Ftr65fG.R. No.

120319 October 6, 1995

LUZON DEVELOPMENT BANK, petitioner,

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

ROMERO, J.:

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

Whether or not the company has violated the Collective Bargaining Agreement
provision and the Memorandum of Agreement dated April 1994, on promotion.

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

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

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

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

In labor law context, arbitration is the reference of a labor dispute to an impartial third person
for determination on the basis of evidence and arguments presented by such parties who have
bound themselves to accept the decision of the arbitrator as final and binding.

Arbitration may be classified, on the basis of the obligation on which it is based, as either
compulsory or voluntary.
Compulsory arbitration is a system whereby the parties to a dispute are compelled by the
government to forego their right to strike and are compelled to accept the resolution of their
dispute through arbitration by a third party. 1The essence of arbitration remains since a
resolution of a dispute is arrived at by resort to a disinterested third party whose decision is final
and binding on the parties, but in compulsory arbitration, such a third party is normally
appointed by the government.

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

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

On the other hand, a labor arbiter under Article 217 of the Labor Code has jurisdiction over the
following enumerated cases:

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

1. Unfair labor practice cases;

2. Termination disputes;
 3. If accompanied with a claim for reinstatement, those cases that workers may file
involving wages, rates of pay, hours of work and other terms and conditions of
employment;

4. Claims for actual, moral, exemplary and other forms of damages arising from
the employer-employee relations;

5. Cases arising from any violation of Article 264 of this Code, including questions
involving the legality of strikes and lockouts;

6. Except claims for Employees Compensation, Social Security, Medicare and

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

xxx xxx xxx

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

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

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

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

xxx xxx xxx

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

xxx xxx xxx

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

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

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

The voluntary arbitrator no less performs a state function pursuant to a governmental power
delegated to him under the provisions therefor in the Labor Code and he falls, therefore, within
the contemplation of the term "instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact
that his functions and powers are provided for in the Labor Code does not place him within the
exceptions to said Sec. 9 since he is a quasi-judicial instrumentality as contemplated therein. It
will be noted that, although the Employees Compensation Commission is also provided for in
the Labor Code, Circular No. 1-91, which is the forerunner of the present Revised
Administrative Circular No. 1-95, laid down the procedure for the appealability of its decisions
to the Court of Appeals under the foregoing rationalization, and this was later adopted by
Republic Act No. 7902 in amending Sec. 9 of B.P. 129.

A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should
likewise be appealable to the Court of Appeals, in line with the procedure outlined in Revised
Administrative Circular No. 1-95, just like those of the quasi-judicial agencies, boards and
commissions enumerated therein.

This would be in furtherance of, and consistent with, the original purpose of Circular No. 1-91
to provide a uniform procedure for the appellate review of adjudications of all quasi-judicial
entities 18 not expressly excepted from the coverage of Sec. 9 of B.P. 129 by either the
Constitution or another statute. Nor will it run counter to the legislative intendment that
decisions of the NLRC be reviewable directly by the Supreme Court since, precisely, the cases
within the adjudicative competence of the voluntary arbitrator are excluded from the
jurisdiction of the NLRC or the labor arbiter.

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

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

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

SO ORDERED.
G.R. No. 102976 October 25, 1995

IRON AND STEEL AUTHORITY, petitioner,

vs.
THE COURT OF APPEALS and MARIA CRISTINA FERTILIZER
CORPORATION, respondents.

FELICIANO, J.:

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

Sec. 2. Objectives The Authority shall have the following objectives:

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

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

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

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

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

(d) to promote full utilization of the existing capacity of the industry, to discourage
investment in excess capacity, and in coordination, with appropriate government
agencies to encourage capital investment in priority areas of the industry;

(e) to assist the industry in securing adequate and low-cost supplies of raw
materials and to reduce the excessive dependence of the country on imports of iron
and steel.

The list of powers and functions of the ISA included the following:
 Sec. 4. Powers and Functions. The authority shall have the following powers
and functions:

xxx xxx xxx

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

xxx xxx xxx

(Emphasis supplied)

P.D. No. 272 initially created petitioner ISA for a term of five (5) years counting from 9 August
1973. 1 When ISA's original term expired on 10 October 1978, its term was extended for another
ten (10) years by Executive Order No. 555 dated 31 August 1979.

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

Since certain portions of the public land subject matter Proclamation No. 2239 were occupied
by a non-operational chemical fertilizer plant and related facilities owned by private respondent
Maria Cristina Fertilizer Corporation ("MCFC"), Letter of Instruction (LOI), No. 1277, also
dated 16 November 1982, was issued directing the NSC to "negotiate with the owners of
MCFC, for and on behalf of the Government, for the compensation of MCFC's present
occupancy rights on the subject land." LOI No. 1277 also directed that should NSC and private
respondent MCFC fail to reach an agreement within a period of sixty (60) days from the date of
LOI No. 1277, petitioner ISA was to exercise its power of eminent domain under P.D. No. 272
and to initiate expropriation proceedings in respect of occupancy rights of private respondent
MCFC relating to the subject public land as well as the plant itself and related facilities and to
cede the same to the NSC. 2
Negotiations between NSC and private respondent MCFC did fail. Accordingly, on 18 August
1983, petitioner ISA commenced eminent domain proceedings against private respondent
MCFC in the Regional Trial Court, Branch 1, of Iligan City, praying that it (ISA) be places in
possession of the property involved upon depositing in court the amount of P1,760,789.69
representing ten percent (10%) of the declared market values of that property. The Philippine
National Bank, as mortgagee of the plant facilities and improvements involved in the
expropriation proceedings, was also impleaded as party-defendant.

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

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

In an Order dated 9 November 1988, the trial court granted MCFC's motion to dismiss and did
dismiss the case. The dismissal was anchored on the provision of the Rules of Court stating that
"only natural or juridical persons or entities authorized by law may be parties in a civil
case." 3 The trial court also referred to non-compliance by petitioner ISA with the requirements
of Section 16, Rule 3 of the Rules of Court. 4

Petitioner ISA moved for reconsideration of the trial court's Order, contending that despite the
expiration of its term, its juridical existence continued until the winding up of its affairs could
be completed. In the alternative, petitioner ISA urged that the Republic of the Philippines, being
the real party-in-interest, should be allowed to be substituted for petitioner ISA. In this
connection, ISA referred to a letter from the Office of the President dated 28 September 1988
which especially directed the Solicitor General to continue the expropriation case.

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

The property to be expropriated is not for public use or benefit [__] but for the use
and benefit [__] of NSC, a government controlled private corporation engaged in
private business and for profit, specially now that the government, according to
newspaper reports, is offering for sale to the public its [shares of stock] in the
National Steel Corporation in line with the pronounced policy of the present
administration to disengage the government from its private business
ventures. 5 (Brackets supplied)
Petitioner went on appeal to the Court of Appeals. In a Decision dated 8 October 1991, the
Court of Appeals affirmed the order of dismissal of the trial court. The Court of Appeals held
that petitioner ISA, "a government regulatory agency exercising sovereign functions," did not
have the same rights as an ordinary corporation and that the ISA, unlike corporations organized
under the Corporation Code, was not entitled to a period for winding up its affairs after
expiration of its legally mandated term, with the result that upon expiration of its term on 11
August 1987, ISA was "abolished and [had] no more legal authority to perform governmental
functions." The Court of Appeals went on to say that the action for expropriation could not
prosper because the basis for the proceedings, the ISA's exercise of its delegated authority to
expropriate, had become ineffective as a result of the delegate's dissolution, and could not be
continued in the name of Republic of the Philippines, represented by the Solicitor General:

It is our considered opinion that under the law, the complaint cannot prosper, and
therefore, has to be dismissed without prejudice to the refiling of a new complaint
for expropriation if the Congress sees it fit." (Emphases supplied)

At the same time, however, the Court of Appeals held that it was premature for the trial
court to have ruled that the expropriation suit was not for a public purpose, considering
that the parties had not yet rested their respective cases.

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

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

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

Rule 3, Section 1 of the Rules of Court specifies who may be parties to a civil action:
 Sec. 1. Who May Be Parties. Only natural or juridical persons or entities
authorized by law may be parties in a civil action.

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

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

(b) entities authorized by law to institute actions.

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

Sec. 4. Powers and Functions. The Authority shall have the following powers
and functions:

xxx xxx xxx

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

xxx xxx xxx

(Emphasis supplied)

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

xxx xxx xxx

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

(Emphasis supplied)

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

We consider that the ISA is properly regarded as an agent or delegate of the Republic of the
Philippines. The Republic itself is a body corporate and juridical person vested with the full
panoply of powers and attributes which are compendiously described as "legal personality." The
relevant definitions are found in the Administrative Code of 1987:

Sec. 2. General Terms Defined. Unless the specific words of the text, or the
context as a whole, or a particular statute, require a different meaning:

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

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

xxx xxx xxx

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

(10) Instrumentality refers to any agency of the National Government, not

integrated within the department framework, vested with special functions or
jurisdiction by law, endowed with some if not all corporate powers, administering
special funds, and enjoying operational autonomy, usually through a charter. This
term includes regulatory agencies, chartered institutions and government-owned or
controlled corporations.

xxx xxx xxx

(Emphases supplied)

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

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

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

executor or administrator, or a party authorized by statute may sue or be sued
without joining the party for whose benefit the action is presented or defended; but
the court may, at any stage of the proceedings, order such beneficiary to be made a
party. . . . . (Emphasis supplied)
In the instant case, ISA instituted the expropriation proceedings in its capacity as an agent or
delegate or representative of the Republic of the Philippines pursuant to its authority under P.D.
No. 272. The present expropriation suit was brought on behalf of and for the benefit of the
Republic as the principal of ISA. Paragraph 7 of the complaint stated:

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

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

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

It is also relevant to note that the non-joinder of the Republic which occurred upon the
expiration of ISA's statutory term, was not a ground for dismissal of such proceedings since a
party may be dropped or added by order of the court, on motion of any party or on the court's
own initiative at any stage of the action and on such terms as are just. 13 In the instant case, the
Republic has precisely moved to take over the proceedings as party-plaintiff.

In E.B. Marcha Transport Company, Inc. v. Intermediate Appellate Court, 14 the Court
recognized that the Republic may initiate or participate in actions involving its agents. There the
Republic of the Philippines was held to be a proper party to sue for recovery of possession of
property although the "real" or registered owner of the property was the Philippine Ports
Authority, a government agency vested with a separate juridical personality. The Court said:

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

In E.B. Marcha, the Court also stressed that to require the Republic to commence all over
again another proceeding, as the trial court and Court of Appeals had required, was to
generate unwarranted delay and create needless repetition of proceedings:
 More importantly, as we see it, dismissing the complaint on the ground that the
Republic of the Philippines is not the proper party would result in needless delay
in the settlement of this matter and also in derogation of the policy against
multiplicity of suits. Such a decision would require the Philippine Ports Authority
to refile the very same complaint already proved by the Republic of the Philippines
and bring back as it were to square one. 16 (Emphasis supplied)

As noted earlier, the Court of Appeals declined to permit the substitution of the Republic of the
Philippines for the ISA upon the ground that the action for expropriation could not prosper
because the basis for the proceedings, the ISA's exercise of its delegated authority to
expropriate, had become legally ineffective by reason of the expiration of the statutory term of
the agent or delegated i.e., ISA. Since, as we have held above, the powers and functions of ISA
have reverted to the Republic of the Philippines upon the termination of the statutory term of
ISA, the question should be addressed whether fresh legislative authority is necessary before the
Republic of the Philippines may continue the expropriation proceedings initiated by its own
delegate or agent.

While the power of eminent domain is, in principle, vested primarily in the legislative
department of the government, we believe and so hold that no new legislative act is necessary
should the Republic decide, upon being substituted for ISA, in fact to continue to prosecute the
expropriation proceedings. For the legislative authority, a long time ago, enacted a continuing or
standing delegation of authority to the President of the Philippines to exercise, or cause the
exercise of, the power of eminent domain on behalf of the Government of the Republic of the
Philippines. The 1917 Revised Administrative Code, which was in effect at the time of the
commencement of the present expropriation proceedings before the Iligan Regional Trial Court,
provided that:

Sec. 64. Particular powers and duties of the President of the Philippines. In
addition to his general supervisory authority, the President of the Philippines shall
have such other specific powers and duties as are expressly conferred or imposed
on him by law, and also, in particular, the powers and duties set forth in this
Chapter.

Among such special powers and duties shall be:

xxx xxx xxx

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

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

The Revised Administrative Code of 1987 currently in force has substantially reproduced
the foregoing provision in the following terms:

Sec. 12. Power of eminent domain. The President shall determine when it is
necessary or advantageous to exercise the power of eminent domain in behalf of
the National Government, and direct the Solicitor General, whenever he deems the
action advisable, to institute expopriation proceedings in the proper court.
(Emphasis supplied)

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

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

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

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

SO ORDERED.
G.R. No. 84811 August 29, 1989

SOLID HOMES, INC., petitioner,

vs.
TERESITA PAYAWAL and COURT OF APPEALS, respondents.

CRUZ, J.:

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

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

Solid Homes moved to dismiss the complaint on the ground that the court had no jurisdiction,
this being vested in the National Housing Authority under PD No. 957. The motion was denied.
The defendant repleaded the objection in its answer, citing Section 3 of the said decree
providing that "the National Housing Authority shall have exclusive jurisdiction to regulate the
real estate trade and business in accordance with the provisions of this Decree." After trial,
judgment was rendered in favor of the plaintiff and the defendant was ordered to deliver to her
the title to the land or, failing this, to refund to her the sum of P 38,949.87 plus interest from
1975 and until the full amount was paid. She was also awarded P 5,000.00 moral damages, P
5,000.00 exemplary damages, P 10,000.00 attorney's fees, and the costs of the suit. 1
Solid Homes appealed but the decision was affirmed by the respondent court, 2 which also
berated the appellant for its obvious efforts to evade a legitimate obligation, including its
dilatory tactics during the trial. The petitioner was also reproved for its "gall" in collecting the
further amount of P 1,238.47 from the plaintiff purportedly for realty taxes and registration
expenses despite its inability to deliver the title to the land.

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

SEC. 41. Other remedies.-The rights and remedies provided in this Decree shall be
in addition to any and all other rights and remedies that may be available under
existing laws.

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

The applicable law is PD No. 957, as amended by PD No. 1344, entitled "Empowering the
National Housing Authority to Issue Writs of Execution in the Enforcement of Its Decisions
Under Presidential Decree No. 957."

Section 1 of the latter decree provides as follows:

SECTION 1. In the exercise of its function to regulate the real estate trade and
business and in addition to its powers provided for in Presidential Decree No. 957,
the National Housing Authority shall have exclusive jurisdiction to hear and decide
cases of the following nature:

A. Unsound real estate business practices;

B. Claims involving refund and any other claims filed by subdivision lot or
condominium unit buyer against the project owner, developer, dealer, broker or
salesman; and

C. Cases involving specific performance of contractuala statutory obligations filed

by buyers of subdivision lot or condominium unit against the owner, developer,
dealer, broker or salesman. (Emphasis supplied.)
The language of this section, especially the italicized portions, leaves no room for doubt that
"exclusive jurisdiction" over the case between the petitioner and the private respondent is vested
not in the Regional Trial Court but in the National Housing Authority. 3

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

SEC. 19. Jurisdiction in civil cases.-Regional Trial Courts shall exercise exclusive
original jurisdiction:

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

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

xxx xxx xxx

(8) In all other cases in which the demand, exclusive of interest and cost or the
value of the property in controversy, amounts to more than twenty thousand pesos
(P 20,000.00).

It stresses, additionally, that BP No. 129 should control as the later enactment, having been
promulgated in 1981, after PD No. 957 was issued in 1975 and PD No. 1344 in 1978.

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

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

xxx xxx xxx

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

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

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

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

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

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

xxx xxx xxx

 Besides, a strict construction of the subject provisions of PD No. 1344 which
would deny the HSRC the authority to adjudicate claims for damages and for
damages and for attorney's fees would result in multiplicity of suits in that the
subdivision condominium buyer who wins a case in the HSRC and who is thereby
deemed entitled to claim damages and attorney's fees would be forced to litigate in
the regular courts for the purpose, a situation which is obviously not in the
contemplation of the law. (Emphasis supplied.) 7

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

Statutes conferring powers on their administrative agencies must be liberally construed to

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

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

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

WHEREFORE, the challenged decision of the respondent court is REVERSED and the
decision of the Regional Trial Court of Quezon City in Civil Case No. Q-36119 is SET ASIDE,
without prejudice to the filing of the appropriate complaint before the Housing and Land Use
Regulatory Board. No costs.
SO ORDERED.
G.R. No. 164789 August 27, 2009

CHRISTIAN GENERAL ASSEMBLY, INC., Petitioner,

vs.
SPS. AVELINO C. IGNACIO and PRISCILLA T. IGNACIO, Respondents.

DECISION

BRION, J.:

We resolve in this Rule 45 petition the legal issue of whether an action to rescind a contract to
sell a subdivision lot that the buyer found to be under litigation falls under the exclusive
jurisdiction of the Housing and Land Use Regulatory Board (HLURB).

In this petition,1 Christian General Assembly, Inc. (CGA) prays that we set aside the
decision2 issued by the Court of Appeals (CA) in CAG.R. SP No. 75717 that dismissed its
complaint for rescission filed with the Regional Trial Court (RTC) of Bulacan for lack of
jurisdiction, as well as the CA resolution3 that denied its motion for reconsideration.

FACTUAL ANTECEDENTS

The present controversy traces its roots to the case filed by CGA against the Spouses Avelino
and Priscilla Ignacio (respondents) for rescission of their Contract to Sell before the RTC,
Branch 14, Malolos, Bulacan. The facts, drawn from the records and outlined below, are not in
dispute.

On April 30, 1998, CGA entered into a Contract to Sell a subdivision lot4 (subject property)
with the respondents the registered owners and developers of a housing subdivision known as
Villa Priscilla Subdivision located in Barangay Cutcut, Pulilan, Bulacan. Under the Contract to
Sell, CGA would pay P2,373,000.00 for the subject property on installment basis; they were to
pay a down payment of P1,186,500, with the balance payable within three years on equal
monthly amortization payments of P46,593.85, inclusive of interest at 24% per annum, starting
June 1998.

On August 5, 2000, the parties mutually agreed to amend the Contract to Sell to extend the
payment period from three to five years, calculated from the date of purchase and based on the
increased total consideration of P2,706,600, with equal monthly installments of P37,615.00,
inclusive of interest at 24% per annum, starting September 2000.

According to CGA, it religiously paid the monthly installments until its administrative pastor
discovered that the title covering the subject property suffered from fatal flaws and defects.
CGA learned that the subject property was actually part of two consolidated lots (Lots 2-F and
2-G Bsd-04-000829 [OLT]) that the respondents had acquired from Nicanor Adriano (Adriano)
and Ceferino Sison (Sison), respectively. Adriano and Sison were former tenant-beneficiaries of
Purificacion S. Imperial (Imperial) whose property in Cutcut, Pulilan, Bulacan5 had been placed
under Presidential Decree (PD) No. 27s Operation Land Transfer.6 According to CGA,
Imperial applied for the retention of five hectares of her land under Republic Act No.
6657,7 which the Department of Agrarian Reform (DAR) granted in its October 2, 1997 order
(DAR Order). The DAR Order authorized Imperial to retain the farm lots previously awarded to
the tenant-beneficiaries, including Lot 2-F previously awarded to Adriano, and Lot 2-G Bsd-04-
000829 awarded to Sison. On appeal, the Office of the President8 and the CA9 upheld the DAR
Order. Through the Courts Resolution dated January 19, 2005 in G.R. No. 165650, we affirmed
the DAR Order by denying the petition for review of the appellate decision.

Understandably aggrieved after discovering these circumstances, CGA filed a complaint against
the respondents before the RTC on April 30, 2002.10 CGA claimed that the respondents
fraudulently concealed the fact that the subject property was part of a property under litigation;
thus, the Contract to Sell was a rescissible contract under Article 1381 of the Civil Code. CGA
asked the trial court to rescind the contract; order the respondents to return the amounts already
paid; and award actual, moral and exemplary damages, attorneys fees and litigation expenses.

Instead of filing an answer, the respondents filed a motion to dismiss asserting that the RTC had
no jurisdiction over the case.11 Citing PD No. 95712 and PD No. 1344, the respondents claimed
that the case falls within the exclusive jurisdiction of the HLURB since it involved the sale of a
subdivision lot. CGA opposed the motion to dismiss, claiming that the action is for rescission of
contract, not specific performance, and is not among the actions within the exclusive
jurisdiction of the HLURB, as specified by PD No. 957 and PD No. 1344.

On October 15, 2002, the RTC issued an order denying the respondents motion to dismiss. The
RTC held that the action for rescission of contract and damages due to the respondents
fraudulent misrepresentation that they are the rightful owners of the subject property, free from
all liens and encumbrances, is outside the HLURBs jurisdiction.1avvphi1

The respondents countered by filing a petition for certiorari with the CA. In its October 20,
2003 decision, the CA found merit in the respondents position and set the RTC order aside; the
CA ruled that the HLURB had exclusive jurisdiction over the subject matter of the complaint
since it involved a contract to sell a subdivision lot based on the provisions of PD No. 957 and
PD No. 1344.

Contending that the CA committed reversible error, the CGA now comes before the Court
asking us to overturn the CA decision and resolution.
 THE PETITION

In its petition, CGA argues that the CA erred -

(1) in applying Article 1191 of the Civil Code for breach of reciprocal obligation, while
the petitioners action is for the rescission of a rescissible contract under Article 1381 of
the same Code, which is cognizable by the regular court; and

(2) in holding that the HLURB has exclusive jurisdiction over the petitioners action by
applying Antipolo Realty Corp v. National Housing Corporation13 and other cited cases.

In essence, the main issue we are asked to resolve is which of the two the regular court or the
HLURB has exclusive jurisdiction over CGAs action for rescission and damages.

According to CGA, the exclusive jurisdiction of the HLURB, as set forth in PD No. 1344 and
PD No. 957, is limited to cases involving specific performance and does not cover actions for
rescission.

Taking the opposing view, respondents insist that since CGAs case involves the sale of a
subdivision lot, it falls under the HLURBs exclusive jurisdiction.

THE COURTS RULING

We find no merit in the petition and consequently affirm the CA decision.

Development of the HLURBs jurisdiction

The nature of an action and the jurisdiction of a tribunal are determined by the material
allegations of the complaint and the law governing at the time the action was commenced. The
jurisdiction of the tribunal over the subject matter or nature of an action is conferred only by
law, not by the parties consent or by their waiver in favor of a court that would otherwise have
no jurisdiction over the subject matter or the nature of an action.14Thus, the determination of
whether the CGAs cause of action falls under the jurisdiction of the HLURB necessitates a
closer examination of the laws defining the HLURBs jurisdiction and authority.

PD No. 957, enacted on July 12, 1976, was intended to closely supervise and regulate the real
estate subdivision and condominium businesses in order to curb the growing number of
swindling and fraudulent manipulations perpetrated by unscrupulous subdivision and
condominium sellers and operators. As one of its "whereas clauses" states:
WHEREAS, reports of alarming magnitude also show cases of swindling and fraudulent
manipulations perpetrated by unscrupulous subdivision and condominium sellers and operators,
such as failure to deliver titles to the buyers or titles free from liens and encumbrances, and to
pay real estate taxes, and fraudulent sales of the same subdivision lots to different innocent
purchasers for value;

Section 3 of PD No. 957 granted the National Housing Authority (NHA) the "exclusive
jurisdiction to regulate the real estate trade and business." Thereafter, PD No. 1344 was issued
on April 2, 1978 to expand the jurisdiction of the NHA to include the following:

SECTION 1. In the exercise of its functions to regulate the real estate trade and business and in
addition to its powers provided for in Presidential Decree No. 957, the National Housing
Authority shall have exclusive jurisdiction to hear and decide cases of the following nature:

A. Unsound real estate business practices;

B. Claims involving refund and any other claims filed by subdivision lot or condominium
unit buyer against the project owner, developer, dealer, broker or salesman; and

C. Cases involving specific performance of contractual and statutory obligations filed by

buyers of subdivision lot or condominium unit against the owner, developer, dealer,
broker or salesman.

Executive Order No. 648 (EO 648), dated February 7, 1981, transferred the regulatory and
quasi-judicial functions of the NHA to the Human Settlements Regulatory Commission
(HSRC). Section 8 of EO 648 provides:

SECTION 8. Transfer of Functions. -The regulatory functions of the National Housing

Authority pursuant to Presidential Decree Nos. 957, 1216, 1344 and other related laws are
hereby transferred to the Commission [Human Settlements Regulatory Commission]. x x x.
Among these regulatory functions are: 1) Regulation of the real estate trade and business; x x x
11) Hear and decide cases of unsound real estate business practices; claims involving refund
filed against project owners, developers, dealers, brokers, or salesmen; and cases of specific
performance.

Pursuant to Executive Order No. 90 dated December 17, 1986, the HSRC was renamed as the
HLURB.

Rationale for HLURBs extensive quasi-judicial powers

The surge in the real estate business in the country brought with it an increasing number of
cases between subdivision owners/developers and lot buyers on the issue of the extent of the
HLURBs exclusive jurisdiction. In the cases that reached us, we have consistently ruled that
the HLURB has exclusive jurisdiction over complaints arising from contracts between the
subdivision developer and the lot buyer or those aimed at compelling the subdivision developer
to comply with its contractual and statutory obligations to make the subdivision a better place to
live in.15

We explained the HLURBs exclusive jurisdiction at length in Sps. Osea v. Ambrosio,16 where
we said:

Generally, the extent to which an administrative agency may exercise its powers depends
largely, if not wholly, on the provisions of the statute creating or empowering such agency.
Presidential Decree (P.D.) No. 1344, "Empowering The National Housing Authority To Issue
Writ Of Execution In The Enforcement Of Its Decision Under Presidential Decree No. 957,"
clarifies and spells out the quasi-judicial dimensions of the grant of jurisdiction to the HLURB
in the following specific terms:

SEC. 1. In the exercise of its functions to regulate the real estate trade and business and in
addition to its powers provided for in Presidential Decree No. 957, the National Housing
Authority shall have exclusive jurisdiction to hear and decide cases of the following nature:

A. Unsound real estate business practices;

B. Claims involving refund and any other claims filed by subdivision lot or condominium
unit buyer against the project owner, developer, dealer, broker or salesman; and

C. Cases involving specific performance of contractual and statutory obligations filed by

buyers of subdivision lots or condominium units against the owner, developer, dealer,
broker or salesman.

The extent to which the HLURB has been vested with quasi-judicial authority must also be
determined by referring to the terms of P.D. No. 957, "The Subdivision And Condominium
Buyers' Protective Decree." Section 3 of this statute provides:

x x x National Housing Authority [now HLURB]. - The National Housing Authority shall have
exclusive jurisdiction to regulate the real estate trade and business in accordance with the
provisions of this Decree.

The need for the scope of the regulatory authority thus lodged in the HLURB is indicated in the
second, third and fourth preambular paragraphs of PD 957 which provide:
WHEREAS, numerous reports reveal that many real estate subdivision owners, developers,
operators, and/or sellers have reneged on their representations and obligations to provide and
maintain properly subdivision roads, drainage, sewerage, water systems, lighting systems, and
other similar basic requirements, thus endangering the health and safety of home and lot buyers;

WHEREAS, reports of alarming magnitude also show cases of swindling and fraudulent
manipulations perpetrated by unscrupulous subdivision and condominium sellers and operators,
such as failure to deliver titles to the buyers or titles free from liens and encumbrances, and to
pay real estate taxes, and fraudulent sales of the same subdivision lots to different innocent
purchasers for value;

xxxx

WHEREAS, this state of affairs has rendered it imperative that the real estate subdivision and
condominium businesses be closely supervised and regulated, and that penalties be imposed on
fraudulent practices and manipulations committed in connection therewith.

The provisions of PD 957 were intended to encompass all questions regarding subdivisions and
condominiums. The intention was aimed at providing for an appropriate government agency,
the HLURB, to which all parties aggrieved in the implementation of provisions and the
enforcement of contractual rights with respect to said category of real estate may take recourse.
The business of developing subdivisions and corporations being imbued with public interest and
welfare, any question arising from the exercise of that prerogative should be brought to the
HLURB which has the technical know-how on the matter. In the exercise of its powers, the
HLURB must commonly interpret and apply contracts and determine the rights of private
parties under such contracts. This ancillary power is no longer a uniquely judicial function,
exercisable only by the regular courts.

As observed in C.T. Torres Enterprises, Inc. v. Hibionada:

The argument that only courts of justice can adjudicate claims resoluble under the provisions of
the Civil Code is out of step with the fast-changing times. There are hundreds of administrative
bodies now performing this function by virtue of a valid authorization from the legislature. This
quasi-judicial function, as it is called, is exercised by them as an incident of the principal power
entrusted to them of regulating certain activities falling under their particular expertise.

In the Solid Homes case for example the Court affirmed the competence of the Housing and
Land Use Regulatory Board to award damages although this is an essentially judicial power
exercisable ordinarily only by the courts of justice. This departure from the traditional
allocation of governmental powers is justified by expediency, or the need of the government to
respond swiftly and competently to the pressing problems of the modern world. [Emphasis
supplied.]

Another case Antipolo Realty Corporation v. NHA17 explained the grant of the HLURBs
expansive quasi-judicial powers. We said:

In this era of clogged court dockets, the need for specialized administrative boards or
commissions with the special knowledge, experience and capability to hear and determine
promptly disputes on technical matters or essentially factual matters, subject to judicial review
in case of grave abuse of discretion, has become well nigh indispensable. Thus, in 1984, the
Court noted that between the power lodged in an administrative body and a court, the
unmistakable trend has been to refer it to the former.

xxx

In general, the quantum of judicial or quasi-judicial powers which an administrative agency

may exercise is defined in the enabling act of such agency. In other words, the extent to which
an administrative entity may exercise such powers depends largely, if not wholly on the
provisions of the statute creating or empowering such agency. In the exercise of such powers,
the agency concerned must commonly interpret and apply contracts and determine the rights of
private parties under such contracts, One thrust of the multiplication of administrative agencies
is that the interpretation of contracts and the determination of private rights thereunder is no
longer a uniquely judicial function, exercisable only by our regular courts. [Emphasis supplied.]

Subdivision cases under the RTCs jurisdiction

The expansive grant of jurisdiction to the HLURB does not mean, however, that all cases
involving subdivision lots automatically fall under its jurisdiction. As we said in Roxas v. Court
of Appeals: 18

In our view, the mere relationship between the parties, i.e., that of being subdivision
owner/developer and subdivision lot buyer, does not automatically vest jurisdiction in the
HLURB. For an action to fall within the exclusive jurisdiction of the HLURB, the decisive
element is the nature of the action as enumerated in Section 1 of P.D. 1344. On this matter, we
have consistently held that the concerned administrative agency, the National Housing
Authority (NHA) before and now the HLURB, has jurisdiction over complaints aimed at
compelling the subdivision developer to comply with its contractual and statutory obligations.

xxx
Note particularly pars. (b) and (c) as worded, where the HLURBs jurisdiction concerns cases
commenced by subdivision lot or condominium unit buyers. As to par. (a), concerning "unsound
real estate practices," it would appear that the logical complainant would be the buyers and
customers against the sellers (subdivision owners and developers or condominium builders and
realtors ), and not vice versa. [Emphasis supplied.]

Pursuant to Roxas, we held in Pilar Development Corporation v. Villar19 and Suntay v.

Gocolay20 that the HLURB has no jurisdiction over cases filed by subdivision or condominium
owners or developers against subdivision lot or condominium unit buyers or owners. The
rationale behind this can be found in the wordings of Sec. 1, PD No. 1344, which expressly
qualifies that the cases cognizable by the HLURB are those instituted by subdivision or
condomium buyers or owners against the project developer or owner. This is also in keeping
with the policy of the law, which is to curb unscrupulous practices in the real estate trade and
business.21

Thus, in the cases of Fajardo Jr. v. Freedom to Build, Inc.,[22] and Cadimas v. Carrion,23 we
upheld the RTCs jurisdiction even if the subject matter was a subdivision lot since it was the
subdivision developer who filed the action against the buyer for violation of the contract to sell.

The only instance that HLURB may take cognizance of a case filed by the developer is when
said case is instituted as a compulsory counterclaim to a pending case filed against it by the
buyer or owner of a subdivision lot or condominium unit. This was what happened in Francel
Realty Corporation v. Sycip,24 where the HLURB took cognizance of the developers claim
against the buyer in order to forestall splitting of causes of action.

Obviously, where it is not clear from the allegations in the complaint that the property involved
is a subdivision lot, as in Javellana v. Hon. Presiding Judge, RTC, Branch 30, Manila,25 the case
falls under the jurisdiction of the regular courts and not the HLURB. Similarly, in Spouses Dela
Cruz v. Court of Appeals,26 we held that the RTC had jurisdiction over a case where the conflict
involved a subdivision lot buyer and a party who owned a number of subdivision lots but was
not himself the subdivision developer.

The Present Case

In the present case, CGA is unquestionably the buyer of a subdivision lot from the respondents,
who sold the property in their capacities as owner and developer. As CGA stated in its
complaint:

2.01. Defendants are the registered owners and developers of a housing subdivision
presently known as Villa Priscilla Subdivision located at Brgy. Cutcut, Pulilan, Bulacan;
2.02 On or about April 30, 1998, the plaintiff thru its Administrative Pastor bought from
defendants on installment basis a parcel of land designated at Lot 1, Block 4 of the said
Villa Priscilla Subdivision xxx

xxx

2.04 At the time of the execution of the second Contract to Sell (Annex "B"), Lot 1,
Block 4 of the Villa Priscilla Subdivision was already covered by Transfer Certificate of
Title No. T-127776 of the Registry of Deeds of Quezon City in the name of Iluminada T.
Soneja, married to Asterio Soneja (defendant Priscilla T. Ignacios sister and brother-in-
law) and the defendants as co-owners, but the latter represented themselves to be the real
and absolute owners thereof, as in fact it was annotated in the title that they were
empowered to sell the same. Copy of TCT No. T-127776 is hereto attached and made part
hereof as Annex "C".

2.05 Plaintiff has been religiously paying the agreed monthly installments until its
Administrative Pastor discovered recently that while apparently clean on its face, the title
covering the subject lot actually suffers from fatal flaws and defects as it is part of the
property involved in litigation even before the original Contract to Sell (Annex "A"),
which defendants deliberately and fraudulently concealed from the plaintiff;

2.06 As shown in the technical description of TCT No. T-127776 (Annex "C"), it covers a
portion of consolidated Lots 2-F and 2-G Bsd-04-000829 (OLT), which were respectively
acquired by defendants from Nicanor Adriano and Ceferino Sison, former tenants-
beneficiaries of Purificacion S. Imperial, whose property at Cutcut, Pulilan, Bulacan
originally covered by TCT No. 240878 containing an area of 119,431 square meters was
placed under Operation Land Transfer under P.D. No. 27;

2.07 Said Purificacion S. Imperial applied for retention of five (5) hectares of her
property at Cutcut, Pulilan, Bulacan under Rep, Act No. 6657 and the same was granted
by the Department of Agrarian Reform (DAR) to cover in whole or in part farm lots
previously awarded to tenants-beneficiaries, including inter alia Nicanor Adrianos Lot 2-
F and Ceferino Sisons Lot 2-G Bsd-04-000829 (OLT).

xxx

2.08 Said order of October 2, 1997 was affirmed and declared final and executory, and
the case was considered closed, as in fact there was already an Implementing Order dated
November 10, 1997.
 xxx

3.03 As may thus be seen, the defendants deliberately and fraudulently concealed from
the plaintiff that fact that the parcel of land sold to the latter under the Contract to Sell
(Annexes "A" and "B") is part of the property already under litigation and in fact part of
the five-hectare retention awarded to the original owner, Purificacion S. Imperial.

xxx

3.05 Plaintiff is by law entitled to the rescission of the Contracts to Sell (Annexes "A"
and "B") by restitution of what has already been paid to date for the subject property in
the total amount of P2,515,899.20, thus formal demand therefor was made on the
defendants thru a letter dated April 5, 2002, which they received but refused to
acknowledge receipt. Copy of said letter is hereto attached and made part hereof as
Annex "J". 27 [Emphasis supplied.]

From these allegations, the main thrust of the CGA complaint is clear to compel the
respondents to refund the payments already made for the subject property because the
respondents were selling a property that they apparently did not own. In other words, CGA
claims that since the respondents cannot comply with their obligations under the contract, i.e.,
to deliver the property free from all liens and encumbrances, CGA is entitled to rescind the
contract and get a refund of the payments already made. This cause of action clearly falls under
the actions contemplated by Paragraph (b), Section 1 of PD No. 1344, which reads:

SEC. 1. In the exercise of its functions to regulate the real estate trade and business and in
addition to its powers provided for in Presidential Decree No. 957, the National Housing
Authority shall have exclusive jurisdiction to hear and decide cases of the following nature:

xxx

B. Claims involving refund and any other claims filed by subdivision lot or condominium
unit buyer against the project owner, developer, dealer, broker or salesman; and

We view CGAs contention that the CA erred in applying Article 1191 of the Civil Code as
basis for the contracts rescission to be a negligible point. Regardless of whether the rescission
of contract is based on Article 1191 or 1381 of the Civil Code, the fact remains that what CGA
principally wants is a refund of all payments it already made to the respondents. This intent,
amply articulated in its complaint, places its action within the ambit of the HLURBs exclusive
jurisdiction and outside the reach of the regular courts. Accordingly, CGA has to file its
complaint before the HLURB, the body with the proper jurisdiction.
WHEREFORE, premises considered, we DENY the petition and AFFIRM the October 20,
2003 Decision of the Court of Appeals in CA G.R. SP No. 75717 dismissing for lack of
jurisdiction the CGA complaint filed with the RTC, Branch 14 of Malolos, Bulacan.

SO ORDERED.
G.R. No. 106498 June 28, 1993

LOLITA DADUBO, petitioner,

vs.
CIVIL SERVICE COMMISSION and the DEVELOPMENT BANK OF THE
PHILIPPINES, respondents.

Francisco P. Duran for petitioner.

CRUZ, J.:

Petitioner Lolita A. Dadubo, Senior Accounts Analyst and Rosario B. Cidro, Cash Supervisor,
of the Development Bank of the Philippines, Borongan Branch were administratively charged
with conduct prejudicial to the best interest of the service. 1 The charges were based on reports
on the unposted withdrawal of P60,000.00 from Savings Account No. 87-692 in the name of
Eric Tiu, Edgar Tiu, and/or Pilar Tiu.

The formal investigations revealed that in the morning of August 13, 1987, Erlinda Veloso,
authorized representative of the Tius, presented an undated withdrawal slip for
P60,000.00. 2 Dadubo, as acting teller, prepared the corresponding ticket and voucher in the
name of the cash supervisor, Rosario Cidro. Dadubo initialed the withdrawal slip, ticket and
voucher, all dated August 13, 1987, and passed on to Cidro all the documents on the said
transaction. These were then forwarded to the accountant, Reynaldo Dorado, who signed the
voucher ledger card of the Tius' savings account and forwarded the documents to Apolinario
Babaylon, bookkeeper, who was also acting as posting machine operator. After posting the
amount of P60,000.00 on the ledger card and passbook, Babaylon initialed the withdrawal slip
and returned the documents to Dorado, who approved the withdrawal and thereafter disbursed
the P60,000.00 to Veloso. The Received payment portion of the withdrawal slip was signed
Veloso but Cidro, who disbursed the amount, failed to initial the passbook.

After banking hours, another withdrawal slip was presented by Feliciano Bugtas, Jr., also an
employee of the Tius.3 This was the second P60,000.00 withdrawal. Veloso did not know about
it. The withdrawal slip was processed and approved on the same day, August 13, 1987. The
space Posted by was initialed by Babaylon but no posting was actually made because the
passbook was not presented. While the withdrawal slip was dated August 13, 1987, all other
supporting documents were dated August 14, 1987, this being a withdrawal after banking hours
(ABH).
The following day, August 14, 1987, prior to the payment of the ABH withdrawal, Veloso
presented another undated withdrawal slip for P60,000.00. 4 This was the third P60,000.00
withdrawal. The withdrawal slip was received by Dorado, who handed it to Dadubo. At that
time, Cidro was encashing the check at PNB to satisfy the ABH withdrawal. When she returned
from the bank, she paid this withdrawal to Veloso, who thought that what she was collecting
was the P60,000.00 corresponding to the withdrawal slip she presented that morning.

When Dadubo informed Cidro about the third withdrawal, till money of P100,000.00 was made
to service it. Prior to the payment of the third P60,000.00 withdrawal, Veloso came back and
presented another withdrawal slip for P40,000.00. 5 The petitioner claimed she disbursed
P100,000.00 to Veloso, covering the third P60,000.00 and the P40,000.00 withdrawals. On the
other hand, Veloso testified that she received only P40,000.00 from the petitioner. She
acknowledged receipt of the amount by signing the withdrawal slip and indicating opposite her
signature the amount of P40,000.00.

That left the balance of P60,000.00 unaccounted for and directly imputable to Dadubo.

On the basis of these findings, DBP found Dadubo guilty of dishonesty for embezzlement of
bank funds. She was penalized with dismissal from the service. 6 Cidro was adjudged guilty of
gross neglect of duty and fined in an amount equivalent to one month basic salary, payable
through salary deductions in not more than 12 installments.

Dadubo appealed to the Merit Systems Protection Board (MSPB), 7 which affirmed the decision
of the DBP, declaring as follows:

There is nothing in the records to show that the Senior Manager, Personnel
Services and Vice-Chairman, both of the DBP, abused their discretion in deciding
the case against the appellant or that their decision was made and attended with
arbitrariness or unfairness. To all intents and purposes, the ensuing decision was a
necessary consequence of the evidence.

However, DBP was reversed by the Civil Service Commission in its Resolution No. 91-642,
dated May 21, 1991, 8which reduced Dadubo's penalty to suspension for six months on the
ground that:

Although Dadubo made alterations on the dates in the Ledger Card from August 13
to August 14, the fact remains that the bank was defrauded on account of said ABH
withdrawal (for) which Cidro is held responsible and accordingly found guilty of
Gross Neglect of Duty and Inefficiency and Incompetence in the Performance of
Official Duty. It was also Dadubo who reported on the irreconcilable P60,000.00.
 The most that Dadubo could be charged with is willful violation of office
regulation when she undertook reconciliation for under the Bank Manual the tellers
are not allowed access to the savings account ledger cards.

Respondent DBP moved reconsideration. On July 16, 1992, the Commission acting favorably
on the motion, promulgated Resolution No.
92-878 9 affirming the earlier findings of the DBP as to Dadubo guilt, thus

The records reveal that Dadubo admitted in her Answer that she changed entry of
the date August 13 to 14 in the ledger in the course of her reconciliation which she
was advised not to do.

xxx xxx xxx

This act of admission needs no further elaboration to prove that Dadubo is guilty of
the charge. Such admission is however treated as a mitigating circumstance which
is offset by the aggravating circumstance of taking advantage of her official
position. There is no reason for her to change or alter entries in the ledger unless
she intends to benefit therefrom or to conceal some facts.

Further, it should be noted that the report was made only on September 28, 1987
(the date the report on reconciliation was submitted to the Regional Office). It
should be emphasized as earlier stated that Dadubo was not authorized to reconcile
the subsidiary ledger cards for the period ending August 20, 1987. Hence, as
emphatically stated in the MSPB decision, ". . . respondent Dadubo manipulated
the bank records to conceal the offense which constituted the act of dishonesty."

The opinion of an acting Internal Audit Officer, whose report was among the
preliminary findings considered in the investigation of the case, is not conclusive
as there are other available and convincing evidence to prove the guilt of Dadubo.

Dadubo has brought her case to this Court in this petition for certiorari. She claims that CSC
Resolution No. 92-878 failed to comply with the constitutional requirement to state clearly and
distinctly the facts an the law on which the decision is based; CSC Resolution No. 92-878
conflicts with the findings of fact in CSC Resolution No. 91-642; the Commission manifestly
overlooked or disregarded certain relevant facts not disputed by the parties; and it based its
conclusions entirely on speculations, surmises or conjectures.

Required to comment, the Solicitor General argued that CSC Resolution No. 92-878 did not
need to restate the legal and factual bases of the original decision in CSC-MSPB No. 497 which
already explained the relevant facts and the applicable law. The petitioner had admitted that she
changed the entry of the dates in the subsidiary ledger card from August 13 to 14 in the course
of her reconciliation work although she was not authorized to do this. This admission, along
with the other evidence Presented during the investigation in the bank, proved Dadubo's guilt.
Moreover, the affidavit of Albert C. Ballicud was inadmissible in evidence because he was
never subjected to cross-examination.

The petitioner's challenges are mainly factual. The rule is that the findings of fact of
administrative bodies, if based on substantial evidence, are controlling on the reviewing
authority. 10 is settled that it is not for the appellate court to substitute its own judgment for that
of the administrative agency on the sufficiency of the evidence and the credibility of the
witnesses. 11 Administrative decisions on matters within their jurisdiction are entitled to respect
and can only be set aside on proof of grave abuse of discretion, fraud or error of law. 12 None of
these vices has been shown in this case.

The petitioner's invocation of due process is without merit. Her complaint that she was not
sufficiently informed of the charges against her has no basis. While the rules governing Judicial
trials should be observed as much as possible, their strict observance is not indispensable in
administrative cases. 13 As this Court has held, "the standard of due process that must be met in
administrative tribunals allows a certain latitude as long as the element of fairness is not
ignored." 14

The essence of due process is distilled in the immortal cry of Themistocles to Eurybiades:
"Strike, but hear me first!" Less dramatically, it simply connotes an opportunity to be heard. The
petitioner had several opportunities to be heard and to present evidence that she was not guilty
of embezzlement but only of failure to comply with the tellering procedure. Not only did she
testify at her formal investigation but she also filed a motion for reconsideration with the DBP,
then appealed to the Merit Systems Protection Board (MSPB), and later elevated the case to the
Civil Service Commission. Having been given all these opportunities to be heard, which she
fully availed of, she cannot now complain that she was denied due process.

Appreciation of the evidence submitted by the parties was, to repeat, the prerogative of the
administrative body, subject to reversal only upon a clear showing of arbitrariness. The rejection
of the affidavit of Ballicud, for example, was not improper because there was nothing in that
document showing that the petitioner did not embezzle the P60,000.00.

It is true that the petitioner was formally charged with conduct prejudicial to the best interest of
the bank and not specifically with embezzlement. Nevertheless, the allegations and the evidence
presented sufficiently proved her guilt of embezzlement of bank funds, which in unquestionably
prejudicial to the best interest of the bank.
The charge against the respondent in an administrative case need not be drafted with the
precision of an information in a criminal prosecution. It is sufficient that he is apprised of the
substance of the charge against him; what is controlling is the allegation of the acts complained
of, not the designation of the offense. 15

We must also dismiss the petitioner's complaint that CSC Resolution No. 92-878 failed to
comply with the constitutional requirement to state clearly and distinctly the facts and the law
on which a decision is based. We have held that this provision applies only to courts of justice
and not to administrative bodies like the Civil Service Commission. 16 In any event, there was
an earlier statement of the facts and the law involved in the decision rendered by the MSPB
dated February 28, 1990, which affirmed DBP's decision to dismiss the petitioner. In both
decisions, the facts and the law on which they were based were clearly and distinctly stated.

It is worth adding that inasmuch as Civil Service Resolution No. 92-878 was rendered only to
resolve DBP's motion for reconsideration, it was not really necessary to re-state the factual an,
legal bases for the said decisions. Even resolutions issued by this Court do not need to conform,
to the first paragraph of Article VIII, Section 14, of the Constitution, for reasoning extensively
discussed in Borromeo v. Court of Appeals 17 and other subsequent cases. 18

We find no justification to nullify or modify the questioned resolution. It would perhaps have
been more thorough if certain other officers of the bank had been also investigated for their part
in the anomalous transaction. But that matter is not before this Court and cannot be resolved by
us at this time.

WHEREFORE, the petition is DISMISSED for lack of a clear showing of grave abuse of
discretion on the part of the Civil Service Commission in issuing the questioned resolutions.
Costs against the petitioner.

SO ORDERED.

G.R. No. L-30637 July 16, 1987

LIANGA BAY LOGGING, CO., INC., petitioner,

vs.
HON. MANUEL LOPEZ ENAGE, in his capacity as Presiding Judge of Branch II of the
Court of First, Instance of Agusan, and AGO TIMBER CORPORATION, respondents.

TEEHANKEE, C.J.:

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

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

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

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

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

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

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

That to follow the claim of the Ago Timber Corporation would reduce the area of the
Lianga Bay Logging, Co., Inc. to 107,046 hectares instead of the area granted which is
110,406 hectares.

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

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

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

Petitioner elevated the case to the Office of the President, where in a decision dated June 16,
1966, signed by then Assistant Executive Secretary Jose J. Leido, Jr., the ruling of the then
Secretary of Agriculture and Natural Resources was affirmed. 5 On motion for reconsideration,
the Office of the President issued another decision dated August 9, 1968 signed by then
Assistant Executive Secretary Gilberto Duavit reversing and overturning the decision of the
then Acting Secretary of Agriculture and Natural Resources and affirming in toto and reinstating
the decision, dated March 20, 1961, of the Director of Forestry. 6

Respondent Ago filed a motion for reconsideration of the decision dated August 9, 1968 of the
Office of the President but after written opposition of petitioner Lianga, the same was denied in
an order dated October 2, 1968, signed by then Assistant Executive Secretary Jose J. Leido, Jr. 7

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

As prayed for, respondent judge issued a temporary restraining order on October 28, 1968, on a
bond of P20,000, enjoining the defendants from carrying out the decision of the Office of the
President. The corresponding writ was issued the next day, or on October 29, 1968. 9

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

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

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

The Court finds merit in the petition.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ACCORDINGLY, the petition for certiorari and prohibition is granted. The restraining order
heretofore issued by the Court against enforcement of the preliminary injunction and related
orders issued by respondent judge is the case below is made permanent and the respondent
judge or whoever has taken his place is hereby ordered to dismiss Civil Case No. 1253.

SO ORDERED.
 [G.R. No. 112745. October 16, 1997]

AQUILINO T. LARIN, petitioner, vs. THE EXECUTIVE SECRETARY, SECRETARY

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

DECISION

TORRES, JR., J.:

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

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

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

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

"WHEREFORE, judgment is now rendered in Criminal Cases Nos. 14208 and

14209 convicting accused Assistant Commissioner for Specific Tax Aquilino T.
Larin, Chief of the Alcohol tax Division TEODORO P. PARENO, and Chief of
the Revenue accounting Division POTENCIANA M. EVANGELISTA:

xxx

SO ORDERED.

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

This is a report in the case of Assistant Commissioner AQUILINO T. LARIN of the

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

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

xxx

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

Acting by authority of the President, Sr. Deputy Executive Secretary Leonardo A.

Quisumbing issued Memorandum Order No. 164 dated August 25, 1993 which provides for the
creation of an Executive Committee to investigate the administrative charge against herein
petitioner Aquilino T. Larin. It states thus:t

A Committee is hereby created to investigate the administrative complaint filed against

Aquilino T. Larin, Assistant Commissioner, Bureau of Internal Revenue, to be composed
of:
 Atty. Frumencio A. Lagustan Chairman

Assistant Executive Secretary for Legislation

Mr. Jose B. Alejandro Member

Presidential Assistant

Atty. Jaime M. Maza Member

Assistant commissioner of Inspector services

Bureau of Internal Revenue

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

xxx

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

xxx

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

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

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

Pursuant to Presidential Memorandum Order No. 164, you are hereby directed to file
your position paper on the aforementioned charges within seven (7) days from receipt
hereof xxx.
 Failure to file the required position paper shall be considered as a waiver on your part to
submit such paper or to be heard, in which case, the Committee shall deem the case
submitted on the basis of the documents and records at hand.

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

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

xxx

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

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

Meanwhile, the President issued the challenged Executive order No. 132 dated October 26,
1993 which mandates for the streamlining of the Bureau of Internal Revenue. Under said order,
some positions and functions are either abolished, renamed, decentralized or transferred to other
offices, while other offices are also created. The Excise Tax Service or the Specific Tax Service,
of which petitioner was the Assistant Commissioner, was one of those offices that was
abolished by said executive order.

The corresponding implementing rules of Executive Order No. 132, namely, revenue
Administrative Orders Nos. 4-93 and 5-93, were subsequently issued .by the Bureau of Internal
Revenue.
 On October 27, 1993, or one day after the promulgation of Executive Order No.132, the
President appointed the following as BIR Assistant Commissioners:

1. Bernardo A. Frianeza

2. Dominador L. Galura

3. Jaime D. Gonzales

4. Lilia C. Guillermo

5. Rizalina S. Magalona

6. Victorino C. Mamalateo

7. Jaime M. Masa

8. Antonio N. Pangilinan

9. Melchor S. Ramos

10. Joel L. Tan-Torres

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

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

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

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

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

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

The ultimate issue to be resolved in the instant case falls on the determination of the validity
of petitioners dismissal from office. Incidentally, in order to resolve this matter, it is imperative
that We consider these questions : a) Who has the power to discipline the petitioner?, b) Were
the proceedings taken pursuant to Memorandum Order No. 164 in accord with due process?, c)
What is the effect of petitioners acquittal in the criminal case to his administrative charge? d)
Does the President have the power to reorganize the BIR or to issue the questioned E.O. NO.
132?, e) Is the reorganization of BIR pursuant to E.O. No. 132 tainted with bad faith?

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

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

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

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

"This pertains to the administrative charge against Assistant Commissioner Aquilino T.

Larin of the Bureau of Internal Revenue, for grave misconduct by virtue of a
Memorandum signed by Acting Secretary Leong of the Department of Finance, on the
basis of decision handed down by the Hon. Sandiganbayan convicting Larin, et. al. in
Criminal Cases No. 14208 and 14209."[4]
 In a nutshell, the criminal cases against petitioner refer to his alleged violation of Section
268 (4) of the National Internal Revenue Code and of section 3(e) of R.A. No.3019 as a
consequence of his act of favorably recommending the grant of tax credit to Tanduay Distillery,
Inc.. The pertinent portion of the judgment of the Sandiganbayan reads:

"As above pointed out, the accused had conspired in knowingly preparing false
memoranda and certification in order to effect a fraud upon taxes due to the government.
By their separate acts which had resulted in an appropriate tax credit of P180,701,682.00
in favor of Tanduay. The government had been defrauded of a tax revenue - for the full
amount, if one is to look at the availments or utilization thereof (Exhibits 'AA' to 'AA-31-
a'), or for a substantial portion thereof (P73,000,000.00) if we are to rely on the letter of
Deputy Commissioner Eufracio D. Santos (Exhibits '21' for all the accused).\ As pointed
out above, the confluence of acts and omissions committed by accused Larin, Pareno and
Evangelista adequately prove conspiracy among them for no other purpose than to bring
about a tax credit which Tanduay did not deserve. These misrepresentations as to how
much Tanduay had paid in ad valorem taxes obviously constituted a fraud of tax revenue
of the government xxx.'[5]

However, it must be stressed at this juncture that the conviction of petitioner by the
Sandiganbayan was set aside by this court in our decision promulgated on April 17, 1996 in
G.R. Nos. 108037-38 and 107119-20. We specifically ruled in no uncertain terms that : a)
petitioner cannot be held negligent in relying on the certification of a co-equal unit in the BIR,
b) it is not incumbent upon Larin to go beyond the certification made by the Revenue
Accounting Division that Tanduay Distillery, Inc. had paid the ad valorem taxes, c) there is
nothing irregular or anything false in Larin's marginal note on the memorandum addressed to
Pareno, the Chief of Alcohol Tax Division who was also one of the accused, but eventually
acquitted, in the said criminal cases, and d) there is no proof of actual agreement between the
accused, including petitioner, to commit the illegal acts charged. We are emphatic in our
resolution in said cases that there is nothing "illegal with the acts committed by the
petitioner(s)." We also declare that "there is no showing that petitioner(s) had acted irregularly,
or performed acts outside of his (their) official functions." Significantly, these acts which We
categorically declare to be not unlawful and improper in G.R. Nos. 108037-38 and G.R. Nos.
107119-20 are the very same acts for which petitioner is held to be administratively responsible.
Any charge of malfeasance or misfeasance on the part of the petitioner is clearly belied by our
conclusion in said cases. In the light of this decisive pronouncement, We see no reason for the
administrative charge to continue - it must, thus, be dismissed.

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

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

Let us now examine Executive Order No. 132.

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

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

We do not agree.

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

Section 48 of R.A. 7645 provides that:

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

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

"Sec. 62, Unauthorized Organizational Charges. -- Unless otherwise created by law or

directed by the President of the Philippines, no organizational unit or changes in key
positions in any department or agency shall be authorized in their respective organization
structures and be funded from appropriations by this Act." (italics ours)

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

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

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

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

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

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

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

Section 11 provides inter alia:

"xxx

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

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

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

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

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

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

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

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

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

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

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

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

Section 1.1.2 of said executive order provides that:

"1.1.2 The Intelligence and Investigation Office and the Inspection Service are abolished.
An Intelligence and Investigation Service is hereby created to absorb the same
functions of the abolished office and service. xxx" (italics ours)
 This provision is a clear illustration of the circumstance mentioned in Section 2 (b) of R.A.
No. 6656 that an office is abolished and another one performing substantially the same function
is created.

Another circumstance is the creation of services and divisions in the BIR resulting to a
significant increase in the number of positions in the said bureau as contemplated in paragraph
(a) of section 2 of R.A. No. 6656. Under Section 1.3 of E.O. No. 132, the Information Systems
Group has two newly created Systems Services. Aside from this, six new divisions are also
created. Under Section 1.2.1, three more divisions of the Assessment Service are formed. With
this newly created offices, there is no doubt that a significant increase of positions will
correspondingly follow.

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

Commissioner violates Section 4 of R.A. No. 6656. Under said provision, officers holding
permanent appointments are given preference for appointment to the new positions in the
approved staffing pattern comparable to their former position or in case there are not enough
comparable positions to positions next lower in rank. It is undeniable that petitioner is a career
executive officer who is holding a permanent position. Hence, he should have given preference
for appointment in the position of Assistant Commissioner. As claimed by petitioner, Antonio
Pangilinan who was one of those appointed as Assistant Commissioner, "is an outsider of sorts
to the bureau, not having been an incumbent officer of the bureau at the time of the
reorganization." We should not lose sight of the second paragraph of Section 4 of R.A. No. 6656
which explicitly states that no new employees shall be taken in until all permanent officers shall
have been appointed for permanent position.

IN VIEW OF THE FOREGOING, the petition is granted, and petitioner is hereby

reinstated to his position as Assistant Commissioner without loss of seniority rights and shall be
entitled to full backwages from the time of his separation from service until actual reinstatement
unless, in the meanwhile, he would have reached the compulsory retirement age of sixty-five
years in which case, he shall be deemed to have retired at such age and entitled thereafter to the
corresponding retirement benefits.

SO ORDERED.
G.R. No. 81954 August 8, 1989

CESAR Z. DARIO, petitioner,

vs.
HON. SALVADOR M. MISON, HON. VICENTE JAYME and HON. CATALINO
MACARAIG, JR., in their respective capacities as Commissioner of Customs, Secretary of
Finance, and Executive Secretary, respondents.

G.R. No. 81967 August 8, 1989

VICENTE A. FERIA JR., petitioner,

vs.
HON. SALVADOR M. MISON, HON. VICENTE JAYME, and HON. CATALINO
MACARAIG, JR., in their respective capacities as Commissioner of Customs, Secretary of
Finance, and Executive Secretary, respondents.

G.R. No. 82023 August 8, 1989

ADOLFO CASARENO, PACIFICO LAGLEVA, JULIAN C. ESPIRITU, DENNIS A.

AZARRAGA, RENATO DE JESUS, NICASIO C. GAMBOA, CORAZON RALLOS
NIEVES, FELICITACION R. GELUZ, LEODEGARIO H. FLORESCA, SUBAER
PACASUM, ZENAIDA LANARIA, JOSE B. ORTIZ, GLICERIO R. DOLAR,
CORNELIO NAPA, PABLO B. SANTOS, FERMIN RODRIGUEZ, DALISAY
BAUTISTA, LEONARDO JOSE, ALBERTO LONTOK, PORFIRIO TABINO, JOSE
BARREDO, ROBERTO ARNALDO, ESTER TAN, PEDRO BAKAL, ROSARIO DAVID,
RODOLFO AFUANG, LORENZO CATRE, LEONCIA CATRE, ROBERTO ABADA,
petitioners,
vs.
COMMISSIONER SALVADOR M. MISON, COMMISSIONER, BUREAU OF
CUSTOMS, respondent.

G.R. No. 83737 August 8, 1989

BENEDICTO L. AMASA and WILLIAM S. DIONISIO, petitioners,

vs.
PATRICIA A. STO. TOMAS, in her capacity as Chairman of the Civil Service
Commission and SALVADOR MISON, in his capacity as Commissioner of the Bureau of
Customs, respondents.

G.R. No. 85310 August 8, 1989

SALVADOR M. MISON, in his capacity as Commissioner of Customs, petitioner,

vs.
CIVIL SERVICE COMMISSION, ABACA, SISINIO T., ABAD, ROGELIO C.,
ABADIANO, JOSE P., ABCEDE, NEMECIO C., ABIOG, ELY F., ABLAZA, AURORA
M., AGBAYANI, NELSON I., AGRES ANICETO, AGUILAR, FLOR, AGUILUCHO MA.
TERESA R., AGUSTIN, BONIFACIO T., ALANO, ALEX P., ALBA, MAXIMO F. JR.,
ALBANO, ROBERT B., ALCANTARA, JOSE G., ALMARIO, RODOLFO F., ALVEZ,
ROMUALDO R., AMISTAD RUDY M., AMOS, FRANCIS F., ANDRES, RODRIGO V.,
ANGELES, RICARDO S., ANOLIN, MILAGROS H., AQUINO, PASCASIO E., ARABE,
MELINDA M., ARCANGEL, AGUSTIN S., JR., ARPON, ULPLIANO U., JR., ARREZA,
ARTEMIO M., JR., ARROJO, ANTONIO P., ARVISU, ALEXANDER S., ASCA;O,
ANTONIO T., ASLAHON, JULAHON P., ASUNCION, VICTOR R., ATANGAN, LORNA
S., ATIENZA, ALEXANDER R., BACAL, URSULINO C., BA;AGA, MARLOWE, Z.,
BANTA, ALBERTO T., BARREDO, JOSE B., BARROS, VICTOR C., BARTOLOME,
FELIPE A., BAYSAC, REYNALDO S., BELENO, ANTONIO B., BERNARDO, ROMEO
D., BERNAS, MARCIANO S., BOHOL, AUXILIADOR G., BRAVO, VICTOR M.,
BULEG, BALILIS R., CALNEA, MERCEDES M., CALVO, HONESTO G., CAMACHO,
CARLOS V., CAMPOS, RODOLFO C., CAPULONG, RODRIGO G., CARINGAL,
GRACIA Z., CARLOS, LORENZO B., CARRANTO, FIDEL U., CARUNGCONG,
ALFREDO M., CASTRO, PATRICIA J., CATELO, ROGELIO B., CATURLA,
MANUEL B., CENIZAL, JOSEFINA F., CINCO, LUISITO, CONDE0, JOSE C., JR.,
CORCUERA, FIDEL S., CORNETA, VICENTE S., CORONADO, RICARDO S., CRUZ,
EDUARDO S., CRUZ, EDILBERTO A., CRUZ, EFIGENIA B., CRUZADO, MARCIAL
C., CUSTODIO, RODOLFO M., DABON, NORMA M., DALINDIN, EDNA MAE D.,
DANDAL, EDEN F., DATUHARON, SATA A., DAZO, GODOFREDO L., DE CASTRO,
LEOPAPA, DE GUZMAN, ANTONIO A., DE GUZMAN, RENATO E., DE LA CRUZ,
AMADO A., JR., DE LA CRUZ, FRANCISCO C., DE LA PE;A, LEONARDO, DEL
CAMPO, ORLANDO, DEL RIO, MAMERTO P., JR., DEMESA, WILHELMINA T.,
DIMAKUTA, SALIC L., DIZON, FELICITAS A., DOCTOR, HEIDY M., DOLAR,
GLICERIO R., DOMINGO, NICANOR J., DOMINGO, PERFECTO V., JR., DUAY,
JUANA G., DYSANGCO, RENATO F., EDILLOR, ALFREDO P., ELEVAZO,
LEONARDO A., ESCUYOS, MANUEL M., JR., ESMERIA, ANTONIO E., ESPALDON,
MA. LOURDES H., ESPINA, FRANCO A., ESTURCO, RODOLFO C., EVANGELINO,
FERMIN I., FELIX, ERNESTO G., FERNANDEZ, ANDREW M., FERRAREN,
ANTONIO C., FERRERA, WENCESLAO A., FRANCISCO, PELAGIO S., JR.,
FUENTES, RUDY L., GAGALANG, RENATO V., GALANG, EDGARDO R., GAMBOA,
ANTONIO C., GAN, ALBERTO R., GARCIA, GILBERT M., GARCIA, EDNA V.,
GARCIA, JUAN L., GAVIOLA, LILIAN V., GEMPARO, SEGUNDINA G.,
GOBENCIONG, FLORDELIZ B., GRATE, FREDERICK R., GREGORIO, LAURO P.,
GUARTICO, AMMON H., GUIANG, MYRNA N., GUINTO, DELFIN C.,
HERNANDEZ, LUCAS A., HONRALES, LORETO N., HUERTO, LEOPOLDO H.,
HULAR , LANNYROSS E., IBA;EZ, ESTER C., ILAGAN, HONORATO C.,
INFANTE, REYNALDO C., ISAIS, RAY C., ISMAEL, HADJI AKRAM B., JANOLO,
VIRGILIO M., JAVIER, AMADOR L., JAVIER, ROBERTO S., JAVIER, WILLIAM R.,
JOVEN, MEMIA A., JULIAN, REYNALDO V., JUMAMOY, ABUNDIO A.,
JUMAQUIAO, DOMINGO F., KAINDOY, PASCUAL B., JR., KOH, NANIE G.,
LABILLES, ERNESTO S., LABRADOR, WILFREDO M., LAGA, BIENVENIDO M.,
LAGLEVA, PACIFICO Z., LAGMAN, EVANGELINE G., LAMPONG, WILFREDO G.,
LANDICHO, RESTITUTO A., LAPITAN, CAMILO M., LAURENTE, REYNALDO A.,
LICARTE, EVARISTO R., LIPIO, VICTOR O., LITTAUA, FRANKLIN Z., LOPEZ,
MELENCIO L., LUMBA, OLIVIA., MACAISA, BENITO T., MACAISA, ERLINDA C.,
MAGAT, ELPIDIO, MAGLAYA, FERNANDO P., MALABANAN, ALFREDO C.,
MALIBIRAN, ROSITA D., MALIJAN, LAZARO V., MALLI, JAVIER M., MANAHAN,
RAMON S., MANUEL, ELPIDIO R., MARAVILLA, GIL B., MARCELO, GIL C.,
MARI;AS, RODOLFO V., MAROKET, JESUS C., MARTIN, NEMENCIO A.,
MARTINEZ, ROMEO M., MARTINEZ, ROSELINA M., MATIBAG, ANGELINA G.,
MATUGAS, ERNESTO T., MATUGAS, FRANCISCO T., MAYUGA, PORTIA E.,
MEDINA, NESTOR M., MEDINA, ROLANDO S., MENDAVIA, AVELINO I.,
MENDOZA, POTENCIANO G., MIL, RAY M., MIRAVALLES, ANASTACIA L.,
MONFORTE, EUGENIO, JR., G., MONTANO, ERNESTO F., MONTERO, JUAN M.
III., MORALDE, ESMERALDO B., JR., MORALES, CONCHITA D.L., MORALES,
NESTOR P., MORALES, SHIRLEY S., MUNAR, JUANITA L., MU;OZ, VICENTE R.,
MURILLO, MANUEL M., NACION, PEDRO R., NAGAL, HENRY N., NAPA,
CORNELIO B., NAVARRO, HENRY L., NEJAL, FREDRICK E., NICOLAS,
REYNALDO S., NIEVES, RUFINO A., OLAIVAR, SEBASTIAN T., OLEGARIO, LEO
Q., ORTEGA, ARLENE R., ORTEGA, JESUS R., OSORIO, ABNER S., PAPIO,
FLORENTINO T. II, PASCUA, ARNULFO A., PASTOR, ROSARIO, PELAYO,
ROSARIO L., PE;A, AIDA C., PEREZ, ESPERIDION B., PEREZ, JESUS BAYANI M.,
PRE, ISIDRO A., PRUDENCIADO, EULOGIA S., PUNZALAN, LAMBERTO N., PURA,
ARNOLD T., QUINONES, EDGARDO I., QUINTOS, AMADEO C., JR., QUIRAY,
NICOLAS C., RAMIREZ, ROBERTO P., RA;ADA, RODRIGO C., RARAS, ANTONIO
A., RAVAL, VIOLETA V., RAZAL, BETTY R., REGALA, PONCE F., REYES,
LIBERATO R., REYES, MANUEL E., REYES, NORMA Z., REYES, TELESFORO F.,
RIVERA, ROSITA L., ROCES, ROBERTO V., ROQUE, TERESITA S., ROSANES,
MARILOU M., ROSETE, ADAN I., RUANTO, REY, CRISTO C., JR., SABLADA,
PASCASIO G., SALAZAR, SILVERIA S., SALAZAR, VICTORIA A., SALIMBACOD,
PERLITA C., SALMINGO, LOURDES M., SANTIAGO, EMELITA B., SATINA,
PORFIRIO C., SEKITO, COSME B., JR., SIMON, RAMON P., SINGSON, MELECIO
C., SORIANO, ANGELO L., SORIANO, MAGDALENA R., SUMULONG, ISIDRO L.,
JR., SUNICO, ABELARDO T., TABIJE, EMMA B., TAN, RUDY, GOROSPE, TAN,
ESTER S., TAN, JULITA S., TECSON, BEATRIZ B., TOLENTINO, BENIGNO A.,
TURINGAN, ENRICO T., JR., UMPA, ALI A., VALIC, LUCIO E., VASQUEZ,
NICANOR B., VELARDE, EDGARDO C., VERA, AVELINO A., VERAME, OSCAR E.,
VIADO, LILIAN T., VIERNES, NAPOLEON K., VILLALON, DENNIS A., VILLAR,
LUZ L., VILLALUZ, EMELITO V., ZATA, ANGEL A., JR., ACHARON, CRISTETO,
ALBA, RENATO B., AMON, JULITA C., AUSTRIA, ERNESTO C., CALO,
RAYMUNDO M., CENTENO, BENJAMIN R., DE CASTRO, LEOPAPA C ., DONATO,
ESTELITA P., DONATO, FELIPE S., FLORES, PEDRITO S., GALAROSA, RENATO,
MALAWI, MAUYAG, MONTENEGRO, FRANCISCO M., OMEGA, PETRONILO T.,
SANTOS, GUILLERMO F., TEMPLO, CELSO, VALDERAMA, JAIME B., and
VALDEZ, NORA M., respondents.
G.R. No. 85335 August 8, 1989

FRANKLIN Z. LITTAUA, ADAN I. ROSETE, FRANCISCO T. MATUGAS, MA. J.

ANGELINA G. MATIBAG, LEODEGARDIO H. FLORESCA, LEONARDO A. DELA
PE;A, ABELARDO T. SUNICO, MELENCIO L. LOPEZ, NEMENCIO A. MARTIN,
RUDY M. AMISTAD, ERNESTO T. MATUGAS, SILVERIA S. SALAZAR, LILLIAN V.
GAVIOLA, MILAGROS ANOLIN, JOSE B. ORTIZ, ARTEMIO ARREZA, JR.,
GILVERTO M. GARCIA, ANTONIO A. RARAS, FLORDELINA B. GOBENCIONG,
ANICETO AGRES, EDGAR Y. QUINONES, MANUEL B. CATURLA, ELY F. ABIOG,
RODRIGO C. RANADA, LAURO GREGORIO, ALBERTO I. GAN, EDGARDO
GALANG, RAY C. ISAIS, NICANOR B. VASQUEZ, MANUEL ESCUYOS, JR.,
ANTONIO B. BELENO, ELPIO R. MANUEL, AUXILIADOR C. BOHOL, LEONARDO
ELEVAZO, VICENTE S. CORNETA, petitioners,
vs.
COM. SALVADOR M. MISON/BUREAU OF CUSTOMS and the CIVIL SERVICE
COMMISSION, respondents.

G.R. No. 86241 August 8, 1989

SALVADOR M. MISON, in his capacity as Commissioner of Customs, petitioner,

vs.
CIVIL SERVICE COMMISSION, SENEN S. DIMAGUILA, ROMEO P. ARABE
BERNARDO S. QUINTONG, GREGORIO P. REYES, and ROMULO C.
BADILLO respondents

SARMIENTO, J.:

The Court writes finis to this contreversy that has raged bitterly for the several months. It does
so out of ligitimate presentement of more suits reaching it as a consequence of the government
reorganization and the instability it has wrought on the performance and efficiency of the
bureaucracy. The Court is apprehensive that unless the final word is given and the ground rules
are settled, the issue will fester, and likely foment on the constitutional crisis for the nation,
itself biset with grave and serious problems.

The facts are not in dispute.

On March 25, 1986, President Corazon Aquino promulgated Proclamation No. 3,

"DECLARING A NATIONAL POLICY TO IMPLEMENT THE REFORMS MANDATED BY
THE PEOPLE, PROTECTING THEIR BASIC RIGHTS, ADOPTING A PROVISIONAL
CONSTITUTION, AND PROVIDING FOR AN ORDERLY TRANSITION TO A
GOVERNMENT UNDER A NEW CONSTITUTION." Among other things, Proclamation No.
3 provided:

SECTION 1. ...

The President shall give priority to measures to achieve the mandate of the people to:

(a) Completely reorganize the government, eradicate unjust and oppressive

structures, and all iniquitous vestiges of the previous regime; 1

...

Pursuant thereto, it was also provided:

SECTION 1. In the reorganization of the government, priority shall be given to measures

to promote economy, efficiency, and the eradication of graft and corruption.

SECTION 2. All elective and appointive officials and employees under the 1973
Constitution shall continue in office until otherwise provided by proclamation or
executive order or upon the appointment and qualification of their successors, if such is
made within a period of one year from February 25, 1986.

SECTION 3. Any public officer or employee separated from the service as a result of the
organization effected under this Proclamation shall, if entitled under the laws then in
force, receive the retirement and other benefits accruing thereunder.

SECTION 4. The records, equipment, buildings, facilities and other properties of all
government offices shall be carefully preserved. In case any office or body is abolished or
reorganized pursuant to this Proclamation, its FUNDS and properties shall be transferred
to the office or body to which its powers, functions and responsibilities substantially
pertain. 2

Actually, the reorganization process started as early as February 25, 1986, when the President,
in her first act in office, called upon "all appointive public officials to submit their courtesy
resignation(s) beginning with the members of the Supreme Court."3 Later on, she abolished the
Batasang Pambansa4 and the positions of Prime Minister and Cabinet 5 under the 1973
Constitution.

Since then, the President has issued a number of executive orders and directives reorganizing
various other government offices, a number of which, with respect to elected local officials, has
been challenged in this Court, 6and two of which, with respect to appointed functionaries, have
likewise been questioned herein. 7

On May 28, 1986, the President enacted Executive Order No. 17, "PRESCRIBING RULES
AND REGULATIONS FOR THE IMPLEMENTATION OF SECTION 2, ARTICLE III OF
THE FREEDOM CONSTITUTION." Executive Order No. 17 recognized the "unnecessary
anxiety and demoralization among the deserving officials and employees" the ongoing
government reorganization had generated, and prescribed as "grounds for the
separation/replacement of personnel," the following:

SECTION 3. The following shall be the grounds for separation replacement of personnel:

1) Existence of a case for summary dismissal pursuant to Section 40 of the Civil

Service Law;

2) Existence of a probable cause for violation of the Anti-Graft and Corrupt

Practices Act as determined by the Mnistry Head concerned;

3) Gross incompetence or inefficiency in the discharge of functions;

4) Misuse of public office for partisan political purposes;

5) Any other analogous ground showing that the incumbent is unfit to remain in the
service or his separation/replacement is in the interest of the service.8

On January 30, 1987, the President promulgated Executive Order No. 127, "REORGANIZING
THE MINISTRY OF FINANCE." 9 Among other offices, Executive Order No. 127 provided for
the reorganization of the Bureau of Customs 10 and prescribed a new staffing pattern therefor.

Three days later, on February 2, 1987, 11 the Filipino people adopted the new Constitution.

On January 6, 1988, incumbent Commissioner of Customs Salvador Mison issued a

Memorandum, in the nature of "Guidelines on the Implementation of Reorganization Executive
Orders," 12 prescribing the procedure in personnel placement. It also provided:

1. By February 28, 1988, the employees covered by Executive Order 127 and the
grace period extended to the Bureau of Customs by the President of the Philippines
on reorganization shall be:

a) informed of their re-appointment, or

b) offered another position in the same department or agency or

c) informed of their termination. 13

On the same date, Commissioner Mison constituted a Reorganization Appeals Board charged
with adjudicating appeals from removals under the above Memorandum. 14 On January 26,
1988, Commissioner Mison addressed several notices to various Customs officials, in the tenor
as follows:

Sir:
 Please be informed that the Bureau is now in the process of implementing the
Reorganization Program under Executive Order No. 127.

Pursuant to Section 59 of the same Executive Order, all officers and employees of the
Department of Finance, or the Bureau of Customs in particular, shall continue to perform
their respective duties and responsibilities in a hold-over capacity, and that those
incumbents whose positions are not carried in the new reorganization pattern, or who are
not re- appointed, shall be deemed separated from the service.

In this connection, we regret to inform you that your services are hereby terminated as of
February 28, 1988. Subject to the normal clearances, you may receive the retirement
benefits to which you may be entitled under existing laws, rules and regulations.

In the meantime, your name will be included in the consolidated list compiled by the
Civil Service Commission so that you may be given priority for future employment with
the Government as the need arises.

Sincerely yours,
(Sgd) SALVADOR M. MISON
Commissioner15

As far as the records will yield, the following were recipients of these notices:

1. CESAR DARIO

2. VICENTE FERIA, JR.

3. ADOLFO CASARENO

4. PACIFICO LAGLEVA

5. JULIAN C. ESPIRITU

6. DENNIS A. AZARRAGA

7. RENATO DE JESUS

8. NICASIO C. GAMBOA

9. CORAZON RALLOS NIEVES

10. FELICITACION R. GELUZ

11. LEODEGARIO H. FLORESCA

12. SUBAER PACASUM

13. ZENAIDA LANARIA

14. JOSE B. ORTIZ

15. GLICERIO R. DOLAR

16. CORNELIO NAPA

17. PABLO B. SANTOS

18. FERMIN RODRIGUEZ

19. DALISAY BAUTISTA

20. LEONARDO JOSE

21. ALBERTO LONTOK

22. PORFIRIO TABINO

23. JOSE BARREDO

24. ROBERTO ARNALDO

25. ESTER TAN

26. PEDRO BAKAL

27. ROSARIO DAVID

28. RODOLFO AFUANG

29. LORENZO CATRE

30. LEONCIA CATRE

31. ROBERTO ABADA

32. ABACA, SISINIO T.

33. ABjAD, ROGELIO C.

34. ABADIANO, JOSE P

35. ABCEDE, NEMECIO C.

36. ABIOG, ELY F.

37. ABLAZA, AURORA M.

38. AGBAYANI, NELSON I.

39. AGRES, ANICETO

40. AGUILAR, FLOR

41. AGUILUCHO, MA. TERESA R.

42. AGUSTIN, BONIFACIO T.

43. ALANO, ALEX P.

44. ALBA, MAXIMO F. JR.

45. ALBANO, ROBERT B.

46. ALCANTARA, JOSE G.

47. ALMARIO, RODOLFO F.

48. ALVEZ, ROMUALDO R.

49. AMISTAD, RUDY M.

50. AMOS, FRANCIS F.

51. ANDRES, RODRIGO V.

52. ANGELES, RICARDO S.

53. ANOLIN, MILAGROS H.

54. AQUINO, PASCASIO E. L.

55. ARABE, MELINDA M.

56. ARCANGEL, AGUSTIN S, JR.

57. ARPON, ULPIANO U., JR.

58. ARREZA, ARTEMIO M, JR.

59. ARROJO, ANTONIO P.

60. ARVISU, ALEXANDER S.

61. ASCA;O, ANTONIO T.

62. ASLAHON, JULAHON P.

63. ASUNCION, VICTOR R.

64. ATANGAN, LORNA S.

65. ANTIENZA, ALEXANDER R.

66. BACAL URSULINO C.

67. BA;AGA, MARLOWE Z.

68. BANTA, ALBERTO T.

69. BARROS, VICTOR C.

70. BARTOLOME, FELIPE A.

71. BAYSAC, REYNALDO S.

72. BELENO, ANTONIO B.

73. BERNARDO, ROMEO D.

74. BERNAS, MARCIANO S.

75. BOHOL, AUXILIADOR G.

76. BRAVO, VICTOR M.

77. BULEG, BALILIS R.

78. CALNEA, MERCEDES M.

79. CALVO, HONESTO G.

80. CAMACHO, CARLOS V.

81. CAMPOS, RODOLFO C.

82. CAPULONG, RODRIGO G.

83. CARINGAL, GRACIA Z.

84. CARLOS, LORENZO B.

85. CARRANTO, FIDEL U.

86. CARUNGCONG, ALFREDO M.

87. CASTRO, PATRICIA J.

88. CATELO, ROGELIO B.

89. CATURLA, MANUEL B.

90. CENIZAL, JOSEFINA F.

91. CINCO, LUISITO

92. CONDE, JOSE C., JR.

93. CORCUERA, FIDEL S.

94. CORNETA, VICENTE S.

95. CORONADO, RICARDO S.

96. CRUZ, EDUARDO S.

97. CRUZ, EDILBERTO A,

98. CRUZ, EFIGENIA B.

99. CRUZADO,NORMA M.

100. CUSTODIO, RODOLFO M.

101. DABON, NORMA M.

102. DALINDIN, EDNA MAE D.

103. DANDAL, EDEN F.

104. DATUHARON, SATA A.

105. DAZO, GODOFREDO L.

106. DE CASTRO, LEOPAPA

107. DE GUZMAN, ANTONIO A.

108. DE GUZMAN, RENATO E.

109. DE LA CRUZ, AMADO A., JR.

110. DE LA CRUZ, FRANCISCO C.

111. DE LA PE;A, LEONARDO

112. DEL CAMPO, ORLANDO

113. DEL RIO, MAMERTO P., JR.

114. DEMESA, WILHELMINA T.

115. DIMAKUTA, SALIC L.

116. DIZON, FELICITAS A.

117. DOCTOR, HEIDY M.

118. DOMINGO, NICANOR J.

119. DOMINGO, PERFECTO V., JR.

120. DUAY, JUANA G.

121. DYSANGCO, RENATO F.

122. EDILLOR, ALFREDO P.

123. ELEVAZO, LEONARDO A

124. ESCUYOS, MANUEL M., JR.

125. ESMERIA, ANTONIO E.

126. ESPALDON, MA. LOURDES H.

127. ESPINA, FRANCO A.

128. ESTURCO, RODOLFO C.

129. EVANGELINO, FERMIN I.

130. FELIX, ERNESTO G.

131. FERNANDEZ, ANDREW M.

132. FERRAREN, ANTONIO C.

133. FERRERA, WENCESLAO A.

134. FRANCISCO, PELAGIO S, JR.

135. FUENTES, RUDY L.

136. GAGALANG, RENATO V.

137. GALANG, EDGARDO R.

138. GAMBOA, ANTONIO C.

139. GAN, ALBERTO P

140. GARCIA, GILBERT M.

141. GARCIA, EDNA V.

142. GARCIA, JUAN L.

143. GAVIOIA, LILIAN V.

144. GEMPARO, SEGUNDINA G.

145. GOBENCIONG, FLORDELIZ B.

146. GRATE, FREDERICK R.

147. GREGORIO, LAURO P.

148. GUARTICO, AMMON H.

149. GUIANG, MYRNA N.

150. GUINTO, DELFIN C.

151. HERNANDEZ, LUCAS A.

152. HONRALES, LORETO N.

153. HUERTO, LEOPOLDO H.

154. HULAR, LANNYROSS E.

155. IBA;EZ, ESTER C.

156. ILAGAN, HONORATO C.

157. INFANTE, REYNALDO C.

158. ISAIS, RAY C.

159. ISMAEL, HADJI AKRAM B.

160. JANOLO, VIRGILIO M.

161. JAVIER, AMADOR L.

162. JAVIER, ROBERTO S.

163. JAVIER, WILLIAM R.

164. JOVEN, MEMIA A.

165. JULIAN, REYNALDO V.

166. JUMAMOY, ABUNDIO A.

167. JUMAQUIAO, DOMINGO F.

168. KAINDOY, PASCUAL B., JR.

169. KOH, NANIE G.

170. LABILLES, ERNESTO S.

171. LABRADOR, WILFREDO M.

172. LAGA, BIENVENIDO M.

173. LAGMAN, EVANGELINE G.

174. LAMPONG, WILFREDO G.

175. LANDICHO, RESTITUTO A.

176. LAPITAN, CAMILO M.

177. LAURENTE, REYNALDO A.

178. LICARTE, EVARISTO R.

179. LIPIO, VICTOR O.

180. LITTAUA, FRANKLIN Z.

181. LOPEZ, MELENCIO L.

182. LUMBA, OLIVIA R.

183. MACAISA, BENITO T.

184. MACAISA, ERLINDA C.

185. MAGAT, ELPIDIO

186. MAGLAYA, FERNANDO P.

187. MALABANAN, ALFREDO C.

188. MALIBIRAN, ROSITA D.

189. MALIJAN, LAZARO V.

190. MALLI, JAVIER M.

191. MANAHAN, RAMON S.

192. MANUEL, ELPIDIO R.

193. MARAVILLA, GIL B.

194. MARCELO, GIL C.

195. MARI;AS, RODOLFO V.

196. MAROKET ,JESUS C.

197. MARTIN, NEMENCIO A.

198. MARTINEZ, ROMEO M.

199. MARTINEZ, ROSELINA M.

200. MATIBAG, ANGELINA G.

201. MATUGAS, ERNESTO T.

202. MATUGAS, FRANCISCO T.

203. MAYUGA, PORTIA E.

204. MEDINA, NESTOR M.

205. MEDINA, ROLANDO S.

206. MENDAVIA, AVELINO

207. MENDOZA, POTENCIANO G.

208. MIL, RAY M.

209. MIRAVALLES, ANASTACIA L.

210. MONFORTE, EUGENIO, JR. G.

211. MONTANO, ERNESTO F.

212. MONTERO, JUAN M. III

213. MORALDE, ESMERALDO B., JR.

214. MORALES, CONCHITA D. L

215. MORALES, NESTOR P.

216. MORALES, SHIRLEY S.

217. MUNAR, JUANITA L.

218. MU;OZ, VICENTE R.

219. MURILLO, MANUEL M.

220. NACION, PEDRO R.

221. NAGAL, HENRY N.

222. NAVARRO, HENRY L.

223. NEJAL FREDRICK E.

224. NICOLAS, REYNALDO S.

225. NIEVES, RUFINO A.

226. OLAIVAR, SEBASTIAN T.

227. OLEGARIO, LEO Q.

228. ORTEGA, ARLENE R.

229. ORTEGA, JESUS R.

230. OSORIO, ABNER S.

231. PAPIO FLORENTINO T. II

232. PASCUA, ARNULFO A.

233. PASTOR, ROSARIO

234. PELAYO, ROSARIO L.

235. PE;A, AIDA C.

236. PEREZ, ESPERIDION B.

237. PEREZ, JESUS BAYANI M.

238. PRE, ISIDRO A.

239. PRUDENCIADO, EULOGIA S.

240. PUNZALAN, LAMBERTO N.

241. PURA, ARNOLD T.

242. QUINONES, EDGARDO I.

243. QUINTOS, AMADEO C., JR.

244. QUIRAY, NICOLAS C.

245. RAMIREZ, ROBERTO P.

246. RANADA, RODRIGO C.

247. RARAS, ANTONIO A.

248. RAVAL, VIOLETA V.

249. RAZAL, BETTY R.

250. REGALA, PONCE F.

251. REYES, LIBERATO R.

252. REYES, MANUEL E.

253. REYES, NORMA Z.

254. REYES, TELESPORO F.

255. RIVERA, ROSITA L.

256. ROCES, ROBERTO V.

257. ROQUE, TERESITA S.

258. ROSANES, MARILOU M.

259. ROSETE, ADAN I.

260. RUANTO, REY CRISTO C., JR.

261. SABLADA, PASCASIO G.

262. SALAZAR, SILVERIA S.

263. SALAZAR, VICTORIA A.

264. SALIMBACOD, PERLITA C.

265. SALMINGO, LOURDES M.

266. SANTIAGO, EMELITA B.

267. SATINA, PORFIRIO C.

268. SEKITO, COSME B JR.

269. SIMON, RAMON P.

270. SINGSON, MELENCIO C.

271. SORIANO, ANGELO L.

272. SORIANO, MAGDALENA R.

273. SUNICO, ABELARDO T .

274. TABIJE, EMMA B.

275. TAN, RUDY GOROSPE

276. TAN, ESTER S.

277. TAN, JULITA S.

278. TECSON, BEATRIZ B.

279. TOLENTINO, BENIGNO A.

280. TURINGAN, ENRICO T JR.

281. UMPA, ALI A.

282. VALIC, LUCIO E.

283. VASQUEZ, NICANOR B.

284. VELARDE, EDGARDO C.

285. VERA, AVELINO A.

286. VERAME, OSCAR E.

287. VIADO, LILIAN T.

288. VIERNES, NAPOLEON K

289. VILLALON, DENNIS A.

290. VILLAR, LUZ L.

291. VILLALUZ, EMELITO V.

292. VILLAR, LUZ L.

293. ZATA, ANGELA JR.

294. ACHARON, CRISTETO

295. ALBA, RENATO B.

296. AMON, JULITA C.

297. AUSTRIA, ERNESTO C.

298. CALO, RAYMUNDO M.

299. CENTENO, BENJAMIN R.

300. DONATO, ESTELITA P.

301. DONATO, FELIPE S

302. FLORES, PEDRITO S.

303. GALAROSA, RENATO

304. MALAWI, MAUYAG

305. MONTENEGRO, FRANSISCO M.

306. OMEGA, PETRONILO T.

307. SANTOS, GUILLERMO P.

308. TEMPLO, CELSO

309. VALDERAMA, JAIME B.

310. VALDEZ, NORA M.

Cesar Dario is the petitioner in G.R. No. 81954; Vicente Feria, Jr., is the petitioner in G.R. No.
81967; Messrs. Adolfo Caserano Pacifico Lagleva Julian C. Espiritu, Dennis A. Azarraga
Renato de Jesus, Nicasio C. Gamboa, Mesdames Corazon Rallos Nieves and Felicitacion R.
Geluz Messrs. Leodegario H. Floresca, Subaer Pacasum Ms. Zenaida Lanaria Mr. Jose B. Ortiz,
Ms. Gliceria R. Dolar, Ms. Cornelia Napa, Pablo B. Santos, Fermin Rodriguez, Ms. Daligay
Bautista, Messrs. Leonardo Jose, Alberto Lontok, Porfirio Tabino Jose Barredo, Roberto
Arnaldo, Ms. Ester Tan, Messrs. Pedro Bakal, Rosario David, Rodolfo Afuang, Lorenzo Catre,,
Ms. Leoncia Catre, and Roberto Abaca, are the petitioners in G.R. No. 82023; the last
279 16 individuals mentioned are the private respondents in G.R. No. 85310.

As far as the records will likewise reveal, 17 a total of 394 officials and employees of the Bureau
of Customs were given individual notices of separation. A number supposedly sought
reinstatement with the Reorganization Appeals Board while others went to the Civil Service
Commission. The first thirty-one mentioned above came directly to this Court.

On June 30, 1988, the Civil Service Commission promulgated its ruling ordering the
reinstatement of the 279 employees, the 279 private respondents in G.R. No. 85310, the
dispositive portion of which reads as follows:

WHEREFORE, it is hereby ordered that:

1. Appellants be immediately reappointed to positions of comparable or equivalent

rank in the Bureau of Customs without loss of seniority rights;

2. Appellants be paid their back salaries reckoned from the dates of their illegal
termination based on the rates under the approved new staffing pattern but not
lower than their former salaries.

This action of the Commission should not, however, be interpreted as an exoneration of

the appellants from any accusation of wrongdoing and, therefore, their reappointments
are without prejudice to:

1. Proceeding with investigation of appellants with pending administrative cases,

and where investigations have been finished, to promptly, render the appropriate
decisions;

2. The filing of appropriate administrative complaints against appellants with

derogatory reports or information if evidence so warrants.

SO ORDERED. 18

On July 15, 1988, Commissioner Mison, represented by the Solicitor General, filed a motion for
reconsideration Acting on the motion, the Civil Service Commission, on September 20, 1988,
denied reconsideration. 19
On October 20, 1988, Commissioner Mison instituted certiorari proceedings with this Court,
docketed, as above-stated, as G.R. No. 85310 of this Court.

On November 16,1988, the Civil Service Commission further disposed the appeal (from the
resolution of the Reorganization Appeals Board) of five more employees, holding as follows:

WHEREFORE, it is hereby ordered that:

1. Appellants be immediately reappointed to positions of comparable or equivalent

rank in the Bureau of Customs without loss of seniority rights; and

2. Appellants be paid their back salaries to be reckoned from the date of their
illegal termination based on the rates under the approved new staffing pattern but
not lower than their former salaries.

This action of the Commission should not, however, be interpreted as an exoneration of

the herein appellants from any accusation of any wrongdoing and therefore, their
reappointments are without prejudice to:

1. Proceeding with investigation of appellants with pending administrative cases, if

any, and where investigations have been finished, to promptly, render the
appropriate decisions; and

2. The filing of appropriate administrative complaints against appellant with

derogatory reports or information, if any, and if evidence so warrants.

SO ORDERED. 20

On January 6, 1989, Commissioner Mison challenged the Civil Service Commission's

Resolution in this Court; his petitioner has been docketed herein as G.R. No. 86241. The
employees ordered to be reinstated are Senen Dimaguila, Romeo Arabe, Bemardo
Quintong,Gregorio Reyes, and Romulo Badillo. 21

On June 10, 1988, Republic Act No. 6656, "AN ACT TO PROTECT THE SECURITY OF
TENURE OF CIVIL SERVICE OFFICERS AND EMPLOYEES IN THE
IMPLEMENTATION OF GOVERNMENT REORGANIZATION," 22was signed into law.
Under Section 7, thereof:

Sec. 9. All officers and employees who are found by the Civil Service Commission to
have been separated in violation of the provisions of this Act, shall be ordered reinstated
or reappointed as the case may be without loss of seniority and shall be entitled to full
pay for the period of separation. Unless also separated for cause, all officers and
employees, including casuals and temporary employees, who have been separated
pursuant to reorganization shall, if entitled thereto, be paid the appropriate separation pay
and retirement and other benefits under existing laws within ninety (90) days from the
date of the effectivity of their separation or from the date of the receipt of the resolution
 of their appeals as the case may be: Provided, That application for clearance has been
filed and no action thereon has been made by the corresponding department or agency.
Those who are not entitled to said benefits shall be paid a separation gratuity in the
amount equivalent to one (1) month salary for every year of service. Such separation pay
and retirement benefits shall have priority of payment out of the savings of the
department or agency concerned. 23

On June 23, 1988, Benedicto Amasa and William Dionisio, customs examiners appointed by
Commissioner Mison pursuant to the ostensible reorganization subject of this controversy,
petitioned the Court to contest the validity of the statute. The petition is docketed as G.R. No.
83737.

On October 21, 1988, thirty-five more Customs officials whom the Civil Service Commission
had ordered reinstated by its June 30,1988 Resolution filed their own petition to compel the
Commissioner of Customs to comply with the said Resolution. The petition is docketed as G.R.
No. 85335.

On November 29, 1988, we resolved to consolidate all seven petitions.

On the same date, we resolved to set the matter for hearing on January 12, 1989. At the said
hearing, the parties, represented by their counsels (a) retired Justice Ruperto Martin; (b) retired
Justice Lino Patajo. (c) former Dean Froilan Bacungan (d) Atty. Lester Escobar (e) Atty.
Faustino Tugade and (f) Atty. Alexander Padilla, presented their arguments. Solicitor General
Francisco Chavez argued on behalf of the Commissioner of Customs (except in G.R. 85335, in
which he represented the Bureau of Customs and the Civil Service
Commission).lwph1.t Former Senator Ambrosio Padilla also appeared and argued
as amicus curiae Thereafter, we resolved to require the parties to submit their respective
memoranda which they did in due time.

There is no question that the administration may validly carry out a government reorganization
insofar as these cases are concerned, the reorganization of the Bureau of Customs by
mandate not only of the Provisional Constitution, supra, but also of the various Executive
Orders decreed by the Chief Executive in her capacity as sole lawmaking authority under the
1986-1987 revolutionary government. It should also be noted that under the present
Constitution, there is a recognition, albeit implied, that a government reorganization may be
legitimately undertaken, subject to certain conditions. 24

The Court understands that the parties are agreed on the validity of a reorganization per se the
only question being, as shall be later seen: What is the nature and extent of this government
reorganization?

The Court disregards the questions raised as to procedure, failure to exhaust administrative
remedies, the standing of certain parties to sue, 25 and other technical objections, for two
reasons, "[b]ecause of the demands of public interest, including the need for stability in the
public service,"26 and because of the serious implications of these cases on the administration of
the Philippine civil service and the rights of public servants.

The urgings in G.R. Nos. 85335 and 85310, that the Civil Service Commission's Resolution
dated June 30, 1988 had attained a character of finality for failure of Commissioner Mison to
apply for judicial review or ask for reconsideration seasonalbly under Presidential Decree No.
807, 27 or under Republic Act No. 6656, 28 or under the Constitution, 29 are likewise rejected.
The records show that the Bureau of Customs had until July 15, 1988 to ask for reconsideration
or come to this Court pursuant to Section 39 of Presidential Decree No. 807. The records
likewise show that the Solicitor General filed a motion for reconsideration on July 15,
1988.30 The Civil Service Commission issued its Resolution denying reconsideration on
September 20, 1988; a copy of this Resolution was received by the Bureau on September 23,
1988.31 Hence the Bureau had until October 23, 1988 to elevate the matter on certiorari to this
Court.32 Since the Bureau's petition was filed on October 20, 1988, it was filed on time.

We reject, finally, contentions that the Bureau's petition (in G.R. 85310) raises no jurisdictional
questions, and is therefore bereft of any basis as a petition for certiorari under Rule 65 of the
Rules of Court. 33 We find that the questions raised in Commissioner Mison's petition (in G.R.
85310) are, indeed, proper for certiorari, if by "jurisdictional questions" we mean questions
having to do with "an indifferent disregard of the law, arbitrariness and caprice, or omission to
weigh pertinent considerations, a decision arrived at without rational deliberation, 34 as
distinguished from questions that require "digging into the merits and unearthing errors of
judgment 35 which is the office, on the other hand, of review under Rule 45 of the said Rules.
What cannot be denied is the fact that the act of the Civil Service Commission of reinstating
hundreds of Customs employees Commissioner Mison had separated, has implications not only
on the entire reorganization process decreed no less than by the Provisional Constitution, but on
the Philippine bureaucracy in general; these implications are of such a magnitude that it cannot
be said that assuming that the Civil Service Commission erred the Commission
committed a plain "error of judgment" that Aratuc says cannot be corrected by the extraordinary
remedy of certiorari or any special civil action. We reaffirm the teaching of Aratuc as
regards recourse to this Court with respect to rulings of the Civil Service Commission which
is that judgments of the Commission may be brought to the Supreme Court
through certiorari alone, under Rule 65 of the Rules of Court.

In Aratuc we declared:

It is once evident from these constitutional and statutory modifications that there is a
definite tendency to enhance and invigorate the role of the Commission on Elections as
the independent constitutional body charged with the safeguarding of free, peaceful and
honest elections. The framers of the new Constitution must be presumed to have definite
knowledge of what it means to make the decisions, orders and rulings of the Commission
"subject to review by the Supreme Court'. And since instead of maintaining that provision
intact, it ordained that the Commission's actuations be instead 'brought to the Supreme
Court on certiorari", We cannot insist that there was no intent to change the nature of the
 remedy, considering that the limited scope of certiorari, compared to a review, is well
known in remedial law.36

We observe no fundamental difference between the Commission on Elections and the Civil
Service Commission (or the Commission on Audit for that matter) in terms of the constitutional
intent to leave the constitutional bodies alone in the enforcement of laws relative to elections,
with respect to the former, and the civil service, with respect to the latter (or the audit of
government accounts, with respect to the Commission on Audit). As the poll body is the "sole
judge" 37 of all election cases, so is the Civil Service Commission the single arbiter of all
controversies pertaining to the civil service.

It should also be noted that under the new Constitution, as under the 1973 Charter, "any
decision, order, or ruling of each Commission may be brought to the Supreme Court
on certiorari," 38 which, as Aratuc tells us, "technically connotes something less than saying that
the same 'shall be subject to review by the Supreme Court,' " 39 which in turn suggests an appeal
by petition for review under Rule 45. Therefore, our jurisdiction over cases emanating from the
Civil Service Commission is limited to complaints of lack or excess of jurisdiction or grave
abuse of discretion tantamount to lack or excess of jurisdiction, complaints that
justify certiorari under Rule 65.

While Republic Act No. 6656 states that judgments of the Commission are "final and
executory"40 and hence, unappealable, under Rule 65, certiorari precisely lies in the absence of
an appeal. 41

Accordingly, we accept Commissioner Mison petition (G.R. No. 85310) which clearly charges
the Civil Service Commission with grave abuse of discretion, a proper subject of certiorari,
although it may not have so stated in explicit terms.

As to charges that the said petition has been filed out of time, we reiterate that it has been filed
seasonably. It is to be stressed that the Solicitor General had thirty days from September 23,
1988 (the date the Resolution, dated September 20,1988, of the Civil Service Commission,
denying reconsideration, was received) to commence the instant certiorari proceedings. As we
stated, under the Constitution, an aggrieved party has thirty days within which to challenge "any
decision, order, or ruling" 42 of the Commission. To say that the period should be counted from
the Solicitor's receipt of the main Resolution, dated June 30, 1988, is to say that he should not
have asked for reconsideration But to say that is to deny him the right to contest (by a motion
for reconsideration) any ruling, other than the main decision, when, precisely, the Constitution
gives him such a right. That is also to place him at a "no-win" situation because if he did not
move for a reconsideration, he would have been faulted for demanding certiorari too early,
under the general rule that a motion for reconsideration should preface a resort to a special civil
action. 43Hence, we must reckon the thirty-day period from receipt of the order of denial.

We come to the merits of these cases.

G.R. Nos. 81954, 81967, 82023, and 85335:

The Case for the Employees

The petitioner in G.R. No. 81954, Cesar Dario was one of the Deputy Commissioners of the
Bureau of Customs until his relief on orders of Commissioner Mison on January 26, 1988. In
essence, he questions the legality of his dismiss, which he alleges was upon the authority of
Section 59 of Executive Order No. 127, supra, hereinbelow reproduced as follows:

SEC. 59. New Structure and Pattern. Upon approval of this Executive Order, the officers
and employees of the Ministry shall, in a holdover capacity, continue to perform their
respective duties and responsibilities and receive the corresponding salaries and benefits
unless in the meantime they are separated from government service pursuant to Executive
Order No. 17 (1986) or Article III of the Freedom Constitution.

The new position structure and staffing pattern of the Ministry shall be approved and
prescribed by the Minister within one hundred twenty (120) days from the approval of
this Executive Order and the authorized positions created hereunder shall be filled with
regular appointments by him or by the President, as the case may be. Those incumbents
whose positions are not included therein or who are not reappointed shall be deemed
separated from the service. Those separated from the service shall receive the retirement
benefits to which they may be entitled under existing laws, rules and regulations.
Otherwise, they shall be paid the equivalent of one month basic salary for every year of
service, or the equivalent nearest fraction thereof favorable to them on the basis of
highest salary received but in no case shall such payment exceed the equivalent of 12
months salary.

No court or administrative body shall issue any writ of preliminary injunction or

restraining order to enjoin the separation/replacement of any officer or employee effected
under this Executive Order.44

a provision he claims the Commissioner could not have legally invoked. He avers that he could
not have been legally deemed to be an "[incumbent] whose [position] [is] not included therein
or who [is] not reappointed"45 to justify his separation from the service. He contends that neither
the Executive Order (under the second paragraph of the section) nor the staffing pattern
proposed by the Secretary of Finance 46 abolished the office of Deputy Commissioner of
Customs, but, rather, increased it to three. 47 Nor can it be said, so he further maintains, that he
had not been "reappointed" 48 (under the second paragraph of the section) because
"[[r]eappointment therein presupposes that the position to which it refers is a new one in lieu of
that which has been abolished or although an existing one, has absorbed that which has been
abolished." 49 He claims, finally, that under the Provisional Constitution, the power to dismiss
public officials without cause ended on February 25, 1987,50 and that thereafter, public officials
enjoyed security of tenure under the provisions of the 1987 Constitution.51

Like Dario Vicente Feria, the petitioner in G.R. No. 81967, was a Deputy Commissioner at the
Bureau until his separation directed by Commissioner Mison. And like Dario he claims that
under the 1987 Constitution, he has acquired security of tenure and that he cannot be said to be
covered by Section 59 of Executive Order No. 127, having been appointed on April 22, 1986
during the effectivity of the Provisional Constitution. He adds that under Executive Order No.
39, "ENLARGING THE POWERS AND FUNCTIONS OF THE COMMISSIONER OF
CUSTOMS,"52 the Commissioner of Customs has the power "[t]o appoint all Bureau personnel,
except those appointed by the President," 53 and that his position, which is that of a Presidential
appointee, is beyond the control of Commissioner Mison for purposes of reorganization.

The petitioners in G.R. No. 82023, collectors and examiners in venous ports of the Philippines,
say, on the other hand, that the purpose of reorganization is to end corruption at the Bureau of
Customs and that since there is no finding that they are guilty of corruption, they cannot be
validly dismissed from the service.

The Case for Commissioner Mison

In his comments, the Commissioner relies on this Court's resolution in Jose v. Arroyo54 in which
the following statement appears in the last paragraph thereof:

The contention of petitioner that Executive Order No. 127 is violative of the provision of
the 1987 Constitution guaranteeing career civil service employees security of tenure
overlooks the provisions of Section 16, Article XVIII (Transitory Provisions) which
explicitly authorize the removal of career civil service employees "not for cause but as a
result of the reorganization pursuant to Proclamation No. 3 dated March 25, 1986 and the
reorganization following the ratification of this Constitution." By virtue of said provision,
the reorganization of the Bureau of Customs under Executive Order No. 127 may
continue even after the ratification of the Constitution, and career civil service employees
may be separated from the service without cause as a result of such reorganization.55

For this reason, Mison posits, claims of violation of security of tenure are allegedly no defense.
He further states that the deadline prescribed by the Provisional Constitution (February 25,
1987) has been superseded by the 1987 Constitution, specifically, the transitory provisions
thereof, 56 which allows a reorganization thereafter (after February 25, 1987) as this very Court
has so declared in Jose v. Arroyo. Mison submits that contrary to the employees' argument,
Section 59 of Executive Order No. 127 is applicable (in particular, to Dario and Feria in the
sense that retention in the Bureau, under the Executive Order, depends on either retention of the
position in the new staffing pattern or reappointment of the incumbent, and since the dismissed
employees had not been reappointed, they had been considered legally separated. Moreover,
Mison proffers that under Section 59 incumbents are considered on holdover status, "which
means that all those positions were considered vacant." 57 The Solicitor General denies the
applicability of Palma-Fernandez v. De la Paz 58 because that case supposedly involved a mere
transfer and not a separation. He rejects, finally, the force and effect of Executive Order Nos. 17
and 39 for the reason that Executive Order No. 17, which was meant to implement the
Provisional Constitution, 59 had ceased to have force and effect upon the ratification of the 1987
Constitution, and that, under Executive Order No. 39, the dismissals contemplated were "for
cause" while the separations now under question were "not for cause" and were a result of
government reorganize organization decreed by Executive Order No. 127. Anent Republic Act
No. 6656, he expresses doubts on the constitutionality of the grant of retroactivity therein (as
regards the reinforcement of security of tenure) since the new Constitution clearly allows
reorganization after its effectivity.

G.R. Nos. 85310 and 86241

The Position of Commissioner Mison

Commissioner's twin petitions are direct challenges to three rulings of the Civil Service
Commission: (1) the Resolution, dated June 30, 1988, reinstating the 265 customs employees
above-stated; (2) the Resolution, dated September 20, 1988, denying reconsideration; and (3)
the Resolution, dated November 16, 1988, reinstating five employees. The Commissioner's
arguments are as follows:

1. The ongoing government reorganization is in the nature of a "progressive" 60 reorganization

"impelled by the need to overhaul the entire government bureaucracy" 61 following the people
power revolution of 1986;

2. There was faithful compliance by the Bureau of the various guidelines issued by the
President, in particular, as to deliberation, and selection of personnel for appointment under the
new staffing pattern;

3. The separated employees have been, under Section 59 of Executive Order No. 127, on mere
holdover standing, "which means that all positions are declared vacant;" 62

4. Jose v. Arroyo has declared the validity of Executive Order No. 127 under the transitory
provisions of the 1987 Constitution;

5. Republic Act No. 6656 is of doubtful constitutionality.

The Ruling of the Civil Service Commission

The position of the Civil Service Commission is as follows:

1. Reorganizations occur where there has been a reduction in personnel or redundancy of

functions; there is no showing that the reorganization in question has been carried out for either
purpose on the contrary, the dismissals now disputed were carried out by mere service of
notices;

2. The current Customs reorganization has not been made according to Malaca;ang guidelines;
information on file with the Commission shows that Commissioner Mison has been appointing
unqualified personnel;

3. Jose v. Arroyo, in validating Executive Order No. 127, did not countenance illegal removals;

4. Republic Act No. 6656 protects security of tenure in the course of reorganizations.
The Court's ruling

Reorganization, Fundamental Principles of.

I.

The core provision of law involved is Section 16 Article XVIII, of the 1987 Constitution. We
quote:

Sec. 16. Career civil service employees separated from the service not for cause but as a
result of the reorganization pursuant to Proclamation No. 3 dated March 25, 1986 and the
reorganization following the ratification of this Constitution shag be entitled to
appropriate separation pay and to retirement and other benefits accruing to them under
the laws of general application in force at the time of their separation. In lieul thereof, at
the option of the employees, they may be considered for employment in the Government
or in any of its subdivisions, instrumentalities, or agencies, including government-owned
or controlled corporations and their subsidiaries. This provision also applies to career
officers whose resignation, tendered in line with the existing policy, had been accepted. 63

The Court considers the above provision critical for two reasons: (1) It is the only provision
in so far as it mentions removals not for cause that would arguably support the challenged
dismissals by mere notice, and (2) It is the single existing law on reorganization after the
ratification of the 1987 Charter, except Republic Act No. 6656, which came much later, on June
10, 1988. [Nota been Executive Orders No. 116 (covering the Ministry of Agriculture & Food),
117 (Ministry of Education, Culture & Sports), 119 (Health), 120 (Tourism), 123 (Social
Welfare & Development), 124 (Public Works & Highways), 125 transportation &
Communications), 126 (Labor & Employment), 127 (Finance), 128 (Science & Technology),
129 (Agrarian Reform), 131 (Natural Resources), 132 (Foreign Affairs), and 133 (Trade &
Industry) were all promulgated on January 30,1987, prior to the adoption of the Constitution on
February 2, 1987].64

It is also to be observed that unlike the grants of power to effect reorganizations under the past
Constitutions, the above provision comes as a mere recognition of the right of the Government
to reorganize its offices, bureaus, and instrumentalities. Under Section 4, Article XVI, of the
1935 Constitution:

Section 4. All officers and employees in the existing Government of the Philippine
Islands shall continue in office until the Congress shall provide otherwise, but all officers
whose appointments are by this Constitution vested in the President shall vacate their
respective office(s) upon the appointment and qualification of their successors, if such
appointment is made within a period of one year from the date of the inauguration of the
Commonwealth of the Philippines. 65

Under Section 9, Article XVII, of the 1973 Charter:

 Section 9. All officials and employees in the existing Government of the Republic of the
Philippines shall continue in office until otherwise provided by law or decreed by the
incumbent President of the Philippines, but all officials whose appointments are by this
Constitution vested in the Prime Minister shall vacate their respective offices upon the
appointment and qualification of their successors. 66

The Freedom Constitution is, as earlier seen, couched in similar language:

SECTION 2. All elective and appointive officials and employees under the 1973
Constitution shall continue in office until otherwise provided by proclamation or
executive order or upon the appointment and qualification of their successors, if such is
made within a period of one year from February 25, 1986.67

Other than references to "reorganization following the ratification of this Constitution," there is
no provision for "automatic" vacancies under the 1987 Constitution.

Invariably, transition periods are characterized by provisions for "automatic" vacancies. They
are dictated by the need to hasten the passage from the old to the new Constitution free from the
"fetters" of due process and security of tenure.

At this point, we must distinguish removals from separations arising from abolition of office
(not by virtue of the Constitution) as a result of reorganization carried out by reason of economy
or to remove redundancy of functions. In the latter case, the Government is obliged to prove
good faith.68 In case of removals undertaken to comply with clear and explicit constitutional
mandates, the Government is not hard put to prove anything, plainly and simply because the
Constitution allows it.

Evidently, the question is whether or not Section 16 of Article XVIII of the 1987 Constitution is
a grant of a license upon the Government to remove career public officials it could have validly
done under an "automatic" vacancy-authority and to remove them without rhyme or reason.

As we have seen, since 1935, transition periods have been characterized by provisions for
"automatic" vacancies. We take the silence of the 1987 Constitution on this matter as a restraint
upon the Government to dismiss public servants at a moment's notice.

What is, indeed, apparent is the fact that if the present Charter envisioned an "automatic"
vacancy, it should have said so in clearer terms, as its 1935, 1973, and 1986 counterparts had so
stated.

The constitutional "lapse" means either one of two things: (1) The Constitution meant to
continue the reorganization under the prior Charter (of the Revolutionary Government), in the
sense that the latter provides for "automatic" vacancies, or (2) It meant to put a stop to those
'automatic" vacancies. By itself, however, it is ambiguous, referring as it does to two stages of
reorganization the first, to its conferment or authorization under Proclamation No. 3
(Freedom Charter) and the second, to its implementation on its effectivity date (February 2,
1987).lwph1.t But as we asserted, if the intent of Section 16 of Article XVIII of the 1987
Constitution were to extend the effects of reorganize tion under the Freedom Constitution, it
should have said so in clear terms. It is illogical why it should talk of two phases of
reorganization when it could have simply acknowledged the continuing effect of the first
reorganization.

Second, plainly the concern of Section 16 is to ensure compensation for victims" of

constitutional revamps whether under the Freedom or existing Constitution and only
secondarily and impliedly, to allow reorganization. We turn to the records of the Constitutional
Commission:

INQUIRY OF MR. PADILLA

On the query of Mr. Padilla whether there is a need for a specific reference to
Proclamation No. 3 and not merely state "result of the reorganization following the
ratification of this Constitution', Mr. Suarez, on behalf of the Committee, replied that it is
necessary, inasmuch as there are two stages of reorganization covered by the Section.

Mr. Padilla pointed out that since the proposal of the Commission on Government
Reorganization have not been implemented yet, it would be better to use the phrase
"reorganization before or after the ratification of the Constitution' to simplify the Section.
Mr. Suarez instead suggested the phrase "as a result of the reorganization effected before
or after the ratification of the Constitution' on the understanding that the provision would
apply to employees terminated because of the reorganization pursuant to Proclamation
No. 3 and even those affected by the reorganization during the Marcos regime.
Additionally, Mr. Suarez pointed out that it is also for this reason that the Committee
specified the two Constitutions the Freedom Constitution and the 1986 [1987]
Constitution. 69

Simply, the provision benefits career civil service employees separated from the service. And
the separation contemplated must be due to or the result of (1) the reorganization pursuant to
Proclamation No. 3 dated March 25, 1986, (2) the reorganization from February 2, 1987, and
(3) the resignations of career officers tendered in line with the existing policy and which
resignations have been accepted. The phrase "not for cause" is clearly and primarily
exclusionary, to exclude those career civil service employees separated "for cause." In other
words, in order to be entitled to the benefits granted under Section 16 of Article XVIII of the
Constitution of 1987, two requisites, one negative and the other positive, must concur, to wit:

1. the separation must not be for cause, and

2. the separation must be due to any of the three situations mentioned above.

By its terms, the authority to remove public officials under the Provisional Constitution ended
on February 25, 1987, advanced by jurisprudence to February 2, 1987. 70 It Can only mean,
then, that whatever reorganization is taking place is upon the authority of the present Charter,
and necessarily, upon the mantle of its provisions and safeguards. Hence, it can not be
legitimately stated that we are merely continuing what the revolutionary Constitution of the
Revolutionary Government had started. We are through with reorganization under the Freedom
Constitution the first stage. We are on the second stage that inferred from the provisions
of Section 16 of Article XVIII of the permanent basic document.

This is confirmed not only by the deliberations of the Constitutional Commission, supra, but is
apparent from the Charter's own words. It also warrants our holding in Esguerra and Palma-
Fernandez, in which we categorically declared that after February 2, 1987, incumbent officials
and employees have acquired security of tenure, which is not a deterrent against separation by
reorganization under the quondam fundamental law.

Finally, there is the concern of the State to ensure that this reorganization is no "purge" like the
execrated reorganizations under martial rule. And, of course, we also have the democratic
character of the Charter itself.

Commissioner Mison would have had a point, insofar as he contends that the reorganization is
open-ended ("progressive"), had it been a reorganization under the revolutionary authority,
specifically of the Provisional Constitution. For then, the power to remove government
employees would have been truly wide ranging and limitless, not only because Proclamation
No. 3 permitted it, but because of the nature of revolutionary authority itself, its totalitarian
tendencies, and the monopoly of power in the men and women who wield it.

What must be understood, however, is that notwithstanding her immense revolutionary powers,
the President was, nevertheless, magnanimous in her rule. This is apparent from Executive
Order No. 17, which established safeguards against the strong arm and ruthless propensity that
accompanies reorganizations notwithstanding the fact that removals arising therefrom were
"not for cause," and in spite of the fact that such removals would have been valid and
unquestionable. Despite that, the Chief Executive saw, as we said, the "unnecessary anxiety and
demoralization" in the government rank and file that reorganization was causing, and prescribed
guidelines for personnel action. Specifically, she said on May 28, 1986:

WHEREAS, in order to obviate unnecessary anxiety and demoralization among the

deserving officials and employees, particularly in the career civil service, it is necessary
to prescribe the rules and regulations for implementing the said constitutional provision
to protect career civil servants whose qualifications and performance meet the standards
of service demanded by the New Government, and to ensure that only those found
corrupt, inefficient and undeserving are separated from the government service; 71

Noteworthy is the injunction embodied in the Executive Order that dismissals should be made
on the basis of findings of inefficiency, graft, and unfitness to render public service.*

The President's Memorandum of October 14, 1987 should furthermore be considered. We quote,
in part:
 Further to the Memorandum dated October 2, 1987 on the same subject, I have ordered
that there will be no further layoffs this year of personnel as a result of the government
reorganization. 72

Assuming, then, that this reorganization allows removals "not for cause" in a manner that would
have been permissible in a revolutionary setting as Commissioner Mison so purports, it would
seem that the Commissioner would have been powerless, in any event, to order dismissals at the
Customs Bureau left and right. Hence, even if we accepted his "progressive" reorganization
theory, he would still have to come to terms with the Chief Executive's subsequent directives
moderating the revolutionary authority's plenary power to separate government officials and
employees.

Reorganization under the 1987 Constitution, Nature, Extent, and Limitations of; Jose v. Arroyo,
clarified.

The controversy seems to be that we have, ourselves, supposedly extended the effects of
government reorganization under the Provisional Constitution to the regime of the 1987
Constitution. Jose v. Arroyo73 is said to be the authority for this argument. Evidently, if Arroyo
indeed so ruled, Arroyo would be inconsistent with the earlier pronouncement of Esguerra and
the later holding of Palma-Fernandez. The question, however, is: Did Arroyo, in fact, extend
the effects of reorganization under the revolutionary Charter to the era of the new Constitution?

There are a few points about Arroyo that have to be explained. First, the opinion expressed
therein that "[b]y virtue of said provision the reorganization of the Bureau of Customs under
Executive Order No. 127 may continue even after the ratification of this constitution and career
civil service employees may be separated from the service without cause as a result of such
reorganization" 74 is in the nature of an obiter dictum. We dismissed Jose's petition 75 primarily
because it was "clearly premature, speculative, and purely anticipatory, based merely on
newspaper reports which do not show any direct or threatened injury," 76 it appearing that the
reorganization of the Bureau of Customs had not been, then, set in motion. Jose therefore had
no cause for complaint, which was enough basis to dismiss the petition. The remark anent
separation "without cause" was therefore not necessary for the disposition of the case.
In Morales v. Parades,77 it was held that an obiter dictum "lacks the force of an adjudication and
should not ordinarily be regarded as such."78

Secondly, Arroyo is an unsigned resolution while Palma Fernandez is a full-blown decision,

although both are en banc cases. While a resolution of the Court is no less forceful than a
decision, the latter has a special weight.

Thirdly, Palma-Fernandez v. De la Paz comes as a later doctrine. (Jose v. Arroyo was

promulgated on August 11, 1987 while Palma-Fernandez was decided on August 31, 1987.) It
is well-established that a later judgment supersedes a prior one in case of an inconsistency.

As we have suggested, the transitory provisions of the 1987 Constitution allude to two stages of
the reorganization, the first stage being the reorganization under Proclamation No. 3 which
had already been consummated the second stage being that adverted to in the transitory
provisions themselves which is underway. Hence, when we spoke, in Arroyo, of
reorganization after the effectivity of the new Constitution, we referred to the second stage of
the reorganization. Accordingly, we cannot be said to have carried over reorganization under the
Freedom Constitution to its 1987 counterpart.

Finally, Arroyo is not necessarily incompatible with Palma-Fernandez (or Esguerra).

As we have demonstrated, reorganization under the aegis of the 1987 Constitution is not as
stern as reorganization under the prior Charter. Whereas the latter, sans the President's
subsequently imposed constraints, envisioned a purgation, the same cannot be said of the
reorganization inferred under the new Constitution because, precisely, the new Constitution
seeks to usher in a democratic regime. But even if we concede ex gratia argumenti that Section
16 is an exception to due process and no-removal-"except for cause provided by law" principles
enshrined in the very same 1987 Constitution, 79 which may possibly justify removals "not for
cause," there is no contradiction in terms here because, while the former Constitution left the
axe to fall where it might, the present organic act requires that removals "not for cause" must be
as a result of reorganization. As we observed, the Constitution does not provide for "automatic"
vacancies. It must also pass the test of good faith a test not obviously required under the
revolutionary government formerly prevailing, but a test well-established in democratic
societies and in this government under a democratic Charter.

When, therefore, Arroyo permitted a reorganization under Executive Order No. 127 after the
ratification of the 1987 Constitution, Arroyo permitted a reorganization provided that it is done
in good faith. Otherwise, security of tenure would be an insuperable implement. 80

Reorganizations in this jurisdiction have been regarded as valid provided they are
pursued in good faith. 81 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 a dismissal) or separation actually occurs because the position itself
ceases to exist. And in that case, security of tenure would not be a Chinese wall. Be that as
it may, if the "abolition," which is nothing else but a separation or removal, is done for
political reasons or purposely to defeat sty of tenure, or otherwise not in good faith, no
valid "abolition' takes place and whatever "abolition' is done, is void ab initio. There is an
invalid "abolition" as where there is merely a change of nomenclature of positions, 82 or
where claims of economy are belied by the existence of ample funds. 83

It is to be stressed that by predisposing a reorganization to the yardstick of good faith, we are

not, as a consequence, imposing a "cause" for restructuring. Retrenchment in the course of a
reorganization in good faith is still removal "not for cause," if by "cause" we refer to "grounds"
or conditions that call for disciplinary action.**

Good faith, as a component of a reorganization under a constitutional regime, is judged from the
facts of each case. However, under Republic Act No. 6656, we are told:
 SEC. 2. No officer or employee in the career service shall be removed except for a valid
cause and after due notice and hearing. A valid cause for removal 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 functions as the original offices; (e) Where the removal violates the order of
separation provided in Section 3 hereof. 84

It is in light hereof that we take up questions about Commissioner Mison's good faith, or lack of
it.

Reorganization of the Bureau of Customs,

Lack of Good Faith in.

The Court finds that after February 2, 1987 no perceptible restructuring of the Customs
hierarchy except for the change of personnel has occurred, which would have justified (an
things being equal) the contested dismisses. The contention that the staffing pattern at the
Bureau (which would have furnished a justification for a personnel movement) is the same s
pattern prescribed by Section 34 of Executive Order No. 127 already prevailing when
Commissioner Mison took over the Customs helm, has not been successfully
contradicted 85 There is no showing that legitimate structural changes have been made or a
reorganization actually undertaken, for that matter at the Bureau since Commissioner Mison
assumed office, which would have validly prompted him to hire and fire employees. There can
therefore be no actual reorganization to speak of, in the sense, say, of reduction of personnel,
consolidation of offices, or abolition thereof by reason of economy or redundancy of functions,
but a revamp of personnel pure and simple.

The records indeed show that Commissioner Mison separated about 394 Customs personnel but
replaced them with 522 as of August 18, 1988. 86 This betrays a clear intent to "pack" the
Bureau of Customs. He did so, furthermore, in defiance of the President's directive to halt
further layoffs as a consequence of reorganization. 87Finally, he was aware that layoffs should
observe the procedure laid down by Executive Order No. 17.

We are not, of course, striking down Executive Order No. 127 for repugnancy to the
Constitution. While the act is valid, still and all, the means with which it was implemented is
not. 88
Executive Order No. 127, Specific Case of.

With respect to Executive Order No. 127, Commissioner Mison submits that under Section 59
thereof, "[t]hose incumbents whose positions are not included therein or who are not
reappointed shall be deemed separated from the service." He submits that because the 394
removed personnel have not been "reappointed," they are considered terminated. To begin with,
the Commissioner's appointing power is subject to the provisions of Executive Order No. 39.
Under Executive Order No. 39, the Commissioner of Customs may "appoint all Bureau
personnel, except those appointed by the President." 89

Accordingly, with respect to Deputy Commissioners Cesar Dario and Vicente Feria, Jr.,
Commissioner Mison could not have validly terminated them, they being Presidential
appointees.

Secondly, and as we have asserted, Section 59 has been rendered inoperative according to our
holding in Palma-Fernandez.

That Customs employees, under Section 59 of Executive Order No. 127 had been on a mere
holdover status cannot mean that the positions held by them had become vacant. In Palma-
Fernandez, we said in no uncertain terms:

The argument that, on the basis of this provision, petitioner's term of office ended on 30
January 1987 and that she continued in the performance of her duties merely in a hold
over capacity and could be transferred to another position without violating any of her
legal rights, is untenable. The occupancy of a position in a hold-over capacity was
conceived to facilitate reorganization and would have lapsed on 25 February 1987 (under
the Provisional Constitution), but advanced to February 2, 1987 when the 1987
Constitution became effective (De Leon. et al., vs. Hon. Benjamin B. Esquerra, et. al.,
G.R. No. 78059, 31 August 1987). After the said date the provisions of the latter on
security of tenure govern. 90

It should be seen, finally, that we are not barring Commissioner Mison from carrying out a
reorganization under the transitory provisions of the 1987 Constitution. But such a
reorganization should be subject to the criterion of good faith.

Resume.

In resume, we restate as follows:

1. The President could have validly removed government employees, elected or appointed,
without cause but only before the effectivity of the 1987 Constitution on February 2, 1987 (De
Leon v. Esguerra, supra; Palma-Fernandez vs. De la Paz, supra); in this connection, Section 59
(on non-reappointment of incumbents) of Executive Order No. 127 cannot be a basis for
termination;
2. In such a case, dismissed employees shall be paid separation and retirement benefits or upon
their option be given reemployment opportunities (CONST. [1987], art. XVIII, sec. 16; Rep.
Act No. 6656, sec. 9);

3. From February 2, 1987, the State does not lose the right to reorganize the Government
resulting in the separation of career civil service employees [CONST. (1987), supra] provided,
that such a reorganization is made in good faith. (Rep. Act No. 6656, supra.)

G.R. No. 83737

This disposition also resolves G.R. No. 83737. As we have indicated, G.R. No. 83737 is a
challenge to the validity of Republic Act No. 6656. In brief, it is argued that the Act, insofar as
it strengthens security of tenure 91 and as far as it provides for a retroactive effect, 92 runs
counter to the transitory provisions of the new Constitution on removals not for cause.

It can be seen that the Act, insofar as it provides for reinstatament of employees separated
without "a valid cause and after due notice and hearing" 93 is not contrary to the transitory
provisions of the new Constitution. The Court reiterates that although the Charter's transitory
provisions mention separations "not for cause," separations thereunder must nevertheless be on
account of a valid reorganization and which do not come about automatically. Otherwise,
security of tenure may be invoked. Moreover, it can be seen that the statute itself recognizes
removals without cause. However, it also acknowledges the possibility of the leadership using
the artifice of reorganization to frustrate security of tenure. For this reason, it has installed
safeguards. There is nothing unconstitutional about the Act.

We recognize the injury Commissioner Mison's replacements would sustain. We also

commisserate with them. But our concern is the greater wrong inflicted on the dismissed
employees on account of their regal separation from the civil service.

WHEREFORE, THE RESOLUTIONS OF THE CIVIL SERVICE COMMISSION, DATED

JUNE 30, 1988, SEPTEMBER 20, 1988, NOVEMBER 16, 1988, INVOLVED IN G.R. NOS.
85310, 85335, AND 86241, AND MAY 8, 1989, INVOLVED IN G.R. NO. 85310, ARE
AFFIRMED.

THE PETITIONS IN G.R. NOS. 81954, 81967, 82023, AND 85335 ARE GRANTED. THE
PETITIONS IN G.R. NOS. 83737, 85310 AND 86241 ARE DISMISSED.

THE COMMISSIONER OF CUSTOMS IS ORDERED TO REINSTATE THE EMPLOYEES

SEPARATED AS A RESULT OF HIS NOTICES DATED JANUARY 26, 1988.

THE EMPLOYEES WHOM COMMISSIONER MISON MAY HAVE APPOINTED AS

REPLACEMENTS ARE ORDERED TO VACATE THEIR POSTS SUBJECT TO THE
PAYMENT OF WHATEVER BENEFITS THAT MAY BE PROVIDED BY LAW.

NO COSTS.
IT IS SO ORDERED.

Gutierrez, Jr., Paras, Gancayco, Bidin, Cortes, Gri;o-Aquino and Medialdea, JJ., concur.

Padilla, J., took no part.

Separate Opinions

CRUZ, J., concurring:

I concur with the majority view so ably presented by Mr. Justice Abraham F. Sarmiento. While
additional comments may seem superfluous in view of the exhaustiveness of his ponencia, I
nevertheless offer the following brief observations for whatever they may be worth.

Emphasizing Article XVII, Section 16 of the Constitution, the dissenting opinion considers the
ongoing government reorganization valid because it is merely a continuation of the
reorganization begun during the transition period. The reason for this conclusion is the phrase
"and the reorganization following the ratification of the Constitution," that is to say, after
February 2, 1987, appearing in the said provision. The consequence (and I hope I have not
misread it) is that the present reorganization may still be undertaken with the same
"absoluteness" that was allowed the revolutionary reorganization although the Freedom
Constitution is no longer in force.

Reorganization of the government may be required by the legislature even independently of

specific constitutional authorization, as in the case, for example, of R.A. No. 51 and B.P. No.
129. Being revolutionary in nature, the reorganization decreed by Article III of the Freedom
Constitution was unlimited as to its method except only as it was later restricted by President
Aquino herself through various issuances, particularly E.O. No. 17. But this reorganization, for
all its permitted summariness, was not indefinite. Under Section 3 of the said Article III, it was
allowed only up to February 29,1987 (which we advanced to February 2, 1987, when the new
Constitution became effective).

The clear implication is that any government reorganization that may be undertaken thereafter
must be authorized by the legislature only and may not be allowed the special liberties and
protection enjoyed by the revolutionary reorganization. Otherwise, there would have been no
necessity at all for the time limitation expressly prescribed by the Freedom Constitution.

I cannot accept the view that Section 16 is an authorization for the open-ended reorganization of
the government "following the ratification of the Constitution." I read the provision as merely
conferring benefits deservedly or not on persons separated from the government as a
result of the reorganization of the government, whether undertaken during the transition period
or as a result of a law passed thereafter. What the grants is privileges to the retirees, not power
to the provision government. It is axiomatic that grants of power are not lightly inferred,
especially if these impinge on individual rights, and I do not see why we should depart from this
rule.

To hold that the present reorganization is a continuation of the one begun during the transition
period is to recognize the theory of the public respondent that all officers and employees not
separated earlier remain in a hold-over capacity only and so may be replaced at any time even
without cause. That is a dangerous proposition that threatens the security and stability of every
civil servant in the executive department. What is worse is that this situation may
continue indefinitely as the claimed "progressive" reorganization has no limitation as to time.

Removal imports the forcible separation of the incumbent before the expiration of his term and
can be done only for cause as provided by law. Contrary to common belief, a reorganization
does not result in removal but in a different mode of terminating official relations known as
abolition of the office (and the security of tenure attached thereto.) The erstwhile holder of the
abolished office cannot claim he has been removed without cause in violation of his
constitutional security of tenure. The reason is that the right itself has disappeared with the
abolished office as an accessory following the principal. (Ocampo v. Sec. of Justice, 51 O.G.
147; De la Llana v. Alba, 112 SCRA 294; Manalang v. Quitoriano, 94 Phil. 903.)

This notwithstanding, the power to reorganize is not unlimited. It is essential that it be based on
a valid purpose, such as the promotion of efficiency and economy in the government through a
pruning of offices or the streamlining of their functions. (Cervantes v. Auditor-General, 91 Phil.
359.) Normally, a reorganization cannot be validly undertaken as a means of purging the
undesirables for this would be a removal in disguise undertaken en masse to circumvent the
constitutional requirement of legal cause. (Eradication of graft and corruption was one of the
expressed purposes of the revolutionary organization, but this was authorized by the Freedom
Constitution itself.) In short, a reorganization, to be valid, must be done in good faith. (Urgelio
v. Osmena, 9 SCRA 317; Cuneta v. Court of Appeals, 1 SCRA 663; Carino v. ACCFA, 18
SCRA 183.)

A mere recitation no matter how lengthy of the directives, guidelines, memoranda, etc.
issued by the government and the action purportedly taken thereunder does not by itself prove
good faith. We know only too well that these instructions, for all their noble and sterile
purposes, are rarely followed in their actual implementation. The reality in this case, as the
majority opinion has pointed out and as clearly established in the hearing we held, is that the
supposed reorganization was undertaken with an eye not to achieving the avowed objectives but
to accommodating new appointees at the expense of the dislodged petitioners. That was also the
finding of the Civil Service Commission, to which we must accord a becoming respect as the
constitutional office charged with the protection of the civil service from the evils of the spoils
system.

The present administration deserves full support in its desire to improve the civil service, but
this objective must be pursued in a manner consistent with the Constitution. This praiseworthy
purpose cannot be accomplished by an indiscriminate reorganization that will sweep in its wake
the innocent along with the redundant and inept, for the benefit of the current favorites.

MELENCIO-HERRERA, J., dissenting:

The historical underpinnings of Government efforts at reorganization hark back to the people
power phenomenon of 22-24 February 1986, and Proclamation No. 1 of President Corazon C.
Aquino, issued on 25 February 1986, stating in no uncertain terms that "the people expect a
reorganization of government." In its wake followed Executive Order No. 5, issued on 12
March 1986, "Creating a Presidential Commission on Government Reorganization," with the
following relevant provisions:

WHEREAS, there is need to effect the necessary and proper changes in the
organizational and functional structures of the national and local governments, its
agencies and instrumentalities, including government-owned and controlled corporations
and their subsidiaries, in order to promote economy, efficiency and effectiveness in the
delivery of public services

xxx xxx xxx

Section 2. The functional jurisdiction of the PCGR shall encompass, as necessary,

the reorganization of the national and local governments, its agencies and
instrumentalities including government-owned or controlled corporations and their
subsidiaries.

xxx xxx xxx (Emphasis supplied)

Succeeding it was Proclamation No. 3, dated 25 March 1986, also known as the Freedom
Constitution, declaring, in part, in its Preamble as follows:

WHEREAS, the direct mandate of the people as manifested by their extraordinary action
demands the complete reorganization of the government, ... (Emphasis supplied)

and pertinently providing:

ARTICLE II

Section I

xxx xxx xxx

The President shall give priority to measures to achieve the mandate of the people to:

(a) Completely reorganize the government and eradicate unjust and oppressive
structures, and all iniquitous vestiges of the previous regime;" (Emphasis supplied)
 xxx xxx xxx

ARTICLE III GOVERNMENT REORGANIZATION

Section 2. All elective and appointive officials and employees under the 1973
Constitution shall continue in office until otherwise provided by proclamation or
executive order or upon the designation or appointment and qualification of their
successors, if such is made within a period of one year from February 25, 1986.

Section 3. Any public office or employee separated from the service as a result of the
reorganization effected under this Proclamation shall, if entitled under the laws then in
force, receive the retirement and other benefits accruing thereunder. (Emphasis ours)

On 28 May 1986, Executive Order No. 17 was issued "Prescribing Rules and Regulations for
the Implementation of Section 2, Article III of the Freedom Constitution' providing, inter alia,
as follows:

Section 1. In the course of implementing Article III, Section 2 of the Freedom

Constitution, the Head of each Ministry shall see to it that the separation or replacement
of officers and employees is made only for justifiable reasons, to prevent indiscriminate
dismissal, of personnel in the career civil service whose qualifications and performance
meet the standards of public service of the New Government.

xxx xxx xxx

The Ministry concerned shall adopt its own rules and procedures for the review and
assessment of its own personnel, including the identification of sensitive positions which
require more rigid assessment of the incumbents, and shall complete such
review/assessment as expeditiously as possible but not later than February 24, 1987 to
prevent undue demoralization in the public service.

Section 2. The Ministry Head concerned, on the basis of such review and assessment
shall determine who shall be separated from the service. Thereafter, he shall issue to the
official or employee concerned a notice of separation which shall indicate therein the
reason/s or ground /s for such separation and the fact that the separated official or
employee has the right to file a petition for reconsideration pursuant to this Order.
Separation from the service shall be effective upon receipt of such notice, either
personally by the official or employee concerned or on his behalf by a person of
sufficient discretion.

Section 3. The following shall be the grounds for separation/ replacement of personnel:

1. Existence of a case for summary dismissal pursuant to Section 40 of the

Civil Service Law;
 2. Existence of a probable cause for violation of the Anti-Graft and Corrupt
Practice Act as determined by the Ministry Head concerned;

3. Gross incompetence or inefficiency in the discharge of functions;

4. Misuse of Public office for partisan political purposes;

5. Any other analogous ground showing that the incumbent is unfit to remain
in the service or his separation/replacement is in the interest of the service.

Section 11. This Executive Order shall not apply to elective officials or those designated
to replace them, presidential appointees, casual and contractual employees, or officials
and employees removed pursuant to disciplinary proceedings under the Civil Service
Law and rules, and to those laid off as a result of the reorganization undertaken pursuant
to Executive Order No. 5. (Emphasis supplied)

On 6 August 1986, Executive Order No. 39 was issued by the President "Enlarging the Powers
and Functions of the Commissioner of Customs", as follows:

xxx xxx xxx

SECTION 1. In addition to the powers and functions of the Commissioner of Customs,

he is hereby authorized, subject to the Civil Service Law and its implementing rules and
regulations:

a) To appoint all Bureau personnel, except those appointed by the President;

b) To discipline, suspend, dismiss or otherwise penalize erring Bureau

officers and employees;

c) To act on all matters pertaining to promotion, transfer, detail,

reassignment, reinstatement, reemployment and other personnel action,
involving officers and employees of the Bureau of Customs.

xxx xxx xxx

On 30 January 1987, Executive Order No. 127 was issued "Reorganizing the Ministry of
Finance." Similar Orders, approximately thirteen (13) in all, 1 were issued in respect of the other
executive departments. The relevant provisions relative to the Bureau of Customs read:

RECALLING that the reorganization of the government is mandated expressly in Article

II, Section l(a) and Article III of the Freedom Constitution;

HAVING IN MIND that pursuant to Executive Order No. 5 (1986), it is directed that the
necessary and proper changes in the organizational and functional structures of the
government, its agencies and instrumentalities, be effected in order to promote efficiency
and effectiveness in the delivery of public services;

BELIEVING that it is necessary to reorganize the Ministry of Finance to make it more

capable and responsive, organizationally and functionally, in its primary mandate of
judiciously generating and efficiently managing the financial resources of the
Government, its subdivisions and instrumentalities in order to attain the socio-economic
objectives of the national development programs.

xxx xxx xxx

SEC. 2. Reorganization. The Ministry of Finance, hereinafter referred to as Ministry,

is hereby reorganized, structurally and functionally, in accordance with the provisions of
this Executive Order.

SEC. 33. Bureau of Customs.

... Executive Order No. 39 dated 6 August 1986 which grants autonomy to the
Commissioner of Customs in matters of appointment and discipline of Customs
personnel shall remain in effect.

SEC. 55. Abolition of Units Integral to Ministry. All units not included in the
structural organization as herein provided and all positions thereof are hereby deemed
abolished. ... Their personnel shall be entitled to the benefits provided in the second
paragraph of Section 59 hereof.

SEC. 59. New Structure and Pattern. Upon approval of this Executive Order, the
officers and employees of the Ministry shall, in a holdover capacity, continue to perform
their respective duties and responsibilities and receive the corresponding salaries and
benefits unless in the meantime they are separated from government service pursuant to
executive Order No. 17 (1986) or article III of the Freedom Constitution.

The new position structure and staffing pattern of the ministry shall be approved and
prescribed by the Minister within one hundred twenty (120) days from the approval of
this Executive Order and the authorized positions created hereunder shall be filled with
regular appointments by him or by the President, as the case may be. Those incumbents
whose positions are not included therein or who are not reappointed shall be deemed
separated from the service. Those separated from the service shall receive the retirement
benefits to which they may be entitled under the existing laws, rules and regulations.
Otherwise, they shall be paid the equivalent of one month basic salary for every year of
service or the equivalent nearest fraction thereof favorable to them on the basis of highest
salary received, but in no case shall such payment exceed the equivalent of 12 months
salary.
 No court or administrative body shall issue any writ or preliminary junction or restraining
order to enjoin the separation/replacement of any officer or employee affected under this
Executive Order.

Section 67 All laws, ordinances, rules, regulations and other issuances or parts
thereof, which are inconsistent with this Executive Order, are hereby repealed or
modified accordingly.

xxx xxx xxx (Emphasis ours)

On 2 February 1987, the present Constitution took effect (De Leon, et al., vs. Esguerra, G.R.
No. 78059, August 31, 1987153 SCRA 602). Reorganization in the Government service
pursuant to Proclamation No. 3, supra, was provided for in its Section 16, Article XVIII entitled
Transitory Provisions, reading:

Section 16. Career civil service employees separated from the service not for cause but as
a result of the reorganization pursuant to Proclamation No. 3 dated March 25, 1986 and
the reorganization following the ratification of this Constitution shall be entitled to
appropriate separation pay and to retirement and other benefits accruing to them under
the laws of general application in force at the time of their separation. In lieu thereof, at
the option of the employees, they may be considered for employment in the Government
or in any of its subdivisions, instrumentalities, or agencies, including government owned
or controlled corporations and their subsidiaries. Ms provision also applies to career
officers whose resignation, tendered in line with the existing policy, has been accepted.

On 24 May 1987 the then Commissioner of Customs, Alexander A. Padilla, transmitted to the
Department of Finance for approval the proposed "position structure and staffing pattern" of the
Bureau of Customs. Said Department gave its imprimatur. Thereafter, the staffing pattern was
transmitted to and approved by the Department of Budget and Management on 7 September
1987 for implementation. Under the old staffing pattern, there were 7,302 positions while under
the new staffing pattern, there are 6,530 positions CSC Resolution in CSC Case No. 1, dated 20
September 1988, pp. 3-4).

On 22 September 1987, Salvador M. Mison assumed office as Commissioner of Customs.

On 2 October 1987 "Malacanang Memorandum Re: Guidelines on the Implementation of

Reorganization Executive Orders" was issued reading, insofar as revelant to these cases, as
follows:

It is my concern that ongoing process of government reorganization be conducted in a

manner that is expeditious, as well as sensitive to the dislocating consequences arising
from specific personnel decisions.

The entire process of reorganization, and in particular the process of separation from
service, must be carried out in the most humane manner possible.
 For this purpose, the following guidelines shall be strictly followed:

1. By October 21, 1987, all employees covered by the Executive Orders for
each agency on reorganization shall be:

a. informed of their reappointment or

b. offered another position in the same department/ agency or

c. informed of their termination.

2. In the event of an offer for a lower position, there will be no reduction in

the salary.

xxx xxx xxx

4. Each department/agency shall constitute a Reorganization Appeals Board

at the central office, on or before October 21, 1987, to review or reconsider
appeals or complaints relative to reorganization. All cases submitted to the
Boards shall be resolved subject to the following guidelines:

a. publication or posting of the appeal procedure promulgated by the

Department Secretary;

b. adherence to due process;

c. disposition within 30 days from submission of the case;

d written notification of the action taken and the grounds thereof.

Action by the Appeals Review Board does not preclude appeal to the Civil Service
Commission.

5. Placement in the new staffing pattern of incumbent personnel shall be

completed prior to the hiring of new personnel, if any.

xxx xxx xxx (Emphasis ours)

On 25 November 1987 Commissioner Mison wrote the President requesting a grace period until
the end of February 1988 within which to completely undertake the reorganization of the
Bureau of Customs pursuant to Executive Order No. 127 dated 30 January 1987. Said request
was granted in a letter-reply by Executive Secretary Catalino Macaraig, Jr., dated 22 December
1987.
On 6 January 1988, within the extended period requested, Bureau of Customs Memorandum
"Re: Guidelines on the Implementation of Reorganization Executive Orders" was issued in the
same tenor as the Malacanang Memorandum of 2 October 1987, providing inter alia:

To effectively implement the reorganization at the Bureau of Customs, particularly in the

selection and placement of personnel, and insure that the best qualified and most
competent personnel in the career service are retained, the following guidelines are
hereby prescribed for the guidance of all concerned

1. By February 28, 1988 all employees covered by Executive Order No. 127 and
the grace period extended to the Bureau of Customs by the President of the
Philippines on reorganization shall be:

a. informed of their reappointment, or

b. offered another position in the same department or agency or

c. informed of their termination.

2. In the event of termination, the employee shall:

a. be included in a consolidated list compiled by the Civil Service

Commission. All departments who are recruiting shall give preference to the
employees in the list; and

b. continue to receive salary and benefits until February 28, 1988, and

c. be guaranteed the release of separation benefits within 45 days from

termination and in no case later than June 15, 1988.

xxx xxx xxx (Emphasis supplied)

It is to be noted that paragraph 1 above and its sub-sections reproduced verbatim the
Malacanang Guidelines of 2 October 1987 in that the employees concerned were merely to be
informed of their termination.

On 28 January 1988 Commissioner Mison addressed identical letters of termination to Bureau

of Customs officers and employees effective on 28 February 1988.

As of 18 August 1988, Commissioner Mison appointed five hundred twenty-two (522) officials
and employees of the Bureau of Customs (CSC Resolution in CSC Case No. 1, dated 20
September 1988, p. 6). In fact, in a letter dated 27 January 1988, Commissioner Mison
recommended Jose M. Balde for appointment to President Aquino as one of three (3) Deputy
Commissioners under Executive Order No. 127.
In the interim, during the pendency of these Petitions, Republic Act No. 6656, entitled "An Act
to Protect the Security of Tenure of Civil Service Officers and Employees in the Implementation
of Government Reorganization" was passed by Congress on 9 June 1988. The President signed
it into law on 10 June 1988 and the statute took effect on 29 June 1988.

On 20 June 1988 Motions were filed, in these cases pending before this Court, invoking the
provisions of Republic Act No. 6656. The relevant provisions thereof read:

SECTION 1. It is hereby declared the policy of the State to protect the security of tenure
of civil service officers and employees in the reorganization of the various agencies of the
National government ....

SECTION 2. No officer or employee in the career service shall be removed except for a
valid cause and after due notice and hearing. A valid cause for removal 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 functions as
the original offices;

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

xxx xxx xxx

SECTION 9. All officers and employees who are found by the Civil Service Commission
to have been separated in violation of the provisions of this Act, shall be ordered
reinstated or reappointed as the case may be without loss of seniority and shall be entitled
to full pay for the period of separation. Unless also separated for cause, all officers and
employees, including casuals and temporary employees, who have been separated
pursuant to reorganization shall, if entitled thereto, be paid the appropriate separation pay
and retirement and other benefits under existing laws within ninety (90) days from the
 date of the effectivity of their separation or from the date of the receipt of the resolution
of their appeals as the case may be: Provided, That application for clearance has been
filed and no action thereon has been made by the corresponding department or agency.
Those who are not entitled to said benefits shall be paid a separation gratuity in the
amount equivalent to one (1) month salary for every year of service. Such separation pay
and retirement benefits shall have priority of payment out of the savings of the
department or agency concerned.

xxx xxx xxx

SECTION 11. The executive branch of the government shall implement reorganization
schemes within a specified period of time authorized by law.

In the case of the 1987 reorganization of the executive branch, all departments and
agencies which are authorized by executive orders promulgated by the President to
reorganize shall have ninety (90) days from the approval of this Act within which to
implement their respective reorganization plans in accordance with the provisions of this
Act.

xxx xxx xxx

SECTION 13. All laws, rules and regulations or parts thereof, inconsistent with the
provisions of this Act are hereby repealed or modified accordingly. The rights and
benefits under this Act shall be retroactive as of June 30, 1987.

xxx xxx xxx (Emphasis ours)

Given the foregoing statutory backdrop, the issues can now be addressed.

Scope of Section 16, Art. XVIII, 1987 Constitution

Crucial to the present controversy is the construction to be given to the abovementioned

Constitutional provision (SECTION 16, for brevity), which speaks of.

Career civil service employees separated from the service not for cause

but as a result of the reorganization pursuant to Proclamation No. 3 dated March 25, 1986

and the reorganization following the ratification of this Constitution ... (paragraphing
supplied).

To our minds, SECTION 16 clearly recognizes (1) the reorganization authorized by

Proclamation No. 3; (2) that such separation is NOT FOR CAUSE but as a result of the
reorganization pursuant to said Proclamation; and (3) that the reorganization pursuant to
Proclamation No. 3 may be continued even after the ratification of the 1987 Constitution
during the transition period.
Separation NOT FOR CAUSE

The canon for the removal or suspension of a civil service officer or employee is that it must be
FOR CAUSE. That means a guarantee of both procedural and substantive due process.
Basically, procedural due process would require that suspension or dismissal come only after
notice and hearing. Substantive due process would require that suspension or dismissal be 'for
cause'." Bernas The Constitution of the Republic of the Philippines: A Commentary, Vol. II,
First Edition, 1988, p. 334)

The guarantee of removal FOR CAUSE is enshrined in Article IX-B, Section 2(3) of the 1987
Constitution, which states that 'No officer or employee of the civil service shall be removed or
suspended except FOR CAUSE provided by law."

There can be no question then as to the meaning of the phrase FOR CAUSE. It simply means
the observance of both procedural and substantive due process in cases of removal of officers or
employees of the civil service. When SECTION 16 speaks, therefore, of separation from the
service NOT FOR CAUSE, it can only mean the diametrical opposite. The constitutional intent
to exempt the separation of civil service employees pursuant to Proclamation No. 3 from the
operation of Article IX-B, Section 2(3), becomes readily apparent. A distinction is explicitly
made between removal FOR CAUSE, which as aforestated, requires due process, and dismissal
NOT FOR CAUSE, which implies that the latter is not bound by the "fetters' of due process.

It is obviously for that reason that Section 16 grants separation pay and retirement benefits to
those separated NOT FOR CAUSE but as a result of the reorganization precisely to soften the
impact of the non-observance of due process. "What is envisioned in Section 16 is not a remedy
for arbitrary removal of civil servants enjoying security of tenure but some form of relief for
members of the career civil service who may have been or may be legally but involuntarily
'reorganized out' of the service or may have voluntarily resigned pursuant to the reorganization
policy" (ibid., p. 615).

Reorganization Pursuant to Proclamation No. 3 to Continue Transitorily Even After

Ratification

By its very context, SECTION 16 envisages the continuance of the reorganization pursuant to
Proclamation No. 3 even after ratification of the Constitution and during the transition period.
The two [2] stages contemplated, namely, (1) the stage before and (2) after ratification, refer to
the same nature of separation "NOT FOR CAUSE but as a result of Proclamation No. 3." No
valid reason has been advanced for a different treatment after ratification as the majority opines
i.e., that separation NOT FOR CAUSE is allowed before ratification but that, thereafter,
separation can only be FOR CAUSE.

A fundamental principle of Constitutional construction is to assure the realization of the purpose

of the framers of the organic law and of the people who adopted it.
That the reorganization commenced pursuant to Proclamation No. 3 was envisioned to continue
even after the ratification of the 1987 Constitution, at least transitorily, is evident from the intent
of its authors discoverable from their deliberations held on 3 October 1986 and evincing their
awareness that such reorganization had not as yet been fully implemented. Thus:

Mr. PADILLA. Mr. Presiding Officer, on lines 2 to 5 is the clause 'pursuant to the
provisions of Article III of Proclamation No. 3, issued on March 25, 1986, and the
reorganization.' Are those words necessary? Can we not just say 'result of the
reorganization following the ratification of this Constitution'? In other words, must we
make specific reference to Proclamation No. 3?

Mr. SUAREZ. Yes. I think the committee feels that is necessary, because in truth there
has been a reorganization by virtue of Proclamation No. 3. In other words, there are two
stages of reorganization covered by this section.

Mr. PADILIA. I understand there is a reorganization committee headed by a minister?

Mr. SUAREZ. Philippine Commission on Government Reorganization.

Mr. PADILLA. But whether that has already been implemented or not, I do not believe in
it. There has been a plan, but I do not think it has been implemented. If we want to
include any previous reorganization after or before the ratification, why do we not just
say reorganization before or after the ratification' to simplify the provision and eliminate
two-and-a-half sentences that may not be necessary? And as a result of the
reorganization, if the committee feels there has been reorganization before ratification
and there be reorganization after, we just say 'before or after the ratification of this
Constitution.

Mr. SUAREZ. Something like this as a result of the reorganization effected before or
after the ratification of the Constitution on the understanding, with the statement into the
records, that this would be applicable to those reorganized out pursuant to the Freedom
Constitution also.

Mr. PADILLA. That is understood if there has been a reorganization before the
ratification or a reorganization after the ratification." (RECORDS of the Constitutional
Commission, Vol. 5, p. 416) (Emphasis provided)

It should also be recalled that the deadline for the reorganization under Proclamation No. 3 was
"one year from February 25, 1986" (Article III, Section 2), or up to February 24, 1987.
Executive Order No. 17 itself provided that the review/assessment of personnel be completed
"not later than February 24, 1987." But, confronted with the reality of the ratification of the
Constitution before that deadline without reorganization having been completed, there was need
for a provision allowing for its continuance even after ratification and until completed. It was
also to beat that deadline that EO 127 and similar issuances, providing for the reorganization of
departments of government, were all dated 30 January 1987 or prior to the plebiscite held on 2
February 1987. The intent to continue and complete the reorganizations started is self- evident
in SECTION 16.

In Jose vs. Arroyo, et al. (G.R. No. 78435, August 11, 1987), which was a Petition
for certiorari and Prohibition to enjoin the implementation of Executive Order No. 127, we
recognized that the reorganization pursuant to Proclamation No. 3 as mandated by SECTION
16, was to continue even after ratification when we stated:

The contention of petitioner that EO No. 127 is violative of the provision of the 1987
Constitution guaranteeing career civil service employees security of tenure overlooks the
provision of Section 16, Art. XVIII (Transitory Provisions) which explicitly authorizes
the removal of career civil service employees not for cause but as a result of the
reorganization pursuant to Proclamation No. 3 dated March 25, 1986 and the
reorganization following the ratification of the Constitution. By virtue of said provision,
the reorganization of the Bureau of Customs under Executive Order No. 127 may
continue even after the ratification of this Constitution and career civil service employees
may be separated from the service without cause as a result of such
reorganization. (Emphasis ours)

With due respect to the majority, we disagree with its conclusion that the foregoing
pronouncement is mere "obiter dictum."

An obiter dictum or dictum has been defined as a remark or opinion uttered, by the way.
It is a statement of the court concerning a question which was not directly before it (In re
Hess 23 A. 2d. 298, 301, 20 N.J. Misc. 12).lwph1.t It is language unnecessary to a
decision, (a) ruling on an issue not raised, or (an) opinion of a judge which does not
embody the resolution or determination of the court, and is made without argument or
full consideration of the point (Lawson v. US, 176 F2d 49, 51, 85 U.S. App. D.C. 167). It
is an expression of opinion by the court or judge on a collateral question not directly
involved, (Crescent Ring Co. v. Travelers Indemnity Co. 132 A. 106, 107, 102 N.J. Law
85) or not necessary for the decision Du Bell v. Union Central Life Ins. Co., 29, So. 2d
709, 712; 211 La. 167).

In the case at bar, however, directly involved and squarely before the Court was the issue of
whether EO 127 violates Section 2(3) of Article IX-B of the 1987 Constitution against removal
of civil service employees except for cause." Petitioner batted for the affirmative of the
proposition, while respondents contended that "removal of civil service employees without
cause is allowed not only under the Provisional Constitution but also under the 1987
Constitution if the same is made pursuant to a reorganization after the ratification of the
Constitution."

It may be that the Court dismissed that Petition for being premature, speculative and purely
anticipatory" inasmuch as petitioner therein had "not received any communication terminating
or threatening to terminate his services." But that was only one consideration. The Court still
proceeded to decide all the issues adversatively contested by the parties, namely "1) that the
expiration date of February 25, 1 987 fixed by Section 2 of Proclamation No. 3 on which said
Executive order is based had already lapsed; 2) that the Executive Order has not been published
in the Official Gazette as required by Article 2 of the Civil Code and Section 1 1 of the Revised
Administrative Code; and 3) that its enforcement violates Section 2(3) of Article IX B of the
1987 Constitution against removal of civil service employees except for cause."

The ruling of the Court, therefore, on the Constitutional issues presented, particularly, the lapse
of the period mandated by Proclamation No. 3, and the validity of EO 127, cannot be said to be
mere "obiter." They were ultimate issues directly before the Court, expressly decided in the
course of the consideration of the case, so that any resolution thereon must be considered as
authoritative precedent, and not a mere dictum (See Valli v. US, 94 F2d 687 certiorari granted
58 S. Ct. 760, 303 U.S. 82 L. Ed. 1092; See also Weedin v. Tayokichi Yamada 4 F. (2d) 455).
Such resolution would not lose its value as a precedent just because the disposition of the case
was also made on some other ground.

.....And this rule applies as to all pertinent questions although only incidentally involved,
which are presented and decided in the regular course of the consideration of the case,
and lead up to the final conclusion (Northern Pac. Ry Co. v. Baker, D.C. Wash., 3 F.
Suppl. 1; See also Wisconsin Power and Light Co. v. City of Beloit 254 NW 119; Chase
v. American Cartage Co. 186 N.W. 598; City of Detroit, et al. v. Public Utilities Comm.
286 N.W. 368). Accordingly, a point expressly decided does not lose its value as a
precedent because the disposition of the case is made on some other ground. (Wagner v.
Com Products Refining Co. D.C. N.J. 28 F 2d 617) Where a case presents two or more
points, any one of which is sufficient to determine the ultimate issue, but the court
actually decides all such points, the case is an authoritative precedent as to every point
decided, and none of such points can be regarded as having merely the status of a dictum
(See U.S. Title Insurance and Trust Co., Cal., 44 S. Ct. 621, 265 U.S. 472, 68 L. Ed.
1110; Van Dyke v. Parker 83 F. (2d) 35) and one point should not be denied authority
merely because another point was more dwelt on and more fully argued and considered.
(Richmond Screw Anchor Co. v. U.S. 48 S. Ct. 194, 275 U.S. 331, 72 L. Ed. 303)"

It is true that in Palma-Fernandez vs. de la Paz (G.R. No. 78946, April 15, 1986, 160 SCRA
751), we had stated:

The argument that, on the basis of this provision (Section 26 of Executive Order No. 119,
or the 'Reorganization Act of the Ministry of Health'), petitioner's term of office ended on
30 January 1987 and that she continued in the performance of her duties merely in a hold-
over capacity and could be transferred to another position without violating any of her
legal rights, is untenable. The occupancy of a position in a hold-over capacity was
conceived to facilitate reorganization and would have lapsed on 25 February 1987 (under
the Provisional Constitution), but advanced to 2 February 1987 when the 1987
Constitution became effective (De Leon, et al., vs. Hon. Esguerra, et al., G.R. No. 78059,
31 August 1987, 153 SCRA 602). After the d date the provisions of the latter on security
of tenure govern.
The factual situation in the two cases, however, radically differ. In the cited case, Dra. Palma-
Fernandez, the petitioner, had already been extended a permanent appointment as Assistant
Director for Professional Services of the East Avenue Medical Center but was still being
transferred by the Medical Center Chief to the Research Office against her consent. Separation
from the service as a result of reorganization was not involved. The question then arose as to
whether the latter official had the authority to transfer or whether the power to appoint and
remove subordinate officers and employees was lodged in the Secretary of Health. Related to
that issue was the vital one of whether or not her transfer, effected on 29 May 1987, was
tantamount to a removal without cause. Significant, too, is the fact that the transfer was
basically made "in the interest of the service" pursuant to Section 24(c) of PD No. 807, or the
Civil Service Decree, and not because she was being reorganized out by virtue of EO 119 or the
"Reorganization Act of the Ministry of Health," although the said Act was invoked after the
fact. And so it was that SECTION 16 was never mentioned, much less invoked in the Palma-
Fernandez case.

Finally, on this point, it is inaccurate for the majority to state that there were no reorganization
orders after ratification. There were, namely, EO 181 (Reorganization Act of the Civil Service
Commission), June 1, 1987; EO 193 (Reorganization Act of the Office of Energy Affairs), June
10, 1987; EO 230 (Reorganization Act of NEDA), July 22, 1987; EO 262 (Reorganization Act
of the Department of Local Government), July 25, 1987; EO 297 (Reorganization Act of the
Office of the Press Secretary), July 25, 1987.

The Element of Good Faith

The majority concedes that reorganization can be undertaken provided it be in good faith but
concludes that Commissioner Mison was not in good faith.

The aforesaid conclusion is contradicted by the records.

Executive Order No. 127, dated 30 January 1987, specifically authorized the reorganization of
the Bureau of Customs "structurally and functionally" and provided for the abolition of all units
and positions thereof not included in the structural organization S election 55).

As stated heretofore, it was the former Commissioner of Customs, Alexander A. Padilla who, on
24 May 1987, transmitted to the Department of Finance for approval the proposed "position
structure and staffing pattern" of the Bureau of Customs. This was approved by the Department
of Finance. Thereafter, it was transmitted to and approved by the Department of Budget and
Management on 7 September 1987 for implementation. Under the old staffing pattern, there
were 7,302 positions while under the new staffing pattern, there are 6,530 positions.

On 2 October 1987 "Malacanang Memorandum Re: Guidelines on the Implementation of

Reorganization Executive Orders" provided:

By October 21, 1987, all employees covered by the Executive orders for each agency on
reorganization shall be:
 a. informed of their reappointment, or

b. offered another position in the same department or agency, or

c. informed of their termination. (emphasis supplied)

On 25 November 1987 Commissioner Mison asked for and was granted by the President an
extension up to February 1988 within which to completely undertake the reorganization of the
Bureau of Customs.

On 6 January 1988, he issued Bureau of Customs Memorandum "Re Guidelines on the

Implementation of Reorganization Executive Orders" reiterating the above- quoted portion of
the Malacanang Memorandum of 2 October 1987. Pursuant thereto, on 28 January 1988,
Commissioner Mison addressed uniform letters of termination to the employees listed on pages
15, 16 and 17 of the majority opinion, effective on 28 February 1988, within the extended
period granted.

The records further show that upon Commissioner Mison's official inquiry, Secretary of Justice
Sedfrey A. Ordo;ez, rendered the following Opinion:

. . . It is believed that customs employees who are reorganized out in the course of the
implementation of E.O. No. 127 (reorganizing the Department of Finance) need not be
informed of the nature and cause of their separation from the service. It is enough that
they be 'informed of their termination' pursuant to section 1(c) of the Memorandum dated
October 2, 1987 of President Aquino, which reads:

1. By October 21, 1987, all employees covered by the Executive orders for each
agency on reorganization shall be:

xxx xxx xxx

c) Informed of their terminations.

The constitutional mandate that 'no officer or employee of the civil service shall be
renewed or suspended except for cause as provided by law' (Sec. 2(4) (sic), Article IX-B
of the 1987 Constitution) does not apply to employees who are separated from office as a
result of the reorganization of that Bureau as directed in Executive Order No. 127.

xxx xxx xxx

Regarding your (third) query, the issue as to the constitutionality of Executive Order No.
127 is set at rest, after the Supreme Court resolved to dismiss the petition
for certiorari questioning its enforceability, for lack of merit (see Jose vs. Arroyo, et
al., supra). (Opinion No. 41, s. 1988, March 3, 1988) (Emphasis supplied)
The former Chairman of the Civil Service Commission, Celerina G. Gotladera likewise
periodically consulted by Commissioner Mison, also expressed the opinion that "it is not a
prerequisite prior to the separation of an employee pursuant to reorganization that he be
administratively charged." (Annex 16, p. 411, Rollo, G.R. No. 85310)

Moreover, the records show that the final selection and placement of personnel was done by a
Placement Committee, one of whose members is the Head of the Civil Service Commission
Field Office, namely, Mrs. Purificacion Cuerdo The appointment of employees made by
Commissioner Mison was based on the list approved by said Placement Committee.

But the majority further faults Mison for defying the President's directive to halt further layoffs
as a consequence of reorganization, citing OP Memo of 14 October 1987, reading:

Further to the Memorandum dated October 2, 1987 on the same subject, I have ordered
that there will be no further layoffs this year of personnel as a result of the government
reorganization. (p. 45, Decision)

The foregoing, however, must be deemed superseded by later developments, namely, the grant
to Commissioner Mison by the President on 22 December 1987 of a grace period until the end
of February 1988 within which to completely undertake the reorganization of the Bureau of
Customs, which was, in fact, accomplished by 28 February 1988.

To further show lack of good faith, the majority states that Commissioner Mison failed to
observe the procedure laid down by EO 17, supra, directing inter alia that a notice of separation
be issued to an employee to be terminated indicating therein the reason/s or ground/s for such
separation. That requirement, however, does not appear in Section 59 of EO 127, which
provides on the contrary "that those incumbents whose positions are not included in the new
position structure and staffing pattern of the Ministry or who are not reappointed shall be
deemed separated from the service." The right granted by EO 17 to an employee to be informed
of the ground for his separation must be deemed to have been revoked by the repealing clause
of EO 127 (Section 67) providing that "all laws, ordinances or parts thereof, which are
inconsistent with this Executive Order, are hereby repealed and modified accordingly."

Moreover, Section 11 of EO 17 explicitly excepts from its coverage a reorganization pursuant to

EO 5. Thus

The Executive Order shall not apply to elective officials or those designated to replace
them, presidential appointees, casual and contractual employees, or officials and
employees removed pursuant to desciplinary proceedings under the Civil Service law and
rules, and to those laid off as a result of reorganization undertaken pursuant to Executive
Order No. 5. (Emphasis ours)

That EO 127 was issued pursuant to or in implementation of EO 5, is shown by its introductory

portion reading:
 Recalling that the reorganization of the government is mandated expressly by Article II,
Section 1 (a) and Article III of the Freedom Constitution;

Having in mind that pursuant to Executive order No. 5 (1986), it is directed that the
necessary and proper changes in the organizational and functional structures of the
government, its agencies and instrumentalities, be effected in order to promote efficiency
and effectiveness in the delivery of public service; (Italics supplied)

Constitutionality of Republic Act No. 6656

The majority also relies on Republic Act No. 6656 entitled an "Act to Protect the Security of
Tenure of Civil Service Officers and Employees in the Implementation of Government
Reorganization," particularly Section 2 thereof, to test the good faith of Commissioner Mison.

We are of the view, however, that in providing for retroactivity in its Section 13, RA 6656
clashes frontally with SECTION 16.

1) SECTION 16 clearly recognizes that career service employees separated from the service by
reason of the "complete reorganization of the government" pursuant to Proclamation No. 3 may
be separated NOT FOR CAUSE. And yet, RA 6656 requires the exact opposite separation
FOR CAUSE. It would not be remiss to quote the provision again:

SEC. 2. No officer or employee in the career service shall be removed except for a valid
cause and after due notice and hearing. A valid cause for removal exist when, pursuant to
a bona fide reorganization, a position has been abolished or rendered redundant or there
is a need to merge, divide, or consolidate positions in order to meet the exigencies of the
service, or other lawful causes allowed by the Civil Service law. The existence of any or
some of the following circumstances may be considered as evidence of bad faith in the
removals made as a result of reorganization, giving rise to a claim for reinstatement or
reappointment by an aggrieved party: (a) Where there is a significant increase in the
number of positions in the new staffing pattern of the department or agency concerned;
(b) Where an office is abolished and another performing substantially the same functions
is created; (c) Where incumbents are replaced by those less qualified in terms of status of
appointment, performance and merit; (d) Where there is a reclassification of offices in the
department or agency concerned and the reclassified offices perform substantially the
same functions as the original offices; (e) Where the removal violates the order of
separation provided in Section 3 hereof. (Republic Act No. 6156)

The standards laid down are the "traditional" criteria for removal of employees from the career
service, e.g. valid cause, due notice and hearing, abolition of, or redundancy of offices.
Proclamation No. 3, on the other hand, effectuates the "progressive" type of reorganization
dictated by the exigencies of the historical and political upheaval at the time. The "traditional"
type is limited in scope. It is concerned with the individual approach where the particular
employee involved is charged administratively and where the requisites of notice and hearing
have to be observed. The "progressive" kind of reorganization, on the other hand, is the
collective way. It is wider in scope, and is the reorganization contemplated under SECTION 16.

2) By providing for reinstatement in its Section 9, RA 6656 adds a benefit not included in
SECTION 16. The benefits granted by the latter provision to employees separated NOT FOR
CAUSE but as a consequence of reorganization are "separation pay, retirement, and other
benefits accruing to them under the laws of general application in force at the time of their
separation." The benefit of reinstatement is not included. RA 6656, however, allows
reinstatement. That it cannot do because under SECTION 16, it is not one of the laws "in force
at the time of their separation."

The Constitution is the paramount law to which all laws must conform. It is from the
Constitution that all statutes must derive their bearings. The legislative authority of the State
must yield to the expression of the sovereign will. No statutory enactment can disregard the
Charter from which it draws its own existence (Phil. Long Distance Telephone Co. v. Collector
of Internal Revenue, 90 Phil. 674 [1952]). But, that is exactly what RA 6656 does in providing
for retroactivity it disregards and contravenes a Constitutional imperative. To save it, it
should be applied and construed prospectively and not retroactively notwithstanding its explicit
provision. Then, and only then, would it make good law.

Effects of Reorganization

To be sure, the reorganization could effect 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 the 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.

But a reorganized employee is not without rights. His right lies in his past services, the
entitlement to which must be provided for by law. EO 127 provides for the same in its Section
59, and so does SECTION 16 when the latter specified that career civil service employees
separated from the service not for cause:

shall be entitled to appropriate separation pay and to retirement and other benefits
accruing to them under the laws of general application in force at the time of their
separation. In lieu thereof, at the option of the employees, they may be considered for
employment in the Government or in any of its subdivisions, instrumentalities, or
agencies, including government-owned or controlled corporations and their subsidiaries.
This provision also applies to career officers whose resignation, tendered in line with the
existing policy, has been accepted.

This is a reward for the employee's past service to the Government. But this is all There is no
vested property right to be reemployed in a reorganized office.
 The right to an office or to employment with government or any of its agencies is not a
vested property right, and removal therefrom will not support the question of due
process" Yantsin v. Aberdeen, 54 Wash 2d 787, 345 P 2d 178). A civil service employee
does not have a constitutionally protected right to his position, which position is in the
nature of a public office, political in character and held by way of grant or privilege
extended by government; generally he has been held to have no property right or vested
interest to which due process guaranties extend (See Taylor v. Beckham 178 U.S. 548, 44
L Ed. 1187; Angilly v. US CA2 NY 199 F 2d 642; People ex. rel. Baker v. Wilson, 39 III
App 2d 443, 189 NE 2d 1; Kelliheller v. NY State Civil Service Com 21 Misc 2d 1034,
194 NYS 2d 89).

To ensure, however, that no meritorious employee has been separated from the service, there
would be no harm, in fact, it could do a lot of good, if the Commissioner of Customs reviews
the evaluation and placements he has so far made and sees to it that those terminated are
included in a consolidated list to be given preference by departments who are recruiting
(Section 2[a], BOC Memorandum, January 6,1988).lwph1.t

Conclusion

Premises considered, and subject to the observation hereinabove made, it is our considered view
that the separation from the service "NOT FOR CAUSE but as a result of the reorganization
pursuant to Proclamation No. 3 dated March 25, 1986" of the affected officers and employees of
the Bureau of Customs should be UPHELD, and the Resolutions of the Civil Service
Commission, dated 30 June 1988, 20 September 1988, and 16 November 1988 should be SET
ASIDE for having been issued in grave abuse of discretion.

Republic Act No. 6656, in so far as it provides for retroactivity, should be declared
UNCONSTITUTIONAL for being repugnant to the letter and spirit of Section 16, Article XVIII
of the 1987 Constitution.

Fernan, C.J., Narvasa, Feliciano, Regalado, JJ., concur.

 [G.R. No. 142801-802. July 10, 2001]

BUKLOD NG KAWANING EIIB, CESAR POSADA, REMEDIOS G. PRINCESA,

BENJAMIN KHO, BENIGNO MANGA, LULU MENDOZA, petitioners, vs. HON.
EXECUTIVE SECRETARY RONALDO B. ZAMORA, HON. SECRETARY JOSE
PARDO, DEPARTMENT OF FINANCE, HON. SECRETARY BENJAMIN
DIOKNO, DEPARTMENT OF BUDGET AND MANAGEMENT, HON.
SECRETARY ARTEMIO TUQUERO, DEPARTMENT OF JUSTICE, respondents.

DECISION

SANDOVAL-GUTIERREZ, J.:

In this petition for certiorari, prohibition and mandamus, petitioners Buklod Ng Kawaning
EIIB, Cesar Posada, Remedios Princesa, Benjamin Kho, Benigno Manga and Lulu Mendoza,
for themselves and in behalf of others with whom they share a common or general interest, seek
the nullification of Executive Order No. 191[1] and Executive Order No. 223[2] on the ground
that they were issued by the Office of the President with grave abuse of discretion and in
violation of their constitutional right to security of tenure.

The facts are undisputed:

On June 30, 1987, former President Corazon C. Aquino, issued Executive Order No.
127[3] establishing the Economic Intelligence and Investigation Bureau (EIIB) as part of the
structural organization of the Ministry of Finance.[4] The EIIB was designated to perform the
following functions:

(a) Receive, gather and evaluate intelligence reports and information and evidence on the
nature, modes and extent of illegal activities affecting the national economy, such as, but
not limited to, economic sabotage, smuggling, tax evasion, and dollar-salting, investigate
the same and aid in the prosecution of cases;

(b) Coordinate with external abgencies in monitoring the financial and economic activities
of persons or entities, whether domestic or foreign, which may adversely affect national
financial interest with the goal of regulating, controlling or preventing said activities;

(c) Provide all intelligence units of operating Bureaus or Offices under the Ministry with the
general framework and guidelines in the conduct of intelligence and investigating works;
 (d) Supervise, monitor and coordinate all the intelligence and investigation operations of the
operating Bureaus and Offices under the Ministry;

(e) Investigate, hear and file, upon clearance by the Minister, anti-graft and corruption cases
against personnel of the Ministry and its constituents units;

(f) Perform such other appropriate functions as may be assigned by the Minister or his
deputies.[5]

In a desire to achieve harmony of efforts and to prevent possible conflicts among agencies
in the course of their anti-smuggling operations, President Aquino issued Memorandum Order
No. 225 on March 17, 1989, providing, among others, that the EIIB shall be the agency of
primary responsibility for anti-smuggling operations in all land areas and inland waters and
waterways outside the areas of sole jurisdiction of the Bureau of Customs.[6]

Eleven years after, or on January 7, 2000, President Joseph Estrada issued Executive Order
No. 191 entitled Deactivation of the Economic Intelligence and Investigation Bureau.
[7]
Motivated by the fact that the designated functions of the EIIB are also being performed by
the other existing agencies of the government and that there is a need to constantly monitor the
overlapping of functions among these agencies, former President Estrada ordered the
deactivation of EIIB and the transfer of its functions to the Bureau of Customs and the National
Bureau of Investigation.

Meanwhile, President Estrada issued Executive Order No. 196[8] creating the Presidential
Anti-Smuggling Task Force Aduana.[9]

Then the day feared by the EIIB employees came. On March 29, 2000, President Estrada
issued Executive Order No. 223[10] providing that all EIIB personnel occupying positions
specified therein shall be deemed separated from the service effective April 30, 2000, pursuant
to a bona fide reorganization resulting to abolition, redundancy, merger, division, or
consolidation of positions.[11]

Agonizing over the loss of their employment, petitioners now come before this Court
invoking our power of judicial review of Executive Order Nos. 191 and 223. They anchor their
petition on the following arguments:

Executive Order Nos. 191 and 223 should be annulled as they are unconstitutional for
being violative of Section 2(3), Article IX-B of the Philippine Constitution and/or for
having been issued with grave abuse of discretion amounting to lack or excess of
jurisdiction.

B.

The abolition of the EIIB is a hoax. Similarly, if Executive Order Nos. 191 and 223 are
considered to effect a reorganization of the EIIB, such reorganization was made in bad
faith.

C.

The President has no authority to abolish the EIIB.

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

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

The petition is bereft of merit.

Despite the presence of some procedural flaws in the instant petition, such as, petitioners
disregard of the hierarchy of courts and the non-exhaustion of administrative remedies, we
deem it necessary to address the issues. It is in the interest of the State that questions relating to
the status and existence of a public office be settled without delay. We are not without
precedent. In Dario v. Mison,[12] we liberally decreed:

The Court disregards the questions raised as to procedure, failure to exhaust administrative
remedies, the standing of certain parties to sue, for two reasons, `[b]ecause of the demands of
public interest, including the need for stability in the public service,' and because of the
serious implications of these cases on the administration of the Philippine civil service and the
rights of public servants.
 At first glance, it seems that the resolution of this case hinges on the question - Does the
deactivation of EIIB constitute abolition of an office? However, after coming to terms with the
prevailing law and jurisprudence, we are certain that the ultimate queries should be a) Does the
President have the authority to reorganize the executive department? and, b) How should the
reorganization be carried out?

Surely, there exists a distinction between the words deactivate and abolish.
To deactivate means to render inactive or ineffective or to break up by discharging or
reassigning personnel,[13] while to abolish means to do away with, to annul, abrogate or destroy
completely.[14] In essence, abolition denotes an intention to do away with the
office wholly and permanently.[15] Thus, while in abolition, the office ceases to exist, the same is
not true in deactivation where the office continues to exist, albeit remaining dormant or
inoperative. Be that as it may, deactivation and abolition are both reorganization measures.

The Solicitor General only invokes the above distinctions on the mistaken assumption that
the President has no power to abolish an office.

The general rule has always been that the power to abolish a public office is lodged with the
legislature.[16] This proceeds from the legal precept that the power to create includes the power
to destroy. A public office is either created by the Constitution, by statute, or by authority of
law.[17] Thus, except where the office was created by the Constitution itself, it may be abolished
by the same legislature that brought it into existence.[18]

The exception, however, is that as far as bureaus, agencies or offices in the executive
department are concerned, the Presidents power of control may justify him to inactivate the
functions of a particular office,[19] or certain laws may grant him the broad authority to carry out
reorganization measures.[20] The case in point is Larin v. Executive Secretary.[21] In this case, it
was argued that there is no law which empowers the President to reorganize the BIR. In
decreeing otherwise, this Court sustained the following legal basis, thus:

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

We do not agree.

xxxxxx

Section 48 of R.A. 7645 provides that:

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

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

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

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

xxxxxx

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

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

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

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

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

We adhere to the precedent or ruling in Larin that this provision recognizes the authority of
the President to effect organizational changes in the department or agency under the executive
structure. Such a ruling further finds support in Section 78 of Republic Act No. 8760. [22] Under
this law, the heads of departments, bureaus, offices and agencies and other entities in the
Executive Branch are directed (a) to conduct a comprehensive review of their respective
mandates, missions, objectives, functions, programs, projects, activities and systems and
procedures; (b) identify activities which are no longer essential in the delivery of public
services and which may be scaled down, phased-out or abolished; and (c) adopt measures that
will result in the streamlined organization and improved overall performance of their respective
agencies.[23] Section 78 ends up with the mandate that the actual streamlining and productivity
improvement in agency organization and operation shall be effected pursuant to Circulars or
Orders issued for the purpose by the Office of the President.[24] The law has spoken clearly. We
are left only with the duty to sustain.

But of course, the list of legal basis authorizing the President to reorganize any department
or agency in the executive branch does not have to end here. We must not lose sight of the very
source of the power that which constitutes an express grant of power. Under Section 31, Book
III of Executive Order No. 292 (otherwise known as the Administrative Code of 1987), the
President, subject to the policy in the Executive Office and in order to
achieve simplicity, economy and efficiency, shall have the continuing authority to
reorganize the administrative structure of the Office of the President. For this purpose, he
may transfer the functions of other Departments or Agencies to the Office of the
President. In Canonizado v. Aguirre,[25] 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. [26] It falls under the
Office of the President. Hence, it is subject to the Presidents continuing authority to reorganize.
 It having been duly established that the President has the authority to carry out
reorganization in any branch or agency of the executive department, what is then left for us to
resolve is whether or not the reorganization is valid. In this jurisdiction, reorganizations have
been regarded as valid provided they are pursued in good faith. Reorganization is carried out in
good faith if it is for the purpose of economy or to make bureaucracy more efficient.
[27]
Pertinently, Republic Act No. 6656[28] provides for the circumstances which may be
considered as evidence of bad faith in the removal of civil service employees made as a result
of reorganization, to wit: (a) where there is a significant increase in the number of positions in
the new staffing pattern of the department or agency concerned; (b) where an office is abolished
and another performing substantially the same functions is created; (c) where incumbents are
replaced by those less qualified in terms of status of appointment, performance and
merit; (d) where there is a classification of offices in the department or agency concerned and
the reclassified offices perform substantially the same functions as the original offices,
and (e) where the removal violates the order of separation.[29]

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

We are not convinced.

An examination of the pertinent Executive Orders [30] shows that the deactivation of EIIB
and the creation of Task Force Aduana were done in good faith. It was not for the purpose of
removing the EIIB employees, but to achieve the ultimate purpose of E.O. No. 191, which is
economy. While Task Force Aduana was created to take the place of EIIB, its creation does not
entail expense to the government.

Firstly, there is no employment of new personnel to man the Task Force. E.O. No. 196
provides that the technical, administrative and special staffs of EIIB are to be composed of
people who are already in the public service, they being employees of other existing
agencies. Their tenure with the Task Force would only be temporary, i.e., only when the
agency where they belong is called upon to assist the Task Force. Since their employment
with the Task force is only by way of detail or assignment, they retain their employment
with the existing agencies. And should the need for them cease, they would be sent back to
the agency concerned.

Secondly, the thrust of E.O. No. 196 is to have a small group of military men under the
direct control and supervision of the President as base of the governments anti-smuggling
campaign. Such a smaller base has the necessary powers 1) to enlist the assistance of any
department, bureau, or office and to use their respective personnel, facilities and resources;
and 2) to select and recruit personnel from within the PSG and ISAFP for assignment to the
Task Force. Obviously, the idea is to encourage the utilization of personnel, facilities and
resources of the already existing departments, agencies, bureaus, etc., instead of
maintaining an independent office with a whole set of personnel and facilities. The EIIB
had proven itself burdensome for the government because it maintained separate offices in
every region in the Philippines.

And thirdly, it is evident from the yearly budget appropriation of the government that the
creation of the Task Force Aduana was especially intended to lessen EIIBs expenses. Tracing
from the yearly General Appropriations Act, it appears that the allotted amount for the EIIBs
general administration, support, and operations for the year 1995, was P128,031,000;[31] for
1996, P182,156,000;[32] for 1998, P219,889,000;[33] and, for 1999, P238,743,000.
[34] [35]
These amounts were far above the P50,000,000 allocation to the Task Force Aduana for
the year 2000.

While basically, the functions of the EIIB have devolved upon the Task Force Aduana, we
find the latter to have additional new powers. The Task Force Aduana, being composed of
elements from the Presidential Security Group (PSG) and Intelligence Service Armed Forces of
the Philippines (ISAFP),[36] has the essential power to effect searches, seizures and arrests. The
EIIB did not have this power. The Task Force Aduana has the power to enlist the assistance of
any department, bureau, office, or instrumentality of the government, including government-
owned or controlled corporations; and to use their personnel, facilities and resources. Again, the
EIIB did not have this power. And, the Task Force Aduana has the additional authority to
conduct investigation of cases involving ill-gotten wealth. This was not expressly granted to the
EIIB.

Consequently, it cannot be said that there is a feigned reorganization. In Blaquera v. Civil

Sevice Commission, [37] we ruled that a reorganization in good faith is one designed to trim the
fat off the bureaucracy and institute economy and greater efficiency in its operation.

Lastly, we hold that petitioners right to security of tenure is not violated. Nothing is better
settled in our law than that the abolition of an office within the competence of a legitimate body
if done in good faith suffers from no infirmity. Valid abolition of offices is neither removal nor
separation of the incumbents.[38] In the instructive words laid down by this Court in Dario v.
Mison,[39] through Justice Abraham F. Sarmiento:

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

Indeed, there is no such thing as an absolute right to hold office. Except constitutional
offices which provide for special immunity as regards salary and tenure, no one can be said to
have any vested right in an office or its salary.[40]

While we cast a commiserating look upon the plight of all the EIIB employees whose lives
perhaps are now torn with uncertainties, we cannot ignore the unfortunate reality that our
government is also battling the impact of a plummeting economy. Unless the government is
given the chance to recuperate by instituting economy and efficiency in its system, the EIIB will
not be the last agency to suffer the impact. We cannot frustrate valid measures which are
designed to rebuild the executive department.

WHEREFORE, the petition is hereby DENIED. No costs.

SO ORDERED.

Davide, Jr., C.J., Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Pardo, Buena,Ynares-
Santiago, and De Leon, Jr., JJ., concur.

Panganiban and Quisumbing, JJ., in the result.

Gonzaga-Reyes, J., on leave.

 a[G.R. No. 152845. August 5, 2003]

DRIANITA BAGAOISAN, FELY MADRIAGA, SHIRLY TAGABAN, RICARDO

SARANDI, SUSAN IMPERIAL, BENJAMIN DEMDEM, RODOLFO DAGA,
EDGARDO BACLIG, GREGORIO LABAYAN, HILARIO JEREZ, and MARIA
CORAZON CUANANG, petitioners, vs. NATIONAL TOBACCO
ADMINISTRATION, represented by ANTONIO DE GUZMAN and PERLITA
BAULA, respondents.

DECISION

VITUG, J.:

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

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

On 10 June 1996, petitioners, all occupying different positions at the NTA office in Batac,
Ilocos Norte, received individual notices of termination of their employment with the NTA
effective thirty (30) days from receipt thereof. Finding themselves without any immediate relief
from their dismissal from the service, petitioners filed a petition for certiorari, prohibition
and mandamus, with prayer for preliminary mandatory injunction and/or temporary restraining
order, with the Regional Trial Court (RTC) of Batac, Ilocos Norte, and prayed -
1) that a restraining order be immediately issued enjoining the respondents from enforcing the
notice of termination addressed individually to the petitioners and/or from committing further
acts of dispossession and/or ousting the petitioners from their respective offices;

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

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

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

I. Whether or not respondents submitted evidence as proof that petitioners, individually,

were not the best qualified and most deserving among the incumbent applicant-
employees.

II. Whether or not incumbent permanent employees, including herein petitioners,

automatically enjoy a preferential right and the right of first refusal to
appointments/reappointments in the new Organization Structure And Staffing
Pattern (OSSP) of respondent NTA.

III. Whether or not respondent NTA in implementing the mandated reorganization

pursuant to E.O. No. 29, as amended by E.O. No. 36, strictly adhere to the
implementing rules on reorganization, particularly RA 6656 and of the Civil
Service Commission Rules on Government Reorganization.

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

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

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

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

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

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

V. The Court of Appeals erred in ignoring case law/jurisprudence in the abolition of an

office.[3]

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

On 21 February 2003, petitioners submitted a Motion to Admit Petition For En

Banc Resolution of the case allegedly to address a basic question, i.e., the legal and
constitutional issue on whether the NTA may be reorganized by an executive fiat, not by
legislative action.[4] In their Petition for an En Banc Resolution petitioners would have it that -

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

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

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

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

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

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

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

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

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

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

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

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

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

`We do not agree.

`x x x x x x

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

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

`Said provision clearly mentions the acts of `scaling down, phasing out and abolition of offices
only and does not cover the creation of offices or transfer of functions. Nevertheless, the act of
creating and decentralizing is included in the subsequent provision of Section 62 which
provides that:
``Sec. 62. Unauthorized organizational changes. Unless otherwise created by law or directed by
the President of the Philippines, no organizational unit or changes in key positions in any
department or agency shall be authorized in their respective organization structures and be
funded from appropriations by this Act.

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

`x x x x x x

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

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

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

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

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

`Sec. 77. Organized Changes. Unless otherwise provided by law or directed by the President of
the Philippines, no changes in key positions or organizational units in any department or agency
shall be authorized in their respective organizational structures and funded from appropriations
provided by this Act.
We adhere to the x x x ruling in Larin that this provision recognizes the authority of the
President to effect organizational changes in the department or agency under the executive
structure. Such a ruling further finds support in Section 78 of Republic Act No. 8760. Under
this law, the heads of departments, bureaus, offices and agencies and other entities in the
Executive Branch are directed (a) to conduct a comprehensive review of this respective
mandates, missions, objectives, functions, programs, projects, activities and systems and
procedures; (b) identify activities which are no longer essential in the delivery of public services
and which may be scaled down, phased-out or abolished; and (c) adopt measures that will result
in the streamlined organization and improved overall performance of their respective
agencies. Section 78 ends up with the mandate that the actual streamlining and productivity
improvement in agency organization and operation shall be effected pursuant to Circulars or
Orders issued for the purpose by the Office of the President. The law has spoken clearly. We are
left only with the duty to sustain.

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

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

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

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

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

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

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

x x x x x x x x x.

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

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

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

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

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

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

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

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

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

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

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

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

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

SO ORDERED.

Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio, and Azcuna, JJ., concur.
 [G.R. No. 142283. February 6, 2003]

ROSA LIGAYA C. DOMINGO, ROMEO M. FERNANDEZ, VICTORIA S.

ESTRADA, JULIETA C. FAJARDO, ADELAIDA B. GAWIRAN, MARCIANO M.
SERVO, VICTORIA S. DAOANG, FELICIANO N. TOLEDO III, JAYNELYN D.
FLORES, MA. LIZA B. LLOREN, ROMELIA A. CONTAPAY, MARIVIC B.
TOLITOL, PAZ LEVITA G. VILLANUEVA, EDITHA C. HERNANDEZ, JOSE
HERNANDEZ, JR., VERONICA C. BELLES, AMELITA S. BUCE,MERCELITA
C. MARANAN, CRISTITUTO C. LLOREN, HERNANDO M.
EVANGELISTA, and CARLOS BACAY, JR., petitioners, vs. HON. RONALDO D.
ZAMORA, in his capacity as the Executive Secretary, HON. ANDREW B.
GONZALES, in his capacity as the Secretary of Education, and HON. CARLOS D.
TUASON, in his capacity as the Chairman of the Philippine Sports
Commission, respondents.

DECISION

CARPIO, J.:

The Case

This is a petition for certiorari and prohibition[1] with prayer for temporary restraining order
seeking to nullify Executive Order No. 81 and Memoranda Nos. 01592 and 01594.[2] The
assailed executive order transferred the sports development programs and activities of the
Department of Education, Culture and Sports (DECS for brevity) to the Philippine Sports
Commission (PSC for brevity). The questioned memoranda (DECS Memoranda for brevity), on
the other hand, reassigned all Bureau of Physical Education and School Sports (BPESS for
brevity) personnel named in the DECS Memoranda to various offices within the DECS.

The Facts

On March 5, 1999, former President Joseph E. Estrada issued Executive Order No. 81 [3] (EO
81 for brevity) entitled Transferring the Sports Programs and Activities of the Department of
Education, Culture and Sports to the Philippine Sports Commission and Defining the Role of
DECS in School-Based Sports.

EO 81 provided thus:
Section 1. Transferring the Sports Program and Activities to the PSC. All the functions,
programs and activities of DECS related to sports development as provided for in Sec. 16 of EO
117 (s. 1987) are hereby transferred to PSC.

Section 2. Defining the Role of DECS in School-Based Sports. The DECS shall have
jurisdiction and function over the enhancement of Physical Education (P.E.) curriculum and its
application in whatever form inside schools.

Section 3. The Role of PSC. As the primary agency tasked to formulate policies and oversee the
national sports development program, the management and implementation of all school-based
sports competitions among schools at the district, provincial, regional, national and international
levels, in coordination with concerned public and private entities shall be transferred to the
PSC.

Pursuant to EO 81, former DECS Secretary Andrew B. Gonzales (Secretary Gonzales for
brevity) issued Memorandum No. 01592 on January 10, 2000. Memorandum No. 01592
temporarily reassigned, in the exigency of the service, all remaining BPESS Staff to other
divisions or bureaus of the DECS effective March 15, 2000.

On January 21, 2000, Secretary Gonzales issued Memorandum No. 01594 reassigning the
BPESS staff named in the Memorandum to various offices within the DECS effective March
15, 2000. Petitioners were among the BPESS personnel affected by Memorandum No.
01594. Dissatisfied with their reassignment, petitioners filed the instant petition.

In their Petition, petitioners argue that EO 81 is void and unconstitutional for being an
undue legislation by President Estrada. Petitioners maintain that the Presidents issuance of EO
81 violated the principle of separation of powers. Petitioners also challenge the DECS
Memoranda for violating their right to security of tenure.

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

During the pendency of the case, Republic Act No. 9155 (RA 9155 for brevity), otherwise
known as the Governance of Basic Education Act of 2001, was enacted on August 11, 2001.RA
9155 expressly abolished the BPESS and transferred the functions, programs and activities of
the DECS relating to sports competition to the PSC. The pertinent provision thereof reads:
SEC. 9. Abolition of BPESS. All functions, programs and activities of the Department of
Education related to sports competition shall be transferred to the Philippine Sports
Commission (PSC). The Program for school sports and physical fitness shall remain part of the
basic education curriculum.

The Bureau of Physical Education and School Sports (BPESS) is hereby abolished. The
personnel of the BPESS, presently detailed with the PSC, are hereby transferred to the PSC
without loss of rank, including the plantilla positions they occupy. All other BPESS personnel
shall be retained by the Department.

The Issue

The issue to resolve is whether EO 81 and the DECS Memoranda are valid.

The Courts Ruling

We dismiss this petition for being moot and academic.

As manifested by both petitioners[4] and respondents,[5] the subsequent enactment of RA

9155 has rendered the issues in the present case moot and academic. Since RA 9155 abolished
the BPESS and transferred the DECS functions relating to sports competition to the PSC,
petitioners now admit that it is no longer plausible to raise any ultra vires assumption by the
PSC of the functions of the BPESS. [6] Moreover, since RA 9155 provides that BPESS personnel
not transferred to the PSC shall be retained by the DECS, petitioners now accept that the law
explicitly protects and preserves[7] their right to security of tenure.

Although the issue is already academic, its significance constrains the Court to point out
that Executive Order No. 292 (EO 292 for brevity), otherwise known as the Administrative
Code of 1987, expressly grants the President continuing authority to reorganize the Office of the
President. Section 31 of EO 292 provides:

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

(1) Restructure the internal organization of the Office of the President Proper, including the
immediate Offices, the Presidential Special Assistants/Advisers System and the Common
Support System, by abolishing, consolidating or merging units thereof or transferring functions
from one unit to another;
(2) Transfer any function under the Office of the President to any other Department or Agency
as well as transfer functions 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. (Emphasis supplied.)

Since EO 81 is based on the Presidents continuing authority under Section 31 (2) and (3) of
EO 292,[8] EO 81 is a valid exercise of the Presidents delegated power to reorganize the Office
of the President. The law grants the President this power in recognition of the recurring need of
every President to reorganize his office to achieve simplicity, economy and efficiency. The
Office of the President is the nerve center of the Executive Branch. To remain effective and
efficient, the Office of the President must be capable of being shaped and reshaped by the
President in the manner he deems fit to carry out his directives and policies. After all, the Office
of the President is the command post of the President. This is the rationale behind the Presidents
continuing authority to reorganize the administrative structure of the Office of the President.

Petitioners contention that the DECS is not part of the Office of the President is
immaterial. Under EO 292, the DECS is indisputably a Department of the Executive
Branch. Even if the DECS is not part of the Office of the President, Section 31 (2) and (3) of
EO 292 clearly authorizes the President to transfer any function or agency of the DECS to the
Office of the President. Under its charter, the PSC is attached to the Office of the President.
[9]
Therefore, the President has the authority to transfer the functions, programs and activities of
DECS related to sports development[10] to the PSC, making EO 81 a valid presidential issuance.

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

This distinction is crucial as it affects the security of tenure of employees. The abolition of
an office in good faith necessarily results in the employees cessation in office, but in such event
there is no dismissal or separation because the office itself ceases to exist. [11] On the other hand,
the transfer of functions or agencies does not result in the employees cessation in office because
his office continues to exist although in another department, agency or office. In the instant
case, the BPESS employees who were not transferred to PSC were at first temporarily, then
later permanently reassigned to other offices of the DECS, ensuring their continued
employment. At any rate, RA 9155 now mandates that these employees shall be retained by the
Department.

WHEREFORE, the instant petition is DISMISSED. No pronouncement as to costs.

SO ORDERED.
G.R. No. L-23004 June 30, 1965

MAKATI STOCK EXCHANGE, INC., petitioner,

vs.
SECURITIES AND EXCHANGE COMMISSION and MANILA STOCK
EXCHANGE, respondents.

Hermenegildo B. Reyes for petitioner.

Office of the Solicitor General for respondent Securities and Exchange Commission.
Norberto J. Quisumbing and Emma Quisumbing-Fernando for respondent Manila Stock
Exchange.

BENGZON, C.J.:

This is a review of the resolution of the Securities and Exchange Commission which would
deny the Makati Stock Exchange, Inc., permission to operate a stock exchange unless it agreed
not to list for trading on its board, securities already listed in the Manila Stock Exchange.

Objecting to the requirement, Makati Stock Exchange, Inc. contends that the Commission has
no power to impose it and that, anyway, it is illegal, discriminatory and unjust.

Under the law, no stock exchange may do business in the Philippines unless it is previously
registered with the Commission by filing a statement containing the information described in
Sec. 17 of the Securities Act (Commonwealth Act 83, as amended).

It is assumed that the Commission may permit registration if the section is complied with; if
not, it may refuse. And there is now no question that the section has been complied with, or
would be complied with, except that the Makati Stock Exchange, upon challenging this
particular requirement of the Commission (rule against double listing) may be deemed to have
shown inability or refusal to abide by its rules, and thereby to have given ground for denying
registration. [Sec. 17 (a) (1) and (d)].

Such rule provides: "... nor shall a security already listed in any securities exchange be listed
anew in any other securities exchange ... ."

The objection of Makati Stock Exchange, Inc., to this rule is understandable. There is actually
only one securities exchange The Manila Stock Exchange that has been operating alone
for the past 25 years; and all or presumably all available or worthwhile securities for
trading in the market are now listed there. In effect, the Commission permits the Makati Stock
Exchange, Inc., to deal only with other securities. Which is tantamount to permitting a store to
open provided it sells only those goods not sold in other stores. And if there's only one existing
store, 1 the result is a monopoly.
It is not farfetched to assert as petitioner does 2 that for all practical purposes, the
Commission's order or resolution would make it impossible for the Makati Stock Exchange to
operate. So, its "permission" amounted to a "prohibition."

Apparently, the Commission acted "in the public interest." 3 Hence, it is pertinent to inquire
whether the Commission may "in the public interest" prohibit (or make impossible) the
establishment of another stock exchange (besides the Manila Stock Exchange), on the ground
that the operation of two or more exchanges adversely affects the public interest.

At first glance, the answer should be in the negative, because the law itself contemplated, and,
therefore, tacitly permitted or tolerated at least, the operation of two or more exchanges.

Wherever two or more exchanges exist, the Commission, by order, shall require and
enforce uniformity of trading regulations in and/or between said exchanges. [Emphasis
Ours] (Sec. 28b-13, Securities Act.)

In fact, as admitted by respondents, there were five stock exchanges in Manila, before the
Pacific War (p. 10, brief), when the Securities Act was approved or amended. (Respondent
Commission even admits that dual listing was practiced then.) So if the existence of more than
one exchange were contrary to public interest, it is strange that the Congress having from time
to time enacted legislation amending the Securities Act, 4 has not barred multiplicity of
exchanges.

Forgetting for the moment the monopolistic aspect of the Commission's resolution, let us
examine the authority of the Commission to promulgate and implement the rule in question.

It is fundamental that an administrative officer has only such powers as are expressly granted to
him by the statute, and those necessarily implied in the exercise thereof.

In its brief and its resolution now subject to review, the Commission cites no provision
expressly supporting its rule. Nevertheless, it suggests that the power is "necessary for the
execution of the functions vested in it"; but it makes no explanation, perhaps relying on the
reasons advanced in support of its position that trading of the same securities in two or more
stock exchanges, fails to give protection to the investors, besides contravening public interest.
(Of this, we shall treat later) .

On the legality of its rule, the Commission's argument is that: (a) it was approved by the
Department Head before the War; and (b) it is not in conflict with the provisions of the
Securities Act. In our opinion, the approval of the Department, 5 by itself, adds no weight in a
judicial litigation; and the test is not whether the Act forbids the Commission from imposing a
prohibition, but whether it empowers the Commission to prohibit. No specific portion of the
statute has been cited to uphold this power. It is not found in sec. 28 (of the Securities Act),
which is entitled "Powers (of the Commission) with Respect to Exchanges and Securities." 6
According to many court precedents, the general power to "regulate" which the Commission
has (Sec. 33) does not imply authority to prohibit." 7

The Manila Stock Exchange, obviously the beneficiary of the disputed rule, contends that the
power may be inferred from the express power of the Commission to suspend trading in a
security, under said sec. 28 which reads partly:

And if in its opinion, the public interest so requires, summarily to suspend trading in any
registered security on any securities exchange ... . (Sec. 28[3], Securities Act.)

However, the Commission has not acted nor claimed to have acted in pursuance of such
authority, for the simple reason that suspension under it may only be for ten days. Indeed, this
section, if applicable, precisely argues against the position of the Commission because the
"suspension," if it is, and as applied to Makati Stock Exchange, continues for an indefinite
period, if not forever; whereas this Section 28 authorizes suspension for ten days only. Besides,
the suspension of trading in the security should not be on one exchange only, but
on all exchanges; bearing in mind that suspension should be ordered "for the protection of
investors" (first par., sec. 28) in all exchanges, naturally, and if "the public interest so requires"
[sec. 28(3)].

This brings up the Commission's principal conclusions underlying its determination viz.: (a)
that the establishment of another exchange in the environs of Manila would be inimical to the
public interest; and (b) that double or multiple listing of securities should be prohibited for the
"protection of the investors."

(a) Public Interest Having already adverted to this aspect of the matter, and the emerging
monopoly of the Manila Stock Exchange, we may, at this juncture, emphasize that by restricting
free competition in the marketing of stocks, and depriving the public of the advantages thereof
the Commission all but permits what the law punishes as monopolies as "crimes against public
interest." 8

"A stock exchange is essentially monopolistic," the Commission states in its resolution (p. 14-a,
Appendix, Brief for Petitioner). This reveals the basic foundation of the Commission's process
of reasoning. And yet, a few pages afterwards, it recalls the benefits to be derived "from the
existence of two or more exchanges," and the desirability of "a healthy and fair competition in
the securities market," even as it expresses the belief that "a fair field of competition among
stock exchanges should be encouraged only to resolve, paradoxically enough, that Manila Stock
Exchange shall, in effect, continue to be the only stock exchange in Manila or in the
Philippines.

"Double listing of a security," explains the Commission, "divides the sellers and the buyers,
thus destroying the essence of a stock exchange as a two-way auction market for the securities,
where all the buyers and sellers in one geographical area converge in one defined place, and the
bidders compete with each other to purchase the security at the lowest possible price and those
seeking to sell it compete with each other to get the highest price therefor. In this sense, a stock
exchange is essentially monopolistic."

Inconclusive premises, for sure. For it is debatable whether the buyer of stock may get the
lowest price where all the sellers assemble in only one place. The price there, in one sale, will
tend to fix the price for the succeeding, sales, and he has no chance to get a lower price
except at another stock exchange. Therefore, the arrangement desired by the Commission may,
at most, be beneficial to sellers of stock not to buyers although what applies to buyers
should obtain equally as to sellers (looking for higher prices). Besides, there is the brokerage
fee which must be considered. Not to mention the personality of the broker.

(b) Protection of investors. At any rate, supposing the arrangement contemplated

is beneficial to investors (as the Commission says), it is to be doubted whether it is "necessary"
for their "protection" within the purview of the Securities Act. As the purpose of the Act is to
give adequate and effective protection to the investing public against fraudulent
representations, or false promises and the imposition of worthless ventures, 9 it is hard to see
how the proposed concentration of the market has a necessary bearing to the prevention of
deceptive devices or unlawful practices. For it is not mere semantics to declare that acts for the
protection of investors are necessarily beneficial to them; but not everything beneficial to them
is necessary for their protection.

And yet, the Commission realizes that if there were two or more exchanges "the same security
may sell for more in one exchange and sell for less in the other. Variance in price of the same
security would be the rule ... ." Needless to add, the brokerage rates will also differ.

This, precisely, strengthens the objection to the Commission's ruling. Such difference in prices
and rates gives the buyer of shares alternative options, with the opportunity to invest at lower
expense; and the seller, to dispose at higher prices. Consequently, for the investors' benefit
(protection is not the word), quality of listing 10 should be permitted, nay, encouraged, and other
exchanges allowed to operate. The circumstance that some people "made a lot of money due to
the difference in prices of securities traded in the stock exchanges of Manila before the war" as
the Commission noted, furnishes no sufficient reason to let one exchange corner the market. If
there was undue manipulation or unfair advantage in exchange trading the Commission should
have other means to correct the specific abuses.

Granted that, as the Commission observes, "what the country needs is not another" market for
securities already listed on the Manila Stock Exchange, but "one that would focus its attention
and energies on the listing of new securities and thus effectively help in raising capital sorely
needed by our ... unlisted industries and enterprises."

Nonetheless, we discover no legal authority for it to shore up (and stifle) free enterprise and
individual liberty along channels leading to that economic desideratum. 11

The Legislature has specified the conditions under which a stock exchange may legally obtain a
permit (sec. 17, Securities Act); it is not for the Commission to impose others. If the existence
of two competing exchanges jeopardizes public interest which is doubtful let the
Congress speak. 12 Undoubtedly, the opinion and recommendation of the Commission will be
given weight by the Legislature, in judging whether or not to restrict individual enterprise and
business opportunities. But until otherwise directed by law, the operation of exchanges should
not be so regulated as practically to create a monopoly by preventing the establishment of other
stock exchanges and thereby contravening:

(a) the organizers' (Makati's) Constitutional right to equality before the law;

(b) their guaranteed civil liberty to pursue any lawful employment or trade; and

(c) the investor's right to choose where to buy or to sell, and his privilege to select the
brokers in his employment. 13

And no extended elucidation is needed to conclude that for a licensing officer to deny license
solely on the basis of what he believes is best for the economy of the country may amount to
regimentation or, in this instance, the exercise of undelegated legislative powers and discretion.

Thus, it has been held that where the licensing statute does not expressly or impliedly authorize
the officer in charge, he may not refuse to grant a license simply on the ground that a sufficient
number of licenses to serve the needs of the public have already been issued. (53 C.J.S. p. 636.)

Concerning res judicata. Calling attention to the Commission's order of May 27, 1963,
which Makati Stock did not appeal, the Manila Stock Exchange pleads the doctrine of res
judicata. 14 (The order now reviewed is dated May 7, 1964.)

It appears that when Makati Stock Exchange, Inc. presented its articles of incorporation to the
Commission, the latter, after making some inquiries, issued on May 27, 1963, an order reading
as follows.

Let the certificate of incorporation of the MAKATI STOCK EXCHANGE be issued, and
if the organizers thereof are willing to abide by the foregoing conditions, they may file
the proper application for the registration and licensing of the said Exchange.

In that order, the Commission advanced the opinion that "it would permit the establishment and
operation of the proposed Makati Stock Exchange, provided ... it shall not list for trading on its
board, securities already listed in the Manila Stock Exchange ... ."

Admittedly, Makati Stock Exchange, Inc. has not appealed from that order of May 27, 1963.
Now, Manila Stock insists on res judicata.

Why should Makati have appealed? It got the certificate of incorporation which it wanted. The
condition or proviso mentioned would only apply if and when it subsequently filed the
application for registration as stock exchange. It had not yet applied. It was not the time to
question the condition; 15 Makati was still exploring the convenience of soliciting the permit to
operate subject to that condition. And it could have logically thought that, since the condition
did not affect its articles of incorporation, it should not appeal the order (of May 27, 1963)
which after all, granted the certificate of incorporation (corporate existence) it wanted at that
time.

And when the Makati Stock Exchange finally found that it could not successfully operate with
the condition attached, it took the issue by the horns, and expressing its desire for registration
and license, it requested that the condition (against double listing) be dispensed with. The order
of the Commission denying, such request is dated May 7, 1964, and is now under, review.

Indeed, there can be no valid objection to the discussion of this issue of double listing
now, 16 because even if the Makati Stock Exchange, Inc. may be held to have accepted the
permission to operate with the condition against double listing (for having failed to appeal the
order of May 27, 1963), still it was not precluded from afterwards contesting 17 the validity of
such condition or rule:

(1) An agreement (which shall not be construed as a waiver of any constitutional right or any
right to contest the validity of any rule or regulation) to comply and to enforce so far as is
within its powers, compliance by its members, with the provisions of this Act, and any
amendment thereto, and any rule or regulation made or to be made thereunder. (See. 17-a-1,
Securities Act [Emphasis Ours].)

Surely, this petition for review has suitably been coursed. And making reasonable allowances
for the presumption of regularity and validity of administrative action, we feel constrained to
reach the conclusion that the respondent Commission possesses no power to impose the
condition of the rule, which, additionally, results in discrimination and violation of
constitutional rights.

ACCORDINGLY, the license of the petition to operate a stock exchange is approved without
such condition. Costs shall be paid by the Manila Stock Exchange. So ordered.
G.R. No. 90336 August 12, 1991

RUPERTO TAULE, petitioner,

vs.
SECRETARY LUIS T. SANTOS and GOVERNOR LEANDRO VERCELES, respondents.

Balgos & Perez and Bugaring, Tugonon & Associates Law Offices for petitioner.

Juan G. Atencia for private respondent.

GANCAYCO, J.:p

The extent of authority of the Secretary of Local Government over the katipunan ng mga
barangay or the barangay councils is brought to the fore in this case.

On June 18,1989, the Federation of Associations of Barangay Councils (FABC) of Catanduanes,

composed of eleven (11) members, in their capacities as Presidents of the Association of
Barangay Councils in their respective municipalities, convened in Virac, Catanduanes with six
members in attendance for the purpose of holding the election of its officers.

Present were petitioner Ruperto Taule of San Miguel, Allan Aquino of Viga, Vicente Avila of
Virac, Fidel Jacob of Panganiban, Leo Sales of Caramoran and Manuel Torres of Baras. The
Board of Election Supervisors/Consultants was composed of Provincial Government Operation
Officer (PGOO) Alberto P. Molina, Jr. as Chairman with Provincial Treasurer Luis A.
Manlapaz, Jr. and Provincial Election Supervisor Arnold Soquerata as members.

When the group decided to hold the election despite the absence of five (5) of its members, the
Provincial Treasurer and the Provincial Election Supervisor walked out.

The election nevertheless proceeded with PGOO Alberto P. Molina, Jr. as presiding officer.
Chosen as members of the Board of Directors were Taule, Aquino, Avila, Jacob and Sales.

Thereafter, the following were elected officers of the FABC:

President Ruperto Taule

Vice-President Allan Aquino

Secretary Vicente Avila

Treasurer Fidel Jacob

Auditor Leo Sales 1

On June 19, 1989, respondent Leandro I. Verceles, Governor of Catanduanes, sent a letter to
respondent Luis T. Santos, the Secretary of Local Government,* protesting the election of the
officers of the FABC and seeking its nullification in view of several flagrant irregularities in the
manner it was conducted. 2

In compliance with the order of respondent Secretary, petitioner Ruperto Taule as President of
the FABC, filed his comment on the letter-protest of respondent Governor denying the alleged
irregularities and denouncing said respondent Governor for meddling or intervening in the
election of FABC officers which is a purely non-partisan affair and at the same time requesting
for his appointment as a member of the Sangguniang Panlalawigan of the province being the
duly elected President of the FABC in Catanduanes. 3

On August 4, 1989, respondent Secretary issued a resolution nullifying the election of the
officers of the FABC in Catanduanes held on June 18, 1989 and ordering a new one to be
conducted as early as possible to be presided by the Regional Director of Region V of the
Department of Local Government. 4

Petitioner filed a motion for reconsideration of the resolution of August 4, 1989 but it was
denied by respondent Secretary in his resolution of September 5, 1989. 5

In the petition for certiorari before Us, petitioner seeks the reversal of the resolutions of
respondent Secretary dated August 4, 1989 and September 5, 1989 for being null and void.

Petitioner raises the following issues:

1) Whether or not the respondent Secretary has jurisdiction to entertain an election

protest involving the election of the officers of the Federation of Association of
Barangay Councils;

2) Whether or not the respondent Governor has the legal personality to file an
election protest;

3) Assuming that the respondent Secretary has jurisdiction over the election
protest, whether or not he committed grave abuse of discretion amounting to lack
of jurisdiction in nullifying the election;

The Katipunan ng mga Barangay is the organization of all sangguniang barangays in the
following levels: in municipalities to be known as katipunang bayan; in cities, katipunang
panlungsod; in provinces, katipunang panlalawigan; in regions, katipunang pampook; and on
the national level, katipunan ng mga barangay. 6

The Local Government Code provides for the manner in which the katipunan ng mga
barangay at all levels shall be organized:

Sec. 110. Organization. (1) The katipunan at all levels shall be organized in the
following manner:
 (a) The katipunan in each level shall elect a board of directors and a set of officers.
The president of each level shall represent the katipunan concerned in the next
higher level of organization.

(b) The katipunan ng mga barangay shall be composed of the katipunang pampook,
which shall in turn be composed of the presidents of the katipunang panlalawigan
and the katipunang panlungsod. The presidents of the katipunang bayan in each
province shall constitute the katipunang panlalawigan. The katipunang panlungsod
and the katipunang bayan shall be composed of the punong barangays of cities and
municipalities, respectively.

xxx xxx xxx

The respondent Secretary, acting in accordance with the provision of the Local Government
Code empowering him to "promulgate in detail the implementing circulars and the rules and
regulations to carry out the various administrative actions required for the initial
implementation of this Code in such a manner as will ensure the least disruption of on-going
programs and projects 7 issued Department of Local Government Circular No. 89-09 on April 7,
1989, 8 to provide the guidelines for the conduct of the elections of officers of the Katipunan ng
mga Barangay at the municipal, city, provincial, regional and national levels.

It is now the contention of petitioner that neither the constitution nor the law grants jurisdiction
upon the respondent Secretary over election contests involving the election of officers of the
FABC, the katipunan ng mga barangay at the provincial level. It is petitioner's theory that under
Article IX, C, Section 2 of the 1987 Constitution, it is the Commission on Elections which has
jurisdiction over all contests involving elective barangay officials.

On the other hand, it is the opinion of the respondent Secretary that any violation of the
guidelines as set forth in said circular would be a ground for filing a protest and would vest
upon the Department jurisdiction to resolve any protest that may be filed in relation thereto.

Under Article IX, C, Section 2(2) of the 1987 Constitution, the Commission on Elections shall
exercise "exclusive original jurisdiction over all contests relating to the elections, returns, and
qualifications of all elective regional, provincial, and city officials, and appellate jurisdiction
over all contests involving elective municipal officials decided by trial courts of general
jurisdiction, or involving elective barangay officials decided by trial courts of limited
jurisdiction." The 1987 Constitution expanded the jurisdiction of the COMELEC by granting it
appellate jurisdiction over all contests involving elective municipal officials decided by trial
courts of general jurisdiction or elective barangay officials decided by trial courts of limited
jurisdiction. 9

The jurisdiction of the COMELEC over contests involving elective barangay officials is limited
to appellate jurisdiction from decisions of the trial courts. Under the law, 10 the sworn petition
contesting the election of a barangay officer shall be filed with the proper Municipal or
Metropolitan Trial Court by any candidate who has duly filed a certificate of candidacy and has
been voted for the same office within 10 days after the proclamation of the results. A voter may
also contest the election of any barangay officer on the ground of ineligibility or of disloyalty to
the Republic of the Philippines by filing a sworn petition for quo warranto with the
Metropolitan or Municipal Trial Court within 10 days after the proclamation of the results of the
election. 11 Only appeals from decisions of inferior courts on election matters as aforestated may
be decided by the COMELEC.

The Court agrees with the Solicitor General that the jurisdiction of the COMELEC is over
popular elections, the elected officials of which are determined through the will of the
electorate. An election is the embodiment of the popular will, the expression of the sovereign
power of the people. 12 It involves the choice or selection of candidates to public office by
popular vote. 13 Specifically, the term "election," in the context of the Constitution, may refer to
the conduct of the polls, including the listing of voters, the holding of the electoral campaign,
and the casting and counting of the votes 14which do not characterize the election of officers in
the Katipunan ng mga barangay. "Election contests" would refer to adversary proceedings by
which matters involving the title or claim of title to an elective office, made before or after
proclamation of the winner, is settled whether or not the contestant is claiming the office in
dispute 15 and in the case of elections of barangay officials, it is restricted to proceedings after
the proclamation of the winners as no pre-proclamation controversies are allowed. 16

The jurisdiction of the COMELEC does not cover protests over the organizational set-up of the
katipunan ng mga barangay composed of popularly elected punong barangays as prescribed by
law whose officers are voted upon by their respective members. The COMELEC exercises only
appellate jurisdiction over election contests involving elective barangay officials decided by the
Metropolitan or Municipal Trial Courts which likewise have limited jurisdiction. The authority
of the COMELEC over the katipunan ng mga barangay is limited by law to supervision of the
election of the representative of the katipunan concerned to the sanggunian in a particular level
conducted by their own respective organization. 17

However, the Secretary of Local Government is not vested with jurisdiction to entertain any
protest involving the election of officers of the FABC.

There is no question that he is vested with the power to promulgate rules and regulations as set
forth in Section 222 of the Local Government Code.

Likewise, under Book IV, Title XII, Chapter 1, See. 3(2) of the Administrative Code of
1987, ** the respondent Secretary has the power to "establish and prescribe rules, regulations
and other issuances and implementing laws on the general supervision of local government
units and on the promotion of local autonomy and monitor compliance thereof by said units."

Also, the respondent Secretary's rule making power is provided in See. 7, Chapter II, Book IV
of the Administrative Code, to wit:

(3) Promulgate rules and regulations necessary to carry out department objectives,
policies, functions, plans, programs and projects;
Thus, DLG Circular No. 89-09 was issued by respondent Secretary in pursuance of his rule-
making power conferred by law and which now has the force and effect of law. 18

Now the question that arises is whether or not a violation of said circular vests jurisdiction upon
the respondent Secretary, as claimed by him, to hear a protest filed in relation thereto and
consequently declare an election null and void.

It is a well-settled principle of administrative law that unless expressly empowered,

administrative agencies are bereft of quasi- judicial powers. 19 The jurisdiction of administrative
authorities is dependent entirely upon the provisions of the statutes reposing power in them;
they cannot confer it upon themselves. 20 Such jurisdiction is essential to give validity to their
determinations. 21

There is neither a statutory nor constitutional provision expressly or even by necessary

implication conferring upon the Secretary of Local Government the power to assume
jurisdiction over an election protect involving officers of the katipunan ng mga barangay. An
understanding of the extent of authority of the Secretary over local governments is therefore
necessary if We are to resolve the issue at hand.

Presidential power over local governments is limited by the Constitution to the exercise of
general supervision 22 "to ensure that local affairs are administered according to law." 23 The
general supervision is exercised by the President through the Secretary of Local Government. 24

In administrative law, supervision means overseeing or the power or authority of an officer to

see that the subordinate officers perform their duties. If the latter fails or neglects to fulfill them
the former may take such action or step as prescribed by law to make them perform their duties.
Control, on the other hand, means the power of an officer 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 for that of the latter. The fundamental law permits the Chief Executive
to wield no more authority than that of checking whether said local government or the officers
thereof perform their duties as provided by statutory enactments. Hence, the President cannot
interfere with local governments so long as the same or its officers act within the scope of their
authority. 25 Supervisory power, when contrasted with control, is the power of mere oversight
over an inferior body; it does not include any restraining authority over such body. 26

Construing the constitutional limitation on the power of general supervision of the President
over local governments, We hold that respondent Secretary has no authority to pass upon the
validity or regularity of the election of the officers of the katipunan. To allow respondent
Secretary to do so will give him more power than the law or the Constitution grants. It will in
effect give him control over local government officials for it will permit him to interfere in a
purely democratic and non-partisan activity aimed at strengthening the barangay as the basic
component of local governments so that the ultimate goal of fullest autonomy may be achieved.
In fact, his order that the new elections to be conducted be presided by the Regional Director is
a clear and direct interference by the Department with the political affairs of the barangays
which is not permitted by the limitation of presidential power to general supervision over local
governments. 27

Indeed, it is the policy of the state to ensure the autonomy of local governments. 28 This state
policy is echoed in the Local Government Code wherein it is declared that "the State shall
guarantee and promote the autonomy of local government units to ensure their fullest
development as self-reliant communities and make them more effective partners in the pursuit
of national development and social progress." 29 To deny the Secretary of Local Government the
power to review the regularity of the elections of officers of the katipunan would be to enhance
the avowed state policy of promoting the autonomy of local governments.

Moreover, although the Department is given the power to prescribe rules, regulations and other
issuances, the Administrative Code limits its authority to merely "monitoring compliance" by
local government units of such issuances. 30 To monitor means "to watch, observe or
check. 31 This is compatible with the power of supervision of the Secretary over local
governments which as earlier discussed is limited to checking whether the local government
unit concerned or the officers thereof perform their duties as provided by statutory enactments.
Even the Local Government Code which grants the Secretary power to issue implementing
circulars, rules and regulations is silent as to how these issuances should be enforced. Since the
respondent Secretary exercises only supervision and not control over local governments, it is
truly doubtful if he could enforce compliance with the DLG Circular. 32 Any doubt therefore as
to the power of the Secretary to interfere with local affairs should be resolved in favor of the
greater autonomy of the local government.

Thus, the Court holds that in assuming jurisdiction over the election protest filed by respondent
Governor and declaring the election of the officers of the FABC on June 18, 1989 as null and
void, the respondent Secretary acted in excess of his jurisdiction. The respondent Secretary not
having the jurisdiction to hear an election protest involving officers of the FABC, the recourse
of the parties is to the ordinary courts. The Regional Trial Courts have the exclusive original
jurisdiction to hear the protest. 33

The provision in DLG Circular No. 89-15 amending DLG Circular No. 89-09 which states that
"whenever the guidelines are not substantially complied with, the election shall be declared null
and void by the Department of Local Government and an election shall conduct and being
invoked by the Solicitor General cannot be applied. DLG Circular No. 89-15 was issued on July
3, 1989 after the June 18, 1989 elections of the FABC officers and it is the rule in statutory
construction that laws, including circulars and regulations 34 cannot be applied
retrospectively. 35Moreover, such provision is null and void for having been issued in excess of
the respondent Secretary's jurisdiction, inasmuch as an administrative authority cannot confer
jurisdiction upon itself.

As regards the second issue raised by petitioner, the Court finds that respondent Governor has
the personality to file the protest. Under Section 205 of the Local Government Code, the
membership of the sangguniang panlalawigan consists of the governor, the vice-governor,
elective members of the said sanggunian and the presidents of the katipunang panlalawigan and
the kabataang barangay provincial federation. The governor acts as the presiding officer of
the sangguniang panlalawigan. 36

As presiding officer of the sagguniang panlalawigan, the respondent governor has an interest in
the election of the officers of the FABC since its elected president becomes a member of the
assembly. If the president of the FABC assumes his presidency under questionable
circumstances and is allowed to sit in the sangguniang panlalawigan the official actions of the
sanggunian may be vulnerable to attacks as to their validity or legality. Hence, respondent
governor is a proper party to question the regularity of the elections of the officers of the FABC.

As to the third issue raised by petitioner, the Court has already ruled that the respondent
Secretary has no jurisdiction to hear the protest and nullify the elections.

Nevertheless, the Court holds that the issue of the validity of the elections should now be
resolved in order to prevent any unnecessary delay that may result from the commencement of
an appropriate action by the parties.

The elections were declared null and void primarily for failure to comply with Section 2.4 of
DLG Circular No. 89-09 which provides that "the incumbent FABC President or the Vice-
President shall preside over the reorganizational meeting, there being a quorum." The rule
specifically provides that it is the incumbent FABC President or Vice-President who shall
preside over the meeting. The word "shall" should be taken in its ordinary signification, i.e., it
must be imperative or mandatory and not merely
permissive, 37 as the rule is explicit and requires no other interpretation. If it had been intended
that any other official should preside, the rules would have provided so, as it did in the elections
at the town and city levels 38 as well as the regional level.. 39

It is admitted that neither the incumbent FABC President nor the Vice-President presided over
the meeting and elections but Alberto P. Molina, Jr., the Chairman of the Board of Election
Supervisors/Consultants. Thus, there was a clear violation of the aforesaid mandatory provision.
On this ground, the elections should be nullified.

Under Sec. 2.3.2.7 of the same circular it is provided that a Board of Election
Supervisors/Consultants shall be constituted to oversee and/or witness the canvassing of votes
and proclamation of winners. The rules confine the role of the Board of Election
Supervisors/Consultants to merely overseeing and witnessing the conduct of elections. This is
consistent with the provision in the Local Government Code limiting the authority of the
COMELEC to the supervision of the election. 40

In case at bar, PGOO Molina, the Chairman of the Board, presided over the elections. There
was direct participation by the Chairman of the Board in the elections contrary to what is
dictated by the rules. Worse, there was no Board of Election Supervisors to oversee the
elections in view of the walk out staged by its two other members, the Provincial COMELEC
Supervisor and the Provincial Treasurer. The objective of keeping the election free and honest
was therefore compromised.
The Court therefore finds that the election of officers of the FABC held on June 18, 1989 is null
and void for failure to comply with the provisions of DLG Circular No. 89-09.

Meanwhile, pending resolution of this petition, petitioner filed a supplemental petition alleging
that public respondent Local Government Secretary, in his memorandum dated June 7, 1990,
designated Augusto Antonio as temporary representative of the Federation to the sangguniang
panlalawigan of Catanduanes. 41 By virtue of this memorandum, respondent governor swore
into said office Augusto Antonio on June 14, 1990. 42

The Solicitor General filed his comment on the supplemental petition 43 as required by the
resolution of the Court dated September 13,1990.

In his comment, the Solicitor General dismissed the supervening event alleged by petitioner as
something immaterial to the petition. He argues that Antonio's appointment was merely
temporary "until such time that the provincial FABC president in that province has been elected,
appointed and qualified." 44 He stresses that Antonio's appointment was only a remedial measure
designed to cope with the problems brought about by the absence of a representative of the
FABC to the "sanggunian ang panlalawigan."

Sec. 205 (2) of the Local Government Code (B.P. Blg. 337) provides-

(2) The sangguniang panlalawigan shall be composed of the governor, the vice-
governor, elective members of the said sanggunian and the presidents of the
katipunang panlalawigan and the kabataang barangay provincial federation who
shall be appointed by the President of the Philippines. (Emphasis supplied.)

Batas Pambansa Blg. 51, under Sec. 2 likewise states:

xxx xxx xxx

The sangguniang panlalawigan of each province shall be composed of the governor

as chairman and presiding officer, the vice-governor as presiding officer pro
tempore, the elective sangguniang panlalawigan members, and the appointive
members consisting of the president of the provincial association of barangay
councils, and the president of the provincial federation of the kabataang barangay.
(Emphasis supplied.)

In Ignacio vs. Banate Jr. 45 the Court, interpreting similarly worded provisions of Batas
Pambansa Blg. 337 and Batas Pambansa Blg. 51 on the composition of the sangguniang
panlungsod, 46 declared as null and void the appointment of private respondent Leoncio Banate
Jr. as member of the Sangguniang Panlungsod of the City of Roxas representing the katipunang
panlungsod ng mga barangay for he lacked the elegibility and qualification required by law, not
being a barangay captain and for not having been elected president of the association of
barangay councils. The Court held that an unqualified person cannot be appointed a member of
the sanggunian, even in an acting capacity. In Reyes vs. Ferrer, 47 the appointment of Nemesio
L. Rasgo Jr. as representative of the youth sector to the sangguniang panlungsod of Davao City
was declared invalid since he was never the president of the kabataang barangay city federation
as required by Sec. 173, Batas Pambansa Blg. 337.

In the present controversy involving the sangguniang panlalawigan, the law is likewise explicit.
To be appointed by the President of the Philippines to sit in the sangguniang panlalawigan is
the president of the katipunang panlalawigan. The appointee must meet the qualifications set by
law. 48 The appointing power is bound by law to comply with the requirements as to the basic
qualifications of the appointee to the sangguniang panlalawigan. The President of the
Philippines or his alter ego, the Secretary of Local Government, has no authority to appoint
anyone who does not meet the minimum qualification to be the president of the federation of
barangay councils.

Augusto Antonio is not the president of the federation. He is a member of the federation but he
was not even present during the elections despite notice. The argument that Antonio was
appointed as a remedial measure in the exigency of the service cannot be sustained. Since
Antonio does not meet the basic qualification of being president of the federation, his
appointment to the sangguniang panlalawigan is not justified notwithstanding that such
appointment is merely in a temporary capacity. If the intention of the respondent Secretary was
to protect the interest of the federation in the sanggunian, he should have appointed the
incumbent FABC President in a hold-over capacity. For even under the guidelines, the term of
office of officers of the katipunan at all levels shall be from the date of their election until their
successors shall have been duly elected and qualified, without prejudice to the terms of their
appointments as members of the sanggunian to which they may be correspondingly
appointed. 49 Since the election is still under protest such that no successor of the incumbent has
as yet qualified, the respondent Secretary has no choice but to have the incumbent FABC
President sit as member of the sanggunian. He could even have appointed petitioner since he
was elected the president of the federation but not Antonio. The appointment of Antonio,
allegedly the protege of respondent Governor, gives credence to petitioner's charge of political
interference by respondent Governor in the organization. This should not be allowed. The
barangays should be insulated from any partisan activity or political intervention if only to give
true meaning to local autonomy.

WHEREFORE, the petition is GRANTED in that the resolution of respondent Secretary dated
August 4, 1989 is hereby SET ASIDE for having been issued in excess of jurisdiction.

The election of the officials of the ABC Federation held on June 18, 1989 is hereby annulled. A
new election of officers of the federation is hereby ordered to be conducted immediately in
accordance with the governing rules and regulations.

The Supplemental petition is hereby GRANTED. The appointment of Augusto Antonio as

representative to the Sangguniang Panlalawigan in a temporary capacity is declared null and
void.

No costs.
SO ORDERED.