G.R. NO. 103982. December 11, 1992. ANTONIO A. MECANO, Petitioner vs. COA. DECISION CAMPOS, JR., J.

: Antonio A. Mecano, through a petition for certiorari, seeks to nullify the decision of the Commission on Audit (COA, for brevity) embodied in its 7th Indorsement, dated January 16, 1992, denying his claim for reimbursement under Section 699 of the Revised Administrative Code RAC), as amended, in the total amount of P40,831.00. Petitioner is a Director II of the National Bureau of Investigation (NBI). He was hospitalized for cholecystitis from March 26, 1990 to April 7, 1990, on account of which he incurred medical and hospitalization expenses, the total amount of which he is claiming from the COA. On May 11, 1990, in a memorandum to the NBI Director, Alfredo S. Lim (Director Lim, for brevity), he requested reimbursement for his expenses on the ground that he is entitled to the benefits under Section 699 (*1) of the RAC, the pertinent provisions of which read: "Sec. 699. Allowance in case of injury, death, or sickness incurred in performance of duty. -- When a person in the service of the national government or in the service of the government of a province, city, municipality or municipal district is so injured in the performance of duty as thereby to receive some actual physical hurt or wound, the proper Head of Department may direct that absence during any period of disability thereby occasioned shall be on full pay, though not more than six months, and in such case he may in his discretion also authorize the payment of the medical attendance, necessary transportation, subsistence and hospital fees of the injured person. Absence in the case contemplated shall be charged first against vacation leave, if any there be. xxxxxx "In case of sickness caused by or connected directly with the performance of some act in the line of duty, the Department head may in his discretion authorize the payment of the necessary hospital fees." Director Lim then forwarded petitioner's claim, in a 1st Indorsement dated June 22, 1990, to the Secretary of Justice, along with the comment, bearing the same date, of Gerarda Galang, Chief, of the NBI, "recommending favorable action thereof". Finding petitioner's illness to be service-connected, the Committee on Physical Examination of the Department of Justice favorably recommended the payment of petitioner's claim. However, then Undersecretary of Justice Silvestre H. Bello III, in a 4th Indorsement dated November 21, 1990, returned petitioner's claim to Director Lim, having considered the statements of the Chairman of the COA in its 5th Indorsement dated 19 September 1990, to the effect that the RAC being relied upon was repealed by the Administrative Code of 1987.

Petitioner then re-submitted his claim to Director Lim, with a copy of Opinion No. 73, S. 1991 (*2) dated April 26, 1991 of then Secretary of Justice Franklin M. Drilon (Secretary Drilon, for brevity) stating that "the issuance of the Administrative Code did not operate to repeal or abrogate in its entirety the Revised Administrative Code, including the particular Section 699 of the latter". On May 10, 1991, Director Lim, under a 5th Indorsement transmitted anew Mecano's claim to then Undersecretary Bello for favorable consideration. Under a 6th Indorsement, dated July 2, 1991, Secretary Drilon forwarded petitioner's claim to the COA Chairman, recommending payment of the same. COA Chairman EUFEMIO C. Domingo, in his 7th Indorsement of January 16, 1992, however, denied petitioner's claim on the ground that Section 699 of the RAC has been repealed by the Administrative Code of 1987, solely for the reason that the same section was not restated nor reenacted in the Administrative Code of 1987. He commented, however, that the claim may be filed with the Employees' Compensation Commission, considering that the illness of Director Mecano occurred after the effectivity of the Administrative Code of 1987. Eventually, petitioner's claim was returned by Undersecretary of Justice Eduardo Montenegro to Director Lim under a 9th Indorsement dated February 7, 1992, with the advice that petitioner "elevate the matter to the Supreme Court if he so desires". On the sole issue of whether or not the Administrative Code of 1987 repealed or abrogated Section 699 of the RAC, this petition was brought for the consideration of this Court. Petitioner anchors his claim on Section 699 of the RAC, as amended, and on the aforementioned Opinion No. 73, S. 1991 of Secretary Drilon. He further maintains that in the event that a claim is filed with the Employees' Compensation Commission, as suggested by respondent, he would still not be barred from filing a claim under the subject section. Thus, the resolution of whether or not there was a repeal of the Revised Administrative Code of 1917 would decide the fate of petitioner's claim for reimbursement. The COA, on the other hand, strongly maintains that the enactment of the Administrative Code of 1987 (Exec. Order No. 292) operated to revoke or supplant in its entirety the Revised Administrative Code of 1917. The COA claims that from the "whereas" clauses of the new Administrative Code, it can be gleaned that it was the intent of the legislature to repeal the old Code. Moreover, the COA questions the applicability of the aforesaid opinion of the Secretary of Justice in deciding the matter. Lastly, the COA contends that employment-related sickness, injury or death is adequately covered by the Employees' Compensation Program under P.D. 626, such that to allow simultaneous recovery of benefits under both laws on account of the same contingency would be unfair and unjust to the Government. The question of whether a particular law has been repealed or not by a subsequent law is a matter of legislative intent. The lawmakers may expressly repeal a law by incorporating therein a repealing provision which expressly and specifically cites the particular law or laws, and portions thereof, that are intended to be repealed. (*3) A declaration in a statute, usually in its repealing clause, that a particular and specific law, identified by its number or title, is repealed is an express repeal; all others are implied repeals. (*4) In the case of the two Administrative Codes in question, the ascertainment of whether or not it was the intent of the legislature to supplant the old Code with the new Code partly depends on

the scrutiny of the repealing clause of the new Code. This provision is found in Section 27, Book VII (Final Provisions) of the Administrative Code of 1987 which reads: "Sec. 27. Repealing Clause. -- All laws, decrees, orders, rules and regulations, or portions thereof, inconsistent with this Code are hereby repealed or modified accordingly." The question that should be asked is: What is the nature of this repealing clause? It is certainly not an express repealing clause because it fails to identify or designate the act or acts that are intended to be repealed. (*5) Rather, it is an example of a general repealing provision, as stated in Opinion No. 73, S. 1991. It is a clause which predicates the intended repeal under the condition that a substantial conflict must be found in existing and prior acts. The failure to add a specific repealing clause indicates that the intent was not to repeal any existing law, unless an irreconcilable inconsistency and repugnancy exist in the terms of the new and old laws. (*6) The latter situation falls under the category of an implied repeal. Repeal by implication proceeds on the premise that where a statute of later date clearly reveals an intention on the part of the legislature to abrogate a prior act on the subject, that intention must be given effect. (*7) Hence, before there can be a repeal, there must be a clear showing on the part of the lawmaker that the intent in enacting the new law was to abrogate the old one. The intention to repeal must be clear and manifest; (*8) otherwise, at least, as a general rule, the later act is to be construed as a continuation of, and not a substitute for, the first act and will continue so far as the two acts are the same from the time of the first enactment. (*9) There are two categories of repeal by implication. The first is where provisions in the two acts on the same subject matter are in an irreconcilable conflict, the later act to the extent of the conflict constitutes an implied repeal of the earlier one. The second is if the later act covers the whole subject of the earlier one and is clearly intended as a substitute, it will operate to repeal the earlier law. (*10) Implied repeal by irreconcilable inconsistency takes place when the two statutes cover the same subject matter; they are so clearly inconsistent and incompatible with each other that they cannot be reconciled or harmonized; and both cannot be given effect, that is, that one law cannot be enforced without nullifying the other. (*11) Comparing the two Codes, it is apparent that the new Code does not cover nor attempt to cover the entire subject matter of the old Code. There are several matters treated in the old Code which are not found in the new Code, such as the provisions on notaries public, the leave law, the public bonding law, military reservations, claims for sickness benefits under Section 699, and still others. Moreover, the COA failed to demonstrate that the provisions of the two Codes on the matter of the subject claim are in an irreconcilable conflict. In fact, there can be no such conflict claimed by petitioner has not been restated in the Administrative Code of 1987. However, the COA would have us consider that the fact that Section 699 was not restated in the Administrative Code of 1987 meant that the same section had been repealed. It further maintained that to allow the particular provisions not restated in the new Code to continue in force argues against the Code itself. The COA anchored this argument on the whereas clause of the 1987 Code, which states:

"WHEREAS, the effectiveness of the Government will be enhanced by a new Administrative Code which incorporates in a unified document the major structural, functional and procedural principles and rules of governance; and xxxxxx It argues, in effect, that what is contemplated is only one Code -- the Administrative Code of 1987. This contention is untenable. The fact that a later enactment may relate to the same subject matter as that of an earlier statute is not of itself sufficient to cause an implied repeal of the prior act, since the new statute may merely be cumulative or a continuation of the old one. (*12) What is necessary is a manifest indication of legislative purpose to repeal. (*13) We come now to the second category of repeal -- the enactment of a statute revising or codifying the former laws on the whole subject matter. This is only possible if the revised statute or code was intended to cover the whole subject to be a complete and perfect system in itself. It is the rule that a subsequent statute is deemed to repeal a prior law if the former revises the whole subject matter of the former statute. (*14) When both intent and scope clearly evince the idea of a repeal, then all parts and provisions of the prior act that are omitted from the revised act are deemed repealed. (*15) Furthermore, before there can be an implied under this category, it must be the clear intent of the legislature that the later act be the substitute to the prior act. (*16) According to Opinion No. 73, S. 1991 of the Secretary of Justice, what appears clear is the intent to cover only those aspects of government that pertain to administration, organization and procedure, understandably because of the many changes that transpired in the government structure since the enactment of the RAC decades of years ago. The COA challenges the weight that this opinion carries in the determination of this controversy inasmuch as the body which had been entrusted with the implementation of this particular provision has already rendered its decision. The COA relied on the rule in administrative law enunciated in the case of Sison vs. Pangramuyen (*17) that in the absence of palpable error or grave abuse of discretion, the Court would be loathe to substitute its own judgment for that of the administrative agency entrusted with the enforcement and implementation of the law. This will not hold water. This principle is subject to limitations. Administrative decisions may be reviewed by the courts upon a showing that the decision is vitiated by fraud, imposition or mistake. (*18) It has been held that Opinions of the Secretary and Undersecretary of Justice are material in the construction of statutes in pari materia. (*19) Lastly, it is a well-settled rule of statutory construction that repeals of statutes by implication are not favored. (*20) The presumption is against inconsistency and repugnancy for the legislature is presumed to know the existing laws on the subject and not to have enacted inconsistent or conflicting statutes. (*21) This Court, in a case, explains the principle in detail as follows: "Repeals by implication are not favored, and will not be decreed unless it is manifest that the legislature so intended. As laws are presumed to

be passed with deliberation with full knowledge of all existing ones on the subject, it is but reasonable to conclude that in passing a statute it was not intended to interfere with or abrogate any former law relating to some matter, unless the repugnancy between the two is not only irreconcilable, but also clear and convincing, and flowing necessarily from the language used, unless the later act fully embraces the subject matter of the earlier, or unless the reason for the earlier act is beyond peradventure renewed. Hence, every effort must be used to make all acts stand and if, by any reasonable construction, they can be reconciled, the later act will not operate as a repeal of the earlier. (*22) Regarding respondent's contention that recovery under this subject section shall bar the recovery of benefits under the Employees' Compensation Program, the same cannot be upheld. The second sentence of Article 173, Chapter II, Title II (dealing on Employees' Compensation and State Insurance Fund), Book IV of the Labor Code, as amended by P.D. 1921, expressly provides that "the payment of compensation under this Title shall not bar the recovery of benefits as provided for in Section 699 of the Revised Administrative Code x x x whose benefits are administered by the system (meaning SSS or GSIS) or by other agencies of the government." WHEREFORE, premises considered, the Court resolves to GRANT the petition; respondent is hereby ordered to give due course to petitioner's claim for benefits No costs. SO ORDERED.
G.R. No. L-66614 January 25, 1988 PRIMITIVO LEVERIZA, FE LEVERIZA, PARUNGAO & ANTONIO C. VASCO, petitioners, vs. INTERMEDIATE APPELLATE COURT, MOBIL OIL PHILIPPINES & CIVIL AERONAUTICS ADMINISTRATION,respondents.

BIDIN, J.: This is a Petition for Review on certiorari seeking the reversal of the decision of the Intermediate Appellate Court, Third Division * dated February 29, 1984 in AC-G.R. No. CV No. 61705 entitled Mobil Oil Philippines, Inc., plaintiff-appellee vs. Primitivo Leveriza Parungao, Antonio C.

Vasco and Civil Aeronautics Administration, defendants-appellants; Primitive Leveriza, Fe Leveriza Parungao and Antonio C. Leveriza, cross-defendant, affirming in totothe decision of the trial court dated April 6, 1976. As found by the trial court and adopted by the Intermediate Appellate Court, the facts of this case are as follows: Around three contracts of lease resolve the basic issues in the instant case. These three contracts are as follows: First Contract. For purposes of easy reference and brevity, this contract shall be referred to hereinafter as Contract A. This is a "CONTRACT OF LEASE", executed between the REPUBLIC OF THE PHILIPPINES, represented by Defendant CIVIL AERONAUTICS ADMINISTRATION, as lessor, and ROSARIO C. LEVERIZA, as lessee, on April 2, 1965, over a certain parcel of land at the MIA area, consisting of approximately 4,502 square meters, at a monthly rental of P450.20, for a period of 25 years, (Exhibit "A", Exhibit "I-Leverizas", Exhibit "I-CAA"). Second Contracts. For purposes of easy references and brevity, this contract shall be referred to hereinafter as Contract B. This is a "LEASE AGREEMENT", executed between ROSARIO C. LEVERIZA, as lessor, and Plaintiff MOBIL OIL PHILIPPINES, INC., as lessee on May 21, 1965, over 3,000 square meters of that SAME Parcel of land subject of Contract A above mentioned, at a monthly rental of P1,500.00, for a period of 25 years (Exhibit 'B', Exhibit 4-Leverizas' ). Third Contract. For purposes of easy reference and brevity, this contract shall be referred to hereinafter as Contract C. This is a "LEASE AGREEMENT", executed between Defendant CIVIL AERONAUTICS ADMINISTRATION, as lessor, and plaintiff MOBIL OIL PHILIPPINES, INC., as lessee, on June 1, 1968 over that SAME parcel of land (Lot A, on plan being a portion of Parcel, Psu 2031), containing an area of 3,000 square meters more or less, at a monthly rental of P.25 per square meter for the second 200 square meters, and P.20 per square meter for the rest, for a period of 29 (sic) years. (Exhibit "C"). There is no dispute among the parties that the subject matter of the three contracts of lease above mentioned, Contract A, Contract B, and Contract C, is the same parcel of land, with the noted difference that while in Contract A, the area leased is 4,502 square meters, in Contract B and Contract C, the area has been reduced to 3,000 square meters. To summarize: Contract A a lease contract of April 2, 1965 between the Republic of the Philippines, represented by Defendant Civil Aeronautics Administration and Rosario C. Leveriza over a parcel of land containing an area of 4,502 square meters, for 25 years. Contract B a lease contract (in effect a sublease) of May 21, 1965 between defendant Rosario C. Leveriza and plaintiff Mobil Oil Philippines, Inc. over the same parcel of land, but reduced to 3,000 square meters for 25 years; and Contract C a lease contract of June 1, 1968 between defendant Civil Aeronautics Administration and plaintiff Mobil Oil Philippines,

Inc., over the same parcel of land, but reduced to 3,000 square meters, for 25 years. It is important to note, for a clear understanding of the issues involved, that it appears that defendant Civil Aeronautics Administration as LESSOR, leased the same parcel of land, for durations of time that overlapped to two lessees, to wit: (1) Defendant Rosario C. Leveriza, and that plaintiff Mobil Oil Philippines, Inc., as LESSEE, leased the same parcel of land from two lessors, to wit: (1) defendant Rosario C. Leveriza and (2) defendant Civil Aeronautics Administration, Inc., for durations of time that also overlapped. For purposes of brevity defendant Civil Aeronautics Administration shall be referred to hereinafter as defendant CAA. Rosario C. Leveriza, the lessee in Contract A and the lessor in Contract B, is now deceased. This is the reason why her successor-in-interest, her heirs, are sued, namely: Defendants Primitive Leveriza, her second husband, (now also deceased), Fe Leveriza Parungao, her daughter by her second husband, and Antonio C. Vasco, her son by her first husband. For purposes of brevity, these defendants shall be referred to hereinafter as Defendants Leveriza. Plaintiff Mobil Oil Philippines, Inc., shall be referred to hereinafter simply as the Plaintiff. (pp. 95-99, Record on Appeal). Plaintiff in this case seeks the rescission or cancellation of Contract A and Contract B on the ground that Contract A from which Contract B is derived and depends has already been cancelled by the defendant Civil Aeronautics Administration and maintains that Contract C with the defendant CAA is the only valid and subsisting contract insofar as the parcel of land, subject to the present litigation is concerned. On the other hand, defendants Leverizas' claim that Contract A which is their contract with CAA has never been legally cancelled and still valid and subsisting; that it is Contract C between plaintiff and defendant CAA which should be declared void. Defendant CAA asserts that Exhibit "A" is still valid and subsisting because its cancellation by Guillermo Jurado was ineffective and asks the court to annul Contract A because of the violation committed by defendant Leveriza in leasing the parcel of land to plaintiff by virtue of Contract B without the consent of defendant CAA. Defendant CAA further asserts that Contract C not having been approved by the Director of Public Works and Communications is not valid. ... xxx xxx xxx After trial, the lower court render judgment on April 6, 1976 the dispositive part of which reads: WHEREFORE, after having thus considered the evidence of all the parties, testimonial and documentary, and their memoranda and reply-memoranda, this Court hereby renders judgment: 1. Declaring Contract A as having been validly cancelled on June 28, 1966, and has therefore ceased to have any effect as of that date;

2. Declaring that Contract B has likewise ceased to have any effect as of June 28, 1966 because of the cancellation of Contract A; 3. Declaring that Contract C was validly entered into on June 1, 1968, and that it is still valid and subsisting; 4. Ordering defendant CAA to refund to defendants Leverizas the amount of P32,189.30 with 6% per annum until fully paid; 5. Ordering defendants Leverizas to refund to plaintiff the amount of P48,000.00 with 6% interest per annum until fully paid; 6. Dismissing defendants Leverizas' four counterclaims against plaintiff; 7. Dismissing defendants Leverizas' cross-claim against defendant CAA; 8. Dismissing defendant CAA's counterclaim against plaintiff; 9. Dismissing defendant CAA's counterclaim against defendant Leverizas. No pronouncements as to costs. On June 2, 1976, defendant Leveriza filed a motion for new trial on the ground of newly discovered evidence, lack of jurisdiction of the court over the case and lack of evidentiary support of the decision which was denied in the order of November 12,1976 (Rollo, p. 17). On July 27, 1976, the CAA filed a Motion for Reconsideration, averring that because the lot lease was properly registered in the name of the Republic of the Philippines, it was only the President of the Philippines or an officer duly designated by him who could execute the lease contract pursuant to Sec. 567 of the Revised Administrative Code; that the Airport General Manager has no authority to cancel Contract A, the contract entered into between the CAA and Leveriza, and that Contract C between the CAA and Mobil was void for not having been approved by the Secretary of Public Works and Communications. Said motion was however denied on November 12, 1976 (Rollo, p. 18). On appeal, the Intermediate Appellate Court, being in full accord with the trial court, rendered a decision on February 29, 1984, the dispositive part of which reads: WHEREFORE, finding no reversible error in the decision of the lower court dated April 6, 1976, the same is hereby affirmed in toto. Hence, this petition. The petitioners raised the following assignment of errors: I THE INTERMEDIATE APPELLATE COURT ERRED IN HOLDING THAT THE ADMINISTRATOR OF THE CIVIL AERONAUTICS ADMINISTRATION (CAA) HAD

THE STATUTORY AUTHORITY TO LEASE, EVEN WITHOUT APPROVAL OF THE THEN SECRETARY OF PUBLIC WORKS AND COMMUNICATIONS, REAL PROPERTY BELONGING TO THE REPUBLIC OF THE PHILIPPINES. II THE INTERMEDIATE APPELLATE COURT ERRED IN HOLDING THAT THE ADMINISTRATOR OF THE CIVIL AERONAUTICS ADMINISTRATION HAD STATUTORY AUTHORITY, WITHOUT THE APPROVAL OF THE THEN SECRETARY OF PUBLIC WORKS AND COMMUNICATIONS, TO CANCEL A LEASE CONTRACT OVER REAL PROPERTY OWNED BY THE REPUBLIC OF THE PHILIPPINES, WHICH CONTRACT WAS APPROVED, AS REQUIRED BY LAW, BY THE SECRETARY. III THE INTERMEDIATE APPELLATE COURT ERRED WHEN IT RULED THAT THE CONTRACT OF SUBLEASE (CONTRACT B) ENTERED INTO BETWEEN PETITIONERS' PREDECESSOR-IN-INTEREST AND RESPONDENT MOBIL OIL PHILIPPINES, INC. WAS WITHOUT THE CONSENT OF THE ADMINISTRATOR OF THE CIVIL AERONAUTICS ADMINISTRATION. The petition is devoid of merit. There is no dispute that Contract "A" at the time of its execution was a valid contract. The issue therefore is whether or not said contract is still subsisting after its cancellation by CAA on the ground of a sublease executed by petitioners with Mobil Oil Philippines without the consent of CAA and the execution of another contract of lease between CAA and Mobil Oil Philippines (Contract "C"). Petitioners contend that Contract "A" is still subsisting because Contract "B" is a valid sublease and does not constitute a ground for the cancellation of Contract "A", while Contract "C", a subsequent lease agreement between CAA and Mobil Oil Philippines is null and void, for lack of approval by the Department Secretary. Petitioners anchor their position on Sections 567 and 568 of the Revised Administrative Code which require among others, that subject contracts should be executed by the President of the Philippines or by an officer duly designated by him, unless authority to execute the same is by law vested in some other officer (Petition, Rollo, pp. 15-16). At the other extreme, respondent Mobil Oil Philippines asserts that Contract "A" was validly cancelled on June 28, 1966 and so was Contract "B" which was derived therefrom. Accordingly, it maintains that Contract "C" is the only valid contract insofar as the parcel of land in question is concerned and that approval of the Department Head is not necessary under Section 32 (par. 24) of the Republic Act 776 which expressly vested authority to enter into such contracts in the Administrator of CAA (Comment; Rollo, p. 83). On its part, respondent Civil Aeronautics Administration took the middle ground with its view that Contract "A" is still subsisting as its cancellation is ineffective without the approval of the Department Head but said contract is not enforceable because of petitioners' violation of its terms and conditions by entering into Contract "B" of sublease without the consent of CAA. The CAA further asserts that Contract "C" not having been approved by the Secretary of Public Works and Communications, is not valid (Rollo, p. 43). However, in its comment filed with the Supreme Court, the CAA made a complete turnabout adopting the interpretation and ruling made by the trial court which was affirmed by the Intermediate Appellate Court (Court of Appeals), that the CAA Administrator has the power to

execute the deed or contract of lease involving real properties under its administration belonging to the Republic of the Philippines without the approval of the Department Head as clearly provided in Section 32, paragraph (24) of Republic Act 776. The issue narrows down to whether or not there is a valid ground for the cancellation of Contract "A." Contract "A" was entered into by CAA as the lessor and the Leverizas as the lessee specifically "for the purpose of operating and managing a gasoline station by the latter, to serve vehicles going in and out of the airport." As regards prior consent of the lessor to the transfer of rights to the leased premises, the provision of paragraph 7 of said Contract reads in full: 7. The Party of the Second part may transfer her rights to the leased premises but in such eventuality, the consent of the Party of the First Part shall first be secured. In any event, such transfer of rights shall have to respect the terms and conditions of this agreement. Paragraph 8 provides the sanction for the violation of the above-mentioned terms and conditions of the contract. Said paragraph reads: 8. Failure on the part of the Party of the Second Part to comply with the terms and conditions herein agreed upon shall be sufficient for revocation of this contract by the Party of the First Part without need of judicial demand. It is not disputed that the Leverizas (lessees) entered into a contract of sublease (Contract "B") with Mobil Oil Philippines without the consent of CAA (lessor). The cancellation of the contract was made in a letter dated June 28, 1966 of Guillermo P. Jurado, Airport General Manager of CAA addressed to Rosario Leveriza, as follows: (Letterhead) June 28, 1966 Mrs. Rosario Leveriza Manila International Airport Madam: It has been found out by the undersigned that you have sublet the property of the CAA leased to you and by virtue of this, your lease contract is hereby cancelled because of the violation of the stipulations of the contract. I would like to inform you that even without having sublet the said property the said contract would have been cancelled as per attached communication. Very truly yours,

For the Directo r: (Sgd.) Illegible (Typed ) GUILLERMO P. JURADO Airport General Manager Respondent Leverizas and the CAA assailed the validity of such cancellation, claiming that the Airport General Manager had no legal authority to make the cancellation. They maintain that it is only the Secretary of Public Works and Communications, acting for the President, or by delegation of power, the Director of Civil Aeronautics Administration who could validly cancel the contract. They do admit, however, and it is evident from the records that the Airport General Manager signed "For the Director." Under the circumstances, there is no question that such act enjoys the presumption of regularity, not to mention the unassailable fact that such act was subsequently affirmed or ratified by the Director of the CAA himself (Record on Appeal, pp. 108-110). Petitioners argue that cancelling or setting aside a contract approved by the Secretary is, in effect, repealing an act of the Secretary which is beyond the authority of the Administrator. Such argument is untenable. The terms and conditions under which such revocation or cancellation may be made, have already been specifically provided for in Contract "A" which has already been approved by the Department Head, It is evident that in the implementation of aforesaid contract, the approval of said Department Head is no longer necessary if not redundant. It is further contended that even granting that such cancellation was effective, a subsequent billing by the Accounting Department of the CAA has in effect waived or nullified the rescission of Contract "A." It will be recalled that the questioned cancellation of Contract "A" was among others, mainly based on the violation of its terms and conditions, specifically, the sublease of the property by the lessee without the consent of the lessor. The billing of the petitioners by the Accounting Department of the CAA if indeed it transpired, after the cancellation of Contract "A" is obviously an error. However, this Court has already ruled that the mistakes of government personnel should not affect public interest. In San Mauricio Mining Company v. Ancheta (105 SCRA 391, 422), it has been held that as a matter of law rooted in the protection of public interest, and also as a general policy to protect the government and the people, errors of government personnel in the performance of their duties should never deprive the people of the right to rectify such error and recover what might be lost or be bartered away in any actuation, deal or transaction concerned. In the case at bar, the lower court in its decision which has been affirmed by the Court of Appeals, ordered the CAA to refund to the petitioners the amount of rentals which was not due from them with 6% interest per annum until fully paid. Petitioners further assail the interpretation of Contract "A", claiming that Contract "B" was a mere sublease to respondent Mobil Oil Philippines, Inc. and requires no prior consent of CAA to perfect

the same. Citing Article 1650 of the Civil Code, they assert that the prohibition to sublease must be expressed and cannot be merely implied or inferred (Rollo, p. 151). As correctly found by the Court of Appeals, petitioners in asserting the non- necessity for a prior consent interprets the first sentence of paragraph 7 of Contract "A" to refer to an assignment of lease under Article 1649 of the Civil Code and not to a mere sublease. A careful scrutiny of said paragraph of Contract "A" clearly shows that it speaks of transfer of rights of Rosario Leveriza to the leased premises and not to assignment of the lease (Rollo, pp. 48-49). Petitioners likewise argued that it was contemplated by the parties to Contract "A" that Mobil Oil Philippines would be the owner of the gasoline station it would construct on the leased premises during the period of the lease, hence, it is understood that it must be given a right to use and occupy the lot in question in the form of a sub-lease (Rollo, p. 152). In Contract "A", it was categorically stated that it is the lessee (petitioner) who will manage and operate the gasoline station. The fact that Mobil Oil was mentioned in that contract was clearly not intended to give approval to a sublease between petitioners and said company but rather to insure that in the arrangements to be made between them, it must be understood that after the expiration of the lease contract, whatever improvements have been constructed in the leased premises shall be relinquished to CAA. Thus, this Court held that "the primary and elementary rule of construction of documents is that when the words or language thereof is clear and plain or readily understandable by any ordinary reader thereof, there is absolutely no room for interpretation or construction anymore." (San Mauricio Mining Company v. Ancheta, supra). Finally, petitioners contend that the administrator of CAA cannot execute without approval of the Department Secretary, a valid contract of lease over real property owned by the Republic of the Philippines, citing Sections 567 and 568 of the Revised Administrative Code, which provide as follows: SEC. 567. Authority of the President of the Philippines to execute contracts relative to real property. When the Republic of the Philippines is party to a deed conveying the title to real property or is party to any lease or other contract relating to real property belonging to said government, said deed or contract shall be executed on behalf of said government by the President of the Philippines or by an officer duly designated by him, unless authority to execute the same is by law expressly vested in some other officer. (Emphasis supplied) SEC. 568. Authority of national officials to make contract. Written contracts not within the purview of the preceding section shall, in the absence of special provision, be executed, with the approval of the proper Department Head, by the Chief of the Bureau or Office having control of the appropriation against which the contract would create a charge; or if there is no such chief, by the proper Department Head himself or the President of the Philippines as the case may require. On the other hand, respondent CAA avers that the CAA Administrator has the authority to lease real property belonging to the Republic of the Philippines under its administration even without the approval of the Secretary of Public Works and Communications, which authority is expressly vested in it by law, more particularly Section 32 (24) of Republic Act 776, which reads: Sec. 32. Powers and Duties of the Administrator. Subject to the general control and supervision of the Department Head, the Administrator shall have, among others, the following powers and duties:

xxx xxx xxx (24) To administer, operate, manage, control, maintain and develop the Manila International Airport and all government aerodromes except those controlled or operated by the Armed Forces of the Philippines including such power and duties as: ... (b) to enter into, make and execute contracts of any kind with any person, firm, or public or private corporation or entity; (c) to acquire, hold, purchase, or lease any personal or real property; right of ways, and easements which may be proper or necessary: Provided, that no real property thus acquired and any other real property of the Civil Aeronautics Administration shall be sold without the approval of the President of the Philippines. ... There is no dispute that the Revised Administrative Code is a general law while Republic Act 776 is a special law nor in the fact that the real property subject of the lease in Contract "C" is real property belonging to the Republic of the Philippines. Under 567 of the Revised Administrative Code, such contract of lease must be executed: (1) by the President of the Philippines, or (2) by an officer duly designated by him or (3) by an officer expressly vested by law. It is readily apparent that in the case at bar, the Civil Aeronautics Administration has the authority to enter into Contracts of Lease for the government under the third category. Thus, as correctly ruled by the Court of Appeals, the Civil Aeronautics Administration has the power to execute the deed or contract involving leases of real properties belonging to the Republic of the Philippines, not because it is an entity duly designated by the President but because the said authority to execute the same is, by law expressly vested in it. Under the above-cited Section 32 (par. 24) of Republic Act 776, the Administrator (Director) of the Civil Aeronautics Administration by reason of its creation and existence, administers properties belonging to the Republic of the Philippines and it is on these properties that the Administrator must exercise his vast power and discharge his duty to enter into, make and execute contract of any kind with any person, firm, or public or private corporation or entity and to acquire, hold, purchase, or lease any personal or real property, right of ways and easements which may be proper or necessary. The exception, however, is the sale of properties acquired by CAA or any other real properties of the same which must have the approval of the President of the Philippines. The Court of appeals took cognizance of the striking absence of such proviso in the other transactions contemplated in paragraph (24) and is convinced as we are, that the Director of the Civil Aeronautics Administration does not need the prior approval of the President or the Secretary of Public Works and Communications in the execution of Contract "C." In this regard, this Court, ruled that another basic principle of statutory construction mandates that general legislation must give way to special legislation on the same subject, and generally be so interpreted as to embrace only cases in which the special provisions are not applicable (Sto. Domingo v. De los Angeles, 96 SCRA 139),. that specific statute prevails over a general statute (De Jesus v. People, 120 SCRA 760) and that where two statutes are of equal theoretical application to a particular case, the one designed therefor specially should prevail (Wil Wilhensen, Inc. v. Baluyot, 83 SCRA 38) WHEREFORE, the petition is DISMISSED for lack of merit and the decision of the Court of Appeals appealed from is AFFIRMED in toto. SO ORDERED.

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. 1The 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. 2Ideally, 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,16 and 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 entities 18 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 nonoperational 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 partydefendant.

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 nonenactment 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. IGNACIA BALICAS, petitioner, vs. FACT-FINDING & INTELLIGENCE BUREAU (FFIB), OFFICE OF THE OMBUDSMAN, respondent. DECISION QUISUMBING, J.:

This petition for review on certiorari assails the Court of Appeals decision*1+ dated August 25, 2000 and resolution[2] of November 13, 2000 in CA-G.R. SP No. 56386, which affirmed the Ombudsmans decision[3] dismissing petitioner from government service for gross neglect of duty in connection with the tragedy at the Cherry Hills Subdivision in Antipolo City on August 3, 1999.

The antecedent facts as summarized in the Ombudsmans decision are as follows:

Based on the evidence adduced by the complainant, the following is the chronological series of events which led to the development of the CHS (Cherry Hills Subdivision):

August 28, 1990 Philjas Corporation, whose primary purposes, among others are: to own, develop, subdivide, market and provide low-cost housing for the poor, was registered with the Securities and Exchange Commission (SEC).

February 19, 1991 then City Mayor Daniel S. Garcia, endorsed to the Housing and Land Use Regulatory Board (HLURB) the proposed CHS.

Thereafter, or on 07 March 1991, based on the favorable recommendations of Mayor Garcia, respondent TAN, issued the Preliminary Approval and Locational Clearance (PALC) for the development of CHS.

On July 5, 1991, then HLURB Commissioner respondent TUNGPALAN issued Development Permit No. 910216 for land development only for the entire land area of 12.1034 hectares covered by TCT No. 35083 (now TCT 208837) and with 1,003 saleable lots/units with project classification B.P. 220 Model ASocialized Housing (p. 96, Records), with several conditions for its development.

Three (3) days thereafter or on July 8, 1991, respondent JASARENO, allowed/granted the leveling/earthmoving operations of the development project of the area subject to certain conditions.

On November 18, 1991, then HLURB Commissioner AMADO B. DELORIA issued Certificate of Registration No. 91-11-0576 in favor of CHS, with License to Sell No. 91-11-0592 for the 1,007 lots/units in the subdivision.

Eventually, on December 10, 1991, respondent POLLISCO issued Small Scale Mining Permit (SSMP) No. IV-316 to Philjas to extract and remove 10,000 cu. meters of filling materials from the area where the CHS is located.

Thereafter, or on January 12, 1994, Philjas applied for a Small Scale Mining Permit (SSMP) under P.D. 1899 with the Rizal Provincial Government to extract and remove 50,000 metric tons of filling materials per annum on CHS 2.8 hectares.

Thus, on January 17, 1994, respondent MAGNO, informed ELIEZER I. RODRIGUEZ of Philjas that CHS is within the EIS System and as such must secure ECC from the DENR. Philjas was accordingly informed of the matter such that it applied for the issuance of ECC from the DENR-Region IV, on February 3, 1994.

On March 12, 1994, an Inspection Report allegedly prepared by respondent BALICAS, attested by respondent RUTAQUIO and approved by respondent TOLENTINO re: field evaluation to the issuance of ECC, was submitted.

Consequently, on April 28, 1994, upon recommendations of respondent TOLENTINO, Philjas application for ECC was approved by respondent PRINCIPE, then Regional Executive Director, DENR under ECC-137R1-212-94.

A Mining Field Report for SSMP dated May 10, 1994 was submitted pursuant to the inspection report prepared by respondents CAYETANO, FELICIANO, HILADO and BURGOS, based on their inspection conducted on April 25 to 29, 1994. The report recommended, among others, that the proposed extraction of materials would pose no adverse effect to the environment.

Records further disclosed that on August 10, 1994, respondent BALICAS monitored the implementation of the CHS Project Development to check compliance with the terms and conditions in the ECC. Again, on August 23, 1995, she conducted another monitoring on the project for the same purpose. In both instances, she noted that the project was still in the construction stage hence, compliance with the stipulated conditions could not be fully assessed, and therefore, a follow-up monitoring is proper. It appeared from the records that this August 23, 1995 monitoring inspection was the last one conducted by the DENR.

On September 24, 1994, GOV. CASIMIRO I. YNARES, JR., approved the SSMP applied for by Philjas under SSMP No. RZL-012, allowing Philjas to extract and remove 50,000 metric tons of filling materials from the area for a period of two (2) years from date of its issue until September 6, 1996.[4]

Immediately after the tragic incident on August 3, 1999, a fact-finding investigation was conducted by the Office of the Ombudsman through its Fact-Finding and Intelligence Bureau (FFIB), which duly filed an administrative complaint with the Office of the Ombudsman against several officials of the Housing and

Land Use Regulatory Board (HLURB), Department of Environment and Natural Resources (DENR), and the local government of Antipolo.

The charge against petitioner involved a supposed failure on her part to monitor and inspect the development of Cherry Hills Subdivision, which was assumed to be her duty as DENR senior environmental management specialist assigned in the province of Rizal.

For her part, petitioner belied allegations that monitoring was not conducted, claiming that she monitored the development of Cherry Hills Subdivision as evidenced by three (3) monitoring reports dated March 12, 1994, August 10, 1994 and August 23, 1995. She averred that she also conducted subsequent compliance monitoring of the terms and conditions of Philjas Environmental Compliance Certificate (ECC) on May 19, 1997 and noted no violation thereon. She further claimed good faith and exercise of due diligence, insisting that the tragedy was a fortuitous event. She reasoned that the collapse did not occur in Cherry Hills, but in the adjacent mountain eastern side of the subdivision.

On November 15, 1999, the Office of the Ombudsman rendered a decision imposing upon petitioner the supreme penalty of dismissal from office for gross neglect of duty finding:

RESPONDENT BALICAS

Records show that she monitored and inspected the CHS [Cherry Hills Subdivision] only thrice (3), to wit:

1. Inspection Report dated 12 March 1994

2. Monitoring Report dated 10 August 1994

3. Monitoring Report dated 23 August 1995

Verily, with this scant frequency, how can respondent Balicas sweepingly claim that there was no violation of ECC compliance and that she had done what is necessary in accordance with the regular

performance of her duties. She herself recognized the fact that the collapsed area is not the subdivision in question but the adjacent mountain eastern side of the CHS. It is incumbent upon her to establish the same in her monitoring and inspection reports and make objective recommendations re: its possible adverse effect to the environment and to the residents of the CHS and nearby areas. Her defense that the position of the CHS shows the impossibility of checking the would-be adverse effect clearly established her incompetence. No expert mind is needed to know that mountains cause landslide and erosion. Cherry Hills Subdivision is a living witness to this.[5]

Petitioner seasonably filed a petition for review of the Ombudsmans decision with the Court of Appeals. In its decision dated August 25, 2000, the Court of Appeals dismissed the petition for lack of merit and affirmed the appealed decision. It found that the landslide was a preventable occurrence and that petitioner was guilty of gross negligence in failing to closely monitor Philjas compliance with the conditions of the ECC given the known inherent instability of the ground where the subdivision was developed. The appellate court likewise denied petitioners motion for reconsideration in its resolution dated November 13, 2000.

Petitioner now comes to this Court for review on certiorari, under Rule 45 of the Rules of Civil Procedure, of the appellate courts decision. She alleges that the Court of Appeals committed serious errors of law in affirming the Ombudsmans conclusion that:

1 There was gross negligence on the part of petitioner Balicas in the performance of her official duties as Senior Environmental Management Specialist (SEMS) of the Provincial Environment and Natural Resources Office (PENRO) Province of Rizal, DENR Region IV; and the alleged gross neglect of duty of petitioner warranted the imposition of the extreme penalty of dismissal from the service.

2. The landslide which caused the death of several residents of the subdivision and the destruction of property is not a fortuitous event and therefore preventible.[6]

The main issues are whether or not the Court of Appeals committed serious errors of law in: (1) holding petitioner guilty of gross neglect of duty and (2) imposing upon her the extreme penalty of dismissal from office.

In order to ascertain if there had been gross neglect of duty, we have to look at the lawfully prescribed duties of petitioner. Unfortunately, DENR regulations are silent on the specific duties of a senior

environmental management specialist. Internal regulations merely speak of the functions of the Provincial Environment and Natural Resources Office (PENRO) to which petitioner directly reports.

Nonetheless, petitioner relies on a letter[7] dated December 13, 1999 from the chief of personnel, DENR Region IV, which defines the duties of a senior environmental management specialist as follows:

1. Conducts investigation of pollution sources or complaints;

2. Review[s] plans and specifications of proposes (sic) or existing treatment plants and pollution abatement structures and devices to determine their efficiency and suitability for the kind of pollutants to be removed and to recommend issuance or denial of permits;

3. Conducts follow-up inspection of construction of pollution abatement/work and structures to oversee compliance with approved plans and specifications;

4. Recommends remedial measures for the prevention, abatement and control of pollution;

5. Prepares technical reports on pollution investigation and related activities; and

6. Performs related work as assigned.

It is readily apparent that no monitoring duty whatsoever is mentioned in the said letter. The PENRO, on the other hand, is mandated to:

1. conduct surveillance and inspection of pollution sources and control facilities and undertake/initiate measures relative to pollution-related complaints of the general public for appropriate referral to the regional office;

2. comment on the project description, determine if the project fall within the Environmental Impact Statement (EIS) System[8] and submit the same to the regional office; and

3. implement programs and projects related to environmental management within the PENRO.[9]

In addition, the PENRO is likewise tasked to monitor the project proponents compliance with the conditions stipulated in the ECC, with support from the DENR regional office and the Environmental Management Bureau.[10] The primary purpose of compliance monitoring is to ensure the judicious implementation of sound and standard environmental quality during the development stage of a particular project. Specifically, it aims to:

1. monitor project compliance with the conditions set in the ECC;

2. monitor compliance with the Environmental Management Plan (EMP) and applicable laws, rules and regulations; and

3. provide a basis for timely decision-making and effective planning and management of environmental measures through the monitoring of actual project impacts vis--vis predicted impacts in the EIS.[11]

Based on the foregoing, the monitoring duties of the PENRO mainly deal with broad environmental concerns, particularly pollution abatement. This general monitoring duty is applicable to all types of physical developments that may adversely impact on the environment, whether housing projects, industrial sites, recreational facilities, or scientific undertakings.

However, a more specific monitoring duty is imposed on the HLURB as the sole regulatory body for housing and land development. It is mandated to encourage greater private sector participation in lowcost housing through (1) liberalization of development standards, (2) simplification of regulations and (3) decentralization of approvals for permits and licenses.[12]

P.D. No. 1586[13] prescribes the following duties on the HLURB (then Ministry of Human Settlements) in connection with environmentally critical projects requiring an ECC:

SECTION 4. Presidential Proclamation of Environmentally Critical Areas and Projects. The President of the Philippines may, on his own initiative or upon recommendation of the National Environment Protection Council, by proclamation declare certain projects, undertakings or areas in the country as environmentally critical. No person, partnership or corporation shall undertake or operate any such declared environmentally critical project or area without first securing an Environmental Compliance Certificate issued by the President or his duly authorized representative. For the proper management of said critical project or area, the President may by his proclamation reorganize such government offices, agencies, institutions, corporations or instrumentalities including the re-alignment of government personnel, and their specific functions and responsibilities.

For the same purpose as above, the Ministry of Human Settlements [now HLURB] shall: (a) prepare the proper land or water use pattern for said critical project(s) or area(s); (b) establish ambient environmental quality standards; (c) develop a program of environmental enhancement or protective measures against calamitous factors such as earthquake, floods, water erosion and others; and (d) perform such other functions as may be directed by the President from time to time. (Emphasis ours.)

The legal duty to monitor housing projects, like the Cherry Hills Subdivision, against calamities such as landslides due to continuous rain, is clearly placed on the HLURB, not on the petitioner as PENRO senior environmental management specialist. In fact, the law imposes no clear and direct duty on petitioner to perform such narrowly defined monitoring function.

In the related case of Principe v. Fact-Finding and Intelligence Bureau,[14] this Court found Antonio Principe, regional executive director for DENR Region IV who approved Philjas application for ECC, not liable for gross neglect of duty. The Court reversed the decision of the Court of Appeals and thereby annulled the decision of the Ombudsman in OMB-ADM-09-661, dated December 1, 1999, dismissing Principe from the government service. We ordered his reinstatement with back pay and without loss of seniority.[15]

The rationale for our decision in Principe bears reiteration: the responsibility of monitoring housing and land development projects is not lodged with the DENR, but with the HLURB as the sole regulatory body for housing and land development. Thus, we must stress that we find no legal basis to hold petitioner, who is an officer of DENR, liable for gross neglect of the duty pertaining to another agency, the HLURB. It was grave error for the appellate court to sustain the Ombudsmans ruling that she should be dismissed from the service. The reinstatement of petitioner is clearly called for.

WHEREFORE, the petition is hereby GRANTED. The Court of Appeals decision affirming the Ombudsmans dismissal of petitioner IGNACIA BALICAS from office is REVERSED and SET ASIDE, and petitioners REINSTATEMENT to her position with back pay and without loss of seniority rights is hereby ordered.

SO ORDERED. Malaga v. Penachos GR 86695 1992 FIRST DIVISION

[G.R. No. 86695, September 03, 1992]

MARIA ELENA MALAGA, DOING BUSINESS UNDER THE NAME B.E. CONSTRUCTION; JOSIELEEN NAJARRO, DOING BUSINESS UNDER THE NAME BEST BUILT CONSTRUCTION; JOSE N. OCCEA, DOING BUSINESS UNDER THE NAME THE FIRM OF JOSE N. OCCEA; AND THE ILOILO BUILDERS CORPORATION, PETITIONERS, VS. MANUEL R. PENACHOS, JR., ALFREDO MATANGGA, ENRICO TICAR AND TERESITA VILLANUEVA, IN THEIR RESPECTIVE CAPACITIES AS CHAIRMAN AND MEMBERS OF THE PREQUALIFICATION BIDS AND AWARDS COMMITTEE (PBAC) - BENIGNO PANISTANTE, IN HIS CAPACITY AS PRESIDENT OF ILOILO STATE COLLEGE OF FISHERIES, AS WELL AS IN THEIR RESPECTIVE PERSONAL CAPACITIES; AND HON. LODRIGIO L. LEBAQUIN, RESPONDENTS.

DECISION

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 Occea 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 amining, 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 prequalification 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 30day 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 a charter. This term includes regulatory agencies, chartered institutions, and government-owned or controlled corporations. (Sec. 2 (5) Introductory Provisions).

The same Code describes a chartered institution thus: Chartered institution - refers to any agency organized or operating under a special charter, and vested by law with functions relating to specific constitutional policies or objectives. This term includes the state universities and colleges, and the monetary authority of the state. (Sec. 2 (12) Introductory Provisions).

It is clear from the above definitions that ISCOF is a chartered institution and is therefore covered by P.D. 1818.

There are also indications in its charter that ISCOF is a government instrumentality. First, it was created in pursuance of the integrated fisheries development policy of the State, a priority program of the government to effect the socio-economic life of the nation. Second, the Treasurer of the Republic of the Philippines shall also be the ex-officio Treasurer of the state college with its accounts and expenses to be audited by the Commission on Audit or its duly authorized representative. Third, heads of bureaus and offices of the National Government are authorized to loan or transfer to it, upon request of the president of the state college, such apparatus, equipment, or supplies and even the services of such employees as can be spared without serious detriment to public service. Lastly, an additional amount of P1.5M had been appropriated out of the funds of the National Treasury and it was also decreed in its charter that the funds and maintenance of the state college would henceforth be included in the General Appropriations Law.[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 discretion in 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, Occea Builders, is not entitled to relief because it admittedly submitted its prequalification 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.Grio-Aquino, Medialdea, and Bellosillo, JJ., concur.

ADMINSTRATIVE AGENCIES
ISABELO T. CRISOSTOMO, petitioner, vs. THE COURT OF APPEALS and the PEOPLE OF THE PHILIPPINES, respondents.* DECISION MENDOZA, J.:

This is a petition to review the decision of the Court of Appeals dated July 15, 1992, the dispositive portion of which reads:

WHEREFORE, the present petition is partially granted. The questioned Orders and writs directing (1) reinstatement of respondent Isabelo T. Crisostomo to the position of President of the Polytechnic University of the Philippines, and (2) payment of salaries and benefits which said respondent failed to receive during his suspension insofar as such payment includes those accruing after the abolition of the PCC and its transfer to the PUP, are hereby set aside. Accordingly, further proceedings consistent with

this decision may be taken by the court a quo to determine the correct amounts due and payable to said respondent by the said university.

The background of this case is as follows:

Petitioner Isabelo Crisostomo was President of the Philippine College of Commerce (PCC), having been appointed to that position by the President of the Philippines on July 17, 1974.

During his incumbency as president of the PCC, two administrative cases were filed against petitioner for illegal use of government vehicles, misappropriation of construction materials belonging to the college, oppression and harassment, grave misconduct, nepotism and dishonesty. The administrative cases, which were filed with the Office of the President, were subsequently referred to the Office of the Solicitor General for investigation.

Charges of violations of R.A. No. 3019, 3 (e) and R.A. No. 992, 20-21 and R.A. No. 733, 14 were likewise filed against him with the Office of Tanodbayan.

On June 14, 1976, three (3) informations for violation of Sec. 3 (e) of the Anti-Graft and Corrupt Practices Act (R.A. No. 3019, as amended) were filed against him. The informations alleged that he appropriated for himself a bahay kubo, which was intended for the College, and construction materials worth P250,000.00, more or less. Petitioner was also accused of using a driver of the College as his personal and family driver.[1]

On October 22, 1976, petitioner was preventively suspended from office pursuant to R.A. No. 3019, 13, as amended. In his place Dr. Pablo T. Mateo, Jr. was designated as officer-in-charge on November 10, 1976, and then as Acting President on May 13, 1977.

On April 1, 1978, P.D. No. 1341 was issued by then President Ferdinand E. Marcos, CONVERTING THE PHILIPPINE COLLEGE OF COMMERCE INTO A POLYTECHNIC UNIVERSITY, DEFINING ITS OBJECTIVES, ORGANIZATIONAL STRUCTURE AND FUNCTIONS, AND EXPANDING ITS CURRICULAR OFFERINGS.

Mateo continued as the head of the new University. On April 3, 1979, he was appointed Acting President and on March 28, 1980, as President for a term of six (6) years.

On July 11, 1980, the Circuit Criminal Court of Manila rendered judgment acquitting petitioner of the charges against him. The dispositive portion of the decision reads:

WHEREFORE, the Court finds the accused, Isabelo T. Crisostomo, not guilty of the violations charged in all these three cases and hereby acquits him therefrom, with costs de oficio. The bail bonds filed by said accused for his provisional liberty are hereby cancelled and released.

Pursuant to the provisions of Section 13, R.A. No. 3019, as amended, otherwise known as The Anti-Graft and Corrupt Practices Act, and under which the accused has been suspended by this Court in an Order dated October 22, 1976, said accused is hereby ordered reinstated to the position of President of the Philippine College of Commerce, now known as the Polytechnic University of the Philippines, from which he has been suspended. By virtue of said reinstatement, he is entitled to receive the salaries and other benefits which he failed to receive during suspension, unless in the meantime administrative proceedings have been filed against him.

The bail bonds filed by the accused for his provisional liberty in these cases are hereby cancelled and released.

SO ORDERED.

The cases filed before the Tanodbayan (now the Ombudsman) were likewise dismissed on August 8, 1991 on the ground that they had become moot and academic. On the other hand, the administrative cases were dismissed for failure of the complainants to prosecute them.

On February 12, 1992, petitioner filed with the Regional Trial Court a motion for execution of the judgment, particularly the part ordering his reinstatement to the position of president of the PUP and the payment of his salaries and other benefits during the period of suspension.

The motion was granted and a partial writ of execution was issued by the trial court on March 6, 1992. On March 26, 1992, however, President Corazon C. Aquino appointed Dr. Jaime Gellor as acting president of the PUP, following the expiration of the term of office of Dr. Nemesio Prudente, who had succeeded Dr. Mateo. Petitioner was one of the five nominees considered by the President of the Philippines for the position.

On April 24, 1992, the Regional Trial Court, through respondent Judge Teresita Dy-Liaco Flores, issued another order, reiterating her earlier order for the reinstatement of petitioner to the position of PUP president. A writ of execution, ordering the sheriff to implement the order of reinstatement, was issued.

In his return dated April 28, 1992, the sheriff stated that he had executed the writ by installing petitioner as President of the PUP, although Dr. Gellor did not vacate the office as he wanted to consult with the President of the Philippines first. This led to a contempt citation against Dr. Gellor. A hearing was set on May 7, 1992. On May 5, 1992, petitioner also moved to cite Department of Education, Culture and Sports Secretary Isidro Cario in contempt of court. Petitioner assumed the office of president of the PUP.

On May 18, 1992, therefore, the People of the Philippines filed a petition for certiorari and prohibition (CA G.R. No. 27931), assailing the two orders and the writs of execution issued by the trial court. It also asked for a temporary restraining order.

On June 25, 1992, the Court of Appeals issued a temporary restraining order, enjoining petitioner to cease and desist from acting as president of the PUP pursuant to the reinstatement orders of the trial court, and enjoining further proceedings in Criminal Cases Nos. VI-2329-2331.

On July 15, 1992, the Seventh Division of the Court of Appeals rendered a decision,[2] the dispositive portion of which is set forth at the beginning of this opinion. Said decision set aside the orders and writ of reinstatement issued by the trial court. The payment of salaries and benefits to petitioner accruing after the conversion of the PCC to the PUP was disallowed. Recovery of salaries and benefits was limited to those accruing from the time of petitioners suspension until the conversion of the PCC to the PUP. The case was remanded to the trial court for a determination of the amounts due and payable to petitioner.

Hence this petition. Petitioner argues that P.D. No. 1341, which converted the PCC into the PUP, did not abolish the PCC. He contends that if the law had intended the PCC to lose its existence, it would have specified that the PCC was being abolished rather than converted and that if the PUP was intended to be a new institution, the law would have said it was being created. Petitioner claims that the PUP is merely a continuation of the existence of the PCC, and, hence, he could be reinstated to his former position as president.

In part the contention is well taken, but, as will presently be explained, reinstatement is no longer possible because of the promulgation of P.D. No. 1437 by the President of the Philippines on June 10, 1978.

P.D. No. 1341 did not abolish, but only changed, the former Philippine College of Commerce into what is now the Polytechnic University of the Philippines, in the same way that earlier in 1952, R.A. No. 778 had converted what was then the Philippine School of Commerce into the Philippine College of Commerce. What took place was a change in academic status of the educational institution, not in its corporate life. Hence the change in its name, the expansion of its curricular offerings, and the changes in its structure and organization.

As petitioner correctly points out, when the purpose is to abolish a department or an office or an organization and to replace it with another one, the lawmaking authority says so. He cites the following examples:

E.O. No. 709:

1. There is hereby created a Ministry of Trade and Industry, hereinafter referred to as the Ministry. The existing Ministry of Trade established pursuant to Presidential Decree No. 721 as amended, and the existing Ministry established pursuant to Presidential Decree No. 488 as amended, are abolished together with their services, bureaus and similar agencies, regional offices, and all other entities under their supervision and control. . . .

E.O. No. 710:

 1. There is hereby created a Ministry of Public Works and Highways, hereinafter referred to as the Ministry. The existing Ministry of Public Works established pursuant to Executive Order No. 546 as amended, and the existing Ministry of Public Highways established pursuant to Presidential Decree No. 458 as amended, are abolished together with their services, bureaus and similar agencies, regional offices, and all other entities within their supervision and control. . . .

R.A. No. 6975:

13. Creation and Composition. - A National Police Commission, hereinafter referred to as the Commission, is hereby created for the purpose of effectively discharging the functions prescribed in the Constitution and provided in this Act. The Commission shall be a collegial body within the Department. It shall be composed of a Chairman and four (4) regular commissioners, one (1) of whom shall be designated as Vice-Chairman by the President. The Secretary of the Department shall be the ex-officio Chairman of the Commission, while the Vice-Chairman shall act as the executive officer of the Commission.

xxx xxx

xxx

90. Status of Present NAPOLCOM, PC-INP. - Upon the effectivity of this Act, the present National Police Commission, and the Philippine Constabulary-Integrated National Police shall cease to exist. The Philippine Constabulary, which is the nucleus of the integrated Philippine Constabulary-Integrated National Police, shall cease to be a major service of the Armed Forces of the Philippines. The Integrated National Police, which is the civilian component of the Philippine Constabulary-Integrated National Police, shall cease to be the national police force and in lieu thereof, a new police force shall be established and constituted pursuant to this Act.

In contrast, P.D. No. 1341, provides:

1. The present Philippine College of Commerce is hereby converted into a university to be known as the Polytechnic University of the Philippines, hereinafter referred to in this Decree as the University.

As already noted, R.A. No. 778 earlier provided:

 1. The present Philippine School of Commerce, located in the City of Manila, Philippines, is hereby granted full college status and converted into the Philippine College of Commerce, which will offer not only its present one-year and two-year vocational commercial curricula, the latter leading to the titles of Associate in Business Education and/or Associate in Commerce, but also four-year courses leading to the degrees of Bachelor of Science in Business in Education and Bachelor of Science in Commerce, and fiveyear courses leading to the degrees of Master of Arts in Business Education and Master of Arts in Commerce, respectively.

The appellate court ruled, however, that the PUP and the PCC are not one and the same institution but two different entities and that since petitioner Crisostomos term was coterminous with the legal existence of the PCC, petitioners term expired upon the abolition of the PCC. In reaching this conclusion, the Court of Appeals took into account the following:

a) After respondent Crisostomos suspension, P.D. No. 1341 (entitled CONVERTING THE PHILIPPINE COLLEGE OF COMMERCE INTO A POLYTECHNIC UNIVERSITY, DEFINING ITS OBJECTIVES, ORGANIZATIONAL STRUCTURE AND FUNCTIONS, AND EXPANDING ITS CURRICULAR OFFERINGS) was issued on April 1, 1978. This decree explicitly provides that PUPs objectives and purposes cover not only PCCs offering of programs in the field of commerce and business administration but also programs in other polytechnic areas and in other fields such as agriculture, arts and trades and fisheries . . . (section 2). Being a university, PUP was conceived as a bigger institution absorbing, merging and integrating the entire PCC and other national schools as may be transferred to this new state university.

b) The manner of selection and appointment of the university head is substantially different from that provided by the PCC Charter. The PUP President shall be appointed by the President of the Philippines upon recommendation of the Secretary of Education and Culture after consultation with the University Board of Regents (section 4, P.D. 1341). The President of PCC, on the other hand, was appointed by the President of the Philippines upon recommendation of the Board of Trustees (Section 4, R.A. 778).

c) The composition of the new universitys Board of Regents is likewise different from that of the PCC Board of Trustees (which included the chairman of the Senate Committee on Education and the chairman of the House Committee on Education, the President of the PCC Alumni Association as well as the President of the Chamber of Commerce of the Philippines). Whereas, among others, the NEDA

Director-General, the Secretary of Industry and the Secretary of Labor are members of the PUP Board of Regents. (Section 6, P.D. 1341).

d) The decree moreover transferred to the new university all the properties including equipment and facilities:

. . . owned by the Philippine College of Commerce and such other National Schools as may be integrated . . . including their obligations and appropriations . . . (Sec. 12; Italics supplied).*3+

But these are hardly indicia of an intent to abolish an existing institution and to create a new one. New course offerings can be added to the curriculum of a school without affecting its legal existence. Nor will changes in its existing structure and organization bring about its abolition and the creation of a new one. Only an express declaration to that effect by the lawmaking authority will.

The Court of Appeals also cites the provision of P.D. No. 1341 as allegedly implying the abolition of the PCC and the creation of a new one the PUP in its stead:

12. All parcels of land, buildings, equipment and facilities owned by the Philippine College of Commerce and such other national schools as may be integrated by virtue of this decree, including their obligations and appropriations thereof, shall stand transferred to the Polytechnic University of the Philippines, provided, however, that said national schools shall continue to receive their corresponding shares from the special education fund of the municipal/provincial/city government concerned as are now enjoyed by them in accordance with existing laws and/or decrees.

The law does not state that the lands, buildings and equipment owned by the PCC were being transferred to the PUP but only that they stand transferred to it. Stand transferred simply means, for example, that lands transferred to the PCC were to be understood as transferred to the PUP as the new name of the institution.

But the reinstatement of petitioner to the position of president of the PUP could not be ordered by the trial court because on June 10, 1978, P.D. No. 1437 had been promulgated fixing the term of office of presidents of state universities and colleges at six (6) years, renewable for another term of six (6) years,

and authorizing the President of the Philippines to terminate the terms of incumbents who were not reappointed. P.D. No. 1437 provides:

6. The head of the university or college shall be known as the President of the university or college. He shall be qualified for the position and appointed for a term of six (6) years by the President of the Philippines upon recommendation of the Secretary of Education and Culture after consulting with the Board which may be renewed for another term upon recommendation of the Secretary of Education and Culture after consulting the Board. In case of vacancy by reason of death, absence or resignation, the Secretary of Education and Culture shall have the authority to designate an officer in charge of the college or university pending the appointment of the President.

The powers and duties of the President of the university or college, in addition to those specifically provided for in this Decree shall be those usually pertaining to the office of the president of a university or college.

7. The incumbent president of a chartered state college or university whose term may be terminated according to this Decree, shall be entitled to full retirement benefits: provided that he has served the government for at least twenty (20) years; and provided, further that in case the number of years served is less than 20 years, he shall be entitled to one month pay for every year of service.

In this case, Dr. Pablo T. Mateo Jr., who had been acting president of the university since April 3, 1979, was appointed president of PUP for a term of six (6) years on March 28, 1980, with the result that petitioners term was cut short. In accordance with 7 of the law, therefore, petitioner became entitled only to retirement benefits or the payment of separation pay. Petitioner must have recognized this fact, that is why in 1992 he asked then President Aquino to consider him for appointment to the same position after it had become vacant in consequence of the retirement of Dr. Prudente.

WHEREFORE, the decision of the Court of Appeals is MODIFIED by SETTING ASIDE the questioned orders of the Regional Trial Court directing the reinstatement of the petitioner Isabelo T. Crisostomo to the position of president of the Polytechnic University of the Philippines and the payment to him of salaries and benefits which he failed to receive during his suspension in so far as such payment would include salaries accruing after March 28, 1980 when petitioner Crisostomos term was terminated. Further proceedings in accordance with this decision may be taken by the trial court to determine the amount due and payable to petitioner by the university up to March 28, 1980.

SO ORDERED.

EN BANC

LOUIS BAROK C. BIRAOGO, Petitioner,

- versus -

THE PHILIPPINE TRUTH COMMISSION OF 2010, Respondent. x-----------------------x REP. EDCEL C. LAGMAN, REP. RODOLFO B. ALBANO, JR., REP. SIMEON A. DATUMANONG, and REP. ORLANDO B. FUA, SR., Petitioners,

- versus -

EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR. and DEPARTMENT OF BUDGET AND MANAGEMENT SECRETARY FLORENCIO B. ABAD, Respondents.

G.R. No. 192935

G.R. No. 193036

Present:

CORONA, C.J., CARPIO, CARPIO MORALES, VELASCO, JR.,

NACHURA, LEONARDO-DE CASTRO, BRION, PERALTA, BERSAMIN, DEL CASTILLO, ABAD, VILLARAMA, JR., PEREZ, MENDOZA, and SERENO, JJ.

Promulgated:

December 7, 2010

x -------------------------------------------------------------------------------------- x

DECISION

MENDOZA, J.:

When the judiciary mediates to allocate constitutional boundaries, it does not assert any superiority over the other departments; it does not in reality nullify or invalidate an act of the legislature, but only asserts the solemn and sacred obligation assigned to it by the Constitution to determine conflicting claims of authority under the Constitution and to establish for the parties in an actual controversy the rights which that instrument secures and guarantees to them.

--- Justice Jose P. Laurel[1]

The role of the Constitution cannot be overlooked. It is through the Constitution that the fundamental powers of government are established, limited and defined, and by which these powers are distributed among the several departments.[2] The Constitution is the basic and paramount law to which all other laws must conform and to which all persons, including the highest officials of the land, must defer.[3] Constitutional doctrines must remain steadfast no matter what may be the tides of time. It cannot be simply made to sway and accommodate the call of situations and much more tailor itself to the whims and caprices of government and the people who run it.[4]

For consideration before the Court are two consolidated cases[5] both of which essentially assail the validity and constitutionality of Executive Order No. 1, dated July 30, 2010, entitled Creating the Philippine Truth Commission of 2010.

The first case is G.R. No. 192935, a special civil action for prohibition instituted by petitioner Louis Biraogo (Biraogo) in his capacity as a citizen and taxpayer. Biraogo assails Executive Order No. 1 for being violative of the legislative power of Congress under Section 1, Article VI of the Constitution[6] as it usurps the constitutional authority of the legislature to create a public office and to appropriate funds therefor.[7]

The second case, G.R. No. 193036, is a special civil action for certiorari and prohibition filed by petitioners Edcel C. Lagman, Rodolfo B. Albano Jr., Simeon A. Datumanong, and Orlando B. Fua, Sr. (petitioners-legislators) as incumbent members of the House of Representatives.

The genesis of the foregoing cases can be traced to the events prior to the historic May 2010 elections, when then Senator Benigno Simeon Aquino III declared his staunch condemnation of graft and

corruption with his slogan, Kung walang corrupt, walang mahirap. The Filipino people, convinced of his sincerity and of his ability to carry out this noble objective, catapulted the good senator to the presidency.

To transform his campaign slogan into reality, President Aquino found a need for a special body to investigate reported cases of graft and corruption allegedly committed during the previous administration.

Thus, at the dawn of his administration, the President on July 30, 2010, signed Executive Order No. 1 establishing the Philippine Truth Commission of 2010 (Truth Commission). Pertinent provisions of said executive order read: EXECUTIVE ORDER NO. 1

CREATING THE PHILIPPINE TRUTH COMMISSION OF 2010

WHEREAS, Article XI, Section 1 of the 1987 Constitution of the Philippines solemnly enshrines the principle that a public office is a public trust and mandates that public officers and employees, who are servants of the people, must at all times be accountable to the latter, serve them with utmost responsibility, integrity, loyalty and efficiency, act with patriotism and justice, and lead modest lives;

WHEREAS, corruption is among the most despicable acts of defiance of this principle and notorious violation of this mandate;

WHEREAS, corruption is an evil and scourge which seriously affects the political, economic, and social life of a nation; in a very special way it inflicts untold misfortune and misery on the poor, the marginalized and underprivileged sector of society;

WHEREAS, corruption in the Philippines has reached very alarming levels, and undermined the peoples trust and confidence in the Government and its institutions;

WHEREAS, there is an urgent call for the determination of the truth regarding certain reports of large scale graft and corruption in the government and to put a closure to them by the filing of the appropriate cases against those involved, if warranted, and to deter others from committing the evil, restore the peoples faith and confidence in the Government and in their public servants;

WHEREAS, the Presidents battlecry during his campaign for the Presidency in the last elections kung walang corrupt, walang mahirap expresses a solemn pledge that if elected, he would end corruption and the evil it breeds;

WHEREAS, there is a need for a separate body dedicated solely to investigating and finding out the truth concerning the reported cases of graft and corruption during the previous administration, and which will recommend the prosecution of the offenders and secure justice for all;

WHEREAS, Book III, Chapter 10, Section 31 of Executive Order No. 292, otherwise known as the Revised Administrative Code of the Philippines, gives the President the continuing authority to reorganize the Office of the President.

NOW, THEREFORE, I, BENIGNO SIMEON AQUINO III, President of the Republic of the Philippines, by virtue of the powers vested in me by law, do hereby order:

SECTION 1. Creation of a Commission. There is hereby created the PHILIPPINE TRUTH COMMISSION, hereinafter referred to as the COMMISSION, which shall primarily seek and find the truth on, and toward this end, investigate reports of graft and corruption of such scale and magnitude that shock and offend the moral and ethical sensibilities of the people, committed by public officers and employees, their co-principals, accomplices and accessories from the private sector, if any, during the previous administration; and thereafter recommend the appropriate action or measure to be taken thereon to ensure that the full measure of justice shall be served without fear or favor. The Commission shall be composed of a Chairman and four (4) members who will act as an independent collegial body.

SECTION 2. Powers and Functions. The Commission, which shall have all the powers of an investigative body under Section 37, Chapter 9, Book I of the Administrative Code of 1987, is primarily tasked to conduct a thorough fact-finding investigation of reported cases of graft and corruption

referred to in Section 1, involving third level public officers and higher, their co-principals, accomplices and accessories from the private sector, if any, during the previous administration and thereafter submit its finding and recommendations to the President, Congress and the Ombudsman.

In particular, it shall:

a)

Identify and determine the reported cases of such graft and corruption which it will investigate;

b) Collect, receive, review and evaluate evidence related to or regarding the cases of large scale corruption which it has chosen to investigate, and to this end require any agency, official or employee of the Executive Branch, including government-owned or controlled corporations, to produce documents, books, records and other papers;

c) Upon proper request or representation, obtain information and documents from the Senate and the House of Representatives records of investigations conducted by committees thereof relating to matters or subjects being investigated by the Commission;

d) Upon proper request and representation, obtain information from the courts, including the Sandiganbayan and the Office of the Court Administrator, information or documents in respect to corruption cases filed with the Sandiganbayan or the regular courts, as the case may be;

e) Invite or subpoena witnesses and take their testimonies and for that purpose, administer oaths or affirmations as the case may be;

f) Recommend, in cases where there is a need to utilize any person as a state witness to ensure that the ends of justice be fully served, that such person who qualifies as a state witness under the Revised Rules of Court of the Philippines be admitted for that purpose;

g) Turn over from time to time, for expeditious prosecution, to the appropriate prosecutorial authorities, by means of a special or interim report and recommendation, all evidence on corruption of public officers and employees and their private sector co-principals, accomplices or accessories, if any,

when in the course of its investigation the Commission finds that there is reasonable ground to believe that they are liable for graft and corruption under pertinent applicable laws;

h) Call upon any government investigative or prosecutorial agency such as the Department of Justice or any of the agencies under it, and the Presidential Anti-Graft Commission, for such assistance and cooperation as it may require in the discharge of its functions and duties;

i) Engage or contract the services of resource persons, professionals and other personnel determined by it as necessary to carry out its mandate;

j) Promulgate its rules and regulations or rules of procedure it deems necessary to effectively and efficiently carry out the objectives of this Executive Order and to ensure the orderly conduct of its investigations, proceedings and hearings, including the presentation of evidence;

k) Exercise such other acts incident to or are appropriate and necessary in connection with the objectives and purposes of this Order.

SECTION 3. Staffing Requirements. x x x.

SECTION 4. Detail of Employees. x x x.

SECTION 5. Engagement of Experts. x x x

SECTION 6. Conduct of Proceedings. x x x.

SECTION 7. Right to Counsel of Witnesses/Resource Persons. x x x.

SECTION 8. Protection of Witnesses/Resource Persons. x x x.

SECTION 9. Refusal to Obey Subpoena, Take Oath or Give Testimony. Any government official or personnel who, without lawful excuse, fails to appear upon subpoena issued by the Commission or who, appearing before the Commission refuses to take oath or affirmation, give testimony or produce documents for inspection, when required, shall be subject to administrative disciplinary action. Any private person who does the same may be dealt with in accordance with law.

SECTION 10. Duty to Extend Assistance to the Commission.

x x x.

SECTION 11. Budget for the Commission. The Office of the President shall provide the necessary funds for the Commission to ensure that it can exercise its powers, execute its functions, and perform its duties and responsibilities as effectively, efficiently, and expeditiously as possible.

SECTION 12. Office. x x x.

SECTION 13. Furniture/Equipment. x x x.

SECTION 14. Term of the Commission. The Commission shall accomplish its mission on or before December 31, 2012.

SECTION 15. Publication of Final Report. x x x.

SECTION 16. Transfer of Records and Facilities of the Commission. x x x.

SECTION 17. Special Provision Concerning Mandate. If and when in the judgment of the President there is a need to expand the mandate of the Commission as defined in Section 1 hereof to include the investigation of cases and instances of graft and corruption during the prior administrations, such mandate may be so extended accordingly by way of a supplemental Executive Order.

SECTION 18. Separability Clause. If any provision of this Order is declared unconstitutional, the same shall not affect the validity and effectivity of the other provisions hereof.

SECTION 19. Effectivity. This Executive Order shall take effect immediately.

DONE in the City of Manila, Philippines, this 30th day of July 2010.

(SGD.) BENIGNO S. AQUINO III

By the President:

(SGD.) PAQUITO N. OCHOA, JR. Executive Secretary

Nature of the Truth Commission

As can be gleaned from the above-quoted provisions, the Philippine Truth Commission (PTC) is a mere ad hoc body formed under the Office of the President with the primary task to investigate reports of graft and corruption committed by third-level public officers and employees, their co-principals, accomplices and accessories during the previous administration, and thereafter to submit its finding and recommendations to the President, Congress and the Ombudsman. Though it has been described as an independent collegial body, it is essentially an entity within the Office of the President Proper and subject to his control. Doubtless, it constitutes a public office, as an ad hoc body is one.[8]

To accomplish its task, the PTC shall have all the powers of an investigative body under Section 37, Chapter 9, Book I of the Administrative Code of 1987. It is not, however, a quasi-judicial body as it cannot adjudicate, arbitrate, resolve, settle, or render awards in disputes between contending parties.

All it can do is gather, collect and assess evidence of graft and corruption and make recommendations. It may have subpoena powers but it has no power to cite people in contempt, much less order their arrest. Although it is a fact-finding body, it cannot determine from such facts if probable cause exists as to warrant the filing of an information in our courts of law. Needless to state, it cannot impose criminal, civil or administrative penalties or sanctions.

The PTC is different from the truth commissions in other countries which have been created as official, transitory and non-judicial fact-finding bodies to establish the facts and context of serious violations of human rights or of international humanitarian law in a countrys past.*9+ They are usually established by states emerging from periods of internal unrest, civil strife or authoritarianism to serve as mechanisms for transitional justice.

Truth commissions have been described as bodies that share the following characteristics: (1) they examine only past events; (2) they investigate patterns of abuse committed over a period of time, as opposed to a particular event; (3) they are temporary bodies that finish their work with the submission of a report containing conclusions and recommendations; and (4) they are officially sanctioned, authorized or empowered by the State.*10+ Commissions members are usually empowered to conduct research, support victims, and propose policy recommendations to prevent recurrence of crimes. Through their investigations, the commissions may aim to discover and learn more about past abuses, or formally acknowledge them. They may aim to prepare the way for prosecutions and recommend institutional reforms.*11+

Thus, their main goals range from retribution to reconciliation. The Nuremburg and Tokyo war crime tribunals are examples of a retributory or vindicatory body set up to try and punish those responsible for crimes against humanity. A form of a reconciliatory tribunal is the Truth and Reconciliation Commission of South Africa, the principal function of which was to heal the wounds of past violence and to prevent future conflict by providing a cathartic experience for victims.

The PTC is a far cry from South Africas model. The latter placed more emphasis on reconciliation than on judicial retribution, while the marching order of the PTC is the identification and punishment of perpetrators. As one writer[12] puts it:

The order ruled out reconciliation. It translated the Draconian code spelled out by Aquino in his inaugural speech: To those who talk about reconciliation, if they mean that they would like us to simply forget about the wrongs that they have committed in the past, we have this to say: There can be no reconciliation without justice. When we allow crimes to go unpunished, we give consent to their occurring over and over again.

The Thrusts of the Petitions

Barely a month after the issuance of Executive Order No. 1, the petitioners asked the Court to declare it unconstitutional and to enjoin the PTC from performing its functions. A perusal of the arguments of the petitioners in both cases shows that they are essentially the same. The petitioners-legislators summarized them in the following manner:

(a) E.O. No. 1 violates the separation of powers as it arrogates the power of the Congress to create a public office and appropriate funds for its operation.

(b) The provision of Book III, Chapter 10, Section 31 of the Administrative Code of 1987 cannot legitimize E.O. No. 1 because the delegated authority of the President to structurally reorganize the Office of the President to achieve economy, simplicity and efficiency does not include the power to create an entirely new public office which was hitherto inexistent like the Truth Commission.

(c) E.O. No. 1 illegally amended the Constitution and pertinent statutes when it vested the Truth Commission with quasi-judicial powers duplicating, if not superseding, those of the Office of the Ombudsman created under the 1987 Constitution and the Department of Justice created under the Administrative Code of 1987.

(d) E.O. No. 1 violates the equal protection clause as it selectively targets for investigation and prosecution officials and personnel of the previous administration as if corruption is their peculiar species even as it excludes those of the other administrations, past and present, who may be indictable.

(e) The creation of the Philippine Truth Commission of 2010 violates the consistent and general international practice of four decades wherein States constitute truth commissions to exclusively investigate human rights violations, which customary practice forms part of the generally accepted

principles of international law which the Philippines is mandated to adhere to pursuant to the Declaration of Principles enshrined in the Constitution.

(f) The creation of the Truth Commission is an exercise in futility, an adventure in partisan hostility, a launching pad for trial/conviction by publicity and a mere populist propaganda to mistakenly impress the people that widespread poverty will altogether vanish if corruption is eliminated without even addressing the other major causes of poverty.

(g) The mere fact that previous commissions were not constitutionally challenged is of no moment because neither laches nor estoppel can bar an eventual question on the constitutionality and validity of an executive issuance or even a statute.*13+

In their Consolidated Comment,[14] the respondents, through the Office of the Solicitor General (OSG), essentially questioned the legal standing of petitioners and defended the assailed executive order with the following arguments:

1] E.O. No. 1 does not arrogate the powers of Congress to create a public office because the Presidents executive power and power of control necessarily include the inherent power to conduct investigations to ensure that laws are faithfully executed and that, in any event, the Constitution, Revised Administrative Code of 1987 (E.O. No. 292), [15] Presidential Decree (P.D.) No. 1416[16] (as amended by P.D. No. 1772), R.A. No. 9970,[17] and settled jurisprudence that authorize the President to create or form such bodies.

2] E.O. No. 1 does not usurp the power of Congress to appropriate funds because there is no appropriation but a mere allocation of funds already appropriated by Congress.

3] The Truth Commission does not duplicate or supersede the functions of the Office of the Ombudsman (Ombudsman) and the Department of Justice (DOJ), because it is a fact-finding body and not a quasijudicial body and its functions do not duplicate, supplant or erode the latters jurisdiction.

4] The Truth Commission does not violate the equal protection clause because it was validly created for laudable purposes.

The OSG then points to the continued existence and validity of other executive orders and presidential issuances creating similar bodies to justify the creation of the PTC such as Presidential Complaint and Action Commission (PCAC) by President Ramon B. Magsaysay, Presidential Committee on Administrative Performance Efficiency (PCAPE) by President Carlos P. Garcia and Presidential Agency on Reform and Government Operations (PARGO) by President Ferdinand E. Marcos.[18] From the petitions, pleadings, transcripts, and memoranda, the following are the principal issues to be resolved:

1. Whether or not the petitioners have the legal standing to file their respective petitions and question Executive Order No. 1;

2. Whether or not Executive Order No. 1 violates the principle of separation of powers by usurping the powers of Congress to create and to appropriate funds for public offices, agencies and commissions;

3. Whether or not Executive Order No. 1 supplants the powers of the Ombudsman and the DOJ;

4. Whether or not Executive Order No. 1 violates the equal protection clause; and

5. Whether or not petitioners are entitled to injunctive relief.

Essential requisites for judicial review

Before proceeding to resolve the issue of the constitutionality of Executive Order No. 1, the Court needs to ascertain whether the requisites for a valid exercise of its power of judicial review are present.

Like almost all powers conferred by the Constitution, the power of judicial review is subject to limitations, to wit: (1) there must be an actual case or controversy calling for the exercise of judicial power; (2) the person challenging the act must have the standing to question the validity of the subject act or issuance; otherwise stated, he 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; (3) the question of constitutionality must be raised at the earliest opportunity; and (4) the issue of constitutionality must be the very lis mota of the case.[19]

Among all these limitations, only the legal standing of the petitioners has been put at issue.

Legal Standing of the Petitioners

The OSG attacks the legal personality of the petitioners-legislators to file their petition for failure to demonstrate their personal stake in the outcome of the case. It argues that the petitioners have not shown that they have sustained or are in danger of sustaining any personal injury attributable to the creation of the PTC. Not claiming to be the subject of the commissions investigations, petitioners will not sustain injury in its creation or as a result of its proceedings.[20]

The Court disagrees with the OSG in questioning the legal standing of the petitioners-legislators to assail Executive Order No. 1. Evidently, their petition primarily invokes usurpation of the power of the Congress as a body to which they belong as members. This certainly justifies their resolve to take the cudgels for Congress as an institution and present the complaints on the usurpation of their power and rights as members of the legislature before the Court. As held in Philippine Constitution Association v. Enriquez,[21]

To the extent the powers of Congress are impaired, so is the power of each member thereof, since his office confers a right to participate in the exercise of the powers of that institution.

An act of the Executive which injures the institution of Congress causes a derivative but nonetheless substantial injury, which can be questioned by a member of Congress. In such a case, any member of Congress can have a resort to the courts.

Indeed, legislators have a legal standing to see to it that the prerogative, powers and privileges vested by the Constitution in their office remain inviolate. Thus, they are allowed to question the validity of any official action which, to their mind, infringes on their prerogatives as legislators.[22]

With regard to Biraogo, the OSG argues that, as a taxpayer, he has no standing to question the creation of the PTC and the budget for its operations.[23] It emphasizes that the funds to be used for the creation and operation of the commission are to be taken from those funds already appropriated by Congress. Thus, the allocation and disbursement of funds for the commission will not entail congressional action but will simply be an exercise of the Presidents power over contingent funds.

As correctly pointed out by the OSG, Biraogo has not shown that he sustained, or is in danger of sustaining, any personal and direct injury attributable to the implementation of Executive Order No. 1. Nowhere in his petition is an assertion of a clear right that may justify his clamor for the Court to exercise judicial power and to wield the axe over presidential issuances in defense of the Constitution. The case of David v. Arroyo[24] explained the deep-seated rules on locus standi. Thus:

Locus standi is defined as a right of appearance in a court of justice on a given question. In private suits, standing is governed by the real-parties-in interest rule as contained in Section 2, Rule 3 of the 1997 Rules of Civil Procedure, as amended. It provides that every action must be prosecuted or defended in the name of the real party in interest. Accordingly, the real-party-in interest is the party who stands to be benefited or injured by the judgment in the suit or the party entitled to the avails of the suit. Succinctly put, the plaintiffs standing is based on his own right to the relief sought.

The difficulty of determining locus standi arises in public suits. Here, the plaintiff who asserts a public right in assailing an allegedly illegal official action, does so as a representative of the general public. He may be a person who is affected no differently from any other person. He could be suing as a stranger, or in the category of a citizen, or taxpayer. In either case, he has to adequately show that he is entitled to seek judicial protection. In other words, he has to make out a sufficient interest in the vindication of the public order and the securing of relief as a citizen or taxpayer.

Case law in most jurisdictions now allows both citizen and taxpayer standing in public actions. The distinction was first laid down in Beauchamp v. Silk, where it was held that the plaintiff in a taxpayers suit is in a different category from the plaintiff in a citizens suit. In the former, the plaintiff is affected

by the expenditure of public funds, while in the latter, he is but the mere instrument of the public concern. As held by the New York Supreme Court in People ex rel Case v. Collins: In matter of mere public right, howeverthe people are the real partiesIt is at least the right, if not the duty, of every citizen to interfere and see that a public offence be properly pursued and punished, and that a public grievance be remedied. With respect to taxpayers suits, Terr v. Jordan held that the right of a citizen and a taxpayer to maintain an action in courts to restrain the unlawful use of public funds to his injury cannot be denied.

However, to prevent just about any person from seeking judicial interference in any official policy or act with which he disagreed with, and thus hinders the activities of governmental agencies engaged in public service, the United State Supreme Court laid down the more stringent direct injury test in Ex Parte Levitt, later reaffirmed in Tileston v. Ullman. The same Court ruled that for a private individual to invoke the judicial power to determine the validity of an executive or legislative action, he must show that he has sustained a direct injury as a result of that action, and it is not sufficient that he has a general interest common to all members of the public.

This Court adopted the direct injury test in our jurisdiction. In People v. Vera, it held 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. The Vera doctrine was upheld in a litany of cases, such as, Custodio v. President of the Senate, Manila Race Horse Trainers Association v. De la Fuente, Pascual v. Secretary of Public Works and Anti-Chinese League of the Philippines v. Felix. [Emphases included. Citations omitted]

Notwithstanding, the Court leans on the doctrine that the rule on standing is a matter of procedure, hence, can be relaxed for nontraditional plaintiffs like ordinary citizens, taxpayers, and legislators when the public interest so requires, such as when the matter is of transcendental importance, of overreaching significance to society, or of paramount public interest.*25+

Thus, in Coconut Oil Refiners Association, Inc. v. Torres,[26] the Court held that in cases of paramount importance where serious constitutional questions are involved, the standing requirements may be relaxed and a suit may be allowed to prosper even where there is no direct injury to the party claiming the right of judicial review. In the first Emergency Powers Cases,[27] ordinary citizens and taxpayers were allowed to question the constitutionality of several executive orders although they had only an indirect and general interest shared in common with the public.

The OSG claims that the determinants of transcendental importance[28] laid down in CREBA v. ERC and Meralco[29] are non-existent in this case. The Court, however, finds reason in Biraogos assertion that the petition covers matters of transcendental importance to justify the exercise of jurisdiction by the Court. There are constitutional issues in the petition which deserve the attention of this Court in view of their seriousness, novelty and weight as precedents. Where the issues are of transcendental and paramount importance not only to the public but also to the Bench and the Bar, they should be resolved for the guidance of all.[30] Undoubtedly, the Filipino people are more than interested to know the status of the Presidents first effort to bring about a promised change to the country. The Court takes cognizance of the petition not due to overwhelming political undertones that clothe the issue in the eyes of the public, but because the Court stands firm in its oath to perform its constitutional duty to settle legal controversies with overreaching significance to society.

Power of the President to Create the Truth Commission

In his memorandum in G.R. No. 192935, Biraogo asserts that the Truth Commission is a public office and not merely an adjunct body of the Office of the President.[31] Thus, in order that the President may create a public office he must be empowered by the Constitution, a statute or an authorization vested in him by law. According to petitioner, such power cannot be presumed[32] since there is no provision in the Constitution or any specific law that authorizes the President to create a truth commission.[33] He adds that Section 31 of the Administrative Code of 1987, granting the President the continuing authority to reorganize his office, cannot serve as basis for the creation of a truth commission considering the aforesaid provision merely uses verbs such as reorganize, transfer, consolidate, merge, and abolish.*34+ Insofar as it vests in the President the plenary power to reorganize the Office of the President to the extent of creating a public office, Section 31 is inconsistent with the principle of separation of powers enshrined in the Constitution and must be deemed repealed upon the effectivity thereof.[35]

Similarly, in G.R. No. 193036, petitioners-legislators argue that the creation of a public office lies within the province of Congress and not with the executive branch of government. They maintain that the delegated authority of the President to reorganize under Section 31 of the Revised Administrative Code: 1) does not permit the President to create a public office, much less a truth commission; 2) is limited to the reorganization of the administrative structure of the Office of the President; 3) is limited to the restructuring of the internal organs of the Office of the President Proper, transfer of functions and transfer of agencies; and 4) only to achieve simplicity, economy and efficiency.[36] Such continuing authority of the President to reorganize his office is limited, and by issuing Executive Order No. 1, the President overstepped the limits of this delegated authority.

The OSG counters that there is nothing exclusively legislative about the creation by the President of a fact-finding body such as a truth commission. Pointing to numerous offices created by past presidents, it argues that the authority of the President to create public offices within the Office of the President Proper has long been recognized.[37] According to the OSG, the Executive, just like the other two branches of government, possesses the inherent authority to create fact-finding committees to assist it in the performance of its constitutionally mandated functions and in the exercise of its administrative functions.[38] This power, as the OSG explains it, is but an adjunct of the plenary powers wielded by the President under Section 1 and his power of control under Section 17, both of Article VII of the Constitution.[39]

It contends that the President is necessarily vested with the power to conduct fact-finding investigations, pursuant to his duty to ensure that all laws are enforced by public officials and employees of his department and in the exercise of his authority to assume directly the functions of the executive department, bureau and office, or interfere with the discretion of his officials.[40] The power of the President to investigate is not limited to the exercise of his power of control over his subordinates in the executive branch, but extends further in the exercise of his other powers, such as his power to discipline subordinates,[41] his power for rule making, adjudication and licensing purposes[42] and in order to be informed on matters which he is entitled to know.[43]

The OSG also cites the recent case of Banda v. Ermita,[44] where it was held that the President has the power to reorganize the offices and agencies in the executive department in line with his constitutionally granted power of control and by virtue of a valid delegation of the legislative power to reorganize executive offices under existing statutes.

Thus, the OSG concludes that the power of control necessarily includes the power to create offices. For the OSG, the President may create the PTC in order to, among others, put a closure to the reported large scale graft and corruption in the government.[45]

The question, therefore, before the Court is this: Does the creation of the PTC fall within the ambit of the power to reorganize as expressed in Section 31 of the Revised Administrative Code? Section 31 contemplates reorganization as limited by the following functional and structural lines: (1) restructuring the internal organization of the Office of the President Proper by abolishing, consolidating or merging units thereof or transferring functions from one unit to another; (2) transferring any function under the Office of the President to any other Department/Agency or vice versa; or (3) transferring any agency under the Office of the President to any other Department/Agency or vice versa. Clearly, the

provision refers to reduction of personnel, consolidation of offices, or abolition thereof by reason of economy or redundancy of functions. These point to situations where a body or an office is already existent but a modification or alteration thereof has to be effected. The creation of an office is nowhere mentioned, much less envisioned in said provision. Accordingly, the answer to the question is in the negative.

To say that the PTC is borne out of a restructuring of the Office of the President under Section 31 is a misplaced supposition, even in the plainest meaning attributable to the term restructure an alteration of an existing structure. Evidently, the PTC was not part of the structure of the Office of the President prior to the enactment of Executive Order No. 1. As held in Buklod ng Kawaning EIIB v. Hon. Executive Secretary,[46]

But of course, the list of legal basis authorizing the President to reorganize any department or agency in the executive branch does not have to end here. We must not lose sight of the very source of the power that which constitutes an express grant of power. Under Section 31, Book III of Executive Order No. 292 (otherwise known as the Administrative Code of 1987), "the President, subject to the policy in the Executive Office and in order to achieve simplicity, economy and efficiency, shall have the continuing authority to reorganize the administrative structure of the Office of the President." For this purpose, he may transfer the functions of other Departments or Agencies to the Office of the President. In Canonizado v. Aguirre [323 SCRA 312 (2000)], we ruled that reorganization "involves the reduction of personnel, consolidation of offices, or abolition thereof by reason of economy or redundancy of functions." It takes place when there is an alteration of the existing structure of government offices or units therein, including the lines of control, authority and responsibility between them. The EIIB is a bureau attached to the Department of Finance. It falls under the Office of the President. Hence, it is subject to the Presidents continuing authority to reorganize. *Emphasis Supplied+

In the same vein, the creation of the PTC is not justified by the Presidents power of control. Control is essentially the power to alter or modify or nullify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former with that of the latter.[47] Clearly, the power of control is entirely different from the power to create public offices. The former is inherent in the Executive, while the latter finds basis from either a valid delegation from Congress, or his inherent duty to faithfully execute the laws.

The question is this, is there a valid delegation of power from Congress, empowering the President to create a public office?

According to the OSG, the power to create a truth commission pursuant to the above provision finds statutory basis under P.D. 1416, as amended by P.D. No. 1772.[48] The said law granted the President the continuing authority to reorganize the national government, including the power to group, consolidate bureaus and agencies, to abolish offices, to transfer functions, to create and classify functions, services and activities, transfer appropriations, and to standardize salaries and materials. This decree, in relation to Section 20, Title I, Book III of E.O. 292 has been invoked in several cases such as Larin v. Executive Secretary.[49]

The Court, however, declines to recognize P.D. No. 1416 as a justification for the President to create a public office. Said decree is already stale, anachronistic and inoperable. P.D. No. 1416 was a delegation to then President Marcos of the authority to reorganize the administrative structure of the national government including the power to create offices and transfer appropriations pursuant to one of the purposes of the decree, embodied in its last Whereas clause:

WHEREAS, the transition towards the parliamentary form of government will necessitate flexibility in the organization of the national government.

Clearly, as it was only for the purpose of providing manageability and resiliency during the interim, P.D. No. 1416, as amended by P.D. No. 1772, became functus oficio upon the convening of the First Congress, as expressly provided in Section 6, Article XVIII of the 1987 Constitution. In fact, even the Solicitor General agrees with this view. Thus:

ASSOCIATE JUSTICE CARPIO: Because P.D. 1416 was enacted was the last whereas clause of P.D. 1416 says it was enacted to prepare the transition from presidential to parliamentary. Now, in a parliamentary form of government, the legislative and executive powers are fused, correct?

SOLICITOR GENERAL CADIZ:

Yes, Your Honor.

ASSOCIATE JUSTICE CARPIO: That is why, that P.D. 1416 was issued. Now would you agree with me that P.D. 1416 should not be considered effective anymore upon the promulgation, adoption, ratification of the 1987 Constitution.

SOLICITOR GENERAL CADIZ:

Not the whole of P.D. [No.] 1416, Your Honor.

ASSOCIATE JUSTICE CARPIO: The power of the President to reorganize the entire National Government is deemed repealed, at least, upon the adoption of the 1987 Constitution, correct.

SOLICITOR GENERAL CADIZ:

Yes, Your Honor.[50]

While the power to create a truth commission cannot pass muster on the basis of P.D. No. 1416 as amended by P.D. No. 1772, the creation of the PTC finds justification under Section 17, Article VII of the Constitution, imposing upon the President the duty to ensure that the laws are faithfully executed. Section 17 reads:

Section 17. The President shall have control of all the executive departments, bureaus, and offices. He shall ensure that the laws be faithfully executed. (Emphasis supplied).

As correctly pointed out by the respondents, the allocation of power in the three principal branches of government is a grant of all powers inherent in them. The Presidents power to conduct investigations to aid him in ensuring the faithful execution of laws in this case, fundamental laws on public accountability and transparency is inherent in the Presidents powers as the Chief Executive. That the authority of the President to conduct investigations and to create bodies to execute this power is not explicitly mentioned in the Constitution or in statutes does not mean that he is bereft of such authority.[51] As explained in the landmark case of Marcos v. Manglapus:[52]

x x x. The 1987 Constitution, however, brought back the presidential system of government and restored the separation of legislative, executive and judicial powers by their actual distribution among three distinct branches of government with provision for checks and balances.

It would not be accurate, however, to state that "executive power" is the power to enforce the laws, for the President is head of state as well as head of government and whatever powers inherent in such positions pertain to the office unless the Constitution itself withholds it. Furthermore, the Constitution itself provides that the execution of the laws is only one of the powers of the President. It also grants the President other powers that do not involve the execution of any provision of law, e.g., his power over the country's foreign relations.

On these premises, we hold the view that although the 1987 Constitution imposes limitations on the exercise of specific powers of the President, it maintains intact what is traditionally considered as within the scope of "executive power." Corollarily, the powers of the President cannot be said to be limited only to the specific powers enumerated in the Constitution. In other words, executive power is more than the sum of specific powers so enumerated.

It has been advanced that whatever power inherent in the government that is neither legislative nor judicial has to be executive. x x x.

Indeed, the Executive is given much leeway in ensuring that our laws are faithfully executed. As stated above, the powers of the President are not limited to those specific powers under the Constitution.[53] One of the recognized powers of the President granted pursuant to this constitutionally-mandated duty is the power to create ad hoc committees. This flows from the obvious need to ascertain facts and determine if laws have been faithfully executed. Thus, in Department of Health v. Camposano,[54] the authority of the President to issue Administrative Order No. 298, creating an investigative committee to look into the administrative charges filed against the employees of the Department of Health for the anomalous purchase of medicines was upheld. In said case, it was ruled:

The Chief Executives power to create the Ad hoc Investigating Committee cannot be doubted. Having been constitutionally granted full control of the Executive Department, to which respondents belong, the President has the obligation to ensure that all executive officials and employees faithfully

comply with the law. With AO 298 as mandate, the legality of the investigation is sustained. Such validity is not affected by the fact that the investigating team and the PCAGC had the same composition, or that the former used the offices and facilities of the latter in conducting the inquiry. [Emphasis supplied]

It should be stressed that the purpose of allowing ad hoc investigating bodies to exist is to allow an inquiry into matters which the President is entitled to know so that he can be properly advised and guided in the performance of his duties relative to the execution and enforcement of the laws of the land. And if history is to be revisited, this was also the objective of the investigative bodies created in the past like the PCAC, PCAPE, PARGO, the Feliciano Commission, the Melo Commission and the Zenarosa Commission. There being no changes in the government structure, the Court is not inclined to declare such executive power as non-existent just because the direction of the political winds have changed.

On the charge that Executive Order No. 1 transgresses the power of Congress to appropriate funds for the operation of a public office, suffice it to say that there will be no appropriation but only an allotment or allocations of existing funds already appropriated. Accordingly, there is no usurpation on the part of the Executive of the power of Congress to appropriate funds. Further, there is no need to specify the amount to be earmarked for the operation of the commission because, in the words of the Solicitor General, whatever funds the Congress has provided for the Office of the President will be the very source of the funds for the commission.*55+ Moreover, since the amount that would be allocated to the PTC shall be subject to existing auditing rules and regulations, there is no impropriety in the funding.

Power of the Truth Commission to Investigate

The Presidents power to conduct investigations to ensure that laws are faithfully executed is well recognized. It flows from the faithful-execution clause of the Constitution under Article VII, Section 17 thereof.[56] As the Chief Executive, the president represents the government as a whole and sees to it that all laws are enforced by the officials and employees of his department. He has the authority to directly assume the functions of the executive department.[57]

Invoking this authority, the President constituted the PTC to primarily investigate reports of graft and corruption and to recommend the appropriate action. As previously stated, no quasi-judicial powers have been vested in the said body as it cannot adjudicate rights of persons who come before it. It has been said that Quasi-judicial powers involve the power to hear and determine questions of fact

to which the legislative policy is to apply and to decide in accordance with the standards laid down by law itself in enforcing and administering the same law.*58+ In simpler terms, judicial discretion is involved in the exercise of these quasi-judicial power, such that it is exclusively vested in the judiciary and must be clearly authorized by the legislature in the case of administrative agencies.

The distinction between the power to investigate and the power to adjudicate was delineated by the Court in Cario v. Commission on Human Rights.[59] Thus:

"Investigate," commonly understood, means to examine, explore, inquire or delve or probe into, research on, study. The dictionary definition of "investigate" is "to observe or study closely: inquire into systematically: "to search or inquire into: x x to subject to an official probe x x: to conduct an official inquiry." The purpose of investigation, of course, is to discover, to find out, to learn, obtain information. Nowhere included or intimated is the notion of settling, deciding or resolving a controversy involved in the facts inquired into by application of the law to the facts established by the inquiry.

The legal meaning of "investigate" is essentially the same: "(t)o follow up step by step by patient inquiry or observation. To trace or track; to search into; to examine and inquire into with care and accuracy; to find out by careful inquisition; examination; the taking of evidence; a legal inquiry;" "to inquire; to make an investigation," "investigation" being in turn described as "(a)n administrative function, the exercise of which ordinarily does not require a hearing. 2 Am J2d Adm L Sec. 257; x x an inquiry, judicial or otherwise, for the discovery and collection of facts concerning a certain matter or matters."

"Adjudicate," commonly or popularly understood, means to adjudge, arbitrate, judge, decide, determine, resolve, rule on, settle. The dictionary defines the term as "to settle finally (the rights and duties of the parties to a court case) on the merits of issues raised: x x to pass judgment on: settle judicially: x x act as judge." And "adjudge" means "to decide or rule upon as a judge or with judicial or quasi-judicial powers: x x to award or grant judicially in a case of controversy x x." In the legal sense, "adjudicate" means: "To settle in the exercise of judicial authority. To determine finally. Synonymous with adjudge in its strictest sense;" and "adjudge" means: "To pass on judicially, to decide, settle or decree, or to sentence or condemn. x x. Implies a judicial determination of a fact, and the entry of a judgment." [Italics included. Citations Omitted]

Fact-finding is not adjudication and it cannot be likened to the judicial function of a court of justice, or even a quasi-judicial agency or office. The function of receiving evidence and ascertaining therefrom the

facts of a controversy is not a judicial function. To be considered as such, the act of receiving evidence and arriving at factual conclusions in a controversy must be accompanied by the authority of applying the law to the factual conclusions to the end that the controversy may be decided or resolved authoritatively, finally and definitively, subject to appeals or modes of review as may be provided by law.[60] Even respondents themselves admit that the commission is bereft of any quasi-judicial power.[61]

Contrary to petitioners apprehension, the PTC will not supplant the Ombudsman or the DOJ or erode their respective powers. If at all, the investigative function of the commission will complement those of the two offices. As pointed out by the Solicitor General, the recommendation to prosecute is but a consequence of the overall task of the commission to conduct a fact-finding investigation.*62+ The actual prosecution of suspected offenders, much less adjudication on the merits of the charges against them,*63+ is certainly not a function given to the commission. The phrase, when in the course of its investigation, under Section 2(g), highlights this fact and gives credence to a contrary interpretation from that of the petitioners. The function of determining probable cause for the filing of the appropriate complaints before the courts remains to be with the DOJ and the Ombudsman.[64]

At any rate, the Ombudsmans power to investigate under R.A. No. 6770 is not exclusive but is shared with other similarly authorized government agencies. Thus, in the case of Ombudsman v. Galicia,[65] it was written:

This power of investigation granted to the Ombudsman by the 1987 Constitution and The Ombudsman Act is not exclusive but is shared with other similarly authorized government agencies such as the PCGG and judges of municipal trial courts and municipal circuit trial courts. The power to conduct preliminary investigation on charges against public employees and officials is likewise concurrently shared with the Department of Justice. Despite the passage of the Local Government Code in 1991, the Ombudsman retains concurrent jurisdiction with the Office of the President and the local Sanggunians to investigate complaints against local elective officials. [Emphasis supplied].

Also, Executive Order No. 1 cannot contravene the power of the Ombudsman to investigate criminal cases under Section 15 (1) of R.A. No. 6770, which states:

(1) Investigate and prosecute on its own or on complaint by any person, any act or omission of any public officer or employee, office or agency, when such act or omission appears to be illegal, unjust, improper or inefficient. It has primary jurisdiction over cases cognizable by the Sandiganbayan and, in the exercise of its primary jurisdiction, it may take over, at any stage, from any investigatory agency of government, the investigation of such cases. [Emphases supplied]

The act of investigation by the Ombudsman as enunciated above contemplates the conduct of a preliminary investigation or the determination of the existence of probable cause. This is categorically out of the PTCs sphere of functions. Its power to investigate is limited to obtaining facts so that it can advise and guide the President in the performance of his duties relative to the execution and enforcement of the laws of the land. In this regard, the PTC commits no act of usurpation of the Ombudsmans primordial duties.

The same holds true with respect to the DOJ. Its authority under Section 3 (2), Chapter 1, Title III, Book IV in the Revised Administrative Code is by no means exclusive and, thus, can be shared with a body likewise tasked to investigate the commission of crimes.

Finally, nowhere in Executive Order No. 1 can it be inferred that the findings of the PTC are to be accorded conclusiveness. Much like its predecessors, the Davide Commission, the Feliciano Commission and the Zenarosa Commission, its findings would, at best, be recommendatory in nature. And being so, the Ombudsman and the DOJ have a wider degree of latitude to decide whether or not to reject the recommendation. These offices, therefore, are not deprived of their mandated duties but will instead be aided by the reports of the PTC for possible indictments for violations of graft laws.

Violation of the Equal Protection Clause

Although the purpose of the Truth Commission falls within the investigative power of the President, the Court finds difficulty in upholding the constitutionality of Executive Order No. 1 in view of its apparent transgression of the equal protection clause enshrined in Section 1, Article III (Bill of Rights) of the 1987 Constitution. Section 1 reads:

Section 1. No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws.

The petitioners assail Executive Order No. 1 because it is violative of this constitutional safeguard. They contend that it does not apply equally to all members of the same class such that the intent of singling out the previous administration as its sole object makes the PTC an adventure in partisan hostility.*66+ Thus, in order to be accorded with validity, the commission must also cover reports of graft and corruption in virtually all administrations previous to that of former President Arroyo.[67]

The petitioners argue that the search for truth behind the reported cases of graft and corruption must encompass acts committed not only during the administration of former President Arroyo but also during prior administrations where the same magnitude of controversies and anomalies*68+ were reported to have been committed against the Filipino people. They assail the classification formulated by the respondents as it does not fall under the recognized exceptions because first, there is no substantial distinction between the group of officials targeted for investigation by Executive Order No. 1 and other groups or persons who abused their public office for personal gain; and second, the selective classification is not germane to the purpose of Executive Order No. 1 to end corruption.*69+ In order to attain constitutional permission, the petitioners advocate that the commission should deal with graft and grafters prior and subsequent to the Arroyo administration with the strong arm of the law with equal force.*70]

Position of respondents

According to respondents, while Executive Order No. 1 identifies the previous administration as the initial subject of the investigation, following Section 17 thereof, the PTC will not confine itself to cases of large scale graft and corruption solely during the said administration.[71] Assuming arguendo that the commission would confine its proceedings to officials of the previous administration, the petitioners argue that no offense is committed against the equal protection clause for the segregation of the transactions of public officers during the previous administration as possible subjects of investigation is a valid classification based on substantial distinctions and is germane to the evils which the Executive Order seeks to correct.*72+ To distinguish the Arroyo administration from past administrations, it recited the following:

First. E.O. No. 1 was issued in view of widespread reports of large scale graft and corruption in the previous administration which have eroded public confidence in public institutions. There is, therefore,

an urgent call for the determination of the truth regarding certain reports of large scale graft and corruption in the government and to put a closure to them by the filing of the appropriate cases against those involved, if warranted, and to deter others from committing the evil, restore the peoples faith and confidence in the Government and in their public servants.

Second. The segregation of the preceding administration as the object of fact-finding is warranted by the reality that unlike with administrations long gone, the current administration will most likely bear the immediate consequence of the policies of the previous administration.

Third. The classification of the previous administration as a separate class for investigation lies in the reality that the evidence of possible criminal activity, the evidence that could lead to recovery of public monies illegally dissipated, the policy lessons to be learned to ensure that anti-corruption laws are faithfully executed, are more easily established in the regime that immediately precede the current administration.

Fourth. Many administrations subject the transactions of their predecessors to investigations to provide closure to issues that are pivotal to national life or even as a routine measure of due diligence and good housekeeping by a nascent administration like the Presidential Commission on Good Government (PCGG), created by the late President Corazon C. Aquino under Executive Order No. 1 to pursue the recovery of ill-gotten wealth of her predecessor former President Ferdinand Marcos and his cronies, and the Saguisag Commission created by former President Joseph Estrada under Administrative Order No, 53, to form an ad-hoc and independent citizens committee to investigate all the facts and circumstances surrounding Philippine Centennial projects of his predecessor, former President Fidel V. Ramos.[73] [Emphases supplied]

Concept of the Equal Protection Clause

One of the basic principles on which this government was founded is that of the equality of right which is embodied in Section 1, Article III of the 1987 Constitution. The equal protection of the laws is embraced in the concept of due process, as every unfair discrimination offends the requirements of justice and fair play. It has been embodied in a separate clause, however, to provide for a more specific guaranty against any form of undue favoritism or hostility from the government. Arbitrariness in general may be challenged on the basis of the due process clause. But if the particular act assailed partakes of an unwarranted partiality or prejudice, the sharper weapon to cut it down is the equal protection clause.[74]

According to a long line of decisions, equal protection simply requires that all persons or things similarly situated should be treated alike, both as to rights conferred and responsibilities imposed.*75+ It requires public bodies and institutions to treat similarly situated individuals in a similar manner.*76+ The purpose of the equal protection clause is to secure every person within a states jurisdiction against intentional and arbitrary discrimination, whether occasioned by the express terms of a statue or by its improper execution through the states duly constituted authorities.*77+ In other words, the concept of equal justice under the law requires the state to govern impartially, and it may not draw distinctions between individuals solely on differences that are irrelevant to a legitimate governmental objective.*78+

The equal protection clause is aimed at all official state actions, not just those of the legislature.[79] Its inhibitions cover all the departments of the government including the political and executive departments, and extend to all actions of a state denying equal protection of the laws, through whatever agency or whatever guise is taken. [80]

It, however, does not require the universal application of the laws to all persons or things without distinction. What it simply requires is equality among equals as determined according to a valid classification. Indeed, the equal protection clause permits classification. Such classification, however, to be valid must pass the test of reasonableness. The test has four requisites: (1) The classification rests on substantial distinctions; (2) It is germane to the purpose of the law; (3) It is not limited to existing conditions only; and (4) It applies equally to all members of the same class.*81+ Superficial differences do not make for a valid classification.*82+

For a classification to meet the requirements of constitutionality, it must include or embrace all persons who naturally belong to the class.*83+ The classification will be regarded as invalid if all the members of the class are not similarly treated, both as to rights conferred and obligations imposed. It is not necessary that the classification be made with absolute symmetry, in the sense that the members of the class should possess the same characteristics in equal degree. Substantial similarity will suffice; and as long as this is achieved, all those covered by the classification are to be treated equally. The mere fact that an individual belonging to a class differs from the other members, as long as that class is substantially distinguishable from all others, does not justify the non-application of the law to him.*84+

The classification must not be based on existing circumstances only, or so constituted as to preclude addition to the number included in the class. It must be of such a nature as to embrace all those who may thereafter be in similar circumstances and conditions. It must not leave out or underinclude those that should otherwise fall into a certain classification. As elucidated in Victoriano v. Elizalde Rope Workers' Union[85] and reiterated in a long line of cases,[86] The guaranty of equal protection of the laws is not a guaranty of equality in the application of the laws upon all citizens of the state. It is not, therefore, a requirement, in order to avoid the constitutional prohibition against inequality, that every man, woman and child should be affected alike by a statute. Equality of operation of statutes does not mean indiscriminate operation on persons merely as such, but on persons according to the circumstances surrounding them. It guarantees equality, not identity of rights. The Constitution does not require that things which are different in fact be treated in law as though they were the same. The equal protection clause does not forbid discrimination as to things that are different. It does not prohibit legislation which is limited either in the object to which it is directed or by the territory within which it is to operate.

The equal protection of the laws clause of the Constitution allows classification. Classification in law, as in the other departments of knowledge or practice, is the grouping of things in speculation or practice because they agree with one another in certain particulars. A law is not invalid because of simple inequality. The very idea of classification is that of inequality, so that it goes without saying that the mere fact of inequality in no manner determines the matter of constitutionality. All that is required of a valid classification is that it be reasonable, which means that the classification should be based on substantial distinctions which make for real differences, that it must be germane to the purpose of the law; that it must not be limited to existing conditions only; and that it must apply equally to each member of the class. This Court has held that the standard is satisfied if the classification or distinction is based on a reasonable foundation or rational basis and is not palpably arbitrary. [Citations omitted]

Applying these precepts to this case, Executive Order No. 1 should be struck down as violative of the equal protection clause. The clear mandate of the envisioned truth commission is to investigate and find out the truth concerning the reported cases of graft and corruption during the previous administration*87+ only. The intent to single out the previous administration is plain, patent and manifest. Mention of it has been made in at least three portions of the questioned executive order. Specifically, these are:

WHEREAS, there is a need for a separate body dedicated solely to investigating and finding out the truth concerning the reported cases of graft and corruption during the previous administration, and which will recommend the prosecution of the offenders and secure justice for all;

SECTION 1. Creation of a Commission. There is hereby created the PHILIPPINE TRUTH COMMISSION, hereinafter referred to as the COMMISSION, which shall primarily seek and find the truth on, and toward this end, investigate reports of graft and corruption of such scale and magnitude that shock and offend the moral and ethical sensibilities of the people, committed by public officers and employees, their co-principals, accomplices and accessories from the private sector, if any, during the previous administration; and thereafter recommend the appropriate action or measure to be taken thereon to ensure that the full measure of justice shall be served without fear or favor.

SECTION 2. Powers and Functions. The Commission, which shall have all the powers of an investigative body under Section 37, Chapter 9, Book I of the Administrative Code of 1987, is primarily tasked to conduct a thorough fact-finding investigation of reported cases of graft and corruption referred to in Section 1, involving third level public officers and higher, their co-principals, accomplices and accessories from the private sector, if any, during the previous administration and thereafter submit its finding and recommendations to the President, Congress and the Ombudsman. [Emphases supplied]

In this regard, it must be borne in mind that the Arroyo administration is but just a member of a class, that is, a class of past administrations. It is not a class of its own. Not to include past administrations similarly situated constitutes arbitrariness which the equal protection clause cannot sanction. Such discriminating differentiation clearly reverberates to label the commission as a vehicle for vindictiveness and selective retribution.

Though the OSG enumerates several differences between the Arroyo administration and other past administrations, these distinctions are not substantial enough to merit the restriction of the investigation to the previous administration only. The reports of widespread corruption in the Arroyo administration cannot be taken as basis for distinguishing said administration from earlier administrations which were also blemished by similar widespread reports of impropriety. They are not inherent in, and do not inure solely to, the Arroyo administration. As Justice Isagani Cruz put it, Superficial differences do not make for a valid classification.*88+

The public needs to be enlightened why Executive Order No. 1 chooses to limit the scope of the intended investigation to the previous administration only. The OSG ventures to opine that to include other past administrations, at this point, may unnecessarily overburden the commission and lead it to

lose its effectiveness.*89+ The reason given is specious. It is without doubt irrelevant to the legitimate and noble objective of the PTC to stamp out or end corruption and the evil it breeds.*90+

The probability that there would be difficulty in unearthing evidence or that the earlier reports involving the earlier administrations were already inquired into is beside the point. Obviously, deceased presidents and cases which have already prescribed can no longer be the subjects of inquiry by the PTC. Neither is the PTC expected to conduct simultaneous investigations of previous administrations, given the bodys limited time and resources. The law does not require the impossible (Lex non cogit ad impossibilia).[91]

Given the foregoing physical and legal impossibility, the Court logically recognizes the unfeasibility of investigating almost a centurys worth of graft cases. However, the fact remains that Executive Order No. 1 suffers from arbitrary classification. The PTC, to be true to its mandate of searching for the truth, must not exclude the other past administrations. The PTC must, at least, have the authority to investigate all past administrations. While reasonable prioritization is permitted, it should not be arbitrary lest it be struck down for being unconstitutional. In the often quoted language of Yick Wo v. Hopkins,[92]

Though the law itself be fair on its face and impartial in appearance, yet, if applied and administered by public authority with an evil eye and an unequal hand, so as practically to make unjust and illegal discriminations between persons in similar circumstances, material to their rights, the denial of equal justice is still within the prohibition of the constitution. [Emphasis supplied]

It could be argued that considering that the PTC is an ad hoc body, its scope is limited. The Court, however, is of the considered view that although its focus is restricted, the constitutional guarantee of equal protection under the laws should not in any way be circumvented. The Constitution is the fundamental and paramount law of the nation to which all other laws must conform and in accordance with which all private rights determined and all public authority administered.[93] Laws that do not conform to the Constitution should be stricken down for being unconstitutional.[94] While the thrust of the PTC is specific, that is, for investigation of acts of graft and corruption, Executive Order No. 1, to survive, must be read together with the provisions of the Constitution. To exclude the earlier administrations in the guise of substantial distinctions would only confirm the petitioners lament that the subject executive order is only an adventure in partisan hostility. In the case of US v. Cyprian,*95+

it was written: A rather limited number of such classifications have routinely been held or assumed to be arbitrary; those include: race, national origin, gender, political activity or membership in a political party, union activity or membership in a labor union, or more generally the exercise of first amendment rights.

To reiterate, in order for a classification to meet the requirements of constitutionality, it must include or embrace all persons who naturally belong to the class.*96+ Such a classification must not be based on existing circumstances only, or so constituted as to preclude additions to the number included within a class, but must be of such a nature as to embrace all those who may thereafter be in similar circumstances and conditions. Furthermore, all who are in situations and circumstances which are relative to the discriminatory legislation and which are indistinguishable from those of the members of the class must be brought under the influence of the law and treated by it in the same way as are the members of the class.*97+

The Court is not unaware that mere underinclusiveness is not fatal to the validity of a law under the equal protection clause.*98+ Legislation is not unconstitutional merely because it is not all-embracing and does not include all the evils within its reach.*99+ It has been written that a regulation challenged under the equal protection clause is not devoid of a rational predicate simply because it happens to be incomplete.[100] In several instances, the underinclusiveness was not considered a valid reason to strike down a law or regulation where the purpose can be attained in future legislations or regulations. These cases refer to the step by step process.*101+ With regard to equal protection claims, a legislature does not run the risk of losing the entire remedial scheme simply because it fails, through inadvertence or otherwise, to cover every evil that might conceivably have been attacked.*102+

In Executive Order No. 1, however, there is no inadvertence. That the previous administration was picked out was deliberate and intentional as can be gleaned from the fact that it was underscored at least three times in the assailed executive order. It must be noted that Executive Order No. 1 does not even mention any particular act, event or report to be focused on unlike the investigative commissions created in the past. The equal protection clause is violated by purposeful and intentional discrimination.*103+

To disprove petitioners contention that there is deliberate discrimination, the OSG clarifies that the commission does not only confine itself to cases of large scale graft and corruption committed during the previous administration.[104] The OSG points to Section 17 of Executive Order No. 1, which provides:

SECTION 17. Special Provision Concerning Mandate. If and when in the judgment of the President there is a need to expand the mandate of the Commission as defined in Section 1 hereof to include the investigation of cases and instances of graft and corruption during the prior administrations, such mandate may be so extended accordingly by way of a supplemental Executive Order.

The Court is not convinced. Although Section 17 allows the President the discretion to expand the scope of investigations of the PTC so as to include the acts of graft and corruption committed in other past administrations, it does not guarantee that they would be covered in the future. Such expanded mandate of the commission will still depend on the whim and caprice of the President. If he would decide not to include them, the section would then be meaningless. This will only fortify the fears of the petitioners that the Executive Order No. 1 was crafted to tailor-fit the prosecution of officials and personalities of the Arroyo administration.*105+

The Court tried to seek guidance from the pronouncement in the case of Virata v. Sandiganbayan,[106] that the PCGG Charter (composed of Executive Orders Nos. 1, 2 and 14) does not violate the equal protection clause. The decision, however, was devoid of any discussion on how such conclusory statement was arrived at, the principal issue in said case being only the sufficiency of a cause of action.

A final word

The issue that seems to take center stage at present is - whether or not the Supreme Court, in the exercise of its constitutionally mandated power of Judicial Review with respect to recent initiatives of the legislature and the executive department, is exercising undue interference. Is the Highest Tribunal, which is expected to be the protector of the Constitution, itself guilty of violating fundamental tenets like the doctrine of separation of powers? Time and again, this issue has been addressed by the Court, but it seems that the present political situation calls for it to once again explain the legal basis of its action lest it continually be accused of being a hindrance to the nations thrust to progress.

The Philippine Supreme Court, according to Article VIII, Section 1 of the 1987 Constitution, is vested with Judicial Power that includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave of abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the government.

Furthermore, in Section 4(2) thereof, it is vested with the power of judicial review which is the power to declare a treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation unconstitutional. This power also includes the duty to rule on the constitutionality of the application, or operation of presidential decrees, proclamations, orders, instructions, ordinances, and other regulations. These provisions, however, have been fertile grounds of conflict between the Supreme Court, on one hand, and the two co-equal bodies of government, on the other. Many times the Court has been accused of asserting superiority over the other departments.

To answer this accusation, the words of Justice Laurel would be a good source of enlightenment, to wit: And when the judiciary mediates to allocate constitutional boundaries, it does not assert any superiority over the other departments; it does not in reality nullify or invalidate an act of the legislature, but only asserts the solemn and sacred obligation assigned to it by the Constitution to determine conflicting claims of authority under the Constitution and to establish for the parties in an actual controversy the rights which that instrument secures and guarantees to them.*107+

Thus, the Court, in exercising its power of judicial review, is not imposing its own will upon a co-equal body but rather simply making sure that any act of government is done in consonance with the authorities and rights allocated to it by the Constitution. And, if after said review, the Court finds no constitutional violations of any sort, then, it has no more authority of proscribing the actions under review. Otherwise, the Court will not be deterred to pronounce said act as void and unconstitutional.

It cannot be denied that most government actions are inspired with noble intentions, all geared towards the betterment of the nation and its people. But then again, it is important to remember this ethical principle: The end does not justify the means. No matter how noble and worthy of admiration the purpose of an act, but if the means to be employed in accomplishing it is simply irreconcilable with constitutional parameters, then it cannot still be allowed.[108] The Court cannot just turn a blind eye and simply let it pass. It will continue to uphold the Constitution and its enshrined principles.

The Constitution must ever remain supreme. All must bow to the mandate of this law. Expediency must not be allowed to sap its strength nor greed for power debase its rectitude.*109+ Lest it be misunderstood, this is not the death knell for a truth commission as nobly envisioned by the present administration. Perhaps a revision of the executive issuance so as to include the earlier past administrations would allow it to pass the test of reasonableness and not be an affront to the Constitution. Of all the branches of the government, it is the judiciary which is the most interested in knowing the truth and so it will not allow itself to be a hindrance or obstacle to its attainment. It must, however, be emphasized that the search for the truth must be within constitutional bounds for ours is still a government of laws and not of men.*110+

WHEREFORE, the petitions are GRANTED. Executive Order No. 1 is hereby declared UNCONSTITUTIONAL insofar as it is violative of the equal protection clause of the Constitution.

As also prayed for, the respondents are hereby ordered to cease and desist from carrying out the provisions of Executive Order No. 1.

SO ORDERED.

Kapisanan ng mga kawani ng ERB vs Com. Barin

The Case

This is a special civil action for certiorari and prohibition[1] of the selection and appointment of employees of the Energy Regulatory Commission (ERC) by the ERC Board of Commissioners.

Petitioner Kapisanan ng mga Kawani ng Energy Regulatory Board (KERB) seeks to declare Section 38 of Republic Act No. 9136 (RA 9136), which abolished the Energy Regulatory Board (ERB) and created the ERC, as unconstitutional and to prohibit the ERC Commissioners from filling up the ERCs plantilla.

The Facts

RA 9136, popularly known as EPIRA (for Electric Power Industry Reform Act of 2001), was enacted on 8 June 2001 and took effect on 26 June 2001. Section 38 of RA 9136 provides for the abolition of the ERB and the creation of the ERC. The pertinent portions of Section 38 read:

Creation of the Energy Regulatory Commission. There is hereby created an independent, quasijudicial regulatory board to be named the Energy Regulatory Commission (ERC). For this purpose, the existing Energy Regulatory Board (ERB) created under Executive Order No. 172, as amended, is hereby abolished.

The Commission shall be composed of a Chairman and four (4) members to be appointed by the President of the Philippines. x x x

Within three (3) months from the creation of the ERC, the Chairman shall submit for the approval of the President of the Philippines the new organizational structure and plantilla positions necessary to carry out the powers and functions of the ERC.

xxxx

The Chairman and members of the Commission shall assume office at the beginning of their terms: Provided, That, if upon the effectivity of this Act, the Commission has not been constituted and the new staffing pattern and plantilla positions have not been approved and filled-up, the current Board and existing personnel of ERB shall continue to hold office.

The existing personnel of the ERB, if qualified, shall be given preference in the filling up of plantilla positions created in the ERC, subject to existing civil service rules and regulations.

At the time of the filing of this petition, the ERC was composed of Commissioner Fe B. Barin and Deputy Commissioners Carlos R. Alindada, Leticia V. Ibay, Oliver B. Butalid, and Mary Anne B. Colayco (collectively, Commissioners). The Commissioners assumed office on 15 August 2001. Pursuant to Section 38 of RA 9136, the Commissioners issued the proposed Table of Organization, Staffing Pattern, and Salary Structure on 25 September 2001 which the President of the Philippines approved on 13 November 2001. Meanwhile, KERB submitted to the Commissioners its Resolution No. 2001-02 on 13 September 2001. Resolution No. 2001-02 requested the Commissioners for an opportunity to be informed on the proposed plantilla positions with their equivalent qualification standards.

On 17 October 2001, the Commissioners issued the guidelines for the selection and hiring of ERC employees. A portion of the guidelines reflects the Commissioners view on the selection and hiring of the ERC employees vis-a-vis Civil Service rules, thus:

Since R.A. 9136 has abolished the Energy Regulatory Board (ERB), it is the view of the Commission that the provisions of Republic Act No. 6656 (An Act to Protect the Security of [Tenure of] Civil Service Officers and Employees in the Implementation of Government Reorganization) will not directly apply to ERCs current efforts to establish a new organization. Civil Service laws, rules and regulations, however, will have suppletory application to the extent possible in regard to the selection and placement of employees in the ERC.[2] (Emphasis supplied)

On 5 November 2005, KERB sent a letter to the Commissioners stating the KERB members objection to the Commissioners stand that Civil Service laws, rules and regulations have suppletory application in the selection and placement of the ERC employees. KERB asserted that RA 9136 did not abolish the ERB or change the ERBs character as an economic regulator of the electric power industry. KERB insisted that RA 9136 merely changed the ERBs name to the ERC and expanded the ERBs functions and objectives. KERB sent the Commissioners yet another letter on 13 November 2001. KERB made a number of requests: (1) the issuance of a formal letter related to the date of filing of job applications, including the use of Civil Service application form no. 212; (2) the creation of a placement/recruitment committee and setting guidelines relative to its functions, without prejudice to existing Civil Service rules and regulations; and (3) copies of the plantilla positions and their corresponding qualification standards duly approved by either the President of the Philippines or the Civil Service Commission (CSC).

Commissioner Barin replied to KERBs letter on 15 November 2001. She stated that Civil Service application form no. 212 and the ERC-prescribed application format are substantially the same. Furthermore, the creation of a placement/recruitment committee is no longer necessary because there is already a prescribed set of guidelines for the recruitment of personnel. The ERC hired an independent consultant to administer the necessary tests for the technical and managerial levels. Finally, the ERC already posted the plantilla positions, which prescribe higher standards, as approved by the Department of Budget and Management. Commissioner Barin stated that positions in the ERC do not need the prior approval of the CSC, as the ERC is only required to submit the qualification standards to the CSC.

On 5 December 2001, the ERC published a classified advertisement in the Philippine Star. Two days later, the CSC received a list of vacancies and qualification standards from the ERC. The ERC formed a Selection Committee to process all applications.

KERB, fearful of the uncertainty of the employment status of its members, filed the present petition on 20 December 2001. KERB later filed an Urgent Ex Parte Motion to Enjoin Termination of Petitioner ERB Employees on 2 January 2002. However, before the ERC received KERBs pleadings, the Selection Committee already presented its list of proposed appointees to the Commissioners.

In their Comment, the Commissioners describe the status of the ERB employees appointment in the ERC as follows:

As of February 1, 2002, of the two hundred twelve (212) ERB employees, one hundred thirty eighty [sic] (138) were rehired and appointed to ERC plantilla positions and sixty six (66) opted to retire or be separated from the service. Those who were rehired and those who opted to retire or be separated constituted about ninety six (96%) percent of the entire ERB employees. The list of the ERB employees appointed to new positions in the ERC is attached hereto as Annex 1. Only eight (8) ERB employees could not be appointed to new positions due to the reduction of the ERC plantilla and the absence of positions appropriate to their respective qualifications and skills. The appropriate notice was issued to each of them informing them of their separation from the service and assuring them of their entitlement to separation pay and other benefits in accordance with existing laws.*3+

The Issues

KERB raises the following issues before this Court:

1.

Whether Section 38 of RA 9136 abolishing the ERB is constitutional; and

2. Whether the Commissioners of the ERC were correct in disregarding and considering merely suppletory in character the protective mantle of RA 6656 as to the ERB employees or petitioner in this case.[4]

The Ruling of the Court

The petition has no merit.

We disregard the procedural defects in the petition, such as KERBs personality to file the petition on behalf of its alleged members and Elmar Agirs authority to institute the action, because of the demands of public interest.[5]

Constitutionality of the ERBs Abolition and the ERCs Creation

All laws enjoy the presumption of constitutionality. To justify the nullification of a law, there must be a clear and unequivocal breach of the Constitution. KERB failed to show any breach of the Constitution.

A public office is created by the Constitution or by law or by an officer or tribunal to which the power to create the office has been delegated by the legislature.[6] The power to create an office carries with it the power to abolish. President Corazon C. Aquino, then exercising her legislative powers, created the ERB by issuing Executive Order No. 172 on 8 May 1987.

The question of whether a law abolishes an office is a question of legislative intent. There should not be any controversy if there is an explicit declaration of abolition in the law itself.[7] Section 38 of RA 9136 explicitly abolished the ERB. However, abolition of an office and its related positions is different from removal of an incumbent from his office. Abolition and removal are mutually exclusive concepts. From a legal standpoint, there is no occupant in an abolished office. Where there is no occupant, there is no tenure to speak of. Thus, impairment of the constitutional guarantee of security of tenure does not arise in the abolition of an office. On the other hand, removal implies that the office and its related positions subsist and that the occupants are merely separated from their positions.[8]

A valid order of abolition must not only come from a legitimate body, it must also be made in good faith. An abolition is made in good faith when it is not made for political or personal reasons, or when it does not circumvent the constitutional security of tenure of civil service employees.[9] Abolition of an office may be brought about by reasons of economy, or to remove redundancy of functions, or a clear and explicit constitutional mandate for such termination of employment.[10] Where one office is abolished and replaced with another office vested with similar functions, the abolition is a legal nullity.[11] When there is a void abolition, the incumbent is deemed to have never ceased holding office.

KERB asserts that there was no valid abolition of the ERB but there was merely a reorganization done in bad faith. Evidences of bad faith are enumerated in Section 2 of Republic Act No. 6656 (RA 6656),[12] Section 2 of RA 6656 reads:

No officer or employee in the career service shall be removed except for a valid cause and after due notice and hearing. A valid cause for removal exists when, pursuant to a bona fide reorganization, a position has been abolished or rendered redundant or there is a need to merge, divide, or consolidate positions in order to meet the exigencies of the service, or other lawful causes allowed by the Civil Service Law. The existence of any or some of the following circumstances may be considered as evidence of bad faith in the removals made as a result of reorganization, giving rise to a claim for reinstatement or reappointment by an aggrieved party:

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

(b) created;

Where an office is abolished and another performing substantially the same functions is

(c) Where incumbents are replaced by those less qualified in terms of status of appointment, performance and merit;

(d) Where there is a reclassification of offices in the department or agency concerned and the reclassified offices perform substantially the same function as the original offices;

(e)

Where the removal violates the order of separation provided in Section 3 hereof.

KERB claims that the present case falls under the situation described in Section 2(b) of RA 6656. We thus need to compare the provisions enumerating the powers and functions of the ERB and the ERC to see whether they have substantially the same functions. Under Executive Order No. 172, the ERB has the following powers and functions:

SEC. 3. Jurisdiction, Powers and Functions of the Board. When warranted and only when public necessity requires, the Board may regulate the business of importing, exporting, re-exporting, shipping, transporting, processing, refining, marketing and distributing energy resources. Energy resource means any substance or phenomenon which by itself or in combination with others, or after processing or refining or the application to it of technology, emanates, generates or causes the emanation or generation of energy, such as but not limited to, petroleum or petroleum products, coal, marsh gas, methane gas, geothermal and hydroelectric sources of energy, uranium and other similar radioactive minerals, solar energy, tidal power, as well as non-conventional existing and potential sources.

The Board shall, upon proper notice and hearing, exercise the following, among other powers and functions:

(a) Fix and regulate the prices of petroleum products;

(b) Fix and regulate the rate schedule or prices of piped gas to be charged by duly franchised gas companies which distribute gas by means of underground pipe system;

(c) Fix and regulate the rates of pipeline concessionaires under the provisions of Republic Act No. 387, as amended, otherwise known as the Petroleum Act of 1949, as amended by Presidential Decree No. 1700;

(d) Regulate the capacities of new refineries or additional capacities of existing refineries and license refineries that may be organized after the issuance of this Executive Order, under such terms and conditions as are consistent with the national interest;

(e) Whenever the Board has determined that there is a shortage of any petroleum product, or when public interest so requires, it may take such steps as it may consider necessary, including the temporary adjustment of the levels of prices of petroleum products and the payment to the Oil Price Stabilization Fund created under Presidential Decree No. 1956 by persons or entities engaged in the petroleum industry of such amounts as may be determined by the Board, which will enable the importer to recover its cost of importation.

SEC. 4. Reorganized or Abolished Agency. (a) The Board of Energy is hereby reconstituted into the Energy Regulatory Board, and the formers powers and functions under Republic Act No. 6173, as amended by Presidential Decree No. 1208, as amended, are transferred to the latter.

(b) The regulatory and adjudicatory powers and functions exercised by the Bureau of Energy Utilization under Presidential Decree No. 1206, as amended, are transferred to the Board, the provisions of Executive Order No. 131 notwithstanding.

SEC. 5. Other Transferred Powers and Functions. The power of the Land Transportation Commission to determine, fix and/or prescribe rates or charges pertaining to the hauling of petroleum products are transferred to the Board. The power to fix and regulate the rates or charges pertinent to shipping or transporting of petroleum products shall also be exercised by the Board.

The foregoing transfer of powers and functions shall include applicable funds and appropriations, records, equipment, property and such personnel as may be necessary; Provided, That with reference to

paragraph (b) of Section 4 hereof, only such amount of funds and appropriations of the Bureau of Energy Utilization, as well as only the personnel thereof who are completely or primarily involved in the exercise by said Bureau of its regulatory and adjudicatory powers and functions, shall be affected by such transfer: Provided, further, That the funds and appropriations as well as the records, equipment, property and all personnel of the reorganized Board of Energy shall be transferred to the Energy Regulatory Board.

SEC. 6. Power to Promulgate Rules and Perform Other Acts. The Board shall have the power to promulgate rules and regulations relevant to procedures governing hearings before it and enforce compliance with any rule, regulation, order or other requirements: Provided, That said rules and regulations shall take effect fifteen (15) days after publication in the Official Gazette. It shall also perform such other acts as may be necessary or conducive to the exercise of its powers and functions, and the attainment of the purposes of this Order.

On the other hand, Section 43 of RA 9136 enumerates the basic functions of the ERC.

SEC. 43. Functions of the ERC. The ERC shall promote competition, encourage market development, ensure customer choice and discourage/penalize abuse of market power in the restructured electricity industry. In appropriate cases, the ERC is authorized to issue cease and desist order after due notice and hearing. Towards this end, it shall be responsible for the following key functions in the restructured industry:

(a) Enforce the implementing rules and regulations of this Act;

(b) Within six (6) months from the effectivity of this Act, promulgate and enforce, in accordance with law, a National Grid Code and a Distribution Code which shall include, but not limited to, the following:

(i) Performance standards for TRANSCO O & M Concessionaire, distribution utilities and suppliers: Provided, That in the establishment of the performance standards, the nature and function of the entities shall be considered; and

(ii) Financial capability standards for the generating companies, the TRANSCO, distribution utilities and suppliers: Provided, That in the formulation of the financial capability standards, the nature and function of the entity shall be considered: Provided, further, That such standards are set to ensure that the electric power industry participants meet the minimum financial standards to protect the public interest. Determine, fix, and approve, after due notice and public hearings the universal charge, to be imposed on all electricity end-users pursuant to Section 34 hereof;

(c) Enforce the rules and regulations governing the operations of the electricity spot market and the activities of the spot market operator and other participants in the spot market, for the purpose of ensuring a greater supply and rational pricing of electricity;

(d) Determine the level of cross subsidies in the existing retail rate until the same is removed pursuant to Section 73 hereof;

(e) Amend or revoke, after due notice and hearing, the authority to operate of any person or entity which fails to comply with the provisions hereof, the IRR or any order or resolution of the ERC. In the event a divestment is required, the ERC shall allow the affected party sufficient time to remedy the infraction or for an orderly disposal, but shall in no case exceed twelve (12) months from the issuance of the order;

(f) In the public interest, establish and enforce a methodology for setting transmission and distribution wheeling rates and retail rates for the captive market of a distribution utility, taking into account all relevant considerations, including the efficiency or inefficiency of the regulated entities. The rates must be such as to allow the recovery of just and reasonable costs and a reasonable return on rate base (RORB) to enable the entity to operate viably. The ERC may adopt alternative forms of internationally-accepted rate setting methodology as it may deem appropriate. The rate-setting methodology so adopted and applied must ensure a reasonable price of electricity. The rates prescribed shall be non-discriminatory. To achieve this objective and to ensure the complete removal of cross subsidies, the cap on the recoverable rate of system losses prescribed in Section 10 of Republic Act No. 7832, is hereby amended and shall be replaced by caps which shall be determined by the ERC based on load density, sales mix, cost of service, delivery voltage and other technical considerations it may promulgate. The ERC shall determine such form of rate-setting methodology, which shall promote efficiency. In case the rate setting methodology used is RORB, it shall be subject to the following guidelines:

(i) For purposes of determining the rate base, the TRANSCO or any distribution utility may be allowed to revalue its eligible assets not more than once every three (3) years by an independent appraisal company: Provided, however, That ERC may give an exemption in case of unusual devaluation: Provided, further, That the ERC shall exert efforts to minimize price shocks in order to protect the consumers;

(ii) Interest expenses are not allowable deductions from permissible return on rate base;

(iii) In determining eligible cost of services that will be passed on to the end-users, the ERC shall establish minimum efficiency performance standards for the TRANSCO and distribution utilities including systems losses, interruption frequency rates, and collection efficiency;

(iv) Further, in determining rate base, the TRANSCO or any distribution utility shall not be allowed to include management inefficiencies like cost of project delays not excused by force majeure, penalties and related interest during construction applicable to these unexcused delays; and

(v) Any significant operating costs or project investments of TRANSCO and distribution utilities which shall become part of the rate base shall be subject to the verification of the ERC to ensure that the contracting and procurement of the equipment, assets and services have been subjected to transparent and accepted industry procurement and purchasing practices to protect the public interest.

(g) Three (3) years after the imposition of the universal charge, ensure that the charges of the TRANSCO or any distribution utility shall bear no cross subsidies between grids, within grids, or between classes of customers, except as provided herein;

(h) Review and approve any changes on the terms and conditions of service of the TRANSCO or any distribution utility;

(i) Allow the TRANSCO to charge user fees for ancillary services to all electric power industry participants or self-generating entities connected to the grid. Such fees shall be fixed by the ERC after due notice and public hearing;

(j) Set a lifeline rate for the marginalized end-users;

(k) Monitor and take measures in accordance with this Act to penalize abuse of market power, cartelization, and anti-competitive or discriminatory behavior by any electric power industry participant;

(l) Impose fines or penalties for any non-compliance with or breach of this Act, the IRR of this Act and the rules and regulations which it promulgates or administers;

(m) Take any other action delegated to it pursuant to this Act;

(n) Before the end of April of each year, submit to the Office of the President of the Philippines and Congress, copy furnished the DOE, an annual report containing such matters or cases which have been filed before or referred to it during the preceding year, the actions and proceedings undertaken and its decision or resolution in each case. The ERC shall make copies of such reports available to any interested party upon payment of a charge which reflects the printing costs. The ERC shall publish all its decisions involving rates and anticompetitive cases in at least one (1) newspaper of general circulation, and/or post electronically and circulate to all interested electric power industry participants copies of its resolutions to ensure fair and impartial treatment;

(o) Monitor the activities of the generation and supply of the electric power industry with the end in view of promoting free market competition and ensuring that the allocation or pass through of bulk purchase cost by distributors is transparent, non-discriminatory and that any existing subsidies shall be divided pro rata among all retail suppliers;

(p) Act on applications for or modifications of certificates of public convenience and/or necessity, licenses or permits of franchised electric utilities in accordance with law and revoke, review and modify such certificates, licenses or permits in appropriate cases, such as in cases of violations of the Grid Code, Distribution Code and other rules and regulations issued by the ERC in accordance with law;

(q) Act on applications for cost recovery and return on demand side management projects;

(r) In the exercise of its investigative and quasi-judicial powers, act against any participant or player in the energy sector for violations of any law, rule and regulation governing the same, including the rules on cross ownership, anticompetitive practices, abuse of market positions and similar or related acts by any participant in the energy sector, or by any person as may be provided by law, and require any person or entity to submit any report or data relative to any investigation or hearing conducted pursuant to this Act;

(s) Inspect, on its own or through duly authorized representatives, the premises, books of accounts and records of any person or entity at any time, in the exercise of its quasi-judicial power for purposes of determining the existence of any anticompetitive behavior and/or market power abuse and any violation of rules and regulations issued by the ERC;

(t) Perform such other regulatory functions as are appropriate and necessary in order to ensure the successful restructuring and modernization of the electric power industry, such as, but not limited to, the rules and guidelines under which generation companies, distribution utilities which are not publicly listed shall offer and sell to the public a portion not less than fifteen percent (15%) of their common shares of stocks: Provided, however, That generation companies, distribution utilities or their respective holding companies that are already listed in the PSE are deemed in compliance. For existing companies, such public offering shall be implemented not later than five (5) years from the effectivity of this Act. New companies shall implement their respective public offerings not later than five (5) years from the issuance of their certificate of compliance; and

(u) The ERC shall have the original and exclusive jurisdiction over all cases contesting rates, fees, fines and penalties imposed by the ERC in the exercise of the abovementioned powers, functions and

responsibilities and over all cases involving disputes between and among participants or players in the energy sector.

All notices of hearings to be conducted by the ERC for the purpose of fixing rates or fees shall be published at least twice for two successive weeks in two (2) newspapers of nationwide circulation.

Aside from Section 43, additional functions of the ERC are scattered throughout RA 9136:

1. SEC. 6. Generation Sector. Generation of electric power, a business affected with public interest, shall be competitive and open.

Upon the effectivity of this Act, any new generation company shall, before it operates, secure from the Energy Regulatory Commission (ERC) a certificate of compliance pursuant to the standards set forth in this Act, as well as health, safety and environmental clearances from the appropriate government agencies under existing laws.

xxxx

2.

SEC. 8. Creation of the National Transmission Company. x x x

That the subtransmission assets shall be operated and maintained by TRANSCO until their disposal to qualified distribution utilities which are in a position to take over the responsibility for operating, maintaining, upgrading, and expanding said assets. xxx

In case of disagreement in valuation, procedures, ownership participation and other issues, the ERC shall resolve such issues.

xxxx

3.

SEC. 23. Functions of Distribution Utilities. x x x

Distribution utilities shall submit to the ERC a statement of their compliance with the technical specifications prescribed in the Distribution Code and the performance standards prescribed in the IRR of this Act. Distribution utilities which do not comply with any of the prescribed technical specifications and performance standards shall submit to the ERC a plan to comply, within three (3) years, with said prescribed technical specifications and performance standards. The ERC shall, within sixty (60) days upon receipt of such plan, evaluate the same and notify the distribution utility concerned of its action. Failure to submit a feasible and credible plan and/or failure to implement the same shall serve as grounds for the imposition of appropriate sanctions, fines or penalties.

xxxx

4. SEC. 28. De-monopolization and Shareholding Dispersal. In compliance with the constitutional mandate for dispersal of ownership and de-monopolization of public utilities, the holdings of persons, natural or juridical, including directors, officers, stockholders and related interests, in a distribution utility and their respective holding companies shall not exceed twenty-five (25%) percent of the voting shares of stock unless the utility or the company holding the shares or its controlling stockholders are already listed in the Philippine Stock Exchange (PSE): Provided, That controlling stockholders of small distribution utilities are hereby required to list in the PSE within five (5) years from the enactment of this Act if they already own the stocks. New controlling stockholders shall undertake such listing within five (5) years from the time they acquire ownership and control. A small distribution company is one whose peak demand is equal to Ten megawatts (10MW).

The ERC shall, within sixty (60) days from the effectivity of this Act, promulgate the rules and regulations to implement and effect this provision.

xxxx

5. SEC. 29. Supply Sector. x x x all suppliers of electricity to the contestable market shall require a license from the ERC.

For this purpose, the ERC shall promulgate rules and regulations prescribing the qualifications of electricity suppliers which shall include, among other requirements, a demonstration of their technical capability, financial capability, and creditworthiness: Provided, That the ERC shall have authority to require electricity suppliers to furnish a bond or other evidence of the ability of a supplier to withstand market disturbances or other events that may increase the cost of providing service.

xxxx

6.

SEC. 30. Wholesale Electricity Spot Market. x x x

Subject to the compliance with the membership criteria, all generating companies, distribution utilities, suppliers, bulk consumers/end-users and other similar entities authorized by the ERC shall be eligible to become members of the wholesale electricity spot market.

The ERC may authorize other similar entities to become eligible as members, either directly or indirectly, of the wholesale electricity spot market.

xxxx

7.

SEC. 31. Retail Competition and Open Access. x x x

Upon the initial implementation of open access, the ERC shall allow all electricity end-users with a monthly average peak demand of at least one megawatt (1MW) for the preceding twelve (12) months to be the contestable market. xxx Subsequently and every year thereafter, the ERC shall evaluate the performance of the market. x x x

8.

SEC. 32. NPC Stranded Debt and Contract Cost Recovery.

xxx

The ERC shall verify the reasonable amounts and determine the manner and duration for the full recovery of stranded debt and stranded contract costs as defined herein x x x x

9. SEC. 34. Universal Charge. Within one (1) year from the effectivity of this Act, a universal charge to be determined, fixed and approved by the ERC, shall be imposed on all electricity end-users x x x x

10. SEC. 35. Royalties, Returns and Tax Rates for Indigenous Energy Resources. x x x

To ensure lower rates for end-users, the ERC shall forthwith reduce the rates of power from all indigenous sources of energy.

11. SEC. 36. Unbundling of Rates and Functions. x x x

each distribution utility shall file its revised rates for the approval by the ERC. x x x x

12. SEC. 40. Enhancement of Technical Competence. The ERC shall establish rigorous training programs for its staff for the purpose of enhancing the technical competence of the ERC in the following areas: evaluation of technical performance and monitoring of compliance with service and performance standards, performance-based rate-setting reform, environmental standards and such other areas as will enable the ERC to adequately perform its duties and functions.

13. SEC. 41. Promotion of Consumer Interests. The ERC shall handle consumer complaints and ensure the adequate promotion of consumer interests.

14. SEC. 45. Cross Ownership, Market Power Abuse and Anti-Competitive Behavior. No participant in the electricity industry may engage in any anti-competitive behavior including, but not limited to, crosssubsidization, price or market manipulation, or other unfair trade practices detrimental to the encouragement and protection of contestable markets.

xxxx

(c) x x x The ERC shall, within one (1) year from the effectivity of this Act, promulgate rules and regulations to promote competition, encourage market development and customer choice and discourage/penalize abuse of market power, cartelization and any anticompetitive or discriminatory behavior, in order to further the intent of this Act and protect the public interest. Such rules and regulations shall define the following:

(a) the relevant markets for purposes of establishing abuse or misuse of monopoly or market position;

(b) areas of isolated grids; and

(c) the periodic reportorial requirements of electric power industry participants as may be necessary to enforce the provisions of this Section.

The ERC shall, motu proprio, monitor and penalize any market power abuse or anticompetitive or discriminatory act or behavior by any participant in the electric power industry.

15. SEC. 51. Powers. The PSALM Corp. shall, in the performance of its functions and for the attainment of its objective, have the following powers: x x x

(e) To liquidate the NPC stranded contract costs utilizing proceeds from sales and other property contributed to it, including the proceeds from the universal charge;

xxxx

16. SEC. 60. Debts of Electric Cooperatives. x x x The ERC shall ensure a reduction in the rates of electric cooperatives commensurate with the resulting savings due to the removal of the amortization payments of their loans. x x x x

17. SEC. 62. Joint Congressional Power Commission. x x x

x x x the Power Commission is hereby empowered to require the DOE, ERC, NEA, TRANSCO, generation companies, distribution utilities, suppliers and other electric power industry participants to submit reports and all pertinent data and information relating to the performance of their respective functions in the industry. xxx

xxxx

18. SEC. 65. Environmental Protection. Participants in the generation, distribution and transmission sub-sectors of the industry shall comply with all environmental laws, rules, regulations and standards promulgated by the Department of Environment and Natural Resources including, in appropriate cases, the establishment of an environmental guarantee fund.

19. SEC. 67. NPC Offer of Transition Supply Contracts. Within six (6) months from the effectivity of this Act, NPC shall file with the ERC for its approval a transition supply contract duly negotiated with the distribution utilities containing the terms and conditions of supply and a corresponding schedule of rates, consistent with the provisions hereof, including adjustments and/or indexation formulas which shall apply to the term of such contracts.

xxxx

20. SEC. 69. Renegotiation of Power Purchase and Energy Conversion Agreements between Government Entities. Within three (3) months from the effectivity of this Act, all power purchase and energy conversion agreements between the PNOC-Energy Development Corporation (PNOC-EDC) and NPC, including but not limited to the Palimpinon, Tongonan and Mt. Apo Geothermal complexes, shall be reviewed by the ERC and the terms thereof amended to remove any hidden costs or extraordinary mark-ups in the cost of power or steam above their true costs. All amended contracts shall be submitted to the Joint Congressional Power Commission for approval. The ERC shall ensure that all savings realized from the reduction of said mark-ups shall be passed on to all end-users.

After comparing the functions of the ERB and the ERC, we find that the ERC indeed assumed the functions of the ERB. However, the overlap in the functions of the ERB and of the ERC does not mean that there is no valid abolition of the ERB. The ERC has new and expanded functions which are intended to meet the specific needs of a deregulated power industry. Indeed, National Land Titles and Deeds Registration Administration v. Civil Service Commission stated that:

[I]f the newly created office has substantially new, different or additional functions, duties or powers, so that it may be said in fact to create an office different from the one abolished, even though it embraces all or some of the duties of the old office it will be considered as an abolition of one office and the creation of a new or different one. The same is true if one office is abolished and its duties, for reasons of economy are given to an existing officer or office.[13]

KERB argues that RA 9136 did not abolish the ERB nor did it alter its essential character as an economic regulator of the electric power industry. x x x RA 9136 rather changed merely ERBs name and title to that of the ERC even as it expanded its functions and objectives to keep pace with the times. To uphold KERBs argument regarding the invalidity of the ERBs abolition is to ignore the developments in the history of energy regulation.

The regulation of public services started way back in 1902 with the enactment of Act No. 520 which created the Coastwise Rate Commission. In 1906, Act No. 1507 was passed creating the Supervising Railway Expert. The following year, Act No. 1779 was enacted creating the Board of Rate Regulation. Then, Act No 2307, which was patterned after the Public Service Law of the State of New Jersey, was approved by the Philippine Commission in 1914, creating the Board of Public Utility Commissioners, composed of three members, which absorbed all the functions of the Coastwise Rate Commission, the Supervising Railway Expert, and the Board of Rate Regulation.

Thereafter, several laws were enacted on public utility regulation. On November 7, 1936, Commonwealth Act No. 146, otherwise known as the Public Service Law, was enacted by the National

Assembly. The Public Service Commission (PSC) had jurisdiction, supervision, and control over all public services, including the electric power service.

After almost four decades, significant developments in the energy sector changed the landscape of economic regulation in the country.

April 30, 1971 R.A. No. 6173 was passed creating the Oil Industry Commission (OIC), which was tasked to regulate the oil industry and to ensure the adequate supply of petroleum products at reasonable prices.

September 24, 1972 then President Ferdinand E. Marcos issued Presidential Decree No. 1 which ordered the preparation of the Integrated Reorganization Plan by the Commission on Reorganization. The Plan abolished the PSC and transferred the regulatory and adjudicatory functions pertaining to the electricity industry and water resources to then Board of Power and Waterworks (BOPW).

October 6, 1977 the government created the Department of Energy (DOE) and consequently abolished the OIC, which was replaced by the creation of the Board of Energy (BOE) through Presidential Decree No. 1206. The BOE, in addition, assumed the powers and functions of the BOPW over the electric power industry.

May 8, 1987 the BOE was reconstituted into the Energy Regulatory Board (ERB), pursuant to Executive Order No. 172 issued by then President Corazon C. Aquino as part of her governments reorganization program. The rationale was to consolidate and entrust into a single body all the regulatory and adjudicatory functions pertaining to the energy sector. Thus, the power to regulate the power rates and services of private electric utilities was transferred to the ERB.

December 28, 1992 Republic Act No. 7638 signed, where the power to fix the rates of the National Power Corporation (NPC) and the rural electric cooperatives (RECs) was passed on to the ERB. Non-pricing functions of the ERB with respect to the petroleum industry were transferred to the DOE, i.e., regulating the capacities of new refineries.

February 10, 1998 enactment of Republic Act 8479: Downstream Oil Industry Deregulation Act of 1998, which prescribed a five-month transition period, before full deregulation of the oil industry,

during which ERB would implement an automatic pricing mechanism (APM) for petroleum products every month.

June 12, 1998 the Philippine oil industry was fully deregulated, thus, ERBs focus of responsibility centered on the electric industry.

June 8, 2001 enactment of Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act (EPIRA) of 2001. The Act abolished the ERB and created in its place the Energy Regulatory Commission (ERC) which is a purely independent regulatory body performing the combined quasi-judicial, quasi-legislative and administrative functions in the electric industry.[14]

Throughout the years, the scope of the regulation has gradually narrowed from that of public services in 1902 to the electricity industry and water resources in 1972 to the electric power industry and oil industry in 1977 to the electric industry alone in 1998. The ERC retains the ERBs traditional rate and service regulation functions. However, the ERC now also has to promote competitive operations in the electricity market. RA 9136 expanded the ERCs concerns to encompass both the consumers and the utility investors. Thus, the EPIRA provides a framework for the restructuring of the industry, including the privatization of the assets of the National Power Corporation (NPC), the transition to a competitive structure, and the delineation of the roles of various government agencies and the private entities. The law ordains the division of the industry into four (4) distinct sectors, namely: generation, transmission, distribution and supply. Corollarily, the NPC generating plants have to privatized and its transmission business spun off and privatized thereafter.

In tandem with the restructuring of the industry is the establishment of a strong and purely independent regulatory body. Thus, the law created the ERC in place of the Energy Regulatory Board (ERB).

To achieve its aforestated goal, the law has reconfigured the organization of the regulatory body. x x x[15]

There is no question in our minds that, because of the expansion of the ERCs functions and concerns, there was a valid abolition of the ERB. Thus, there is no merit to KERBs allegation that there is an impairment of the security of tenure of the ERBs employees.

WHEREFORE, we DISMISS the petition. No costs.

SO ORDERED.

SECOND DIVISION

[G.R. No. 155336. November 25, 2004]

COMMISSION ON HUMAN RIGHTS EMPLOYEES ASSOCIATION (CHREA) Represented by its President, MARCIAL A. SANCHEZ, JR., petitioner, vs.COMMISSION ON HUMAN RIGHTS, respondent. DECISION
CHICO-NAZARIO, J.:

Can the Commission on Human Rights lawfully implement an upgrading and reclassification of personnel positions without the prior approval of the Department of Budget and Management? Before this Court is a petition for review filed by petitioner Commission on Human Rights Employees Association (CHREA) challenging the Decision [1] dated 29 November 2001 of the Court of Appeals in CA-G.R. SP No. 59678 affirming the Resolutions[2] dated 16 December 1999 and 09 June 2000 of the Civil Service Commission (CSC), which sustained the validity of the upgrading and reclassification of certain personnel positions in the Commission on Human Rights (CHR) despite the disapproval thereof by the Department of Budget and Management (DBM). Also assailed is the resolution dated 11 September 2002 of the Court of Appeals denying the motion for reconsideration filed by petitioner. The antecedent facts which spawned the present controversy are as follows: On 14 February 1998, Congress passed Republic Act No. 8522, otherwise known as the General Appropriations Act of 1998. It provided for Special Provisions Applicable to All Constitutional Offices Enjoying Fiscal Autonomy. The last portion of Article XXXIII covers the appropriations of the CHR. These special provisions state:

1. Organizational Structure. Any provision of law to the contrary notwithstanding and within the limits of their respective appropriations as authorized in this Act, the Constitutional Commissions and Offices enjoying fiscal autonomy are authorized to formulate and implement the organizational structures of their respective offices, to fix and determine the salaries, allowances, and other benefits of their personnel, and whenever public interest so requires, make adjustments in their personal services itemization including, but not limited to, the transfer of item or creation of new positions in their respective offices: PROVIDED, That officers and employees whose positions are affected by such reorganization or adjustments shall be granted retirement gratuities and separation pay in accordance with existing laws, which shall be payable from any unexpended balance of, orsavings in the appropriations of their respective offices: PROVIDED, FURTHER, That the implementation hereof shall be in accordance with salary rates, allowances and other benefits authorized under compensation standardization laws. 2. Use of Savings. The Constitutional Commissions and Offices enjoying fiscal autonomy are hereby authorized to use savings in their respective appropriations for: (a) printing and/or publication of decisions, resolutions, and training information materials; (b) repair, maintenance and improvement of central and regional offices, facilities and equipment; (c) purchase of books, journals, periodicals and equipment; (d) necessary expenses for the employment of temporary, contractual and casual employees; (e) payment of extraordinary and miscellaneous expenses, commutable representation and transportation allowances, and fringe benefits for their officials and employees as may be authorized by law; and (f) other official purposes, subject to accounting and auditing rules and regulations. (Emphases supplied)
On the strength of these special provisions, the CHR, through its then Chairperson Aurora P. Navarette-Recia and Commissioners Nasser A. Marohomsalic, Mercedes V. Contreras, Vicente P. Sibulo, and Jorge R. Coquia, promulgated Resolution No. A98047 on 04 September 1998, adopting an upgrading and reclassification scheme among selected positions in the Commission, to wit:

WHEREAS, the General Appropriations Act, FY 1998, R.A. No. 8522 has provided special provisions applicable to all Constitutional Offices enjoying Fiscal Autonomy, particularly on organizational structures and authorizes the same to formulate and implement the organizational structures of their respective offices to fix and determine the salaries, allowances and other benefits of their personnel and whenever public interest so requires, make adjustments in the personnel services itemization including, but not limited to, the transfer of item or creation of new positions in their respective offices: PROVIDED, That officers and employees whose positions are affected by such reorganization or adjustments shall be granted retirement gratuities and

separation pay in accordance with existing laws, which shall be payable from any unexpanded balance of, or savings in the appropriations of their respective offices; WHEREAS, the Commission on Human Rights is a member of the Constitutional Fiscal Autonomy Group (CFAG) and on July 24, 1998, CFAG passed an approved Joint Resolution No. 49 adopting internal rules implementing the special provisions heretoforth mentioned; NOW THEREFORE, the Commission by virtue of its fiscal autonomy hereby approves and authorizes the upgrading and augmentation of the commensurate amount generated from savings under Personal Services to support the implementation of this resolution effective Calendar Year 1998; Let the Human Resources Development Division (HRDD) prepare the necessary Notice of Salary Adjustment and other appropriate documents to implement this resolution; . . . .[3] (Emphasis supplied)
Annexed to said resolution is the proposed creation of ten additional plantilla positions, namely: one Director IV position, with Salary Grade 28 for the Caraga Regional Office, four Security Officer II with Salary Grade 15, and five Process Servers, with Salary Grade 5 under the Office of the Commissioners. [4] On 19 October 1998, CHR issued Resolution No. A98-055[5] providing for the upgrading or raising of salary grades of the following positions in the Commission: Number of Positions 12 Position Title From Attorney VI (In the Regional Field Offices) Director III Financial & Management Officer II Budget Officer III Accountant To Director IV From 26 To 28 P229,104.00 Salary Grade Total Salary Requirements

4 1

Director IV Director IV

27 24

28 28

38,928.00 36,744.00

Budget Officer IV Chief

18

24

51,756.00

18

24

51,756.00

III 1 1 Cashier III Information Officer V

Accountant Cashier V Director IV 18 24 24 28 51,756.00 36,744.00[6]

It, likewise, provided for the creation and upgrading of the following positions:

A. Creation
Number of Positions 4 Position Title Salary Grade Total Salary Requirements 684,780.00

Security Officer II (Coterminous)

15

B. Upgrading
Number of Positions 1 2 Position Title From Attorney V Security Officer I To Director IV Security Officer II From 25 11 Salary Grade To 28 15 Total Salary Requirements P28,092.00 57,456.00

-----------------Total 3 P 85,548.00[7]

To support the implementation of such scheme, the CHR, in the same resolution, authorized the augmentation of a commensurate amount generated from savings under Personnel Services. By virtue of Resolution No. A98-062 dated 17 November 1998, the CHR collapsed the vacant positions in the body to provide additional source of funding for said staffing modification. Among the positions collapsed were: one Attorney III, four Attorney IV, one Chemist III, three Special Investigator I, one Clerk III, and one Accounting Clerk II.[8] The CHR forwarded said staffing modification and upgrading scheme to the DBM with a request for its approval, but the then DBM secretary Benjamin Diokno denied the request on the following justification:

 Based on the evaluations made the request was not favorably considered as it effectively involved the elevation of the field units from divisions to services. The present proposal seeks further to upgrade the twelve (12) positions of Attorney VI, SG-26 to Director IV, SG-28. This would elevate the field units to a bureau or regional office, a level even higher than the one previously denied. The request to upgrade the three (3) positions of Director III, SG-27 to Director IV, SG-28, in the Central Office in effect would elevate the services to Office and change the context from support to substantive without actual change in functions. In the absence of a specific provision of law which may be used as a legal basis to elevate the level of divisions to a bureau or regional office, and the services to offices, we reiterate our previous stand denying the upgrading of the twelve (12) positions of Attorney VI, SG-26 to Director III, SG-27 or Director IV, SG-28, in the Field Operations Office (FOO) and three (3) Director III, SG-27 to Director IV, SG-28 in the Central Office. As represented, President Ramos then issued a Memorandum to the DBM Secretary dated 10 December 1997, directing the latter to increase the number of Plantilla positions in the CHR both Central and Regional Offices to implement the Philippine Decade Plan on Human Rights Education, the Philippine Human Rights Plan and Barangay Rights Actions Center in accordance with existing laws. (Emphasis in the original) Pursuant to Section 78 of the General Provisions of the General Appropriations Act (GAA) FY 1998, no organizational unit or changes in key positions shall be authorized unless provided by law or directed by the President, thus, the creation of a Finance Management Office and a Public Affairs Office cannot be given favorable recommendation. Moreover, as provided under Section 2 of RA No. 6758, otherwise known as the Compensation Standardization Law, the Department of Budget and Management is directed to establish and administer a unified compensation and position classification system in the government. The Supreme Court ruled in the case of Victorina Cruz vs. Court of Appeals, G.R. No. 119155, dated January 30, 1996, that this Department has the sole power and discretion to administer the compensation and position classification system of the National Government. Being a member of the fiscal autonomy group does not vest the agency with the authority to reclassify, upgrade, and create positions without approval of the DBM. While the members of the Group are authorized to formulate and implement the

organizational structures of their respective offices and determine the compensation of their personnel, such authority is not absolute and must be exercised within the parameters of the Unified Position Classification and Compensation System established under RA 6758 more popularly known as the Compensation Standardization Law. We therefore reiterate our previous stand on the matter.[9](Emphases supplied)
In light of the DBMs disapproval of the proposed personnel modification scheme, the CSC-National Capital Region Office, through a memorandum dated 29 March 1999, recommended to the CSC-Central Office that the subject appointments be rejected owing to the DBMs disapproval of the plantilla reclassification. Meanwhile, the officers of petitioner CHREA, in representation of the rank and file employees of the CHR, requested the CSC-Central Office to affirm the recommendation of the CSC-Regional Office. CHREA stood its ground in saying that the DBM is the only agency with appropriate authority mandated by law to evaluate and approve matters of reclassification and upgrading, as well as creation of positions. The CSC-Central Office denied CHREAs request in a Resolution dated 16 December 1999, and reversed the recommendation of the CSC-Regional Office that the upgrading scheme be censured. The decretal portion of which reads:

WHEREFORE, the request of Ronnie N. Rosero, Hubert V. Ruiz, Flordeliza A. Briones, George Q. Dumlao [and], Corazon A. Santos-Tiu, is hereby denied.[10]
CHREA filed a motion for reconsideration, but the CSC-Central Office denied the same on 09 June 2000. Given the cacophony of judgments between the DBM and the CSC, petitioner CHREA elevated the matter to the Court of Appeals. The Court of Appeals affirmed the pronouncement of the CSC-Central Office and upheld the validity of the upgrading, retitling, and reclassification scheme in the CHR on the justification that such action is within the ambit of CHRs fiscal autonomy. The fallo of the Court of Appeals decision provides:

IN VIEW OF ALL THE FOREGOING, the instant petition is ordered DISMISSED and the questioned Civil Service Commission Resolution No. 99-2800 dated December 16, 1999 as well as No. 001354 dated June 9, 2000, are hereby AFFIRMED. No cost.[11]
Unperturbed, petitioner filed this petition in this Court contending that:
A.

THE COURT OF APPEALS GRAVELY ERRED WHEN IT HELD THAT UNDER THE 1987 CONSTITUTION, THE COMMISSION ON HUMAN RIGHTS ENJOYS FISCAL AUTONOMY.
B.

THE COURT OF APPEALS SERIOUSLY ERRED IN UPHOLDING THE CONSTRUCTION OF THE COMMISSION ON HUMAN RIGHTS OF REPUBLIC ACT NO. 8522 (THE GENERAL APPROPRIATIONS ACT FOR THE FISCAL YEAR 1998) DESPITE ITS BEING IN SHARP CONFLICT WITH THE 1987 CONSTITUTION AND THE STATUTE ITSELF.
C.

THE COURT OF APPEALS SERIOUSLY AND GRAVELY ERRED IN AFFIRMING THE VALIDITY OF THE CIVIL SERVICE COMMISSION RESOLUTION NOS. 992800 AND 001354 AS WELL AS THAT OF THE OPINION OF THE DEPARTMENT OF JUSTICE IN STATING THAT THE COMMISSION ON HUMAN RIGHTS ENJOYS FISCAL AUTONOMY UNDER THE 1987 CONSTITUTION AND THAT THIS FISCAL AUTONOMY INCLUDES THE ACTION TAKEN BY IT IN COLLAPSING, UPGRADING AND RECLASSIFICATION OF POSITIONS THEREIN.[12]
The central question we must answer in order to resolve this case is: Can the Commission on Human Rights validly implement an upgrading, reclassification, creation, and collapsing of plantillapositions in the Commission without the prior approval of the Department of Budget and Management? Petitioner CHREA grouses that the Court of Appeals and the CSC-Central Office both erred in sanctioning the CHRs alleged blanket authority to upgrade, reclassify, and create positions inasmuch as the approval of the DBM relative to such scheme is still indispensable. Petitioner bewails that the CSC and the Court of Appeals erroneously assumed that CHR enjoys fiscal autonomy insofar as financial matters are concerned, particularly with regard to the upgrading and reclassification of positions therein. Respondent CHR sharply retorts that petitioner has no locus standi considering that there exists no official written record in the Commission recognizing petitioner as a bona fide organization of its employees nor is there anything in the records to show that its president, Marcial A. Sanchez, Jr., has the authority to sue the CHR. The CHR contends that it has the authority to cause the upgrading, reclassification, plantilla creation, and collapsing scheme sans the approval of the DBM because it enjoys fiscal autonomy. After a thorough consideration of the arguments of both parties and an assiduous scrutiny of the records in the case at bar, it is the Courts opinion that the present petition is imbued with merit.

On petitioners personality to bring this suit, we held in a multitude of cases that a proper party is one who has sustained or is in immediate danger of sustaining an injury as a result of the act complained of.[13] Here, petitioner, which consists of rank and file employees of respondent CHR, protests that the upgrading and collapsing of positions benefited only a select few in the upper level positions in the Commission resulting to the demoralization of the rank and file employees. This sufficiently meets the injury test. Indeed, the CHRs upgrading scheme, if found to be valid, potentially entails eating up the Commissions savings or that portion of its budgetary pie otherwise allocated for Personnel Services, from which the benefits of the employees, including those in the rank and file, are derived. Further, the personality of petitioner to file this case was recognized by the CSC when it took cognizance of the CHREAs request to affirm the recommendation of the CSC-National Capital Region Office. CHREAs personality to bring the suit was a nonissue in the Court of Appeals when it passed upon the merits of this case. Thus, neither should our hands be tied by this technical concern. Indeed, it is settled jurisprudence that an issue that was neither raised in the complaint nor in the court below cannot be raised for the first time on appeal, as to do so would be offensive to the basic rules of fair play, justice, and due process.[14] We now delve into the main issue of whether or not the approval by the DBM is a condition precedent to the enactment of an upgrading, reclassification, creation and collapsing of plantilla positions in the CHR. Germane to our discussion is Rep. Act No. 6758, An Act Prescribing a Revised Compensation and Position Classification System in the Government and For Other Purposes, or the Salary Standardization Law, dated 01 July 1989, which provides in Sections 2 and 4 thereof that it is the DBM that shall establish and administer a unified Compensation and Position Classification System. Thus:

SEC. 2. Statement of Policy. -- It is hereby declared the policy of the State to provide equal pay for substantially equal work and to base differences in pay upon substantive differences in duties and responsibilities, and qualification requirements of the positions. In determining rates of pay, due regard shall be given to, among others, prevailing rates in the private sector for comparable work. For this purpose, the Department of Budget and Management (DBM) is hereby directed to establish and administer a unified Compensation and Position Classification System, hereinafter referred to as the System as provided for in Presidential Decree No. 985, as amended, that shall be applied for all government entities, as mandated by the Constitution. (Emphasis supplied.) SEC. 4. Coverage. The Compensation and Position Classification System herein provided shall apply to all positions, appointive or elective, on full or part-time basis, now existing or hereafter created in the government, including government-owned or controlled corporations and government financial institutions.

The term government refers to the Executive, the Legislative and the Judicial Branches and the Constitutional Commissions and shall include all, but shall not be limited to, departments, bureaus, offices, boards, commissions, courts, tribunals, councils, authorities, administrations, centers, institutes, state colleges and universities, local government units, and the armed forces. The term governmentowned or controlled corporations and financial institutions shall include all corporations and financial institutions owned or controlled by the National Government, whether such corporations and financial institutions perform governmental or proprietary functions. (Emphasis supplied.)
The disputation of the Court of Appeals that the CHR is exempt from the long arm of the Salary Standardization Law is flawed considering that the coverage thereof, as defined above, encompasses the entire gamut of government offices, sans qualification. This power to administer is not purely ministerial in character as erroneously held by the Court of Appeals. The word to administer means to control or regulate in behalf of others; to direct or superintend the execution, application or conduct of; and to manage or conduct public affairs, as to administer the government of the state.[15] The regulatory power of the DBM on matters of compensation is encrypted not only in law, but in jurisprudence as well. In the recent case of Philippine Retirement Authority (PRA) v. Jesusito L. Buag,[16] this Court, speaking through Mr. Justice Reynato Puno, ruled that compensation, allowances, and other benefits received by PRA officials and employees without the requisite approval or authority of the DBM are unauthorized and irregular. In the words of the Court

Despite the power granted to the Board of Directors of PRA to establish and fix a compensation and benefits scheme for its employees, the same is subject to the review of the Department of Budget and Management. However, in view of the express powers granted to PRA under its charter, the extent of the review authority of the Department of Budget and Management is limited. As stated in Intia, the task of the Department of Budget and Management is simply to review the compensation and benefits plan of the government agency or entity concerned and determine if the same complies with the prescribed policies and guidelines issued in this regard. The role of the Department of Budget and Management is supervisorial in nature, its main duty being to ascertain that the proposed compensation, benefits and other incentives to be given to PRA officials and employees adhere to the policies and guidelines issued in accordance with applicable laws.
In Victorina Cruz v. Court of Appeals,[17] we held that the DBM has the sole power and discretion to administer the compensation and position classification system of the national government.

In Intia, Jr. v. Commission on Audit,[18] the Court held that although the charter[19] of the Philippine Postal Corporation (PPC) grants it the power to fix the compensation and benefits of its employees and exempts PPC from the coverage of the rules and regulations of the Compensation and Position Classification Office, by virtue of Section 6 of P.D. No. 1597, the compensation system established by the PPC is, nonetheless, subject to the review of the DBM. This Court intoned:

It should be emphasized that the review by the DBM of any PPC resolution affecting the compensation structure of its personnel should not be interpreted to mean that the DBM can dictate upon the PPC Board of Directors and deprive the latter of its discretion on the matter. Rather, the DBMs function is merely to ensure that the action taken by the Board of Directors complies with the requirements of the law, specifically, that PPCs compensation system conforms as closely as possible with that provided for under R.A. No. 6758. (Emphasis supplied.)
As measured by the foregoing legal and jurisprudential yardsticks, the imprimatur of the DBM must first be sought prior to implementation of any reclassification or upgrading of positions in government. This is consonant to the mandate of the DBM under the Revised Administrative Code of 1987, Section 3, Chapter 1, Title XVII, to wit:

SEC. 3. Powers and Functions. The Department of Budget and Management shall assist the President in the preparation of a national resources and expenditures budget, preparation, execution and control of the National Budget, preparation and maintenance of accounting systems essential to the budgetary process, achievement of more economy and efficiency in the management of government operations, administration of compensation and position classification systems, assessment of organizational effectiveness and review and evaluation of legislative proposals having budgetary or organizational implications. (Emphasis supplied.)
Irrefragably, it is within the turf of the DBM Secretary to disallow the upgrading, reclassification, and creation of additional plantilla positions in the CHR based on its finding that such scheme lacks legal justification. Notably, the CHR itself recognizes the authority of the DBM to deny or approve the proposed reclassification of positions as evidenced by its three letters to the DBM requesting approval thereof. As such, it is now estopped from now claiming that the nod of approval it has previously sought from the DBM is a superfluity. The Court of Appeals incorrectly relied on the pronouncement of the CSC-Central Office that the CHR is a constitutional commission, and as such enjoys fiscal autonomy.[20] Palpably, the Court of Appeals Decision was based on the mistaken premise that the CHR belongs to the species of constitutional commissions. But, Article IX of the Constitution states in no uncertain terms that only the CSC, the Commission on

Elections, and the Commission on Audit shall be tagged as Constitutional Commissions with the appurtenant right to fiscal autonomy. Thus:

Sec. 1. The Constitutional Commissions, which shall be independent, are the Civil Service Commission, the Commission on Elections, and the Commission on Audit. Sec. 5. The Commission shall enjoy fiscal autonomy. Their approved annual appropriations shall be automatically and regularly released.
Along the same vein, the Administrative Code, in Chapter 5, Sections 24 and 26 of Book II on Distribution of Powers of Government, the constitutional commissions shall include only the Civil Service Commission, the Commission on Elections, and the Commission on Audit, which are granted independence and fiscal autonomy. In contrast, Chapter 5, Section 29 thereof, is silent on the grant of similar powers to the other bodies including the CHR. Thus:

SEC. 24. Constitutional Commissions. The Constitutional Commissions, which shall be independent, are the Civil Service Commission, the Commission on Elections, and the Commission on Audit. SEC. 26. Fiscal Autonomy. The Constitutional Commissions shall enjoy fiscal autonomy. The approved annual appropriations shall be automatically and regularly released. SEC. 29. Other Bodies. There shall be in accordance with the Constitution, an Office of the Ombudsman, a Commission on Human Rights, and independent central monetary authority, and a national police commission. Likewise, as provided in the Constitution, Congress may establish an independent economic and planning agency. (Emphasis ours.)
From the 1987 Constitution and the Administrative Code, it is abundantly clear that the CHR is not among the class of Constitutional Commissions. As expressed in the oft-repeated maxim expressio unius est exclusio alterius, the express mention of one person, thing, act or consequence excludes all others. Stated otherwise, expressium facit cessare tacitum what is expressed puts an end to what is implied.[21] Nor is there any legal basis to support the contention that the CHR enjoys fiscal autonomy. In essence, fiscal autonomy entails freedom from outside control and limitations, other than those provided by law. It is the freedom to allocate and utilize funds granted by law, in accordance with law, and pursuant to the wisdom and dispatch its needs may require from time to time.[22] In Blaquera v. Alcala andBengzon v. Drilon,[23] it is understood that it is only the Judiciary, the Civil Service Commission, the Commission on Audit, the Commission on Elections, and the Office of the Ombudsman, which enjoy fiscal autonomy. Thus, in Bengzon,[24] we explained:

As envisioned in the Constitution, the fiscal autonomy enjoyed by the Judiciary, the Civil Service Commission, the Commission on Audit, the Commission on Elections, and the Office of the Ombudsman contemplates a guarantee of full flexibility to allocate and utilize their resources with the wisdom and dispatch that their needs require. It recognizes the power and authority to levy, assess and collect fees, fix rates of compensation not exceeding the highest rates authorized by law for compensation and pay plans of the government and allocate and disburse such sums as may be provided by law or prescribed by them in the course of the discharge of their functions. ... The Judiciary, the Constitutional Commissions, and the Ombudsman must have the independence and flexibility needed in the discharge of their constitutional duties. The imposition of restrictions and constraints on the manner the independent constitutional offices allocate and utilize the funds appropriated for their operations is anathema to fiscal autonomy and violative not only of the express mandate of the Constitution but especially as regards the Supreme Court, of the independence and separation of powers upon which the entire fabric of our constitutional system is based. In the interest of comity and cooperation, the Supreme Court, [the] Constitutional Commissions, and the Ombudsman have so far limited their objections to constant reminders. We now agree with the petitioners that this grant of autonomy should cease to be a meaningless provision. (Emphasis supplied.)
Neither does the fact that the CHR was admitted as a member by the Constitutional Fiscal Autonomy Group (CFAG) ipso facto clothed it with fiscal autonomy. Fiscal autonomy is a constitutional grant, not a tag obtainable by membership. We note with interest that the special provision under Rep. Act No. 8522, while cited under the heading of the CHR, did not specifically mention CHR as among those offices to which the special provision to formulate and implement organizational structures apply, but merely states its coverage to include Constitutional Commissions and Offices enjoying fiscal autonomy. In contrast, the Special Provision Applicable to the Judiciary under Article XXVIII of the General Appropriations Act of 1998 specifically mentions that such special provision applies to the judiciary and had categorically authorized the Chief Justice of the Supreme Court to formulate and implement the organizational structure of the Judiciary, to wit:

1. Organizational Structure. Any provision of law to the contrary notwithstanding and within the limits of their respective appropriations authorized in this Act, the Chief Justice of the Supreme Court is authorized to formulate and implement organizational structure of the Judiciary, to fix and determine the salaries, allowances, and other benefits of their personnel, and whenever public interest so requires, make adjustments in the personal services itemization including, but not limited to, the

transfer of item or creation of new positions in the Judiciary; PROVIDED, That officers and employees whose positions are affected by such reorganization or adjustments shall be granted retirement gratuities and separation pay in accordance with existing law, which shall be payable from any unexpended balance of, or savings in the appropriations of their respective offices: PROVIDED, FURTHER, That the implementation hereof shall be in accordance with salary rates, allowances and other benefits authorized under compensation standardization laws. (Emphasis supplied.)
All told, the CHR, although admittedly a constitutional creation is, nonetheless, not included in the genus of offices accorded fiscal autonomy by constitutional or legislative fiat. Even assuming en arguendo that the CHR enjoys fiscal autonomy, we share the stance of the DBM that the grant of fiscal autonomy notwithstanding, all government offices must, all the same, kowtow to the Salary Standardization Law. We are of the same mind with the DBM on its standpoint, thus-

Being a member of the fiscal autonomy group does not vest the agency with the authority to reclassify, upgrade, and create positions without approval of the DBM. While the members of the Group are authorized to formulate and implement the organizational structures of their respective offices and determine the compensation of their personnel, such authority is not absolute and must be exercised within the parameters of the Unified Position Classification and Compensation System established under RA 6758 more popularly known as the Compensation Standardization Law.[25] (Emphasis supplied.)
The most lucid argument against the stand of respondent, however, is the provision of Rep. Act No. 8522 that the implementation hereof shall be in accordance with salary rates, allowances and other benefits authorized under compensation standardization laws.[26] Indeed, the law upon which respondent heavily anchors its case upon has expressly provided that any form of adjustment in the organizational structure must be within the parameters of the Salary Standardization Law. The Salary Standardization Law has gained impetus in addressing one of the basic causes of discontent of many civil servants.[27] For this purpose, Congress has delegated to the DBM the power to administer the Salary Standardization Law and to ensure that the spirit behind it is observed. This power is part of the system of checks and balances or system of restraints in our government. The DBMs exercise of such authority is not in itself an arrogation inasmuch as it is pursuant to the paramount law of the land, the Salary Standardization Law and the Administrative Code. In line with its role to breathe life into the policy behind the Salary Standardization Law of providing equal pay for substantially equal work and to base differences in pay upon substantive differences in duties and responsibilities, and qualification

requirements of the positions, the DBM, in the case under review, made a determination, after a thorough evaluation, that the reclassification and upgrading scheme proposed by the CHR lacks legal rationalization. The DBM expounded that Section 78 of the general provisions of the General Appropriations Act FY 1998, which the CHR heavily relies upon to justify its reclassification scheme, explicitly provides that no organizational unit or changes in key positions shall be authorized unless provided by law or directed by the President. Here, the DBM discerned that there is no law authorizing the creation of a Finance Management Office and a Public Affairs Office in the CHR. Anent CHRs proposal to upgrade twelve positions of Attorney VI, SG-26 to Director IV, SG-28, and four positions of Director III, SG-27 to Director IV, SG-28, in the Central Office, the DBM denied the same as this would change the context from support to substantive without actual change in functions. This view of the DBM, as the laws designated body to implement and administer a unified compensation system, is beyond cavil. The interpretation of an administrative government agency, which is tasked to implement a statute is accorded great respect and ordinarily controls the construction of the courts. In Energy Regulatory Board v. Court of Appeals,[28] we echoed the basic rule that the courts will not interfere in matters which are addressed to the sound discretion of government agencies entrusted with the regulation of activities coming under the special technical knowledge and training of such agencies. To be sure, considering his expertise on matters affecting the nations coffers, the Secretary of the DBM, as the Presidents alter ego, knows from where he speaks inasmuch as he has the front seat view of the adverse effects of an unwarranted upgrading or creation of positions in the CHR in particular and in the entire government in general. WHEREFORE, the petition is GRANTED, the Decision dated 29 November 2001 of the Court of Appeals in CA-G.R. SP No. 59678 and its Resolution dated 11 September 2002 are hereby REVERSED and SET ASIDE. The ruling dated 29 March 1999 of the Civil Service Commision-National Capital Region is REINSTATED. The Commission on Human Rights Resolution No. A98-047 dated 04 September 1998, Resolution No. A98055 dated 19 October 1998 and Resolution No. A98-062 dated 17 November 1998 without the approval of the Department of Budget and Management are disallowed. No pronouncement as to costs. SO ORDERED. Puno, Acting C.J., Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.

REORGANIZATION
EN BANC
ANAK MINDANAO PARTYLIST GROUP, as represented by Rep. Mujiv S. Hataman, and MAMALO DESCENDANTS ORGANIZATION, INC., as represented by its Chairman Romy Pardi, Petitioners, G.R. No. 166052 Present: PUNO, C.J., QUISUMBING, YNARES-SANTIAGO, SANDOVAL-GUTIERREZ, CARPIO, AUSTRIA-MARTINEZ, CORONA, CARPIO MORALES, AZCUNA, TINGA, CHICO-NAZARIO, GARCIA, VELASCO, JR., NACHURA, and REYES, JJ.

- versus -

THE EXECUTIVE SECRETARY, THE HON. EDUARDO R. ERMITA, and Promulgated: THE SECRETARY OF AGRARIAN/LAND REFORM, August 29, 2007 THE HON. RENE C. VILLA, Respondents. x----------------------------------------------------------------------------------------x

DECISION

CARPIO MORALES, J.: Petitioners Anak Mindanao Party-List Group (AMIN) and Mamalo Descendants Organization, Inc. (MDOI) assail the constitutionality of Executive Order (E.O.) Nos. 364 and 379, both issued in 2004, via the present Petition for Certiorari and Prohibition with prayer for injunctive relief. E.O. No. 364, which on September 27, 2004, reads: President Gloria Macapagal-Arroyo issued

EXECUTIVE ORDER NO. 364 TRANSFORMING THE DEPARTMENT OF AGRARIAN REFORM INTO THE DEPARTMENT OF LAND REFORM WHEREAS, one of the five reform packages of the Arroyo administration is Social Justice and Basic [N]eeds; WHEREAS, one of the five anti-poverty measures for social justice is asset reform; WHEREAS, asset reforms covers [sic] agrarian reform, urban land reform, and ancestral domain reform; WHEREAS, urban land reform is a concern of the Presidential Commission [for] the Urban Poor (PCUP) and ancestral domain reform is a concern of the National Commission on Indigenous Peoples (NCIP); WHEREAS, another of the five reform packages of the Arroyo administration is Anti-Corruption and Good Government; WHEREAS, one of the Good Government reforms of the Arroyo administration is rationalizing the bureaucracy by consolidating related functions into one department; WHEREAS, under law and jurisprudence, the President of the Philippines has broad powers to reorganize the offices under her supervision and control; NOW[,] THEREFORE[,] I, Gloria Macapagal-Arroyo, by the powers vested in me as President of the Republic of the Philippines, do hereby order: SECTION 1. The Department of Agrarian Reform is hereby transformed into the Department of Land Reform. It shall be responsible for all land reform in

the country, including agrarian reform, urban land reform, and ancestral domain reform. SECTION 2. The PCUP is hereby placed under the supervision and control of the Department of Land Reform. The Chairman of the PCUP shall be exofficio Undersecretary of the Department of Land Reform for Urban Land Reform. SECTION 3. The NCIP is hereby placed under the supervision and control of the Department of Land Reform. The Chairman of the NCIP shall be ex-officio Undersecretary of the Department of Land Reform for Ancestral Domain Reform. SECTION 4. The PCUP and the NCIP shall have access to the services provided by the Departments Finance, Management and Administrative Office; Policy, Planning and Legal Affairs Office, Field Operations and Support Services Office, and all other offices of the Department of Land Reform. SECTION 5. All previous issuances that conflict with this Executive Order are hereby repealed or modified accordingly. SECTION 6. This Executive Order takes effect immediately. (Emphasis and underscoring supplied)

E.O. No. 379, which amended E.O. No. 364 a month later or on October 26, 2004, reads:
EXECUTIVE ORDER NO. 379 AMENDING EXECUTIVE ORDER NO. 364 ENTITLED TRANSFORMING THE DEPARTMENT OF AGRARIAN REFORM INTO THE DEPARTMENT OF LAND REFORM WHEREAS, Republic Act No. 8371 created the National Commission on Indigenous Peoples; WHEREAS, pursuant to the Administrative Code of 1987, the President has the continuing authority to reorganize the administrative structure of the National Government. NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, President of the Republic of the Philippines, by virtue of the powers vested in me by the Constitution and existing laws, do hereby order: Section 1. Amending Section 3 of Executive Order No. 364. Section 3 of Executive Order No. 364, dated September 27, 2004 shall now read as follows:

Section 3. The National Commission on Indigenous Peoples (NCIP) shall be an attached agency of the Department of Land Reform. Section 2. Compensation. The Chairperson shall suffer no diminution in rank and salary. Section 3. Repealing Clause. All executive issuances, rules and regulations or parts thereof which are inconsistent with this Executive Order are hereby revoked, amended or modified accordingly. Section immediately. 4. Effectivity. This Executive Order shall (Emphasis and underscoring in the original) take effect

Petitioners contend that the two presidential issuances are unconstitutional for violating:
THE CONSTITUTIONAL PRINCIPLES OF SEPARATION OF POWERS AND OF THE RULE OF LAW[;] THE CONSTITUTIONAL SCHEME AND POLICIES FOR AGRARIAN REFORM, URBAN LAND REFORM, INDIGENOUS PEOPLES RIGHTS AND ANCESTRAL DOMAIN[; AND] THE CONSTITUTIONAL RIGHT OF THE PEOPLE AND THEIR ORGANIZATIONS TO EFFECTIVE AND REASONABLE PARTICIPATION IN DECISION-MAKING, INCLUDING THROUGH ADEQUATE CONSULTATION[.][1]

By Resolution of December 6, 2005, this Court gave due course to the Petition and required the submission of memoranda, with which petitioners and respondents complied onMarch 24, 2006 and April 11, 2006, respectively. The issue on the transformation of the Department of Agrarian Reform (DAR) into the Department of Land Reform (DLR) became moot and academic, however, the department having reverted to its former name by virtue of E.O. No. 456[2] which was issued on August 23, 2005. The Court is thus left with the sole issue of the legality of placing the Presidential Commission[3] for the Urban Poor (PCUP) under the supervision and

control of the DAR, and the National Commission on Indigenous Peoples (NCIP) under the DAR as an attached agency. Before inquiring into the validity of the reorganization, petitioners locus standi or legal standing, inter alia,[4] becomes a preliminary question. The Office of the Solicitor General (OSG), on behalf of respondents, concedes that AMIN[5] has the requisite legal standing to file this suit as member[6] of Congress. Petitioners find it impermissible for the Executive to intrude into the domain of the Legislature. They posit that an act of the Executive which injures the institution of Congress causes a derivative but nonetheless substantial injury, which can be questioned by a member of Congress.[7] They add that to the extent that the powers of Congress are impaired, so is the power of each member thereof, since his office confers a right to participate in the exercise of the powers of that institution.[8] Indeed, a member of the House of Representatives has standing to maintain inviolate the prerogatives, powers and privileges vested by the Constitution in his office.[9] The OSG questions, however, the standing of MDOI, a registered peoples organization of Teduray and Lambangian tribesfolk of (North) Upi and South Upi in the province ofMaguindanao. As co-petitioner, MDOI alleges that it is concerned with the negative impact of NCIPs becoming an attached agency of the DAR on the processing of ancestral domain claims. It fears that transferring the NCIP to the DAR would affect the processing of ancestral domain claims filed by its members. Locus standi or legal standing has been defined as a personal and substantial interest in a case such that the party has sustained or will sustain direct injury as a result of the governmental act that is being challenged. The gist of the question of standing is whether a party alleges such personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation

of issues upon which the court depends for illumination of difficult constitutional questions.[10] It has been held that a party who assails the constitutionality of a statute must have a direct and personal interest. It must show not only that the law or any governmental act is invalid, but also that it sustained or is in immediate danger of sustaining some direct injury as a result of its enforcement, and not merely that it suffers thereby in some indefinite way. It must show that it has been or is about to be denied some right or privilege to which it is lawfully entitled or that it is about to be subjected to some burdens or penalties by reason of the statute or act complained of.[11] For a concerned party to be allowed to raise a constitutional question, it must show that (1) it has personally suffered some actual or threatened injury as a result of the allegedly illegal conduct of the government, (2) the injury is fairly traceable to the challenged action, and (3) the injury is likely to be redressed by a favorable action.[12] An examination of MDOIs nebulous claims of negative impact and probable setbacks[13] shows that they are too abstract to be considered judicially cognizable. And the line of causation it proffers between the challenged action and alleged injury is too attenuated. Vague propositions that the implementation of the assailed orders will work injustice and violate the rights of its members cannot clothe MDOI with the requisite standing. Neither would its status as a peoples organization vest it with the legal standing to assail the validity of the executive orders.[14] La Bugal-Blaan Tribal Association, Inc. v. Ramos,[15] which MDOI cites in support of its claim to legal standing, is inapplicable as it is not similarly situated with the therein petitioners who alleged personal and substantial injury resulting from the mining activities permitted by the assailed statute. And so is Cruz v. Secretary of Environment and Natural Resources,[16] for the indigenous peoples leaders and organizations were not the petitioners therein, who necessarily had to satisfy the locus standi requirement, but were intervenors who sought and were

allowed to be impleaded, not to assail but to defend the constitutionality of the statute. Moreover, MDOI raises no issue of transcendental importance to justify a relaxation of the rule on legal standing. To be accorded standing on the ground of transcendental importance, Senate of the Philippines v. Ermita[17] requires that the following elements must be established: (1) the public character of the funds or other assets involved in the case, (2) the presence of a clear case of disregard of a constitutional or statutory prohibition by the public respondent agency or instrumentality of government, and (3) the lack of any other party with a more direct and specific interest in raising the questions being raised. The presence of these elements MDOI failed to establish, much less allege. Francisco, Jr. v. Fernando[18] more specifically declares that the transcendental importance of the issues raised must relate to the merits of the petition. This Court, not being a venue for the ventilation of generalized grievances, must thus deny adjudication of the matters raised by MDOI. Now, on AMINs position. AMIN charges the Executive Department with transgression of the principle of separation of powers. Under the principle of separation of powers, Congress, the President, and the Judiciary may not encroach on fields allocated to each of them. The legislature is generally limited to the enactment of laws, the executive to the enforcement of laws, and the judiciary to their interpretation and application to cases and controversies. The principle presupposes mutual respect by and between the executive, legislative and judicial departments of the government and calls for them to be left alone to discharge their duties as they see fit.[19] AMIN contends that since the DAR, PCUP and NCIP were created by statutes,[20] they can only be transformed, merged or attached by statutes, not by mere executive orders.

While AMIN concedes that the executive power is vested in the President[21] who, as Chief Executive, holds the power of control of all the executive departments, bureaus, and offices,[22] it posits that this broad power of control including the power to reorganize is qualified and limited, for it cannot be exercised in a manner contrary to law, citing the constitutional duty[23] of the President to ensure that the laws, including those creating the agencies, be faithfully executed. AMIN cites the naming of the PCUP as a presidential commission to be clearly an extension of the President, and the creation of the NCIP as an independent agency under the Office of the President.[24] It thus argues that since the legislature had seen fit to create these agencies at separate times and with distinct mandates, the President should respect that legislative disposition. In fine, AMIN contends that any reorganization of these administrative agencies should be the subject of a statute. AMINs position fails to impress. The Constitution confers, by express provision, the power of control over executive departments, bureaus and offices in the President alone. And it lays down a limitation on the legislative power.
The line that delineates the Legislative and Executive power is not indistinct. Legislative power is the authority, under the Constitution, to make laws, and to alter and repeal them. The Constitution, as the will of the people in their original, sovereign and unlimited capacity, has vested this power in the Congress of the Philippines. The grant of legislative power to Congress is broad, general and comprehensive. The legislative body possesses plenary power for all purposes of civil government. Any power, deemed to be legislative by usage and tradition, is necessarily possessed by Congress, unless the Constitution has lodged it elsewhere. In fine, except as limited by the Constitution, either expressly or impliedly, legislative power embraces all subjects and extends to matters of general concern or common interest. While Congress is vested with the power to enact laws, the President executes the laws. The executive power is vested in the President. It is generally defined as the power to enforce and administer the laws. It is the power of carrying the laws into practical operation and enforcing their due observance.

As head of the Executive Department, the President is the Chief Executive. He represents the government as a whole and sees to it that all laws are enforced by the officials and employees of his department. He has control over the executive department, bureaus and offices. This means that he has the authority to assume directly the functions of the executive department, bureau and office, or interfere with the discretion of its officials. Corollary to the power of control, the President also has the duty of supervising and enforcement of laws for the maintenance of general peace and public order. Thus, he is granted administrative power over bureaus and offices under his control to enable him to discharge his duties effectively.[25] (Italics omitted, underscoring supplied)

The Constitutions express grant of the power of control in the President justifies an executive action to carry out reorganization measures under a broad authority of law.[26] In enacting a statute, the legislature is presumed to have deliberated with full knowledge of all existing laws and jurisprudence on the subject.[27] It is thus reasonable to conclude that in passing a statute which places an agency under the Office of the President, it was in accordance with existing laws and jurisprudence on the Presidents power to reorganize. In establishing an executive department, bureau or office, the legislature necessarily ordains an executive agencys position in the scheme of administrative structure. Such determination is primary,[28] but subject to the Presidents continuing authority to reorganize the administrative structure. As far as bureaus, agencies or offices in the executive department are concerned, the power of control may justify the President to deactivate the functions of a particular office. Or a law may expressly grant the President the broad authority to carry out reorganization measures.[29] The Administrative Code of 1987 is one such law:[30]
SEC. 30. Functions of Agencies under the Office of the President. Agencies under the Office of the President shall continue to operate and function in accordance with their respective charters or laws creating them, except as otherwise provided in this Code or by law. SEC. 31. Continuing Authority of the President to Reorganize his Office. The President, subject to the policy in the Executive Office and in order to achieve simplicity, economy and efficiency,shall have continuing authority to

reorganize the administrative structure of the Office of the President. For this purpose, he may take any of the following actions: (1) Restructure the internal organization of the Office of the President Proper, including the immediate Offices, the Presidential Special Assistants/Advisers System and the Common Staff Support System, by abolishing, consolidating, or merging units thereof or transferring functions from one unit to another; (2) Transfer any function under the Office of the President to any other Department or Agency as well as transfer functions to the Office of the President from other Departments and Agencies; and (3) Transfer any agency under the Office of the President to any other department or agency as well as transfer agencies to the Office of the President from other departments or agencies.[31] (Italics in the original; emphasis and underscoring supplied)

In carrying out the laws into practical operation, the President is best equipped to assess whether an executive agency ought to continue operating in accordance with its charter or the law creating it. This is not to say that the legislature is incapable of making a similar assessment and appropriate action within its plenary power. The Administrative Code of 1987 merely underscores the need to provide the President with suitable solutions to situations on hand to meet the exigencies of the service that may call for the exercise of the power of control.
x x x The law grants the President this power in recognition of the recurring need of every President to reorganize his office to achieve simplicity, economy and efficiency. The Office of the President is the nerve center of the Executive Branch. To remain effective and efficient, the Office of the President must be capable of being shaped and reshaped by the President in the manner he deems fit to carry out his directives and policies. After all, the Office of the President is the command post of the President. This is the rationale behind the Presidents continuing authority to reorganize the administrative structure of the Office of the President.[32]

The Office of the President consists of the Office of the President proper and the agencies under it.[33] It is not disputed that PCUP and NCIP were formed as agencies under the Office of the President.[34] The Agencies under the Office of

the President refer to those offices placed under the chairmanship of the President, those under the supervision and control of the President, those under the administrative supervision of the Office of the President, those attached to the Office for policy and program coordination, and those that are not placed by law or order creating them under any special department.[35] As thus provided by law, the President may transfer any agency under the Office of the President to any other department or agency, subject to the policy in the Executive Office and in order to achieve simplicity, economy and efficiency. Gauged against these guidelines,[36] the challenged executive orders may not be said to have been issued with grave abuse of discretion or in violation of the rule of law. The references in E.O. 364 to asset reform as an anti-poverty measure for social justice and to rationalization of the bureaucracy in furtherance of good government[37] encapsulate a portion of the existing policy in the Executive Office. As averred by the OSG, the President saw it fit to streamline the agencies so as not to hinder the delivery of crucial social reforms.[38] The consolidation of functions in E.O. 364 aims to attain the objectives of simplicity, economy and efficiency as gathered from the provision granting PCUP and NCIP access to the range of services provided by the DARs technical offices and support systems.[39] The characterization of the NCIP as an independent agency under the Office of the President does not remove said body from the Presidents control and supervision with respect to its performance of administrative functions. So it has been opined:
That Congress did not intend to place the NCIP under the control of the President in all instances is evident in the IPRA itself, which provides that the decisions of the NCIP in the exercise of its quasi-judicial functions shall be appealable to the Court of Appeals, like those of the National Labor Relations Commission (NLRC) and the Securities and Exchange Commission (SEC). Nevertheless, the NCIP, although independent to a certain degree, was placed by Congress under the office of the President and, as such, is still subject to the Presidents power of control and supervision granted under Section 17, Article

VII of the Constitution with respect to its performance of administrative functions[.][40] (Underscoring supplied)

In transferring the NCIP to the DAR as an attached agency, the President effectively tempered the exercise of presidential authority and considerably recognized that degree of independence. The Administrative Code of 1987 categorizes administrative relationships into (1) supervision and control, (2) administrative supervision, and (3) attachment.[41] With respect to the third category, it has been held that an attached agency has a larger measure of independence from the Department to which it is attached than one which is under departmental supervision and control or administrative supervision. This is borne out by the lateral relationship between the Department and the attached agency. The attachment is merely for policy and program coordination.[42] Indeed, the essential autonomous character of a board is not negated by its attachment to a commission.[43] AMIN argues, however, that there is an anachronism of sorts because there can be no policy and program coordination between conceptually different areas of reform. It claims that the new framework subsuming agrarian reform, urban land reform and ancestral domain reform is fundamentally incoherent in view of the widely different contexts.[44] And it posits that it is a substantive transformation or reorientation that runs contrary to the constitutional scheme and policies. AMIN goes on to proffer the concept of ordering the law[45] which, so it alleges, can be said of the Constitutions distinct treatment of these three areas, as reflected in separate provisions in different parts of the Constitution.[46] It argues that the Constitution did not intend an over-arching concept of agrarian reform to encompass the two other areas, and that how the law is ordered in a certain way should not be undermined by mere executive orders in the guise of administrative efficiency. The Court is not persuaded.

The interplay of various areas of reform in the promotion of social justice is not something implausible or unlikely.[47] Their interlocking nature cuts across labels and works against a rigid pigeonholing of executive tasks among the members of the Presidents official family. Notably, the Constitution inhibited from identifying and compartmentalizing the composition of the Cabinet. In vesting executive power in one person rather than in a plural executive, the evident intention was to invest the power holder with energy.[48] AMIN takes premium on the severed treatment of these reform areas in marked provisions of the Constitution. It is a precept, however, that inferences drawn from title, chapter or section headings are entitled to very little weight.[49] And so must reliance on sub-headings,[50] or the lack thereof, to support a strained deduction be given the weight of helium. Secondary aids may be consulted to remove, not to create doubt. [51] AMINs thesis unsettles, more than settles the order of things in construing the Constitution. Its interpretation fails to clearly establish that the so-called ordering or arrangement of provisions in the Constitution was consciously adopted to imply a signification in terms of government hierarchy from where a constitutional mandate can per se be derived or asserted. It fails to demonstrate that the ordering or layout was not simply a matter of style in constitutional drafting but one of intention in government structuring. With its inherent ambiguity, the proposed interpretation cannot be made a basis for declaring a law or governmental act unconstitutional. A law has in its favor the presumption of constitutionality. For it to be nullified, it must be shown that there is a clear and unequivocal breach of the Constitution. The ground for nullity must be clear and beyond reasonable doubt.[52] Any reasonable doubt should, following the universal rule of legal hermeneutics, be resolved in favor of the constitutionality of a law.[53] Ople v. Torres[54] on which AMIN relies is unavailing. In that case, an administrative order involved a system of identification that required a delicate adjustment of various contending state policies properly lodged in the legislative arena. It was declared unconstitutional for dealing with a subject that should be covered by law and for violating the right to privacy.

In the present case, AMIN glaringly failed to show how the reorganization by executive fiat would hamper the exercise of citizens rights and privileges. It rested on the ambiguous conclusion that the reorganization jeopardizes economic, social and cultural rights. It intimated, without expounding, that the agendum behind the issuances is to weaken the indigenous peoples rights in favor of the mining industry. And it raised concerns about the possible retrogression in DARs performance as the added workload may impede the implementation of the comprehensive agrarian reform program. AMIN has not shown, however, that by placing the NCIP as an attached agency of the DAR, the President altered the nature and dynamics of the jurisdiction and adjudicatory functions of the NCIP concerning all claims and disputes involving rights of indigenous cultural communities and indigenous peoples. Nor has it been shown, nay alleged, that the reorganization was made in bad faith.[55] As for the other arguments raised by AMIN which pertain to the wisdom or soundness of the executive decision, the Court finds it unnecessary to pass upon them. The raging debate on the most fitting framework in the delivery of social services is endless in the political arena. It is not the business of this Court to join in the fray. Courts have no judicial power to review cases involving political questions and, as a rule, will desist from taking cognizance of speculative or hypothetical cases, advisory opinions and cases that have become moot.[56] Finally, a word on the last ground proffered for declaring the unconstitutionality of the assailed issuances that they violate Section 16, Article XIII of the Constitution[57] on the peoples right to participate in decision-making through adequate consultation mechanisms. The framers of the Constitution recognized that the consultation mechanisms were already operating without the States action by law, such that the role of the State would be mere facilitation, not necessarily creation of these consultation mechanisms. The State provides the support, but eventually it is the people, properly organized in their associations, who can assert the right and pursue the

objective. Penalty for failure on the part of the government to consult could only be reflected in the ballot box and would not nullify government action.[58]

WHEREFORE, the petition is DISMISSED. Executive Order Nos. 364 and 379 issued on September 27, 2004 and October 26, 2004, respectively, are declared not unconstitutional. SO ORDERED.

FIRST DIVISION [G.R. No. 152845. August 5, 2003]

DRIANITA BAGAOISAN, FELY MADRIAGA, SHIRLY TAGABAN, RICARDO SARANDI, SUSAN IMPERIAL, BENJAMIN DEMDEM, RODOLFO DAGA, EDGARDO BACLIG, GREGORIO LABAYAN, HILARIO JEREZ, and MARIA CORAZON CUANANG, petitioners, vs. NATIONAL TOBACCO ADMINISTRATION, represented by ANTONIO DE GUZMAN and PERLITA BAULA, respondents. DECISION VITUG, J.:

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

On 11 November 1998, the rank and file employees of NTA Batac, among whom included herein petitioners, filed a letter-appeal with the Civil Service Commission and sought its assistance in recalling

the OSSP. On 04 December 1998, the OSSP was approved by the Department of Budget and Management (DBM) subject to certain revisions. On even date, the NTA created a placement committee to assist the appointing authority in the selection and placement of permanent personnel in the revised OSSP. The results of the evaluation by the committee on the individual qualifications of applicants to the positions in the new OSSP were then disseminated and posted at the central and provincial offices of the NTA.

On 10 June 1996, petitioners, all occupying different positions at the NTA office in Batac, Ilocos Norte, received individual notices of termination of their employment with the NTA effective thirty (30) days from receipt thereof. Finding themselves without any immediate relief from their dismissal from the service, petitioners filed a petition for certiorari, prohibition and mandamus, with prayer for preliminary mandatory injunction and/or temporary restraining order, with the Regional Trial Court (RTC) of Batac, Ilocos Norte, and prayed -

1) that a restraining order be immediately issued enjoining the respondents from enforcing the notice of termination addressed individually to the petitioners and/or from committing further acts of dispossession and/or ousting the petitioners from their respective offices;

2) that a writ of preliminary injunction be issued against the respondents, commanding them to maintain the status quo to protect the rights of the petitioners pending the determination of the validity of the implementation of their dismissal from the service; and

3) that, after trial on the merits, judgment be rendered declaring the notice of termination of the petitioners illegal and the reorganization null and void and ordering their reinstatement with backwages, if applicable, commanding the respondents to desist from further terminating their services, and making the injunction permanent.*1+

The RTC, on 09 September 2000, ordered the NTA to appoint petitioners in the new OSSP to positions similar or comparable to their respective former assignments. A motion for reconsideration filed by the NTA was denied by the trial court in its order of 28 February 2001. Thereupon, the NTA filed an appeal with the Court of Appeals, raising the following issues:

I. Whether or not respondents submitted evidence as proof that petitioners, individually, were not the best qualified and most deserving among the incumbent applicant-employees.

II. Whether or not incumbent permanent employees, including herein petitioners, automatically enjoy a preferential right and the right of first refusal to appointments/reappointments in the new Organization Structure And Staffing Pattern (OSSP) of respondent NTA.

III. Whether or not respondent NTA in implementing the mandated reorganization pursuant to E.O. No. 29, as amended by E.O. No. 36, strictly adhere to the implementing rules on reorganization, particularly RA 6656 and of the Civil Service Commission Rules on Government Reorganization.

IV. Whether or not the validity of E.O. Nos. 29 and 36 can be put in issue in the instant case/appeal.*2+

On 20 February 2002, the appellate court rendered a decision reversing and setting aside the assailed orders of the trial court.

Petitioners went to this Court to assail the decision of the Court of Appeals, contending that -

I. The Court of Appeals erred in making a finding that went beyond the issues of the case and which are contrary to those of the trial court and that it overlooked certain relevant facts not disputed by the parties and which, if properly considered, would justify a different conclusion;

II. The Court of Appeals erred in upholding Executive Order Nos. 29 and 36 of the Office of the President which are mere administrative issuances which do not have the force and effect of a law to warrant abolition of positions and/or effecting total reorganization;

III. The Court of Appeals erred in holding that petitioners removal from the service is in accordance with law;

IV. The Court of Appeals erred in holding that respondent NTA was not guilty of bad faith in the termination of the services of petitioners; (and)

V.

The Court of Appeals erred in ignoring case law/jurisprudence in the abolition of an office.*3+

In its resolution of 10 July 2002, the Court required the NTA to file its comment on the petition. On 18 November 2002, after the NTA had filed its comment of 23 September 2002, the Court issued its resolution denying the petition for failure of petitioners to sufficiently show any reversible error on the part of the appellate court in its challenged decision so as to warrant the exercise by this Court of its discretionary appellate jurisdiction. A motion for reconsideration filed by petitioners was denied in the Courts resolution of 20 January 2002.

On 21 February 2003, petitioners submitted a Motion to Admit Petition For En Banc Resolution of the case allegedly to address a basic question, i.e., the legal and constitutional issue on whether the NTA may be reorganized by an executive fiat, not by legislative action.*4+ In their Petition for an En Banc Resolution petitioners would have it that -

1. The Court of Appeals decision upholding the reorganization of the National Tobacco Administration sets a dangerous precedent in that:

a) A mere Executive Order issued by the Office of the President and procured by a government functionary would have the effect of a blanket authority to reorganize a bureau, office or agency attached to the various executive departments;

b) The President of the Philippines would have the plenary power to reorganize the entire government Bureaucracy through the issuance of an Executive Order, an administrative issuance without the benefit of due deliberation, debate and discussion of members of both chambers of the Congress of the Philippines;

c) The right to security of tenure to a career position created by law or statute would be defeated by the mere adoption of an Organizational Structure and Staffing Pattern issued pursuant to an Executive Order which is not a law and could thus not abolish an office created by law;

2. The case law on abolition of an office would be disregarded, ignored and abandoned if the Court of Appeals decision subject matter of this Petition would remain undisturbed and untouched. In other words, previous doctrines and precedents of this Highest Court would in effect be reversed and/or modified with the Court of Appeals judgment, should it remain unchallenged.

3. Section 4 of Executive Order No. 245 dated July 24, 1987 (Annex D, Petition), issued by the Revolutionary government of former President Corazon Aquino, and the law creating NTA, which provides that the governing body of NTA is the Board of Directors, would be rendered meaningless, ineffective and a dead letter law because the challenged NTA reorganization which was erroneously upheld by the Court of Appeals was adopted and implemented by then NTA Administrator Antonio de Guzman without the corresponding authority from the Board of Directors as mandated therein. In brief, the reorganization is an ultra vires act of the NTA Administrator.

4. The challenged Executive Order No. 29 issued by former President Joseph Estrada but unsigned by then Executive Secretary Ronaldo Zamora would in effect be erroneously upheld and given legal effect as to supersede, amend and/or modify Executive Order No. 245, a law issued during the Freedom Constitution of President Corazon Aquino. In brief, a mere executive order would amend, supersede and/or render ineffective a law or statute.*5+

In order to allow the parties a full opportunity to ventilate their views on the matter, the Court ultimately resolved to hear the parties in oral argument. Essentially, the core question raised by them is whether or not the President, through the issuance of an executive order, can validly carry out the reorganization of the NTA.

Notwithstanding the apparent procedural lapse on the part of petitioner to implead the Office of the President as party respondent pursuant to Section 7, Rule 3, of the 1997 Revised Rules of Civil Procedure, [6] this Court resolved to rule on the merits of the petition.

Buklod ng Kawaning EIIB vs. Zamora[7] ruled that the President, based on existing laws, had the authority to carry out a reorganization in any branch or agency of the executive department. In said case, Buklod ng Kawaning EIIB challenged the issuance, and sought the nullification, of Executive Order No. 191 (Deactivation of the Economic Intelligence and Investigation Bureau) and Executive Order No. 223 (Supplementary Executive Order No. 191 on the Deactivation of the Economic Intelligence and Investigation Bureau and for Other Matters) on the ground that they were issued by the President with

grave abuse of discretion and in violation of their constitutional right to security of tenure. The Court explained:

The general rule has always been that the power to abolish a public office is lodged with the legislature. This proceeds from the legal precept that the power to create includes the power to destroy. A public office is either created by the Constitution, by statute, or by authority of law. Thus, except where the office was created by the Constitution itself, it may be abolished by the same legislature that brought it into existence.

The exception, however, is that as far as bureaus, agencies or offices in the executive department are concerned, the Presidents power of control may justify him to inactivate the functions of a particular office, or certain laws may grant him the broad authority to carry out reorganization measures. The case in point is Larin v. Executive Secretary [280 SCRA 713]. In this case, it was argued that there is no law which empowers the President to reorganize the BIR. In decreeing otherwise, this Court sustained the following legal basis, thus:

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

`We do not agree.

`x x x

xxx

`Section 48 of R.A. 7645 provides that:

``Sec. 48. Scaling Down and Phase Out of Activities of Agencies Within the Executive Branch. The heads of departments, bureaus and offices and agencies are hereby directed to identify their respective activities which are no longer essential in the delivery of public services and which may be scaled down, phased out or abolished, subject to civil service rules and regulations. x x x. Actual scaling down, phasing out or abolition of the activities shall be effected pursuant to Circulars or Orders issued for the purpose by the Office of the President.

`Said provision clearly mentions the acts of `scaling down, phasing out and abolition of offices only and does not cover the creation of offices or transfer of functions. Nevertheless, the act of creating and decentralizing is included in the subsequent provision of Section 62 which provides that:

``Sec. 62. Unauthorized organizational changes. Unless otherwise created by law or directed by the President of the Philippines, no organizational unit or changes in key positions in any department or agency shall be authorized in their respective organization structures and be funded from appropriations by this Act.

`The foregoing provision evidently shows that the President is authorized to effect organizational changes including the creation of offices in the department or agency concerned.

`x x x

xxx

`Another legal basis of E.O. No. 132 is Section 20, Book III of E.O. No. 292 which states:

``Sec. 20. Residual Powers. Unless Congress provides otherwise, the President shall exercise such other powers and functions vested in the President which are provided for under the laws and which are not specifically enumerated above or which are not delegated by the President in accordance with law.

`This provision speaks of such other powers vested in the President under the law. What law then gives him the power to reorganize? It is Presidential Decree No. 1772 which amended Presidential Decree No. 1416. These decrees expressly grant the President of the Philippines the continuing authority to reorganize the national government, which includes the power to group, consolidate bureaus and agencies, to abolish offices, to transfer functions, to create and classify functions, services and activities and to standardize salaries and materials. The validity of these two decrees are unquestionable. The 1987 Constitution clearly provides that `all laws, decrees, executive orders, proclamations, letter of instructions and other executive issuances not inconsistent with this Constitution shall remain operative until amended, repealed or revoked. So far, there is yet no law amending or repealing said decrees.

Now, let us take a look at the assailed executive order.

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

`Sec. 77. Organized Changes. Unless otherwise provided by law or directed by the President of the Philippines, no changes in key positions or organizational units in any department or agency shall be authorized in their respective organizational structures and funded from appropriations provided by this Act.

We adhere to the x x x ruling in Larin that this provision recognizes the authority of the President to effect organizational changes in the department or agency under the executive structure. Such a ruling further finds support in Section 78 of Republic Act No. 8760. Under this law, the heads of departments, bureaus, offices and agencies and other entities in the Executive Branch are directed (a) to conduct a comprehensive review of this respective mandates, missions, objectives, functions, programs, projects, activities and systems and procedures; (b) identify activities which are no longer essential in the delivery of public services and which may be scaled down, phased-out or abolished; and (c) adopt measures that will result in the streamlined organization and improved overall performance of their respective agencies. Section 78 ends up with the mandate that the actual streamlining and productivity improvement in agency organization and operation shall be effected pursuant to Circulars or Orders issued for the purpose by the Office of the President. The law has spoken clearly. We are left only with the duty to sustain.

But of course, the list of legal basis authorizing the President to reorganize any department or agency in the executive branch does not have to end here. We must not lose sight of the very source of the power that which constitutes an express grant of power. Under Section 31, Book III of Executive Order No. 292 (otherwise known as the Administrative Code of 1987), the President, subject to the policy in the Executive Office and in order to achieve simplicity, economy and efficiency, shall have the continuing authority to reorganize the administrative structure of the Office of the President. For this purpose, he may transfer the functions of other Departments or Agencies to the Office of the President. In Canonizado vs. Aguirre [323 SCRA 312], we ruled that reorganization involves the reduction of personnel, consolidation of offices, or abolition thereof by reason of economy or redundancy of functions. It takes place when there is an alteration of the existing structure of government offices or units therein, including the lines of control, authority and responsibility between them. The EIIB is a bureau attached to the Department of Finance. It falls under the Office of the President. Hence, it is subject to the Presidents continuing authority to reorganize.

It having been duly established that the President has the authority to carry out reorganization in any branch or agency of the executive department, what is then left for us to resolve is whether or not the reorganization is valid. In this jurisdiction, reorganizations have been regarded as valid provided they are pursued in good faith. Reorganization is carried out in `good faith if it is for the purpose of economy or to make bureaucracy more efficient. Pertinently, Republic Act No. 6656 provides for the circumstances which may be considered as evidence of bad faith in the removal of civil service employees made as a result of reorganization, to wit: (a) where there is a significant increase in the number of positions in the new staffing pattern of the department or agency concerned; (b) where an office is abolished and another performing substantially the same functions is created; (c) where incumbents are replaced by those less qualified in terms of status of appointment, performance and merit; (d) where there is a classification of offices in the department or agency concerned and the reclassified offices perform substantially the same functions as the original offices, and (e) where the removal violates the order of separation.*8+

The Court of Appeals, in its now assailed decision, has found no evidence of bad faith on the part of the NTA; thus -

In the case at bar, we find no evidence that the respondents committed bad faith in issuing the notices of non-appointment to the petitioners.

Firstly, the number of positions in the new staffing pattern did not increase. Rather, it decreased from 1,125 positions to 750. It is thus natural that ones position may be lost through the removal or abolition of an office.

Secondly, the petitioners failed to specifically show which offices were abolished and the new ones that were created performing substantially the same functions.

Thirdly, the petitioners likewise failed to prove that less qualified employees were appointed to the positions to which they applied.

x x x

xxx

x x x.

Fourthly, the preference stated in Section 4 of R.A. 6656, only means that old employees should be considered first, but it does not necessarily follow that they should then automatically be appointed. This is because the law does not preclude the infusion of new blood, younger dynamism, or necessary talents into the government service, provided that the acts of the appointing power are bonafide for the best interest of the public service and the person chosen has the needed qualifications.*9+

These findings of the appellate court are basically factual which this Court must respect and be held bound.

It is important to emphasize that the questioned Executive Orders No. 29 and No. 36 have not abolished the National Tobacco Administration but merely mandated its reorganization through the streamlining or reduction of its personnel. Article VII, Section 17,[10] of the Constitution, expressly grants the President control of all executive departments, bureaus, agencies and offices which may justify an executive action to inactivate the functions of a particular office or to carry out reorganization measures under a broad authority of law.[11] Section 78 of the General Provisions of Republic Act No. 8522 (General Appropriations Act of FY 1998) has decreed that the President may direct changes in the organization and key positions in any department, bureau or agency pursuant to Article VI, Section 25,[12] of the Constitution, which grants to the Executive Department the authority to recommend the budget necessary for its operation. Evidently, this grant of power includes the authority to evaluate each and every government agency, including the determination of the most economical and efficient staffing pattern, under the Executive Department.

In the recent case of Rosa Ligaya C. Domingo, et al. vs. Hon. Ronaldo D. Zamora, in his capacity as the Executive Secretary, et al.,*13+ this Court has had occasion to also delve on the Presidents power to reorganize the Office of the President under Section 31(2) and (3) of Executive Order No. 292 and the power to reorganize the Office of the President Proper. The Court has there observed:

x x x. Under Section 31(1) of EO 292, the President can reorganize the Office of the President Proper by abolishing, consolidating or merging units, or by transferring functions from one unit to another. In contrast, under Section 31(2) and (3) of EO 292, the Presidents power to reorganize offices outside the Office of the President Proper but still within the Office of the President is limited to merely transferring functions or agencies from the Office of the President to Departments or Agencies, and vice versa.

The provisions of Section 31, Book III, Chapter 10, of Executive Order No. 292 (Administrative Code of 1987), above-referred to, reads thusly:

SEC. 31. Continuing Authority of the President to Reorganize his Office. The President, subject to the policy in the Executive Office and in order to achieve simplicity, economy and efficiency, shall have continuing authority to reorganize the administrative structure of the Office of the President. For this purpose, he may take any of the following actions:

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

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

(3) Transfer any agency under the Office of the President to any other department or agency as well as transfer agencies to the Office of the President from other departments and agencies.

The first sentence of the law is an express grant to the President of a continuing authority to reorganize the administrative structure of the Office of the President. The succeeding numbered paragraphs are not in the nature of provisos that unduly limit the aim and scope of the grant to the President of the power to reorganize but are to be viewed in consonance therewith. Section 31(1) of Executive Order No. 292 specifically refers to the Presidents power to restructure the internal organization of the Office of the President Proper, by abolishing, consolidating or merging units hereof or transferring functions from one unit to another, while Section 31(2) and (3) concern executive offices outside the Office of the President Proper allowing the President to transfer any function under the Office of the President to any other Department or Agency and vice-versa, and the transfer of any agency under the Office of the President to any other department or agency and vice-versa.[14]

In the present instance, involving neither an abolition nor transfer of offices, the assailed action is a mere reorganization under the general provisions of the law consisting mainly of streamlining the NTA in the interest of simplicity, economy and efficiency. It is an act well within the authority of President motivated and carried out, according to the findings of the appellate court, in good faith, a factual assessment that this Court could only but accept.[15]

In passing, relative to petitioners Motion for an En Banc Resolution of the Case, it may be well to remind counsel, that the Court En Banc is not an appellate tribunal to which appeals from a Division of the Court may be taken. A Division of the Court is the Supreme Court as fully and veritably as the Court En Banc itself and a decision of its Division is as authoritative and final as a decision of the Court En Banc. Referrals of cases from a Division to the Court En Banc do not take place as just a matter of routine but only on such specified grounds as the Court in its discretion may allow.[16]

WHEREFORE, the Motion to Admit Petition for En Banc resolution and the Petition for an En Banc Resolution are DENIED for lack of merit. Let entry of judgment be made in due course. No costs.

SO ORDERED. G.R. No. 84301. April 7, 1993.

NATIONAL LAND TITLES AND DEEDS REGISTRATION ADMINISTRATION, petitioner, vs. CIVIL SERVICE COMMISSION and VIOLETA L. GARCIA, respondents.

The Solicitor General for petitioner.

Raul R. Estrella for private respondent.

SYLLABUS

1. ADMINISTRATIVE LAW; EXECUTIVE ORDER NO. 649; REORGANIZED LAND REGISTRATION COMMISSION TO NALTDRA; EXPRESSLY PROVIDED THE ABOLITION OF EXISTING POSITIONS. Executive Order No. 649 authorized the reorganization of the Land Registration Commission (LRC) into the National Land Titles and Deeds Registration Administration (NALTDRA). It abolished all the positions in the now defunct LRC and required new appointments to be issued to all employees of the NALTDRA. The question of whether or not a law abolishes an office is one of legislative intent about which there can be no controversy whatsoever if there is an explicit declaration in the law itself. A closer

examination of Executive Order No. 649 which authorized the reorganization of the Land Registration Commission (LRC) into the National Land Titles and Deeds Registration Administration (NALTDRA), reveals that said law in express terms, provided for the abolition of existing positions. Thus, without need of any interpretation, the law mandates that from the moment an implementing order is issued, all positions in the Land Registration Commission are deemed non-existent. This, however, does not mean removal. Abolition of a position does not involve or mean removal for the reason that removal implies that the post subsists and that one is merely separated therefrom. (Arao vs. Luspo, 20 SCRA 722 [1967]) After abolition, there is in law no occupant. Thus, there can be no tenure to speak of. It is in this sense that from the standpoint of strict law, the question of any impairment of security of tenure does not arise. (De la Llana vs. Alba, 112 SCRA 294 [1982])

2. ID.; ID.; ID.; REORGANIZATION, VALID WHEN PURSUED IN GOOD FAITH; CASE AT BAR. 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. Two questions therefore arise: (1) was the abolition carried out by a legitimate body?; and (2) was it done in good faith? There is no dispute over the authority to carry out a valid reorganization in any branch or agency of the Government. Under Section 9, Article XVII of the 1973 Constitution. The power to reorganize is, however; not absolute. We have held in Dario vs. Mison that reorganizations in this jurisdiction have been regarded as valid provided they are pursued in good faith. This court has pronounced that if the newly created office has substantially new, different or additional functions, duties or powers, so that it may be said in fact to create an office different from the one abolished, even though it embraces all or some of the duties of the old office it will be considered as an abolition of one office and the creation of a new or different one. The same is true if one office is abolished and its duties, for reasons of economy are given to an existing officer or office. Executive Order No. 649 was enacted to improve the services and better systematize the operation of the Land Registration Commission. A reorganization is carried out in good faith if it is for the purpose of economy or to make bureaucracy more efficient. To this end, the requirement of Bar membership to qualify for key positions in the NALTDRA was imposed to meet the changing circumstances and new development of the times. Private respondent Garcia who formerly held the position of Deputy Register of Deeds II did not have such qualification. It is thus clear that she cannot hold any key position in the NALTDRA, The additional qualification was not intended to remove her from office. Rather, it was a criterion imposed concomitant with a valid reorganization measure.

3. ID.; ID.; ID.; THERE IS NO VESTED PROPERTY RIGHT TO BE RE-EMPLOYED IN A REORGANIZED OFFICE; CASE AT BAR. There is no such thing as a vested interest or an estate in an office, or even an absolute right to hold it. Except constitutional offices which provide for special immunity as regards salary and tenure, no one can be said to have any vested right in an office or its salary. None of the exceptions to this rule are obtaining in this case. To reiterate, the position which private respondent Garcia would like to occupy anew was abolished pursuant to Executive Order No. 649, a valid reorganization measure. There is no vested property right to be re employed in a reorganized office. Not

being a member of the Bar, the minimum requirement to qualify under the reorganization law for permanent appointment as Deputy Register of Deeds II, she cannot be reinstated to her former position without violating the express mandate of the law.

DECISION

CAMPOS, JR., J p:

The sole issue for our consideration in this case is whether or not membership in the bar, which is the qualification requirement prescribed for appointment to the position of Deputy Register of Deeds under Section 4 of Executive Order No. 649 (Reorganizing the Land Registration Commission (LRC) into the National Land Titles and Deeds Registration Administration or NALTDRA) should be required of and/or applied only to new applicants and not to those who were already in the service of the LRC as deputy register of deeds at the time of the issuance and implementation of the abovesaid Executive Order.

The facts, as succinctly stated in the Resolution ** of the Civil Service Commission, are as follows:

"The records show that in 1977, petitioner Garcia, a Bachelor of Laws graduate and a first grade civil service eligible was appointed Deputy Register of Deeds VII under permanent status. Said position was later reclassified to Deputy Register of Deeds III pursuant to PD 1529, to which position, petitioner was also appointed under permanent status up to September 1984. She was for two years, more or less, designated as Acting Branch Register of Deeds of Meycauayan, Bulacan. By virtue of Executive Order No. 649 (which took effect on February 9, 1981) which authorized the restructuring of the Land Registration Commission to National Land Titles and Deeds Registration Administration and regionalizing the Offices of the Registers therein, petitioner Garcia was issued an appointment as Deputy Register of Deeds II on October 1, 1984, under temporary status, for not being a member of the Philippine Bar. She appealed to the Secretary of Justice but her request was denied. Petitioner Garcia moved for reconsideration but her motion remained unacted. On October 23, 1984, petitioner Garcia was administratively charged with Conduct Prejudicial to the Best Interest of the Service. While said case was pending decision, her temporary appointment as such was renewed in 1985. In a Memorandum dated October 30, 1986, the then Minister, now Secretary, of Justice notified petitioner Garcia of the termination of her services as Deputy Register of Deeds II on the ground that she was "receiving bribe money". Said Memorandum of Termination which took effect on February 9, 1987, was the subject of an appeal to the Inter-Agency Review Committee which in turn referred the appeal to the Merit Systems Protection Board (MSPB).

In its Order dated July 6, 1987, the MSPB dropped the appeal of petitioner Garcia on the ground that since the termination of her services was due to the expiration of her temporary appointment, her separation is in order. Her motion for reconsideration was denied on similar ground." 1

However, in its Resolution 2 dated June 30, 1988, the Civil Service Commission directed that private respondent Garcia be restored to her position as Deputy Register of Deeds II or its equivalent in the NALTDRA. It held that "under the vested right theory the new requirement of BAR membership to qualify for permanent appointment as Deputy Register of Deeds II or higher as mandated under said Executive Order, would not apply to her (private respondent Garcia) but only to the filling up of vacant lawyer positions on or after February 9, 1981, the date said Executive Order took effect." 3 A fortiori, since private respondent Garcia had been holding the position of Deputy Register of Deeds II from 1977 to September 1984, she should not be affected by the operation on February 1, 1981 of Executive Order No. 649.

Petitioner NALTDRA filed the present petition to assail the validity of the above Resolution of the Civil Service Commission. It contends that Sections 8 and 10 of Executive Order No. 649 abolished all existing positions in the LRC and transferred their functions to the appropriate new offices created by said Executive Order, which newly created offices required the issuance of new appointments to qualified office holders. Verily, Executive Order No. 649 applies to private respondent Garcia, and not being a member of the Bar, she cannot be reinstated to her former position as Deputy Register of Deeds II.

We find merit in the petition.

Executive Order No. 649 authorized the reorganization of the Land Registration Commission (LRC) into the National Land Titles and Deeds Registration Administration (NALTDRA). It abolished all the positions in the now defunct LRC and required new appointments to be issued to all employees of the NALTDRA.

The question of whether or not a law abolishes an office is one of legislative intent about which there can be no controversy whatsoever if there is an explicit declaration in the law itself. 4 A closer examination of Executive Order No. 649 which authorized the reorganization of the Land Registration Commission (LRC) into the National Land Titles and Deeds Registration Administration (NALTDRA), reveals that said law in express terms, provided for the abolition of existing positions, to wit:

Sec. 8. Abolition of Existing Positions in the Land Registration Commission . . .

All structural units in the Land Registration Commission and in the registries of deeds, and all Positions therein shall cease to exist from the date specified in the implementing order to be issued by the President pursuant to the preceding paragraph. Their pertinent functions, applicable appropriations, records, equipment and property shall be transferred to the appropriate staff or offices therein created. (Emphasis Supplied.)

Thus, without need of any interpretation, the law mandates that from the moment an implementing order is issued, all positions in the Land Registration Commission are deemed non-existent. This, however, does not mean removal. Abolition of a position does not involve or mean removal for the reason that removal implies that the post subsists and that one is merely separated therefrom. 5 After abolition, there is in law no occupant. Thus, there can be no tenure to speak of. It is in this sense that from the standpoint of strict law, the question of any impairment of security of tenure does not arise. 6

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. Two questions therefore arise: (1) was the abolition carried out by a legitimate body?; and (2) was it done in good faith?

There is no dispute over the authority to carry out a valid reorganization in any branch or agency of the Government. Under Section 9, Article XVII of the 1973 Constitution, the applicable law at that time:

Sec. 9. All officials and employees in the existing Government of the Republic of the Philippines shall continue in office until otherwise provided by law or decreed by the incumbent President of the Philippines, but all officials whose appointments are by this Constitution vested in the Prime Minister shall vacate their respective offices upon the appointment and qualifications of their successors.

The power to reorganize is, however; not absolute. We have held in Dario vs. Mison 7 that reorganizations in this jurisdiction have been regarded as valid provided they are pursued in good faith. This court has pronounced 8 that if the newly created office has substantially new, different or additional functions, duties or powers, so that it may be said in fact to create an office different from the one abolished, even though it embraces all or some of the duties of the old office it will be considered as an abolition of one office and the creation of a new or different one. The same is true if one office is abolished and its duties, for reasons of economy are given to an existing officer or office.

Executive Order No. 649 was enacted to improve the services and better systematize the operation of the Land Registration Commission. 9 A reorganization is carried out in good faith if it is for the purpose of economy or to make bureaucracy more efficient. 10 To this end, the requirement of Bar membership to qualify for key positions in the NALTDRA was imposed to meet the changing circumstances and new development of the times. 11 Private respondent Garcia who formerly held the position of Deputy Register of Deeds II did not have such qualification. It is thus clear that she cannot hold any key position in the NALTDRA, The additional qualification was not intended to remove her from office. Rather, it was a criterion imposed concomitant with a valid reorganization measure.

A final word, on the "vested right theory" advanced by respondent Civil Service Commission. There is no such thing as a vested interest or an estate in an office, or even an absolute right to hold it. Except constitutional offices which provide for special immunity as regards salary and tenure, no one can be said to have any vested right in an office or its salary. 12 None of the exceptions to this rule are obtaining in this case.

To reiterate, the position which private respondent Garcia would like to occupy anew was abolished pursuant to Executive Order No. 649, a valid reorganization measure. There is no vested property right to be re employed in a reorganized office. Not being a member of the Bar, the minimum requirement to qualify under the reorganization law for permanent appointment as Deputy Register of Deeds II, she cannot be reinstated to her former position without violating the express mandate of the law.

WHEREFORE, premises considered, We hereby GRANT the petition and SET ASIDE the questioned Resolution of the Civil Service Commission reinstating private respondent to her former position as Deputy Register of Deeds II or its equivalent in the National Land Titles and Deeds Registration Administration.

SO ORDERED. G.R. No. 101251 November 5, 1992

ELISEO A. SINON, petitioner, vs.

CIVIL SERVICE COMMISSION, DEPARTMENT OF AGRICULTURE-REORGANIZATION APPEALS BOARD AND JUANA BANAN, respondents.

CAMPOS, JR., J.:

This petition for certiorari seeks to annul the following Resolutions of the public respondents Civil Service Commission (the "CSC") * and Department of Agriculture Reorganization Appeals Board (the "DARAB"), ** to wit:

1. Resolution No. 97 dated August 23, 1989, issued by respondent DARAB which revoked petitioner's permanent appointment as Municipal Agriculture Officer (MAO) and appointed, in his stead, private respondent Juana Banan (Rollo 17);

2. Resolution dated February 8, 1991 issued by the respondent CSC affirming the aforementioned Resolution of respondent DARAB (Rollo 22);

3. Resolution dated July 11, 1991 issued by the respondent CSC which denied petitioner's motion for the reconsideration of the respondent Commission's Resolution dated February 8, 1991. 1

The antecedent facts are as follows:

Prior to the reorganization of the then Minister of Agriculture and Food (the "MAF"), the private respondent Juana Banan was the incumbent Municipal Agricultural Officer (MAO) of the aforesaid Minister in Region II, Cagayan, while the petitioner Eliseo Sinon occupied the position of Fisheries Extension Specialist (FES) II in the Bureau of Fisheries and Aquatic Resources (BFAR) in the same region.

However, the reorganization of the MAF into the Department of Agriculture (the "DA"), with the issuance of Executive Order No. 116 dated 30 January 1987, called for the evaluation of the following

employees for twenty nine position of MAO in Region II, Cagayan. The list as prepared by the Placement Committee included the herein petitioner Sinon but excluded the respondent Banan:

1.

Binoya, Vicente 76.20%

2.

Cabana, Isidro 75.01%

3.

Sebastian, Alice 74.18%

4.

Zingapan, Benjamin

70.73%

5.

Guzman, Wilhemina de la P.

70.50%

6.

Gervacio, Agnes69.86%

7.

Somera, Hilario S.

68.13%

8.

Tolentino, Julian R.

67.64%

9.

Guillermo, Pedro

67.22%

10.

Tambio, Rodolfo

67.00%

11.

Aquino, Martina 66.94%

12.

Bassig, Pio P.

66.84%

13.

Rumpon, Danilo P.

65.61%

14.

Zareno, Bernardo

65.57%

15.

Madrid, Angel S. 65.57%

16.

Callangan, Napoleon

65.45%

17.

Fiesta, Felicisimo

65.29%

18.

Alvarez, Benefranco

64.99%

19.

Baggayan, Samuel O.

64.42%

20.

Umbay, Pedro T.

64.01%

21.

De la Cruz, Florencio M. 62.07%

22.

Leonador, Ernesto T.

61.88%

23.

Miguel, Jose

61.86%

24.

Berlan, Herminia C.

61.76%

25.

Soliman, Clemente

61.52%

26.

Llopis, Lino

61.47%

27.

Baliuag, Felicidad

61.39%

28.

Aresta, Leticia 60.67%

29.

Sinon, Eliseo A. 60.66% 2

(Emphasis supplied)

Thus, respondents Banan filed an appeal with the DARAB for re-evaluation of the qualification of all those included in the aforementioned list made by the Placement Committee.

On August 23, 1989, the DARAB released Resolution No. 97 in which the ranking for 29 MAO prepared by the Placement Committee was re-evaluated as follows:

1.

Binoya, Vicente 76.20%

2.

Cabana, Isidro 75.01%

3.

Sebastian, Alice 72.18%

4.

Zingapan, Benjamin

70.73%

5.

Guzman, Wilhemina de la P.

70.50%

6.

Gervacio, Agnes70.04%

7.

Somera, Hilario S.

68.13%

8.

Tolentino, Julian Jr.

67.22%

9.

Guillermo, Pedro

67.22%

10.

Tambio, Rodolfo

67.00%

11.

Aquino, Martina D.

66.94%

12.

Bassig, Pio P.

66.84%

13.

Rumpon, Danilo P.

65.61%

14.

Madrid, Angel 65.57%

15.

Callangan, Napoleon

65.45%

16.

Fiesta, Felicisimo

65.29%

17.

Alvarez, Benefranco

64.99%

18.

Baggayan, Samuel O.

64.42%

19.

Umbay, Pedro T.

64.01%

20.

De la Cruz, Florencio M. 62.07%

21.

Leonador, Ernesto T.

61.88%

22.

Miguel, Jose L. 61.86%

23.

Berlan, Herminia C.

61.76%

24.

Soliman, Clemente

61.52%

25.

Zareno, Bernardo

61.50%

26.

Llopis, Lino

61.47%

27.

Baliuag, Felicidad

61.39%

28.

Aresta, Leticia 60.67%

29.

Banan, Juana

59.32% 2

(Emphasis supplied)

In this re-evaluation, petitioner Sinon was displaced by the respondent Banan and this same resolution was duly approved by the Secretary of the Department of Agriculture, Carlos G. Dominguez, who also affixed his signature on the same date.

However, on August 30, 1988, Sinon received an appointment as MAO for Region II in Cagayan as approved by Regional Director Gumersindo D. Lasam on the basis of the first evaluation made by the Placement Committee.

Thus, Sinon filed an appeal docketed as Civil Service Case No. 573 on November 22, 1989 to the CSC. This appeal was granted mainly for two reasons: first, the respondent DARAB failed to file its Comment within the period required; and second, the evaluation of the qualification of the employees is a question of fact which the appointing authority or the Placement Committee assisting him is in a better position to determine. Hence, the Resolution dated 28 February 1989 of the DARAB was set aside. 4

On March 19, 1990, Banan filed a Motion for Reconsideration in which she pitted her qualifications against Sinon for the last slot in the 29 available MAO positions. At the same time, she pointed out that to allow the findings of the Placement Committee to supersede the DARAB resolution which the Secretary of Agriculture had approved would be tantamount to giving precedence to the Placement Committee over the head of the agency.

Finally, on February 8, 1991, CSC, after reviewing the Comment filed by the DARAB which had not been considered earlier in the Civil Service Case No. 573, the CSC granted respondent Banan's Motion for Reconsideration and gave due course to her appointment by the DARAB.

On March 21, 1991, Sinon filed a Motion for Reconsideration of the February 8, 1991 Resolution which however was denied by the CSC in its assailed Resolution dated July 11, 1991.

According to the respondent CSC:

Mr. Sinon strongly argued that the findings of the Placement Committee on the qualifications of the parties should be accorded deference and greater weight over that of the RAB. Under the Placement Committee's evaluation, Mr. Sinon garnered 60.66 while Ms. Juana Banan earned 57.32 after assessing the contending parties qualification in education, relevant experience, eligibility and other factors. Following the request of several parties for reevaluation, the RAB in their decision gave Mr. Sinon 57.66 while Ms. Banan obtained 59.32. Seemingly the findings of the two bodies are in conflict. Mr. Sinon argues that the findings of the Placement Committee should prevail since it is specially mandated by RA 6656.

We disagree. The Placement Committee's function is recommendatory in nature. The agency's Reorganization Appeals Board was specially created by the Circular of the Office of the President dated October 2, 1987 and conferred with authority to review appeals and complaints of officials and employees affected by the reorganization. the decision of the agency RAB has the imprimatur of the Secretary of that agency and is therefore controlling in matters of and is therefore controlling in matters of appointment. Under this principle, the decision of the DARAB in this case enjoys precedence over the Placement Committee. 5

Hence, this petition was filed with a prayer for a writ of preliminary injunction and/or restraining order to enjoin the execution of the assailed resolutions.

Without giving due course to the petition for a writ of preliminary injunction, the court required the parties to file their respective Comments. 6

On 12 November 1991, the Court gave due course to the petition and required the parties to submit their respective Memoranda. 7

The main issue for Our consideration is this: whether or not the CSC committed grave abuse discretion in reviewing and re-evaluating the ring or qualification of the petitioner Sinon.

The arguments of the petitioner can be summed up as follows:

1). In issuing the Resolution of 8 February 1991, the CSC in effect revoked the appointment that the petitioner received as early as 30 August 1989 and which was deemed permanent by virtue of the approval of the Regional Director of the Department of Agriculture:

2). In giving petitioner a rating of only 57.66%, 8 from his previous rating of 60.66% and at the same time according a rating of 59.32% to private respondent from a rating of only 57.32%, the CSC departed from its power which is limited only to that of "review", and hence encroached upon the power of appointment exclusively lodged in the appointment authority;

3) In giving due course to the appointment of respondent Banan in its Resolution of 8 February 1991, CSC was directing the appointment of a substitute of their own choice when the power to appoint was exclusively lodged in the appointing authority.

We rule as follows.

By grave abuse of discretion is meant such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. The abuse of discretion must be patent and gross as to amount to an evasion of positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion or hostility. 9

Contrary to the allegations of the petitioner, We do not find any evidence of grave abuse of discretion on the part of the CSC when it issued Resolution dated 8 February 1991 which in effect approved the appointment of respondent Banan over petitioner Sinon.

With the reorganization of the MAF into the DA with Executive order No. 116, it became imperative to "protect the security of tenure of Civil Service Officers and employees in the implementation of government reorganization". Thus, Congress passed Republic Act No. 6656. 10

It was under the same law of R.A. 6656 that the Placement Committee was created:

Section 6. In order that the best qualified and most deserving persons shall be appointed in any reorganization, there shall be created a Placement Committee in each department or agency to assist the appointing authority in the judicious selection and placement of personnel. The Committee shall consist of two (2) members appointed by the head of the department or agency, a representative of the appointing authority, and two (2) members duly elected by the employees holding positions in the first and second levels of the career service: Provided, that if there is a registered employee association with a majority of the employees as members, that employee association shall also have a representative in the Committee: Provided, Further, that immediately upon the approval of the staffing pattern of the department or agency concerned, such staffing pattern shall be made known to all officers and employees of the agency who shall be invited to apply for any of the positions authorized therein. Such application shall be considered by the committee in the placement and selection of personnel. (Emphasis supplied).

To "assist" mean to lend an aid to, 11 or to contribute effort in the complete accomplishment of an ultimate purpose intended to be effected by those engaged. 12

In contrast, to "recommend" 13 is to present one's advice or choice as having one's approval or to represent or urge as advisable or expedient. It involves the Idea that another has the final decision.

Clearly, the Placement Committee was charged with the duty of exercising the same discretionary functions as the appointing authority in the judicious selection and placement of personnel when the law empowered it to "assist" the appointment authority.

The same law also allows any officer or employee aggrieved by the appointments to file an appeal with the appointing authority who shall made a decision within thirty (30) days from the filing thereof. If the same employee is still not satisfied with the decision of the appointing authority, he may further appeal within ten (10) days from the receipt thereof the CSC. 14

In the case at bar, the Circular dated October 2, 1987 of the Office of the President created the agency Reorganization Appeals Board to address the problem of the employees affected by the reorganizations.

The foregoing legal measures spell out the remedies of aggrieved parties which make it impossible to give the status of finality to any appointment until all protests or oppositions are duly heard.

Thus, while it is true that the appointment paper received by petitioner Sinon on 30 August 1989 for the position of MAO had not conferred any permanent status and was still subject to the following conditions attached to any appointment in the civil service:

Provided that there is no pending administrative case against the appointee, no pending protest against the appointment, nor any decision by competent authority that will adversely affect the approval of the appointment . 15

Hence, for as long as the re-evaluation of the qualification filed by Banan was pending, the petitioner cannot claim that he had been issued with a "complete" appointment. Neither is there any point in asserting that his appointment had "cured" whatever changes was subsequently recommended by the DARAB. 16

The fact that the DARAB is capable of re-evaluating the findings of the Placement Committed only to find that Sinon is not qualified should no be taken as a grave abuse of discretion.

We cannot subscribe to petitioner Sinon's insistence that the public respondent CSC had disregarded the findings of the Placement Committee. The truth is, these findings of the Placement Committee. The truth is, these findings were re-evaluated and the report after such re-evaluation was submitted to and approved by the Secretary of Agriculture. The CSC affirmed the findings of the DARAB.

Because of all the foregoing circumstances, the jurisprudence cited by the petitioner Sinon appears to be incorrect. 17

Neither do we find in the Resolution of 8 February 1991, any statement by the CSC directing the appointment of the respondent Banan. Hence, there was no directive from the CSC that may be misinterpreted as a usurpation of any appointing power. 18

Besides, in affirming the appointment of Banan as recommended by the DARAB and approved by the Secretary of Agriculture, the CSC is only being consistent with the law. Section 4 or R.A. 6656 mandates that officers and employees holding permanent appointments shall be given preference for

appointment to the new positions in the approved staffing pattern comparable to their former positions. Also, the term incumbent officer and the privileges generally accorded to them would more aptly refer to Banan and not to petitioner Sinon whose appointment was never confirmed completely. 19 There is no dispute that the position of MAO in the old staffing pattern is most comparable to the MAO in the new staffing pattern.

Finally, the Solicitor General in behalf of the CSC correctly noted that the petitioner Sinon had conveniently omitted the then Secretary of Agriculture who had affixed his approval on the findings of the DARAB. Petitioner Sinon knew fully well that as head of the agency, the Secretary of Agriculture was the appointing authority.

It must be recalled that the whole purpose of reorganization is that is it is a "process of restructuring the bureaucracy's organizational and functional set-up, to make it more viable in terms of the economy, efficiency, effectiveness and make it more responsive to the needs of its public clientele as authorized by law." 20 For as long as the CSC confines itself within the limits set out by law and does not encroach upon the prerogatives endowed to other authorities, this Court must sustain the Commission.

WHEREFORE, the petition is DENIED with costs against the petitioner.

SO ORDERED.

G.R. No. 93355 April 7, 1992

LUIS B. DOMINGO, petitioner, vs. DEVELOPMENT BANK OF THE PHILIPPINES and CIVIL SERVICE COMMISSION, respondents.

REGALADO, J.:

This special civil action impugns the resolution 1 of respondent Civil Service Commission (CSC) promulgated on April 10, 1990 in CSC Case No. 473 setting aside its earlier resolution of November 27, 1989 and affirming the separation of petitioner Luis B. Domingo as Senior Training and Career Development Officer of the Development Bank of the Philippines (DBP).

Petitioner was employed by DBP as Senior Training and Career Development Officer on permanent status from February, 1979 to December 1986.

On December 3, 1986, Executive Order No 81 (The Revised Charter of DBP) was passed authorizing the reorganization of DBP in this wise:

Sec. 32. Authority to Reorganize. In view of the new scope of operations of the Bank, a reorganization of the Bank and a reduction in force are hereby authorized to achieve simplicity and economy in operations, including adopting a new staffing pattern to suit the reduced operations envisioned. The formulation of the program of reorganization shall be completed within six months after the approval of this Charter, and the full implementation of the reorganization program within thirty months thereafter.

Further, Sections 33 and 34 thereof provide:

Sec. 33. Implementing Details; Organization and Staffing of the Bank.

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In the implementation of the reorganization of the Bank, as authorized under the preceding section, qualified personnel of the Bank may be appointed to appropriate positions in the new staffing pattern thereof and those not so appointed are deemed separated from the service. No preferential or priority rights shall be given to or enjoyed by any officer or personnel of the Bank for appointment to any position in the new staffing pattern nor shall any officer or personnel be considered as having prior or vested rights with respect to retention in the Bank or in any position as may have been created in its new staffing pattern, even if he should be the incumbent of a similar position therein.

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Sec. 34. Separation Benefits. All those who shall retire from the service or are separated therefrom on account of the reorganization of the Bank under the provisions of this Charter shall be entitled to all gratuities and benefits provided for under existing laws and/or supplementary retirement plans adopted by and effective in the Bank: . . .

Pursuant thereto, DBP issued Board Resolution No. 304-87 allowing the issuance of temporary appointments to all DBP personnel in order to fully implement the reorganization. The resolution states in part:

It is understood that pursuant to Section 32 of the new DBP Charter full implementation of the reorganization program shall be completed within a period of thirty-six (36) months from the approval of this Charter. In this connection, the plantilla approved and appointments issued are purely interim and the Bank is reserving its right to put in place the permanent structure of the Bank as well as the permanent appointments thereto until the end of the 36-month period. 2

In effect, said resolution authorized the issuance of temporary appointments to all DBP personnel to allow maximum flexibility in the implementation of the reorganization. Such temporary appointments issued had a maximum period of twelve (12) months during which period the performance of the incumbents were assessed on the basis of the results of their evaluation.

With the passage of Executive Order No. 81 and Board Resolution No. 304 87, DBP undertook the evaluation and comparative assessment of all its personnel under the CSC approved New Performance Appraisal System, a peer and control rating process which served as an assessment tool of DBP's screening process.

Petitioner Domingo was issued a temporary appointment on January 2, 1987 for a period of one (1) year, which was renewed for another period up to November 30, 1988. Thereafter, in a memorandum 3 dated November 23, 1988 issued by the Final Review Committee, petitioner got a performance rating of "below average," by reason of which his appointment was "made to lapse."

Consequently, petitioner, together with a certain Evangeline Javier, filed with the CSC a joint verified complaint 4 against DBP for illegal dismissal. The complainants therein alleged that their dismissal constituted a violation of the Civil Service Law against the issuance of temporary appointments to permanent employees, as well as of their right to security of tenure and due process.

On November 27, 1989, CSC issued a resolution 5 in CSC Case No. 473 directing "the reappointment of Mr. Domingo and Ms. Javier as Senior Training and Career Development Officer and Research Analyst or any such equivalent rank under the staffing pattern of DBP." The order for reappointment was premised on the findings of the CSC that "(t)he action of the DBP to issue temporary appointments to all DBP personnel in order to allow for the maximum flexibility in evaluating the performance of incumbents is not in accord with civil service law rules," in that "(t)o issue a temporary appointment to one who has been on permanent status before will deprive the employee of benefits accorded permanent employees and will adversely affect his security of tenure," aside from the fact that such an act is contrary to Section 25 (a) of Presidential Decree No. 807.

DBP filed a motion for reconsideration 6 on December 27, 1989 alleging, inter alia, that the issuance of temporary appointments to all the DBP employees was purely an interim arrangement; that in spite of the temporary appointment, they continued to enjoy the salary, allowances and other benefits corresponding to permanent employees; that there can be no impairment of herein petitioner's security of tenure since the new DBP charter expressly provides that "qualified personnel of the bank may be appointed to appropriate positions in the new staffing pattern and those not so appointed are deemed separated from the service;" that petitioner was evaluated and comparatively assessed under a rating system approved by the respondent commission; and that petitioner cannot claim that he was denied due process of law considering that, although several appeals were received by the Final Review Committee from other employees similarly situated, herein petitioner never appealed his rating or the extension of his temporary appointment although he was advised to do so by his direct supervisor.

On April 10, 1990, CSC rendered the questioned resolution setting aside its previous decision and affirming the separation of herein petitioner. In so ruling, CSC explained that:

While it is true that this Commission ruled that the issuance of temporary appointment to all DBP personnel in order to allow "for maximum flexibility" in evaluating the performance of incumbents is not in accord with civil service laws and rules, however it cannot lose sight of the fact that appellants are among those who indeed got a below average rating (unsatisfactory) when their performance were reevaluated and comparatively reassessed by the Final Review Committee of the Bank approved by the Vice Chairman.

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In effect, the determinative factor for retention and the separation from the service is the individual performance rating.

While the Commission supports the principle of merit and fitness and strongly protects the security of tenure of civil service officials and employees which are the essence of careerism in the civil service, it does not however, sanction the reappointment of said officials and employees who have fallen short of the performance necessary in order to maintain at all times efficiency and effectiveness in the Office.

It bears stressing that the DBP submitted the records and documents in support of its allegations that Mr. Domingo and Ms. Javier have indeed got(ten) a below average rating (unsatisfactory) during the filing of the instant motion for reconsideration. Had DBP promptly submitted the records/documents supporting its allegations, this Commission at the outset should have sustained the separation of the appellants from the service on ground of poor performance (below average rating, unsatisfactory) after the reassessment and re-evaluation by the Bank through the Final Review Committee. The CSC could not have guessed that such was the basis of the DBP's termination of Domingo and Javier until the papers were submitted to it. . . .

It must be pointed out that appellants' separation from the service was the lapse of their temporary appointment. The non-extension or non-issuance of permanent appointments were principally based on their below average rating (unsatisfactory) performance after they were reevaluated and comparatively reassessed by the Final Review Committee of the Bank. After all, the 1986 DBP Revised Charter (E.O. No. 81) gives the Bank a wide latitude of discretion in the reappointment of its personnel, subject to existing civil service laws, rules and regulations.

There is no doubt that the DBP conducted a reevaluation and comparative reassessment of its employees for placement/retention (for permanent) and for separation from the service and found out that appellants are wanting of performance, having been rated as "Below Average." 7

Hence this petition, whereby petitioner raises the following issues:

1.

Petitioner's tenure of office was violated by respondents;

2. Petitioner was not afforded a day in court and was denied procedural due process in the unilateral evaluation by his peers of his efficiency ratings for the years 1987 and 1988;

3. Average and below average efficiency ratings are not valid grounds for termination of the service of petitioner;

4. Section 5 of the rules implementing Republic Act No. 6656 is repugnant to the constitutional mandate that "no officer or employee of the Civil Service be removed or suspended except for cause provided by law;" and

5. Section 16, Article XVIII, Transitory Provisions of the New Constitution was also violated by respondents. 8

I. Petitioner puts in issue the validity of the reorganization implemented by DBP in that the same violates his right to security of tenure. He contends that government reorganization cannot be a valid ground to terminate the services of government employees, pursuant to the ruling in the case of Dario vs. Mison, et al. 9

This statement of petitioner is incomplete and inaccurate, if not outright erroneous. Either petitioner misunderstood or he totally overlooked what was stated in the aforecited decision which held that "reorganizations in this jurisdiction have been regarded as valid provided they are pursued in good faith." As we said in Dario:

Reorganizations in this jurisdiction have been regarded as valid provided they are pursued in good faith. As a general rule, a reorganization is carried out in "good faith" if it is for the purpose of economy or to make bureaucracy more efficient. In that event, no dismissal (in case of dismissal) or separation actually occurs because the position itself ceases to exist. And in that case, security of tenure would not be a Chinese wall.

Clearly, from our pronouncements in Dario, reorganization is a recognized valid ground for separation of civil service employees, subject only to the condition that it be done in good faith. No less than the Constitution itself in Section 16 of the Transitory Provisions, together with Sections 33 and 34 of Executive Order No. 81 and Section 9 of Republic Act No. 6656, support this conclusion with the declaration that all those not so appointed in the implementation of said reorganization shall be deemed separated from the service with the concomitant recognition of their entitlement to appropriate separation benefits and/or retirement plans of the reorganized government agency.

The facts of this case, particularly the evaluation process adopted by DBP, bear out the existence of good faith in the course of reorganization.

As a tool in the assessment process, a bank-wide peer and control rating process was implemented. Under this process, the peers and supervisors rated the DBP employees. 10

To make the reorganization as open, representative and fair as possible, two principal groups were formed: (1) the Group Placement Screening Committee (GPSC) and (2) the Central Placement Screening Committee (CPSC), to review all recommendations (for retention or separation) prior to submissions to the Chairman an the Board of Directors. The members of the two screening committees were the Department and Group Heads and representatives from the Career Officials Association and the DBP Employees Union. The CPSC was further represented by the DBP Civil Service Officer, who sat as consultant to help resolve questions on Civil Service rules and regulations.

As an assessment tool to the Bank's screening process, a peer and control rating process was implemented bank-wide, the results of which were used as a gauge to determine the suitability of an employee to stay in the Bank. Through this rating, the Bank determines the value of the individual employee to the Bank with the help of his peers (peer rating) and his supervisors (control rating). 11

Also, as part of the evaluation process, a Final Review Committee, composed of the group, department or unit head, the heads of the Human Resource Center and of the Personnel Services, and representatives from the Career Officials Association and the Employees Union, was created to screen further and to recommend the change in status of the employee's appointment from temporary to permanent beginning 1988. For the rank and file level, the committee was chaired by the Vice-Chairman while the officer level was presided over by the Chairman of the Bank. 12

The performance rating system used and adopted by DBP was duly approved by the Civil Service Commission. Herein petitioner was evaluated and comparatively assessed under this approved rating system. This is shown by the memorandum to the Vice-Chairman from the DBP Final Review Committee wherein petitioner, among other DBP employees, was evaluated and rated on his performance, and was shown to have gotten a rating of "below average." 13

In the comment 14 filed by DBP with the CSC, respondent bank explained the procedure it adopted in the evaluation of herein petitioner, together with one Evangeline Javier, to wit:

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4. During the second phase of the screening process, the Bank used several instruments for determining proficiency or skills on the job. More than skills, however, the evaluation also covered trait factors to determine a positive work attitude. The Bank placed a premium on work attitude because it believes that technical and professional skills can easily be acquired by an ordinary normal individual as long as he has the right attitude towards learning.

5. These attitudes are part of the new corporate culture outlined in the corporate philosophy instituted for the Bank and disseminated thru the various corporate culture seminars, monthly tertulias, speeches of the Chairman and numerous various internal communications and bulletins. One of the most important values emphasized was TEAMWORK due to the very lean personnel force that the Bank was left with and the competition it has to contend with in the industry.

6. Mr. Domingo and Miss Javier were subjected to this rating process as all other employees of the Bank were.

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8. Mr. Domingo and Miss Javier were recommended for a renewal of temporary status after assessment of their performance because of several indications of lack of skill and their inability to work with others in the department where they were stationed. In a compassionate stance, it was considered

in the Central Personnel Committee to transfer them to another department or unit of the Bank where they may be more effective and productive, but they expressed preference to stay in the training unit of the Bank, the Human Resource Center.

9. Along with others whose performance for 1987 was found wanting, Mr. Domingo and Miss Javier were recommended for reappointment as temporary for another period from January to November 1988 to give the Bank sufficient time to consider their cases. However, in an evaluation of performance for all extendees in November 1988, Mr. Domingo and Miss Javier were again found wanting having both acquired a rating of "Below Average."

In addition, it is not disputed that DBP now has less than 2,000 employees from a former high level of around 4,000 employees in 1986. And, under Section 27 of Presidential Decree No. 807, the Government is authorized to lay off employees in case of a reduction due to reorganization, thus:

Sec. 27. Reduction in Force. Whenever it becomes necessary because of lack of work or funds or due to a change in the scope or nature of an agency's program, or as a result of reorganization, to reduce the staff of any department or agency, those in the same group or class of positions in one or more agencies within the particular department or agency wherein the reduction is to be effected shall be reasonably compared in terms of relative fitness, efficiency and length of service, and those found to be least qualified for the remaining positions shall be laid off.

Lastly, petitioner failed to invoke the presence of any of the circumstances enumerated under Section 2 of Republic Act No. 6656 which would show or tend to show the existence of bad faith in the implementation of the reorganization.

Quintessentially, the reorganization having been conducted in accordance with the mandate of Dario, it can safely be concluded that indeed the reorganization was attended by good faith, ergo, valid. The dismissal of herein petitioner is a removal for cause which, therefore, does not violate his security of tenure.

As a final note on this issue, we quote with approval the statement of Mme. Justice Ameurfina A. Melencio-Herrera in her dissenting opinion in the above-cited case:

To be sure, the reorganization could affect the tenure of members of the career service as defined in Section 5, Article IV of Presidential Decree No. 807, and may even result in the separation from office of some meritorious employees. But even then, the greater good of the greatest number and the right of the citizenry to a good government, and as they themselves have mandated through the vehicle of Proclamation No. 3, provide the justification for the said injury to the individual. In terms of values, the interest of an employee to security of tenure must yield to the interest of the entire populace and to an efficient and honest government.

II. Petitioner also maintains that "average" and "below average" efficiency ratings are not valid grounds for his termination from the service.

It has become a basic and primordial concern of the State to insure and promote the constitutional mandate that appointments in the civil service shall be made only according to merit and fitness pursuant to its adopted policy of requiring public officers and employees to serve with the highest degree of responsibility, integrity, loyalty and efficiency. 15 As a matter of fact, the development and retention of a competent and efficient work force in the public service is considered as a primary concern of the Government. 16 Hence, employees are selected on the basis of merit and fitness to perform the duties and assume the responsibilities of the position to which they are appointed. 17 Concomitantly, the government has committed itself to engender a continuing program of career and personnel development for all government employees, 18 by establishing a performance evaluation system to be administered in such manner as to continually foster the improvement of individual employee efficiency and organizational effectiveness. 19

All these abundantly show that the State puts a premium on an individual's efficiency, merit and fitness before one is accepted into the career service. A civil service employee's efficiency rating, therefore, is a decisive factor for his continued service with the Government. The inescapable conclusion is that a "below average" efficiency rating is sufficient justification for the termination of a government employee such as herein petitioner. This is the reason why, painful as it may be, petitioner's separation must be affirmed if public good is to be subserved. In the words of respondent commission in its questioned resolution, it cannot "sanction the reappointment of said officials and employees who have fallen short of the performance necessary in order to maintain at all times efficiency and effectiveness in the Office." 20

III. Petitioner finally contends that where the purpose of the evaluation proceeding is to ascertain whether he should be retained or separated from the service, it is a proceeding to determine the existence of a ground for his termination and, therefore, he should be afforded a day in court, pursuant

to the requirements of procedural due process, to defend himself against any adverse findings in the process of evaluation of his performance.

Petitioner's contention cannot be sustained.

Section 2 of Republic Act No. 6656 provides that "no officer or employee in the career service shall be removed except for a valid cause and after due notice and hearing." Thus, there is no question that while dismissal due to a bona fide reorganization is recognized as a valid cause, this does not justify a detraction from the mandatory requirement of notice and hearing. However, it is equally true and it is a basic rule of due process that "what the law prohibits is not the absence of previous notice but the absolute absence thereof and the lack of opportunity to be heard." 21 There is no violation of procedural due process even where no hearing was conducted for as long as the party was given a chance to present his evidence and defend himself.

The records show that petitioner had the opportunity to present his side and/or to contest the results of the evaluation proceedings. In DBP's motion for the reconsideration of the original decision of respondent commission, respondent bank averred:

It may be stated that although several appeals were received by the Final Review Committee from other employees similarly situated (i.e., also given temporary appointments for 1988), Mr. Domingo and Miss Javier never appealed their ratings or the extension of their temporary appointments in 1988. Even at this writing, the Bank has not received any formal appeal from them although they were advised to do so by their direct supervisor. 22

The fact that petitioner made no appeal to the Final Review Committee was duly considered by respondent commission in resolving said motion for reconsideration and in affirming the separation of petitioner from the service, noting that "appellants Mr. Domingo, and Miss Javier did not file or submit their opposition to the motion for reconsideration." Consequently, petitioner cannot, by his own inaction, legally claim that he was denied due process of law.

Considering petitioner's years of service, despite the unfortunate result of the reorganization insofar as he is concerned, he should be allowed separation and other retirement benefits accruing to him by reason of his termination, as provided for in Section 16, Article XVIII of the 1987 Constitution, as well as in Section 9 of Republic Act No. 6656 and Section 34 of Executive Order No. 81.

WHEREFORE, no grave abuse of discretion having been committed by respondent Civil Service Commission, its challenged resolution of April 10, 1990 is hereby AFFIRMED.

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 Commission 2 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:

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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.

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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, 1974 4 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.

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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 interrelated 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. AQUILINO T. LARIN, petitioner, vs. THE EXECUTIVE SECRETARY, SECRETARY OF FINANCE, COMMISSIONER OF THE BUREAU OF INTERNAL REVENUE AND THE COMMITTEE CREATED TO INVESTIGATE THE ADMINISTRATIVE COMPLAINT AGAINST AQUILINO T. LARIN, COMPOSED OF FRUMENCIO A. LAGUSTAN, JOSE B. ALEJANDRINO and JAIME M. MAZA, respondents.

DECISION TORRES, JR., J.:

Challenge in this petition is the validity of petitioners removal from service as Assistant Commissioner of the Excise Tax Service of the Bureau of Internal Revenue. Incidentally, he questions Memorandum order no. 164 issued by the Office of the President, which provides for the creation of A Committee to Investigate the Administrative Complaint Against Aquilino T. Larin, Assistant Commissioner, Bureau of Internal Revenue as well as the investigation made in pursuance thereto and Administrative Order No. 101 dated December 2, 1993 which found him guilty of grave misconduct in the administrative charge and imposed upon him the penalty of dismissal from office.

Likewise, petitioner seeks to assail the legality of Executive Order No. 132, issued by President Ramos on October 26, 1993, which provides for the Streamlining of the Bureau of Internal Revenue, and of its implementing rules issued by the Bureau of Internal Revenue, namely: a) Administrative Order No. 4-93, which provides for the Organizational Structure and Statement of General Functions of Offices in the National Office and b) Administrative Order No. 5-93, which provides for Redefining the Areas of Jurisdiction and Renumbering of Regional And District Offices.

The antecedent facts of the instant case as succinctly related by the Solicitor General are as follows:

On September 18, 1992, [1] a decision was rendered by the Sandiganbayan convicting herein petitioner Aquilino T. Larin, Revenue Specific Tax Officer, then Assistant Commisioner of the Bureau of Internal Revenue and his co-accused (except Justino E. Galban, Jr.) of the crimes of violation of Section 268 (4) of the National Internal Revenue Code and Section 3 (e) of R.A. 3019 in Criminal Cases Nos. 14208-14209, entitled People of the Philippines, Plaintiff vs. Aquilino T. Larin, Teodoro T. Pareno, Justino E. Galban, Jr. and Potenciana N. Evangelista, Accused, the dispositive portion of the judgment reads:

"WHEREFORE, judgment is now rendered in Criminal Cases Nos. 14208 and 14209 convicting accused Assistant Commissioner for Specific Tax Aquilino T. Larin, Chief of the Alcohol tax Division TEODORO P. PARENO, and Chief of the Revenue accounting Division POTENCIANA M. EVANGELISTA:

xxx

SO ORDERED.

The fact of petitioners conviction was reported to the President of the Philippines by the then Acting Finance Secretary Leong through a memorandum dated June 4, 1993. The memorandum states, inter alia:

This is a report in the case of Assistant Commissioner AQUILINO T. LARIN of the Excise tax Service, Bureau of Internal Revenue, a presidential appointee, one of those convicted in the Criminal Case Nos. 14208-14209, entitled People of the Philippines vs. Aquilino T. Larin, et. al. Referred to the Department of Finace by the Commissioner of Internal Revenue.

The cases against Pareno and Evangelista are being acted upon by the Bureau of Internal revenue as they non-presidential appointees.

xxx

It is clear from the foregoing that Mr. Larin has found beyond reasonable doubt to have committed acts constituting grave misconduct. Under the Civil Service Laws and Rules which require only preponderance of evidence, grave misconduct is punishable by dismissal.

Acting by authority of the President, Sr. Deputy Executive Secretary Leonardo A. Quisumbing issued Memorandum Order No. 164 dated August 25, 1993 which provides for the creation of an Executive Committee to investigate the administrative charge against herein petitioner Aquilino T. Larin. It states thus:

A Committee is hereby created to investigate the administrative complaint filed against Aquilino T. Larin, Assistant Commissioner, Bureau of Internal Revenue, to be composed of:

Atty. Frumencio A. Lagustan Chairman Assistant Executive Secretary for Legislation

Mr. Jose B. Alejandro Member Presidential Assistant

Atty. Jaime M. Maza Member Assistant commissioner of Inspector services Bureau of Internal Revenue

The Committee shall have the powers and prerogatives of (an) investigating committee under the administrative Code of 1987 including the power to summon witnesses, administer oath or take testimony or evidence relevant to the investigation by subpoena ad testificandum and subpoena duces tecum:

xxx

The Committee shall convene immediately, conduct the investigation in the most expeditious manner, and terminate the same as soon as practicable from its first scheduled date of hearing.

xxx

Consequently, the Committee directed the petitioner to respond to the administrative charge leveled against him through a letter dated September 17, 1993, thus:

Presidential Memorandum Order No. 164 dated August 25, 1993, a xerox copy of which is hereto attached for your ready reference, created an Investigation Committee to look into the charges against you which are also the subject of the Criminal Cases No. 14208 and 14209 entitled People of the Philippines vs. Aquilino T. Larin, et. al.

The committee has its possession a certified true copy of the Decision of the Sandiganbayan in the above-mentioned cases.

Pursuant to Presidential Memorandum Order No. 164, you are hereby directed to file your position paper on the aforementioned charges within seven (7) days from receipt hereof xxx.

Failure to file the required position paper shall be considered as a waiver on your part to submit such paper or to be heard, in which case, the Committee shall deem the case submitted on the basis of the documents and records at hand.

In compliance, petitioner submitted a letter dated September 30, 1993 which was addressed to Atty. Frumencio A. Lagustan , the Chairman of the Investigating Committee. In said latter, he asserts that,

The case being sub-judice, I may not , therefore, comment on the merits of issues involved for fear of being cited in contempt of Court. This position paper is thus limited to furnishing the Committee pertinent documents submitted with the Supreme Court and other tribunal which took cognizance of the case in the past, as follows:

xxx

The foregoing documents readily show that I am not administratively liable or criminally culpable of the charges leveled against me, and that the aforesaid cases are mere prosecutions caused to be filed and are being orchestrated by taxpayers who were prejudiced by multi-million peso assessments I caused to be issued against them in my official capacity as Assistant Commissioner, Excise Tax office of Bureau of Internal Revenue.

In the same letter, petitioner claims that the administrative complaint against him is already barred: a) on jurisdictional ground as the Office of the Ombudsman had already taken cognizance of the case and had caused the filing only of the criminal charges against him, b) by res judicata, c) double jeopardy, and d) because to proceed with the case would be redundant, oppressive and a plain persecution against him.

Meanwhile, the President issued the challenged Executive order No. 132 dated October 26, 1993 which mandates for the streamlining of the Bureau of Internal Revenue. Under said order, some positions and

functions are either abolished, renamed, decentralized or transferred to other offices, while other offices are also created. The Excise Tax Service or the Specific Tax Service, of which petitioner was the Assistant Commissioner, was one of those offices that was abolished by said executive order.

The corresponding implementing rules of Executive Order No. 132, namely, revenue Administrative Orders Nos. 4-93 and 5-93, were subsequently issued .by the Bureau of Internal Revenue.

On October 27, 1993, or one day after the promulgation of Executive Order No.132, the President appointed the following as BIR Assistant Commissioners:

1. Bernardo A. Frianeza 2. Dominador L. Galura 3. Jaime D. Gonzales 4. Lilia C. Guillermo 5. Rizalina S. Magalona 6. Victorino C. Mamalateo 7. Jaime M. Masa 8. Antonio N. Pangilinan 9. Melchor S. Ramos 10. Joel L. Tan-Torres

Consequently, the president, in the assailed Administrative Order No. 101 dated December 2, 1993, found petitioner guilty of grave misconduct in the administrative charge and imposed upon him the penalty of dismissal with forfeiture of his leave credits and retirement benefits including disqualification for reappointment in the government service.

Aggrieved, petitioner filed directly with this Court the instant petition on December 13, 1993 to question basically his alleged unlawful removal from office.

On April 17, 1996 and while the instant petition is pending, this Court set aside the conviction of the petitioner in Criminal Case Nos. 14208 and 14209.

In his petition, petitioner challenged the authority of the President to dismiss him from office. He argued that in so far as presidential appointees who are Career Executive Service Officers are concerned, the President exercises only the power of control not the power to remove. He also averred that the administrative investigation conducted under Memorandum Order No. 164 is void as it violated his right to due process. According to him, the letter of the Committee dated September 17, 1993 and his position paper dated September 30, 1993 are not sufficient for purposes of complying with the requirements of due process. He alleged that he was not informed of the administrative charges leveled against him nor was he given official notice of his dismissal.

Petitioner likewise claimed that he was removed as a result of the reorganization made by the Executive Department in the BIR pursuant to Executive Order No. 132. Thus, he assailed said Executive Order No. 132 and its implementing rules, namely, Revenue Administrative Orders 4-93 and 5-93 for being ultra vires. He claimed that there is yet no law enacted by Congress which authorizes the reorganization by the Executive Department of executive agencies, particularly the Bureau of Internal revenue. He said that the reorganization sought to be effected by the Executive Department on the basis of E.O. No. 132 is tainted with bad faith in apparent violation of Section 2 of R.A. 6656, otherwise known as the Act Protecting the Security of Tenure of Civil Service Officers and Employees in the Implementation of Government Reorganization.

On the other hand, respondents contended that since petitioner is the presidential appointee, he falls under the disciplining authority of the President. They also contended that E.O. No. 132 and its implementing rules were validly issued pursuant to Sections 48 and 62 of Republic Act No. 7645. Apart from this, the other legal bases of E.O. No. 132 as stated in its preamble are Section 63 of E.O No.127 (Reorganizing the Ministry of Finance), and Section 20, Book III of E.O. No. 292, otherwise known as the Administrative Code of 1987. In addition, it is clear that in Section 11 of R.A No.6656 future reorganization is expressly contemplated and nothing in said law that prohibits subsequent reorganization through an executive order. Significantly, respondents clarified that petitioner was not dismissed by virtue of EO 132. Respondents claimed that he was removed from office because he was found guilty of grave misconduct in the administrative cases filed against him.

The ultimate issue to be resolved in the instant case falls on the determination of the validity of petitioners dismissal from office. Incidentally, in order to resolve this matter, it is imperative that We consider these questions : a) Who has the power to discipline the petitioner?, b) Were the proceedings

taken pursuant to Memorandum Order No. 164 in accord with due process?, c) What is the effect of petitioners acquittal in the criminal case to his administrative charge? d) Does the President have the power to reorganize the BIR or to issue the questioned E.O. NO. 132?, e) Is the reorganization of BIR pursuant to E.O. No. 132 tainted with bad faith?

At the outset, it is worthy to note that the position of the Assistant Commissioner of the BIR is part of the Career Executive Service.[2] Under the law,[3] Career Executive Service officers, namely Undersecretary, Assistant Secretary, Bureau director, Assistant Bureau Director, Regional Director, Assistant Regional Director, Chief of Department Service and other officers of equivalent rank as may be identified by the Career Executive Service Board, are all appointed by the President. Concededly, petitioner was appointed as Assistant Commissioner in January, 1987 by then President Aquino. Thus, petitioner is a presidential appointee who belongs to career service of the Civil Service. Being a presidential appointee, he comes under the direct diciplining authority of the President. This is in line with the well settled principle that the power to remove is inherent in the power to appoint conferred to the President by Section 16, Article VII of the Constitution. Thus, it is ineluctably clear that Memorandum Order No. 164, which created a committee to investigate the administrative charge against petitioner, was issued pursuant to the power of removal of the President. This power of removal, however, is not an absolute one which accepts no reservation. It must be pointed out that petitioner is a career service officer. Under the Administrative Code of 1987, career service is characterized by the existence of security of tenure, as contra-distinguished from non-career service whose tenure is co-terminus with that of the appointing or subject to his pleasure, or limited to a period specified by law or to the duration of a particular project for which purpose the employment was made. As a career service officer, petitioner enjoys the right to security of tenure. No less than the 1987 Constitution guarantees the right of security of tenure of the employees of the civil service. Specifically, Section 36 of P.D. No. 807, as amended, otherwise known as Civil Service Decree of the Philippines, is emphatic that career service officers and employees who enjoy security of tenure may be removed only for any of the causes enumerated in said law. In other words, the fact that the petitioner is a presidential appointee does not give the appointing authority the license to remove him at will or at his pleasure for it is an admitted fact that he is likewise a career service officer who under the law is the recipient of tenurial protection, thus, may only be removed for a cause and in accordance with procedural due process.

Was petitioner then removed from office for a legal cause under a valid proceeding?

Although the proceedings taken complied with the requirements of procedural due process, this Court, however, considers that petitioner was not dismissed for a valid cause.

It should be noted that what precipitated the creation of the investigative committee to look into the administrative charge against petitioner is his conviction by the Sandiganbayan in criminal Case Nos. 14208 and 14209. As admitted by the respondents, the administrative case against petitioner is based on the Sandiganbayan Decision of September 18, 1992. Thus, in the Administrative Order No. 101 issued by Senior Deputy Executive Secretary Quisumbing which found petitioner guilty of grave misconduct, it clearly states that:

"This pertains to the administrative charge against Assistant Commissioner Aquilino T. Larin of the Bureau of Internal Revenue, for grave misconduct by virtue of a Memorandum signed by Acting Secretary Leong of the Department of Finance, on the basis of decision handed down by the Hon. Sandiganbayan convicting Larin, et. al. in Criminal Cases No. 14208 and 14209."[4]

In a nutshell, the criminal cases against petitioner refer to his alleged violation of Section 268 (4) of the National Internal Revenue Code and of section 3(e) of R.A. No.3019 as a consequence of his act of favorably recommending the grant of tax credit to Tanduay Distillery, Inc.. The pertinent portion of the judgment of the Sandiganbayan reads:

"As above pointed out, the accused had conspired in knowingly preparing false memoranda and certification in order to effect a fraud upon taxes due to the government. By their separate acts which had resulted in an appropriate tax credit of P180,701,682.00 in favor of Tanduay. The government had been defrauded of a tax revenue - for the full amount, if one is to look at the availments or utilization thereof (Exhibits 'AA' to 'AA-31-a'), or for a substantial portion thereof (P73,000,000.00) if we are to rely on the letter of Deputy Commissioner Eufracio D. Santos (Exhibits '21' for all the accused).

As pointed out above, the confluence of acts and omissions committed by accused Larin, Pareno and Evangelista adequately prove conspiracy among them for no other purpose than to bring about a tax credit which Tanduay did not deserve. These misrepresentations as to how much Tanduay had paid in ad valorem taxes obviously constituted a fraud of tax revenue of the government xxx.'[5]

However, it must be stressed at this juncture that the conviction of petitioner by the Sandiganbayan was set aside by this court in our decision promulgated on April 17, 1996 in G.R. Nos. 108037-38 and 10711920. We specifically ruled in no uncertain terms that : a) petitioner cannot be held negligent in relying on the certification of a co-equal unit in the BIR, b) it is not incumbent upon Larin to go beyond the certification made by the Revenue Accounting Division that Tanduay Distillery, Inc. had paid the ad valorem taxes, c) there is nothing irregular or anything false in Larin's marginal note on the

memorandum addressed to Pareno, the Chief of Alcohol Tax Division who was also one of the accused, but eventually acquitted, in the said criminal cases, and d) there is no proof of actual agreement between the accused, including petitioner, to commit the illegal acts charged. We are emphatic in our resolution in said cases that there is nothing "illegal with the acts committed by the petitioner(s)." We also declare that "there is no showing that petitioner(s) had acted irregularly, or performed acts outside of his (their) official functions." Significantly, these acts which We categorically declare to be not unlawful and improper in G.R. Nos. 108037-38 and G.R. Nos. 107119-20 are the very same acts for which petitioner is held to be administratively responsible. Any charge of malfeasance or misfeasance on the part of the petitioner is clearly belied by our conclusion in said cases. In the light of this decisive pronouncement, We see no reason for the administrative charge to continue - it must, thus, be dismissed.

We are not unaware of the rule that since administrative cases are independent from criminal actions for the same act or omission, the dismissal or acquittal of the criminal charge does not foreclose the institution of administrative action nor carry with it the relief from administrative liability.[6] However, the circumstantial setting of the instant case sets it miles apart from the foregoing rule and placed it well within the exception. Corollarily, where the very basis of the administrative case against petitioner is his conviction in the criminal action which was later on set aside by this court upon a categorical and clear findings that the acts for which he was administratively held liable are not unlawful and irregular, the acquittal of the petitioner in the criminal case necessarily entails the dismissal of the administrative action against him, because in such a case, there is no basis nor justifiable reason to maintain the administrative suit.

On the aspect of procedural due process, suffice it to say that petitioner was given every chance to present his side. The rule is well settled that the essence of due process in administrative proceedings is that a party be afforded a reasonable opportunity to be heard and to submit any evidence he may have in support of his defense.[7] The records clearly show that on October 1, 1993 petitioner submitted his letter-response dated September 30, 1993 to the administrative charged filed against him. Aside from his letter, he also submitted various documents attached as annexes to his letter, all of which are evidences supporting his defense. Prior to this, he received a letter dated September 17, 1993 from the Investigation Committee requiring him to explain his side concerning the charge. It cannot therefore be argued that petitioner was denied of due process.

Let us now examine Executive Order No. 132.

As stated earlier, with the issuance of Executive Order No. 132, some of the positions and offices, including the office of Excise Tax Services of which petitioner was the Assistant Commissioner, were abolished or otherwise decentralized. Consequently, the President released the list of appointed Assistant Commissioners of the BIR. Apparently, petitioner was not included.

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

We do not agree.

Under its Preamble, E.O. No. 132 lays down the legal basis of its issuance, namely: a) Section 48 and 62 of R.A. No. 7645, b) Section 63 of E.O. No. 127, and c) Section 20, Book III of E.O. No. 292.

Section 48 of R.A. 7645 provides that:

"Sec. 48. Scaling Down and Phase Out of Activities of Agencies Within the Executive Branch. -- The heads of departments, bureaus and offices and agencies are hereby directed to identify their respective activities which are no longer essential in the delivery of public services and which may be scaled down, phased out or abolished, subject to civil rules and regulations. xxx. Actual scaling down, phasing out or abolition of the activities shall be effective pursuant to Circulars or Orders issued for the purpose by the Office of the President." (italics ours)

Said provision clearly mentions the acts of "scaling down, phasing out and abolition" of offices only and does not cover the creation of offices or transfer of functions. Nevertheless, the act of creating and decentralizing is included in the subsequent provision of Section 62, which provides that:

"Sec. 62, Unauthorized Organizational Charges. -- Unless otherwise created by law or directed by the President of the Philippines, no organizational unit or changes in key positions in any department or agency shall be authorized in their respective organization structures and be funded from appropriations by this Act." (italics ours)

The foregoing provision evidently shows that the President is authorized to effect organizational changes including the creation of offices in the department or agency concerned.

The contention of petitioner that the two provisions are riders deserves scant consideration. Well settled is the rule that every law has in its favor the presumption of constitutionality.[8] Unless and until a specific provision of the law is declared invalid and unconstitutional, the same is valid and binding for all intents and purposes.

Another legal basis of E.O. No. 132 is Section 20, Book III of E.O. No. 292 which states:

"Sec.20. Residual Powers. -- Unless Congress provides otherwise, the President shall exercise such other powers and functions vested in the President which are provided for under the laws and which are not specifically enumerated above or which are not delegated by the President in accordance with law." (italics ours)

This provision speaks of such other powers vested in the President under the law. What law then which gives him the power to reorganize? It is Presidential Decree No. 1772[9] which amended Presidential Decree No. 1416. These decrees expressly grant the President of the Philippines the continuing authority to reorganize the national government, which includes the power to group, consolidate bureaus and agencies, to abolish offices, to transfer functions, to create and classify functions, services and activities and to standardize salaries and materials. The validity of these two decrees are unquestionable. The 1987 Constitution clearly provides that "all laws, decrees, executive orders, proclamations, letters of instructions and other executive issuances not inconsistent with this Constitution shall remain operative until amended, repealed or revoked."[10] So far, there is yet no law amending or repealing said decrees. Significantly, the Constitution itself recognizes future reorganizations in the government as what is revealed in Section 16 of Article XVIII, thus:

"Sec. 16. Career civil service employees separated from service not for cause but as a result of the xxx reorganization following the ratification of this Constitution shall be entitled to appropriate separation pay xxx."

However, We can not consider E.O. No. 127 signed on January 30, 1987 as a legal basis for the reorganization of the BIR. E.O. No. 127 should be related to the second paragraph of Section 11 of Republic Act No. 6656.

Section 11 provides inter alia:

"xxx

In the case of the 1987 reorganization of the executive branch, all departments and agencies which are authorized by executive orders promulgated by the President to reorganize shall have ninety days from the approval of this act within which to implement their respective reorganization plans in accordance with the provisions of this Act." (italics ours)

Executive Order No. 127 was part of the 1987 reorganization contemplated under said provision. Obviously, it had become stale by virtue of the expiration of the ninety day deadline period. It can not thus be used as a proper basis for the reorganization of the BIR. Nevertheless, as shown earlier, there are other legal bases to sustain the authority of the President to issue the questioned E.O. No. 132.

While the President's power to reorganize can not be denied, this does not mean however that the reorganization itself is properly made in accordance with law. Well-settled is the rule that reorganization is regarded as valid provided it is pursued in good faith. Thus, in Dario vs. Mison, this court has had the occasion to clarify that:

"As a general rule, a reorganization is carried out in good faith if it is for the purpose of economy or to make bureaucracy more efficient. In that event no dismissal or separation actually occurs because the position itself ceases to exist. And in that case the security of tenure would not be a Chinese Wall. Be that as it may, if the abolition which is nothing else but a separation or removal, is done for political reasons or purposely to defeat security of tenure, or otherwise not in good faith, no valid abolition takes place and whatever abolition is done is void ab initio. There is an invalid abolition as where there is merely a change of nomenclature of positions or where claims of economy are belied by the existence of ample funds."[11]

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

Sec. 2. No officer or employee in the career service shall be removed except for a valid cause and after due notice and hearing. A valid cause for removal exist when, pursuant to a bona fide reorganization, a position has been abolished or rendered redundant or there is a need to merge, divide, or consolidate positions in order to meet the exigencies of the service, or other lawful causes allowed by the Civil Service Law. The existence of any or some of the following circumstances may be considered as evidence of bad faith in the removals made as a result of the reorganization, giving rise to a claim for reinstatement or reappointment by an aggrieved party:

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

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

c) Where incumbents are replaced by those less qualified in terms of status of appointment, performance and merit;

d) Where there is a reclassification of offices in the department or agency concerned and the reclassified offices perform substantially the same functions as the original offices;

e) Where the removal violates the order of separation provided in Section 3 hereof."

A reading of some of the provisions of the questioned E.O. No. 132 clearly leads us to an inescapable conclusion that there are circumstances considered as evidences of bad faith in the reorganization of the BIR.

Section 1.1.2 of said executive order provides that:

"1.1.2 The Intelligence and Investigation Office and the Inspection Service are abolished. An Intelligence and Investigation Service is hereby created to absorb the same functions of the abolished office and service. xxx" (italics ours)

This provision is a clear illustration of the circumstance mentioned in Section 2 (b) of R.A. No. 6656 that an office is abolished and another one performing substantially the same function is created.

Another circumstance is the creation of services and divisions in the BIR resulting to a significant increase in the number of positions in the said bureau as contemplated in paragraph (a) of section 2 of R.A. No. 6656. Under Section 1.3 of E.O. No. 132, the Information Systems Group has two newly created Systems Services. Aside from this, six new divisions are also created. Under Section 1.2.1, three more divisions of the Assessment Service are formed. With this newly created offices, there is no doubt that a significant increase of positions will correspondingly follow.

Furthermore, it is perceivable that the non-reappointment of the petitioner as Assistant Commissioner violates Section 4 of R.A. No. 6656. Under said provision, officers holding permanent appointments are given preference for appointment to the new positions in the approved staffing pattern comparable to their former position or in case there are not enough comparable positions to positions next lower in rank. It is undeniable that petitioner is a career executive officer who is holding a permanent position. Hence, he should have given preference for appointment in the position of Assistant Commissioner. As claimed by petitioner, Antonio Pangilinan who was one of those appointed as Assistant Commissioner, "is an outsider of sorts to the bureau, not having been an incumbent officer of the bureau at the time of the reorganization." We should not lose sight of the second paragraph of Section 4 of R.A. No. 6656 which explicitly states that no new employees shall be taken in until all permanent officers shall have been appointed for permanent position.

IN VIEW OF THE FOREGOING, the petition is granted, and petitioner is hereby reinstated to his position as Assistant Commissioner without loss of seniority rights and shall be entitled to full backwages from the time of his separation from service until actual reinstatement unless, in the meanwhile, he would have reached the compulsory retirement age of sixty-five years in which case, he shall be deemed to have retired at such age and entitled thereafter to the corresponding retirement benefits.

SO ORDERED.
G.R. No. 111091 August 21, 1995 ENGINEER CLARO J. PRECLARO, petitioner, vs. SANDIGANBAYAN and PEOPLE OF THE PHILIPPINES, respondents.

KAPUNAN, J.: On 14 June 1990, petitioner was charged before the Sandiganbayan with a violation of Sec. 3(b) of R.A. No. 3019 as amended, otherwise known as the Anti-Graft and Corrupt Practices Act. The information against him read as follows: That on or about June 8, 1990, or sometime prior thereto, in Quezon City, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, a public officer, being then the Project Manager/ Consultant of the Chemical Mineral Division, Industrial Technology Development Institute, Department of Science and Technology, a component of the Industrial Development Institute (ITDI for brevity) which is an agency of the Department of Science and Technology (DOST for brevity), wherein the Jaime Sta. Maria Construction undertook the construction of the building in Bicutan, Taguig, Metro Manila, with a total cost of SEVENTEEN MILLION SIX HUNDRED NINETY FIVE THOUSAND PESOS (P17,695,000.00) jointly funded by the Philippine and Japanese Governments, and while the said construction has not yet been finally completed, accused either directly requested and/or demanded for himself or for another, the sum of TWO HUNDRED THOUSAND PESOS (P200,000.00), claimed as part of the expected profit of FOUR HUNDRED SIXTY THOUSAND PESOS (P460,000.00) in connection with the construction of that government building wherein the accused had to intervene under the law in his capacity as Project Manager/Consultant of said construction said offense having been committed in relation to the performance of his official duties.
CONTRARY TO LAW. 1

On 20 July 1990, during arraignment, petitioner pleaded "not guilty" to the charges against him. On 30 June 1993, after trial on the merits, the Second Division of the Sandiganbayan rendered judgment finding petitioner guilty beyond reasonable doubt. The dispositive portion reads as follows: WHEREFORE, judgment is hereby rendered finding accused Claro Preclaro y Jambalos GUILTY beyond reasonable doubt of the violation of Section 3, paragraph (b) of Republic Act No. 3019, as amended, otherwise known as the Anti-Graft and Corrupt Practices Act, and he is hereby sentenced to suffer an indeterminate penalty ranging from SIX (6) YEARS and ONE (1) MONTH, as the minimum, to TEN (10) YEARS and ONE (1) DAY, as the maximum, perpetual disqualification from public office and to pay the costs of this action.
SO ORDERED. 2

The antecedent facts are largely undisputed. On 1 October 1989, the Chemical Mineral Division of the Industrial Technology Development Institute (ITDI), a component of the Department of Science and Technology (DOST) employed Petitioner under a written contract of services as Project Manager to supervise the construction of the ITDI-CMD (JICA) Building at the DOST Compound in Bicutan, Taguig, Metro Manila. 3 The contract was to remain in effect from October 1, 1989 up to the end of the construction period unless sooner terminated. 4 Petitioner was to be paid a monthly salary drawn from counter-part funds duly financed by foreign-assisted projects and government funds duly released by the Department of Budget and Management. 5

In November 1989, to build the aforementioned CMD Structure, DOST contracted the services of the Jaime Sta. Maria Construction Company with Engr. Alexander Resoso, as the company's project engineer. 6 How petitioner committed a violation of the Anti-Graft & Corrupt Practices Act is narrated in the Comment of the Solicitor General and amply supported by the records. The material portions are hereunder reproduced: xxx xxx xxx 3. In the month of May, 1990, Alexander Resoso, Project Engineer of the Sta. Maria Construction Company, was in the process of evaluating a Change Order for some electricals in the building construction when petitioner approached him at the project site (p. 11, 25, Ibid.). 4. Unexpectedly, petitioner made some overtures that expenses in the Change Order will be deductive (meaning, charged to the contractor by deducting from the contract price), instead of additive (meaning, charged to the owner). Petitioner intimated that he can forget about the deductive provided he gets P200,000.00, a chunk of the contractor's profit which he roughly estimated to be around P460,000.00 (pp. 12-13, 22, Ibid.). 5. Having conveyed the proposal to Jaime Sta. Maria, Sr., the owner of Sta. Maria Construction Company, Resoso thereafter asked petitioner if he wanted a rendezvous for him to receive the money. Petitioner chose Wendy's Restaurant, corner E. Delos Santos Avenue and Camias Street, on June 6, 1990 at around 8:00 o'clock in the evening (p. 14, Ibid.). 6. However, Sta. Maria, Sr. asked for two (2) more days or until the 8th of June, perceiving financial constraints (Ibid.). 7. Petitioner relented, saying "O.K. lang with me because we are not in a hurry." (p. 15, Ibid.) Petitioner was thereafter asked to bring along the result of the punch list (meaning, the list of defective or correctible works to be done by the contractor) (p. 15, Ibid.; p. 10, TSN, 18 Oct. 1991). 8. On 7 June 1990, Sta. Maria, Sr. and Resoso proceeded to the National Bureau of Investigation (NBI) to report the incident (p. 15, 35, Ibid.). 9. The NBI suggested an entrapment plan to which Sta. Maria, Sr. signified his conformity (p. 16, TSN, 12 Oct. 1990). Accordingly, Sta. Maria, Sr. was requested to produce the amount of P50,000.00 in P500.00 denomination to represent the grease money (p. 37, TSN, 6 Sept. 1990). 10. The next day, or on 8 June 1990, Resoso delivered the money to the NBI. Thereafter, the money was dusted with flourescent powder and placed inside an attache case (pp. 1617, Ibid.). Resoso got the attache case and was instructed not to open it. Similarly, he was advised to proceed at the Wendy's Restaurant earlier than the designated time where a group of NBI men awaited him and his companion, Sta. Maria, Jr. (pp. 17-18, Ibid.). 11. Hence, from the NBI, Resoso passed by the Jade Valley Restaurant in Timog, Quezon City, to fetch Sta. Maria, Jr. (Ibid.).

12. At around 7:35 p.m., Resoso and Sta. Maria, Jr. arrived at the Wendy's Restaurant. They were led by the NBI men to a table previously reserved by them which was similarly adjacent to a table occupied by them (pp. 18-19, Ibid.). 13. Twenty minutes later, petitioner arrived. Supposedly, the following conversation took place, to wit: JUSTICE BALAJADIA: q. When Dave Preclaro arrived, what did he do? a. We asked him his order and we talked about the punch list. q. What was his comment about the punch list? a. He told us that it is harder to produce small items than big ones. q. How long did you converse with Engr. Claro Preclaro? a. I think thirty minutes or so. q. Was Preclaro alone when he came? a. Yes, Your Honor. xxx xxx xxx PROS. CAOILI: q. When you talk[ed] about his punch list, did you talk about anything else? a. Engineer Sta. Maria, Jr., they were conversing with Dave Preclaro and he told [him], "O, paano na." JUSTICE ESCAREAL: q. Who said "Paano na?" a. Engineer Sta. Maria, [Jr.]. And then Preclaro told [him], "Paano, How will the money be arranged and can I bring it?" he said. And then Jimmy Sta. Maria, Jr. told him it was arranged on two bundles on two envelopes. And then Dave Preclaro told, "Puede" and he asked Jimmy Sta. Maria, Jr. if there is express teller and could he deposit during night time but Engineer Sta. Maria, Jr. told him, "I do

not have any knowledge or I do not have any express teller you can deposit. I only know credit card." PROS. CAOILI: q. When Engr. Sta. Maria intervened and interviewed him that way, was there anything that happened? a. Jimmy Sta. Maria, Jr. handed two envelopes to Preclaro. q. Did Claro Preclaro receive these two envelopes from Engineer Sta. Maria? a. Yes, sir. (pp. 19-21, Ibid., See also pp. 13-14, TSN, 29 Oct. 1990.) 14. From the moment petitioner received the two envelopes with his right hand, thereafter placing them under his left armpit, he was accosted by the NBI men (p. 22, TSN, 12 Oct. 1990). 15. A camera flashed to record the event. Petitioner instinctively docked to avoid the taking of pictures. In such manner, the two envelopes fell (p. 23, Ibid.). 16. The NBI men directed petitioner to pick up the two envelopes. Petitioner refused. Hence, one of the NBI men picked up the envelopes and placed them inside a big brown envelope (p. 27, Ibid.) 17. Petitioner was thenceforth brought to the NBI for examination (p. 28; Ibid.).
18. At the NBI Forensic Chemistry Section, petitioner's right palmar hand was tested positive of flourescent powder. The same flourescent powder, however, cannot be detected in petitioner's Tshirt and pants (p. 5, TSN, 29 Oct. 1990).7

xxx xxx xxx Thus, as brought out at the outset, an information was filed against petitioner which, after due hearing, resulted in his conviction by the Sandiganbayan. Not satisfied with the decision, petitioner instituted the present petition for review, ascribing to the Sandiganbayan the following errors: 1. THE SANDIGANBAYAN ERRED IN TAKING COGNIZANCE OF THE CASE, INSTEAD OF DISMISSING IT FOR LACK OF JURISDICTION, THE [PETITIONER] NOT BEING A PUBLIC OFFICER; and 2. THE SANDIGANBAYAN ERRED IN NOT RULING THAT NOT ALL THE ELEMENTS OF THE OFFENSE CHARGED HAVE BEEN ESTABLISHED BEYOND REASONABLE DOUBT AND/OR THAT THE GUILT OF THE [PETITIONER] HAS NOT BEEN ESTABLISHED BEYOND REASONABLE DOUBT. We find the petition unmeritorious.

On the first issue, petitioner asserts that he is not a public officer as defined by Sec. 2(b) of the AntiGraft & Corrupt Practices Act (R.A. No. 3019 as amended), because he was neither elected nor appointed to a public office. Rather, petitioner maintains that he is merely a private individual hired by the ITDI on contractual basis for a particular project and for a specified period 8 as evidenced by the contract of services 9 he entered into with the ITDI. Petitioner, to further support his "theory," alleged that he was not issued any appointment paper separate from the abovementioned contract. He was not required to use the bundy clock to record his hours of work and neither did he take an oath of office. 10 We are not convinced by petitioner's arguments. Petitioner miscontrues the definition of "public officer" in R.A. No. 3019 which, according to Sec. 2(b) thereof "includes elective and appointive officials and employees, permanent or temporary, whether in the classified or unclassified or exemption service receiving compensation, even nominal, from the government. . . ." The word "includes" used in defining a public officer in Sec. 2(b) indicates that the definition is not restrictive. The terms "classified, unclassified or exemption service" were the old categories of positions in the civil service which have been reclassified into Career Service and Non-Career Service 11 by PD 807 providing for the organization of the Civil Service Commission 12 and by the Administrative Code of 1987. 13 Non-career service in particular is characterized by (1) entrance on bases other than those of the usual test of merit and fitness utilized for the career service;and (2) tenure which is limited to a period specified by law, or which is coterminous with that of the appointing authority or subject to his pleasure, or which is limited to the duration of a particular project for which purpose employment was made. The Non-Career Service shall include: (1) Elective officials and their personal or confidential staff; (2) Secretaries and other officials of Cabinet rank who hold their positions at the pleasure of the President and their personal or confidential staff(s); (3) Chairman and members of commissions and boards with fixed terms of office and their personal or confidential staff; (4) Contractual personnel or those whose employment in the government is in accordance with a special contract to undertake a specific work or job, requiring special or technical skills not available in the employing agency, to be accomplished within a specific period, which in no case shall exceed one year, and performs or accomplishes the specific work or job, under his own responsibility with a minimum of direction and supervision from the hiring agency; and
(5) Emergency and seasonal personnel. (Emphasis ours.)
14

From the foregoing classification, it is quite evident that petitioner falls under the non-career service category (formerly termed the unclassified or exemption service) of the Civil Service and thus is a public officer as defined by Sec. 2(b) of the Anti-Graft & Corrupt Practices Act (R.A. No. 3019).

The fact that petitioner is not required to record his working hours by means of a bundy clock or did not take an oath of office became unessential considerations in view of the above-mentioned provision of law clearly including petitioner within the definition of a public officer. Similarly, petitioner's averment that he could not be prosecuted under the Anti-Graft & Corrupt Practices Act because his intervention "was not required by law but in the performance of a contract of services entered into by him as a private individual contractor," 15 is erroneous. As discussed above, petitioner falls within the definition of a public officer and as such, his duties delineated in Annex "B" of the contract of services 16 are subsumed under the phrase "wherein the public officer in his official capacity has to intervene under the law." 17 Petitioner's allegation, to borrow a cliche, is nothing but a mere splitting of hairs. Among petitioner's duties as project manager is to evaluate the contractor's accomplishment reports/billings 18hence, as correctly ruled by the Sandiganbayan he has the "privilege and authority to make a favorable recommendation and act favorably in behalf of the government," signing acceptance papers and approving deductives and additives are some examples. 19 All of the elements of Sec. 3(b) of the Anti-Graft & Corrupt Practices Act are, therefore, present. Anent the second issue, we likewise find Petitioner's allegations completely bereft of merit. Petitioner insists that the prosecution has failed to establish his guilt beyond reasonable doubt and that the charges against him should be rejected for being improbable, unbelievable and contrary to human nature. We disagree. Proof beyond reasonable doubt does not mean that which produces absolute certainty. Only moral certainty is required or "that degree of proof which produces conviction in an unprejudiced mind." 20 We have extensively reviewed the records of this case and we find no reason to overturn the findings of the Sandiganbayan. Petitioner enumerates the alleged improbabilities and inconsistencies in the testimonies of the prosecution witnesses. We shall examine the testimonies referred to with meticulousness. Petitioner asserts that it was improbable for him to have demanded P200,000.00 from Engr. Resoso, when he could have just talked directly to the contractor himself. It is quite irrelevant from whom petitioner demanded his percentage share of P200,000.00 whether from the contractor's project engineer, Engr. Alexander Resoso or directly from the contractor himself Engr. Jaime Sta. Maria Sr. That petitioner made such a demand is all that is required by Sec. 3(b) of R.A. No. 3019 and this element has been sufficiently established by the testimony of Engr. Resoso, thus: xxx xxx xxx Q You said when you were computing your Change Order Mr. Preclaro or Dave Preclaro whom you identified approached you, what did you talk about? A He mentioned to me that we are deductive in our Change Order three and four so after our conversation I told this conversation to my boss that we are deductible in the Change Order three and four and then my boss told me to ask why it is deductive.

Q Did you ask the accused here, Dave Preclaro why it is considered deductive? A Yes, sir. Q What was his answer if any? A I asked him that my boss is asking me to ask you how come it became deductive when my computation is additive and he told me that I have done so much for your company already and then he picked up cement bag paper bag and computed our alleged profit amounting to One Hundred Sixty Thousand Pesos and then he told me that he used to use some percentage in projects maximum and minimum and in our case he would use a minimum percentage and multiply to 60 and . . . JUSTICE ESCAREAL: Q What is 460? A P460,000.00 and he said take of the butal and get two Hundred Thousand Pesos. JUSTICE BALAJADIA: What is the translation now? WITNESS: A And he said disregard the excess and I will just get the P200,000.00. (Emphasis ours.) PROS. CAOILI: Q What does he mean by that if you know? A I do not know sir. He just said, I will get the P200,000.00 and tell it to your boss. (Emphasis ours.) JUSTICE BALAJADIA: Q What is P200,000.00? A It is Two Hundred Thousand Pesos. PROS. CAOILI: Q What did you answer him when he told you that?

A He told me to forget the deductive and electrical and after that I told my boss what he told me. Q Who is your boss? A Santa Maria Sr. Q What was the reaction of your boss when you relayed the message to Mr. Preclaro? A The next day he told me to ask Dave where and when to pick up the money so the next day I asked Dave "Where do you intend to get the money, the Boss wanted to know." Q What was the answer of Dave? A And he told me, Wendy's Restaurant at 3:00 o'clock. Q When? A June 6 Wednesday. Q When he told you that did you comply with June 6 appointment? A I told my boss what he told me again that the meeting will take place at Wendy's Restaurant corner Edsa and Camias Street at around 8:00 o'clock p.m. June 6, Wednesday. Q What did your boss tell you? A The next day he told me to ask Dave. Q What did your boss tell you? A My boss told me to ask Dave to postpone the meeting on June 6 to be postponed on June 8 at the same place and same time because my boss is having financial problem. Q Did you relay the postponement to Dave Preclaro? A Yes sir. I told what my boss told me. Q What was his reaction? A Dave told me "O.K. lang with me" because we are not in a hurry. Any way we are the ones to sign the acceptance papers and my boss instructed me that on Friday to ask Dave to bring along the result of the punch list and if possible also to bring along the acceptance papers to be signed by Dave, Lydia Mejia and Dr. Lirag the director.

Q What happened next after meeting with Preclaro to relay the postponement if any? A Nothing happened. The next day, Thursday the boss instructed me to go with him to the NBI to give a statement. Q Did you go to the NBI and report to the incident to the NBI? A Yes sir. Q Did you give a statement before any of the agents of the of the NBI?
A Yes sir. 21

xxx xxx xxx Likewise, petitioner's alleged refusal to see Mr. Jaime Sta. Maria Sr. when the latter tried to arrange meetings with him regarding his demand 22 does not weaken the cause against petitioner. It does not at all prove that petitioner did not ask for money. Conceivably petitioner did not muster enough courage to ask money directly from the contractor himself. Getting the amount through the project engineer would be safer because if Mr. Sta. Maria, Sr. had refused to give money, petitioner could always deny having made the demand. Petitioner contends that the percentage demanded in the amount of P200,000.00 is too high considering that the estimated profit of the contractor from the CMD project is only P460,000.00. In petitioner's words, this would "scare the goose that lays the golden egg." 23 We reject this argument. The aforementioned contractor's profit is petitioner's own computation as testified to by Engr. Resoso: xxx xxx xxx A I asked him that my boss is asking me to ask you how come it became deductive when my computation is additive and he told me that I have done so much for your company already and then he picked up cement bag paper bag and computed our alleged profit amounting to One Hundred Sixty Thousand Pesos and then he told me that he used to use some percentage in projects maximum and minimum and in our case he would use a minimum percentage and multiply to 460 and . . . (Emphasis ours.) JUSTICE ESCAREAL: Q What is 460? A P460,000.00 and it ended to P215 thousand or P20,000.00 and he said take of the butal and get the Two Hundred Thousand Pesos. (Emphasis ours.) JUSTICE BALAJADIA: What is the translation now?

WITNESS: A And he said disregard the excess and I will just get the P200,000.00. PROS. CAOILI: Q What does he mean by that if you know? A I do not know sir.
He just said, I will get the P200,000.00 and tell it to your boss. 24

xxx xxx xxx The records, however, do not show the true and actual amount that the Sta. Maria Construction will earn as profit. There is, therefore, no basis for petitioner's contention as the actual profit may be lower or higher than his estimation. Besides, as related by Engr. Resoso, petitioner considers the P200,000.00 percentage proper compensation since he has allegedly done so much for the Sta. Maria construction company. 25 Petitioner also argues that: According to STA. MARIA, SR., they were deductive by P280,000.00 (Id., pp. 34-35). If STA. MARIA CONSTRUCTION was deductive in the amount of P280,000.00, why would the petitioner still demand P200,000.00 which would increase the contractor's loss to P480,000.00!
It might have been different if the changes were additive where STA. MARIA CONSTRUCTION would have earned more, thereby providing motive for the petitioner to ask for a percentage! 26

But this is precisely what petitioner was bargaining for P200,000.00 in exchange for forgetting about the deductive 27 and thus prevent the Sta. Maria Construction from incurring losses. Petitioner's contention that it was impossible for him to make any demands because the final decision regarding accomplishments and billing lies with the DOST technical committee is unacceptable. Petitioner is part of the abovementioned technical committee as the ITDI representative consultant. This is part of his duties under the contract of services in connection with which he was employed by the ITDI. Even, assuming arguendo that petitioner does not make the final decision, as supervisor/consultant, his recommendations will necessarily carry much weight. Engr. Resoso testified thus: PROS. CAOILI: Q As a Project Engineer to whom do you present your billing papers accomplishment report or purchase order? A The billing paper was being taken cared of by the, of our office. I personally do my job as supervision in the construction.

Q Do you have any counterpart to supervise the project from the government side? A Yes, we have. Yes, the DOST have a technical Committee Infra-Structure Committee and also the ITDI as its own representative. Q Who composed the Technical Committee of the DOST? A A certain Engineer Velasco, Engineer Sande Banez and Engineer Mejia. Q How about the ITDI? A The ITDI representative composed of Dave Preclaro. Q Who is this Dave Preclaro? A He is the consultant of ITDI. (Emphasis ours.) xxx xxx xxx ATTY. CAOILI: Q As Project Engineer do you consult to any body regarding your job? A First if there is any problem in the site I consult my boss. PROS. CAOILI: Q How about with the other consultants representing the ITDI and DOST? A In the construction site we have meeting every Monday to discuss any problem. Q With whom do you discuss this problem? A The Infra-structure Committee of DOST and the Infra-structure Committee of ITDI, the architect and the contractor. We had weekly meetings. Q What matters if any do you consult with Mr. Claro Preclaro? ATTY. JIMENEZ: No basis. JUSTICE ESCAREAL: They met on problems on Mondays.

ATTY. JIMENEZ: But there is no mention of Preclaro specifically. JUSTICE ESCAREAL: With the representative of DOST and Preclaro ATTY. JIMENEZ: Does that also mean that Preclaro is also among the representatives he is going to consult with? Well any way. . . JUSTICE ESCAREAL: Witness may answer the question. Read back the question. COURT STENOGRAPHER: Reading back the question as ordered by the Court. WITNESS:
A Every Monday meeting we tackle with accomplishment report the billing papers. 28 (Emphasis ours.)

xxx xxx xxx Petitioner also claims that the testimonies of the prosecution witnesses regarding the entrapment itself are conflicting, doubtful or improbable: (aaa) according to RESOSO, only FOUR (4) P500 bills were dusted with flourescent powder and used in the alleged entrapment.
Contradicting RESOSO, STA. MARIA, SR. said that he gave fifty thousand (P50,000.00) pesos in P500 denomination to the NBI. 29

There is no such inconsistency. Said witnesses were testifying on two different subjects. Engr. Sta. Maria, Sr.'s testimony touched on the amount he gave the NBI for use in the entrapment while Engr. Resoso's declaration referred only to the number of bills dusted with flourescent powder. Petitioner, likewise, misappreciated the following testimony of Resoso: PROS. CAOILI: Q What did he do with the two envelopes upon receiving the same?

A Then he asked Jaime Sta. Maria, Jr. if there is bank teller express, if he could deposit the money but Mr. Sta. Maria said, "I do not have, I only have credit cards." 30

Petitioner intended to deposit the money in his own account not that of Mr. Sta. Maria, Jr. He was merely inquiring from the latter if there was an express teller nearby where he could make the deposit. Mr. Sta. Maria Jr. himself testified as follows:
A He asked me if there was express teller. I told him I do not know then he asked me whether it is possible to deposit at the Express Teller at that time. I told him I don't know because I have no express teller card and he asked me how am I going to arrange, how was it arranged if I will bring it, can I bring it. Then I told him that it was placed in two envelopes consisting of 500 Peso bills and then he said "Okay na yan." 31

The failure of the NBI to take photographs of the actual turn-over of the money to petitioner is not fatal to the People's cause. The transaction was witnessed by several people, among whom were Engr. Resoso, Mr. Sta. Maria Jr. and the NBI agents whose testimonies on the circumstances before, during and after the turn-over are consistent, logical and credible. According to NBI Agent Francisco Balanban Sr., they purposely took no photographs of the actual turn-over so as not to alert and scare off the petitioner. During cross-examination Agent Balanban Jr. stated: xxx xxx xxx Q Now, of course, this entrapment operation, you made certain preparation to make sure that you would be able to gather evidence in support of the entrapment? A Yes sir. Q As a matter of fact you even brought photographer for the purpose? A That is right sir. Q And that photographer was precisely brought along to record the entrapment? A Yes sir. Q From the beginning to the end, that was the purpose? A At the time of the arrest sir. ATTY. JIMENEZ: From the time of the handing over of the envelopes until the entrapment would have been terminated?

A No sir we plan to take the photograph only during the arrest because if we take photographs he would be alerted during the handing of the envelopes. (Emphasis ours.) Q So you did not intend to take photographs of the act of handing of the envelopes to the suspect? A We intended but during that time we cannot take photographs at the time of the handling because the flash will alert the suspect. (Emphasis ours.) JUSTICE ESCAREAL: Why did you not position the photographer to a far distance place with camera with telescopic lens? A We did not Your Honor. ATTY. JIMENEZ: So was it your intention to take photographs only at the time that he is already being arrested?
A Yes sir. 32

xxx xxx xxx Petitioner insists that when his hands were placed under ultra-violet light, both were found negative for flourescent powder. This is petitioner's own conclusion which is not supported by evidence. Such self-serving statement will not prevail over the clear and competent testimony and the report 33 submitted by the forensic expert of the NBI Ms. Demelen R. dela Cruz, who was the one who conducted the test and found petitioner's right palmar hand positive for flourescent powder, the same hand he used, according to witnesses Resoso and Sta. Maria Jr., to get the money from the latter. xxx xxx xxx Q Mrs. dela Cruz since when have you been a Forensic Chemist at NBI? A Since 1981 sir. Q JUSTICE ESCAREAL: Q By the way, is the defense willing to admit that the witness is a competent as . . . . ATTY. JIMENEZ: Admitted Your Honor. PROS. CAOILI:

Madam Witness did you conduct a forensic examination in the person of one Dave Preclaro y Jambalos? A Yes sir. Q If that person whom you examined is here in court would you be able to recognize him? ATTY. JIMENEZ: We admit that the accused is the one examined by the witness. ATTY. CAOILI: Did you prepare the result of the examination in writing? A Yes sir. PROS. CAOILI: Showing to you Physic Examination No. 90-961 which for purposes of identification has already been marked as Exh. H what relation has this have with the report that you mentioned a while ago? A This is the same report that I prepared sir. Q How did you conduct such flourescent examination? A The left and right hands of the accused were placed under the ultra violet lamp sir. Q What was the result? A It gave a . . . under the ultra violent lamp the palmer hands of the suspect gave positive result for the presence of flourescent powder. Q What palmar hands? A Right hand sir. Q What other examination did you conduct? A And also the clothing, consisting of the t-shirts and the pants were examined. Under the ultra violet lamp the presence of the flourescent powder of the t-shirts and pants cannot be seen or distinguished because the fibers or the material of the cloth under the ultra violet lamp was flouresce. Q Please tell the Court why the t-shirts and pants under the ultra violent lamp was flouresce?

A The materials or the fibers of the clothings it could have been dyed with flourescent dyes sir. 34

xxx xxx xxx What we find improbable and contrary to human experience is petitioner's claim that he was set up by Engr. Sta. Maria Sr. and Engr. Resoso for no other purpose but revenge on account, for petitioner's failure to recommend the Sta. Maria Construction to perform the extra electrical works. 35 The Sandiganbayan has aptly ruled on this matter, thus:
For another, the claim of accused that there was ill-will on the part of the construction company is hardly plausible. It is highly improbable for the company to embark on a malicious prosecution of an innocent person for the simple reason that such person had recommended the services of another construction firm. And it is extremely impossible for such company to enlist the cooperation and employ the services of the government's chief investigative agency for such an anomalous undertaking. It is more in accord with reason and logic to presuppose that there was some sort of a mischievous demand made by the accused in exchange for certain favorable considerations, such as, favorable recommendation on the completeness of the project, hasslefree release of funds, erasure of deductives, etc. Indeed, the rationale for the occurrence of the meeting and the demand for money is infinite and boundless. 36

As correctly pointed out by the Solicitor General, Engr. Sta. Maria Sr., who was then engaged in the construction of another DOST building, would not risk his business or livelihood just to exact revenge which is neither profitable nor logical. As we aptly stated in Maleg v. Sandiganbayan: 37 It is hard to believe that the complainant who is a contractor would jeopardize and prejudice his business interests and risk being blacklisted in government infrastructure projects, knowing that with the institution of the case, he may find it no longer advisable nor profitable to continue in his construction ventures. It is hardly probable that the complainant would weave out of the blue a serious accusation just to retaliate and take revenge on the accused. From the foregoing, the conclusion is inescapable that on the basis of the testimonial and documentary evidence presented during the trial, the guilt of petitioner has been established beyond reasonable doubt. WHEREFORE, the appealed decision of the Sandiganbayan is hereby AFFIRMED. SO ORDERED.