EN BANC

[G.R. No. 120319. October 6, 1995.]

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

Eusebio P. Navarro, Jr. and Adolfo R. Fandialan for

petitioner.
Ester S. Garcia for respondent Voluntary Arbitrator.
Napoleon Banzuela, Jr. for private respondent.
SYLLABUS
1.  LABOR AND SOCIAL LEGISLATION; LABOR
CODE; ARBITRATION; DEFINED. — 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.
2.  ID.; ID.; ID.; CLASSIFICATION; COMPULSORY
ARBITRATION AND VOLUNTARY ARBITRATION. —
Arbitration may be classified 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
disinterested third party normally appointed by the
government, and whose decision is final and binding on the
parties. 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 who is mutually acceptable, for a
final and binding resolution.
 3.  ID.; ID.; ARBITRATORS AND LABOR ARBITERS;
JURISDICTION AND APPEALS, COMPARED AND
DISCUSSED. — Article 261 of the Labor Code provides for
exclusive original jurisdiction of voluntary arbitrator or panel
of arbitrators. 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 has
jurisdiction on cases enumerated under Article 217 of the
Labor Code.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. 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," 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." 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, 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.
4.  ID.; ID.; VOLUNTARY ARBITRATORS; STATUS IS
THAT OF A QUASI-JUDICIAL INSTRUMENTALITY;
DECISIONS APPEALABLE TO THE COURT OF APPEALS.
— In Volkschel Labor Union, et al., v. NLRC, et al., 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., 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. Section 9 of B.P.
Blg. 129, as amended by Republic Act No. 7902, provides
that the Court of Appeals shall exercise exclusive appellate
jurisdiction over all final judgments, decisions, resolutions,
orders or awards of quasi-judicial agencies and
instrumentalities. Governmental "agency" or "instrumentality"
are synonymous. Either of them is a means by which a
government acts, or by which a certain government act or
function is performed. The voluntary arbitrator performs a
state function pursuant to a governmental power delegated
to him under the provisions in the Labor Code and he falls,
therefore, within the contemplation of the term
"instrumentality" in Sec. 9 of B.P. 129. The award or decision
of the voluntary arbitrator is equated 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.cdtai

DECISION
ROMERO, J : p

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:cdasia

"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."cdtai

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. cdt

Compulsory arbitration is a system whereby

the parties to a dispute are compelled by the
government to forego their right to strike and are
compelled to accept the resolution of their dispute
through arbitration by a third party. 1 The essence of
arbitration remains since a resolution of a dispute is
arrived at by resort to a disinterested third party
whose decision is final and binding on the parties,
but in compulsory arbitration, such a third party is
normally appointed by the government.
Under voluntary arbitration, on the other hand,
referral of a dispute by the parties is made, pursuant
to a voluntary arbitration clause in their collective
agreement, to an impartial third person for a final and
binding resolution. 2 Ideally, arbitration awards are
supposed to be complied with by both parties without
delay, such that once an award has been rendered
by an arbitrator, nothing is left to be done by both
parties but to comply with the same. After all, they
 are presumed to have freely chosen arbitration as
the mode of settlement for that particular dispute.
Pursuant thereto, they have chosen a mutually
acceptable arbitrator who shall hear and decide their
case. Above all, they have mutually agreed to be
bound by said arbitrator's decision.
In the Philippine context, the parties 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. aisadc

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; cdt

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. cdta

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

o v e r a l l fi n a l j u d g m e n t s , d e c i s i o n s ,
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. cdasia

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
C o m m i s s i o n , 11 t h a t t h e b r o a d e r t e r m
"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. cdtai

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 cdt

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. CDta

Padilla, Regalado, Davide, Jr., Bellosillo, Puno, Vitug,

Kapunan, Mendoza, Francisco and Hermosisima, Jr., JJ.,
concur.
Feliciano, J., concurs in the result.
Narvasa, C.J. and Melo, J., are on leave.
 

(Luzon Development Bank v. Association of Luzon

|||

Development Bank Employees, G.R. No. 120319, [October

6, 1995], 319 PHIL 262-272)
 THIRD DIVISION
[G.R. No. 102976. October 25, 1995.]
IRON AND STEEL AUTHORITY, petitioner, vs. THE
COURT OF APPEALS and MARIA CRISTINA FERTILIZER
CORPORATION, respondents.
The Solicitor General for petitioner.
cdlex

Angara, Abello, Concepcion, Regala & Cruz for private

respondent.
SYLLABUS
1.  REMEDIAL LAW; CIVIL PROCEDURE; WHO MAY
BE PARTIES TO A CIVIL ACTION. — Rule 3, Section 1 of
the Rules of Court specifies who may be parties to a civil
action. Under this 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 persons such as corporations, on the
other hand; and (b) entities authorized by law to institute
actions.
2.  ID.; ID.; ID.; THE REPUBLIC AS A CORPORATE
BODY IS VESTED WITH "LEGAL PERSONALITY." — 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."
3.  ID.; ID.; ID.; AN INCORPORATED AGENCY OR
INSTRUMENTALITY OF THE GOVERNMENT IS VESTED
WITH A DISTINCT JURIDICAL PERSONALITY. — 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.
4.  POLITICAL LAW; GOVERNMENT AGENCIES OR
INSTRUMENTALITIES; INCORPORATED OR NON-
I N C O R P O R AT E D ; C O N S E Q U E N C E S O F T H E
EXPIRATION OF STATUTORY TERM. — It is worth noting
that the term "Authority" has been used to designate both
incorporated and non-incorporated agencies or
instrumentalities of the Government. 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.
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) The Rules of Court at the same
time expressly recognize the role of representative parties.
5.  CONSTITUTIONAL LAW; POWER OF EMINENT
DOMAIN; VALID DELEGATION TO THE PRESIDENT IN
THE CASE AT BAR. — While the power of eminent domain
is, in principle, vested primarily in the legislative department
of the government, this Court believes and so holds 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. 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.
DECISION
FELICIANO, J : p

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: cdasia

"SECTION 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; cdtai

(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." cdt

The list of powers and functions of the ISA included

the following:
"SECTION 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;
cdasia

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
of 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 code the same to the NSC. 2 aisadc

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 placed 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 on-
going, 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. cdta

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: cdasia

"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." (Emphasis supplied.)cdtai

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:
"SECTION 1. Who May Be Parties. —
Only natural or juridical persons or entities
authorized by law may be parties in a civil
action."cdasia

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
persons such as corporations, on the
other hand; and

(b) entities authorized by law to institute actions. aisadc

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:
"SECTION 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; cdasia

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; cdtai

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:
"SECTION 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: cdt

(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 and controlled
corporations. cdasia

xxx xxx xxx"

(Emphasis 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:
aisadc

"SECTION 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) cdta

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. cdasia

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
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: cdtai

"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 delegate, 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:cdt

"SECTION 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) cdasia
 The Revised Administrative Code of 1987 currently in
force has substantially reproduced the foregoing provision in
the following terms:
"SECTION 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 expropriation
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 aisadc

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.
cdta

SO ORDERED.
Romero, Melo, Vitug and Panganiban, JJ., concur.

(Iron and Steel Authority v. Court of Appeals, G.R. No.

|||

102976, [October 25, 1995], 319 PHIL 648-665)

 THIRD DIVISION
[G.R. No. 149179. July 15, 2005.]
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY,
INC., petitioner, vs. CITY OF BACOLOD, FLORENTINO T.
GUANCO, in his capacity as the City Treasurer of
Bacolod City, and ANTONIO G. LACZI, in his capacity as
the City Legal Officer of Bacolod City, respondents.
Estelito P. Mendoza for petitioner.
Bacolod City Legal Office for respondents.
SYLLABUS
1.   POLITICAL LAW; LOCAL GOVERNMENT;
TAXATION; FRANCHISE TAX; REPUBLIC ACT NO. 7925,
SECTION 23 THEREOF; "MOST-FAVORED-TREATMENT"
CLAUSE, CONSTRUED. — As we see it, the only question
which commends itself for our resolution is, whether or not
Section 23 of Rep. Act No. 7925, also called the "most-
favored-treatment" clause, operates to exempt petitioner
PLDT from the payment of franchise tax imposed by the
respondent City of Bacolod. Contrary to petitioner's claim,
the issue thus posed is not one of "first impression" insofar
as this Court is concerned. In PLDT vs. City of Davao, this
Court interpreted Section 23 of Rep. Act No. 7925 as not
operating to exempt PLDT from the payment of franchise tax
imposed upon it by the City of Davao: In sum, it does not
appear that, in approving §23 of R.A. No. 7925, Congress
intended it to operate as a blanket tax exemption to all
telecommunications entities. Applying the rule of strict
construction of laws granting tax exemptions and the rule
that doubts should be resolved in favor of municipal
corporations in interpreting statutory provisions on municipal
taxing powers, we hold that §23 of R.A. No. 7925 cannot
be considered as having amended petitioner's franchise so
as to entitle it to exemption from the imposition of local
franchise taxes. Consequently, we hold that petitioner is
liable to pay local franchise taxes in the amount of
P3,681,985.72 for the period covering the first to the fourth
quarter of 1999 and that it is not entitled to a refund of taxes
paid by it for the period covering the first to the third quarter
of 1998.
2.  ID.; ID.; ID.; ID.; ID.; GRANT OF TAX EXEMPTION
TO SMART AND GLOBE DOES NOT IPSO FACTO APPLY
TO P H I L I P P I N E L O N G D I S TA N C E T E L E P H O N E
COMPANY, INC. — As in City of Davao, supra, petitioner
presently argues that because Smart Communications, Inc.
(SMART) and Globe Telecom (GLOBE) under whose
respective franchises granted after the effectivity of the Local
Government Code, are exempt from franchise tax, it follows
that petitioner is likewise exempt from the franchise tax
sought to be collected by the City of Bacolod, on the
reasoning that the grant of tax exemption to SMART and
GLOBE ipso facto applies to PLDT, consistent with the
"most-favored-treatment" clause found in Section 23 of the
Public Telecommunications Policy Act of the Philippines
(Rep. Act No. 7925). Again, there is nothing novel in
petitioner's contention. In rejecting PLDT's contention, this
Court ruled in City of Davao as follows: The acceptance of
petitioner's theory would result in absurd consequences. To
illustrate: In its franchise, Globe is required to pay a
franchise tax of only one and one-half percentum (1/2%
[sic] ) of all gross receipts from its transactions while Smart
is required to pay a tax of three percent (3%) on all gross
receipts from business transacted. Petitioner's theory would
require that, to level the playing field, any "advantage, favor,
privilege, exemption, or immunity" granted to Globe must be
extended to all telecommunications companies, including
Smart. If, later, Congress again grants a franchise to another
telecommunications company imposing, say, one percent
(1%) franchise tax, then all other telecommunications
franchises will have to be adjusted to "level the playing field"
so to speak. This could not have been the intent of Congress
in enacting Section 23 of Rep. Act 7925. Petitioner's theory
will leave the Government with the burden of having to keep
track of all granted telecommunications franchises, lest
some companies be treated unequally. It is different if
Congress enacts a law specifically granting uniform
advantages, favor, privilege, exemption or immunity to all
telecommunications entities.
3.  ID.; ID.; ID.; ID.; ID.; DOES NOT REFER TO TAX
EXEMPTION BUT ONLY TO EXEMPTION FROM CERTAIN
REGULATIONS AND REQUIREMENTS IMPOSED BY THE
NATIONAL TELECOMMUNICATIONS COMMISSION. — On
PLDT's motion for reconsideration in City of Davao, the
Court added in its en banc Resolution of March 25, 2003,
that even as it is a state policy to promote a level playing
field in the communications industry, Section 23 of Rep. Act
No. 7925 does not refer to tax exemption but only to
exemption from certain regulations and requirements
i m p o s e d b y t h e N a t i o n a l Te l e c o m m u n i c a t i o n s
Commission: . . . . The records of Congress are bereft of any
discussion or even mention of tax exemption. To the
contrary, what the Chairman of the Committee on
Transportation, Rep. Jerome V. Paras, mentioned in his
sponsorship of H.B. No. 14028, which became R.A. No.
7925, were 'equal access clauses' in interconnection
agreements, not tax exemptions. He said: There is also a
n e e d t o p r o m o t e a l e v e l p l a y i n g fi e l d i n t h e
telecommunications industry. New entities must be granted
protection against dominant carriers through the
encouragement of equitable access charges and equal
access clauses in interconnection agreements and the strict
policing of predatory pricing by dominant carriers. Equal
access should be granted to all operators connecting into the
interexchange network. There should be no discrimination
against any carrier in terms of priorities and/or quality of
services. Nor does the term 'exemption' in §23 of R.A. No.
7925 mean tax exemption. The term refers to exemption
from certain regulations and requirements imposed by the
National Telecommunications Commission (NTC). For
instance, R.A. No. 7925, §17 provides: 'The Commission
shall exempt any specific telecommunications service from
its rate or tariff regulations if the service has sufficient
competition to ensure fair and reasonable rates or tariffs.'
Another exemption granted by the law in line with its policy
of deregulation is the exemption from the requirement of
securing permits from the NTC every time a
telecommunications company imports equipment.
4.   ID.; ID.; ID.; ID.; ID.; RULE THAT TAX
EXEMPTION SHOULD BE APPLIED IN STRICTISSIMI
JURIS AGAINST THE TAXPAYER AND LIBERALLY IN
FAVOR OF THE GOVERNMENT APPLIES EQUALLY TO
TAX EXCLUSIONS; TAX EXEMPTION DISTINGUISHED
FROM TAX EXCLUSION. — In the same en banc
Resolution, the Court even rejected PLDT's contention that
the "in-lieu-of-all-taxes" clause does not refer to "tax
exemption" but to "tax exclusion" and hence, the strictissimi
juris rule does not apply, explaining that these two terms
actually mean the same thing, such that the rule that tax
exemption should be applied in strictissimi juris against the
taxpayer and liberally in favor of the government applies
equally to tax exclusions. Thus: Indeed, both in their nature
and in their effect there is no difference between tax
exemption and tax exclusion. Exemption is an immunity or
privilege; it is freedom from a charge or burden to which
others are subjected. Exclusion, on the other hand, is the
removal of otherwise taxable items from the reach of
taxation, e.g., exclusions from gross income and allowable
deductions. Exclusion is thus also an immunity or privilege
which frees a taxpayer from a charge to which others are
subjected. Consequently, the rule that tax exemption should
be applied in strictissimi juris against the taxpayer and
liberally in favor of the government applies equally to tax
exclusions. To construe otherwise the 'in lieu of all taxes'
provision invoked is to be inconsistent with the theory that
R.A. No. 7925, §23 grants tax exemption because of a
similar grant to Globe and Smart.
5.   ID.; ID.; ID.; ID.; ID.; THE BUREAU OF LOCAL
GOVERNMENT FINANCE IS NOT AN ADMINISTRATIVE
AGENCY WHOSE FINDINGS OF FACT ARE GIVEN
WEIGHT AND DEFERENCE IN COURTS. — PLDT likewise
argued in said case that the RTC at Davao City erred in not
giving weight to the ruling of the BLGF which, according to
petitioner, is an administrative agency with technical
expertise and mastery over the specialized matters assigned
to it. But then again, we held in Davao: To be sure, the BLGF
is not an administrative agency whose findings on questions
of fact are given weight and deference in the courts. The
authorities cited by petitioner pertain to the Court of Tax
Appeals, a highly specialized court which performs judicial
functions as it was created for the review of tax cases. In
contrast, the BLGF was created merely to provide
consultative services and technical assistance to local
governments and the general public on local taxation, real
property assessment, and other related matters, among
others. The question raised by petitioner is a legal question,
to wit, the interpretation of §23 of R.A. No. 7925. There is,
therefore, no basis for claiming expertise for the BLGF that
administrative agencies are said to possess in their
respective fields.
DECISION
GARCIA, J : p

In this appeal by way of a petition for review on

certiorari under Rule 45 of the Rules of Court, petitioner
Philippine Long Distance Telephone Company (PLDT),
seeks the reversal and setting aside of the July 23, 2001
decision 1 of the Regional Trial Court at Bacolod City,
Branch 42, dismissing its petition in Civil Case No.
99-10786, an action to declare petitioner as exempt from the
payment of franchise and business taxes sought to be
imposed and collected by the respondent City of Bacolod.
The material facts are not at all disputed:
PLDT is a holder of a legislative franchise under Act
No. 3436, as amended, to render local and international
telecommunications services. On August 24, 1991, the terms
and conditions of its franchise were consolidated under
Republic Act No. 7082, 2 Section 12 of which embodies the
so-called "in-lieu-of-all-taxes" clause, whereunder PLDT
shall pay a franchise tax equivalent to three percent (3%) of
all its gross receipts, which franchise tax shall be "in lieu of
all taxes". More specifically, the provision pertinently reads:
SEC. 12.  . . . In addition thereto, the
grantee, its successors or assigns shall pay a
franchise tax equivalent to three percent (3%)
 of all gross receipts of the telephone or other
telecommunications businesses transacted
under this franchise by the grantee, its
successors or assigns, and the said
percentage shall be in lieu of all taxes on this
franchise or earnings thereof. . . . (Italics
ours).

Meanwhile, or on January 1, 1992, Republic Act No.

7160, otherwise known as the Local Government Code, took
effect. Section 137 of the Code, in relation to Section 151
thereof, grants cities and other local government units the
power to impose local franchise tax on businesses enjoying
a franchise, thus:
S E C . 1 3 7 .  F r a n c h i s e Ta x . —
Notwithstanding any exemption granted by
any law or other special law, the province
may impose a tax on businesses enjoying a
franchise, at a rate not exceeding fifty percent
(50%) of one percent (1%) of the gross
annual receipts for the preceding calendar
year based on the incoming receipt, or
realized, within its territorial jurisdiction.

xxx xxx xxx

SEC. 151. Scope of Taxing Powers. —
Except as otherwise provided in this Code,
the city, may levy the taxes, fees, and
charges which the province or municipality
may impose: Provided, however, That the
 taxes, fees, and charges levied and collected
by highly urbanized and independent
component cities shall accrue to them and
distributed in accordance with the provisions
of this Code.

The rates of taxes that the city may

levy may exceed the maximum rates allowed
for the province or municipality by not more
than fifty percent (50%) except the rates of
professional and amusement taxes.

By Section 193 of the same Code, all tax exemption

privileges then enjoyed by all persons, whether natural or
juridical, save those expressly mentioned therein, were
withdrawn, necessarily including those taxes from which
PLDT is exempted under the "in-lieu-of-all-taxes" clause in
its charter. We quote Section 193:
S E C . 1 9 3 .  W i t h d r a w a l o f Ta x
Exemption Privileges. — Unless otherwise
provided in this Code, tax exemptions or
incentives granted to, or presently enjoyed by
all persons, whether natural or juridical,
including government-owned or controlled
corporations, except local water districts,
cooperatives duly registered under R.A.
6938, non-stock and non-profit hospitals and
educational institutions, are hereby withdrawn
upon the effectivity of this Code.
 A i m i n g t o l e v e l t h e p l a y i n g fi e l d a m o n g
telecommunication companies, Congress enacted Republic
Act No. 7925, otherwise known as the Public
Telecommunications Policy Act of the Philippines, which took
effect on March 16, 1995. To achieve the legislative intent,
Section 23 thereof, also known as the "most-favored-
treatment" clause, provides for an equality of treatment in the
telecommunications industry, thus:
SEC. 23.  Equality of Treatment in the
Telecommunications Industry. — Any
advantage, favor, privilege, exemption, or
immunity granted under existing franchises,
or may hereafter be granted shall ipso facto
become part of previously granted
telecommunications franchises and shall be
accorded immediately and unconditionally to
the grantees of such franchises: Provided,
however, That the foregoing shall neither
apply to nor affect provisions of
telecommunications franchises concerning
territory covered by the franchise, the life
span of the franchise, or the type of the
service authorized by the franchise.

In August 1995, the City of Bacolod, invoking its

authority under Section 137, in relation to Section 151 and
Section 193, supra, of the Local Government Code, made an
assessment on PLDT for the payment of franchise tax due
the City.
Complying therewith, PLDT began paying the City
franchise tax from the year 1994 until the third quarter of
1998, at which time the total franchise tax it had paid the City
already amounted to P2,770, 696.37. aTcSID

On June 2, 1998, the Department of Finance through

its Bureau of Local Government Finance (BLGF), issued a
ruling to the effect that as of March 16, 1995, the effectivity
date of the Public Telecommunications Policy Act of the
Philippines (Rep. Act No. 7925), PLDT, among other
telecommunication companies, became exempt from local
franchise tax. Pertinently, the BLGF ruling reads:
It appears that RA 7082 further
amending ACT No. 3436 which granted to
PLDT a franchise to install, operate and
maintain a telephone system throughout the
Philippine Islands was approved on August 3,
1991. Section 12 of said franchise, likewise,
contains the 'in lieu of all taxes' proviso.

In this connection, Section 23 of RA

7925, quoted hereunder, which was approved
on March 1, 1995 provides for the equality of
treatment in the telecommunications industry:

xxx xxx xxx

On the basis of the aforequoted
Section 23 of RA 7925, PLDT as a
telecommunications franchise holder
becomes automatically covered by the tax
exemption provisions of RA 7925, which took
effect on March 16, 1995.
 Accordingly, PLDT shall be exempt
from the payment of franchise and business
taxes imposable by LGUs under Sections
137 and 143, respectively, of the LGC [Local
Government Code], upon the effectivity of
RA 7925 on March 16, 1995. However,
PLDT shall be liable to pay the franchise
and business taxes on its gross receipts
realized from January 1, 1992 up to
March 15, 1995, during which period
PLDT was not enjoying the 'most favored
clause' proviso of RA 7025 [sic]. 3

Invoking the aforequoted ruling, PLDT then stopped

paying local franchise and business taxes to Bacolod City
starting the fourth quarter of 1998.
The controversy came to a head-on when, sometime
in 1999, PLDT applied for the issuance of a Mayor's Permit
but the City of Bacolod withheld issuance thereof pending
PLDT's payment of its franchise tax liability in the following
amounts: (1) P358,258.30 for the fourth quarter of 1998; and
(b) P1,424,578.10 for the year 1999, all in the aggregate
amount of P1,782,836.40, excluding surcharges and
interest, about which PLDT was duly informed by the City
Treasurer via a 5th Indorsement dated March 16, 1999 for
PLDT's "appropriate action". 4
In time, PLDT filed a protest 5 with the Office of the
City Legal Officer, questioning the assessment and at the
same time asking for a refund of the local franchise taxes it
paid in 1997 until the third quarter of 1998.
 In a reply-letter dated March 26, 1999, 6 City Legal
Officer Antonio G. Laczi denied the protest and ordered
PLDT to pay the questioned assessment.
Hence, on May 14, 1999, in the Regional Trial Court at
Bacolod City, PLDT filed its petition 7 in Civil Case No.
99-10786, therein praying for a judgment declaring it as
exempt from the payment of local franchise and business
taxes; ordering the respondent City to henceforth cease and
desist from assessing and collecting said taxes; directing the
City to issue the Mayor's Permit for the year 1999; and
requiring it to refund the amount of P2,770,606.37, allegedly
representing overpaid franchise taxes for the years 1997 and
1998 with interest until fully paid.
In time, the respondent City filed its Answer/Comment
to the petition, 8 basically maintaining that Section 137 of the
Local Government Code remains as the operative law
despite the enactment of the Public Telecommunications
Policy Act of the Philippines (Rep. Act No. 7925), and
accordingly prayed for the dismissal of the petition.
In the ensuing pre-trial conference, the parties
manifested that they would not present any testimonial
evidence, and merely requested for time to file their
respective memoranda, to which the trial court acceded.
Eventually, in the herein assailed decision dated July
23, 2001, 9 the trial court dismissed PLDT's petition, thus:
WHEREFORE, premises considered,
the petition should be, as it is hereby
DISMISSED. No costs.

SO ORDERED.
 Therefrom, PLDT came to this Court via the present
recourse, imputing the following errors on the part of the trial
court:
5 . 0 1 . a .  T H E L O W E R C O U R T E R R E D I N
SUSTAINING RESPONDENTS' POSITION
THAT SECTION 137 OF THE LOCAL
GOVERNMENT CODE, WHICH, IN
RELATION TO SECTION 151 THEREOF,
ALLOWS RESPONDENT CITY TO IMPOSE
THE FRANCHISE TAX, IS APPLICABLE IN
THIS CASE.

5.01.b.  THE LOWER COURT ERRED IN NOT

HOLDING THAT UNDER PETITIONER'S
FRANCHISE (REPUBLIC ACT NO. 7082),
A S A M E N D E D A N D E X PA N D E D B Y
SECTION 23 OF REPUBLIC ACT NO. 7925
(PUBLIC TELECOMMUNICATIONS POLICY
ACT), TAKING INTO ACCOUNT THE
FRANCHISES OF GLOBE TELECOM, INC.,
(GLOBE) (REPUBLIC ACT NO. 7229) AND
SMART COMMUNICATIONS, INC. (SMART)
(REPUBLIC ACT NO. 7294), WHICH WERE
ENACTED SUBSEQUENT TO THE LOCAL
GOVERNMENT CODE, NO FRANCHISE
TAXES MAY BE IMPOSED ON PETITIONER
BY RESPONDENT CITY.

 
5.01.c.  THE LOWER COURT ERRED IN NOT
GIVING WEIGHT TO THE RULING OF THE
DEPARTMENT OF FINANCE, THROUGH
ITS BUREAU OF LOCAL GOVERNMENT
FINANCE, THAT PETITIONER IS EXEMPT
FROM THE PAYMENT OF FRANCHISE AND
BUSINESS TAXES IMPOSABLE BY LOCAL
GOVERNMENT UNITS UNDER THE LOCAL
GOVERNMENT CODE.

5 . 0 1 . d .  T H E L O W E R C O U R T E R R E D I N
DISMISSING THE PETITION BELOW.

As we see it, the only question which commends itself

for our resolution is, whether or not Section 23 of Rep. Act
No. 7925, also called the "most-favored-treatment" clause,
operates to exempt petitioner PLDT from the payment of
franchise tax imposed by the respondent City of Bacolod.
Contrary to petitioner's claim, the issue thus posed is
not one of "first impression" insofar as this Court is
concerned. For sure, this is not the first time for petitioner
PLDT to invoke the jurisdiction of this Court on the same
question, albeit involving another city.
In PLDT vs. City of Davao, 10 this Court has had the
occasion to interpret Section 23 of Rep. Act No. 7925. There,
we ruled that Section 23 does not operate to exempt PLDT
from the payment of franchise tax imposed upon it by the
City of Davao:
In sum, it does not appear that, in
approving §23 of R.A. No. 7925, Congress
 intended it to operate as a blanket tax
exemption to all telecommunications entities.
Applying the rule of strict construction of laws
granting tax exemptions and the rule that
doubts should be resolved in favor of
municipal corporations in interpreting
statutory provisions on municipal taxing
powers, we hold that §23 of R.A. No. 7925
cannot be considered as having amended
petitioner's franchise so as to entitle it to
exemption from the imposition of local
franchise taxes. Consequently, we hold that
petitioner is liable to pay local franchise taxes
in the amount of P3,681,985.72 for the period
covering the first to the fourth quarter of 1999
and that it is not entitled to a refund of taxes
paid by it for the period covering the first to
the third quarter of 1998. 11

Explains this Court in the same case:

To begin with, tax exemptions are
highly disfavored. The reason for this was
explained by this Court in Asiatic Petroleum
Co. v. Llanes, in which it was held:

. . . Exemptions from taxation are

highly disfavored, so much so that they may
almost be said to be odious to the law. He
who claims an exemption must be able to
point to some positive provision of law
creating the right . . . As was said by the
Supreme Court of Tennessee in Memphis vs.
U. & P. Bank (91 Tenn., 546, 550), 'The right
of taxation is inherent in the State. It is a
prerogative essential to the perpetuity of the
government; and he who claims an
exemption from the common burden must
justify his claim by the clearest grant of
organic or statute law.' Other utterances
equally or more emphatic come readily to
hand from the highest authority. In Ohio Life
Ins. and Trust Co. vs. Debolt (16 Howard,
416), it was said by Chief Justice Taney, that
the right of taxation will not be held to have
been surrendered, 'unless the intention to
surrender is manifested by words too plain to
be mistaken.' In the case of the Delaware
Railroad Tax (18 Wallace, 206, 226), the
Supreme Court of the United States said that
the surrender, when claimed, must be shown
by clear, unambiguous language, which will
admit of no reasonable construction
consistent with the reservation of the power.
If a doubt arises as to the intent of the
legislature, that doubt must be solved in favor
of the State. In Erie Railway Company vs.
Commonwealth of Pennsylvania (21 Wallace,
492, 499), Mr. Justice Hunt, speaking of
exemptions, observed that a State cannot
strip itself of the most essential power of
taxation by doubtful words. 'It cannot, by
ambiguous language, be deprived of this
highest attribute of sovereignty.' In Tennessee
vs. Whitworth (117 U.S., 129, 136), it was
said: 'In all cases of this kind the question is
as to the intent of the legislature, the
presumption always being against any
surrender of the taxing power.' In Farrington
vs. Tennessee and County of Shelby (95
U.S., 379, 686), Mr. Justice Swayne said: '. . .
When exemption is claimed, it must be
shown indubitably to exist. At the outset,
every presumption is against it. A well-
founded doubt is fatal to the claim. It is only
when the terms of the concession are too
explicit to admit fairly of any other
construction that the proposition can be
supported.'

The tax exemption must be expressed

in the statute in clear language that leaves no
doubt of the intention of the legislature to
grant such exemption. And, even if it is
granted, the exemption must be interpreted in
strictissimi juris against the taxpayer and
liberally in favor of the taxing authority.

xxx xxx xxx

The fact is that the term 'exemption' in
§23 is too general. A cardinal rule in statutory
construction is that legislative intent must be
ascertained from a consideration of the
statute as a whole and not merely of a
particular provision. For, taken in the abstract,
a word or phrase might easily convey a
meaning which is different from the one
actually intended. A general provision may
actually have a limited application if read
together with other provisions. Hence, a
consideration of the law itself in its entirety
and the proceedings of both Houses of
Congress is in order.

xxx xxx xxx

R.A. No. 7925 is thus a legislative
enactment designed to set the national policy
on telecommunications and provide the
structures to implement it to keep up with the
technological advances in the industry and
the needs of the public. The thrust of the law
is to promote gradually the deregulation of
the entry, pricing, and operations of all public
telecommunications entities and thus
promote a level playing field in the
telecommunications industry. There is
nothing in the language of §23 nor in the
proceedings of both the House of
Representatives and the Senate in enacting
R .A. N o . 7 9 2 5 w h i ch sh o w s th a t i t
contemplates the grant of tax exemptions to
all telecommunications entities, including
those whose exemptions had been withdrawn
by the LGC. CTEDSI
 What this Court said in Asiatic
Petroleum Co. v. Llanes applies mutatis
mutandis to this case: 'When exemption is
claimed, it must be shown indubitably to
exist. At the outset, every presumption is
against it. A well-founded doubt is fatal to the
claim. It is only when the terms of the
concession are too explicit to admit fairly of
any other construction that the proposition
can be supported.' In this case, the word
'exemption' in §23 of R.A. No. 7925 could
c o n te m p l a te e x e m p t i o n f r o m c e r t a i n
regulatory or reporting requirements, bearing
in mind the policy of the law. It is noteworthy
that, in holding Smart and Globe exempt from
local taxes, the BLGF did not base its opinion
on §23 but on the fact that the franchises
granted to them after the effectivity of the
LGC exempted them from the payment of
local franchise and business taxes.

As in City of Davao, supra, petitioner presently argues

that because Smart Communications, Inc. (SMART) and
Globe Telecom (GLOBE) under whose respective franchises
granted after the effectivity of the Local Government Code,
are exempt from franchise tax, it follows that petitioner is
likewise exempt from the franchise tax sought to be collected
by the City of Bacolod, on the reasoning that the grant of tax
exemption to SMART and GLOBE ipso facto applies to
PLDT, consistent with the "most-favored-treatment" clause
found in Section 23 of the Public Telecommunications Policy
Act of the Philippines (Rep. Act No. 7925).
 Again, there is nothing novel in petitioner's contention.
In fact, this Court in City of Davao, even adverted to PLDT's
argument therein, thus:
Finally, it [PLDT] argues that because
Smart and Globe are exempt from the
franchise tax, it follows that it must likewise
be exempt from the tax being collected by the
City of Davao because the grant of tax
exemption to Smart and Globe ipso facto
extended the same exemption to it.

In rejecting PLDT's contention, this Court ruled in City

of Davao as follows:
The acceptance of petitioner's theory
would result in absurd consequences. To
illustrate: In its franchise, Globe is required to
pay a franchise tax of only one and one-half
percentum (1/2% [sic]) of all gross receipts
from its transactions while Smart is required
to pay a tax of three percent (3%) on all gross
receipts from business transacted.
Petitioner's theory would require that, to level
the playing field, any "advantage, favor,
privilege, exemption, or immunity" granted to
Globe must be extended to all
telecommunications companies, including
Smart. If, later, Congress again grants a
franchise to another telecommunications
company imposing, say, one percent (1%)
franchise tax, then all other
telecommunications franchises will have to
be adjusted to "level the playing field" so to
 speak. This could not have been the intent of
Congress in enacting Section 23 of Rep. Act
7925. Petitioner's theory will leave the
Government with the burden of having to
keep track of all granted telecommunications
franchises, lest some companies be treated
unequally. It is different if Congress enacts a
law specifically granting uniform advantages,
favor, privilege, exemption or immunity to all
telecommunications entities.

On PLDT's motion for reconsideration in Davao, the

Court added in its en banc Resolution of March 25, 2003, 12
that even as it is a state policy to promote a level playing
field in the communications industry, Section 23 of Rep. Act
No. 7925 does not refer to tax exemption but only to
exemption from certain regulations and requirements
imposed by the National Telecommunications Commission:
. . . . The records of Congress are
bereft of any discussion or even mention of
tax exemption. To the contrary, what the
Chairman of the Committee on
Transportation, Rep. Jerome V. Paras,
mentioned in his sponsorship of H.B. No.
14028, which became R.A. No. 7925, were
'equal access clauses' in interconnection
agreements, not tax exemptions. He said:

 
 There is also a need to promote a
level playing field in the telecommunications
industry. New entities must be granted
protection against dominant carriers through
the encouragement of equitable access
charges and equal access clauses in
interconnection agreements and the strict
policing of predatory pricing by dominant
carriers. Equal access should be granted to
all operators connecting into the
interexchange network. There should be no
discrimination against any carrier in terms of
priorities and/or quality of services.

Nor does the term 'exemption' in §23

of R.A. No. 7925 mean tax exemption. The
term refers to exemption from certain
regulations and requirements imposed by the
National Telecommunications Commission
(NTC). For instance, R.A. No. 7925, §17
provides: 'The Commission shall exempt any
specific telecommunications service from its
rate or tariff regulations if the service has
sufficient competition to ensure fair and
reasonable rates or tariffs.' Another
exemption granted by the law in line with its
policy of deregulation is the exemption from
the requirement of securing permits from the
NTC every time a telecommunications
company imports equipment. 13
 In the same en banc Resolution, the Court even
rejected PLDT's contention that the "in-lieu-of-all-taxes"
clause does not refer to "tax exemption" but to "tax
exclusion" and hence, the strictissimi juris rule does not
apply, explaining that these two terms actually mean the
same thing, such that the rule that tax exemption should be
applied in strictissimi juris against the taxpayer and liberally
in favor of the government applies equally to tax exclusions.
Thus:
Indeed, both in their nature and in their
effect there is no difference between tax
exemption and tax exclusion. Exemption is
an immunity or privilege; it is freedom from a
charge or burden to which others are
subjected. Exclusion, on the other hand, is
the removal of otherwise taxable items from
the reach of taxation, e.g., exclusions from
gross income and allowable deductions.
Exclusion is thus also an immunity or
privilege which frees a taxpayer from a
charge to which others are subjected.
Consequently, the rule that tax exemption
should be applied in strictissimi juris against
the taxpayer and liberally in favor of the
government applies equally to tax exclusions.
To construe otherwise the 'in lieu of all taxes'
provision invoked is to be inconsistent with
the theory that R.A. No. 7925, §23 grants tax
exemption because of a similar grant to
Globe and Smart. 14
 PLDT likewise argued in said case that the RTC at
Davao City erred in not giving weight to the ruling of the
BLGF which, according to petitioner, is an administrative
agency with technical expertise and mastery over the
specialized matters assigned to it. But then again, we held in
Davao:
To be sure, the BLGF is not an
administrative agency whose findings on
questions of fact are given weight and
deference in the courts. The authorities cited
by petitioner pertain to the Court of Tax
Appeals, a highly specialized court which
performs judicial functions as it was created
for the review of tax cases. In contrast, the
BLGF was created merely to provide
consultative services and technical
assistance to local governments and the
general public on local taxation, real property
assessment, and other related matters,
among others. The question raised by
petitioner is a legal question, to wit, the
interpretation of §23 of R.A. No. 7925. There
is, therefore, no basis for claiming expertise
for the BLGF that administrative agencies are
said to possess in their respective fields. 15

We note, quite interestingly, that apart from the

particular local government unit involved in the earlier case
of PLDT vs. Davao, the arguments presently advanced by
petitioner on the issue herein posed are but a mere
reiteration if not repetition of the very same arguments it has
already raised in Davao. For sure, the errors presently
assigned are substantially the same as those in Davao, all of
which have been adequately addressed and passed upon by
this Court in its decision therein as well as in its en banc
resolution in that case.
WHEREFORE, the instant petition is DENIED and the
assailed decision dated July 23, 2001 of the lower court
AFFIRMED.
Costs against petitioner.
SO ORDERED.
Sandoval-Gutierrez, Corona and Carpio Morales, JJ.,
concur.
Panganiban, J., took no part. Former counsel of a party.

(Philippine Long Distance Telephone Co. v. City of Bacolod,

|||

G.R. No. 149179, [July 15, 2005], 502 PHIL 100-115)

 FIRST DIVISION
[G.R. No. 84811. August 29, 1989.]
SOLID HOMES, INC., petitioner, vs. TERESITA PAYAWAL
and COURT OF APPEALS, respondents.
SYLLABUS
1.  ADMINISTRATIVE LAW; NATIONAL
H O U S I N G A U T H O R I T Y; E X C L U S I V E
JURISDICTION. — 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. (P.D. 957 as amended
by P.D. 1344)
2.  STATUTORY CONSTRUCTION AND
INTERPRETATION; IN CASE OF CONFLICT
BETWEEN A GENERAL AND A SPECIFIC LAW,
THE LATTER PREVAILS. — 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.
 3. ID.; ID.; FACT OF EARLY ENACTMENT OF
EITHER LAW, IMMATERIAL. — 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.
4.  ID.; STATUTES CONFERRING POWERS
ON ADMINISTRATIVE AGENCIES, LIBERALLY
CONSTRUED. — 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.
5 .  R E M E D I A L L AW; J U R I S D I C T I O N ;
DECISION RENDERED WITHOUT JURISDICTION,
NULL AND VOID; EXCEPTION; CASE AT BAR. —
Any decision rendered without jurisdiction is a total
nullity and may be struck down at any time, even on
appeal before this Court. The only exception is
where the party raising the issue is barred by
estoppel, which does not appear in the case before
us. On the contrary, the issue was raised as early as
in the motion to dismiss filed in the trial court by the
petitioner, which continued to plead it in its answer
and, later, on appeal to the respondent court. We
have no choice, therefore, notwithstanding the delay
this decision will entail, to nullify the proceedings in
the trial court for lack of jurisdiction.
DECISION
CRUZ, J : p

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.
LibLex

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 P28,080.00, and that by September
10, 1981, she had already paid the defendant the
total amount of P38,949.87 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 P38,949.87 plus interest from 1975 and until
the full amount was paid. She was also awarded
P5,000.00 moral damages, P5,000.00 exemplary
damages, P10,000.00 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 P1,238.47
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. 967." 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 .  C a s e s i n v o l v i n g s p e c i fi c
performance of contractual and 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 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
(P20,000.00).

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. llcd

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
plaintiffs plainly valid, just and demandable claim. LibLex

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 1 of the said decree. That is what we are
doing now. LexLib

It is settled that any decision rendered without

jurisdiction is a total nullity and may be struck down
at any time, even on appeal before this Court. 11 The
only exception is where the party raising the issue is
barred by estoppel, 12 which does not appear in the
case before us. On the contrary, the issue was
raised as early as in the motion to dismiss filed in the
trial court by the petitioner, which continued to plead
it in its answer and, later, on appeal to the
respondent court. We have no choice, therefore,
notwithstanding the delay this decision will entail, to
nullify the proceedings in the trial court for lack of
jurisdiction.
WHEREFORE, the challenged decision of the
respondent court is REVERSED and the decision of
the Regional Trial Court of Quezon City in Civil Case
No. Q-36119 is SET ASIDE, without prejudice to the
filing of the appropriate complaint before the Housing
and Land Use Regulatory Board. No costs.
SO ORDERED.
Narvasa, Gancayco, Griño-Aquino and Medialdea, JJ .,
concur.
 
 (Solid Homes, Inc. v. Payawal, G.R. No. 84811, [August 29,
|||

1989], 257 PHIL 914-922)

 SECOND DIVISION
[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 :p

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 decision 2
issued by the Court of Appeals (CA) in CA-G.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 resolution 3
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 lot 4 (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, Bulacan
5 had been placed under Presidential Decree (PD)
No. 27's 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 President 8 and
the CA 9 upheld the DAR Order. Through the Court's
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, attorney's 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. 957 12
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. SHADcT

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 HLURB's jurisdiction.
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 petitioner's 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 petitioner's
action by applying Antipolo Realty
C o r p . v. N a t i o n a l H o u s i n g
Corporation 13 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 CGA's
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 CGA's case involves the sale of a
subdivision lot, it falls under the HLURB's exclusive
jurisdiction.
THE COURT'S RULING
We find no merit in the petition and consequently affirm
the CA decision.
Development of the HLURB's

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. 14 Thus, the
determination of whether the CGA's cause of action
falls under the jurisdiction of the HLURB
necessitates a closer examination of the laws
defining the HLURB's jurisdiction and authority. ITaESD

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: CIDaTc

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
u n i t a g a i n s t t h e o w n e r,
developer, dealer, broker or
salesman. HAaDTE

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]. . . . . Among these regulatory
functions are: 1) Regulation of the real estate
trade and business; . . . 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. EaTCSA
Rationale for HLURB's

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 HLURB's
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 HLURB's exclusive
jurisdiction at length in Sps. Osea v. Ambrosio, 16
where we said: aCITEH

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
u n i t s a g a i n s t t h e o w n e r,
developer, dealer, broker or
salesman. EDIaSH

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:

. . . 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;

xxx xxx xxx

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.
A s o b s e r v e d i n C . T. To r r e s
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. TEcAHI
 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.

NHA 17 — explained the grant of the HLURB's
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'.ScaATD
 xxx xxx 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


RTC's 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 aHTEIA
 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 xxx xxx

Note particularly pars. (b) and (c) as

worded, where the HLURB's 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.] ACcHIa
 Pursuant to Roxas, we held in Pilar
Development Corporation v. Villar 19 and Suntay v.
Gocolay 20 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 RTC's 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.
HCaDIS

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
developer's 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. HDTSCc

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 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. Ignacio's 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". AIHaCc

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 Adriano's Lot 2-F
and Ceferino Sison's Lot 2-G Bsd-04-000829
(OLT). EcTDCI

xxx xxx 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 xxx 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 xxx 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.]
EITcaD
 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 xxx 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 CGA's contention — that the CA

erred in applying Article 1191 of the Civil Code as
basis for the contract's 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 HLURB's 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. EDCcaS

SO ORDERED.
Quisumbing, Carpio Morales, Del Castillo and Abad, JJ.,
concur.

(Christian General Assembly, Inc. v. Spouses Ignacio, G.R.

|||

No. 164789, [August 27, 2009], 613 PHIL 629-646)

 EN BANC
[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.
SYLLABUS
1. CONSTITUTIONAL LAW; CIVIL SERVICE COMMISSION;
FINDINGS OF FACTS OF ADMINISTRATIVE BODIES;
CONTROLLING ON THE REVIEWING AUTHORITY IF
BASED ON SUBSTANTIAL EVIDENCE. — The rule is that
the findings of fact of administrative bodies, if based on
substantial evidence, are controlling on the reviewing
authority. It is settled that it is not for the appellate court to
substitute it own judgment for that of the administrative
agency on the sufficiency of the evidence and the credibility
of the witnesses. 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.
2.  PETITIONER'S INVOCATION OF DUE PROCESS IS
WITHOUT MERIT; REASON. — 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. 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."
3.  THE CHARGE IN AN ADMINISTRATIVE CASE; THE
ALLEGATION OF THE ACTS COMPLAINED OF IS
CONTROLLING, NOT THE DESIGNATION OF THE
OFFENSE. — 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 is
unquestionably prejudicial to the best interest of the bank.
The charge against the respondent in an administrative case
need not de 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.
4.  THE CONSTITUTIONAL REQUIREMENT TO STATE
CLEARLY AND DISTINCTLY THE FACTS AND THE LAW
ON WHICH A DECISION IS BASED; APPLIES ONLY TO
COURTS OF JUSTICE AND NOT TO ADMINISTRATIVE
BODIES LIKE THE CIVIL SERVICE COMMISSION. — 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. 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.
DECISION
CRUZ, J :p
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.
LLjur

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 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 by 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, 8 which 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 for 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's 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 Office, 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 petitioner

for certiorari. She claims 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 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 It is settled that it is not for the appellate court to
substitute it 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 System 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 is
unquestionably prejudicial to the best interest of the bank.
The charge against the respondent in an administrative case
need not de 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 restate the
factual and 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 reasons 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 petitioner 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.
Narvasa, C .J ., Feliciano, Bidin, Griño-Aquino, Regalado,
Davide, Jr., Romero, Nocon, Bellosillo, Melo and Quiason,
JJ ., concur.
Padilla, J ., is on leave.
(Dadubo v. Civil Service Commission, G.R. No. 106498,
|||

[June 28, 1993], 295 PHIL 825-833)

 FIRST DIVISION
[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.
SYLLABUS
1 .  A D M I N I S T R AT I V E L AW; R E V I S E D
A D M I N I S T R AT I V E C O D E ; B U R E A U O F
FORESTRY; VESTED WITH THE JURISDICTION
AND AUTHORITY OVER DEMARCATION OF ALL
PUBLIC FOREST AND FOREST RESERVES. —
Respondent Judge erred in taking cognizance of the
complaint filed by respondent Ago, asking for the
determination anew of the correct boundary line 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 modify the decision of the
Director of Forestry when advisable in the public
interests, whose decision is in turn appealable to the
Office of the President.
2.  ID.; ID.; ID.; ID.; COURTS OF JUSTICE
D E V O I D O F J U R I S D I C T I O N T O TA K E
C O G N I Z A N C E P U R E LY A D M I N I S T R AT I V E
MATTERS. — 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, 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.
3.  REMEDIAL LAW; EVIDENCE; FINDINGS
OF ADMINISTRATIVE BODIES SHALL NOT BE
DISTURBED ON APPEAL. — 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. 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. 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."
4.  ID.; CIVIL PROCEDURE; DRAFT OF
DECISION DOES NOT OPERATE AS A JUDGMENT
ON A CASE UNTIL THE SAME IS DULY SIGNED
AND DELIVERED TO THE CLERK FOR FILING
AND PROMULGATION. — 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. Respondent should be aware of
this rule. In still another case of Ago v. Court of
Appeals, (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
still 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."
5. ID.; EVIDENCE; BURDEN OF PROOF AND
PRESUMPTION; SUSPICION AND CONJECTURES
CAN NOT OVERCOME THE PRESUMPTION OF
REGULARITY AND LEGALITY OF OFFICIAL
ACTIONS. — 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. It is
presumed that an official of a department performs
his official duties regularly. 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).
6.  ADMINISTRATIVE LAW; ORDINARY
TIMBER LICENSE; OPERATES AS A CONTRACT
BETWEEN THE GOVERNMENT AND THE
G R A N T E E ; T E R M S A N D S T I P U L AT I O N S
THEREOF, NOT SUBJECT TO QUESTIONING BY
GRANTEE. — 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.
7 .  I D . ; P R O V I S I O N A L R E M E D I E S ;
INJUNCTION; ISSUANCE THEREOF BY COURT
O F F I R S T I N S TA N C E L I M I T E D TO A C T S
COMMITTED WITHIN ITS TERRITORIAL
BOUNDARIES. — 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, 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. 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
except where the sole issue is the legality of the
decision of the administrative officials.
8. ID.; ID.; ID.; ID.; EXCEPTION. — 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. We
thus declared in Director of Forestry v. Ruiz: "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.
9.  ID.; ID.; ID.; WRIT IN EXCESS OF
JURISDICTION, VOID. — 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. 584-52. Only a
portion of this area was in fact transferred to
respondent Ago as described in its Ordinary Timber
License No. 1323-'60(New).
1 0 .  I D . ; S P E C I A L C I V I L A C T I O N ;
CERTIORARI; GRAVE ABUSE OF DISCRETION;
REFUSAL TO DISMISS A CASE ON APPARENT
LACK OF JURISDICTION AND ISSUING WRIT OF
INJUNCTION. — 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.
 
DECISION
TEEHANKEE, C.J : p

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 N90ºE, 21,000 meters;
N12ºW, 21,150 meters; N40ºW, 3,000 meters;
N31ºW, 2,800 meters; N50ºW, 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: LibLex

"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 licenses, 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. 3 The 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
R e s p o n d e n t A g o fi l e d a m o t i o n f o r
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 line 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. prcd

Respondent Judge erred in taking cognizance

of the complaint filed by respondent Ago, asking for
the determination anew of the correct boundary line
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 modify 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.llcd

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 still 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.
LLphil

"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. 584-52. 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.
Narvasa, Cruz, Paras and Gancayco, JJ., concur.
(Lianga Bay Logging, Co., Inc. v. Enage, G.R. No. L-30637,
|||

[July 16, 1987], 236 PHIL 84-102)

 EN BANC
[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,
ULPIANO U., JR., ARREZA, ARTEMIO M., JR., ARROJO,
ANTONIO P., ARVISU, ALEXANDER S., ASCAÑO,
ANTONIO T., ASLAHON, JULAHON P., ASUNCION,
VICTOR R., ATANGAN, LORNA S., ATIENZA,
ALEXANDER R., BACAL, URSULINO C., BAÑAGA,
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, CONDE, 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 PENA, 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., CARCIA, 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., IBAÑEZ,
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 R., 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., MARIÑAS,
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., MUÑOZ,
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., PEÑA, 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., RAÑADA, 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
PEÑA, 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. RAÑADA, 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.
SYLLABUS
 MELENCIO-HERRERA, J., dissenting opinion:
1.  ADMINISTRATIVE LAW; CIVIL SERVICE
ACT; REMOVAL OR SUSPENSION OF CIVIL
SERVICE OFFICER MUST BE FOR CAUSE; "FOR
CAUSE" CONSTRUED. — 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'.
2. ID.; ID.; ID.; GUARANTEE ENSHRINED IN
THE CONSTITUTION. — 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."
3.  REMEDIAL LAW; SUPREME COURT;
JUDGMENT; OBITER DICTUM, DEFINED. — 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). 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. Traveler's 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).
4.  ID.; ID.; ID.; RESOLUTION OF THE
ULTIMATE ISSUES, NOT AN OBITER. — 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 F.2d 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.
5.  ADMINISTRATIVE LAW; EXECUTIVE
ORDER NO. 127; SEPARATION FROM OFFICE;
RIGHT TO BE INFORMED OF GROUND OF
SEPARATION UNDER EXECUTIVE ORDER NO.
17, DISPENSED WITH. — 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
O r d e r, a r e h e r e b y r e p e a l e d a n d m o d i fi e d
accordingly."
6. ID.; CIVIL SERVICE ACT; REMOVAL FROM
CAREER SERVICE; TYPES OF
REORGANIZATION. — 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.
7.  ID.; ID.; ID.; RIGHTS AVAILABLE TO A
REORGANIZED EMPLOYEE. — 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."
8.  ID.; ID.; RIGHT TO AN OFFICE OR
EMPLOYMENT WITH GOVERNMENT, NOT A
VESTED RIGHT. — 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).
DECISION
SARMIENTO, J : p
 The Court writes finis to this controversy that
has raged bitterly for the past several months. It
does so out of a legitimate presentiment 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 a
constitutional crisis for the nation, itself beset with
grave and serious problems. Cdpr

The facts are not in dispute.

On March 25, 1986, President Corazon Aquino
promulgated Proclamation No. 3, "DECLARING A
N AT I O N A L P O L I C Y TO I M P L E M E N T T H E
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.

S E C T I O N 2 .  A l l e l e c t i v e a n d
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 the 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 Pambansa 4
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, 6 and 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; cdphil

2)  Existence of a probable cause for

violation of the Anti-Graft and Corrupt
Practices 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. 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 .  B y F e b r u a r y 2 8 , 1 9 8 8 , a l l
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 )  i n f o r m e d o f t h e i r r e -
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. LibLex
 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

Commissioner 15
As far as the records will yield, the following
were recipients of these notices:
1 CESAR DARIO 30 LEONCIA CATRE
2 VICENTE FERIA, JR. 31 ROBERTO ABADA
ADOLFO
3 CASARENO 32 ABACA SISINIO T.
4 PACIFICO LAGLEVA 33 ABAD, ROGELIO C.
5 JULIAN C. ESPIRITU 34 ABADIANO, JOSE P.
 DENNIS A.
6 AZARRAGA 35 ABCEDE, NEMECIO C.
7 RENATO DE JESUS 36 ABIOG, ELY F.
NICASIO C.
8 GAMBOA 37 ABLAZA, AURORA M.
CORAZON RALLOS
9 NIEVES 38 AGBAYANI, NELSON I.
FELICITACION R.
10 GELUZ 39 AGRES, ANICETO.
LEODEGARIO H.
11 FLORESCA 40 AGUILAR, FLOR
AGUILUCHO, MA.
12 SUBAER PACASUM 41 TERESA R.
13 ZENAIDA LANARIA 42 AGUSTIN, BONIFACIO T.
14 JOSE B. ORTIZ 43 ALANO, ALEX P.
15 GLICERIO R. DOLAR 44 ALBA, MAXIMO F. JR.
16 CORNELIO NAPA 45 ALBANO ROBERT B.
17 PABLO B. SANTOS 46 ALCANTARA, JOSE G.
FERMIN
18 RODRIGUEZ 47 ALMARIO, RODOLFO F.
19 DALISAY BAUTISTA 48 ALVEZ, ROMUALDO R.
20 LEONARDO JOSE 49 AMISTAD, RUDY M.
21 ALBERTO LONTOK 50 AMOS, FRANCIS F.
22 PORFIRIO TABINO 51 ANDRES, RODRIGO V.
23 JOSE BARREDO 52 ANGELES, RICARDO S.
ROBERTO
24 ARNALDO 53 ANOLIN, MILAGROS H.
AQUINO, PASCASIO E.
25 ESTER TAN 54 L.
26 PEDRO BAKAL 55 ARABE, MELINDA M.
ARCANGEL, AGUSTIN
27 ROSARIO DAVID 56 S., JR.
 ARREZA, ARTEMIO M.,
28 RODOLFO AFUANG 58 JR.
29 LORENZO CATRE 59 ARROJO, ANTONIO P.
ARVISU, DE GUZMAN, ANTONIO
60 ALEXANDER S. 107A.
ASCAÑO, ANTONIO DE GUZMAN, RENATO
61 T. 108E.
ASLAHON,
62 JULAHON P. 109GAN, ALBERTO R.
DELA CRUZ,
63 ASUNCION, VICTOR. 110 FRANCISCO C.
DE LA PEÑA,
64 ATANGAN, LORNA S. 111 LEONARDO
ATIENZA,
65 ALEXANDER. 112DEL CAMPO, ORLANDO
BACAL, URSULINO DEL RIO, MAMERTO P.,
66 C. 113 JR.
BAÑAGA, MARLOWE DE MESA, WILHELMINA
67 Z. 114 T.
68 BANTA, ALBERTO T. 115DIMAKUTA, SALIC L.
69 BARROS, VICTOR C. 116DIZON, FELICITAS A.
BARTOLOME,
70 FELIPE A. 117DOCTOR, HEIDY M.
BAYSAC,
71 REYNALDO S. 118DOMINGO, NICANOR J.
BELENO, ANTONIO DOMINGO, PERFECTO
72 B. 119 V., JR.
BERNARDO,
73 ROMEO D. 120DUAY, JUANA G.
BERNAS,
74 MARCIANO S. 121DYSANGCO, RENATO F.
BOHOL,
75 AUXILIADOR G. 122EDILLOR, ALFREDO P.
 ELEVAZO, LEONARDO
76 BRAVO, VICTOR M. 123A.
ESCUYOS, MANUEL M.,
77 BULEG, BALILIS R. 124JR.
CALNEA,
78 MERCEDES M. 125ESMERIA, ANTONIO E.
CALVO, HONESTO ESPALDON, MA.
79 G. 126LOURDES H.
CAMACHO, CARLOS
80 V. 127ESPINA, FRANCO A.
CAMPOS, RODOLFO
81 C. 128ESTURCO, RODOLFO C.
CAPULONG,
82 RODRIGO G. 129EVANGELINO, FERMIN I.
CARINGAL, GRACIA
83 Z. 130FELIX, ERNESTO G.
CARLOS, LORENZO FERNANDEZ, ANDREW
84 B. 131M.
CARRANTO, FIDEL FERRAREN, ANTONIO
85 U. 132C.
CARUNGCONG, FERRERA, WENCESLAO
86 ALFREDO M. 133A.
CASTRO, PATRICIA FRANCISCO, PELAGIO
87 J. 134S., JR.
CATELO, ROGELIO
88 B. 135FUENTES, RUDY L.
CATURLA, MANUEL
89 B. 136GAGALANG, RENATO V.
CENIZAL, JOSEFINA
90 F. 137GALANG, EDGARDO R.
91 CINCO, LUISITO 138GAMBOA, ANTONIO C.
CONDE, JOSE C.,
92 JR. 139GAN, ALBERTO R.
 CORCUERA, FIDEL
93 S. 140GARCIA, GILBERT M.
CORNETA, VICENTE
94 S. 141GARCIA, EDNA V.
CORONADO,
95 RICARDO S. 142GARCIA, JUAN L.
98 CRUZ, EDUARDO S. 143GAVIOLA, LILIAN V.
GEMPARO, SEGUNDINA
97 CRUZ, EDILBERTO A 144G.
GOBENCIONG,
98 CRUZ, EFIGENIA B. 145FLORDELIZ B.
CRUZADO, MARCIAL
99 C. 146GRATE, FREDERICK R.
CUSTUDIO,
100RODOLFO M. 147GREGORIO, LAURO P.
101DABON, NORMA M. 148GUARTICO, AMMON H.
DALINDIN, EDNA
102MAE D. 149GUIANG, MYRNA N.
103DANDAL, EDEN F. 150GUINTO, DELFIN C.
DATUHARON, SATA
104A. 151HERNANDEZ, LUCAS A.
DAZO, GODOFREDO
105L. 152HONRALES, LORETO N.
DE CASTRO,
106LEOPAPA 153HUERTO, LEOPOLDO H.
HULAR,
154LANNYROSS E. 201MATUGAS, ERNESTO T.
MATUGAS, FRANCISCO
155IBAÑEZ, ESTER C. 202T.
ILAGAN, HONORATO
156C. 203MAYUGA, PORTIA E.
INFANTE,
157REYNALDO C. 204MEDINA, NESTOR M.
158ISAIS, RAY C. 205MEDINA, ROLANDO S.
ISMAEL, HADJI
159AKRAM B. 206MENDAVIA AVELINO I.
JANOLO, VIRGILIO MENDOZA,
160M. 207POTENCIANO G.
161JAVIER, AMADOR L. 208MIL, RAY M.
JAVIER, ROBERTO MIRAVALLES,
162S. 209ANASTACIA L.
MONFORTE, EUGENIO,
163JAVIER, WILLIAM R. 210JR. G.
164JOVEN, MEMIA A. 211MONTANO, ERNESTO F.
JULIAN, REYNALDO
165V. 212MONTERO, JUAN M. III
JUMAMOY, MORALDE,
166ABUNDIO A. 213ESMERALDO B., JR.
JUMAQUIAO, MORALES, CONCHITA
167DOMINGO F. 214D.L.
KAINDOY, PASCUAL
163B., JR. 215MORALES, NESTOR P.
169KOH, NANIE G. 216MORALES, SHIRLEY S.
LABILLES,
170ERNESTO S. 217MUNAR, JUANITA L.
LABRADOR,
171WILFREDO M. 213MUÑOZ, VICENTE R.
LAGA, BIENVENIDO
172M. 219MURILLO, MANUEL M.
LAGMAN,
173EVANGELINE G. 220NACION, PEDRO R.
LAMPONG,
174WILFREDO G. 221NAGAL, HENRY N.
LANDICHO, 22
175RESTITUTO A. 2: NAVARRO, HENRY L.
176LAPITAN, CAMILO M. 223NEJAL, FREDRICK E.
 LAURENTE,
177REYNALDO A. 224NICOLAS, REYNALDO S.
LICARTE, EVARISTO
178R. 225NIEVES, RUFINO A.
179LIPIO, VICTOR O. 226OLAIVAR, SEBASTIAN T.
LITTAUA, FRANKLIN
180Z. 227OLEGARIO, LEO Q.
LOPEZ, MELENCIO
181L. 228ORTEGA ARLENE R.
182LUMBA OLIVIA R. 229ORTEGA, JESUS R.
183MACAISA BENITO T. 230OSORIO, ABNER S.
MACAISA ERLINDA PAPIO, FLORENTINO T.
184C. 231II
135MAGAT, ELPIDIO 232PASCUA, ARNULFO A.
MAGLAYA,
136FERNANDO P. 233PASTOR, ROSARIO
MALIBIRAN,
137ALFREDO C. 234PELAYO, ROSARIO L.
MALIBIRAN, ROSITA
138D. 235PEÑA, AIDA C.
189MALIJAN, LAZARO V. 236PEREZ, ESPERIDION B.
PEREZ, JESUS BAYANI
190MALLI, JAVIER M. 237M.
MANAHAN, RAMON
191S. 233PEREZ, ISIDRO A.
MANUEL, ELPIDIO PRUDENCIADO,
192R. 239EULOGIA S.
PUNZALAN, LAMBERTO
193MARAVILLIA, GIL B. 240N.
194MARCELO, GIL C. 241PURA, ARNOLD T.
MARIÑAS, QUINONES, EDGARDO
195RODOLFO V. 242I.
 QUINTOS, AMADEO C.,
196MAROKET, JESUS C. 243JR.
MARTIN, NEMENCIO
197A. 244QUIRAY, NICOLAS C.
MARTINEZ, ROMEO
198M. 245RAMIREZ, ROBERTO P.
MARTINEZ,
199ROSELINA M. 246RANADA, RODRIGO C.
MATIBAG,
200ANGELINA G. 247RARAS, ANTONIO A.
TOLENTINO, BENIGNO
248RAVAL, VIOLETA V. 280A.
TURINGAN, ENRICO T.,
249RAZAL, BETTY R. 281JR.
250REGALA, PONCE F. 282UMPA, ALI A.
REYES, LIBERATO
251R. 283VALIC, LUCIO E.
252REYES, MANUEL E. 284VASQUEZ, NICANOR B.
258REYES, NORMA Z. 285VELARDE, EDGARDO C.
REYES,
254TELESFORO F. 286VERA, AVELINO A.
255RIVERA, ROSITA L. 287VERAME, OSCAR E.
ROCES, ROBERTO
256V. 288VIADO, LILLIAN T.
ROQUE, TERESITA
257S. 289VIERNES, NAPOLEON K.
ROSANES,
258MARILOU M. 290VILLALON, DENNIS A.
259ROSETE, ADAN I. 291VILLAR, LUZ L.
RUANTO, REY
260CRISTO C., JR. 292VILLALUZ, EMELITO V.
SABLADA,
261PASCASIO G. 293ZATA, ANGEL A, JR.
 SALAZAR, SILVERIA
262S. 294ACHARON, CRISTETO
SALAZAR, VICTORIA
263A. 295ALBA, RENATO B.
SALIMBACOD,
264PERLITA C. 296AMON, JULITA C.
SALMINGO,
265LOURDES M. 297AUSTRIA, ERNESTO C.
SANTIAGO, EMELITA
266B. 293CALO, RAYMUNDO M.
SATINA, PORFIRIO CENTENO, BENJAMIN
267C. 299R.
SEKITO, COSME B.,
268JR. 300DONATO, ESTELITA P.
269SIMON, RAMON P. 301DONATO, FELIPE S.
SINGSON, MELECIO
270C. 302FLORES, PEDRITO S.
SORIANO, ANGELO
271L. 303GALAROSA, RENATO
SORIANO,
272MAGDALENA R. 304MALAWI, MAUYAG
SUMULONG, MONTENEGRO,
273ISIDORO L., JR. 305FRANCISCO M.
SUNICO, ABELARDO
274T. 306OMEGA, PETRONILO T.
275TABIJE, EMMA B. 307SANTOS, GUILLERMO F.
TAN, RUDY
276GOROSPE 308TEMPLO, CELSO
277TAN, ESTER S. 309VALDERAMA, JAIME B.
273TAN, JULITA S. 310VALDEZ, NORA M.
TECSON, BEATRIZ
279B.
 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. Dalisay 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 Abada, are
the petitioners in G.R. No. 82023; the last 279 16
individuals mentioned are the private respondents in
G.R. No. 85310. prcd

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 .  A p p e l l a n t s b e i m m e d i a t e l y
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

n o t , h o w e v e r, b e i n t e r p r e t e d a s a n
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;
cdrep
 2 .  T h e fi l i n g o f a p p r o p r i a t e
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 .  A p p e l l a n t s b e i m m e d i a t e l y
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

n o t , h o w e v e r, b e i n t e r p r e t e d a s a n
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 .  T h e fi l i n g o f a p p r o p r i a t e
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 petition has been
docketed herein as G.R. No. 86241. The employees
ordered to be reinstated are Senen Dimaguila,
Romeo Arabe, Bernardo 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," 22 was 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. llcd

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). 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 seasonably 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 5 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. cdtai

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's
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. 43 Hence, we must
reckon the thirty-day period from receipt of the order
of denial.cdasia

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 dismissal, 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 various 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. LLphil

The Case for Commissioner Mison

In his comments, the Commissioner relies on
this Court's resolution in Jose v. Arroyo, 54 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 reorganization 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.
dctai

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 Malacañang 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; LLjur

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:
S e c . 1 6 .  C a r e e r c i v i l s e r v i c e
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. 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 —
insofar 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 bene: 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:
S E C T I O N 2 .  A l l e l e c t i v e a n d
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. cdlex

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). But as we asserted, if the intent of Section 16
of Article XVIII of the 1987 Constitution were to
extend the effects of reorganization 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. cdll

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
proposals 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.
cda

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
a m o n g t h e d e s e r v i n g o f fi c i a l s a n d
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
s e r v a n t s w h o s e q u a l i fi c a t i o n s a n d
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 lay-offs
 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. LLpr

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. Arroyo 73 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. Paredes, 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. prLL

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.
W h e r e a s t h e l a t t e r, s a n s t h e P r e s i d e n t ' 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 impediment. 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
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, 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 (all things being equal)
the contested dismissals. The contention that the
staffing pattern at the Bureau (which would have
furnished a justification for a personnel movement) is
the same staffing 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. LLpr

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 lay-offs as a
consequence of reorganization. 87 Finally, he was
aware that lay-offs 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
personnels except those appointed by the
President." 89
A c c o r d i n g l y, w i t h r e s p e c t t o D e p u t y
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
loss 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 reinstatement 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 illegal 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
M I S O N M AY H AV E A P P O I N T E D A S
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, Griño-Aquino
and Medialdea, JJ ., concur.
Padilla, J ., No part, related to counsel for respondent Abaca
in G.R. No. 85310.
(Dario v. Mison, G.R. No. 81954, 8196, 85335, 86241,
|||

[August 8, 1989], 257 PHIL 84-163)

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

The Supreme Court granted the petition and

reinstated petitioner with full backwages. The Court held that
where the very basis of the administrative case against
petitioner is his conviction in the criminal action which was
later on set aside by the Court upon a categorical and clear
finding 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 more basis nor justifiable reason
to maintain the administrative suit. The Court also ruled that
the reorganization of the Bureau was tainted with
circumstances considered as evidences of bad faith.
Petition granted.
SYLLABUS
1.  CONSTITUTIONAL LAW; BILL OF RIGHTS;
PROCEDURAL DUE PROCESS; IT CANNOT BE ARGUED
THAT PETITIONER WAS DENIED OF DUE PROCESS, AS
THE RECORDS CLEARLY SHOW THAT HE SUBMITTED
HIS LETTER-RESPONSE TO THE ADMINISTRATIVE
CHARGE FILED AGAINST HIM AND OTHER DOCUMENTS
ATTACHED AS ANNEXES TO HIS LETTER, ALL OF
WHICH ARE EVIDENCE SUPPORTING HIS DEFENSE. —
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.
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 The records
clearly show that on October 1, 1993 petitioner submitted his
letter-response dated September 30, 1993 to the
administrative charge 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.
2.  POLITICAL LAW; EXECUTIVE DEPARTMENT;
THE FACT THAT PETITIONER IS A PRESIDENTIAL
APPOINTEE DOES NOT GIVE THE APPOINTING
AUTHORITY THE LICENSE TO REMOVE HIM AT WILL OR
AT HIS PLEASURE FOR IT IS AN ADMITTED FACT THAT
HE IS LIKEWISE A CAREER SERVICE OFFICER WHO
UNDER THE LAW IS THE RECIPIENT OF TENURIAL
PROTECTION, THUS, MAY ONLY BE REMOVED FOR A
CAUSE UNDER A VALID PROCEEDINGS. — Petitioner is a
presidential appointee who belongs to career service of the
Civil Service. Being a presidential appointee, he comes
under the direct disciplining 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 authority or subject
to his pleasure, or limited to the period specified by law or to
the duration of a particular project for which purpose the
employment was made. As a career service officer, petitioner
enjoys the right to security of tenure. No less than the 1987
Constitution guarantees the right of security of tenure of the
employees of the civil service. Specifically, Section 36 of P.D.
No. 807, as amended, otherwise known as Civil Service
Decree of the Philippines, is emphatic that career service
officers and employees who enjoy security of tenure may be
removed only for any of the causes enumerated in said law.
In other words, the fact that the petitioner is a presidential
appointee does not give the appointing authority the license
to remove him at will or at his pleasure for it is an admitted
fact that he is likewise a career service officer who under the
law is the recipient of tenurial protection, thus, may only be
removed for a cause and in accordance with procedural due
process.
3.  ID.; ID.; ID.; EXECUTIVE ORDER NO. 127
CANNOT BE CONSIDERED AS THE LEGAL BASIS FOR
THE REORGANIZATION OF THE BUREAU OF INTERNAL
REVENUE; REASON. — 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:"...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." 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 days 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.
4.  ID.;ID.;ID.;WHEN IS A REORGANIZATION
REGARDED AS VALID. — 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."
5. ID.; ID.; ID.; CIRCUMSTANCES CONSIDERED AS
EVIDENCE OF BAD FAITH IN THE REORGANIZATION OF
THE BUREAU OF INTERNAL REVENUE. — In this regard,
it is worth mentioning that Section 2 of R.A. No. 6656 lists
down the circumstances evidencing bad faith in the removal
of employees as a result of the reorganization. A 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. . . ." 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 functions 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 these newly
created offices, there is no doubt that a significant increase
of positions will correspondingly follow.
IHTASa

6. ID.; ID.; ID.; THE NON-REAPPOINTMENT OF THE

PETITIONER AS ASSISTANT COMMISSIONER VIOLATES
SECTION 4 OF REPUBLIC ACT NO. 6656. — It is
perceivable that the non-reappointment of the petitioner as
Assistant Commissioner violates Section 4 of R.A. 6656.
Under said provision, officers holding permanent
appointments are given preference for appointment to the
new positions in the approved staffing pattern comparable to
their former positions or in case there are not enough
comparable positions to positions next lower in rank. It is
undeniable that petitioner is a career executive officer who is
holding a permanent position. Hence, he should have been
given preference for appointment in the position of Assistant
Commissioner. 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.cTDECH
DECISION
TORRES, JR., J : p

Challenged in this petition is the validity of petitioner's

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
Commissioner 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 xxx xxx

SO ORDERED."

The fact of petitioner's 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 Criminal Case Nos.
14208-14209, entitled 'People of the
 Philippines vs. Aquilino T. Larin, et. al.'
referred to the Department of Finance by the
Commissioner of Internal Revenue.

The cases against Pareno and

Evangelista are being acted upon by the
Bureau of Internal Revenue as they are non-
presidential appointees.

xxx xxx xxx

It is clear from the foregoing that Mr.

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

Acting by authority of the President, Sr. Deputy

Executive Secretary Leonardo A. Quisumbing issued
Memorandum Order No. 164 dated August 25, 1993 which
provides for the creation of an Executive Committee to
investigate the administrative charge against herein
petitioner Aquilino T. Larin. It states thus:
"A Committee is hereby created to
investigate the administrative complaint filed
 a g a i n s t A q u i l i n o T. L a r i n , A s s i s t a n t
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 for Inspector Services
Bureau of Internal Revenue
The Committee shall have all 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 xxx 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 xxx 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.
cdrep

The Committee has in 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 . . .

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 the
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 xxx 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 persecutions 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 the 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) by 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. Maza
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 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 a presidential appointee, he falls under the
disciplining authority of the President. They also contended
that E.O. No. 132 and its implementing rules were validly
issued pursuant to Sections 48 and 62 of Republic Act No.
7645. 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 petitioner's
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
petitioner's 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?, and 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
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
disciplining 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 authority 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 petitioner is a presidential
appointee does not give the appointing authority the license
to remove him at will or at his pleasure for it is an admitted
fact that he is likewise a career service officer who under the
law is the recipient of tenurial protection, thus, may only be
removed for a cause and in accordance with procedural due
process. cdasia
 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 a decision handed down by the Hon.
Sandiganbayan convicting Larin, et. al. in
Criminal Case Nos. 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
Ta n d u a y d i d n o t d e s e r v e . T h e s e
misrepresentations as to how much Tanduay
had paid in ad valorem taxes obviously
constituted a fraud of tax revenue of the
government ..." 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 can not 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 finding 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 more 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 charge 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
can not 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
bases 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 service rules and
regulations. . . . 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." (emphasis 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
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." (emphasis 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." (emphasis 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:
" S e c . 1 6 .  C a r e e r c i v i l s e r v i c e
employees separated from service not for
cause but as a result of the . . .
reorganization following the ratification of this
Constitution shall be entitled to appropriate
separation pay . . ."

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 xxx 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." (emphasis 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 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 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. cdrep

Section 1.1.2 of said executive order provides that:

" 1 . 1 . 2  T h e I n t e l l i g e n c e a n d
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. ..." (emphasis 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 these
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
positions or in case there are not enough comparable
positions to positions next lower in rank. It is undeniable that
petitioner is a career executive officer who is holding a
permanent position. Hence, he should have been given
preference for appointment in the position of Assistant
Commissioner. 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.
Narvasa, C .J .,Davide, Jr.,Romero, Bellosillo, Melo, Puno,
Vitug, Kapunan, Mendoza, Francisco, Hermosisima, Jr.and
Panganiban, JJ ., concur.
Regalado, J .,is on leave.
 
(Larin v. Executive Secretary, G.R. No. 112745, [October
|||

16, 1997], 345 PHIL 962-983)

 EN BANC
[G.R. Nos. 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.
Public Interest Law Center for petitioners.
The Solicitor General for respondents.
SYNOPSIS
The Economic Intelligence and Investigation Bureau
(EIIB) of the Ministry of Finance was created on June 30,
1987 by Executive Order No. 127. On January 7, 2000, then
President Joseph Estrada issued Executive Order No. 191
deactivating the EIIB. Its function was transferred to the
newly created Task Force Aduana which utilized the
personnel, facilities and resources of existing departments,
agencies and bureaus. Thus, no new employees were hired.
Its personnel came from other agencies and detailed with
the Task Force. On March 29, 2000, Executive Order No.
223 was issued separating all EIIB personnel from the
service effective April 30, 2000. Aggrieved, petitioners,
employees of the EIIB, without exhausting administrative
remedies and the hierarchy of courts, resorted to this
recourse challenging Executive Orders Nos. 191 and 223 as
violative of their right to security of tenure and usurpation by
the President of the power of Congress to abolish public
office.
 Procedural flaws like the disregard of hierarchy of
courts and non-exhaustion of administrative remedies may
be ignored where the demands of public interest requires it
as where the status and existence of public office is in issue.
The general rule is that the power to abolish a public
office lies with the Legislature. However, the President by
virtue of Section 31, Book III of Executive Order No. 292
(Administrative Code of 1987), Section 48 of R.A. 7645,
Section 20, Book III of E.O. No. 292, and Section 78 of R.A.
8760, may abolish, in good faith, bureaus, agencies or
offices.EICSTa

Where an office is abolished to achieve the ultimate

purpose of economy, as in the case at bar, the same is made
in good faith.
SYLLABUS
1.  REMEDIAL LAW; ACTIONS; PROCEDURAL
FLAWS MAY BE DISREGARDED WHERE PUBLIC
INTEREST DEMANDS IT. — 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.
2.  ADMINISTRATIVE LAW; PUBLIC OFFICE;
"DEACTIVATE" AND "ABOLISH," DISTINGUISHED. —
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, while to "abolish" means to do away
with, to annul, abrogate or destroy completely. In essence,
abolition denotes an intention to do away with the office
wholly and permanently.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.
3.  ID.; ID.; POWER TO ABOLISH PUBLIC OFFICE,
AS A GENERAL RULE, LODGED WITH THE
LEGISLATURE. — 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.
4. ID.;ID.;ID.;EXCEPTION. — The exception, however,
is that as far as bureaus, agencies or offices in the executive
department are concerned, the President's power of control
may justify him to inactivate the functions of a particular
office, or certain laws may grant him the broad authority to
carry out reorganization measures. The case in point is Larin
v. Executive Secretary.
5.  CONSTITUTIONAL LAW; PRESIDENT; WITH
AUTHORITY TO EFFECT ORGANIZATIONAL CHANGES,
INCLUDING ABOLITION, IN EXECUTIVE DEPARTMENT
OR AGENCY; BASIS. — 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. 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. 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 v. Aguirre,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
President's continuing authority to reorganize.HIaTDS

6.  ADMINISTRATIVE LAW; PUBLIC OFFICE;

REORGANIZATION CARRIED OUT IN GOOD FAITH,
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.
7.  ID.; ID.; ID.; DEACTIVATION OF EIIB AND
CREATION OF TASK FORCE ADUANA, MADE IN GOOD
FAITH. — An examination of the pertinent Executive Orders
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. 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. 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.It is evident from the
yearly budget appropriation of the government that the
creation of the Task Force Aduana was especially intended
to lessen EIIB's expenses.
8.  ID.;ID.;ABOLITION OF OFFICE; DOES NOT
CURTAIL RIGHT TO SECURITY OF TENURE. — 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.
EIASDT

9.  ID.;ID.;EXCEPT IN CONSTITUTIONAL OFFICES,

NO ONE HAS VESTED RIGHT IN AN OFFICE OR ITS
SALARY. — 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.
DECISION
SANDOVAL-GUTIERREZ, J : p

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 agencies

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:
"A

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.
DcICEa

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 President's power of control may justify him
to inactivate the functions of a particular office, 19 or certain
laws may grant him the broad authority to carry out
reorganization measures. 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.

xxx xxx xxx

Section 48 of R.A. 7645 provides that:

'SECTION 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. ..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:

' S E C T I O N 6 2 .  U n a u t h o r i z e d
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.' (emphasis 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.
xxx xxx xxx
 Another legal basis of E.O. No. 132 is
Section 20, Book III of E.O. No. 292 which
states:

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

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
President's 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 government's 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 EIIB's
expenses. Tracing from the yearly General Appropriations
Act, it appears that the allotted amount for the EIIB's 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 These
amounts were far above the P50,000,000 35 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 Service Commission, 37
we ruled that a reorganization in good faith is one designed
to trim the fat off the bureaucracy and institute economy and
greater efficiency in its operation.
Lastly, we hold that petitioners' right to security of tenure is
not violated. Nothing is better settled in our law than that the
abolition of an office within the competence of a legitimate
body if done in good faith suffers from no infirmity. Valid
abolition of offices is neither removal nor separation of the
incumbents. 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. CHDaAE

Davide, Jr.,C.J.,Bellosillo, Melo, Puno, Vitug, Kapunan,

Mendoza, Pardo, Buena, Ynares-Santiago and De Leon,
Jr.,JJ., concur.
Quisumbing and Panganiban, JJ., concurs in the result.
Gonzaga-Reyes, J.,is on leave.

(Buklod ng Kawaning EIIB v. Zamora, G.R. Nos.

|||

142801-802, [July 10, 2001], 413 PHIL 281-299)

 FIRST DIVISION
[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.
The Law Firm of Nitorreda and Nasser for petitioners.
Solicitor General for respondents.
SYNOPSIS
Petition for certiorari seeking to nullify EO No. 81 and
Memoranda Nos. 01592 and 01594 issued pursuant thereto,
which transferred the sports development programs and
activities of the DECS to the Philippine Sports Commission
(PSC). Petitioners claimed that EO 81 is void for being an
undue legislation by President Estrada and the questioned
memoranda reassigned all Bureau of Physical Education
and School Sports (BPESS) personnel named in the DECS
Memoranda to various offices within the DECS. ECcDAH

The subsequent enactment of RA 9155 abolishing the

BPESS and transferring the DECS' functions relating to
sports competition to the PSC has rendered the petition
moot and academic. Also, petitioners admit that RA 9155
now explicitly provides for the protection of their right to
security of tenure.
SYLLABUS
1.  POLITICAL LAW; ADMINISTRATIVE CODE OF
1987; EO 81 IS A VALID EXERCISE OF THE PRESIDENT'S
DELEGATED POWER TO REORGANIZE THE OFFICE OF
THE PRESIDENT. — 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. Under Section 31. . .
Since EO 81 is based on the President's continuing authority
under Section 31 (2) and (3) of EO 292, EO 81 is a valid
exercise of the President's delegated power to reorganize
the Office of the President. The law grants the President this
power in recognition of the recurring need of every President
to reorganize his office "to achieve simplicity, economy and
efficiency." The Office of the President is the nerve center of
the Executive Branch. To remain effective and efficient, the
Office of the President must be capable of being shaped and
reshaped by the President in the manner he deems fit to
carry out his directives and policies. After all, the Office of
the President is the command post of the President. This is
the rationale behind the President's continuing authority to
reorganize the administrative structure of the Office of the
President. 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. Therefore,
the President has the authority to transfer the "functions,
programs and activities of DECS related to sports
development" to the PSC, making EO 81 a valid presidential
issuance. acTDCI

2.  ID.; ID.; ID.; DISTINGUISHED FROM THE

PRESIDENT'S POWER TO REORGANIZE THE OFFICE
OF THE PRESIDENT PROPER; CASE AT BAR. —
However, the President's power to reorganize the Office of
the President under Section 31 (2) and (3) of EO 292 should
be distinguished from his power to reorganize the Office of
the President Proper. Under Section 31 (1) of EO 292, the
President can reorganize the Office of the President Proper
by abolishing, consolidating or merging units, or by
transferring functions from one unit to another. In contrast,
under Section 31 (2) and (3) of EO 292, the President's
power to reorganize offices outside the Office of the
President Proper but still within the Office of the President is
limited to merely transferring functions or agencies from the
Office of the President to Departments or Agencies, and vice
versa. This distinction is crucial as it affects the security of
tenure of employees. The abolition of an office in good faith
necessarily results in the employee's cessation in office, but
in such event there is no dismissal or separation because
the office itself ceases to exist. On the other hand, the
transfer of functions or agencies does not result in the
employee's cessation in office because his office continues
to exist although in another department, agency or office. In
the instant case, the BPESS employees who were not
transferred to PSC were at first temporarily, then later
permanently reassigned to other offices of the DECS,
ensuring their continued employment. At any rate, RA 9155
now mandates that these employees "shall be retained by
the Department."
DECISION
CARPIO, J : p

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 President's
issuance of EO 81 violated the principle of separation of
powers. Petitioners also challenge the DECS Memoranda for
violating their right to security of tenure.
Petitioners seek to nullify EO 81 and the DECS
Memoranda. Petitioners pray that this Court prohibit the PSC
from performing functions related to school sports
development. Petitioners further pray that, upon filing of the
petition, this Court issue a temporary restraining order
against respondents to desist from implementing EO 81.
During the pendency of the case, Republic Act No.
9155 ("RA 9155" for brevity), otherwise known as the
"Governance of Basic Education Act of 2001," was enacted
on August 11, 2001. RA 9155 expressly abolished the
BPESS and transferred the functions, programs and
activities of the DECS relating to sports competition to the
PSC. 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 Court's 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 )  R e s t r u c t u r e t h e i n t e r n a l
organization of the Office of the President
Proper, including the immediate Offices, the
Presidential Special Assistants/Advisers
System and the Common Support System,
by abolishing, consolidating or merging units
thereof or transferring functions from one unit
to another;

(2)  Transfer any function under the

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

Since EO 81 is based on the President's continuing

authority under Section 31 (2) and (3) of EO 292, 8 EO 81 is
a valid exercise of the President's delegated power to
reorganize the Office of the President. The law grants the
President this power in recognition of the recurring need of
every President to reorganize his office "to achieve
simplicity, economy and efficiency." The Office of the
President is the nerve center of the Executive Branch. To
remain effective and efficient, the Office of the President
must be capable of being shaped and reshaped by the
President in the manner he deems fit to carry out his
directives and policies. After all, the Office of the President is
the command post of the President. This is the rationale
behind the President's continuing authority to reorganize the
administrative structure of the Office of the President.
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 President's power to reorganize the
Office of the President under Section 31 (2) and (3) of EO
292 should be distinguished from his power to reorganize
the Office of the President Proper. Under Section 31 (1) of
EO 292, the President can reorganize the Office of the
President Proper by abolishing, consolidating or merging
units, or by transferring functions from one unit to another.
In contrast, under Section 31 (2) and (3) of EO 292, the
President's power to reorganize offices outside the Office of
the President Proper but still within the Office of the
President is limited to merely transferring functions or
agencies from the Office of the President to Departments or
Agencies, and vice versa.
This distinction is crucial as it affects the security of
tenure of employees. The abolition of an office in good faith
necessarily results in the employee's cessation in office, but
in such event there is no dismissal or separation because
the office itself ceases to exist. 11 On the other hand, the
transfer of functions or agencies does not result in the
employee's cessation in office because his office continues
to exist although in another department, agency or office. In
the instant case, the BPESS employees who were not
transferred to PSC were at first temporarily, then later
permanently reassigned to other offices of the DECS,
ensuring their continued employment. At any rate, RA 9155
now mandates that these employees "shall be retained by
the Department." SaIHDA

WHEREFORE, the instant petition is DISMISSED. No

pronouncement as to costs.
 SO ORDERED.
Davide, Jr., C.J., Vitug and Azcuna, JJ., concur.
Ynares-Santiago, J., took no part.
(Domingo v. Zamora, G.R. No. 142283, [February 6, 2003],
|||

445 PHIL 7-15)

 FIRST DIVISION
[G.R. No. 152845. August 5, 2003.]
DRIANITA BAGAOISAN, FELY MADRIAGA, SHIRLY
TAGABAN, RICARDO SARANDI, SUSAN IMPERIAL,
BENJAMIN DEMDEM, RODOLFO DAGA, EDGARDO
BACLIG, GREGORIO LABAYAN, HILARIO JEREZ, and
MARIA CORAZON CUANANG, petitioners,vs.NATIONAL
TOBACCO ADMINISTRATION, Represented by ANTONIO
DE GUZMAN and PERLITA BAULA, respondents.
The Law Offices of Huerla Abesamis & Associates for
petitioners.
Office of the Government Carporale Counsel for public
respondent.
SYNOPSIS
President Joseph Estrada issued several Executive
Orders reorganizing the National Tobacco Administration
(NTA).In compliance therewith, the NTA prepared and
adopted a new Organization Structure and Staffing Pattern
(OSSP).Petitioners were rank and file employees of NTA
who were terminated and were not considered in the OSSP.
They filed a petition for certiorari, prohibition and mandamus
before the Regional Trial Court of Batac, Ilocos Norte to
enjoin the respondents from enforcing the notice of
termination addressed to the petitioners. The RTC decided in
favor of petitioners and thus ordered NTA to appoint
petitioners in the new OSSP. On appeal, the Court of
Appeals reversed the RTC ruling. The Supreme Court
affirmed the appellate court's decision and denied the motion
for reconsideration.
Petitioners, therefore, filed this motion to admit petition
for en banc resolution of the case allegedly to address the
legal and constitutional issue of reorganizing NTA by an
executive fiat and not by legislative action. According to the
Court, this involved neither an abolition nor transfer of
offices; the assailed action was merely reorganization under
the general provisions of the law consisting mainly of
streamlining the NTA in the interest of simplicity, economy
and efficiency. It was, therefore, an act well within the
authority of the President motivated and carried out,
according to the findings of the appellate court, in good faith,
a factual assessment accepted by the Court.
As to petitioners' Motion for an En Banc Resolution of
the Case, the Court reminded counsel for petitioners that the
Court En Banc is not an appellate tribunal to which appeals
from a Division of the Court may be taken. Petitioners'
motion was denied.
SYLLABUS
1.  POLITICAL LAW; EXECUTIVE DEPARTMENT;
PRESIDENT IS EXPRESSLY GRANTED CONTROL
THEREOF; APPLICATION IN CASE AT BAR. — 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, 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. 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, 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., this Court has had
occasion to also delve on the President's 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: ". . . .Under Section 31(1) of EO 292, the
President can reorganize the Office of the President Proper
by abolishing, consolidating or merging units, or by
transferring functions from one unit to another. In contrast,
under Section 31(2) and (3) of EO 292, the President's
power to reorganize offices outside the Office of the
President Proper but still within the Office of the President is
limited to merely transferring functions or agencies from the
Office of the President to Departments or Agencies, and vice
versa." 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 President's power to restructure
the internal organization of the Office of the President
Proper,by abolishing, consolidating or merging units hereof
or transferring functions from one unit to another, while
Section 31(2) and (3) concern executive offices outside the
Office of the President Proper allowing the President to
transfer any function under the Office of the President to any
other Department or Agency and vice-versa, and the transfer
of any agency under the Office of the President to any other
department or agency and vice-versa.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.
ESTAIH

2.  ID.;JUDICIARY; SUPREME COURT; THE COURT

EN BANC IS NOT AN APPELLATE TRIBUNAL TO WHICH
APPEALS FROM A DIVISION OF THE COURT MAY BE
TAKEN. — 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.
DECISION
VITUG, J :
p

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. CcAIDa

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
Court's resolution of 20 January 2002.
On 21 February 2003, petitioners submitted a "Motion
to Admit Petition For En Banc Resolution" of the case
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 )  T h e P r e s i d e n t o f t h e
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
President's 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.

'xxx xxx xxx

'Section 48 of R.A. 7645
provides that:SEIDAC

"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. ...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:

" S e c . 6 2 .  U n a u t h o r i z e d
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.

'xxx xxx xxx

'Another legal basis of E.O. No.
132 is Section 20, Book III of E.O. No.
292 which states:
 "Sec. 20.  Residual Powers.—
Unless Congress provides otherwise,
the President shall exercise such other
powers and functions vested in the
President which are provided for under
the laws and which are not specifically
enumerated above or which are not
delegated by the President in
accordance with law.'

'This provision speaks of such

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

"Now, let us take a look at the assailed

executive order.

"In the whereas clause of E.O. No.

191, former President Estrada anchored his
authority to deactivate EIIB on Section 77 of
Republic Act 8745 (FY 1999 General
Appropriations Act), a provision similar to
Section 62 of R.A. 7645 quoted in Larin,thus:

"'Sec. 77.  Organized Changes.

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

"We adhere to the ...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 President's 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 one's 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.

"xxx xxx xxx

"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. caIDSH

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

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 President's power to
restructure the internal organization of the Office of
the President Proper,by abolishing, consolidating or
merging units hereof or transferring functions from
one unit to another, while Section 31(2) and (3)
concern executive offices outside the Office of the
President Proper allowing the President to transfer
any function under the Office of the President to any
other Department or Agency and vice-versa,and the
transfer of any agency under the Office of the
President to any other department or agency and
vice-versa. 14
In the present instance, involving neither an abolition
nor transfer of offices, the assailed action is a mere
reorganization under the general provisions of the law
consisting mainly of streamlining the NTA in the interest of
simplicity, economy and efficiency. It is an act well within the
authority of President motivated and carried out, according
to the findings of the appellate court, in good faith, a factual
assessment that this Court could only but accept. 15
In passing, relative to petitioners' "Motion for an En
Banc Resolution of the Case," it may be well to remind
counsel, that the Court En Banc is not an appellate tribunal
to which appeals from a Division of the Court may be taken.
A Division of the Court is the Supreme Court as fully and
veritably as the Court En Banc itself and a decision of its
Division is as authoritative and final as a decision of the
Court En Banc.Referrals of cases from a Division to the
Court En Banc do not take place as just a matter of routine
but only on such specified grounds as the Court in its
discretion may allow. 16
WHEREFORE, the Motion to Admit Petition for En
Banc resolution and the Petition for an En Banc Resolution
are DENIED for lack of merit. Let entry of judgment be made
in due course. No costs.
SO ORDERED.
Davide, Jr., C .J ., Ynares-Santiago, Carpio and Azcuna.
JJ .,concur.
 
(Bagaoisan v. National Tobacco Administration, G.R. No.
|||

152845, [August 5, 2003], 455 PHIL 761-777)