon C. Aquino
and Ameurfina Melencio-Herrera disqualified because the first-named was the
chairman and the other two, members of the Committee on Judicial
Reorganization. At the hearing, the motion was denied. It was made clear then
and there that not one of the three members of the Court had any hand in the
framing or in the discussion of Batas Pambansa Blg. 129. They were not consulted.
They did not testify. The challenged legislation is entirely the product of the
efforts of the legislative body. 100 Their work was limited, as set forth in the
Executive Order, to submitting alternative plan for reorganization. That is more in
the nature of scholarly studies. That the undertook. There could be no possible
objection to such activity. Ever since 1973, this Tribunal has had administrative
supervision over interior courts. It has had the opportunity to inform itself as to
the way judicial business is conducted and how it may be improved. Even prior to
the 1973 Constitution, it is the recollection of the writer of this opinion that either
the then Chairman or members of the Committee on Justice of the then Senate of
the Philippines 101 consulted members of the Court in drafting proposed
legislation affecting the judiciary. It is not inappropriate to cite this excerpt from
an article in the 1975 Supreme Court Review: "In the twentieth century the Chief
Justice of the United States has played a leading part in judicial reform. A variety
of conditions have been responsible for the development of this role, and
foremost among them has been the creation of explicit institutional structures
designed to facilitate reform." 102 Also: "Thus the Chief Justice cannot avoid
exposure to and direct involvement in judicial reform at the federal level and, to
the extent issues of judicial federalism arise, at the state level as well." 103

12. It is a cardinal article of faith of our constitutional regime that it is the people
who are endowed with rights, to secure which a government is instituted. Acting
as it does through public officials, it has to grant them either expressly or
impliedly certain powers. Those they exercise not for their own benefit but for the
body politic. The Constitution does not speak in the language of ambiguity: "A
public office is a public trust." 104 That is more than a moral adjuration It is a legal
imperative. The law may vest in a public 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 security of tenure provision to assure judicial
independence is to be viewed. It is an added guarantee that justices and judges
can administer justice undeterred by any fear of reprisal or untoward
consequence. Their judgments then are even more likely to be inspired solely by
their knowledge of the law and the dictates of their conscience, free from the
corrupting influence of base or unworthy motives. The independence of which
they are assured is impressed with a significance transcending that of a purely
personal right. As thus viewed, it is not solely for their welfare. The challenged
legislation Thus subject d to the most rigorous scrutiny by this Tribunal, lest by
lack of due care and circumspection, it allow the erosion of that Ideal so firmly
embedded in the national consciousness There is this farther thought to consider.
independence in thought and action necessarily is rooted in one's mind and heart.
As emphasized by former Chief Justice Paras in Ocampo v. Secretary of
Justice, 105 there is no surer guarantee of judicial independence than the God-
given character and fitness of those appointed to the Bench. The judges may be
guaranteed a fixed tenure of office during good behavior, 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 another, the independence of the
judiciary will be nothing more than a myth 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 aspirations and to fulfilling the hopes of the sovereign people as expressed in
the Constitution. There is wisdom as well as validity to this pronouncement of
Justice Malcolm in Manila Electric Co. v. Pasay Transportation Company, 109 a
decision promulgated almost half a century ago: "Just as the Supreme Court, as
the guardian of constitutional rights, should not sanction usurpations by any
other department or the government, so should it as strictly confine its own
sphere of influence to the powers expressly or by implication conferred on it by
the Organic Act." 110 To that basic postulate underlying our constitutional system,
this Court remains committed.

WHEREFORE, the unconstitutionality of Batas Pambansa Blg. 129 not having been
shown, this petition is dismissed. No costs.
G.R. No. L-30637 July 16, 1987
LIANGA BAY LOGGING, CO., INC., petitioner,
vs.
HON. MANUEL LOPEZ ENAGE, in his capacity as Presiding Judge of Branch
II of the Court of First, Instance of Agusan, and AGO TIMBER
CORPORATION, respondents.

TEEHANKEE, C.J.:

The Court grants the petition for certiorari and prohibition and holds that
respondent judge, absent any showing of grave abuse of discretion, has no
competence nor authority to review anew the decision in administrative
proceedings of respondents public officials (director of forestry, secretary of
agriculture and natural resources and assistant executive secretaries of the Office
of the President) in determining the correct boundary line of the licensed timber
areas of the contending parties. The Court reaffirms the established principle that
findings of fact by an administrative board or agency or official, following a
hearing, are binding upon the courts and will not be disturbed except where the
board, agency and/or official(s) have gone beyond their statutory authority,
exercised unconstitutional powers or clearly acted arbitrarily and without regard
to their duty or with grave abuse of discretion.

The parties herein are both forest concessionaries whose licensed areas are
adjacent to each other. The concession of petitioner Lianga Bay Logging
Corporation Co., Inc. (hereinafter referred to as petitioner Lianga) as described in
its Timber License Agreement No. 49, is located in the municipalities of Tago,
Cagwait, Marihatag and Lianga, all in the Province of Surigao, consisting of
110,406 hectares, more or less, while that of respondent Ago Timber Corporation
(hereinafter referred to as respondent Ago) granted under Ordinary Timber
License No. 1323-60 [New] is located at Los Arcos and San Salvador, Province of
Agusan, with an approximate area of 4,000 hectares. It was a part of a forest area
of 9,000 hectares originally licensed to one Narciso Lansang under Ordinary
Timber License No. 584-'52.

Since the concessions of petitioner and respondent are adjacent to each other,
they have a common boundary-the Agusan-Surigao Provincial boundary-whereby
the eastern boundary of respondent Ago's concession is petitioner Lianga's
western boundary. The western boundary of petitioner Lianga is described as "...
Corner 5, a point in the intersection of the Agusan-Surigao Provincial boundary
and Los Arcos-Lianga Road; thence following Agusan-Surigao Provincial boundary
in a general northerly and northwesterly and northerly directions about 39,500
meters to Corner 6, a point at the intersection of the Agusan-Surigao Provincial
boundary and Nalagdao Creek ..." The eastern boundary of respondent Ago's
concession is described as "... point 4, along the Agusan-Surigao boundary; thence
following Agusan-Surigao boundary in a general southeasterly and southerly
directions about 12,000 meters to point 5, a point along Los Arcos-Lianga Road;
..." 1

Because of reports of encroachment by both parties on each other's concession

areas, the Director of Forestry ordered a survey to establish on the ground the
common boundary of their respective concession areas. Forester Cipriano
Melchor undertook the survey and fixed the common boundary as "Corner 5 of
Lianga Bay Logging Company at Km. 10.2 instead of Km. 9.7 on the Lianga-Arcos
Road and lines N900E, 21,000 meters; N12 W, 21,150 meters; N40 W, 3,000
meters; N31 W, 2,800 meters; N50 W, 1,700 meters" which respondent Ago
protested claiming that "its eastern boundary should be the provincial boundary
line of Agusan-Surigao as described in Section 1 of Art. 1693 of the Philippine
Commission as indicated in the green pencil in the attached sketch" of the areas
as prepared by the Bureau of Forestry. 2 The Director of Forestry, after
considering the evidence, found:

That the claim of the Ago Timber Corporation portrays a line (green line) far
different in alignment with the line (red) as indicated in the original License
Control Map of this Office;

That the claim of the Ago Timber Corporation (green line does not conform
to the distance of 6,800 meters from point 3 to point 4 of the original
description of the area of Narciso Lansang but would project said line to a
distance of approximately 13,800 meters;

That to follow the claim of the Ago Timber Corporation would increase the
area of Narciso Lansang from 9,000 to 12,360 hectares;

That to follow the claim of the Ago Timber Corporation would reduce the
area of the Lianga Bay Logging, Co., Inc. to 107,046 hectares instead of the
area granted which is 110,406 hectares.
and ruled that "the claim of the Ago Timber Corporation runs counter to the
intentions of this Office is granting the license of Mr. Narciso Lansang; and
further, that it also runs counter to the intentions of this Office in granting the
Timber License Agreement to the Lianga Bay Logging Co., Inc. The intentions of
this Office in granting the two licenses (Lansang and Lianga Bay Logging Co., Inc.)
are patently manifest in that distances and bearings are the controlling factors. If
mention was ever made of the Agusan-Surigao boundary, as the common
boundary line of both licensees, this Office could not have meant the Agusan-
Surigao boundary as described under Section 1 of Act 1693 of the Philippine
Commission for were it so it could have been so easy for this Office to mention
the distance from point 3 to point 4 of Narciso Lansang as approximately 13,800
meters. This cannot be considered a mistake considering that the percentage of
error which is more or less 103% is too high an error to be committed by an Office
manned by competent technical men. The Agusan-Surigao boundary as
mentioned in the technical descriptions of both licensees, is, therefore, patently
an imaginary line based on B.F. License Control Map. Such being the case, it
is reiterated that distance and bearings control the description where an
imaginary line exists. 3The decision fixed the common boundary of the licensed
areas of the Ago Timber Corporation and Lianga Bay Logging Co., Inc. as that
indicated in red pencil of the sketch attached to the decision.

In an appeal interposed by respondent Ago, docketed in the Department of

Agriculture and Natural Resources as DANR Case No. 2268, the then Acting
Secretary of Agriculture and Natural Resources Jose Y. Feliciano, in a decision
dated August 9, 1965 set aside the appealed decision of the Director of Forestry
and ruled that "(T)he common boundary line of the licensed areas of the Ago
Timber Corporation and the Lianga Bay Logging Co., Inc., should be that indicated
by the green line on the same sketch which had been made an integral part of the
appealed decision." 4

Petitioner elevated the case to the Office of the President, where in a decision
dated June 16, 1966, signed by then Assistant Executive Secretary Jose J. Leido,
Jr., the ruling of the then Secretary of Agriculture and Natural Resources was
affirmed. 5 On motion for reconsideration, the Office of the President issued
another decision dated August 9, 1968 signed by then Assistant Executive
Secretary Gilberto Duavit reversing and overturning the decision of the then
Acting Secretary of Agriculture and Natural Resources and affirming in toto and
reinstating the decision, dated March 20, 1961, of the Director of Forestry. 6
Respondent Ago filed a motion for reconsideration of the decision dated August
9, 1968 of the Office of the President but after written opposition of petitioner
Lianga, the same was denied in an order dated October 2, 1968, signed by then
Assistant Executive Secretary Jose J. Leido, Jr. 7

On October 21, 1968, a new action was commenced by Ago Timber Corporation,
as plaintiff, in the Court of First Instance of Agusan, Branch II, docketed thereat as
Civil Case No. 1253, against Lianga Bay Logging Co., Inc., Assistant Executive
Secretaries Jose J. Leido, Jr. and Gilberto M. Duavit and Director of Forestry, as
defendants, for "Determination of Correct Boundary Line of License Timber Areas
and Damages with Preliminary Injunction" reiterating once more the same
question raised and passed upon in DANR Case No. 2268 and insisting that "a
judicial review of such divergent administrative decisions is necessary in order to
determine the correct boundary fine of the licensed areas in question." 8

As prayed for, respondent judge issued a temporary restraining order on October

28, 1968, on a bond of P20,000, enjoining the defendants from carrying out the
decision of the Office of the President. The corresponding writ was issued the
next day, or on October 29, 1968. 9

On November 10, 1968, defendant Lianga (herein petitioner) moved for dismissal
of the complaint and for dissolution of the temporary restraining order on
grounds that the complaint states no cause of action and that the court has no
jurisdiction over the person of respondent public officials and respondent
corporation. It also submitted its opposition to plaintiff's (herein respondent
prayer for the issuance of a writ of preliminary injunction. 10 A supplemental
motion was filed on December 6, 1968. 11

On December 19, 1968, the lower court issued an order denying petitioner
Lianga's motion to dismiss and granting the writ of preliminary injunction prayed
for by respondent Ago. 12 Lianga's Motion for Reconsideration of the Order was
denied on May 9, 1969. 13 Hence, this petition praying of the Court (a) to declare
that the Director of Forestry has the exclusive jurisdiction to determine the
common boundary of the licensed areas of petitioners and respondents and that
the decision of the Office of the President dated August 9, 1968 is final and
executory; (b) to order the dismissal of Civil Case No. 1253 in the Court of First
Instance of Agusan; (c) to declare that respondent Judge acted without
jurisdiction or in excess of jurisdiction and with grave abuse of discretion,
amounting to lack of jurisdiction, in issuing the temporary restraining order dated
October 28, 1968 and granting the preliminary injunction per its Order dated
December 19, 1968; and (d) to annul the aforementioned orders.

After respondent's comments on the petition and petitioner's reply thereto, this
Court on June 30, 1969 issued a restraining order enjoining in turn the
enforcement of the preliminary injunction and related orders issued by the
respondent court in Civil Case No. 1253. 14

The Court finds merit in the petition.

Respondent Judge erred in taking cognizance of the complaint filed by respondent

Ago, asking for the determination anew of the correct boundary fine of its
licensed timber area, for the same issue had already been determined by the
Director of Forestry, the Secretary of Agriculture and Natural Resources and the
Office of the President, administrative officials under whose jurisdictions the
matter properly belongs. Section 1816 of the Revised Administrative Code vests in
the Bureau of Forestry, the jurisdiction and authority over the demarcation,
protection, management, reproduction, reforestation, occupancy, and use of all
public forests and forest reserves and over the granting of licenses for game and
fish, and for the taking of forest products, including stone and earth therefrom.
The Secretary of Agriculture and Natural Resources, as department head, may
repeal or in the decision of the Director of Forestry when advisable in the public
interests, 15 whose decision is in turn appealable to the Office of the President. 16

In giving due course to the complaint below, the respondent court would
necessarily have to assess and evaluate anew all the evidence presented in the
administrative proceedings, 17 which is beyond its competence and jurisdiction.
For the respondent court to consider and weigh again the evidence already
presented and passed upon by said officials would be to allow it to substitute its
judgment for that of said officials who are in a better position to consider and
weigh the same in the light of the authority specifically vested in them by law.
Such a posture cannot be entertained, for it is a well-settled doctrine that the
courts of justice will generally not interfere with purely administrative matters
which are addressed to the sound discretion of government agencies and their
expertise unless there is a clear showing that the latter acted arbitrarily or with
grave abuse of discretion or when they have acted in a capricious and whimsical
manner such that their action may amount to an excess or lack of jurisdiction. 18
A doctrine long recognized is that where the law confines in an administrative
office the power to determine particular questions or matters, upon the facts to
be presented, the jurisdiction of such office shall prevail over the courts. 19

The general rule, under the principles of administrative law in force in this
jurisdiction, is that decisions of administrative officers shall not be disturbed by
the courts, except when the former have acted without or in excess of their
jurisdiction, or with grave abuse of discretion. Findings of administrative officials
and agencies who have acquired expertise because their jurisdiction is confined to
specific matters are generally accorded not only respect but at times even finality
of such findings are supported by substantial evidence. 20 As recently stressed by
the Court, "in this era of clogged court dockets, the need for specialized
administrative boards or commissions with the special knowledge, experience
and capability to hear and determine promptly disputes on technical matters or
essentially factual matters, subject to judicial review in case of grave abuse of
discretion, has become well nigh indispensable." 21

The facts and circumstances in the instant case are similar to the earlier case
of Pajo, et al. v. Ago, et al. 22 (where therein respondent Pastor Ago is the
president of herein respondent Ago Timber Corporation). In the said case, therein
respondent Pastor Ago, after an adverse decision of the Director of Forestry,
Secretary of Agriculture and Natural Resources and Executive Secretary in
connection with his application for renewal of his expired timber licenses, filed
with the Court of First instance of Agusan a petition for certiorari, prohibition and
damages with preliminary injunction alleging that the rejection of his application
for renewal by the Director of Forestry and Secretary of Agriculture and Natural
Resources and its affirmance by the Executive Secretary constituted an abuse of
discretion and was therefore illegal. The Court held that "there can be no
question that petitioner Director of Forestry has jurisdiction over the grant or
renewal of respondent Ago's timber license (Sec. 1816, Rev. Adm. Code); that
petitioner Secretary of Agriculture and Natural Resources as department head, is
empowered by law to affirm, modify or reject said grant or renewal of respondent
Ago's timber license by petitioner Director of Forestry (Sec. 79[c], Rev. Adm.
Code); and that petitioner Executive Secretary, acting for and in behalf and by
authority of the President has, likewise, jurisdiction to affirm, modify or reverse
the orders regarding the grant or renewal of said timber license by the two
aforementioned officials." The Court went on to say that, "(I)n the case of
Espinosa, et al. v. Makalintal, et al. (79 Phil. 134; 45 Off. Gaz. 712), we held that
the powers granted to the Secretary of Agriculture and Commerce (Natural
Resources) by law regarding the disposition of public lands such as granting of
licenses, permits, leases, and contracts or approving, rejecting, reinstating, or
cancelling applications or deciding conflicting applications, are all executive and
administrative in nature. It is a well-recognized principle that purely
administrative and discretionary functions may not be interfered with by the
courts. In general, courts have no supervising power over the proceedings and
actions of the administrative departments of the government. This is generally
true with respect to acts involving the exercise of judgment or discretion, and
findings of act. Findings of fact by an administrative board, agency or official,
following a hearing, are binding upon the courts and will not be disturbed except
where the board, agency or official has gone beyond his statutory authority,
exercised unconstitutional powers or clearly acted arbitrarily and without regard
to his duty or with grave abuse of discretion. And we have repeatedly held that
there is grave abuse of discretion justifying the issuance of the writ of certiorari
only when there is capricious and whimsical exercise of judgment as is equivalent
to lack of jurisdiction. (Abad Santos v. Province of Tarlac, 67 Phil. 480; Tan vs.
People, 88 Phil. 609)"

Respondent Ago contends that the motion filed by petitioner Lianga for
reconsideration of the decision of the Office of the President was denied in an
alleged "decision" dated August 15, 1966, allegedly signed by then Assistant
Executive Secretary Jose J. Leido, Jr. that, "however, for some mysterious,
unknown if not anomalous reasons and/or illegal considerations, the "decision"
allegedly dated August 15, 1966(Annex "D") was never released" and instead a
decision was released on August 9, 1968, signed by then Assistant Executive
Secretary Gilberto M. Duavit, which reversed the findings and conclusions of the
Office of the President in its first decision dated June 16, 1966 and signed by then
Assistant Executive Secretary Leido.

It is elementary that a draft of a decision does not operate as judgment on a case

until the same is duly signed and delivered to the clerk for filing and
promulgation. A decision cannot be considered as binding on the parties until its
promulgation. 23 Respondent should be aware of this rule. In still another case
of Ago v. Court of Appeals, 24 (where herein respondent Ago was the petitioner)
the Court held that, "While it is to be presumed that the judgment that was
dictated in open court will be the judgment of the court, the court may still
modify said order as the same is being put into writing. And even if the order or
judgment has already been put into writing and signed, while it has not yet been
delivered to the clerk for filing, it is stin subject to amendment or change by the
judge. It is only when the judgment signed by the judge is actually filed with the
clerk of court that it becomes a valid and binding judgment. Prior thereto, it could
still be subject to amendment and change and may not, therefore, constitute the
real judgment of the court."

Respondent alleges "that in view of the hopelessly conflicting decisions of the

administrative bodies and/or offices of the Philippine government, and the
important questions of law and fact involved therein, as well as the well-
grounded fear and suspicion that some anomalous, illicit and unlawful
considerations had intervened in the concealment of the decision of August 15,
1966 (Annex "D") of Assistant Executive Secretary Gilberto M. Duavit, a judicial
review of such divergent administrative decisions is necessary in order to
determine the correct boundary line of the licensed areas in question and restore
the faith and confidence of the people in the actuations of our public officials and
in our system of administration of justice."

The mere suspicion of respondent that there were anomalies in the non-release
of the Leido "decision" allegedly denying petitioner's motion for reconsideration
and the substitution thereof by the Duavit decision granting reconsideration does
not justify judicial review. Beliefs, suspicions and conjectures cannot overcome
the presumption of regularity and legality of official actions. 25 It is presumed that
an official of a department performs his official duties regularly. 26 It should be
noted, furthermore, that as hereinabove stated with regard to the case history in
the Office of the President, Ago's motion for reconsideration of the Duavit
decision dated August 9, 1968 was denied in the Order dated October 2, 1968 and
signed by Assistant Executive Secretary Leido himself (who thereby joined in the
reversal of his own first decision dated June 16, 1966 and signed by himself).

The Ordinary Timber License No. 1323-'60[New] which approved the transfer to
respondent Ago of the 4,000 hectares from the forest area originally licensed to
Narciso Lansang, stipulates certain conditions, terms and limitations, among
which were: that the decision of the Director of Forestry as to the exact location
of its licensed areas is final; that the license is subject to whatever decision that
may be rendered on the boundary conflict between the Lianga Bay Logging Co.
and the Ago Timber Corporation; that the terms and conditions of the license are
subject to change at the discretion of the Director of Forestry and the license may
be made to expire at an earlier date. Under Section 1834 of the Revised
Administrative Code, the Director of Forestry, upon granting any license, may
prescribe and insert therein such terms, conditions, and limitations, not
inconsistent with law, as may be deemed by him to be in the public interest. The
license operates as a contract between the government and respondent.
Respondent, therefore, is estopped from questioning the terms and stipulation
thereof.

Clearly, the injunctive writ should not have been issued. The provisions of law
explicitly provide that Courts of First Instance shall have the power to issue writ of
injunction, mandamus, certiorari, prohibition, quo warranto and habeas corpus in
their respective places, 27 if the petition filed relates to the acts or omissions of an
inferior court, or of a corporation, board, officer or person, within their
jurisdiction. 28

The jurisdiction or authority of the Court of First Instance to control or restrain

acts by means of the writ of injunction is limited only to acts which are being
committed within the territorial boundaries of their respective provinces or
districts 29 except where the sole issue is the legality of the decision of the
administrative officials. 30

In the leading case of Palanan Lumber Plywood Co., Inc. v. Arranz 31 which
involved a petition for certiorari and prohibition filed in the Court of First Instance
of Isabela against the same respondent public officials as here and where the
administrative proceedings taken were similar to the case at bar, the Court laid
down the rule that: "We agree with the petitioner that the respondent Court
acted without jurisdiction in issuing a preliminary injunction against the
petitioners Executive Secretary, Secretary of Agriculture and Natural Resources
and the Director of Forestry, who have their official residences in Manila and
Quezon City, outside of the territorial jurisdiction of the respondent Court of First
Instance of Isabela. Both the statutory provisions and the settled jurisdiction of
this Court unanimously affirm that the extraordinary writs issued by the Court of
First Instance are limited to and operative only within their respective provinces
and districts."

A different rule applies only when the point in controversy relates solely to a
determination of a question of law whether the decision of the respondent
administrative officials was legally correct or not. 32 We thus declared in Director
of Forestry v. Ruiz. 33 "In Palanan Lumber & Plywood Co., Inc., supra, we
reaffirmed the rule of non-jurisdiction of courts of first instance to issue injunctive
writs in order to control acts outside of their premises or districts. We went
further and said that when the petition filed with the courts of first instance not
only questions the legal correctness of the decision of administrative officials but
also seeks to enjoin the enforcement of the said decision, the court could not
validly issue the writ of injunction when the officials sought to be restrained from
enforcing the decision are not stationed within its territory.1avvphi1

"To recapitulate, insofar as injunctive or prohibitory writs are concerned, the rule
still stands that courts of first instance have the power to issue writs limited to
and operative only within their respective provinces or districts. "

The writ of preliminary injunction issued by respondent court is furthermore void,

since it appears that the forest area described in the injunctive writ includes areas
not licensed to respondent Ago. The forest area referred to and described therein
comprises the whole area originally licensed to Narciso Lansang under the earlier
Ordinary Timber License No. 58452. Only a portion of this area was in fact
transferred to respondent Ago as described in its Ordinary Timber License No.
1323-'60[New].

It is abundantly clear that respondent court has no jurisdiction over the subject
matter of Civil Case No. 1253 of the Court of First Instance of Agusan nor has it
jurisdiction to decide on the common boundary of the licensed areas of petitioner
Lianga and respondent Ago, as determined by respondents public officials against
whom no case of grave abuse of discretion has been made. Absent a cause of
action and jurisdiction, respondent Judge acted with grave abuse of discretion
and excess, if not lack, of jurisdiction in refusing to dismiss the case under review
and in issuing the writ of preliminary injunction enjoining the enforcement of the
final decision dated August 9, 1968 and the order affirming the same dated
October 2, 1968 of the Office of the President.

ACCORDINGLY, the petition for certiorari and prohibition is granted. The

restraining order heretofore issued by the Court against enforcement of the
preliminary injunction and related orders issued by respondent judge is the case
below is made permanent and the respondent judge or whoever has taken his
place is hereby ordered to dismiss Civil Case No. 1253.
SO ORDERED.

G.R. No. 84811 August 29, 1989

SOLID HOMES, INC., petitioner,
vs.
TERESITA PAYAWAL and COURT OF APPEALS, respondents.

CRUZ, J.:

We are asked to reverse a decision of the Court of Appeals sustaining the

jurisdiction of the Regional Trial Court of Quezon City over a complaint filed by a
buyer, the herein private respondent, against the petitioner, for delivery of title to
a subdivision lot. The position of the petitioner, the defendant in that action, is
that the decision of the trial court is null and void ab initio because the case
should have been heard and decided by what is now called the Housing and Land
Use Regulatory Board.

The complaint was filed on August 31, 1982, by Teresita Payawal against Solid
Homes, Inc. before the Regional Trial Court of Quezon City and docketed as Civil
Case No. Q-36119. The plaintiff alleged that the defendant contracted to sell to
her a subdivision lot in Marikina on June 9, 1975, for the agreed price of P
28,080.00, and that by September 10, 1981, she had already paid the defendant
the total amount of P 38,949.87 in monthly installments and interests. Solid
Homes subsequently executed a deed of sale over the land but failed to deliver
the corresponding certificate of title despite her repeated demands because, as it
appeared later, the defendant had mortgaged the property in bad faith to a
financing company. The plaintiff asked for delivery of the title to the lot or,
alternatively, the return of all the amounts paid by her plus interest. She also
claimed moral and exemplary damages, attorney's fees and the costs of the suit.

Solid Homes moved to dismiss the complaint on the ground that the court had no
jurisdiction, this being vested in the National Housing Authority under PD No. 957.
The motion was denied. The defendant repleaded the objection in its answer,
citing Section 3 of the said decree providing that "the National Housing Authority
shall have exclusive jurisdiction to regulate the real estate trade and business in
accordance with the provisions of this Decree." After trial, judgment was
rendered in favor of the plaintiff and the defendant was ordered to deliver to her
the title to the land or, failing this, to refund to her the sum of P 38,949.87 plus
interest from 1975 and until the full amount was paid. She was also awarded P
5,000.00 moral damages, P 5,000.00 exemplary damages, P 10,000.00 attorney's
fees, and the costs of the suit.1

Solid Homes appealed but the decision was affirmed by the respondent
court, 2 which also berated the appellant for its obvious efforts to evade a
legitimate obligation, including its dilatory tactics during the trial. The petitioner
was also reproved for its "gall" in collecting the further amount of P 1,238.47 from
the plaintiff purportedly for realty taxes and registration expenses despite its
inability to deliver the title to the land.

In holding that the trial court had jurisdiction, the respondent court referred to
Section 41 of PD No. 957 itself providing that:

SEC. 41. Other remedies.-The rights and remedies provided in this

Decree shall be in addition to any and all other rights and remedies
that may be available under existing laws.

and declared that "its clear and unambiguous tenor undermine(d) the
(petitioner's) pretension that the court a quowas bereft of jurisdiction." The
decision also dismissed the contrary opinion of the Secretary of Justice as
impinging on the authority of the courts of justice. While we are disturbed by the
findings of fact of the trial court and the respondent court on the dubious conduct
of the petitioner, we nevertheless must sustain it on the jurisdictional issue.

The applicable law is PD No. 957, as amended by PD No. 1344, entitled

"Empowering the National Housing Authority to Issue Writs of Execution in the
Enforcement of Its Decisions Under Presidential Decree No. 957." Section 1 of the
latter decree provides as follows:

SECTION 1. In the exercise of its function to regulate the real estate

trade and business and in addition to its powers provided for in
Presidential Decree No. 957, the National Housing Authority shall
haveexclusive jurisdiction to hear and decide cases of the following
nature:
 A. Unsound real estate business practices;

B. Claims involving refund and any other claims filed by subdivision

lot or condominium unit buyer against the project owner, developer,
dealer, broker or salesman; and

C. Cases involving specific performance of contractuala statutory

obligations filed by buyers of subdivision lot or condominium unit
against the owner, developer, dealer, broker or salesman. (Emphasis
supplied.)

The language of this section, especially the italicized portions, leaves no room for
doubt that "exclusive jurisdiction" over the case between the petitioner and the
private respondent is vested not in the Regional Trial Court but in the National
Housing Authority. 3

The private respondent contends that the applicable law is BP No. 129, which
confers on regional trial courts jurisdiction to hear and decide cases mentioned in
its Section 19, reading in part as follows:

SEC. 19. Jurisdiction in civil cases.-Regional Trial Courts shall exercise

exclusive original jurisdiction:

(1) In all civil actions in which the subject of the litigation is incapable
of pecuniary estimation;

(2) In all civil actions which involve the title to, or possession of, real
property, or any interest therein, except actions for forcible entry
into and unlawful detainer of lands or buildings, original jurisdiction
over which is conferred upon Metropolitan Trial Courts, Municipal
Trial Courts, and Municipal Circuit Trial Courts;

xxx xxx xxx

(8) In all other cases in which the demand, exclusive of interest and
cost or the value of the property in controversy, amounts to more
than twenty thousand pesos (P 20,000.00).
It stresses, additionally, that BP No. 129 should control as the later enactment,
having been promulgated in 1981, after PD No. 957 was issued in 1975 and PD
No. 1344 in 1978.

This construction must yield to the familiar canon that in case of conflict between
a general law and a special law, the latter must prevail regardless of the dates of
their enactment. Thus, it has been held that-

The fact that one law is special and the other general creates a
presumption that the special act is to be considered as remaining an
exception of the general act, one as a general law of the land and the
other as the law of the particular case. 4

xxx xxx xxx

The circumstance that the special law is passed before or after the
general act does not change the principle. Where the special law is
later, it will be regarded as an exception to, or a qualification of, the
prior general act; and where the general act is later, the special
statute will be construed as remaining an exception to its terms,
unless repealed expressly or by necessary implication. 5

It is obvious that the general law in this case is BP No. 129 and PD No. 1344 the
special law.

The argument that the trial court could also assume jurisdiction because of
Section 41 of PD No. 957, earlier quoted, is also unacceptable. We do not read
that provision as vesting concurrent jurisdiction on the Regional Trial Court and
the Board over the complaint mentioned in PD No. 1344 if only because grants of
power are not to be lightly inferred or merely implied. The only purpose of this
section, as we see it, is to reserve. to the aggrieved party such other remedies as
may be provided by existing law, like a prosecution for the act complained of
under the Revised Penal Code. 6

On the competence of the Board to award damages, we find that this is part of
the exclusive power conferred upon it by PD No. 1344 to hear and decide "claims
involving refund and any other claims filed by subdivision lot or condominium unit
buyers against the project owner, developer, dealer, broker or salesman." It was
therefore erroneous for the respondent to brush aside the well-taken opinion of
the Secretary of Justice that-

Such claim for damages which the subdivision/condominium buyer

may have against the owner, developer, dealer or salesman, being a
necessary consequence of an adjudication of liability for non-
performance of contractual or statutory obligation, may be deemed
necessarily included in the phrase "claims involving refund and any
other claims" used in the aforequoted subparagraph C of Section 1 of
PD No. 1344. The phrase "any other claims" is, we believe,
sufficiently broad to include any and all claims which are incidental to
or a necessary consequence of the claims/cases specifically included
in the grant of jurisdiction to the National Housing Authority under
the subject provisions.

The same may be said with respect to claims for attorney's fees
which are recoverable either by agreement of the parties or pursuant
to Art. 2208 of the Civil Code (1) when exemplary damages are
awarded and (2) where the defendant acted in gross and evident bad
faith in refusing to satisfy the plaintiff 's plainly valid, just and
demandable claim.

xxx xxx xxx

Besides, a strict construction of the subject provisions of PD No. 1344

which would deny the HSRC the authority to adjudicate claims for
damages and for damages and for attorney's fees would result in
multiplicity of suits in that the subdivision condominium buyer who
wins a case in the HSRC and who is thereby deemed entitled to claim
damages and attorney's fees would be forced to litigate in the regular
courts for the purpose, a situation which is obviously not in the
contemplation of the law. (Emphasis supplied.)7

As a result of the growing complexity of the modern society, it has become

necessary to create more and more administrative bodies to help in the
regulation of its ramified activities. Specialized in the particular fields assigned to
them, they can deal with the problems thereof with more expertise and dispatch
than can be expected from the legislature or the courts of justice. This is the
reason for the increasing vesture of quasi-legislative and quasi-judicial powers in
what is now not unreasonably called the fourth department of the government.

Statutes conferring powers on their administrative agencies must be liberally

construed to enable them to discharge their assigned duties in accordance with
the legislative purpose. 8 Following this policy in Antipolo Realty Corporation v.
National Housing Authority, 9 the Court sustained the competence of the
respondent administrative body, in the exercise of the exclusive jurisdiction
vested in it by PD No. 957 and PD No. 1344, to determine the rights of the parties
under a contract to sell a subdivision lot.

It remains to state that, contrary to the contention of the petitioner, the case of
Tropical Homes v. National Housing Authority 10 is not in point. We upheld in that
case the constitutionality of the procedure for appeal provided for in PD No.
1344, but we did not rule there that the National Housing Authority and not the
Regional Trial Court had exclusive jurisdiction over the cases enumerated in
Section I of the said decree. That is what we are doing now.

It is settled that any decision rendered without jurisdiction is a total nullity and
may be struck down at any time, even on appeal before this Court. 11 The only
exception is where the party raising the issue is barred by estoppel, 12 which does
not appear in the case before us. On the contrary, the issue was raised as early as
in the motion to dismiss filed in the trial court by the petitioner, which continued
to plead it in its answer and, later, on appeal to the respondent court. We have no
choice, therefore, notwithstanding the delay this decision will entail, to nullify the
proceedings in the trial court for lack of jurisdiction.

WHEREFORE, the challenged decision of the respondent court is REVERSED and

the decision of the Regional Trial Court of Quezon City in Civil Case No. Q-36119 is
SET ASIDE, without prejudice to the filing of the appropriate complaint before the
Housing and Land Use Regulatory Board. No costs.

SO ORDERED.
G.R. No. L-45839 June 1, 1988
RUFINO MATIENZO, GODOFREDO ESPIRITU, DIOSCORRO FRANCO, AND LA
SUERTE TRANSPORTATION CORPORATION, petitioners,
vs.
HON. LEOPOLDO M. ABELLERA, ACTING CHAIRMAN OF THE BOARD OF
TRANSPORTATION, HON. GODOFREDO Q. ASUNCION, MEMBER OF THE
BOARD OF TRANSPORTATION, ARTURO DELA CRUZ, MS TRANSPORTATION
CO., INC., NEW FAMILIA TRANSPORTATION CO., ROBERTO MOJARES, ET
AL., respondents.

GUTIERREZ, JR., J.:

This is a petition for certiorari and prohibition, with application for preliminary
injunction, seeking the annulment and inhibition of the grant or award of
provisional permits or special authority by the respondent Board of
Transportation (BOT) to respondent taxicab operators, for the operation and
legalization of "excess taxicab units" under certain provisions of Presidential
Decree No. 101 "despite the lapse of the power to do so thereunder," and "in
violation of other provisions of the Decree, Letter of Instructions No. 379 and
other relevant rules of the BOT."

The petitioners and private respondents are all authorized taxicab operators in
Metro Manila. The respondents, however, admittedly operate "colorum" or
"kabit" taxicab units. On or about the second week of February, 1977, private
respondents filed their petitions with the respondent Board for the legalization of
their unauthorized "excess" taxicab units citing Presidential Decree No. 101,
promulgated on January 17, 1973, "to eradicate the harmful and unlawful trade of
clandestine operators, by replacing or allowing them to become legitimate and
responsible operators." Within a matter of days, the respondent Board
promulgated its orders setting the applications for hearing and granting
applicants provisional authority to operate their "excess taxicab units" for which
legalization was sought. Thus, the present petition.

Opposing the applications and seeking to restrain the grant of provisional permits
or authority, as well as the annulment of permits already granted under PD 101,
the petitioners allege that the BOT acted without jurisdiction in taking cognizance
of the petitions for legalization and awarding special permits to the private
respondents.

Presidential Decree No. 101 vested in the Board of Transportation the power,
among others "To grant special permits of limited term for the operation of public
utility motor vehicles as may, in the judgment of the Board, be necessary to
replace or convert clandestine operators into legitimate and responsible
operators." (Section 1, PD 101)

Citing, however, Section 4 of the Decree which provides:

SEC. 4. Transitory Provision. — Six months after the promulgation of

this Decree, the Board of Transportation, the Bureau of
Transportation, The Philippine Constabulary, the city and municipal
forces, and the provincial and city fiscals shall wage a concerted and
relentless drive towards the total elimination and punishment of all
clandestine and unlawful operators of public utility motor vehicles."

the petitioners argue that neither the Board of Transportation chairman nor any
member thereof had the power, at the time the petitions were filed (i.e. in 1977),
to legitimize clandestine operations under PD 101 as such power had been limited
to a period of six (6) months from and after the promulgation of the Decree on
January 17, 1973. They state that, thereafter, the power lapses and
becomes functus officio.

To reinforce their stand, the petitioners refer to certain provisions of the Rules
and Regulations implementing PD 101 issued by respondent Board, Letter of
Instructions No. 379, and BOT Memorandum Circular No. 76-25 (a). In summary,
these rules provide inter alia that (1) only applications for special permits for
"colorum" or "kabit" operators filed before July 17, 1973 shall be accepted and
processed (Secs. 3 and 16 (c), BOT-LTC-HPG Joint Regulations Implementing PD
101, pp. 33 and 47, Rollo); (2) Every provisional authority given to any taxi
operator shall be cancelled immediately and no provisional authority shall
thereafter be issued (par. 6, Letter of Instructions No. 379, issued March 10, 1976,
p. 58, Rollo); (3) Effective immediately, no provisional authorities on applications
for certificates of public convenience shall be granted or existing provisional
authorities on new applications extended to, among others, taxi denominations in
Metro Manila (BOT Memorandum Circular No. 75-25 (a), August 30, 1976, p. 64,
Rollo); (4) All taxis authorized to operate within Metro Manila shall obtain new
special permits from the BOT, which permits shall be the only ones recognized
within the area (par. 8, LOI No. 379, supra); and (5) No bonafide applicant may
apply for special permit to operate, among others, new taxicab services, and, no
application for such new service shall be accepted for filing or processed by any
LTC agency or granted under these regulations by any LTC Regional Office until
after it shall have announced its program of development for these types of
public motor vehicles (Sec. 16d, BOT-LTC-HPG Joint Regulations, p. 47, Rollo).

The petitioners raise the following issues:

I. WHETHER OR NOT THE BOARD OF TRANSPORTATION HAS THE

POWER TO GRANT PROVISIONAL PERMITS TO OPERATE DESPITE THE
BAN THEREON UNDER LETTER OF INSTRUCTIONS NO. 379;

II. WHETHER OR NOT THE BOARD OF TRANSPORTATION HAS THE

POWER TO LEGALIZE, AT THIS TIME, CLANDESTINE AND UNLAWFUL
TAXICAB OPERATIONS UNDER SECTION 1, P.D. 101; AND

III. WHETHER OR NOT THE PROCEDURE BEING FOLLOWED BY THE

BOARD IN THE CASES IN QUESTION SATISFIES THE PROCEDURAL DUE
PROCESS REQUIREMENTS. (p. 119, Rollo)

We need not pass upon the first issue raised anent the grant of provisional
authority to respondents. Considering that the effectivity of the provisional
permits issued to the respondents was expressly limited to June 30, 1977, as
evidenced by the BOT orders granting the same (Annexes G, H, I and J among
others) and Memorandum Circular No. 77-4 dated January 20, 1977 (p. 151,
Rollo), implementing paragraph 6 of LOI 379 (ordering immediate cancellation of
all provisional authorities issued to taxicab operators, supra), which provides:

5. After June 30, 1977, all provisional authorities are deemed

cancelled, even if hearings on the main application have not been
terminated.

the issue is MOOT and ACADEMIC. Only the issue on legalization remains under
consideration.
Justifying its action on private respondent's applications, the respondent Board
emphasizes public need as the overriding concern. It is argued that under PD 101,
it is the fixed policy of the State "to eradicate the harmful and unlawful trade of
clandestine operators by replacing or allowing them to become legitimate and
responsible ones" (Whereas clause, PD 101). In view thereof, it is maintained that
respondent Board may continue to grant to "colorum" operators the benefits of
legalization under PD 101, despite the lapse of its power, after six (6) months, to
do so, without taking punitive measures against the said operators.

Indeed, a reading of Section 1, PD 101, shows a grant of powers to the

respondent Board to issue provisional permits as a step towards the legalization
of colorum taxicab operations without the alleged time limitation. There is
nothing in Section 4, cited by the petitioners, to suggest the expiration of such
powers six (6) months after promulgation of the Decree. Rather, it merely
provides for the withdrawal of the State's waiver of its right to punish said
colorum operators for their illegal acts. In other words, the cited section declares
when the period of moratorium suspending the relentless drive to eliminate
illegal operators shall end. Clearly, there is no impediment to the Board's exercise
of jurisdiction under its broad powers under the Public Service Act to issue
certificates of public convenience to achieve the avowed purpose of PD 101 (Sec.
16a, Public Service Act, Nov. 7, 1936).

It is a settled principle of law that in determining whether a board or commission

has a certain power, the authority given should be liberally construed in the light
of the purposes for which it was created, and that which is incidentally necessary
to a full implementation of the legislative intent should be upheld as being
germane to the law. Necessarily, too, where the end is required, the appropriate
means are deemed given (Martin, Administrative Law, 1979, p. 46). Thus, as
averred by the respondents:

... [A]ll things considered, the question is what is the best for the
interest of the public. Whether PD 101 has lost its effectiveness or
not, will in no way prevent this Board from resolving the question in
the same candor and spirit that P.D. 101 and LOI 379 were issued to
cope with the multifarious ills that plague our transport system. ...
(Emphasis supplied) (pp. 91-92, Rollo)
This, the private respondents appreciate, as they make reference to PD 101,
merely to cite the compassion with which colorum operators were dealt with
under the law. They state that it is "in the same vein and spirit that this Honorable
Board has extended the Decree of legalization to the operatives of the various PUJ
and PUB services along legislative methods," that respondents pray for
authorization of their colorum units in actual operation in Metro Manila (Petitions
for Legalization, Annexes E & F, par. 7, pp. 65-79, Rollo).

Anent the petitioners' reliance on the BOT Rules and Regulations Implementing
PD 101 as well as its Memorandum Circular No. 76-25(a), the BOT itself has
declared:

In line with its duty to rationalize the transport industry, the Board
shall. from time to time, re- study the public need for public utilities
in any area in the Philippines for the purpose of re- evaluating the
policies. (p. 64, Rollo)

Thus, the respondents correctly argue that "as the need of the public changes and
oscillates with the trends of modern life, so must the Memo Orders issued by
respondent jibe with the dynamic and flexible standards of public needs. ...
Respondent Board is not supposed to 'tie its hands' on its issued Memo Orders
should public interest demand otherwise" (Answer of private respondents, p. 121,
Rollo).

The fate of the private respondent's petitions is initially for the Board to
determine. From the records of the case, acceptance of the respondent's
applications appears to be a question correctly within the discretion of the
respondent Board to decide. As a rule, where the jurisdiction of the BOT to take
cognizance of an application for legalization is settled, the Court enjoins the
exercise thereof only when there is fraud, abuse of discretion or error of law.
Furthermore, the court does not interfere, as a rule, with administrative action
prior to its completion or finality . It is only after judicial review is no longer
premature that we ascertain in proper cases whether the administrative findings
are not in violation of law, whether they are free from fraud or imposition and
whether they find substantial support from the evidence.

Finally, with respect to the last issue raised by the petitioners alleging the denial
of due process by respondent Board in granting the provisional permits to the
private respondents and in taking cognizance of their applications for legalization
without notice and hearing, suffice it to say that PD 101 does not require such
notice or hearing for the grant of temporary authority . The provisional nature of
the authority and the fact that the primary application shall be given a full hearing
are the safeguards against its abuse. As to the applications for legalization
themselves, the Public Service Act does enjoin the Board to give notice and
hearing before exercising any of its powers under Sec. 16 thereof. However, the
allegations that due process has been denied are negated by the hearings set by
the Board on the applications as expressed in its orders resolving the petitions for
special permits (Annexes G, H, I, pp. 80-102, Rollo).

The Board stated:

The grounds involved in the petition are of first impression. It cannot

resolve the issue ex-parte. It needs to hear the views of other parties
who may have an interest, or whose interest may be affected by any
decision that this Board may take.

The Board therefore, decides to set the petition for hearing.

xxx xxx xxx

As to the required notice, it is impossible for the respondent Board to give

personal notice to all parties who may be interested in the matter, which parties
are unknown to it. Its aforementioned order substantially complies with the
requirement. The petitioners having been able to timely oppose the petitions in
question, any lack of notice is deemed cured.

WHEREFORE. the petition is hereby DISMISSED for lack of merit. The questioned
orders of the then Board of Transportation are AFFIRMED.

SO ORDERED.
G.R. No. 71837 July 26, 1988
CHUNG KA BIO, WELLINGTON CHUNG, CHUNG SIONG PEK, VICTORIANO
CHUNG, and MANUEL CHUNG TONG OH, petitioners,
vs.
INTERMEDIATE APPELLATE COURT (2nd Special Cases Division),
SECURITIES and EXCHANGE COMMISSION EN BANC, HON. ANTONIO R.
MANABAT, HON. JAMES K. ABUGAN, HON. ANTERO F.L. VILLAFLOR, JR.,
HON. SIXTO T.J. DE GUZMAN, JR., ALFREDO CHING, CHING TAN, CHIONG
TIONG TAY, CHUNG KIAT HUA, CHENG LU KUN, EMILIO TAN EDO, ROBERTO
G. CENON and PHILIPPINE BLOOMING MILLS COMPANY, INC., respondents.

Blanco Law Firm for petitioners.

The Solicitor General for respondent SEC.

Balgos & Perez Law Office for Philippine Blooming Mills Company, Inc.

Quiason, Ermitaño, Makalintal & Barot Law Offices for private respondents Ching
Tan and Chiong Tiong Tay.

Angara, Concepcion, Regala & Cruz Law Offices for private respondents.

CRUZ, J.:

The Philippine Blooming Mills Company, Inc. was incorporated on January 19,
1952, for a term of 25 years which expired on January 19,1977. 1 On May 14,
1977, the members of its board of directors executed a deed of assignment of all
of the accounts receivables, properties, obligations and liabilities of the old PBM
in favor of Chung Siong Pek in his capacity as treasurer of the new PBM, then in
the process of reincorporation. 2 On June 14, 1977, the new PMB was issued a
certificate of incorporation by the Securities and Exchange Commission. 3

On May 5, 1981, Chung Ka Bio and the other petitioners herein, all stockholders
of the old PBM, filed with the SEC a petition for liquidation (but not for
dissolution) of both the old PBM and the new PBM. The allegation was that the
former had become legally non-existent for failure to extend its corporate life and
that the latter had likewise beenipso facto dissolved for non-use of the charter
and continuous failure to operate within 2 years from incorporation. 4

Dismissed for lack of a cause of action, the case, docketed as AC No. 055, was
reinstated on appeal to the SEC en banc and remanded to a new panel of hearing
officers for further proceedings, including the proper accounting of the assets and
liabilities of the old PBM. This order was appealed to the Intermediate Appellate
Court in a petition for partial review, docketed as AC GR SP No. 00843,
questioning the authority of the SEC in Case No. 055 to adjudicate a matter not
properly raised on appeal or resolved in the order appealed from.5

In a related development, Alfredo Ching, one of the members of the board of

directors of the old PBM who executed the deed of assignment, filed with the
Intermediate Appellate Court a separate petition for certiorari, docketed as AC GR
No. 01099, in which he questioned the same order and the decision of the SEC in
AC Case No. 055. He alleged that the SEC had gravely erred in not dismissing the
petition for liquidation since the action amounted to a quo warranto proceeding
which only the state could institute through the Solicitor General. 6

Earlier, on April 1, 1982, the new PBM and Alfredo Ching had filed with the SEC a
petition for suspension of payment, which was opposed by Chung Ka Bio, et al.,
on the ground that the SEC had no jurisdiction over a petition for suspension of
payments initiated by a mere individual. The opposition was rejected and the case
was set for hearing. Chung Ka Bio elevated the matter to the SEC en
banc on certiorari with preliminary injunction and receivership, docketed as SEC
EB No. 018, praying for the annulment and setting aside of the proceedings. On
May 10, 1983, the case was remanded to the hearing officers for further
proceedings. 7

Chung Ka Bio came to this Court but we referred his case to the Intermediate
Appellate Court where it was docketed as GR SP No. 01007. The three
cases, viz., PBM Co., Inc. v. SEC, AC GR SP 00843; Chung Ka Bio, et al. v. SEC, AC GR
SP No. 01007; and Alfredo Ching, et al. v. SEC, AC GR SP No. 01099 were then
consolidated in the respondent court which, on February 28, 1985, issued the
decision now challenged on certiorari by the petitioners in the case at bar. The
decision affirmed the orders issued by the SEC in the said cases except the
requirement for the accounting of the assets of the old PBM, which was set
aside.8
The petitioners now contend as follows:

1. The board of directors of an already dissolved corporation does not have the
inherent power, without the express consent of the stockholders, to convey all its
assets to a new corporation.

2. The new corporation is accountable for the said assets to the stockholders of
the dissolved corporation who had not consented to the conveyance of the same
to the new corporation.

3. The new corporation has not substantially complied with the two-year
requirement of Section 22 of the new Corporation Code on non-user because its
stockholders never adopted a set of by-laws.

4. A quo warranto proceeding is no longer necessary to dissolve a corporation

which is already "deemed dissolved" under Section 22 of the new Corporation
Code.

5. The Securities and Exchange Commission has no jurisdiction over a petition for
suspension of payments filed by an individual only.9

On the first contention, the petitioners insist that they have never given their
consent to the creation of the new corporation nor have they indicated their
agreement to transfer their respective stocks in the old PBM to the new PBM. The
creation of the new corporation with the transfer thereto of the assets of the old
corporation was not within the powers of the board of directors of the latter as it
was authorized only to wind up the affairs of such company and not in any case to
continue its business. Moreover, no stockholders' meeting had been convened to
discuss the deed of assignment and the 2/3 vote required by the Corporation Law
to authorize such conveyance had not been obtained.10

The pertinent provisions of the Corporation Law, which was the law then in force,
are the following:

SEC. 77. Every corporation whose charter expired by its own

limitation or is annulled by forfeiture or otherwise, or whose
corporate existence for other purposes is terminated in any other
manner, shall nevertheless be continued as a body corporate for
three years after the time when it would have been dissolved, for the
purpose of prosecuting and defending suits by or against it and of
enabling it gradually to settle and close its affairs, to dispose of and
convey its property and to divide its capital stock, but not for the
purpose of continuing the business for which it was established."

SEC. 28-1/2. A corporation may, by action taken at any meeting of its

board of directors, sell, lease, exchange, or otherwise dispose of all
or substantially all of its property and assets, including its goodwill,
upon such terms and conditions and for such considerations, which
may be money, stocks bonds, or other instruments for the payment
of money or other property or other considerations, as its board of
directors deem expedient, when and as authorized by the affirmative
vote of shareholders holding shares in the corporation entitling them
to exercise at least two-thirds of the voting power on such a proposal
at a shareholders' meeting called for that purpose. Notice of such
meeting shall be given to all of the shareholders of record of the
corporation whether or not they shall be entitled to vote thereat:
Provided, however, That any stockholder who did not vote to
authorize the action of the board of directors, may, within forty days
after the date upon which such action was authorized, object thereto
in writing and demand payment for his shares. If, after such a
demand by a stockholder, the corporation and the stockholder can
not agree upon the value of his share or shares at the time such
corporate action was authorized, such value shall be ascertained by
three disinterested persons, one of whom shall be named by the
stockholder, another by the corporation, and the third by the two
thus chosen. The finding of the appraisers shall be final and if their
award is not paid by the corporation within thirty days after it is
made, it may be recovered in an action by the stockholder against
the corporation. Upon payment by the corporation to the
stockholder of the agreed or awarded price of his shares, the
stockholder shall forthwith transfer and assign the share or shares
held by him as directed by the corporation.

Unless and until such sale, lease, or exchange shall be abandoned,

the stockholder making such demand in writing ceases to be a
stockholder and shall have no rights with respect to such shares
except the right to receive payment therefor as aforesaid.
 A stockholder shall not be entitled to payment for his shares under
the provisions of this section unless the value of the corporate assets
which would remain after such payment would be at least equal to
the aggregate amount of its debts and liabilities exclusive of capital
stock.

Nothing in this section is intended to restrict the power of any

corporation, without the authorization thereof by the shareholders,
to sell, lease, exchange, or otherwise dispose of, any of its property if
thereby the corporate business be not substantially limited, or if the
proceeds of such property be appropriated to the conduct or
development of its remaining business.

These are now Sections 122 and 40, respectively, with modifications, of the
Corporation Code.

As the first contention is based on the negative averment that no stockholders'

meeting was held and the 2/3 consent vote was not obtained, there is no need for
affirmative proof. Even so, there is the presumption of regularity which must
operate in favor of the private respondents, who insist that the proper
authorization as required by the Corporation Law was duly obtained at a meeting
called for the purpose. (That authorization was embodied in a unanimous
resolution dated March 19, 1977, which was reproduced verbatim in the deed of
assignment.) 11Otherwise, the new PBM would not have been issued a certificate
of incorporation, which should also be presumed to have been done regularly. It
must also be noted that under Section 28-1/2, "any stockholder who did not vote
to authorize the action of the board of directors may, within forty days after the
date upon which such action was authorized, object thereto in writing and
demand payment for his shares." The record does not show, nor have the
petitioners alleged or proven, that they filed a written objection and demanded
payment of their shares during the reglementary forty-day period. This
circumstance should bolster the private respondents' claim that the authorization
was unanimous.

While we agree that the board of directors is not normally permitted to

undertake any activity outside of the usual liquidation of the business of the
dissolved corporation, there is nothing to prevent the stockholders from
conveying their respective shareholdings toward the creation of a new
corporation to continue the business of the old. Winding up is the sole activity of
a dissolved corporation that does not intend to incorporate anew. If it does,
however, it is not unlawful for the old board of directors to negotiate and transfer
the assets of the dissolved corporation to the new corporation intended to be
created as long as the stockholders have given their consent. This was not
prohibited by the Corporation Act. In fact, it was expressly allowed by Section 28-
1/2.

What the Court finds especially intriguing in this case is the fact that although the
deed of assignment was executed in 1977, it was only in 1981 that it occurred to
the petitioners to question its validity. All of four years had elapsed before the
petitioners filed their action for liquidation of both the old and the new
corporations, and during this period, the new PBM was in full operation, openly
and quite visibly conducting the same business undertaken earlier by the old
dissolved PBM. The petitioners and the private respondents are not strangers but
relatives and close business associates. 12 The PBM office is in the heart of Metro
Manila. 13 The new corporation, like the old, employs as many as 2,000 persons,
the same personnel who worked for the old PBM. 14 Additionally, one of the
petitioners, Chung Siong Pek was one of the directors who executed the deed of
assignment in favor of the old PBM and it was he also who received the deeded
assets on behalf and as treasurer of the new PBM. 15 Surely, these circumstances
must operate to bar the petitioners now from questioning the deed of assignment
after this long period of inaction in the protection of the rights they are now
belatedly asserting. Laches has operated against them.

We have said in a number of cases that laches, in a general sense, means the
failure or neglect, for an unreasonable and unexplained length of time, to do that
which, by exercising due diligence, could or should have been done earlier. 16 It is
negligence or omission to assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it either has abandoned or declined
to assert it. 17 Public policy requires, for the peace of society, the discouragement
of claims grown stale for non-assertion. 18 Unlike the statute of limitations, laches
does not involve mere lapse or passage of time but is principally an impediment
to the assertion or enforcement of a right which has become under the
circumstances inequitable or unfair to permit. 19

The essential elements of laches are: (1) conduct on the part of the defendant, or
of one under whom he claims, giving rise to the sitution complained of; (2) delay
in asserting complainant's right after he had knowledge of the defendant's
conduct and after he has an opportunity to sue; (3) lack of knowledge or notice
on the part of the defendant that the complainant would assert the right on
which he bases his suit; (4) injury or prejudice to the defendant in the event relief
is accorded to the complainant.20

All the requisites are present in the case at bar. To begin with, what gave rise to
the situation now complained of by the petitioners was the adoption of the deed
of assignment by the directors of the old PBM allegedly without the consent of its
stockholders and the acceptance of the deeded assets by the new PBM. Secondly,
there was delay on the petitioners' part since it took them nearly four years, i.e.,
from May 14, 1977 to May 5,1981, before they made their move to assail the
transfer despite complete knowledge of the transaction. It is also evident that the
new PBM could not have had the slightest suspicion that the petitioners would
assert the right on which they now base their suit, especially Chung Siong Pek,
who in fact acted not only as director of the old PBM but also as treasurer of the
new PBM in the transaction. Finally, the injury or prejudice in the event relief is
granted is obvious as all the transactions of the new PBM will have to be undone,
including credits extended and commitments made to third parties in good faith.

The second contention must also fall with the first, and for the same reasons.

The third contention is likewise rejected for, as already shown, it is undeniable

that the new PBM has in fact been operating all these years. The petitioners'
argument that Alfredo Ching was merely continuing the business of the old PBM
is self-defeating for they themselves argue that the old PBM had already been
dissolved. As for the contention that the election of Wellington Chung and J.R.
Blanco as directors was subject to the outcome of the petition for liquidation, this
is clearly self-serving and completely without proof. Moreover, failure to file the
by-laws does not automatically operate to dissolve a corporation but is now
considered only a ground for such dissolution.

Section 19 of the Corporation Law, part of which is now Section 22 of the

Corporation Code, provided that the powers of the corporation would cease if it
did not formally organize and commence the transaction of its business or the
continuation of its works within two years from date of its incorporation. Section
20, which has been reproduced with some modifications in Section 46 of the
Corporation Code, expressly declared that "every corporation formed under this
Act, must within one month after the filing of the articles of incorporation with
the Securities and Exchange Commission, adopt a code of by-laws." Whether this
provision should be given mandatory or only directory effect remained a
controversial question until it became academic with the adoption of PD 902-A.
Under this decree, it is now clear that the failure to file by-laws within the
required period is only a ground for suspension or revocation of the certificate of
registration of corporations.

Non-filing of the by-laws will not result in automatic dissolution of the

corporation. Under Section 6(i) of PD 902-A, the SEC is empowered to "suspend or
revoked, after proper notice and hearing, the franchise or certificate of
registration of a corporation" on the ground inter alia of "failure to file by-laws
within the required period." It is clear from this provision that there must first of
all be a hearing to determine the existence of the ground, and secondly, assuming
such finding, the penalty is not necessarily revocation but may be only suspension
of the charter. In fact, under the rules and regulations of the SEC, failure to file
the by-laws on time may be penalized merely with the imposition of an
administrative fine without affecting the corporate existence of the erring firm. 21

It should be stressed in this connection that substantial compliance with

conditions subsequent will suffice to perfect corporate personality. Organization
and commencement of transaction of corporate business are but conditions
subsequent and not prerequisites for acquisition of corporate personality. The
adoption and filing of by-laws is also a condition subsequent. Under Section 19 of
the Corporation Code, a corporation commences its corporate existence and
juridical personality and is deemed incorporated from the date the Securities and
Exchange Commission issues certificate of incorporation under its official seal.
This may be done even before the filing of the by-laws, which under Section 46 of
the Corporation Code, must be adopted "within one month after receipt of official
notice of the issuance of its certificate of incorporation."

Distinguishing creation from defects in organization, Fletcher has the following to

say:

Ordinarily, want of, or defects in, the organization of a corporation,

as distinguished from its creation, do not preclude the existence of
a de facto corporation; and requirements in special charters or
general incorporation laws relating to organization are often
 construed to be merely directory, or to conditions subsequent rather
than conditions precedent, so that compliance therewith is not
necessary to create even a dejure corporation. It has been held that
there may be a de facto corporation notwithstanding a failure to give
the notice required by the statute of the meeting for the of or
organization; or though there would failure to fix and limit the
amount of the capital stock of the company at the first meeting; or a
failure to issue stock; or that there were informalities in the
proceedings of such meeting, or that no certificate of organization
was executed or filed. And the same has been held to be true though
no board of directors has been elected, and though there were
irregularities with respect to the number, term, place of residence
and of meeting of the board of directors, or some of the persons
chosen as directors are not qualified, even though the taking of these
various steps is necessary to the proper use of the franchise. ....

In any case, the deficiency claimed by the petitioners was corrected when the
new PBM adopted and filed its by-laws on September 6, 1981,22 thus rendering
the third issue also moot and academic.

It is needless as well to dwell on the fourth contention, in view of the findings that
the new PBM has not been ipso facto dissolved.

On the fifth and final issue, the respondent court justifies assumption by the SEC
of jurisdiction over the petition for suspension of payment filed by the individual
on the general principle against multiplicity of suits.

Under Section 5(d), PD 902-A, as amended by PD 1758, however, it is clearly

provided that such jurisdiction may be exercised only in:

d) Petitions of corporations, partnerships or associations to be

declared in the state of suspension of payments in cases where the
corporation, partnership or association possess sufficient property to
cover all its debts but foresees the impossibility of meeting them
when they respectively fall due or in cases where the corporation,
partnership or association has no sufficient assets to cover its
liabilities but is under the management of a Rehabilitation Receiver
or Management Committee created pursuant to this Decree.
This section clearly does not allow a mere individual to file the petition which is
limited to "corporations, partnerships or associations." Administrative agencies
like the SEC are tribunals of limited jurisdiction and, as such, can exercise only
those powers which are specifically granted to them by their enabling
statutes. 23 Consequently, where no authority is granted to hear petitions
of individuals for suspension of payments, such petitions are beyond the
competence of the SEC. The analogy offered by the respondent court is clearly
inappropriate for while it is true that the Sandiganbayan may assume jurisdiction
over private individuals, it is because its charter expressly allows this in specified
cases. No similar permission is found in PD 902-A.

The circumstance that Ching is a co-signer in the corporation's promissory notes,

collateral or guarantee or security agreements, does not make him a proper
party. Jurisdiction over the subject matter must exist as a matter of law and
cannot be fixed by agreement of the parties, acquired through, or waived,
enlarged or diminished by, any act or omission; neither can it be conferred by
acquiescence of the tribunal. Hence, Alfredo Ching, as a mere individual, cannot
be allowed as a co-petitioner in SEC Case No. 2250.

WHEREFORE, the appealed decision is AFFIRMED as above modified, with costs

against the petitioners.

SO ORDERED.
G.R. No. 96938 October 15, 1991
GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), petitioner,
vs.
CIVIL SERVICE COMMISSION, HEIRS OF ELIZAR NAMUCO, and HEIRS OF
EUSEBIO MANUEL, respondents.
Benigno M. Puno for private respondents.
Fetalino, Llamas-Villanueva and Noro for CSC.

NARVASA, J.:

In May, 1981, the Government Service Insurance System (GSIS) dismissed six (6)
employees as being "notoriously undersirable," they having allegedly been found
to be connected with irregularities in the canvass of supplies and materials. The
dismissal was based on Article IX, Presidential Decree No. 807 (Civil Service
Law) 1 in relation to LOI 14-A and/or LOI No. 72. The employees' Motion for
Reconsideration was subsequently denied.

Five of these six dismissed employees appealed to the Merit Systems Board. The
Board found the dismissals to be illegal because effected without formal charges
having been filed or an opportunity given to the employees to answer, and
ordered the remand of the cases to the GSIS for appropriate disciplinary
proceedings.

The GSIS appealed tothe Civil Service Commission. By Resolution dated October
21, 1987, the Commission ruled that the dismissal of all five was indeed illegal and
disposed as follows:

WHEREFORE, it being obvious that respondents' separation from the

service is illegal, the GSIS is directed to reinstate them with payment of
back salaries and benefits due them not later than ten (10) days from
receipt of a copy hereof, without prejudice to the right of the GSIS to
pursue proper disciplinary action against them. It is also directed that the
services of their replacement be terminated effective upon reinstatement
of herein respondents.

xxx xxx xxx

Still unconvinced, the GSIS appealed to the Supreme Court (G.R. Nos. 80321-22).
Once more, it was rebuffed. On July 4, 1988 this Court's Second Division
promulgated a Resolution which:

a) denied its petition for failing to show any grave abuse of discretion on
the part of the Civl Service Commission, the dismissals of the employees
having in truth been made without formal charge and hearin, and

b) declared that reinstatement of said five employees was proper, "without

prejudice to the right of the GSIS to pursue proper disciplinary action
against them;"

c) MODIFIED, however, the challenged CSC Resolution of October 21, 1987

"by elminating the payment of back salaries to private respondents
(employees) until the outcome of the disciplinary proceedings is known,
considering the gravity of the offenses imputed to them ..., 2
d) ordered reinstateement only of three employees, namely: Domingo Canero, Renato Navarro and Belen Guerrero,
"it appearing tht respondents Elizar Namuco and Eusebio Manuel have since passed away." 3

On January 8, 1990, the aforesaid Resolution of July 4, 1988 having become final, the heirs of Namuco and Manuel filed a
motion for execution of the Civil Service Commission Resolution of October 21, 1987, supra. The GSIS opposed the motion. It
argued that the CSC Resolution of October 21, 1987 — directing reinstatement of the employees and payment to them of back
salaries and benefits — had been superseded by the Second Division's Resolution of July 4, 1988 — precisely eliminating the
payment of back salaries.

The Civil Service Commission granted the motion for execution in an Order dated June 20, 1990. It accordingly directed the
GSIS "to pay the compulsory heirs of deceased Elizar Namuco and Eusebio Manuel for the period from the date of their illegal
separation up to the date of their demise." The GSIS filed a motion for reconsideration. It was denied by Order of the CSC dated
November 22, 1990.

Once again the GSIS has come to this Court, this time praying that certiorari issue to nullify the Orders of June 20, 1990 and
November 22, 1990. Here it contends that the Civil Service Commission has no pwer to execute its judgments and final orders
or resolutions, and even conceding the contrary, the writ of execution issued on June 20, 1990 is void because it varies this
Court's Resolution of July 4, 1988.
The Civil Service Commission, like the Commission on Elections and the Commission on Audit, is a consitutional commission
invested by the Constitution and relevant laws not only with authority to administer the civil service, 4
but also with
5
quasi-judicial powers. It has the authority to hear and decide administrative
disciplinary cases instituted directly with it or brought to it on appeal. 6 The
Commission shall decide by a majority vote of all its Members any case or matter
brought before it within sixty days from the date of its submission for decision it
within sixty days from the date of its submission for on certiorari by any aggrieved
party within thirty days from receipt of a copy thereof. 7 It has the power, too,
sitting en banc, to promulgate its own rules concerning pleadings and practice
before it or before any of its offices, which rules should not however diminish,
increase, or modify substantive rights. 8
On October 9, 1989, the Civil Service Commission promulgated Resolution No. 89-779 adopting, approving and putting into
effect simplified rules of procedure on administrative disciplinary and protest cases, pursuant tothe authority granted by the
constitutional and statutory provisions above cited, as well as Republic Act No. 6713. 9
Those rules provide,
10
among other things, that decision in "administrative disciplinary cases" shall be
immediately executory unless a motion for reconsideration is seasonably filed. If
the decision of the Commission is brought to the Supreme Court on certiorari, the
same shall still be executory unless a restraining order or preliminary injunction is
issued by the High Court." 11 This is similar to a provision in the former Civil
Service Rules authorizing the Commissioner, "if public interest so warrants, ... (to)
order his decision executed pending appeal to the Civil Service Board of
Appeals." 12 The provisions are analogous and entirely consistent with the duty or
responsibility reposed in the Chairman by PD 807, subject to policies and
resolutions adopted by the Commission, "to enforce decision on administrative
discipline involving officials of the Commission," 13 as well as with Section 37 of
the same decree declaring that an appeal to the Commission 14 "shall not stop the
decision from being executory, and in case the penalty is suspension or removal,
the respondent shall be considered as having been under preventive suspension
during the pendency of the appeal in the event he wins an appeal."

In light of all the foregoing consitutional and statutory provisions, it would appear
absurd to deny to the Civil Service Commission the power or authority or order
execution of its decisions, resolutions or orders which, it should be stressed, it has
been exercising through the years. It would seem quite obvious that the authority
to decide cases is inutile unless accompanied by the authority to see taht what
has been decided is carried out. Hence, the grant to a tribunal or agency of
adjudicatory power, or the authority to hear and adjudge cases, should normally
and logically be deemed to include the grant of authority to enforce or execute
the judgments it thus renders, unless the law otherwise provides.

In any event, the Commission's exercise of that power of execution has been
sanctioned by this Court in several cases.

In Cucharo v. Subido, 15 for instance, this Court sustained the challenged directive
of the Civil Service Commissioner, that his decision "be executed immediately 'but
not beyond ten days from receipt thereof ...". The Court said:

As a major premise, it has been the repeated pronouncement of this

Supreme Tribunal that the Civil Service Commissioner has the discretion
toorder the immediate execution in the public interst of his
decisionseparating petitioner-appellant from the service, always sbuject
however to the rule that, in the event the Civil Service Board of Appeals or
the proper court determines that his dismissal is illegal, he should be paid
the salary corresponding to the period of his separation from the service
unitl his reinstatement.

Petitioner GSIS concedes that the heirs of Namuco and Manuel "are entitled tothe
retirement/death and other benefits due them as government employees" since,
at the time of their death, they "can be considered not to have been separated
from the separated from the service." 16
It contend, however, that since Namuco and Manuel had not been "completely exonerated of the administrative charge filed
against them — as the filing of the proper disciplinary action was yet to have been taken had death not claimed them" — no
back salaries may be paid to them, although they "may charge the period of (their) suspension against (their) leave credits, if
any, and may commute such leave credits to money
value;" 17
this, on the authority of this Court's decision in Clemente v. Commission on
18
Audit. It is in line with these considerations, it argues, that the final and
executory Resolution of this Court's Second Division of July 4, 1988 should be
construed; 19 and since the Commission's Order of July 20, 1990 maikes a contrary
disposition, the latter order obviously cannot prevail and must be deemed void
and ineffectual.

This Court's Resolution of July 4, 1988, as already stated, modified the Civil
Service Commission's Resolution of October 21, 1987 — inter alia granting back
salaries tothe five dismissed employees, including Namuco and Manuel — and
pertinently reads as follows:
 We modify the said Order, however, by eliminating the payment of back
salaries to private respondents until the outcome of the disciplinary
proceedings is known, considering the gravity of the offense imputed to
them in connection with the irregularities in the canvass of supplies and
materials at the GSIS.

The reinstatement order shall apply only to respondents Domingo Canero,

Renato Navarro and Belen Guerrero, it appearing that respondents Elizar
Namuco and Eusebio Manuel have since passed away. ....

On the other hand, as also already stated, the Commission's Order of June 20,
1990 directed the GSIS "to pay the compulsory heirs of deceased Elizar Namuco
and Eusebio Manuel for the period from the date of their illegal separation up to
the date of their demise."

The Commission asserted that in promulgating its disparate ruling, it was acting
"in the interest of justice and for other humanitarian reasons," since the question
of whether or not Namuco and Manuel should receive back salaries was
"dependent on the result of the disciplinary proceedings against their co-
respondents in the administrative case before the GSIS," and since at the tiem of
their death, "no formal charge ... (had) as yet been made, nor any finding of their
personal culpability ... and ... they are no longer in a position to refute the
charge."

The Court agrees that the challenged orders of the Civil Service Commission
should be upheld, and not merely upon compassionate grounds, but simply
because there is no fair and feasible alternative in the circumstances. To be sure,
if the deceased employees were still alive, it would at least be arguable, positing
the primacy of this Court's final dispositions, that the issue of payment of their
back salaries should properly await the outcome of the disciplinary proceedings
referred to in the Second Division's Resolution of July 4, 1988.

Death, however, has already sealed that outcome, foreclosing the initiation of
disciplinary administrative proceedings, or the continuation of any then pending,
against the deceased employees. Whatever may be said of the binding force of
the Resolution of July 4, 1988 so far as, to all intents and pursposes, it makes
exoneration in the adminstrative proceedings a condition precedent to payment
of back salaries, it cannot exact an impossible performance or decree a useless
exercise. Even in the case of crimes, the death of the offender exteinguishes
criminal liability, not only as to the personal, but also as to the pecuniary,
penalties if it occurs before final judgment.20 In this context, the subsequent
disciplinary proceedings, even if not assailable on grounds of due process, would
be an inutile, empty procedure in so far as the deceased employees are
concerned; they could not possibly be bound by any substatiation in said
proceedings of the original charges: irrigularities in the canvass of supplies and
materials. The questioned order of the Civil Service Commission merely
recognized the impossibility of complying with the Resolution of July 4, 1988 and
the legal futility of attempting a post-mortem investigation of the character
contemplated.

WHEREFORE, the petition is DISMISSED, without pronouncement as to costs.

SO ORDERED.