G.R. No.

103982 December 11, 1992

ANTONIO A. MECANO, petitioner,
vs.
COMMISSION ON AUDIT, respondent.

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.
Allowances in case of injury, death, or sickness incurred in performance of duty. When a person
in the service of the national 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.
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, LED 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 abregate 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 had been repealed by the Administrative Code of 1987, solely for the reason that the same section was not
restated nor re-enacted 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 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 inconcistency and repugnancy exist in the terms of the new and old laws. 6 This 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 because the provision on sickness benefits of the
nature being 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 incorporate
in a unified document the major structural, functional and procedural principles and rules of governance; and
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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 evidence 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 repeal 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 . . . 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. 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.
From a submission agreement of the Luzon Development Bank (LDB) and the Association of Luzon Development
Bank Employees (ALDBE) arose an arbitration case to resolve the following issue:
Whether or not the company has violated the Collective Bargaining Agreement provision and the Memorandum of
Agreement dated April 1994, on promotion.
At a conference, the parties agreed on the submission of their respective Position Papers on December 1-15, 1994.
Atty. Ester S. Garcia, in her capacity as Voluntary Arbitrator, received ALDBE's Position Paper on January 18, 1995.
LDB, on the other hand, failed to submit its Position Paper despite a letter from the Voluntary Arbitrator reminding
them to do so. As of May 23, 1995 no Position Paper had been filed by LDB.
On May 24, 1995, without LDB's Position Paper, the Voluntary Arbitrator rendered a decision disposing as follows:
WHEREFORE, finding is hereby made that the Bank has not adhered to the Collective Bargaining Agreement
provision nor the Memorandum of Agreement on promotion.
Hence, this petition for certiorari and prohibition seeking to set aside the decision of the Voluntary Arbitrator and to
prohibit her from enforcing the same.
In labor law context, arbitration is the reference of a labor dispute to an impartial third person for determination on
the basis of evidence and arguments presented by such parties who have bound themselves to accept the decision
of the arbitrator as final and binding.
Arbitration may be classified, on the basis of the obligation on which it is based, as either compulsory or voluntary.
Compulsory arbitration is a system whereby the parties to a dispute are compelled by the government to forego
their right to strike and are compelled to accept the resolution of their dispute through arbitration by a third party. 1
The essence of arbitration remains since a resolution of a dispute is arrived at by resort to a disinterested third
party whose decision is final and binding on the parties, but in compulsory arbitration, such a third party is normally
appointed by the government.
Under voluntary arbitration, on the other hand, referral of a dispute by the parties is made, pursuant to a voluntary
arbitration clause in their collective agreement, to an impartial third person for a final and binding resolution. 2
Ideally, arbitration awards are supposed to be complied with by both parties without delay, such that once an award
has been rendered by an arbitrator, nothing is left to be done by both parties but to comply with the same. After all,
they are presumed to have freely chosen arbitration as the mode of settlement for that particular dispute. Pursuant

thereto, they have chosen a mutually acceptable arbitrator who shall hear and decide their case. Above all, they
have mutually agreed to de bound by said arbitrator's decision.
In the Philippine context, the parties to a Collective Bargaining Agreement (CBA) are required to include therein
provisions for a machinery for the resolution of grievances arising from the interpretation or implementation of the
CBA or company personnel policies. 3 For this purpose, parties to a CBA shall name and designate therein a
voluntary arbitrator or a panel of arbitrators, or include a procedure for their selection, preferably from those
accredited by the National Conciliation and Mediation Board (NCMB). Article 261 of the Labor Code accordingly
provides for exclusive original jurisdiction of such voluntary arbitrator or panel of arbitrators over (1) the
interpretation or implementation of the CBA and (2) the interpretation or enforcement of company personnel
policies. Article 262 authorizes them, but only upon agreement of the parties, to exercise jurisdiction over other
labor disputes.
On the other hand, a labor arbiter under Article 217 of the Labor Code has jurisdiction over the following
enumerated cases:
. . . (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction
to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision
without extension, even in the absence of stenographic notes, the following cases involving all workers, whether
agricultural or non-agricultural:
1.

Unfair labor practice cases;

2.

Termination disputes;

3.
If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of
pay, hours of work and other terms and conditions of employment;
4.
Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee
relations;
5.
Cases arising from any violation of Article 264 of this Code, including questions involving the legality of
strikes and lockouts;
6.
Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other
claims, arising from employer-employee relations, including those of persons in domestic or household service,
involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim
for reinstatement.
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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:
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(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.
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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.
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:

(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;
(Emphasis supplied)
P.D. No. 272 initially created petitioner ISA for a term of five (5) years counting from 9 August 1973. 1 When ISA's
original term expired on 10 October 1978, its term was extended for another ten (10) years by Executive Order No.
555 dated 31 August 1979.
The National Steel Corporation ("NSC") then a wholly owned subsidiary of the National Development Corporation
which is itself an entity wholly owned by the National Government, embarked on an expansion program embracing,
among other things, the construction of an integrated steel mill in Iligan City. The construction of such a steel mill
was considered a priority and major industrial project of the Government. Pursuant to the expansion program of the
NSC, Proclamation No. 2239 was issued by the President of the Philippines on 16 November 1982 withdrawing from
sale or settlement a large tract of public land (totalling about 30.25 hectares in area) located in Iligan City, and
reserving that land for the use and immediate occupancy of NSC.

Since certain portions of the public land subject matter Proclamation No. 2239 were occupied by a non-operational
chemical fertilizer plant and related facilities owned by private respondent Maria Cristina Fertilizer Corporation
("MCFC"), Letter of Instruction (LOI), No. 1277, also dated 16 November 1982, was issued directing the NSC to
"negotiate with the owners of MCFC, for and on behalf of the Government, for the compensation of MCFC's present
occupancy rights on the subject land." LOI No. 1277 also directed that should NSC and private respondent MCFC fail
to reach an agreement within a period of sixty (60) days from the date of LOI No. 1277, petitioner ISA was to
exercise its power of eminent domain under P.D. No. 272 and to initiate expropriation proceedings in respect of
occupancy rights of private respondent MCFC relating to the subject public land as well as the plant itself and
related facilities and to cede the same to the NSC. 2
Negotiations between NSC and private respondent MCFC did fail. Accordingly, on 18 August 1983, petitioner ISA
commenced eminent domain proceedings against private respondent MCFC in the Regional Trial Court, Branch 1, of
Iligan City, praying that it (ISA) be places in possession of the property involved upon depositing in court the
amount of P1,760,789.69 representing ten percent (10%) of the declared market values of that property. The
Philippine National Bank, as mortgagee of the plant facilities and improvements involved in the expropriation
proceedings, was also impleaded as party-defendant.
On 17 September 1983, a writ of possession was issued by the trial court in favor of ISA. ISA in turn placed NSC in
possession and control of the land occupied by MCFC's fertilizer plant installation.
The case proceeded to trial. While the trial was ongoing, however, the statutory existence of petitioner ISA expired
on 11 August 1988. MCFC then filed a motion to dismiss, contending that no valid judgment could be rendered
against ISA which had ceased to be a juridical person. Petitioner ISA filed its opposition to this motion.
In an Order dated 9 November 1988, the trial court granted MCFC's motion to dismiss and did dismiss the case. The
dismissal was anchored on the provision of the Rules of Court stating that "only natural or juridical persons or
entities authorized by law may be parties in a civil case." 3 The trial court also referred to non-compliance by
petitioner ISA with the requirements of Section 16, Rule 3 of the Rules of Court. 4
Petitioner ISA moved for reconsideration of the trial court's Order, contending that despite the expiration of its term,
its juridical existence continued until the winding up of its affairs could be completed. In the alternative, petitioner
ISA urged that the Republic of the Philippines, being the real party-in-interest, should be allowed to be substituted
for petitioner ISA. In this connection, ISA referred to a letter from the Office of the President dated 28 September
1988 which especially directed the Solicitor General to continue the expropriation case.
The trial court denied the motion for reconsideration, stating, among other things that:
The property to be expropriated is not for public use or benefit [__] but for the use and benefit [__] of NSC, a
government controlled private corporation engaged in private business and for profit, specially now that the
government, according to newspaper reports, is offering for sale to the public its [shares of stock] in the National
Steel Corporation in line with the pronounced policy of the present administration to disengage the government
from its private business ventures. 5 (Brackets supplied)
Petitioner went on appeal to the Court of Appeals. In a Decision dated 8 October 1991, the Court of Appeals
affirmed the order of dismissal of the trial court. The Court of Appeals held that petitioner ISA, "a government
regulatory agency exercising sovereign functions," did not have the same rights as an ordinary corporation and that
the ISA, unlike corporations organized under the Corporation Code, was not entitled to a period for winding up its
affairs after expiration of its legally mandated term, with the result that upon expiration of its term on 11 August
1987, ISA was "abolished and [had] no more legal authority to perform governmental functions." The Court of
Appeals went on to say that the action for expropriation could not prosper because the basis for the proceedings,
the ISA's exercise of its delegated authority to expropriate, had become ineffective as a result of the delegate's
dissolution, and could not be continued in the name of Republic of the Philippines, represented by the Solicitor
General:
It is our considered opinion that under the law, the complaint cannot prosper, and therefore, has to be dismissed
without prejudice to the refiling of a new complaint for expropriation if the Congress sees it fit." (Emphases
supplied)

At the same time, however, the Court of Appeals held that it was premature for the trial court to have ruled that the
expropriation suit was not for a public purpose, considering that the parties had not yet rested their respective
cases.
In this Petition for Review, the Solicitor General argues that since ISA initiated and prosecuted the action for
expropriation in its capacity as agent of the Republic of the Philippines, the Republic, as principal of ISA, is entitled
to be substituted and to be made a party-plaintiff after the agent ISA's term had expired.
Private respondent MCFC, upon the other hand, argues that the failure of Congress to enact a law further extending
the term of ISA after 11 August 1988 evinced a "clear legislative intent to terminate the juridical existence of ISA,"
and that the authorization issued by the Office of the President to the Solicitor General for continued prosecution of
the expropriation suit could not prevail over such negative intent. It is also contended that the exercise of the
eminent domain by ISA or the Republic is improper, since that power would be exercised "not on behalf of the
National Government but for the benefit of NSC."
The principal issue which we must address in this case is whether or not the Republic of the Philippines is entitled to
be substituted for ISA in view of the expiration of ISA's term. As will be made clear below, this is really the only
issue which we must resolve at this time.
Rule 3, Section 1 of the Rules of Court specifies who may be parties to a civil action:
Sec. 1. Who May Be Parties. Only natural or juridical persons or entities authorized by law may be parties in a
civil action.
Under the above quoted provision, it will be seen that those who can be parties to a civil action may be broadly
categorized into two (2) groups:
(a)
those who are recognized as persons under the law whether natural, i.e., biological persons, on the one
hand, or juridical person such as corporations, on the other hand; and
(b)

entities authorized by law to institute actions.

Examination of the statute which created petitioner ISA shows that ISA falls under category (b) above. P.D. No. 272,
as already noted, contains express authorization to ISA to commence expropriation proceedings like those here
involved:
Sec. 4.

Powers and Functions. The Authority shall have the following powers and functions:

(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;
(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:
(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;
(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 nonincorporated 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.
(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.
(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.
(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:

(h)
To determine when it is necessary or advantageous to exercise the right of eminent domain in behalf of the
Government of the Philippines; and to direct the Secretary of Justice, where such act is deemed advisable, to cause
the condemnation proceedings to be begun in the court having proper jurisdiction. (Emphasis supplied)
The Revised Administrative Code of 1987 currently in force has substantially reproduced the foregoing provision in
the following terms:
Sec. 12. Power of eminent domain. The President shall determine when it is necessary or advantageous to
exercise the power of eminent domain in behalf of the National Government, and direct the Solicitor General,
whenever he deems the action advisable, to institute expopriation proceedings in the proper court. (Emphasis
supplied)
In the present case, the President, exercising the power duly delegated under both the 1917 and 1987 Revised
Administrative Codes in effect made a determination that it was necessary and advantageous to exercise the power
of eminent domain in behalf of the Government of the Republic and accordingly directed the Solicitor General to
proceed with the suit. 17
It is argued by private respondent MCFC that, because Congress after becoming once more the depository of
primary legislative power, had not enacted a statute extending the term of ISA, such non-enactment must be
deemed a manifestation of a legislative design to discontinue or abort the present expropriation suit. We find this
argument much too speculative; it rests too much upon simple silence on the part of Congress and casually
disregards the existence of Section 12 of the 1987 Administrative Code already quoted above.
Other contentions are made by private respondent MCFC, such as, that the constitutional requirement of "public
use" or "public purpose" is not present in the instant case, and that the indispensable element of just compensation
is also absent. We agree with the Court of Appeals in this connection that these contentions, which were adopted
and set out by the Regional Trial Court in its order of dismissal, are premature and are appropriately addressed in
the proceedings before the trial court. Those proceedings have yet to produce a decision on the merits, since trial
was still on going at the time the Regional Trial Court precipitously dismissed the expropriation proceedings.
Moreover, as a pragmatic matter, the Republic is, by such substitution as party-plaintiff, accorded an opportunity to
determine whether or not, or to what extent, the proceedings should be continued in view of all the subsequent
developments in the iron and steel sector of the country including, though not limited to, the partial privatization of
the NSC.
WHEREFORE, for all the foregoing, the Decision of the Court of Appeals dated 8 October 1991 to the extent that it
affirmed the trial court's order dismissing the expropriation proceedings, is hereby REVERSED and SET ASIDE and
the case is REMANDED to the court a quo which shall allow the substitution of the Republic of the Philippines for
petitioner Iron and Steel Authority and for further proceedings consistent with this Decision. No pronouncement as
to costs.
SO ORDERED

[G.R. No. 86695. September 3, 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, v. MANUEL R. PENACHOS, JR., ALFREDO
MATANGGA, ENRICO TICAR AND TERESITA VILLANUEVA, in their respective capacities as Chairman and Members of
the Pre-qualification 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.
Salas, Villareal & Velasco, for Petitioners.
Virgilio A. Sindico for Respondents.
1.
ADMINISTRATIVE LAW; GOVERNMENT INSTRUMENTALITY, DEFINED. The 1987 Administrative Code
defines a government instrumentality as follows: Instrumentality refers to any agency of the National Government,

not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with
some if not all corporate powers, administering special funds, and enjoying operational autonomy, usually through a
charter. This term includes regulatory agencies, chartered institutions, and government-owned or controlled
corporations. (Sec. 2 (5) Introductory Provisions).
2.
ID.; CHARTERED INSTITUTION; DEFINED; APPLICATION IN CASE AT BAR. The 1987 Administrative Code
describes a chartered institution thus: Chartered institution refers to any agency organized or operating under a
special charter, and vested by law with functions relating to specific 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. (Presidential Decree No. 1523)
3.
ID.; PROHIBITION OF ANY COURT FROM ISSUING INJUNCTION IN CASES INVOLVING INFRASTRUCTURE
PROJECTS OF GOVERNMENT (P.D. 1818); POWER OF THE COURTS TO RESTRAIN APPLICATION. In the case of
Datiles and Co. v. Sucaldito, (186 SCRA 704) 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.
4.
ID.; POLICIES AND GUIDELINES PRESCRIBED FOR GOVERNMENT INFRASTRUCTURE (PD 1594); RULES
IMPLEMENTING THEREOF, NOT SUFFICIENTLY COMPLIED WITH IN CASE AT BAR. 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. (IB 13
1.2-19, Implementing Rules and Regulations of P.D. 1594 as amended) 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 oclock in the afternoon of December 12, 1988. This scheduled 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 prequalification documents to 10 oclock in the morning of December 2, 1988, and the opening of bids to 1 oclock 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. (B.E. & Best Builts licenses were valid until June 30, 1989. [Ex. P & O respectively:
both were marked on December 28, 1988]) 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. (Caltex Phil. v. Delgado Bros., 96 Phil. 368) 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.
5.
ID.; ID.; ID.; PURPOSE THEREOF; CASE AT BAR. 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. (Hannan v. Board of Education, 25 Okla. 372) 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.
6.
ID.; ID.; ID.; EFFECT OF NON-COMPLIANCE THEREOF. 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. 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.
7.
CIVIL LAW; NOMINAL DAMAGES; AWARD THEREOF, WHEN AVAILABLE. 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.
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.chanrobles.com.ph : virtual law library
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 the 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, 3 oclock in the afternoon. 1
Petitioners Maria Elena Malaga and Josieleen Najarro, respectively doing business under the name of the B.E.
Construction and Best Built Construction, submitted their pre-qualification documents at two oclock 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 oclock 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 issued restraining orders, preliminary injunctions and preliminary mandatory injunctions by P.D.
1818.chanroblesvirtualawlibrary
The decree reads pertinently as follows:chanrob1es virtual 1aw library
Section 1.
No Court in the Philippines shall have jurisdiction to issue any restraining order, preliminary
injunction, or preliminary infrastructure project, or a mining, fishery, forest or other natural resource development
project of the government, or any public utility operated by the government, including among others public utilities
for the transport of the goods and 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 oclock 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 of 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. v. 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:chanrob1es virtual 1aw
library
The government, however, is bound by basic principles of fairness and decency under the due process clauses of
the Bill of Rights. P.D. 385 was 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 misleads (p. 188, Emphasis 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 construed 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 sheriffs 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:chanrobles.com : virtual law library
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 oclock of the given late, 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
oclock 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 purpose 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 is 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-qualifications documents was at 10 oclock of
December 2, 1988, and the opening of bids would be held at 1 oclock in the afternoon of December 12, 1988. As of
ten oclock in the morning of December 2, 1988, B.E. construction and Best Built construction had filed only their
letters of intent. At two oclock in the afternoon, B.E., and Best Built filed through their common representative,
Nenette Garuello, their pre-qualification documents which were admitted but stamped "submitted late." The
petitioners were informed of their disqualification on the same date, and the disqualification became final on
December 6, 1988. Having failed to take immediate action to compel PBAC to pre-qualify them despite their notice
of disqualification, they cannot now come to this Court to question the binding 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 estimate
project cost is from P1M to P5M, the issuance of plans, specifications and proposal book forms should made thirty
days before the date of bidding. 7 They point out that these forms were issued only on December 2, 1988, and not
at the latest on November 12, 1988, the beginning of the 30-day period prior to the scheduled bidding.
In their Rejoinder, the private respondents aver that the documents of B.E. and Best Built were received although
filed late and were reviewed by the Award Committee, which discovered that the contractors had expired licenses.
B.E.s temporary certificate of Renewal of Contractors License was valid only until September 30, 1988, while Best
Builts license was valid only up to June 30, 1988.chanrobles lawlibrary : rednad
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:chanrob1es virtual 1aw library
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:chanrob1es virtual 1aw library
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 of
effect the socio-economic life of the nation. Second, the Treasurer of the Republic of the Philippines also be the ex-

officio Treasurer of the state college 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. v. 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.chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph
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 of 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 oclock 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 cutoff time for the submission of pre-qualification documents to 10 oclock in the morning of December 2, 1988, and
the opening of bids to 1 oclock 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 facts 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 public 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 estimate 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.chanrobles law library : red
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 and 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 irregularities 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 respondents 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:jgc:chanrobles.com.ph
"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 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 pre-qualification documents on December 5,
1988, or three days after the deadline.chanrobles virtual lawlibrary
WHEREFORE, judgment is hereby rendered: a) upholding the restraining order dated December 12, 1988, as not
covered by the prohibition in P.D. 1818; b) ordering the chairman and the members of the PBAC board of trustees,
namely Manuel R. Penachos, Jr., Alfredo Matangga, Enrico Ticar, and Teresita Villanueva, to each pay separately to
petitioners Maria Elena Malaga and Josieleen Najarro nominal damages P10,000.00 each; and c) removing the said
chairman and members from the PBAC board of trustees, or whoever among them is still incumbent therein, for
their malfeasance in office. Costs against PBAC.
Let a copy of this decision be sent to the Office of the Ombudsman.
SO ORDERED.
G.R. Nos. 91383-84

May 31, 1991

SOCORRO COSTA CRISOSTOMO, petitioner,

vs.

COURT OF APPEALS and NORMA SAN JOSE, DIANA J. TORRES, respondents.

Quiason, Makalintal, Barot, Torres, Ibarra & Sison for petitioner.
Augusto J. Salas for Diana J. Torres.

PARAS, J.:
This is a petition for review on certiorari of the: (1) decision * of the Court of Appeals dated July 31, 1989 in CA-G.R.
CV Nos. 11816 and 11817, entitled "Socorro Costa Crisostomo vs. Norma San Jose and Diana Torres", which
modified the decision of the Regional Trial Court, Branch 154, Pasig, Metro Manila, and (2) resolution dated
December 11, 1989, which denied the motion for reconsideration.
As gathered from the records, the facts of the case are as follows:
Socorro Costa Crisostomo (Crisostomo for short) was the registered owner of a residential house and lot known as
Lot No. 6, Block 60, located in Mandaluyong, Metro Manila and covered by Transfer Certificate of Title No. 39286 of
the Register of Deeds of Pasig. Crisostomo has occupied the property ever since she had the house built and has
introduced other improvements thereon like fruit bearing trees and ornamental plants (Rollo, Petition, p. 9).
Sometime in 1978, Norma San Jose (San Jose for short) offered to buy the above-mentioned parcel of land including
the house thereon for the sum of P300,000.00 which amount was agreed upon to be paid from the proceeds of a
loan that was to be obtained by said respondent San Jose from a bank using petitioner Crisostomo's title as
collateral. As payment, San Jose issued three (3) post dated Far East Bank and Trust Company checks in the total
amount of P300,000.00 (Ibid., p. 4).
Crisostomo accepted the offer, lent her title to San Jose and on May 17, 1978 executed a Deed of Absolute Sale in
favor of San Jose (Rollo, Petitioner's Memorandum, p. 106).
On May 22, 1978, Crisostomo, upon San Jose's request, executed another deed of sale over the same property with
the understanding that said document was for the purpose of reducing San Jose's registration fees and tax liabilities
(Ibid.).
On May 26, 1978, San Jose registered the second deed of absolute sale with the Registry of Deeds of Pasig. At the
same time, Transfer Certificate of Title No. 39286 was cancelled, and in its place, Transfer Certificate of Title No.
11835 was issued (Rollo, Petition, pp. 10-11).
After Crisostomo got tired of San Jose's unfulfilled promises to make good the postdated checks, the former decided
to encash the postdated checks after their maturity dates with Far East Bank and Trust Company. Unfortunately, the
same were all dishonored and returned to Crisostomo with the notation of the Bank as "Account Closed." (Ibid.).
Upon inquiry by Crisostomo, San Jose replied that when her application for a loan with a second bank, the Philippine
Commercial and Industrial Bank, was not approved, she shifted to Security Bank and Trust Company. Soon enough,
Crisostomo discovered that San Jose's loan application was disapproved because the collateral was insufficient for
the amount of the loan she was borrowing (Ibid.).
For Crisostomo's protection, San Jose signed a written undertaking for the forfeiture of the earnest money in the
amount of P20,000.00 in favor of herein petitioner with a certification that the title to the property will be returned
within one (1) month after non-effectivity of its sale, duly registered in petitioner's name. The aforementioned
amount of P20,000.00 was the only payment Crisostomo ever received from San Jose (Ibid.).
Upon Crisostomo's insistence for the return of the title, San Jose informed Crisostomo that the title was in the
possession of Diana J. Torres, the mortgagee (Rollo, Memorandum for Petitioner, p. 108).
San Jose never returned the said title as she had promised nor did she ever make any payment to the petitioner
(Ibid.).
Crisostomo made a written demand to Diana J. Torres (Torres for short) to reconvey the subject property to her. This
demand was not satisfied (Ibid.).

Petitioner was thus compelled to file Civil Case No. 34356 on September 3, 1979 against San Jose but this was later
amended to include Torres (Ibid.).
On the other hand, San Jose filed in an apparent attempt to forestall the extra-judicial foreclosure and public auction
sale scheduled on September 18, 1979, Civil Case No. 34489 on September 17, 1979 against respondent Torres. On
January 9, 1980 both actions were consolidated on motion of the parties and were jointly tried thereafter (Ibid.).
In a decision dated March 31, 1986, the Regional Trial Court of Pasig, Branch CLIV (154) decided in favor of the
petitioner, the dispositive portion of which decision reads:
WHEREFORE, judgment is hereby rendered against the defendants in favor of the plaintiff as follows:
In Civil Case No. 34356
1)
The Deed of Absolute Sale executed by plaintiff over the property covered by Transfer Certificate of Title
No. 39286 of the Register of Deeds of Pasig, Metro Manila, is hereby ordered rescinded;
2)
Transfer Certificate of Title No. 11835 of the Register of Deeds of Pasig, Metro Manila, in the name of
defendant Norma San Jose is hereby ordered cancelled;
3)
Defendant Norma San Jose is hereby ordered to reconvey the title covering subject property within twenty
(20) days from the finality of this judgment;
4)
Defendants are also hereby ordered, jointly and severally, to pay plaintiff (a) the amount of P100,000.00
representing moral damages, (b) P20,000.00 as attorney's fees, and (c) the costs;
5)
As a consequence of the rescission of the sale, plaintiff is ordered to return the amount of P20,000.00
which she received as earnest money. However, this amount shall be off-set against the amount of damages
assessed against defendants;
6)
The Deed of Real Estate Mortgage executed by defendant Norma San Jose in favor of defendant Diana
Torres is hereby order (sic) nullified. The Register of Deeds of Pasig, Metro Manila is authorized to cancel the
annotation of said mortgage on the title to be issued in favor of plaintiff.
In Civil Case No. 34489
1)

Defendant Norma San Jose is hereby ordered to pay defendant Diana Torres the amount of P100,000.00.

SO ORDERED. (Rollo, Annex "A", pp. 37-38).

Torres appealed the above-stated decision to the Court of Appeals which modified the judgment of the trial court in
a decision, the dispositive portion of which reads as follows:
WHEREFORE, the decision appealed from is hereby MODIFIED in that the Deed of Real Estate Mortgage in favor of
appellant Diana Torres be noted on the Certificate of Title which is to be re-issued to the appellee, and, appellant
Diana Torres is hereby excluded from indemnifying the appellee the amounts representing moral damages,
attorney's fees, and costs, but is AFFIRMED in all other respects.
SO ORDERED. (Rollo, Annex "A", p. 41).
Petitioner filed a motion for partial reconsideration of the appellate court's decision but the same was denied in a
Resolution dated December 11, 1989 (Rollo, Annex "B", p. 45).
Hence, the petition.
The Court in its resolution dated June 27, 1990 gave due course to the petition and required both parties to submit
their respective memoranda (Rollo, Resolution, p. 78).
The only issue to be resolved in the instant case is whether or not private respondent Diana Torres is a mortgagee
in good faith.

The petition is impressed with merit.

While it is settled that the jurisdiction of the Supreme Court in cases brought to it from the Court of Appeals is
limited to reviewing and revising errors of law imputed to the latter, the findings of fact of the Court of Appeals may
be set aside, among others, on the following grounds: ". . . (2) the inference made is manifestly mistaken; . . . (6)
the findings of fact of the Court of Appeals are contrary to those of the trial court; . . .," (Tolentino vs. De Jesus, 56
SCRA 167 [1974]; Villamor vs. Court of Appeals, 162 SCRA 574 [1988]; Layugan vs. Intermediate Appellate Court,
167 SCRA 363 [1988]).
A careful study of the records shows that the Court of Appeals erred in finding that private respondent Diana Torres
is a mortgagee in good faith on the basis of the evidence.
There are strong indications that Atty. Flor Martinez, the lawyer of Diana J. Torres, the mortgagee, knew of the defect
of San Jose's title.
Atty. Martinez is a close acquaintance of Norma San Jose, their long relationship dating back to 1974 (Rollo, p. 60).
When the subject property was offered by San Jose as collateral for a loan, Atty. Martinez referred her to a client,
Diana Torres. For her part, Torres instructed and authorized Atty. Martinez to view and inspect the property as well
as to ascertain the genuineness and authenticity of San Jose's title (Hearing of October 6, 1989, TSN, p. 6; Rollo, p.
113).
While feigning ignorance of the owner of subject property, she admitted later on cross-examination that Socorro
Crisostomo was the owner from whom San Jose allegedly bought the property (Hearing of April 20, 1983, TSN, pp.
6-11).
Even more persuasive is the fact that when Atty. Martinez personally inspected the property with San Jose for her
client Torres, she allowed herself to be introduced to Socorro Crisostomo who was then actually occupying the
house, as a Bank Inspector of the Development Bank of Meycauayan, Bulacan from whom the loan was being
obtained, obviously to convince Crisostomo that the procedure is in accordance with her agreement with San Jose.
Thus, petitioner Crisostomo and Atty. Flor Martinez testified as follows in the trial court:
TESTIMONY OF PETITIONER SOCORRO COSTA CRISOSTOMO:
Atty. Beltran
Q

Do you know Atty. Martinez here, have you ever met Atty. Martinez?

I met her June 17, 1978.

Where did you meet Atty. Martinez?

She came at home that evening with Norma San Jose.

Where were you when Atty. Martinez and Norma San Jose came to your house?

I was at home.

Did you have any companion there?

I was with my maid.

Before that date, did you have occasion to meet Atty. Martinez?

Yes. (sic) That was my first time to meet her.

Was there any introduction made to you?

A
She was introduced as a Bank Inspector of Private Development Bank of Meycauayan, Bulacan. (Emphasis
supplied)
Q

Who introduced her to you?

Norma San Jose.

You mean she was introduced to you to inspect that property in question?

Yes.

Why was that supposed inspection to be made on behalf of the Meycauayan Bank?

She claimed that that was the bank wherein she was borrowing her loan.

In connection with that inspection supposed to be made, what was the purpose, if you know?

To facilitate to (sic) processing, according to them." (T.S.N., pp. 16-17, Feb. 5, 1981)

xxx

xxx

xxx

On cross-examination of Atty. Flor Martinez by Atty. Beltran, she stated:

xxx

xxx

xxx

But your visit of the premises was purposely for the benefit of this Diana Torres, am I right?

Of course, because she is my client.

And so in that visit of yours, you saw the plaintiff here personally?

Yes, I saw her then.

And you had a conversation with her?

I had.

xxx
Q

xxx

xxx

Will you please tell the Honorable Court what was the main purpose of your visit at the premises?

A
As the lawyer of the prospective mortgagee, I was duty bound to make a fair assessment as to whether the
proposed collateral (sic) commensurate to the amount applied for. In other words, it was in connection with the
mortgage.
xxx

xxx

xxx

And did you inquire from the plaintiff why was she there at the moment?

She was introduced to me as the Tia Coring.

Q
And from your conversation, did you come to know that the plaintiff here, Socorro Crisostomo, is the same
Tia Coring whom she mentioned to you she bought the property from? (Emphasis supplied)
A
xxx

Yes, the same Tia Coring who sold the property to her. (Emphasis supplied)
xxx

xxx

Q
And under these circumstances, you never inquired from the plaintiff whom you personally saw why she
was there in the property or until when she would remain in that place? (Emphasis supplied)

A
No, because it would be unethical to ask that question, she being the Tia Coring of (sic) the owner.
(Emphasis supplied) (T.S.N., pp. 81-85, April 28, 1983)
xxx

xxx

xxx

Finally, when Torres herself visited the property she carefully evaded seeing Crisostomo personally, the actual
occupant thereof, who could have easily enlightened her as to the true owner (Rollo, p. 116). Such unnatural
behavior points more convincingly to the fact that she was aware that San Jose was not its real owner.
In Philippine National Bank vs. Court of Appeals (153 SCRA 435 [1987]), the Supreme Court had the occasion to rule
that a person dealing with registered land has a right to rely upon the fact of the Torrens Certificate of Title and to
dispense with the need of inquiring further, except when the party concerned has actual knowledge of facts and
circumstances that would impel a reasonably cautious man to make further inquiries (Gonzales vs. Intermediate
Appellate Court, 157 SCRA 587 [1988]).
Even assuming that Torres does not in fact know the circumstances of the sale, she is bound by the knowledge of
Atty. Martinez or by the latter's negligence in her haphazard investigation because the negligence of her agents is
her own negligence (PCIB vs. Villalva, 48 SCRA 37 [1972]).
It is a well-settled rule that a purchaser or mortgagee cannot close his eyes to facts which should put a reasonable
man upon his guard, and then claim that he acted in good faith under the belief that there was no defect in the title
of the vendor or mortgagor. His mere refusal to believe that such defect exists, or his willful closing of his eyes to
the possibility of the existence of a defect in the vendor's or mortgagor's title, will not make him an innocent
purchaser or mortgagee for value, if it afterwards develops that the title was in fact defective, and it appears that
he had such notice of the defects as would have led to its discovery had he acted with the measure of precaution
which may be required of a prudent man in a like situation (Leung Yee vs. Strong Machinery Co., 37 Phil. 644; RFC
vs. Javillonar, 57 O.G. 39, September 25, 1961; C.N. Hodges vs. Dy Buncio and Co., Inc., 116 Phil. 595; Manacop vs.
Cansino, 61 O.G. 21, August 2, 1965, 1 SCRA 527; Gaticana vs. Gaffud, 27 SCRA 706 [1969]).
The appellate court, therefore, gravely erred in the appreciation of evidence on the good faith of private respondent
Diana Torres.1wphi1 Consequently, because respondent Torres was not a mortgagee in good faith, there is no
sufficient basis for the appellate court to order the notation of the Deed of Real Estate Mortgage in favor of private
respondent Diana Torres on the Certificate of title which is to be re-issued to herein petitioner.
PREMISES CONSIDERED, the decision of the respondent appellate court is REVERSED and SET ASIDE, and the
decision of the trial court is REINSTATED.
SO ORDERED.
G.R. No. 192935

December 7, 2010

LOUIS "BAROK" C. BIRAOGO, Petitioner,

vs.
THE PHILIPPINE TRUTH COMMISSION OF 2010, Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 193036
REP. EDCEL C. LAGMAN, REP. RODOLFO B. ALBANO, JR., REP. SIMEON A. DATUMANONG, and REP. ORLANDO B. FUA,
SR., Petitioners,
vs.
EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR. and DEPARTMENT OF BUDGET AND MANAGEMENT SECRETARY
FLORENCIO B. ABAD, Respondents.
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. Laurel1
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 cases5 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 Constitution6 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
writer12 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. 141616 (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 quasi-judicial 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. Arroyo24 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 importance28 laid down in CREBA v. ERC and Meralco29
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 presumed32 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
purposes42 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 inhere 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 quasijudicial 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' Union85 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.
G.R. No. 150974

June 29, 2007

KAPISANAN NG MGA KAWANI NG ENERGY REGULATORY BOARD, petitioner,

vs.

COMMISSIONER FE B. BARIN, DEPUTY COMMISSIONERS CARLOS R. ALINDADA, LETICIA V. IBAY, OLIVER B. BUTALID,
and MARY ANNE B. COLAYCO, of the ENERGY REGULATORY COMMISSION, respondent.
DECISION
CARPIO, J.:
The Case
This is a special civil action for certiorari and prohibition1 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, quasi-judicial 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-avis 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) 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 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 selfgenerating 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. x x x
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. x x x
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, cross-subsidization,
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 x15
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.
G.R. No. 155336

July 21, 2006

COMMISSION ON HUMAN RIGHTS EMPLOYEES' ASSOCIATION (CHREA) Represented by its President, MARCIAL A.
SANCHEZ, JR., petitioner,
vs.
COMMISSION ON HUMAN RIGHTS, respondent.
RESOLUTION
CHICO-NAZARIO, J.:
On 25 November 2004, the Court promulgated its Decision1 in the above-entitled case, ruling in favor of the
petitioner. The dispositive portion reads as follows:
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 Commission-National Capital Region is REINSTATED. The Commission on Human
Rights Resolution No. A98-047 dated 04 September 1998, Resolution No. A98-055 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.2
A Motion for Reconsideration3 was consequently filed by the respondent to which petitioner filed an Opposition.4
In its Motion, respondent prays in the main that this Court reconsiders its ruling that respondent is not among the
constitutional bodies clothed with fiscal autonomy.
To recall, the facts5 of the case 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, 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.
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. (Emphasis supplied)
on the strength of this special provisions, the Commission on Human Rights [or 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. A98-047 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 respective 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; x x x (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.
On 19 October 1998, CHR issued Resolution No. A98-055 providing for the upgrading or raising of salary grade of
the following positions in the Commission:
xxxx
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.
The CHR forwarded said staffing modification and upgrading scheme to the Department of Budget and Management
[DBM] with a request for its approval, but the 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. (Emphasis supplied)
In light of the DBM's 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 DBM's disapproval of the plantilla reclassification.
Meanwhile, the officers of petitioner Commission on Human Rights Employees' Association [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 CHREA's 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.
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 CHR's 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.
Unfazed, the petitioner elevated its case to this Court and successfully obtained the favorable action in its Decision
dated 25 November 2004. In its Motion for Reconsideration of the said Decision, the respondent defined the
assignment of errors6 for resolution, namely:
I. WITH ALL DUE RESPECT, THE SECOND DIVISION OF THE HONORABLE SUPREME COURT GRAVELY AND SERIOUSLY
ERRED WHEN IT RULED THAT THERE IS NO LEGAL BASIS TO SUPPORT THE CONTENTION THAT THE CHR ENJOYS
FISCAL AUTONOMY.
II. WITH ALL DUE RESPECT, THE SECOND DIVISION OF THE HONORABLE SUPREME COURT ERRED IN STATING THAT
THE SPECIAL PROVISION OF THE REP. ACT. (SIC) NO. 8522 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;
III. WITH ALL DUE RESPECT, THE SECOND DIVISION OF THE HONORABLE SUPREME COURT ERRED WHEN IT RULED
THAT THE CHR ALTHOUGH ADMITTEDLY A CONSTITUTIONAL CREATION IS NONETHELESS NOT INCLUDED IN THE
GENUS OF THE OFFICES ACCORDED FISCAL AUTONOMY BY CONSTITUTIONAL OR LEGISLATIVE FIAT.
IV. WITH ALL DUE RESPECT, THE SECOND DIVISION OF THE HONORABLE SUPREME COURT ERRED IN DECIDING TO
REINSTATE THE RULING DATED 29 MARCH 1999 OF THE CIVIL SERVICE COMMISSION NATIONAL CAPITAL REGION;
V. WITH ALL DUE RESPECT, THE SECOND DIVISION OF THE HONORABLE SUPREME COURT ERRED IN DECIDING TO
DISALLOW THE COMMISSION ON HUMAN RIGHTS RESOLUTION NO. A98-047 DATED SEPTEMBER 04, 1998,
RESOLUTION NO. A98-055 DATED 19 OCTOBER 1998 AND RESOLUTION NO. A98-062 DATED 17 NOVEMBER 1998
WITHOUT THE APPROVAL OF THE DEPARTMENT OF BUDGET AND MANAGEMENT.
Although this Court may have been persuaded to take a second look at this case and partly modify the assailed
Decision, such modification shall not materially affect the dispositive portion thereof.
As already settled in the assailed Decision of this Court, the creation of respondent may be constitutionally
mandated, but it is not, in the strict sense, a constitutional commission. Article IX of the 1987 Constitution, plainly
entitled "Constitutional Commissions," identifies only the Civil Service Commission, the Commission on Elections,
and the Commission on Audit. The mandate for the creation of the respondent is found in Section 17 of Article XIII of
the 1987 Constitution on Human Rights, which reads that
Sec. 17. (1) There is hereby created an independent office called the Commission on Human Rights.
Thus, the respondent cannot invoke provisions under Article IX of the 1987 Constitution on constitutional
commissions for its benefit. It must be able to present constitutional and/or statutory basis particularly pertaining to
it to support its claim of fiscal autonomy.
The 1987 Constitution expressly and unambiguously grants fiscal autonomy only to the Judiciary, the constitutional
commissions, and the Office of the Ombudsman.
The 1987 Constitution recognizes the fiscal autonomy of the Judiciary in Article VIII, Section 3, reproduced below
Sec. 3. The Judiciary shall enjoy fiscal autonomy. Appropriations for the Judiciary may not be reduced by the
legislature below the amount appropriated for the previous year and, after approval, shall be automatically and
regularly released.
Constitutional commissions are granted fiscal autonomy by the 1987 Constitution in Article IX, Part A, Section 5, a
provision applied in common to all constitutional commissions, to wit

Sec. 5. The Commission shall enjoy fiscal autonomy. Their approved annual appropriations shall be automatically
and regularly released.
The Office of the Ombudsman enjoys fiscal autonomy by virtue of Article XI, Section 14, of the 1987 Constitution,
which provides that
Sec. 14. The Office of the Ombudsman shall enjoy fiscal autonomy. Its approved annual appropriations shall be
automatically and regularly released.
Each of the afore-quoted provisions consists of two sentences stating that: (1) The government entity shall enjoy
fiscal autonomy; and (2) its approved annual appropriation shall be automatically and regularly released. The
respondent anchors its claim to fiscal autonomy on the fourth paragraph of Article XIII, Section 17, according to
which
Sec. 17. x x x
xxxx
(4) The approved annual appropriations of the Commission shall be automatically and regularly released.
As compared to the previously quoted Article VIII, Section 3; Article IX, Part A, Section 5; and Article XI, Section 14 of
the 1987 Constitution on the Judiciary, the constitutional commissions, and the Office of the Ombudsman,
respectively, Article XIII, Section 17(4) on the Commission of Human Rights (CHR) evidently does not contain the
first sentence on the express grant of fiscal autonomy, and reproduces only the second sentence on the automatic
and regular release of its approved annual appropriations. Question now arises as to the significance of such a
difference in the way the said provisions are worded.
To settle this ambiguity, a perusal of the records of the Constitutional Commission (ConCom) is enlightening.
During the drafting of Article XIII, Section 17(4), of the 1987 Constitution, the ConCom members had the following
discussion7
MR. BENGZON. I have another paragraph, Madam President. This could be a separate section or another paragraph
depending on what the committee desires and what the Committee on Style would wish: "THE COMMISSION SHALL
ENJOY FISCAL AUTONOMY. THE APPROVED ANNUAL APPROPRIATIONS OF THE COMMISSION SHALL BE
AUTOMATICALLY AND REGULARLY RELEASED." It will align this Human Rights Commission with other commissions
that we have created in the Constitution in order to further insure the independence of the Human Rights
Commission.
MR. DAVIDE. Madam President.
THE PRESIDENT. Commissioner Davide is recognized.
MR. DAVIDE. I introduced that particular amendment yesterday, but there was a proposed modification presented
by Commissioner Maambong to delete the first sentence. I am in favor of the modification presented earlier. So,
may I propose that the particular amendment should not carry the first sentence, only the second sentence which
reads: "THE APPROVED ANNUAL APPROPRIATIONS OF THE COMMISSION SHALL BE AUTOMATICALLY AND REGULARLY
RELEASED."
MR. BENGZON. Why do we want to delete the sentence which says "THE COMMISSION SHALL ENJOY FISCAL
AUTONOMY"?
MR. DAVIDE. That would be a surplusage because the autonomy actually intended is the automatic release of these
appropriations.
MR. BENGZON. If that is the case, then maybe we should also delete such sentence in the other articles that we
have approved. I will just leave it up to the Committee on Style, as long as it is in the record that that is the sense of
the Commission, Madam President.
THE PRESIDENT. What does the committee say on this point?

MR. SARMIENTO. Accepted, Madam President. We leave it to the Committee on Style, so long as the intent is there.
MR. BENGZON. In other words, what we are really saying is that if the Committee on Style feels that it would be
more elegant and it is a surplusage to include the first sentence, then so be it as long as it is recorded in the Journal
that it is the sense of the Commission that the Human Rights Commission will enjoy fiscal autonomy.
MR. GUINGONA. Madam President.
MR. MONSOD. Madam President.
THE PRESIDENT. Commissioner Guingona is recognized.
MR. GUINGONA. May I respectfully invite the attention of the honorable Commissioners that there are two
committees that are tasked with the same work and, therefore, reference can be made not only to the Committee
on Style but also to the Sponsorship Committee.
Thank you, Madam President.
MR. MONSOD. Madam President.
THE PRESIDENT. Commissioner Monsod is recognized.
MR. MONSOD. Maybe we should just say that the minimum condition that the committee agrees to is: "THE
APPROVED ANNUAL APPROPRIATIONS OF THE COMMISSION SHALL BE AUTOMATICALLY AND REGULARLY RELEASED."
That is a minimum condition and we just allow the committees to add the first sentence if they wish. But with the
second sentence, the sense is already there.
MR. BENGZON. No problem, Madam President.
THE PRESIDENT. This was taken up yesterday.
MR. BENGZON. But it was deferred, I understand, Madam President. So if we approve this now, then it will be firmly
included.
THE PRESIDENT. So, will the Commissioner please read it now as it is?
MR. BENGZON. I will read the amendment as accepted. "THE APPROVED ANNUAL APPROPRIATIONS OF THE
COMMISSION SHALL BE AUTOMATICALLY AND REGULARLY RELEASED."
THE PRESIDENT. Is there any objection to this proposed amendment which has been accepted by the committee?
MR. PADILLA. Madam President.
THE PRESIDENT. Commissioner Padilla is recognized.
MR. PADILLA. The wording reminds me of the provisions under the judiciary and the constitutional commissions. Is
the intention to elevate the position of this proposed commission which is only investigative and recommendatory
to the high dignity of a constitutional commission, as well as the independence of the judiciary, by making a
positive statement in the Constitution that its appropriation shall be released automatically and so forth? It seems
that we are complicating and also reiterating several provisions that would make our Constitution not only too long
but too complicated. I wonder if that is the purpose because even other bodies with semi-judicial functions do not
enjoy such kind of constitutional guarantee. It is just an inquiry.
MR. BENGZON. It is not so much the fact that we want to elevate this into a constitutional commission as it is more
of an insurance that the independence of the Human Rights Commission, even though it is not considered as a
constitutional commission as contemplated and as compared to the Civil Service Commission, the COMELEC and
COA, is maintained. And this is as elegant as the other sentences. So, we submit the same to the body.

MR. SARMIENTO. The proposed amendment has been accepted by the committee, but we have this objection from
Commissioner Padilla. So, may we throw the issue to the body?
MR. GUINGONA. Madam President, just for clarification. Does the amendment of the honorable Commissioner
Bengzon refer only to the release? I was thinking that although I am very, very strongly in favor of this commission
and would give it one of the top priorities, there are other top priorities that we may want to address ourselves to.
For example, in the Committee on Human Resources, we would like to give top priority to education; therefore, if
this does not refer only to an automatic and regular release but would refer to the matter of priorities in the
preparation of the budget, then I am afraid that we might already be curtailing too much the discretion on the part
of both the legislature and the executive to determine the priorities that should be given at a given time.
MR. BENGZON. Madam President, the sentence means what it says and it is clear.
THE PRESIDENT. Will the Commissioner please read.
MR. BENGZON. It only refers to the release which should be automatic and regular.
THE PRESIDENT. Please state it again so that we will be clarified before we take a vote.
MR. GUINGONA. Thank you, Madam President.
MR. BENGZON. It will read: "THE APPROVED ANNUAL APPROPRIATIONS OF THE COMMISSION SHALL BE
AUTOMATICALLY AND REGULARLY RELEASED."
VOTING
THE PRESIDENT. As many as are in favor of this particular section, please raise their hand. (Several Members raised
their hand.)
As many as are against, please raise their hand. (Few Members raised their hand.)
As many as are abstaining, please raise their hand. (Two Members raised their hand.)
The results show 26 votes in favor, 4 against and 2 abstentions; the amendment is approved. (Emphases supplied.)
The respondent relies on the statement of then Constitutional Commissioner Hilario G. Davide, Jr. that the first
sentence on the express grant of fiscal autonomy to the respondent was deleted from Article XIII, Section 17(4) of
the 1987 Constitution because it was a surplusage. Respondent posits that the second sentence, directing the
automatic and regular release of its approved annual appropriations, has the same essence as the express grant of
fiscal autonomy, thus rendering the first sentence redundant and unnecessary.
This Court, however, believes otherwise. The statement of then Constitutional Commissioner Davide should be read
in full. Referring to the deletion of the first sentence on the express grant of fiscal autonomy, he explained that the
first sentence "would be a surplusage because the autonomy actually intended is the automatic release of these
appropriations.8" (Emphasis supplied.)
Even in the latter discussion between Constitutional Commissioners Jose F.S. Bengzon, Jr. and Serafin V.C. Guingona,
wherein Constitutional Commissioner Guingona asked for clarification whether respondent shall also be extended
priorities in the preparation of the national budget, Constitutional Commissioner Bengzon replied that "x x x the
sentence means what it says and it is clear,"9 and that "[i]t only refers to the release which should be automatic
and regular."10
Therefore, after reviewing the deliberations of the ConCom on Article XIII, Section 17(4), of the 1987 Constitution, in
its entirety, not just bits and pieces thereof, this Court is convinced that the ConCom had intended to grant to the
respondent the privilege of having its approved annual appropriations automatically and regularly released, but
nothing more. While it may be conceded that the automatic and regular release of approved annual appropriations
is an aspect of fiscal autonomy, it is just one of many others.
This Court has already defined the scope and extent of fiscal autonomy in the case of Bengzon v. Drilon,11 as
follows

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.
Fiscal autonomy means freedom from outside control. x x x
The foregoing excerpt sufficiently elucidates that the grant of fiscal autonomy is more extensive than the mere
automatic and regular release of approved annual appropriations of the government entity. It is also worth stressing
herein that in Bengzon v. Drilon, this Court, ruling En Banc, only recognized the fiscal autonomy of the Judiciary; the
constitutional commissions, namely, the Civil Service Commission, the Commission on Audit, and the Commission
on Elections; and the Office of the Ombudsman. Respondent is conspicuously left out of the enumeration.
Moreover, the ConCom had the following deliberations12 on the meaning of the fiscal autonomy extended to the
constitutional commissions in what is to become later Article IX, Part A, Section 5, of the 1987 Constitution
THE PRESIDING OFFICER (Mr. Treas). Commissioner de Castro is recognized.
MR. DE CASTRO: Thank you.
This morning, I asked the proponent of this resolution what is included in the term "fiscal autonomy." The answer I
got is that it is for the automatic release of the budget. I propose that the sentence "The Commissions shall enjoy
fiscal autonomy" be deleted but the second sentence shall remain. The reason is that it is already redundant. Fiscal
autonomy means the automatic release of appropriations.
MR. MONSOD. Mr. Presiding Officer, may we answer the honorable Commissioner.
I think the answer of the Chairman of our Committee this morning was that it would involve the automatic and
regular release of the funds once approved. In addition, we are suggesting that fiscal autonomy include the
nonimposition of any other procedures, for example, a preaudit system in the commissions or bodies that enjoy
fiscal autonomy. So, actually, the definition of fiscal autonomy would be a bit broader than just the automatic
release.
MR. DE CASTRO. Does the Commissioner mean that these commissions will not be subjected to preaudit?
MR. MONSOD. Our proposal actually in the provisions on the Commission on Audit is that they be subjected to
comprehensive postaudit procedures and where their internal control system is inadequate, in the opinion of the
Commission on Audit, then the commission may also take such measures as are necessary to correct the
inadequacies which might include special preaudit systems.
THE PRESIDING OFFICER (Mr. Treas). The Chair understands, therefore, that the proposed amendment of
Commissioner de Castro is not acceptable to the Committee?
MR. DE CASTRO. Not yet, Mr. Presiding Officer, because we are still on the answer to me this morning, which stated
the record will bear me out that fiscal autonomy means the automatic release of appropriations. It means the
automatic release and nothing more. We were in the same Committee and when we asked the COA about this, they
insisted that there must be preaudit. If fiscal autonomy means that there will be no preaudit, I do not know what will
happen to this.
THE PRESIDING OFFICER (Mr. Treas). So, what is the stand of the Committee insofar as the proposed amendment
of Commissioner de Castro is concerned?
MR. DE CASTRO. May I just say one sentence, Mr. Presiding Officer? If the Committee's stand is that fiscal autonomy
means the automatic release of the appropriations, then I say that the first sentence "The Commissions shall
enjoy fiscal autonomy" -- should be deleted because it is a repetition of the second sentence.
Thank you.

MR. MONSOD. Mr. Presiding Officer, the position of the Committee is that fiscal autonomy may include other things
than just the automatic and regular release of the funds.
THE PRESIDING OFFICER (Mr. Treas). With that explanation, what is the pleasure of Commissioner de Castro? Does
he insist on his amendment?
MR. DE CASTRO. Is the Chairman changing his answer from this morning's question? If he does, I will ask some more
questions about fiscal autonomy.
MR. MONSOD. Mr. Presiding Officer, I think at the beginning of this exchange, we already told the honorable
Commissioner that the Chairman of the Committee had not meant to make it an all-inclusive definition. And if he
was misled into thinking of another meaning, we apologize for it. But our position is that fiscal autonomy would
include other rights than just merely automatic and regular disbursement.
MR. DE CASTRO. Does it include exception from preaudit?
MR. MONSOD. Yes, it would include the imposition of certain preaudit requirements for release, because if the
preaudit requirements are inserted into the process of release, it would defeat the objective of automatic and
regular release.
Based on the preceding exchange, it can be derived that the first sentence of Article IX, Part A, Section 5, of the
1987 Constitution, expressly granting fiscal autonomy to constitutional commissions, does not have the same
meaning as the second sentence, directing the automatic and regular release of their approved annual
appropriations, hence, the resistance of Constitutional Commissioner Christian S. Monsod to the suggested
amendment of Constitutional Commissioner Crispino M. De Castro to just delete the first sentence.
In addition, the Constitutional Fiscal Autonomy Group (CFAG), to which respondent avers membership, defined the
term "fiscal autonomy" in its Joint Resolution No. 49, dated 24 July 1998, as follows
IV. Definition of Terms:
1. Fiscal Autonomy shall mean independence or freedom regarding financial matters from outside control and is
characterized by self direction or self determination. It does not mean mere automatic and regular release of
approved appropriations to agencies vested with such power in a very real sense, the fiscal autonomy
contemplated in the constitution is enjoyed even before and, with more reasons, after the release of the
appropriations. Fiscal autonomy encompasses, among others, budget preparation and implementation, flexibility in
fund utilization of approved appropriations, use of savings and disposition of receipts. x x x (Emphasis supplied.)
While the assailed Decision and the present Resolution may render the status of respondent's membership in CFAG
uncertain, the then Chairperson of respondent, Aurora P. Navarrete-Recina, duly signed CFAG Joint Resolution No.
49, and respondent should be held bound by the definition of fiscal autonomy therein. CFAG Joint Resolution No. 49
categorically declares that fiscal autonomy means more than just the automatic and regular release of approved
appropriation, and also encompasses, among other things: (1) budget preparation and implementation; (2)
flexibility in fund utilization of approved appropriations; and (3) use of savings and disposition of receipts. Having
agreed to such a definition of fiscal autonomy, respondent has done a complete turn-about herein and is now
contradicting itself by arguing that the automatic and regular release of its approved annual appropriations is
already tantamount to fiscal autonomy.
Consequently, this Court concludes that the 1987 Constitution extends to respondent a certain degree of fiscal
autonomy through the privilege of having its approved annual appropriations released automatically and regularly.
However, it withholds from respondent fiscal autonomy, in its broad or extensive sense, as granted to the Judiciary,
constitutional commissions, and the Office of the Ombudsman. Operative herein is the rule of statutory
construction, expressio unius est exclusio alterius, wherein the express mention of one person, thing, or
consequence implies the exclusion of all others.13 The rule proceeds from the premise that the legislature (or in
this case, the ConCom) would not have made specific enumerations in a statute (or the Constitution) had the
intention not been to restrict its meaning and to confine its terms to those expressly mentioned.14

The provisions of Executive Order No. 292, otherwise known as the Administrative Code of 1987, on the fiscal
autonomy of constitutional commissions, the Office of the Ombudsman, and the respondent, merely follow the
phraseology used in the corresponding provisions of the 1987 Constitution, thus
Book II, Chapter 5, Section 26. Fiscal Autonomy. The Constitutional Commissions shall enjoy fiscal autonomy. The
approved annual appropriations shall be automatically and regularly released.
Book V, Title II, Subtitle B, Section 4. Fiscal Autonomy. The Office of the Ombudsman shall enjoy fiscal autonomy.
Its approved annual appropriations shall be automatically and regularly released.
Book V, Title II, Subtitle A, Section 6. Annual Appropriations. The approved annual appropriations of the
Commission on Human Rights shall be automatically and regularly released.
While the Administrative Code of 1987 has no reference to the fiscal autonomy of the Judiciary, it does have
provisions on the fiscal autonomy of the constitutional commissions and the Office of the Ombudsman. It is very
interesting to note that while Book II, Chapter 5, Section 26 (on constitutional commissions) and Book V, Title 2,
Subtitle B, Section 4 (on the Office of the Ombudsman) of the Code are entitled "Fiscal Autonomy," Book V, Title 2,
Subtitle A, Section 6 (on respondent) bears the title "Annual Appropriations." Further, the provisions on the
constitutional commissions and the Office of the Ombudsman in the Administrative Code of 1987, just like in the
1987 Constitution, are composed of two sentences: (1) The government entity shall enjoy fiscal autonomy; and (2)
Its approved annual appropriation shall be automatically and regularly released. The provision on respondent in the
same Code is limited only to the second sentence.
Respondent asserts that it is granted fiscal autonomy by Book VI, Chapter 1, Section 1, paragraph 9, of the
Administrative Code of 1987, which reads
SEC. 1. Constitutional Policies on the Budget.
xxxx
(9) Fiscal autonomy shall be enjoyed by the Judiciary, Constitutional Commissions, Office of the Ombudsman, Local
Government and Commission on Human Rights.
As its title suggests, the afore-cited provision is supposed to merely re-state the policies on budget as declared by
the 1987 Constitution and, therefore, cannot grant or extend to the respondent a privilege not found in the 1987
Constitution. Book VI of the Administrative Code of 1987, under which the said provision is found, pertains to
National Government Budgeting. Respondent may have been included in the enumeration of fiscally autonomous
government entities because it does enjoy an aspect of fiscal autonomy, that of the automatic and regular release
of its approved annual appropriations from the national budget. The general declaration of fiscal autonomy of the
respondent in Section 1, paragraph 9, of Book V of the Administrative Code of 1987 on National Government
Budgeting, must be qualified and limited by Section 6 of Book V, Title II, Subtitle A of the same Code specifically
pertaining to respondent. It should be borne in mind that the general rule is that a word, phrase or provision should
not be construed in isolation, but must be interpreted in relation to other provisions of the law.15
To reiterate, under the Constitution, as well as the Administrative Code of 1987, respondent enjoys fiscal autonomy
only to the extent that its approved annual appropriations shall be automatically and regularly released, but nothing
more.
On the main issue of whether or not the approval by the Department of Budget and Management (DBM) is a
condition precedent to the enactment of an upgrading, reclassification, creation and collapsing of plantilla positions
in the CHR, this Court staunchly holds that as prescinding from the legal and jurisprudential yardsticks discussed in
length in the assailed Decision, the imprimatur of the DBM must first be sought prior to implementation of any
reclassification or upgrading of positions in government.
Regardless of whether or not respondent enjoys fiscal autonomy, this Court shares 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. This Court is of the same mind with the DBM16 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. x x x (Emphasis supplied).
To drive home this point, in the special provision covering the Judiciary as quoted above, the judiciary was not
vested with the power to formulate and implement organizational structures beyond the salary rates, allowances
and other benefits under the compensation standardization laws. Stated differently, although the Judiciary is
allowed to reorganize, any such reorganization must, nevertheless, be in strict adherence to the Salary
Standardization Law. Ergo, any reorganization therein must be with the conformity of the DBM inasmuch as it is the
government arm tasked by law to implement the Salary Standardization Law.
In Republic Act No. 9227, or "An Act Granting Additional Compensation in the Form of Special Allowances for
Justices, Judges and All Other Positions in the Judiciary with the Equivalent Rank of Justices of the Court of Appeals
and Judges of the Regional Trial Court, and for Other Purposes," the grant of Special Allowances to members of the
Judiciary did not operate to exempt members thereof from the Salary Standardization Law. In Section 7 of Republic
Act No. 9227, the Supreme Court and the DBM were specifically tasked to issue the necessary guidelines for the
proper implementation of this Act in respect to funds coming from the National Treasury.17 Resultantly, the
Supreme Court and the DBM issued Joint Circular No. 2004-1 on 13 January 2004 which provided guidelines on the
funding source for the grant of this special allowance. Thus, although Administrative Order No. 137, issued by
President Gloria Macapagal-Arroyo on 27 December 2005, extended to the Chairman and Commissioners or
Members of the CHR the same benefits and privileges enjoyed by members of constitutional commissions and the
Judiciary in the matter of rationalized rate of allowances and liberalized computation of retirement benefits and
accumulated leave credits, it still does not exempt respondent from the Salary Standardization Law.
If the judiciary, a co-equal branch of government, which was expressly granted by the Constitution with fiscal
autonomy, is required to conform to the Salary Standardization Law and is subject to the scrutiny of the DBM,
sagaciously, the respondent cannot be deemed to enjoy a better position than the Judiciary. The respondent must,
likewise, toe the line.
This Court shall no longer belabor the point it has already delved upon in length in its Decision that Congress has
delegated to the DBM the power to administer the Salary Standardization Law, which power is part of the system of
checks and balances or system of restraints in the Philippine government. This Court, thus, reiterates the point that
the DBM's exercise of such authority is not in itself an arrogation inasmuch as it is pursuant to the 1987
Constitution, the paramount law of the land; the Salary Standardization Law; and the Administrative Code of 1987.
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 respondent lacks legal
rationalization.
The DBM expounded that Section 78 of the General Provisions of the General Appropriations Act (GAA), FY 1998,
which the respondent 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 respondent's proposal to upgrade twelve (12) positions of Attorney VI,
SG-28 to Director IV, SG-28, and three (3) positions of Director III, SG-27 to Director IV, SG-28, in its 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 law's 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,18 the Court 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 nation's coffers, the Secretary of the DBM, as the
President's 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.
As the final thrust, given this Court's previous pronouncement in the present Resolution that the fiscal autonomy
granted to the respondent by the 1987 Constitution and the Administrative Code of 1987 shall be limited only to the
automatic and regular release of its approved annual appropriations, respondent is precluded from invoking the
Special Provisions Applicable to All Constitutional Offices Enjoying Fiscal Autonomy in the 1998 GAA. The said
Special Provisions read
Special Provisions Applicable to All Constitutional Offices Enjoying Fiscal Autonomy
1. Organization 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 the personal services itemization including, but not limited to, the transfer of item or
creation of new positions in their respective offices: PROVIDED, That the 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, 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.
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 or 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.
It is unequivocal that the afore-quoted Special Provisions of the 1998 GAA refer to the broad and extensive concept
of fiscal autonomy. They already go beyond ensuring the automatic and regular release of the approved annual
appropriations, but already enumerate the ways by which the named government entities can use their
appropriations to effect changes in their organizational structure and their savings for certain official purposes.
Even assuming arguendo that the said Special Provisions are applicable to respondent, it should be noted that the
last sentence in paragraph 1 qualifies the power of a fiscally autonomous government entity to formulate and
implement changes in its organizational structure so that, "x x x the implementation hereof shall be in accordance
with salary rates, allowances and other benefits authorized under compensation standardization laws." And, as
exhaustively expounded in the assailed Decision and the herein Resolution, only the DBM has the authority and the
technical expertise to determine compliance by respondent to the provisions of the Salary Standardization Law.
WHEREFORE, the Motion for Reconsideration is PARTIALLY GRANTED. The assailed decision of this Court dated 25
November 2004 is hereby MODIFIED, declaring the respondent CHR as a constitutional body enjoying limited fiscal
autonomy, in the sense that it is entitled to the automatic and regular release of its approved annual
appropriations; nonetheless, it is still required to conform to the Salary Standardization Law. Accordingly, its entire
reclassification scheme remains subject to the approval of the DBM. No pronouncement as to costs.
SO ORDERED.
G.R. No. 166052

August 29, 2007

ANAK MINDANAO PARTY-LIST GROUP, as represented by Rep. Mujiv S. Hataman, and MAMALO DESCENDANTS
ORGANIZATION, INC., as represented by its Chairman Romy Pardi, Petitioners,
vs.
THE EXECUTIVE SECRETARY, THE HON. EDUARDO R. ERMITA, and THE SECRETARY OF AGRARIAN/LAND REFORM,
THE HON. RENE C. VILLA, Respondents.
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 President Gloria Macapagal-Arroyo issued on September 27, 2004, reads:
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 ex-officio 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 4. Effectivity. This Executive Order shall take effect immediately. (Emphasis and underscoring in the original)
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 on March 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. 4562 which was issued on August 23, 2005.
The Court is thus left with the sole issue of the legality of placing the Presidential Commission3 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 AMIN5 has the requisite legal
standing to file this suit as member6 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 of Maguindanao.

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. Ermita17 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. Fernando18 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 President21 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 duty23 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 government37 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. Torres54 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.lavvphil
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 Constitution57 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.
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

5.

Guzman, Wilhemina de la P.

6.

Gervacio, Agnes 69.86%

7.

Somera, Hilario S.68.13%

8.

Tolentino, Julian R.

9.

Guillermo, Pedro 67.22%

10.

Tambio, Rodolfo

11.

Aquino, Martina 66.94%

12.

Bassig, Pio P.

13.

Rumpon, Danilo P.

14.

Zareno, Bernardo 65.57%

15.

Madrid, Angel S. 65.57%

16.

Callangan, Napoleon

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

24.

Berlan, Herminia C.

61.76%

25.

Soliman, Clemente

61.52%

26.

Llopis, Lino

70.73%

67.64%

67.00%

66.84%
65.61%

65.45%

61.86%

61.47%

70.50%

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

5.

Guzman, Wilhemina de la P.

6.

Gervacio, Agnes 70.04%

7.

Somera, Hilario S.68.13%

8.

Tolentino, Julian Jr.

9.

Guillermo, Pedro 67.22%

10.

Tambio, Rodolfo

11.

Aquino, Martina D.

12.

Bassig, Pio P.

13.

Rumpon, Danilo P.

14.

Madrid, Angel 65.57%

15.

Callangan, Napoleon

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.

23.

Berlan, Herminia C.

70.73%

67.22%

67.00%
66.94%

66.84%
65.61%

65.45%

61.86%
61.76%

70.50%

24.

Soliman, Clemente

61.52%

25.

Zareno, Bernardo 61.50%

26.

Llopis, Lino

27.

Baliuag, Felicidad 61.39%

28.

Aresta, Leticia

60.67%

29.

Banan, Juana

59.32% 2

61.47%

(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 mot 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.
xxx

xxx

xxx

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.
xxx

xxx

xxx

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 bankwide, 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. 934359. 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 exofficio 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:
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(3)
The Office of Legal Affairs shall provide the Chairman with legal advice and assistance; render counselling
services; undertake legal studies and researches; prepare opinions and ruling in the interpretation and application
of the Civil Service law, rules and regulations; prosecute violations of such law, rules and regulations; and represent
the Commission before any court or tribunal.
(4)
The Office of Planning and Management shall formulate development plans, programs and projects;
undertake research and studies on the different aspects of public personnel management; administer management
improvement programs; and provide fiscal and budgetary services.
(5)
The Central Administrative Office shall provide the Commission with personnel, financial, logistics and
other basic support services.
(6)
The Office of Central Personnel Records shall formulate and implement policies, standards, rules and
regulations pertaining to personnel records maintenance, security, control and disposal; provide storage and
extension services; and provide and maintain library services.
(7)
The Office of Position Classification and Compensation shall formulate and implement policies, standards,
rules and regulations relative to the administration of position classification and compensation.
(8)
The Office of Recruitment, Examination and Placement shall provide leadership and assistance in
developing and implementing the overall Commission programs relating to recruitment, execution and placement,
and formulate policies, standards, rules and regulations for the proper implementation of the Commission's
examination and placement programs.
(9)
The Office of Career Systems and Standards shall provide leadership and assistance in the formulation and
evaluation of personnel systems and standards relative to performance appraisal, merit promotion, and employee
incentive benefit and awards.
(10)
The Office of Human Resource Development shall provide leadership and assistance in the development
and retention of qualified and efficient work force in the Civil Service; formulate standards for training and staff

development; administer service-wide scholarship programs; develop training literature and materials; coordinate
and integrate all training activities and evaluate training programs.
(11)
The Office of Personnel Inspection and Audit shall develop policies, standards, rules and regulations for the
effective conduct or inspection and audit personnel and personnel management programs and the exercise of
delegated authority; provide technical and advisory services to Civil Service Regional Offices and government
agencies in the implementation of their personnel programs and evaluation systems.
(12)
The Office of Personnel Relations shall provide leadership and assistance in the development and
implementation of policies, standards, rules and regulations in the accreditation of employee associations or
organizations and in the adjustment and settlement of employee grievances and management of employee
disputes.
(13)
The Office of Corporate Affairs shall formulate and implement policies, standards, rules and regulations
governing corporate officials and employees in the areas of recruitment, examination, placement, career
development, merit and awards systems, position classification and compensation, performing appraisal, employee
welfare and benefit, discipline and other aspects of personnel management on the basis of comparable industry
practices.
(14)
The Office of Retirement Administration shall be responsible for the enforcement of the constitutional and
statutory provisions, relative to retirement and the regulation for the effective implementation of the retirement of
government officials and employees.
(15)
The Regional and Field Offices. The Commission shall have not less than thirteen (13) Regional offices
each to be headed by a Director, and such field offices as may be needed, each to be headed by an official with at
least the rank of an Assistant Director.
As read together, the inescapable conclusion is that respondent Commission's power to reorganize is limited to
offices under its control as enumerated in Section 16, supra. From its inception, the CESB was intended to be an
autonomous entity, albeit administratively attached to respondent Commission. As conceptualized by the
Reorganization Committee "the CESB shall be autonomous. It is expected to view the problem of building up
executive manpower in the government with a broad and positive outlook." 6 The essential autonomous character
of the CESB is not negated by its attachment to respondent Commission. By said attachment, CESB was not made
to fall within the control of respondent Commission. Under the Administrative Code of 1987, the purpose of
attaching one functionally inter-related government agency to another is to attain "policy and program
coordination." This is clearly etched out in Section 38(3), Chapter 7, Book IV of the aforecited Code, to wit:
(3)
Attachment. (a) This refers to the lateral relationship between the department or its equivalent and
attached agency or corporation for purposes of policy and program coordination. The coordination may be
accomplished by having the department represented in the governing board of the attached agency or corporation,
either as chairman or as a member, with or without voting rights, if this is permitted by the charter; having the
attached corporation or agency comply with a system of periodic reporting which shall reflect the progress of
programs and projects; and having the department or its equivalent provide general policies through its
representative in the board, which shall serve as the framework for the internal policies of the attached corporation
or agency.
Respondent Commission also relies on the case of Datumanong, et al., vs. Civil Service Commission, G. R. No.
114380 where the petition assailing the abolition of the CESB was dismissed for lack of cause of action. Suffice to
state that the reliance is misplaced considering that the cited case was dismissed for lack of standing of the
petitioner, hence, the lack of cause of action.
IN VIEW WHEREOF, the petition is granted and Resolution No. 93-4359 of the respondent Commission is hereby
annulled and set aside. No costs.
SO ORDERED.